Q4 2021 Behavioral Health M&A Report

Updated: May 7


Mertz Taggart Behavioral Health Mergers & Acquisitions Report for Quarter 4 Q4 2021
Mertz Taggart Behavioral Health M&A Report for Q4 2021

With demand for addiction treatment and mental health services continuing to surge, a busy fourth quarter capped off a record-setting year for mergers and acquisitions in the behavioral healthcare sector. A record 49 transactions in behavioral healthcare overall closed in the final three months of 2021, bringing the total number of deals for the year to 149, over a 34% year-over-year increase over the previous record high of 111 recorded in 2020. The subsector of addiction treatment saw a record number of deals completed in the quarter, and activity in mental health was near record highs, as well.


“The data reflects what we are seeing with our clients,” said Mertz Taggart Managing Partner Kevin Taggart. “Demand for quality mental health and addiction treatment services remains sky-high, with the pandemic adding fuel to a marketplace that already was strong. This has resulted in record valuations for these providers.”


Private equity accounted for 40 of the quarter’s 49 transactions, a figure that includes nine platform deals. The surge in M&A activity to close out 2021 is indicative of the number of sellers looking for an exit from the industry, a trend that Taggart said has been driven by two factors: pandemic-induced burnout and the lingering threat of an increase in the capital gains tax rate, which has been looming for more than a year, but still has yet to come to fruition.

Looking ahead to the start of the new year, Taggart said many transactions targeted for year-end in 2021 will end up closing in the first quarter of 2022. Beyond those first three months of the year, however, deal volume is difficult to predict.


“Demand will remain strong,” Taggart said, “but valuations could be tempered by rising interest rates, which the Federal Reserve has recently signaled may begin as early as the second quarter.”


Total Behavioral Health 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


A total of 30 deals in addiction treatment closed in the fourth quarter, eclipsing the previous high of 20 set in the second quarter of 2019.


Addiction Treatment Transactions by Quarter

BayMark Health Services and Behavioral Health Group (BHG) alone combined to account for more than a third of the activity within the sector, completing nine deals:


In November, BayMark’s AppleGate Recovery acquired East West Family Care, an office-based opioid treatment (OBOT) program in Nashville, Tennessee. BayMark then completed three deals in December. First, it announced the acquisition of Polaris Renewal Services, which operates two opioid treatment programs (OTPs) for adults in western Pennsylvania. The company then added Granite Recovery Centers, which has a pair of residential facilities and sober living homes in southern New Hampshire. Finally, BayMark completed an acquisition of Riverwood Group, a medication-assisted treatment provider, which added four new states to the company’s OTP portfolio.


In October, BHG expanded its footprint in Rhode Island with its acquisition of the four OTPs owned by The Journey to Hope, Health & Healing, and entered Maryland with the acquisition of Phoenix Health Center. BHG then expanded its presence in Virginia with a deal to acquire Staunton Treatment Center. Finally, BHG closed out the year when they acquired an eight-state OTP, Center for Behavioral Health.


Outpatient addiction treatment provider BrightView Health added five centers in Virginia to its network of 46 locations across four states with its acquisition of Right Path Treatment Centers in December.


Tennessee-based outpatient treatment provider Cedar Recovery added Occupational Health Services East Knoxville, an OBOT facility previously owned and operated by Dr. James “Jake” Harrison.


Community Medical Centers (CMS), the Arizona-based OTP operator with more than 40 clinics in nine states, acquired Medpro Treatment Centers. Mertz Taggart represented Medpro as its exclusive merger and acquisition advisory firm in the transaction. Private equity firm FFL Partners and Two Sigma Impact, the impact investing business of Two Sigma, meanwhile, acquired a majority ownership stake in CMS.


Cobb County Community Services Board and Haralson Behavioral Health Services consolidated and integrated in December. The combined agency is now conducting business as Highland Rivers Health.


Odyssey Behavioral Healthcare expanded its addiction and dual diagnosis treatment capabilities and added detoxification services with its acquisition of CIVIQ Health, the parent company of the Silver Pines and Steps to Recovery programs in Pennsylvania.


