Private equity sellers are bringing three different behavioral health companies to market.
- Center Partners’ Bradford Health Services, Levine Leichtman’s Monte Nido & Affiliates and Housatonic Partners’ Embark Behavioral Health are currently exploring sales, Sources tell Axios.
Why it matters: As demand for behavioral health services continues to outstrip supply, investors and strategic buyers of all stripes are pouring capital behind the various subspecialties of the sector in significant ways. Ideally, more money in the sector means more access to care.
Consider Optum recent $1.2 billion purchase of Refresh Mental Healthand the funding of virtual mental health startups like Eleos Health, which this morning raised $20 million in Series A funding.
Driving the news: In one of the three situations, sources tell Axios that Jefferies is providing financial advice to Chandler, Ariz.-based Embark on a possible sale.
- Embark, formerly known as Calo Programs, offers several treatment programs for teens and young adults struggling with mental health and substance abuse issues.
- The company generates about $40 million in EBITDA, the sources say. That’s more than about $5 million of EBITDA when Housatonic invested a minority stake in January 2017, one person adds.
- In another recent adolescent-focused mental health deal, Onex Partners last year invested in Newport Healthcare at a valuation of $1.3 billion.
Yes, and: Harris Williams is advising on the potential sale of Bradford Health Services, which sources say generates between $20 million and $30 million of EBITDA.
- Center Partners’ investment in the Birmingham, Alabama-based business dates back to mid-2016.
- Bradford offers drug and alcohol addiction treatment programs, both inpatient and outpatient, and through detoxification centers, in Alabama, Arkansas, Mississippi, North Carolina and Tennessee.
Finally, Initial offers for LLCP’s Monte Nide were due March 22, according to a source.
- Monte Nido, which Sarah first wrote in october had hired Harris Williams for a sale, treats adults and teens with eating disorders.
- Roughly $45 million of EBITDA is trading for the business, the sources say. Since LLCP invested in September 2016, the company has more than doubled its presence to 40 programs in 13 states.
- Arguably the best trade-off for Monte Nido is Eating Recovery Center (although it has more recently expanded into mood and anxiety treatment), which Apax Partners and Oak HC/FT teamed up to acquire in a roughly $1.4 deal. billion in october, sarah previously wrote.
- That translated to more than 15 times ERC’s marketed EBITDA of $91 million, the sources said at the time, or closer to 18.5x when pro forma EBITDA is applied, another source said.
The bottom line: Investors are lining up to back behavioral health providers, and that may ultimately help address the category’s access agenda, both by adding new treatment facilities and leveraging virtual capabilities.
LLCP and Harris Williams declined to comment. Center Partners, Housatonic, Embark, Bradford and Jefferies did not respond to requests for comment.
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