What are the main business models in digital health?

Why are digital health business models getting interesting again now?

Digital health business models are getting interesting again because money has returned to the sector, but investors are concentrating it around companies that have already found a convincing way to get paid.

Rock Health counted $14.2 billion of U.S. digital-health venture funding in 2025, up 35% from the previous year and the highest total since 2022. Yet deal count fell from 509 to 482. Mega-rounds absorbed 42% of all funding, and removing the nine biggest fundraisers would have pushed the annual total below 2024.

The concentration continued into 2026. Rock Health counted another $4.0 billion across 110 deals in the first quarter, the strongest first quarter since the pandemic peak. Twelve mega-deals alone captured 59% of the money. Investors are spending more on digital health these days, but they are making much narrower bets.

The public markets give us another useful test. Hinge Health and Omada Health both went public in 2025 after building large employer and health-plan businesses. Hims & Hers is already generating several billion dollars of annualized consumer revenue. Doximity remains highly profitable. Tempus has turned diagnostics and healthcare data into a business approaching a $1.6 billion annual revenue run rate.

The post-pandemic correction has made the winners easier to identify. We now have enough scaled companies and financial disclosures to see which models are actually holding up.

What actually counts as a digital health business model, and who pays for it?

A digital health business model describes how a company turns software-enabled healthcare into revenue, and the clearest way to understand one is to ask who pays and what exactly they are buying.

That definition puts very different businesses under the same digital-health umbrella. Doximity sells access to a professional network and healthcare workflow software. Hims & Hers sells treatment directly to consumers. Omada provides chronic-care programs funded mainly through employers and health plans. Tempus sells diagnostic tests while licensing healthcare data and analytical products to life-sciences companies. Oura sells hardware and then charges for an ongoing membership.

Their technologies overlap far more than their economics do.

The end user also frequently pays nothing. A patient can use Hinge Health while an employer funds the program. A physician can use Doximity for free while pharmaceutical companies and health systems generate the platform's revenue. A patient can receive remote monitoring while Medicare reimburses the clinician.

That separation between user and payer explains why two products solving the same medical problem can end up with completely different businesses. A consumer-funded company gets fast purchasing decisions but has to acquire every customer itself. An employer-funded company can gain thousands of eligible users through one contract, although enterprise sales take months. Reimbursement opens much larger healthcare budgets but brings coding, evidence and payer rules with it.

“Subscription” tells us surprisingly little on its own. A consumer subscription, an employer contract and a recurring Medicare payment can all create monthly revenue while producing completely different margins, retention and acquisition costs.

Who pays?	What they are really buying	Common way to charge	Examples
Consumer	Convenient access, treatment, wellness or monitoring	Subscription, consultation, product sale	Hims & Hers, Oura, BetterHelp
Employer or health plan	Lower medical costs and better chronic-care management	Annual contract, PMPM, enrolled or engaged member fees	Hinge Health, Omada Health
Provider or health system	Less administrative work, better workflow, more capacity	Enterprise SaaS, usage or per-clinician pricing	Abridge, Doximity workflow products
Medicare or insurer	Covered healthcare and measurable clinical improvement	Claims, recurring care payments, outcomes-linked reimbursement	Remote monitoring providers, digital treatments, ACCESS participants
Pharma or life sciences	Clinician access, research data, trials and analytics	Marketing, licensing, research services	Doximity, Tempus AI

Can consumer digital health really make money today?

Consumer digital health can make serious money today when the company sells a recurring health outcome or treatment that consumers care enough about to keep paying for.

Hims & Hers gives us the clearest large-scale example. In its latest reported quarter, revenue reached $753 million, up 38% year over year, while subscribers reached 2.89 million, up 19%. Monthly revenue per average subscriber climbed from $76 to $92.

That gap is important. Revenue grew roughly twice as fast as the subscriber base because Hims is selling more healthcare through each relationship. The company has moved far beyond its early erectile-dysfunction and hair-loss products into weight management, dermatology, mental health and other categories, while also expanding internationally.

