VANCOUVER, BC, Dec. 15, 2020 /CNW/ – Numinus Wellness Inc. (“Numinus” or the “Company”) (TSXV: NUMI), a company creating an ecosystem of health solutions centered around developing and supporting the safe, evidence-based, accessible use of psychedelic-assisted psychotherapies (PAP), is pleased to announce the acquisition of Montreal-based Mindspace Psychology Services Inc (DBA Mindspace Wellbeing), a leader and pioneer in psychedelic programming. The agreement brings together the capabilities of two leading Canadian organizations to develop and scale delivery of evidence-based psychedelic-assisted psychotherapy to provide the highest quality patient outcomes. “Adding Mindspace to the Numinus platform will provide strong synergies for both companies,” said Dr. Devon Christie, Medical Director at Numinus and a MAPS-trained therapist for the delivery of MDMA-assisted psychotherapy. “The companies have similar values and complementary strengths, which make this a strong corporate and cultural fit. We are also proud to grow our presence nationally through this announcement.” “Joining the Numinus team is a natural choice,” said Dr. Joe Flanders, Founder and Managing Partner of Mindspace. “It’s an excellent opportunity for us to work closely with a partner that shares our vision and values. We are impressed by the depth and rigor of Numinus’ clinical team and their authentic commitment to finding meaningful, accessible, and sustainable solutions to the mental health challenges we collectively face”. “We’re very excited to be bringing the Mindspace brand under the Numinus umbrella,” said Payton Nyquvest, CEO of Numinus. “The combination furthers our stated mission and delivers on our prospectus. This is a first and major step forward in our plan for global expansion of revenue-generating clinics and virtual therapy with the objective of health and wellness for all. Today’s announcement sets a positive trajectory for making psychedelic-assisted psychotherapy more accessible to those in need.” Read the full press release here .

LEWISVILLE, TEXAS (PRWEB) DECEMBER 15, 2020 BayMark Health Services announced this week an exciting addition to their portfolio of Substance Use Disorder Services, Liberty Bay Recovery Center, a residential treatment facility in Portland, Maine. BayMark is well-known in the addiction treatment industry as the North American leader in Opioid Use Disorder treatment with more than 250 facilities across the continent providing a variety of treatment options including medication-assisted treatment, counseling, and both inpatient and outpatient withdrawal management services. That portfolio, until recently, included only one residential treatment facility in Bala, Ontario, Greenestone Muskoka. The addition of Liberty Bay is a gratifying one for the company whose mission to improve the lives of individuals with substance use disorders will be well-served by bringing both their clinical and administrative expertise into a new U.S. treatment space. Mertz Taggart was the sell-side advisor of this healthcare Mergers and Acquisitions transaction. Read the full details of the transaction via press release. Trackbacks/Pingbacks Behavioral Health M&A Quarterly Report: Q4 2020 – Mertz Taggart - […] network of more than 250 facilities across the United States and Canada. Mertz Taggart represented Liberty Bay in the…

LEWISVILLE, TEXAS (PRWEB) DECEMBER 17, 2020 BayMark Health Services recently announced its partnership with Recovery Pathways, an office-based opioid treatment (OBOT) provider with three locations in Western Pennsylvania. The programs, two of which are located in Washington, PA and the third in Monroeville, PA, offer medication-assisted treatment (MAT) for opioid addiction using buprenorphine-based medications in an outpatient, physician’s office setting. Buprenorphine-based medications include Suboxone®, Subutex®, and Zubsolv®. Recovery Pathways three convenient locations provide comprehensive treatment to patients with Opioid Use Disorder (OUD) from western Pennsylvania, Ohio, and West Virginia. BayMark now operates or collaborates with eight outpatient, office-based opioid treatment (OBOT) locations in Pennsylvania including Family Recovery Solutions in Central PA, as well as three MedMark Treatment Centers Opioid Treatment Programs offering both methadone and buprenorphine-based products, located east of Pittsburgh. All BayMark-affiliated facilities share a common goal, to improve access to comprehensive and compassionate treatment for individuals who wish to overcome opioid misuse. The outpatient, flexible services provided by OBOT’s allow patients to maintain their commitments and keep living their lives during treatment. Read the full press release here.

