Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Buying Up Chiropractic Clinics
Transcript
- Lucas: Here's a number that stopped me this week: private equity-backed chiropractic chains have roughly doubled their clinic count since 2020. Not a huge headline — you don't see it on CNBC — but it's a perfect example of the roll-up playbook moving into a new niche. Luna: Chiropractic? I feel like most people still think of a solo practitioner with a table in a strip mall. How do you even roll that up? Lucas: Right, that's exactly the stereotype — and it's still true for maybe 80 percent of the market. But the remaining 20 percent is increasingly owned by a handful of companies. The best-known is The Joint Corp — they franchise chiropractic clinics, mostly cash-pay, no appointment needed. They went from about 500 locations at the start of 2020 to over 900 today. Luna: And that's a franchise model, not a pure roll-up. But there are firms doing straight acquisitions too? Lucas: Absolutely. ChiroOne is a big one — they're backed by private equity and they acquire existing practices, then consolidate back-office operations. They've got around 200 clinics now, mostly in the Southeast. Then you've got smaller regional players like ProChiro in the Midwest and ChiroCare in Texas. The pattern is identical to what we've seen in dental or veterinary: buy the local practice, keep the brand local, centralize the billing and marketing. Luna: What's the economic case here? Chiropractic feels like it's more discretionary than, say, urgent care. People don't 'need' an adjustment the way they need stitches. Lucas: That's true, but the business has some attractive features. First, it's largely cash-based — many chiropractors don't take insurance, or they take very limited plans. That means no fighting with insurers over reimbursement rates. Second, the overhead is low: you need treatment tables, some X-ray equipment, and a receptionist. A single practitioner can gross three to five hundred thousand dollars a year. Third, the customer base is surprisingly sticky — people who go regularly tend to keep going. Luna: Sticky how? I've never heard someone say they're 'loyal' to their chiropractor. Lucas: Think of it like a subscription. Many chiropractors sell treatment packages — twelve visits for four hundred dollars, something like that. Once a patient commits, they're likely to come back for months or years. The Joint Corp's same-store sales grew something like 8 percent year-over-year in 2025. That's not explosive, but it's steady. And for private equity, steady recurring revenue is gold. Luna: So the play is: buy a practice, increase patient volume through marketing, centralize billing, and maybe raise prices. Is that actually better for patients? Lucas: That's the big question. On one hand, chains can invest in better equipment, more convenient hours, and online booking. The Joint Corp clinics are open evenings and weekends — that's a real improvement over a solo doc who works ten to four, Tuesday through Thursday. On the other hand, there's a concern that corporate owners push for higher patient volume, which could mean shorter appointments and more 'up-selling' of add-on services like decompression therapy or supplements. Luna: I've read that some chiropractic chains have been investigated for billing practices — like billing insurance for services that weren't medically necessary. Is that a risk in the roll-up model? Lucas: It's definitely a risk when you centralize billing and put pressure on revenue per patient. The larger the chain, the more scrutiny it attracts from regulators. In 2023, the Department of Justice settled with a large chiropractic chain for over 10 million dollars over false claims allegations. Private equity firms are usually aware of this — they hire compliance officers, but the incentive structure can still push in the wrong direction. Luna: So the roll-up playbook, which works beautifully for something like parking lots or HVAC, gets trickier when you're dealing with clinical judgment. Lucas: Exactly. That's why you see more private equity activity in 'cash-pay' chiropractic — where there's less regulatory entanglement because no insurance claim is filed. The Joint Corp is almost entirely cash-pay. ChiroOne does take some insurance, but they've been moving toward membership models. The cash-pay model is simpler to scale. Luna: And the valuation math — what does a chiropractic practice typically sell for? Lucas: Valuations vary widely by region and profitability, but a solo practice doing 400,000 in annual revenue might sell for three to five times its discretionary earnings — call it one to two million dollars. For a private equity firm, that's small. But if you buy ten practices in a metro area and combine them under one brand, you can often achieve economies of scale that boost margins from maybe 20 percent to 30 percent or more. Luna: So the consolidation thesis is basically the same as dental: fragment the market, buy small, combine back-office, increase margins, exit