PE Firm Reportedly Looking to Sell SpringStone for $1B

Welsh, Carson, Anderson & Stowe is reportedly looking to sell SpringStone, its network of more than 30 behavioral health facilities, according to PE Hub

The news outlet cited “four sources with knowledge on the matter,” reporting that the private equity firm is hoping to get upward of $1 billion for the Louisville, Kentucky-based business it backed and helped found in 2010.

Today, SpringStone has 33 outpatient locations and 18 outpatient locations, serving patients across nine states. Plus, it’s growing, according to the company’s website. Across its facilities, SpringStone treats a number of behavioral health conditions, including substance use disorder (SUD). 

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While the company has not yet begun the formal sale process, Welsh, Carson, Anderson & Stowe has already connected with several potential buyers, including multiple private equity firms, according to PE Hub.

The sale rumors come amid record deal flow for the behavioral health industry, with experts predicting M&A could reach a new peak in 2021. As a result, behavioral health valuations are expected to be similarly high, especially for certain subsectors.

“There’s a lot of capital in these private equity funds, and … a fair amount of capital on corporate balance sheets as well,” Burk Lindsey — managing director in the health care investment banking group at Raymond James & Associates — previously said. “Interest rates are low, so capital is plentiful.”

He added that platform businesses with attractive growth profiles and track records of multi-faceted growth — especially those in hot sub-segments segments — are trading at anywhere from 10x to 12x for platforms. 

If a transaction is in SpringStone’s future, Welsh, Carson, Anderson & Stowe stands to see an especially profitable deal given the lack of large behavioral health providers currently up for sale.

BHB reached out to SpringStone for comment but had not yet heard back at the time of publication.

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