Two leading investment firms, Apax Partners and Oak HC/FT, have joined forces to purchase the treatment provider Eating Recovery Center (ERC). The two companies acquired Denver-based ERC from CCMP Capital, a global private equity firm headquartered in New York, New York, for a reported $1.4 billion.
Founded in 2008, ERC is one of the largest eating disorder treatment providers in the U.S., with 30 centers across Colorado, California, Illinois, Texas, Ohio, Maryland and Washington. ERC’s treatment offerings include inpatient services, intensive outpatient programming and virtual care. ERC operates a division called ERC Pathlight, which provides mood and anxiety treatment to patients.
The ERC acquisition indicates a growing interest in the eating disorder treatment market among private equity investors. Eating disorders afflict over 30 million Americans, and the market for treating this deadly disorder is estimated to be worth upwards of a billion dollars.
Last month, another major deal in the eating disorder treatment space was completed when private equity-backed Monte Nido & Affiliates acquired Walden Behavioral Care, which operates one of the nation’s largest 24-hour inpatient and residential care facilities dedicated to the treatment of eating disorders. Monte Nido is one of the most established and premier eating disorder treatment providers in the United States.
CCMP had previously purchased ERC in 2017 from Lee Equity Partners, an American private equity firm, for a reported $580 million. At the time, ERC had a pro forma adjusted EBITDA of about $45 million. In April of 2021, ERC reported an EBITDA of about $65 million, suggesting the company could yield an EBITDA multiple in the 15x to 20x range.