If you followed the home health, hospice and home care M&A in 2020, you saw a little bit of everything. For the very early part of this year, most buyers and sellers hit the pause button on dealmaking to observe how the COVID-19 pandemic would impact post-acute care and aging services providers. There were some smaller tuck-in transactions, but hardly any market-moving blockbusters. That changed toward the end of 2020. “This year really had it all,” Mertz Taggart Managing Partner Cory Mertz says. “And after a slow start, things began picking up in late summer. I now believe we’re on a record-setting pace for home health, hospice, and home care M&A activity headed into 2021.” Overall, there were at least 75 home health, hospice, and home care transactions during the first three quarters of 2020, Mertz Taggart data shows . While the fourth quarter is still underway, early indications show it should be a record quarter, ultimately putting 2020 in line with 2019 and 2018, despite a once-in-a-century public health emergency. “At the risk of playing the spoiler, Q4 will be a record quarter for M&A,” Mertz says. “And I would expect this momentum will carry well into 2021.” Cory Mertz, Managing Partner, Mertz Taggart ‘Hitting pause’ on Medicare certified home health Going into 2020, most industry insiders believed that the Patient-Driven Groupings Model (PDGM) would lead to a wave of consolidation, similar to the aftermath of the Prospective Payment System (PPS) in the 1990s. That didn’t happen. In response to the COVID-19 crisis and severe volume swings, the U.S. government tossed out a series of lifelines to support all varieties of health care providers. Those lifelines included the 2% Medicare sequestration suspension, the expansion of advanced payment from the U.S. Centers for Medicare & Medicaid Services (CMS), grants under the Provider Relief Fund and more. Thousands of smaller mom-and-pop home health agencies also utilized the Paycheck Protection Program (PPP) to stay afloat during this difficult time. Combined, all of those resources gave some potential sellers feeling the pressure from PDGM a financial boost. Other potential sellers didn’t end up selling because they didn’t want to disrupt patient care. “We didn’t feel the true impact of PDGM this year,” Mertz says. Cory Mertz, Managing Partner, Mertz Taggart That’s not to say home health dealmaking was nonexistent. Yes, there were fewer deals than in 2018 and 2019, but the first three quarters of 2020 saw at least 27 different transactions. In September, The Pennant Group Inc. (Nasdaq: PNTG) announced it had acquired CMS Home Health Care, a Texas agency with locations in Brownwood and Coleman. In August, Actinium Healthcare Holdings announced its acquisition of Central Home Health Services of Texas Inc. Earlier in the year, BrightSpring Health Services made a deal for Advanced Home Care’s home health and home infusion businesses. LHC Group Inc. (Nasdaq: LHCG) announced several new or expanded home health joint ventures throughout 2020. In riding out PDGM and COVID-19’s impact, many home health operators said they hit pause on all M&A action. Most reversed course toward the end of summer. “I’ve been selling home health agencies since 2006,” Mertz says. “I can’t remember a time when demand has been higher than it is now. Since July, we have received an incredible amount of calls from both strategic and financial buyers looking for home health assets.” The constant in a sea of change While home health M&A activity had its ups and downs, hospice never really cooled off. In fact, by the end of 2020’s third quarter, there were almost as many hospice transactions — 46 — as all of 2019. Despite the public health emergency, hospice multiples remained high as well. “If you are a hospice operator looking for an exit, there has never been a better time to consider a sale,” Mertz says. “Demand is much higher than supply right now, especially for larger hospices.” Cory Mertz, Managing Partner, Mertz Taggart The biggest hospice news to come out of 2020? That would assuredly be the industry-shaping mega-merger between AccentCare Inc. and Seasons Hospice & Palliative care. Currently, AccentCare is the fifth-largest home health provider in the nation, according to data from LexisNexis. Seasons is the fifth-largest hospice provider. In combining the two, the companies hope to create a diversified post-acute care powerhouse with more than $1.5 billion in annual revenues. “With these two organizations together, we have a rare opportunity to shape the future of skilled home-based care,” Steve Rodgers, CEO of AccentCare, said when the deal was first announced. “The new organization will bring together the expertise and vision needed to re-think patient-centered care in the home, and offer innovative solutions to the health systems and physician groups we serve.” That wasn’t the only major hospice deal, however. In November, Addus HomeCare Corporation (Nasdaq: ADUS) announced that it was buying Queen City