Getty Images

News

Digital health funding trends up in 2026, fueled by AI

U.S. digital health funding hit $7.4 billion in the first half of 2026, driven largely by the AI boom, but investors are now prioritizing healthcare expertise and workflow orchestration.

Anuja Vaidya
By
Published: 28 Jul 2026

Fueled by AI, digital health funding in the first half of 2026 surpassed last year's total by $1 billion, according to a recent Rock Health report. However, as AI makes digital healthcare more effective, investors are zeroing in on companies helmed by leaders with healthcare expertise and those focused on orchestration.

The report shows that U.S. digital health startups raised $7.4 billion across 244 deals in the first half of 2026, up from $6.4 billion across 245 deals in the first half of 2025. The second quarter of 2026 saw funding total $3.2 billion, slightly lower than the $4.2 billion in the first quarter of 2026 but on par with Q2 2025, which saw $3.4 billion in funding.

"All told, this year's funding is on track to continue a recent upswing, as the market makes an AI-powered rebound from its post-pandemic reset in 2023 ($10.9B) and 2024 ($10.5B)," the report stated.

The overall median deal size rose from $12 million in the first half of 2025 to $14 million during the same period in 2026. Mega deals, that is, financing that exceeds $100 million, remain a key feature of the digital health landscape. In the first half of 2026, 19 companies raised 20 mega deals, representing 45% of all capital invested. This figure is up from 42% in 2025 and 22% in 2024.

Most of the mega deals involved first-time recipients; however, the report noted some back-to-back mega deals, including clinical AI platform Aidoc, which raised two rounds of $150 million in less than a year.

Mental healthcare continues to be the most heavily funded clinical area, according to the report. Mental health startups like Talkiatry and Grow Therapy raised mega rounds exceeding $100 million, but concerns remain about the safety and efficacy of these platforms as AI becomes increasingly integrated into digital healthcare.

Weight management/obesity is the second most-funded clinical indication, driven by the GLP-1 market. Mega deals in the space include eMed, which raised $200 million in series A funding, and Nourish, which secured $100 million in a series C round.

After the uptick in digital health IPOs in 2025, there appears to be a slowdown this year. The sector saw seven public exits last year, but none yet in 2026, the report noted.

Instead, digital health companies are engaging in mergers and acquisitions. In the first half of 2026, there were 115 acquisitions of digital health companies. Of these deals, 71 were announced in Q2, which has been the busiest M&A quarter since Q3 2021.

Investors double down on differentiators

As AI becomes ubiquitous in the digital health sector, technical differentiators between companies are shrinking, the report stated. As such, certain factors have emerged as key advantages in the age of AI:

For instance, earlier-stage investors highlighted the importance of domain experience, noting that founders with experience within healthcare organizations, with clinical or administrative backgrounds and who display discernment and sharp instinct will have an advantage.

Additionally, companies that can offer scale and own a greater share of the operating layer will be valuable, as orchestrating healthcare workflows across tasks becomes more important than performing single tasks.

Not only that, but companies that work with their health system customers to tailor and support technology deployment, as well as those that provide measurable return on investment, will also set themselves apart from the competition.

"The destination remains the same -- to make healthcare better for all -- but the routes are shifting," the report concluded. "Expectations are shifting, relationships are evolving, and so are the ways companies build lasting advantage."

Anuja Vaidya has covered the healthcare industry since 2012. She currently covers healthcare IT and innovation, including artificial intelligence, digital healthcare, EHRs and interoperability.

Dig Deeper on Digital health apps