Find out the latest news and trends in healthcare M&A – and how they affect you.
Healthcare and pharma services M&A displayed strong activity in 2024. Peter Jennings and Jessica Sandercock look at some of the key transactions and explain how UK health policy will influence dealmaking in the year ahead.
By Peter Jennings and Jessica Sandercock
What a difference a year makes. Back in January 2024, investors faced a year of global election uncertainty, and interest rates were still high. Despite this, there were 411 healthcare deals, a 4% increase on 2023.
Announced M&A activity in healthcare - quarterly
Source: Capital IQ, Zephyr, Mergermarket, Health Investor, LaingBuisson, Grant Thornton UK
There was investment in all subsectors, and volumes in pharmaceutical services, and medical products were bolstered by venture capital firms backing innovation.
Private equity (PE) and venture capital remained active, accounting for 45% of all deals in 2024, compared to 49.5% in 2023.
Annual deal numbers were boosted by a flurry of activity in the second half of the year, as investors gained clarity on the new Government’s plans for the NHS and confidence from falling inflation and base rates.
This momentum, coupled with the sector’s evergreen strengths (growing end-user demand, forward-looking visibility) will continue to power dealmaking in 2025.
Announced M&A activity in social care - quarterly
Source: Capital IQ, Zephyr, Mergermarket, Health Investor, LaingBuisson, Grant Thornton UK
Activity in social care M&A increased in the second half of 2024, with 43 deals in H2 compared to 35 deals in H1.
For the year in full, there were 78 social care deals compared to 88 in 2023. This marks a 13% decrease in a year of both good and bad news for the sector.
In September 2024, the Darzi Report suggested that partnerships with private companies could help expand the capacity of social care services to meet rising demand, as well as push innovation in technology adoption, in areas such as digital care management systems.
Meanwhile, October 2024 data from Workforce Intelligence showed that staff turnover in adult social care is reducing (though still not ideal). 2023/24 churn rates stood at 24.8% compared to 29.1% the prior year, the lowest rate for over six years.
The Autumn Budget included increases to employer National Insurance Contributions (NICs) and the National Living Wage (NLW), which will heavily impact the workforce-dependent social care sector. The NIC contributions alone will cost adult social care providers £900 million in 2025, according to analysis by the Nuffield Trust. The sector is waiting for clarity on whether the Government will step in to cover this shortfall.
The sector’s other big wait-and-see is what the newly proposed National Care Service will look like, with a plan set to be published by 2028. Despite these unknowns, investors are still betting on the sector due to strong underlying market dynamics of increasing end-user demand in an ageing population.
We advised Creative Care on its January 2025 sale to Consensus. Both companies provide residential support to people with autism, learning difficulties, and other complex needs. The deal adds 10 residential services in the East Midlands to Consensus’s 100-strong UK portfolio.
Also, in January 2025, we helped GSA sell two care homes to Welford Healthcare and a large USA property investor.
Announced M&A activity in medical products and medtech - quarterly
Source: Capital IQ, Zephyr, Mergermarket, Health Investor, LaingBuisson, Grant Thornton UK
It’s been a tough few years for the medical device sector. Demand dropped as elective surgery was paused during the COVID-19 pandemic, and manufacturers also had to adapt to NHS Net zero targets and transition to the EU’s Medical Device Regulation (MDR) in 2021.
Despite these challenges, the sector has remained resilient, benefiting from a strong demand regardless of the economic cycle. In the Autumn Budget, the Government stated that some of the £20.4 billion set aside to drive research and development (R&D) would be allocated to products and tools for increasing resilience in the NHS.
We advised LDC in its September 2024 investment in Bullen Healthcare, . Bullen is the UK’s largest independent dispensing appliance contractor of stoma, urology, and wound-care products. The investment will fund growth in innovation and clinical excellence.
In September 2024, patient care firm GBUK bought UK-based Severn Healthcare Technologies, a distributor of single-use medical devices. This marks GBUK’s second deal since London PE firm ACME acquired it in December 2023 – the first was the acquisition of patient handling and moving devices firm, Care & Independence in July 2024.
For more insight on the medical products sector, our ‘Medical Products: ones to watch’ report identifying some of the most successful businesses is launching soon. The report recognises contributions to the healthcare industry and UK economy along with insights from industry leaders. To receive the report sign up to our private healthcare mailing list.