Hospice and its affiliate, Miracle City Hospice, for about $192 million. “The Addus deal clearly reflects just how much companies are willing to pay for high-quality hospice assets,” Mertz says. “Queen City Hospice has an average daily census of about 900 and annualized revenues of about $56 million.” Hospice is likely to remain hot moving forward, thanks in part to new reimbursement opportunities the hospice Medicare Advantage carve-in and new direct-contracting models from CMS. Home care primed to take off Home care may soon become the new hospice. Over the past couple of years, health systems and payers have increasingly begun to recognize the important role non-medical in-home care service providers play in keeping people healthy, with study after study highlighting the impact social determinants of health have on overall wellness. Now, home care is being driven to the forefront even faster by emerging hospital-at-home and SNF-at-home programs, both of which require the kind of high-touch, low-cost support home care offers. Soon, there may even be additional payment models to support both models. “Traditional home health care payment will not be sufficient given these individuals will require a mix of both skilled home health care services and also home care assistance with activities of daily living,” David Grabowski, a professor in the department of health care policy at Harvard Medical School, told Home Health Care News in August . “The model will have to recognize these enhanced service needs.” Among the largest home care deals this year came in September, when the Providence Service Corporation (Nasdaq: PRSC) announced it had entered into a definitive agreement to purchase home-based care company Simplura Health Group for an enterprise value of $575 million. Another significant deal that included non-medical home care assets was the acquisition of Help at Home by Centerbridge Partners and The Vistria Group, two large PE firms. Prior to an official announcement, reports surfaced the Help at Home’s price tag was around $1.4 billion. Although home care is primed to take off in 2021, it did lag behind home health and hospice from an M&A perspective throughout 2020. That’s not linked to a lack of interest, but rather a shortage of scalable home care assets coming to market. Get ready for a big year ahead Even with the COVID-19 pandemic, it was an exciting year for home health, hospice and home care M&A . Next year has the potential to be a historic one in terms of deal volume, with the entire health care system looking to shift more

LAS VEGAS–December 21, 2020 –( BUSINESS WIRE )– Landmark Recovery  – announced the opening of a new in-patient drug and alcohol recovery treatment center in Las Vegas on Dec. 18. Landmark worked with Wellness Real Estate Partners (“WREP”), a private real estate company focused exclusively on investing in real estate leased to behavioral health companies. WREP facilitated the transaction by providing the capital necessary to acquire the real estate previously owned by  Las Vegas Recovery Centers  and entered into a long-term lease with Landmark. This is Landmark’s first acquisition deal within the recovery space, but they are not new to addiction treatment. Landmark owns and operates 6 other recovery treatment centers in Oklahoma, Indiana and Kentucky and is on track to open an additional 10 locations across the U.S. in 2021. Mertz Taggart provided sell-side services for Las Vegas Recovery Centers in the transaction . Landmark now operates in four states and plans to open 10 new locations in 2021. Read the full press release . Trackbacks/Pingbacks Behavioral Health M&A Quarterly Report: Q4 2020 – Mertz Taggart - […] in December. Mertz Taggart provided sell-side services for Las Vegas Recovery Centers in the transaction. Landmark now operates in…

HASBROUCK HEIGHTS, N.J., Jan. 7, 2021 /PRNewswire/ — Care Finders Total Care, LLC (CFTC) is pleased to announce the addition of another outstanding homecare agency to their Pennsylvania group of companies. ORI HomeCare follows on the heels of their recent acquisition of Union Home Care and provides an even deeper base for CFTC in the greater Philadelphia area. This partnership allows Care Finders Total Care, LLC to build on the two dominant service models offered in Philadelphia — the hourly and Family Care segment of the market — while expanding into the ODP waiver program. Pennsylvania continues to be an extremely important pillar of the CFTC growth strategy into 2021. Coverage in the Northeast now includes 19 offices in New Jersey, three offices in Connecticut, and nine offices in Pennsylvania. “The combination of ORI HomeCare and Union Home Care, in addition to Philadelphia Home Care Agency and At Home Quality Care, provides great strength for CFTC as the company continues to develop its presence in the Northeast region,” CareFinders CEO Jim Robinson commented. ORI HomeCare was represented on the sell-side by Mertz Taggart Read the full press release here.

