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AI-driven companies now account for three out of every four health technology and tech-enabled healthcare services deals in 2025, according to a report from J.P. Morgan.
The analysis, which tracks investment patterns across the industry, shows that Series B rounds alone represent 60% of AI-related transactions so far this year.
The report attributes the surge in AI funding to healthcare’s mounting workforce strain, noting that automation and clinical support tools are helping providers offset a projected shortfall of roughly 44,000 family medicine physicians by 2037.
The study revealed AI adoption is already widespread: 90% of health systems use AI for imaging and radiology, 67% deploy it for early sepsis detection, and 60% rely on ambient note-taking tools.
In addition, the report found investment activity remains concentrated at the earlier stages, with seed deals representing 20% to 30% of overall health technology volume. Mega-deals, however, continue to dominate total dollars raised, accounting for 42% of capital deployed.
Early-stage trends also underscore the shift toward AI: In 2025, half of all first-time financings backed AI-centric startups, compared with just 20% in 2020.
"The markets are actively testing AI valuations, particularly given the varying levels of sophistication and development costs – basic rules-based bots, agents and then, of course, small and large language models," Andrew McEvoy, head of health tech, innovation economy, J.P. Morgan, told MobiHealthnews.
He added that while there are many factors to consider when assessing value, it is essential to focus on proven use cases, quantifiable customer ROI, ongoing maintenance expenses and the risk of obsolescence.
"If there are major gaps in these areas, it might be hype," McEvoy said.
Valuations have diverged sharply as well, with late-stage AI companies up more than 50% this year, while valuations for non-AI companies have fallen by more than 20%.
McEvoy said this disparity reflects investor focus on technologies that can boost efficiency and expand clinical capacity.
"Almost everyone has an AI strategy now, and if they don’t, they are likely exploring one," he said. "I imagine the number of non-AI health tech firms will continue to decline; however, given the upfront, standalone development costs are prohibitive, many take a 'partner, build, buy' approach."
He said that scaling up leads to lower cost ratios and is perhaps why the market is seeing a lot of strategic partnerships forming and increased mergers and acquisitions in health tech.
THE LARGER TREND
McEvoy pointed out that the era of isolated point solutions is fading, as many providers now aim to streamline their vendor relationships and invest in more comprehensive, end-to-end solutions.
"We continue to hear that our clients are exploring product adjacencies and new capabilities – organic and through acquisition – to enhance their platforms and long-term value to customers," he said.
Despite the intense investment in AI, healthcare executives continue to raise concerns over deploying the technology before having the necessary expertise, according to a report from the Healthcare Financial Management Association.
Health executives told MobiHealthNews that while AI has been the clear tech driver in healthcare in 2025 – and will continue to be in 2026 – the tech is still not ready for widespread adoption.
