‘The Sky Is the Limit’: What Sellers, Buyers Are Searching for in Addiction Treatment Deals

The growing demand for substance use disorder (SUD) services and the fragmented nature of the industry has made it prime for consolidation.

Potential buyers prioritize reputation, quality and the ability to expand their geographical reach. Meanwhile, sellers want a transaction that keeps the integrity of their business intact, according to panelists at Behavioral Health Business’ INVEST.

“We continue to see some of the large-scale providers being really active in the M&A space, who are described as more serial acquirers in roll-up strategies,” Chad Smith, CEO of BrightView Health, said during the panel.


Cincinnati-based addiction treatment provider BrightView largely focuses on outpatient addiction treatment services. Founded in 2015, it treats upwards of 20,000 patients and has 97 sites across several states.

Private equity investors and large operators, in particular, have made several large SUD transactions this year. For example, last week, private equity firm Lee Equity purchased SUD provider Bradford Health in an acquisition that included 40 facilities.

Behavioral health consolidation as a whole has picked up over the last few years. In the first half of 2022, behavioral health deals accounted for 41% of all health care deals, according to data from M&A advisory firm The Braff Group.


Substance use disorder deals are the second most popular type of behavioral health transaction, right after mental health deals. However, the number of deals in the space has dropped from 85 in 2021 to 60 in the first half of 2022, representing a 29.4% decline, The Braff Group data reports.

Still, the demand for service remains high. There are 40.3 million Americans over the age of 12 with an SUD, according to the CDC.

As more operators look to expand geographically, smaller providers with a quality reputation could be a prime M&A target.

“What we’re really focused on is market reputation,” Smith said. “ About half of our patients come from a referral partner in the community. So we’re very involved with the criminal justice [system], the health care system. People are going to come spend time in our facilities, get to know our people. If we make an acquisition that [clients] weren’t very fond of from the beginning, we have a tough, uphill battle.”

Chad Smith, BrightView CEO, talks at INVEST. Photo: BHB

Indeed, BrightView has been a very active acquirer. In fact, Smith noted that the company has completed nine acquisitions in recent years.

For example, in August, it bought virtual and in-person medication-assisted treatment (MAT) and psychotherapy service provider Column Health. This acquisition brought with it 12 new locations in Massachusetts and Connecticut. In 2021, BrightView also acquired SUD providers Right Path and Aspire.

In addition to reputation, investors and buyers are looking for quality, scalability and new potential service lines, other industry leaders point out. Psychedelics pose an especially intriguing opportunity to some, with recent research suggesting new use cases for mescaline, psilocybin and other drugs.

“I think investors are increasingly pushing on the ability to scale without compromising those patient outcomes and satisfaction,” Rose Bromka, COO at Boulder Care, said at INVEST. “It seems that we are going to see increasing interest around psychedelic treatment for both mental health and substance use disorder.”

Portland-based Boulder Care is a virtual SUD treatment provider – one that has generated plenty of momentum. The company has raised more than $50 million in funding, with a $36 million Series B coming in June.

Its services include treatment for opioid use disorder and alcohol use disorder through virtual care. Its services also include MAT.

The seller’s perspective

In order for any transaction to work, the seller and buyer must see eye to eye. That has become increasingly difficult from a financial perspective, with sellers and buyers often forced to navigate vast valuation gaps.

“When you’re in a market where there’s expectations for future growth, usually the expectations for future growth are greater than reality,” Braff President Dexter Braff said at INVEST. “Because you don’t have a baseline, … so the sky is the limit when you’re projecting what may happen in the future.”

Rose Bromka, COO at Boulder Care, talks at INVEST. Photo: BHB

But financial details aren’t the only considerations buyers and sellers must figure out.

Many operators looking to sell need the acquirer to be on board with carrying out the organization’s initial mission.

“I think that we would potentially be identified as a target for acquisition,” Bromka said. “One of the things that would be really important for the leadership and executive team and investors … is that we’re not compromising our values when it comes to caring for people who are often left out of the system, prioritizing clinical and patient outcomes.”

On its end, Boulder Care has been one of the digital pioneers in value-based care contracts. If the company were to be acquired, its value-based care partnership and contract model would need to be a part of that deal, Bromka explained.

“It’s really important to us as we operate our business that we’re partnering with payers in a value-based arrangement from the outset,” she said. “We’ve had a lot of success moving managed Medicaid payers to case rate and database arrangements. [So] being acquired by a provider that was really driven in an old model that relied on clinical visits – your database would be really unattractive to us.”

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