Health tech and digital health merger and acquisition activity remains a major force in 2026, driven by strategic expansion and the race for competitive artificial intelligence capabilities.
In the first quarter of 2026 alone, the health tech sector recorded 149 M&A deals, on pace to exceed 2025’s full year total of 555, according to data from the Corum Group. Underscoring this pace was strong interest from both strategic and financial buyers, with private equity firms accounting for 31% of the deals. Disclosed deal value in the quarter was $22.7 billion, already approaching 2025’s full year total of $30.3 billion, the Corum Group reported.
According to Capstone Partners, as of September, M&A in the healthcare IT sector grew 23% year-over-year to 179 deals. At the current pace, transaction volume is on track to exceed the record 348 deals in full-year 2025. Sector activity has been supported by improving buyer confidence, a growing seller pipeline and demand for the robust universe of AI-enabled business-to-business assets, David DeSimone, managing partner of technology, media and telecom at Capstone Partners, wrote in a report.
Rock Health reports that the first half of 2026 saw 115 acquisitions of digital health companies, just above 2025’s pace of 199 annual deals and well above 2024’s 121. Of the deals during the first six months of 2026, 71 were announced in Q2, the busiest M&A quarter since Q3 2021.
M&A captured 97.6% of digital health exits in H1 2026, with 84 exits, according to Galen Growth. And the dealmaking reflects a heavy wave of consolidation in the market.
There are several factors driving the uptick in digital health M&A this year, investors and executives say. Companies are using acquisitions to expand into new markets, add complementary products and build broader platform offerings, noted Neil Patel, head of ventures at Redesign Health, a global venture and applied technology firm focused on building next-generation healthcare companies.
Sword Health, a company that provides an artificial intelligence-first care model, acquired rival Kaia Health for $285 million in January to grow its global footprint. Hinge Health, a digital musculoskeletal and migraine care platform, bought Cylinder Health for $105 million, to expand into gastrointestinal care.
The wave of digital health M&A is a "sign of a healthy market," Patel noted. "The capital that's being raised, these are war chests that are being raised for opportunistic M&A," he said.
Case in point, healthcare AI startup Abridge raised $300 million in June 2025 and told Business Insider it was looking to fund M&A. Two months ago, the company bought Altrina to boost agentic AI for clinical workflows. Altrina co-founders Mo Nasir and Harvey Hu, along with founding engineer Karthik Prasad, joined Abridge as part of the deal.
Here's a quick rundown on other notable deals so far this year: Sword Health continues to be active in M&A with plans to acquire Headspace, to move into the digital mental health space; nutrition care company Berry Street merged with India-based Healthify; Doctronic, an AI-native virtual primary care provider, acquired text-based pediatric care platform Summer Health; virtual care and health navigation company Included Health penned a deal to acquire Firefly Health to scale health plan alternatives for employers and Hims & Hers spent $1.2 billion to buy Australian digital health company Eucalyptus.
In the mental health space, Universal Health Services, a for-profit acute and behavioral hospital operator, bought virtual behavioral care provider Talkspace to bolster its behavioral health offerings. Spring Health is set to acquire Alma to help build a “lifelong mental health platform.”
Companies that sell digital health offerings to employers are increasingly expanding through acquisitions to offer a broader suite of services and gain a larger share of employer spending, Patel noted.
"It's both an offensive move and a defensive move at the same time as companies look to expand horizontally. You want to cover as much surface area as you possibly can for your buyers," he told Fierce Healthcare.
The rise of AI is further fueling the trend by speeding product development and intensifying competition, prompting companies to either build or buy new capabilities to strengthen their market position.
That puts employers and enterprise customers in a position to negotiate bundled pricing across multiple products, Patel said. "They reduce their overall spend on whatever those sets of solutions are. They end up doing more price shopping versus best-of-breed shopping, and that serves whoever is in that seat that's able to move more aggressively, that's able to put together those pricing plans and win the internal market share with the customer," he said. "You can either develop the products faster, or you can acquire, or you can do both."
Revenue cycle management continues to be a hot sector for dealmaking. IKS Health bought TruBridge to extend its RCM capabilities to rural providers. Med-Metrix acquired Vitalware, a mid-revenue cycle business unit, from Health Catalyst and also purchased CanAide in pursuit of new automation and Medicaid eligibility and enrollment capabilities. Innovaccer picked up CaduceusHealth to combine its AI platform with the company's revenue cycle management services and staff to serve ambulatory care providers. In May, Carlyle said it acquired majority stakes in Knack RCM and EqualizeRCM, both healthcare RCM companies. R1 bought AI-powered prior authorization automation company Humata Health.
And, Thoreau Group, a healthcare investment platform founded by private equity executive Matt Holt, signed a $12 billion agreement to take control of RCM company Ensemble Health.