Pyramid Healthcare completed a pair of transactions, acquiring The Bluff in Augusta, Georgia, and Atlanta Addiction Recovery Centers.


Florida-based Regard Recovery announced its acquisition of fellow mental health and addiction treatment services provider JourneyPure, expanding Regard’s presence into Tennessee and Kentucky.


Promises Behavioral Health announced in November it had completed a full recapitalization with New York-based investment management firm Assured Healthcare Partners, a platform deal that will allow Promises to resume its expansion plans.


MindBeacon Holdings, a provider of digital therapy, closed an acquisition of all issued and outstanding shares of Harmony Healthcare, which provides mental health and addiction treatment for children, adolescents and adults in Nevada.


Mindpath Health, a provider of outpatient treatment services, expanded into Ohio with a deal for four Vertava Health offices in Cleveland and Columbus.



Mental Health


Merger and acquisition activity in the mental health subsector remained strong in the fourth quarter, with 16 transactions announced. It was the category’s most active quarter of 2021 and a record-high, eclipsing the previous high of 15 transactions announced in the final quarter of 2020.


Mental Health Transactions by Quarter

Among the mental health-related transactions reported in the fourth quarter:

New Perspectives Center for Counseling & Therapy was acquired by Refresh Mental Health. Mertz Taggart served as the exclusive M&A advisor for New Perspectives in the transaction. | READ: New Perspectives Center Director Tim Markwell reflects on working with Mertz Taggart


Apax Partners and Oak HC/FT joined forces to acquire Eating Recovery Center and its portfolio of 30 centers across seven states from CCMP Capital for a reported $1.4 billion.


Delic Holdings Corp. acquired Ketamine Wellness Centers Arizona, creating the largest chain of wellness centers providing ketamine treatments in the United States.


Discovery Behavioral Health, which operates a network of mental health, substance use and eating disorder treatment centers, acquired Awakenings KC Clinical Neuroscience Institute, an outpatient mental health services provider in Prairie Village, Kansas.


Florida-based Elite DNA Therapy Services widen its reach across the panhandle and northern parts of the state with its acquisition of Impact Behavioral Health.


Two months after first announcing a merger, Headspace and Ginger closed the deal, creating a $3 billion mental health company.


Lifestance Health, a publicly traded behavioral healthcare company, acquired Washington state-based Acuity Counseling.


In addition to its aforementioned deal for four Vertava Health properties in Ohio, Mindpath Health expanded into Arizona with a deal for Metropolitan Neuro Behavioral Institute, which serves the greater Chandler, Arizona, area.



Autism Services and Intellectual/Developmental Disabilities


Just seven deals were announced in the autism and I/DD space, the fewest transactions in a quarter for the category since Q2 of 2020. The most notable deal among them was a $219 million Series B funding campaign for Elemy, the digital healthcare company formerly known as Sprout Therapy. The funding reflects a pre-deal valuation for the company of $931 million.

IDD/Autism Transactions by Quarter

Other deals announced in the autism and I/DD space in the fourth quarter include:

OCI Holdings, which conducts business as Care Options for Kids and is backed by Ancor Capital Partners, acquired The Missing Peace Autism Therapy Center.


CareSource, a not-for-profit, multistate managed care company, acquired The Columbus Organization, a provider of services for individuals with I/DD and behavioral health challenges in 13 states.


The Center for Social Dynamics, a portfolio company of NMS Capital, partnered with South Sound Behavior Therapy in Washington state.


H2 Health, a portfolio company of the healthcare-focused private equity firm Grant Avenue Capital, expanded its pediatric therapy service offerings with its acquisition of Great Strides Rehabilitation, adding applied behavior analysis therapy to H2 Health’s continuum of care.

The Stepping Stones Group, a national provider of therapeutic, behavioral, autism, nursing and educational services for children, acquired Behavioral Learning Center, a therapeutic and behavioral health company based in California.



1,186 views