Healthcare M&A: Grading Our 2025 Predictions—and What Comes Next
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July 02, 2026
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When we published Healthcare M&A for 2025: Key Trends and Strategic Considerations last year, we anticipated a year of cautious optimism: a stabilization of deal flow, a focus on post-acquisition value creation and an uptick in technology investment.
As 2026 is now well underway, we’re holding those calls up against what actually happened. The broad direction held, but not every prediction landed cleanly — and the market moved in ways we didn’t fully anticipate. Transaction volume declined year over year rather than surged, even as deal quality and sophistication have improved.1 Investors are demonstrating sharper selectivity, focusing on assets with operational maturity, scalable infrastructure and sustainable margin expansion.
Below, we revisit each of our four predictions, grade how it played out, and look ahead to what the rest of 2026 and early 2027 may bring for healthcare M&A.
Prediction #1: Private Equity Investment Activity in Healthcare Will Remain Strong.
Verdict: Partly Right
What We Called:
We projected that PE investment in the healthcare sector would stay at similar levels to 2024 with the potential for increased activity in the second half of 2025. Even if interest rates remain stable as opposed to declining, we anticipated many investors and businesses would be likely to move forward with their strategic investment plans.
What Materialized:
Overall deal value in 2025 remained robust, but overall deal volume in U.S. health services was down roughly 17% in 2025 compared with 2024, according to an analysis by PCE Investment Bankers.2 This suggests a change in the deal mix with a relatively lower transaction volume but larger deal sizes.
What To Do Now:
Investors are being more selective and scrutinizing assets more carefully before committing capital. Healthcare organizations that are already PE-backed or seeking new investment should focus on creating measurable operational improvements over financial engineering. Areas of focus should include improving revenue cycles, reducing cost-per-encounter and translating improvements into EBITDA growth.
Prediction #2: Post-Acquisition Value Creation Remains the Core of ROI.
Verdict: Right
What We Called:
We anticipated that 2025 would be defined by operational optimization rather than acquisition volume. With extended hold periods and a higher cost of capital, the focus was expected to shift toward integration and margin improvement.
What Materialized:
That thesis has held. Private equity buyouts posted longer hold periods across industries, including healthcare.3 Firms are emphasizing cost containment, revenue-cycle automation and data-driven workforce strategies to unlock EBITDA growth.
Organizations that built disciplined integration playbooks and leveraged analytics are outperforming peers. PitchBook data shows operational improvement initiatives have produced a median 120-basis-point EBITDA margin expansion across healthcare service portfolios year to date.4
What To Do Now:
With hold periods lengthening and multiple expansion no longer a reliable path to returns, integration diligence is now as critical as financial diligence. Operational value creation, specifically in revenue cycle performance, has become a primary lever for EBITDA growth. Bringing in revenue cycle management (“RCM”) expertise to the fund level allows investment teams to standardize performance across assets, accelerate diligence and identify revenue risk before it becomes a material issue. Platforms that move beyond traditional roll-up models and treat RCM, patient access and payer engagement as core value creation levers rather than back-office functions can find durable margin expansion. These firms enter exit conversations better equipped, with the documented operational performance that buyers and their lenders now demand.
Prediction #3: Healthcare Technology Investment Refines, Not Retreats.
Verdict: Right on Direction
What We Called:
We projected that health-tech and digital enablement would remain key investment priorities in 2025.
What Materialized:
Investor enthusiasm remains intact but more discerning. Through H2 2025, healthcare IT deal value remained strong and steady with a 2.1% increase in deal count during the year and a 15.9% higher deal count in H2 2025 versus H2 2024. Deal transaction value soared by 23.9% as well.5 Transactions are generally smaller, more targeted and increasingly focused on platforms with validated reimbursement models and interoperable data ecosystems.
Behavioral health, women’s health and chronic-care analytics remain active segments. The post-AI hype era has clarified investor expectations: They now value embedded, measurable automation over theoretical capability.6
“The era of speculative healthcare IT (“HCIT”) investing is over — today’s winners are platforms that embed into clinical workflows, leverage AI functionalities, prove tangible financial and operational value, and scale within the realities of the U.S. health system.” – Kendall Pelander
What To Do Now:
The window for speculative healthcare technology investment has closed. Capital is now flowing to platforms that prove operational value in real environments, not pilot programs. Among healthcare professionals surveyed by HFMA in early 2026, 27% report their organizations are actively deploying AI at scale across multiple revenue cycle functions and 53% are conducting pilots in select areas. Yet, just over half describe their teams as prepared for what comes next, signaling that deployment is outpacing governance and execution discipline.7 For investors and PE-backed organizations, the practical implication is straightforward: Diligence on healthcare technology assets must be rebuilt around measurable operational benchmarks — denial rate reduction, days in A/R, clean claim rate and prior authorization turnaround — rather than capability demonstrations. Notably, 63% of hospital revenue cycle leaders report they are not taking a proactive approach to identifying revenue risk, which means organizations that couple technology investment with experienced RCM operators who can translate AI capability into workflow-embedded, reimbursement-validated performance will have a durable competitive advantage over those deploying technology alone.8
Prediction #4: Specialty Sectors Continue to Deliver With New Complexity.
