2024 Healthcare M&A Outlook

“Leading indicators such as sell-side M&A pitch activity and a stabilizing credit environment, combined with positive sentiment from the Federal Reserve for future rate cuts resulting in bullish public equity market reaction, provide a much-needed dose of market clarity and investor support”.

Hector Torres
Managing Director, DC Advisory US

Healthcare M&A activity in 2023 was characterized by a largely tepid deal environment comprised of reticent sellers concerned over significant valuation bid/ask spreads as sellers desperately tried to hold onto the all-time high valuations achieved in 2021 and early 2022. The first half of 2023 saw deal volumes decline materially[1] given various macroeconomic challenges such as rapidly increasing cost of capital, bank failures over-levered company balance sheets, and margin compression from lingering inflation, among other factors. These broad market dynamics resulted in an M&A valuation reset, with multiples receding back to pre-COVID levels[2],  leaving previously willing sellers take a “wait and see” approach for much of the first half of 2023.

Source: Bain, Healthcare Private Equity Market 2023 Year in Review and Outlook report, January 3 2024


Private equity investors’ need to deploy capital represents a dynamic of pent-up demand and we anticipate a robust return of M&A deal activity in 2024 as inflation has come under control, credit markets have stabilized, and many sellers are capitulating on the valuation reset.

A flight to top-quality investment targets continues to support robust valuations, while investors and lenders remain cautious on investment opportunities that “have a story” regarding the financial profile, recent performance, and near-term growth opportunities. Organic growth is instead the key focus driving investor interest with a keen eye on platform integrations, existing infrastructure, and a recent track record that supports the growth story. We believe the market has materially moved away from underwriting dramatic EBITDA Pro Forma adjustments, common in 2021 and 2022, that have since not materialized.

(Left) Source: Copyright © 2023 S&P Global Market Intelligence (Aggregate dry powder value of global private equity funds with vintage year between January 1 2014 – January 1 2024, as reported by the company)

(Right) Source: The Wall Street Journal, ‘Historical Prices’ of U.S. 10 Year Treasury Note (between January 1 2019 – January 3 2024)


2024 Outlook for Healthcare Services & Physician Practice Management (PPM)


“What Was Once Old, Is New Again: Both investors and lenders have reverted to platforms demonstrating success in deploying the traditional PPM playbook that was successful for over two decades. A flight to quality is focused on: platforms delivering organic growth over multiple periods, regional density in the markets served, integrated practices with unified systems and protocols, corporate infrastructure built and in place with demonstrable value creation justifying a consolidation strategy.”

Rich Blann
Managing Director, DC Advisory US


In 2023, the market hit pause on M&A following an 18-month period over 2021 and 2022 that delivered record M&A volume, as seen below. Deal volume for add-ons slowed materially in 2023 while platform recapitalizations were almost non-existent[3]. We believe many industry consolidator platforms focused inward on integrating the high volume of acquisitions completed in that time, while others needed to recalibrate their balance sheets under the new credit regime.

After emerging from the market shutdown of COVID, deal volume and valuation in 2021 and early 2022 surpassed historic highs. Seller exuberance waned in late 2022 and into 2023 as the market reset was under way. There were more failed / paused deals than completed transactions due to a chasm in the bid/ask spreads. Healthy consolidators benefited as valuations receded and competition declined.

Source: Pitchbook (Transactions with disclosed deal values up to $500 m announced within all subsectors of the Healthcare Services industry between January 1 2017 – September 30 2023)


PPM Poised for Resurgence - 2023 M&A deal volume across all of Healthcare Services dropped to its lowest level since 2017, as demonstrated by the deal count in the chart above. This was due in part to many PPM consolidators scaling back or halting M&A activity altogether, caused by factors such as:

  • Balance sheet constraints and cost of capital impacting ability to pay premium valuations
  • Consolidators needing to integrate a record volume of legacy PPM acquisitions
  • Continued bid/ask spread widening as sellers held out for 2021 / 2022 valuation multiples

We believe the overall health of the PPM M&A market improved in 2023 by virtue of renewed investor discipline and a laser focus on true target-company earnings (e.g., EBITDA), a continued emphasis on operational and clinical integration, and a focus on the pursuit of de novo growth strategies. These elements, combined with the ever-increasing pipeline of high-quality M&A transactions awaiting further market stabilization, should all work to support a robust 2024.   

Investor sentiment in late 2023 strongly favored traditional PPM platforms with long operating and financial history of success to validate the investment thesis for consolidation. This preference remains, with investors bringing a discerning eye to young platforms with limited history and experience.

We anticipate a robust return of M&A activity in 2024 for both consolidators and platform trades. With limited benefits for the M&A deal environment in the short-term, platforms focusing inward on business building and integration should benefit all constituents in the longer term and be more prudent on add-on activity and valuation levels.


2024 Outlook for MedTech & related services

“There is a lot to be excited about Medtech and related services M&A in 2024. Continued organic growth, attractive margins and the non-cyclical nature of Medtech demand positions the sector extremely well in an improving M&A environment.”

