What You Ought to Know:
– After a robust begin to the yr, the digital well being sector skilled a big pullback in Q2 2025, with deal quantity declining to its lowest quarterly exercise stage within the final 5 years, in accordance with new report from CB Insights.
– The brand new CB Insights report, “State of Digital Health Q2’25” reveals the drop displays rising investor selectivity and capital focus in fewer, high-conviction bets amidst ongoing international 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 5-12 months 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 accordance with CB Insights knowledge. This pullback follows a sturdy Q1 and mirrors the broader enterprise panorama, the place deal exercise reached its lowest stage 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% enhance from the prior quarter. This rise was powered by a number of important raises, most notably Neuralink’s $650M Sequence E spherical, the most important digital well being deal since 2021, which is able to 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 Sequence 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 Sequence B spherical.
AI Firms Seize Extra Than Two-Thirds of Digital Well being Funding
AI continues to be the dominant pressure 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 Sequence E spherical.
- Medical Documentation Options: This market was the second highest-funded, attracting $639M throughout 5 offers. Key firms on this area embody Abridge ($300M), Commure ($200M), and Nabla ($70M), all targeted on AI-powered medical note-taking instruments. All three boast robust CB Insights Mosaic scores above 900.
Two Digital Well being Firms Go Public with $1B+ Valuations
Digital health noticed its first important IPO exercise in over a yr, 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 provide employer-driven continual care applications, betting on entry to commercially insured sufferers to draw payers searching for price financial savings.
- Hinge Well being: Supplies musculoskeletal remedy applications to employers and well being plans, combining digital bodily remedy, movement monitoring, and customized teaching. It raised $854 million throughout 12 rounds earlier than its IPO.
- Omada Well being: Targets continual circumstances like diabetes, hypertension, and weight problems by its AI-enhanced digital care platform, which launched a nutrition-focused AI agent this yr. 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 trade.
Deal Sizes Proceed to Rise as Traders Prioritize Bigger Rounds
Regardless of the general decline in deal quantity, the worldwide median digital well being deal measurement reached $6M as of Q2 2025, up from $5.1M in 2024—the best stage within the final 4 years. The typical deal measurement additionally jumped to $22.2M, a 35% enhance from 2024, reflecting a focus of bigger offers on the prime. Actually, 44% of whole digital well being funding in Q2 got here from the seven mega-rounds.
Late-stage median spherical measurement hit $49M within the first half of 2025, a 23% enhance from $40M in 2024, reaching its highest stage 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/research/report/digital-health-trends-q2-2025/
