Q1 2025 Behavioral Health M&A Report
- Emin Beganovic
- 23 hours ago
- 7 min read
Updated: 10 minutes ago
After an especially active first quarter and with signs currently indicating a healthy and active pipeline, analysts at Mertz Taggart are bullish in their outlook on the behavioral healthcare market for 2025.
Behavioral Health M&A
A total of 47 transactions involving behavioral healthcare organizations were reported in the first quarter of the year. This included 34 M&A transactions, the most since Q4 2022.
Activity within the intellectual/developmental disabilities (I/DD) and autism sectors has seen a resurgence, with a reported 12 transactions in Q1—the highest volume recorded since 2021. Sales of organizations that provide applied behavior analysis (ABA) therapy have been especially competitive, said Mertz Taggart managing partner Kevin Taggart.
“During COVID and right after COVID, a lot of ABA companies experienced wage inflation without getting rate increases, so there was some high-profile bankruptcy with some large providers that left California, Colorado and other states,” said Taggart. “The dust has seemed to settle on that over the last six months or so, and so now we’re seeing a lot of groups asking for ABA businesses. That’s a positive.”
Within the subsector of mental health, demand has remained consistent for going on two-and-a-half years. 29 transactions (19 M&A and 10 growth deals) involving mental healthcare providers were reported in Q1, a figure roughly in line with the 30 deals announced in the final quarter of 2024.
Although it’s not readily apparent based strictly on the number of transactions announced, buyers’ interest in psychiatric hospitals is high, Taggart said. There simply aren’t enough smaller, independent providers available to meet the demand.
“We’ve had more groups ask us for psych hospitals since Q1 this year than probably any quarter in the last three or four years,” he said. “But there are fewer smaller operators out there. There just haven’t been as many deals completed because there’s not enough supply. But there are definitely groups looking.”
Finally, Taggart noted one additional trend to watch: the continued flow of growth deals at high valuations.
“Money has continued to pour in to these growth deals, which surprised us a bit,” he said.
Addiction Treatment M&A
Once a subsector that analysts could reliably expect to have the highest number of transactions in a quarter, addiction treatment deal volume has remained flat for two years now. Deals are still getting done, Taggart clarified, but not to the level of historical norms. Nine deals involving addiction treatment providers were reported in Q1, matching the total from each of the prior two quarters. This included seven M&A transactions and one growth deal.
The following addiction treatment transactions were reported in Q1:
Wellpath Recovery Solutions, a provider of services at inpatient psychiatric hospitals, residential treatment centers and mental health rehabilitation centers, as well as community-based services, was acquired by an undisclosed buyer in a deal that will cancel out about $375 million in debt of parent company Wellpath Holdings.
Optimal Investment Group, a Sherman Oaks, California-based private equity firm, made a strategic investment in Recovery Dynamics in Los Angeles.
Substance use disorder (SUD) treatment provider Meridian Behavioral Health expanded its continuum of care with its acquisition of Gateway Recovery in January.
Denver-based addiction treatment providers AspenRidge Recovery and Colorado Medication-Assisted Recovery announced a merger in March. Both companies were founded by Cortland Mathers-Suter, who was named CEO of the combined company.
Oceans Healthcare acquired Haven Behavioral Healthcare, adding seven new locations across five new states, bringing the total number of states in which it operates to nine. The deal was backed by private equity firm Webster Equity Partners.
The respective boards of directors of Family Service & Guidance Center and Valeo Behavioral Healthcare announced their approval of plans to merge the two organizations into a single Certified Community Behavioral Health Clinic within the next year.
Silver Hill Hospital announced in February that it has completed its acquisition of Freedom Institute to expand its psychiatric care services in New York City. As part of the deal, Freedom Institute has been rebranded as Silver Hill New York.
1888 Equity acquired Jaywalker Lodge, a drug and alcohol rehabilitation facility in Colorado. Mertz Taggart provided exclusive sell-side advisory services.
Acadia Healthcare completed its acquisition of North Carolina-based Sellati & Co. Mertz Taggart provided exclusive sell-side advisory services.
Two growth funding deals were also announced:
You Are Accountable, a New York-based peer SUD support company, raised $1.9 million in funding, the company announced in February. Investors were not disclosed.
Bicycle Health, a virtual opioid use disorder (OUD) treatment provider, completed a $16.5 million funding round led by Questa Capital Management.
Mental Health M&A
As mentioned above, demand has remained healthy for mental healthcare providers, particularly those that offer psychiatry and ancillary services, Taggart said.
“There is still strong demand for mental health, especially psychiatry practices or groups that offer psychiatry services, even just medication management or ancillary services such as transcranial magnetic stimulation or ketamine-assisted therapy,” said Taggart. “There is still good demand for outpatient mental health—not to the level it was in 2022, but it’s been pretty steady in recent years, even with some notable strategic buyers taking a pause.”
Those strategic buyers, he added, are now showing signs they are ready to get off the sidelines, a development that could spur more activity later this year.
Deals involving mental healthcare organizations in Q1 included the following:
Riverside Impact Capital, a firm that specializes in working with mental health practices, announced a strategic investment in Evergreen Counseling. Mertz Taggart provided exclusive sell-side advisory services.
