Preliminary results from the healthcare M&A market reveal activity declined sharply in the second quarter of 2025. Volume has reached approximately 430 deals so far, and with only a week left in June, we don’t expect another 100 announcements to match the 523 deals closed in the first quarter of 2025. Compared with the second quarter of 2024, results are down approximately 16% in Q2:25.
Dealmakers and industry experts have hinted at this slowdown in the conversations we’ve had with them over the past few months. Market uncertainty is the number one headwind cited; from shifting tariff and trade policies that hurt hospital supply chains, to looming Medicaid cuts and persistent interest rate challenges.
There is also a wave of state-level regulatory efforts, like in Massachusetts and California, and new oversight bills in Minnesota and Colorado, that are delaying deals with expanded disclosure, approvals and monitoring. These efforts primarily target private equity (PE) investments in healthcare, which has been one of the main drivers of M&A for the past five years. If PE investors are forced to turn away, that could reshape the landscape.
However, most dealmakers have noted that deals are still happening behind the scenes, but negotiations are more protracted than usual. Buyers are much more stringent when valuating a target during the acquisition process, stretching the due diligence process out. And sellers, especially PE firms, have pulled their assets or platform companies off the market due to less-than-ideal bids and valuations.
Activity in most sectors declined by an average of 10%, but a few took severe hits, including Medical Devices (67% decline), Biotechnology (34% decline) and Medical Outpatient Buildings (20% decline). Medical device manufacturers were impacted heavily by the escalating U.S. trade tensions and tariff threats, and the Trump administration’s cuts across federal health agencies are creating challenges for the drug industry, especially regarding drug approval and timelines. Deals for healthcare properties have been sluggish because of elevated borrowing costs, prolonging asset sales. Demand and long-term tailwinds can only drive so much activity, even for healthcare real estate deals.
Volume in the Physician Medical Group sector fell by 10%, dropping to 103 deals so far. PE buyers account for approximately half of those deals, but health systems and various strategic buyers have pushed into the market.
Home Health & Hospice and Behavioral Health Care also declined in activity, hitting 24 deals in Q2. Demand for Hospitals has slowed dramatically this year; only eight deals were announced in the second quarter, down from 11 in the first quarter. These sectors depend heavily on Medicaid and Medicare, so it’s no surprise to find activity stifled by the expected slash in healthcare spending.
There were several notable deals in the second quarter. Siemens AG paid $5.1 billion for Dotmatics, a health analytics company, and the health system Ascension announced two major deals. In April, it spent $575 million for Cedar Park Regional Medical Center in Cedar Park, Texas, and in a huge push into the outpatient care market, it bought AmSurg, which operates 257 ambulatory surgery centers in 34 states. The LevinPro HC team has been unable to confirm an official price, but reporting from Bloomberg suggests the transaction was valued at $3.9 billion.
At the end of 2024, many dealmakers were excited for 2025, expecting a wave of new deals and investments, but so far, those predictions have not been realized. Investors are moving with caution and there is an appetite for dealmaking, but if the market remains this volatile, we expect even more of a slowdown in the second half the year.
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