Key Takeaways
- • Mid-market healthcare PE funds ($500 million to $4 billion AUM) have historically outperformed the broader market and maintained deal volume and exits since 2020, according to Bain & Company's 2025 Global Healthcare Private Equity Report.
- • Mid-market funds with healthcare exposure raised about $59 billion since 2022, roughly 40% more than in the previous three years.
- • Provider deals historically made up 55% of mid-market deal volume, but activity has shifted toward derivative provider businesses in healthcare IT and services, with deal volume growing at a roughly 36% CAGR since 2022.
- • Firms are moving beyond buy-and-build tuck-in strategies toward centralized infrastructure and capability-driven synergies, tailored by subsegment.
- • Biopharma deal activity has held its pace since the 2021 surge even as the broader healthcare PE market retreated, and LPs continue to favor mid-market funds for their track record.
Summary
Bain & Company's 2025 Global Healthcare Private Equity Report finds that mid-market healthcare-focused private equity funds, which range from $500 million to $4 billion in assets under management, have historically outperformed the broader market. According to the report, these funds maintained buyout activity and exits since 2020 even as the wider healthcare buyout market struggled. Bain cites Webster Equity Partners' exit from specialty-care medical group Retina Consultants of America as an example.
The performance has supported fundraising. Mid-market funds with healthcare exposure raised about $59 billion since 2022, exceeding fundraising in the prior three years by about 40%. Bain notes that limited partners continue to be attracted to these funds given their track record of performance and innovation.
Historically, provider deals accounted for 55% of mid-market deal volume, mostly involving US physician groups or retail health providers. That mix is shifting toward derivative acquisitions in services and healthcare IT. Examples include Knox Lane's majority acquisition of All Star Healthcare Solutions in healthcare staffing and Altaris' purchase of Sharecare in patient engagement. Business models addressing labor costs, staffing shortages, reimbursement pressure and revenue integrity have gained traction, and investment in these derivatives has grown at a compound annual growth rate of about 36% since 2022. Biopharma activity has also maintained its pace since the 2021 deal surge, with notable biopharma IT deals including WindRose Health Investors' acquisition of SubjectWell and GI Partners' acquisition of eClinical Solutions.
Bain argues that buy-and-build strategies, which previously drove a meaningful share of returns through tuck-in acquisitions and multiple expansion, have become harder to execute. Value creation now depends more on centralized infrastructure and capability expansion, with playbooks tailored by subsegment. For physician practices, this can mean adding ancillary services or centralizing billing and IT, while for CROs and CDMOs it can mean adding capacity or capabilities. Bain also says mid-market firms will need deeper internal expertise, including generative AI playbooks, to compete effectively in the current deal climate and macro conditions that have curtailed sponsor exits.
The performance has supported fundraising. Mid-market funds with healthcare exposure raised about $59 billion since 2022, exceeding fundraising in the prior three years by about 40%. Bain notes that limited partners continue to be attracted to these funds given their track record of performance and innovation.
Historically, provider deals accounted for 55% of mid-market deal volume, mostly involving US physician groups or retail health providers. That mix is shifting toward derivative acquisitions in services and healthcare IT. Examples include Knox Lane's majority acquisition of All Star Healthcare Solutions in healthcare staffing and Altaris' purchase of Sharecare in patient engagement. Business models addressing labor costs, staffing shortages, reimbursement pressure and revenue integrity have gained traction, and investment in these derivatives has grown at a compound annual growth rate of about 36% since 2022. Biopharma activity has also maintained its pace since the 2021 deal surge, with notable biopharma IT deals including WindRose Health Investors' acquisition of SubjectWell and GI Partners' acquisition of eClinical Solutions.
Bain argues that buy-and-build strategies, which previously drove a meaningful share of returns through tuck-in acquisitions and multiple expansion, have become harder to execute. Value creation now depends more on centralized infrastructure and capability expansion, with playbooks tailored by subsegment. For physician practices, this can mean adding ancillary services or centralizing billing and IT, while for CROs and CDMOs it can mean adding capacity or capabilities. Bain also says mid-market firms will need deeper internal expertise, including generative AI playbooks, to compete effectively in the current deal climate and macro conditions that have curtailed sponsor exits.
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