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Q4 2023 Behavioral Health M&A Report

Updated: Apr 25

Headline: Behavioral Health M&A Report: Q4 2023

The final three months of 2023 were a relatively quiet period within the behavioral healthcare sector. Just 31 deals were completed—the fewest since the second quarter of 2020 and the onset of the COVID-19 pandemic.

Though 2023 was down, all indications point to increased activity in 2024. "We've had the opportunity to speak with industry and financial buyers over the past few weeks," said Mertz Taggart Managing Partner Kevin Taggart. "The consensus today is that we'll have increased activity across the sector. Improved capital markets and quality deal flow will drive the activity, especially in the 2nd half of 2024."

However, seed and venture funding accounted for more than a third of those transactions, with

12 such deals representing a total investment of $257.9 million. These investments could be a

preview of behavioral healthcare organizations to watch, added Taggart.

“Some of these venture back firms will end up being major players in the industry, but I also think that many of them won't make it for a variety of reasons”, he said. Combined, venture capital and private equity firms completed 24 of the 31 transactions in the quarter.

One deal alone accounted for nearly half of the VC money that was invested in behavioral healthcare in Q4. In October, Headway, a healthcare tech startup that connects patients and in-

network therapists, raised $125 million in Series C funding, according to a Reuters report. The

round was led by Spark Capital Partners, with participation from existing investors Thrive

Capital, Accel, and Andreessen Horowitz, as well as the insurance company Health Care Service


While Mertz Taggart analysts don’t expect an immediate jump in dealmaking in 2024, we expect activity could see an increase if widely expected interest rate cuts by the Federal Reserve come

to fruition in Q2.

“We expect more companies to go to market in 2024, reverting to pre-pandemic levels,”

Taggart said. “However, buyers will be more disciplined about the companies they choose to

invest in or purchase. Much of that discipline is being imposed by higher interest rates and

banks themselves.”

To make their organizations more attractive to buyers and investors, Taggart said prospective

sellers would be well served to take stock of the state of their operations. Performing some

level of clinical, compliance, and quality-of-earnings audits prior to going to market can help

mitigate deal risk, he said.

Addiction Treatment M&A

Although the final three months of 2023 marked the most active quarter of the year for the

addiction treatment subsector, with 11 transactions announced, the year-to-date total of 28

deals involving addiction treatment providers solidified 2023 as the least active year in M&A for

addiction treatment organizations since the onset of the pandemic. For comparison, 32 deals

involving addiction treatment providers were announced in the fourth quarter alone in 2021.

Chart: Addiction Treatment Transactions by Quarter

Addiction treatment transactions include the following:

  • Abacus Investments acquired Louisiana-based Longbranch Retreat & Recovery Center in a platform deal.

  • Borden Cottage, a luxury residential drug, alcohol, and co-occurring behavioral health treatment program in Camden, Maine, transitioned to independent ownership in October.

  • New Jersey-based outpatient treatment providers BlueCrest Recovery Center, QuickSilver Counseling Center, and Assess With Guidance merged to form BlueCrest Health Group.

  • Defining Wellness Centers, a Jackson, Mississippi-based SUD treatment organization, was acquired by Fulcrum Equity Partners.

  • Also in Mississippi, Vertava Health, a provider of addiction treatment and mental health services in Southaven, was acquired by Bradford Health Services.

  • The Handley Foundation acquired Origins Behavioral HealthCare and its locations across Texas and Florida.

Among the transactions completed in the quarter, three providers announced they had secured significant investments:

  • PursueCare, a Connecticut-based virtual substance use disorder (SUD) treatment organization, raised $20 million in a Series B funding round led by T.Rx Capital and Yamaha Motor Ventures, along with participation from Seyen Capital and OCA Ventures.

  • Sunnyside, a digital health company that addresses alcohol addiction, secured $11.5 million in Series A funding, with Motley Fool Ventures leading the round and Will Ventures also participating.

