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.
- Write to us if you've heard the latest.
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:
- Vistria Group's quiet youth mental health bet, Sandstone Care.
- Revelstoke Capital Partners' $700 million-plus deal for eating disorder treatment provider Monte Nido & Affiliates.