The national opioid epidemic has spurred increased interest from private equity firms in addiction treatment centers, reports The Wall Street Journal.
Here are four things to know from the report.
1. Private equity firms put $11.4 million into treatment facilities in 2011 compared to $2.9 billion in 2016, according to WSJ, which cites research firm PitchBook Data. The number of private equity deals increased by 20 between 2011 and 2016.
2. The report cites various recent deals as examples. This includes Kohlberg & Co.'s $180 million acquisition of Wickenburg, Ariz.-based The Meadows rehabilitation center and multiple investors spending $34 million in 2016 for a stake in Red Bank, N.J.-based Sun Behavioral Health.
3. WSJ attributes the increased private equity investment in treatment facilities to various factors such as "soaring demand [for centers], expanded insurance coverage [via federal legislation] and the chance to consolidate a highly fragmented market."
4. Treatment center executives told WSJ private equity firms have sometimes sought to buy and convert nonprofit outfits to for-profit entities.
Read the full report here.