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Pyramid Healthcare, a Duncansville, Pennsylvania-based behavioral health provider, should be positioned to explore a sale towards the end of next year, said a source familiar with the matter.
Backed by Clearview Capital since 2011, the addiction treatment company expects have roughly USD 150m in revenue and EBITDA close to 15% at the time of its sale, according to the source.
Multiples in the behavioral health space can reach upwards of 10x-12x EBITDA, especially for companies such as Pyramid, whose revenue stream comes entirely from in-network and government providers, which is more stable and reliable, the source added.
Despite a significant amount of inbound sale interest from financial and strategic buyers, the source explained that Pyramid is implementing a new electronic medical record (EMR) system and is also in the process of expanding several facilities, and waiting to bear fruit on those initiatives before exiting.
Pyramid provides treatment for adults and teens suffering from addiction or substance abuse, as well as individuals with mental health disorders. Founded in 1999, the company has at least 26 facilities located throughout Pennsylvania, according to its website. It more recently branched out via acquisitions into North Carolina and New Jersey.
The source said Pyramid expects to close a small acquisition later this week.
Addiction treatment centers are among the most highly coveted sub-sectors in the overall behavioral health space, according to a report earlier this month by Mergermarket, which pegged Pyramid as a likely near-term sale target.
The main strategic acquirers in the behavioral health space, as noted in that report, are Acadia Healthcare Company [NASDAQ:ACHC], Universal Health Services [NYSE:UHS] and AAC Holdings [NYSE:AAC], while PE-backed consolidators include Kohlberg & Company-backed Alita Care, Audax Group-backed Meridian Behavioral Health, Goldman Sachs-backed Advanced Recovery Systems and Centre Partners-backed Bradford Health Services.
Pyramid did not return request for comment. Clearview declined to comment for this report.
by Deborah Balshem in Fort Lauderdale
As seen in the mergermarket newsletter on 27/06/2017