Hims has increasingly pulled prescribing, personalization, pharmacy and fulfillment into the same system. That gives the company more control over the customer and a larger share of each healthcare dollar.

The latest numbers also show the cost of that strategy. Gross margin fell from 76% to 64% year over year in the latest quarter, marketing spending reached $262 million, and free cash flow was negative. Consumer healthcare can scale very quickly, but every extra layer of medication, fulfillment and paid acquisition makes the business heavier than pure software.

The split inside DTC digital health is pretty clear. Low-priced apps face brutal competition for attention and easy cancellation. High-intent healthcare categories such as weight loss, fertility, sexual health, diagnostics and chronic treatment can support much higher spending per customer.

That is also why digital-health companies have been adding pharmacies, laboratory testing and other services. Hims, Function, Oura, Whoop and other consumer platforms have all been pushing further into testing, monitoring or treatment lately.

The strongest consumer model today looks much closer to a digital healthcare retailer than a conventional app subscription.

If you want more recent data on this point, please see our latest digital health market report.

Is telehealth actually a good business model?

Telehealth can be a good business, but video consultations alone create surprisingly little economic advantage.

Teladoc's latest results make the problem unusually visible because the company contains two different virtual-care models. Its Integrated Care segment generated about $394 million of quarterly revenue and a 16.5% adjusted EBITDA margin. BetterHelp generated about $213 million and an adjusted EBITDA margin of only 0.2%.

BetterHelp revenue also fell 12% year over year, while Integrated Care edged higher.

Both businesses deliver healthcare remotely. The big economic difference comes from distribution. BetterHelp historically relied heavily on attracting individual consumers, whereas Teladoc's Integrated Care products are sold through employers and health plans. One relationship can bring access to a large population without buying every user through consumer advertising.

Virtual care still requires clinicians, scheduling, support, licensure and clinical operations. Moving the appointment onto a screen removes the clinic room, but the expensive human work remains.

The economics improve when technology lets clinicians manage more patients, moves part of the interaction to asynchronous care or brings users through an existing payer relationship. Distribution and labor efficiency matter far more than the fact that the visit happens online.

Can employer-funded digital health actually scale?

Employer- and health-plan-funded digital care has now proven that it can scale, and the latest Hinge Health and Omada Health numbers are much stronger than the old idea of “corporate wellness.”

Hinge Health generated $213 million of revenue in its latest quarter, up 53% year over year. GAAP gross margin reached 86%, and free cash flow was almost $100 million. Its client count rose 24% to 2,929. Hinge also raised its full-year revenue outlook to roughly $858 million.

Those are remarkable economics for a company involved in actual musculoskeletal care. Hinge combines software, AI, connected devices and clinicians, but technology handles enough of the delivery that revenue can grow much faster than clinical labor.

Omada gives us a second example across diabetes, hypertension, weight management and musculoskeletal care. Its latest quarterly revenue rose 43% to almost $88 million, membership increased 45%, gross margin reached 73%, and the company produced $5 million of net income. Omada now reports more than one million members and a three-year average customer-retention rate above 90%.

Pricing inside this model is also becoming more sophisticated. The old shorthand was PMPM, meaning a fixed payment per member per month. Today, companies increasingly mix platform fees with payments tied to enrollment, engagement or completed programs. Hinge generally begins recognizing revenue once eligible people become engaged members. Omada's revenue similarly depends heavily on actual participation.

That shifts some risk onto the digital-health company. Signing an employer is only the beginning; the vendor still needs employees to enroll and use the service.

The attraction for buyers is straightforward: they already pay for musculoskeletal surgery, diabetes complications, obesity drugs and other expensive claims. A digital-health vendor can sell against those costs rather than asking for a completely new software budget.

Can digital health companies really get paid for better outcomes?

Digital health companies can increasingly get paid for health outcomes, and the arrival of standardized Medicare payment models is making that much more commercially important.

