Q1-2020 Behavioral Health Update
Consolidation within the Behavioral Health sector continued to see robust activity, led by a slew of new platforms and strategic add-ons in the autism services, addiction treatment and mental health segments. Autism services continues to be the most active subsector within the space, with multiple landmark transactions taking place within the first quarter. The most notable transaction was Blue Sprig Pediatrics’ (BSP) recapitalization of Shore Capital-backed Florida Autism Centers in what was the fourth autism deal in the last six months valued over $100M. Additionally, NexPhase-backed Action Behavior Centers is rumored to be out to market, less than one year after taking on investment, which indicates just how seller-friendly an environment the space has been prior to disruptions associated with COVID-19.
In spite of all of this consolidation, the crippling impact of COVID-19 on businesses has clearly been the most impactful development for the quarter and will seemingly continue to be so for an undetermined amount of time. As social distancing, clinic and school closings, and state-wide shutdowns have led to reduced volume and financial strain on businesses, taking advantage of government stimulus programs, such as the SBA Paycheck Protection Program, as well as telehealth services, will be crucial to navigating the current environment. Select subsectors within behavioral health, such as telepsychiatry and mental health, are expected to see increased demand from the pandemic but, overall, Provident expects M&A activity to be impacted in Q2, with transactions delayed to Q3 and Q4 closings.
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