Healthcare Private Equity in 2025

I. Introduction

Healthcare Private Equity in 2025 sits at the intersection of structural demand, operational pressure, and capital discipline—making it one of the clearest tests of private equity underwriting and execution in the current cycle. After several years shaped by pandemic-driven distortions, elevated entry multiples, and uneven exit conditions, the sector is entering a more selective—but no less strategic—phase. For private equity firms, healthcare remains one of the few verticals where long-term tailwinds persist across economic cycles, yet 2025 has reinforced a central reality: not all healthcare assets generate risk-adjusted returns equally.

At its core, healthcare continues to benefit from demographic inevitability. Aging populations, rising chronic disease prevalence, and sustained demand for essential services provide revenue visibility that few sectors can match, making healthcare a durable allocation within PE portfolios. However, these tailwinds are increasingly offset by margin compression, labor constraints, and regulatory complexity—forcing sponsors to move beyond passive buy-and-hold strategies toward active ownership models. In 2025, value creation is less about financial engineering and more about operational transformation, platform scalability, and defensible pricing power.

Private equity deployment within healthcare has shifted decisively toward services, software, and infrastructure-enabled models that support repeatable value creation and multiple ownership cycles. Asset-light businesses—such as revenue cycle management (RCM), healthcare IT, pharma services, and outsourced clinical support—continue to attract disproportionate sponsor interest due to their recurring revenue profiles, lower capital intensity, and defensive end markets. Traditional provider-based investments remain active, but capital is increasingly concentrated in outpatient platforms, roll-up strategies, and local market density plays rather than national hospital exposure.

Another defining feature of healthcare private equity in 2025 is the growing emphasis on scale and specialization as prerequisites for return durability. Large-cap sponsors are prioritizing platform assets capable of supporting add-on acquisitions, technology layering, and geographic expansion. Mid-market firms, meanwhile, are leaning into buy-and-build strategies across fragmented subsectors such as behavioral health, home health, and specialty physician services. Across deal sizes, underwriting assumptions have become more conservative, with greater scrutiny on reimbursement growth, exit multiples, and hold periods.

Capital markets dynamics are also reshaping private equity behavior. While exit activity has begun to recover, IPO windows remain selective, and strategic buyers are prioritizing assets with clear unit economics and integration readiness. As a result, secondary buyouts and continuation vehicles are playing a larger role in liquidity generation—reinforcing healthcare’s reputation as a long-duration asset class rather than a short-cycle trade. In this environment, firms with deep operating capabilities and sector specialization retain a meaningful advantage.

Importantly, healthcare private equity in 2025 is no longer evaluated on financial outcomes alone. Assets are increasingly underwritten through the lens of regulatory durability, governance quality, and stakeholder risk. Payers, regulators, and counterparties are applying greater scrutiny to PE-backed platforms, particularly around staffing models, pricing discipline, and compliance infrastructure. This shift is pushing sponsors to professionalize governance frameworks and invest more heavily in data systems, compliance processes, and operational oversight.

This report examines how private equity firms are navigating the healthcare landscape in 2025—where capital remains abundant, but conviction must be earned. We analyze deal activity, capital flows, subsector performance, and value creation strategies to assess where sponsors are deploying capital, where risks are emerging, and which healthcare models are best positioned to deliver durable returns.

II. Healthcare Private Equity Deal Activity Reaches New Highs in 2025

Healthcare private equity delivered a record-setting year in 2025, reaffirming the sector’s position as one of private equity’s most resilient and capital-attractive verticals. Disclosed deal value exceeded an estimated $191 billion, surpassing the prior peak reached in 2021 and marking a decisive rebound from the valuation reset that characterized 2022 and 2023. Approximately 445 healthcare buyouts were announced during the year, representing the second-highest annual deal count on record.

This performance reflects a market that has recalibrated rather than retrenched. Following a prolonged period of rising rates, compressed multiples, and cautious underwriting, sponsors re-entered the market in 2024 and accelerated deployment further in 2025—targeting assets with defensive demand, recurring revenue, and identifiable operational upside. North America continued to dominate deal activity, while Europe and Asia-Pacific maintained steady participation, reinforcing healthcare’s role as a core global PE allocation.

Crucially, 2025 also marked a meaningful reopening of exit markets. Exit value surged to an estimated $156 billion, nearly tripling from 2024 levels and ranking as the second-highest exit value year on record. Exit volume followed a similar trajectory, signaling improved liquidity across sponsor portfolios. The rebound was driven disproportionately by large-scale exits, reflecting renewed buyer confidence and improved financing conditions.