We can see the mature version of value-based care in Aledade. The company provides technology and operational support to independent primary-care practices and participates in healthcare arrangements where better preventive care and lower total medical spending generate shared savings.

Aledade now works with more than 3,000 primary-care organizations caring for over three million patients in value-based contracts. For the 2024 Medicare Shared Savings Program performance year, Aledade's accountable-care organizations generated more than $1 billion of savings relative to Medicare benchmarks and earned more than $775 million in shared-savings payments. Ninety-three percent of its ACOs earned shared savings, compared with 73% outside its network.

That economic pool is much larger than a normal software subscription because the company is working against total healthcare spending.

CMS is now taking a similar idea into technology-supported chronic care through ACCESS. The ten-year Medicare model pays participating organizations through recurring Outcome-Aligned Payments for conditions including hypertension, diabetes, chronic musculoskeletal pain and depression. Payment is tied to measurable improvement rather than a prescribed volume of activities.

More than 150 organizations have already been accepted around the launch of ACCESS. Private health plans representing about 165 million members have also pledged to introduce payment structures aligned with the model, with some starting during 2026 and broader alignment planned over the following years.

Historically, a company with good clinical results still had to negotiate a custom commercial structure with employer after employer or insurer after insurer. Standardized outcome-based payment gives technology-supported care a clearer route into existing healthcare budgets.

The upside can be much larger than SaaS. The catch is that some of the revenue now depends on whether patients actually improve.

If you want more recent data on this point, please see our latest digital health market report.

Can digital health marketplaces make money without delivering healthcare?

Digital health marketplaces can build attractive businesses without employing doctors or delivering the medical treatment themselves, provided they control enough patient demand.

Zocdoc shows how the model works. Patients search for clinicians and book appointments for free. Providers generally pay when the marketplace brings them a new patient, with booking fees varying by specialty and location. The company can also sell sponsored placement and additional provider tools.

Economically, Zocdoc resembles a performance-marketing marketplace. It collects healthcare intent from consumers, matches that demand with available appointment capacity and gets paid when the match converts.

The model avoids many of the costs that make care delivery difficult. Zocdoc does not need to finance the dermatologist's salary, operate the clinic or take responsibility for the medical encounter.

The weakness appears after the first appointment. A patient and doctor can build a direct relationship, so Zocdoc needs a steady flow of people searching for new providers.

That makes the model particularly attractive in fragmented healthcare markets where consumers struggle to find available clinicians and providers already spend heavily to acquire new patients.

Why does Doximity give doctors so much away for free?

Doximity gives physicians free digital tools because access to a huge, verified medical audience is worth more than subscription revenue from the physicians themselves.

More than 85% of U.S. physicians are represented on Doximity's network. Doctors can use core networking, communication, clinical search and workflow tools without becoming the main source of revenue. Pharmaceutical manufacturers and healthcare organizations pay Doximity for marketing, hiring and workflow products.

The economics show why this works. Doximity produced $645 million of revenue in its last full fiscal year and $358 million of adjusted EBITDA, a margin of 55.5%. Free cash flow reached $318 million.

Its latest quarter still produced a 47.7% adjusted EBITDA margin, even as Doximity increased spending on AI and workflow products. Quarterly active prescribers using those workflow tools grew more than 30% year over year, while AI search queries grew more than 25% from the previous quarter.

Doximity built the scarce audience first and monetized the businesses trying to reach that audience. Pharmaceutical companies value precise access to clinicians. Health systems need recruiting and workflow tools. Software products can then be distributed through a network doctors already use.

Charging physicians directly could actually weaken that model if it slowed adoption. A very valuable professional audience can be worth more when the audience itself remains free.

Are AI scribes becoming digital health's best SaaS business?

Clinical AI and AI scribes are currently among digital health's most attractive SaaS models because hospitals can see the economic benefit quickly and the vendor can sell software without taking over the medical care itself.

