Mergium tracked 22 pediatric therapy M&A deals in H1 2026. Dr. Luis Lopez on private equity’s return, scarce platform assets, a rare ABA ESOP, and state risk.
Key Takeaways
- Pediatric therapy M&A volume settled rather than surged: Mergium counted 22 transactions in the first half of 2026, inside the 20 to 24 band the firm has tracked since the post-pandemic peak burned off. Lopez reads that as stabilization rather than re-acceleration, and warns against extrapolating from a single half.
- Medicaid reimbursement risk has become an underwriting input, not a footnote: Buyers are pricing prior authorization, audit exposure, and rate volatility into diligence rather than avoiding difficult states outright. Three of the five deals Mergium highlighted landed in Arizona and Oklahoma, where payers moved against providers during the same six months.
- New platform formation slowed to three, and Lopez blames supply, not appetite: Only three deals involved sponsors buying founder-owned practices to seed new platforms, against ten across all of 2025. Lopez says investor interest is undiminished and the binding constraint is a shortage of founder-owned businesses with the scale, management depth, and payer diversification buyers now require.
- ABA ESOPs stay rare, and the earlier ones did not stay employee-owned: North Arrow ABA’s June transaction was the fifth ESOP Mergium has identified in the sector since 2017, but most of its predecessors were absorbed by private equity within a few years. Lopez expects employee ownership to remain a niche path while strategics and sponsor-backed platforms take the rest.
Twenty-two is not a number that starts arguments. It is what Mergium Advisors counted in pediatric therapy mergers and acquisitions between January and June of this year, and it sits almost exactly where the firm’s count has sat in every first half since the post-pandemic investment cycle burned off: somewhere between twenty and twenty-four.
Nine of those transactions were announced in May and June, Dr. Luis F. Lopez, President of Mergium Advisors, told Acuity in an interview. A small number surfaced only after the firm’s May update, which put the running total at 11 pediatric therapy deals through April, “as is common in this market, where not every transaction is announced immediately.” Lopez is careful about what the flat line means.
“We view the H1 total as evidence of a market that has stabilized rather than one that is re-accelerating,” he said. “That said, we’re cautious about extrapolating too far. The market appears stable today, but M&A activity remains sensitive to broader economic conditions, financing markets, reimbursement developments, and operational challenges facing pediatric therapy providers.”
The composition underneath the number moved considerably more than the number did. And in at least one case, the calm reading of the aggregate and the lived experience of a company inside it have diverged sharply.
Private Equity-Backed Platforms Drove 65 Percent of Pediatric Therapy M&A
Sponsor-backed platforms accounted for roughly 65 percent of transactions in the half, against an average near 60 percent since 2020. Lopez now counts approximately 93 private equity-backed platforms operating in pediatric therapy, up from the roughly 90 he cited in May. That interrupts the shift toward strategic acquirers Mergium described at the end of 2025, and Lopez traces it to arithmetic more than sentiment. Platforms built around buy-and-build have to keep buying.
“As these platforms mature, many will eventually be recapitalized or sold to another private equity firm,” he said. “But those ownership changes typically don’t end the acquisition strategy: they often extend it. The new sponsor usually seeks to continue expanding the platform through additional acquisitions.”
New Platform Formation in Pediatric Therapy Slowed to Three Deals
The more striking figure in the half is three. That is how many transactions involved a sponsor acquiring a founder-owned practice to establish a new platform, down from ten across all of 2025. Lopez declines to read a structural cooling into it.
“In our view, the more significant constraint is the availability of high-quality platform assets rather than a lack of investor interest or available capital,” he said. A platform requires a founder-owned organization with scale, a strong management team, and a footprint that can support future acquisitions. “Those assets are relatively scarce.” Buyers have also grown more selective, he said, prioritizing diversified payer mixes and demonstrated resilience, which can suppress platform counts without signaling weaker long-term interest.
He returns to that point unprompted. “There are still a number of regional pediatric therapy providers that could serve as attractive platform investments,” he said, “so we believe the opportunity for new platform creation remains very much alive.”
