Mertz Taggart follows the publicly traded home-based care companies and reports on their earnings calls each quarter. As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively. Historically seen as the “ultimate consolidators”, the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A. Addus Homecare (Nasdaq: ADUS) Highlights Addus reported revenue of $373.1 million for the quarter, up 26% from Q4 2024. Growth was led by the Personal Care segment, representing 77% of the business, which grew same-store revenue by 6.3% and overall revenue by 30% year-over-year compared to the prior year quarter. The segment benefited from stable hiring trends and favorable rate support in large markets including Texas and Illinois, the company’s two largest markets. The Hospice segment, making up 19% of quarterly revenue, experienced 16% year-over-year same-store growth as a result of operational improvements which saw increases in admissions, average daily census and revenue per patient day. The segment also benefited from a 3.1% increase in the 2026 Medicare hospice reimbursement rate which came into effect on October 1. The company’s Home Health segment, which represents 5% of the business, saw a 7% decline in same-store revenue year- over-year, but still remains a critical piece of Addus’ full continuum of care. 25% of the Hospice segment’s admissions in New Mexico and Tennessee are attributable to the company’s Home Health business. Addus ended full-year 2025 with revenue of $1.4 billion and adjusted EBITDA of $180 million, an increase of 23% and 28%, respectively, from 2024. Key Financial Figures M&A Activity CEO Dirk Ellison commented, “Our development team continues to focus on both clinical and non-clinical acquisition opportunities which would increase both density and geographic coverage. We will continue our disciplined approach to identify strategic personal care service transactions as well as to evaluate smaller clinical transactions. That said, while there is more optimism around home healthcare due to the final health rule for 2026 being more favorable than was originally proposed, questions remain about potential future rate increases and the uncertainty of the retrospective payment adjustments.” Management clarified that they will continue to source and evaluate acquisition opportunities similar to the ones closed so far this year, with a focus on markets where Addus can leverage its strong personal care network. Guidance Management expects a sequential gross margin decline of 120 basis points from normal seasonality, annual merit increases and the annual reset of payroll taxes. A 3.9% rate increase in Illinois that came into effect on Jan 1 is expected to add $17.5 million in annualized revenues in 2026. Aveanna Healthcare (Nasdaq: AVAH) Highlights Aveanna reported Q4 2025 revenue of $662.5 million, up 27% year-over-year, and Q4 2025 adjusted EBITDA of $85 million, representing a 54% increase over the prior year quarter. Management attributed this growth to an improved reimbursement rate and volume environment and the continued success of cost savings initiatives. The Private Duty Services segment, representing 82% of the business, grew 28% year-over-year driven by an 18% year-over-year increase in volume and a 10% increase in revenue per hour as a result of the company’s preferred payor strategy and other Medicaid rate enhancements. The Home Health & Hospice Segment, which represents 10% of the business, grew 27% year-over-year. The business line saw 10,400 admissions and 14,000 total episodes of care during the quarter, up 22% and 25% over the prior year quarter, respectively. Aveanna continues to expand its preferred payor strategy, ending 2025 with 30 preferred payor agreements, up from 22 at the end of 2024. Q4 2025 preferred payor volumes accounted for approximately 57% of total MCO volumes in its Private Duty Services business. Key Financial Figures M&A Activity Aveanna announced the acquisition of Family First Homecare, a multi-state provider of pediatric home care with 27 locations, for $175.5 million or approximately 7.5x post-synergy EBITDA. The transaction is expected to close in late Q2 2026 pending regulatory approvals. CEO Jeff Shaner noted the deal allows Aveanna to expand within Florida, where Family First generates approximately two-thirds of its revenue, enabling the company to service effectively every county in the state. Management signaled continued interest in M&A with plans to pursue tuck-in acquisitions for its Home Health & Hospice segment. Management also identified Ohio, West Virginia, Kentucky and Tennessee as target expansion states for the company’s Private Duty Services business. Guidance Aveanna guided to full-year 2026 revenue between $2.54 to $2.56 billion and adjusted EBITDA of $318 to $322 million, excluding any impact from the Family First acquisition, implying core EBITDA growth of approximately 7%. Management expects six to eight state rate enhancements in its Private Duty Services business in 2026, with increases expected to be between 1% to 5% rather than the larger structural resets of prior years. The Pennant Group, Inc. (Nasdaq: PNTG) Highlights Pennant Group reported Q4 2025 total revenue of $289 million, an increase of 53% over the prior year quarter, driven by growth in all three of its operating segments. Full-year consolidated revenue and adjusted EBITDA came in at $948 and $72 million, up 36% and 20% from 2024, respectively. The Hospice segment, representing 34% quarterly revenue, grew 53% year-over-year driven by a 47% increase in average daily census, reaching an all-time high of 5,060. Same-store ADC and admissions grew 8.4% and 6.6%, respectively. The Home Health segment, inclusive of Home Care revenue, grew 73% year-over-year and saw an 81% surge in quarterly admissions, driven by the company’s recent acquisition of divested assets from UnitedHealth Group and Amedisys. Same-store Medicare admissions and Medicare revenue per episode grew 8.2% and 3.7%, respectively. Throughout 2025, Pennant Group added more than 100 leaders to its CEO in Training program and elevated an additional 39 leaders to C-level status within their local operations, strengthening the company’s talent bench for M&A integration and organic expansion. Key Financial Figures M&A Activity Pennant Group continues to integrate the divested assets it purchased from the UnitedHealth Group and Amedisys transaction, which added significant density in the Southeastern market. Management expects to complete the integration by October 2026. The company closed two Senior Living acquisitions during the quarter, including a 55-bed Idaho-based assisted living community now known as Twin Rivers Senior Living and the real estate of Honey Creek Heights Senior Living, a 135-bed Wisconsin-based assisted living community that previously sold its operations to Pennant Group in January 2025. Commenting on M&A expectations going into 2026, President and COO John Gochnour said, “We are always disciplined in our approach, but we will be even more selective on the Home Health and Hospice front in the first half of 2026, as we focus on ensuring our recently acquired operations are on firm footing.” Guidance Management issued initial full-year 2026 guidance of $1.13 to $1.17 billion in revenue and $88.5 to $94.1 million in adjusted EBITDA. CFO Lynette Walbom characterized the guidance as conservative, as management expects noise from integration in the first three quarters of the year. Enhabit, Inc. (Nasdaq: EHAB) Highlights Enhabit reported quarterly revenue of $270 million, representing a 5% increase from the prior year quarter, and adjusted EBITDA of $28 million. The company’s Home Health segment, which makes up 76% of the business, grew 3% year-over-year driven by admissions growth of 7.3% or 8.1% when normalized for branches closed in 2025 and average daily census growth of 6.4% compared to the prior year. Medicare average daily census continues to stabilize as it fell 1.7% sequentially. The Hospice segment, representing the remaining 24% of the business, grew 10% year-over-year led by a 9.9% increase year-over-year in average daily census. Admissions increased 0.8% year-over-year or 3% when normalized for branches closed in 2025. Enhabit opened four de novo locations during the quarter, bringing the total to 10 de novo locations in 2025. The company continued to de-lever its balance sheet during the quarter with a reduction in bank debt by $15 million, yielding a leverage ratio of 3.7x. The company has reduced total bank debt by $125 million since Q4 2023, resulting in an annualized cash interest savings of $22 million. Key Financial Figures M&A Activity On February 23, 2026, Enhabit announced that it had entered into a definitive agreement to be acquired by Kinderhook Industries, a middle market private equity firm, for $13.80 per share or a total enterprise value of $1.1 billion, representing a premium of approximately 24.4% to the company’s closing share price as of February 20 or a 33.8% premium to Enhabit’s 60-day volume-weighted average share price for the period ending February 20. The transaction is expected to close during the second quarter of 2026, subject to regulatory approvals and other closing conditions. In a press release, President and CEO Barb Jacobsmeyer commented, “Under Kinderhook’s ownership, Enhabit will benefit from additional resources and expertise that will support long-term investments in our people, clinical excellence and innovation without the short-term pressures of the public markets.” Guidance As a result of its pending acquisition by Kinderhook Industries, management has suspended its practice of providing financial guidance. BrightSpring Health Services, Inc. (NASDAQ: BTSG) Highlights BrightSpring delivered total Q4 2025 revenue of $3.6 billion, up 29% from the prior year quarter. Full-year 2025 revenue came in at $12.9 billion, a 28% year-over-year increase, while the company achieved a full-year adjusted EBITDA of $618 million, a 34% increase from 2024. Pharmacy Solutions, which represents 89% of the business, grew revenue 32% year-over-year to $3.2 billion. Within the segment, Infusion and Specialty revenue grew 43% to $2.6 billion while the Home and Community Pharmacy service line’s revenue declined 1% to $593 million, reflecting the unwinding of a bankrupt customer and the exit of uneconomic accounts. Provider Services, representing 11% of the business, reported quarterly revenue of $394 million, up 13% year-over-year, with a segment adjusted EBITDA margin of 16.4%, a 50-basis point expansion driven by economies of scale and efficiency. The Home Health Hospice and Primary Care businesses, which represents 55% of the Provider Services segment, grew revenue 19% year-over-year driven primarily by a 15% increase in average daily census. Key Financial Figures M&A Activity BrightSpring closed its acquisition of 107 Amedisys and LHC branches in a two-part transaction on December 1 and December 31, 2025, at a purchase price of $239 million funded entirely from cash on hand. The assets generated full-year 2025 pro forma revenue of $345 million and are geographically complementary to BrightSpring’s existing Home Health and Hospice footprint. Management expects the acquired assets to contribute approximately $30 million in adjusted EBITDA in 2026. The pending divestiture of the company’s Community Living business received FTC approval and is expected to close by the end of Q1 2026. The transaction will generate approximately $715 million in net after-tax cash proceeds from $835 million in gross consideration, with proceeds earmarked primarily for debt repayment. CEO Jon Rousseau reiterated BrightSpring’s intention to continue pursuing thoughtful tuck-in acquisitions in 2026 commenting, “The hallmarks of the company now for 10 years has been volume and efficiency and then accretive M&A. That story has really never been more intact.” Guidance Management issued initial 2026 guidance of $14.45 to $15.0 billion in total revenue, inclusive of Pharmacy Solutions revenue of $12.6 to $13.1 billion and Provider Services revenue of $1.85 to $1.9 billion. Total adjusted EBITDA is expected to be between $760 and $790 million. Option Care Health, Inc. (NASDAQ: OPCH) Highlights Option Care reported full-year 2025 net revenue of $5.6 billion, up 13% over the prior year, driven by balanced growth across acute and chronic therapies. Acute revenue grew in the mid-teens while chronic therapies saw low double-digit growth. Stelara biosimilar adoption represented a full-year 2025 revenue headwind of 160 basis points, impacting Q4 2025 gross profit negatively by $20 million, consistent with management’s expectations. Full-year adjusted EBITDA came in at $471 million, representing a 6% increase over the prior year, with a margin of 8.3%. Throughout 2025, the company added five new site-of-care programs with regional health plans and two with non-traditional payors. Management noted increasing payor engagement around total cost of care and MLR management, with momentum expected to continue into 2026. Option Care served over 315,000 unique patients in 2025, an all-time high, and completed over 2.5 million infusion events. Over 25 centers now offer advanced practitioner capabilities, up from 24 in Q3 2025. Approximately 40% of claims are now processed without human intervention through AI and automation initiatives. The company is expanding AI use cases into call center agentic capabilities, workforce optimization and inventory management. Key Financial Figures M&A Activity While discussing the company’s M&A strategy, CFO Meenal Sethna commented, “We remain active on identifying complementary tuck-ins and adjacencies. We acquired Intramed Plus earlier in the year, and the business and financial performance beat our initial expectations. We will continue to exercise discipline as we evaluate potential acquisitions, ensuring they are both strategic and financially attractive.” Guidance Management reaffirmed full-year 2026 guidance initially provided in January of $5.8 to $6.0 billion in revenue, adjusted EBITDA of $480 to $505 million and operating cash flow of at least $340 million. Option Care’s revenue guidance incorporates a 400-basis point headwind from biosimilar adoptions such as Stelara. To download the .pdf version of this report, click below. Disclaimer The information contained in this document is provided for informational and marketing purposes only by Mertz Taggart and is not intended as investment, financial, legal, tax, or other professional advice. The content has been compiled using publicly available sources, including but not limited to SEC filings accessed via EDGAR, Seeking Alpha, and Yahoo Finance. While we strive to ensure the accuracy and reliability of the information presented, Mertz Taggart does not warrant or guarantee the completeness, timeliness, or accuracy of the information, nor shall it be held liable for any errors or omissions. This document does not constitute a solicitation, recommendation, or offer to buy or sell any securities or other financial instruments. Any views or opinions expressed are those of the author(s) and do not necessarily reflect the views of Mertz Taggart or its affiliates. Recipients should not rely solely on the information herein for making investment or strategic decisions. All readers are encouraged to conduct their own independent research and to consult with their professional advisors before making any financial or business decisions. 