NEW YORK–( BUSINESS WIRE )– Enhanced Healthcare Partners , a leading healthcare-focused private equity firm specializing in middle-market healthcare services businesses, is pleased to announce its investment in NeuroPsychiatric Hospitals , a leading provider of integrated healthcare for patients with acute psychiatric disorders and complex medical and neurological disorders. Founded in 2006, NPH utilizes an integrated model of care supported by an interdisciplinary team of healthcare practitioners to ensure the diverse needs of each of their patients are addressed. Unlike the traditional hospital emergency room or a psychiatric care facility where the clinical staff is not equipped to care for patients with both psychiatric and medical issues, NPH’s clinical staff have expertise across multiple disciplines including psychiatric, behavioral, neurological, and medical disorders. The funding from EHP will be used to advance NPH’s expansion efforts and strategic objectives. NPH currently has four locations in Indiana and plans to open additional hospitals in Arizona and Texas during the second half of 2020. EHP will partner with NPH Founder and CEO Cameron Gilbert, PhD, at this inflection point, and together they will continue to build upon NPH’s platform designed to meet the needs of this significantly underserved psychiatric and medical patient population. EHP and NPH have plans for further expansion nationwide. Read the full press release here. Trackbacks/Pingbacks Behavioral Health M&A Report: Q3 2020 – Mertz Taggart - […] equity firm Enhanced Healthcare Partners has invested in NeuroPsychiatric Hospitals, an acute care provider with four locations in Indiana.… Home Health Insights: It’s All About the Multiple (…Or Is It?) - [...] ‘Not So Fast’…There’s No Straight Answer....

DALLAS–(BUSINESS WIRE)–December 22, 2020 — Dallas-based AccentCare and Rosemont, Illinois-based Seasons Hospice & Palliative Care (Seasons), along with Advent International, the private equity sponsor of AccentCare, announced today they have finalized an agreement to combine their two organizations to better meet the growing needs for their services. The duo announced the intent to merge last month, and plan to move forward with a thoughtful integration now that the merger is complete. Providing the full continuum of post-acute care as a unified organization will simplify the complexity that comes with navigating multiple companies, benefiting physicians, payors, and patients alike. Above all, both organizations remain dedicated to providing great service and enhancing capabilities health system and other strategic partners can rely on to ensure quality care for their patients. Read the full press release press release here.

There has been talk lately about M&A activity in the home health industry, prompting questions from many practitioners about the process of valuing and selling a home health agency. The purpose of our “Insights” series is to address these questions and more. Before considering a sale, owners should be aware of the numerous factors that can make or break a transaction. In this article, we will focus on the most important issue of all: Trust. SELLER BEWARE In any transaction, it is paramount that the two parties trust each other. Without some level of trust, it will be difficult to move a transaction forward to closing. But what do we mean by trust? And why is it important? Certainly, we can’t expect the parties of a transaction to trust each other as they would a family member or close friend. However, when selling your home health agency, there are a number of critical questions you should ask: Does my company fit into the buyer’s strategic plan? This may be the most fundamental question of all. If you can’t understand why someone wants to buy your home health agency, you will likely find each step in the process to be more difficult to take than the last. Don’t be afraid to ask these questions directly to the buyer: • Have you acquired similar agencies in the past? • What is your plan to integrate my company into yours? • How does my company fit into your strategic plan? Is the buyer working in good faith to close the transaction in a timely manner? Or do they seem more interested in learning the details of my company? Does the buyer have the wherewithal to close on the transaction? • Do they have a fund established, a credit facility, or cash in the bank? • Can they secure the necessary funding if they plan to use a combination of debt and equity? • Do they have a track record of closing transactions in a timely manner? Will my legacy be carried on? For many owners, their agency represents a labor of love - they started not only to build a business, but to help others. If leaving something behind is important to you, make sure this question is answered to your satisfaction. Will my employees be treated well after the sale? Many small businesses have a family atmosphere where employees have been present through good times and bad; you will want to make sure they are taken care of. Ask this question specifically to the buyer. Valuable employees should be viewed as valuable assets to a future owner. Make sure this is the case. WALK A MILE IN THE BUYER’S SHOES Remember, there are two parties to the transaction. What will the buyer need from you in order to feel comfortable with the transaction? The buyer will have three main concerns: Have I been given information that is 100% complete and accurate? Buying a home health agency is a big decision for a buyer, and a lot of money is involved. Buyers need to feel comfortable that they have placed the appropriate value on your business. Complete and accurate financials are critical in this respect as they serve as the basis for calculating value. Most credible buyers will want confidence that the value they’re placing on your agency will hold up under the scrutiny (and expense) of due diligence. Will the seller continue to focus their energy on the business while the transaction is proceeding? Naturally, this process is time consuming and distracting. But if business falls off during the transaction, the buyer could come back and attempt to negotiate for a lower valuation, which would not be in your best interest. Maintain your focus on running the business to ensure a positive outcome for all parties. Are there any issues lurking in the shadows that could affect the value of the business? • Potential litigation? • Audit Risk? • Compliance or labor issues? A TWO-WAY STREET The further you go into a transaction, the more important the issue of trust becomes. If either party feels uncomfortable, the transaction is in jeopardy and significant time and money may have gone to waste. Communication is critical. Proceed cautiously - get all of your questions answered, and remember to see things from the buyer’s point of view. You have poured your heart and soul into building your agency. Make sure you walk away with more than just a big payday.

