Scoop: Revelstoke buys Monte Nido for upwards of $700M

Revelstoke Capital Partners won the auction for Monte Nido & Affiliates, agreeing to acquire the eating disorder treatment provider from Levine Leichtman Capital Partners, multiple sources tell Axios.

• Some of those people place a valuation around the ballpark of $725 million.

Why it matters: The COVID-19 environment fueled a spike in hospitalizations for anorexia and other eating disorders among adolescents.

Driving the news: The Denver-based private equity shop signed the deal over the weekend, concluding a Harris Williams-run auction process that kicked off late last year, sources say.

• Sources previously cited estimated pro forma EBITDA of about $50 million for 2022, (or $65 million with maturities), but one source adds that actual EBITDA is more like $40 million.

Context: Monte Nido provides various residential treatment, partial hospitalization, and intensive outpatient programs for the treatment of eating disorders, a common comorbidity of depression and other behavioral health issues.

• Monte Nido historically slanted towards lower- and moderate-acuity patients, a more competitive care setting in contrast to high-acuity patients, but more recently diversified, sources say.
• The company invested in higher acuity patient populations through its acquisitions of Walden Behavioral Care in September 2021 and Arizona-based Rosewood Center for Eating Disorders in October 2020, the latter through which it also entered the Southwest market.
• Monte Nido as of July encompasses five different brands with 47 programs in fourteen states.

Yes, and: The Monte Nido deal comes after Revelstoke in January put its money behind another area of behavioral health, investing in substance abuse treatment provider Crossroads Treatment Centers alongside CDPQ.

State of play: Monte Nido follows the joint acquisition of industry leader Eating Recovery Center by Apax and Oak HC/FT last fall. (ERC for its part has diversified into mood & anxiety disorder treatment.)

• Sources at the time told Sarah the deal was valued at approximately $1.4 billion, with the company projecting $91 million of pro forma mature EBITDA for 2021.

• Apax's Andy Cavanna and Oak HC/FT's Andrew Adams then spoke to the shortage of good providers in the market, emphasizing the value of having an omnichannel approach that encompasses both in-person and virtual care — particularly when it comes to addressing the country's access problem.

The bottom line: Sale processes seem to be taking a little bit longer in today's turbulent market, but we continue to see private equity and venture capital flock to various pockets of behavioral health — be it Vistria Group's quiet youth mental health bet or AI-driven digital startup Wysa landing $20 million in Series B funding.

LLCP and Revelstoke declined to comment.

Claire Rychlewski contributed to this report.