Industry Trends
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
Advised Western Milling in their sale to the Western Milling ESOP Trust
Executive Summary
Healthcare M&A activity continued to cool through Q3 2025, with 1,056 closed transactions over the last twelve months (LTM), down from 1,200 last quarter. Despite reduced volume, valuations remained healthy, with a median TEV/EBITDA multiple of 12.77x and TEV/Revenue multiple of 3.54x, underscoring investor confidence in the sector’s long-term outlook. Strategic buyers drove over 86% of deal flow, targeting specialized assets in biotech, life sciences, and healthcare services. While financing conditions remained tight, strong corporate balance sheets and renewed momentum in elective care supported ongoing consolidation and investment in innovation across the industry.1
Market Dynamics
Valuations in healthcare stabilized in Q3 2025 as buyers adjusted to a normalized rate environment and selective dealmaking. Revenue multiples held at 3.63x, while EBITDA multiples eased to 12.77x down from 16.02x last quarter, reflecting discipline across large-cap and mid-market transactions. Activity concentrated in segments with durable demand—biotech, medtech, and digital health—while growth-stage firms faced pressure from slower funding cycles and higher diligence requirements.
Buyer Landscape
Strategic Acquirers: Strategic buyers dominated Q3 2025 activity, representing 910 deals (86%) in the LTM period. Consolidation was led by global pharma, medtech, and integrated health systems pursuing scale and innovation pipelines. Notable deals included Sanofi’s $9.9B acquisition of Blueprint Medicines and Optum’s $3.9B purchase of Amedisys, reinforcing continued alignment between pharmaceutical discovery and care delivery.1
Financial Buyers: Financial sponsors accounted for 128 deals (12%) in the LTM period, maintaining a selective focus on specialty providers and healthcare IT platforms. Representative activity included Battery Ventures’ acquisition of Enzo Biochem and Keensight Capital’s investment in Isto Biologics, reflecting investor appetite for recurring revenue and contract manufacturing opportunities.1
Industry Comparison
Healthcare M&A remained more resilient than cyclical sectors like retail and industrials, buoyed by its recession-resistant fundamentals and recurring revenue base. However, it lagged high-growth technology segments in valuation expansion. Global healthcare M&A volume is projected to decline slightly (~3–5% YoY) in 2025 before stabilizing as macroeconomic pressures ease and strategic acquirers re-engage. With strong fundamentals and innovation momentum, the sector is positioned for a moderate rebound in 2026, supported by ongoing consolidation across biotech, services, and digital health.
Geographic Expansion
Top U.S. States: Deal flow remained geographically diversified across major healthcare and life sciences hubs. California led all states with 159 transactions, followed by Florida (74), Texas (66), Massachusetts (63), and New York (63).1
Cross-Border Trends: Cross-border M&A activity in Q3 2025 was driven by major European acquirers such as Sanofi, Merck KGaA, and GSK, which pursued U.S. biotech and therapeutic assets to expand global pipelines and strengthen specialty drug portfolios.
