Private equity (PE) firms have long been drawn to the healthcare sector, enticed by its resilience and growth potential. In recent years, major players like Bain Capital and TPG have intensified their investments in medical services, aiming to capitalize on demographic trends and technological advancements. However, this aggressive push has not been without challenges, as regulatory scrutiny and operational hurdles have tested the viability of such investments.
The Surge in Healthcare M&A Activity
Between 2020 and 2022, healthcare services witnessed a significant uptick in PE activity. According to S&P Global, the aggregate transaction value in Q1 2022 peaked at $19 billion, marking a high point in recent years. However, by 2023, there was a noticeable decline, with investments in healthcare services falling by 59% compared to the previous year. This downturn was attributed to factors such as rising interest rates and increased regulatory scrutiny.
In 2024, the healthcare sector experienced a notable shift in M&A dynamics. While the total number of deals saw a slight decline, the overall deal value increased, indicating a focus on larger, high-value transactions.
- Deal Volume: There were approximately 1,373 health services deals in 2024, a 9% decrease from 1,506 deals in 2023. However, this figure remains significantly higher than pre-pandemic levels, which averaged around 814 deals in 2020 and 828 in 2019.
- Deal Value: The total value of health services M&A deals increased from $63 billion in 2023 to $69 billion in 2024. This uptick suggests a strategic emphasis on larger-scale transactions.
- Private Equity Activity: Global healthcare private equity deal value soared to an estimated $115 billion in 2024, marking the second-highest total on record. This surge was propelled by an increase in the number of large deals, with five transactions exceeding $5 billion, compared to two in 2023.
Notable Private Equity-Backed Healthcare Megadeals in 2024
Several key transactions illustrate the scale and focus of private equity-backed investments in 2024:
- Catalent Inc. Acquisition by Novo Holdings A/S – $16.3 Billion: Novo Holdings acquired Catalent Inc., a leading contract development and manufacturing organization (CDMO), to enhance its biologics manufacturing capabilities.
- R1 RCM Buyout by TowerBrook Capital Partners and Clayton, Dubilier & Rice – $8.9 Billion: The acquisition emphasized the growing demand for efficient healthcare administrative services.
- Sanofi’s Acquisition of Blueprint Medicines Corporation – Over $9 Billion: Although led by a strategic buyer, the deal exemplifies the kind of high-value targets drawing interest from private capital.
Looking ahead, PwC anticipates a robust M&A market in 2025, driven by improving macroeconomic conditions and a backlog of deferred transactions.
Key Trends in 2025 Healthcare Private Equity
- Surge in AI and Healthcare IT Investments
Artificial intelligence (AI) is at the forefront of healthcare innovation in 2025. PE firms are increasingly investing in AI-driven solutions that enhance clinical workflows, reduce administrative burdens, and improve patient outcomes. Notably, AI-powered ambient listening scribes are being adopted to alleviate documentation tasks for clinicians, allowing more focus on patient care.
- Expansion in Asia-Pacific Markets
The Asia-Pacific region, particularly India, Japan, and South Korea, is witnessing a significant uptick in healthcare PE activity. India accounted for 26% of deal volume in 2024, emerging as the largest PE market in the region by volume. Factors such as an expanding middle class, aging populations, and regulatory reforms are attracting investors to these markets.
- Focus on Mid-Market Funds
Mid-market healthcare-focused PE funds, managing between $500 million and $4 billion, have shown resilience and strong performance. These funds have raised approximately $59 billion since 2022, marking a 40% increase over the previous three years. Their success is attributed to innovative investment strategies and a focus on specialized sectors like healthcare IT and biopharma.
Notable Private Equity Activities in 2025
- Healthscope Hospital Portfolio Sale
Private equity interest is reigniting in Healthscope, as the sale process ramps up following the company’s recent receivership. Pacific Equity Partners (PEP)-owned Healthe Care, Australia’s third-largest hospital operator, is looking to acquire 12 surgical hospitals from Healthscope’s 37-hospital portfolio. Smaller firms Genesis Capital and Mercury Capital are targeting the company’s mental health facilities.
