Behavioral Health Transactions Down After ‘Outlier Year,’ But Ample Dealmaking Action Still Expected

Behavioral health deal pace is slowing after 2021’s record-breaking year. Overall, the behavioral health sector saw 53 deals in the first half of 2022.

That’s according to data from KPMG LLP, Epstein Becker & Green and FocalPoint Partners.

“It’s more of an entire marketplace phenomenon as opposed to a behavioral health deficiency that’s dragging down the number of deals,” Larry Kocot, principal at KPMG, told Behavioral Health Business.


Behavioral health deals are currently on pace to reach 106 in all of 2022, according to additional data from the analysts provided by Kocot. This is down from the 137 deals made in the behavioral health industry in 2021.

But those numbers don’t necessarily tell the whole picture because 2021 was an outlier year.

Prior to 2021, the number of behavioral health deals was steadily increasing. For example, in 2019, there were 49 deals. Meanwhile, in 2020, there were 80 deals. The number of behavioral health deals in 2022 is expected to exceed the deal volume in 2020 by 30%.


In the first quarter of 2022, behavioral health deals roughly matched 2021’s. But the war in Ukraine and other economic factors began to impact the market at large in Q2, Kocot said.

“When you put it in perspective of the economic headwinds that are out there for the entire industry and the pullback in deals of the entire industry, we’re looking at the deal flow to be still pretty healthy for behavioral,” Kocot said.

While behavioral health still has a lot of investor interest, Kocot noted that there is an issue with staffing mental health practices.

Adapted from Analysis by KPMG, LLP, Epstein Becker & Green, and FocalPoint Partners

“It’s becoming more and more clear that while behavioral health demand is rising, the supply of available resources is just not there to meet the demand,” Kocot said.

Only about 27.89% of behavioral health needs are met in the U.S., according to the Designated

Health Professional Shortage Areas Statistics for Q3 2022. Some of the biggest operators in the space, including Universal Health Services (NYSE: UHS) and Acadia (NASDAQ: ACHC), have noted recruiting and retaining difficulties.

Yet analysts predict behavioral health will weather the bear market and continue to have a consistent deal volume.

“We expect stable volume in behavioral health transactions, including deals related to substance abuse, other addiction disorders and basic mental health care, as the demand for all of the foregoing is expanding due to many factors, including pandemic-induced burnout, isolation and depression,” KPMG, Epstein Becker & Green and FocalPoint Partners said in the recent analysis.

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