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 slowed in Q1 2025, totaling 1,156 closed transactions (LTM), down from 1,323 a year earlier. Strategic buyers led the charge, accounting for 85.6% of deals, with continued focus on clinical services, diagnostics, and digital health. Private equity remained active in niche platforms but approached valuations more conservatively. Median TEV/EBITDA fell to 13.3x from 14.8x, and TEV/Revenue to 3.20x from 3.93x, signaling a broader shift in buyer preferences toward proven margin durability and scalable models. Below, we explore key transactions, geographic distribution, and emerging trends shaping the Healthcare M&A landscape.1
Market Dynamics
Macroeconomic headwinds and tighter financing conditions continued to temper deal flow. Revenue-focused platforms faced greater valuation pressure, as median TEV/Revenue dropped by 19% YoY. While EBITDA multiples also compressed, buyers remained engaged in sectors demonstrating cost-efficiency, reimbursement stability, or exposure to outpatient and home-based care—areas viewed as lower-risk amid the evolving healthcare delivery landscape.1
Buyer Landscape
Strategic Acquirers: Dominated the Healthcare M&A market with 990 deals (87.4% of total), pursuing growth in specialized therapeutic areas, precision medicine, and digital health solutions. Notably, Cencora’s $5.1B acquisition of Retina Consultants highlights strategic interest in specialty healthcare providers.
Financial Buyers: Closed 143 deals, actively investing in niche healthcare segments with scalable platforms. Transactions like Ampersand and GHO Capital's $1.07B buyout of Avid Bioservices underscore private equity’s appetite for targeted growth investments.1
Industry Comparison
While overall healthcare M&A volume declined 13% YoY, the sector remains more active than others with greater consumer or interest-rate sensitivity. TEV/EBITDA multiples fell to 13.3x—still elevated relative to most industries, though below the 14.8x seen in Q1 2024. Compared to more volatile sectors, healthcare continues to attract capital due to its essential service profile and embedded demographic demand.1
Geographic Expansion
Top U.S. States: California (134 deals), Texas (64), and Florida (87) led Healthcare M&A, driven by robust provider networks, favorable demographics, and concentrated innovation hubs.1
Cross-Border Trends: Foreign acquirers, including Roche’s $1.54B purchase of Poseida Therapeutics, actively pursued U.S. healthcare targets to diversify product pipelines and mitigate global market risks.
Notable Transactions
Largest Transactions Closed
| Target | Buyer | Value ($mm) |
| Retina Consultants of America | Cencora, Inc. | $5,100.00 |
| Inari Medical, Inc. | Stryker Corporation | $4,810.00 |
| Medicare Advantage & Supplemental Businesses (Cigna) | Health Care Service Corporation | $3,300.00 |
| The GI Alliance Management, LLC | Cardinal Health, Inc. | $2,800.00 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Poseida Therapeutics, Inc. | Roche Holdings, Inc. | $1,540.00 |
| IDRX, Inc. | GSK plc | $1,150.00 |
| Revance Therapeutics, Inc. | Crown Laboratories, Inc. | $878.00 |
| Ambry Genetics Corporation | Tempus AI, Inc. | $598.00 |
Other Financial Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Avid Bioservices, Inc. | Ampersand Management LLC; GHO Capital Partners LLP | $1,070.00 |
| Portfolio of Skilled Nursing Facilities (TN & AL) | CareTrust REIT, Inc. | $500.00 |
| Singular Genomics Systems, Inc. | Deerfield Management Company, L.P. Series C | $106.00 |
| AMOpportunities, Inc. | Cerberus Capital Management, L.P.; Newland Realty Capital | $67.00 |
Source S&P Capital IQ as of 4/17/2025 and PCE Proprietary Data
Emerging Trends
Key trends shaping Healthcare M&A:
- AI and Digital Health Integration
Healthcare organizations are increasingly acquiring AI-driven platforms and digital health solutions to enhance care delivery and operational efficiency. This trend is propelled by the need to meet rising patient expectations and to manage costs effectively. - Private Equity's Focus on Specialty Services
Private equity firms are targeting specialized healthcare services, such as ambulatory infusion centers and behavioral health, to capitalize on fragmented markets and scalable models. These sectors offer opportunities for consolidation and growth.6 - Regulatory Scrutiny Intensifies
State and federal regulators are increasing oversight of healthcare transactions, particularly those involving private equity, to address concerns about consolidation and its impact on care quality and costs.3 - Shift Toward Value-Based Care Models
Healthcare organizations intensified their shift toward value-based care by expanding outpatient services and home-based care, aiming to enhance patient outcomes and reduce costs. This transition is driven by a projected 10.6% growth in outpatient volumes over the next five years and a 20% increase in hospital participation in value-based payment program.4 - Consumer Health Market Expansion
The consumer health sector is experiencing growth, with companies pursuing M&A strategies to offer integrated health solutions directly to consumers, reflecting a shift towards personalized and accessible healthcare.
Outlook for Next Quarter
Opportunities: A more business-friendly regulatory environment and declining interest rates are fostering optimism for increased M&A activity in digital health and specialty care sectors. This is evidenced by digital health startups raising $3 billion in Q1 2025, signaling robust investor interest.2
Risks: Despite these positive trends, persistent regulatory scrutiny, particularly at the state level, and potential policy shifts continue to pose challenges to deal closures. This necessitates thorough due diligence and robust compliance strategies to navigate the complex regulatory landscape.
Predicted Activity: A resurgence in M&A is projected, driven by strategic acquisitions in technology-enabled services and the need for healthcare organizations to adapt to evolving patient care models.7
PCE Transactions
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