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The healthcare M&A market is entering 2026 with strong tailwinds, including private equity engagement, projected lower interest rates and emerging technologies. These macroeconomic conditions are expected to fuel deal activity. Leveraging our LevinPro HC transaction data and insights from industry experts, here is an outlook on the 2026 healthcare M&A market and which sectors dealmakers should keep on their radar.
The sectors we’ll be covering in this outlook:
• Dental
• Behavioral Health Care
• Home Health & Hospice
• eHealth
Dental
In the Physician Medical Group (PMG) space, no specialty has attracted more attention than dental. Since 2021, dental practices have accounted for approximately 37% of all transactions in the PMG sector, with deal totals higher than those in markets such as Behavioral Health Care, Home Health & Hospice and even Medical Outpatient Buildings. We’re expecting another robust and highly active year in 2026 for several key reasons, outlined below.
DSOs
Dental services organizations (DSOs), especially those backed by private equity (PE), will continue to drive market consolidation. Dentists like partnering with DSOs because these companies provide administrative support and offer favorable terms that allow owners to maintain a stake in their practice. In turn, DSOs can expand rapidly, achieving economies of scale that no other investor type in the healthcare industry can match. In our 2024 and 2025 editions of the Healthcare Services Acquisition Report, PE-backed DSOs such as MB2 Dental Solutions and Heartland Dental ranked as the most active investors across all sectors. And some projections expect the DSO market to grow by nearly 17% by 2030.
Further, several large DSOs were just traded in 2025, receiving an influx of capital to fuel further growth. GTCR acquired Dentalcorp, one of North America’s fastest-growing networks of dental practices, for $1.58 billion, and Warburg Pincus made a $525 million strategic investment in MB2 Dental. Other emerging platforms, like Max Surgical Specialty Management, have also been receiving institutional funding; the company closed on a $77 million senior credit facility provided by Freeport Financial Partners, LLC, allowing the organization to expand in the northeast.
Highly Fragmented (Still)
The dental market, despite all the deal activity and consolidation of the past five years, remains highly fragmented. According to an August 2025 report from the American Dental Association, 34% of dentists were in solo practice in 2024, out of a total workforce of about 200,000. According to the same report, only 16% of dentists are affiliated with a DSO, leaving ample growth opportunities for PE-backed platforms.
New Insurance Reforms
Throughout 2025, several states have been considering laws to enact dental loss ratio (DLR) requirements, which require dental insurers to spend a minimum percentage of premiums on patient care or refund the difference to covered individuals and groups. These laws could lead to higher reimbursements for providers and higher returns for investors. Some states recently passed DLR laws, such as Montana, North Dakota and Washington, and the momentum is expected to increase pressure for similar legislation in other states throughout 2026.
Behavioral Health Care
In terms of M&A volume, the Behavioral Health Care sector is having a stellar year in 2025. With approximately a month left in the year, the sector has already seen a 30% increase in deal volume over the full 12 months of 2024, reaching 95 deals. That’s the highest level of deal activity since 2022. We expect momentum to continue into 2026.
Continued Demand
Since the COVID-19 pandemic, there has been a significant increase in the demand for mental health services in the United States, and supply has not been able to keep pace. According to KFF data, more than 122 million people (about one-third of the U.S. population) live in a federally designated Health Professional Shortage Area for mental health care as of late 2024.
From an investment perspective, this imbalance promises guaranteed utilization and revenue streams, especially for high-performing specialties, such as substance use disorder providers. The strong demand for services will continue to drive consolidation as providers seek to expand their offerings, reach new markets and increase their capacity.
“The fundamental demand [for behavioral health care] is unrelenting, and the market fragmentation is creating incredible ‘roll-up’ opportunities, especially for tech-enabled outpatient and adolescent services,” said Andre Ulloa, Founder and Managing Director at Healthcare M&A Advisors, a boutique investment bank providing M&A advisory ser-
vices to owners and operators in the lower-middle market healthcare industry. “Investors are prioritizing platforms that integrate AI and measurement-based care to improve clinical outcomes and operational efficiency, validating the continuous investment we see in this space.”
