Rock Health’s sunnier 2025: up 35% due to AI, but a tale of ‘have and have nots’

February 19, 2026 | by

Rock Health’s 2025 digital health roundup, published in January, was upbeat–as usual, and in no way Hemingwayan. Their calculation of US digital health fundings was up 35% versus 2024, rising to $14.2 billion from 2024’s $10.5 billion. This was a higher number and a stark contrast to Silicon Valley Bank’s (SVB) tracking of US and EU healthtech investments as a 1) lower number and 2) flat 5%, growing from 2024’s $13.2 billion to $13.9 billion [TTA 14 Jan].

Let’s do some unpacking:

  • The number of digital health deals went down from 509 to 482, a decline of 5.3%.
  • In terms of current dollars, 2025’s funding of $14.2 billion was, as projected, a snap back to 2020’s $14.4 billion, as 2024 was to 2019. In constant/inflation-adjusted dollars, applying a cumulative inflation of 25%, 2025 is well under 2020 but better than 2019; 2020’s $14.4 billion then is equivalent to $18.3 billion today.
  • Where Rock Health and SVB agree is the ‘barbell’ profile of what gets funded.  
    • Mega funds like General Catalyst and Andreessen Horowitz (a16z) do mega deals: 26 mega deals and 15 newly-minted unicorns (up from six last year), for a funding average by these two in D+ of $266 million, versus Series A of $24.1 million. 
    • The funding also skews towards “AI-enabled” companies and secondarily, wellness
    • Something that made this Editor go ‘hmmm…’:Rock Health’s usual analysis of letter deals across all funders is, unusually, missing in their 2025 report. The only comparison made is from GC and a16z, two mega funders. Inadvertently, Rock Health has drawn a bright line on the contraction of venture and private equity funders not only in available funds, but in sheer numbers. Discussed here intermittently, especially in the context of SVB’s failure and rescue, but at more length here in this 2023 commentary.
  • What they have picked up that SVB didn’t was the continuing significant number of unlabeled, non-letter financings–35% of deals, but down from 44% in 2023. Before 2021, unlabeled financings were fairly rare and in single digits.
  • The other significant pickup was that over 600 companies they track have not raised anything since 2021-2022. That could be a sign of health–that they are profitable and operating successfully on their cash flow–or barely staggering through and cannot get financing. 
  • M&A revived in 2025 with 195 deals in 2025, up 61% from 2024’s crater. Digital health companies were the majority acquirers (66%) with private equity at 10%. Rock Health attributes this to ‘tapestry weaving’ (creating more continuous solutions to flesh out platforms), legacy acquisitions by AI companies (a/k/a smush togethers, something New Mountain Capital excels at), and ‘acqui-hires’ to get top talent and tech.
    • They note of NMC: “Now, they’re weaving the largest “M&A tapestry” in digital health thus far: Matt Holt, NMC’s former managing director and president of private equity, is reportedly leaving to combine five NMC portfolio companies into a $30B holding company called Thoreau.”, a $30 billion deal broken out in a graphic. The five companies are Datavant, Swoop, Machinify, Smarter Technologies (itself a combine of SmarterDx, Thoughtful.ai, and Access Healthcare in RCM), and OfficeAlly. Whether this pending move (December) will actually work or turn into a petite version of Change Healthcare, we can only surmise.
  • IPOs haven’t really revived in digital health. Rock Health counts five IPOs in 2025, but only two are really digital health, Hinge Health and Omada Health, same as 2024. Both were at relatively flat valuations. The other three are more legitimately classified as biotech–Heartflow, Carlsmed, and Profusa. IPOs may improve in 2026, with Doc.com’s filing for a Nasdaq listing earlier this month and Devoted Health now at a post-F financing.
  • There is zero here about bankruptcies and reorganizations. No reference to the utter implosion of 23andMe and its shocking sale back to founder/CEO Anne Wojcicki.

The impact of ACCESS and ELEVATE. There is also a good graphic analysis of two CMS models that may support digital health more comprehensively than previous value-based care models such as ACO shared savings. The first CMMI model, ACCESS, will be debuting in July and is a 10 year voluntary payment model for Original Medicare outcomes in chronic care management. It reduces barriers for digital health to profitably work with CMS because it offers direct patient enrollment and waiving copays. The other from CMS is ELEVATE, launching in September, which funds up to 30 proposals with $100 million over three years to raise health and prevention for Original Medicare beneficiaries.

Rock Health’s 2025 wrapup

2026 remains Anyone’s Guess. It feels better…but….

Editor’s Note: Our Readers know that this Editor considers Rock Health a bit of a cheerleader for Sand Road. They play both sides of the fence as a venture fund/accelerator. There’s nothing wrong in that. SVB, like other financial institutions, funds a broad swath of healthcare and makes no bones about it. That is why their analysis, which also included EU and a bit of Asia, made its broader and tarter take on 2025 even more interesting.

What’s missing is year-to-year consistency in Rock Health’s analyses, notably what digital health sectors were funded and the Series letter breakdown across all funders.

