The healthcare mergers and acquisitions (M&A) market began 2025 with a slower start than expected given the easing headwinds and building momentum at the end of last year, with the number of deals reported in Q1 lower than the number of deals reported in the same period last year. However, deal volume steadied in February and March as market participants adjusted their strategies to align with a shifting enforcement and economic landscape. That said, recent announcements around tariffs, potential reductions in Medicaid reimbursement due to eligibility redeterminations, and possible expiration of enhanced premium tax credits have left some investors still skeptical heading into Q2.
Investment from private equity (PE) continued to be an important driver for healthcare deal activity in Q1, with PE firms acquiring everything from physician and dental practices to Fortune 100 company Walgreens Boots Alliance.
This report provides an overview of key developments in Q1, including regulatory enforcement trends and notable transaction activity.
Physician Practice Management
Following the Federal Reserve’s lowering of interest rates and California Governor Newson’s veto of California Assembly Bill 3129 (which targeted PE investments in healthcare), the end-of-year outlook on deal activity within the physician practice management (PPM) sector appeared favorable. However, regulatory headwinds continued to pose challenges for the PPM sector in Q1, as PE investors continued to find themselves in the crosshairs of state regulators. Indeed, the first legislative session saw many states, including Connecticut, Maine and New York propose legislation that would impose new or expanded notice requirements with respect to certain healthcare transactions and/or restrict PE investment in certain healthcare providers, including via management services organizations (MSOs).
Additionally, California and Oregon both renewed efforts to impose restrictions on PE investment. California’s recently proposed Senate Bill 351, the successor to 2024’s vetoed Assembly Bill (AB) 3129, is substantially the same bill as AB 3129 with the primary difference being that it removed language requiring notice and consent of the state attorney general for certain PE healthcare transactions.. The bill explicitly targets PE firms or hedge funds and prohibits them from becoming “involved in any manner” with interfering with the professional judgment of a physician or dental practice. Oregon’s Senate Bill 951 is the spiritual successor to last year’s House Bill 4130, which notably failed in 2024. The bill would prohibit professional corporations and their physician owners from relinquishing control over their assets, business operations or clinical practices or decisions to MSOs. All MSO agreement renewals, acquisitions, sales, or transfers of ownership or membership interests in a professional medical entity that occur after the passage date would be subject to the statute beginning on January 1, 2026. MSOs and medical practice entities with current arrangements that are not amended after the passage date have an extended deadline.
To date, 15 states have put in place or proposed “material transaction” laws which Bass, Berry & Sims is actively tracking via our interactive healthcare transactions map.
Finally, although not specific to healthcare, several states (Washington, West Virginia, Colorado, Hawaii, Nevada, California and Utah) and Washington, D.C. recently proposed their own versions of the Uniform Antitrust Pre-Merger Notification Act. These state laws will impose an additional layer of regulatory filings for certain large mergers and acquisitions.
Despite ongoing regulatory scrutiny, according to LevinPro, there were approximately 105 reported deals in the PPM sector in Q1.
The dental market continued to set the pace among specialties—accounting for 61% of PPM deals according to LevinPro. While MB2 (backed by Charlesbank Capital Partners and Warburg Pincus) led the industry among all PE investors with three dental acquisitions in March alone, other dental service organization (DSO) platforms remained active. For example, Parkview Dental Partners (backed by Cathay Capital) had a very busy Q1. The company announced the acquisition of two Lifetime Smiles Dental Care practices in Florida on January 28, and then added Dr. Douglas C. Went, Jr.’s periodontist practice in Brandon, Florida on March 5. These acquisitions signal that Parkview is still committed to expanding its footprint as it now operates 25 dental practices within the state of Florida. Meanwhile, Heartland Dental (backed by KKR) acquired dental practices in Michigan, South Carolina and Florida; Straine Dental Management (a dentist-owned and led DSO) was likewise involved in a string of deals during Q1 expanding its network across South Carolina, Missouri and Texas.
