Behavioral Health Insights

MARCH 2022

Medication-Assisted Treatment (MAT) Summary

Medication-Assisted Treatment (MAT) is the use of FDA-approved medications, in combination with counseling and behavioral therapies, to provide a “whole-patient” approach to the treatment of substance use disorders, mainly alcohol use disorder (AUD), opioid use disorder (OUD) and opioid overdose prevention. For many years, behavioral health and traditional medicine were partitioned, as were the providers, systems and organizations that attended to them. As a result, behavioral healthcare, especially MAT, has developed as a distinct segment of the healthcare sector with its own challenges, regulatory concerns, reimbursement landscape and operating models.

Substance abuse is a particularly relevant sector of behavioral health in the U.S.; with over 40 million people (12% of the US population) being affected. Prescription drug overdoses have increased 242% since 1999. Approximately 70,000 people died from opioid overdoses in 2020, a rate of 21.4 deaths per 100,000 people which is 38% higher compared to 2019.

~ $27B Estimated 2022 U.S. market size for substance abuse and mental health clinics
~ 26,058 Estimated substance abuse and mental health facilities in the U.S.
~ 301k 2021 estimated employment at substance abuse and mental health facilities in the U.S.
3.7% Annual sector growth from 2021 to 2026P
~ $740B Annual societal cost of drug abuse and addiction (related to crime, lost work productivity and health care)

Investor Interest in Behavioral Health

The key driver of sector growth over the past several years has been the increase in behavioral health expansion following the healthcare reform and the accompanying growth in government spending for behavioral health. These forces have unlocked demand for behavioral services that have long been constrained by various factors limiting access. AMB expects heavy consolidation in the future as thriving pure-play operators seek to acquire one another to achieve scale and capitalize on operational efficiencies. Furthermore, we anticipate strategic interest as healthcare systems and population health managers seek behavioral health solutions and partnerships.

Key Investment
Attributes of MAT

Historical Lack of Accessibility and Affordability Contributing to Underreported Demand

  • Over 90% of Americans that struggle with addiction are not currently receiving treatment due to high costs for treatment and fragmented operators

Large Population of Private Insurance Individuals

  • The number of people with private health insurance continues to grow at approximately 1.3% annually and supports 21% of industry revenue

PE Add-ons and Platform Expansion

  • Expected growth in private equity add-on transactions due to multiple firms’ entrance in the industry

Increased Funding for SAMHSA Means Elevated Funding for Operators

  • Increased funding will allow operators to make investments in prevention, treatment and recovery infrastructure, promote support for providers and address unique local needs to deliver substance use disorder services
Recent MAT
Legislation
  • The Drug Addiction Treatment Act of 2000 (DATA 2000) permits physicians who meet certain qualifications to treat opioid dependency with narcotic medications approved by the FDA –including buprenorphine – in treatment settings other than opioid treatment programs (OTP).
  • The Comprehensive Addiction and Recovery Act of 2016 (CARA) addresses the opioid pandemic and endorses the use of MAT for OUD.
  • The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act is a broad package of Medicaid, Medicare and public health measures to address the opioid epidemic. It works with the Opioid Crisis Response Act of 2018.

Behavioral Health MAT Deal Breakdown

Select Private Equity Platform Activity

2021
2021
2020
2018
2017
2015

Platform Add-On Snapshot

Date Target Name Acquirer
January 2022 Center for Behavioral Health Kentucky Behavioral Health Group
December 2021 Strategic Behavioral Health Summit Behavioral Healthcare
September 2021 Cornerstone of Recovery Bradford Health Services
July 2021 Nashville Recovery Center BRC Healthcare
July 2021 Aspire BrightView Health
March 2021 Southcoast Behavioral Health Footprints to Recovery
January 2021 Renew Recovery BrightView Health

AMB Investment Banking Snapshot and Deal Team

AMB focuses on lower middle-market healthcare niches where consumerism and fragmentation meet to disrupt traditional healthcare channels. We typically advise companies with EBITDA of $5M to $20M and an average enterprise value of $100M, but will move up and down the spectrum. AMB’s research-oriented approach to business development has resulted in a vast network of strategic and financial sponsor relationships that yield industry leading intelligence and optimal outcomes for our clients.

Gordon A. Maner

Chief Executive Officer
843-405-1106 Direct
gordon.maner@ambwealth.com

Mikel Parker

Managing Director
843-501-2183 Direct
mikel.parker@ambadvisors.com

Ryan Loehr, CPA

Managing Director
843-405-1108 Direct
ryan.loehr@ambadvisors.com

Johnny Cross

Vice President
843-371-8596 Direct
johnny.cross@ambadvisors.com

Mike Nisbet

Associate
843-308-1198 Direct
mike.nisbet@ambadvisors.com

Kevin Williams

Analyst
843-473-7981 Direct
kevin.williams@ambadvisors.com

Max Kitchen

Analyst
843-405-1113 Direct
max.kitchen@ambadvisors.com