How Healthcare RCM Owners Can Capitalize on 2025's Booming M&A Market

Volume 12, Issue 3, February 18, 2025

By: Jack Turgeon

The healthcare revenue cycle management (RCM) sector is experiencing record merger and acquisitions (M&A) activity. At VERTESS, we are seeing private equity firms and strategic acquirers aggressively pursuing acquisitions of RCM companies big and small, with increased interest in those companies that offer artificial intelligence (AI)-driven automation, scalable technology, and strong financial performance. As healthcare providers struggle with rising administrative costs, payer rules, and increased patient financial responsibility, there is heightened demand for efficient, technology-enabled RCM solutions.

For healthcare RCM business owners considering an exit, 2025 presents a prime opportunity to sell at what could be a premium valuation. However, not all RCM businesses are equally attractive to buyers. The most valuable companies are those with qualities like recurring revenue, automation-driven efficiencies, a diverse client base, and strong earnings before interest, taxes, depreciation and amortization (EBITDA) margins.

Whether you're looking to sell your RCM business in the next 12-24 months or want to position it for future growth, understanding the current market and what buyers are looking for are essential.

Overview of the Healthcare Revenue Cycle Management Market

Over the past several years, the healthcare RCM market has experienced significant consolidation, and there's no indication this momentum will slow down soon. Consolidation is being driven by a variety of factors, such as increased financial pressures on healthcare providers and a shift toward technology-driven solutions. The ongoing complexity of reimbursement, rising out-of-pocket costs, and administrative inefficiencies are among the reasons that have elevated demand for automation, interoperability, and outsourced RCM services.

Private equity and strategic acquirers have increasingly focused on business-to-business (B2B) RCM solutions while largely avoiding direct-to-consumer healthcare segments, as these have struggled more with inflation coupled with consumer spending challenges. The B2B RCM market has experienced strong M&A activity, with the middle market attracting competitive valuations and a record number of private-equity-led platform acquisitions.

5 Key Trends Driving Healthcare RCM M&A Activity

Here are five of the trends that we're seeing as significant factors contributing to the elevated interest in healthcare RCM companies.

1. AI and automation reshaping RCM
It's clear that the adoption of AI and automation is transforming the RCM landscape, with 98% of healthcare organizations indicating they have implemented or are planning to implement AI strategies to enhance efficiency and financial performance. AI-powered automation has become more integral to coding, claims processing, and eligibility verification, significantly reducing manual errors and administrative burdens.

The increasing reliance on AI has driven a surge in RCM M&A activity, with AI-driven RCM transactions representing 21% of deals in early 2023, compared to 11%-12% in prior years. Major acquisitions highlight this trend, including CloudMed's $4.1 billion acquisition by R1 RCM, with CloudMed having optimized reimbursement workflows using AI, and Apixio's acquisition by New Mountain Capital, with Apixio having leveraged AI-powered risk adjustment and analytics to improve financial outcomes.

2. Private equity firms leading the RCM buyout boom
Private equity firms are the dominant force in healthcare RCM M&A, with nearly half of healthcare information technology (IT) transactions in 2024 involving private equity buyers. This figure marks a 20% year-over-year growth. Investors are aggressively pursuing buy-and-build strategies, acquiring smaller, specialized RCM firms and integrating them into scalable platforms to enhance value.

Noteworthy transactions include Francisco Partners' $1.1 billion acquisition of AdvancedMD, which expanded its cloud-based practice management and RCM software capabilities, and Petal Solutions' acquisition of Medcom Billing Systems, which strengthened its medical billing automation portfolio. Additionally, Elevate Patient Financial Solutions, backed by Edgewater and Frazier Healthcare, acquired NYX Health Eligibility Services, reinforcing its Medicaid-focused RCM solutions.

3. M&A valuations remain strong
RCM companies continue to command high valuations, particularly in the middle market, where competition among investors is fierce. From 2021 to 2024, the average enterprise value (EV)/revenue multiple for RCM deals reached 6.1x, significantly outpacing the 4.4x average from 2018 to 2020. The middle market — transactions under $500 million — has been particularly active, making up more than 80% of sector deals in 2024 as both private equity firms and strategic acquirers compete for companies with highly desirable qualities like recurring revenue models, scalable technology, and strong contract structures. The combination of predictable cash flows and growing demand for AI-driven automation has positioned healthcare RCM as one of the most sought-after healthcare IT investment categories.

4. Consolidation of RCM technology firms
The healthcare RCM market remains highly fragmented. This provides a strong M&A pipeline for platform acquisitions and roll-up strategies. Large healthcare IT vendors are actively acquiring RCM firms to integrate AI, automation, and risk adjustment tools into their solutions rather than building in-house capabilities. Industry leaders, such as Waystar, R1 RCM, and Epic, are expanding their product offerings in an effort to enhance revenue cycle efficiency and reduce administrative complexity. The scale of consolidation is further evident in Clayton, Dubilier & Rice  and TowerBrook Capital Partners' $8.9 billion take-private acquisition of R1 RCM. This deal reinforced the attractiveness of end-to-end RCM platforms.

