New York City-based private equity firm NexPhase Capital LP could be looking to sell its stake in the autism services Action Behavior Centers.
Axios Pro reports that NexPhase Capital is mulling a sale of the Austin, Texas-based Action Behavior Centers. NexPhase announced its investment in the Applied Behavioral Analysis and autism services provider in October 2018.
Action Behavior Centers’ reported trailing adjusted EBITDA of about $40 million is projected to grow to $60 million by the end of 2022, according to Axios Pro.
The company operates 140 locations in Colorado, Texas, Illinois, North Carolina and Arizona, according to its website. This makes Action Behavior Centers one of the larger autism services operators in the U.S. The Center for Autism and Related Disorders (CARD) purports to be the world’s largest autism treatment provider with 219 centers.
The potential sale could fetch a large acquisition price. Deal multiples in the behavioral health sector have increased significantly as the COVID pandemic highlights the massive shortfall between the demand for behavioral health services and its supply. Dexter Braff, president of the M&A firm The Braff Group, told Behavioral Health Business earlier in the year that he expected multiples to stay strong going into 2022.
While investor enthusiasm for behavioral health appears to have slowed in 2022, private equity firms have shown significant interest in autism services over the last several years.
In 2012, The Braff Group tracked 2 deals in the autism and intellectual and developmental disabilities (IDD) segments, according to their proprietary data set.
Then, deal volume blossomed to 37 in 2018 and peaked at 46 in 2019. Both 2020 and 2021 saw 39 autism service deals, according to the data.
The jump in investment into ABA and related autism treatment is tied to two major market forces.
First, policy advocates pushed statehouses to mandate that insurers cover ABA services. This opened up access to ABA for families through health plans and was a reliable source of revenue for ABA providers.
Second, the detection of autism grew significantly from the early 2000s. A growing rate of autism potentially acts as a proxy for the potential increase in the size of the autism services market.
But new research suggests that the rate of autism is as high as 1 in 29. A group of Chinese researchers analyzed data from the National Health Interview Survey, which is conducted by the Department of Health and Human Services, and found that the reported rate of autism increased to 3.49% in 2020 from 2.30% in 2019.