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

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’ to make the joint venture a true success. 

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