February 14th, 2025
Mergium analyzes merger and acquisition activity in mental health from 2020 to 2024.
M&A – The numbers
The following graph presents the number of mergers and acquisition transactions by buyer type on an annual basis from 2020 to 2024:
Source: Mergium research.
Notes:
This analysis:
Includes companies that offer outpatient services, in person or via telehealth, B2C and/or B2B, offering psychiatry, medication management, talk therapy, TMS, ketamine and esketamine therapies and other psychedelic treatments. It also includes mental health hospitals, and residential, IOP, and PHP treatments.
Types of transactions and buyers:
PE (Buyout): Transactions by private equity firms (“PE”).
PE (Secondary Buyouts (SBOs)): Sale of companies by one PE to another PE.
PE (Platform): Typically, after closing of an M&A by a private equity, the acquired company (“Platform”) grows through acquisitions (“add-ons”) of smaller firms and de novo locations. The acquisitions of those smaller companies are registered here.
Strategic Buyer: These are acquisitions made by a company that is not a PE, nor a Platform of a PE.
The study only includes what is widely understood as mergers and acquisitions and does not include private placements, i.e., acquisitions of shares and debt instruments by private investors when a company sells newly issued shares or debt. These transactions are regulated by the U.S. Securities and Exchange Commission and usually executed applying a federal exemption, like rule 506 (b).
M&A activity in 2024 was similar to 2023
The number of transactions in 2024 was similar to 2023 (63 vs 63). We can see a decrease in acquisitions by private equity firms via buyouts and even a decrease in add-ons by platform companies. Those decreases are compensated by an increase in acquisitions by strategic buyers.
Activity in 2024 and 2023 was much lower than the post pandemic years of 2021 and 2022, but still better than 2020.
On the outpatient front and as expected, since 2022 we see a decrease in transactions including psychedelic treatments. Also, we see a decrease in the number of transactions, including TMS. By far, most of the transactions include psychiatric treatments and talk therapy.
On the inpatient side, since 2022, we see a decline in the number of M&A transactions of mental health hospitals.
What To Expect Moving Forward
The first forty five days of 2025 started with a strong M&A activity, especially acquisitions by platform companies and by strategics. Given the initial enthusiasm of capital markets with the new Trump Administration, we should expect a continuation of this activity during 2025. However, that activity will be affected by policies formulated during the first months of this new Administration. Those policies are on a number of fronts including those affecting macroeconomic conditions, private investment, and healthcare industry agents.
Additional resources:
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If interested in knowing about our experience in selling / acquiring healthcare services companies, click here