Healthcare services deal activity improved in 2025 but lost momentum late in the year, as policy uncertainty and regulatory friction pushed transactions into the future.

According to our latest report, total deal count rose 9.6% year-over-year to an estimated 747 transactions in 2025, even as deal value declined 1.6% amid fewer closings and a notable slowdown in the fourth quarter.

 

The key takeaway is not contraction, but delay. PitchBook estimates that Q4 deal activity ran roughly 15% below prior-year levels as investors waited for clarity on 2026 enhanced premium subsidies and navigated rising scrutiny of physician practice management (PPM) models—particularly in states with higher regulatory burdens such as California. That pause has created what many investors now view as pent-up demand likely to reemerge in 2026.

Despite the late-year slowdown, 2025 delivered several marquee transactions. These included Cencora's $7.4 billion acquisition of the remaining equity it did not already own in OneOncology, Ascension's $3.9 billion purchase of AMSURG, and multi-billion-dollar leveraged buyouts of Dentalcorp Holdings and home infusion provider KabaFusion. Exit activity was also resilient, with PE exit counts up 17.1% year over year and exit values rising 14.1%.

Under the surface, deal activity varied sharply by subsector. Skilled nursing facilities, specialty pharmacy, hospitals and health systems, and intellectual and developmental disability (IDD) practices led growth. By contrast, PPM deal count fell 18%, driven by steep declines in gastroenterology, fertility, ENT and dental. Notably, however, PPM exit volume jumped 57.1%—often an early signal of a coming rebound in new platform investments.

Valuations suggest a stable foundation for renewed activity. Public healthcare services multiples are near long-term averages, while hospital systems—particularly those with strong cash balances—are signaling renewed interest in ambulatory surgical centers and PPM acquisitions. At the January 2026 J.P. Morgan Healthcare Conference, hospital executives emphasized a strategic shift toward lower-cost ambulatory care.

Looking ahead, artificial intelligence is poised to be a critical catalyst. PitchBook notes that AI adoption—especially in revenue cycle management and practice efficiency—is accelerating across providers, with adoption rates nearly twice those of payers. As one investor put it, "AI is becoming less of an upside lever and more of a baseline requirement for healthcare services valuations." As policy uncertainty clears, those dynamics could make 2026 a breakout year for healthcare services M&A.