to a larger platform. Lucas: Exactly the same. And the exit options are similar too — either sell to a larger private equity firm, or take the company public. The Joint Corp is already public, trading on the NASDAQ. Their market cap is around 300 million dollars. Not enormous, but it shows there's a path to liquidity. Luna: Are there any structural barriers that make chiropractic harder to roll up than, say, dental? Lucas: A few. One is that many states have 'corporate practice of medicine' laws that restrict who can own a healthcare practice. Some states explicitly prohibit non-chiropractors from owning chiropractic clinics. So private equity firms often have to structure deals as 'management services agreements' — they own the assets and provide management, but a licensed chiropractor retains clinical ownership. That adds complexity. Luna: Interesting. So there's a workaround, but it's not as clean as buying a dental practice. Lucas: Right. Another barrier is that chiropractors are notoriously independent. The profession has a strong tradition of solo practice — many chiropractors see themselves as healers, not businesspeople. So convincing them to sell can be harder than in, say, veterinary medicine, where burnout rates are higher. Luna: But the demographics might push them toward selling. The average chiropractor is getting older, and there aren't enough new grads to replace them. Lucas: That's a key driver. The American Chiropractic Association says about 25 percent of practicing chiropractors are over 55. Many are looking to retire in the next decade. And younger chiropractors often prefer a salaried position with a chain over the hassle of running their own business. So the supply of acquisition targets is growing. Luna: Let's talk about the broader market environment. It's June 2026 — interest rates have been higher for longer than many expected. Does that slow down these roll-ups? Lucas: It does, in the sense that debt financing is more expensive. Private equity firms rely on leverage to juice returns. When borrowing costs are higher, they need to be more selective. But chiropractic practices are relatively inexpensive — a million-dollar acquisition doesn't require huge debt. And the cash-pay model means stable cash flows, which lenders like. So the roll-up continues, just maybe at a slightly slower pace. Luna: Any interesting new entrants or trends in this space right now? Lucas: One trend I'm watching is chiropractic clinics adding adjacent services — physical therapy, massage, even primary care. Some chains are positioning themselves as 'musculoskeletal health' platforms. That broadens the addressable market and increases revenue per patient. Another is the use of technology: some chains are deploying ai driven diagnostic tools to standardize care and reduce reliance on individual clinician judgment. Luna: That feels like it could be a double-edged sword. Standardization might improve consistency, but it could also alienate patients who value the personal touch of a long-time chiropractor. Lucas: Totally. And that's the tension at the heart of every roll-up: scale versus service. Private equity is very good at the former, less good at the latter. The firms that succeed in chiropractic will be the ones that figure out how to keep patients happy while squeezing out inefficiencies. Luna: Speaking of keeping things sustainable — and I know this is a little off the main thread — but conversations like this take a lot of research and prep time. If listeners have found value in these deep dives, there's a small way to help keep the show going. Lucas: Yeah, genuinely. A couple of dollars a month is what keeps these episodes ad-free and focused. If you've gotten something out of them, buy me a coffee dot com slash fexingo. No pressure, just appreciated. Luna: Exactly. And honestly, it makes a real difference — it's what lets us spend time on niche topics like chiropractic roll-ups instead of just chasing the biggest headlines. Lucas: Alright, back to it. So where do I think this goes over the next few years? I expect we'll see at least two or three more large platforms emerge, each with 500-plus clinics. The cash-pay model will likely grow faster than insurance-based because it's simpler. And we may see some consolidation among the consolidators — the larger chains buying up the smaller regional players. Luna: So the endgame is maybe five or six national chains controlling half the market, with the rest remaining independent. Lucas: That's my bet. And for the independent chiropractor, the question becomes: do you want to be part of that machine, or do you want to stay small and differentiate on personal care? There's room for both, but the economics increasingly favor the chains. Luna: Interesting episode. I think a lot of listeners will look at their local chiropractor a little differently now. Lucas: That's the goal. Next time, we're looking at how private equity is buying up fire and security alarm companies — another fragmented industry flying under the radar.