The behavioral health market could see another activist investor bring private equity into the space.
Summit, New Jersey-based Concord Health Partners announced Monday the final close of a $150 million fund focused on growth-stage companies that either have innovative technologies or improve access to care, improve quality or reduce costs.
The fund is called the Concord Innovation Fund II, according to a news release.
Concord Health Partners has so far deployed 50% of the capital committed to the fund. That capital went to several healthcare companies, including Austin-based telepsychiatry company Iris Telehealth and Switzerland-based digital neurotherapy company MindMaze, according to the release.
Concord Health Partners and Seattle-based Columbia Pacific Advisors led the $40 million Series B round for Iris Telehealth. It was announced in April.
Other behavioral health portfolio companies for Concord Health Partners include cognitive behavioral therapy-based digital tools provider Learn To Live.
The latest fund marks a new step in the evolution of Concord Health Partners, the release said. The firm is exploring additional near-term offerings in the areas of emerging innovation and behavioral health.
The firm hopes to position itself for what could be a wave of behavioral health companies seeking growth-stage capital following the surge of venture capital that has flowed into health technology and technology services over the past few years, James Olsen, founder and managing partner at Concord Health Partners told Behavioral Health Business.
“Broadly speaking, we see a very significant set of opportunities,” Olsen said of investing in behavioral health. “We know it’s attractive given the need and given our strong relationship with significant providers and payers in the industry, all of whom are focused on innovative technologies and solutions that address behavioral health. It’s a great fit for us.”
Olsen pointed to Iris Telehealth and Learn To Live as examples of the fund’s approach.
“These are really innovative technologies that increase access to quality care, increase utilization and engagement on the front end, and address some pain points in behavioral health,” Olsen said. “Those are the things we’re going to focus on. … [There are] there are many possibilities.”
Concord Innovation Fund II is 300% larger than the firm’s inaugural fund, which closed in November 2019. It includes more than 50 limited partners (LPs).
LPs participating in the fund include family offices, endowments, institutional investors, as well as payers and healthcare organizations, including the American Hospital Association.
“Concord has quickly demonstrated its ability to find and realize investment opportunities across the continuum of care,” Rick Pollack, president and CEO of the American Hospital Association, said in the release.
Overall, behavioral health dealmaking is on track for a banner year in 2021, with some exceptions for private equity deals, according to M&A advisory firm The Braff Group.
It tracked 102 behavioral health deals in the first half of the year, down 20% from the same period last year. However, the volume of deals in the autism treatment space is about 15% higher than in 2021, according to data owned by the company.
“The story is a bit different when it comes to behavioral health private equity investment activity,” The Braff Group said in a recent report. “Although declining, sponsored transactions are only 11.4% behind last year.
“But if we break it down between market-entry platform deals and follow-on deals, the data tells us a bit more. Although platform volume is down 28.6%, trailing companies are down just 5.6% after 2021.”
The Braff Group tracked 251 deals in 2021, up about 33% from another very good deal-making year in 2020.