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A home care M&A case study with Becky Reel, founder of For Papa’s Sake Home Care At a Glance Sector: Home Care  |  Deal Type: Sell-Side M&A   The Situation: Becky Reel built For Papa’s Sake Home Care in honor of her grandfather and grew it by 300% over a decade, earning the #1 agency ranking in North America from Home Care Pulse. She had promised her parents she would build the agency to the point where its sale could fund their retirement. The Challenge: Selling wasn’t just a financial decision. Becky was balancing the demands of running the agency, raising two young children, and navigating the emotional weight of letting go of a business that carried her family’s name and legacy. She needed an advisor who understood both the business and the personal stakes. The Mertz Taggart Approach: Senior advisor Bruce Vanderlaan led a hands-on engagement. He educated Becky through every stage of the process, attended every meeting in person, and evaluated buyers not just on price but on their alignment with the agency’s mission and values. The Outcome: Becky found a buyer who shared her commitment to patient care and staff well-being. Her promise to her parents was fulfilled. The agency’s legacy continues under new ownership. When Becky Reel decided to sell the home care agency she’d built in honor of her grandfather, she needed more than a broker. She needed a partner who understood what was at stake, for her family, her employees, and the patients who depended on her team. Becky chose Mertz Taggart. Below, she shares the story of selling For Papa’s Sake Home Care, from the promise that started it all to the moment she found the right buyer to carry it forward. Honoring a Promise and a Legacy For Papa’s Sake Home Care was born from a promise and a mission close to my heart. Named in honor of my grandfather, who I called Papa, who endured a tragic experience in a nursing home, the agency represented our commitment to create a better option for seniors—one rooted in dignity, safety, and genuine care. My promise to my parents was equally important: to build and grow the agency to a point where its sale could fund their fulfilling retirement.  Over my 10 years, we grew by 300%, was ranked the number 1 agency in North America by Home Care Pulse (now Activated Insights), and received the Leader of Excellence award for seven consecutive years. Selling this agency was not just about a transaction; it was about finding someone who would continue this legacy of care.   Balancing Family, Legacy, and the Demands of the Sale  The journey to sell was a long and intensive process. As a mother to two young children and a wife, I still had my day-to-day responsibilities: running the agency, being present with my family, and somehow balancing all this with the intense demands of the sale process. The emotional weight of parting with something so personal was heavy, compounded by the need to maintain the agency’s standards and focus on my family’s needs. Bruce , my advisor from Mertz Taggart, recognized this balancing act and stepped in as more than a business guide; he became my greatest advocate and support system. Empathy and Strategic Expertise  Bruce and the Mertz Taggart team brought a unique blend of empathy and strategic acumen to every aspect of the process. Bruce understood that selling our agency was not just about numbers—it was about preserving a legacy. His focus was not only on maximizing the agency’s value but also on finding a buyer who respected the values that built it. He guided me with skill and precision, making complex decisions easier and ensuring I felt confident at each step. Ongoing Support During Critical Moments One of the most telling moments was when a potential buyer arranged a meeting that could determine the future of the agency. The stakes felt high, and I was nervous about facing such a pivotal moment alone. Without hesitation, Bruce booked a flight the very next day to be by my side, offering both his strategic insights and his steadfast support. His presence turned what could have been an overwhelming experience into one where I felt empowered and reassured. Client-Centered for Every Step of the Journey Throughout the process, Bruce and Mertz Taggart never made me question their commitment to me and my goals. In moments of doubt and exhaustion—when the balance of family, agency responsibilities, and the emotional toll of the sale felt like too much—Bruce reminded me of the impact we had made and the legacy it would leave behind. His encouragement and compassion kept me grounded and helped me see the journey through to the end. A Partner Who Truly Cares Selling For Papa’s Sake Home Care was one of the most significant and emotional decisions of my life. Bruce’s empathy, dedication, and strategic guidance made it possible to honor my promise to my parents while ensuring the agency’s legacy would continue. For anyone considering the sale of a home care agency they’ve poured heart and soul into, Mertz Taggart is more than an M&A firm—they are partners who truly care about their clients’ well-being and success. We are delighted to have received this incredibly in-depth testimonial from our client, Becky Reel . Becky’s story reflects what drives our work at Mertz Taggart: helping healthcare owners navigate the most consequential decision of their professional lives with the guidance, honesty, and advocacy they deserve. Every engagement is personal. Every outcome matters. Considering a Sale of Your Home Care Agency? Whether you’re years away or actively exploring your options, every conversation with Mertz Taggart is confidential. We’re here when you’re ready. Contact us: info@mertztaggart.com | 770.888.1171 Read more stories from our clients on our Testimonials page › Learn about our approach to home care M&A › Follow us on LinkedIn for daily insights ›

Mertz Taggart Home Health, Home Care & Hospice M&A Update for Q3 2021 With both the height of the COVID-19 pandemic and the start of the Patient-Driven Groupings Model (PDGM) now in the rearview mirror, in-home care buyers and motivated sellers are finding it easier to come together on deals. There were 44 total home health, hospice and home care transactions completed in the third quarter of 2021, up from the 41 deals that took place in the previous quarter. Over the past three years, the only quarter with more transactions was 2020 Q4. “All three sub-industries remain strong, but the increased activity has little to do with increased demand,” Mertz Taggart Managing Partner Cory Mertz says. “Demand has been strong for several quarters and continues. This is a supply-driven market.” Note: Total industry transactions does not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. There are a few main factors helping drive supply in the back half of 2021. For starters, there’s the likely increase in the capital gains tax rate. When put in effect, it will diminish a prospective seller’s return or force them to place a bigger price tag on their business, in turn limiting buyer interest. What remains unknown is when this hike will go into effect, and its severity. “The Biden administration came out of the gate with some pretty draconian targets,” Mertz says. “The current “Build Back Better” reconciliation package is still in negotiations, but it appears to be much less severe than the original targets.” However, he adds, it’s quite possible that the effective date is already in the rearview mirror, with the current package delayed in congress. In addition to a capital-gains tax increase , the COVID-19 pandemic is nearly entering its second year, bringing sustained operational difficulties. “We’ve heard from many owners who are feeling a sense of burnout,” Mertz says. “Maybe they were already thinking about a sale in the next couple of years, but then the ongoing pandemic just accelerated their timelines.” Looking ahead, home health supply may be bolstered even further by the proposed Home Health Value-Based Purchasing (HHVBP) Model expansion as well. Franchise deals headline home care M&A activity There were at least 18 home care-related transactions in Q3 2021, according to Mertz Taggart data. That was on par with the previous quarter, which registered 19 home care deals. One of the splashiest home care transactions in the third quarter was Honor’s acquisition of Home Instead Senior Care . Combined, the Honor-Home Instead enterprise represents more than $2.1 billion in home care services revenue, according to the companies. Private equity group Searchlight Capital Partners also acquired a majority stake in Care Advantage in the third quarter. Care Advantage offers a variety of in-home care services to patients across Virginia, Maryland, Washington, D.C., and Delaware. ModivCare Inc . (NYSE: MODV) closed on a $340 million purchase of CareFinders Total Care early on in Q3, advancing the publicly traded company’s plan to become one of the largest personal care services providers in the country. ModivCare purchased Simplura Health Group in September 2020. A key theme to the home care M&A landscape throughout this year has been lots of activity around franchisors. “The third quarter saw another franchisor acquired in Home Instead” Mertz says. “That brings the total number of franchisors who have sold in 2021 to three, compared to just three in the previous five years. Franchisors give financial buyers both immediate scale, which can be leveraged, and the ability to quickly grow EBITDA via acquisition of both existing franchisees and independents. This is a model that has been proven by other PE groups.” Home health transactions up The home health sub-sector saw a noticeable spike in dealmaking. Mertz Taggart tracked at least 16 home health-related deals in Q3 2021, on par with Q2. Home health M&A activity is likely to remain robust moving into 2022, especially if the U.S. Centers for Medicare & Medicaid Services (CMS) finalizes its plan to expand HHVBP to all 50 states. “As part of its basic framework, the HHVBP proposal exposes home health agencies to a 5% upward or downward payment adjustment,” Mertz says. “Agencies that perform well can take any bonus payments and reinvest in the business or in M&A. Those who don't perform well effectively pay a penalty to those who do." LHC Group Inc. (Nasdaq: LHCG) made a flurry of deals in August, including the purchase of Alexandria, Virginia-based Cavalier Healthcare Services . Strategically, the acquisition opens up a new service area for LHC Group, allowing it to better leverage its operations in the Washington, D.C., and Maryland markets. Mertz Taggart provided exclusive transaction advisory services in this transaction, representing the seller. In July, the Visiting Nurse Association (VNA) — a nonprofit provider in Omaha, Nebraska, and Council Bluffs, Iowa — sold its home health and hospice operations to Amedisys Inc. (Nasdaq; AMED). Under the terms of the transaction, VNA’s home health and hospice services rebranded to “Amedisys Home Health” and “AseraCare Hospice, an Amedisys Company,” respectively. Mertz Taggart provided buyside advisory services to Amedisys in this transaction. The biggest home health-related deal in Q3 2021 also came from LHC Group. In September, the company announced it was acquiring 23 home health locations, 11 hospice agencies and 13 therapy businesses from Brookdale Senior Living Inc . (NYSE: BKD) and HCA Healthcare (NYSE: HCA). The transaction represented annualized revenue of about $146 million, according to the company. Hospice dealmaking takes another leap There were at least 23 hospice-related deals in Q3 2021, up from 17 transactions in Q2. Since the start of 2018, no quarter has seen more hospice M&A activity apart from the fourth quarter of last year, which tallied 29 hospice-related transactions. The pure-play hospice transactions in Q3 included Agape Care’s purchase of Integrity Hospice-Dubin , in addition to Charter Healthcare Group’s acquisition of Generations Hospice Care. “Humana Inc. (NYSE: HUM) additionally completed its $8.1 billion acquisition of Kindred at Home in this previous quarter,” Mertz says. “That’s a deal to keep an eye on from a hospice perspective, as Humana has discussed plans to separate Kindred’s hospice operations.” Entering the final stretch Of the 44 home health, hospice and home care transactions in Q3 2021, private equity buyers and their portfolio companies led the way with 25 deals. Public companies like LHC Group, Amedisys and others took part in at least 16 transactions. “We predicted a very strong finish to an already-strong year,” Mertz says. “The third quarter did not disappoint.”

