The State-of-the-State in Digital Health: A Look Back at Q1 and a Look Ahead for Marketers

Written By: Dan Martin 

With one quarter of 2025 now in the books, I thought it was a good time to pause, pick our
heads up and assess what transpired and what it could mean for healthIT and digital health
companies and marketers as we look ahead to the next nine months.

At a macroeconomic level, Q1 could be summed up as one of mixed results and
performance. I’ve always said that the market hates uncertainty but from where I sit it
seems uncertainty is now the new certainty and may remain that way for the rest of the
year. The positives in Q1 included a strong corporate earnings season with U.S. earnings
growing double digit (according to J.P. Morgan) and the labor market remained strong with
the Bureau of Labor Statistics reporting the unemployment rate held near historic lows of
4.1% year-over-year. On the flip side, main issues creating headwinds included a slowing
GDP growth to 1.6% signaling weakening consumer demand and cautious corporate
spending. And uncertainty created by the Trump Administration’s tighter monetary policies
and, of course, the impact of tariffs on growth and inflation.

Looking through the lens of healthIT and digital health, Q1 mirrored the broader economy,
showing a mix of growth and challenges all underpinned by the Trump Administration’s
reshaping of healthcare leadership, oversight and budgets. According to Rock Health’s Q1
2025 Market Overview, U.S. digital health funding saw $3.0B invested across 122 deals.
Compared to last quarter (Q4 2024), Q1 saw more total dollars invested across a relatively
steady deal volume, pushing average deal size from $15.5M in Q4 2024 to $24.4M in Q1
2025. Early-stage startups dominated deal count with seed, Series A, and Series B rounds
comprising 83% of labeled deals in Q1 2025. However, there was also some momentum in
larger, late-stage funding rounds. Although there were only five raises that were Series D or
later, three of those surpassed $100M which brought the quarter’s median Series D+ round
size up to $105M (compared to $55M median Series D+ round size in 2024) and was the
first time, according to Rock Health, that the Series D+ median deal size has been over
$100M since 2021. A small sample size and a baby step, but a step in the right direction
nonetheless and something to keep an eye on to see if these later-stage companies move
to the next level and start to thaw the ice cold IPO waters.

Taking the $3B invested in Q1 and projecting a similar amount of investment for each of the
upcoming three quarters of 2025 assuming similar market conditions, the digital health
market could potentially see an approximate total of $12B invested in 2025, slightly more
than 2024 ($10.2B) and 2023 ($10.8B) and well behind 2019’s $29.3B. Meaning, while we
are seeing some small signs of progress (but nothing in line with boom years), digital health
companies will continually need to be agile, adapt to constant change and be resilient over
the rest of this year.

Against the backdrop of tariffs, continued innovation, uncertainty and volatility, Rock
Health encourages digital health companies to “generate strategies that turn barriers into
opportunities when the moment is right” through what it calls ‘leapfrogging’ approaches to
jump ahead and achieve success. They outline four approaches used by companies in
today’s market climate:

1. Tapestry weaving—using strategic mergers and acquisitions to stitch together new features and capabilities into their healthcare offerings.
2. Modular tech stacks—building flexibility into their tech infrastructure where components can be easily swapped out as better or more cost-effective solutions emerge.
3. Channel partnerships—robust, coordinated, multi-partner partner networks that redefine how companies present to consumers and extend their influence into new spheres.
4. Engaging disruptors— directly engaging with competitors, specifically larger
   companies that embrace startup competitors, to navigate and influence market
   evolution.

With all this funding and business strategy context, what can healthIT and digital health
communicators take away to help support their brands? Here are five things to think about
weaving into your comms strategy this year:

● Create and demonstrate value. With VC money continuing to be invested with
caution and IPOs still seemingly paused or delayed until market conditions improve
(e.g. Hinge Health), articulating value will be paramount—value that positions the
brand as a strong investment when the market turns and an ideal partner or M&A
candidate that can bring a winning approach to driving innovation, expanding Total
Available Market (TAM) and engaging patients and other key audiences.

● Think about bringing Voice of the Customer (VOC) into play to help tell your
story, add credibility and provide third-party validation—win announcements, video
testimonials and industry awards to name a few.

● Leverage executives and other SMEs to infuse POVs and insights to content and
earned media efforts to build sustainable thought leadership beyond simply
awareness. Highlight company, product/solution and customer traction that
showcases momentum and tangible impact.

● Dust off the M&A and partnership communications skills. With an expected
uptick in mergers and acquisitions as well as strategic partnerships, health
communicators will need to work across not only their own organizations but also
those of VC and other company’s communications and executive functions. Doing
so will help them distill the elements of a good, synergistic story that articulates the
‘what’ and, more importantly, the ‘why’ and clearly states how the combined entity
will be better positioned to further the collective efforts and results.

● Don’t forget about internal audiences. In addition to the typical external
vehicles—release, Q&A, website and social content—internal communications will
also play a big role. The need to communicate authentic key messages that rally
employee bases around an improved mission and vision will not be a ‘nice to have’
but a ‘need to have’.

Want to talk more about what Wireside can do to help your brand stand out and achieve
success? Contact Us.

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