Behavioral Health Deal Values Up 900% Quarter-Over-Quarter

Behavioral health care deal values spiked 900% in the second quarter of 2020 compared to Q1, with one huge private equity deal — and the coronavirus — leading the charge. The sector could continue to see a trend of higher valuations going forward. 

That’s according to a recent report by PricewaterhouseCoopers’ (PwC) Health Research Institute. PwC is a global network of firms that delivers tax and consulting services for businesses.

“COVID-19-driven needs could impact the types of assets health services companies find valuable,” the report said. “Behavioral health is … seeing COVID-related demand, and Medicaid enrollment has increased, so capabilities in these areas could become more valuable.”


Amid the coronavirus, mental health has become a larger part of the national conversation. Americans are grappling with loss of jobs and loved ones, as well with the isolation and fear of being infected that comes with the virus.

As a result, far more people are dealing with depression and anxiety. In the third week of July, for example, 30% of adults had depression symptoms and 36% had anxiety disorder symptoms, according to the National Center for Health Statistics and Census Bureau’s Household Pulse Survey.

During the same period last year, only 6.6% of people reported depressive disorder symptoms, with 8.2% having anxiety symptoms.


TPG’s $1.2B behavioral investment

The biggest behavioral deal so far this year came in April, when international private equity platform company TPG Capital invested $1.2 billion in LifeStance Health. In doing so, TPG joined existing investors Summit Partners and Silversmith Capital Partners in backing LifeStance.

The transaction accounted for more than 92% of the deal value in the behavioral health sector for the first six months of 2020. Total deal value for that period was about $1.3 billion.

Bellevue, Wash.-based LifeStance is a behavioral health provider that offers a variety of services both in-person and via telehealth. It has 2,000 behavioral health clinicians across 200 offices in 15 states, serving commercially insured patients on an in-network basis. It boasts more than one million visits per year and does about 25,000 telemedicine visits per week.

TPG’s investment will help LifeStance expand its geographic reach and online presence to serve more Americans, according to a press release announcing the news. 

It could also indicate more of what’s to come for the behavioral health sector as a whole, according to the PwC report.

“TPG Capital’s $1.2 billion investment in LifeStance Health … could suggest that 2020 will see additional large deals among those with capital to spend,” the report said. “Capabilities seeing COVID-accelerated importance — including behavioral care, virtual care, and other areas — could be of particular interest.”

The behavioral health care industry saw 29 deals in the first half of 2020, down 27.5% year-over-year, according to the report. Similar deal volume dips occurred across a variety of sectors, as the coronavirus has delayed and slowed some transactions.

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