What You Ought to Know:
– After a robust begin to the 12 months, the digital well being sector skilled a big pullback in Q2 2025, with deal quantity declining to its lowest quarterly exercise degree within the final 5 years, in response to new report from CB Insights.
– The brand new CB Insights report, “State of Digital Well being Q2’25” reveals the drop displays rising investor selectivity and capital focus in fewer, high-conviction bets amidst ongoing world financial uncertainty. Regardless of the contraction within the broader sector, AI continued to dominate funding, and two established firms achieved $1B+ valuations upon going public.
Deal Quantity Hits 5-Yr Low
Digital well being fairness funding skilled a 21% quarter-over-quarter (QoQ) drop in Q2 2025, falling to $4.4B. Deal depend additionally declined to 267 from 325 in Q1 2025, marking the bottom quarterly whole within the final 5 years, in response to CB Insights knowledge. This pullback follows a strong Q1 and mirrors the broader enterprise panorama, the place deal exercise reached its lowest degree since 2016.
The funding panorama this quarter exhibits a transparent desire for extra mature firms. Whereas early-stage rounds averaged $7.7M in Q2 (down from $11.7M in Q1), late-stage offers averaged $137M, a 69% improve from the prior quarter. This rise was powered by a couple of important raises, most notably Neuralink’s $650M Collection E spherical, the biggest digital well being deal since 2021, which can advance the corporate’s AI-powered brain-computer interface platform.
Regardless of the general pullback, Q2 produced two new unicorns this quarter:
- Pathos: An AI-driven oncology drug developer, achieved unicorn standing after elevating a $365M Collection D spherical, one of many largest digital well being funding rounds of the quarter.
- Nourish: A telenutrition platform, additionally reached unicorn standing after securing its $70M Collection B spherical.
AI Corporations Seize Extra Than Two-Thirds of Digital Well being Funding
AI continues to be the dominant power in digital well being funding. AI-focused firms captured a powerful 69% of all digital well being funding in Q2 2025, up from 60% in Q1, whereas their deal share held regular at 41%. Notably, AI firms claimed 9 of the ten largest offers this quarter, together with 6 of the 7 mega-rounds (fundraises of $100M or extra).
AI-driven investments spanned a number of high-impact markets in Q2:
- Medical Mind-Laptop Interface (BCI): This was the highest-funded market in digital well being, pushed solely by Neuralink’s $650M Collection E spherical.
- Medical Documentation Options: This market was the second highest-funded, attracting $639M throughout 5 offers. Key firms on this house embody Abridge ($300M), Commure ($200M), and Nabla ($70M), all centered on AI-powered medical note-taking instruments. All three boast sturdy CB Insights Mosaic scores above 900.
Two Digital Well being Corporations Go Public with $1B+ Valuations
Digital well being noticed its first important IPO exercise in over a 12 months, signaling a possible thawing of the general public markets. Hinge Well being and Omada Well being debuted in Q2 2025 at valuations of $2.6B and $1.1B, respectively. These are the primary digital well being IPOs to surpass the $1 billion mark within the final 4 quarters.
Each firms supply employer-driven continual care applications, betting on entry to commercially insured sufferers to draw payers searching for value financial savings.
- Hinge Well being: Offers musculoskeletal remedy applications to employers and well being plans, combining digital bodily remedy, movement monitoring, and personalised teaching. It raised $854 million throughout 12 rounds earlier than its IPO.
- Omada Well being: Targets continual situations like diabetes, hypertension, and weight problems by way of its AI-enhanced digital care platform, which launched a nutrition-focused AI agent this 12 months. It raised $530 million over 14 rounds earlier than its IPO.
These IPOs break a multi-year drought, throughout which digital well being firms delayed going public amid market volatility. As two of the sector’s most mature startups, their profitable exits might function bellwethers for the broader business.
Deal Sizes Proceed to Rise as Buyers Prioritize Bigger Rounds
Regardless of the general decline in deal quantity, the worldwide median digital well being deal dimension reached $6M as of Q2 2025, up from $5.1M in 2024—the very best degree within the final 4 years. The common deal dimension additionally jumped to $22.2M, a 35% improve from 2024, reflecting a focus of bigger offers on the high. In actual fact, 44% of whole digital well being funding in Q2 got here from the seven mega-rounds.
Late-stage median spherical dimension hit $49M within the first half of 2025, a 23% improve from $40M in 2024, reaching its highest degree since 2021’s $74M peak. These figures point out that buyers are consolidating capital round fewer, bigger late-stage bets.
For extra details about this report, go to https://www.cbinsights.com/analysis/report/digital-health-trends-q2-2025/
