Many of the fastest-growing behavioral health companies in the U.S. believe their recent eye-popping revenue growth is sustainable. Going a step further, some even see it as all but guaranteed.
These companies, identified by the 2024 Inc. 5000 list, are enabled, in part, by the specific segment of behavioral health they operate in and their market’s underlying conditions. There is overwhelming demand for certain behavioral health services — and that demand is likely to increase.
“If the question is, ‘Is this sustainable?’ our view is, yes, it sadly is,” Mark Heit, chief growth officer for Taunton, Massachusetts-based Transformations Care Network, told Behavioral Health Business. “I think that the continued need for services is only becoming more broad.”
Transformations Care Network offers outpatient mental health services. These include therapy and psychiatric service and, increasingly, interventional psychiatric services such as transcranial magnetic stimulation (TMS) and various ketamine-assisted therapies.
Founded in 2019, it ranked at No. 979 on the 2024 Inc. 5000 list, with 520% revenue growth for the three-year period ending in 2023.
The company’s earliest growth came via M&A. But about two years ago, the growth tool of choice became de novo expansion, Heit said. Transformations Care Network became what it is today via a four-way merger. Since the pivot, about 50% of the company’s growth has been de novo, he added.
“[De novo growth] has really allowed us to focus on some of the things from a sustainability perspective that we believe will allow us to continue to grow,” Heit said.
That, in part, is a continued focus on investing in its local practices so that they become “anchors” in their communities that “aggregate the provider expertise that exists in those communities and become a great place for providers to work.”
Going forward, one of Transformations Care Networks’ objectives is investing in employees, especially clinicians to overcome workfor challenges. Many executives interviewed for this story pointed to staffing challenges as the No. 1 barrier to sustained hypergrowth.
Mental health services primed for growth
To some degree, the large growth percentages are just functions of math. But that can’t totally explain the clip at which many companies are growing, hinting at the underlying demand for behavioral health services.
Still, many of the companies on the list generally tend to be younger. The relatively smaller annual revenue denominators of a less mature company tend to lead to potentially misleading growth percentages as a company starts to find success. This is true in some part for the behavioral health companies on the list, but not all.
For example, Little Rock, Arkansas-based outpatient mental health provider Chenal Family Therapy was founded in 2010 and has made appearances on the Inc. 5000 ever since 2018. Another example is Boston-based The Stepping Stones Group, which was founded in 2014 and is something of a perennial fixture on the list. It has appeared on the Inc. 5000 list nine years in a row. This year it ranked at No. 2,545, with 203% revenue growth.
As the younger companies begin to mature, they say that they will be able to expand their rate of growth, as is the case with the B2B-focused digital mental health provider Modern Health, which came in at No. 728 on Inc.’s list, with 661% revenue growth.
“The reality is that the mental health sector as it exists today is still in its infancy,” Gyre Renwick, the president of Modern Health, told BHB. “We’re seeing just incredible demand from employers out there really wanting a solution like ours today, and realizing that the existing infrastructure for mental health needs is inadequate.
“People aren’t getting the support that they need and they (employers) are not able to drive the engagement with the benefits they have.”
Echoing a similar sentiment, Sentari Minor, chief of staff and head of investor relations for Scottsdale, Arizona-based evolvedMD, told BHB that his company’s niche provides his company “an unlimited opportunity to grow.”
evolvedMD partners with primary care providers to offer patients integrated behavioral health and physical care under a model called collaborative care. In doing so, evolvedMD hopes to bridge the rift between physical health care and behavioral health, a fundamental flaw in the American health care system. It currently offers services at 200 locations.
Autism therapy is still a greenfield opportunity
Like the mental health segment, the fundamental aspects of the autism therapy market support sustainable growth for many companies.
The demand for services is high and not at all met by the present supply of providers. The rate at which autism is diagnosed is increasing. And payers are facing pressure from regulators to take parity laws to heart.
These fundamentals played a part in allowing several autism therapy providers to make repeat appearances on the Inc. 5000, even relatively mature autism platforms like the Stepping Stones Group.
This suggests that the growth trajectory for savvy operators in the space is up and to the right.
Another repeatedly ranked company, Rockville, Maryland-based Behavioral Framework, landed at No. 1,974, with 264% revenue growth on this year’s list. The company’s CEO, Kyle West, told BHB that the company’s rapid growth will likely continue unabated for several years. Behavioral Framework appeared on the list in 2023, 2022 and 2021, where it ranked at No. 46.
“The growth feels the same even though the percentage increase has gone down just by the nature of having a larger denominator each year,” West said. “But it felt the same the whole way.”
West notes that there is no true national autism therapy provider in the U.S. Many of the large platform companies are regionally isolated or have a very diffused footprint. This leaves plenty of space for his company and several others to put up dizzying growth numbers over the next few years.
Behavioral Framework, founded in 2017, is still comparatively small. It operates in Maryland, North Carolina, Virginia and Washington, D.C. Across its footprint, it operates six clinics, offers in-home services in all states, and offers school-based services in North Carolina and Virginia.
Up until very recently, the company’s growth was done without M&A: It acquired Behavior Consultation & Psychological Services (BCPS) in July. The Inc. 5000 list looked at companies’ financial data that ended December 2023; this acquisition was not included.
Similarly, Fort Lauderdale, Florida-based ABA Centers of America — the highest ranking of all behavioral health providers on the Inc. 5000 — has grown so far exclusively on a de novo model. The company is funded by its own cash flow and the capital its current leadership team has invested.
As of the writing of this article, ABA Centers of America offers in-home and school-based therapies in 31 markets, 20 of which also have clinics.
CEO Chris Barnett said the company has been able to achieve 32,192% revenue growth and rank at No. 5 overall by taking an iterative approach to opening clinics and refining the company’s infrastructure.
“So much of building a de novo growth model is building infrastructure,” Barnett told BHB. “We’ve spent the last three years building the infrastructure. Imagine how quickly we could go now. … And I’ve set up that infrastructure in order to be able to grow fast while maintaining our clinical excellence.”
While repeating 39,000% revenue growth again is not likely, Barnett expects its revenue growth to still rank it high on the Inc. 5000 lists.
Barnett’s preferred approach is to open one location, refine the process for that location, do it again, refine further and then try to replicate at multiple sites at once. This creates a self-refining infrastructure that enables continued growth, he said. Eventually, a growing company experiences the benefits of economies of scale, furthering sustainable growth.
ABA Centers of America has yet to experience the benefits of growing via M&A or taking on investment partners like private equity firms. These approaches could further the company’s reach if well executed.
The private equity firm Renovus Capital Partners invested in Behavioral Framework at the beginning of the year. At that time, Behavioral Framework had 800 clinicians. Today, it employs about 1,250.
West says that autism therapy companies will eventually find the “ceiling” of growth but also says the autism therapy industry is in its “infancy,” and hasn’t found its outer limits.
Companies featured in this article:
ABA Centers of America, Behavioral Framework, evolvedMD, Modern Health, Transformations Care Network
