In Q2, M&A activity in the behavioral health space slowed down due to rising costs and staff shortages, leading to many behavioral health facilities closing down. For instance, Michigan-based Chelsea Hospital and Wisconsin-based Froedtert Health closed their behavioral health units. However, despite these challenges, there are some trends that could drive deal activity in the future. Telehealth and virtual care were a few deals that occurred in Q2, with many digital behavioral health companies completing funding rounds. Mental health is also a focus area in the behavioral health sector, with more deals completed in this sector in the past five years. We expect investment in the mental health sector to continue and intensify. Urbana, Illinois-based Carle Health’s acquisition of UnityPoint, a three-hospital system that provides behavioral health services, was another notable deal in Q2.
