AI continued to dominate funding, reflecting capital concentration in fewer, high-conviction bets. Established companies attracted investors, as evident by the quarter’s two $1B+ IPOs. The result is a market divided between mature companies attracting major capital, while the broader sector contracts. 

Download the full report to access comprehensive data and charts on the evolving state of digital health.

Key takeaways from the report include:

• Funding fell as deal volume hit a 5-year low. Equity funding dropped 21% QoQ to $4.4B, while deal count declined to 267 from 325 in Q1’25 — the lowest quarterly total in the last 5 years, according to CB Insights data. The pullback follows a strong Q1, with global economic uncertainty and reduced capital dampening dealmaking activity. 
• AI companies captured more than two-thirds of digital health funding. AI startups raised $3B in Q2, accounting for 69% of all digital health funding, up from 60% in Q1. The AI deal share held steady from the previous quarter at 41%, with capital flowing to areas such as clinical documentation, brain-computer interfaces, and electronic health record (EHR) integration tools. 
• 2 digital health companies went public with $1B+ valuations. Hinge Health and Omada Health went public in Q2 at valuations of $2.6B and $1.1B, respectively. Both companies offer employer-driven chronic care programs and represent the year’s largest digital health IPOs — the first to debut above the $1B mark in the last 4 quarters. 
• Median deal size continues to rise in 2025 as investors prioritize larger rounds. The global median deal size reached $6M for the first half of the year, up from $5.1M in 2024. The U.S. led the increase with a median deal size of $9.3M. 

We dive into the trends below.

Funding fell as deal volume hit a 5-year low

Digital health equity funding fell 21% QoQ in Q2’25, while deal volume dropped 18% to its lowest level in 5 years. This trend mirrors the broader venture landscape, where deal activity reached its lowest level since 2016.

Despite the pullback, Q2 produced 2 new unicorns this quarter. AI-driven oncology drug developer Pathos raised a $365M Series D round, one of the largest digital health funding rounds of the quarter. Telenutrition platform Nourish reached unicorn status after securing its $70M Series B round. 

The funding landscape this quarter shows a clear preference for mature companies. Early-stage rounds averaged $7.7M in Q2, down from $11.7M in Q1. Meanwhile, late-stage deals averaged $137M, up 69% from the prior quarter.

This rise was powered by a few significant raises, most notably the Elon Musk co-founded Neuralink’s $650M Series E round – the largest digital health deal since 2021. The funding will advance the company’s AI-powered brain-computer interface platform, with applications aimed at neurological disorders. 

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AI companies captured more than two-thirds of digital health funding

AI-focused companies captured 69% of digital health funding in Q2’25 — up from 60% in Q1 — while deal share held steady at 41%. Notably, AI companies claimed 9 of the 10 largest deals this quarter, including 6 of the 7 mega-rounds ($100M+).

In fact, AI companies drove funding across multiple markets in Q2. The medical brain-computer interface market was the highest-funded market in digital health, driven solely by Neuralink’s $650M Series E round.

The second highest-funded market this quarter was clinical documentation solutions ($639M across 5 deals). This included Abridge ($300M), Commure ($200M), and Nabla ($70M), all of which are building AI-powered clinical note-taking tools. All three companies have CB Insights Mosaic scores above 900, indicating strong company health.

Explore 100+ healthcare AI companies funded in Q2’25

Two digital health companies went public with $1B+ valuations

Digital health saw its first significant IPO activity in over a year, with Hinge Health and Omada Health debuting in Q2’25 at valuations of $2.6B and $1.1B, respectively.

These are the first digital health IPOs to debut above the $1B mark in the last 4 quarters. Both companies target employer populations with chronic care programs, betting that access to commercially insured patients will attract payers seeking cost savings.

Hinge Health provides musculoskeletal therapy programs to employers and health plans, combining virtual physical therapy, motion tracking, and personalized coaching. Omada Health targets chronic conditions like diabetes, hypertension, and obesity through its AI-enhanced virtual care platform, which introduced a nutrition-focused agent this year.

Both companies went public after years of sustained growth and funding. Hinge Health raised $854M across 12 rounds before its IPO, including a $400M Series E round in October 2021. Omada Health raised $530M over 14 rounds. Its most recent financing was a $192M Series E round in February 2022. 

Their IPOs break a multi-year drought as digital health companies delayed going public amid market volatility. As 2 of the sector’s most mature startups, these exits may be bellwethers for the industry.

Explore digital health IPOs in the last 4 quarters

Deal sizes continue to rise in 2025 as investors prioritize larger rounds

The global median digital health deal size reached $6M as of Q2’25, up from $5.1M in 2024, the highest level in the last 4 years. Also, the average deal size jumped to $22.2M, a 35% increase from 2024, reflecting a concentration of larger deals at the top.

In fact, 44% of total digital health funding in Q2 were from the 7 mega-rounds.

