8 SUD Treatment Companies to Watch in 2024

The substance use disorder (SUD) treatment industry has experienced significant challenges and breakthroughs in 2024, but a handful of providers are emerging as ones to watch in the coming year.

The SUD dealmaking space has stayed stale thus far in 2024. While deals once flowed freely, only 10 closed in the first half of the year. This contrasts starkly with just a few years earlier. In 2021 and 2022, some quarters saw over 20 deals.

Investors’ interest in SUD businesses cooled due to lending markets and regulatory changes, according to M&A advisory firm Provident Healthcare Partners. Increased scrutiny from the FTC and more expensive capital have also lowered valuations and lengthened the dealmaking process.

Despite these hurdles, deal flow will likely increase over the coming year. Venture capital and growth equity investment have waxed as private equity’s has waned. One of the reasons is that minority investments can skirt regulatory issues.

Trends within the SUD industry offer increased hope for some types of providers.

While luxury residential SUD care has become scarce in the dealmaking space, outpatient SUD deals have increased. Medication-assisted treatment (MAT), which is far cheaper to operate than residential care, is set to become even more popular.

Providers have seen the solidification of some COVID-era flexibilities, including take-home methadone treatment and telehealth flexibilities within Medicare. Still, other flexibilities are still set to expire by the end of 2024, including the removal of a mandatory in-person visit within six months of initiating telehealth SUD care, and then annually.

SUD providers have told BHB that it would be hard to “put the genie back in the bottle” regarding potential reversals of telehealth flexibilities. But some behavioral health companies have begun to adjust their processes to prepare in case flexibilities expire.

The sluggish dealmaking and funding environment in 2024 has put providers that have changed hands or received funding dollars under a spotlight. Behavioral Health Business has its eye on eight SUD companies worth watching in the next year.

New growth for fresh faces

Newly-formed Brentwood, Tennessee-based Tulip Hill Healthcare is on a path of aggressive growth.

Tulip Hill Healthcare was formed in May through a merger of Tennessee-based Tulip Hill Recovery and two Kentucky-based treatment centers: Louisville Addiction Center and Lexington Addiction Center.

The provider’s treatment options include residential care, partial hospitalization programs (PHPs), intensive outpatient programs (IOP) services and outpatient services. Tulip Hill primarily provides care through commercial insurance.

The company has made a name for itself by offering PHP, IOP and housing reimbursable through commercial insurance in areas where that combination isn’t otherwise available.

Jacob Biddulph, Tulip Hill’s vice president, previously told Behavioral Health Business that the merger positioned the company for future growth, with executives planning to open three new facilities over the next two years.

The company is wasting no time executing its vision. Tulip Hill acquired two Tennessee-based detox centers in early August: Tennessee Detox Center and Live Again Detox.

Tulip Hill is eyeing Massachusetts and Kentucky to open new facilities, focusing on underserved areas, Biddulph told BHB. The company also plans to expand its service lines and improve quality of care.

BHB is watching Tulip Hill to see if it continues on its trajectory of rapid expansion. Since PHP/IOPs were the SUD segment with the highest deal volume in 2023, it will be interesting to see if companies touting these offerings sustain this deal flow in 2024.

A sink or swim moment

Digital OUD treatment provider Bicycle Health has experienced a tumultuous 2024 thus far.

Boston-based Bicycle provides medications for opioid use disorder (MOUDs), including buprenorphine and naloxone, therapy and support groups, all delivered virtually.

The provider laid off a significant portion of its staff in March. A representative told BHB the layoffs realigned resources “to direct patient care.”

Weeks later, Bicycle clinicians filed to unionize, citing insufficient time allowances to provide care to existing patients, obtuse billing practices and refusal to heed clinicians’ opinions.

Bicycle told BHB that the company has a great relationship with its clinicians. The next month, clinicians voted to unionize with the Union of American Physicians and Dentists (UAPD).

Still, Bicycle has already demonstrated its ability to grow despite its struggles. In July, the company launched an opioid use disorder (OUD) program for Maine teens. Dr. Brian Clear, Bicycle’s chief medical officer, told BHB that the startup planned to continue to expand the program in the future.

And the company has a bit of capital to fall back on. The company last raised funds in a series B round in 2022, bringing its total funding to $83 million

The provider has also continued to perform addiction research and announced a pilot of wearable technology in June.

Bicycle’s struggles coupled with its persistence in new programs are good reasons to keep an eye on the provider. BHB will be watching Bicycle to see if its undercurrents cause the company to sink, or if it will swim despite them.

Feeling fine(d)

SUD treatment provider Crossroads specializes in whole-person, comprehensive treatment pathways including, MAT, counseling and peer support.

The company operates 101 outpatient clinics across nine states, including Virginia, Pennsylvania and New Jersey. However, the number of clinics has diminished over the last year. In July of 2023, Crossroads operated 129 locations in 10 states.

This downsizing could be an attempt to improve the company’s bottom line, which, combined with the timing of Crossroads’ owners’ holding period, potentially positions the company for a sale.

There are also other, less favorable reasons to monitor the provider.

Crossroads was recently fined over $860,000 for allegedly fraudulently submitting falsified claims to Medicaid from 2016 to mid-2023. Four of its clinics were identified as participating in the fraud.

The alleged false claims only stopped after a whistleblower filed a lawsuit against the company.

It is important to note that many behavioral health companies are facing lawsuits and fines and still continue operating.

