Activity in the Addiction Treatment Market in 2026 and Beyond
This is an exclusive BHB+ story.
Activity in the addiction treatment and substance use disorder markets has been trepidatious throughout 2026 as operators and providers prepare for headwinds from Medicaid changes effective in January. Deals are still happening, but with increased investor scrutiny on consolidation, diligence, capital allocation, and pickier buyers. In 2027, operators can expect a focus on:
- Payer diversification
- Step-down admissions
- Patient and workforce retention
to attract investment.
"The threshold for what gets done is a little bit different… There’s still a lot of people who require the treatment that aren’t getting it, so that’s one tailwind to the space. Fundamentally, we do operate in a highly fragmented space where the majority of operators are still single-site or regional. So, consolidation is still going to be a key element to the market." — Moses Adubi, Principal of Healthcare Services Investment at Deerfield Management
Deerfield Management, based in New York City, specializes in healthcare, addiction treatment, and behavioral health deals.
The need for treatment and consolidation will define 2027's initial transactions. Investors are focusing on in-network revenues, payer concentration, care continuums, retention, and quality measurements to guide their investments.
"The market has evolved from a volume story to a quality story." — Moses Adubi
Providers and operators should focus on:
- Reporting infrastructures
- Data analysis demonstrating market readiness
- Compliance practices
- Financial trends
- Differentiating their organizations
"As an operator, this is still a maturing space… The most attractive acquisition opportunities are those that demonstrate clinical or operational differentiation. Things are not tried and true here, and that’s opportunity…" — Marshal Salomon, CEO of BayMark Health Services
BayMark Health Services is a leading provider of medication-assisted treatment (MAT) for addiction and substance use disorders.
Heading into 2027, with increased Medicaid headwinds, buyers will seek companies with specialized care and proven quality outcomes for successful mergers and portfolio additions.
"The reality is, you earn trust through outcomes and experiences… We’ve seen over the last several years [that] some people have dipped their toes in substance abuse treatment. All of that synthesis is driving EBITDA and return on multiples that may not be sustainable long term. So, being with a group that understands quality is crucial." — Justin Adams, COO at Bradford Health Services
Bradford Health Services operates over 36 locations across 8 states.
With a renewed focus on quality, 2027’s market promises to be a significant year for the addiction treatment sector.