A steady second half of 2020 bodes well for 2021. Behavioral health M&A remained steadily active in the fourth quarter of 2020, with a total of 27 transactions, according to the latest data from M&A advisory firm Mertz Taggart. Announcements in addiction treatment led the segment in Q4 with some large groups moving forward on multiple acquisition deals. The year finished with 97 transactions overall. 2020’s total number of deals were comparable to those in the previous two years, despite a global pandemic. In 2019, the segment witnessed 97 announcements, and in 2018 an even 100. “The second half of 2020 was as strong as we’ve seen ,” said Mertz Taggart Managing Partner Kevin Taggart. “ Combine that with the threat of a near-term capital gains tax hike, and we expect an active 2021.” He said new partnerships and access to capital will become especially important in the months to come as healthcare providers emerge from the coronavirus pandemic with a more competitive landscape than before. “We know that financial mechanisms have been shifting,” Taggart said. “While loans and operating income remain the primary sources of capital, private equity investment could be the important variable that contributes to a more optimistic outlook for many behavioral health providers.” Taggart believes the continued infusion of private equity assets combined with a clear forecast of pent-up demand for services will offer a boost to revenue by mid-year. Yet, providers that are able to build capacity quickly will also need to be resourceful in how they approach the imbalance of supply and demand, leveraging technology and strong operational sophistication. “We see additional evidence of a positive outlook in behavioral health based on the number of new center openings across the country,” Taggart continued. “And these are brick-and-mortar locations, banking on an increase in in-person services, even as they continue to rely on telehealth visits.” With an anticipated surge in demand, new center openings and private equity interest, Taggart believes M&A activity could reach a new peak in mid-to-late 2021. The last three years have demonstrated that there’s still plenty of room for strategic acquisitions in behavioral health. Note: The sum of sub-industries (broken down above) does not always equal total sector deal volume, as some transactions include more than one sub-industry. Addiction Treatment In Q4, the deal activity continued for several growing PE-backed portfolio companies. As they add new locations, many are also launching rebranding efforts to unite their networks in name as well as in operations. A recent survey from the National Association of Addiction Treatment Providers noted that providers are making significant investments in technology, which will likely set them up for more objective quality-of-care measurement, which also leads to improved reimbursement from payers. “Buyers are definitely not looking to add scale for the sake of scale,” said Taggart. “Proven clinical quality and the ability to increase census has to be part of the growth strategy.” It was a busy quarter for BayMark Health Services with a number of significant deals. The addiction treatment organization acquired Liberty Bay Recovery Center , a residential treatment center in Portland, Maine, making it the second residential offering in the BayMark network of more than 250 facilities across the United States and Canada. Mertz Taggart represented Liberty Bay in the transaction . BayMark also announced the acquisition of Limestone Health , an opioid treatment program with three locations in Indiana, formerly owned by Springstone, Inc. The transaction represents BayMark’s first entry into the state. In December, it acquired Choices of Louisiana , which offers opioid treatment programs in three locations, and additionally in a separate transaction, it added Recovery Pathways , an office-based opioid treatment provider with three locations in Pennsylvania, to its roster. Also in December, BayMark acquired Echo Treatment Center in Pennsylvania, which will fall under the MedMark Treatment Centers brand. BayMark is a portfolio company of Webster Equity Partners. Summit BHC has acquired Seabrook in New Jersey, adding a 153-bed inpatient center and three outpatient centers to its portfolio. The deal marks Summit’s first entry into New Jersey and brings the company’s total number of locations to 22. Mertz Taggart provided sell-side services for Seabrook in the transaction. Landmark Recovery acquired Las Vegas Recovery Centers in December . 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. Arisa Health announced the acquisition of the Wilbur D. Mills Treatment Center in Arkansas, which includes a residential and outpatient center as well as an apartment complex for those in recovery. It will be rebranded as Arisa Health Recovery at Mills. Behavioral Health Group announced several deals in Q4. It expanded into Rhode Island with the acquisition of the Center for Treatment & Recovery, LLC , which will be rebranded as BHG Pawtucket Treatment Center. It also announced it had expanded its footprint in Alabama with the acquisition of Huntsville Recovery, Inc. and Stevenson Recovery, Inc. in October. The two locations will be rebranded with the BHG name. In November, BHG acquired Wellness Ambulatory Care in Tennessee. In all, the company operates across 15 states. Discovery Behavioral Health acquired Prosperity Wellness Center , a 40-bed residential treatment center in Washington, representing the 10th brand added to the Discovery portfolio. The organization operates four existing outpatient centers in the state as well. Center For Discovery and Cliffside Malibu merged in 2018 to form Discovery Behavioral Health as a newly created parent company, backed by Webster Equity Partners . Autism Services & Intellectual/Developmental Disabilities Individuals with autism spectrum disorder and intellectual/developmental disabilities were among those experiencing added distress in 2020 attributed to reduced access to services because of the pandemic, according to a report from the National Institutes of Health. As a result, more individuals will likely need a higher level of care in 2021, including involvement from family and loved ones. “Care that extends to the family will be a sought-after service offering,” Taggart says. “We should expect to see buyers looking for acquisitions to enhance comprehensive services and whole-person care.” SPG in October announced two deals. It acquired applied behavioral analysis (ABA) provider Family Support Center as well as Go2Consult , a speech and language services provider. The transactions broaden the geographic coverage for SPG, a portfolio company of Ridgemont Equity Partners . Blue Sprig Pediatrics, Inc. announced a deal to acquire the assets of the Michigan-based Momentum Autism Therapy Services , a center- and home-based provider of ABA services. Pharos Capital Group, LLC in December acquired Catalyst Behavioral Solutions , a Utah-based mental and behavioral health services provider, marking its seventh acquisition. Catalyst offers Catalyst Academy, a program for children. In a platform deal , New Capital Partners and OSF Ventures , part of the OSF Health System, acquired DotCom Therapy, Inc , provider of virtual counseling and therapy for autism spectrum disorder. Caravel Autism Health announced the acquisition of Behavior Therapy Solutions of Minnesota . The combined organization will serve children with autism and their families through a network of six autism therapy centers in the state. Apara Autism Centers in December acquired Behavior Pioneers , a provider of ABA services with four locations in Texas. Mental Health Even now, providers are still wrestling with parity issues, Taggart said. Therefore, mental health organizations that have beneficial in-network contracts with payers will be attractive to strategic buyers. And consolidation will help providers gain the scale they need to bring much-needed leverage to the negotiating table. And any organization that can demonstrate comparable quality of care and reasonable profitability through the use of virtual appointments will be an attractive target. Pathways Health and Community Support, LLC completed the acqu here isition of Access Family Services, Family Behavioral Resources , and Autism Education and Research Institute —three intervention service organizations which will be combined into one entity. Pathways operates in 18 states and the District of Columbia. Previously, Atar Capital acquired Pathways from Molina Healthcare in 2018. Monte Nido & Affiliates , a portfolio company of Levine Leichtman Capital Partners , acquired Rosewood Ranch, L.P. , a network of three eating disorder treatment facilities in Arizona. With the transaction, Monte Nido now operates 29 residential and outpatient facilities in 11 states. The Stepping Stones Group , announced the acquisition of Ardor School Solutions , a provider of school-based therapeutic and behavioral health services. Stepping Stones is a portfolio company of Five Arrows Capital Partners . The deal expands the organization’s geographic footprint into New Mexico and Arizona. ProtoCall Services , a 24/7 telephonic crisis intervention provider acquired The Shrink Space , a referral management software platform that is used in higher education with a national network of more than 4,000 licensed clinicians, prescribers and treatment centers. Private equity firm Kelso has acquired a majority interest in Refresh Mental Health , an outpatient mental health network with 200 locations nationwide. Kelso’s stake in Refresh was acquired from affiliates of investment firm Lindsay Goldberg, which helped found Refresh in 2017. Locations acquired in this platform deal include outpatient substance use disorder, eating disorder and mental health treatment centers. Summit Behavioral Healthcare LLC purchased the shuttered 92-bed Clear View Behavioral Center in Colorado for $29.2 million in a deal that closed in December. Summit intends to apply for a new license and begin operations within the first six months of 2021. In a platform deal, Revelstoke Capital Partners acquired Family Care Center , which provides outpatient psychiatry services to the U.S. Armed Forces and veterans in Colorado. The organization plans to expand services in the state and in new geographic areas. Latticework Capital Management in December acquired Beacon Behavioral Hospital, which operates seven intensive outpatient locations and four inpatient hospitals in Louisiana. Now with this platform deal, leaders plan to expand into new states and add new service offerings. Magellan Health, Inc. in December completed a transaction to acquire a 70% interest in Bayless Integrated Healthcare , an outpatient behavioral health and primary care provider in Arizona. Magellan’s core competency has been in managed care, however, the organization has the option to buy the remaining equity in Bayless within the next 36 months. Bayless brings additional integrated health, telehealth and other provider capabilities to the Magellan portfolio. View the Q3 2020 Behavioral Health Report . Trackbacks/Pingbacks Behavioral Health M&A Report: Q1 2021 – Mertz Taggart - […] a busy quarter to close out 2020, BayMark Health Services stayed busy in the new year, announcing the acquisition of Partners in […]