On the physician front, the specialties of ophthalmology and cardiology received a lot of attention during Q1. In January, Sight Growth Partners (backed by Chicago Pacific Founders) expanded its platforms in Connecticut and New York by acquiring Doctor & Associates and Sambursky Eye & Esthetics, respectively. Eye Health America (backed by LLR Partners) announced its partnership with Florida-based Quiqley Eye Specialists on February 17, and EyeSouth Partners (backed by Olympus Partners) announced a partnership with Retina Institute of Illinois on March 20. The latter two transactions, involving ophthalmology practices specializing in retinal care, are perhaps evidence of a building momentum around retina practice transactions following Cencora’s (NYSE: COR) acquisition of Retina Consultants of America.
In the cardiology space, two nonprofit health systems expanded their networks during Q1. Vanderbilt Health acquired Tennova Healthcare-Clarksville’s cardiology practice from Community Health System (NYSE: CYH). Joe DiMaggio Children’s Hospital, a nonprofit healthcare organization, added to its Heart Institute by acquiring a pediatric cardiology practice. In total, 14 pediatric cardiac physicians, who operate out of five offices in South Florida, joined the Joe DiMaggio Children’s Hospital network.
Another specialty that saw activity during Q1 was orthopedics. OrthoCarolina, one of the nation’s largest independently owned orthopedic practices, sold its physical therapy business. In that deal, PT Solutions Physical Therapy teamed up with Novant Health to acquire OrthoCarolina’s physical therapy division for an undisclosed amount. In addition, NYU Langone Health and NYU Langone Orthopedics announced the acquisition of Rothman Orthopaedics of Greater New York, which expanded the system’s orthopedic offerings in the state.
On March 17, UnitedHealth Group’s (NYSE: UNH) subsidiary Optum completed its acquisition of Oklahoma-based FlexCare Infusion, a portfolio of several companies primarily focused on ambulatory infusion. In addition to its ambulatory infusion centers, FlexCare operates over 30 clinic locations offering various medical specialty services across Alabama, Arizona, Oklahoma, West Virginia, Washington and Colorado.
While regulatory hurdles likely will force PPM buyers and sellers to seek creative solutions going forward, there is still clearly an appetite on both sides for continued consolidation—particularly as several specialties remain highly fragmented and others offer access to ancillary lines of revenue, including clinical research and ambulatory surgery centers. Physicians continue to bear the brunt of increasing administrative costs. For many, the burdens of running a small practice have made it difficult to focus on the actual practice of medicine. Therefore, physicians also will continue to seek partnerships with MSOs, hospitals or large physician groups. Dr. Gerard Abreo, co-founder of Southeast Houston Cardiology (SHC), spoke highly of the benefits of such partnerships in February in a post-merger study which took place one year after SHC’s merger into CLS Health (a Houston-based physician-owned medical group). Dr. Abreo claimed that “The time for single practice is over… It is very hard to manage, it is very hard to compete, the managed care contracts are not going to come to you as a solo doc, so you have to either join a bigger group or sell to a hospital or to a venture capital group.”
Clinical Research Organizations
After another growth year in 2024, PE firms continued to demonstrate an interest in the clinical research organization (CRO) sector in Q1. Given the increasing regulatory scrutiny on investments in physician and dental practices, CROs have become a viable alternative investment vehicle—even more so given the fragmented nature of the sector and ability to deliver desirable goods or services. Recently, several CROs have focused on clinical trials of prescriptions designed to combat diabetes and promote weight loss.
A few noteworthy transactions were announced or closed in Q1 of 2025. For example, MMS (backed by Lindsay Goldberg) acquired Exploristics and KerusCloud Simulation platform. The deal aligns with MMS’s focus on broadening its data-focused solutions. In February, Flourish Research (backed by Genstar Capital), an industry leading multi-site clinical trial organization, announced the acquisition of Diablo Clinical Research, touting the company’s reputation and proximity to Silicon Valley. Over the last 30 years, Diablo has conducted more than 1,000 clinical trials at its independent, single-site research facility. On March 18, The START Center for Cancer Research (backed by Warburg Pincus) announced it entered into a definitive agreement to acquire Carolina Urologic Research Center, described as the premier urologic clinical research site specializing in genitourinary oncology. The deal closed on April 1.
