Board Thread:Naruto Gaiden/@comment-12509038-20150702050604/@comment-945885-20150702071727

Kabuto heel-face turned after Izanami was cast on him, so it's no surprise that he was allowed to return to the orphanage and resume his life. Sasuke knew that was Itachi's wish, also. That whole reveal of him working at the orphanage was pretty easy to see coming.

And if you really want to get into that, consider how many people died under the orders of the various Gokage. Frankly, this is a world where life is cheap. The villages exist almost purely as military states, and depend economically on mercenary activity.

Kabuto was rehabilitated by Izanami and is now caring for orphans who were killed in the ninja world. Seems like a better outcome than him rotting away in a prison.