Healthcare M&A: Trends, challenges & opportunities in 2025

“With the assumption that the new administration is pro-business, there’s an expectation that there would be a potential leniency on getting deals done.”

Glenn Barenbaum

Principal, Transaction Advisory Services, Diligence Healthcare
Grant Thornton Advisors LLC

“With the assumption that the new administration is pro-business, there’s an expectation that there would be a potential leniency on getting deals done,” Barenbaum said. But there are mixed signals and much uncertainty regarding the administration’s approach to healthcare in the U.S. In February 2025, the Federal Trade Commission and the Justice Department issued statements expressing an intent to keep the existing guidelines (the 2023 Merger Guidelines), therefore wholesale changes may not happen immediately. While a climate of deregulation may seem to bolster healthcare M&A, worries about the impact of the widespread use of tariffs as a trade policy could spark an economic downturn.

However, the skepticism of current vaccines by the Health and Human Services Department Director Robert F. Kennedy Jr. in the administration have worried many in the medical fields. Feedback from within the healthcare ecosystem suggests a possible pivot in healthcare policy approaches — a move away from traditional pharmaceutical-focused healthcare delivery and toward more holistic treatments.

This also could lead to more focus on preventive health through better nutrition, citing recent discussions about revisiting the food pyramid and examining food production practices in the United States. The FDA's recent ban of Red Dye No. 3 could be part of a broader trend toward addressing root causes of health issues rather than just treating symptoms. The connection between food consumption patterns and health outcomes, particularly for conditions like diabetes and heart disease, was highlighted as an area likely to receive increased attention, which could indicate more deals for companies that focus wellness.

However, the administration’s enacted and proposed cuts to the National Institute of Health, the Centers for Disease Control and Prevention, and freezes on research grants to various U.S. universities are having immediate effects on the research being done at these institutions. McGurl said these effects would necessarily include jeopardizing the various private entity partnerships with those agencies and institutions, and medical research in general in the U.S.

Focus on patient empowerment

These likely changes in emphasis in the way healthcare and associated treatment is provided from the new administration could guide the focus of private equity investment to more closely embrace overall wellness and healthcare consumerism trends. McGurl said there is significant private equity interest particularly in the consolidation of medical spa and aesthetic businesses, addiction treatment, in-home care, adolescent autism services, traditional outpatient psychiatric and behavioral healthcare. McGurl further added there is a high probability these moves will lead to a marked increase in structured relationships between private equity and healthcare systems as they focus on managing operating margin across facilities and service lines.

The tie to all these factors, Beder said, was a shift toward metabolic health approaches, marking a departure from traditional drug-based treatment and a transition to self-health. This emphasis change could be viewed as a challenge to traditional healthcare delivery: the misalignment between patient needs and provider availability. This disconnection has historically limited the ability of patients in the U.S. to access care when most needed.

In alignment with this push to more accessibility, there is a growing intersection of consumer technology and healthcare services through devices like the Apple Watch, the Whoop, the Oura Ring and other wearables as well as remote patient monitoring technology. Modern healthcare tools such as these are increasingly enabling consumers and providers to actively track patient vital signs and empowering the patient to make informed decisions about their care delivery preferences, and consumer interest in these products and service platforms are expected to continue to gain interest in 2025. McGurl added that we expect a mid-range convergence of data between wearables with medical records to improve prevention, access, and recovery.

These developments point to an evolution in healthcare technology's role, with the focus shifting from provider-centric to patient-centric solutions. Consumer transparency and control represent a significant change from the traditional model where patients relied solely on medical professionals for health insights. McGurl expects healthcare sector startups focused on patient-centric products, services, and related health-technology to attract significant investor interest for the balance of 2025 and beyond.

Virtual health expansion and restrictions

The dramatic upsurge in the use of virtual health has made virtual health companies a common target for M&A interest. However, Barenbaum said uncertainty regarding virtual health regulation extensions was currently tamping down market activity, though the uncertainty has not slowed deals. Iris Telehealth’s acquisition of InnovaTel, announced Jan. 21, makes Iris one of the largest virtual health telepsychiatry providers in the U.S. The move underscores the impact of virtual health consolidation in the behavioral health sector, where it plays a significant role in cost reduction and patient experience enhancement.

Medicare extended telehealth services through Sept. 30, 2025, while noting that Federally Qualified Health Centers and Rural Health Clinics can continue to provide services virtually through Jan. 1, 2026. Virtual health has its limitations, but in the area of rural care and behavior health, particularly as a first-line treatment aid, virtual care will likely remain a viable valuable treatment option. 

“I believe some level of virtual healthcare delivery options will remain available,” Beder said, “traditional telemedicine visits may decline in volume, but new variants of virtual healthcare delivery such as the virtual nurse or remote patient monitoring will likely grow and reduce certain in person nurse interactions and patient visits to providers.”