In our 2024 year-end report, we noted that investors are also beginning to allocate capital to CRO-adjacent service providers, and that trend appeared to continue in Q1. Clario, a prominent provider of endpoint data solutions to the clinical trial industry, announced two transactions in March. First, Clario acquired WCG Clinical Services’ electronic clinical outcomes assessments (eCOA) business. eCOAs are used to evaluate the safety and efficacy of new drugs by measuring how a clinical trial participant feels or functions. WCG’s eCOA operations offer specialized functionality in the areas of neurology, psychiatry, neuropathic pain, and rare diseases. Second, Clario announced that it had come to terms with NeuroRx, an imaging analysis company, to further enhance Clario’s focus on neurology. Similarly, in January, Thoma Bravo, a globally recognized PE firm that specializes in software investments, announced a merger between Suvoda and Greenphire, which is expected to close early in Q2. The merger seeks to unite the expertise and assets of two clinical trial technology leaders in hopes of providing better service to patients by simplifying clinical trial workflow.
We anticipate that the CRO market will continue to draw an increasing amount of interest from investors, including as a counterbalance to the potential decrease in deals in the PPM sector.
Ambulatory Surgery Centers
Q1 produced several splashy headlines describing unique transactions in the ambulatory surgery center (ASC) industry.
In late January, Bain Capital sent a proposal to Surgery Partners’ board of directors offering $27.25 per share to acquire the remaining 71% of the company’s outstanding shares not already owned by Bain. As we reported in our 2024 Q3 and year-end reports, Surgery Partners explored a handful of offers from other potential buyers at the end of last year. In their non-binding proposal, Bain partners Devin O’Reilly and Andrew Kaplan noted Bain is not interested in a transaction that would require it to sell its stake in Surgery Partners. The proposal indicates that any potential transaction would be subject to a non-waivable condition that requires the approval of the holders of a majority of the common stock shares not owned by Bain, and approval of a fully empowered special committee comprised solely of independent and disinterested directors. Nevertheless, the offer has sparked concern among some industry leaders about the increasing dominance of PE in the ASC space.
In February, Tenet Healthcare’s (NYSE: THC) ASC platform, United Surgical Partners International (USPI), considered the largest ambulatory platform in the U.S., continued its rapid and robust expansion by partnering with Choice Care Surgery Center, located in Midland, Texas. Choice Care Surgery Center offers a broad range of services, including cardiology, gynecology, endovascular surgery, gastroenterology, orthopedic surgery, hand and plastic surgery, and urology. In other notable joint venture news, Bon Secours Mercy Health expanded its partnership with Compass Surgical Partners to develop 30 new ASCs across Kentucky, Ohio, South Carolina, Virginia, Maryland, New York and Florida. In late 2024, the partners announced plans to open an 8,000 square foot cardiovascular ASC in Virginia that is presently set to open in late 2025.
In contrast to these large chain operators and an industry characterized, to a growing extent, by consolidation by PE buyers, Becker’s ASC Review recently reported on a new ASC development company, Ker Leader Medical, which is “dedicated to preserving physician autonomy and promoting ASC independence.” Ker Leader delivers operational support, from staff training and workflow optimization to compliance management and performance monitoring, with the goal of leveling the playing field and providing an alternative exit strategy to PE investment for ASC leaders. Only time will tell if it can succeed in luring away ASCs from other, prototypical buyers.
Hospitals & Health Systems
A busy period of hospital and health system M&A has continued in Q1 of 2025, with several transactions announced or completed, a trend which we expect will continue throughout the rest of the year.