Late-stage median round size hit $49M in the first half of 2025, up 23% from $40M in 2024 — the highest since 2021’s $74M peak. These figures indicate that investors are consolidating capital around fewer, larger late-stage bets. 

Explore this quarter’s mega-rounds

MORE DIGITAL HEALTH RESEARCH FROM CB INSIGHTS 

• State of Digital Health Q1’25 Report
• State of Venture Q2’25 Report
• Pharma AI readiness: How the 50 largest companies by market cap stack up
• The AI in drug R&D market map
• The humanoid robots market map

The post State of Digital Health Q2’25 Report appeared first on CB Insights Research.

By combining AI with physical dexterity, humanoids can perform complex tasks once limited to people, without the expensive facility modifications that traditional automation requires.

While manufacturing and warehousing use cases lead in early adoption, humanoids are expanding into healthcare, retail, and hospitality sectors, signaling widespread potential in industries that need human-like movement and flexibility.

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Now, our Book of Scouting Reports offers in-depth analysis on every single one of the private companies featured in the market map.

Combining CB Insights’ proprietary data and AI, scouting reports provide insight into each company’s:

• Funding history
• Headcount
• Key takeaways (including opportunities and threats)
• Commercial Maturity score
• Mosaic score

Download the book to see all 49 scouting reports.

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We highlight three pivotal trends from the event — backed by examples and CB Insights data — that capture the sector’s shifting dynamics in 2025.

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The sector also showed renewed vitality through the return of billion-dollar M&A deals and the highest quarterly addition of new unicorns in nearly three years. These developments further confirm that the digital health landscape is prioritizing specialized market leaders over broader capital distribution. 

Key takeaways from the report include: 

• Investors are concentrating capital in fewer, higher-quality bets. Equity funding jumped 47% QoQ to reach the highest level since Q2’22, even as deal count dropped 9%. Startups with strong clinical validation, demonstrable ROI, and scalable business models are leading the pack. 

• Mega-rounds are back, and AI is claiming most of them. Funding from mega-rounds ($100M+ deals) surged to $2.5B across 11 deals in Q1, capturing 46% of all digital health funding — the highest share since Q4’21. AI-focused startups secured 8 of these 11 mega-rounds, signaling where investors expect outsized returns. 

• AI companies are capturing more than half of digital health funding. AI startups raised $3.2B in Q1, or 60% of all digital health funding — up from 41% in 2024. Top-funded segments included AI-derived small molecule drug discovery and clinical documentation tools, underscoring the shift toward targeted, high-impact applications. 

• Billion-dollar deals mark a digital health M&A revival. M&A activity surged 27% QoQ to 51 deals in Q1, with the US driving growth and two $1B+ acquisitions (CentralReach and Alto Pharmacy) demonstrating renewed market confidence in high-value digital health platforms. 

• Unicorn creation rebounds, driven by AI-native platforms. Digital health saw 6 new unicorns in Q1’25 —  more than in all of 2024 — and the highest quarterly total since Q2’22. With half focused on AI for provider workflows, the data suggests investor conviction is highest where AI directly supports care delivery.  

We dive into the trends below. 

Investors are concentrating capital in fewer, higher-quality bets

Digital health equity funding surged 47% QoQ, making it the strongest quarter since Q2’22. But while capital surged, deal volume slipped 9%, underscoring a broader VC trend: fewer bets, bigger checks.. This consolidation pushed the global median deal size from $5.4M to $6.4M. 

This growth was powered by a handful of major raises, most notably Isomorphic Labs‘ record-breaking $600M Series A on the final day of Q1. This investment — the largest ever for AI in drug discovery — will support the company’s evolution from an AI molecular design platform to a comprehensive therapeutic discovery engine. 

Deal stage distribution also shifted. Early-stage deal share declined from 60% of total volume in 2024 to 51% in 2025 YTD, while mid and late-stage deal shares increased slightly. But the most striking change was in deal size: median late-stage deal size grew 96% QoQ, compared to 41% for mid-stage and 25% for early-stage rounds.  

This late-stage surge reflects investor preference for companies with regulatory milestones and scalable AI platforms. Examples include Saluda Medical, which received FDA approval for its Evoke System; Insilico Medicine, advancing drug candidates to clinical trials; and Innovaccer, now serving 6 of the top 10 US healthcare systems.  

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Mega-rounds are back, and AI is claiming most of them 

Mega-rounds made a strong comeback in Q1’25, totaling $2.5B across 11 deals — more than double Q4’24’s funding, despite only a modest uptick in volume. These $100M+ investments captured 46% of all digital health funding, marking the highest concentration of capital in mega-rounds since Q4’21 and signaling renewed investor confidence in mature digital health companies. 

