CB Insights State of Digital Health Q1 2025

CB Insights put out its State of Digital Health report for the first quarter, and it looks like it’ll take more than a stock market nosedive to stop the health tech rebound.

Although some of the themes might sound familiar to those that keep up with Rock Health’s analysis – primarily more funding directed toward fewer companies – CB Insights adds some interesting findings that it broke down into four main buckets.

Investors are concentrating their capital. Total VC funding jumped 47% QoQ to reach the highest level seen since 2022, even as the total number of rounds dropped 9%. (Obligatory Disclaimer: CB Insights’ definition of “digital health” includes more AI drug discovery and clinical trials than Rock Health).

• One of the most striking changes was in investment size: median late-stage checks grew 96% QoQ, compared to 41% for mid-stage and 25% for early-stage rounds. [Chart 1]

Mega-rounds are back, and AI is claiming most of them. Funding from $100M+ mega-rounds surged to $2.5B across 11 deals in Q1, capturing 46% of total investment (highest since 2021).

• AI startups secured 8 of these 11 mega-rounds, a strong signal of where investors are expecting outsized returns. AI startups pulled in 60% of Q1 funding [Chart 2]

Billion-dollar moves mark an M&A revival. M&A activity surged 27% to 51 transactions in Q1, with the U.S. demonstrating “renewed market confidence in high-value digital health platforms.”

• Q1 featured two $1B+ acquisitions, with Roper Technologies acquiring autism care software provider CentralReach for $1.6B, and Paulus Holdings picking digital pharmacy platform Alto Pharmacy for $1.5B. [Chart 3]

Unicorn creation rebounds, driven by AI platforms. Digital health saw 6 new unicorns minted in Q1, more than all of 2024 and the highest quarterly total since Q2 2022.

• With half focused on AI for provider workflows, the report suggests investor conviction is highest where AI directly supports care delivery. [Chart 4]

The Takeaway

CB Insights just delivered more evidence that the digital health market is impressively resilient, even if its definition of that market is a little wider than we’re used to.