Behavioral healthcare M&A pace picks up

The behavioral healthcare services space is gaining traction in the larger healthcare sector, and mergers and acquisition activity year to date reflects the growth, according to a new report from Capstone Headwaters.

Year to date, M&A activity in the subsector has already surpassed 2018 levels, with 38 recorded transactions, compared to 28 transactions YTD in 2018. The findings come at a time when M&A across the healthcare sector has continued to rise over the last several years, particularly among hospital and health systems.

Some of the driving factors ramping up M&A include a reduced stigma on mental illness, as well as the opioid abuse crisis across the nation. In particular, one 2018 bill, the Support for Patient and Communities Act, allotted $90 million in federal funding for opioid addiction.

Among the 38 transactions, outpatient services are becoming increasingly popular, with 18 companies offering outpatient care and 10 with a focus on child behavioral services. Still, outpatient services currently only represent 28% of behavioral services. Nearly 15% of adults received care, 7.5% of which received outpatient services and only 1% received inpatient services.

Capstone Headwaters is an investment bank focused on middle-market business owners, investors and creditors, providing advisory services for M&A, private placement and corporate restructuring.