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Investment activity is rising within advanced diagnostic imaging (ADI), which has emerged as one of the most attractive and strategically important segments within healthcare services per Lincoln International’s Healthcare Group. In 2026, investors are increasingly seeking imaging platforms that offer scale, technology adoption and operational sophistication.

Insights from Lincoln’s healthcare services team were featured in Investors in Healthcare, where they discussed structural demands on the market, differentiating technologies, valuations and the opportunities in the quarters to come.

“It’s no longer a question of EBITDA and the number of sites acquired over the last 12 months. But if you can show you have taken the platform to the next level, then this is where people are getting excited,” said Dirk-Oliver Löffler, Managing Director and Co-Head of Healthcare, Europe.

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The discussion drew from the new Lincoln Lens portal, which encompasses more than 7,000 portfolio company valuations and an incremental 2,500 asset-backed finance investments, valued as of Q2 2026. Our Capital Advisory Group also shared recently observed financing terms.

The Lincoln team shared its perspective on how:

• The average rate of overall growth has reduced slightly in recent months
• More companies are showing particularly weak performance, indicating pressure at the edges of the market
• Credit metrics are trending, including covenants and payment-in-kind (PIK) interest
• The health of the overall market is trending, including mergers and acquisitions (M&A) volume, loan volume, leverage levels and market pricing

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This quarter, the public markets outperformed the European LPMI, with the FTSE 250 and STOXX 600 EVs increasing 4.3% and 7.5%, respectively, as public markets recovered from Q1 and the ripple effect of the software sell-off across other sectors. As with previous quarters, the recovery in public markets was almost entirely attributed to the impact of changes in EV multiples. The PMI is primarily driven by operating performance and was not subject to the same volatility as observed in the public markets within Q1 and Q2. Over the last 12 months, the PMI’s return of 2.7% outperformed that of the FTSE 250’s of 0.3%, but it trailed the STOXX 600’s return of 11.4%.

“Q2 marked a return to the European LPMI’s long-term pattern: Private company enterprise value growth was driven by operating performance, not multiple expansion,” noted Steve Kaplan, Neubauer Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, who assists and advises Lincoln on the European LPMI. “The public market’s much larger gain reflected a rapid repricing of future growth expectations across AI infrastructure and adjacent sectors. Private markets did not participate to the same extent, but they also did not experience the same degree of volatility.”

Quarter Highlights:

• This quarter: Multiples had a negative impact, though to a lesser extent than in Q1. The median EV multiple for the constituents of the PMI was 11.5x in Q2.
• Earnings: Last quarter, earnings growth was offset by significant multiple contraction. In Q2, however, the impact of multiple compression was more limited, allowing earnings growth to drive index returns—a dynamic that has been the primary contributor to index performance since the inception of the European LPMI. Across all industries, the percentage of companies reporting year-over-year (YoY) LTM revenue growth increased from 71.5% to 73.8%, and the percentage of companies reporting YoY LTM EBITDA growth declined from 63.6% to 63.1%. Furthermore, the rate of revenue growth increased from 7.3% to 7.7%, while the rate of EBITDA growth slowed from 6.0% to 5.3%.
• UK vs. Eurozone: UK companies continued to outperform the Eurozone in Q2, increasing 1.4% versus 0.7% for the Eurozone. Average company size was broadly comparable, with a median LTM EBITDA of approximately €25.9 million in the UK versus €30.4 million in the Eurozone, suggesting the performance gap was driven more by operating performance and sector mix than scale. The Eurozone had greater exposure to lower-growth sectors, such as industrials, while the UK had more exposure to business services, which was the strongest-performing industry within in the index this quarter.
• Sector Highlights:
  • Business Services: Business services recorded the highest EV growth this quarter, with an increase of 2.8%. IT services, professional & human capital services and marketing & information services were the largest contributors to the industry’s increase. However, this could more broadly be seen as a recovery off of a weaker Q1.
  • Technology: Technology, which represented 17% of the European LPMI this quarter, was the only sector to decline in Q2. Technology company valuations decreased 0.7%, after declining 6.4% in Q1 as valuation pressure associated with software sell-off began to ease. Software EVs, specifically, declined 1.3% this quarter (versus an 8.3% decline in Q1), despite earnings not yet deteriorating from AI-related disruptions.
  • Consumer: Consumer EVs grew this quarter, increasing 2.1%, albeit a moderation in growth relative to Q1. Similarly to Q1, the lifestyle and leisure subsector continued to account for the largest portion of the EV increase.
  • Industrials: Whilst industrial EVs had declined in Q1, they were relatively flat in Q2. Performance was the drag on growth this quarter, rather than the impact of multiples; indicating that some of the operational pressures from rising energy costs and supply chain disruption may be beginning to emerge in earnings.
• Small and Large Businesses: Large companies (i.e., EBITDA > €30 million) outperformed small companies in Q2, with EVs increasing 1.1% versus a broadly flat 0.1% increase for smaller companies. The performance gap was driven by a stronger earnings contribution from larger companies, while the impact from multiple contraction was similar across both cohorts.