Verdict: Partly Right
What We Called:
We highlighted behavioral health, fertility, infusion and women’s health as attractive consolidation targets with strong fundamentals.
What Materialized:
That projection remains accurate, though margins are tightening in some sectors. Behavioral health remained robust, with transaction volume seeing more than 42% year-over-year growth in 2025, but reimbursement compression and site-of-care shifts have softened returns in infusion and fertility.9,10
- Behavioral Health remained one of the busiest healthcare subsectors based on tracking by the Private Equity Stakeholder Project (“PESP”).11 The main driver behind the ever-increasing demand for behavioral health services is that the need for these services has outpaced supply for years and shows no signs of abating. For investors, behavioral health has strong noncyclical positioning with favorable reimbursement models.
- The Infusion Therapy market saw an all-time high in M&A volume in 2025, at least partially driven by CVS Health’s sudden slashing of home and alternative site infusion services in Q424.12 CVS’s pullback of their services dramatically fragmented the competitive landscape in short order. CVS provided infusion services to an estimated 480,000 patients annually and held roughly 15% of market share.13 This created a surge in referrals that left the remaining providers struggling to scale their staffing and operating infrastructure to accommodate the volume shift due to CVS’s significant scale down. The infusion industry remains a fragmented one. Yet, the number of platforms that have made more than a handful of acquisitions over the past few years has been relatively low, with average deal sizes fairly large.14
- Fertility & Women’s Health remained an active consolidation target in 2025. However, while consolidation remained a strategic priority in fertility services during 2025, transaction volume slowed relative to prior years, which mirrors the broader dynamics of PE investments in healthcare services. Fertility industry sources reported fewer clinic acquisitions and longer sale timelines versus the peak roll-up periods of prior years.15
What To Do Now:
Investors should double down on operational scalability and reimbursement diversification. Uncertainty around the “One Big Beautiful Bill Act” (“OBBBA”) impact on Medicaid funding underscores the need for platforms to reduce Medicaid payer concentration through commercial contract expansion and employer partnership development. It will be important to ensure revenue cycle operations can keep pace with clinical growth, particularly in payer contract management, prior authorization workflows, coding expertise and tightening credentialing and provider enrollment infrastructure. Building integrated care pathways, enhancing data visibility and strengthening payer partnerships will separate resilient platforms from those stretched too thin.
Looking Ahead: Our Predictions for H2 2026 and Into 2027
The patterns that defined 2025, such as selectivity over volume, operational discipline over financial engineering and quality over quantity, are not transitional. They are the new baseline.
As the market moves through the second half of 2026 and into 2027, we're making four new predictions on what comes next — and each one widens the gap between operationally prepared assets and everyone else:
- New Prediction #1: The OBBBA will accelerate consolidation among financially pressured providers The largest Medicaid cuts in program history will begin materializing in 2027, and the M&A implications are already visible. Distressed transactions reached a record 43.5% of hospital deal volume in 2025, which is a trend that will accelerate as OBBBA-driven revenue reductions hit organizations with high Medicaid payer concentration.16 For PE investors, this creates a well-defined acquisition opportunity: motivated sellers, compressed valuations and assets with clear operational upside for buyers who can bring capital, management expertise and RCM infrastructure to bear quickly. The window between now and the steepest cuts — projected at the latter half of this decade — is the strategic opportunity.
- New Prediction #2: Creative capital structures will become standard practice Joint ventures between PE funds and health systems are gaining meaningful traction, allowing both parties to share risk while leveraging complementary expertise — particularly as health systems facing Medicaid pressure from the OBBBA seek capital partners without relinquishing operational control. Minority and staged investments are increasingly common as lenders tighten underwriting standards and sponsors seek to preserve optionality in an uncertain reimbursement environment. On the financing side, private credit has evolved from a niche source of capital for a select few healthcare borrowers into a first port of call for sponsors across all segments of the market. But, borrowers are increasingly benefiting from renewed competition. In large buyout financings above $1 billion, banks’ shares fell to just 39% in 2023 but have since recovered to just over 50% in 2025 as banking regulation eases and traditional lenders re-enter the market aggressively.17 For healthcare organizations on either side of a transaction, this increasingly competitive financing environment means greater structural flexibility, but also greater scrutiny of cash flow predictability and revenue transparency, as both private credit lenders and returning bank lenders are demanding cleaner operational documentation before committing capital.