BATON ROUGE, La., June 01, 2020 (GLOBE NEWSWIRE) — Amedisys, Inc. (NASDAQ:AMED), a leading provider of home health, hospice and personal care, announced today that, through one of its wholly owned subsidiaries, it has closed on its acquisition of Homecare Preferred Choice, Inc., doing business as AseraCare Hospice (“AseraCare Hospice” or “AseraCare”), a national hospice care provider with an executive office in Plano, Texas and administrative support center in Fort Smith, Arkansas. Under the terms of the agreement, Amedisys acquired 100 percent of the ownership interests in AseraCare Hospice for a cash purchase price of $235 million, which is inclusive of a $32 million tax asset bringing the net purchase price to $203 million. The Company did not use any of the funds received by the Company from the Public Health and Social Services Emergency Fund that was appropriated by Congress to the Department of Health and Human Services in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to fund the acquisition. “AseraCare has been on our radar for a long time. We have long admired their strong culture, focus on patients and employees and commitment to always providing high-quality care,” stated Paul Kusserow, Amedisys’ president and chief executive officer. “We are excited about the opportunity, as one company, to bring the gift of hospice to more communities.” Founded in 1994, AseraCare Hospice cares for more than 2,100 patients daily and employs more than 1,200 hospice professionals in 44 locations across 14 states, generating approximately $117 million in annual revenues. This acquisition adds greater scale to Amedisys’ high-quality, nationwide network. Combined, our new hospice operations will include 190 care centers in 35 states, with an average daily census of approximately 14,000 patients and approximately 7,000 hospice employees. “We feel privileged to welcome AseraCare Hospice into the Amedisys family. We share our commitment to delivering compassionate, patient-centered care to patients and their families, and a culture of engagement and support to our colleagues and caregivers,” said Anthony Mollica, Amedisys’ president of hospice. “We are all in the hospice business because we care. For us, this is not our job; caregiving is our calling.” This acquisition is the fourth hospice acquisition for Amedisys since 2019. The Company acquired and integrated Compassionate Care Hospice in February 2019, RoseRock Healthcare in April 2019 and Asana Hospice in January 2020.   “AseraCare and Amedisys have always shared an absolute and sacred commitment to help our patients live each day to its fullest, one person, one family and one community at a time,” stated AseraCare President Larry Deans. “I am fully confident that Amedisys will continue and build upon our mission-driven purpose and high-quality care for our patients and families for years to come.” Read more here… GlobeNewswire Click to read Amedisys to Acquire AseraCare Hospice for $235 Million

For years, many medicaid-reimbursed healthcare services companies operated with a certain degree of "stealth." While you were aware of your internal growth and revenue, that data was largely private. That changed recently. The release of the most recent Medicaid payment data has acted as a searchlight on the private healthcare market. For agencies in non-medical home care and private duty nursing (PDN), internal performance metrics are now effectively public search criteria. If you have noticed an uptick in "exploratory" emails or calls from private equity groups, strategic acquirers, and other advisors, this transparency is the reason why. The Buyer’s New Map Institutional buyers and large strategic aggregators operate on data. With the new Medicaid files, their Business Development teams are no longer guessing who the market leaders are in a specific region—they are filtering for them. If your company is doing $5M or more in revenue, you are likely now a "Tier-1 Target" on a proprietary spreadsheet. For smaller agencies, you have become an ideal "add-on" candidate for platforms looking to increase density. Why "Direct Interest" Isn't Always a Compliment It is flattering when a multi-billion-dollar fund reaches out to "learn more about your story." However, from a first-principles perspective, you must recognize the tactical intent. When a buyer approaches you directly, their primary goal is to preempt a competitive process.  By engaging you before you have representation, they can: Define the Valuation:  They use the data they found to anchor a price before you know what the broader market would pay. Control the Terms:  They utilize their "deal fatigue" and sophisticated legal teams to navigate a transaction where they hold the information advantage. Eliminate Competition:  They know that if you go to market with a firm like Mertz Taggart, the price will likely increase as multiple buyers compete for the asset. Seller Beware: The Cost of Going Alone The danger of the current data release is that it creates a false sense of security. A buyer might offer a "fair" multiple of the revenue they see in the public data. But "fair" is not "maximum." As we have discussed in our Seller Beware  posts, owners who negotiate directly with sophisticated buyers often leave millions on the table—not because the offer was "bad," but because they lacked the competitive leverage to find the best  offer. The Mertz Taggart Perspective Visibility is a double-edged sword. While it is good to be noticed, being "found" by a professional buyer puts you on their home turf. Our role is to provide the counter-balance. We bring institutional-quality execution  to private sellers, ensuring that when a buyer comes to the table with their data, you meet them with a disciplined process, market-validated credibility, and a relentless advocate in your corner. Before you respond to that "exploratory" inquiry, ensure you aren't setting a ceiling on your life's work.

Originally presented as a live webinar by the Mertz Taggart behavioral health team: Kevin Taggart, Peter Thiessen, and Dr. Anke Stugk If you're a behavioral health business owner thinking about selling, whether that's six months from now or three years down the road,  the decisions you make today will directly impact what your business is worth when the time comes. We recently hosted a webinar covering the full lifecycle of a behavioral health transaction: how to prepare, what buyers look for, what the process actually looks like, and where the market stands heading into 2026. This post distills the key takeaways for owners who are weighing their options. Watch the full webinar here: The Market Is More Active Than You Think Let's start with the question everyone wants answered: is now a good time to sell? The short answer is yes…with some nuance. If you've been hearing that the M&A market is down, you're not wrong that deal volume pulled back from the highs of 2021 and 2022. Those were anomaly years, driven in part by anticipated tax changes and a wave of private equity capital entering behavioral health. Transaction volume nearly doubled compared to pre-COVID norms, and when it corrected in 2023 and 2024, it felt like a sharper decline than it actually was. Here's the reality: 2023 and 2024 were still solid years when compared to pre-pandemic baselines of roughly 100 transactions per year. And 2025 has been our busiest year since 2021 on the behavioral health side — we've closed seven transactions with several more in the pipeline. More importantly, private equity interest remains strong. We're seeing a high number of new platform investments, which is a leading indicator for add-on acquisition activity in 2026 and 2027. Every time a PE group makes a platform investment in behavioral health, they're planning to do multiple add-on acquisitions in subsequent years. That creates more buyers competing for well-run businesses like yours. What's happening by subsector Substance use disorder (SUD):  The biggest shift here is that several large strategic buyers — groups that used to account for 15 to 25 transactions a year combined — have been on the sidelines. But new buyers have stepped in to fill much of that gap. Out-of-network businesses remain harder to sell, though there are exceptions for highly specialized programs. Autism and IDD:  After a rough stretch in 2022 and 2023 driven by wage inflation and the high-profile Carta bankruptcy, the ABA market has rebounded. We're seeing competitive processes again for well-run programs, and buyer interest is strong heading into 2026. Outpatient mental health:  This remains one of the most active areas. Psychiatry practices with integrated counseling services are in particularly high demand. We're still seeing double-digit multiples for businesses that check the right boxes — strong financials, good payer mix, and a scalable model. A note on venture capital:  Over the past few years, venture-backed telehealth companies entered behavioral health and were valued like software companies. That growth has slowed considerably. The distinction matters: venture capital tends to invest in pre-profitability growth stories, while private equity invests in EBITDA-positive businesses. If you're running a profitable, well-managed practice, private equity is your buyer universe, and that market is healthy. Getting Your Financial House in Order Buyers will scrutinize your financials going back at least two years, sometimes three. The single most impactful thing you can do to prepare is make sure your books are clean, consistent, and well-organized. Consistency matters more than perfection.  Categorize your revenue and expenses the same way every month, every year. When a buyer or their QoE firm can't easily compare one period to the next because line items keep moving around, it creates questions, and questions slow deals down. Personal expenses are normal; just be transparent.  We see it all the time: owners running personal travel, vehicles, or other expenses through the business. That's fine. We handle these through what's called EBITDA normalization — we add back personal or one-time expenses to show the true profitability of the business. The key is being upfront about them from the start. Develop budgets and forecasts.  Buyers want to see that you have a plan and that you can execute against it. If you forecasted 15% growth and delivered 12%, that's a conversation. If you forecasted 30% and delivered 2%, that's a red flag. During the transaction year especially, your performance against forecast is under a microscope. No last-minute surprises.  This cannot be overstated. If there are pending audits, legal issues, licensing concerns, or accreditation problems, disclose them early. We've seen deals fall apart 60 days before closing because a seller tried to hide an accreditation issue — and it took them another two years to find a buyer after that. These things almost always come out during due diligence. Bringing them forward early lets everyone work through solutions while the deal is still on track. What Drives Valuation, and What Hurts It Understanding what buyers value helps you make better decisions long before you ever go to market. What increases your valuation Diversified payer mix.  The more insurance contracts you have (Blue Cross, Cigna, Humana, Medicaid, Medicare, and others), the less risk a buyer takes on. Heavy reliance on a single payer is one of the most common valuation discounts we see. A strong management team.  Especially if you're not planning to stay long-term, buyers want to know who's going to run the business after you leave. Having a capable number two or three in place, people with experience who are committed to staying, makes a meaningful difference in what a buyer will pay. A scalable model.  Buyers are thinking about growth from the moment they evaluate your business. Can they replicate what you've built in a new market? Do you have the back-office infrastructure (HR, IT, billing) to support expansion? And critically, have you proven it works? If you've successfully opened a second or third location, that gives buyers far more confidence than a theoretical growth plan. Consistent growth.  Steady, demonstrable growth over two to three years is one of the strongest signals you can send. It doesn't have to be dramatic, even modest growth shows a business that's healthy and trending in the right direction. Clean clinical documentation and billing compliance.  Low denial rates and well-maintained clinical notes make due diligence smoother and signal operational maturity to buyers. What raises red flags Declining revenue.  This gets noticed immediately and makes it significantly harder to get a deal across the finish line, especially if the decline happens during the transaction year. Low EBITDA margins.  If your margins are meaningfully below your peers in the same geography and service line, buyers will ask why — and whether fixing it means cutting costs or adding headcount, both of which affect their return. High staff turnover.  This can signal that you're running too lean, which leads to burnout. Buyers know that means they'll need to hire more people post-close, adding expenses they didn't budget for. Customer or referral concentration.  If one referral source or one payer represents a disproportionate share of your revenue, that's a risk factor. Diversifying before you go to market strengthens your position. Unresolved audits.  