The half’s clearest example arrived on its final day. Cathay Capital announced the launch of Ascendia Autism Care on June 30, built around a founding affiliate operating 20 centers across eight states, with Gladstone Capital Corporation as a capital partner. The affiliate was not named, a small illustration of Lopez’s longer-standing argument that pediatric therapy M&A is legible mainly in aggregate and rarely deal by deal. Earlier in the year, Momentum Health Partners, spun out of the Phoenix real estate firm MCR Companies, launched by acquiring Advanced Autism Center for Treatment, an Arizona and Montana provider, and a buyer group affiliated with Aquitaine Capital acquired KidsChoice, a multidisciplinary provider in Oklahoma.
Deal counts here are definitional as much as empirical. Mertz Taggart identified three new private equity platforms in the first quarter alone, including the platform built on InBloom Autism Services by Elysium Management, a family office rather than a traditional fund, which is the sort of distinction that keeps a transaction inside one tracker’s count and outside another’s. Trackers using broader autism-services definitions have reported first-half totals several times higher than Mergium’s pediatric therapy figure. None is wrong. They are counting different things.
Medicaid Reimbursement Risk Is Now a Pediatric Therapy Underwriting Input
KidsChoice rebranded as Mirabelle Care in June. What its new owners did not know at closing was that the Oklahoma Health Care Authority had suspended the company’s SoonerCare provider numbers back in November over a determination that a credible allegation of fraud existed, then waited 207 days to say so. By late June the company was near missing payroll for 210 employees across seven clinics serving roughly 500 children. A judge ordered the agency to pay all amounts owed and lift the suspension on July 15. Mirabelle Care has said the conduct under scrutiny predated its January acquisition, and the underlying investigation remains active.
That is what state risk looks like once it stops being a line in a diligence memo. Lopez does not dispute that the environment has changed. “Reimbursement rates, prior authorization requirements, audit activity, fraud and waste enforcement, and the overall regulatory environment have become increasingly important components of diligence and underwriting,” he said. What he resists is the conclusion that buyers are retreating.
“That doesn’t necessarily mean buyers are avoiding states with more challenging environments,” he said. “Rather, they are adjusting their expectations regarding growth, margins, operational complexity, and valuation. Experienced operators understand how to manage these risks and may still be very interested in those markets if the acquisition fits their strategy.”
The evidence for that reading is unusually direct this year, because Mergium’s heat map of the most active markets and the map of states tightening their ABA rules have largely converged. Arizona hosted two of the five transactions Mergium highlighted while three managed care organizations terminated contracts with two of the state’s largest ABA providers, prompting a class action from eleven families who estimated up to 1,000 children could lose access. Virginia, also on the heat map, began capping Medicaid ABA at 20 cumulative hours a week on July 1. North Carolina reopened its Policy 8F rewrite for comment, Illinois has not moved its rates since 2022, and California is rewriting Medi-Cal ABA coverage under a draft All Plan Letter.
Lopez offers a structural explanation for the geographic concentration, and it has little to do with reimbursement generosity: platforms buy where they already operate, or next door, “reflecting a strategy of geographic density rather than entering entirely new regions.” The research supports him. A research letter published in JAMA Pediatrics in January counted 574 private equity-acquired autism service sites across 42 states between 2015 and 2024, clustered in California, Texas, Colorado, Illinois, and Florida. The 2026 heat map overlaps that map almost exactly.
Multidisciplinary Pediatric Therapy Demand Meets an ABA-Only Counterexample
Speech therapy edged past applied behavior analysis as the service most often represented among targets, 16 to 15, with occupational therapy at 11. Lopez waves it off as sample noise, noting that several of the half’s buyers were platforms built around speech, occupational, and physical therapy, which mechanically lifts those counts. “I don’t see this as a signal that buyers are moving away from ABA,” he said.
