Healthcare buyers get more selective in 2026

Healthcare M&A is tilting toward strategic fit over sheer size in 2026, with buyers narrowing their target list and scrutinizing financial and operational performance more closely. KPMG says deal volume fell 12.6% in the first half of the year while disclosed value dropped 79.2%, underscoring a market shaped by smaller, more selective transactions.

Why it matters: - Healthcare buyers are prioritizing acquisitions that strengthen services, expand reach and improve operations rather than pursuing scale for its own sake. - Sellers that can show strategic fit, stable finances and clean operations may have a better shot at interest, stronger valuation and smoother due diligence.

What happened: - KPMG's H1 2026 Healthcare M&A Report found healthcare deal volume fell 12.6% year over year to 361 deals. - Disclosed deal value fell 79.2% year over year to $8.6 billion. - KPMG said the drop in deal value was influenced by large transactions in prior periods, so the figures should be read in context rather than as a uniform decline across every healthcare segment. - Strategic buyers accounted for 67% of healthcare deal volume in the first half of 2026.

The details: - Buyers are evaluating how well a target complements existing services, geography, operating model and long-term growth plans. - Common acquisition goals include expanding specialized care, improving access, strengthening referral networks and adding operational capabilities. - KPMG identified strategic capability acquisition, market expansion and operational improvement as recurring deal themes. - Valuation reviews are looking beyond revenue and company size to earnings quality, operating margins, payer mix, revenue concentration, reimbursement exposure and reporting consistency. - Sellers are being pushed to prepare financial statements, document major expenses, assess operational performance and identify risks that could affect valuation or diligence. - Buyers are using disciplined valuation and financial analysis to judge whether a target matches acquisition goals and justifies integration costs. - Healthcare due diligence can include licensing, billing practices, payer relationships, contracts, staffing, compliance documents, technology systems and management continuity. - Incomplete records, unresolved compliance issues or dependence on a small group of key people can slow or reshape a deal. - Integration planning now starts earlier, with buyers weighing how people, systems, processes and services will fit into the larger organization. - Covenant Health Advisors offers buy-side and sell-side advisory, business valuation and strategic consulting for healthcare organizations, owners and investors. - The firm says its healthcare M&A advisory services help clients evaluate opportunities, prepare for sales and navigate healthcare acquisitions.

Between the lines: - The market is not shutting down; it is becoming more disciplined. - Buyers appear to be favoring businesses that can prove both strategic relevance and post-deal operability. - That shift raises the bar for sellers, especially those with weaker financial records, operational complexity or regulatory baggage. - The emphasis on integration suggests acquirers are weighing execution risk more heavily than they did during more aggressive deal cycles.

What's next: - KPMG expects second-half 2026 activity to stay supported by consolidation, outpatient expansion and demand for technology-enabled healthcare capabilities. - Financing conditions, valuation expectations, reimbursement exposure, regulatory requirements and buyer-seller strategy will continue to shape which deals move forward. - Healthcare owners considering a sale may need to prepare earlier on valuation, documentation and buyer positioning. - Acquirers will likely keep testing strategic fit against financial and operational risk before committing to a transaction.

The bottom line: - Healthcare M&A in 2026 is still active, but buyers want fewer deals and better fits.