PE Firms Take Note of Increasing Demand for Autism Services

Better awareness and detection of autism has tripled diagnosis rates over the last 15 years, causing private equity investors to take note. 

Of late, the market has seen a recent spate of private equity deals in the autism and Applied Behavioral Analysis (ABA) therapy space. That follows a stalling out of investment in the autism treatment sector in recent years, after reaching a high in 2019, according to industry data

Following the height of the coronavirus pandemic — which prompted investors to pour billions into the mental health services space — investors have had the chance to reorient themselves to the potential of investing in the autism and ABA space, Kim Strunk, the founder of autism treatment and ABA provider Hopebridge LLC, told Behavioral Health Business.


“There is huge demand for these services; it’s hard to look away from that opportunity,” Strunk said. “Demand isn’t going anywhere. It’s proved that over the last 17 years to me. I don’t know that I ever anticipated demand like we’re having now.”

Strunk’s own company, which serves about 3,000 children across 12 states, was acquired by private equity firm Arsenal Capital Partners in 2019 for an undisclosed sum.

Arsenal Capital previously disclosed that the fund used to acquire Hopebridge typically invests between $100 million and $500 million of enterprise value for health care platforms. reports that Arsenal’s takeover of Hopebridge gave it a valuation of $255 million.


Arsenal Capital has continued to engage with the autism treatment segment. It announced a partnership with the Autism Impact Fund to help Arsenal select high-potential companies in the sector.

Strunk added that ​​patient volumes remained consistent even during the height of the pandemic, leaving staffing as the only bottleneck to Hopebridge’s growth.

The latest deals and data

So far this year, BHB reported on several PE-backed deals in the autism space.

This includes The Stepping Stones Group, backed by the private equity firm Five Arrows Capital Partners, acquisition of Oceanside, California-based HM Therapy.

Additionally, Charleston, South Carolina-based private equity firm Frontline Healthcare Partners acquired stakes in Tennessee-based ABA and autism service providers JoyBridge Kids in May and Bay Area Clinical Associates in April.

At the end of May, New York City-based Enhanced Healthcare Partners announced that it acquired Los Angeles-based Howard J. Chudler & Associates for an undisclosed amount.

Despite the many deal announcements, Fort Myers, Florida-based M&A consulting firm Mertz Taggart has tracked a slight downward trend in autism-related deals. Packaging autism and deals in the intellectual and developmental disabilities (IDD) services segment, the firm tracked six deals in the first quarter of the year compared to 11 in 2021 and eight in the fourth quarter of 2021.

Autism and IDD services deals totaled 40 in 2021 and 38 in 2020, which saw a quarterly high of 16 in the third quarter, according to Mertz Taggart’s data. 

Proprietary data from the M&A firm The Braff Group shows a slightly different story.

Over the last 10 years, deals in autism service services have seen big-time growth. In 2012, The Braff Group tracked 2 deals. However, deal volume blossomed to 37 in 2018 and peaked at 46 in 2018. Both 2020 and 2021 saw 39 autism service deals, according to the data.

Earlier in the year, Braff and other behavioral health leaders told BHB that the autism services segment is likely to see stagnant growth with fewer large available autism companies up for grabs.

Forces at play in autism investment

Autism service grew in popularity as an investment as the number of states mandating ABA therapy grew and better detection of autism led to higher rates of autism diagnosis — all of which facilitated growing demand for services.

When Stunk got started in 2005, autism rates stood at about 1 in 166 children. Today, the Centers for Disease Control and Prevention finds that about 1 in 44 children have autism. That’s an almost 3X increase in the rate of diagnosis.

ABA therapy — rarely if ever covered over 15 years ago, Strunk said — became the gold standard therapy for autism and a mandated benefit in all 50 states.

Prior to this Struck often was only able to bill for speech and occupational therapy services her autism patients needed and, effectively, gave away the ABA services until they were widely covered by payers, she said.

The pandemic demonstrated the durability of the demand for ABA service: Patient volumes were unaffected by the pandemic, Strunk said.

“We had families for that brief period of time … begging us to reopen,” Strunk said. “It causes a real crisis for families when they don’t have access ​​and it really speaks to what our mission has always been, to help children get access to these services.”

The pandemic worsened the bottleneck created by workforce issues.

Most states require children to have an autism diagnosis before they can receive insurance-covered services. But many of the large psychology groups in Hopebridge’s markets can have wait times as long as two years, Strunk said.

Hopebridge has its own psychologists and other diagnosticians in-house, getting enough psychologists on staff is a challenge.

The business is also struggling to hire enough Board Certified Behavior Analysts (BCBAs), which are professionals with graduate-level certification in ABA, and registered behavior technicians (RBTs), which are non-graduate degree paraprofessionals.

“People are always looking for the best deal. These frontline positions are $15 to $18 an hour positions. There’s a lot of competition,” Strunk said, pointing out that companies like Starbucks offer a starting wage of $15 an hour and Amazon places its average starting wage at about $18.

Still, even when considering workforce challenges, Strunk said demand is powerful and growing. She also is bullish on the application of technology to address challenges in the segment.

“There’s more than one way to skin a cat and we have to think about the space in terms of demand,” Strunk said. “With an unwavering demand and the ability to deliver the services in a multitude of environments, I think the opportunity for investors is still a very, very real opportunity.”

Companies featured in this article:

, , , , , , , , , , , ,