M&A activity snapshot
Healthcare software is one of the busiest M&A categories in healthcare. Capstone Partners counted 179 healthcare IT transactions through YTD 2026, up 22.6% year over year, after a record 348 in 2025. Software Equity Group reports healthcare was the most active vertical in 2Q26, at 16.0% of vertical SaaS transactions.
This page covers software sold to practices and payers: EHR, practice management, scheduling, and patient engagement. Outsourced billing staff are covered on the medical billing page. Under the 2022 NAICS, these firms fall in 513210, Software Publishers, which replaced 2017 code 511210.
AI is reshaping the deal mix. AI-enabled targets made up 34.6% of sector M&A through June 30, 2026, compared with 8.7% in 2022, per Capstone. B2B infrastructure serving hospitals, practices, and payers accounted for 73.7% of healthcare IT deals YTD.
Who is buying
Large sponsors set the reference deals for practice software. Bain Capital and Hellman & Friedman agreed to acquire EHR vendor athenahealth for $17 billion from Veritas Capital and Evergreen Coast Capital. Thoma Bravo closed its $1.8 billion acquisition of NextGen Healthcare in November 2023, adding a vendor that serves more than 100,000 ambulatory healthcare providers.
Specialty EHRs trade between sponsors. Clearlake Capital made a significant majority growth investment in ModMed in March 2025. Refresh Miami reported a $5.3 billion valuation, with Clearlake buying the stake from Warburg Pincus. In rehab therapy software, Net Health acquired Keet Health from WebPT as part of a broader collaboration between the two vendors.
Public strategics and other sponsors are active too. Capstone's 2025 deal list includes Bain Capital Private Equity's $2,600.0 million HealthEdge deal and Roper Technologies' $1,850.0 million CentralReach purchase. Greenberg Advisors notes Waystar's acquisition of Iodine Software among 2025's high-profile public-buyer deals.
Sponsor add-on activity is rising. Financial sponsors rose 27.1% year over year to 49.7% of healthcare IT deal volume, per Capstone. Across all SaaS, private equity and venture-backed buyers took part in 59% of 2Q26 transactions.
What buyers look for
Recurring revenue and interoperability top the list. Capstone notes that targets with a high degree of recurring revenue, advanced interoperability, and strong B2B end market exposure have continued to garner premium multiples. Greenberg Advisors saw practice management software post the largest surge among technology offerings in 2025. Many view these platforms as vehicles for cross-selling revenue cycle and analytics tools.
Regulation is a core diligence workstream. ONC-certified health IT supports care at more than 96% of hospitals and 78% of office-based physicians. The HTI-1 rule added algorithm transparency requirements and made USCDI v3 the certification baseline as of January 1, 2026.
Information blocking carries real penalty exposure. OIG can impose up to a $1 million penalty per violation on an entity it finds committed information blocking. Buyers ask for complaint history, data-export practices, and API access terms.
The rules are also moving. ASTP/ONC's December 2025 HTI-5 proposal would remove 34 of 60 certification criteria and revise seven, including dropping the AI "model card" requirements. The ONC fact sheet cited here describes HTI-5 as a proposed rule.
What makes a strong company
A healthcare software business that commands a premium typically shows:
- Net revenue retention above the general SaaS median. SaaS Capital reports a 102% median NRR for $25,000 to $50,000 ACV companies, with the top quartile at 111%. No healthcare-specific series is published, so this is a proxy.
- ARR growth at or above the 24% median growth rate SaaS Capital found for companies above $1 million in ARR.
- A Rule of 40 score at or above the line. Software Equity Group says growth rate and profit margin should add up to 40% or more.
- Current ONC certification where customers need it, with a clear plan for USCDI v3 and any HTI-5 changes.
- Signed HIPAA business associate agreements and a clean record on patient-data access requests.
- Specialty depth or embedded workflows, such as scheduling, billing, or patient engagement, that make the product hard to replace.
Valuation and deal structure
Healthcare IT has priced above general software. Capstone reports average sector multiples of 7.3x EV/revenue for 2025 through YTD 2026, up from 4.6x in 2023-2024. Its earlier report showed an 18.8x average EV/EBITDA multiple from 2023 through YTD 2025. The average healthcare IT deal value climbed to $686.3M, pulled up by large transactions.
General SaaS data gives a lower anchor. Software Equity Group puts the 2Q26 median SaaS M&A multiple at 4.0x EV/TTM revenue. It reports a median B2B SaaS EBITDA multiple of about 29.7x at year-end 2025, while noting most private deals do not disclose EBITDA.
Averages hide a wide spread. Multiples come only from deals with disclosed terms, and small practice-software vendors rarely disclose them. Earnouts tied to ARR targets and seller rollover are common tools in software deals generally, but no cited source here breaks out their use for healthcare software.
Outlook
Expect deal volume to stay high through 2027. Capstone says the sector is on trajectory to surpass 2025's record of 348 transactions, with sponsors adding AI tuck-ins to existing EHR and RCM platforms.
Two forces will shape pricing. AI capability is now a sorting factor, as AI-enabled targets rose to 34.6% of sector deals. Federal rules may ease if HTI-5 is finalized as proposed, which would lower certification costs for developers. Vendors with high retention, current certification, and documented data-sharing practices should keep drawing the strongest bids.
Own a healthcare software business and want a baseline before you talk to buyers? Run the valuation tool. Back to Healthcare Services M&A. See also: how buy-side mandates feed PE pipelines.