Introduction
The Federal Trade Commission has long treated healthcare as a front-line merger enforcement sector, and the past two years have sharpened rather than softened that focus. Second Requests are rare in absolute terms: the agencies issued 41 of them in fiscal 2025, covering 2.1% of the 1,944 reportable transactions, according to the fiscal 2025 Hart-Scott-Rodino annual report. What matters is where that small number lands. Both litigated merger challenges the FTC highlighted in that report were medical device deals, and the agency's wider healthcare docket runs through physician roll-ups, staffing platforms, and pharmacy benefit managers. The premise is that healthcare concentration reaches consumers directly through higher prices, narrower access, and weaker care. For bankers, that premise becomes a pricing input: antitrust risk drives deal certainty, the size of reverse termination fees and conditionality, and which buyers can credibly bid at all.
The Enforcement Landscape
Healthcare antitrust review is not one process but three overlapping ones: federal merger review that starts with the HSR filing, conduct investigations that can reach deals closed years earlier, and a growing set of state healthcare transaction statutes that capture transactions the federal thresholds never touch. The federal layer sets the timetable most deals are priced against.
- Second Request
A request for additional information and documentary material issued under the Hart-Scott-Rodino Act when the reviewing agency cannot resolve its questions within the initial 30-day waiting period. It suspends the clock until both parties substantially comply, which in practice adds six to twelve months plus significant document production, deposition and economic expert cost. Second Requests concentrate in the largest deals: roughly 21% of reported transactions above $10 billion drew one in fiscal 2025, against 2.1% of filings overall.
Innovation Market Theory in Pharma
The FTC has pioneered the "innovation market" theory in pharmaceutical antitrust, challenging mergers not just based on overlap in existing commercial products but based on overlap in pipeline programs that may compete in the future.
- Innovation Market Theory
An antitrust framework in which the FTC defines the relevant market by R&D pipelines rather than commercial products. If two merging companies both have candidates targeting the same disease with similar mechanisms of action, the FTC may argue the merger eliminates future competition even though neither product is on the market, and require pipeline divestitures as a condition of clearance. The theory is contested because it asks the agency to predict which programs will succeed and how they would compete.
The practical impact reaches beyond biopharma. Acquirers must analyze not only commercial product overlap, which they already do, but pipeline overlap including early-stage programs years from approval, and divestitures of pipeline assets are now routine conditions of clearance. The FTC's 2025 challenge to a pre-commercial device deal, described below, showed that the same reasoning applies wherever two companies are the credible developers of a product neither one sells yet.
Serial Acquisition Scrutiny
The FTC has increasingly targeted the platform and add-on strategy that drives healthcare services PE activity. Individual add-ons are often too small to trigger an HSR filing, with the size-of-transaction threshold set at $133.9 million for 2026 under the FTC's annual threshold update, up from $126.4 million the prior year. The concern is that dozens of sub-threshold acquisitions can build the same concentration that a single large transaction would never have been allowed to create.
PE-Focused Enforcement
The FTC has been willing to treat PE firms as economic actors in their own right, not passive holders of separate portfolio companies. If a sponsor owns two healthcare services platforms in adjacent markets, an acquisition by either can be analyzed against the sponsor's combined position. The anesthesia case shows how far that reaches: Welsh Carson settled in January 2025 under an order that caps its USAP stake and board seat, requires prior FTC approval for new anesthesia investments nationwide, and requires advance notice of other hospital-based physician deals. USAP itself reached an agreement in principle with the FTC in April 2026. Neither settlement carried a monetary penalty or an admission of liability, which is the usual shape of sponsor-side resolutions.
| Enforcement Theme | Example Actions | Impact on Deal Practice |
|---|---|---|
| Innovation market | Pipeline and pre-commercial overlap theories | Overlap analysis extends to unapproved programs |
| Serial acquisitions | US Anesthesia Partners and Welsh Carson orders | Antitrust screening before the add-on LOI |
| PE aggregation | Sponsor-level notice obligations in consent orders | Sponsors map overlap across every holding |
| Device mergers | Edwards/JenaValve blocked, GTCR/Surmodics cleared | Litigation risk is real, remedies still work |
Recent Enforcement Actions
Four outcomes from 2025 and 2026 map the current boundaries better than any policy statement.
Edwards/JenaValve. The FTC challenged Edwards Lifesciences' $945 million acquisition of JenaValve Technology in August 2025, arguing the two were the only companies running US clinical trials for a transcatheter valve to treat aortic regurgitation. After a six-day hearing, the District Court for the District of Columbia granted a preliminary injunction on January 9, 2026 and Edwards abandoned the deal. Neither company had an approved product, so there were no market shares to argue about: the FTC won on business documents, physician testimony and evidence of head-to-head development rivalry.
GTCR/Surmodics. The FTC sued in March 2025 to block the sponsor GTCR from combining its Biocoat business with Surmodics, the two largest suppliers of hydrophilic coatings for medical devices. In November 2025 the Northern District of Illinois denied the injunction, and the $627 million deal closed after the parties executed a divestiture of part of Biocoat's coatings business. It was the first merger challenge of the current administration to fail in court, and the lesson was about remedies: a credible divestiture, presented on the parties' own terms, can still carry a contested healthcare deal.
Aya Healthcare/Cross Country. Aya terminated its $615 million acquisition of Cross Country Healthcare on December 4, 2025, after the FTC identified significant competitive concerns in the software and managed services hospitals use to source and manage travel nurses. No complaint was ever filed. A review that outlasts the outside date kills a deal as effectively as a court can, a risk amplified when the 43-day federal shutdown extended the waiting period day for day.
UnitedHealth/Amedisys. Healthcare deals do not always sit with the FTC. The DOJ, joined by four state attorneys general, sued to block UnitedHealth's $3.3 billion acquisition of Amedisys; in December 2025 the court approved a consent decree divesting at least 164 home health and hospice locations across 19 states, the largest outpatient healthcare divestiture ever used to resolve a merger challenge.
Impact on Deal Structure and Strategy
FTC enforcement risk directly shapes how healthcare deals are structured:
Reverse termination fees (RTFs) repriced as antitrust risk rose. A Mergermarket study of large US-listed healthcare deals found the share carrying an RTF climbed from roughly a quarter of deals announced between January 2019 and mid-2021 to 58% of those announced under the Khan FTC, with the average fee rising from 2.83% to 4.76% of purchase price. Read that as evidence of how the market repriced regulatory risk, not as a live benchmark. What a seller can extract still tracks the specific overlap, the buyer's appetite for litigating, and how long the seller is asked to wait.
Extended outside dates of 12-18 months (versus 6-9 months in other sectors) account for the longer regulatory approval timeline and the possibility of FTC litigation. Aya/Cross Country is the cautionary version: the parties ran out of calendar before the agency ran out of questions.
Divestiture provisions are increasingly pre-negotiated, with the parties agreeing in advance which assets would be sold to answer an agency objection and who bears the shortfall if a buyer proves hard to find. GTCR/Surmodics showed the leverage that preparation carries: the parties put their own remedy in front of the court rather than waiting for the FTC to design one. For sponsor-led platform strategies, the same discipline belongs at the screening stage, where a local overlap can be avoided rather than remedied.
The next article covers deal certainty mechanisms, including reverse termination fees, ticking fees, and outside dates that compensate parties for healthcare's uniquely long regulatory timelines.
