Onex Partners Finalizes 60% Purchase of Newport in Reported $1.3B Deal

One month after private equity platform Onex Partners agreed to acquire a majority stake in Newport Healthcare, the deal is now officially done.

The Toronto-based Onex Corporation — a financial investment firm that oversees Onex Partners — announced Tuesday it had completed its purchase in Newport, a behavioral health provider for teens, young adults and their families with locations on the East and West Coasts of the United States.

Under the deal, Onex Partners V — a closed fund managed by Onex Partners — will take an approximately 60% ownership stake in Newport. The final purchase price was not disclosed by Onex Partners in a press release announcing the news. Citing sources familiar with the deal, PE Hub reported the value to be $1.3 billion.

Founded in 2008, Newport Healthcare operates two programs for young individuals: the teen-focused Newport Academy, and Newport Institute, which provides services to young adults up to age 28. Both programs focus on the treatment of behavioral issues such as anxiety, depression, trauma and substance use disorders (SUDs).

Newport Healthcare also operates the Center for Families, which works with teens ages 13 to 17 and their families to provide partial hospitalization (PHP) and intensive outpatient programming (PHP), along with outpatient care.

Onex Partners has acquired Newport from Carlyle Group (Nasdaq: CG), the global investment firm that in April had been rumored to have been considering a sale of the provider. Sources told PE Hub at the time that a possible deal was expected to command a sale price of over $1 billion, although no prospective buyer had been identified.

Carlyle Group — which also has financial backing in residential treatment provider Odyssey Behavioral Healthcare — has exited in full its investment in Newport, PE Hub reported. Auction for Newport, according to the publication, was conducted by multinational investment bank Jeffries.

Adjusted EBITDA for Newport is projected to come in north of $80 million for 2021, while trailing 12-month EBITDA will fall near the low $70 million range, according to sources cited by PE Hub.

The private equity world has held high expectations for behavioral health activity in 2021, particularly as the nation’s SUD epidemic worsens and the pandemic has contributed to a rise in demand for behavioral health assistance.  

The Newport deal might also be a reflection of the increased need for behavioral assistance for teens and young adults. During the pandemic, 7 out of 10 teens ages 13 to 19 have experienced struggles with mental health, according to findings from the Harris Poll.