Life sciences and health care M&A update: Q1 2025

Despite a positive outlook, with expectations of increased revenue and improved profitability, health care services companies continue to face unprecedented stress deriving from a significant health care professional shortage.

Life sciences and health care trends

  • Health care services
    During Q1 2025, the health care services sector saw a surge in M&A activity with dental and behavioral health deals leading the way.1
  • Health care technology
    As the digital health market continues to mature, larger companies are strategically acquiring innovative startups to broaden their product portfolios and extend their market reach.2
  • Life sciences and pharma services
    The life sciences and pharma services sector in Q1 2025 witnessed robust M&A activity, exceeding expectations with a significant number of deals across all subsectors.3
  • Medical devices and supplies
    The medical devices and supplies sector experienced moderate growth; tailwinds include an increase in demand for remote patient monitoring devices, and the respective market size is expected to grow to $285.9 billion by 2034, from $59.9 billion in 2025, at a CAGR of 18.9%.4
  • Payors and payor services
    Over the past five years, third-party administrator revenue has grown at a CAGR of 2.4%, reaching $319.8 billion, with a 1.4% increase so far in 2025.5

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