AI-focused startups dominated these large investments, securing 8 of the 11 mega-rounds in Q1. Standout deals include Isomorphic Labs’ $600M Series A for therapeutic development, Truveta‘s $320M Series C for electronic health record (EHR) data analytics, and Innovaccer’s $275M Series F for its clinical decision support platform. 

Explore this quarter’s mega-rounds

AI companies are capturing more than half of digital health funding

AI now accounts for the majority of digital health funding, pulling in 60% of Q1’25 investment — up from 41% in 2024 and 37% in 2023. This quarter marks the first time AI companies have captured more than half of all digital health dollars, signaling a structural shift likely to continue as the sector matures.   

Despite an overall decline in digital health deals, AI digital health deal volume rose 6% QoQ — from 109 in Q4’24 to 116 in Q1’25 — underscoring sustained investor appetite for AI-driven solutions. The top-funded AI markets were AI-derived small molecule drugs ($204M across 5 deals) and clinical documentation solutions ($372M across 4 deals). 

The surge reflects not just hype, but real traction: AI is evolving from general-purpose tools to vertical-specific, regulatory-compliant platforms that address provider burnout, accelerate R&D, and improve diagnostics.  

High-momentum startups in Q1’25 — according to CB Insights’ Mosaic score — include Ubie (Mosaic score: 922), which offers an AI-powered symptom tracker, and Suki (Mosaic score: 913), a voice assistant for clinical documentation.  These use cases show how AI is delivering measurable clinical and operational value across the ecosystem. 

See 370+ high-potential AI startups in digital health

Billion-dollar deals mark a digital health M&A revival

M&A activity surged 27% QoQ to 51 deals in Q1, reaching its highest level since Q1’23. This growth was driven entirely by US companies, where deal volume increased 85% QoQ to 37, while Europe dipped slightly (12 to 10 deals) and Asia saw just 1 deal, down from 3. 

The quarter featured two $1B+ acquisitions — the first such deals since Q2’22 — signaling the return of strategic buyers to the market. Roper Technologies‘ acquired CentralReach, an autism and IDD care software provider, for $1.6B and Paulus Holdings purchased digital pharmacy platform Alto Pharmacy for $1.5B. 

These acquisitions highlight a strategic shift toward platforms with market dominance and proprietary data. Alto Pharmacy serves more than 500,000 patients and captures deep insights into medication use and patient behavior. CentralReach supports 200,000 users with rich clinical and behavioral datasets for autism and IDD care. Strategic buyers are showing a clear willingness to pay premium valuations for scaled operations paired with hard-to-replicate data ecosystems.  

Unicorn creation rebounds, driven by AI-native platforms 

6 new unicorns were minted in Q1’25 –  the most in a single quarter since Q2’22 – but with  a striking difference in scale. Today’s unicorns are leaner, averaging just 196 employees compared to 408 during the 2021-2022 boom. OpenEvidence reached the milestone with a team of just 21. 

They’re also reaching unicorn status faster. The average time to unicorn this year has fallen to 6 years from 7 in 2022, with Hippocratic AI setting the pace — hitting a $1B+ valuation just two years after its founding in 2023. 

Regionally, the US led the charge with 4 new unicorns, while Europe contributed 1 and Asia celebrated its first digital health unicorn birth since 2021.  

Half of these newly minted unicorns apply AI to support provider workflows: Hippocratic AI (patient follow-up), Abridge (clinical documentation), and OpenEvidence (healthcare decision-making). This trend highlights both growing demand for clinician-support tools — and strong investor conviction in AI’s ability to deliver venture-scale returns.

With M&A activity surging and $1B+ acquisitions returning to the market, these companies are prime candidates for notable future exits. Based on CB Insights’ M&A probability metrics, OpenEvidence stands out as the frontrunner with a 35% likelihood of acquisition in the next 2 years, while Neko Health follows with 22% — both exceeding the market average of 20%. follows with 22% – both exceeding the market average of 20%. 

See all of digital health’s current 120+ unicorns

MORE DIGITAL HEALTH RESEARCH FROM CB INSIGHTS 

• State of Digital Health 2024 Report 
• The generative AI in healthcare and life sciences market map 
• AI in clinical trials: How the tech is serving pharma’s riskiest bet 
• The cybersecurity in healthcare market map 
• Digital Health 50: The most promising digital health startups of 2024 

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Estimates indicate that US hospitals lose $262B annually to revenue cycle inefficiencies, while drugmakers spend more than $1B on average to develop a single drug. Meanwhile, the healthcare workforce in the US faces high burnout and a projected shortage of 124,000 physicians by 2034, according to the Association of American Medical Colleges.

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Mirroring trends in the broader venture market, AI proved to be a bright spot amid the downturn in digital health deals. In 2024, AI-focused companies secured 42% of digital health funding and accounted for 31% of deals — both record highs.

Download the full report to access comprehensive data and charts on the evolving state of digital health.

