Market Outlook - Digital Health
- Global equity funding climbed to $7.4B in Q1’26, a 25% increase quarter-over-quarter from the Q4’25 total of $5.9B, and the highest quarterly total since Q2’22.
- The average global deal size increased from $20.2M in 2025 to $29.6M in Q1’26, ultimately spurred by larger investments in later-stage rounds, with mega-rounds ($100M+) capturing a record 60% of all capital across just nineteen financings.
- Capital is concentrating around AI’s move into clinical and commercial decision-making, with big pharma partnering directly with discovery platforms rather than acquiring them outright, while buyers elsewhere in the market are increasingly pricing deals on commercial traction rather than regulatory clearance alone.
- The U.S. market share of deals dropped from 56% in Q4’25 to 47% in Q1’26, signaling that global investors are spreading capital more evenly as Europe gains momentum in digital health investment.
- Among the quarter’s top fundraising deals were Earendil Labs’ $787M private equity round, backed by Hillhouse Investment and DST Global, and Whoop’s $575M Series G at a $10.1B valuation, led by Collaborative Fund.
- Digital health M&A activity surged from Q4’25 to Q1’26, with M&A exits climbing from 38 to 56. Abbott’s $23B acquisition of Exact Sciences led the quarter, alongside DeepHealth’s $269M purchase of Gleamer.
Sources: CB Insights
Subsector Spotlight: Medical Imaging AI
- The global AI in medical imaging market was valued at approximately $1.8 billion in 2025 and is forecast to reach $20.2 billion by 2033 at a ~35.1% CAGR, reflecting accelerating adoption across hospitals and diagnostic centers worldwide.
- Investment and deployment continue to accelerate as health systems look to improve diagnostic accuracy, reduce radiologist workload, and streamline imaging workflows. In the U.S. alone, the AI in medical imaging market is estimated at $697 million in 2025 and is projected to grow to $2.9 billion by 2030 at a 33.2% CAGR, fueled by rising demand for AI-enabled disease detection and patient monitoring tools.
- Adoption is diversifying across imaging modalities (CT, MRI, X-ray, ultrasound) and clinical applications (neurology, oncology, cardiology), with deep learning leading the technology approach and North America holding the largest regional share.
Sources: Grand View Research, CapIQ
Highly regulated market requiring FDA clearance (U.S.), CE marking (EU), and country-specific regulatory approvals prior to commercialization
Fragmented vendor landscape with hundreds of point solutions focused on specific anatomies, modalities, or clinical use cases, alongside larger imaging OEMs and workflow platform providers
Complex integration requirements, as solutions must interoperate seamlessly with PACS, RIS, EHR systems, and hospital IT infrastructure
Continued reliance on clinical validation, radiologist trust, and established distribution partnerships, despite growing automation and AI-driven workflow capabilities
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