Mergers and acquisitions in the Behavioral Health Care sector have been on a tear in recent years, relatively speaking. The caveat is that many deals are done locally, between private or not-for-profit organizations, and most are not publicly announced. Private equity firms have been piling into this space, and they aren’t known for a lot of transparency around portfolio companies, unless they’re touting their platform-building prowess.
Through mid-September, M&A activity in this sector stands at 37 deals, up 12% compared with the same period in 2016 (33 deals then).
Dollar values haven’t kept up the pace, however. Just $554 million in financing has been publicly announced through mid-September 2017, which is 78% below spending in the same period in 2016. That included the $2.2 billion acquisition announced by Acadia Healthcare Co. (NASDAQ: ACHC) in January 2016, for the U.K.-based Priory Group.
Removing that out-sized transaction from the mix, 2016’s total through mid-September would be just $310 million, and 2017’s spending would be 78% higher. Such is the nature of dollar values in M&A, and why they aren’t a good measure of investor interest in any healthcare sector.
2016 ended with 45 announced behavioral health care transactions, the largest amount since 1997, when we began tracking transactions in the sector. That year, 61 deals were announced and total spending reached $1.3 billion. That year, Magellan Health Services (then NYSE: MGL) made 14 separate acquisitions for $963.9 million. Those were the days.
This year, the sector is on track to surpass last year’s total. Acadia Healthcare has yet to announnce an acquisition, although it’s been doing a lot of partnering and de novo construction of psychiatric hospitals. With three and half months left to go in the year, anything can happen.
