A noticeable increase in M&A demand in the field of Mental Health began in the second quarter of 2020. During the pandemic, self-isolation was introduced around the world, which helped save people’s lives. However, a sharp change in lifestyle has led to an increase in psychological problems, borderline states and mental disorders. The high demand for consultations and the need to expand telemedicine capabilities have led to the increased development of the Mental Health sector. The peak of mergers and acquisitions occurred in the 4th quarter of 2021. The market continues to grow in 2023, creating significant investment interest.
The limiting factor for growth in M&A transactions during this period was the antimonopoly policy, which is aimed at increased control of mergers and acquisitions. The Government’s task was to prevent monopoly and unjustified price increases. Also, authorized services strictly monitor the purity of transactions.
People’s mental health often suffers against the background of crises, wars, global catastrophes. Unlike most industries in which inflation and lower interest rates lead to a decrease in market volumes, Mental Health has the opposite trend.
In the last quarter of 2022 alone, 48 merger deals were announced. This is almost 50% more than in the previous quarter.
There were 36 transactions in the mental health subsector, 13 of them on the platform. In the future, after each transaction on the platform for 7 years, one or more additional transactions are concluded.
There were 36 transactions in the mental health subsector, 13 of them on the platform. In the future, after each transaction on the platform for 7 years, one or more additional transactions are concluded.
Successful M&A deals in the field of Mental Health
Mergers and acquisitions are made with the following tasks:
- Increase competitiveness.
- Increase sales volumes and geography of representative offices.
- Expand the range of services and their quality.
- Increase capitalization.
Successful M&A transactions in the field of Mental Health are divided into areas:
- drug addiction treatment;
- therapy of psychological disorders.
In total, 14 deals involving drug treatment providers were announced.
Private equity firm The Vistria Group has acquired Sandstone Care in a $200 million deal
The Vistria Group has responded to the government’s call for support for young people who have suffered psychologically from self-isolation in COVID. As a result, the company’s management decided to invest in this segment.
Sandstone Care specializes in helping teenagers with drug addiction and other disorders. They carry out detoxification, treatment of adolescents in the hospital, extended care, day care, intensive outpatient treatment, help to lead a sober lifestyle and conduct general outpatient programs.
When choosing a company to conclude an M&A transaction in the field of Mental Health, not only services and specialists, the scale of the company, but also its financial indicators are taken into account. Sandstone Care’s EBITDA was $12 million. The task of the merger was to expand the geography and create accessible mechanisms for psychiatric support of the population in different states. The amount of the transaction was not disclosed. According to experts, the approximate amount turned out to be higher than the planned investments and could amount to about 300 million US dollars.
Sandstone Care also acquired a 25% stake in Sevita in January 2022 for approximately US$ 3 billion. Sevita specializes in providing care services for persons with intellectual disabilities, developmental disabilities, physical or behavioral disabilities or other special needs.
Lifepoint Health and Springstone Health Opco US Behavioral Partners deal for $250 million
In August, the merger of Lifepoint Health and Springstone Health Opco US Behavioral Partners took place. Springstone is a leading provider of behavioral health services with 18 behavioral health hospitals and 35 outpatient departments in nine states.
After the acquisition of a controlling stake, Springstone will have real estate and a monetary share in management.
The main objectives of the M&A transaction in the field of Mental Health Lifepoint Health during the acquisition of the company were:
- expand the range of professional services;
- increase the coverage of the territory.
Both companies share the values of providing high-quality care in their segment.
Merger of Acadia Healthcare with Tufts Medicine
The M&A deal in the field of Mental Health took place in July. The purpose of the merger: to build a 144-bed behavioral health hospital in Massachusetts as part of a $65 million joint venture.
In the context of fast-growing markets, Acadia Healthcare has already concluded several similar deals from January to March 2022, namely:
- CenterPointe Behavioral Health System was acquired.
- A partnership has been established with Lutheran Health Network of Indiana LLC.
- Close collaboration with Geisinger Health to expand behavioral health services. The partnership will help to build a 96-bed hospital.
Successful M&A deals in the field of Mental Health in the treatment of mental illnesses
The demand for services continues to grow. During the 3rd quarter of 2022, 81 M&A transactions were concluded in the field of Mental Health.
Greenbrook TMS has announced the strategic acquisition of Success TMS and a US$ 75 million credit facility with Madryn Asset Management
Success TMS is one of the largest providers of transcranial magnetic stimulation therapy (“TMS”) in the United States, with 47 active locations throughout Florida, Pennsylvania, Illinois, New Jersey, Nevada and Wisconsin. The merger of the companies will expand the network to 191 centers, increase revenue and staff of highly qualified specialists.
