Digital health funding rebounded in the first quarter of 2026, with startups raising $4 billion across 110 deals, according to Rock Health data reported by MedCity News. The total marked a $1 billion increase from the same period last year, when companies raised $3 billion across 122 deals.
The rebound was driven largely by bigger financings rather than a broader rise in deal volume. The average digital health financing reached $36.7 million during the quarter, the highest quarterly average since the fourth quarter of 2021. Twelve companies raised rounds of $100 million or more, led by WHOOP’s $575 million Series G, Verily’s $300 million round, and OpenEvidence’s $250 million financing.
M&A activity also rose during the quarter, with 43 digital health deals compared with 30 in the previous quarter. Some of the most notable transactions focused on specialized talent rather than traditional asset or revenue acquisition. Rock Health pointed to OpenAI’s acquisition of health data startup Torch and Headway’s purchase of Tezi, which develops an autonomous AI recruiting agent.
The quarter also showed the limits of large-scale consolidation. A proposed venture led by Matt Holt, former managing director and president of private equity at New Mountain Capital, would have combined five health tech portfolio companies in a deal valued at more than $30 billion. The deal collapsed last month because of disagreements over governance and financing, according to MedCity News.
Rock Health also stopped separating AI and non-AI startups in its first-quarter report, reflecting how common AI has become across digital health. The firm said the distinction has become less meaningful as more startups build AI into their products, operations, or infrastructure.
Despite the funding rebound, the market remains selective. Rock Health cautioned that geopolitical uncertainty, shifting federal priorities, healthcare regulation, and macroeconomic pressure could continue to shape investment decisions. In that environment, investors are expected to keep concentrating capital in companies with clearer paths to growth and sustainability.