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.” 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. 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. 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. 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.

An influx of capital into the addiction treatment space, investors’ renewed confidence in the behavioral healthcare sector, and a potential scaling back of the capital gains tax rate increase proposed earlier this year have merger and acquisition activity remaining on a record-setting pace. Overall, the third quarter saw moderately strong activity with 25 total transactions announced, down from 33 in the second quarter. With 93 deals announced thus far, 2021 remains on track to eclipse the record 116 transactions reported in 2020. Of note, a record 10 private equity platform transactions, including three in mental health, three in addiction treatment, and three in the autism services and intellectual/developmental disabilities space, were reported in the third quarter. “Initially, I believe this was driven by the potential for a capital gains tax increase,” said Mertz Taggart Managing Partner Kevin Taggart. “But I also think behavioral health has become more attractive to many investors because it has held up very well during the pandemic, especially compared to other potential investment options.” Note: Total industry transactions does not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. The Biden-Harris administration previously introduced legislation that would move the tax rate on long-term capital gains from 23.8% (including the 3.8% Medicare tax) to 43.4%. If passed, the changes were expected to take effect on Jan. 1, 2022. The bill, however, has met resistance in the Senate in recent weeks, and its passage is now far less certain. “It appears that any increase to the capital gains tax rate will be more modest if it even gets done this year,” Taggart said. “I think concern among investors on this front has certainly lessened since the beginning of the year, and I also believe that momentum for M&A activity will continue into at least the first half of 2022.” In the meantime, Taggart said that bandwidth for third-party advisors, especially attorneys and accounting firms that perform quality of earnings assessments, will remain the most likely potential roadblock to deals closing in the final three months of 2021. Addiction Treatment Nearly $3 billion in capital poured into the addiction treatment sector in the third quarter, including a pair of deals each valued at more than $1 billion. Although down slightly from the 17 deals in addiction treatment that were announced in the second quarter, the 13 deals announced in the third quarter are a signal that investors believe future growth opportunities in the behavioral health sector remain vast. Activity in the addiction treatment space was highlighted by Patient Square Capital acquiring Summit BHC from FFL Partners and Lee Equity Partners for $1.3 billion. The selling firms were each poised to reap four times their invested capital, according to a report by PE Hub. Private equity firm Onex Partners completed its acquisition of Newport Healthcare in a $1.3 billion deal, outpacing the expected $1 billion-plus valuation that had been expected, per PE Hub. Wayspring, formerly known as axialHealthcare, announced in September that along with changing its name, the company received a $75 million investment led by Valtruis, along with Centene Corp., CareSource, HLM Venture Partners, and other existing investors. In July, BayMark Health Services acquired Mt. Sinai Wellness Center, a residential treatment center in Dahlonega, Georgia. Mertz Taggart provided exclusive M&A advisory services in this transaction, representing the seller. Bradford Health Services acquired Cornerstone of Recovery, which operates two Knoxville, Tennessee-area inpatient facilities, growing Bradford’s network to 25 facilities across four states in the Southeast. BRC Healthcare expanded its portfolio with deal for four substance use treatment programs in Nashville, Tennessee: Nashville Recovery Center, NRC Clinical, Nashville Detox Center, and Tennessee Recovery Clinic. Broadstep Behavioral Health announced a deal for Coastal Southeastern United Care, which provides behavioral health and substance use disorder treatment for adults, adolescents, and children in 10 North Carolina counties, as well as Dillon County, South Carolina. Memorial Hermann Health System sold Houston-based Memorial Hermann Prevention & Recovery Center and its network of outpatient programs to Discovery Behavioral Health, expanding Discovery’s network of more than 100 programs nationwide. Kolmac Outpatient Recovery Centers in Maryland announced in July that it had completed a merger Concerted Care Group, which operates three locations in the state. Recovery Ways continued its multistate expansion in early August with a deal for Idaho Behavioral Health, which operates four programs in