Q3 2022 Behavioral Health M&A Update

Updated: Nov 17


A blue background with a white Mertz Taggart Logo. Text reads Behavioral Health M&A Report Q3 2022
Behavioral Health M&A Report: Q3 2022

Despite economic headwinds observed in the form of inflation, climbing interest rates, and the equity market, overall transaction volume in the behavioral healthcare sector remained strong in the third quarter of 2022. A total of 48 deals were announced in the 3-month period ending September 30, a 50% increase over the prior quarter.


Activity was paced by a record 36 transactions completed within the mental health subsector, including 13 platform transactions.


“This is significant, as each platform transaction tends to portend several add-on transactions over the ensuing 3 to 7 years. This is the typical private equity model,” Mertz Taggart Managing Partner Kevin Taggart said. “The demand for mental health services merger and acquisition opportunities is unprecedented, at least in my experience. There is not a more sought-after industry in healthcare services than mental health.”


Mertz Taggart completed 3 transactions in the quarter, representing the seller in each of the following deals:

  • Global Behavioral Education Alliance, a network of licensed professionals specializing in the treatment of autism spectrum disorders through telehealth and direct services, sold to the private equity firm Evolve Capital.

  • Anew Era TMS & Psychiatry, operator of 6 transcranial magnetic stimulation centers in Texas and another 6 in California, was sold to Discovery Behavioral Health, which is backed by Webster Equity.

  • The Hello Foundation, a network of in-person and online speech-language pathologists and assistants, school psychologists, and occupational therapists, was sold to Solace Pediatric Home Healthcare.

Transaction volume should remain high to close out 2022 and carry into the start of the new year, Taggart said. “We are expecting a strong finish to 2022 and good start to 2023 based on our current deal pipeline and client activity,” he said. “We are still very bullish on the lower middle market for behavioral health, with outpatient mental health leading the way.”

A chart showing total behavioral health industry M&A transactions by quarter
Note: Total industry transactions does not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry.

Addiction Treatment

After a modest second quarter, merger and acquisition activity in the addiction treatment space rebounded in Q3. A total of 14 deals involving addiction treatment providers were announced. That was an increase from the 9 deals reported in Q2—the lowest volume of addiction treatment transactions in a quarter dating back to mid-2018—and was in line with the average of 15 addiction treatment transactions announced per quarter since the beginning of 2020.


A chart showing Addiction Treatment M&A Transactions by Quarter
Addiction Treatment M&A Transactions by Quarter

Private equity played a large role in the addiction treatment subsector’s M&A activity in the quarter:

  • Enso Recovery was acquired in a private equity-backed strategic deal.

  • In addition to its deal for Anew Era TMS & Psychiatry, Discovery Behavioral Health acquired Prevention and Recovery Center and Brookdale Recovery in private equity-backed strategic deals.

  • MBX Capital completed a deal to acquire Journey Collab in a private equity platform transaction.

  • In July, Baymark Health Services acquired San Antonio Recovery Center in a PE-backed strategic sale.

  • Private equity firm The Vistria Group acquired Sandstone Care in a deal valued at $200 million, according to media reports.

  • In August, Lifepoint Health acquired a majority stake in Springstone Health Opco’s management group US Behavioral Partners in a private equity-backed strategic deal valued at $250 million.

  • BrightView completed a PE-backed strategic acquisition of Column Health, which operates 12 treatment facilities in 2 states.

  • Among the other transactions involving addiction treatment provider organizations in the third quarter, Pathway Healthcare expanded with a strategic acquisition of Dallas, Texas-based Innovation360.

  • United Recovery Project announced in August it had completed an acquisition of The Genesis House.

  • In July, Acadia Healthcare teamed up with Tufts Medicine to build a 144-bed behavioral health hospital in Massachusetts in a $65 million joint venture.

  • Cayuga Centers announced in September that Miami-Dade County child and family services provider Institute for Child & Family Health is joining its family of services in Florida.



