Skip to main content
Illustration: Sarah Grillo/Axios

Linden Capital Partners explores the sale of addiction treatment provider Pinnacle Treatment Centers, multiple sources tell Sarah.

Why is this important: The demand for better access to behavioral health services, including addiction treatment, continues to outstrip the supply.

  • According to the CDC, drug overdose deaths in the United States in 2021 increased by 15% year over year, mainly due to the use of opioids and methamphetamine.
  • Age-old tailwinds have long fueled the demand for behavioral healthcare, and the consequences of the pandemic, whether unemployment or death, have only added to the long-term distress – increasing this imbalance between supply and demand.

What is happening: Lincoln International has been hired to handle the Pinnacle sale, which has just kicked off, sources say.

  • Pinnacle, based in Mt. Laurel, New Jersey, forecasts between $70 million and $75 million in EBITDA for 2022, according to sources.

The context: Pinnacle offers a variety of programs including drug rehabilitation, residential, inpatient, partial inpatient, and outpatient treatment for people with addictions. It also offers drug treatment for opioid addiction.

  • Pinnacle processes more than 10,000 people a day through its more than 115 locations in eight states.
  • This implies that its footprint nearly quadrupled under Linden’s six-year tenure – at the time of the sale, Pinnacle was a network of more than 30 facilities in five states.

State of play: Private equity firms have built a handful of behavioral health platforms dedicated to addiction treatment.

  • Community Medical Services, an opioid treatment provider, was acquired by FFL Partners and Two Sigma Impact in December.
  • Behavioral Health Group is an opioid treatment network that Vistria Group bought in 2018 for a valuation of more than $250 million, Sarah wrote at the time.
  • BayMark Health Services is an opioid addiction treatment company that Webster Equity Partners invested in a continuation fund last year.
  • Summit BHC is an acute psychiatric care and addiction treatment company that Patient Square Capital bought for an enterprise value of $1.3 billion last year, producing a 4x return for sellers Lee Equity and FFL Partners, wrote Sarah.

💭 Our thought bubble: Despite a flurry of sponsor activity, quality issues have made investing in the space more difficult in recent years.

  • However, as programs increasingly focus on quality metrics, evidence-based practices and payer transparency, we could see more capital flowing into the sector, especially in the context of a crisis. continue opioids.

Linden declined to comment, and Lincoln did not immediately return a request for comment.

Claire Rychlewski contributed reporting.