💌 Your 2025 health tech recap is here!
Plus, the biggest health tech deals of 2025
Over the coming weeks, we’ll see a lot of great predictions for 2026. But before looking into the future, I thought it would be helpful if we take a quick spin over the last 12 months in healthcare.
In this post, I will share a few big trends from the year:
Concentrated capital
Regulatory uncertainty
AI acceleration
As well as the biggest health tech deals of 2025:
Unicorn rebound
Record M&A
IPO class of 2025
2025 industry trends
1. Concentrated capital
Many of us felt a “fewer, bigger” trend this year as money and power continued to concentrate. We saw this across venture funding for startups and in venture capital itself with the rise of mega-managers.
Concentrated capital: 41% of all VC dollars deployed through July went to just 10 deals, with eight of them being AI companies. [Pitchbook]
Mega-deals in digital health: Mega-deals ($100M+ rounds) in our space stayed flat this year at ~3% of deals, but made up 42% of VC dollars, up from 37% in 2024. [JPM]
The rise of mega-managers: Big VC funds keep getting bigger. Last year, just 9 firms accounted for nearly 50% of all capital raised by U.S. funds. This means capital is being concentrated among fewer and fewer hands. [Carta]
Mega VCs ❤️ mega-deals: Nearly 80% of mega deals through Q3 had a mega fund on the term sheet—with Andreessen, Kleiner Perkins, and General Catalyst leading the pack. [Rock Health]
For founders, this means if you’re in the “mega-fund zone,” you raise huge rounds at generous multiples. The rest are competing for a shrinking pool of early-stage dollars.
2. Regulatory uncertainty
If 2025 taught us anything, it’s that uncertainty is the only certainty.
“Tariff tantrum”: In April, the U.S. slapped a 10% duty on almost all imports. Many of these tariffs were later paused or contested in court, but the chaos and uncertainty made it hard for companies to plan more than a quarter ahead, and the markets suffered as a result. [JP Morgan]
Medicaid & ACA cuts: The One Big Beautiful Bill Act (OBBBA) cut healthcare funding by $1.1 trillion through 2034. Researchers estimate that 15 million people will become uninsured because of cuts to Medicaid and the ACA marketplace. [CBPP]
FDA turmoil: The year saw mass firings and partial rehirings, along with infighting at the FDA. An internal memo claiming COVID vaccines killed 10 children led 12 former commissioners to sound the alarm on current leadership. Amid this chaos, RBC analysts found that FDA drug approvals took longer this year and that the FDA rejected more applications than normal. [KFF, Stat, ArsTechnica]
AI regulation TBD: At the beginning of the year, the FDA issued draft guidance on labeling for AI/ML-enabled products, and throughout 2025, a patchwork of state laws added stricter rules on how AI can be marketed and used in healthcare [FDA, Fenwick]
For founders, the good news is that startups are built for agility. With lean structures and fewer decision layers, startups can pivot faster and experiment more freely amid regulatory chaos. And maybe even find new opportunities during this time. Adaptability is your greatest competitive advantage as a founder, so use it!
3. AI acceleration
As Dr. Nele Jessel, chief medical officer of Athenahealth, said, “2025 was the year we stopped debating whether AI belongs in healthcare and started proving that it does”.
Rapid uptake: Healthcare adopted AI 2.2× faster than the broader economy; in just two years, it jumped from ~3% adoption to 22% of organizations, with health systems leading at 27%. [Menlo VC]
Shortened buying cycles: Buying cycles shrank from 8.0 to 6.6 months for health systems (and from 6.0 to 4.7 months for outpatient providers), as dollars clustered into three buckets—ambient documentation, billing/insurance automation, and operations AI. [Menlo VC, Healthcare Brew]
Fragmentation & modularity: The explosion of AI point solutions in 2025 created a fragmented market and new operational friction. Organizations struggled to absorb so many tools, prompting them to rethink how to integrate and manage these technologies. [McKinsey]
This year, startups were divided into either being AI‑native or scrambling to bolt on AI capabilities, and that divide showed up in valuations: AI‑driven startups held a 2.5× higher revenue multiple advantage over their non‑AI peers (20× vs. 8×). For founders, that means AI is now table stakes.
Biggest health tech deals of 2025
🦄 Unicorn rebound
At least 15 US-based health tech companies achieved unicorn status ($1B+ valuation) in 2025, up from six in 2024, but still well below the 2021 peak of 46 new unicorns. When compared to the overall count of new unicorns (via Pitchbook), digital health accounted for about 10% of all new unicorns this year, a new record.
