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Health industries accounting and reporting quarterly insights: September 2025

  • Insight
  • September 30, 2025

Introducing our latest quarterly industry insights for the pharmaceutical, life sciences, medtech, healthcare, and not-for-profit sectors. This edition features our From breaking point to breakthrough: the $1 trillion opportunity to reinvent healthcare report, an update on regulatory and accounting topics, additional insights on FASB pronouncements and updates healthcare and not for profit entities.

Spotlight The $1 trillion opportunity to reinvent healthcare

One-fifth of today’s $5 trillion healthcare system will be redirected over the next decade. Investments are shifting away from infrastructure-heavy, labor-constrained, inefficient, and costly healthcare delivery models toward scalable, technology-enabled care that is personal, affordable, and preventive—where illness can be predicted and addressed before it happens, when, how, and where consumers want it.

Read how you can seize this sweeping movement and position your organization at the forefront of healthcare’s future.

Regulatory and accounting updates

SEC Comment Letter trends

Health Q3 2025 chart

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

And, while it’s still early in the SEC’s review cycle for calendar 2024 filings, we have started to see a few comments related to the adoption of the new segment disclosure standard (ASU 2023-07) in 2024 annual reports. The SEC staff have raised questions on measures of segment profit or loss presented by companies, disclosures on how the CODM uses the measures of profit or loss in assessing performance and allocating resources, and how companies have identified their segment expenses.

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 June 30, 2025 (Current Period) and the 12 months ended July 1, 2024 (Prior Period) in relation to Form 10-K and Form 10-Q filings.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key provisions (both domestic and international) of the 2017 Tax Cuts & Jobs Act, expanding certain incentives under the 2022 Inflation Reduction Act while accelerating the phase-out of others, and modifying the endowment excise tax on higher education institutions.

The enactment of the OBBBA to reform the US tax code is likely to have financial reporting implications for most companies with US operations. However, given the timing of enactment (after the June 30 period-end date) and the variety of effective dates for key provisions, only certain of those financial reporting implications will affect current-year financial statements.

The OBBBA permanently suspends the current Section 174 requirement to capitalize and amortize US research & development (R&D) expenditures paid or incurred. For tax years beginning after December 31, 2024, companies can elect to expense R&D expenditures incurred in the US, capitalize and amortize them over the life of the research (minimum of 60 months), or capitalize and amortize them over 10 years. Small business taxpayers may apply the rules retroactively to tax years beginning after December 31, 2021.

The OBBBA makes additional changes to international tax provisions, including substantive changes to existing global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), and base erosion and anti-abuse tax (BEAT) provisions. Please refer to our In Depth for a summary of the accounting considerations of this new tax legislation.

In addition to the impact on taxes, there are also other implications of the OBBBA for health industries as outlined in our industry assessment “The One Big Beautiful Bill Act (OBBBA): A trillion-dollar turn in US health policy”:

Key impacts of the OBBBA in health industries:

  • Medicaid community engagement requirements and tighter rules for eligibility

  • States will likely take on more responsibility while also navigating funding constraints

  • ACA Marketplace costs are expected to rise, and insurers may exit certain markets

  • Hospitals, especially rural providers, will face growing financial pressure

  • Pharmaceutical and life sciences companies may see less government spending on drugs

  • Tax incentives aim to boost domestic drug manufacturing

Please listen to this podcast for a high level summary of OBBBA and what it means for the future of US healthcare.

On September 4, 2025, the SEC released the Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions. The agenda covers the SEC’s areas of focus including:

  • Potential rule proposals related to the offer and sale of crypto assets to help clarify the regulatory framework for crypto assets and provide greater certainty to the market. 
  • A number of envisioned deregulatory rule proposals to reduce compliance burdens and facilitate capital formation, including by simplifying pathways for raising capital and investor access to private businesses.
  • Amending existing rules to improve and modernize them as well as address disclosure burdens.

The agenda also reflects the withdrawal of a number of rules imposed by the last Administration that do not align with the current Administration’s regulatory philosophy.

