The Digital Health Dichotomy - Who Gets Funded and Who Doesn’t

In the first quarter of 2026, U.S. digital health companies raised $5.34 billion across 105 deals.

Sounds like good news, right? Funding is up 20% year over year.

But here's the catch.

Nearly 60% of that money went to just 12 mega deals of $100 million or more.

Companies like Whoop, which raised $575 million in a Series G, and Open Evidence, which raised $250 million in a Series D, are capturing most of the available capital.

So if you're a mid-tier or early-stage digital health company, You're competing for the leftovers.

And frankly, the math is brutal.

So let's state the problem clearly.

Digital health funding is concentrating on a shrinking number of companies.

The market is creating a have and have not split that's getting wider by the quarter.

And this isn't a temporary blip.

Rock Health's data shows this pattern accelerating.

If the pace of mega deals holds, 2026 will close with nearly 50 rounds worth $100 million or more, almost double last year's count.

But here's what that looks like on the ground.

In Q1 2026, the average deal size hit $56.2 million, a 144% increase from the same quarter last year.

But the average is misleading.

Remove the mega deals, and you've got 93 companies splitting roughly the remaining capital.

And that's a very different picture.

And here's another signal.

Deal count dropped 51% year over year.

So not only is the money concentrating, but fewer companies are getting funded at all.

So why is this especially serious right now? Well, three reasons come to mind.

First, the AI hype cycle is distorting valuations.

Rock Health noted something important in their H1 2026 report.

Investors and buyers have moved past asking who has AI and are now asking a harder question.