Deep Dive into Software

Software performance was broadly stable in Q2, while valuation declines were increasingly concentrated among more highly levered and underperforming businesses.

Over the last two quarters, movements in software enterprise values have been driven predominantly by changes in valuation multiples rather than performance, which improved again this quarter, with private company fundamentals proving comparatively resilient even as investors reassessed the appropriate valuation for software assets. As the market increasingly differentiates between business models, growth profiles and credit quality, the dispersion in valuations across the sector is likely to become more pronounced. For example, across European software loans valued by Lincoln in Q2, the estimated fair values improved for those with loan-to-value (LTV) ratios under 45%.

“Q2 reinforces that adjustments to software valuations are not one size fits all,” noted Nick Baldwin, Managing Director in Lincoln International’s European Valuations & Opinions Group.

“The relevant distinction is not simply vertical versus horizontal. It is whether a company has a durable value proposition, recurring customer demand and a capital structure that can absorb volatility. Lower-LTV software credits remained well protected, while weaker and more highly levered businesses continued to be marked more selectively.”

Credit Check

Covenant metrics remained broadly stable in Q2, though pressure on weaker borrowers continued to remain evident. The covenant default rate remained flat at 1.5%, but there were seven new issuers with breaches in the quarter. At the same time, PIK usage increased to 16.7% from 16.1% in Q1, with “bad PIK” edging up from 7.9% to 8.1%. Businesses with “bad PIK” remain materially more challenged, with LTVs that were approximately 25% above initial transaction levels. Further, there is clear evidence of increased lender-control activity, with €4.5 billion in debt foreclosures across eight issuers already so far this year. This amount far exceeds what has been experienced over the last three years.

Amidst the potential stress, lenders are looking to generate liquidity in other ways, and they are doing so via the secondary market. Following Q1 redemption pressure on business development companies and other liquidity-sensitive direct lenders, Lincoln observed a meaningful increase in private loans being traded before maturity within the United States.

Financing Conditions

European private credit markets remained active in Q2, with deal flow continuing despite the ongoing uncertainty around AI disruption, economic policy shifts and geopolitical uncertainty. Competitive dynamics are still supporting borrower-friendly terms, although lenders are becoming more selective, particularly in software, where underwriting standards have tightened. While spreads remain stable, leverage levels have edged lower as lenders apply greater scrutiny and higher base rates constrain debt capacity. Reflecting this, Lincoln has maintained its spread guidance from March 2026 but reduced the high end of its leverage guidance by 0.25x across unitranche, second lien and subordinated debt structures for all size categories.

The Bottom Line

Q2 marked a return to the European LPMI’s more typical pattern, with earnings growth once again outweighing the impact from multiples. While overall private market fundamentals remained resilient, the quarter also highlighted increasing differentiation across sectors and companies, particularly as investors and lenders placed greater emphasis on business quality, leverage and earnings resilience.

Nick Baldwin, Managing Director in Lincoln International’s European Valuations & Opinions Group, commented, “The key takeaway from Q2 is that selectivity is becoming increasingly important. The broad valuation adjustment seen in Q1 has moderated, but that does not mean all businesses are benefiting equally. In software, for example, underlying performance remained broadly stable while valuation declines became increasingly concentrated among weaker and more highly levered companies. Stronger companies with resilient earnings and more conservative capital structures continue to attract support.”

About Lincoln International

We are trusted investment banking advisors to business owners and senior executives of leading private equity firms and their portfolio companies and to public and privately held companies around the world. Our services include mergers and acquisitions advisory, private funds and capital markets advisory, and valuations and fairness opinions. As one tightly integrated team of 1,400+ professionals in more than 30 offices in 14 countries, we offer an unobstructed perspective on the global private capital markets, backed by superb execution and a deep commitment to client success. With extensive industry knowledge and relationships, timely market intelligence and strategic insights, we forge deep, productive client relationships that endure for decades. Connect with us to learn more at www.lincolninternational.com

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