Private equity activity in healthcare services slowed sharply in the second quarter as rising interest rate expectations, soft patient volumes and new state-level deal restrictions combined to weigh on mergers and acquisitions, according to an Aug. 14 report from PitchBook.
Six things to know:
1. Private equity healthcare services deals dropped 18.5% year over year in the second quarter, and total deal value for the first half of 2026 was down 7.3%, according to the report.
2. Physician practice management deals, the largest healthcare services segment, fell to 71 in the second quarter, down from 111 during the same period last year, a 35.8% year-over-year decline. The segment posted 102 deals in the fourth quarter of 2025 and 89 in the first quarter of 2026, marking a third straight quarterly drop.
3. Generalist and multispecialty provider deal activity is on pace to finish 2026 at 54.4% below 2025 levels, the steepest projected decline among the segments PitchBook tracked. Skilled care and behavioral health deals are pacing 31.6% below last year, while ancillary and outsourced services companies are faring best, on track to land just 4.9% below 2025’s deal count.
4. PitchBook projects 2026 exit count will finish 26.5% below 2025 levels, with exit value down 30.9% year over year.
5. KKR completed a $3.4 billion initial public offering of Lewisville, Texas-based Global Medical Response, the quarter’s largest healthcare services transaction. Boca Raton, Fla.-based Cross Country Healthcare was taken private in a $416 million buyout led by private equity firm Knox Lane.
6. Deals are facing increased regulatory hurdles. A new California law took effect Jan. 1 requiring at least 90 days’ advance notice, as well as detailed financial and governance information for certain transactions involving healthcare entities. A Rhode Island law took effect Jan. 28 requiring advance notice for transactions involving private equity firms and management services organizations. An Oregon law also took effect in January aimed at limiting the use of the “friendly physician” model. PitchBook said these regulations are lengthening transaction timelines, increasing deal costs and complexity and making serial roll-up strategies more complicated to execute.
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