“In the last two years, there’s been a continued surge of new money and buyers [in the behavioral health care market],” said Mike Moran, partner and executive advisor at M&A Healthcare Advisors.

Levin Associates

Almost every sector across the healthcare spectrum has picked up its deal activity this year following a quiet 2020, but the Behavioral Health Care sector has made noticeable jumps as a result of the deal-making environment opening up in tandem with the easing of COVID-19 restrictions.

And the numbers speak for themselves. Deal volume has spiked from 51 deals between January and September 2020 to 81 deals during the same time period this year. Announced purchase prices also have soared in 2021, from a total of $1.33 billion in 2020 to $2.7 billion during 2021.

During just the first few days of 2021, Medical Properties Trust (NYSE: MPW) acquired a 40-facility portfolio of Priory Group’s behavioral health hospitals. The deal’s $1.087 billion price tag is indicative of the growing need for behavioral health services. MPW piggybacked on that deal with the $950 million purchase of 18 behavioral health hospitals and a stake in the operations of Springstone LLC, a leading behavioral health provider, in June 2021. And by all appearances, the rising need for mental health services during the pandemic is a likely driver for these lucrative deals.

“In the last two years, there’s been a continued surge of new money and buyers [in the behavioral health care market],” said Mike Moran, partner and executive advisor at M&A Healthcare Advisors.

“Given the resiliency that these providers have shown throughout the pandemic, the demand for acquisitions within the segment has grown, no question. When speaking to providers across the country, unfortunately one common thread is that mental health struggles continue to surge, thus increasing the demand for more providers in the space.”