Some deals are more strategic talent-driven acquisitions, or what's called acqui-hires, to add specialized engineering and executive teams to scale AI and digital infrastructure. In January, OpenAI acquired Torch, a healthcare startup that unifies lab results, medications and recordings from doctor visits, to serve as the foundation for ChatGPT Health. Hippocratic AI picked up Grove AI, a startup that offers agentic AI for pharma R&D and clinical trial operations, and also brought its team on board.
"There's been a massive uptick in activity [in digital health], both deals getting done and strategic swirl around opportunistic tuck-ins and mergers," said Eric Bormel, managing director in healthcare at investment bank Solomon Partners and one of the firm's senior digital health bankers.
"From a strategic consolidation perspective, the digital health strategics are now at a scale where they can compete with other industry players that perhaps had more cash in past years," he said. "There are some really high-quality businesses in this category that are more than willing to pay in cash to fund this profitable growth strategy."
This month, Hinge Health closed its $105 million all-cash deal for Cylinder Health, and Sword Health's planned all-cash acquisition of Headspace is reportedly valued between $200 million and $300 million.
A tougher funding environment also is pushing many venture-backed firms to pursue consolidation as a path to scale, efficiency and profitable growth.
"As capital has shifted from funding tech-enabled services to funding AI-native solutions, those that are of the 2010s to early 2020s vintages are having to find their own way to profitability, and then therefore find their way to profitable growth. One of the avenues that is available to this cohort of companies is strategic consolidation," Bormel told Fierce Healthcare. "We are observing many flavors of digital health companies across tech-enabled services that are are actively considering how to leverage scale to drive efficiencies to drive profitable growth."
There's an ongoing trend of early-stage companies consolidating horizontally, driven by severe capital concentration and longer timelines between series A and B funding raises. Well-capitalized, later-stage platforms also are buying earlier-stage health tech companies to expand product offerings.
While there is a surge in digital health consolidation, the buyer pool is quite large, Bormel noted, as tech companies outside of healthcare also are making deals in the space. A year ago, Samsung Electronics bought digital health platform Xealth to extend its reach into the healthcare market.
Private equity firms also have a strong appetite for profitable, growing businesses, and are able to pay a premium for high-quality assets, Bormel noted.
Recent PE deals in the healthcare and digital health markets include Shore Capital Partners acquiring ThrivePass in July to expand its footprint in employee benefits and healthcare technology. Lightyear Capital made a strategic investment in Corestream, a voluntary benefits and employee savings technology platform. Frazier Healthcare Partners bought cloud-based EHR provider MatrixCare fro ResMed for $490 million in an all-cash deal. Smarter Technologies, a $1.49 billion healthcare RCM platform, was created through a private equity roll-up by New Mountain Capital. That roll-up deal combined Access Healthcare, Thoughtful.ai and SmarterDx.
Investors and executives believe the digital health M&A surge will continue through 2027. Patel pointed to medical front-office AI agents as an area ripe for consolidation and acquisition targets.
"When you look at a market cycle and you start to see high degrees of competition and commoditization of the technology, you start to get a lot of M&A activity," he noted.
"I'm expecting more M& A activity to happen from the publicly traded or large private healthcare companies," Patel said. "If you look across the stack, I think you have more acquirers that can purchase companies with publicly-traded stock, which ends up being a backdoor to an exit for companies."
"It feels like the moment for digital health is coming, and a lot of growth, particularly on the employer side, is going to come through inorganic acquisition," Bormel noted. "If you think about where the employer is putting their dollars to work, they're focused on ROI [return on investment] and reducing the friction for their employees. If you can offer not one solution but two, three, four or five solutions for that customer, you're far more sticky and less likely to get axed in the next round of vendor fatigue."
And contrary to the COVID-era 2021 peak when health tech and digital health valuations were sky-high, valuations have mostly reset to a disciplined baseline.
With the exception of a handful of high-profile AI companies still commanding outsized valuations, market valuations are normalizing to levels that strategic buyers, private equity firms and public investors view as more sustainable, Bormel noted.
"Private equity is continuing to show a strong interest in the category, and I would expect that to be a theme into '27, so long as rates remain within reason for those investors," he said.
"I'm excited about digital health. I expect the category to continue to attract capital, consolidate and deliver for the broader healthcare system, which at the end of the day, impact is what's most important here. It does seem like this category is delivering the impact to the system," Bormel said.
About five years ago, major tech companies were making splashy deals to expand into health tech and healthcare, such as Google's $2.1 billion purchase of Fitbit in 2021 and Amazon's $3.9 billion deal to obtain One Medical in 2023.
Big tech companies have shifted their strategy and are now leaning more on partnerships to expand their reach into the healthcare market.
Apple has made big moves into wellness and longevity including tie-ups with Quest Diagnostics for lab testing (competing with Function Health), introduced a dedicated longevity tab in the Health app and released a "readiness score" on the Apple Watch for passive recovery tracking (an area dominated by Oura and Whoop).
Amazon also has ramped up partnerships with digital health companies by connecting users to virtual care benefits through its Health Benefits Connector.