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Health industries accounting and reporting quarterly insights: December 2025

  • Insight
  • December 19, 2025

Introducing our latest quarterly industry insights for the pharmaceutical, life sciences, medtech, healthcare, and not-for-profit sectors. This edition features our Deals 2026 Outlook for Health Industries, reminders for 2025 year end and Q1 2026, an update on regulatory and accounting topics, and additional insights on FASB pronouncements. Additionally, we explore other pertinent topics that significantly influence the health industry.

Spotlight US Health Industries Deals 2026 outlook

Just launched, PwC’s Deals 2026 Outlook for Health Industries, offering fresh perspectives on next year’s M&A environment.

  • The Health Services Deals 2026 Outlook highlights how health services M&A has remained steady despite macroeconomic and regulatory pressures, showing only modest declines in volume and value alongside continued strength across key subsectors.
  • The Pharmaceutical and Life Sciences Deals 2026 Outlook outlines how pharmaceutical M&A remains active despite market and policy headwinds, reflecting selective yet strategic dealmaking, stable valuation expectations, and continued investor focus on innovation-rich assets.
  • The MedTech Deals 2026 Outlook reports how deal value surged to decade-high levels on the strength of several megadeals, even as overall activity remained muted, with market dynamics in 2026 expected to be shaped by technology-driven acquisitions, portfolio realignment, increasing private equity influence, and continued regulatory and macroeconomic pressures.

These outlooks offer a grounded view of where the market is heading and what leaders should be preparing for in the year ahead.

Reminders for 2025 year-end and Q1 2026

With the year-end fast approaching for calendar year-end companies, we highlight key reminders on accounting and reporting considerations that may impact the financial statements in the near term. We also include highlights from the AICPA & CIMA Conference on Current SEC and PCAOB Developments held December 8-10.

The imposition of new tariffs and the ongoing evolution of trade policies continue to introduce complexities for businesses that may affect operating results, liquidity, and financial reporting. As the tariff landscape continues to evolve, including new tariffs, changes in tariff rates, the potential elimination of certain tariffs, and legal challenges to some of the tariffs previously imposed, companies need to consider how and when to account for these and other potential changes. Our In Depth, “Accounting implications of tariffs” has been updated to discuss the accounting implications of legal challenges and changes to tariffs.

Public business entities will need to provide the new income tax disclosures detailed in ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in financial statements for fiscal years beginning after December 15, 2024 (i.e., 2025 annual reports for calendar year-end companies). The new standard requires a disaggregated effective tax rate reconciliation and prescribes 8 specific categories of disaggregation with certain categories requiring further disaggregation. The foreign tax effects category prescribes disaggregation by both nature and jurisdiction. The standard also requires a breakdown by federal, state, and foreign jurisdiction of cash payments made for income taxes, net of refunds received, with further disaggregation of state and foreign categories in certain instances. As we approach the end of 2025, companies should confirm that they have all the data necessary to effectively disaggregate the effective tax rate and determine the net cash paid for income taxes by jurisdiction.

Refer to our publication, FASB issues guidance on income tax disclosures, for details about the new requirements and frequently asked questions that have arisen as companies have begun to assess adoption of the new standard.

The 2025 AICPA & CIMA Conference on Current SEC and PCAOB developments took place on December 8th through 10th. This annual conference features representatives from the SEC, PCAOB, FASB, and IASB, along with many other distinguished speakers from the accounting profession who discuss the latest financial reporting, auditing and SEC regulatory developments as well as what to expect in the coming year. For the key messages and takeaways, read our In depth.

Regulatory and accounting updates

A number of jurisdictions have enacted tax laws pursuant to the OECD Pillar Two GloBe minimum tax framework, and those are effective in 2025. Companies with global operations will need to continue to monitor legislative developments in countries in which they operate or to which they have nexus.

During June 2025, the Group of Seven (G7) countries reached a mutual understanding to exempt US-parented companies from the under-taxed profits rule (UTPR) and income-inclusion rule (IIR) taxing mechanisms under Pillar Two. The G7 agreement, like the overall OECD Pillar Two framework, does not constitute tax law in any individual jurisdiction. As such, under ASC 740 companies must determine their Pillar Two outcomes based on the existing enacted tax laws. While future changes in law may be expected as a result of the G7 agreement, a number of steps need to occur before any UTPR or IIR exemptions are enacted, starting with further guidance from the OECD on the scope of the exemptions and how those exemptions will apply. The OECD has stated that they have a goal of issuing this guidance by the end of 2025, but timing is still uncertain. Following the issuance of this administrative guidance by the OECD, individual jurisdictions will need to follow their local legislative process in order for the guidance to become law. Changes in tax law are accounted for in the period of enactment.

Please refer to our OECD Pillar Two country tracker for information by country.

On September 29, 2025, The FASB issued ASU 2025-07, Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, introducing a new scope exception under ASC 815 for contracts that are not traded on an exchange and that contain underlyings that are not tied to a party’s own operations or activities. For R&D and other risk-based operational funding arrangements, the new standard is expected to reduce the number of arrangements that must be accounted for as derivatives, which must be marked to fair value each period with changes in value reflected in earnings.

Why it matters

Many R&D funding arrangements are structured such that repayments depend on achieving certain research or regulatory milestones or sales targets. Under the new derivatives scope exception, these features will typically qualify for exclusion from derivative accounting. For example, a repayment feature linked to FDA approval of a drug developed by the company would now meet the specified scope exception. The amendment eliminates the need to assess “predominance” of individual underlyings when multiple operational underlyings are present, assuming all of those underlyings qualify for a scope exception. In a scenario where an R&D funding arrangement is structured to include both a regulatory approval milestone as well as a future sales milestone, both underlyings will now qualify for one of the scope exceptions, and therefore the predominance assessment will not be required. This will reduce complexity for companies and align outcomes more closely with the economics of collaborative R&D funding.

