Discovery Behavioral Health may soon have new majority ownership after its chief lender seized the company.
On June 2, the Irvine, California-based behavioral health provider announced an agreement with HPS Investment Partners that will change the majority ownership and leadership of the company. Pending regulatory approval, HPS will take over majority ownership of Discovery Behavioral Health in exchange for a substantial reduction of its debt obligations, according to a news release.
It’s not clear what the specific terms of the agreement are. It’s not clear what role, if any, Capital One, had in the deal and will have going forward. At the end of 2025, HPS Investment Partners and Capital One seized Discovery Behavioral Health after a change in debt-to-earnings ratio accounting acted as the final straw of repeated default events. Discovery briefly contested the move in New York’s state court but ultimately abandoned the fight after a few days. Discovery Behavioral Health initiated the debt agreements with Capital One and HPS Investment Partners in June 2021.
Discovery Behavioral Health also has a new board of directors and CEO. Pete Clarke, a veteran of the health care management space, now leads the company. He spent much of his career in the dialysis industry, specifically with Davita Inc. (NYSE: DVA).
“In my first two months, I have visited dozens of our programs across the country. It is one thing to know we have many examples of industry-leading, peer-reviewed published outcomes. It is another to see the work in action,” Clarke said in the news release. “What I have seen confirms what drew me to Discovery Behavioral Health: a consistently strong level of care. In many of our programs, we are already the preferred provider and partner for patients, families, and payors, and a place where the best behavioral health professionals want to do their life’s work. My focus is on ensuring that’s true everywhere we operate.”
The new CEO, board and ownership may bring stability to the company’s upper ranks. Clarke is the third CEO to have the role after founder and longtime CEO John Peloquin stepped away in 2025. Tom Britton, a fixture in behavioral health business C-suites, served as CEO for a very brief time just before the company was taken over by Capital One.
Analysis of the leadership teams the company has described on its website shows that there have been 10 changes in the leadership since late 2025: five arrivals and seven departures.