The first quarter of 2025 has landed, and if Rock Health’s latest report is anything to go by, digital health is buzzing with energy.
Even with a new administration adjusting healthcare policies and AI evolving at lightning speed, the sector isn’t slowing down. In fact, it’s gearing up for major growth.
The numbers say it all: the global digital health market is expected to jump from $387.8 billion in 2025 to a massive $2.19 trillion by 2034, growing at a solid 21.2% each year.
Early signs from 2025 show the industry is well on its way.
Rock Health Q1 Report: A quarter of bold moves
According to Rock Health report, the first quarter was packed with cash flow and bold strategic plays. Companies didn’t let uncertainty hold them back. They leaned into it, finding smart, creative ways to move forward.
Investors poured $3 billion into 122 deals in just three months—more than the same time last year. With strong financial backing and some sharp strategies, digital health is not sitting still.
So, what exactly went down, and what might be coming next?
Let’s break down Rock Health’s Q1 2025 report to understand.
The early stage leads the charge while the late stage shows strength
Q1’s investment action was concentrated. Early-stage startups were the real go-getters, the stars of the show.
Deals at the Seed, Series A, and Series B stages made up 83% of all investments. This highlights the huge appetite for fresh innovation and new ideas.
Some young companies also received pretty hefty cheques. Achira raised $33 million in its seed round, while Hippocratic AI scored a massive $141 million in Series B funding.
But it wasn’t just the newcomers making noise. We also saw big players pulling giant late-stage funding rounds. Innovaccer snagged a hefty $275 million, Abridge secured $250 million, and Qventus closed a $105 million round.
These heavyweights bumped the median size of Series D+ deals up to a substantial $105 million, suggesting investors’ growing focus on scaling proven solutions.
The “Leapfrog” strategy: Moving fast and smart
In a market facing its share of uncertainties, Rock Health spotted a smart playbook many companies are using to get ahead. They’re leapfrogging the usual slow growth and making big, strategic jumps instead. Here’s how:
Tapestry weaving through M&A
Companies are engaging in mergers and acquisitions to integrate new features and expand their offerings and capabilities seamlessly.
In Q1 2025, 67% of all M&A deals involved digital health startups buying other digital health startups. For instance, Hone Health acquired Ivee to move into home health, and Hims & Hers picked up Trybe Labs for better-personalised treatment services.
Building flexible modular tech stacks
With AI evolving at breakneck speed, companies don’t want the risk of getting too tied to one tech provider.
Instead, they’re building flexible, modular tech infrastructures with interchangeable components, kind of like Lego blocks. This allows for quick pivots and integrations with the latest AI models as they appear.
Ping An Health’s adoption of DeepSeek’s LLM and Apple’s integration of Google Gemini are perfect case studies for this.
The power of channel partnerships
Companies are leveraging strategic partnerships to reach consumers through new and effective channels. Eli Lilly’s ongoing work with its LillyDirect platform and the joint venture between Wheel and Huma to offer direct-to-consumer access highlight this trend.
It’s a way for smaller players to tap into wider distribution networks and for larger companies to enhance their reach.
“Channel partnerships, if done right, can be very successful. Sales cycles are long for healthcare, and for startups, channel partnerships allow you to ‘skip the line’ and acquire customers more quickly in the early stages.“
-Michelle Davey, CEO, Wheel
Engaging with disruptors
Rather than fighting off disruptive startups, some large and established companies are engaging with them through partnerships, investments, or even acquisitions.
Eli Lilly’s work with Ro to offer affordable GLP-1s and Labcorp’s investment in Teal Health (which is shaking up cervical cancer screening) show that collaboration is becoming the name of the game.
It is about adapting to innovation rather than just fighting against it.
What’s next for Digital Health in 2025?
Looking ahead, the analysis from Rock Health indicates more of these leapfrog strategies in action. Strategic M&A will likely keep rising as companies race to strengthen their offerings and expand fast.
Building flexible tech stacks will become even more crucial as AI keeps evolving. Channel partnerships will become key to getting products into the hands of more consumers. And don’t be surprised if we see even more surprising partnerships between industry giants and scrappy startups.
Bottom line: in 2025, digital health isn’t just surviving—it’s sprinting toward a bold, innovative future.
-By Alkama Sohail and the AHT Team