BHB is watching to see if Crossroads can recover from the negative publicity and fines associated with its civil settlement, as well as if the company will change hands.

The benefits of multiple service lines

Many SUD providers are branching out in service lines, from mental health offerings to gambling treatment.

Virtual SUD treatment provider Pelago, formerly Quit Genius, offers treatment for alcohol and opioid use disorders and also operates service lines for sometimes overlooked SUDs, including tobacco.

New York City-based Pelago focuses on enterprise deals, partnering with employers such as AT&T and GE Appliances, and health plans including Vitality and Express Scripts. 

The company expanded its service lines in April with a new cannabis use disorder treatment program, a relative rarity in the SUD treatment industry.

Offering treatment for tobacco and cannabis users may be a way Pelago sets itself apart from other enterprise-focused behavioral health companies.

The company is focused on ensuring a full continuum of care for its patients with new partnerships designed to create offerings for its higher acuity patients. Pelago teamed up with brick-and-mortar SUD facilities Recovery Centers of America (RCA) and Banyan Treatment Centers in June as a way to connect patients to inpatient services.

The launch of several of Pelago’s initiatives was enabled by its $58 million Series C funding round, which was completed in March. The funds were earmarked for product development and expanding clinical capabilities, which the company seems to be executing quickly.

BHB will be watching Pelago to see if the company continues to set itself apart with its novel approaches to less commonly discussed SUDs, and how it continues to leverage its $58 million raise.

New leadership, new growth

Birmingham, Alabama-based Bradford Health Services is worth keeping an eye on.

The SUD treatment provider recently underwent a leadership transition. Behavioral health veteran Rob Marsh took the helm as CEO in May, and he shared his plans to grow the company with BHB.

Bradford offers a full continuum of SUD services, including sober living, acute medical care and transitional housing, which Marsh said sets the company apart. He plans to expand its services across all of its markets, including North Carolina, Tennessee, Alabama, Texas and Mississippi.

Marsh also hopes to steer the company to grow geographically. He plans to expand to the West and North through de novo and M&A to become a “major player” across the East Coast or Eastern half of the U.S.

Bradford announced its first new location only months after Marsh took over as CEO. The company opened Trinity River Recovery Center, located outside of Dallas, Texas.

BHB is watching Bradford to see if Marsh can push the organization toward further growth, and which key markets it identifies as being a good fit to enter.

Employer deal exploration

Nonprofit SUD treatment provider Hazelden Betty Ford Foundation offers inpatient, outpatient, virtual and detox services, along with intervention and recovery coaching.

The Center City, Minnesota-based provider operates 17 treatment centers and originally exclusively offered residential care before expanding to other treatment pathways.

It is now looking to expand to a new type of partner.

Hazelden Betty Ford Chief Business Growth Officer Robert Poznanovich told BHB in May that employers are increasingly sponsoring SUD programs to lower costs and create healthier workforces. Poznanovich pointed out that while virtual SUD care solutions have become popular among employers working to address SUD cases, different levels of acuity may require more intensive care.

Hazelden Betty Ford has increasingly worked to ink new deals with employers.

The nonprofit has worked with brokers and HR consulting companies to ensure it is part of the industry’s shift toward working with employers. It also developed a bundled care package that has increased the organization’s revenue, according to Poznanovich.

The provider offers employees access to a wellbeing portal, online resources and confidential 24/7 online support for recovery. Offering workplace support for SUDs can save employers $8,500 per employee who achieves recovery, according to Hazelden Betty Ford.

A major barrier to forging these relationships, however, is stigma.

BHB will be keeping an eye on Hazelden Betty Ford to see how the provider can overcome stigma and position itself as a choice option for employers.

PE-backed growth

Health care-focused private equity firm Avesi Partners recently acquired a full-continuum SUD provider worth tracking.

Avesi’s new acquisition, Fresno, California-based First Steps Recovery, provides SUD treatment via medical detox, residential care, PHPs and IOPs and virtual therapy. It sets itself apart from other providers by overlaying a medical team on top of addiction care providers, which it claims improves outcomes and creates the highest quality of care.

First Steps plans to enter additional markets within California and nationwide. It also plans to develop new care settings and create additional programs.

Avesi has a track record of working in behavioral health. Its portfolio includes adolescent behavioral health providers Muir Wood Capital and Point Quest, another adolescent-focused behavioral health provider.

BHB will be watching to see how Avesi executes First Steps plans for growth in the coming year.

Landmark’s reckoning

SUD treatment provider Landmark Recovery has proved that not all press is good press.

Landmark offers medical detox, inpatient rehab, outpatient rehab, PHP, MAT and therapy in eight states.

The Franklin, Tennessee-based provider has been embroiled in litigation and turmoil since mid-2023, when the deaths of multiple Landmark patients became public knowledge.

Soon after that news, Landmark shut down several facilities and slashed its staff count by approximately one-third. The company has also been evicted from multiple facilities after falling behind on rent.

In March, a Landmark employee sued the company for allegations including sexual harassment.

The state of Indiana revoked licenses for three of Landmark’s facilities in the state relating to the deaths of patients. In May, the state agreed to let Landmark operate those facilities again under certain conditions, including giving up its appeals to reopen the facilities and beginning the application process anew.

Prior to Landmark’s year of strife, the company was set to expand its operations and eventually develop value-based care models.

BHB will be watching to see if Landmark buckles under the weight of its negative publicity and regulatory woes, or if it will be able to limp toward a recovery of its own.