Hospitals and health systems continue to consolidate, with several independent hospital acquisitions and mergers between health systems in Q1. For example, Rady Children’s Hospital-San Diego completed its merger with Children’s Hospital of Orange County to form Rady Children’s Health, a three-hospital system. In February, Indiana-based Parkview Health, which currently operates 14 hospitals, signed a letter of intent to affiliate with Logansport Memorial Hospital. As of early April, a transfer agreement has been executed with the goal of transitioning Logansport Memorial Hospital to Parkview by June 30, 2025. Indiana-based Union Health also submitted a new certificate of Public Advantage application to acquire Terre Haute Regional Hospital, which is currently operated by HCA Healthcare (NYSE: HCA). This new application comes after Union Health withdrew its initial application in November 2024 following significant push back. The state has until June 21 to review the merger application before making a decision. On March 3, NYU Langone Health completed its merger with Long Island Community Hospital. Also in March, Indiana-based Deaconess Health System announced it entered into a definitive agreement to acquire Jennie Stuart Health, an acute care hospital in Kentucky, with the transaction expected to close on or before August 1, 2025.
In Q1, several health systems were focused on strategic growth by increasing bed supply and outpatient facilities. For example, in January, Prime Healthcare announced plans to acquire Central Maine Healthcare, a health system with three hospitals, a cancer center and network of over 40 physician practices, by the end of 2025. HCA also completed its $110 million purchase of New Hampshire-based Catholic Medical Center on February 1, a 330-bed regional health hospital with more than 400 providers, followed by a purchase of Lehigh Regional Medical Center from Prime Healthcare on February 27. Later, Santa Clara County in California entered into a definitive agreement to buy Regional Medical Center from HCA for $150 million. The transaction, which officially closed on April 1, integrates the 258-bed hospital into the Santa Clara Valley Healthcare system. North Mississippi Health Services and Baptist Memorial Health, two of Mississippi’s largest health systems, are also competing to buy 96-bed, county-owned, OCH Regional Medical Center. The hospital and county board are expected to decide on a new owner in early May. More recently, after receiving approval for the transaction from the Illinois Health Facilities and Services Review Board at the tail end of 2024, on March 1, Prime Healthcare completed its acquisition of eight Ascension hospitals in Illinois. The acquisition also included four post-acute and senior living facilities and two ASCs. On the same date, AdventHealth completed its $260 million acquisition of ShorePoint Health System in Florida from CHS. The acquisition included related physician clinic operations, outpatient services and an emergency department.
Other hospitals and health systems continued to expand their networks in Q1 with a focus on expanding access to care and care coordination. For example, at the beginning of the quarter, Cayuga Health System and Arnot Health merged into a five-hospital system with over $1 billion in annual revenue. The combined entity now operates under the name Centralus Health, and as a result of the merger, patients will have access to the full spectrum of services provided by both systems. In January, Yale New Haven Health also agreed to acquire Nelson Ambulance, a medical transportation provider to create a more integrated experience for patients across the continuum of care. Pending regulatory approval, the transaction is expected to close in the first half of 2025. Similarly, Ohio-based Dayton Children’s acquired two pediatric practices, Cornerstone Pediatrics and Shelby Pediatrics. The acquisitions are part of Dayton Children’s goal to improve accessibility to pediatric primary care. Ardent Health also completed its acquisition of 18 urgent care clinics from NextCare Urgent Care in New Mexico and Oklahoma. Pennsylvania and New Jersey-based St. Luke’s University Health Network signed a definitive agreement to acquire Grandview Health in Pennsylvania, with the transaction expected to be completed in mid-to-late 2025. Grandview is a community-based system that operates several primary care and outpatient facilities.
In line with its $1 billion divestiture plan announced in 2024, CHS has continued with several divestitures in Q1. On January 31, CHS sold a Mississippi-based hospital, Merit Health Biloxi, to Memorial Health System. As noted earlier, a CHS subsidiary sold a Tennessee-based cardiology practice, Tennova Healthcare, to Vanderbilt University Medical Center, and, as also noted above, on March 1, CHS sold ShorePoint Health System in Florida to AdventHealth for $260 million.
Home Health, Hospice Care & Personal Care Services
Hospice and home health transactions started off strong in Q1. The hospice and home health markets are ripe for continued M&A activity, with new research providing evidence that these services can help improve outcomes and reduce high healthcare spending at the end of life. However, the sector did face some unfavorable attention in 2024 following reports of instances of fraudulent activities, including, for example, failures to submit quality reports, patient safety concerns and coding issues revealed through audits. Government enforcement activities combatting these issues may negatively impact deal activity, however, and the role of PE in this sector will also be something to watch in 2025. We saw PE buyers take a step back from the hospice space in 2023 and 2024, but, if Q1 is any indication of the trajectory of 2025, we expect PE buyers to have a renewed interest in the sector.
