M&A trends in healthcare

Health systems: Restructuring for resilience amid margin pressure

The health systems subsector experienced a significant contraction in M&A activity during H1’25, with deal volume falling to 26 transactions—a 54.4 percent decline from H2’24—and deal value dropping to $1.3 billion, down 59.5 percent over the same period. This steep decline reflects a cautious recalibration among health system leaders, who are increasingly focused on outpatient care networks, physician alignment, and regional bolt-on integration rather than large-scale hospital acquisitions. Standout transactions included the announcement of Ascension’s planned acquisition of AMSURG for $3.9 billion, which will add more than 250 ambulatory surgery centers to its portfolio, the acquisition of Northwell Health by Nuvance Health, and Prime Healthcare Services acquiring a number of hospitals from Ascension.¹ Many large national systems continue to prioritize divestitures of noncore assets and service line rationalization to manage debt and margin pressures. The market is bifurcating, with well-capitalized systems pursuing scale, and struggling institutions seeking lifelines or exiting geographies.

Healthcare IT/Digital health: AI-powered platforms drive mid-market momentum

Healthcare IT and digital health was one of the two subsectors to post a meaningful increase in deal volume, rising 22.7 percent to 135 deals in H1’25, compared to H2’24. However, deal value declined by 12.3 percent to $9.0 billion, indicating a pivot toward mid-market and growth-stage technology assets. Investor interest remains strong in AI-powered platforms, hospital-to-home software, and hybrid care models. Bain Capital’s $2.6 billion acquisition of HealthEdge exemplifies the strategic push toward cloud-based, interoperable solutions.² Other important transactions in this subsector in the first half of the year included Madison Dearborn Partners’ strategic investment in NextGen Healthcare, the acquisition of amino by Capital Rx, and Quantum Health’s purchase of Embold Health. We see buyers prioritizing assets that enable automation, revenue cycle optimization, and value-based care delivery. Despite the value dip, the sector is buoyed by long-term tailwinds in digital transformation and care decentralization.

GenAI is emerging as a critical differentiator in healthcare investment diligence. The MRO acquisition of Q Centrix exemplifies this trend, with buyers increasingly evaluating GenAI’s effectiveness in automating EMR data extraction and case form generation. These capabilities are not only streamlining diligence workflows but also influencing investment theses, as automation potential becomes a key factor in asset attractiveness.

Payers: Portfolio pruning in a post integration pause

The payer subsector saw significant declines across the board, with deal volume dropping 54.0 percent to just 23 transactions, and deal value falling 35.1 percent to $3.7 billion in H1’25, compared to H2’24. This reflects the impact of regulatory uncertainty, particularly around Medicare Advantage reimbursement. Large payers are reassessing their portfolios, with some divesting lines of business that are capital-intensive or margin-constrained. Activity in H1’25 was concentrated in third-party administrators (TPAs), compliance platforms, and value-based care enablers.³ The absence of mega-deals signals a shift toward operational optimization and risk management.

Healthcare services: Platform expansion meets valuation discipline

Healthcare services remained the most active subsector by volume, with 231 deals in H1’25—a 14.4 percent increase from H2’24. Total deal value saw a major increase of 549.8 percent to $20.8 billion, reflecting a shift toward larger corporate and strategic acquisitions. The sector continues to benefit from demographic tailwinds and the shift to outpatient and home-based care. Key transactions included BrightSpring Health Services’ $0.8 billion divestiture to Sevita, and McKesson’s $0.9 billion acquisition of PRISM Vision Group.⁴ Firms are actively consolidating fragmented markets in home health, behavioral health, dental, and specialty care. Buyers are targeting scalable platforms with strong clinical integration, tech enablement, and regional density. Despite valuation compression, the sector remains a magnet for platform-building and roll-up strategies.