Healthcare M&A poised for strong comeback in 2025: PwC

USA – After a period of moderation, healthcare mergers and acquisitions (M&A) are set for a strong rebound in 2025, according to PwC’s latest outlook.

The advisory firm projects that deal volume will remain resilient—hovering between 1,300 to 1,400 transactions annually—buoyed by extended private equity hold periods, a maturing pipeline of sell-ready assets, and the prospect of continued interest rate cuts.

Despite a 9% dip in deal volume from 2023, the healthcare M&A market proved its durability in 2024, logging 1,373 deals by mid-November.

While lower than the 1,506 recorded in 2023 and the record-breaking 1,708 in 2022, the numbers still vastly exceed pre-pandemic levels of 814 in 2020 and 828 in 2019.

As PwC’s Health Services Deals Leader Nick Donkar put it, “The base tends to be around 1,300 to 1,400 announced transactions a year, which is a huge step function.”

This elevated baseline, he notes, reflects the structural changes and sustained momentum following the COVID-19 disruption.

Deal value in 2024 also ticked upward to US $69 billion from US $63 billion the year prior. Although far from the US $197 billion peak in 2021, this moderate rise signals stability.

PwC analysts emphasize that transaction volume is a more reliable gauge of market health than dollar value—especially given the ongoing regulatory hesitation around megadeals, which has kept high-value activity muted.

Only one transaction above US $5 billion was completed in the year ending November 15, 2024: Novo Holdings’ US $16.7 billion acquisition of Catalent.

Other significant 2024 transactions included Cencora’s US $4.6 billion purchase of Retina Consultants of America, Carlyle Group’s US $3.8 billion acquisition of Baxter’s kidney care unit, Cigna’s US $3.7 billion Medicare divestiture to Health Care Service Corporation, and Cardinal Health’s US $2.8 billion cash stake in GI Alliance.

However, Donkar predicts a resurgence in large-scale deals in 2025, especially in the form of take-private transactions.

Several tailwinds are aligning to fuel this projected growth. First, long private equity hold periods—averaging 5.5 years in 2024—are pushing firms to monetize assets acquired during the deal-heavy years of 2020–2022.

This backlog, combined with abundant dry powder and evolving private credit strategies, sets the stage for a new cycle of exits and capital deployment.

Second, political and economic uncertainties that loomed over 2024 are fading. With the U.S. election concluded and the incoming administration signaling a pro-business posture, investor confidence is returning.

The Federal Reserve’s December 2024 interest rate cut—its third of the year—has also improved borrowing conditions and deal financing outlooks.

“We’re at a great launching point for 2025 and beyond,” Donkar said. “Tailwinds are outweighing some of the factors we experienced in 2024.”

Meanwhile, the IPO market for health tech—largely frozen over the past three years—is also showing signs of life.

Following a quiet spell after the IPO boom of 2021, several companies are lining up to go public in 2025.

Among the most watched are Omada Health, Hinge Health, Sword Health, Aledade, Quantum Health, and Maven.

Omada has reportedly filed a confidential S-1, while Hinge is preparing to do the same. This new wave follows a modest reawakening in 2024, which saw listings from Waystar, Tempus, and BrightSpring Health.