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Healthcare M&A Roars Back, Fueled by AI
Healthcare M&A is set for a major rebound in 2026, with private equity and artificial intelligence becoming key drivers in company valuations.
Key Points
- Healthcare M&A is set for a major rebound in 2026, with private equity and artificial intelligence becoming key drivers in company valuations.
- The rebound follows a slump in 2025, where deal value fell to $46 billion before a strong surge in the fourth quarter.
- AI has shifted from an enhancement to a core factor in valuations, as investors prioritize tech-enabled models that can scale without adding labor.
- Private equity investors are targeting software and service platforms, while health systems are selling non-core assets to reinvest in patient care.
After a slow 2025, healthcare dealmaking is poised for a major rebound in 2026, driven by a surge in private equity investment and a new focus on artificial intelligence as a core value driver, according to a PwC report as detailed by Fierce Healthcare.
From slump to surge: Deal value dropped to an estimated $46 billion in 2025 from $62 billion the prior year. But the market caught fire in the final months, exploding from a sleepy $7 billion in the third quarter to $22 billion in the fourth.
The AI premium: The big story for 2026 is how AI has transformed from a "bolt-on enhancement" to a fundamental factor in company valuations. "Tech-enabled care, behavioral health and physician specialty platforms could see some of the most aggressive capital flows in years as acquirers look to scale models that can grow without adding labor," PwC's Dan Farrell told Fierce Healthcare.
Smart money moves: Private equity investors are playing it safe, steering clear of businesses tangled in regulatory red tape and unpredictable reimbursement models. Instead, the new money is flowing into software and service platforms while health systems are cleaning house, shedding non-core assets like labs and home health units to pour cash back into patient care.
The healthcare M&A market is shifting from broad consolidation to targeted, strategic acquisitions. Expect a more competitive landscape where tech-driven efficiency, especially through AI, will command the highest premiums. The healthcare rebound is part of a broader projected comeback for the entire U.S. M&A market in 2026. Within the sector, biopharma and life sciences M&A is also at a strategic turning point, driven by patent cliffs and pipeline pressures.
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