The behavioral health market could see another active investor bring private equity into the space.
Concord Health Partners, based in Summit, New Jersey, announced on Monday the final closing of a $150 million fund focused on growth-stage companies that have innovative technologies or improve access to care, improve the quality or reduce costs.
The fund is called Concord Innovation Fund II, according to a press release.
Concord Health Partners has so far deployed 50% of the committed capital in the fund. That capital went to several healthcare companies, including Austin-based telepsychiatry company Iris Telehealth and Swiss digital therapeutic neurology company MindMaze, according to the release.
Concord Health Partners and Seattle-based Columbia Pacific Advisors led the $40 million Series B funding round for Iris Telehealth. It was announced in April.
Other Concord Health Partners behavioral health portfolio companies include Learn To Live, a provider of digital tools based on cognitive behavioral therapy.
The latest fund marks another step in the evolution of Concord Health Partners, the statement said. The company is exploring other near-term offerings in emerging innovation and behavioral health.
The company hopes to position itself for what could be a wave of growth-stage capital-seeking behavioral health companies following the surge in venture capital into health technologies and technology services in recent years. years, James Olsen, founder and managing partner at Concord Health Partners told Behavioral Health Business.
“Overall, we see a very large opportunity set,” Olsen said of investing in behavioral health. “We know it is attractive, given the needs and our strong alignment with major industry providers and payers, all of whom are focused on innovative technologies and solutions that address behavioral health. It is a very good choice 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 early utilization and engagement, and address some behavioral health pain points,” Olsen said. “That’s the kind of stuff we’re going to focus on. … [There are] lots of opportunities there.
Concord Innovation Fund II is 300% larger than the company’s inaugural fund, which closed in November 2019. It includes more than 50 limited partners (LP).
LPs involved in the fund include family offices, endowments, institutional investors as well as healthcare payers and organizations, including the American Hospital Association.
“Concord has quickly proven its ability to find and execute investment opportunities across the continuum of care,” Rick Pollack, president and CEO of the American Hospital Association, said in the release.
Global behavioral health deals are behind a record year in 2021, with a few exceptions for private equity deals, according to mergers and acquisitions advisory firm The Braff Group.
It tracked 102 behavioral health agreements in the first half of the year, down 20% from the same time last year. However, deal volume in autism treatment is about 15% higher than in 2021, according to company-exclusive data.
“The story is a bit different when it comes to behavioral health private equity investment activity,” Braff Group said in a recent report. “Although down, sponsored transactions are only 11.4% behind last year.
“But if we break it down between market-entry platform deals and follow-ups, the data tells us a bit more. While platform volume is down 28.6%, follow-ups are just 5.6% behind 2021.”
Braff Group tracked 251 deals in 2021, around 33% more than another strong year for deal closings in 2020.