Federal and California reviews of the Sevita-ResCare transaction

The Transaction

Sevita completed its $835 million acquisition of BrightSpring’s ResCare Community Living division on March 31, 2026, after more than a year of federal antitrust review and a California market impact assessment. The deal transferred one of the country’s largest providers of services for people with intellectual and developmental disabilities (IDD) from one private equity-backed company to another.

For more on Sevita, ResCare, and private equity acquisitions of IDD services companies, see our 2025 report on Private Equity in Intellectual and Developmental Disability Services.

ResCare Community Living generated approximately $1.2 billion in revenue and $128 million in adjusted EBITDAserving 14,000 clients in 2024. Its 13,500 employees represented more than one third of BrightSpring’s approximately 37,000 positions.

Sevita is the nation’s largest provider of home and community-based services for individuals with intellectual and developmental disabilities, employing roughly 41,000 people and serving approximately 50,000 individuals across 40 states, with approximately $3 billion in annual revenue.

The federal review found that combining the two largest national providers of residential IDD services would eliminate competition and reduce the incentive to maintain quality. The California review found that the buyer’s debt load, financial history, and quality record were themselves relevant to whether patients would be adequately served – a question antitrust law does not typically ask.

Both Companies Entered Shaped by Private Equity

BrightSpring and Sevita both entered the transaction shaped by years of private equity ownership. BrightSpring – ResCare’s seller – was acquired by private equity firm KKR in 2019 for $1.32 billion, with Walgreens Boots Alliance taking a minority stake. KKR and its affiliates remained majority shareholders when the company went public in 2024; KKR held 54.2% of BrightSpring’s outstanding stock before selling 14 million of its 93 million BrightSpring shares in June 2025.

KKR’s ownership of BrightSpring was questioned in a letter from four U.S. Senators following a 2022 BuzzFeed Newsinvestigation that revealed grossly substandard care and unsafe living conditions at some BrightSpring intermediate care facilities:

“The BuzzFeed News investigation revealed that, after KKR’s acquisition, care at BrightSpring ICFs deteriorated, with regulators finding 118 instances of ‘dangerously low staffing’ in seven states – double the rate found in non-KKR owned facilities. During that same period, KKR boasted that the company increased BrightSpring’s revenue from $2.5 billion in 2018 to $5.6 billion in 2022. But there is no indication that these revenues were used to improve quality of care in ICFs: ‘conditions [at BrightSpring ICFs] grew so dire that nurses and caretakers quit in droves, a state prohibited the company from accepting new residents, and some of the most vulnerable people in its care suffered and died.’”

ResCare’s buyer – Sevita – was acquired by Centerbridge Partners and Vistria Group in a 2019 take-private deal, with Madison Dearborn joining the other private equity firms as a co-owner in 2022. Sevita’s private equity owners took a $100 million debt-funded dividend within six months of acquiring the company, and a $375 million debt-funded dividend in 2021. In 2025, Sevita took on $2.5 billion in new debt to refinance existing debt and to fund the ResCare acquisition.

The FTC Acted on Competition Grounds

On January 30, 2026, the Federal Trade Commission filed an antitrust complaint charging that Sevita’s acquisition of ResCare would eliminate competition between the two largest national providers of residential and community-based IDD services, leading reduced quality and limited options for people with intellectual and developmental disabilities in ICF markets in Indiana, Louisiana, and Texas.

The commission voted 2-0 to accept a proposed consent order allowing the deal to proceed subject to two main remedies. First, Sevita was required to divest 128 ICFs and related assets in Indiana, Louisiana, and Texas to a third-party buyer. Second, Sevita is barred for ten years from acquiring any ICF or IDD practice in the affected markets without advance written notice to the FTC.

California Acted on Ownership Grounds

The deal also received state-level scrutiny by California’s Office of Health Care Affordability (OHCA) within the Department of Health Care Access and Information (HCAI).

OHCA’s responsibilities include reviewing healthcare mergers and acquisitions for potential effects on competition, the state’s ability to meet targets, and affordability. When a transaction is likely to significantly affect any of those factors, OHCA can conduct a Cost and Market Impact Review – a formal assessment of the deal’s effects on the California healthcare market.

OHCA’s final report cleared Sevita to acquire ResCare from BrightSpring on several grounds: Finding it was not likely to significantly increase costs, not likely to materially affect labor competition, and not clearly furthering a consolidation trend in California’s relevant markets.

But the report found that the transaction was likely to increase the risk of reduced quality and access to IDD services – a finding that was partially based on Sevita’s risky financial practices.

The report made this point directly: “as debt service consumes more revenue, Sevita may have less cash available to invest in staffing, training, facility maintenance, and other inputs associated with quality of care.” OHCA cited an HHS report documenting that private equity-owned healthcare companies have faced “negative consequences” from debt-loading, including bankruptcies, layoffs, understaffing, unsafe working conditions, and poor quality ratings.

OHCA’s quality findings drew on California Department of Public Health data showing that in 2024, Sevita’s California ICFs averaged 66 substantiated complaints, 257 deficiencies, and 6 citations per 100 beds – compared to 44 complaints, 196 deficiencies, and 1 citation per 100 beds at ResCare, and 25 complaints, 154 deficiencies, and 1 citation per 100 beds at other comparably sized facilities. Sevita’s average citation amount due per 100 beds was $27,500 – more than eight times the average for other facilities.[1]

OHCA also drew on Moody’s assessments of the “aggressive nature” of Sevita’s financial policies as “a key governance issue” and noted that those policies “pose social risks, given the high value society and state governments place on providing quality care for these individuals and the company’s dependence on Medicaid reimbursement.”

The report closed by reaffirming the nexus between aggressive financial practices and risks to quality and access:

“While Sevita’s risk profile appears to be improving in recent years, aggressive financial practices may reduce Sevita’s ability to invest in quality and increase the risk of facility closures. Taken together with the quality issues discussed above, Sevita’s financial strategy raises concerns about whether the proposed transaction could be followed by reduced investment in ResCare facilities.”

Two Reviews, Two Different Questions

The Sevita-ResCare transaction passed through two distinct regulatory reviews. The FTC acted on competition grounds, finding that eliminating direct rivalry between the two largest national IDD providers would reduce the incentive to maintain quality and preserve choice in certain markets. But antitrust review has no framework for asking whether the buyer itself poses a risk – it asks only whether the transaction changes the competitive landscape.

California’s CMIR helped fill that gap, finding that the identity of the buyer – its debt load, its financial history, its quality record – was itself relevant to whether patients would be adequately served. That is a broader claim than antitrust law typically makes, and in this case it was a well-documented one. Whether the tools that produced both interventions can keep pace with the consolidation that will follow is the more open question.

Further, both reviews cleared the transaction despite Sevita’s well-documented history of resident complaints, citations, and investigations across multiple jurisdictions as well as its private equity owners’ history of aggressive financial practices and debt-funded dividends, which may constrain the company’s ability to address these quality issues.

[1] The OHCA report cites PESP’s 2025 report “Private Equity in Intellectual and Developmental Disability Services” among its sources for Sevita’s publicly reported quality issues.