Whether it's Medicaid, Medicare, or an individual payer audit, open issues create uncertainty. Get them resolved before you're in a transaction if at all possible. Heavy reliance on grant revenue.  Grant-funded revenue is viewed differently than contract or insurance revenue, especially if the grants are new or if the relationship with the granting entity depends entirely on you as the owner. What the M&A Process Actually Looks Like If you've never sold a business before, the process can feel opaque. Here's how it typically works, and why a competitive process matters. Phase 1: Preparation (Month 1) Before anything goes to market, we spend the first month building your Confidential Information Memorandum (SIM), essentially a detailed profile of your business that tells your story to potential buyers. This involves multiple rounds of review and editing to make sure the numbers and narrative are right. Phase 2: Market outreach (Months 2-3) We send a one-page teaser with no identifying information to our buyer network, which is typically around 10,000 contacts. Interested buyers sign an NDA and receive the full SIM. They review it, ask questions, and submit what's called an Indication of Interest (IOI) — their initial view of what the business is worth and how they'd structure a deal. Phase 3: Management meetings and LOIs (Months 3-5) From the IOI pool, which might be 20 or more,  we work with you to narrow it down to five to eight groups that are the best fit. These buyers visit in person, spend a half-day to a full day with you, and then submit a formal Letter of Intent (LOI) with their final offer terms. This is where the competitive process pays off. On a recent deal, we received 23 offers. The lowest offer was 40% of the highest. Most sellers who try to negotiate on their own or work with a single buyer would never know whether they're leaving money on the table. Competition creates pressure that benefits sellers, buyers who really want a well-run business will pay above market to win the process. Phase 4: Due diligence and close (Months 5-9) Once you select a buyer and sign the LOI, they begin due diligence on an exclusive basis. This is the most intensive phase, and it's where organization and responsiveness make the difference between a smooth close and a drawn-out one. Quality of earnings (QoE):  The buyer hires a third-party firm to verify your financials. They'll examine every transaction, every billing record, every adjustment. We prepare our clients for QoE questions before we ever go to market, so by the time the buyer's team digs in, there are rarely surprises. Clinical chart review:  Typically 50 to 200 charts depending on business size. This isn't about finding fault, it's about understanding what the buyer is actually purchasing and where there's room for improvement. We've seen cases where this review actually helped our clients identify and fix documentation gaps before they became compliance issues. Legal due diligence:  The legal request list is often the most intimidating part — 200-plus questions covering everything from contracts to regulatory compliance. But here's what we tell our clients: "N/A" is a perfectly valid answer. A large portion of those questions simply won't apply to your business. Asset verification and reps & warranties insurance:  Toward the end, there's typically a supplemental process to catalog assets and secure insurance that protects both parties post-close. The key to getting through due diligence efficiently is being organized from the start. Consistent file naming, timely responses, and a team that's aligned on the process. Delays in providing information can slow the deal and, in some cases, erode buyer confidence. The professional team around you You're not doing this alone. In addition to your M&A advisor, you'll work with an attorney who handles the purchase agreement, reps and warranties, and legal risk protection, and an accountant who works through quality of earnings responses, working capital adjustments, and financial due diligence. Your advisor coordinates across all parties to keep things moving. Is Now the Right Time? There's no universal answer, but here are a few things worth considering. If your business is growing, your financials are clean, and you have a strong team in place, you're in a position of strength. Market conditions in 2026 look favorable — buyer interest is high, new platform investments are creating more acquirers, and deal volume is trending upward. If you're not quite ready, that's okay too. Many of the owners we work with spend a year or more getting prepared. Some we've known for years before the timing was right. The important thing is to start the conversation early enough that you're making strategic decisions about payer contracts, staffing, documentation, and growth, with an eventual exit in mind. Whether you're ready to go to market or just starting to think about what your business might be worth, we're always happy to have a conversation. Download this article as a guide: Mertz Taggart is a healthcare-focused M&A advisory firm representing sellers of behavioral health and home-based care businesses. To learn more or request a confidential valuation, reach out to our behavioral health experts via email at info@mertztaggart.com

Behavioral Health M&A Executive Summary: A Year of Resilience and Reality Checks Despite economic headwinds and a "bumpy ride" for many operators, 2025 concluded with a slight uptick in overall deal volume. The year ended with 180 total transactions , a modest increase from the 176 recorded in 2024. Q4 2025 saw approximately 39 announced transactions  (30 M&A and 9 Growth deals). While deal volume has cooled from the frenetic pace of Q1 2025, the market remains active, driven largely by the continued dominance of the mental health sub-sector. The Macro View: Regulation & Distress Several major currents shaped 2025: Lender Caution & The "Reimbursement Audit":  Deals in 2025 took longer to close as lenders tapped the brakes to conduct forensic-level diligence on insurance receivables. Following the cash flow disruptions caused by the Change Healthcare cyberattack earlier in 2024 and ongoing Medicaid uncertainty, credit committees are  scrutinizing revenue numbers more closely. Lenders are now slowing down processes to ensure —and effectively insure  against risk—that target companies have robust "denials management" processes and verifiable collectability. They are demanding proof that revenue cycles are resilient before releasing funds, forcing sellers to open their books for longer, more intrusive audits.  “We’re seeing many of the larger providers having reimbursement challenges, which isn’t helping ease the lender’s concerns.   Fortunately, it seems like some of these groups are putting these challenges behind them heading into 2026,” Taggart remarked.  Regulatory Scrutiny on "Roll-Ups":  Federal regulators (FTC/DOJ) have intensified their focus on private equity "roll-up" strategies, particularly in healthcare. This has extended deal timelines and forced buyers to be more cautious about local market concentration. Per Taggart, “We’ve had several deals in 2025 that the private equity backed acquirer didn’t want the deal announced, in order to not draw additional attention to the acquisition”.  The "Flight to Quality":  We are witnessing a bifurcation in the market. Premium assets with strong clinical outcomes and strong management teams are still commanding high multiples. Conversely, "distressed deals" are becoming common for operators who over-leveraged during the cheap-money era or failed to integrate rapid acquisitions. Mental Health M&A The Clear Leader Mental health continues to be the engine of the behavioral health M&A market. The sector outperformed all others in Q4 with 27 transactions , cementing its status as the most active sub-sector of 2025. For the full year, mental health racked up 111 transactions , significantly outpacing Addiction Treatment (33) and I/DD/Autism (36). Notable Q4 Transactions Consolidation in the pediatric and tech-enabled space was a major theme in the final quarter: Hazel Health's "Double Play":  In a major consolidation of the youth mental health market, Hazel Health acquired both Little Otter  (pediatric therapy/psychiatry) and BeMe Health  (teen mobile mental health) in October. The move, coupled with the appointment of Iyah Romm  (Cityblock founder) as CEO, signals Hazel's aggressive push to dominate the school-based and pediatric telehealth space. Talkspace  acquired Wisdo Health , an AI-powered social health platform, to integrate peer support and combat loneliness among its users. Handspring Health  acquired Joon Care , further consolidating the pediatric mental health market. Oak Integrated Care  completed two strategic mergers in December, acquiring both the Association for the Advancement of Mental Health  and the Association of Schools and Agencies of Public Health . Venture Capital & Growth Equity Mental health also continues to lead in venture capital interest with 34 growth deals  in 2025. Investors remain willing to deploy capital here, but they are becoming highly selective. Radial  raised a massive $50 million Series A  round led by General Catalyst . The funding is earmarked to expand its "brain medicine" network, focusing on interventional psychiatry (TMS, Spravato) and technology infrastructure. Nest Health  secured $22.5 million  in growth funding from Amboy Street Ventures  to scale its in-home, whole-family care model. Market Watch: The "Growth at All Costs" Reckoning Despite the activity, cracks are forming in some rapid-growth models. As Taggart predicted, several high-profile platforms faced significant operational and financial challenges in late 2025. Ellie Mental Health: The Franchise Fallacy? Once a darling of the franchise model, Ellie Mental Health  faced substantial headwinds in late 2025. Following rapid expansion, the company's auditors expressed "substantial doubt" regarding its ability to continue as a going concern in its most recent franchise disclosure documents. Franchisees have filed lawsuits alleging the company failed to provide promised backend billing support, leading to revenue cycle failures at the clinic level. In a move to stabilize cash flow, the company sold its corporate "test kitchen" clinics in Minnesota to Nystrom & Associates .  Omni Health Services: The Mid-Market Squeeze In one of the largest provider failures of the quarter, Omni Health Services , a major mental health provider with 18 clinics across Pennsylvania and New Jersey, filed for Chapter 11 bankruptcy  on November 25, 2025. The filing highlights the intense pressure on mid-sized groups that may be over-leveraged or struggling with rising labor costs and reimbursement friction. Talkspace: The Profitability Paradox   Even the public markets are signaling caution. Despite Talkspace  reporting profitability, the company's stock struggled to gain traction in Q4. A one-off $1.2 million loss  in Q3 2025 challenged the company's "bullish narrative," showing that investors are now scrutinizing margins far more closely than top-line revenue growth. Addiction Treatment M&A A Historic Low The addiction treatment sector struggled to find momentum, recording just seven transactions  in Q4. The full-year picture is equally stark. Addiction treatment saw the lowest total deal volume in the last six years . Venture capital has also dried up: there were only four VC deals in the sector for the entire year, with zero  occurring in the last two quarters. Notable Q4 Transactions Despite the slowdown, a few significant strategic moves and consolidations occurred: OneFifteen Closes:  In a sign of the times, OneFifteen , the high-tech substance use treatment center backed by Verily (Google)  and local health systems, closed its doors in Summer 2025. This underscores that even well-funded, tech-forward models are not immune to the sector's economic realities. BriteLife Recovery  acquired Summit Behavioral Health , a New Jersey-based provider, in a strategic expansion. River Cities Capital  made a platform investment in The Blanchard Institute , a North Carolina-based outpatient treatment provider. Autism and I/DD M&A Quiet Stability The Intellectual and Developmental Disabilities (I/DD) and Autism sector saw steady activity with 8 deals  reported in Q4. Growth capital has been notably scarce in this space. There were only two growth deals for the entire year , with one occurring in Q1 and the other in Q4. Notable Q4 Transactions Coyne & Associates  acquired Behavioral Health Works (BHW) , a major deal that reshapes the landscape for ABA providers in California. Brightli & Centerstone Merger:   Brightli  completed a mega-merger with Centerstone , creating one of the largest nonprofit behavioral health providers in the U.S. with over $1 billion  in combined revenue and 10,000 employees. Beacon Behavioral  remained acquisitive, completing two acquisitions in Q4 2025 to cap off an active year. VersiCare Group  expanded its footprint in Michigan with the acquisition of CHS Group, LLC . Outlook: 2026 As we move into 2026, the market is shifting from "growth at any price" to a focus on clinical quality, sustainable margins, and operational integration. "We are seeing a flight to quality," Taggart says. " We expect 2026 to be a year where solid, profitable companies command a premium , while distressed assets continue to come to market and should be an opportunity for buyers to purchase certain assets at a more attractive entrance point."   If you are interested in downloading the PDF version of the Q4 2025 Behavioral Health M&A Report, click the download link below:

