Where private equity deals stand in 2025

Modern Healthcare – Tuesday, August 5, 2025
By Caroline Hudson

Private equity deals in healthcare this year may not be on the downward spiral investors initially feared, according to a PitchBook report released Tuesday.

“The ‘sluggish start’ to PE healthcare services dealmaking that we noted in our Q1 update has evolved into slow but steady activity — below last year’s levels but far from a collapse,” the report said.

PitchBook estimates 322 healthcare services deals closed in the first half of 2025, compared with 339 deals in the first half of 2024.

Macroeconomic factors such as interest rates and tariffs have put widespread pressure on dealmaking in many sectors, but private equity investors still want in on the opportunities healthcare has to offer.

Here are five takeaways from the report.

1. Worst-case scenarios for healthcare deals seem unlikely.

Deals closed this year are roughly keeping pace with 2024, and deal activity has not been as weak as initially feared. Aaron DeGagne, senior research analyst for healthcare at PitchBook, attributed the stabilization to macroeconomic factors, such as more clarity for investors on President Donald Trump’s tariffs and how they impact healthcare services.

However, 2025 is still expected to mark the fourth consecutive year with a decline in the number of deals closed. DeGagne said he expects the deal count to be down 5%-10% for the full year.

2. Home-based care is seeing the most deal activity.

There have been more than 30 deals involving home-based care companies year-to-date, including Aveanna Healthcare Holdings’ $75 million acquisition of Thrive Skilled Pediatric Care, which provides pediatric home care in seven states.

PitchBook breaks home-based care into four parts: home health and hospice, personal care and private duty care, pediatric home care and foster care, and diversified groups that offer care in a variety of categories.

3. Investors are looking past interest rates.

Some private equity investors are no longer waiting for lower interest rates before making deals.

“Rates are going to be higher for longer, and they have been higher for longer,” DeGagne said. “There’s a recognition that if you were holding off on lower rates to make a deal, there’s no clarity on when they’ll decline meaningfully.”

The Federal Reserve has resisted Trump’s demands for lower interest rates this year and decided at a July 30 meeting to maintain its federal funds rate at 4.25% – 4.5%.

4. States remain wary of private equity deals.

State governments are continuing to push for additional oversight on healthcare deals involving private equity. The collapses of Steward Health Care and Prospect Medical Holdings within the past two years have fueled discussions about how legislators can step in to protect patients when business operations go awry.

Various states, including Massachusetts and Oregon, have enacted laws requiring stricter regulatory oversight for healthcare-based transactions and restrictions on certain business models often used by private equity companies.

Private equity investors have said the new laws could limit deal activity in some states in the long term.

“In the states where there’s more significant legislation or requirements, I think by definition the purpose of that is to potentially reduce the size of some of these deals or the likelihood of these deals happening, but that takes time to work through the system,” DeGagne said.

5. Private equity investors still want healthcare assets.

Trump’s tariff policies led some equity investors to pull back amid the ensuing market volatility. However, care delivery is still an attractive space for investors because the non-cyclical demand for healthcare makes the sector resilient.

Investors see opportunities to tap into artificial intelligence and other technologies to improve margins in care delivery, DeGagne said.

“What they’re able to do in some cases is acquire some of these providers, potentially roll them up and then implement technology upgrades,” he said. “When you see a benefit from scale, that’s where it makes sense for PE to come in.”

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