Sorry for the late return. We're traveling this weekend.
87% health is impressive, especially considering it has 900 cycles. Apple says a healthy battery should retain 80% health "up" to (wiggle words) 1000 cycles.
Does that mean they die after 1000 cycles. No, but it suggests that it's in it's twilight years and could fail.
So the battery is healthy enough to upgrade, but the cycle count is high. Were it mine and I wanted to keep it in service, I'd have Apple (and no one else) replace the battery, then update. From this Apple page:
Apple Service and Repair for Mac Laptops - Apple Support
that's going to cost US$249.
If your M1 has only 8GB RAM and a 256GB storage drive, I'd be inclined to go newer. Newer macOS versions are getting a bit "piggy" in their need for drive space and there are lots of complaints here about 256GB storage being too small.
Check your storage capacity and how much is available using Disk Utility:
Intro to Disk Utility on Mac - Apple Support
and your physical RAM amount from "About this Mac..." in you Apple menu.
I'll be home late today but may not be able t get back to you until tomorrow morning.