AI-driven deals sustain steady M&A activity in the healthcare IT sector
AI-driven innovation is accelerating M&A activity in healthcare IT, presenting new investment opportunities, improved regulatory support, and necessitating the digital transformation of outdated legacy systems.
Healthcare IT (HCIT) underpins the offering of most healthcare M&A activity. According to research from Heligan Group, while deal flow remained steady on a quarter-by-quarter basis, driven by AI-related transactions, the HCIT subsector experienced a growth of 25% compared to 2023. Despite this, HCIT specifically accounted for just 12% of the total UK deal volume.
Ramesh Jassal, partner at Heligan Group, said, “Healthcare IT deals peaked in the fourth quarter of 2024, with 82% completed by trade buyers – 24% being inbound deals, 36% internal and 39% outbound. This increase can largely be attributed to the rapid adoption of AI in HCIT, where digitalisation has been propelled to the forefront.
“The prevalence of patients suffering from chronic diseases, including the 2.8 million people in the UK who are out of work due to long-term sickness, is intensifying the demand for innovative HCIT technologies. Telehealth platforms and wearable biosensors, for instance, have become indispensable tools for care staff to monitor patient responses to medications and improve overall health management. As such, the sector is experiencing new investment opportunities and sustained M&A activity as real-time data analytics and AI integration redefine patient care standards.”
Notably, the UK’s NHS AI Lab, which underpins AI integration through targeted funding and innovation challenges, was allocated £14.5m from a total £139m budget for the 2024/2025 period, underscoring the commitment to AI-driven improvements in healthcare.
“The application of AI in healthcare is not only driving efficiencies in diagnostics and treatment decisions but also relieving the burden on staff by performing administration tasks, which we expect to place upward pressure on multiples within the sector,” Jassal added. “With established good practice guidance for data-driven health tech in combination with the MHRA working to streamline the regulation and approval of AI-based medical devices, the M&A vertical is poised for continued expansion.”
Jassal concluded: “As the healthcare sector faces mounting pressure to improve patient wait times, care and operational efficiency in 2025, the digitisation of legacy IT systems and solutions to address skills shortages remain crucial. The future of the sector’s long-term success may depend on the implementation of robust healthcare cybersecurity measures to protect against breaches and attacks, although this is not a critical factor at present. As AI-driven technologies continue to reshape healthcare IT, the sector is poised for sustained growth, scalability and ongoing M&A activity, establishing its pivotal role in the future of healthcare.”