Exit composition shifted notably. In 2025, more than 40 healthcare transactions exceeded $1 billion, reflecting the release of pent-up supply and a renewed appetite for scaled, high-quality platforms. Strategic acquirers, secondary sponsors, and continuation vehicles all played a role—reinforcing healthcare’s appeal as an asset class capable of supporting multiple ownership cycles.

Two structural forces underpinned this activity: record dry powder earmarked for healthcare and a growing cohort of mature sponsor-owned assets approaching the end of fund lives. Together, these dynamics created a favorable backdrop for both acquisitions and exits.

III. Biopharma and Providers Continue to Anchor Healthcare PE Activity, While Medtech Gains Ground

Healthcare private equity activity in 2025 remained concentrated in a small number of core segments, with biopharma and provider services continuing to account for the largest share of buyout activity across both deal count and deal value. These segments have consistently attracted sponsor capital due to their defensive demand profiles, clear scale advantages, and the ability to support large, platform-style investments.

Among all segments, biopharma held the highest share of total deal value in 2025, reflecting the continued prevalence of large-cap transactions in pharmaceutical manufacturing, specialty pharma, and contract development and manufacturing (CDMO) platforms. These assets benefit from long-term demand visibility, regulatory barriers to entry, and growing outsourcing trends across the pharmaceutical value chain—characteristics that align well with private equity’s focus on predictable cash flows and scalability.

Provider services remained the most active segment by deal count, supported by ongoing consolidation across outpatient care, specialty physician practices, and site-of-care shifts away from acute hospital settings. While provider deals tend to be smaller on average than biopharma transactions, their fragmented market structures continue to create opportunities for buy-and-build strategies, particularly for mid-market sponsors seeking operational value creation.

At the same time, medtech emerged as one of the fastest-expanding segments within healthcare private equity. Although it still represents a smaller share of total activity relative to biopharma and providers, medtech’s footprint expanded meaningfully in 2024 and 2025. Growth was driven by increased investment in device-enabled care, minimally invasive technologies, and tech-enabled clinical workflows, as sponsors targeted assets with innovation-driven growth and improving reimbursement clarity.

Other segments, including payer services and life sciences tools, continued to play a more limited but stable role in overall deal activity. These areas attracted targeted investment where assets demonstrated recurring revenue, mission-critical functionality, or exposure to secular growth trends such as clinical research expansion and data-driven healthcare delivery.

Overall, the segment mix in 2025 underscores a key dynamic shaping healthcare private equity: capital continues to concentrate in areas where scale, resilience, and operational leverage intersect, while adjacent segments like medtech gain momentum as technology adoption deepens across the healthcare ecosystem. This balance between established strongholds and emerging opportunities is likely to remain a defining feature of healthcare PE deployment heading into 2026.

IV. Healthcare IT Continues to Lead on Buyout Returns

Beyond deal volume and capital concentration, return performance continues to differentiate healthcare subsectors. As illustrated below, healthcare IT has historically delivered superior investment outcomes relative to other areas of healthcare private equity, reinforcing its status as a priority allocation for financial sponsors.

Between 2017 and 2025, healthcare IT buyout deals generated a median multiple on invested capital (MOIC) of approximately 2.3x, outperforming biopharma and life sciences (2.1x), provider facilities and services (1.9x), and MedTech (1.9x). The performance gap is similarly evident on an internal rate of return basis, with healthcare IT delivering a median IRR of roughly 26%, compared with 22% for biopharma, 20% for provider services, and 17% for MedTech.

This outperformance reflects several structural advantages embedded in healthcare IT business models. Recurring revenue, mission-critical workflows, and lower capital intensity support more predictable cash flows and reduce downside risk across cycles. In addition, software-driven platforms offer clear scalability, enabling sponsors to layer in add-on acquisitions, expand functionality, and drive margin expansion through automation and operating leverage.

Importantly, return dispersion also favors healthcare IT. Top-quartile outcomes in the segment meaningfully exceed those observed in more asset-heavy healthcare models, while downside risk has historically been more contained. This asymmetry has reinforced sponsor preference for IT-enabled platforms, particularly in areas such as revenue cycle management, EHRs, clinical workflow automation, and data infrastructure.

As private equity underwriting remains disciplined and exit markets increasingly reward quality and scalability, historical return data continues to validate healthcare IT’s role as one of the most attractive risk-adjusted investment segments within healthcare buyouts. Heading into 2026, this performance differential is likely to remain a key driver of capital allocation decisions across both large-cap and mid-market sponsors.

