A new report from BRG suggests a significant uptick in transaction activity is expected across the U.S. health care and life sciences sectors in 2025, following slower deal volumes in 2023 and 2024. The findings stem from BRG's "2025 US Healthcare & Life Sciences Transactions Outlook," which surveyed more than 150 executives and decision-makers from provider, payer, and life sciences organizations, supplemented by expert interviews.
After a period dampened by inflation, rising interest rates, and regulatory pressures—which saw global healthcare M&A volume drop nearly 30% from its 2021 peak—industry players are signaling readiness to pursue deals again. This anticipated rebound presents potential opportunities for consultants advising on strategy, M&A, integration, and operational improvements.
The market optimism is widespread, with 82% of provider, 96% of payer, and 70% of life sciences executives anticipating increased transaction activity in their verticals over the next year. Key drivers vary by segment:
Providers: Facing labor cost and staffing challenges, potentially leading to consolidation, particularly in primary care.
Payers: Focused on increasing Medicare Advantage (MA) penetration, enabling value-based care and digital transformation, driving acquisitions in managed care.
Life Sciences: Seeking portfolio enhancements and new drug acquisitions ahead of key patent expirations, spurring deals in biotechnology.
“The industry is eager to bounce back from the inflation, high interest rates and regulatory pressures that have put a strain on deal activity in the past few years,” said David Wildebrandt, a BRG managing director. “Organizations are looking to transactions to seize new opportunities. The challenge now is to move forward strategically.”
Key Findings:
- Transactions on the rise: Providers (82%), payers (96%), and life sciences (70%) respondents believe that transaction activity in their vertical will increase over the next 12 months.
- Return to core capabilities: The most transaction activity in 2025 is expected in the primary care (provider), managed care (payer), and biotechnology (life sciences) areas.
- Top transaction drivers: Labor costs and staffing shortages (providers); MA penetration, value-based care enablement and digital transformation (payers); and portfolio enhancements/new drug acquisitions (life sciences).
- Top hurdles vary by vertical: Providers say financial obstacles are most likely to impact dealmaking; payers highlight regulatory and operational challenges; while life sciences executives emphasize strategic concerns.
- Regulatory & policy uncertainty: Fewer than 5% of respondents say they do not have any regulatory concerns when considering a transaction. Top-ranked concerns include reimbursement compliance, and data privacy and security requirements.
- AI and cybersecurity focus: The overwhelming majority of respondents are likely to be involved in an investment or transaction related to AI (82%) and cybersecurity (84%) in the next 12 months.
“Everyone seems to anticipate increased activity in 2025,” adds John Brock, another BRG Managing Director. “The combination of PE firms’ dry powder, long hold periods, and last year’s price discovery as interest rates fell—among other factors—should help facilitate a meeting of the minds between buyers and sellers.”
Strategic partnerships also emerge as the most anticipated deal type across all verticals, followed by M&A, restructuring and joint ventures.
- Private equity is expected to be a significant catalyst, looking to deploy substantial dry powder and exit investments after extended holding periods.
- Technology remains a major focus, with 82% of respondents likely to pursue AI-related transactions and 84% targeting cybersecurity investments or deals in the next 12 months.
Don’t get too excited, as significant hurdles remain. Providers cite financial issues (working capital, integration costs) as top concerns. Payers worry most about operational inefficiencies and workforce retention. Life sciences executives are more focused on strategic alignment and competition.
Uncertainty also persists in the form of regulatory headwinds, with fewer than 5% of respondents lacking regulatory concerns. Billing, pricing, reimbursement compliance and data privacy/security requirements are top of mind. Potential shifts under the Trump administration regarding antitrust enforcement, tariffs, ACA policies and AI safeguards add complexity.
“Regulatory changes can be a kill shot to a business or a path to profits,” notes Meghan Fitzgerald, CEO and founder of health care investment firm Grey Ghost Capital. “It’s impossible to be a health care dealmaker without knowing the regulatory field, full stop.”
The bottom line: While optimism for renewed dealmaking in health care and life sciences is high for 2025, navigating financial constraints, operational challenges and a complex regulatory environment will require careful strategic planning and execution.
View the 2025 US Healthcare & Life Sciences Transactions Outlook report here.
SOURCE: BRG
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