Greenbrook TMS is the leading provider of FDA-approved TMS therapy, a non-invasive therapy for the treatment of major depressive disorder and other mental disorders in the United States. TMS therapy provides local electromagnetic stimulation of certain areas of the brain that are known to be directly related to mood regulation.
The McCall Foundation acquired Central Naugatuck Valley Help Inc
The Help Inc. company was organized by a group of parents who decided to take care of the health of their children. We took loans from the bank and created our own business. For 50 years, the McCall Foundation has been engaged in the fight against mental disorders. The two companies have teamed up to build new networks of psychiatric pharmacies, group therapeutic homes, and provide outpatient and psychiatric services for their clients.
Thanks to the merger, the companies expanded their geography and expanded the range of services. They developed a common logo and rebranded it. The therapeutic programs of both companies have not changed, they are all of high quality.
Other M&A Deals in the Treatment of Mental Illness:
- SOC Telemed has expanded its behavioral health offerings by acquiring Forefront Telecare.
- MindCare Solutions Group has acquired Psych360, a provider of on-site telemedicine and psychiatric services.
- Irwin Naturals, a publicly traded ketamine treatment facility operator, has added New England to its presence with the acquisition of Preventive Medicine in Vermont and New England Ketamine PLLC. Irwin also acquired 2 ketamine clinics in Georgia and announced in September that it had reached an agreement to purchase Ketamine Media, a growth platform for clinics offering ketamine-assisted therapy.
- Numinus Wellness has completed a $20 million acquisition of Novamind, a Toronto-based mental health company that specializes in psychedelic medicine and operates clinics in Utah and Arizona.
- Sheppard Pratt, a private, non-profit provider of mental health and substance use disorders, has acquired Omni House, a mental health provider in Maryland.
- Acute Behavioral Health has acquired Hallmark Youthcare, an 82-bed short-term residential facility in Virginia.
- Verdugo Mental Health has completed the acquisition of Teen Line, the operator of a mental health support line for young people.
Treatment of autism
The volume of transactions in the field of autism and intellectual/developmental disorders decreased in the third quarter, but demand remains high.
I/DD/Autism M&A Transactions by Quarter
Charles Bank Capital Partners’ $840 million deal with Action Behavior Centers
Charles Bank Capital Partners acquired Action Behavior Centers at auction. ABC is engaged in applied behavioral analysis in Austin, Texas. Has a projected annual adjusted profit of $60 million.
Charles Bank Capital Partners, a private investment bank, is periodically engaged in buying out medium-sized companies at auctions. Unlike the merger of medical structures, its strength lies in management. Thanks to capital and strong management, the business is steadily expanding and making a profit.
Among the remaining deals in the autism treatment subsector:
- Stepping Stones Group has acquired a Behavioral, Educational and Social Therapy Center with the support of PE.
- DotCom Therapy has acquired Wolf+Friends, a community for parents to connect with other families raising children with special needs.
Risk of disruptive innovation for the next 20 years
In the global trend of M&A transactions in the field of mental health, there is a risk in the form of the emergence of interrupting innovations.
For example, in other areas such innovations have left an indelible mark. With the advent of digital cameras, Kodak, the largest company in its industry, went bankrupt, with the advent of touch phones and the ANDROID system ‒ Nokia. Companies that were able to adapt to innovations in time have taken leading positions in the global market.
Similar trends in medicine are often observed. 80 years ago, anti-aging creams from uranium, paints and other products were produced. This continued until it became clear that uranium is radioactive and leads to the development of cancer. Today there are no similar products and companies producing them.
For several decades there was insufficient evidence and X-rays were considered a safe diagnostic method. Studies were done for both pregnant women and children without restrictions. Today, even X-ray frames are being removed in developed countries. Scientists claimed that the Chernobyl nuclear power plant is so safe that it can be placed in the center of Red Square. The result of such statements and methods was disastrous. The construction of nuclear power plants is prohibited in the world and development in this area is extremely limited. The main weapon that everyone is afraid of is a nuclear bomb.
Drastic changes in the field of Mental Health will occur as soon as it is proved and accepted by WHO that the main corporate methods of psychological assistance ‒ meditation, visualization, coaching and hypnosis are not a treatment, but one of the main causes of a person’s loss of connection with reality. That their use leads in the long run from psychological problems, to other borderline states and mental disorders.
In psychotherapy, part of the evidence has already been collected and people affected by meditative states are being treated. However, it may take decades for the trend to take on a global scale. Most of the largest mental health companies may go bankrupt or completely change the range of services if they cannot adapt to the new conditions. Current M&A deals in the field of Mental Health are quite reliable in the medium term.
Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.
