top of page

Behavioral Health M&A Report: Q3 2020

Updated: Jun 9, 2023

Autism and I/DD Organizations Led the Sector this Quarter

Mertz Taggart has just released its quarterly M&A report for the behavioral health sector.

According to the report, transaction activity in behavioral health has rebounded in the third quarter of 2020, with a total of 26 transactions. Autism and intellectual/developmental disabilities organizations led the sector, accounting for 13 announcements in Q3.

“We anticipate strong demand for behavioral health organizations of all types over the next 12 months,” said Mertz Taggart Managing Partner Kevin Taggart. “The strong demand for specialty care, coupled with the providers’ smart pivot toward telehealth services, creates an attractive landscape for investments and follow-on deals.”

Taggart pointed out that private equity buyers are gauging their portfolios against long-term propositions. Yet for now, with uncertainty in market circumstances, many buyers will be hyperfocused on the executive leadership of any potential deal target.

Note: The sum of sub-industries (broken down below) does not always equal total sector deal volume, as some transactions include more than one sub-industry.

“Several CEOs who have been leading some of the industry’s well-known legacy brands in addiction treatment announced this quarter that they would be retiring or moving on, launching a series of simultaneous succession plans,” Taggart said. “Experienced executives have always been valuable assets in any deal, but that could very well become a top priority if we start to see a trickledown effect that results in up-and-coming leaders shifting between organizations or taking on new roles.”

CEOs at Hazelden Betty Ford, Rosecrance, Universal Health Services, and Caron Treatment Centers all announced that they would step down or retire in the coming months.

Across behavioral health, sellers should be standing their ground on valuations, according to Taggart. They especially should consider pushing back against any perception that the global coronavirus pandemic has devalued operations.

“In fact, history has proven that healthcare is quite resilient, and behavioral health continues to be an attractive buy,” he said. “We often see slow-moving deals suddenly pick up pace in the fall, so sellers would be wise to present solid, reasonably optimistic valuations.”

What’s more, the managed care outlook is decidedly bullish for 2021, according to the largest insurance company leaders. That translates into an extra advantage for any behavioral health provider that has in-network contracts and established relationships with payers.

In the past five years or so, behavioral health has witnessed not only a flurry of mergers and acquisitions, but organic expansion as well, Taggart said. Combined synergies have created opportunities to enter into new geographic markets and to add new clinical offerings. The industry forecast leans toward plenty of deal volume yet to be realized in 2021.

Addiction Treatment

New openings continue in the addiction treatment space—an indicator of an optimistic outlook for the long-term rate of service demand. While the Northeast and California have seen the most noteworthy ribbon cuttings, smaller markets are responding to local needs as well.

“Service expansion is typically a factor in deal targets,” Taggart said. “Buyers still have their eyes on building the continuum as well as breaking into new markets.”

BrightView, an outpatient addiction treatment provider with 18 locations in Ohio, announced that it has acquired Rebound Recovery Centers with multiple locations in Kentucky. The company offers medication-assisted treatment and counseling services.

The not-for-profit First Step of Sarasota and Coastal Behavioral Healthcare merged on July 1 and began operating under the First Step brand. With the transaction, First Step brings its number of locations to 33 throughout the Sarasota, Florida, region. It offers residential, crisis, inpatient and outpatient services.

Hunter Street Partners and Healy Capital Partners have jointly invested in Ark Behavioral Health in Massachusetts. The provider offers detox, residential, partial hospitalization and intensive outpatient services in four locations. Capital will be dedicated to expanding Ark’s number of treatment centers.

Providence Treatment has acquired Main Line Recovery, which will now operate under the Providence Treatment brand. The organization offers outpatient addiction treatment services in Pennsylvania.

Pinnacle Treatment Centers announced its acquisition of HealthQwest and the organization’s five outpatient centers in Georgia. It will continue to operate under the HealthQwest brand. Pinnacle operates inpatient and outpatient facilities in eight states.

Averhealth, a provider of drug testing services for courts and social programs, has acquired the testing services of Treatment Assessment Screening Center, a private, not-for-profit in Arizona. Private equity firm Five Arrows Capital Partners provided the investment.

Outreach Recovery has acquired More With Doc C, LLC, expanding its medication-assisted treatment services in Maryland. The company operates multiple locations in four states.

Autism Services & Intellectual/Developmental Disabilities

There’s a renewed effort to encourage early diagnosis and intervention for children with autism spectrum disorder. With a higher prevalence rate, the demand for services will continue to grow.

Meanwhile, with attention focused on job growth for the balance of 2020, advocates will likely ask for more assistance in care coordination for those with intellectual and developmental disabilities (I/DD). Such services will be an attractive complement to traditional supports among deal targets.

Proud Moments ABA in July acquired Autism & Behavior Consulting Services, LLC. Founded in 2014, Proud Moments ABA offers applied behavior analysis (ABA) at 11 locations nationwide.

Acorn Health, a national provider of autism services for children, has acquired the ABA therapy assets affiliated with Concord Foundations Network. The deal enables Acorn Health to expand services into Maryland, Pennsylvania, and Tennessee, while increasing capacity in Michigan and Virginia.

The Center for Social Dynamics, LLC, a portfolio company of NMS Capital, has acquired Behavior & Development Center, LLC, located in Southern California. The deal marks the portfolio company’s second transaction since June.

The Columbus Organization in July announced it had acquired assets of Rendon Support Services, a Florida-based provider of I/DD support services. In September, it also acquired the assets of Advocates in Action, a New Jersey-based care coordination provider. The organization operates under the HealthEdge Investment Partners, LLC portfolio and is CARF-accredited.

Texas-based Caregiver Inc. in August closed the deal to acquire Pine Ridge-Pine Village Inc. in Ohio, which provides residential, day treatment and supported living I/DD services. The transaction represents Caregiver’s seventh acquisition in the state.

Mental Health

Because overall costs are high for individuals with mental health conditions, providers can make an excellent case for payers to continue on with policies that enable access to care, such as telehealth options. In fact, payers report annual costs as much as 3.5 times higher for those with mental health and addiction disorders.

A recent survey also found that 81% of behavioral health providers began using telehealth for the first time this year in response to the COVID-19 pandemic. Additionally, 70% said they plan to continue offering telehealth moving forward.

Summit BHC in July acquired Highland Hospital in Charleston, West Virginia, marking its first entry into the state. The hospital has 115 beds for acute and residential psychiatric care as well as a 16-bed crisis residential/detox substance use disorder treatment center. The deal was Summit’s second acquisition of the year, and has grown its network to 15 states.

Column Health in July announced the acquisition of the Center for Psychiatric Medicine. The organization’s community-based outpatient clinics are located throughout Massachusetts and Connecticut, offering psychiatry, neuropsychiatry and addiction treatment services.

The Comprehensive Counseling LCSWs counseling practice in September was acquired by LearnWell, a Massachusetts-based mental health services company, which gains new multilingual virtual counseling capabilities as a result of deal. Eagle Private Capital and 424 Capital provided the investment.

Private equity firm Enhanced Healthcare Partners has invested in NeuroPsychiatric Hospitals, an acute care provider with four locations in Indiana. The funding will help scale up services and expand into other geographic areas.


  1. Behavioral Health M&A Quarterly Report Q4 2020 – Mertz Taggart - […] To view the Q3 2020 Behavioral Health Report click here. […]

136 views0 comments


bottom of page