Dive Brief:
- Dealmaking in health services is poised for a rebound next year as companies improve in quality and use technology — particularly artificial intelligence — to attract buyers, according to a report published Tuesday by PwC.
- The potential M&A boost in 2026 comes after a slowdown this year. Deal value reached roughly $46 billion through Nov. 30, compared with $62 billion in 2024, according to the analysis.
- AI is emerging as a “genuine differentiator” in health services dealmaking, PwC wrote. Investors are increasingly viewing the technology as a major driver for margin expansion and top-line growth.
Dive Insight:
An uncertain regulatory and reimbursement environment will remain the biggest headwind for healthcare M&A in 2026, PwC wrote in the outlook.
The sector has weathered significant policy change this year. This summer, President Donald Trump signed massive cuts to safety-net insurance program Medicaid into law, and more generous financial assistance for coverage on the Affordable Care Act exchanges looks likely to expire at the end of the year.
Those changes will increase the number of uninsured Americans, putting more financial pressure on providers that will lose revenue and deliver care that won’t be reimbursed. Meanwhile, insurers have faced their own headwinds in government programs.
These policy shifts are coming faster, so buyers are moving quickly to reach competitive advantages, PwC wrote. For example, the CMS finalized some site-neutral pay policies that will align outpatient pay across different care settings this year, demonstrating the need for hospitals and ambulatory care operators to potentially switch up their portfolios.
“In health services, first movers who pair policy foresight with AI-driven execution will set the pace for the sector’s deals in 2026,” Daniel Farrell, health services deals leader at PwC, said in a statement.
Meanwhile, AI has become one of the hottest topics in healthcare technology, as organizations roll out tools to assist with revenue cycle management, clinical documentation and other administrative tasks.
Private equity could also target AI next year. PE firms will continue to move away from healthcare investments that are susceptible to reimbursement or regulatory pressure, and instead to software and services that support care delivery, according to PwC.
That could include AI-backed telehealth platforms, revenue cycle management offerings and tools for workforce optimization and utilization management.
The window for health services initial public offerings is beginning to open too, giving investors another exit option, according to PwC.
“Private equity investors are carrying a sizable backlog of high-quality assets, and improving market conditions—stronger equity valuations, greater stability, and a more favorable interest-rate outlook—are creating a pathway for renewed public-market activity,” the report’s authors wrote.