- Carlyle Group’s Exit from Indegene
On June 5, 2025, shares of Indegene Ltd rose by up to 3.7% following a significant transaction where Sunil Singhania’s Abakkus Emerging Opportunities Fund acquired a stake in the digital healthcare company. This acquisition occurred through a substantial block deal where various institutional investors, including Abakkus, bought shares. The transaction also marked the complete exit of private equity giant Carlyle Group, which divested its entire 10.2% stake in Indegene.
Bain Capital’s Strategic Moves
Bain Capital has been at the forefront of healthcare investments. In 2023, the firm made significant acquisitions, including LeanTaaS, a healthcare AI company, and HealthDrive, a provider of on-site healthcare services. These moves underscore Bain’s focus on integrating technology with healthcare delivery to enhance efficiency and patient outcomes.
Furthermore, Bain’s Double Impact fund acquired a stake in Multi-Specialty Healthcare, emphasizing the firm’s commitment to investments that yield both financial returns and social impact. Such strategies align with the broader industry trend of targeting value-based care models.
TPG’s Diverse Healthcare Portfolio
TPG has also been active in the healthcare space, pursuing a diverse investment strategy. In 2023, TPG acquired Nextech, a healthcare technology firm specializing in electronic medical records and practice management solutions. Additionally, TPG, in partnership with AmerisourceBergen, acquired OneOncology, a network of community oncology practices, highlighting its interest in specialty care sectors.
TPG’s approach reflects a broader trend among PE firms to invest in platforms that offer integrated services, aiming to streamline operations and improve patient care.
Other Major Players in Healthcare PE
Beyond Bain and TPG, numerous other private equity firms are aggressively pursuing opportunities in healthcare:
- KKR: Acquired Geisinger Health as part of its new platform, Risant Health, with the goal of building a national network of value-based care providers.
- Blackstone: Invested heavily in Medline Industries, a manufacturer and distributor of medical supplies, in a deal estimated at over $30 billion.
- Carlyle Group: Made significant investments in One Medical and other primary care platforms prior to their acquisition by Amazon.
- Welsh, Carson, Anderson & Stowe (WCAS): Long-time investor in physician practice management and urgent care networks.
These firms continue to see healthcare as a growth sector, particularly in outpatient care, behavioral health, and digital health platforms.
The Rationale Behind PE Investments in Healthcare
Several factors drive PE interest in the healthcare sector:
- Demographic Trends: An aging population increases demand for healthcare services, providing a stable customer base.
- Fragmentation: Many healthcare markets are fragmented, offering opportunities for consolidation and efficiency gains.
- Technological Advancements: The integration of technology in healthcare promises improved outcomes and cost savings.
- Regulatory Changes: Shifts towards value-based care models incentivize efficient, outcome-focused services, aligning with PE strategies.
Risks and Challenges
Despite the opportunities, PE investments in healthcare are not without risks:
- Regulatory Scrutiny: Legislative actions, such as Oregon’s bill to limit PE control over medical practices, reflect growing concerns about corporate influence in healthcare.
- Operational Challenges: High-profile bankruptcies, like that of Envision Healthcare, highlight the difficulties in managing healthcare operations, especially when burdened with debt.
- Public Perception: There is increasing scrutiny over PE’s role in healthcare, with critics arguing that profit motives may compromise patient care.
Historical Lessons
The healthcare sector has seen mixed outcomes from PE investments. While some ventures have yielded significant returns, others have faced challenges due to overleveraging and misaligned incentives. The key takeaway is that success in healthcare investments requires a nuanced understanding of the sector’s complexities and a commitment to patient-centric models.
Conclusion
Private equity’s foray into healthcare reflects a strategic pursuit of stable, long-term returns. Firms like Bain Capital and TPG are leveraging their resources to transform healthcare delivery, focusing on technology integration and consolidation. However, the path is fraught with challenges, and success hinges on balancing financial objectives with the imperative of quality patient care.