Behavioral health M&A in 2026 will be shaped by a mixed regulatory landscape—with payer pressures threatening some sectors while emerging treatment modalities open new opportunities.
Autism services experienced a surge in deal activity last year after a quiet 2024. While we foresee robust M&A activity to continue in 2026, the sector faces headwinds from payers cutting reimbursement rates and imposing caps on applied behavior analysis (ABA) treatment hours.
But autism services aren’t the only behavioral health sector that could face challenges in 2026. Investors may be hesitant to invest in substance use disorder (SUD) services given the uncertainties about Medicaid cuts over the next year. Still, there could be some positives for the SUD industry on the horizon, as the Drug Enforcement Administration (DEA) continues to extend telehealth flexibilities, potentially signaling future permanence for virtual care.
One area that could be a bright spot in behavioral health over the next year is the rise of interventional psychiatry. Transcranial Magnetic Stimulation, in particular, is growing in popularity, with payers also expanding access to these services. This could be a growing new service line for providers.
Here are some of the biggest trends Behavioral Health Business sees defining 2026.
Cuts imminent to autism rates, coverage
Payers have seen the cost of autism services rise over the past decade. This is particularly true for applied behavior analysis (ABA) services.
In part, this is due to the number of children diagnosed with autism, which has dramatically increased over the past decade. For example, the rates of autism diagnosis increased by 175% between 2011 and 2022 for children aged 5 to 8.
We have already seen payers take steps to respond to the increase in costs. In October, Centene announced it was forming a task force to address spending for ABA services. The task force has collaborated with state partners to form “precision in ABA clinical service definition as well as more stringent supervisory and caregiver engagement requirements.”
But it isn’t just commercial payers that are cutting rates and services. Colorado and North Carolina have both proposed cuts to autism funding, though in both states, providers and patients are suing the states to challenge the changes. Additionally, Indiana is proposing a cap on lifetime ABA hours. And Nebraska, a state with one of the highest reimbursement rates, announced a 48% cut last year.
With federal Medicaid cuts on the table, I don’t foresee this picture getting any rosier.
“We’ve seen state Medicaid authorities reduce their rates, and then commercial payers try to follow suit, despite the increasing pressure on access,” Jim Spink, CEO of Autism Care Partners, told me during a recent webinar. “So for the provider, it’s really difficult.”
Autism Care Partners is a multi-specialty autism therapy provider operating in Massachusetts, Vermont, New Hampshire, Rhode Island and New York.
I think the stories we started to see emerge in 2025 were just the beginning of what we will see across the ABA world. With rising rates of autism and the intensive amount of hours often prescribed for ABA, something has to give.
And this, in turn, could impact PE investment in the sector. New data revealed that PE investment follows states with favorable reimbursement rates. As states begin to pull back on reimbursement rates, we could see an investment shift to reflect this trend.
SUD M&A will continue to be humdrum as Medicaid uncertainties persist
While the M&A market has picked up for behavioral health overall in 2025, SUD services remain stagnant.
While there have been reports of heavy hitters in the sector, including BayMark and BHG, coming on the market, uncertainties around the Medicaid market could make dealmaking difficult.
In the One Big Beautiful Bill Act, individuals with a diagnosed substance use disorder are exempt from Medicaid requirements. Still, many industry insiders say the logistics of qualifying for this exemption could be complicated.
And some providers have already reported that patients are turning away from services.
”We saw early on, as soon as Medicaid cuts were announced, our census started to flatten out, and we said, well, what is happening here and in our patient engagement?” Doug Weiss, CEO of Porch Light Health, said at INVEST. “What we found is our patients are afraid that they’re going to get a bill, so they stop coming to treatment.”
Porch Light Health is an addiction treatment provider with 60 points of care across Colorado and New Mexico.
Given the unknowns, I could foresee investors pulling back on services until some of the logistics are hammered out.
