Industry Trends
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
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Executive Summary
Healthcare M&A activity continued to normalize in Q2 2025, with 1,106 transactions closed over the last twelve months, a significant decrease from 1,320 in the prior year. Strategic buyers dominated the landscape, executing 86.3% of deals, with a focus on acquiring novel therapeutics and expanding service platforms. The quarter was marked by Johnson & Johnson's mega-deal for Intra-Cellular Therapies at $14.7 billion, highlighting big pharma's aggressive pursuit of innovative assets. Valuation multiples compressed, with the median TEV/EBITDA multiple declining to 12.37x from 14.78x. This shift indicates that buyers have become more selective, influenced by tougher financing landscape and closer examination of deals by regulators.1
Market Dynamics
The 16% year-over-year decline in deal volume reflects a market recalibration after the record highs of previous years. While overall volume is down, the value of transactions remains robust, driven by large-scale pharmaceutical and medtech acquisitions. The normalization of valuation multiples indicates that buyers are putting greater emphasis on profitability and near-term revenue synergies, a shift from the growth-at-all-costs mindset that previously characterized the market.
Buyer Landscape
Strategic Acquirers: With 955 deals (86.3%), strategic buyers were focused on pipeline replenishment and portfolio expansion. Johnson & Johnson's acquisition of Intra-Cellular Therapies and Novartis's $3.1 billion deal for Anthos Therapeutics demonstrate a clear strategy to acquire late-stage assets in high-growth areas like neuroscience and cardiology.1
Financial Buyers: Accounting for 129 deals (11.7%), financial sponsors were active in provider services and medical device sectors. Patient Square Capital's $3.6 billion acquisition of Patterson Companies, a leading distributor of dental and animal health products, highlights private equity's continued interest in building scale within fragmented healthcare distribution and services markets.1
Industry Comparison
While Healthcare's 16% decline in deal volume is notable, the sector remains one of the most active for M&A globally. Unlike more cyclical industries, healthcare M&A is driven by non-discretionary factors like patent expirations and the constant need for innovation. The presence of mega-deals in pharma contrasts with smaller, more fragmented dealmaking in other sectors, underscoring the unique, high-stakes nature of healthcare consolidation.
Geographic Expansion
Top U.S. States: M&A activity was heavily concentrated in established hubs for healthcare innovation and services. California (146 deals), Florida (74), and Texas (65) led the nation, driven by the high density of biotech firms, large hospital systems, and physician practices in these states.1
Cross-Border Trends: The quarter saw notable cross-border activity, with European pharmaceutical giants like Novartis (Switzerland) and medical device companies like Zimmer Biomet (U.S.) making significant acquisitions to strengthen their global portfolios and access new markets.
Notable Transactions
Largest Transactions Closed
| Target | Buyer | Value ($mm) |
| Intra-Cellular Therapies, Inc. | Johnson & Johnson Innovative Medicine | $14,654.64 |
| Patterson Companies, Inc. | Patient Square Capital, LP | $3,642.45 |
| Anthos Therapeutics, Inc. | Novartis AG | $3,100.00 |
| Community Oncology Revitalization | US Oncology, Inc. | $2,490.00 |
| CentralReach, LLC | Roper Technologies, Inc. | $1,850.00 |
| Paragon 28, Inc. | Zimmer Biomet Holdings, Inc. | $1,350.45 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| North Coast Medical Supply, LLC | Cardinal Health, Inc. | $1,100.00 |
| Evergreen Theragnostics, Inc. | Lantheus Medical Imaging, Inc. | $1,002.50 |
| Chimerix, Inc. | Jazz Pharmaceuticals plc | $830.60 |
| Accolade, Inc. | Transcarent, Inc. | $861.77 |
Other Financial Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| bluebird bio, Inc. | The Carlyle Group Inc.; SK Capital Partners | $315.21 |
| GetixHealth, LLC | H.I.G. Capital, LLC | n/a |
| Tyber Medical, LLC | Montagu Private Equity LLP | n/a |
Source S&P Capital IQ as of 7/2/2025 and PCE Proprietary Data
Emerging Trends
Key trends shaping Healthcare M&A:
- GLP-1 Adjacency Plays
The massive success of GLP-1 drugs for diabetes and weight loss is creating a new wave of M&A. Companies are acquiring assets that address related co-morbidities (e.g., cardiovascular, sleep apnea) or that offer complementary technologies to improve the patient experience, creating a "halo effect" around the GLP-1 market.2 - Healthcare IT and AI Integration
The acquisition of CentralReach by Roper Technologies highlights a major trend: the convergence of healthcare services and technology. Acquirers are targeting software-as-a-service (SaaS) platforms that enhance clinical workflows, improve patient outcomes, and streamline administrative tasks, with a growing focus on integrating AI for diagnostics and operational efficiency.3 - Physician Practice Management (PPM) Consolidation
Private equity and large strategic buyers continue to consolidate independent physician practices in specialties like oncology, dermatology, and ophthalmology. These platforms offer economies of scale, greater negotiating power with payors, and streamlined back-office support for providers. - Subsector Spotlight: Biopharmaceuticals
This subsector remains the engine of healthcare M&A, with large-cap pharma companies using their significant cash reserves to acquire biotech firms with promising drugs. Deals are focused on high-growth therapeutic areas such as oncology, immunology, and rare diseases to offset looming patent cliffs. - Subsector Spotlight: Medical Devices & Technology (MedTech)
MedTech M&A is focused on acquiring innovative products in high-growth niches like foot and ankle, robotics, and minimally invasive surgery. Companies are willing to pay a premium for technologies that can demonstrate improved clinical outcomes and reduce the total cost of care.
Outlook for Next Quarter
Opportunities: Expect continued high-value acquisitions in the biopharma space as companies face significant revenue losses from patent expirations. The convergence of tech and healthcare will also drive deals, with a focus on companies leveraging AI and data analytics to personalize care and manage chronic conditions.
Risks: Increased antitrust enforcement from the FTC and DOJ remains a significant risk, potentially delaying or blocking large-scale mergers, particularly among competing health systems or service providers. The uncertain reimbursement landscape for new technologies and drugs could also impact valuations and deal certainty.
Predicted Activity: Private equity will continue to be a major force, both in platform acquisitions of provider-based businesses and take-private transactions of publicly traded healthcare companies. We also anticipate a rise in carve-outs and divestitures as large corporations streamline their portfolios to focus on core growth areas.4
PCE Transactions
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