Key takeaways from the report include:

• Digital health dealmaking continues to decline. Despite a slight increase in funding YoY, digital health deal count dropped again in 2024, hitting its lowest annual total (1,225) since 2014. Regionally, Europe saw the sharpest drop in deals, with a 29% YoY decline.
• Fewer deals, bigger checks. The median digital health deal size jumped 39% YoY to hit a record high of $5.3M in 2024. The combination of declining deal volume and larger deal sizes suggests that selective investors are concentrating their resources on companies that meet heightened benchmarks in areas like clinical validation, commercial traction, and regulatory readiness.
• AI takes center stage in digital health. In 2024, AI-focused companies captured 42% of digital health funding and 31% of deals — both record highs. The 5 largest AI-focused digital health deals were spread across diagnostics, drug development, and women’s health.
• Digital health mega-rounds rebound in 2024. Mega-rounds ($100M+ deals) increased in 2024 after 2 years of decline, with the top 3 deals focused on drug discovery and development. Most top deals (7 out of 10) went to US-based companies, pointing to the region’s position as a hub for high-value digital health investment.

We dive into the trends below.

Digital health dealmaking continues to decline

Following 2 years of decline, digital health funding increased slightly in 2024, rising by 3% YoY.

However, digital health deal count fell for the third year straight in 2024. It dropped by 23% YoY to reach just 1,225 — its lowest level since 2014 — highlighting that investors remain cautious.

Regionally, Europe saw the steepest drop, with deal count shrinking 29% YoY to 258, despite a modest funding increase to $2.8B. Asia also experienced a decline, with deal count falling 19% YoY to 218, alongside a funding drop to $0.8B. While still the most active market, the US recorded a 19% YoY decline in deal count to 683, even as funding climbed to $11.7B.

CBI customers: Track 11K+ digital health companies

Fewer deals, bigger checks

While the overall deal count fell, the median digital health deal size surged in 2024.

It climbed by 39% YoY to reach $5.3M — a record high.

This combination of factors suggests that selective investors are prioritizing companies that meet heightened benchmarks in areas like clinical validation, commercial traction, and regulatory readiness.

CBI customers: See 180+ high-potential startups

AI takes center stage in digital health

AI is commanding a growing share of digital health investment activity.

AI-focused companies captured 42% of total digital health funding and 31% of deal volume in 2024 — both record highs. 

This surge reflects heightened investor confidence in AI’s ability to accelerate drug discovery, improve early disease detection, deliver personalized care, and more.

The top 2 AI-focused digital health deals in 2024 went to drug development platform Xaira Therapeutics. Freenome followed with a $254M Series F to expand its AI-driven early cancer detection tools, while Flo Health secured a $200M Series C to scale its personalized women’s health platform. BioAge Labs rounded out the top 5 with a $170M Series D to advance its AI-powered aging-related treatments.

Explore the top AI-focused digital health deals

As AI adoption grows across healthcare operations — from clinical and administrative workflows to drug development — healthcare providers and pharmaceutical giants will likely pursue strategic partnerships and acquisitions to maintain their competitive edge.

Digital health mega-rounds rebound in 2024

Digital health mega-round activity rebounded in 2024 after 2 consecutive years of decline, with deal count rising by 50% YoY to 33.

The top 3 mega-rounds of 2024 all went to drug discovery and development companies. 

Xaira Therapeutics led the pack with two $500M rounds for its AI-driven drug discovery and development platform, followed by Formation Bio with a $372M Series D to advance its drug development efforts. 

At the regional level, the US accounted for 7 of the top 10 mega-rounds in 2024, reflecting its position as a hub for high-value digital health investments. 

MORE DIGITAL HEALTH RESEARCH FROM CB INSIGHTS

• State of Digital Health Q3’24 Report
• AI’s moment in preclinical drug development arrives: Why formulation tech is the next frontier
• Inside the AI drug discovery arms race: Record M&A activity, a biologics funding spree, and more
• Digital Health 50: The most promising digital health startups of 2024
• The $4.6B opportunity in healthcare: Ambient AI to target clinician burnout

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Our 2025 Tech Trends report provides a concrete roadmap for corporate leaders to navigate some of the most important technology shifts in the year ahead.

We include specific recommendations for action so that business leaders can get ahead of the next wave of value creation.

