UT Professor Dr. Peter Fox

Digital Health

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.

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The Wire

• Novo Opens the GLP-1 Gates: A string of un­like­ly part­ner­ships be­tween No­vo Nordisk and its GLP-1 ri­vals will see Hims & Hers, Ro, and LifeMD mem­bers gain access to discounted We­govy di­rect­ly through their tele­health plat­forms. All three companies had been offering compounded versions of the weight loss drug, which the FDA permitted until declaring an end to the shortage last month. That sparked a barrage of litigation from multiple fronts, and it’s interesting to see these partnerships arrive less than a week after Novo claimed victory in the court room.  

• Plenful Series B: Plenful locked in $50M of Series B funding to bring AI automation to healthcare workflows across any format, system, or department. The platform’s most widely adopted use cases include prior authorization, 340B compliance auditing, and order data entry, with major health systems such as MUSC and Cencora reportedly already seeing the benefit in their bottom lines.

• Nabla’s in the Neighborhood: Nabla is now fully rolled out across Neighborhood Healthcare, a leading Federally Qualified Health Center serving nearly 100k patients. The ambient AI platform is uniquely suited to the needs of FQHCs like Neighborhood, with multilingual support – including Spanish and Arabic – as well as personalized note preferences tailored to each clinician’s documentation style.

• Hospital Analysts Get Spooked: New research from Fitch shows that hospital analysts are getting nervous about all the stock market volatility. Although non-profits have enjoyed steady returns throughout the pandemic due to a strong market and interest rate hikes, the recent turmoil could threaten their balance sheet. If these systems see their investment income decline by 25%, Fitch reports that it would reduce the sector’s median days of cash on hand to 215 (down 7% from last year), hindering their ability to weather other unexpected headwinds.

• Woe Is Me: OG mental health chatbot Woebot is shutting down its signature app at the end of June. Although Woebot was one of the first digital health startups to bring chatbots to therapy, competition has grown cutthroat from the recent flood of AI-enabled newcomers in the space. Behavioral Health Business reports that it’s unclear if Woebot’s B2B initiatives with employers and health systems will be impacted since they weren’t explicitly mentioned in the announcement.

• Lumeris Adds Wolters Kluwer: Lumeris integrated Wolters Kluwer’s UpToDate into its Tom AI-powered Primary Care-as-a-Service platform. The integration brings real-time clinical guidance directly into physician workflows to improve decision-making at the point of care. Through “deep data insight and trained clinical models,” Tom can identify and autonomously execute best next actions, from scheduling screenings and monitoring medications to conducting outreach and escalating issues.

• Houston Methodist + Ambience: Houston Methodist is expanding its testing of Ambience’s AI scribe and CDI platform in the ED and inpatient care settings, two high-acuity environments that have largely missed the recent wave of ambient AI adoption. ED clinicians consistently report the highest levels of burnout in the industry, with an average of 4,000 EHR clicks during a busy shift. Ambience announced that the expanded partnership marks the general release of its new ED and inpatient solutions, building on its portfolio of 100+ specialty-tuned offerings.

• The New Health Advice Ecosystem: The latest Edelman Trust Barometer found that patients of all ages are increasingly disregarding medical advice from providers. From 2024 to 2025, the percentage of adults under age 35 that reported preferring medical advice from social media rose from 26% to 38%, while advice from friends or family rose from 32% to 45%. A whopping 61% of survey respondents across all age groups said they feel business, government, and non-governmental organization actions hurt their ability to get quality health care.

• Infinitus Agents Arrive: Infinitus debuted hallucination-free AI voice agents for patient- and provider-facing calls. The patient-facing voice agent can proactively call patients with requests and follow-ups, enabling 24/7 support for questions or other assistance. The provider-facing agents deliver data to or collect information from providers, increasing engagement while reducing administrative obstacles. There’s a demo call included in the release for anyone wondering what it looks like in action.

• ‍AI Data Training Alliance: The data duo of OneMedNet and Protege are teaming up to make real-world datasets more accessible to AI developers and researchers. The alliance makes OneMedNet’s real-time longitudinal patient records available to users of the Protege platform, which links data providers with AI developers.

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The Resource Wire

• The First 30 Days: What to Expect With AI: Implementing AI documentation tools promises significant benefits, but how do you ensure a smooth transition? Playback Health has you covered with this comprehensive 30-day roadmap outlining what to expect, industry best practices, and its own proven implementation approach.

• The State of Payer Enrollment & Credentialing: Rising costs, slow automation, and evolving regulations are creating new challenges for credentialing and enrollment. Medallion’s latest report uncovers the biggest trends shaping the future – and how AI and automation are driving change. Don’t fall behind – get the full report now.

• Nabla’s Looking for an Events Manager: Nabla is scaling up, and it’s looking for an Events Manager to help engage its audience through exceptional experiences. This role will manage events that create meaningful connections and amplify the brand of a company dedicated to bringing joy back to the practice of medicine. Learn more and apply here.

The Industry Wire

1. FDA misses review deadline for genetic drug candidate.
2. Supreme Court sides with HHS on hospital reimbursement.
3. Tenet to continue M&A for ambulatory surgery centers. 
4. C-suite compensation grew 20% in 2024. 
5. FDA ruling ends era of compounded GLP-1 weight-loss drugs.
6. Humana to shore up Medicare Advantage business. 
7. Penn. legislation would legalize OTC ivermectin legality. 
8. GOP senator calls for reversal of federal research cuts.
9. FDA debates whether to approve seasonal COVID shots.
10. RFK Jr.: Don’t flush unused medications.