Behavioral Health M&A Dips in Q3, But On Track for Record in 2021

Mergers and acquisitions (M&A) among behavioral health providers dipped a bit in the third quarter (Q3), but the sector is still poised to close out 2021 on a high note.

Across the behavioral health care spectrum, 25 transactions occurred in Q3 2021, according to a report released by M&A advisory firm Mertz Taggart. The number was down from 33 deals that took place in Q2, but with 93 transactions through September, 2021 is still on track to be another record-breaking year for behavioral health M&A.

Last year, 116 deals transpired in the behavioral health sector, which includes providers of mental health and addiction treatment services, along with operators of services for autism care and individuals with intellectual and developmental disabilities (I/DD).


As 2021 is once again set to be a banner year for behavioral health transactions, Mertz Taggart said the sector has benefitted from factors including an influx of capital, renewed investor confidence and a possible scaledown of President Biden’s planned capital gains tax hike.

“Initially, I believe this was driven by the potential for a capital gains tax increase,” Mertz Taggart Managing Partner Kevin Taggart said in the report. “But I also think behavioral health has become more attractive to many investors because it has held up very well during the pandemic, especially compared to other potential investment options.”

Addiction treatment providers recorded the biggest number of deals in Q3, with $3 billion in capital pouring into the space to facilitate 13 deals. The number was down from 17 deals that occurred in Q2 2021, but two more than occurred in Q2 2020.


Some of the more notable Q3 deals within the addiction treatment segment were Patient Square Capital’s acquisition of Summit BHC and Onex Partners taking a majority stake in Newport Healthcare. Through Q3 2021, 43 deals have taken place among addiction treatment providers, which is seven more than had occurred during the same time period last year.

“Although down slightly from the 17 deals in addiction treatment that were announced in the second quarter, the 13 deals announced in the third quarter are a signal that investors believe future growth opportunities in the behavioral health sector remain vast,” the report noted.

WIthin the mental health segment of behavioral health, seven M&A deals took place in Q3 2021, two more than in the prior quarter. Overall, 36 deals occurred from the start of the year through September, 14 more than the same time period last year.

Some of the noteworthy mental health provider deals included Monte Nido & Affiliates purchasing Walden Behavioral Care last month. Other Q3 dealmaking news included Pathways Health and Community Support acquiring Renew Consulting, as well as Delic Holdings buying Ketamine Wellness Centers in a combination of psychedelic wellness providers.

Among autism and I/DD providers, eight M&A deals were logged in Q3 2021, eight less than the number of transactions from the prior quarter. From the beginning of the year through Q3, 26 deals have been transacted in the autism and I/DD segment, down from 31 occurring between Q1-Q3 2020.

One of the more recent deals involving I/DD providers was Boston-based Sevita last month acquiring multiple companies. Other highlights included:

* Cerberus Capital Management purchasing Lighthouse Autism Center
* The Ontario Teachers’ Pension Plan Board buying Acorn Health
* Autism Care Partners landing fellow provider Puddingstone Place

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