Here are the companies that joined the unicorn club:
As you can see from these logos, they are overwhelmingly AI- and data-driven companies focused on long-horizon, complex care. They include AI infra and tooling (Ambience, Hippocratic, Judi, OpenEvidence, Truveta, Tala, Enveda), plus tech-enabled management of serious, chronic, or high-cost conditions and populations (Strive, Thyme), navigation/health-plan players (Chapter, Curative), and wellness/longevity (Function, Prenuvo, New Limit, Nourish).
What’s remarkable is how young some of these companies are and how quickly they got to a $1B valuation. Tala Health was founded just last year; Hippocratic AI, in 2023; and Function Health and OpenEvidence, in 2022. The oldest company on this list is Judi Health (formerly Capital Rx), at a geriatric eight years in business.
Record-setting M&A
Nine US-based, privately-held companies sold for over $100M this year, including two of the largest deals we’ve ever seen. This puts 2025 in second place for deal volume (behind 2021), but in record place for dollars, with $18.3B in transactions.
Note: I only track privately-held, US-based deals over $100M. So if a company is public or owned by PE at the time of acquisition, like Oak Street or Health Edge, it’s not included in the above calculation (although I do have most of them listed in my database).
We had five billion-dollar acquisitions, including two of the biggest exits we’ve ever seen:
ModMed (EHR and practice management system), acquired by Clearlake Capital for $5.3B
Dotmatics (R&D scientific software), acquired by Siemens for $5.1B
Edifics (health data interchange), acquired by Cotiviti for $3.05B
Iodine (AI-driven RCM), acquired by Waystar for $1.3B
SmarterDx (clinical AI), acquired by New Mountain Capital for $1.0B
What really stood out to me this year was the dominance of private equity and PE-backed platforms on the buy side. Of the nine $100M+ acquisitions, only three were acquired by truly independent strategic companies (IQVIA, Samsung, and Siemens), while the majority were by PE firms or their roll-up platforms.
IPO class of 2025
After a market cooldown post-COVID, healthcare IPOs ramped back up in 2025, with 10 or so IPOs, depending on how you define health tech.
Themes included tech-enabled chronic care (Omada Health, Hinge Health), precision medicine (Heartflow, Caris), connected devices (Beta Bionics, Kestra, Profusa, CeriBell), and software (Wellgistics). Notably missing from the list are any AI tooling companies, which need a few more quarters of growth before going public.
Only one of these companies went public via a SPAC…. Profusa, which has lost most of its value since its July debut, now has a market cap of $11M (lower than the average seed valuation). You can read my past work on SPACs here, including the fact that these companies are 4x more likely to go bankrupt.
Healthcare stocks overall underperformed the broader market this year, continuing a multi-year trend. YTD:
My weighted basket of 69 health tech stocks is up 11.3%
S&P 500 Health Care is up 11.6%
Health Care Select Sector SPDR Fund is up 12.7%
Morningstar’s US Healthcare Index is up 13.2%
Meanwhile:
Nasdaq overall is up 21.6%
Nasdaq 100 Technology Sector Index is up 26.9%
Final thoughts
In 2025, the health tech sector showed that rapid digital adoption wasn’t a COVID blip, but rather the new normal. Even in a tough macroenvironment, healthcare organizations leaned into technology rather than retreating, proving that technology is now essential to operational efficiency and better patient care. AI moved from pilot projects to production, with scalable deployments across clinical, operational, and research workflows demonstrating real‑world value.
At the same time, capital and power concentrated at the top, regulatory winds shifted by the month, and AI accelerated from a novelty to a baseline expectation. Founders who accepted that reality, by building companies resilient to policy shocks, focused on real ROIs and AI‑native at their core, earned disproportionate valuations. Everyone else learned the hard way that in today’s world, you’re either a “have” or a “have‑not,” and I don’t think 2026 will be any more forgiving.
You can download my full database here.
🎧 New podcast episode
On the podcast today, we hosted Emily Melton, the co-founder of VC fund Threshold Ventures. Emily is a “3-cycle” investor (she’s been doing this for 25 years) and has backed Doximity, Elation, Livongo, Wellframe, Xealth, and more. She describes this year as the “Year of the Haves and Have-Nots”. Tune in wherever you get podcasts.
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Amazing summary of the year!
What a year! Thank you for pulling together the best recap for healthcare trends and learnings.