Manish Gupta
Managing Director, DC Advisory US

2023 was a year of improvement for Medtech, but the sector still underperformed the broader S&P 500 index from a valuation perspective[4]. Growth was constrained by a slower than anticipated supply chain recovery, continued hospital staffing issues, and broader economic and inflationary headwinds. GLP-1 drugs also created significant headwinds for public market Medtech valuations as the impact on medical procedures across many sub verticals from cardiology to cosmetics remained unknown.

Source: Copyright © 2023 S&P Global Market Intelligence (Transactions with disclosed deal values announced within the Medtech industry between January 3 - December 31 2023)


However, we believe the Medtech sector is well positioned for a stronger year in terms of development and M&A activity in 2024:

  • Improved hospital staffing, robust procedure backlog, reduced concerns around the impact of GLP-1 drugs (obesity / weight loss drugs) on medical procedure volumes, and a strong outlook for hospital capex should all equate to a better landscape setup for the sector’s demand drivers in 2024. Additionally, the more constructive credit markets in the second half of 2023 and positive momentum going into 2024 should help support broader M&A activity, including companies in the Medtech space. We are already seeing an increased number of quality companies consider strategic options going into 2024, thereby potentially presenting attractive acquisition opportunities 
  • Continued growth of digitization and AI-enabled models integrating with traditional medical devices - FDA approvals for AI algorithms are at an all-time high. Strategic acquirors are already showing strong interest in surgical robotics, AI, digital workflow and collaboration, and portfolio gap fillers
  • Near-shoring of OEM supply chains are boosting organic growth of Medtech suppliers and sustained PE interest in contract manufacturing and low / medium-tech branded Medtech look to support near-term exits for high quality platforms. Rising public market valuations are also providing support for more attractive valuations in M&A generally

Source: Wall Street Research (Transactions with disclosed deal values up to $2.5 bn announced within the US Medtech industry between January 1 2015 – January 1 2024, analysis of average deal size of disclosed transaction values between 2015 – 2023)


Key Trends and Areas of Opportunity in 2024

  • Despite a general slowdown of M&A activity last year, we believe consolidation will continue to drive increased healthcare deal activity in 2024 given the significant fragmentation across healthcare industry sub-sectors, including public-private mix sectors that are still less than 20% consolidated, and further bolstered by the sheer volume of PE portfolio companies that are “sitting on the shelf” waiting for the optimal exit timing
  • The “consolidation of the consolidators” is another emerging trend we forecast to continue in 2024 that should continue to create larger scale organizations intended to fully benefit from lower operating cost structures and optimized clinical care delivery models. Recent example:
    • Platinum Dermatology Partners, a portfolio company of Sun Capital Partners, Inc., completed two transformational mergers in the last two years, which have both enhanced and expanded its current geographic footprint. Sun Capital effectuated the first business combination through the merger of West Dermatology with Platinum Dermatology in 2022. In 2023, Sun Capital completed its most recent transformational transaction via the merger Skin and Cancer Associates of Florida to enter the Florida market. The combination expands Platinum’s platform to over 130 clinics in Arizona, California, Florida, Nevada and Texas with nearly 400 providers[5][6]
  • We believe the increasing demand for alternative transaction vehicles and structures to facilitate recapitalizations without a “traditional exit” will continue in 2024. Alternative transactional pathways should continue to include PE continuation fund strategies, minority investments, structured capital solutions, and strategic mergers ahead of sale event
  • We maintain that non-traditional, cross border pools of capital comprised of foreign strategic players seeking a foothold in the US market, as well as O.U.S financial sponsors seeking higher yield returns across a variety of US health industry sub-sectors, will continue to catalyze and support increased M&A activity in 2024, and beyond
  • Considering the outlook of the subsectors discussed, the stabilized ‘new normal’ credit markets and the increasingly robust pipeline of M&A inventory currently ‘on hold’, we expect M&A activity to ramp up in the first half of 2024

To discuss any of the themes explored in this article, get in touch with Hector Torres > Rich Blann > and Manish Gupta >

This article has been prepared solely for information purposes and is not intended to function as a “research report.” In particular, this means that it is not intended, nor does it contain sufficient information, to make a recommendation as to the advisability of investment in, or the value of, any security.   

Additionally, this article does not constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of any offer to buy, or any recommendation with respect to, any securities. You should not base any investment decision on this article; any investment involves risks, including the risk of loss, and you should not invest without speaking to a financial advisor. 

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[1] https://www.pwc.com/us/en/industries/health-industries/library/health-services-deals-outlook.html

[2] https://www.pwc.com/us/en/industries/health-industries/library/health-services-deals-outlook.html

[3] https://pitchbook.com/news/articles/pe-healthcare-services-it-deals-2023

[4] https://www.medicaldevice-network.com/features/low-value-ma-activity-in-2023-start-of-a-slump-or-a-return-to-normal/?cf-view

[5] https://www.platinumderm.com/platinum-dermatology-partners-expands-into-florida-through-transformational-merger-with-skin-cancer-associates

[6] https://suncappart.com/2022/06/21/sun-capital-partners-and-sterling-partners-merge-west-dermatology-and-platinum-dermatology-partners/