Private equity investors continued to bet massively on behavioral health in the third quarter. PE acquisitions made up more than 60% of all behavioral health transactions in the first three quarters of 2022, according to a new report from The Braff Group.
While deals are down from the peak year of 2021, behavioral health deals in 2022 are expected to surpass those of 2020. In the first three quarters of the year there were a total of 151 transactions for behavioral health.
“As the third quarter held few surprises, our outlook for behavioral health M&A for the remainder of 2022 remains unchanged from our half-yearly report,” The Braff Group wrote in the report. “Not as strong as but continuing what is now a decade-long arc of increasing interest — and investment — in space.
If the first three quarters of 2022 are compared to 2020, rather than the best year of 2021, deal volumes are up about 5%, according to The Braff Group. Additionally, substance use disorder (SUD) deals are up 9% from 2020, mental health deals are up 14%, and non-autistic IDD acquisitions are up 33%.
Investments in medication-assisted treatment (MAT) are on track to reach 29 deals this year — which would tie it into 2021.
Private equity investors are still very active in behavioral health. The Braff Group identified 11 PE investments in the market access platform in the IDD space in 2022, already surpassing 2021.
There is also an uptick in follow-on private equity investments. Less than a quarter of private equity deals were platforms, the rest were follow-on investments.
All in all, the market has been cooling down since last year. In 2021, The Braff Group reported 256 deals, an increase of 35% year-over-year.
“COVID has driven us all insane,” Dexter Braff, president of The Braff Group, said during Behavioral Health Business’s INVEST about the 2021 boom. saying, ‘We really need to get into this market; we knew it was good.’”
Q3 had a number of notable acquisitions.
For example, PE supported ARC Health acquisitions of Focus Forward Counseling & Consulting and Sasco River Center LLC. In addition, PE firm Lee Equity Partners acquired Bradford Health, a provider of substance use disorders, in October.