Idaho. Greenbrook TMS acquired Achieve TMS in an $8 million deal. Windrose Recovery expanded its portfolio of privately owned addiction treatment programs in the Midwest with its acquisition of Positive Sobriety Institute, which offers addiction treatment for professionals and individuals in Chicago. Mental Health Just 7 deals involving mental health treatment providers were announced in the second quarter, down from 15 in Q2, but the list of third-quarter deals includes three significant platform transactions. NorthEast Health Services, InterCare Psychiatric Services, GR&W Health and My Transformation announced a merger to create Transformations Care Network, a multistate, outpatient behavioral health platform that is backed by Shore Capital. The Thurston Group, a private equity firm that focuses on investments in healthcare services companies, acquired ARC Health. Connections Health Solutions received $30 million in funding from the Heritage Group in the crisis stabilization company’s first-ever round of growth funding. Other deals in the mental health sector announced in the third quarter include: Two Sigma Impact acquired Circle of Care, a home- and clinic-based pediatric therapy provider in Texas. Ginger and Headspace announced a merger to create a digital mental health platform to be known as Headspace Health. Monte Nido & Affiliates completed its acquisition of Walden Behavioral Care, which becomes eating disorder treatment provider’s fifth affiliate. Atar Capital, a global private investment firm, announced that its portfolio company Pathways Health and Community Support acquired Renew Consulting in northwest Oregon. Delic Holdings Corp., a psychedelic wellness platform, announced it is acquiring Ketamine Wellness Centers, creating the largest psychedelic wellness chain in the United States. Puget Technologies announced it is moving forward with its acquisition of Behavioral Centers of South Florida. Autism Services and Intellectual/Developmental Disabilities Eight deals were announced in the autism and I/DD space in the third quarter, continuing the pace set in Q2, which saw 7 deals. Activity in this space was highlighted by a pair of significant platform deals. Cerebus Capital acquired Lighthouse Autism from Abry Partners in a deal reportedly worth $400 million, according to PE Hub. Ontario Teachers’ Pension Plan Board, an institutional fund manager serving working and retired teachers in the Canadian province of Ontario, acquired Acorn Health, an applied behavior therapy provider. Sevita, the Centerbridge Partners-backed provider of community-based care that was previously known as The Mentor Network, was an active buyer in the third quarter. The organization acquired three companies: Good Neighbor Homes, New Directions, and Aspire Human Services. Autism Cares Partners announced two acquisitions that will expand the company’s presence in the Northeast—Massachusetts-based autism treatment organization Puddingstone Place and Autism Bridges, a multistate autism treatment organization based in New Hampshire.

An active second quarter and a series of indicators that portend more deals to come have 2021 on track to be a record-setting year for merger and acquisition activity in the behavioral healthcare space. In the second quarter, 26 deals were announced, bringing the total to 57 for the year at its midpoint. That puts 2021 on pace to top the previous high watermark of 107 set in 2020. “We expect transaction volume will likely accelerate over the second half of the year as sellers, burned out from the pandemic, are looking to get something closed in 2021 due to the anticipated increase in the capital gains tax rate,” said Mertz Taggart Managing Partner Kevin Taggart. Note: Total industry transactions does not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. The Biden-Harris administration has introduced a new tax bill that will have significant implications on transactions. The bill proposes moving the tax rate on long-term capital gains from 23.8% (including the 3.8% Medicare tax) to 43.4%, and if passed, would be expected to go into effect on Jan. 1, 2022. Under the current 23.8% rate structure, a $10 million transaction would result in $7.62 million of after-tax proceeds. To net the same $7.62 million after taxes under the new proposed rate, a deal would require $13.46M million in cash proceeds. In the meantime, private equity groups have remained active in behavioral healthcare, accounting for 20 of the second quarter’s 26 transactions, including 18 completed by private equity-backed strategic firms. This includes four transactions by Chicago Pacific Founders’ Recovery Ways and two by Brightview, which is backed by Shore Capital. Deals involving addiction treatment and mental health provider organizations remained in line with activity in the first quarter of 2021. Mergers and acquisitions involving autism services and intellectual/development disabilities service providers, however, dipped from 11 deals completed in the first quarter