Announced M&A activity in pharma services - quarterly
Source: Capital IQ, Zephyr, Mergermarket, Health Investor, LaingBuisson, Grant Thornton UK
Pharma services and life science M&A deal volumes rocketed to 113 in 2024 from 89 in the prior year.
In 2023, there was a lull in demand for third-party research services as ‘Big Pharma’ and biotech funding restabilised following a peak during the COVID-19 pandemic.
Partly spurred by the completion of the US election, funding picked up towards the end of 2024. This has already translated into increased spending on outsourcing services, particularly in the following areas:
Our team helped Signify Research raise a £6 million minority investment from BGF in October 2024. Signify specialises in data to help healthcare providers make strategic healthtech decisions. Its research team provides insights on medical imaging, clinical care, digital health, diagnostic and life sciences, and healthcare IT and AI.
Scantox Group acquired Gentronix, a pre-clinical contract research organisation (CRO) with focus on toxicology testing. Scantox is backed by Nordic investment firm Impilo, reflecting a trend for overseas investment in UK CROs with niche IP-testing methodologies.
In October 2024, Telemos Capital invested in Helios Global Group, a provider of healthcare market access solutions. The funding will help Helios add new service lines and scale its internal infrastructure to support its client base.
Announced M&A activity in NHS partners and retail healthcare - quarterly
There were 94 deals involving NHS partners and healthcare retail in 2024, compared to 99 in 2023. As with other subsectors, deal volumes increased in the second half of the year (40 deals in H1 2024 v H2 54).
In September, the Darzi Report discussed using private providers to drive innovation and deliver more services outside of the hospital environment. In January 2025, the Government unveiled its AI Opportunities Action Plan, which identified several ways in which the technology could save the NHS money. All this is good news for providers who support the NHS and will drive M&A in 2025.
Specialist healthcare providers Connect Health (LDC) and Healthshare (BGF) merged in December 2024. The companies said their combined resources and expertise would offer greater capacity, innovation, and a broader range of services for NHS Integrated Health Boards.
We advised digital psychiatry provider Psych-UK on its October 2024 investment. Psych-UK is an online provider of consultant psychiatrist-led mental health services to the NHS and private patients across the UK.
Demand for UK healthcare retail is growing in a nation frustrated by NHS waiting times and the accessibility of some services, such as IVF.
We advised Bristol Centre for Reproductive Medicine (BCRM) on its October 2024 sale to FutureLife Group. The deal is an example of a growing trend for PE-backed pan-European healthcare services acquiring businesses to expand their UK footprint.
In September we saw Optima Health list on the London Stock Exchange. Optima was spun out of business-critical service provider Marlowe and is well-positioned as one of the UK’s leading occupational health providers to grow both through acquisition and organically in a fragmented market.
Lenders have historically favoured the healthcare sector due to a high demand services and often Government-backed funding. They’re also attracted to forward revenue visibility in areas such as social care, where contracts span multiple years.
However, amid rises to employer NICs and the NLW, they’re keeping a close eye on how local authority funding will track through to social care-operating businesses. Staffing is also a concern, both on the operational and cost side.
Lender checklists include solid- contract backing, forward visibility on revenues, and a low risk that margins could be eroded in future contract renegotiations. On the social care side, many businesses benefit from property backing, which, while not a requirement, certainly supports lenders’ credit analysis.
Life science companies also tick many of these boxes and are attracting some of the highest leverage in the sector. Lenders see an upside in what can be higher- growth businesses, often with significant multi-year contract backing as well as protection for intellectual property.
Cheaper debt facilitated M&A in 2024, as lender competition retuned and average new issue margins fell by around 50-100 basis points. These lower margins, on top of a fall in bank base rates and SONIA, are welcome in themselves, but also as reduced debt service may open up lender support for higher levels of leverage going forward. Other lender-friendly terms returned in 2024, such as greater flexibility in covenants and future M&A controls, and we expect these improvements to continue in in 2025.
Healthcare M&A enters 2025 with clarity on politics and economics – the ‘global election super cycle’ is finished, and UK interest rates are set to fall. Though M&A in the sector has been relatively resilient to external factors, this will no doubt boost deal activity.
Some unknowns do remain: how will the UK Government help healthcare providers with rising costs, and to what extent will the new US Government back Big Pharma?
Despite this, demand for health and social care services is increasing and the way in which it’s delivered to a growing population needs to adapt and evolve. This will drive appetite for healthcare M&A for years to come.
