Healthcare IT Market Activity Improves Across Asset Classes
Capstone’s latest Healthcare Information Technology (IT) Market Update reports that the Healthcare IT market has experienced fervent demand to date, evidenced by robust merger and acquisition (M&A), equity financing, and public equity activity. Elevated healthcare spending in the U.S. has created a strong backdrop for Healthcare IT market participants, particularly for those serving the Business-to-Business (B2B) space. Health expenditure growth outpaced U.S. gross domestic product gains in 2023—a trend projected to continue through 2033. The underlying factors behind this delta have been two-fold: persistent healthcare inflation and an aging U.S. population requiring heightened care. Inflationary pressures have strained relationships between providers, payors, and patients, driving accelerated demand for revenue cycle management (RCM) and electronic health record (EHR) solutions in the B2B segment.
M&A activity in the Healthcare IT market has flourished year to date (YTD), rising 26% compared to the prior year period. Elevated dealmaking in the space has been supported by a robust pool of strategic and financial buyers, namely competing for B2B participants. Acquirers have increasingly pursued B2B deals to capitalize on rising U.S. healthcare expenditures and digital transformation tailwinds. Meanwhile, Direct-to-Consumer (DTC) M&A has dropped year-over-year (YOY) to date as this segment has become largely oversaturated. Strategic buyers have accounted for the majority of Healthcare IT market deals YTD, albeit by a slim margin. Private strategics have often rolled up middle market competitors with advanced capabilities, such as artificial intelligence (AI) and machine learning (ML), to boost technology stacks. However, public strategic M&A has spiked in YTD 2025. A rebound in the Public Equity market has buoyed many public players’ available acquisition capital.
Private equity (PE) acquisitions, exits, and fundraising in the Healthcare IT market have all risen to date as sponsors look to deploy dry powder and distribute returns to capital-hungry limited partners. Strong exit valuations, coupled with muted internal rate of returns, have spurred heightened exit activity in the Healthcare IT space. Sponsor capital raising for Healthcare IT-focused funds has rebounded from 2024’s deep decline. To date, PE capital raised for sector-specific funds has increased 70.1% YOY. In contrast, total PE fundraising in the broader middle market dropped 20.6% YOY through the first half of 2025, according to Capstone’s Q2 2025 Capital Markets Update. Improving sponsor fundraising levels and robust capital overhang bode well for Healthcare IT market transaction activity in the near-term.
Also included in this report:
A breakdown of historical purchase multiples in the sector and what company attributes have drawn premium valuations.
Why M&A has remained the most viable exit path for sponsors in the Healthcare IT market.
How the sector’s Initial Public Offering (IPO) market has reopened for the first time since 2022, with detail on two recent listings.
Capstone Partners’ Technology Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the Healthcare IT Market. Our team partners with leading mid-to-large sized consumer businesses that serve growing end-markets. For more information on the trends featured in our Healthcare IT Market Report or to speak with one of our Technology Investment Banking Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.
