2025 marked a turning point for healthcare M&A following down years in 2023 and 2024. We saw a return to a more normalized transaction environment, supported by both PitchBook data and our own internal deal flow. The deal volume and valuation multiples we saw throughout the year are increasingly aligned with pre-pandemic norms, shares Managing Director and Partner, Brad Smith.
Healthcare performed particularly well in 2025, continuing to be a favored sector among investors and private equity firms. However, several healthcare verticals faced regulatory uncertainty and negative impacts stemming from the “Big Beautiful Bill” and the Medicaid cuts it introduced.
We expect this positive momentum to continue into 2026, with modest increases in both deal activity and valuations. Key drivers include private equity’s significant capital overhang and the growing need to deploy that capital, as well as an uptick in divestitures of aging portfolio companies; both strong indicators of a healthy M&A environment. Additionally, we are seeing a larger wave of baby boomers transitioning out of long-held healthcare businesses.
Following the return of healthy transaction year in 2025 with all signs pointing towards another great year, we asked each Managing Director what they saw in their vertical in 2025 and what they expect 2026 to bring.
Alan Hymowitz – Pharmacy
The year brought notable developments in pharmacy. With biosimilars expanding and GLP-1 therapies emerging, employers were compelled to gain deeper insight into costs and improve negotiations. Biologics remained central in chronic disease treatment, while 2025 saw a significant rise in biosimilar use—as many as 60—due to their cost-effectiveness and clinical suitability. This shift required adjustments in inventory management and payor contracts and heightened pharmacists’ collaboration with payors, physicians, and patients.
The demand for GLP-1 led to increased use of weight management and diabetes therapies, emphasizing the role of pharmacists in managing specialty treatments and working closely with payors. A collaborative approach and medication therapy management (MTM) yielded positive outcomes, positioning pharmacists at the forefront of patient education.
All these trends are expected to continue into 2026, especially with advancements in specialty therapies. GLP-1 therapies mark only the beginning, as both injectable and oral next-generation treatments are on the horizon.
Challenges in 2025 included staff shortages among pharmacists and technicians, as well as drug shortages. Specialty drugs continued to shape pharmacy trends, particularly in oncology and rare diseases. The FDA had approved 39 new drugs, including 14 cancer drugs, by November 2025. Peptide therapies are also anticipated to be prominent in 2026.
Jack Turgeon – Behavioral Health (Intellectual/Developmental Disability)
2025 was a year of recalibration rather than decline in Behavioral Health, particularly across the I/DD landscape. The widely discussed Sevita/ResCare transaction at roughly 6.5x EBITDA briefly fueled speculation of a market correction, yet valuations ultimately held within the stable range we have seen over the past two years. Despite early-year softness in overall healthcare services dealmaking, I/DD proved one of the most resilient subsectors, insulated from tariff volatility and the broader margin pressures affecting hospitals and payors. Premium operators with strong compliance, dependable staffing models, and predictable referral flows continued to attract competitive buyer interest, even as national headlines pointed to rising uncertainty.
Across our engagements, buyer demand for high-quality behavioral health assets remained steady, supported by broader investment momentum in mental health, ABA, home- and community-based care, and other adjacent subsectors. Even as legislative and macroeconomic shifts—such as Medicaid cuts and stricter eligibility requirements—introduced noise into the market, behavioral healthcare fundamentals continued to outperform, supported by stable state-level funding, sustained demand across acuity levels, and the sector’s strong non-cyclical positioning. Our work this year focused on guiding founders through valuation clarity and deal readiness in a disciplined environment where operational excellence and compliance maturity were rewarded. As we look ahead to 2026, the sector enters with stability, strong buyer appetite, and long-term fundamentals that remain firmly intact.
Anna Elliott – Home Health/Hospice
In 2026, I foresee a vibrant resurgence in M&A within home health and hospice, with strategic deals catalyzing innovation amid challenges. Driven by aging demographics, Medicare Advantage expansion, and AI efficiencies, investors will pursue high-value consolidations to build resilient networks that cut costs and elevate standards of care. This dynamic shift will sustain growth, redefine the industry, and empower providers to deliver personalized, tech-enhanced services centered on patient dignity and operational excellence.
