Illustration: Sarah Grillo/Axios
UnitedHealth Group’s Optum unit has quietly bought Jacksonville Beach-based Refresh Mental Health from private equity firm Kelso & Co., sources tell Axios.
Why it's the BFD: Refresh gives Optum a big access point in the broader behavioral health sector, which received increased patient demand from the pandemic and renewed payor focus.
By the numbers: The deal’s price tag is not clear, but it was only in December 2020 that Kelso agreed to buy Refresh at a valuation around $700 million, sources told Sarah at the time.
- Estimated 2020 EBITDA was approximately $40 million ahead of the sale, sources said then.
State of play: There’s a growing recognition around the link between mental health and physical health, and payors and providers are increasingly factoring in the many co-morbidities associated with poor behavioral health conditions.
- Refresh, founded in 2017, operates a network of more than 300 outpatient mental health, substance abuse and eating disorder centers spanning 37 states.
- The pandemic heightened demand for behavioral health services, with unemployment and loss of life stemming from the crisis anticipated to create long-term distress.
- The segment has also proven among the most applicable areas of telehealth throughout the pandemic.
Yes, and: Everyone from large buyout funds to venture capital firms are betting on the sector.
- Recent private equity bets include Patient Square Capital's $1.3 billion deal for Summit BHC, Onex Partners' $1.3 billion deal for Newport Healthcare, and Apax and Oak HC/FT's $1.4 billion deal for Eating Recovery Center.
- Elsewhere, mental health startups including Lyra, Daybreak Health, BetterUp, Calm and Marigold Health have closed VC deals.
What they're saying: Even people who once believed there'd be vendor fatigue in virtual care are seeing white space in digital mental health, Ambar Bhattacharyya, managing director at Maverick Ventures, tells Axios' Erin Brodwin.
- Behavioral health is "such a deep category," that there's plenty of room for startups of varying size and type, Bhattacharyya says. "There are so many companies, and they’ve all done so well, it’s pretty mind-boggling."
Optum confirmed the deal, which has not been publicly announced, in an email to Axios.
- “Optum and Refresh Mental Health are excited to expand effective behavioral care to patients through a more coordinated health system. Together, we will be able to drive deeper integration between medical and behavioral health care and advance personalized care to patients through value-based care,” a company spokesperson wrote.
Kelso declined to comment.