The notable uptick in M&A activity in this sector began in January, as several significant transactions were finalized. After announcing a robust pipeline of hospice acquisitions toward the end of last year, The Pennant Group, Inc. (Nasdaq: PNTG) made good on that promise and kicked off 2025 by completing its purchase of the Oregon assets of Signature Healthcare at Home on January 2. The Idaho-based home health, hospice, and senior living company now has operations that span across 13 states. Another company seeking to broaden its reach through increased M&A activity is Help at Home. In January alone, Help at Home acquired three home care groups in the northeast: Penn Highlands Personal Care Services, Affordable Home Care and Total Care Home Health. Help at Home is focused on advancing home care through innovative programs and services; the organization currently serves over 65,000 clients.
The early momentum in January carried on and spread to the rest of the sector throughout the rest of Q1. St. Croix Hospice announced that it plans to formally acquire the Mayo Clinic Health System’s hospice operations in Southwest Minnesota. We anticipate this deal to close early in Q2, as the parties wait for regulatory approvals. In February, Gracepoint Home Care, a home healthcare service provider with a network that extends to Alabama and Mississippi, acquired Touching Hearts Senior Care, located in Mobile, Alabama.
Meanwhile, in February, UnitedHealth Group (NYSE: UNH) and Amedisys (Nasdaq: AMED) announced planned divestitures in an effort to gain approval of their proposed $3.3 billion merger. The Department of Justice will head to mediation with UnitedHealth Group and Amedisys on April 18 as part of an ongoing antitrust lawsuit.
We anticipate that even with the rise of M&A activity, organizations in this sector will continue to find other ways to scale their operations. In past reports, we highlighted that some hospice systems hoping to expand their operations might look to affiliate with other hospice systems rather than pursue acquisitions themselves. We saw this come to fruition in Q1 when Bristol Hospice announced its partnership with St. Agatha Comfort Care in Las Vegas. Both groups are looking forward to combining resources as they attempt to improve patient care and support.
Digital Health & Health Information Technology
Q1 saw steady deal activity in the digital health and health information technology (HIT) space, with the industry segment having a relatively busy start but steadying as the quarter went on. In January, Transcarent announced it will acquire Accolade (Nasdaq: ACCD) in a take-private transaction valued at approximately $621 million. Transcarent is known for using generative artificial intelligence (AI) to simplify healthcare navigation by combining into one platform benefits information, clinical guidance and care delivery. The transaction is expected to close during Q2. ActiGraph acquired the life sciences business of Biofourmis, a digital health startup. ActiGraph is known for developing smart watches used for measuring health indicators during clinical trials. The transaction includes software and algorithms that will allow ActiGraph to create a comprehensive device-agnostic digital health platform.
Venture capital investment likewise had a strong start to the year. In January, Hippocratic AI completed a $141 million Series B funding round, bringing its total valuation to $1.64 billion. This large investment already seems to be accelerating the company’s work, as it later announced the launch of Polaris 3.0, a 4.2 trillion parameter suite of 22 healthcare-centric large language models (LLMs). The Helper Bees, a technology platform streamlining the delivery of “aging-in-place” services through its network of over 20,000 providers covered by 43 of the largest payors in the nation, successfully completed a $35 million Series C funding round led by Centana Growth Partners.
January also saw the passage of the New York Health Information Privacy Act (NYHIPA). This marks only the nation’s second comprehensive consumer health data law. Though still awaiting the governor’s signature, this law would prohibit the processing of an individual’s “regulated health information” (or RHI) without a valid authorization. It essentially extends protections akin to those found under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and regulations promulgated thereunder, to consumer health data that is not otherwise covered by the federal law. If signed, the Attorney General would have exclusive authority to enforce the law and violators would be subject to stiff penalties, including restitution, disgorgement of profits and civil penalties of no more than $15,000 per violation, among others.