Here is a selection of key findings from the report:

• AI agents are given money to spend: AI agents’ utility is limited until they can make transactions seamlessly. A small group of tech players is building new infrastructure to make that happen.
• The future data center arrives: With data center power usage expected to more than double by 2026, big tech companies are morphing into energy innovators to support AI workloads. There’s a huge opportunity in improving data centers’ energy efficiency.
• Investment floodgates open for RNA therapeutics: RNA therapeutics developers are pioneering new ways to treat traditionally “undruggable” diseases, with a growing focus on neurodegenerative disorders like Alzheimer’s and Huntington’s diseases.
• AI M&A fuels the next wave of corporate strategy: AI’s share of corporate tech M&A has doubled since 2020. Tech incumbents like Nvidia, Salesforce, and Snowflake, as well as consultancies like Accenture, are rapidly acquiring AI startups to tap into enterprise demand. 
• Disease management enters a new phase with AI: AI is improving care delivery across 3 key areas of disease management: precise symptom evaluation; testing/screening for earlier disease detection (including before symptoms even appear); and finding at-risk individuals in datasets of entire patient populations. 
• Retail’s personalization imperative: Generative AI is unlocking 1:1 experiences across commerce touchpoints, with leaders like Target seeing a corresponding 3x boost in conversation rates. Personalization will become omnipresent in retailers’ offerings.
• And much more

Methodology

Our analysis relies on a wide range of CB Insights datasets, including financing and acquisition data, valuations, founding team and key people data, earnings transcripts, and more. We also leverage CB Insights’ proprietary scoring algorithms to measure business health (Mosaic) and maturity (Commercial Maturity), as well as the likelihood of acquisition (M&A Probability score). Throughout the report, we provide CB Insights customers with jumping-off points to dig deeper into the data behind the report.

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In response, robotics companies are seeing an opportunity to deploy their solutions across the healthcare industry — from automated medication dispensing to robotics-assisted physical therapy. Broader interest in the space is also rising, with healthcare robotics news mentions reaching a new high in October.

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Nevertheless, AI activity from Mayo Clinic — which has a reputation for tech innovation, a frontline understanding of healthcare’s complexities, and deep pockets — can serve as a bellwether for AI traction, indicating which tools are more likely to play key roles in the hospital of the future. 

Mayo Clinic (which was ranked No. 1 in our Hospital AI Readiness Index) is also forging partnerships to provide other health systems with guidance on AI strategy and implementation — indicating that where Mayo goes, others will follow.

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What you need to know:

• Skin health is seeing rising attention, with early and mid-stage startups using telehealth business models, AI analytics, and biotech to create new solutions.
• Emerging focus areas span virtual dermatologist consultations, AI-enabled remote skin health monitoring, at-home skin analysis for care routines, new healthy aging therapies, and microbiome-balancing solutions.
• Looking ahead, watch for solutions using smartphones for at-home diagnostics and AI-enabled analytics to gain traction, driven by demand for access to professional, science-based, and personally targeted skin care.

The skin is our largest organ. Maintaining healthy skin is crucial to our overall health and wellness, particularly given that 1 in 5 Americans will develop skin cancer in their lifetime. 

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Meanwhile, M&A activity is on the rise, climbing for the second straight quarter in Q3’24.

Based on our deep dive in the full report, here is the TL;DR on the state of digital health:

• Global digital health funding drops 23% QoQ to hit $3.3B in Q3’24, marking the second-lowest quarterly funding level since 2017. This decline comes despite a slight uptick in deal count QoQ. However, the average deal size in 2024 YTD is $17.8M — a 51% increase from the full-year 2023 average of $11.8M. This jump in average deal size, amid a downturn in deals over the same period, reflects that investors are concentrating larger sums on fewer, later-stage ventures.

• Digital health mega-round deals ($100M+ deals) drop slightly in Q3’24, falling from 9 to 7 QoQ. Meanwhile, mega-round funding and share of total funding also declined QoQ, underscoring a more cautious investor approach. Mega-rounds accounted for 30% of total digital health funding in Q3 — down from 44% in Q2. Top Q3’24 mega-rounds (by round amount) included:
  • Women’s health app Flo Health‘s $200M Series C
  • Digital-first health insurance provider Alan‘s $193M Series F

• The US accounts for 52% of digital health deals in Q3’24, down from 61% in Q2. Meanwhile, Europe and Asia both saw their deal shares rise to 21% in Q3. Asia experienced a greater jump in deal share, gaining 7 percentage points QoQ while Europe gained 3. This shift suggests growing investor interest in markets outside of traditional US hubs.

• Q3’24 sees the emergence of 2 new digital health unicorns — both based in Europe. The newest members of the digital health unicorn club are UK-based Flo Health, a women’s health app, and Huma, a remote patient monitoring platform. Against the backdrop of a broader downturn in new digital health unicorns, these births highlight Europe’s growing importance in the digital health landscape.

• Digital health M&A exits continue to climb in Q3’24, rising 23% QoQ to 37. This rising M&A appetite may be partly fueled by established companies seizing opportunities to scoop up innovative technologies amid a challenging funding environment for startups. The largest M&A deal in Q3’24 was LetsGetChecked’s $525M acquisition of digital pharmacy Truepill.

MORE DIGITAL HEALTH RESEARCH FROM CB INSIGHTS

• State of Digital Health Q2’24 Report
• Digital Health M&A: Every second acquisition in 2024 has been an AI company
• The $4.6B opportunity in healthcare: Ambient AI to target clinician burnout
• Analyzing Eli Lilly’s growth strategy: How the pharma giant is leveraging AI and pioneering a direct-to-patient approach
• Prioritizing clinical trials tech: How 16 tech-driven markets stack up across maturity and momentum

The post State of Digital Health Q3’24 Report appeared first on CB Insights Research.

