CB Insights' Q2 2026 State of Digital Health report shows that global digital health venture activity continued to contract during the second quarter of 2026, reaching its lowest quarterly deal count in more than ten years. A total of 228 equity deals were completed during the quarter, representing a 36% decline from the previous quarter and a two-thirds reduction compared with the peak of 688 deals recorded in Q2 2022.
Although transaction volume declined, median deal sizes continued to increase. The report found that the median digital health financing reached $7.7 million year-to-date in 2026, up 54% from $5.0 million in 2025. Early-stage median rounds rose to $4.8 million, while late-stage financings reached a median of $50 million, reflecting higher capital requirements and more selective investor activity.
Total equity funding declined 24% quarter over quarter to $5.7 billion. However, the overall funding total was heavily influenced by a small number of large transactions. Isomorphic Labs raised a $2.1 billion Series B round, accounting for 37% of all digital health funding during the quarter. The second-largest financing was Chai Discovery's $400 million Series C, reinforcing continued investor interest in AI-enabled drug discovery platforms.
The report also identified a continued slowdown in mergers and acquisitions. Exit activity declined to 47 transactions in Q2 2026, extending the downward trend that began after Q3 2025. Despite the lower volume, several large strategic acquisitions were completed, including Thomas H. Lee Partners' $1.8 billion acquisition of clinical research organization Celerion and Hims' $1.2 billion acquisition of consumer telehealth platform Eucalyptus.
According to CB Insights, the data points to an increasingly concentrated investment environment in which capital is flowing toward established AI platforms with scalable technologies and proven commercial potential. At the same time, fewer early-stage companies are securing financing, suggesting a higher threshold for new entrants. The report concludes that digital health is evolving into a market where AI infrastructure and drug discovery companies capture the majority of investment, while smaller point-solution startups are more likely to face consolidation, down-rounds or acquisition as the sector moves into the second half of 2026.
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