In February, Teladoc Health (NYSE: TDOC) announced it entered into a definitive agreement to purchase Catapult Health, a provider of virtual preventative care services, such as its at-home wellness exam VirtualCheckup, in an all-cash transaction for $65 million. XRHealth acquired RealizedCare, an immersive digital therapeutics company which boasts expertise in behavioral health and chronic pain management. XRHealth uses AI and extended reality (XR) technology to provide an advanced patient care platform with several clinical applications, including for use in physical therapy, cognitive rehabilitation, pain management, and mental health. This follows its November 2024 acquisition of NeuroReality. Following its January acquisition of Alea, Treatment.com AI announced that it had entered into a definitive agreement to acquire Rocket Doctor. Rocket Doctor is a technology-driven digital health platform that seeks to promote access to virtual care throughout North America.
Rounding out the quarter, in March CoachCare, a leading provider of remote patient monitoring (RPM) and chronic care management services, acquired VitalTech. VitalTech provides a comprehensive suite of workflow automation and care management services to managed care organizations (MCOs), home health agencies, physicians and senior living facilities. This transaction comes on the heels of CoachCare’s February acquisition of certain assets from an undisclosed care management company. Following its $10 million Series B funding round led by Orlando Health Ventures and Rockmont Partners, Nashville-based EvidenceCare purchased Boulder-based Agathos, a healthcare IT and physician analytics company. Finally, Denver-based DispatchHealth announced its plans to merge with Medically Home. The combined company will provide hospital-at-home services across 50 major cities and nearly 40 metropolitan areas and will be made available through most major health plans. Forcura, an intelligent workflow management solution provider, merged with Medalogix, a data analytics and clinical decision support company working at the intersection of the digital health and home health and hospice care sectors. The companies announced plans to create a new post-acute care platform.
Furthermore, in March, RLDatix, a lobal leader in safety, workforce and data solutions for healthcare systems and a portfolio company of Five Arrows and TA Associates, acquired IPeople Healthcare, a leader provider of business continuity and data accessibility solutions that ensure uninterrupted access to HER data for providers. The acquisition of IPeople enhances RLDatix’ data migration and archiving offerings for hospitals and health systems.
Finally, ATA Action, the advocacy arm of the American Telemedicine Association, acquired the Digital Therapeutics Alliance (DTA), an international industry group dedicated to expanding access to digital therapeutics.
The digital health and HIT sectors face uncertainty going forward due to the unclear and at times contradictory regulatory posture of the current presidential administration. The Trump administration’s deregulatory agenda will surely have an impact on the digital health space. One of President Trump’s first actions in office was rescinding Biden’s October 2023 Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. Additionally, on February 28, the U.S. Department of Health and Human Services (HHS) rescinded the so-called Richardson Waiver under which HHS had voluntarily agreed to follow the notice-and-comment rulemaking procedures in the Administrative Procedure Act for certain rules. Though the effects of the administration’s early actions are unclear, by all accounts they have the potential to greatly accelerate the development and deployment of AI technology and could broaden the scope of its use.
Similarly, at the end of the quarter, Congress once again extended telehealth flexibilities originally provided during the COVID-19 public health emergency for Medicare beneficiaries, marking a potential boon for virtual care and behavioral health companies. Until October 1, patients will be able to continue receiving telehealth services from any location, including their homes, without any geographic restrictions for originating site. The extension will also keep in place certain other key benefits, including audio-only telehealth services and the ability for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) to provide telehealth services, and it delays the in-person visit requirement for telehealth mental health services.
Behavioral Health
2025 started off strong with a flurry of transactions in the behavioral health sector, with more than 15 transactions in the first three months. We expect this trend will continue given the continued strong demand for behavioral health services.
Technology continues to play a significant role in the behavioral health industry. As noted earlier, this trend was evident in Q1. In January, Avel eCare acquired Amwell’s telepsychiatry business for $21 million. The same month, Iris Telehealth acquired Quartet Health’s telepsychiatry division, innovaTel, making it one of the largest telepsychiatry providers in the U.S., before the balance of Quartet Health was purchased by NeuroFlow, a behavioral health technology and analytics company. In March, California-based April Health, a virtual behavioral healthcare provider, merged with Massachusetts-based Wysa, an AI-powered mental health company. Together, the collaboration will provide patients with a combination of AI and human resources, allowing patients to receive support between clinician visits and eliminating wait times.
