King of Prussia, Pennsylvania-based Recovery Centers of America has acquired the mental health and addiction treatment provider Adolescent & Young Adult Advocates.
Recovery Centers of America said the acquisition will help the company address early-stage addiction in outpatient settings. The terms of the deal were not disclosed. Adolescent & Young Adult Advocates is based in Bryn Mawr, Pennsylvania and offers a comprehensive outpatient treatment program for substance use disorder (SUD), anxiety, depression and other mental health issues, according to a news release.
It focuses on serving youth aged 14 to 26 in the Philadelphia area.
“We are highly focused on using outpatient programming to help adolescents, as we recognize that early substance use correlates with addiction issues later in life, and that the most significant increases in destructive behavior routinely occur among older teens and young adults,” Troy Brindle, CEO of Recovery Centers of America’s outpatient services, said in the release.
Executive Director Patricia McAndrews founded Adolescent & Young Adult Advocates in 2005. The company will now have the name Adolescent & Young Adult Advocates, Recovery Centers of America.
After the merger, it will offer individual, group and family sessions in general outpatient and intensive outpatient programs for young adults, the release states.
At a national level, an estimated 14.1% of adolescents aged 12 to 17 have used an illicit substance in the past year. That number was 38% of young adults aged 18 to 25, the highest of any age group, according to a large federal survey.
In February, Recovery Centers of America announced it would open a 130-bed treatment center in a former Wyndham hotel in Greenville, South Carolina.
Recovery Centers of America operates 10 inpatient addiction treatment facilities in Illinois, Indiana, Maryland, Massachusetts, New Jersey and Pennsylvania. It also operates a growing number of mental health services locations within its centers and in separate offices. It hired an ex-Aetna health care executive to lead the growth of that division.
Recovery Centers of America has secured large amounts of private funding in recent years. Founded in 2014, the company secured $231.5 million from the New York City-based health care investment firm Deerfield Management Co. in 2015 and another $100 million from the firm a year later.
In 2021, it received a $325 million mortgage loan, secured by eight inpatient addiction treatment facilities, from Sabra Health Care REIT (Nasdaq: SBRA).
The Recovery Centers of America’s engagement with Sabra Health Care REIT has become vital for these companies and is an example of another way to secure capital for facility-based behavioral health care providers.
Public disclosures show Recovery Centers of America is among Sabra’s top 10 relationships and accounts for 5.4% of Sabra’s annualized cash net operating income (NOI), worth about $24 million. Other behavioral health investments on the part of Sabra total $784 million and account for 13% of its cash NOI.
REITs like Sabra could be valuable capital partners for new or existing facility-based behavioral health providers. Increasingly, behavioral health companies often seek to offload real estate costs to ensure more capital goes into operations, potentially opening new sources of capital, especially for those backed by private equity.