Indian healthcare M&A crosses Rs 10,000 crore in Q2 FY26 as hospitals, diagnostics drive deal surge: EY

India’s healthcare sector recorded one of its strongest quarters in recent years, with merger and acquisition (M&A) transactions crossing Rs 10,000 crore in the second quarter of FY26, driven by rising demand for high-acuity care, rapid expansion in diagnostics and aggressive capacity additions by large hospital chains, according to a Moneycontrol report citing EY-Parthenon’s quarterly sector update.

Deal activity during the quarter remained broad-based across hospitals, diagnostics and specialty care, spanning buyouts, minority investments and cross-border acquisitions. Private equity and strategic investors continued to back scalable regional platforms with strong clinical depth and technology-enabled operating models, the report said.

High-end clinical specialties such as oncology, cardiology, neurology and gastroenterology led a sharp increase in patient volumes and pricing power. Average revenue per occupied bed rose 10–16 percent year-on-year among large hospital chains, supported by higher case complexity and improved pricing discipline, according to the EY-Parthenon data cited by Moneycontrol.

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India’s largest hospital networks are currently in an expansion phase, with plans to add more than 18,000 beds over the next three to five years. Apollo Hospitals, Max Healthcare, Aster DM Healthcare, Narayana Hrudayalaya, KIMS and several mid-market chains reported double-digit revenue growth, stable to improving occupancy levels and stronger inflows from international patients. Digital and home-care-led services contributed between 25 and 30 percent of revenues for some operators, the report noted.

Diagnostics companies continued to outperform the broader sector, posting revenue growth in the range of 10–22 percent. Several diagnostics chains reported EBITDA margins of 25–35 percent, aided by scale efficiencies and increased demand for genomics, molecular testing and oncology diagnostics. Preventive health and wellness packages accounted for up to 26 percent of quarterly revenues at select players, reflecting rising out-of-pocket spending and deeper penetration into Tier-3 and Tier-4 markets.

Industry consolidation also continued, with the integration of recent acquisitions such as Core Diagnostics, DAPIC and Scientific Pathology progressing across networks. Franchise-led expansion into smaller towns remained a key growth lever for diagnostics players.

Single-specialty hospital chains, including oncology and mother-and-child care providers, reported steady improvement in occupancy, supported by clinician additions and capacity expansion in high-growth clusters. Medical device companies also recorded healthy revenue growth, driven by new capacity commissioning and overseas acquisitions in segments such as cardiology and orthopaedics.

Despite elevated valuations, investor appetite for healthcare assets remained strong. Listed healthcare companies traded at EV/EBITDA multiples ranging from the mid-teens to over 30x, with investors increasingly favouring integrated platforms and technology-enabled offerings, the Moneycontrol report said.

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“Q2 FY26 reinforces the structural strength of India’s healthcare sector,” Kaivaan Movdawalla, national healthcare leader at EY-Parthenon, told Moneycontrol, adding that the shift toward high-acuity care and advanced diagnostics points to durable long-term growth.

Looking ahead, EY-Parthenon expects momentum to remain firm through FY26, supported by rising healthcare consumption, expanding insurance coverage and new hospital capacity coming on stream. While margin pressures may persist for newly commissioned assets, medium-term fundamentals remain robust, the firm said.

Recent transactions highlighted in the report include Manipal Hospitals’ Rs 5,300-crore buyout of Sahyadri Hospitals from Ontario Teachers’ Pension Plan, Baby Memorial Hospital’s acquisition of a majority stake in Meitra Hospital for Rs 1,000–1,200 crore, and Fortis Healthcare’s Rs 470-crore purchase of Shrimann Hospitals in Punjab. Narayana Hrudayalaya also marked its first major overseas expansion with a £183-million acquisition of Practice Plus Group Hospitals in the UK, while Yatharth Hospital expanded its regional footprint through a Rs 260-crore acquisition of a 150-bed facility in Agra.