PE Firm Thurston Group Makes Second Mental Health Deal Since Forming ARC Health

Outpatient mental health provider ARC Health announced Tuesday its acquisition of youth and family mental health service provider Sasco River Center LLC.

Beachwood, Ohio-based ARC Health’s takeover of the Darien, Connecticut-based Sasco River Center is its second deal announced in the last three weeks, marking rapid early growth of the company.

On Aug. 17, ARC Health announced it acquired Southeast Psych. Southeast Psych operates two locations in Charlotte, North Carolina, and a location in Nashville, Tennessee. It too focuses on youth mental health with its “sweet spot” being serving teens, young adults and their families, according to an August announcement.

The financial terms of both deals were not announced.

Sasco River Center operates three locations in Connecticut and employs 60 providers at offices in Darien, Stamford and Wilton. The organization opened its de novo flagship 9,000-square-foot multidisciplinary center in Darien in January 2022, according to a news release.

ARC Health was formed following an August 2021 investment by Thurston Group LLC, a Chicago-based private equity firm. Thurston teamed up with Advanced Recovery Concepts, an Ohio-based outpatient mental health provider, in the move.

In partnership with Thurston, ARC Health aims to partner with like-minded providers across the country as part of its aggressive growth strategy, according to previous Behavioral Health Business coverage.

“ARC can provide the back-office support and economy of scale we need to grow, freeing our team to do what they love best, helping our patients become their best selves,” Chris Bogart, co-founder and co-manager of Sasco River Center, said in a news release.

And even with the two deals in less than a month, ARC Health likely isn’t finished adding to its platform. The company is seeking deals “with leading mental health providers in attractive geographies,” according to a release.

The deal also comes at a time when dealmaking and investment in the behavioral health space are coming off of a wild ride in 2021.

The M&A consulting firm The Braff Group tracked 251 deals in 2021, about 33% more than another very good year for dealmaking in 2020. In 1H 2022, The Braff Group tracked 102 deals, about 20% less than the same period last year.

However, private equity deals – like the PE-backed ARC Health buying Sasco River Center – are running not so far behind 2021.

“While down, sponsored transactions are running only 11.4% behind last year,” The Braff Group wrote in a recent report. “But if we break it down between market-entry platform deals vs. follow-ons, the data tells us a bit more. While platform volume is down 28.6%, follow-ons are running a scant 5.6% behind 2021.”

The report also states “it is not at all unusual” for private equity firms to opt for more follow-on transactions, rather than pricey platform deals, during times of heightened economic uncertainty.

Other data from the firm Mertz Taggart confirm the dip in recent behavioral health dealmaking. However, deal flows continue at a health clip in the autism, intellectual and developmental disabilities, and general mental health sectors.

On its end, Thurston Group targets investments in the health care and related-business-services sectors. Some of its other portfolio companies include Options Medical Weight Loss, US Orthopedic Partners and Smile Doctors.

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