Focus on Care Integration
CMS is pushing to integrate behavioral health and primary care through reimbursement reforms, a notable trend that should drive even more activity in the Behavioral Health Care sector. Proposed changes to the Physician Fee Schedule (PFS), outlined in CMS’s 2025 Medicare Physician Fee Schedule Final Rule, would increase payment rates for providers offering integrated services, including behavioral health. We’re already seeing this play out in the M&A market, exemplified by US Pediatric Partners’ acquisition of Hope Services in April 2025, and 1Care Hospice’s purchase of Reset Behavior Health in 2024.
Watch the Digital Mental Health Providers
No healthcare sector has embraced technology as much as Behavioral Health Care has, and it’s going to play a significant role in the market in 2026. From telehealth to AI-driven diagnostics and care coordination, technology is shaping the industry, and providers well-equipped with these tools are sure to benefit from an investment perspective.
Reimbursement trends for telehealth are moving in a positive direction, as CMS plans to streamline telehealth services under PFS in 2026, and companies like Lyra Health and Spring Health have raised millions through funding rounds, giving them the capital to expand in the market. Some key deals underscoring these trends include Teladoc Health’s $30 million acquisition of UpLift, a tech-enabled provider of virtual mental health therapy, psychiatry and medication management services, and Lyra Health’s purchase of Bend Health, which provides telehealth services to kids, teens and young adults.
Home Health & Hospice
Home Health & Hospice (HH&H) is another sector that experienced an increase in deal activity in 2025, hitting 100 deals by the first week of December, surpassing 2024’s total volume (97 deals). The HH&H industry is facing a convergence of tailwinds and headwinds, driving rapid consolidation. Here are some key reasons we expect deal volume to continue to rise through 2026.
Demographics and Patient Preference
Although demographics are mentioned in any analysis of any healthcare market, it’s
especially important for the HH&H sector. The U.S. population is aging, and that population will need care. Some might require facility care at a skilled nursing center, or others might opt for an assisted living facility, but an overwhelming majority of Medicare beneficiaries prefer home health services. This preference ensures sustained, high demand for home health services and providers in the foreseeable future.
Industry Pressures
The HH&H industry is facing several challenges that could lead to a number of distressed deals in 2026, especially on the reimbursement front. In late November, CMS released its Calendar Year 2026 Home Health Prospective Payment System Final Rule, which will decrease payments in the aggregate by an estimated 1.3%, or $220 million, compared with 2025. It’s less than the 6.4% reduction ($1.13 billion) the industry was bracing for over the summer, but it will still put significant financial strain on smaller agencies where margins are razor-thin as it is.
This pressure often forces smaller agencies into distressed deals, creating a windfall of acquisition opportunities for larger, financially stable operators and PE-backed firms. Companies like Help At Home, Inc. and Bristol Hospice, both PE-sponsored, have announced several bolt-on acquisitions of small agencies throughout the year, and we expect to see more of those transactions in 2026.
“Reimbursement is simply not keeping pace with expenses and without scale these smaller independent organizations are coming to market with lower multiple expectations,” said Greg Anderson, Managing Director of Helix Health Capital. “We believe this will create a feeding frenzy for investors with the resources to integrate efficiently and quickly.”
Even larger players are feeling the pressure, offloading HH&H operations. Earlier in the year, the Mayo Clinic Health System sold parts of its hospice operations in the upper Midwest region of the United States to St. Croix Hospice LLC in two separate deals, and Good Samaritan Hospital sold its hospice operations in Indiana to CommonSpirit Health at Home in October.
eHealth
With still a month left in 2025, eHealth M&A activity has hit a 3-year high, with 280 deal announcements, a 13% increase over last year’s volume. And considering how prevalent technology is becoming in healthcare, there’s little reason to expect momentum to slow in 2026. Although AI has been a hot topic in healthcare (and just about everywhere), our LevinPro HC data show that other specialties and services are also in high demand to help address market challenges.