Healthcare | Q4 2025 | PCE Investment Bankers

Executive Summary

Healthcare M&A activity moderated further through Q4 2025, with 963 closed transactions in FY 2025, down from 1,163 in the prior year, continuing the multi-year normalization from post-pandemic peaks. Despite lower deal volume, valuations remained resilient, with a median TEV/EBITDA multiple of 13.53x and TEV/Revenue of 3.53x, underscoring sustained investor confidence in scaled, differentiated healthcare assets.

Strategic buyers drove nearly 88% of deal activity, led by large-cap pharma, medtech, and healthcare services companies focused on expansion, technology enablement, and operational scale in an increasingly selective capital environment. “Healthcare M&A has entered a more deliberate phase, where disciplined capital deployment and strategic alignment are driving transactions rather than sheer volume,” said Bradley Scharfenberg, Vice President at PCE. “Buyers are prioritizing scaled platforms and assets that align closely with their strategic growth initiatives amid a more selective deal environment.” ¹

Market Dynamics

Healthcare valuations stabilized in Q4 2025 as buyers maintained pricing discipline in a higher-for-longer interest rate environment while continuing to pursue assets with clear strategic fit. EBITDA multiples modestly compressed year-over-year, while revenue multiples remained steady, signaling a preference for profitability, durable cash flows, and defensible market positions over purely growth-driven profiles. Deal activity concentrated in biotech, life sciences tools, and healthcare technology, where innovation and efficiency gains continue to support consolidation despite tighter financing conditions and extended diligence timelines. ¹

Buyer Landscape

Strategic Acquirers: Strategic buyers continued to dominate Q4 2025 activity, representing 845 deals (87.7%) in FY 2025. Consolidation was led by global pharma and medtech players targeting innovation pipelines and scale. Notable transactions included Pfizer’s $9.8B acquisition of Metsera and Roche’s $3.1B acquisition of 89bio, underscoring sustained demand for specialty therapeutics and solutions for obesity diseases.¹

Financial Buyers: Financial sponsors accounted for 118 deals (12.3%) in FY 2025, maintaining a selective focus on healthcare IT and specialty health services. Representative activity included ArchiMed SAS’s $813.2M acquisition of ZimVie Inc., alongside GTCR’s $657M purchase of Surmodics and Patient Square Capital, LP’s $2.8B acquisition of Premier, Inc. These transactions highlight investor appetite for recurring revenue models and tech-enabled platforms that support operational efficiency and care delivery.¹

Industry Comparison

Healthcare M&A remained more resilient than cyclical sectors such as retail and industrials, supported by recession-resistant fundamentals and recurring revenue models. However, it continued to trail high-growth technology segments in valuation expansion. Global healthcare M&A volume declined meaningfully in 2025, down 17.2% YoY (963 transactions vs. 1,163 in the prior year), reflecting macroeconomic headwinds and tighter financing conditions. Despite this slowdown, strategic acquirers maintained strong engagement, particularly in pharma and medtech, signaling confidence in long-term innovation pipelines. With fundamentals intact and consolidation drivers across biotech, healthcare services, and digital health, the sector is positioned for gradual recovery in 2026 as capital markets stabilize and cross-border activity accelerates.

Geographic Expansion

Top U.S. States: Deal flow remained concentrated in major healthcare and life sciences hubs. California led all states with 148 transactions, followed by Florida (85), Texas (63), Massachusetts (63), and New York (61). These states continue to anchor innovation-driven ecosystems and attract both strategic and financial buyers seeking scale and access to talent.¹

Cross-Border Trends: Cross-border M&A activity in Q4 2025 was driven by leading European acquirers such as Novo Nordisk, Roche, and Novartis, which pursued U.S.-based biotech and therapeutic assets to expand global pipelines and strengthen specialty drug portfolios. Asian buyers also participated, with Lotus Pharmaceutical’s $1.16B acquisition of New Alvogen Group Holdings, signaling continued interest in generics and specialty manufacturing capabilities. 

Notable Transactions

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

Emerging Trends

Key trends shaping Healthcare M&A:

1. Selective Rebound in Deal Value & Volume
   While total U.S. healthcare M&A deal value fell to $46B in 2025 from $62B in 2024, Q4 2025 saw a sharp rebound as buyers pursued scale and innovation. Over 950 deals closed in 2025, reflecting a selective but healthy market. Strategic acquirers appear confident in pursuing durable healthcare assets.⁶
2. Workforce & Cost Pressures Shaping M&A Logic
   Wage inflation and staff layoffs are reshaping deal economics. Providence, a not-for-profit health system, cut 600 jobs and plans another ~450 layoffs (nearly 4% of staff in some regions), while Oak Street Health eliminated 219 roles, highlighting margin pressure in labor-intensive models. Buyers are prioritizing targets with strong workforce stability and measurable productivity.⁴
3. Digital & Efficiency-Focused Transactions
   Digital health, health IT, and AI are increasingly central to M&A strategy. In 2025, ~75% of the top 10 deals focused on back-office automation or data-driven platforms, reflecting a premium on measurable efficiency gains. Acquirers target companies that boost throughput, cut administrative costs, or improve care coordination.²
4. Regulatory & Pricing Scrutiny
   Hospital acquisitions of physician practices drove hospital service prices up 3.3% and physician prices up 15.1%, with integrated physicians’ prices rising 9% after additional specialty acquisitions. These increases were largely due to reduced competition rather than better care. Regulators are closely reviewing such consolidations.⁵
5. Subsector Spotlight: Behavioral & Home-Based Care
   Behavioral health attracts capital amid provider shortages and reimbursement shifts. Home-based services also see strong demand due to aging populations and patient preferences shifting to at-home care. Cost pressures and workforce constraints continue to moderate valuation growth.³
6. Subsector Spotlight: Healthcare IT (HCIT) & Digital Health
   In 2025, over 60% of HCIT deals were led by private equity or VC investors. Middle market HCIT companies benefit from partnering with a financial buyer to further scale their platform with additional capital and support. Buyers are focused on scalable platforms that streamline clinical operations, revenue cycle management, and remote monitoring capabilities. Consolidation in back-office, analytics, and care-enablement tech remains a dominant theme.²

Outlook for Next Quarter

Opportunities: AI, automation, and analytics that reduce labor or cost inefficiencies are commanding premium valuations. Digital integration and care coordination remain strong M&A drivers. Buyers are particularly focused on scalable, tech-enabled platforms.²

Risks: Wage inflation and layoffs continue to affect diligence, integration, and operating assumptions. Buyers are modeling longer ramp-up periods, higher ongoing labor costs, and delayed synergy monetization. Staffing and retention stability remain key to post-close performance.⁴

Predicted Activity: M&A in healthcare is expected to remain selective but resilient in 2026. Emphasis will be on digital health, outpatient/post-acute consolidation, and operational-improvement deals. Buyers will favor targets with strong reimbursement visibility while managing regulatory and labor-cost pressures.⁷

PCE Transactions

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