Digital Health Market Outlook
- After a strong performing Q1’25 and Q2’25, global equity funding declined in Q3’25, with funding totaling $4.5B — a 13.5% decrease quarter-over-quarter.
- Despite this decrease in funding, the average global deal size has increased from $16.3M in 2024 to $21.5M through YTD Sep-25, ultimately spurred by larger investments in later stage rounds with nineteen $100M+ financings closed in the time period, already surpassing the full-year 2024.
- While Q3’25 appeared steady on the surface, mounting margin pressures, policy shifts, and AI’s move into core infrastructure are forcing more deliberate, high-impact decisions across the market, with workflow and infrastructure tools emerging as the clearest battleground for innovation.
- The U.S. market share of funding dropped from 54% in Q2’25 to 49% in Q3’25, signaling that global investors are spreading capital more evenly across regions as Europe and Asia gain momentum in digital health investment.
- Among the quarter’s top fundraising deals were Strive Health’s $550M Series D round, led by New Enterprise Associates, and Judi Health’s $400M Series F round led by General Catalyst and Wellington Management.
- Digital health M&A activity saw an uptick from Q2’25 to Q3’25, as the number of M&A exits increased from 47 to 55, respectively. The largest M&A deal of Q3’25 was Waystar’s $1.25B acquisition of Iodine Software, a developer of clinical documentation integrity software for clinicians and hospital administrators.
Hospitality Tech Categories
Subsector Spotlight: Behavioral Health Technology
- The global behavioral health technology market was valued at $27.9B in 2024 and is projected to grow at a CAGR of 18.6%, reaching $77.6B by 2030.
- The behavioral health technology sector is experiencing robust expansion, driven by rising demand for accessible mental health care and rapid digital adoption. In the U.S., the number of adults experiencing mental, behavioral, or emotional disorders climbed to approximately 61.5 million (23.4% of adults) in 2024, with projections reaching 79.6 million by 2030. This surge has exposed a pronounced mismatch between patient demand and provider capacity, prompting a shift toward virtual platforms that offer scalable, flexible care and help alleviate system-wide bottlenecks. Virtual behavioral health solutions now enable same-day or next-day appointments, ongoing therapy, and medication management, particularly benefiting underserved and geographically remote populations while reducing the burden of traditional outpatient facilities.
- Medicaid remains the backbone of the U.S. behavioral-health system—funding nearly half of all mental-health and substance-use treatment—and states continue expanding networks with new providers, tele-behavioral health, and community programs to address access gaps. Federal parity rules and recent $4B workforce and tele-mental-health investments further reinforce system capacity, though proposed policy changes under the current administration have introduced near-term uncertainty, prompting providers to focus on reducing care-delivery costs and preparing for potential budget pressures.
1 in 8 emergency room visits involve mental or substance use disorders.
61.5 million adults experienced mental illness in 2024.
Suicide is the 3rd leading cause of death in young adults.
Digital Adoption Accelerating Growth in Mental Health Tech
- The U.S. mental health technology market is expanding rapidly, fueled by increasing adoption of digital tools for therapy management, patient engagement, and outcome tracking. Demand is rising among providers and payors for interoperable solutions that integrate behavioral health data with primary care and population health platforms.
- Investor momentum remains strong as behavioral health technology proves essential for scalability and compliance. Companies offering AI-driven analytics, seamless EHR integration, and robust tele-behavioral capabilities are well positioned for consolidation and private equity investment through 2025.
