Youth behavioral health provider Embark Behavioral Health has received a significant investment from the private equity firm Consonance Capital Partners.
As part of the deal, Consonance Capital Partners took a controlling stake in the company. The new capital will set Embark Behavioral Health up for an ambitious growth strategy, multiple sources familiar with the investment told Behavioral Health Business.
The equity sale was valued at approximately $400 million with a multiple range of 12- to 15-times EBITDA, the sources told BHB. The deal closed in September.
Representatives of both companies, including Embark Behavioral Health CEO Alex Stavros, declined to comment on the exact terms of the investment.
“We have built the organization deliberately, conservatively, and sustainably, not focused on the fads of the day,” Stavros said in an email. “We don’t do roll-ups because of the negative impact it can have on quality and culture, and we aren’t growing for the sake of growing — but instead we are focused on careful and strategic decisions with the idea of using business as a force for good to solve true societal challenges.”
Housatonic Partners previously backed Embark Behavioral Health and first invested in the company in 2016.
Axios reported in April 2022 that Embark Behavioral Health was up for sale. The report noted that Embark had generated $40 million in EBITDA and retained Jefferies Group to aid in a sale.
According to sources, the company plans to open 60 additional outpatient clinics in the next three years. Embark Behavioral Health today operates 27 programs across 40 locations in 15 states.
Embark Behavioral Health also plans to increase its count of families served “by more than 1,000” in 2023 over the “nearly 1,500 families” it served 2022, according to a recent news release from the company.
Embark Behavioral Health treats preteens, teens and young adults struggling with anxiety, depression and other mental health conditions. It also offers services treating eating disorders and substance use issues.
The company’s treatment modalities include outpatient, wraparound services, virtual services, intensive outpatient programs (IOP), partial hospitalization programs (PHP), short-term residential care, outdoor behavioral health and long-term residential care.
In 2022, it opened outpatient clinic locations in Rockville, Maryland; Ashburn, Virginia; and Atlanta, Georgia; and short-term residential locations in San Martin, California; Bend, Oregon; Marion, Montana; and Independence, Missouri, according to the release.
Embark Behavioral Health launched its virtual services late last year. It also formed the Embark Behavioral Health Foundation last year.
Specific services include trauma-focused cognitive behavioral therapy (TF-CBT), multisystemic therapy, dialectical behavior therapy (DBT), SMART Recovery and other evidence-based treatments.
Broadly, Embark’s mission is to offer “a complete continuum of services to meet the families where they need us,” Stavros said.
“Not a one-size-fits-all approach,” he emphasized.
In addition to serving as CEO of Embark, Stavros is the founder and managing partner of Lia Capital Partners, according to his LinkedIn profile. He joined Embark in 2011.
Embark Behavioral Health focuses on building out comprehensive services in individual markets that health insurance plans will cover, Stavros said.
“Our success has not been overnight and is not a flash in the pan,” Stavros continued.
Last year, the company moved its headquarters to a new office in Chandler, Arizona.
Consonance Capital Partners exclusively invests in middle-market health care companies via growth equity, leveraged buyouts and recapitalization transactions. It has raised over $1.3 billion across two funds. It targets, with some exceptions, companies with between $25 million and $500 million in revenues, according to its website.
Its portfolio includes Nashville, Tennessee-based Psychiatric Medical Care, which specializes in managing psychiatric facilities and has a specialty in senior care. It operates in 30 states and has partnerships with over 250 facilities.
Embark Behavioral Health is a fusion of four companies: Calo Programs, InnerChange Programs, New Vision Wilderness Programs and Potomac Pathways. The very first of these programs launched 25 years ago. Housatonic Partners reinvested in 2018 after Calo Programs acquired InnerChange Programs.
Stavros first became involved with Calo Programs in 2011 when Lia Capital Partners acquired a majority stake in Calo.
Interest in youth behavioral health has increased substantially following the onset of the coronavirus pandemic which revealed a serious national shortage of services. One report reveals that the amount of capital put into youth behavioral health companies surged many times over in 2021. In January, Muir Wood LLC, a youth behavioral health provider, secured investment from the private equity firm Avesi Partners. The Vistria Group – one of health care’s most active private equity investors – invested $200 million in Sandstone Care, a multispecialty provider that focuses on teens and young adults and operates in Colorado, Illinois, Maryland and Virginia.
Companies featured in this article:
Consonance Capital Partners, Embark Behavioral Health, Housatonic Partners
