Investor-backed Medicaid market dealt another blow

• "The majority of [private equity] investors are pretty risk off in Medicaid already," one banker says.

Between the lines: That could spell more trouble for auctions involving behavioral businesses like Atar Capital-backed Clarvida and Warwick Partners-backed New Season Health.

• The companies have presence in California and Minnesota, respectively.

Yes, but: "There are investors that are still, like, 'We like Medicaid, we get it, we have the relationships,'" the banker says.

State of play: Recent deals have involved Medicaid businesses merging their way into adjacent services or other payer categories.

• Medicaid-focused Cityblock acquired rural primary care business Homeward Health last month.
• BPOC-backed Health Management Associates acquired Medicaid-focused technology company HealthTech Solutions in March.

The bottom line: These deferrals further cloud the outlook for Medicaid deals already hindered by OBBBA provisions that tighten eligibility standards and limit key state funding mechanisms.