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Healthcare startups to see surge in M&A as funding dries up


Healthcare startups are set for increased mergers and acquisitions in 2025, driven by cash-strapped firms, declining revenue multiples, and investor caution, particularly in diagnostics and care delivery.

Healthcare startups are poised for increased mergers and acquisitions (M&A) in the current calendar year as revenue multiples decline and cash-strapped firms struggle in a tight funding market, according to early-stage healthcare-focused investment firm W Health Ventures.

The consolidation wave is expected to be most pronounced in diagnostics, where large pathology chains are likely to acquire smaller, hyperlocal labs and radiology centres to expand their geographic reach. Care delivery companies specialising in single fields such as IVF, eyecare, and oncology may also see exits, with promoters selling to private equity-backed platforms, said Namit Chugh, principal at W Health Ventures.

Investor caution has left many healthcare startups strapped for cash. Funding in the sector remained at nearly half of the average levels seen in 2021 and 2022, as backers waited for firms to achieve product-market fit before committing capital. As a result, 70% of early-stage healthcare startups have not raised a funding round since then, W Health Ventures said in a report on India’s healthcare ecosystem.

“A large number of healthcare startups with low cash reserves will become lucrative acquisition targets,” Chugh said. Late-stage, well-funded startups and global private equity firms are expected to drive most of the deal-making. With revenue multiples in private markets down by 60% from 2022 levels, acquisitions are now significantly more attractive for buyers.

Earlier this year, Wysa, an AI-powered mental health chatbot backed by W Health Ventures, merged with US-based April Health to integrate AI-driven mental health support into primary care, signaling a trend of strategic tie-ups.

Among different M&A models, acqui-hiring —where talent is acquired rather than just the business — could gain traction, offering startups an opportunity to expand service lines while securing high-quality, experienced teams. “We foresee more such transactions in 2025, including acquisitions via our portfolio companies,” W Health Ventures stated.

While consolidation accelerates in diagnostics and care delivery, quick-commerce healthcare ventures may struggle. Pharmacy quick-commerce startups face intensifying competition, which could lead to aggressive cash burn through speed and discount wars against local pharmacies. Inventory management challenges and regulatory compliance hurdles further compound the risks.

“By the end of 2025, we anticipate that at least a few q-commerce healthcare players will lose this race,” the report said. “The real question remains — aside from critical patients, does anyone really need medicines in ten minutes?”

Since 2021, W Health Ventures has been investing from its $100-million Fund I in startups such as BeatO, a personalised diabetes management platform; Mylo, a parenting community; AI-guided mental health firm Wysa; and Reveal Healthtech, which provides AI and engineering services to the healthcare industry. The firm is currently raising its second fund, targeting another $100 million.

Healthcare, medical research, patient care, public health, disease prevention, clinical trials, health technology, digital health, telemedicine, medical innovation, epidemiology, healthcare policy, mental health, precision medicine, biomedical science, health informatics, global health, personalized medicine, healthcare management, regenerative medicine,

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