In June and August, the SEC Staff updated the Financial Reporting Manual (FRM). The updates relate mainly to the 2020 amendments to the Regulation S-X requirements for acquired businesses and pro formas. The FRM was also updated for changes to certain standards issued by the PCOAB and for changes to Regulation S-K Items 301, 302, and 303.

Effective July 7, 2025, Kurt Hohl, became the new Chief Accountant of the SEC. Mr. Hohl had most recently founded Corallium Advisors. Before that, he spent 26 years as a partner at Ernst & Young (EY), including as global deputy vice-chair of EY’s Global Assurance Professional Practice. Mr. Hohl previously served at the SEC from 1989 to 1997, rising to Associate Chief Accountant in the Division of Corporation Finance.

PCAOB Chair Erica Y. Williams left the PCAOB Tuesday, July 22. On July 21, 2025, the SEC announced that it has designated George R. Botic to serve as Acting Chair of the PCAOB, effective July 23, 2025. Mr. Botic is a Certified Public Accountant and became a PCAOB Board Member on October 25, 2023. On July 23, 2025, SEC Chairman Paul Atkins issued a statement seeking candidates for all five PCAOB Board positions, including the Chairperson.

On August 21, 2025, the SEC announced that Judge Margaret “Meg” Ryan has been named Director of the Division of Enforcement, effective September 2, 2025. Judge Ryan was a senior judge of the United States Court of Appeals for the Armed Forces. She was nominated to the court in 2006 by President George W. Bush, was confirmed by the United States Senate, and served the entirety of her term through July 2020. Judge Ryan currently is a lecturer on military law and justice at Harvard University Law School. She was a visiting professor at Notre Dame Law School and lecturer at The George Washington University Law School.

On September 10, 2025, the SEC announced that James J. Moloney has been named Director of the agency’s Division of Corporation Finance, effective in October. Mr. Moloney previously served at the SEC for six years prior to joining Gibson Dunn & Cutcher, where he has worked for the past 25 years. During his tenure at the SEC from 1994 to 2000, Mr. Moloney was an attorney-advisor and later a special counsel in the Office of Mergers & Acquisitions in the Division of Corporation Finance.

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. Our In depth discusses key accounting and reporting considerations related to tariffs, including their impact on cost capitalization, contracts with customers, goodwill and long-lived asset impairment assessments, income taxes, and disclosures.

We have also published considerations for the pharmaceutical and life sciences companies including how these shifts are reshaping supply chains, production, and strategic decision-making in health industries.

Additional Insights

R&D Funding Arrangements

On September 29, the FASB issued ASU 2025-07, Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which updates the definition of a derivative to include a scope exception from the accounting definition of a derivative for provisions in contracts where the outcome depends on the operations or activities specific to one of the parties to the contract. The amendments will reduce the number of contracts that are accounted for as derivative instruments and reduce the number of embedded derivatives that are required to be bifurcated from host contracts and separately accounted for as derivatives. Examples of contracts — or embedded features within contracts — that will likely qualify for this new scope exception include regulatory milestone payments included in research and development funding arrangements, as well development and regulatory milestone payments resulting from asset acquisitions or in-licensing arrangements.

The new standard also includes amendments to clarify the accounting for share-based payments received from customers. The new guidance clarifies that share-based noncash consideration — for example warrants received from a customer — is accounted for under ASC 606 until the entity’s right to receive or retain the share-based noncash consideration is unconditional, other than due to the passage of time or conditions that are unrelated to the entity’s performance (or an outcome of the entity’s performance) under the revenue contract. After such conditions have been satisfied and the right to receive or retain the share-based noncash consideration is considered unconditional under ASC 606, the share-based payment is accounted for under the relevant financial instruments guidance.

Read our recently published In Depth for more on the final standard.

Public companies 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 for calendar year-end companies). The new standard requires a disaggregated effective tax rate reconciliation and prescribes 8 specific categories of effective tax rate drivers that must be disaggregated (if applicable and material) as well as further breakdown of significant jurisdictions. The standard also requires a jurisdiction-by-jurisdiction breakdown of cash payments for income taxes paid. 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 cash paid for income taxes paid by jurisdiction.

