Health care private equity still poised, still waiting, still ready in 2025

June 2025

<p>Health care private equity still poised, still waiting, still ready in 2025</p>

Despite all the market turmoil, not much has changed year over year for private equity in 2025. Healthcare PE firms are still waiting for the right signals and conditions to monetize long-held portfolio investments and deploy their massive reserves of pent-up investment capital. 

In October 2024, at the 11th Annual Cain Brothers Private Company Healthcare Conference in New York, discussions hinged on when deal flow would surge again after three years of tepid M&A markets. The story then was about the wait for inflation to subside and the Presidential election to be decided.

At the event, Cain Brothers Managing Director Matt Margulies moderated a panel of Private Equity leaders that included Jeff Abramoff, Partner at Court Square Capital Partners; Ben Edmands, Managing Partner and Co-Founder of Consonance Capital; and Anna Haghgooie, Managing Director at Valtruis, a Welsh, Carson, Anderson & Stow (WCAS) company, and an Operating Partner at WCAS.

As the panel noted, healthcare PE dealmaking peaked in 2021 but looked ready for a surge in investment activity at the end of 2024 in anticipation of falling interest rates.

As Margulies observed, “We’re seeing very high-quality platforms coming to market, and we expect these companies will trade at historically high multiples. Investors must decide whether to pull the trigger on the right business now or hold off until there’s more value opportunity.”

As Court Square Partner Jeff Abramoff noted at the time, private equity remains very discerning about which deals to make. “The big roll-ups, where you’re getting a lot of multiple arbitrage — have fallen out of favor,” he said. Instead, “PE firms seem to be looking for B2B companies that have a really strong organic growth story and great management teams.”

The wait continues.

4 reasons for waiting

In the lead-up to the new Trump Administration, many expected interest rates to fall and pro-business policies to stimulate dealmaking. Instead, expectations for healthcare deals have been dampened by uncertainty, though pockets of activity exist.

Today, Margulies says, we’re in a very similar place as we were in October — with investors poised for massive deal activity — but the reasons for their hesitation have changed.

  • Rather than fall, inflation has actually risen in 2025 and interest rates have held steady, with a rate cut unlikely before the fourth quarter. 
  • Questions around Medicaid funding have yet to be resolved, though it seems like expectations for drastic change have gone down.
  • Tariffs, particularly with China, have brought uncertainty to supply chains and pharmaceutical manufacturers who rely heavily on contract manufacturing organizations based in China and other overseas markets.
  • The Trump Administration’s proposed “Most Favored Nation” policy, which aims to align U.S. drug prices with the lowest prices in OECD countries, also has the potential to disrupt M&A activity up and down the pharma development and supply chain due to uncertainty surrounding future pricing structures and potential regulatory challenges to the pharma ecosystem.


Together, these events and forces have affected dealmaking enthusiasm so far in 2025.

Unleashing deal flow

That doesn’t mean dealmaking has ceased. Pockets of activity indicate that PE investors will deploy capital for the right opportunities with the right risk profile.

For example, rather than the kinds of physician practice rollups characteristic of recent years, there’s more interest in derivative businesses in distribution, outsourcing, and revenue cycle management that are perceived to have less exposure to reimbursement risk. Pharmacy and infusion sectors have also been very active.

Going forward, as clarity around tariffs, Medicaid, and the economic outlook grows, and as businesses and investors learn to navigate this new normal, it seems highly likely that the appetite for private equity investment will also snap back. PE is loaded with cash it would like to deploy. Once those deals take off, the flood will very likely begin.
 

To learn more:

About the Cain Brothers Private Company Healthcare Conference

The 11th annual Cain Brothers Private Company Healthcare Conference, held in New York City, included more than 400 attendees networking and sharing a wealth of knowledge across the combined audience of private companies, industry leaders, and institutional, venture capital, and private equity investors. The forum was packed with thought-provoking presentations and insights on emerging industry trends.

About Cain Brothers, a division of KeyBanc Capital Markets

Cain Brothers is a world-class investment bank focused exclusively on healthcare, with one of the country’s largest teams of senior investment bankers. It brings deep industry knowledge, unrivaled expertise, and a holistic viewpoint to clarify the landscape, offering a comprehensive range of M&A, capital raising, and strategic services to meet the needs of healthcare organizations. Visit key.com/cainbrothers to learn more.

About Key Healthcare®

Key Healthcare provides a holistic approach and deep industry expertise customized to our clients’ needs. Key Healthcare’s comprehensive capabilities include investment banking, real estate, treasury management, and financing solutions. Nearly 10,000 clients rely on Key Healthcare to deliver strategic and innovative solutions that address today's healthcare challenges and opportunities. Visit key.com/healthcare to learn more.

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This article is prepared for general information purposes only. The information contained in this article has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This article does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities.

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