Notable Transactions
Largest Transactions Closed
| Target | Buyer | Value ($mm) |
| Blueprint Medicines Corporation | Sanofi | $9,903.60 |
| Amedisys, Inc. | Optum, Inc. | $3,903.98 |
| SpringWorks Therapeutics, Inc. | Merck KGaA |
$3,788.97 |
| AmWiner & Raphe Holdings, LLC | Bachem Americas, Inc. | $2,300.00 |
| Nova Biomedical Corporation | Advanced Instruments, LLC | $2,200.00 |
| Capstan Therapeutics, Inc. | AbbVie Inc. | $2,100.00 |
| Efimosfermin alfa drug of Boston Pharmaceuticals | GSK plc | $2,000.00 |
| Verve Therapeutics, Inc. | Ridgeway Acquisition Corporation | $1,379.28 |
| SiteOne Therapeutics, Inc. | Eli Lilly and Company | $1,000.00 |
| Sage Therapeutics, Inc. | Saphire, Inc. | $804.81 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Prospect Medical Systems, Inc. | Astrana Health, Inc. | $707.90 |
| Vigil Neuroscience, Inc. | Sanofi | $605.91 |
| DURECT Corporation | Bausch Health Americas, Inc. | $407.25 |
| Y-mAbs Therapeutics, Inc. | SERB S.A.S. | $403.12 |
| iTeos Therapeutics, Inc. | Concentra Biosciences, LLC | $338.89 |
Other Financial Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Enzo Biochem, Inc. | Battery Ventures L.P. | $40.15 |
| Clearwater Security & Compliance LLC | Sunstone Partners Management, LLC | n/a |
| Isto Biologics | Keensight Capital | n/a |
| West-Star Physical Therapy, INC. | Accord Asset Partners, LLC; Paras Capital Partners | n/a |
| OrthoNOW Doral, LLC | Redwood Growth Partners | n/a |
Source S&P Capital IQ as of 10/6/2025 and PCE Proprietary Data
Emerging Trends
Key trends shaping Healthcare M&A:
- Digital & AI Capability Buys
Buyers continue to prize AI, analytics, telehealth, and remote-monitoring assets that cut cost-to-care and enable scale. Through July 2025, deal count was 16% lower year over year, but aggregate value climbed 28%, reflecting fewer but larger strategic transactions.3 - Consolidation in Post-Acute and Behavioral Health
Platform and add-on rollups persist in home health, hospice, behavioral health, and several other healthcare sectors, but federal agencies and states are scrutinizing private equity ownership and its effects on quality and access. Research shows PE-acquired hospitals raise prices 7–16% and profits by 27%, while PE-backed physician practices increase prices 4–20%.5 - Regulatory Scrutiny Intensifies in Home Health M&A
The U.S. Department of Justice required UnitedHealth to divest 164 hospice and home health locations to resolve antitrust concerns over its $3.3B Amedisys acquisition, highlighting rising regulatory oversight in home health deals. This underscores the government’s commitment to maintaining competition and careful review of large-scale healthcare consolidations.8 - Labor and Wage Pressure Shaping Deal Economics
Wage inflation is compressing margins for labor-intensive providers such as hospitals and home health agencies. Buyers are demanding operational improvements and labor productivity cases in diligence.9 - Subsector Spotlight: Hospitals / Integrated Delivery Systems
Health systems emphasize population health, care coordination, and outpatient expansion to manage rising labor costs and payor pressures. Investments in interoperability, predictive analytics, and value-based care programs aim to reduce avoidable admissions and improve patient outcomes in a competitive reimbursement environment.7 - Subsector Spotlight: Medical Devices & Technology (MedTech)
Medtech is seeing rapid innovation in minimally invasive devices, robotics, and AI-enabled surgical platforms. Hospitals are increasingly integrating connected devices and remote monitoring tools to improve procedural outcomes, reduce complications, and drive workflow efficiencies, while reimbursement pressures and regulatory scrutiny push for cost-effective, outcome-driven solutions.2
Outlook for Next Quarter
Opportunities: Buyers that can demonstrate tech-enabled labor productivity, robust care coordination, or scale in outpatient/post-acute channels are likely to command premium valuations. Digital health rollouts, AI-enabled platforms, and strategic pharma/GLP-1 initiatives remain areas of high interest.4
Risks: Rising wage inflation and operating-cost pressures may compress margins, lengthen earn-out periods, and tighten financing for leverage-heavy deals. Heightened regulatory scrutiny of hospital/system consolidation and private equity-backed acquisitions could increase transaction friction and legal risk.6
Predicted Activity: Healthcare M&A is expected to remain selective but steady, with continued platform investments and tuck-in acquisitions in home health, behavioral health, and Health tech. Opportunistic hospital and post-acute asset sales will lift regional deal counts, especially among distressed or underperforming operators.3
PCE Transactions
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