- New Prediction #3: Operational diligence will go deeper, driven by AI-enabled analytics Firms are increasing the application of AI-driven analytics to model revenue scenarios, staffing efficiency and denial trends before acquisition, which is moving pre-close diligence from a financial exercise to a full operational assessment. This shift benefits buyers who invest in the tooling and expertise to execute, and it puts the sellers at a disadvantage if they have not maintained clean operational data. This could create a significant gap between what the sophisticated buyers can see in a target’s revenue performance and what management teams believe is happening in their own organizations. Healthcare organizations’ ability to actively monitor their operational performance in real time is imperative to mitigate this risk.
- New Prediction #4: The exit window is opening but only for the best-prepared assets With dry powder at historic levels, LP pressure for liquidity building and a growing number of PE-backed assets reaching the end of their fund lives, the conditions for an active exit market are firmly in place.18 However, the exit environment will be unforgiving of operational weakness. The aforementioned AI-enabled analytics allow buyers to more easily conduct forensic-level revenue diligence that brings another level of scrutiny to areas like A/R quality and denial trends. Valuations will vary sharply between platforms with documented operational performance and those without. The organizations investing in operational infrastructure today, well before a deal process begins, will capture premium exit multiples in the 2026–2027 window.
Closing Thought
Healthcare M&A in 2026 and beyond will keep shifting from chasing growth to building it. The events of 2025 reaffirmed that operational discipline, reimbursement diversification, digital enablement and specialized expertise remain the core engines of sustainable value creation, and the OBBBA has made that truth more urgent than ever. The advantage belongs to the organizations and investors who pair financial rigor with operational creativity: those who understand not only how to deploy capital, but how to transform it into lasting performance. In a market defined by complexity and consequence, preparation is the only reliable edge.
Footnotes:
1: J.P. Morgan, “2026 Global M&A Annual Outlook: From Turbulence to Transformation” (2026)
2: Jasmund, David, “Healthcare M&A Update,” Pcecompanies.com Industry Reports (Apr. 15, 2026)
3: Angelo Vidal, Karl, “Private Equity Buyouts Record Longer Holding Periods in 2025,” S&P Global (Dec. 22, 2025)
4: Wright, Brian, “H2 2025 Healthcare IT PE Update,” PitchBook (Mar. 10, 2026)
5: Ibid.
6: DeGagne, Aaron, “Q3 2025 Healthtech VC Trends,” Pitchbook (Nov. 19, 2025)
7: Loeffler, Sarah, “The Revenue Cycle of the Future: AI Boom and Workflow Redesigns Accelerate Rev Cycle Transformation,” HFMA (Apr. 21, 2026)
8: Adonis, “Why Revenue Cycle Leaders Are Reassessing Margin Risk in 2026,” HFMA (Mar. 13, 2026)
9: “Healthcare Trends & Transactions: Year in Review,” Bass, Berry & Sims (May 4, 2026)
10: “Private Equity Healthcare Deals: 2025 in Review,” Private Equity Stakeholder Project (Feb. 11, 2026)
12: Hamilton, Will, “Infusion Therapy Valuation Multiples and M&A Trends 2026,” Scope Research (Apr. 21, 2026)
13: Vogel, Susanna, “CVS Health Slashes Infusion Services Offerings, Blaming Industry Headwinds,” Healthcare Dive (Oct. 15, 2024)
14: Ibid.
15: Jones, Griffin, “The Fertility Sector’s Year in Review: 2025,” Inside Reproductive Health (Oct. 24, 2025)
16: Blohm, Kristofer et al., “Hospital and Health System M&A in Review: Uncertainty Transitions to Continued Momentum in 2025,” Kaufman Hall (Jan. 15, 2026)
17: Shan, Lee Ying, “Private Credit’s Cracks Open Door for Wall Street Banks’ Comeback: ‘The Tug of War Is Just Starting,’” CNBC (Mar. 27, 2026)
18: Choi, Jinny, et al. “2025 Annual US PE Breakdown,” PitchBook (Jan. 14, 2026)
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