What you need to know:

• Eli Lilly is using technology to reengineer how it develops treatments, leveraging AI to speed up drug discovery.
• The company is investing in novel drug delivery methods, such as targeted delivery systems, to improve treatment efficacy and the patient experience.
• Lilly is rapidly expanding its direct-to-consumer approach through LillyDirect, partnering with telehealth providers and integrating with digital pharmacies to streamline drug distribution and improve patient access.

Eli Lilly is using technology to reengineer how it develops and delivers treatments.

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What you need to know: 

• Ambient AI is reducing clinician burnout by autonomously documenting clinical interactions. Physicians are already reporting benefits such as being able to see more patients each month.
• Strategic partnerships, like that between Abridge and Kaiser Permanente, are driving large-scale adoption.
• Tech giants like Microsoft and Oracle are entering the space, making ambient AI a key part of their health IT offerings.

Ambient AI — tech that autonomously monitors and reacts to changes in an environment — could be key to addressing the widespread issue of clinician burnout, which costs the US healthcare system an estimated $4.6B annually.  

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Essential resources to understand the future of healthcare:

• • The generative AI in healthcare market map — These tech companies are bringing generative AI into medical research and clinical settings.
  • Pharma AI Readiness Index: Who’s best-positioned for the AI boom? — Assess how prepared top pharmaceutical companies are to adopt and respond to rapidly evolving AI technologies.
  • 6 digital health markets gaining momentum in 2024 — We analyzed early-stage investment trends to uncover which digital health markets — from telepsychiatry to virtual & hybrid women’s healthcare — are quickly evolving and how.
• 
  • The Digital Health 50 — Here are the world’s most promising digital health startups.
  • Big Tech in Healthcare — How Amazon, Google, Microsoft, & Nvidia are looking to transform drug R&D, primary care, and more.
  • State of Digital Health Q2’24 Report — Funding in digital health drops, but larger check sizes and an uptick in exits highlight bright spots for the industry in Q2’24.
• 
  • Longevity tech market map — 64 promising startups across 12 categories aiming to expand lifespans, from human cryopreservation to cellular reprogramming.
  • Digital Health AI M&A — Every second acquisition in 2024 has been an AI company; here’s where we’re seeing the most activity.
  • 20 tech trends to watch closely in 2024 — The technology trends that will transform industries as generative AI takes center stage, including several directly impacting healthcare.

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The post Our top digital health research and trends to watch appeared first on CB Insights Research.

This acquisition follows Commure’s Oct 2023 acquisition of another AI-driven provider workflow solution Athelas — which offers revenue cycle management (RCM) and automated documentation services — further bolstering its AI arsenal.

These deals reflect a key trend in healthcare M&A: AI is all the rage. 

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Amid the decline, investors have shifted their focus to writing fewer, larger checks for more mature companies in the digital health ecosystem. Meanwhile, their interest in early-stage companies has cooled.

Based on our deep dive in the full report, here is the TL;DR on the state of digital health:

• Global digital health funding declines by 26% QoQ, with funding falling to $2.9B across 235 deals in Q2’24 — the lowest quarterly deal volume seen since 2014. However, the annual average deal size globally is $16.7M in 2024 YTD, up 40% from the average for full-year 2023, signaling that investors are writing fewer but larger checks.

• US deal share grows to 61%, up from 54% in Q1’24. While digital health funding in the US declined by 18% QoQ in Q2’24, the US’ proportion of the global deal volume grew, marked by an increase in mid- to late-stage deal share. Median deal size is also up in the US in 2024 so far — sitting at $7.5M vs. $4.6M in full-year 2023.

• Mid-stage deal share jumps to 26% in 2024 YTD, while early-stage deal share falls by 14 percentage points. Early-stage deals have consistently accounted for 60%+ of all digital health deals in recent years. However, in 2024 YTD, early-stage deal share has dropped to 51% as mid- and late-stage deals have captured more investor interest. In the US, early-stage deal share has fallen to 45% in 2024 YTD vs. 62% in full-year 2023.

• $100M+ mega-rounds drop off in Q2’24 but are more varied across the digital health landscape. Digital health mega-rounds dropped from 8 in Q1’24 to 5 in Q2’24. While mega-rounds were focused on biotech in Q1’24, they were more spread out in Q2’24, spanning areas like care navigation, ultrasound tech, and value-based care tools. The largest deal of the quarter ($200M Series D) went to Foodsmart — a telenutrition company focused on chronic disease management.

