Footnotes
Sources:
(1) Capital IQ, Pitchbook, Press releases.
(2) National Alliance on Mental Illness;
(3) Allied Market Research.
Mental Health Services M&A Industry Update Q4 2023
Read more about M&A activity and trends in this sector
Mental health services M&A update
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M&A Activity in Mental Health Services Market
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Healthcare
KPMG Corporate Finance LLC’s investment bankers have extensive Healthcare transaction and industry experience, which enables them to understand the industry-specific issues and challenges facing our clients.
The post-pandemic upswing in demand for mental health services across the U.S. fueled notable growth in M&A activities within the sector. Despite lower volume in 2023, the industry maintained strong deal-making momentum.
- M&A activity within the mental health services sector has been robust, fueled by the rising incidence of mental health issues, de-stigmatization of mental health disorders, and increased patient access to care via telehealth.
- Both private equity firms and strategic investors have taken note of the growing demand for mental healthcare services and are investing heavily in the specialty.
- In the prevailing interest rate environment, private equity firms, which have driven the majority of transactions in the sector, are prioritizing investments in high-quality providers and pursuing strategic add-ons to enhance growth.
- The mental health services sector is poised for continued growth and investment, as stakeholders recognize the importance of addressing mental health needs and capitalize on opportunities presented by innovative, efficient care models.
Mental health practice deal activity(1)
Factors driving consolidation in the sector(2,3)
- Enormous Market with Unmet Need
Valued at $200B in 2020, the mental health industry is projected to reach $285B by 2030. Access to care continues to be a focus as ~50% of the population with mental illness did not receive treatment in 2020.
- Multiple Revenue Streams
Providers of traditional psychiatry services can offer several ancillary service treatments to patients including transcranial magnetic stimulation (TMS), Spravato, and Suboxone.
- Operations Strategy and Scale
Scaled business operations can result in several benefits including bulk purchase savings and professionalized functions including accounting, forecasting, revenue cycle management, marketing and scheduling.
- Technology-Driven Upgrades
Telehealth has continued to expand its role in mental healthcare and is expected to continue to be a part of the patient experience. The integration of tele-psych is aiding in the modernization and increased accessibility of mental healthcare services.
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Walter Olshanski
Managing Director, KPMG Corporate Finance LLC
Walter Olshanski
Managing Director, KPMG Corporate Finance LLC