UK healthcare M&A declined during the first quarter of the year, as dealmakers in the sector contended with a more cautious environment and tight financing conditions.
According to Heligan Group's UK healthcare M&A Q1 2026 update report, there were 53 deals recorded in the UK healthcare sector during the first three months of the year, down from 72 during the same period of 2025.
The first quarter’s activity was dominated by the health and social care subsector, which accounted for 57 per cent of the deal total. According to Heligan Group, health and social care continues to drive M&A in the sector due to high levels of activity in “fragmented, defensive subsectors”, including residential care, nurseries, complex care, pharmacy and broader healthcare services.
Continuing a trend that defined healthcare M&A in 2025, 81 per cent of buyers during Q1 2026 were strategic, in line with the figure of 83 per cent recorded across 2025.
Ramesh Jassal, partner, Corporate Finance, Healthcare at Heligan Group, said: "Deal flow remained broad-based in Q1, with notable hotspots in elderly care, pharma, pharmacies and medical devices, underlining sustained appetite for essential, needs-led services."
Despite the drop in activity, there continued to be solid cross-border activity, with 23 per cent of Q1’s deals being inbound transactions and 20 per cent being outbound. UK buyers targeting overseas deals continued to prioritise targets in the US, while there was also interest in acquisitions in France, Germany and Belgium.
There was also a notable trend of large-cap activity, particularly in the pharma and life sciences subsector. Major deals during the first quarter included GSK's £1.7 billion purchase of RAPT Therapeutics, Smith & Nephew's £450 million takeover of Integrity Orthopaedics, and the acquisition of Apollo Homecare by private equity firm Sovereign Capital Partners.
Discussing the factors that had contributed to an uncertain dealmaking environment at the outset of 2026, Ramesh Jassal pointed to ongoing tight financing conditions, elevated interest rates and staffing cost pressures.
Jassal also noted that uncertainty across England’s Integrated Care Board (ICB) had contributed to longer deal timelines and constrained execution.
He continued: "Geopolitical tensions (including US–Middle East dynamics) are also feeding into energy price volatility and inflation expectations, reinforcing a more cautious, risk-off investor stance with greater valuation scrutiny."
Despite this cautious environment, however, Jassal stated that demand for “defensive, needs-led healthcare assets” was resilient and continued to underpin dealmaking, “particularly for high-quality platforms with strong earnings visibility.”
Summing up the trends that had shaped activity during Q1 2026, Jassal said: "In 2024, deal activity increased into 2025, with strong Q1 volumes and solid year-end closings, reflecting momentum from prior pipelines. However, activity declines into 2026, with a weaker Q1 indicating a slower deal execution with economic uncertainty and ongoing cost and regulatory pressures in healthcare."
Find out more about the broader long-term trends underpinning UK healthcare M&A
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