Source: CB Insights — Foodsmart Funding Insights

• Digital health exits increase in Q2’24, rising from 26 to 32 QoQ. AI-driven platforms were the highlight here, with Tempus (precision medicine) and XtalPi (drug R&D) going public via IPO and Nuvo Group (remote pregnancy monitoring) going public via SPAC. Digital health M&A exit activity also picked up in Q2’24, especially in Europe, which saw M&A deals jump from 5 to 10 QoQ. Globally, virtual care, provider workflow tools, and drug R&D platforms were key categories for M&A in Q2’24.

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From ambient documentation to surgical tools and digital wound care, AI solutions are helping providers focus on patients, improve diagnostics, and find new ways to perform surgeries and other procedures.

To determine which health systems are most prepared for the shift, CB Insights has launched the Hospital AI Readiness Index.

We looked at the top private-sector health systems in the US (by hospital count) and ranked them based on how prepared they are to adapt to a rapidly evolving AI landscape across 2 key pillars: innovation and execution.

• Innovation: The innovation score measures a health system’s track record of developing or acquiring novel AI capabilities. This score is based on CB Insights data including patents, acquisitions, and deal-making activity. It also considers the presence of an AI-dedicated research center.
• Execution: The execution score measures a health system’s ability to bring AI-powered products and services into clinical practice as well as deploy AI internally across business and back-office functions. This score is based on CB Insights data including business relationships, product launch media mentions, and earnings transcripts.

Below, we present the 25 health systems (inclusive of subsidiaries and venture arms) most prepared for AI.

Want to dive into key data featured in this index? CB Insights customers can check out the links below:

• AI investments
• AI acquisitions
• AI patents

Leaders

Mayo Clinic leads in AI readiness primarily due to its relatively high level of AI innovation. 

Its innovative nature is reflected in part by its patent activity. For example, Mayo has filed 50+ patents across areas like cardiovascular health and oncology. It has also invested in AI-enabled companies addressing a range of use cases in healthcare, from clinical documentation to surgical intelligence.

Intermountain Health and Cleveland Clinic round out the top three. 

Notable activities for these players include Intermountain’s internal development of a real-time clinical decision support platform. Meanwhile, Cleveland Clinic stands out on the execution front due to its high volume of AI-focused business relationships, such as a partnership with PathAI focused on leveraging pathology algorithms to enhance translational research and clinical care.

Source: CB Insights — Cleveland Clinic Business Relationship Insights

Innovation

Innovation scores are based on the presence of an AI-dedicated research center and CB Insights data on AI-related patents as well as acquisitions and deal-making activity since 2019 (as of 5/29/2024).

The most active health system in terms of investment count is Mayo Clinic. Its investments highlight areas where AI is picking up steam in healthcare. For example, at the end of 2023, it participated in a funding round for Abridge — a startup that helps transcribe patient-provider conversations and create clinical notes using generative AI — alongside investors like CVS Health Ventures, the American College of Cardiology, and Kaiser Permanente Ventures. Mayo Clinic has also funded companies like Theator, which combines computer vision and AI to help surgeons draw and act on insights from videos of procedures.

Intermountain Health is the second most active AI investor among evaluated health systems. Via its venture arm, Intermountain Ventures, it backed AI-powered patient engagement platform Gyant, which has since been acquired. Most recently, its venture arm invested in Freenome, which develops blood tests for early cancer detection.

When it comes to patent count, Mayo Clinic and Cleveland Clinic lead the pack. 

One focus area for Mayo Clinic is cardiovascular health. For example, in 2022, it was granted a patent for a system that uses a machine learning model to analyze electrocardiogram (ECG) data and predict the likelihood that a patient will have a stroke. 

Source: CB Insights — Mayo Clinic patents

Meanwhile, Cleveland Clinic was granted a patent for a decision support system that utilizes machine learning to individualize radiotherapy doses, enhancing the precision and effectiveness of cancer treatments.

The evaluated health systems are not overly acquisitive — just one has inked an acquisition in the past 5 years: Providence. In 2019, it acquired Lumedic, which uses blockchain and AI to streamline healthcare revenue cycle management.

Execution

Execution scores are based on CB Insights data including AI-related business relationships, product launch media mentions, and earnings transcripts since 2019 (as of 5/29/2024).

The majority of the health systems evaluated for this ranking have established business relationships with AI-enabled companies.

For example, in 2024 so far:

• Mayo Clinic teamed up with Techcyte to develop a platform that will help healthcare organizations harness AI in their pathology practices.
• Meanwhile, Banner Health worked with Regard to ease the administrative burden on clinicians by automating key tasks, like notetaking and chart reviews.
• Johns Hopkins Medicine partnered with Healthy.io to offer digital wound care services to patients.

Few evaluated health systems have earnings calls, as many are non-profit organizations with different financial reporting requirements than publicly traded companies. However, earnings calls among systems that do hold them reveal how AI is coming into view in a hospital setting. 