Activity in the autism and applied behavior analysis (ABA) therapy-related sector also has been on the rise, with several transactions in Q1. For example, Already Autism Health, an autism therapy provider, acquired two providers, Commonwealth ABA and CABS Autism and Behavior Specialists, in late January. The acquisitions expand Already Autism Health’s reach into three additional states. PE firm Nautic Partners also acquired New York City-based Proud Moments ABA, which operates in 12 states and provides ABA therapy in homes and its clinics, from Audax Private Equity. In February, two California-based autism treatment providers, Autism Spectrum Interventions, an in-home and school-based provider, and Quality Behavior Solutions, a clinic-based provider, announced that they will merge under the name Alongside. Also in February, Pennsylvania-based Devereux Advanced Behavioral Health acquired Strawberry Fields, which provides care for individuals with intellectual and developmental disabilities, autism or serious and persistent mental health challenges. The acquisition supports Devereux’s growth plans into community-based supports, and specialty mental health and education services.
Interest in areas such as eating disorders and substance and use disorder treatment remains high. In Q1, Minnesota-based Meridian Behavioral Health acquired Gateway Recovery Centers from Horowitz Health. Gateway Recovery Centers operates two inpatient medically monitored detoxification facilities. Orchard Mental Health Group, a Maryland-based therapy and psychiatric care provider, also acquired GBCC Behavioral Health and Oasis Behavioral Health Urgent Care, adding six locations to its practice. In February, four behavioral health providers combined under the name Well Behavioral Health, with the new organization comprised of four practices: Eating Disorder Recovery Specialists, Mental Health Recovery Specialists, Sanctuary and Well Williamsburg. The group will provide virtual services in nine states and will specialize in treating eating disorders, anxiety, obsessive compulsive disorder and mood disorders. In March, Minnesota-based Partners Behavioral Health acquired four intensive outpatient treatment centers from Nuway. Partners Behavioral Health provides mental health and substance-use treatment services in Minnesota.
There were several other notable deals in the behavioral health sector in Q1, including the acquisition by Oceans Healthcare, a Texas-based inpatient and outpatient behavioral health provider, of Haven Behavioral Healthcare. A federal bankruptcy judge also approved the sale of Wellpath’s behavioral health division for $395 million to a group of its lenders. BrightSpring Health, which operates residential homes for individuals with intellectual and developmental disabilities, announced plans to sell its community living business to Sentiva for $835 million. PAX Health, a PE-backed behavioral health provider, acquired Harris Psychiatric Services, which specializes in treatment for injured workers and accident survivors. The Stepping Stones Group (backed by Leonard Green & Partners) acquired California-based Gallagher Pediatric Services, which provides physical and occupational therapy services in southern California schools.
Managed Care & Value-Based Care
In the managed care sector, there were only a few deals of note in Q1. In January, CareSource, an Ohio-based MCO, consummated its affiliation with Common Ground Healthcare Cooperative (CGHC). Formed in 2012, Wisconsin-based CGHC was a federally designated Consumer Operated and Oriented Plan (CO-OP) pursuant to the Affordable Care Act (ACA). It served as one of the largest ACA marketplace insurers in the state. Following regulatory approval, the transaction closed on January 1. Global Excel Management, a Quebec-based risk management solutions provider with an international footprint, announced its acquisition of Kansas-based Vitori Health, a health plan administrator which specializes in providing tailored health plan solutions to mid-market employers and their employees.