V. Exit Markets Reopen as Regional Momentum Reaccelerates

The strong performance of healthcare private equity in 2025 was not linear. Instead, the year was defined by early momentum, a midyear pullback, and a decisive second-half recovery—a pattern that ultimately reinforced the sector’s underlying resilience. Despite volatility during the middle of the year, healthcare private equity finished 2025 with sharply higher exit activity, both in terms of deal count and aggregate value, as illustrated below.

After a robust start, global deal activity entered the year on a hot streak, with first-quarter volume up approximately 21% year-over-year compared to Q1 2024. This early strength was driven by pent-up deal flow, improving financing conditions, and increased sponsor confidence following a prolonged period of caution. However, momentum softened in the second quarter, particularly in North America and Asia-Pacific, as policy shifts, renewed trade tensions, and tariff uncertainty introduced short-term hesitation among buyers and sellers.

Europe emerged as a notable stabilizer during this period. Unlike other regions, European healthcare deal activity remained consistently strong throughout the year, benefiting from comparatively lower exposure to geopolitical and trade-related shocks. This regional resilience helped offset midyear softness elsewhere and underscored Europe’s growing role as a core engine of global healthcare PE activity.

Crucially, the second-half rebound proved decisive. As macro uncertainty began to ease and transaction processes restarted, deal volume increased 39% from the second to the third quarter, signaling a renewed willingness to transact. By year-end, second-half activity finished an estimated 17% higher than the first half, driven by sustained European momentum and a clear recovery in both North America and Asia-Pacific. This reacceleration translated directly into a stronger exit environment.

As shown above, exit markets reopened meaningfully in 2025. Exit count and value rose sharply, supported by a resurgence in large-scale transactions and a growing share of sponsor-to-sponsor exits, reflecting renewed confidence among financial buyers. IPO activity remained selective, but strategic buyers and secondary sponsors stepped in aggressively for scaled, well-positioned healthcare platforms.

The pattern of 2025—temporary disruption followed by rapid normalization—highlights a defining characteristic of healthcare private equity: durability through volatility. While external shocks briefly slowed activity, they did not derail underlying demand, capital availability, or exit pathways. Instead, the year reinforced healthcare’s position as a sector where timing matters, but structural fundamentals ultimately prevail.

Together, the rebound in exit markets and the regional reacceleration of deal activity set a strong foundation heading into 2026, with sponsors better positioned to monetize mature assets and redeploy capital into the next wave of healthcare opportunities.

VI. Regional Deal Trajectories Diverged, but Scale Drove Outcomes

Healthcare private equity activity in 2025 played out unevenly across regions, reflecting differences in sector exposure, macroeconomic sensitivity, and deal mix. While all major markets finished the year with solid momentum, Europe, North America, and Asia-Pacific followed distinct paths—each shaped by the role of large-cap transactions and the depth of sponsor participation.

Europe: Biopharma and Providers Lead a Breakout Year

Europe emerged as one of the strongest healthcare private equity markets in 2025, with deal value doubling to an estimated $59 billion. Activity was heavily concentrated in biopharma, which dominated buyout volume and accounted for the five largest transactions, together representing approximately 65% of total European deal value. The resurgence of large-scale deals was particularly notable: 15 transactions exceeded $1 billion during the year, compared with just three in 2023 and four in 2024, signaling a clear return of large-cap sponsor activity.

Deal count also expanded meaningfully, surpassing 2024’s high-water mark and extending a growth trend that began in 2022. This expansion reflected not only larger transactions but also a broadening base of mid-market activity, particularly in provider services and specialty healthcare platforms. Exit markets followed suit, with exit value rebounding to an estimated $53 billion after a sharp decline in 2024. Several of the year’s largest exits were sponsor-to-sponsor transactions, highlighting renewed confidence among financial buyers in European healthcare assets. A notable example included the announced sale of a majority stake in STADA Arzneimittel AG, underscoring the appeal of scaled pharmaceutical platforms.

North America: Large Transactions Offset Midyear Volatility

In North America, healthcare private equity activity was shaped by macroeconomic and policy uncertainty, particularly during the second quarter. Deal count and value declined 19% and 37%, respectively, from first-quarter levels as buyers paused amid shifting policy signals and trade-related concerns. Despite this temporary pullback, the market recovered in the second half and delivered a healthy full-year outcome.