  • You Are Accountable, a New York-based SUD treatment platform, secured $2 million from an undisclosed investor.

Mental Health M&A

A total of 19 transactions involving mental healthcare providers were announced in Q4, marking the fifth straight quarter in which mental health-related deals declined after a record 39 transactions were announced in the third quarter of 2022.


Chart: Mental Health Transactions by Quarter

Private equity remains active, accounting for 16 deals, including the following:

  • ARC Health, the Beachwood, Ohio-based mental healthcare practice operator backed by the Thurston Group, acquired three organizations: Exult Healthcare Solutions, Advanced Psychiatric Group, and Mindsoother Therapy Center. Mertz Taggart represented Mindsoother in the transaction.

  • Comprehensive Rehab Consultants received a strategic growth investment from the private equity group of York Capital Management.

  • Integrative Life Network and Integrative Health Centers announced a merger, forming a unified mental and behavioral healthcare company known as Peregrine Health.

  • Partnered Health acquired New View Psychology in a private equity-backed deal.

  • UpLift, a Tampa, Florida-based virtual behavioral healthcare provider, announced in November that it acquired Minded, a psychiatric telehealth organization that focuses on treatment of women.

  • Private equity-backed Kidz Therapy Services acquired Complete Rehabilitation Consultants.

  • Beckley Waves, a venture studio that invests in psychedelics to advance mental health, made a strategic acquisition of Nue Life, a ketamine-assisted therapy provider.

  • The Grunt Style Foundation acquired Irreverent Warriors, uniting a pair of national not-for-profits that specialize in addressing mental health and suicide prevention in the military veteran community.

In addition to the $125 million investment in Headway that was led by Spark Capital Partners, the following organizations announced funding rounds in the fourth quarter:

  • Behavioral health urgent care provider Connections Health Solutions announced its intention to expand with a $28 million Series B funding round led by Town Hall Ventures.

  • Digital peer support marketplace startup Forum received $5.3 million in seed funding from NextView Ventures, along with participation from MBX Capital, Cue Ball Capital, Sahil Bloom of SRB Ventures, Romeen Sheth, Shaan Puri, and City Light Capital.

  • BeMe Health, a Miami, Florida-based virtual pediatric care organization, received a $1.5 million investment from Blue Cross and Blue Shield of Kansas.

  • Ciba Health raised just under $7.5 million in a funding round led by DigiTx Partners.

  • Telehealth-based youth therapy startup Joon Care secured $6 million in investments from Pioneer Square Labs Ventures, Route 66 Ventures, and the company’s CEO, Emily Pesce.

  • Clayful, an on-demand coaching company, netted $7 million in seed funding led by Reach Capital, and education technology investment firm.

  • Nema Health, a virtual provider of post-traumatic stress disorder (PTSD) treatment services, secured $4.1 million in seed funding in a round led by Optum Ventures and .406 Ventures, along with participation from Graymatter Capital and other angel investors.

Autism and Intellectual/Developmental Disabilities M&A

Activity involving providers of autism therapy and intellectual/developmental disabilities treatment services remained light in the fourth quarter, with just 3 deals announced. The year-to-date total for the subsector was 17 transactions, the lowest of any year since the onset of the pandemic.

Chart: I/DD/Autism Transactions by Quarter

Cortica extended its Series D funding round by $40 million, led by CVS Health Ventures, along with participation from LRVHealth, Ascension Investment Management, and the University of Wisconsin Foundation.

Meanwhile, BlueSprig Pediatrics, an autism therapy provider backed by the private equity firm KKR, acquired Trumpet Behavioral Health in Lakewood, Colorado, and New Story, a provider of special education, therapeutic, and mental health services, acquired The Learning Spectrum in a private equity-backed strategic deal.

If you are interested, you can also download the Q4 2023 Behavioral Health M&A Report via the following link:

Q4 2023 BH M&A Report
Download PDF • 830KB


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