Kevin Maahs – Dental
I expect continued consolidation and increased transaction activity within the dental sector, driven by aging practice owners, sustained private equity interest, and the ongoing expansion of sophisticated DSOs seeking both scale and operational efficiency as we enter 2026. At the same time, telehealth platforms will remain an active area of growth and M&A, particularly those with strong compliance frameworks, recurring revenue models, and clear clinical oversight. Buyers will place greater emphasis on profitability, provider retention, and defensible market positioning, rewarding businesses that demonstrate disciplined growth and operational maturity. Overall, I anticipate a more selective but highly strategic M&A environment, where well-positioned dental and telehealth businesses command premium valuations despite broader market normalization.
Blake Peart – Ambulatory Surgical Centers, Urgent Cares, Physician Practices
Looking ahead to 2026, the healthcare M&A market is positioned for a data-supported rebound, with ambulatory surgery centers, small hospitals, urgent care platforms, and physician practices driving activity. Outpatient care continues to accelerate, with over 70% of surgical procedures expected to occur in outpatient settings and ASC volumes growing 6–8% annually, supporting EBITDA margins commonly in the 20–30% range. Physician practices and urgent care centers remain highly attractive as consolidation continues, with private-equity-backed platforms representing over 40% of practice acquisitions and urgent care demand stabilizing at 25–30% above pre-pandemic levels. As capital markets normalize, healthcare deal volume is projected to increase 10–15% year over year, favoring well-run, physician-aligned assets with strong payor mix and operational discipline. Collectively, these trends position 2026 as a compelling window for strategic transactions that deliver scalable growth, durable value, and long-term alignment across the care continuum.
Connor Cruse – Behavioral Health
Heading into 2026, the behavioral health sector continues to draw strong buyer interest across lower-middle-market healthcare, driven by sustained demand for outpatient mental health, psychiatry, PHP/IOP, and evolving value-based care models. We continue to see the most interest around high-quality platforms with experienced clinical leadership, diversified payor mix, scalable infrastructure, and clear, defensible performance metrics. Operators are increasingly focused on tightening operations, integrating services across the continuum of care, and investing in data, compliance, and clinical depth to support the next phase of growth. As market conditions continue to normalize, we expect transaction activity to remain active and increasingly reward well-run, well-positioned organizations.
Gene Quigley – Durable Medical Equipment
The DME sector saw meaningful growth in deal activity in 2025, driven by demographic demand, payor alignment, and the shift toward home-based care. Quarterly deal volume climbed considerably in Q2 2025, indicating accelerated consolidation. This is one of the clearest indicators that 2025 was an active M&A year for DME operators. The DME sector is central to home-based care models, and 2025 saw continued payor and provider movement toward home settings. This made DME providers attractive acquisition targets for scale and integration strategies. DME companies offer predictable recurring revenue (rentals, supplies) and operational leverage—two major drivers of investor interest in 2025.
David Purinton – Substance Use Disorder
2025 marked a clear inflection point from a true risk-off market to one that is selectively back on. Buyers are active again, but they are rewarding durability over “growth for growth’s sake.” Deal flow in SUD has been steady, while mental health has shown stronger momentum, particularly in outpatient counseling and psychiatry where clinicians are increasingly choosing to practice. The clinician shortage has quietly reshaped buyer behavior, pushing capital toward models that align with workforce reality rather than attempting to pull clinicians back into traditional systems of care with lower earning potential. For now, buyers are following the clinicians, and deals are getting done where licensed therapists are already working. Against that backdrop, M&A for systems of care has become sharply bifurcated. Providers that can manage, measure, and report data, outcomes, and performance are attracting competitive interest, while others are being priced down, structured, or left behind entirely. I view this as the market pre-pricing readiness for value-based care, or at least fee-for-service models that increasingly resemble it. States are actively preparing to evaluate behavioral health VBC metrics in 2026, and Medicaid programs are adopting budget and oversight frameworks that bring materially higher utilization management and audit intensity. Assets with heavier Medicaid exposure are facing the steepest scrutiny, and there is far less room for operational error than in prior cycles. Looking to 2026, I expect continued improvement in deal volume and values, but not a return to 2021 exuberance. The winners will be providers that can demonstrate repeatable clinical quality, measured outcomes, and scalable infrastructure, particularly where technology and AI are applied in practical, operator-level ways to lower administrative expense, support clinicians, improve care delivery, automate compliance, and tighten revenue cycle performance. For owners considering a sale, the message is straightforward: the market is open, but it is rewarding preparedness, not potential.
For more information on any of these verticals, trends we are seeing as we enter 2026, or to start the conversation around selling your business, please reach out. We are ready to help!