ARC Health Expands to California with 4th Acquisition of 2023

Beachwood, Ohio-based ARC Health announced Monday its acquisition of Positive Change Counseling Center, marking its first practice in California.

The deal is the company’s fourth announced in 2023. ARC Health is a fast-growing outpatient mental health platform company backed by Chicago-based private equity firm the Thurston Group. Terms of the deal were not disclosed.

“Practice culture is extremely important to me, and being able to maintain our practice mission, vision, and values was always at the forefront of conversations with ARC Health,” Jennifer Lundy-Aguerre, founder of Positive Change Counseling Center, said in a statement. “I am also thrilled to have more access to HR, IT, marketing and recruitment professionals to assist us as we continue to grow to serve our clients and community.”

The deal will help Positive Change Counseling Center expand in the region with the additional support and resources of ARC Health.

Part of ARC Health’s approach is to acquire firms where the founder-owner is willing to continue with the company after the deal, Vincenzo Morra, ARC Health CEO, previously told BHB. This ensures continuity at firms after they are acquired. ARC also consolidates some back-office functions for acquired practices.

Positive Change Counseling Center operates clinics in Southern California — one in Ventura and three others in San Diego. It offers individual, couples and family therapy to people of all ages.

ARC Health has been one of the most active acquirers in the behavioral health space. In March, it acquired Chicago-based Wellington Counseling Group. The company’s other acquisition targets include the Colorado Center for Clinical Excellence, a mental health practice based in Denver. Two weeks before, it announced the acquisition of Kansas City-based Lilac Center.

Deal activity in behavioral health has heightened over the last several years. Analysts project this to be a transitory year as many trends that ramped up investment wind down. According to the M&A firm Mertz Taggart, 2022 saw a slight increase in dealmaking over 2021, a blockbuster year. The Braff Group, another M&A firm, found a 24% decrease in deal volume in 2022 compared to 2021.

Other recent deals in the outpatient mental health space include the Graham Family Office’s acquisition of Quince Orchard Psychotherapy, announced last week. In March, Patriot Capital acquired Dallas, Texas-based Turnwell Mental Health Network.

Consolidation in the mental health space seems to be an open field as the two previous market-leading private-equity-backed platforms have made big-time exits. LifeStance Health Group’s (Nasdaq: LFST) leaders have signaled a pause on M&A as it consolidates and streamlines the dozens of firms it has acquired over the years. Refresh Mental Health was acquired by Optum last year.