The guidance is effective for annual periods beginning after December 15, 2026, but early adoption is permitted. Transitioning to the new guidance may be done on a purely prospective basis to new arrangements or on modified retrospective basis to any arrangements in process as of the beginning of the annual period of adoption. When adopting the guidance on a modified retrospective basis, companies will need to determine which accounting guidance applies to an R&D funding arrangement (for example, ASC 730-20 or ASC 470-10) based on the facts and circumstances that existed when the company originally entered into the contract. To find out more related to the new guidance, read our In depth.

On December 4, 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities, to address the recognition, measurement, and presentation of government grants received by business entities.

US GAAP did not previously contain guidance addressing the recognition and measurement of government grants received by business entities. As a result, entities were required to develop an accounting policy by analogy, for which many turned to IAS 20 or, less commonly, to either the model used by not-for-profit entities for contributions received from the government or the guidance on contingent gains. The new standard remediates this lack of specific US GAAP by amending ASC 832 to include guidance addressing recognition, measurement, and presentation. ASU 2025-10 largely leverages the principles in IAS 20 so companies currently applying IAS 20 by analogy to their government grants will likely not see a significant impact from adoption of the new guidance. The new standard does not apply to not-for-profit entities or employee benefit plans.

The new standard defines a government grant as a transfer of a monetary asset (e.g., cash) or a tangible nonmonetary asset (e.g., a building) from a government to a business entity, other than in an exchange transaction, even an exchange transaction that may be at a significant discount to fair value. The overall principle of the new standard is that a government grant should be recognized in earnings in the same periods that the costs are recognized for which the grant was intended to compensate (i.e., the timing of recognition of grant income should generally match the recognition of the related costs). In addition, a government grant should not be recognized until it is probable that both:

(a) the entity will comply with the conditions attached to the grant, and
(b) the grant will be received.

Furthermore, a grant receivable or grant income may not be recognized before the company begins to incur the related costs (i.e., not until the probable recognition guidance is met for a grant related to an asset or a grant related to income).

The new guidance is eligible for early adoption and will be effective for public business entities for annual periods beginning after December 15, 2028 (including interim periods), and one year later for all other entities. The guidance can be applied on a modified prospective basis, a modified retrospective basis, or a full retrospective basis.

Please see our In depth for further information on the requirements of the final standard.

The SEC has announced its plans to explore potential rulemaking to shift the reporting cadence for public companies—from mandatory quarterly reporting on Form 10-Q to a semiannual model. This concept is not new; in 2018, during President Trump’s first term, the SEC issued a request for comment on modifying quarterly reporting requirements to ease corporate compliance burdens while maintaining disclosures valuable to investors. Although the idea failed to gain momentum at the time, the topic resurfaced in September 2025, and Chairman Paul Atkins has expressed support for revisiting the change.

For a deeper dive, please listen to our podcast.

On December 8, 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to clarify the applicability of the interim reporting guidance, the types of interim reporting and the form and content of interim financial statements in accordance with GAAP. This new standard is unrelated to the SEC’s potential rulemaking and largely clarifies the application of existing guidance and does not significantly change the form or content of interim financial statements and disclosures nor does it in anyway affect the frequency or interval for interim reporting.

SEC Comment Letter trends

Health Q3 2025 chart

Our analysis of SEC comment letters has been updated for letters made public through September 30, 2025. There has been no change in the top five comment letter themes for health industries registrants compared to the prior quarter.

1. This analysis was performed based on topical areas assigned by research firm Audit Analytics for comment letters publicly issued in the 12 months ended September 30, 2025 (Current Period) and the 12 months ended October 1, 2024 (Prior Period) in relation to Form 10-K and Form 10-Q filings.

PwC’s 2025 US Healthcare Consumer Insights and Engagement Survey

The transformation of healthcare is accelerating, driven by advancing technology, shifting expectations and evolving consumer behavior. PwC’s 2025 US Healthcare Consumer Insights Survey explores this dynamic convergence, from ongoing affordability and access challenges to the growing adoption of digital health tools and the increasing role of artificial intelligence.

Four findings from the survey highlight both the persistent barriers consumers face and the opportunities to better support, educate and engage them:

  • 68% of “sandwich generation” caregivers, which includes Millennials and Gen X caring for both children and aging parents, report encountering a barrier when accessing healthcare compared with 55 percent of all consumers.
  • 61% of these caregivers say they worry about affording care if they lose their job or insurance compared with 53 percent of all consumers.
  • 71% of caregivers are currently using or are interested in using AI assisted diagnosis reviewed by a doctor compared with 56 percent of all consumers.
  • 79% of Gen Z report using health technology tools such as wearables, telehealth or online prescription services on a monthly basis compared with 70 percent of all consumers.

To read the full report, click here.

Watch the replay Health industries accounting and reporting hot topics year-end webcast

Were you unable to attend our December 17 Health industries accounting and reporting year-end webcast? Don’t worry, we’ve got you covered. Watch the webcast replay to catch up.

Note: Watching the webcast replay is not eligible for CPE credit.

Thought leadership

Learn how leading medtech companies are redefining growth by pairing breakthrough technologies with smarter, more agile business models.

Discover how payers can transform traditional compliance functions into strategic capabilities that strengthen operations, improve efficiency and better support members.

Catch up on recent Next in Health podcast episodes you may have missed — featuring timely insights on the trends shaping the future of health.

We also have featured publications here which offer deeper insights into the Health Industries sector.

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Josh Herron

Josh Herron

Health Industries Assurance Leader, PwC US

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