The defining feature of North American activity in 2025 was the resurgence of large transactions. Through November, 26 healthcare deals exceeded $1 billion, nearly double the 14 recorded in all of 2024. More than 70% of these transactions were sponsor-to-sponsor sales, reflecting both portfolio maturation and increased secondary buyout activity. While overall deal volumes remained below the peak levels seen in 2021, they edged slightly higher than 2024 totals. Exit markets strengthened materially, with exit value rising to an expected $90 billion, compared with $35 billion the prior year—signaling a meaningful reopening of liquidity for sponsors.

Asia-Pacific: Broad-Based Growth Across Sectors and Geographies

Asia-Pacific delivered one of its strongest healthcare private equity years on record, with deal value surpassing prior highs by more than 30%, even after experiencing a second-quarter slowdown. Unlike Europe and North America, growth in the region was driven by breadth as much as scale, with increased activity across multiple countries and healthcare sub-sectors.

Biopharma and provider services remained the backbone of healthcare PE activity, but 2025 also saw rising investment in medtech and healthcare IT, reflecting growing digitalization and infrastructure buildout across regional healthcare systems. Provider and hospital transactions continued to be a central theme, with deal value expected to more than double year-over-year, rising from approximately $5 billion in 2024 to over $10 billion in 2025. Exit performance improved as well, with exit value increasing by more than 20% and volume up roughly 6%, signaling expanding exit pathways across the region.

Across regions, 2025 reinforced a common theme: while timing and volatility differed, scale, sector exposure, and sponsor depth ultimately determined outcomes. Markets with access to large, high-quality assets and active financial buyers were best positioned to capitalize on the year’s recovery—setting the stage for continued momentum into 2026.

VII. Opportunity Amid Complexity: How Healthcare Investors May Win in 2026

After an uneven recovery through 2025, healthcare private equity is expected to regain consistency in 2026, supported by a more constructive macro environment and mounting pressure to transact. Lower interest rates, record dry powder, and growing LP demand for liquidity are likely to unlock a backlog of deferred deals originating from the 2018–2022 vintage cycle. While the recovery may not be uniform across segments, the ingredients for renewed momentum are firmly in place.

That said, 2026 will not be a return to frictionless dealmaking. Valuation dislocation from the 2020–2021 peak persists, particularly in the mid-market, where buyer and seller expectations remain misaligned. In parallel, policy uncertainty—spanning drug pricing, reimbursement frameworks, and digital health regulation—continues to complicate underwriting. These dynamics may constrain transaction volume in certain segments, even as several large, scaled assets come to market and support activity at the upper end of the deal size spectrum.

Against this backdrop, a set of macro themes is shaping where investors can find conviction. Automation and AI-driven efficiency, ongoing pricing pressure that accelerates the shift toward lower-cost care settings, supply-chain reconfiguration, and China’s emergence as an innovation exporter are increasingly central to healthcare investment theses. In this environment, success in 2026 is less about sector exposure alone and more about aligning capital with operational leverage and structural change.

Where Deal Activity May Concentrate

In healthcare services, 2026 could mark a turning point after several years of muted activity. Physician Practice Management (PPM) appears poised for renewed movement as valuation gaps begin to close and platforms evolve beyond traditional roll-up models. Areas such as revenue cycle management, patient access, infrastructure optimization, and payer engagement are emerging as durable levers for EBITDA growth and margin expansion. Early signs of trading activity in specialties including dermatology, orthopedics, behavioral health, women’s health, and dental suggest that long-stalled assets may finally change hands.

In healthcare IT, deal activity is expected to remain selective and strategy-led. Within RCM, AI-enabled and automated bolt-on acquisitions remain the primary scaling path, particularly as many large offshore BPO platforms have already traded. In contrast, specialty and ambulatory EHRs continue to attract platform-level investment, with growth driven more by product expansion, workflow automation, and deeper integration than by aggressive consolidation.

In pharma services and technology, supply-chain realignment is creating new winners. Onshore CDMOs stand to benefit from tariff-driven shifts, while specialized CROs are gaining relevance as sponsors prioritize flexibility and cost efficiency. Demand is also rising for quality management systems and compliance platforms, as regulatory expectations around data integrity and quality continue to evolve. At the same time, HCP-targeting platforms are gaining momentum as scrutiny and ROI pressure weigh on traditional DTC marketing models.

In life sciences tools and diagnostics, growth is increasingly tied to advanced biologics and temperature-sensitive therapies, including GLP-1s. This is driving demand for cold-chain logistics, validated packaging, and reliability-critical infrastructure—favoring scaled, specialized providers with global footprints and proven qualification data.

