Health services M&A deal value and volume are expected to rebound in 2026 after a down year in 2025, according to a Dec. 16 report from PwC.
In 2026, both strategic acquirers and private equity firms will continue to favor acquiring smaller companies (bolt-ons) and selling portions of the business (carve-outs) that “demonstrate consistent earnings and measurable operational upside, while avoiding areas prone to shifting regulations and reimbursement,” according to the report.
PwC said several trends emerged in mid-2025 that it expects to continue through next year:
- Private equity investors are expected to continue shifting away from reimbursement and regulatory exposure and toward software and service platforms supporting care delivery, according to the report. The targets gaining traction include those offering AI-based telehealth platforms, revenue cycle management tools, workforce optimization, and utilization management and member engagement.
- Health systems and diversified companies are increasingly carving out non-core assets such as labs, home health and revenue cycle businesses to raise liquidity and sharpen strategic focus. While complex to execute, these transactions allow buyers to modernize operations and create value, while sellers redirect capital toward core clinical priorities.
- Drug distribution companies will continue pursuing partnerships and acquisitions with physician practices to improve care integration and patient access, with an emphasis on coordinated delivery, supply chain efficiency and better outcomes in specialty care.
PwC said valuations remain mixed. Overall value per announced deal declined in the third quarter of 2025 amid continued regulatory headwinds and rate pressure. Certain high-growth subsectors, however, are commanding strong multiples “due to their perceived scalability and favorable reimbursement direction.” Those include ASCs, home infusion services and behavioral health platforms.
Improving market conditions are reopening the IPO window for health services companies, with private equity firms holding a backlog of strong assets, according to the report. More organizations are expected to pursue public offerings in 2026 to support growth and liquidity.
Read the full report here.
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