Executive Summary: The Hospice M&A Pivot Record Volume: Q4 2025 recorded 16 hospice transactions, the highest quarterly volume since 2021. Platform Catalysts: Recent premium private equity platform transactions have reset valuation benchmarks and established new precedent multiples. Arbitrage Opportunity: Clear market data allows private equity and other financial sponsors to bid aggressively and still capture a healthy multiple expansion through a combination of strategic M&A and De novos. Strategic Resurgence: A more positive interest rate environment, and a narrowing valuation gap have shifted the market pendulum back toward sellers. In the world of healthcare M&A, the last three years have felt like navigating through a heavy fog. Between rising interest rates and a persistent valuation gap, many owners chose to drop anchor and wait for clearer conditions. But as we move into 2026, that fog has officially lifted. The fourth quarter of 2025 recorded 16 hospice transactions—the strongest quarter we’ve seen in four years. As we noted in our Q3 2025 Home-Based Care M&A Report, the industry was already showing signs of a return to sanity, but this Q4 surge has officially signaled a broader market resurgence. The Power of the "Known Multiple" and Precedent Transactions The market doesn't operate in a vacuum; it needs a catalyst. A series of recent high-profile platform transactions over the past 6 months have fundamentally reset the industry’s compass. While exact deal terms are often confidential, the multiples on these transactions are well-known within the private equity (PE) and buyer community. For each of these transactions, there were dozens of financial buyers that didn’t win the deal—and they are now using those precedent multiples to help inform their current bidding strategies. Multiple Expansion Playbook This new visibility has given private equity firms two specific incentives to jump back into the hospice space: Arbitrage Visibility: PE firms now have a clear arbitrage map. They know that if they acquire regional agencies at current market rates and fold them into a sophisticated platform, they have a clear path to the frothy exit multiples proven by the previously mentioned recent platform trades. The Add-On Engine: Once a PE group acquires a platform, they are often eager to sink their teeth into bolt-on acquisitions at lower “non-platform” multiples to help them both scale and lower their overall acquisition multiple. This is fueling a strong appetite for agencies in the $5M–$20M revenue range that provide geographic density. The Tide is Turning: Interest Rates and Valuations As Managing Partner Cory Mertz recently shared with Jim Parker at Hospice News: "The past few years’ slump has been driven by a valuation gap where sellers hung on to 2021 expectations while buyers got more conservative. Since then, the gap has closed... and buyers have gotten more aggressive." Fed Chair Jerome Powell announced three small rate cuts in 2025. With a consensus that we will see another 2-3 rate cuts later this year, capital is becoming less expensive. For a buyer, even a small drop in rates changes the math, allowing them to stretch further on price for a high-quality, compliant asset. Navigating the 2026 Horizon The momentum from Q4 2025 is expected to carry directly into 2026, signaling a definitive shift in the market's direction. While sellers have moved past the 2021 "valuation hangover" to more realistic expectations, the real catalyst has been the buyers, who are once again eager to put capital to work. "We are bullish on hospice M&A after a four-year slump," says Mertz. “However, the bar for program integrity has never been higher. Buyers are prioritizing agencies with clean clinical records and robust documentation, especially in 'hotspot' states under enhanced CMS oversight.” For owners who have maintained a steady course and built clean, compliant, and scalable agencies, the market conditions have finally aligned. The slack tide has passed, and the pendulum has officially swung in your favor.

As 2025 came to a close, home-based care M&A volume rebounded from the relative lows of 2024, with a total of 105 transactions closed during the year, 21 more than the year prior. This brings the industry transaction volume closer to the levels seen in 2022 and 2023 , which saw 110 and 111 deals, respectively.  Recapping the year, Cory Mertz, managing partner at Mertz Taggart, noted, “2025 has been a bounce-back year for deal volume. When the Fed made its first rate cut at the beginning of Q3 2024 , we started to see an uptick in activity, which led to a strong first quarter to start the year. There were some new curveballs throughout 2025 with macroeconomic uncertainty, a new administration eager to shake things up, regulatory concerns regarding the CMS home health rule and increased scrutiny of hospice compliance, but M&A activity remained relatively strong as the Fed continued to cut rates and buyers saw an opportunity to deploy the dry powder they’ve been holding on to.” The Federal Reserve cut rates three times in 2024 by 100 basis points (1%) and made an additional three cuts in 2025 by 75 basis points (0.75%). As interest rates come down, private equity firms and their portfolio companies, which make up the bulk of home-based care deal volume, have an easier time securing palatable financing for transactions. Home-Based Care M&A Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. Q4 capped off the year with 26 completed transactions, matching the number of deals closed in Q2 of this year and exceeding Q4 2024 by eight. The quarter saw 14 sponsor-backed strategic deals, five private equity platform deals and one public company deal, among other transactions. Unlike the previous eight quarters, non-medical home care did not lead the pack in transactions closed but was instead dethroned by hospice, which saw a record 16 closed transactions, the highest number of deals seen in a single quarter since the COVID-fueled M&A frenzy in 2021. While looking forward to 2026, Cory Mertz summarized his outlook by saying, “We expect to see activity continue to increase into the next year. Private equity funds have ample dry powder to invest, and there are many aging portfolio companies that we’ll likely see go to market in the coming months. There’s also a tendency for portfolio companies to close a few quick acquisitions to boost EBITDA right before kicking off a sale process, so we’re also expecting some additional add-on activity as some of these four, five and six-year-old serial acquirers look to exit soon.” Home Health M&A   Home health M&A activity slowed with only three deals closed during the quarter, matching the number of transactions in Q4 of the year prior. All three transactions were add-ons by sponsor-backed portfolio companies.  VitalCaring Group , a portfolio company of The Vistria Group and Nautic Partners, acquired the home health operations and some of the hospice and palliative care operations of Traditions Health , a Franklin, Tennessee-based provider with patients in 18 states. The deal adds 35 home health, 37 hospice and three palliative care locations to the company’s operations in Oklahoma, Texas, Kansas and Missouri. The fourth quarter also saw CMS release its much-anticipated finalized 2026 home health payment rule in November, which includes a 1.3% aggregate reduction from the prior year, estimated to be about $220 million in payments. Cory Mertz noted, “While the final rule still represents a cut from 2025’s rates, it’s much lower than the 6.4% originally proposed by CMS. We’re seeing some buyers who were previously hesitant to take a risk with all the uncertainty start to get more comfortable looking at home health assets again.” Hospice M&A Hospice M&A activity hit a record high, with 16 total transactions closed during the quarter, the highest seen since Q4 2021. These deals include 10 add-ons from sponsor-backed strategics, two closed private equity platforms and two acquisitions from strategics. The two closed platforms were Legacy Hospice , a hospice provider with locations in Alabama, Arkansas, Mississippi, Missouri and Tennessee, which was acquired by Bain Capital Double Impact , and Agape Care Group , a hospice and palliative care provider for over 5,700 patients in 10 states, which was bought by Linden Capital Partners . Among the add-on deals, the most notable was Traditions Health’s  sale of its hospice and palliative care business to The Care Team , which acquired Traditions’ assets in Illinois, Indiana, Ohio and Virginia, LifeCare Home Health Family , which bought the Georgia operations, and Mission Healthcare , which acquired the assets in California and Oregon. LifeCare Home Health Family  made another acquisition during the quarter when it purchased Infinity   Hospice Care , a family-owned hospice provider serving Nevada and Arizona. And Uplift Hospice closed its third transaction of the year when it acquired Grace Hospice & Palliative Care and Grace Medical Group,  a Tucson-based provider, increasing the company’s average daily census and density in Arizona.  Despite strong demand, hospice transactions still suffer from fears stemming from Medicare clawback risk, especially in enhanced oversight states. Ohio and Georgia recently joined California, Arizona, Nevada and Texas on the enhanced oversight state list, bringing the tally to six so far. Mertz Taggart continues to recommend that providers considering a transaction in the next 24-to-36 months invest in a billing and compliance audit. Cory Mertz noted, “We strongly recommend that all hospice operators undergo a pre-market audit. It’s especially important to quantify clawback risk if you operate within any of those six enhanced oversight states.” Home Care M&A Non-medical home care, which typically contributes the largest share to overall home-based care M&A volume, saw another down quarter. At 11 transactions – including three platform deals, four sponsor-backed add-ons and one public company deal – Q4 represents the slowest quarter of the year, but is still in-line with the activity seen last year. Among the transactions closed this quarter was Addus Homecare’s  acquisition of Del Cielo Home Care Services , an Alice, Texas-based home care provider with 700 clients and annualized revenues of $12.5 million, for a purchase price of $7.4 million. Amivie , a portfolio company of Martis Capital, closed the acquisitions of Atrio Home Health , a Minnesota-based provider of in-home care services, and Rent a Daughter , a Beachwood, Ohio-based provider of senior care services. The platform deals closed this quarter include JL Capital Group’s  acquisition of Thema Home Care , a Downingtown, Pennsylvania-based provider of non-skilled home care, and NexPhase Capital’s  acquisition of Always Best Care , a leading franchisor of in-home senior care services. Although non-medical home care saw a relative low in M&A activity this quarter, Cory Mertz remains optimistic about its outlook, noting, “There are a number of highly acquisitive sponsor-backed portfolio companies in the space that are gearing up to exit in 2026, which means that they’ll be looking to scoop up a few more companies onto their platform to add additional cash flow before going to market. We’re also seeing elevated interest in private duty home care from strategic acquirers who are looking to diversify their payer mix.” If you are interested, you can also download the .PDF version of the Q4 2025 Home-Based Care M&A Report via the following link:

