Exclusive: Sheridan buys ICANotes, the firm’s first investment in EHR software
Sheridan expects to grow ICANotes through add-ons and possibly through a relationship with another portco, SimiTree.
Later on Tuesday, Sheridan Capital Partners is expected to announce the acquisition of ICANotes, a provider of electronic healthcare record (EHR) software for the behavioral healthcare market. The sellers were the ICANotes founders, brothers Richard and Don Morganstern.
To learn more about the firm’s plans for growing its debut EHR investment, PE Hub spoke with Sean Dempsey, co-founder and partner at Sheridan.
The investment comes at a time when behavioral health providers are facing rising demand for care alongside expanding documentation and compliance obligations, according to Sheridan. This has increased the need for EHR platforms designed specifically around mental health workflows. The ICANotes product aims to help clinicians streamline clinical documentation, strengthen compliance and simplify practice management.
Based in Baltimore, ICANotes develops cloud-based software that supports clinical workflows for psychiatrists, therapists, counselors, social workers and nurse practitioners primarily within the psychotherapy (talk therapy) segment of the market. Behavioral healthcare professionals also use it in the treatment of substance use disorder and post-traumatic stress disorder, and in couples counseling, group therapy and rehabilitation programs.
Dempsey sees M&A opportunities to add enhanced reporting capabilities and other specific functions, known as “point solutions.”
“Behavioral health is such a large catch-all with all of these different sub-verticals,” Dempsey said. “We might consider those adjacent verticals in which we would look at other EHRs where the workflows are tailored for those specific types of behavioral health as we think about expanding our addressable market. But our first priority will really be those point solutions so we can go deeper into the talk therapy space.”
Organically, Sheridan plans to build out the company’s sales and marketing functions. It could also explore adding revenue cycle management (RCM) capabilities through a partnership with another of the firm’s portfolio companies, SimiTree. The company, which Sheridan acquired in 2021, is an RCM provider for home care, hospice and behavioral healthcare.
“Revenue cycle businesses are different business models from software,” said Dempsey. “They’re people-heavy and require a lot of hiring and training. It would be something that an EHR business might typically look to acquire rather than build. But since we already have a company in our portfolio, we always think about that network effect and could we create a win-win relationship for both companies?”
More acceptance
Healthcare providers are more reliant today on EHR systems with AI and other capabilities for efficient documentation, billing and revenue cycle workflows that help secure strong reimbursements so they can focus on seeing more patients and increasing access. In the behavioral healthcare space, this need is prevalent in talk therapy, one of the most used services of the space.
“As you see more acceptance of mental health issues as diseases, you see more reimbursement for them,” Dempsey said. “And so, you have seen a number of private equity funds beginning to invest more into the provider space of talk therapy. Looking at that classic consolidation of providers, we think about opportunities for electronic health records as you think about the need for enhanced reporting for those larger enterprise accounts.”
Sheridan is a healthcare-focused PE firm that targets equity investments of $30 million to $150 million in outsourced services, products and manufacturing, healthcare providers and software and technology platforms with EBITDA value of $5 million to $25 million.
In November, the firm sold its majority stake for behavioral healthcare pharmacy platform Tarrytown Expocare Pharmacy, which Sheridan acquired in 2020 for $160 million, to The Carlyle Group.
Other PE firms that have recently invested in the behavioral healthcare sector include Align Capital Partners, which acquired National Test Systems via its portfolio company Premier Biotech; FFL Partners, which invested in Janus RX; Baum Capital Partners, which acquired Triad via Level Education Group; Station Partners, which invested in First Children Services; and NexPhase Capital, which acquired Empower Community Care. PE Hub also covered seven deals in the sector in the first half of 2025.
In the EHR and electronic medical records (EMR) sector, Shofner Capital Partners invested in PtEverywhere; Accel-KKR-backed Residex.AI acquired Kevala; Crest Rock Partners invested in Productive Programming; and Performant Capital made a majority investment in EyeMD EMR Healthcare Systems.