Hospital transactions continued an upward swing in the first quarter of 2026, according to Kaufman Hall’s M&A quarterly activity report released April 9.
The 22 announced transactions were a five-year high for first quarters and the report noted “signs of strategic repositioning were evident” as large and national systems, both for-profit and nonprofit, rationalized their portfolios. Fifteen of the transactions were divestitures, nearly 66% of all quarterly transactions, signaling change afoot.
“Factors that can drive divestitures include underperforming markets, inadequate market scale, inability to execute on strategic initiatives or the need to redirect resources for investment in other core markets or new system initiatives,” the report noted. “At the same time, divestitures by large and national health systems have created opportunities for regional systems to build scale and increase strategic investments within their geographies.”
Five things to know:
1. Three of the 22 transactions were mega mergers, where the smaller party reported $1 billion or more annual revenue.
2. Transacted revenue hit $14.5 billion, a high in recent years. Health systems are positioning themselves for financial strength this year before the impacts of H.R. 1, set to take effect next year, according to the report. Even well-positioned independent systems are looking for larger systems to become strategic partners.
“A return to more robust levels of deal-making is a sign that organizations remain well aware of the need to seek combinations and partnerships to face the challenges and opportunities that lie ahead,” the report notes.
3. Among the 22 first quarter transitions, six had for-profit sellers and 7 were independent nonprofit sellers. Four reported distressed sellers and only one seller was academically affiliated. Five sellers were government organizations and three were religiously affiliated. The average seller revenue was $657 million, up from $401 million last year.
4. Nine buyers were independent nonprofit organizations and six were for-profit systems. Three buyers were academically affiliated and three were religiously affiliated. Buying activity among for-profit systems increased significantly in the quarter while selling activity was flat.
5. Sutter Health’s planned merger with Allina Health in Minneapolis was the quarter’s largest transaction and heralded the possible return of cross-market mergers. The systems stand to generate $26 billion as a combined entity, as Allina becomes Sutter’s Upper Midwest Division.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.