Mertz Taggart follows the publicly traded home-based care companies and reports on their earnings calls each quarter. As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively. Historically seen as the “ultimate consolidators”, the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A. Addus Homecare (Nasdaq: ADUS) Highlights Addus posted revenue of $362.3 million for the quarter, up 25% from Q3 2024. Growth was led by the Personal Care segment, which represents 76% of the business and saw a 6.6% same-store revenue increase and a 28% overall revenue increase year-over-year, driven by strong hiring and patient volumes. The segment has also seen favorable reimbursement support in many states, including rate increases in Illinois and Texas, the company’s two largest markets. The company’s Hospice segment, representing 19% of Q3 2025 revenue, increased same-store revenue by 19% over the prior year quarter, supported by a 9.5% and 6.5% increase in same-store average daily census and admissions, respectively. The Home Health segment, representing 5% of the business, saw a 2.8% decline in year-over-year same-store revenue, but remains a key clinical partner to the company’s other operating segments. Adjusted EBITDA for the quarter came in at $45.1 million, a 31.6% increase over the prior year quarter, reflecting continued operational excellence and cost management. Heather Dixon was elevated to President and COO, replacing Brad Bickham who has taken an advisory role in anticipation of his retirement in March 2026. Key Financial Figures M&A Activity On October 1, Addus announced the acquisition of the personal care operations of Del Cielo Home Care Services, increasing the company’s presence in the South Texas personal care market. CEO Dirk Allison commented, “Our team is excited about this acquisition, and I want to officially welcome the Del Cielo Home Care team to the Addus family. Going forward, our development team will continue to focus on both clinical and nonclinical acquisition opportunities to increase both the density and geographic coverage to our current states. While the proposed home health rule will most likely continue to delay any meaningful home health opportunities, we will be evaluating smaller clinical transactions along with personal care service transactions that fit our strategy.” The company also completed the acquisition of Helping Hands Home Care Services, a personal care, home health and hospice provider serving the Western Pennsylvania market, on August 1. Guidance Management expects a gross margin benefit of 40 basis points year-over-year and 20 basis points sequentially from increased hospice reimbursement and lower unemployment taxes in Q4 2025. Aveanna Healthcare (Nasdaq: AVAH) Highlights Aveanna reported Q3 2025 revenue of $621.9 million, an increase of 22.2% over the prior year quarter. Growth was largely driven by the Private Duty Services segment, which represents 83% of the business and grew 25.6% year-over-year, and the Home Health & Hospice segment, which is responsible for 10% of the company’s quarterly revenue and grew 15.3%. The Private Duty Services unit’s growth was driven primarily by a 12.9% volume increase over the prior year quarter to approximately 11.8 million hours of care and a 12.7% increase in revenue per hour to $43.51 as a result of preferred payor volume growth and rate enhancements. Adjusted EBITDA surged 67.5% year-over-year to $80.1 million due to growing volumes, an improved rate environment and the company’s cost savings initiatives. Aveanna continues to pursue its preferred payor strategy in order to secure more value-based agreements and enhanced reimbursement rates, which has resulted in five additional preferred payor agreements this quarter and improved caregiver hiring and retention. Preferred payor agreements now account for approximately 56% of total Private Duty Services MCO volumes, inclusive of the company’s recent acquisition of Thrive Skilled Pediatric Care. Key Financial Figures M&A Activity CEO Jeff Shaner highlighted the successes of the recent Thrive acquisition and said, “I’d expect us to do more Thrive-like acquisitions in 2026 to continue to build out more Medicaid states.” The company is still on track to complete the integration by the end of the year. Management also shared continued improvements to the company’s liquidity position as a result of increased free cash flow generation and debt refinancing, which allows Aveanna to continue to pay down debt and execute on its M&A strategy. Guidance Management has once again raised its full-year 2025 outlook based on the strength of Q3 2025 and year-to-date results. Full-year 2025 revenue and adjusted EBITDA is expected to be above $2.375 billion and $300 million, respectively. CEO Jeff Shaner reiterated the company’s commitment to their five primary strategic initiatives: enhancing partnerships with preferred and government payors, identifying cost efficiencies, modernizing the Medical Solutions unit, managing capital structure and cash collection and engaging leaders and employees in delivering the Aveanna mission. The Pennant Group, Inc. (Nasdaq: PNTG) Highlights Pennant Group reported total revenues of $229 million for Q3 2025, a 26.8% or $48.4 million increase year-over-year, driven by growth across all three of its operating segments, including a 21.7% increase in Hospice revenue, a 33.3% increase in Home Health revenue, including other Home Care revenue, and a 23.2% increase in Senior Living revenue over the prior year quarter. The Home Health segment, representing 42% of the business, saw increases of 36.2% in total admissions, 7% in same-store admissions and 2.9% in revenue per episode year-over-year. The Hospice segment, representing 33% of Q3 revenue, also saw growth with average daily census, admissions, same-store average daily census and average revenue per day increasing 17.4%, 16.6%, 6.1% and 3.3% year-over-year, respectively. The company amended its existing credit facility, adding a $100 million term loan to free up additional revolver capacity and provide dry powder to deploy strategically. Key Financial Figures M&A Activity In September, Pennant Group closed the acquisition of Healing Hearts Home Health and Healing Hearts Outpatient Therapy, a single-site agency based in Gilette, Wyoming. On October 1, the company closed its $146.5 million acquisition of 54 divested assets from UnitedHealth Group and Amedisys, adding $189.3 million of combined trailing 12-month revenue of which 70% is related to Home Health while the remaining 30% is attributed to Hospice. The acquired assets are located in Tennessee, Georgia and Alabama, all of which are certificate of need states. In November, Pennant Group acquired Twin Rivers Senior Living, a 55-bed assisted living community in Lewiston, Idaho, and the real estate of Honey Creek Heights Senior Living, a West Allis, Wisconsin-based assisted living community with 135 beds, after previously acquiring their operations at the start of the year. CEO Brent Guerisoli commented, “These acquisitions reflect our disciplined growth strategy and our dedication to delivering exceptional care.” Management confirmed that the company will continue to evaluate M&A opportunities in spite of their heavy integration load, with CEO Brent Guerisoli noting, “Market forces and our own reputation as a quality buyer continue to drive a very robust pipeline of acquisition opportunities in all of our segments.” Guidance Management anticipates to close out 2025 with full-year revenue between $911.4 million and $948.6 million, while adjusted EBITDA is expected to land between $70.9 million to $73.8 million. Enhabit Home Health & Hospice (Nasdaq: EHAB) Highlights Enhabit reported quarterly revenues of $263.6 million, a 3.9% increase from the prior year quarter. Growth was primarily driven by its Hospice segment, which grew 20% year-over-year. Home Health revenue fell 0.2% from the prior year quarter but saw 4.3% admissions growth when normalizing for closed branches and a census increase of 3.7%. Fee-for-service Medicare census has continued to stabilize, with the company reporting a 1.4% year-over-year decrease, which is a marked improvement from the 14.1% decline seen in Q3 2024. Non-Medicare admissions, in contrast, rose 10.4% year-over-year and non-Medicare revenue per visit grew 2.8% as a result of continued payor mix management. The Hospice segment, representing 24% of Q3 revenue, has seen its seventh straight quarter of sequential census growth. Normalized for closed branches, admissions grew 3% over the prior year quarter while census grew 12.6%. The company has also added two de novo locations for a total of six newly opened locations year-to-date and are on pace for a total of 10 locations by year-end. The company continues to focus on improving its financial health. Enhabit has been actively paying down debt with its free cash flow, reducing its leverage ratio to 3.9x from 5.4x in Q4 2023. This has lowered annual cash interest expense by approximately $19 million since Q4 2023. Enhabit has grown its direct sales team by 21 or 11% year-over-year in order to unlock additional referral sources. The company reduced its home office expenses by $2.3 million sequentially, landing at 9.1% of revenue compared to 9.9% of revenue in the prior quarter as part of its cost savings initiatives. Key Financial Figures M&A Activity Management’s current focus is on deleveraging the balance sheet and have indicated that they will not be prioritizing M&A until they’ve succeeded in lowering their leverage ratio. As of quarter-end, the company has reduced its leverage ratio to 4.3x from 5.1x in Q2 2024. Guidance Management updated its 2025 full-year guidance, expecting revenue to land between $1.058 billion and $1.063 billion, and adjusted EBITDA is expected to be in the range of $106 million to $109 million. Full-year 2025 adjusted free cash flow is expected to be between $53 million and $61 million. Management reaffirmed its commitment to strategies designed to mitigate pricing headwinds next year as a result of the 2026 CMS Home Health proposed rule. BrightSpring Health Services, Inc. (NASDAQ: BTSG) Highlights BrightSpring posted quarterly revenues of $3.3 billion, a 28% jump from the prior year quarter, and adjusted EBITDA of $160 million, representing a 31% year-over-year increase. Growth was largely driven by the Pharmacy Solutions unit, which grew revenue 31% year-over-year and represents 89% of the business. The segment’s adjusted EBITDA surged 42% over the prior year quarter and saw a total pharmacy script volume of $10.8 million. The Provider Services segment grew revenue and adjusted EBITDA by 9% and 16% year-over-year, respectively, driven by strong growth in the segment’s Home Health, Hospice and Primary Care businesses which collectively represent 50% of the segment’s revenue. The company’s overall adjusted EBITDA margin grew 30 basis points both year-over-year and sequentially to 4.8%, driven by disciplined management of the company’s operating expenses and a greater contribution from generics in the Pharmacy Solutions unit. Key Financial Figures M&A Activity The company pushed back the anticipated closing of its Community Living divesture to Q1 2026 from Q4 2025. BrightSpring expects to receive $715 million in net cash proceeds from the $835 million purchase price. The transaction remains subject to review by the Federal Trade Commission. Management reaffirmed its expectation to close both the Amedisys and LHC branch acquisitions later this quarter and indicated that their financial impacts will be immaterial to their full-year 2025 results. The company continues to focus its M&A efforts on tuck-in acquisitions, with CEO Jon Rousseau commenting, “Our M&A strategy will remain primarily focused on accretive tuck-ins in target geographies.” He indicated that BrightSpring will be targeting acquisitions in the $3 million to $10 million EBITDA