Behavioral Health Care Deals Down 35% in Q3 2019

Behavioral health care acquisitions were down 35% in the third quarter of 2019.

The drop reflects both month-over-month and year-over-year changes. Q3 2019 saw only 17 publicly announced deals, while Q2 2019 and Q3 2018 each saw 26 deals.

That’s according to acquisition data from HealthCareMandA.com, which part of Irving Levin Associates, a publisher of business intelligence for seniors housing and healthcare investors. Irving Levin’s Health Care M&A Report published the quarterly results, along with results from a total of 13 health care sectors.

It’s hard to put a price tag on Q3 deal activity, as financial terms were only disclosed for two of the quarter’s 17 deals. The combined price of those transactions was $14.2 million, according to HealthCareMandA.com.

However, sourcing the buyers is much easier. Private equity firms and their portfolio companies were major players in Q3 2019, accounting for about 76% of deals — or 13 out of 17 transactions — the publisher reported.

Kadiant and The Family Treatment Network were among the most active PE-backed companies making deals in the behavioral health space in the third quarter. 

Kadient, who is backed by TPG Capital, acquired two autism-focused companies, one in California and one in Ohio. Meanwhile The Family Treatment Network, who is owned by Pharos Capital Group, acquired two Florida agencies focused on applied behavioral analysis.

“We’re seeing a new wave of exits as the smaller platforms are being rolled up into regional platforms, almost regardless of their focus,” Lisa E. Phillips, editor of The Health Care M&A Report, said in a press release announcing the news. “With demand for all aspects of behavioral health services growing, particularly autism and substance abuse programs, we expect to see a healthy level of activity into 2020.”