of the year to just six in Q2. “Many private equity groups that have a platform company have decided to go the de novo route rather than to acquire a small provider for what have been high multiples,” Taggart said. “They can do it more cost effectively and have a waiting list shortly after they open.” Looking ahead to the remainder of 2021, Taggart said availability of M&A advisors—from attorneys and accountants to those in the clinical realm—could pose the biggest roadblock to deals getting done before the end of the year. “Many won’t have the bandwidth to handle the volume for those that aren’t already progressing down the path,” Taggart said. “We’ve talked to a number of accounting firms, buyers and legal firms that are concerned they won’t be able to handle the demand for those that aren’t already engaged in the process.” Addiction Treatment Demand for addiction treatment services continues to surge, as the latest CDC data shows more than 92,000 Americans died by overdose in the 12 months ending in November 2020, a record for a 12-month period and a 30% increase over a year prior. M&A activity in the addiction treatment sector saw a slight uptick in the second quarter, with 14 deals announced, up from 12 in Q1. Avenues Recovery expanded its national network of substance use disorder treatment centers with its acquisition of Valley Forge Medical Center and Hospital in Montgomery County, Pennsylvania. BayMark Health Services was active once again, announcing deals for two operators of residential and office-based opioid treatment companies: Hope for Tomorrow in West Virginia and New Day Recovery in Louisiana. The aforementioned deals for Brightview were for Aspire in Chesapeake, Virginia, and Life Spring Recovery in Columbus, Ohio. Virtual peer support services provider MAP Health Management acquired CARMAhealth, which offers primary care and behavioral health management services. Indiana-based Meridian Health Services expanded its addiction treatment services in the state by entering into a partnership with Home with Hope in Lafayette, a deal that included the addition of a maternal treatment program. CPF Recovery Ways announced four deals in the second quarter. The company added addiction treatment providers Alpine Recovery Services and Colonial Clinic, as well as Omega Recovery and Breakthrough Recovery Group, which provide both addiction treatment and mental health services. Jacksonville Beach, Florida-based Refresh Mental Health added Carolina Behavioral Care’s network of programs in central North Carolina to its portfolio. Vertava Health (formerly known as Addiction Campuses of America) expanded its presence in the Mid-South region of the U.S., as well as its MAT, IOP and primary care offerings in outpatient settings, with a deal for Memphis-based IAC Associates. Autism Services & Intellectual/Developmental Disabilities The volume of deals for autism and I/DD services, which has ebbed and flowed on a quarterly basis since mid-2019, once again dipped in the second quarter of 2021. Just six deals in this space were completed in the quarter, down from 11 in Q1 of 2021. Among the deals in the autism and I/DD space announced: Acorn Health Associates expanded its presence in Tennessee by acquiring substantially all of the assets of LEAP Behavior Analysis. In May, Caravel Autism Health added the Center for Autism Treatment, building upon Caravel’s network of six autism therapy centers in the Milwaukee metro area. The Center for Social Dynamics expanded its footprint into Washington and Idaho by partnering with JF Autism Services, which provides ABA services in home-based settings. KNR Therapy, backed by Shields Capital, merged with Forbes Behavioral Services, combining two Florida-based providers of ABA therapy. Mental Health Deals for mental health service providers remained roughly in line with the first quarter of 2021, with 10 deals completed in Q2 compared to 11 in Q1. Demand for services in the sector is expected to remain high in the coming months as the nation starts to enter a post-pandemic phase. Transactions involving mental healthcare organizations in the second quarter included: Community Psychiatry more than doubled its facility count and began a national expansion outside of its headquarters state of California with a deal for North Carolina-based MindPath Care Centers, bringing Community Psychiatry’s total number of facilities over 70. Oaks Integrated Care announced a merger with a fellow not-for-profit provider in New Jersey, Cope Center in Montclair. In June, LifeStance Health Group, a Scottsdale, Arizona-based outpatient provider, announced an IPO of 40 million shares at a public offering of $18 per share. The Mentor Network expanded into North Texas with a deal for Sage Care Therapy Services, with new service offerings including home-based pediatric therapies for children. Vizion Health purchased Brookhaven NeuroNetwork, which includes the operations of Brookhaven Hospital, a behavioral health facility located in Tulsa, Oklahoma.