Venture capital funding for digital health startups is on the rise, driven by an AI-driven recovery following the 2023 post-pandemic reset.
Digital health companies raised $7.4 billion in H1 2026, an increase of $1 billion compared to H1 2026 ($6.4 billion raised), according to Rock Health’s analysis of digital health deals in H1 2026. There were 244 transactions in the first half of 2026. Investors poured $3.2 billion into the sector in the second quarter, down from the $4.2 billion in the first quarter.
Building on trends from last year through the first quarter of this year, venture capital investors are betting on innovative digital health companies, concentrating their money in a few mega-deals, write Rock Health researchers Ashwini Nagappan, Jason Ray, and Maddie Knowles.
In the first half of 2026, 19 companies raised 20 megadeals, or more than $100 million, representing 45% of total invested capital. Over 8% transactions absorbed almost half of the total capital deployed. These mega deals include Whoop ($575 million), OpenEvidence ($250 million), Grow Therapy ($150 million), Verily ($300 million), Talkiatry ($210 million), eMed ($200 million), Forus ($160 million), and Aidoc ($150 million). million dollars), etc.
There were also back-to-back deals, including employer-focused care navigator Garner Health’s $100 million Series E just three months after its $118 million Series D, and clinical AI platform Aidoc’s second $150 million check in less than a year.
Mental health continues to be the most funded clinical indication (note the Talkiatry and Grow Therapy funding rounds mentioned above). Jimini Health also raised $17 million, and The Path brought in $14.3 million. Weight management and obesity is the second most funded clinical indication, driven by the insatiable GLP-1 market and the growing ecosystem around it. There were three huge deals in this sector in 2026: eMed ($200 million), Nourish ($100 million), and Midi ($100 million).
The success of GLP-1 has sparked investor interest in adjacent peptide categories, such as experimental peptides for health and longevity. Superpower raised $30 million, Protocol received $6 million and Feel Peptides received $3 million.
As AI technology rapidly advances, expectations will be reset, the funding landscape will be reshaped, and the competitive landscape will change.
“As AI changes what is easy to build, competitive advantage comes from qualities that are increasingly difficult to replicate,” Rock Health researchers wrote in the report.
“As underlying models improve and it becomes easier to build AI capabilities, it’s becoming harder to maintain technological differentiation. Investors and buyers are no longer asking, ‘Who has the AI?’ Instead, “Who has anything that AI alone can’t provide?” the researchers write.
Rock Health investigated how lasting benefits for digital health startups are evolving in the AI era. The researchers identified four key themes as startups strive to build defensible moats: domain expertise, “owning” more of their workflows, hands-on delivery, and strong partnerships and network effects.
“As AI lowers the barrier to build, founders with deep experience within the healthcare organizations they sell to often have a clearer picture of where the most meaningful (and solvable) problems exist,” Rock Health researchers wrote, based on investor feedback.
“No one knows what the world will be like in two years’ time. The key attribute of the most fundamental pitch for diligence is the founder. Founder-market fit is critical right now. We’ve found that there is a real advantage for founders who understand not only the business function they’re trying to improve, but also the culture and conditions that shape how their customers operate,” said Virtue founder and investor Sean Doolan, as quoted in the report.
Many digital health companies are currently competing for greater ownership of the healthcare business layer. Companies are looking to scale as AI makes it easier to build competing single use case products and agent AI increases the value of coordinating more workflows. Owning more workflows gives startups more context and makes it easier to coordinate between tasks.
Many startups seek to establish a competitive advantage based on after-sales services. Some startups are investing in forward-deployed engineers (FDEs). “The rationale is that launching highly customizable systems requires a white glove service that deploys FDEs to work directly with customers on an ongoing basis to co-develop custom workflows from within the customer’s environment,” Rock Health researchers wrote.
According to Rock Health, Commure and Qualified Health have made FDE a core part of their go-to-market efforts.
Strategic partnerships have also become a key differentiator for startups. “Vendors that partner with organizations and standards that buyers already trust can build on their existing credibility, rather than gaining credibility entirely on their own. And each new integration or approval can make a product more reliable and difficult to replace, giving customers even more reason to stay within the same ecosystem,” the Rock Health researchers wrote.
Abridge has acquired several new partners, partnering with companies such as Nvidia for clinical infrastructure models, the American Health Information Management Association (AHIMA) for coding standards, the American Diabetes Association (ADA) and American Academy of Family Physicians (AAFP) for clinical validation, and Artisight and hellocare.ai for smart room integration. OpenEvidence partners with medical societies and publishers.
Although there have been no initial public offerings in 2026 in the digital health space, several companies are preparing to go public, including Oura, Whoop, and Virta Health. Other companies the industry is watching include Maven Clinic, Devoted Health, and Spring Health.
As another exit strategy, many digital health companies are looking for acquisition targets. Digital health M&A is on the rise, with 115 acquisitions in the first half of this year, slightly ahead of the 2025 pace of 199 deals per year, and significantly higher than the 121 deals in 2024, Rock Health noted. Revenue cycle management is an area where consolidation is actively occurring. To date in 2026, IKS Health has acquired TruBridge to extend its RCM platform to rural areas, Med-Metrix has completed back-to-back deals with Vitalware and CanAide, and Innovaccer has incorporated Caduceus Health into its platform.
Private equity players also placed bets. Matt Holt’s Solow Group has signed a $12 billion deal to acquire RCM player Ensemble Health.
