Healthcare M&A activity slowed in 2024 as economic pressures, regulatory scrutiny, and shifting care models reshaped the deal-making landscape. Rising interest rates and capital costs made financing large transactions more challenging, driving a decline in deal volume and value. However, sectors such as healthcare technology remained active, fueled by demand for AI-driven solutions.

Despite ongoing challenges, value-based care models, pharmaceutical consolidation, and private equity-backed healthcare services are expected to drive M&A activity throughout 2025. 

Key Healthcare M&A Trends from 2024

In 2024, healthcare M&A declined, with deal volume dropping 20% and total deal values down 29% from 2023. Pharmaceutical and life sciences saw an 18% drop in deal volume and a steeper 31% decline in deal value, while healthcare services fell 22% in volume and 21% in value. Higher capital costs increased regulatory scrutiny, and a slower post-pandemic recovery contributed to the slowdown.

Despite these headwinds, private equity remained active, particularly in medtech and digital health. Notable transactions included KKR’s acquisition of a 50% stake in Cotiviti, Thermo Fisher Scientific’s $4.1 billion purchase of Solventum’s purification business, and AbbVie’s $10.1 billion acquisition of ImmunoGen. These deals highlight a trend toward innovation-driven investments, with technology, digital health, and specialized treatments leading M&A activity.

What to Expect in 2025

The momentum from last year is carrying forward into 2025, with several key factors influencing deal activity:

• Growth in Investment in Healthcare Technology: AI, telehealth, and data-driven care models are fueling acquisitions in digital health startups and healthcare IT firms. Investors and providers are increasingly focused on leveraging tech-enabled solutions like remote patient monitoring, personalized medicine, and automation in administrative processes to improve both efficiency and patient outcomes.
• Strategic Consolidation in Pharma: With patent expirations creating financial pressures, large pharmaceutical companies are turning to acquisitions to sustain revenue growth and strengthen their drug pipelines. This trend is particularly evident in high-growth areas such as oncology, gene therapy, and rare diseases. Recent examples include AstraZeneca’s $160 million acquisition of FibroGen’s China unit to bolster its anemia drug portfolio and Merck KGaA’s ongoing discussions to acquire SpringWorks Therapeutics to expand its oncology pipeline.
• Continued Hospital Consolidation Amid Financial Strains: Many hospitals continue to face financial challenges in the post-pandemic era, leading to increased consolidation. Larger health systems are looking to acquire struggling facilities to maintain patient access while also investing in outpatient expansion. However, regulatory scrutiny remains a hurdle, requiring organizations to clearly demonstrate the benefits of these mergers for patient care and cost efficiency.
• Private Equity’s Expanding Role in Healthcare: Private equity firms continue to be key M&A players, investing in technology-enabled services, specialty physician practices, and the pharmaceutical sector. Blackstone and OMERS are divesting healthcare assets, with Blackstone seeking $2.5 billion for HealthEdge and OMERS aiming for $2 billion for Premise Health. Meanwhile, Sycamore Partners is in discussions to acquire Walgreens Boots Alliance, potentially restructuring it into three distinct entities. 

At the same time, the retail pharmacy sector is undergoing major transformation, influencing healthcare M&A activity. Pharmacy closures are creating new acquisition opportunities. Healthcare providers are repurposing former pharmacy sites into urgent care centers and specialty clinics, addressing gaps in care access.  This is driving demand for smaller healthcare hubs in urban and suburban settings.

Positioning for Success in a Shifting Healthcare Market

Healthcare M&A will continue to shape the industry throughout 2025, influencing not just business strategies but also the real estate decisions that support them. As organizations consolidate and expand, optimizing operations and enhancing patient access will be top priorities. The shift toward outpatient care is driving demand for well-located MOBs and ASCs, while retail-to-healthcare conversions are becoming more prevalent as providers repurpose vacant spaces into urgent care centers and specialty clinics. At the same time, rising demand for behavioral health services is fueling the adaptation of office and commercial spaces for mental health and specialty care.

To navigate this evolving landscape, healthcare providers and investors must remain agile, ensuring that their real estate strategies align with changing patient needs and care delivery models. Whether through consolidation, new market entries, or adaptive reuse of existing assets, understanding the intersection of M&A, healthcare operations, and real estate will be critical for long-term success in the months ahead.