Opportunity Amid Complexity: How Healthcare Investors May Win in 2026

Healthcare private equity deal activity, which showed an uneven rebound through 2025, is expected to become more consistent in 2026, as lower interest rates, abundant dry powder, and LP demand for liquidity begin to unlock the backlog of delayed transactions from the 2018-22 cycle.

Despite a constructive macro backdrop, persistent valuation dislocation from the 2020/21 cycle and policy uncertainty around drug pricing, reimbursement, and digital health regulation may constrain mid-market deal flow. Still, with several large assets in (or coming to) market, 2026 could bring renewed momentum in sizable transactions as private equity firms look to deploy dry powder through various deal types.

Amidst the uncertainty, several ‘macro themes’ – rising automation and a push to enhance efficiency through AI, continued pricing pressure contributing to a shift toward lower-cost care settings, supply chain reconfiguration, and China’s increasing role as an innovation ‘exporter’ – can shape investment theses in 2026. 

Based on these trends, PwC sees opportunity across several ‘hot spots’ for ‘traditional’ buyout activity…

In healthcare services:

• After years of muted activity, 2026 could mark the start of renewed movement in Physician Practice Management (PPM), as buyers and sellers begin to close the valuation gap. Leading platforms are moving beyond traditional roll-ups, and revenue cycle management, patient access, infrastructure optimization, and constructive payer engagement are emerging as core levers of sustainable EBITDA growth and margin expansion.
• Early signs of activity in specialties such as dermatology, orthopaedics, behavioral health, women’s health, and dental suggest that long-stalled portfolios may finally begin to trade, presenting distinct opportunities for growth and scale.

In healthcare IT:

• In revenue cycle management (RCM), AI-driven or automated bolt-on point solution acquisitions remain the primary path for scaling RCM stacks, as many large offshore BPO assets have already traded – these include primarily backend or orchestration tools (e.g., prior auth, coding, denials).
• In contrast, specialty and ambulatory EHRs continue to attract platform-level investment, with growth often driven organically through product expansion, deeper integration, and workflow automation rather than roll-ups.

In pharma services and technology:

• On-shore CDMOs are positioned to benefit from tariff-driven supply chain realignments, while specialized, functional CROs stand to gain from sponsors’ push to lower costs and increase flexibility (incl. the shift in outsourcing preferences towards FSPs away from FSOs).
• Quality Management Systems (QMS) and compliance vendors are expected to see stronger demand as sponsors adapt to a fast-changing regulatory environment – from evolving FDA expectations to new quality and data-integrity standards.
• At the same time, HCP-targeting platforms are likely to see continued momentum as regulatory scrutiny and ROI challenges weigh on traditional DTC marketing approaches.

In life science tools and diagnostics:

• Cold-chain and logistics vendors are seeing rising demand as advanced biologics and temperature-sensitive GLP-1s grow faster than the broader market. Manufacturers and CDMOs are spending more on validated, reliability-critical packaging as supply-chain scrutiny increases and regulatory expectations tighten — favoring scaled, specialized players with proven qualification data and global footprints.

In medical devices:

• Large strategics will likely continue to shed non-core assets to double down on category leadership, fueling carveouts, rollups, and focused platform plays
• Deal flow is expected to concentrate on assets delivering above market growth in interventional, minimally invasive, intelligence, image-guided, and regenerative solutions with recurring revenue, procedure pullthrough, and clear clinic economic differentiation
• Cardiology, neurotechnology, surgical robotics, and MedTech biologics remain priority growth arenas which can drive deals for pipeline, platforms, and adjacency expansions
• These therapy megatrends can create value pools which are enabled by service companies who are indexed to them across CDMOs, CROs, etc.
• Despite the sector resilience, early stage MedTech founders continue to face funding scarcity as capital concentrates in later stage assets and there continues to only be a small amount of MedTech focused VCs,  increasing the need and value for forward thinking investors in MedTech innovation

Key Theme Spotlight 

Across many of these ‘hot spots’, AI is playing a crucial role in helping to reshape where value can exist in 2026. The common thread across RCM, diagnostics, CROs, QMS, or tools is the same – AI is often the underlying driver of efficiency – compressing labor costs, changing how workflows scale, and eroding moats built on manual processes or point solutions.

In HCIT, AI-enabled RCM bolt-on tools are absorbing coding and denials work that once required offshore labor. In pharma services, AI-supported study design, data review, and bioanalytics are reducing timelines and lowering biometrics headcount. Notably, pharma commercialization underperformed expectations in 2025 as AI-driven targeting and precision marketing raised the competitive bar — a reminder that AI introduces both threat and opportunity. Players that fail to modernize risk margin erosion, while those that adapt can gain structural cost and speed advantages.

For investors, the question is no longer who “uses” AI, but whose model becomes more effective or more defensible when AI is embedded at scale. Vendors that automate documentation, accelerate throughput, or reduce cycle times are gaining share. AI isn’t the thesis, but in 2026 it’s increasingly the filter for determining which assets can sustain margins and where transformation is non-negotiable.

As deal activity normalizes, and valuations from the 2020-21 cycle remain elevated, investors are increasingly turning to alternative transaction structures to unlock value. These dynamics signal a maturing cycle – one defined less by a surge in volume and more by diversification of deal structures, creative capital deployment, and renewed discipline around value creation. With traditional buyouts still constrained by lingering valuation mismatches, 2026 is shaping up to be a year defined by strategic creativity.

Divestitures / Carve-out opportunities:

2026 Cycle Signal: Moderate/High Momentum

After years of portfolio expansion and cross-sector integration, large healthcare and life sciences players are refocusing on category leadership. This drove a pronounced rise in divestiture and carve-out activity through 2023-2024, as corporates sold non-core assets to redeploy capital into higher-growth segments and protect margins. For private equity, these carve-outs remain attractive entry points into high-quality assets with clear operational and strategic upside.

Looking ahead to 2026, divestiture activity is expected to remain a steady contributor to deal flow, but without the sharp acceleration seen in the prior two years. Divestiture sentiment in 2025 showed continued growth, but at a more measured pace, suggesting the market is shifting from a wave of obvious portfolio clean-ups to a more targeted, strategic pruning cycle. In 2026, most activity is likely to come from select segments where corporates still face margin pressure or strategic misalignment.

Take-privates

2026 Cycle Signal: Moderate

With public markets at or near all-time highs, the headline effect is counterintuitive: a stronger equity market widens the valuation gap between well-performing public assets and those whose multiples haven’t kept pace with fundamentals. That can create a pocket of opportunity for sponsors to take public companies private at relative discounts — particularly in MedTech, where operational complexity, portfolio sprawl, and muted growth often leave assets trading below intrinsic value.

Looking ahead to 2026, take-privates are poised to be a meaningful, and potentially growing, part of the deal mix. The combination of elevated public indices, uneven multiple expansion, and continued portfolio simplification may underpin activity. This activity is likely to be selective rather than broad-based, concentrated in segments where operational turnarounds, carve-outs, or digital enablement can materially shift earnings trajectories.

Continuation Vehicles

2026 Cycle Signal: High

Continuation Vehicles are gaining traction as private equity investors seek to hold high-performing assets beyond the natural life of their funds, while offering liquidity to existing LPs. In healthcare, they’ve become a preferred mechanism for retaining exposure to resilient, cash-generative businesses in CROs, CDMOs, and healthcare services — sectors with strong growth but limited near-term exit options.

Looking to 2026, we expect continuation vehicles to remain a meaningful approach to deal making as LPs increasingly seek liquidity. These structures may also open the door to fresh value-creation planning – particularly for assets that would be mispriced in today's still-choppy exit markets.