Despite a tumultuous summer in the United States, healthcare M&A activity rebounded in the third quarter, hitting 524 deals across the 17 sectors tracked by LevinPro HC. Compared with the second quarter, activity levels increased roughly 6%, and year-over-year activity is effectively the same, with only a 1% difference in deal volume. These margins are likely to widen once deals and transactions are reported in upcoming quarterly reports and filings, however.
Spending skyrocketed, hitting $63.8 billion, more than double the $30 billion from the second quarter and 35% higher than the $47.09 billion spent in Q3:24. The largest deal was Waters Corporation’s $17.5 billion acquisition of Becton, Dickinson and Company‘s biosciences and diagnostic solutions business, which is expected to generate $3.4 billion in revenue in 2025.
The results from the third quarter were surprising for a few reasons, especially the level of headwinds hitting the market. On the Fourth of July, President Trump signed the One Big Beautiful Bill Act, which promises significant changes to Medicaid eligibility and the methods that states can pay for the program. This change is poised to hit rural healthcare significantly, which is why the Republicans included a $50 billion funding measure to offset the cuts. Whether the extra $50 billion will be enough to slow the tide of hospital closures across rural America is yet to be determined.
The Centers for Medicare and Medicaid Services (CMS) also published its reimbursement changes for home health services, which could further destabilize an industry already under pressure.
Despite the wave of reimbursement changes, sectors like Home Health & Health only experienced a marginal decline in activity quarter over quarter, falling to 22 deals from 26. Details are scarce at the moment, but UnitedHealth Group divested 164 home health and hospice locations (including one affiliated palliative care facility) across 19 states, accounting for approximately $528 million in annual revenue. No buyer was disclosed, but UnitedHealth Group agreed to sell the locations to resolve U.S. antitrust concerns over its $3.3 billion acquisition of Amedisys. The Justice Department and attorneys general from four states (Maryland, Illinois, New Jersey and New York) filed a civil antitrust lawsuit in November 2024 to block the deal, arguing it would reduce competition in the home health services market.
Hospital activity actually rose, hitting 16 deals, a quarterly high for the year. Most of the deals were struck by health systems such as the Medical University of South Carolina and the University of Colorado Health, but a few deals were closed by financial investors. IRA Capital acquired the real estate of Houston Physicians’ Hospital, a 130,822-square-foot advanced surgical hospital with 55 beds located in Webster, Texas. The property is 100% leased to a joint venture between the physicians, Memorial Hermann Health System, and United Surgical Partners International.
Investments in physician groups also increased, reaching 128 deals (also a quarterly high for 2025). Spending reached more than $5 billion, driven by several large deals from corporations and private equity investors. The largest was The Specialty Alliance’s $1.9 billion acquisition of Solaris Health, a management services organization for urology providers. It has a network of more than 750 physicians.
The Specialty Alliance is the management service organization branch of Cardinal Health, which is providing the cash for this deal and will own approximately 75% of the two groups after the transaction is complete. Solaris Health physicians and several members of management will join as equity holders and operators in The Specialty Alliance.
Other notable deals include GTCR’s $1.58 billion purchase of Dentalcorp, and Bridgepoint Group’s acquisition of mydentist valued at $1.075 billion.
Investors were heavily drawn to dental practices in the third quarter, accounting for 53% of all deals. SALT Dental Partners, Imagen Dental Partners and Dental365 were frequent buyers in the market. Other specialties, such as orthopaedic groups and pain management providers, saw significant deal activity as well.
A spike from private equity investments helped drive up activity in the third quarter, accounting for nearly 35% of all deal volume. In the second quarter, private equity buyers accounted for only 29%, marking a notable increase from the previous quarter. Although private equity firms still gravitated toward add-on deals in the physician sector (60 deals), they also focused heavily on the eHealth industry, which is riding massive tailwinds from AI and providers’ continued reliance on technology to bolster operations.
One of the largest deals was Patient Square Capital’s $2.6 billion purchase of Premier, Inc., a technology-driven healthcare company that provides solutions to two-thirds of all healthcare providers in the United States. Headquartered in Charlotte, North Carolina, Premier offers integrated data and analytics, collaborative solutions, supply chain solutions, consulting and other services. With this transaction, Premier will be removed from the NASDAQ and will be a private company.
Although deal activity fared well in the third quarter, there are even more headwinds in the fourth quarter. At the time of writing, the U.S. government remains shut down, and a debate over Affordable Care Act subsidies is dividing legislators. KFF believes premiums would double next year if the tax credits expire, which could be a significant disruptor in the healthcare environment. We’ll be sure to keep an eye on this trend to see how it plays out in the healthcare M&A market, so stay tuned.
