Report: Owner of two Colorado mental health facilities on the block

JOHNSTOWN and COLORADO SPRINGS — The out-of-state owner-operator of two mental health facilities is for sale, a report on PE Hub said. The online journal tracks mergers and acquisitions, with particular focus on private equity investors and their portfolios and targets.

Trade journal Behavioral Health Business also picked up the report.

Tennessee-based Summit Behavioral Healthcare LLC debuted 92-bed Johnstown Heights Behavioral Health in May in a building it bought for $29.25 million in December. In January 2020 Summit BHC purchased 112-bed Peak View Behavioral Health in Colorado Springs.

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Summit owns two dozen similar hospitals in the U.S. and is owned by private equity firms Lee Equity Partners in New York and San Francisco-based FFL Partners, formerly Friedman, Fleischer & Lowe.

The current owners bought Summit in 2017 from prior owners, Chicago-based Flexpoint Ford LLC and other investors, which had invested in 2015. Summit had about a dozen psychiatric hospitals in 2017; it was founded in 2013.

According to their respective websites, Lee invests $50 million to $100 million in equity for controlling stakes while FFL marks out middle market prospects with revenue of $30 million to $400 million and a valuation of up to $300 million.

PE Hub said Summit’s 2021 EBITDA is projected at $80 million to $90 million, up from a current run rate in the mid-$70 millions. It said Lee and FFL own equal stakes and have hired investment bankers Moelis and Jefferies to market Summit. Moelis helped them buy Summit from Flexpoint Ford in 2017.

Summit’s C-Suite includes senior executives who have worked together at several Tennessee-based behavioral health hospital systems. These include chief executive Brent Turner, named to his post last September; Jon O’Shaughnessy, CEO for about a year, who moved down a notch to president when it hired Turner; and chief financial officer Chuck Edwards, a Summit co-founder who was formerly with Chicago-based investor Waud Capital Partners. Waud was a majority owner of the now-public Acadia Healthcare Co. Inc. (Nasdaq: ACHC), a $6 billion (market cap) mental health-care hospital system of 225 facilities and 10,000 beds. Turner and O’Shaughnessy previously worked together there.

Former Johnstown Heights CEO Scott Snodgrass left that post Aug. 9 after about four months on the job for the same role at Centennial Peaks Hospital in Louisville. Centennial is owned by Pennsylvania-based operator UHS Inc. (NYSE: UHS), which last year paid $3.1 billion for then-public Psychiatric Solutions Inc., with 100 facilities and 11,000 beds, which was another alma mater of O’Shaughnessy and Turner.

For more on Summit, a possible sale, and the two hospitals, see the September print edition of BizWest.

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