The number of mergers and acquisitions in the UK healthcare sector declined year-on-year during the first quarter of 2026, according to new research from Heligan Group, in a “more cautious environment”.
Heligan Group’s UK healthcare M&A Q1 2026 update report has recorded 53 deals during the period, down from 72 in the same period of last year.
Health and social care dominated Q1 with 57 per cent of deals, which the report said was driven by continued consolidation across ‘fragmented, defensive subsectors’ such as residential care, nurseries, complex care, pharmacy and broader healthcare services.
A total of 81 per cent of buyers were strategic, consistent with 83 per cent in 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 softer volumes, large-cap activity persisted, particularly in pharma and life sciences. Deals included GSK’s £1.7bn acquisition of RAPT Therapeutics, Smith & Nephew’s £450m acquisition of Integrity Orthopaedics, and Sovereign Capital Partners’ acquisition of Apollo Homecare.
Cross-border activity remained balanced, with 23 per cent inbound against 20 per cent outbound deals, and UK buyers continued to prioritise US expansion, alongside interest in France, Germany and Belgium.
“Financing conditions remain tight,” added Jassal. “Elevated interest rates, staffing cost pressures, and uncertainty around ICB funding are extending timelines and constraining deal execution.
“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 a more cautious environment, resilient demand for defensive, needs-led healthcare assets continues to underpin M&A activity, particularly for high-quality platforms with strong earnings visibility.
“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.”
