Investment in autism treatment heats up: Ontario Teachers values Acorn Health at around $250m

Fresh on the heels of Cerberus' $400m-plus deal for Lighthouse Autism, the heightened valuations achieved in the two transactions reflect investors belief in the growth of the autism-treatment industry.

With a second autism-treatment platform trading hands this summer at a premium valuation, Acorn Health is proving another validator that the sub-sector remains an interesting pocket of healthcare investment for growth-focused financial buyers. 

Ontario Teachers’ Pension Plan Board, in its latest multi-site healthcare bet, acquired a  majority stake in Acorn valued at approximately $250 million, four sources familiar with the deal terms told PE Hub. 

Concluding a sale process conducted by Calex Partners, a healthcare services-focused M&A advisory firm, Ontario Teachers’ investment provided an exit for former majority owner MBF Healthcare Partners II.

The deal, announced Friday, implies a 15.5x multiple of pro forma maturity-adjusted EBITDA for 2021, or rather, a 26x multiple of year-end TTM EBITDA, sources said. 

Considering those metrics, the transaction appears precedent-setting, they added. Its valuation speaks to both the company’s quality and growth opportunities sitting in front of the broader autism segment – fueled by the need for greater professionalization and standardization of care in what remains a fragmented and underserved industry, they said. 

The Acorn investment comes on the heels of Abry Partners’ July sale of Lighthouse Autism to Cerberus Capital Management, which commanded a valuation just north of $400 million, PE Hub reported. That implied Lighthouse scored close to or a little over a 14x multiple, based upon the $29 million of 2021 pro forma maturity-adjusted EBITDA quoted by sources. 

Justifying the outcome for Acorn, which provides both center-based and home-based ABA therapy to children with autism spectrum disorder, the platform has proven out a multipronged strategy. The company has achieved scale through a playbook encompassing organic, same store sales growth, tuck-in acquisitions and pure de novo growth, sources said.

Over the last three years, Acorn has grown from one clinic to 51, spanning Michigan, Illinois, Virginia, Florida, Maryland, Pennsylvania and Tennessee.

MBF, a Coral Gables, Florida-headquartered private equity firm, partnered with industry veteran Vicki Kroviak in 2018 to launch Acorn through two simultaneous acquisitions. 

Kroviak, who is the former CEO of eating disorder-treatment network Monte Nido, retained a meaningful stake in Acorn alongside Ontario Teachers’ and other members of management.

“Our new partnership with Ontario Teachers gives Acorn Health additional capabilities to invest in our people, our systems and our clinical infrastructure. We see a substantial need and will continue building a sustainable company offering a highly important service to children with ASD so that they may live their most independent and meaningful lives,” Kroviak said in Friday’s statement. 

Notably, the back-to-back transactions (Acorn and Lighthouse) are the first platforms to transact since General Atlantic in January 2020 invested in ACES. Industry sources told PE Hub that ACES traded hands for a similar but slightly lower metric than Acorn.

Around the same time of the ACES deal, KKR’s Blue Sprig Pediatrics bought Florida Autism Center for an enterprise value of $120 million, including a $95 million cash component, with the remaining portion in stock, PE Hub reported. 

Implying another big outcome, sources said then the asset’s center-level EBITDA sat at around $10 million. However, excluding maturity adjustments, FAC at the time was losing money, they acknowledged, as it was burdened by the significant investment in new unit openings and operational initiatives – a normal dynamic for a platform investing in significant de novo growth. 

For Ontario Teachers, Acorn joins a growing list of global healthcare investments, having backed prior physician practice management platforms in segments including dental, veterinary, ophthalmology and dermatology. 

Recent new platform investments for the Canadian pension plan include US-based NVISION Eye Centers and New Zealand and Australia-based dental clinic operator Abano Healthcare. 

Ontario Teachers and Calex declined to comment, while MBF and Acorn’s Kroviak did not return requests for comment.