That following month, on February 1, Molina Healthcare (NYSE: MOH) closed its acquisition of ConnectiCare Holding Company for a reported price of $350 million. A former subsidiary of EmblemHealth, ConnectiCare served approximately 140,000 beneficiaries through its ACA marketplace, Medicare and other commercial plan offerings. As an insurer largely concentrated in the Medicaid managed care space—with over 81% of its premiums coming from the federal program—this acquisition comes at a critical time for Molina. Given the uncertainty surrounding the future of Medicaid and other entitlement program spending under the Trump administration, the transaction could be an attempt to lessen reliance on Medicaid program funds. The Medicare Advantage program, another major source of revenue for the company, has likewise come under the crosshairs of the Trump administration. During an exchange with Senator Elizabeth Warren, the incoming Centers for Medicare & Medicaid Services (CMS) Administrator, Dr. Mehmet Oz, stated that many of the practices carried out by Medicare Advantage insurers are “cheating” and tantamount to “stealing from the vulnerable.” This exchange—coupled with the recent publication of data from MedPAC showing CMS spends roughly $84 billion more on Medicare Advantage beneficiaries than it would if those same persons enrolled in traditional fee-for-service plans—may mean a regulatory reckoning is in the cards for the program.
In February, Valsoft Corporation, a serial acquirer of software companies, acquired Chordline Heath, a provider of managed care software that supports health plans, third-party administrators (TPAs), accountable care organizations (ACOs), and other risk-bearing entities across the public and private sectors. Finally, NSM Insurance Group, a portfolio company of global investment firm Carlyle (Nasdaq: CG), signed a definitive agreement to sell its U.S. commercial insurance division to New Mountain Capital in February.
In March, CareSource announced an affiliation with New York City-based ElderServe Health, which operates as RiverSpring Health Plans. ElderServe Health is a not-for-profit MCO which exclusively serves the elderly and disabled population through its Medicaid managed care, Medicare Advantage and dual enrollee plans. CareSource is a nonprofit MCO with over two million members, making it one of the largest Medicaid MCOs in the country.
Also in March, Nashville-based Wellvana Health acquired the Medicare Shared Savings Program (MSSP) business from CVS Health (NYSE: CVS) in an all-stock transaction, making Wellvana one of the largest value-based care enablement companies in the nations with presence in 40 states and serving approximately 1 million Medicare patients. In connection with the transaction, CVS made a strategic minority investment in Wellvana.
Pharma Services, Pharmacy & Pharmacy Benefit Managers
It was again a bit quiet in the deal realm of the pharma services, pharmacy and pharmacy benefit managers sector, but one deal did grab headlines across the industry: the going-private transaction for the sale of Walgreens Boots Alliance to PE firm Sycamore Partners.
Despite launching its specialty pharmacy business in 2024, offering new gene and cell services, Walgreens has evidently otherwise been struggling since its foray into the healthcare services market outside of its traditional retail pharmacy offering. Walgreens has suffered significant losses—a reported operating loss of $14.1 billion for fiscal year 2024—since expanding into primary care (via its VillageMD subsidiary) by acquiring home-based care provider CareCentrix. On March 6, Sycamore Partners announced it had entered into a definitive agreement to acquire the struggling retail-healthcare giant for $10 billion in cash plus an amount to pay off the company’s outstanding debt and other liabilities. The total value of the transaction represents up to $23.7 billion.
Elsewhere, Court Square Capital Partners and WindRose Health Investors announced they had closed a private joint investment in Soleo Health, a national provider of specialty pharmacy and infusion services, and Maxor National Pharmacy Services acquired ProxsysRx from Fulcrum Equity Partners, which, according to the announcement, will position the combined entity as the largest independent provider of pharmacy management services to health systems, hospitals, clinics and other provider organizations.
Conclusion
As the first quarter of 2025 concludes, a more cautious and deliberate approach to healthcare dealmaking has become evident. While transaction volume remains strong in certain sectors, acquirers are increasingly focused on regulatory risk and integration feasibility in addition to long-term financial sustainability. It also remains to be seen how the turbulence of the global economy and pending tariffs and resulting trade wars will impact the healthcare M&A market.
Despite these challenges, the industry’s fundamentals remain strong. Continued demand for integrated care delivery, the rise of digital health, and evolving consumer expectations are driving innovation and investment. The key for market participants will be balancing forward momentum with legal scrutiny and compliance obligations. Those who approach these dynamics with strategic structuring, robust diligence and sound legal counsel will be best positioned to succeed in 2025.
