A lot has changed in digital health since the highs of the pandemic, as the amount of funding, and the number of deals, has dropped from the year prior since 2021. In a few years it has gone from over $29 billion being poured in to around $10 billion by 2024.
However, there was some good news in Q1 of this year, as investments more than doubled from the prior quarter, as the digital health space saw $3 billion in funding across 122 deals, according to data from Rock Health. That represents a 66% increase in dollars, up from $1.8 billion in Q4 2024, and a 3% increase in deals, up from 118 in Q4. It’s also a year-over-year increase, growing 11% from the $2.7 billion invested in Q1 2024, though it was also an 8% decrease in the number of deals.
As such, the average deal size also increased to $24.4 million, up 20% from the $20.4 million across 2024.
It should also be noted that Q1 funding has increased in four out of the last five years, so this isn’t an anomaly. However is does “also reflect a continuation of last quarter’s market dynamics and the return of late-stage funding in digital health,” Rock Health wrote.
As the report notes, there were only five funding rounds in Q1 that were Series D or later, but three of them were megadeals, meaning $100 million or more: Innovaccer’s $275 million, Abridge’s $250 million, and Qventus’s $105 million round. Those deals put the median Series D+ round size at $105 million, almost double the $55 million in 2024. It’s also the first time the Series D+ median deal size has gone over $100 million since 2021.
Meanwhile, the vast majority of funding, over 80%, came from early stage deals in the Seed, Series A, and Series B rounds. That included Achira’s $33 million Seed, Open Evidence’s $75 million Series A, and Hippocratic AI’s $141 million Series B.