”With most OBBBA provisions not going into effect until 2027, Medicaid unknowns will continue to shadow behavioral health M&A,” Dexter Braff, president of the Braff Group, said at BHB’s INVEST. “Buyers like certainty; a reduction in reimbursement is certainty, although it’s maybe unfortunate certainty, but no one knows [the specifics yet]. And if the guidelines don’t go into effect until 2027, no one will know the real impact until the earliest, and I mean the earliest, midway in 2027.”
It could very well be that in 2027, once the impacts of Medicaid cuts begin to emerge, dealmaking picks up. As for 2026, I see investors holding their finances close and watching it all play out. Still, if some of the big players do get into the M&A market this year, it could have a ripple effect on the industry.
Controlled substance telehealth prescribing rules will become permanent
At the end of 2025, the Drug Enforcement Administration (DEA) extended telehealth prescribing flexibilities around controlled substances, such as methadone, naltrexone and buprenorphine, which are used for medication-assisted treatment for SUDs, for a fourth time.
These telehealth flexibilities have been in place for six years now. While providers and patients have overall applauded the extension, many have criticized the government for leaving the decision until the final hour and would like to see a path towards permanency.
The wait-and-see nature of the flexibilities has made it difficult for providers to plan with much certainty.
The DEA has previously sought to make new rules permanent. In 2023, it released a proposal that would effectively end all controlled-substance prescribing via telehealth without an in-person visit. This was met with a wave of backlash. The agency received 38,000 comments on the rule. In response, the DEA extended flexibilities to “give DEA time to consider a new path forward for telemedicine.”
But it has been two years since the agency released any new proposals.
I predict that the agency will release, at a minimum, a new proposal in 2026. Likely, the proposal will allow for telehealth prescribing more liberally than the 2023 proposal, but with some additional guardrails to the current flexibilities.
The flexibility in their current form has come under fire after virtual care companies Done and Cerebral faced legal battles for their prescribing practices. Given this fact, I think the new proposals will offer a middle ground for future controlled substance use prescribing.
High-profile stumbles could slow JVs
When it comes to inpatient psychiatric care, there are only a handful of major players in the space. And two of the largest players, Acadia Healthcare (Nasdaq: ACHC) and Universal Health Services (NYSE: UHS), have each faced a host of legal battles over the past few years.
Both organizations have joint ventures at the heart of their business model. And for many health systems, it made sense to partner, psychiatric care is expensive to provide and requires certain expertise.
But I could see health systems that are careful about their reputations evaluating whether a joint venture is the right path forward, given the negative press some of these for-profit companies have received over the past two years.
Earlier this year, Acadia Healthcare closed its Timberline Knolls Residential facility following a lawsuit over sexual assault and rape allegations – though the provider denies these allegations. Additionally, UHS paid $535 million in damages related to a sexual assault suit in 2024.
Given some of these headlines, I could see health systems taking a step back and pausing these partnerships until the negative press subsides, or looking elsewhere for joint ventures, perhaps even to other nonprofit organizations.
Still, as patient demand continues to rise, hospitals will need to add or grow psychiatric services. Hospitals could find themselves in a difficult position as they try to establish a psychiatric service without a partner. But hospitals may decide to either not invest or modestly invest in behavioral health, leaving some patients with few options in their communities.
Prepare for the interventional psychiatry explosion
After years of discussion, 2026 will mark a turning point for interventional psychiatry with a significant expansion in service offerings.
And while I think the entire sector of interventional psychiatry is poised for growth this year, I would pay particular attention to Transcranial Magnetic Stimulation (TMS). More and more payers are now covering the services, and recently we’ve seen an increase in coverage for adolescent patients. For example, in early January, TMS provider BrainWay announced that Premera Blue Cross Blue Shield would expand coverage of its TMS treatment to include patients ages 15 and older.
Additionally, payers typically require patients to have tried a number of failed treatments before covering TMS. But as the technology becomes more readily available and providers can demonstrate positive outcomes, I could see the barrier to entry for TMS treatment becoming less stringent.
As the reimbursement environment becomes more favorable to the treatment, I could see an uptick in providers offering these services.