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Lee Equity buys Bradford Health

Oct 31, 2022
Illustration of a ladder coming out of an empty wine bottle.

Illustration: Maura Losch/Axios

Lee Equity Partners acquired a majority stake in Bradford Health, a Birmingham, Ala.-based operator of treatment centers for substance use disorder.

Why it matters: While many health care deals aren't closing in an accelerated manner today, Bradford is another data point reflecting both the ability to transact in the lower middle market — where lining up financing isn't quite as challenging.

Zoom in: Axios wrote in April that a sale process was underway for Bradford, whose EBITDA sources pegged at some $20 million to $30 million at the time.

  • The deal provides an exit for Centre Partners, which backed Bradford in mid-2016.
  • Harris William and Coker Capital advised Bradford, while Fifth Third and Comvest provided financing for the transaction. Terms were not disclosed.
  • Bradford has a network of 40 substance abuse treatment and recovery facilities spanning five states.

The intrigue: Bradford boasts that it is "an early pioneer in value-based behavioral healthcare reimbursement."

Of note: Lee's investment marks a return to the substance abuse treatment industry for the firm — whose past success and experience make it a logical suitor.

  • Lee and FFL Partners jointly invested in Summit Behavioral Health in 2017, unloading the business in September 2021 to Patient Square Capital at a $1.3 billion valuation.
  • The deal produced a 4x return for both firms, sources told Sarah at the time.

💭 Sarah's thought bubble: Health care services investors are trying to figure out the 'new normal' when it comes to valuations.

  • The behavioral health bellwether folks are really waiting on? Linden Capital Partners' Pinnacle Treatment Centers, a much larger addiction treatment provider currently in play via Lincoln international.

State of play: Bradford's trade reflects private equity's sustained appetite to tackle the underserved behavioral health market. Other notable PE bets behavioral health this year include:

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