Traverse Pointe Partners completed its acquisition of Soma Therapy in a private equity platform deal. Mertz Taggart provided exclusive sell-side advisory services.
ARCpoint Inc. announced in January that it has completed the sale of 68% of its ownership interest in Achieve Behavioral Health Greenville. The buyer in the deal was not disclosed.
Empower Community Care, a global behavioral health organization, acquired Brief Strategic Family Therapy Institute from the University of Miami in a private equity-backed strategic deal.
Avel eCare, a telemedicine provider of clinician-to-clinician services, acquired Amwell Psychiatric Care, a division of Amwell, in a private equity-backed strategic deal. The acquisition expands Avel’s footprint to over 45 states.
Orchard Mental Health Group (formerly known as Quince Orchard Psychotherapy) made a private equity-backed strategic acquisition of GBCC Behavioral Health and Oasis Behavioral Health Urgent Center.
Eating Disorder Recovery Specialists, Mental Health Recovery Specialists, Sanctuary Psychology P.C. and Well Williamsburg—entities founded by clinician-entrepreneurs Sarah Chipps, a psychologist, and Greta Gleissner, a licensed clinical social worker—have been merged to form Well Behavioral Health.
Iris Telehealth has acquired innovaTel from Quartet Health in a private equity-backed strategic deal. Days later, Quartet itself was acquired by NeuroFlow, another behavioral health-focused tech company.
Axess Family Services and Children’s Advantage, a pair of not-for-profit providers that serve Portage County, Ohio, announced a merger in February.
FullBloom, an academic, behavioral and mental health provider for schools, acquired school-based mental health provider CharacterStrong in a move to support its increasing focus on mental healthcare.
TPN.health, a behavioral health network platform, acquired All Counseling and its provider-patient matching technology, TheraMatch.
Boston-based The Stepping Stones Group announced in March it has acquired Gallagher Pediatric Therapy in Fullerton, California, for an undisclosed sum.
AI-powered mental health chatbot company Wysa acquired April Health, a behavioral health company that works with primary care providers.
Beacon Behavioral Partners made two acquisitions in Q1, reaching agreements to acquire Shore Clinical TMS & Wellness Center and Cognizant Behavioral Health Services.
Several mental healthcare organizations also announced growth funding transactions in Q1, including the following:
Mindful Health completed a $12 million funding round led by WP Global Partners.
Digital family mental health startup Little Otter raised $9.5 million in a strategic funding round led by Next Legacy Management.
Sonar Mental Health raised $2.4 million in a pre-seed funding round for its AI-backed youth mental health startup. The funding round was led by Nina Capital.
Digital mental health startup Nema Health raised $14.5 million in a funding round that brought in two new investors: Deerfield Management and CVS Health Ventures, the venture capital arm of CVS Health.
Digital health company DarioHealth raised $25.6 million from an undisclosed investor.
Neurodivergent affirming therapy provider Prosper Health raised $16.2 million in a funding round led by Kindred Ventures.
Trail Mix Ventures Fund II and Foreground Capital led a $12 million investment round for Millie, a maternal mental healthcare company.
TownHome Health raised $500,000 according to SEC filings. An investor has not been disclosed.
Digital alcohol use disorder treatment provider Ria Health raised $12.5 million as part of a Series B funding round led by Peloton Equity.
Bluebird Kids Health raised $31.5 million in a funding round led by F-Prime Capital Partners.
Autism and Intellectual/Developmental Disabilities M&A
The 12 transactions reported in the I/DD and autism subsector for Q1 were the most for a quarter since 2021. One of the ABA therapy companies Mertz Taggart was working with in Q1, received the highest number of offers for any deal the firm has worked on since 2021, Taggart said.
The following is a list of transactions involving providers of I/DD and autism therapy services:
Ascend Capital Partners, a healthcare-focused private equity firm, acquired a majority stake in Unison Therapy Services.
Healthcare-focused private equity fund Leavitt Equity Partners partnered with Pediatrics Plus in Conway, Arkansas.
BrightSpring Health Services divested its I/DD division to Sevita (formerly known as The Mentor Network) in a deal valued at $835 million.
Already Autism Health announced two acquisitions. First, it acquired Commonwealth ABA in a deal backed by private equity firms Triton Pacific Healthcare Partners, Star Mountain Capital and Ace & Co. The company also acquired C.A.B.S., Autism and Behavior Specialists.
Private equity firm Nautic Partners acquired Proud Moments ABA from PE firm Audax Private Equity.
Three Maine-based not-for-profits—GMS, Uplift and Independence Advocates of Maine—announced a merger.
Meridian Executive Services acquired Danville Services Corp. In a private equity-backed strategic deal.
Behavior Genius, a provider of ABA services, acquired Bay ABA in the San Francisco Bay Area.
Regency ABA in Georgia acquired Magnolia Behavior Therapy in Seattle, Washington.
Strawberry Fields, a not-for-profit provider, became an affiliate of Devereux Advanced Behavioral Health.
Delta Behavioral Health Group was acquired by SpringHealth Behavioral Health & Integrated Care.
Frontera Health, an autism services startup that is backed by AI, raised $32 million in a seed funding round led by Lux Capital and Lightspeed Venture Partners.
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