Q3-2021 Behavioral Health Update
The behavioral health space continues to see rapid consolidation across many of the subvertical that make up the universe. The sector saw over two dozen publicly announced deals in the Q3, which is in line with where deal flow has trended over the last few quarters. Private equity firms also continue to show interest in the space as roughly a quarter of transactions were characterized as platform investments.
Although the direct impact of COVID-19 has recently waned, indirect effects such as the deteriorating mental health of young individuals have driven demand for behavioral health services. Demand for mental health services and substance abuse treatment have grown 42% and 27% respectively over the past three months.
Provident anticipates deal flow in the space to remain robust as private firms divest their initial platform investments to new firms via secondary buyouts. Provident also expects a general increase in behavioral health IPOs as large players seek to exit investments through the public markets.
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