The sharpest counterexample sits in Mergium’s own list of notable deals. ACES acquired Ally Pediatric Therapy from SBJ Capital in January, then said it would wind down Ally’s in-house speech, occupational, and feeding services in favor of external care coordination, leaving an ABA-only operation across nine Phoenix locations. Mergium’s report calls this integrating the business into a national ABA platform. Lopez told Acuity in May that buyer theses simply differ: some sponsors want ABA and nothing else, others want the full developmental bundle, and the same target can attract both for opposite reasons.
School-based delivery appeared in 13 targets, second only to clinic settings, but Lopez cautions against reading demand into the count. Many of those organizations also serve children in clinics and homes, and some acquirers specialize in school contracting and keep buying inside their model. Diversified revenue is attractive, he said, though he stops short of saying buyers prefer school-based providers to Medicaid-concentrated ones.
ABA ESOPs Stay Rare, and the Earlier Ones Did Not Stay Employee-Owned
North Arrow ABA finished converting into a wholly employee-owned company in late June and became the first business to complete a transition under Michigan’s Transition to Employee Ownership Pilot Program, according to the state’s Department of Labor and Economic Opportunity. Founder Jonathan Timm told Acuity he had been planning the ESOP for more than five years and had ruled out a private equity sale from the day he started the Traverse City company in 2020. “Selling to private equity would have been incredibly easier and less costly, and there’s a much bigger upside for ownership,” he said. “But that’s not what we did this for.”
By Mergium’s tracking it is the fifth ESOP in the sector since 2017, following Lighthouse Autism Center, SLEA Therapies, Constellations Behavioral Services, and TEIS Early Intervention. Lopez is direct about why the number stays small.
“An ESOP is not simply another exit option: it’s a fundamentally different ownership model,” he said. “While it can provide liquidity for founders, the company must also generate consistent cash flow to service the debt used to purchase the shares, while continuing to invest in clinicians, recruiting, technology, and growth. Not every practice has the financial profile to support that.” He rejects the tempting read that founders are turning to employee ownership because valuations have softened. “For some founders, preserving independence, maintaining their culture, and rewarding long-term employees are as important as maximizing purchase price.”
The harder question is durability, and the sector has a discouraging answer on file. Lighthouse Autism Center, the first name on Mergium’s list, set up its ESOP in 2017, then passed to Abry Partners and, in 2021, to Cerberus Capital Management in a deal reported above $400 million. Employee ownership in this industry has more often been a stop along the way than a destination. Timm believes North Arrow is one of only two employee-owned providers of its kind still standing.
Private Equity Sponsor Exits Are the 2026 Signal Lopez Is Watching
LEARN Behavioral’s purchase of Little Leaves Behavioral Services from FullBloom, which closed May 11 and added 18 center-based programs across Maryland, Virginia, and Florida, was the half’s one true carve-out. Lopez calls it an exception rather than a new phase, and the only transaction of that nature Mergium identified in the past year. Still, a pattern sits beneath the labels: in both the Little Leaves and Ally transactions, the seller was a financial sponsor, not a founder.
That is the shape of a market moving into its exit phase, and it is what Lopez says he is watching for the rest of the year. A significant number of sponsor-backed platforms have now been held longer than five years. “As those investments mature, we expect to see more secondary buyouts and acquisitions by larger strategic or financial buyers,” he said. “Those transactions don’t just represent ownership changes: they often reset the acquisition cycle.” He is also tracking private capital raising, which never appears in M&A statistics but funds the acquisitions that eventually do.
Lopez named no companies, and Mergium’s report identifies none. Acuity reported separately in March that Butterfly Effects, 360 Behavioral Health, Mosaic Pediatric Therapy, and Bierman Autism Centers had all been positioning for sale, several of them well past conventional hold windows.
Mergium advises owners on the sell side, which means a liquid, stable market is both its assessment and its business. Worth holding in view. Also worth noting that its tracking remains among the more granular available in a sector where nearly every transaction is private and terms are almost never disclosed.
What the count cannot hold is the distance between the aggregate and the particular. Twenty-two transactions describes a market behaving normally. It also includes a provider that spent July arguing in court for the payments that keep its doors open, and a Michigan practice that decided the way out was to sell to its own employees. Both are data points. Only one of them looks like stability from the inside.
