In a significant move for autism therapy services, Behavioral Innovations, one of the largest providers of autism services in the United States, has announced a partnership with Tenex Capital Management, a private equity firm based in New York City. The $300 million deal marks the acquisition of Behavioral Innovations by Tenex, bringing a new era of growth and strategy for the company.
The acquisition is notable not only for its size but also for its timing, marking one of the first major platform deals in 2024. According to reports from Mergermarkets, the deal values Behavioral Innovations in the high teens, with some industry experts suggesting that the company’s strategic move toward a sale has been in the works for several months. This move is one of the most significant in the autism therapy space since the October 2023 acquisition of Trumpet Behavioral Health by KKR-backed BlueSprig Pediatrics.
The Transition from Shore Capital Partners to Tenex Capital Management
Prior to this deal, Behavioral Innovations had been backed by Shore Capital Partners, a Chicago-based private equity firm, which invested in the company back in 2017. Under Shore Capital’s stewardship, Behavioral Innovations grew significantly, expanding its reach and increasing the number of locations offering its autism therapy services. Shore Capital has been an active investor in the behavioral health sector, with investments in companies like Transformations Care Network, The Stepping Stones Group, and BrightView Health.
The transition from Shore Capital to Tenex Capital Management signals a strategic shift for Behavioral Innovations. Shore Capital, which has declined to comment on the deal, played an instrumental role in shaping the company’s growth strategy over the past seven years. However, as the company looks toward its next phase of development, Tenex’s involvement is expected to bring a new perspective and an increased focus on expanding its national footprint and continuing to provide top-notch autism therapy services.
Behavioral Innovations’ Market Position and Expansion
Headquartered in Addison, Texas, Behavioral Innovations has long been a leading name in the autism therapy services industry. The company currently operates 80 locations across three states: Texas, Colorado, and Oklahoma. Of these, 63 locations are based in Texas, reflecting the company’s dominant presence in the Lone Star State. Behavioral Innovations provides Applied Behavior Analysis (ABA) therapy, which is widely recognized as an effective treatment for children with autism spectrum disorder (ASD). The company’s mission has always been to offer high-quality, evidence-based therapy that improves the lives of children with autism and helps them achieve their fullest potential.
With a solid foundation in Texas and significant operations in Colorado and Oklahoma, Behavioral Innovations is poised to expand even further under its new ownership. The company’s commitment to providing services in communities that need them the most aligns with Tenex’s investment philosophy, which often targets companies with significant growth potential in essential sectors. As a result, the deal promises not only to help Behavioral Innovations expand its current footprint but also to open up new avenues for service delivery, both geographically and in terms of the range of autism therapy services offered.
The Broader Landscape of Autism Therapy and Dealmaking Trends
The Behavioral Innovations acquisition is part of a broader trend in the autism therapy services space, where both established companies and newcomers are vying for market share. Over the past few years, the autism therapy sector has experienced notable deal activity, including the 2023 acquisition of Trumpet Behavioral Health by BlueSprig Pediatrics, which was backed by KKR. Despite challenges posed by the high-interest rate environment, which has slowed dealmaking across various industries, the autism therapy market has remained resilient, with several major deals occurring in recent months.
Some industry observers have speculated that the slowing of dealmaking in the sector may be temporary. They predict that, as the high-interest rate environment stabilizes and investment demand rebounds, the autism therapy market will see increased deal activity in the latter half of 2024 and into 2025. This timing aligns with the expected end of typical hold periods for many autism therapy platforms that were acquired or received major investments during the peak dealmaking years of 2019 to 2021.
In fact, earlier this month, Caravel Autism Health, which is currently backed by Frazier Healthcare Partners, was reported to be working on a new deal with the firm GTCR. As the market continues to evolve, these ongoing transactions highlight the increasing investor interest in the autism therapy services sector, driven by the growing need for services and the financial potential of the industry.
What’s Next for Behavioral Innovations?
As Behavioral Innovations embarks on this new chapter with Tenex Capital Management, the company is set to experience exciting changes and expansion. Tenex’s backing is expected to provide the company with the resources and expertise needed to accelerate its growth, expand its reach, and invest in new technologies and services that will further enhance the quality of care provided to families and individuals affected by autism.
Tenex Capital’s investment strategy typically focuses on companies with strong management teams and growth potential in essential industries, and Behavioral Innovations fits squarely within this model. With Tenex’s deep industry knowledge and experience in scaling businesses, Behavioral Innovations is well-positioned to continue its growth trajectory, providing autism therapy services to even more communities across the United States.
Furthermore, Tenex’s involvement is likely to bring additional strategic resources to the company, including potential partnerships, technological innovations, and access to new funding opportunities. As a result, Behavioral Innovations is expected to continue to lead the way in delivering evidence-based ABA therapy while expanding its impact in underserved regions.
Industry Outlook: A Growing Demand for Autism Therapy Services
The demand for autism therapy services is expected to continue growing as more families seek specialized care for children with autism spectrum disorder. The rise in autism diagnoses, along with increasing awareness and advocacy for improved treatment options, has made the autism therapy services market one of the fastest-growing sectors in the behavioral health industry. Companies like Behavioral Innovations, which offer evidence-based therapies and have a strong commitment to quality care, are well-positioned to meet this rising demand.
The growth of the autism therapy services market is also being fueled by changing attitudes toward mental health and disability services, as well as increased public and private sector investment in healthcare. These trends are expected to continue in the coming years, making it an exciting time for companies like Behavioral Innovations to expand and innovate.
As the company moves forward under Tenex Capital Management’s leadership, it will be able to tap into new opportunities for growth and service expansion. The acquisition of Behavioral Innovations is not just a major deal for the company itself but also for the broader autism therapy market, which is poised for continued evolution and expansion.
Conclusion
The $300 million acquisition of Behavioral Innovations by Tenex Capital Management marks a significant milestone in the autism therapy services sector. As one of the largest autism therapy providers in the U.S., Behavioral Innovations is well-positioned to continue its growth and impact under its new ownership. With Tenex’s investment and strategic guidance, the company is set to expand its reach, enhance its services, and continue to provide much-needed care to individuals with autism across the country.
As the autism therapy landscape evolves, this acquisition is just one example of the increasing interest in the sector and the growing demand for high-quality, evidence-based therapies. With continued investment, innovation, and a strong commitment to care, companies like Behavioral Innovations will play a vital role in shaping the future of autism therapy and improving the lives of those who rely on these services.
