Financial distress intensified as a driver of transactions in 2025, but health systems continued to make big moves in ambulatory care through acquisitions, divestitures and partnerships, according to Kaufman Hall’s “Hospital and Health System 2025 M&A Review.”
Here are 10 trends to know:
1. Nearly 44% of hospital and health system transactions in 2025 involved a financially distressed organization, up from 31% in 2024 and **15% in 2022.
2. Just 2.2% of deals involved a seller with an A- or higher credit rating, down from 12.3% in 2023.
3. Uncertainty tied to federal policy changes pushed deal volume to record lows in Q1 and Q2, before activity picked up in the second half of the year.
4. The final quarter saw 17 announced transactions, including four mega mergers, signaling a return toward historical activity levels.
5. The average financially distressed seller generated $345 million in annual revenue, showing that mid-sized and larger systems are increasingly under strain.
6. Total transacted revenue in 2025 dropped to $18.5 billion, with more than half coming from Q4, reflecting both fewer deals and smaller average transaction sizes.
7. For-profit organizations were sellers in 11 transactions but buyers in only one, signaling ongoing pressure in hospital operations and shifting investment priorities.
8. Nearly 46% of transactions involved divestitures, as systems continued shedding non-core assets amid margin and capital constraints.
9. State governments increasingly acted as facilitators or funders to prevent hospital closures, favoring “soft landing” transactions that preserve access and workforce stability.
10. While hospital M&A remained muted, systems accelerated deals in ambulatory care, behavioral health and lab services, pointing to a continued shift toward non-acute strategies in 2026.
