Learn Behavioral, formerly Learn-It Systems, has a new owner. Gryphon Investors acquired a majority stake in the behavioral health company from LLR Partners in mid-March. Financial terms weren’t disclosed, of course, but the deal wasn’t cheap. This is Gryphon’s first investment in the Behavioral Health Care space.
LLR put the company up for sale in late October 2018. Even with this deal announcement, LLR hasn’t exited the autism-treatment company completely. The firm and Learn senior management will maintain minority stakes alongside Gryphon.
Based in Baltimore, Learn Behavioral’s primary focus is the delivery of applied behavior analysis (ABA) therapy to children with autism and related disorders in their homes, schools and its learning centers. It now serves more than 4,000 families in 23 states. Other therapies include speech-language therapy, occupational therapy, individual and family counseling, and psychological disorders.
Since it took over Learn Behavioral in May 2016, LLR has overseen at least four acquisitions. The first, in August 2017, was for Behavior Concepts Inc. BCI provides ABA services to more than 500 individuals diagnosed with autism spectrum disorder at their homes or in its centers in Worcester and Fitchburg, Massachusetts.
Two more deals came quickly, in February and March 2018. Advances Learning Center in Watertown, Massachusetts, provides ABA services to children and adults in the Boston area. Moving closer to its home base, Learn acquired Landover, Maryland-based The S.P.A.R.K.S. Group, another ABA and speech therapy provider. The company serves children in southern Maryland, the District of Columbia and northern Virginia.
In October, the company acquired Total Spectrum, an ABA therapy company based in Elmhurst, Illinois, with operations across Illinois, Indiana, Michigan and Wisconsin.
Those assets don’t come cheap, especially since autism-disorder treatment is one of the hottest areas in the Behavioral Health Care sector right now. We’ve heard valuations of the larger companies (like Learn) are asking above 20x EBITDA. At that level, buyers have to have a solid growth plan (usually more M&A) in order to get to an exit.
Every PE firm with a physician practice management platform is planning to sell to a larger PE firm with a physician practice management platform, so why won’t that work for autism-related companies? The major candidate to do the acquiring would be The Blackstone Group (NYSE: BX), which acquired the Center for Autism and Related Disorders (CARD) for an undisclosed amount in April 2018. CARD provides behavioral health services for children and adults affected by autism spectrum disorder, although ABA isn’t listed as one of those services. It has 196 centers in 34 states, so it didn’t come cheap either.