“Hope is not a business model”–advice from two VCs, with a bit more advice on basic banking

July 12, 2023 | by

With yesterday’s article on how digital health funding is resuming its 2019 ‘long and winding road’ trajectory, with 2020-2022 now revealed as a complete aberration (though Rock Health is having trouble admitting it), your Editor returned to two saved articles in her ‘pinned tab file’ to glean some advice for the funding-lorn. 

Funding advice for health tech and digital health companies was the theme of this recent article in MedCityNews. Two Merck Global Health Innovation Fund executives spoke at a late June NYC conference, the fund’s president, Bill Taranto, and vice president Joe Volpe. They highlighted three key points but more between the lines. Editor’s comments follow:

Don’t be afraid of down rounds (or flat rounds) if you need to survive  This referred to the inflated valuations digital health companies received in 2021-22, whether they were profitable or not. The down-round stigma is why we are now seeing a wave of unlabeled and lower-amount rounds for companies that raised Series A and B rounds only 12-24 months prior. “Lack of cash causes bankruptcy.” Quite true, but what if the company never hits the ‘inflection point’ and putters along longer than funders expected at breakeven or mildly profitable? They admitted that unlabeled rounds are a survival tactic. As noted yesterday, they cannot go on forever or even for another 24 months. Prediction: valuations will be coming down in a second-order effect by next year, as well as more companies going private, selling lines of business or IP, or being acquired for unknown amounts.

Expect slower timelines   Startups used to plan six to eight months in advance of fundraising, now they are advised to start a year or more. This reverts back to the norm this Editor personally observed in the first hype curve of 2006-8 where early-stage companies would no sooner close a round or private financing than plan for the next. Note rounds–equity offered in return for notes convertible into shares–are popping up. Volpe described this as frustrating for larger investors like Merck because other investors are taking due diligence to the max and once committed, Merck is having to fund or bridge the company longer. This is a repeat of 2007-8. Investors have lost the fear of missing out (FOMO) that drove 2021-22 funding. They are often happier to walk away and keep their powder dry–if they have any. [TTA 5 Apr]

Get your narrative right  “The most important thing a company has to do before pitching to investors is ensure that it can clearly and honestly describe its narrative, Taranto explained.” More than that, a company has to be realistic about its future. Don’t tell a story that investors will have difficulty believing. Identify what’s the inflection point, when will it be, and is it a hockey stick or a garage lift? Here is where the old saw ‘underpromising and overperforming’ come in handy, as well as running lean. Do this enough and investors will like you a lot. You may also want to get some outside help in crafting and wordsmithing that narrative from a person not invested in the company’s future or your parents.

Now that you have the money, some basic banking and money management advice for founders and company management. We are already seeing amnesia around the events of March-April when four US (SVB, First Republic, Silvergate, and Signature) and one Swiss bank (Credit Suisse) went belly-up, putting a giant hole in the fisc of both startups and VCs. Founders and startup execs can be forgiven for concentrating on The Big Idea, though they seem to be in abundance lately and is no guarantee of success. Now, your Editor has no special financial expertise but as a marketer, has always been dependent on good relations with the financial folks for her budget. Companies come and go, whether small or large, healthcare to car rental to airlines, but there’s much in common when it comes to money.

Your little company may be better off with a big bank. Healthcare Dive looked at this while the collapses were happening. Their article’s point was that dealing with a major bank can be reassuring to investors. A big bank may be what is left in some markets. The downsides are that they move slowly and may not be agreeable to short-term cash loans or bridges. 

Nest your eggs in multiple baskets. Diversify your banking business and keep it below FDIC insurance levels. Spread accounts among a major bank and your regionals. Develop multiple relationships. It’s not being disloyal, it’s being smart. This may also affect where you locate your business. Ask your funders for contacts, but avoid what funders urged prior to March–to go to one bank like SVB or Signature and put all your business there as part of a quid pro quo. It didn’t turn out well for those who did.

Trust but verify. Expect that a bank will be an honest and skilled steward of your precious funds, payables and receivables. But your financial head/CFO should spend a fair amount of time regularly checking that they are and remain so. As to your bank, community responsibility can be positive, but it’s management time taken away from their main business which is stewarding your money. Be insistent on this. If you see their management has many unfilled spots, spends more time on ‘issues’ than on banking, plays in politics, grows too fast, has a lot of investments in crypto, is in play or taken over, execute Plan B and go elsewhere. 

Don’t skimp on your financial staff, policies, and procedures. You may be able to contract for sales, marketing, and R&D, but financial governance–probably not, unless you’re very small and willing to go fractional. Hire a good CFO and give him or her the right staff and power. Adopt rigorous budget and reporting procedures that are adhered to from top down. Don’t assume you or your partners can do it all alone, even if you have Harvard MBAs, or your accountant can do it. And watch your CFO like a hawk. One of the best combinations I’ve observed is a CFO and general counsel. 

Thoughts? Comment below. 

