PE-Backed Harmony Health Group Scoops Up Former Delphi Facilities

Private equity-backed Harmony Health Group has acquired three facilities that were formerly part of Delphi Behavioral Health Group’s network.

Charlotte, North Carolina-based Harmony Health Group operates 13 treatment centers throughout Florida, North Carolina, Tennessee, New Jersey and Massachusetts. Services at those facilities include treatment for mental health and substance-use disorders (SUDs), as well as dual-diagnosis care.

The newly acquired facilities – located in New Jersey and Massachusetts – were part of Delphi’s Serenity at Summit brand.

“We are thrilled to expand our network at a time when the mental health industry is collectively working towards fulfilling the behavioral health needs of communities nationwide,” Dr. Deja Gilbert, CEO of Harmony, said in a statement.

The acquisitions come roughly seven months after Harmony was acquired by PE group Thrive Healthcare for an undisclosed amount. As an investor, Thrive mostly focuses on psychiatric hospitals, outpatient treatment programs, specialty behavioral health providers and residential SUD treatment centers.

After teaming up with Thrive, Gilbert teased a forthcoming expansion for Harmony, which opened its first treatment center in 2015.

“The acquisition of Harmony Recovery Group by Thrive Healthcare marks the beginning of an exciting new chapter for our team,” Gilbert said in November 2022.

In addition to Thrive, Harmony noted in a press release that the expansion was supported by Brightwood Capital Advisors. Brightwood’s main areas of interest include business services, franchising and health care, along with transportation and logistics. Technology and telecommunication is likewise a core area of interest for the firm, according to its website.

Brightwood Capital Advisors was Delphi Behavioral Health Group’s primary lender.

Behavioral Health Business reported that Delphi Behavioral Health Group would begin shutting down its operations and offloading facilities to other operators in January. Multiple factors went into Delphi’s exit from the behavioral health market, including a shift away from luxury addiction treatment and shrinking reimbursement rates from payers.

Delphi struggled despite receiving plenty of PE interest of its own throughout the years, most recently from Capital Southwest Corp. Other early Delphi investors included BlueOx Healthcare Partners and Halifax Group, which ended their investments in October 2017 and April 2020, respectively.

In March, BHB reported that three of Delphi’s 15 total facilities remained open and up for sale.

Moving forward, Harmony will continue to explore dealmaking opportunities to expand even further, Gilbert noted.

“Our focus will be on addressing mental health conditions and their treatment, precisely what individuals in states like New Jersey, Massachusetts and beyond … need to tackle the impending mental health crisis,” the CEO added. “Our goal is to serve our communities and equip individuals with the tools they need to restore hope and harmony in their lives.”

Industry wide, behavioral health dealmaking activity has been down in 2023.

M&A advisory firm Mertz Taggart recorded just 27 transactions in the first quarter of the year – a lower deal volume than any individual quarter since Q2 2022. In comparison, the quarterly average for all of 2022 was over 44 deals.

Inflation, banking troubles and burnout among industry professionals have all dampened M&A activity, according to the firm.