In medical devices, portfolio rationalization among large strategics is expected to fuel carve-outs and focused platform plays. Deal activity is likely to concentrate in assets delivering above-market growth in areas such as interventional and minimally invasive solutions, image-guided technologies, regenerative medicine, and surgical robotics. Cardiology, neurotechnology, and MedTech biologics remain priority arenas, while early-stage MedTech continues to face capital scarcity, increasing the value of patient, long-horizon investors.

AI as a Filter, Not a Thesis

Across these opportunity areas, AI is increasingly the filter through which value is assessed, rather than the investment thesis itself. In RCM, AI is compressing labor costs and displacing manual workflows. In pharma services, AI-supported study design and data analytics are reducing timelines and headcount. In commercialization, AI-driven targeting is raising the bar—rewarding adaptive platforms while eroding margins for laggards.

For investors, the critical question in 2026 is not who “uses” AI, but whose business model becomes more scalable, defensible, and efficient when AI is embedded at scale. Assets that automate documentation, accelerate throughput, or reduce cycle times are gaining share, while those reliant on manual processes face structural pressure.

Alternative Deal Structures Gain Importance

As valuation mismatches persist, alternative deal archetypes are becoming increasingly important. Divestitures and carve-outs remain attractive entry points as corporates refocus on category leadership, though activity is expected to be more targeted than in prior years. Take-privates may gain traction, particularly in MedTech, where public valuations often fail to reflect operational upside. Meanwhile, continuation vehicles are emerging as a preferred tool for retaining exposure to high-performing healthcare assets while providing LP liquidity—especially in services, CROs, and CDMOs.

Taken together, 2026 is shaping up to be a year defined not by indiscriminate volume, but by strategic creativity, disciplined underwriting, and operational differentiation. For healthcare investors, opportunity remains abundant—but winning will require navigating complexity with precision rather than relying on momentum alone.

VIII. Conclusion: From Capital Abundance to Conviction-Driven Investing

Healthcare private equity in 2025 marks a clear transition from a cycle defined by capital abundance to one governed by conviction, execution, and operational depth. While the sector continues to benefit from durable demand drivers and long-term demographic tailwinds, the conditions that once allowed broad-based multiple expansion and rapid exits have given way to a more selective environment. In this new phase, not all healthcare exposure delivers equal returns, and differentiation is increasingly earned rather than assumed.

The rebound in deal and exit activity throughout 2025 confirms that healthcare remains one of private equity’s most investable verticals—but the nature of success has changed. Scale matters more. Business models with recurring revenue, infrastructure leverage, and operational control are commanding the majority of capital, while assets reliant on labor arbitrage, reimbursement uplift, or financial engineering face mounting pressure. Sponsors are underwriting with greater realism around pricing, timelines, and exit pathways, signaling a healthier—but more demanding—market.

At the same time, the reopening of exit markets and the growing role of sponsor-to-sponsor transactions reinforce healthcare’s position as a long-duration asset class capable of supporting multiple ownership cycles. Liquidity has returned, but it is increasingly selective—rewarding platforms that demonstrate resilience, data maturity, and the ability to scale efficiently across regulatory and geographic complexity. Continuation vehicles, carve-outs, and take-privates further underscore a maturing market where creativity in structure is as important as precision in asset selection.

Looking ahead, 2026 is unlikely to deliver a broad-based surge in deal volume. Instead, it will favor investors who can navigate valuation dislocation, policy uncertainty, and accelerating technological change with discipline. AI-enabled efficiency, cost-of-care optimization, and supply-chain realignment are no longer thematic overlays—they are becoming prerequisites for sustainable value creation. In this environment, operational capability is not a differentiator; it is the price of admission.

Ultimately, healthcare private equity is entering a phase where capital alone is insufficient. The firms best positioned to outperform will be those that combine sector specialization, operating expertise, and patience—deploying capital where complexity creates barriers, not where momentum is easiest to chase. In a market defined by scrutiny and selectivity, conviction-backed execution will determine who wins the next chapter of healthcare investing.

Sources and References:

Bain & Company — Global Healthcare Private Equity Report 2026

https://www.bain.com/globalassets/noindex/2026/bain_report_global-healthcare-private-equity-report-2026.pdf

McKinsey & Company — Healthcare Industry Trends and Outlook

https://www.mckinsey.com/industries/healthcare/our-insights/mckinsey-perspectives-on-healthcare-industry-trends-and-the-year-ahead

PwC — 2026 Healthcare Investment Themes

https://www.pwc.com/us/en/industries/health-industries/library/2026-healthcare-investment-themes.html#:~:text=Healthcare%20private%20equity%20deal%20activity,from%20the%202018%2D22%20cycle