The funding pattern has moved sharply in that direction. Rock Health found that clinical and non-clinical workflow companies captured 39% of all U.S. digital-health funding in 2025. AI-enabled companies took 54% of total funding.

Adoption is moving beyond small pilots as well. Abridge says more than 300 enterprise health systems now use its clinical intelligence products, representing organizations that collectively care for more than 250 million patients. The company recently reported that more than half of eligible clinicians were active monthly users of its newer decision-support product, with queries per clinician tripling over two months.

Geisinger offers a more concrete deployment example. The health system expanded Abridge to more than 1,000 clinicians after an initial pilot, with clinician adoption growing 187% over seven months.

The sales pitch is easier to measure than many digital-health promises. Hospitals already know how much physician time disappears into documentation, coding and administrative work. An ambient AI product can be judged on minutes saved, documentation completion, clinician adoption and revenue-cycle effects within a relatively short period.

The competition will be brutal. Electronic-health-record vendors, large technology companies and dozens of startups can all generate clinical notes. The stronger businesses will need to own more of the workflow around those notes, from coding and decision support to prescribing and orders.

If you want more recent data on this point, please see our latest digital health market report.

Do health wearables become better businesses once subscriptions kick in?

Health wearables become much better businesses when the device creates years of recurring membership revenue instead of waiting for the customer to buy another piece of hardware.

Oura is a useful example because the ring is only the beginning of the commercial relationship. The company now reports more than five million paid members. Around 80% of members open the app at least five days a week, according to Oura's health-plan materials, while roughly 80% renew after one year.

That changes the economics of a wearable. A hardware-only company gets paid around the replacement cycle. A subscription wearable can collect revenue every month while the same device is still sitting on the customer's finger.

Whoop pushes the idea further by making membership central to the product and tying hardware access to that recurring relationship. Both companies are also moving beyond fitness scores into sleep, cardiovascular metrics, reproductive health, laboratory testing and other health categories.

The hardware brings extra costs through manufacturing, inventory, logistics and replacements. It also creates something app-only businesses struggle to achieve: continuous proprietary data and a physical reason to keep using the service.

Enterprise distribution adds another layer. Oura, for example, has been selling programs to organizations and health plans, allowing the same device and analytics platform to operate as both a consumer product and an institutional health tool.

For wearables, recurring interpretation is becoming at least as important as the sensor itself.

Can Medicare turn remote patient monitoring into recurring digital health revenue?

Medicare reimbursement can turn remote patient monitoring into recurring digital-health revenue because connected devices, patient data and ongoing clinical management can all sit inside billable care.

Remote monitoring already has separate reimbursement components covering setup, connected-device supply and treatment-management time. Practices can therefore receive continuing payments while using outside technology companies for devices, patient engagement, dashboards and operational support.

CMS expanded the mechanics again for 2026. New remote therapeutic monitoring codes now cover shorter periods of device data, including 2 to 15 days within a 30-day period for certain respiratory and musculoskeletal monitoring. Another code covers the first ten minutes of qualifying monthly treatment-management work.

That gives digital-health vendors a recurring economic base around chronic care. A company can supply the technology to medical practices, enable the monitoring workflow and participate indirectly in revenue that comes from existing insurance reimbursement.

The catch is that reimbursement rules influence the size and shape of the market. An RPM company has limited pricing freedom if payer rates and billing requirements determine what its customers can earn.

There is also an obvious incentive problem when revenue depends on billable monitoring activity. The model remains attractive when the monitoring is clinically useful and technology makes that care cheaper to deliver.

Can prescription digital therapeutics finally make money?

Prescription digital therapeutics still have a difficult standalone business model, although reimbursement is finally becoming more supportive than it was during the category's first wave.

Akili showed how large the gap between clinical approval and commercial adoption can become. EndeavorRx received FDA authorization as a video-game-based treatment for pediatric ADHD after extensive clinical development. Yet Akili struggled to generate enough product revenue through the original prescription model, where adoption depended on physicians prescribing the software and payers covering it.