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

In late July, a spending proposal released by the United States House Committee on Appropriations contained a provision that would prevent the SEC from approving the FASB’s annual budget unless the FASB withdraws ASU 2023-09. To date, no legislation has been enacted that would impose this requirement on the SEC. Given the imminent effective date of the standard, we believe companies should continue with their implementation efforts notwithstanding this potential legislative challenge to the rule.

On July 30, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which relates to estimating credit losses under the FASB’s cumulative expected credit losses (CECL) model. The ASU proposes amendments for the application of CECL to current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606, including those acquired in business combination (acquisition) transactions accounted for under ASC 805.

For all entities, the ASU provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period for eligible assets. Entities will still be required to adjust historical data used in the estimation to reflect current conditions.

In addition, entities other than public business entities can also make an accounting policy election to consider subsequent collections of balances received after the balance sheet date through a date selected by the entity. This policy election is available only if the entity elects the practical expedient noted above. The date selected must be when or before financial statements are available to be issued. Under this accounting policy election, no credit loss would be recorded on balances that have been collected through subsequent receipts and remaining uncollected amounts would be evaluated for credit losses using the practical expedient.

The new guidance will be effective for interim and annual periods beginning after December 15, 2025 and is to be adopted on a prospective basis. Early adoption is permitted.

On September 18, the FASB issued a final standard to modernize the accounting guidance for the costs to develop software for internal use. The new guidance amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming.

Under the new standard, entities will start capitalizing eligible costs when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software.

The new guidance will be effective for all entities for annual periods beginning after December 15, 2027. The guidance can be applied on a fully prospective basis, a modified basis for in-process projects, or a full retrospective basis.

Read our In Depth for more information on the requirements of the final standard.

Healthcare and not for profit updates

Healthcare impacts of OBBBA

In addition to the impact that the OBBBA will have upon pharmaceutical, life sciences, and medtech companies, the new legislation also includes a broad range of provisions that will affect higher education institutions and not-for-profit health care entities. These provisions, along with other newly proposed or imposed regulatory changes made by the Trump administration, have the potential to impact current or future accounting and financial reporting for these entities.

Please refer to our Tax Insight publication for a summary of the provisions of the OBBBA that will impact not-for-profit entities. 

Additionally, our In depth, Higher education & health care: new tax law and other hot topics, provides information on accounting and reporting considerations related to the excise tax on net investment income imposed on certain private colleges and universities by the OBBBA, changes to various grant programs, revenue recognition, and disclosure of risks and uncertainties.

2025 OMB Compliance Supplement Publication Delay

The 2025 Office of Management and Budget (OMB) Compliance Supplement continues to be delayed, although OMB did release a final draft for public consideration on August 21, 2025. The Compliance Supplement is released annually by OMB and provides guidance which auditors use to plan and execute Single Audit and federal compliance audits. Auditors will not be able to issue any Single Audit and federal compliance reports for fiscal years ended on or after June 30, 2025 until the Compliance Supplement is finalized. This delay has impacted the ability of organizations and auditors to plan and prepare for the upcoming audits. Auditors and organizations should ensure they maintain open lines of communication between one another to align expectations and ensure that any assumptions made in the absence of final guidance are clearly understood.

Register now Health industries accounting and reporting hot topics year-end webcast

Join our Health industries accounting and reporting hot topics year-end webcast on December 17 for key insights on the future of healthcare, US deals outlook in health industries, accounting updates, and more. Register today.

Note: This webcast is eligible for CPE credit.

Thought leadership

Explore Behind the Numbers 2026 for essential data-driven insights that spotlight key healthcare trends and strategies to navigate tomorrow's challenges today.

Discover how modernizing health data infrastructure is transforming patient care and operational efficiency.

Uncover insights from the healthcare internal audit providers and payer sector reports to enhance transparency and resilience in healthcare.

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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