ARTICLE SUMMARY:
PE deal activity in the medical device sector has been robust, even as other areas of life sciences are struggling to obtain capital. Excerpted from our recent feature article, "Private Equity's Play in Medtech."
Private equity has been notably active in the medical device sector in 2025. PE investors have taken out or are in the process of buying five public medtech companies, including, most recently, Hologic, one of the few companies primarily focusing on women’s health. TPG and Blackstone have agreed to take the company, which had revenues slightly exceeding $4 billion in 2024, private in a deal valued at $18.3 billion. Dozens of private medical device companies have been or are in the process of being bought by PE investors as well.
Manufacturers are looking for capital to grow their businesses in an expensive, uncertain lending environment, while investors are under pressure from their limited partners (LPs) to deploy the enormous amounts of capital they have raised, points out Oded Ben-Joseph, PhD, managing partner at Outcome Capital, a life-sciences-focused investment bank, adding, “LPs see private equity as an alternative investment and want that money to go to work, not sit.”
Those conditions aren’t new. For more than a decade, private equity firms by and large have been consistently able to raise large healthcare-dedicated funds, which are “resilient amid a broader fundraising slowdown, outraising the rest of the asset class in the first half of 2025 and accounting for an increased share of all PE funds,” according to Pitchbook’s H1 Healthcare Funds Report.
Strikingly, however, PE deal activity in medtech remains robust, even as other areas of life sciences are struggling to obtain capital. Biotechnology companies in particular, unable to attract financing at reasonable valuations amid a multiyear slowdown, have been suffering through a reality check, as investors declined to back high-risk, capital-intensive drug development.
Medtech PE deal flow through the third quarter of this year, however, was $7.4 billion across 75 investments, the second highest on record, behind only 2024, when deal values for the full year totaled $10 billion across 128 deals, according to Pitchbook. Although Pitchbook analysts had projected deal activity could break a record this year, they have since slightly scaled back expectations.
Still, the Pitchbook analysts noted, medtech remains a hot area for PE investors, who see “a strong cycle for medtech innovation (driven by AI and secular growth), pandemic-era investments coming up on exit timelines, and IPO green shoots driving renewed investor optimism for longer-term exit prospects.” Although medical devices account for only a small proportion of total PE deal flow in healthcare, the plethora of opportunities for capital infusion to drive exponential growth in the sector and the ongoing introduction of new technologies that enable operational efficiencies are draws, analysts say.
Stock market dynamics are partly responsible for PE’s current interest in medical devices. Historically, medtech has traded at a 31.36% premium to the S&P 500, on a price-to-earnings basis, but currently that multiple is only 1.06%, points out Ryan Zimmerman, senior medtech research analyst at BTIG. (see Figure 3). Generalists especially have been rotating out of medtech, given the promise of faster-growing opportunities elsewhere. Aware from the glare of public markets, however, PE owners can revamp these companies and focus on the long-term opportunities.
Indeed, private company valuations have been outpacing those of public medtech companies (3.5 to 4 times revenues versus 6 times revenues for private medical device companies). As a result, activist investors like Elliot Associates (took a stake in Medtronic) and Jana Partners (took a stake in Cooper Companies) are aggressively trying to force changes at public medical device laggards, including selling off underperforming assets, some of which are falling into PE investors’ hands.
Recent exit data is reinforcing this optimism. In the first 10 months of 2025, the sector registered 12 exits totaling $3.09 billion, compared with 14 deals worth $0.75 billion for the full year 2024.