The Behavioral Health Care sector has been on a hot streak for more than three years now. In 2018, the pace may be picking up even more. In the first half of the year, 34 transactions were announced, compared with 29 in the first half of 2017.
Prices for these deals, which are primarily between private equity firms and/or not-for-profit entities, are scarce. Only one deal in this sector disclosed a price so far this year, an approximately $108 million transaction in South Africa, for privately held Akeso Clinics. Netcare Limited, the second largest private hospital company in South Africa, was the buyer.
In both years, companies that treated substance abuse disorders were most popular with buyers. In the first half of 2017, 11 targets were focused on treating drug and alcohol addictions in inpatient and/or outpatient programs. In the first half of 2018, that number rose to 16.
One of the largest deals for substance abuse treatment announced in H1:18, in our estimation, was BayMark Health Service‘s acquisition of Canadian Addiction Treatment Centers, based in Markham, Ontario, with more than 70 facilities. BayMark is a portfolio company of Webster Capital, and is the largest opioid treatment company in North America, with 167 programs across 25 states and now, one Canadian province.
Public awareness of autism spectrum disorders has risen swiftly in recent years, as have the number of acquirers targeting companies that work with individuals with developmental difficulties and those on the autism spectrum. Five deals in the first half of 2017 focused on this area, which increased to eight transactions in the first half of this year.
Probably the largest deal for an austim-related company in the first half of 2018 was Blackstone‘s (NYSE: BX) acquisition of the Center for Autism and Related Disorders (CARD). CARD provides behavioral health services for children and adults affected by autism spectrum disorder. It has 196 centers in 34 states.
Targets involved in treatments for eating disorders were not as popular as they have been in previous years. With only the first six months of 2018 to compare, a single deal in this sector focused on eating disorders, compared with two in the first six months of 2017. Not a lot of data to go on, obviously.
None of the deals announced in H1:18 were real estate transactions. There was only one REIT deal announced in the first half of 2017. We doubt that means REITs have moved on to other sectors, but we’ll keep you posted.