5. B2B healthcare RCM platforms outperforming direct-to-consumer healthcare IT
As referenced earlier, B2B healthcare RCM platforms have become the preferred investment target compared to direct-to-consumer healthcare IT. B2B healthcare IT transactions accounted for about 72% of total sector deals in 2024, reflecting a more than 24% year-over-year increase. In contrast, direct-to-consumer healthcare IT companies (e.g., telehealth providers) saw a nearly 29% decline in deal volume due to issues including market saturation and economic pressures.

Private equity and strategic acquirers are prioritizing B2B RCM vendors with qualities like high customer retention, scalable software, and mission-critical revenue cycle capabilities. The shift toward enterprise-focused, technology-driven revenue cycle solutions reflects broader trends in healthcare IT, where automation, interoperability, and financial optimization are paramount.

5 Key Focus Areas for Healthcare RCM Business Owners Preparing for an Exit in 2025

Now let's look at five areas healthcare RCM business owners should focus on if they are planning for or considering a sale of their company this year.

1. Strengthening recurring revenue and contract stability
Buyers, especially private equity firms and strategic acquirers, prioritize healthcare RCM businesses with predictable, recurring revenue streams and long-term client contracts. Owners should work to secure multi-year contracts with providers, payers, and health systems as this will help demonstrate revenue stability. Reducing customer churn and increasing contract renewal rates will enhance valuation and make the business even more attractive to investors. In addition, implementing tiered pricing models, value-based pricing, and/or bundled service agreements can further solidify revenue predictability and enhance the appeal of the company.

2. Investing in AI and automation for operational efficiency
With AI-driven automation playing an increasingly pivotal role in healthcare RCM M&A, owners should be working to ensure their business integrates the likes of AI-powered coding, claims processing, and denial management solutions. We are seeing investors being particularly drawn to scalable, tech-enabled RCM platforms that improve financial outcomes for providers.

Partnering with companies that offer solutions or developing AI-enhanced revenue intelligence tools can differentiate the business while improving EBITDA margins, which will then increase deal value. Companies lacking AI capabilities may struggle to compete in a market where automated, data-driven decision-making is quickly becoming the standard.

3. Expanding market reach and diversifying client base
Client diversification reduces risk and increases buyer appeal. Owners should look for ways to expand into high-growth verticals like behavioral health, dental, ambulatory surgery centers, dermatology, and physical therapy, where RCM services are in demand. Reducing client concentration risk — where a few large customers contribute to a disproportionate share of revenue — will be critical in maximizing valuation.

Additionally, broadening payer mix to include commercial insurance, Medicare, Medicaid, and value-based care arrangements can strengthen revenue resilience. Healthcare RCM businesses that serve a diverse client base across multiple provider specialties and geographies tend to attract stronger acquisition interest and achieve elevated multiples.

4. Optimizing financial performance and profitability
Potential buyers closely evaluate key financial metrics like gross margins, EBITDA, and revenue growth trends. RCM business owners should focus on improving their cash flow efficiency, reducing days sales outstanding (DSO), and increasing clean claim rates to enhance financial performance. Streamlining internal operations through automated billing, outsourcing non-core functions, and implementing AI-driven collections processes can drive margin expansion.

5. Building a strong management team and scalable infrastructure
Investors look for businesses with experienced leadership teams and scalable infrastructure that can support rapid growth post-acquisition. Healthcare RCM owners should invest in hiring (if needed) and retaining top RCM talent, strengthening their compliance teams, and ensuring strong leadership succession plans are in place. A well-prepared management team with clear growth strategies and efficient back-office operations will increase buyer confidence and valuation.

Additionally, maintaining a robust technology stack with interoperable solutions that integrate easily with electronic health record (EHR) systems, payer platforms, AI tools, and other solutions will improve operational scalability.

As M&A activity in the healthcare RCM sector continues to surge, business owners who proactively position their companies for an acquisition will have the greatest opportunities for a profitable exit. Whether you're looking to sell now or in the next few years, the key to securing multiple, realistic offers for your company and maximizing valuation is ensuring that your business meets the criteria today's investors are actively seeking — from AI-driven efficiencies and revenue stability to strong EBITDA and a scalable management team.

At VERTESS, we work exclusively with healthcare business owners to help them strategically prepare for an exit, negotiate the best possible deal, and achieve a successful and smooth post-transaction transition. Our deep relationships with private equity firms, healthcare IT investors, and strategic acquirers allow us to connect healthcare RCM company owners with the right buyers at the right time — better ensuring that they receive the highest valuation for their business.

Additional sources: Pitchbook, Bain and Co.

Jack Turgeon, MBA

As a Managing Director at VERTESS, I bring extensive experience in sales, consulting, and project management from early-stage startups. With an MBA from Babson College, I have a strong foundation in business strategy, operations, and financial analysis. My personal connection to behavioral healthcare through a family member motivates me to help business owners get the best deal possible while ensuring high-quality care for their clients. Throughout the M&A process, I provide comprehensive support at every step. I have a proven track record in negotiations and client management after working with companies in various industries. I’m excited to join VERTESS and make a meaningful impact on the lives of the owners I work with.

We can help you with more information on this and related topics. Contact us today!

Email Jack Turgeon or Call: (781) 635-2883