ViVE post-script: VC panel opines in midst of digital health’s new reality (depression?), and extra ViVE from an attendee

March 31, 2023 | by

Not everything at ViVE this week was fun and music. The organizers included a timely panel discussion with four VCs exploring the crash of digital health funding, enterprises, and whither the fall of the VCs’ favorite bank, Silicon Valley Bank (SVB). It was moderated by MedCityNews‘ editor-in-chief Arundhati Parmar, who published an interview with Zane Burke, late of Livongo and now CEO of Quantum Health, pointedly asking whether Livongo’s sale to Teladoc was a smart one given the troubling post-script [TTA 3 Feb]. The participants — Lee Shapiro, managing partner at 7wireVentures, Emily Melton, managing partner at Threshold Ventures, Richard Mulry, president and CEO of Northwell Holdings, and Ambar Bhattacharyya, managing partner of Maverick Ventures–evidently weren’t given a diet of softballs, either. 

Parmar started with a quote from a recent article in another publication: “The run on SVB was a textbook result of the myopia and egoism that has swallowed the venture capital industry whole.” This refers to the advice that many VCs gave their invested companies–get your money out now. That was the same invested money that the VCs insisted be in SVB, in accounts such as payables and receivables. At least these VCs seemed to realize that now, somewhat obliquely. Shapiro called it a ‘tragedy of the commons’, B-school terminology that refers to too many people using a common resource ruining it because no one is responsible for it. More to the point, he pointed to some in the VC ‘community’ advising their companies to move their money out of SVB, creating the self-fulfilling prophecy of a run on the bank killing it. Melton pointed to social media and everyone rushing to take care of themselves without reflecting on the consequences of their actions.

The next quote and chart that Parmar presented had to do with that Old Devil Profitability in companies that IPO’d. Only two of 17 are profitable and they’ll be a surprise–Privia Health (VBC models for providers), and Progyny (riding the fertility and benefits bubble). Rather abashedly, the panel admitted to valuation frothiness leading to over-valuation, and a new sobriety and realism leading to (drum roll) an emphasis on profitability. Bhattacharyya noted that VCs were pushing growth up until last year. Now, it’s value, ruled by the “Rule of 40” –combined growth rate and profit margin that exceeds 40%, even better cash flow positive, which are tough bars to achieve for all but the most well-positioned (and fortunate) companies. “That’s now the playbook. So we’ve all transitioned to that.” A defensive playbook, in Shapiro’s view. (A close to impossible one that may stifle innovation, in this Editor’s view, though bootstrapped companies have always earned her admiration.)

To that point, Melton, noted that now more than ever, banking institutions like SVB and similar institutions need to work with founders and VCs to bring innovations to market. “One of the things I’m very fearful of is that we get into an environment where people are risked off and retreat right when we need people to be actually leaning in more now than ever.” Larger banks will be happy to take the money–according to Kruze Consulting, an accounting firm that focuses on startups, about half of its clients that recently changed banks moved to JPMorgan Chase–but will a JPM take up ongoing startup risk? 

Does this begin to feel like Catch-22? (Apologies to Joseph Heller) Or health tech back around 2006-2010?  

One comment towards the end hit home for this Editor, having seen it way up close. Too many founders 1) have an idealistic view of the business they started and can’t separate from it, and 2) there’s a time to exit stage left and do something else with your life. One company that may pull it off in its changeover of CEOs is Oscar Health. I’d add that no CEO should be in that seat for more than 5 years, even in well-established, doing-well companies–much less coming close to dying in place as CEO after 25 years as happened recently at one large, publicly traded payer. Very important: every company should have a succession/coverage plan operative from Day 1, because Stuff Happens. The full article in MedCityNews here. Another shorter take, same panel, in Mobihealthnews.

The next chapter for SVB is that after a Federal bailout (and the realization that the SF Federal Reserve was wearing blinders when it came to watchdogging the bank’s health and solvency), it was mostly sold this past week to First Citizens Bank & Trust Company, a regional bank from Raleigh, North Carolina. SVB’s UK holdings were bought much earlier by HSBC. Also up for sale: Leerink Partners, an investment banker for health care and life sciences companies, that was rebranded as SVB Securities. Jeff Leerink, the founder who still heads it, is trying to get it back through a management buyout. WBUR

A more ViVEcious view of the meeting is over at HISTalk, The most substantive sessions this attendee heard were the opening Tuesday by Micky Tripathi, the National Coordinator for HIT at the Office of the National Coordinator (ONC) for Health Information Technology, and a presentation by Shiv Rao (Abridge) and Joon Lee (UPMC) on generative AI. The downside was that most of the Tuesday presentations came off like walking ads, the CHIME track was separate with some members-only, and that exhibitors got little value by staying over Wednesday as the crowd vanished to 20%. Money quote: “ViVE shoots for a vibe of youth, energy, innovation, and fun in its branding, themes, opening remarks, and evening entertainment. Sounds great until you remember that your ticket cost nearly $3,000.” Ouch! That stings! Well, nobody’s perfect. A successful 2023 means that ViVE will be landing in Los Angeles 25-28 February 2024. For many, it’s on to HIMSS23 in a couple of weeks.