For example, Community Health Systems’ EVP of clinical operations, Miguel Benet, highlighted how AI could be deployed to streamline clinical documentation on an earnings call in Q4’23. He also discussed how CHS is using AI to provide patients with relevant information regarding local resources upon discharge — an initiative that has already yielded positive results, such as reductions in length of stay.

Source: CB Insights — Community Health Systems earnings transcripts

Four of the health systems on this list have launched AI-enabled products. 

For example, last year, Intermountain Health developed a platform equipped with real-time clinical decision support tools that leverage AI to improve patient diagnosis and treatment. Just a few months ago, CommonSpirit Health launched Insightli, an internal AI assistant capable of generating written content.

The post Which hospitals have the most AI innovation? Our AI Readiness Index shows Mayo Clinic is leading the pack appeared first on CB Insights Research.

These leaders are harnessing their existing offerings — in areas like cloud computing, AI, and hardware — to service healthcare providers and pharmaceutical companies.

While big tech players are competing with each other in this landscape, they are also carving out distinct strategies: 

• Amazon is going deeper into primary and specialized care.
• Google is amassing troves of health data, which could play a role in its biotech bets. 
• Microsoft is equipping healthcare organizations with AI tools to improve clinical research, drug R&D, and care delivery.
• Nvidia’s long-standing hardware dominance positions it to play a major role in the future of smart hospitals. 

This report uses CB Insights datasets like investments, acquisitions, business relationships, patents, buyer interviews, company scouting reports, and more. Learn more about our data here.

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As a result, femtech categories — spanning hardware, software, and tech-enabled services — have emerged to address a variety of women’s health needs, from menstruation and maternity to menopause and pelvic health. 

To help strategy teams prioritize femtech markets in their planning decisions, we plotted markets using CB Insights’ TECH framework, which scores markets across 2 dimensions:

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It’s tackling the issue on all fronts, from investing in AI-enabled care models via Google Ventures, to forging partnerships through its Google Cloud division, to launching new products that tailor generative AI to healthcare use cases.

These moves seek not only to address the challenges facing the sector, but also to strategically differentiate Google from big tech peers like Nvidia, Microsoft, and Amazon — all of whom are making concerted efforts to integrate AI into healthcare.

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Digital health funding grew 48% quarter-over-quarter in Q1’24. This growth was supported by an increase in $100M+ mega-rounds, which were largely directed at biotech startups and other players leveraging AI.

Despite the increase, however, total funding still came in below pre-pandemic levels in Q1’24. Meanwhile, deal count continued to trend down.

Based on our deep dive below, here is the TL;DR on the state of digital health:

• ​Global digital health funding increases 48% QoQ to reach $3.7B in Q1’24. However, funding was still down 12% vs. Q1’23 and 63% vs. Q1’22. Meanwhile, digital health deal count declined in Q1’24, dropping to its lowest quarterly level since 2014.
  
  
• Funding to US digital health startups rises 44% QoQ. However, the US also saw deals drop to 144 — the fewest in a quarter since 2013. Despite the decline, the US still saw the majority of global digital health deals (53%) and funding (70%) in Q1’24. The US also secured 6 out of 7 digital health mega-rounds in the quarter.
• Average digital health deal size is up 38% in 2024 so far. After dropping from $23.1M in 2021 to $11.9M in 2023, average deal size is up to $16.4M in 2024 so far. This is being driven in part by the resurgence of mega-round deals. In Q1’24, these deals accounted for their second-highest share of quarterly funding since 2022.
• Digital health sees 7 $100M+ mega-rounds in Q1’24. Digital health mega-round deals rebounded QoQ in Q1’24. The largest digital health deal of the quarter went to Freenome — a biotech company focused on cancer detection. While biotech drove the top deals, Q1’24 mega-rounds were spread across the digital health industry, from biomedical NLP to robotics for microsurgery.
• No new unicorns (private companies valued at $1B+) emerge. While Freenome added $1B to its valuation following its Series F mega-round in February 2024, the company had already attained unicorn status in 2020. Among Q1’24 mega-round earners, Abridge saw the largest increase in disclosed valuation. It reached an $850M valuation — up 350% from October 2023.

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The tech giant found a major entry point into healthcare workflows when it acquired Nuance for $19.7B in 2022. It followed up on this by expanding its existing relationship with leading EHR vendor Epic to introduce generative AI across clinical workflows, with the aim of improving provider efficiency and mitigating staffing shortages.

Microsoft’s recent relationships also point to an increasing focus on developing and deploying generative AI in the pharmaceutical industry. The tech behemoth is partnering with and investing in startups in drug development, where early applications of generative AI have seen especially strong investor and commercial traction.

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For instance, diseases that predominantly affect women, such as autoimmune diseases, have been slower to receive funding and research attention.

In recent years, a growing number of femtech startups have emerged to address the issues facing women’s health, and these startups are gaining substantial investment as a result.

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