Mental Health

The 36 transactions announced in the mental healthcare subsector in the third quarter were double the number reported in the previous 3 months, as demand for mental health services continues to swell.

A chart outlining Mental Health M&A Transactions by Quarter
Mental Health M&A Transactions by Quarter

These deals included 13 private equity platform transactions:

  • Grow Therapy secured $50 million in equity financing led by TCV and Transformation Capital, along with participation from SignalFire and SVB.

  • Rippl, a mental health startup led by a former Starbucks executive, launched with $32 million in seed funding led by ARCH Venture Partners and General Catalyst.

  • Venture capital firms Greycroft and Inspired Capital co-led a seed funding round in which digital youth mental health startup Hopscotch secured $8 million.

  • Behavioral health integration tech firm NeuroFlow secured a $25 million growth investment led by SEMCAP Health.

  • Avesi Partners completed a platform deal with Point Quest Education Inc.

  • HC9 and Frist Cressey Ventures Fund II LP led a $16 million funding round for mental health education startup Psych Hub.

  • Digital behavioral health company Alma raised $130 million in a Series D funding led by Thoma Bravo.

  • Summer Health raised $7.5 million to launch a telehealth pediatric messaging platform for parents. The seed funding round was led by Sequoia Capital.

  • Eating disorder startup Arise launched with $4 million in funding led by Greycroft, BBG Ventures, Wireframe Ventures, and individual investors.

  • Bay Area Clinical Associates entered into a partnership with private investment firm Frontline Healthcare Partners.

  • Revelstoke Capital Partners acquired national eating disorder treatment provider Monte Nido & Affiliates for reportedly almost $800m.

  • New Enterprise Associates led a $164 million funding round for Everside Health.

  • Cowles Company completed a platform deal with TMS Solutions.

  • ARC Health completed a private equity-based strategic acquisition of Sasco River Center.

  • SOC Telemed expanded its behavioral health offerings with its acquisition of Forefront Telecare.

  • MindCare Solutions Group acquired Psych360, a telehealth and on-site mental healthcare services provider.

  • Irwin Naturals, a publicly traded operator of ketamine treatment facilities, added New England to its footprint with its acquisition of Preventive Medicine in Vermont and New England Ketamine PLLC. Irwin also acquired 2 ketamine clinics in Georgia, and announced in September that it reached an agreement to purchase Ketamine Media, a growth platform for clinics offering ketamine-assisted therapy.

  • Numinus Wellness completed a $20 million acquisition of Novamind, a Toronto-based mental health company that specializes in psychedelic medicine and operates clinics in Utah and Arizona.

  • Sheppard Pratt, a private, not-for-profit provider of mental health and substance use disorder services, acquired Omni House, a mental health services provider in Maryland.

  • Greenbrook TMS announced a strategic acquisition of Success TMS, along with a $75 million credit facility with Madryn Asset Management.

  • Acute Behavioral Health acquired Hallmark Youthcare, an 82-bed short-term residential facility in Virginia.

  • Verdugo Mental Health completed an acquisition of Teen Line, operator of a mental health support line for young people.

  • Axis Health System completed an acquisition of Midwestern Colorado Mental Health Center.

  • The McCall Foundation acquired Central Naugatuck Valley Help Inc.


Autism Services and Intellectual/Developmental Disabilities

Transaction volume in the autism services and intellectual/developmental disabilities cooled in the third quarter, but demand remains strong.

A chart outlining I/DD/Autism M&A Transactions by Quarter
I/DD/Autism M&A Transactions by Quarter

One deal of note saw Charlesbank Capital Partners acquire applied behavior analysis therapy provider Action Behavior Centers in an auction at a valuation of $840 million. The Austin, Texas-based provider has $60 million in projected annual adjusted earnings.


Among the remaining deals in the subsector announced in Q3:


  • The Stepping Stones Group completed a PE-backed strategic acquisition of the Center for Behavioral, Educational, and Social Therapies.

  • DotCom Therapy acquired Wolf+Friends, a community for parents to connect with other families raising children with special needs.


649 views