Health services M&A remains steady to start 2025 amid concerns around valuation and regulatory scrutiny.
Mounting economic and regulatory pressures haven’t deterred health services dealmaking, which remains robust thanks to the sector’s durability and evolving investor confidence.
Growth in subsectors like behavioral health in the first quarter of the year highlights the resilience of health services, according to PwC’s U.S. Deals 2025 midyear report.
The analysis tracked the sector’s M&A activity through May 15, 2025, and found that the market announced 445 transactions, pushing the last 12-month (LTM) total to 1,265 deals, down 7% compared to 2024. The disclosed value of the deals was about $64 billion, down 8% from 2024 but marking a 2% increase from 2023.
Though only megadeal was announced in that period, the $17.9 billion price tag for the Walgreens Boots Alliance acquisition by Sycamore represented around 28% of all disclosed value.
“Other services,” consisting of contract research organizations, ambulatory surgical centers, home infusion, and medical office buildings, led all subsectors with 454 LTM deals and more than $31 billion in value.
Physician groups had the second-highest deal volume with 413, accounting for $11.3 billion in disclosed value, while hospitals had the third-highest value at $8.7 billion on 52 deals.
In hospital dealmaking, General Catalyst’s purchase of Summa Health could be a precursor to venture capital interest in acute care, PwC noted.
After cooling post-pandemic, the behavioral health space is rekindling investor enthusiasm. In the first quarter, deal flow spiked over 35% year-over-year, with autism-related deals doubling to their highest quarterly levels since 2020.
Across seven tracked public subsectors, including home health, labs, skilled nursing, ambulatory care, managed care, and acute systems, EBITDA multiples have compressed since May 2024. Managed care valuations are about 19% below last year, under pressure from rising medical loss ratios and political uncertainty around M&A pricing.
Strategies for dealmakers
Embrace deal flexibility and innovation, deploying non-traditional structures to close deals in an environment with high interest rates.
Target subsector specialization, from behavioral health to outpatient care, that aligns with regulatory trends and investor appetite.
Strengthen regulatory readiness, with strong antitrust strategies and engagement around site-neutral payment reforms.
Monitor capital sources, including venture capital for acute systems and private equity for stand-alone care assets.
Despite uncertainty, PwC offered a cautiously optimistic outlook. With private equity reserves still flush and activity holding firm, health services are poised for sustained activity in the second half of 2025.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Health services saw 1,265 deals and $64 billion in value over 12 months, PwC’s deals report found.
Behavioral health is rebounding, with first quarter deal flow up over 35% year-over-year.
Investors are adjusting strategies with flexible deal structures and sharper regulatory planning.