range. Guidance Management revised their full-year 2025 guidance upwards as a result of their third quarter performance and higher expectations for Q4 2025. Adjusted EBITDA is expected to land between $605 million and $615 million, excluding any financial impact from the company’s soon-to-be divested Community Living segment. Management continues to expect an additional 16 to 18 limited distribution drug launches over the next 12 to 18 months. Option Care Health, Inc. (NASDAQ: OPCH) Highlights Option Care posted quarterly revenues of $1.5 billion, representing a 12.2% increase over the prior year quarter. Growth was underpinned by mid-teens and low double-digit growth year-over-year in their acute and chronic portfolios, respectively. The adoption of Stelara biosimilars, which carry a lower reference price and reimbursement rate, negatively impacted the company’s chronic portfolio growth by 380 basis points. Gross profit grew 6.3% year-over-year to $272.9 million, but saw a margin decline due to the aforementioned adoption of Stelara biosimilars and the impact from lower margin orphan therapies. Despite the margin pressure, Option Care reported adjusted EBITDA of $119.5 million, which represents a 3.4% increase over the prior year period as a result of strong revenue growth and disciplined cost management. After refinancing and extending the maturity of their term loan to reduce borrowing costs and add an additional $50 million in liquidity, the company’s leverage ratio stands at 1.9x. The company launched three new enhanced applications to drive efficiencies in the patient onboarding process and staffing utilization. Meenal Sethna joined Option Care as the company’s CFO, filling in for Mike Shapiro who recently stepped down into a strategic advisory role. Key Financial Figures M&A Activity Option Care continues its integration efforts from its acquisition of Intramed Plus, an infusion services provider serving South Carolina, earlier in the year. Newly-appointed CFO Meenal Sethna reaffirmed management’s intentions to continue evaluating potential tuck-in acquisitions, saying, “We remain active in assessing M&A opportunities, focusing on strategic tuck-ins and near adjacency opportunities.” Guidance Management updated its guidance for full-year 2025 and expects to generate revenue of $5.6 billion to $5.65 billion and adjusted EBITDA of $468 million to $473 million. Option Care reaffirmed its expectation to generate over $320 million in cash flow from operations. The company, consistent with comments from prior earnings releases, does not expect potential tariffs, most favored nation pricing and other similar policy changes to have a material impact on full-year 2025 earnings. To download the .pdf version of this report, click below. Disclaimer The information contained in this document is provided for informational and marketing purposes only by Mertz Taggart and is not intended as investment, financial, legal, tax, or other professional advice. The content has been compiled using publicly available sources, including but not limited to SEC filings accessed via EDGAR, Seeking Alpha, and Yahoo Finance. While we strive to ensure the accuracy and reliability of the information presented, Mertz Taggart does not warrant or guarantee the completeness, timeliness, or accuracy of the information, nor shall it be held liable for any errors or omissions. This document does not constitute a solicitation, recommendation, or offer to buy or sell any securities or other financial instruments. Any views or opinions expressed are those of the author(s) and do not necessarily reflect the views of Mertz Taggart or its affiliates. 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Behavioral Health M&A Reading recent headlines, one might be inclined to think M&A activity across behavioral healthcare is in the midst of a slowdown. But while deal volume has receded from the highs of 2021 and 2022, behavioral healthcare is on track for a total number of mergers and acquisitions that still outpaces historic norms. In the third quarter, 40 deals were reported—a figure that puts 2025 on track for about 167 transactions by year’s end. For comparison, behavioral healthcare was seeing roughly 100 deals per year completed before the COVID-19 pandemic. “And a lot of deals lag, too,” added Mertz Taggart managing partner Kevin Taggart. “It could be three or four months before some transactions are announced publicly. When all is said and done, I would anticipate a final total for 2025 that ends up higher than the current projected total.” While tighter lending environments and negative headlines—including Acadia Healthcare announcing the closure of multiple facilities and layoffs of about 400 employees   and several bankruptcies announced by other provider organizations within the industry—buyers’ interest has not waned. Mertz Taggart closed three deals in Q3, and has closed seven behavioral transactions to date for 2025, with more expected by year’s end. “Deals are still getting done with attractive multiples for highly desirable companies,” Taggart said. “They are getting a little harder to complete. We’ve had a few this year where the first buyer fell through, so we’ve had to move on to the second one.  “Private equity is still reaching out to us weekly looking for behavioral health opportunities,” he added. Of the 40 behavioral healthcare transactions announced in Q3, 10 were growth deals, continuing a trend that has emerged post-COVID. A threshold for such investments could be looming on the horizon, though, Taggart cautioned. “We’re going to see some of these groups struggle to get additional investment because of their sky-high valuation,” he said. “They’re valued more like tech companies, and you still need people to operate them. But some are starting to do acquisitions as well, so we’ll see. “I do think the growth capital market will slow because the brick-and-mortar groups can use technology as well.” Overall, Taggart said, the firm expects a strong finish to 2025 and is bullish on 2026. Addiction Treatment M&A A total of eight transactions involving addiction treatment providers were announced in Q3, bringing the year-to-date total to 27.  Prior to 2021, addiction treatment was a stalwart of deal volume. Activity has decreased in recent years, though, as organizations that could be counted on for making deals, such as Baymark, Behavioral Health Group, and to a lesser degree, Summit Behavioral Health, Pinnacle Behavioral Health, and others have slowed or stopped their growth through acquisition.  “There are new buyers coming into the space. That’s taken a little while to ramp up,” Taggart said. “Overall, I’m still bullish, although out-of-network is still tough.” To that point, Taggart noted a recent report   that Pyramid Healthcare and Advanced Recovery Systems are preparing for sales. “These larger transactions, if and when they do happen and especially if they happen at strong multiples, will prompt more providers to do more deals,” he said. Taggart said he expects to see the addiction treatment market begin to open up again in 2026. Notable deals involving addiction treatment provider organizations in Q3 included the following: Mertz Taggart advised St. Joseph’s Recovery Center  in West Virginia on a platform transaction to an East Coast-based private equity group. The Ridge Ohio , a rehabilitation services provider with two facilities in Ohio, received $18 million in investments from Prospect Capital Corporation and Thesis Capital Partners. Bradford Health Services  acquired three Texas-based programs: The Last Resort Recovery Center , Crestone Wellness and  The Chapter House , making them one of more active buyers in the SUD market. Luxury SUD treatment provider The Hope House , a portfolio company of Chicago-based private equity firm Traverse Pointe Partners, acquired Winward Way Recovery  in Newport Beach, California. Crossroads Treatment Centers  expanded its footprint in Pennsylvania with a deal to acquire Family Health Services , an outpatient addiction treatment provider with two facilities in the greater Pittsburgh region. Louisiana-based Nova Vital Recovery  announced a statewide expansion in September with its acquisition of Magnolia Recovery Services . The deal complements Nova Vital’s recent addition of intensive outpatient programs in Shreveport and Monroe. Mental Health M&A The mental health subsector has continued its post-COVID acceleration in transactions, with 25 deals announced in Q3. Private equity firms have shown interest in mental healthcare providers, although buyers have gotten more discerning, Taggart said. “They’re looking for more medical practices versus strictly counseling-based providers,” he said. “Psychiatry practices are well-positioned going into 2026. Offering ancillary services, such as transcranial magnetic stimulation and Spravato (esketamine), is also helpful for margin expansion as well.” Among the most notable deals reported in the third quarter, The Carlyle Group  is acquiring Psychiatric Medical Care  in a $400 million, private equity-backed deal, according to a media report . Mertz Taggart represented Modern Recovery/Avery’s House , a teen mental health program based in Arizona & Idaho. All 10 growth funding deals reported in Q3 involved mental healthcare providers. This included value-based care provider AbsoluteCare  raising $135 million in equity funding to expand into new markets. Other growth deals announced: Diana Health  announced it raised $55.4 million in a Series C funding round led by HealthQuest Capital and several previous investors. Digital eating disorder treatment provider Equip Health  raised $46.6 million, according to public documents filed with the SEC. Another telehealth provider, the youth-focused startup Cartwheel Care , disclosed that it has raised $35 million of a $44 million funding round, led by an undisclosed investor. Other transactions involving mental healthcare providers in Q3 included: Rosecrance Behavioral Health , a not-for-profit therapy and SUD treatment provider, acquired Ascend CHC  in a move that will allow Rosecrance to add eating disorder care and specialty sports and performance counseling services. Cerebral , a telehealth-based provider, acquired Resilience Lab  in a private equity-backed strategic deal. Uwill , an international provider of mental health and wellness solutions, acquired tbh, which provides support for students and young adults facing basic needs insecurity and mental health challenges. Nystrom & Associates acquired the Minnesota-based operations of Ellie Mental Health , creating a combined organization that operates 84 locations across five states. Autism and Intellectual/Developmental Disabilities M&A Within the autism and intellectual/developmental disabilities (I/DD) subsector, eight deals were reported in Q3, bringing the year-to-date total to 27. Since the blockbuster year of 2021, in which 44 deals were announced, autism and I/DD provider organizations have faced significant headwinds from wage inflation, especially among behavioral technicians, Taggart said. However, as wages began to settle in 2024, momentum for deal activity has renewed. The transactions involving autism and I/DD therapy providers included the following: Mertz Taggart advised a Northeast ABA provider as a platform for a Canadian private equity firm. Achieve Partners  acquired Westside Children’s Therapy , a provider with 30 centers in the Chicagoland area.  First Children Services  secured a strategic growth investment from Station Partners  to support its continued expansion. Redwood Family Care , a multi-state provider of I/DD services, acquired Minnesota-based Eagles Wing , which offers residential and day support services to individuals with developmental disabilities. A Change in Trajectory , a Van Nuys, California-based, family-oriented agency that serves individuals with special needs, was acquired by Pine Street Group, an investment holding company that targets middle and lower-middle market businesses. DOMA , a Minneapolis-based provider of I/DD services, announced its acquisition of Payee Support Services  in Ohio, strengthening its presence in the Midwest. Following the retirement of longtime CEO Jack Priggen, Cardinal of Minnesota , a provider of residential and in-home services for persons with disabilities, has been acquired by The Cottages Group of Burnesville .