Analysis of Decrease in Private Equity Healthcare Investments in Q1 2025
The first quarter of 2025 has revealed significant changes in the landscape of private equity investments within the healthcare sector. According to data from LevinPro HC, private equity firms, collectively referred to as "PE Buyers," executed 166 transactions in the healthcare mergers and acquisitions (M&A) market. This number constitutes about 35% of the total 480 healthcare deals reported during the same period. On the surface, this represents a slight decrease from the 170 PE transactions announced in the last quarter of 2024 but indicates a 7% increase compared to the 155 deals recorded in the first quarter of 2024.
In terms of disclosed financial commitments, PE Buyers spent over $29.98 billion across 11 major deals in the first quarter. Notably, the most significant transaction involved Sycamore Partners’ acquisition of Walgreens Boots Alliance for $17.9 billion. This deal included the long-term debt of the pharmacy giant, which saw total sales amounting to $147.7 billion in 2024 but also reported an operating loss of $14.1 billion, highlighting the financial complexities involved in such sizable transactions.
Interest in Physician Medical Groups (PMG) was particularly pronounced, with 66 total deal announcements. PMGs accounted for nearly 40% of all private equity activity within the healthcare sector during this quarter. PE Buyer engagement in this market segment remained consistent with numbers from the fourth quarter of 2024, where 67 deals were announced. Within the PMG sector, dental practices garnered particular interest, making up 50% of acquisition targets—33 out of the total transactions. This marked an increase from the previous quarter, where 29 dental deals were recorded, although it remains a 25% decrease from the 44 acquisitions noted in the first quarter of 2024.
Another area gaining traction among PE Buyers was digital health, which saw 25 transactions, representing 15% of all private equity activity this quarter. This is up from the 20 transactions reported in the first quarter of 2024. The field of revenue cycle management emerged as the most dynamic eHealth specialty, with eight acquisitions undertaken by PE firms. Thoma Bravo and its portfolio of companies notably dominated this space, completing several transactions, such as acquiring Meddbase through Cority, a firm specializing in occupational health management. Another portfolio company, Bluesight, took over Protenus, known for its healthcare compliance analytics.
Additional data from Q125 reflects 22 transactions categorized under Other Services, 16 in Home Health and Hospice, 11 related to Behavioral Healthcare, and eight transactions involving Laboratories, MRI and Dialysis. The most active buyer during this quarter was MB2 Dental Solutions, affiliated with Warburg Pincus and Charlesbank Capital Partners, which accomplished seven deals. This marks a steep decline of 65% in activity from the first quarter of 2024 when MB2 Dental reported 20 transactions. Heartland Dental, backed by KKR & Co. Inc., followed as the second most active buyer, with five transactions completed.
Despite the decline in private equity-backed transactions when comparing quarters, the overall atmosphere within the healthcare M&A market remains optimistic. Investors and advisors continue to believe that private equity firms will navigate the economic obstacles currently standing in the way and will announce new transactions in the upcoming quarters. Analysts, including Kate Humphrey, suggest that while the drop in transactions is noteworthy, private equity retains a pivotal role in the healthcare sector’s evolution.
For those following these trends, results from every quarter are compiled in The Health Care M&A Report, a key feature of LevinPro HC, published by Irving Levin Associates, LLC. If you're interested in more detailed reports or data, accessible contact information is provided.
Irving Levin Associates boasts a legacy of over 70 years in delivering comprehensive M&A intelligence, principally tailored for investors focused on senior housing and healthcare markets. With offices situated in both New Canaan, Connecticut, and North Bethesda, Maryland, the firm remains dedicated to maintaining extensive databases and resources pertinent to these evolving markets.
In terms of disclosed financial commitments, PE Buyers spent over $29.98 billion across 11 major deals in the first quarter. Notably, the most significant transaction involved Sycamore Partners’ acquisition of Walgreens Boots Alliance for $17.9 billion. This deal included the long-term debt of the pharmacy giant, which saw total sales amounting to $147.7 billion in 2024 but also reported an operating loss of $14.1 billion, highlighting the financial complexities involved in such sizable transactions.
Interest in Physician Medical Groups (PMG) was particularly pronounced, with 66 total deal announcements. PMGs accounted for nearly 40% of all private equity activity within the healthcare sector during this quarter. PE Buyer engagement in this market segment remained consistent with numbers from the fourth quarter of 2024, where 67 deals were announced. Within the PMG sector, dental practices garnered particular interest, making up 50% of acquisition targets—33 out of the total transactions. This marked an increase from the previous quarter, where 29 dental deals were recorded, although it remains a 25% decrease from the 44 acquisitions noted in the first quarter of 2024.
Another area gaining traction among PE Buyers was digital health, which saw 25 transactions, representing 15% of all private equity activity this quarter. This is up from the 20 transactions reported in the first quarter of 2024. The field of revenue cycle management emerged as the most dynamic eHealth specialty, with eight acquisitions undertaken by PE firms. Thoma Bravo and its portfolio of companies notably dominated this space, completing several transactions, such as acquiring Meddbase through Cority, a firm specializing in occupational health management. Another portfolio company, Bluesight, took over Protenus, known for its healthcare compliance analytics.
Additional data from Q125 reflects 22 transactions categorized under Other Services, 16 in Home Health and Hospice, 11 related to Behavioral Healthcare, and eight transactions involving Laboratories, MRI and Dialysis. The most active buyer during this quarter was MB2 Dental Solutions, affiliated with Warburg Pincus and Charlesbank Capital Partners, which accomplished seven deals. This marks a steep decline of 65% in activity from the first quarter of 2024 when MB2 Dental reported 20 transactions. Heartland Dental, backed by KKR & Co. Inc., followed as the second most active buyer, with five transactions completed.
Despite the decline in private equity-backed transactions when comparing quarters, the overall atmosphere within the healthcare M&A market remains optimistic. Investors and advisors continue to believe that private equity firms will navigate the economic obstacles currently standing in the way and will announce new transactions in the upcoming quarters. Analysts, including Kate Humphrey, suggest that while the drop in transactions is noteworthy, private equity retains a pivotal role in the healthcare sector’s evolution.
For those following these trends, results from every quarter are compiled in The Health Care M&A Report, a key feature of LevinPro HC, published by Irving Levin Associates, LLC. If you're interested in more detailed reports or data, accessible contact information is provided.
Irving Levin Associates boasts a legacy of over 70 years in delivering comprehensive M&A intelligence, principally tailored for investors focused on senior housing and healthcare markets. With offices situated in both New Canaan, Connecticut, and North Bethesda, Maryland, the firm remains dedicated to maintaining extensive databases and resources pertinent to these evolving markets.
Topics Financial Services & Investing）
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