The company eventually moved toward direct consumer access, reduced its commercial infrastructure and was later acquired. The technology had crossed a difficult regulatory threshold, while the payment system remained much harder to solve.

That experience explains why prescription digital therapeutics have struggled. A company can end up carrying many pharmaceutical-style costs, including clinical studies, regulatory review, physician education and payer negotiations, while consumers still perceive the finished product as an app.

The reimbursement picture has improved. Medicare now has Digital Mental Health Treatment billing pathways, and companies such as Big Health are commercializing FDA-cleared products including SleepioRx and DaylightRx through healthcare providers. CMS's new ACCESS model goes further by creating recurring outcomes-linked payment for technology-supported chronic care.

For now, a huge independent business built around one prescription app still looks hard to justify. Digital therapeutics look more convincing when they sit inside a broader provider, payer or chronic-care platform with established distribution.

If you want more recent data on this point, please see our latest digital health market report.

Why do digital diagnostics companies like Tempus sell both tests and data?

Digital diagnostics companies can create unusually strong economics when every clinical test also expands a dataset that pharmaceutical and research customers are willing to pay for.

Tempus is the clearest scaled example. In its latest quarter, the company generated $382.5 million of revenue, up 22% year over year. Diagnostics contributed $289.3 million, while Data and Applications contributed another $93.2 million.

That means almost one-quarter of revenue came from the information layer surrounding the clinical business.

The faster-growing part is especially interesting. Tempus said Data Licensing and Modeling revenue grew 36% year over year, and the company signed roughly $200 million of new Data and Applications licenses during the quarter. It also delivered an oncology foundation model to AstraZeneca.

The loop is powerful. Diagnostic tests generate clinically relevant information. As testing volume grows, the company builds a larger longitudinal dataset. Pharmaceutical companies can then use that infrastructure for biomarker research, drug development, patient stratification, trial recruitment and modeling.

Tempus says its network connects with around 65% of U.S. academic medical centers and roughly 55% of U.S. oncologists. Its research infrastructure now contains tens of millions of records. At that scale, more testing creates more data, and richer data makes the research platform more valuable.

Few digital-health models can monetize the same underlying infrastructure through two such different budgets. Diagnostics draws from healthcare spending; data licensing draws from pharmaceutical R&D and commercial spending.

Why are some digital health companies much more profitable than others?

Digital health companies become much more profitable when existing channels bring them customers and software handles a large share of the work required to serve each additional user.

We can see the distribution effect inside Teladoc. BetterHelp's consumer therapy business produced a 0.2% adjusted EBITDA margin in the latest quarter, while Integrated Care reached 16.5%. Both rely on virtual care, but the employer and health-plan channel removes much of the repeated consumer-acquisition burden.

We can see the labor effect in Omada. According to its latest SEC filing, part of the company's recent gross-margin expansion came from lower personnel cost per member as care-team efficiency improved and supporting technology handled more of the workload. Gross margin reached 73% in the latest quarter.

Hinge provides the strongest version of that pattern: 53% revenue growth, an 86% GAAP gross margin and almost $100 million of quarterly free cash flow despite delivering actual clinical care.

Consumer businesses face a different equation. Hims & Hers grew much faster than most enterprise health companies in its latest quarter, yet gross margin fell to 64% as its mix became more operationally intensive. It also spent $262 million on marketing during the quarter.

Software businesses sit at the easiest end of the spectrum. Doximity's last full-year adjusted EBITDA margin reached 55.5% because the company can monetize a vast clinician network without employing the physicians or funding the healthcare delivered through it.

The three numbers worth watching are customer-acquisition cost, human labor per customer and physical product cost. They explain much of the difference between a digital-health business that behaves like software and one that behaves like healthcare services or e-commerce.

Model	Recent margin evidence	Main economic advantage	Main cost problem
Healthcare software / professional network	Doximity FY2026 adjusted EBITDA margin: 55.5%	Software scales across an existing clinician network	Product development and enterprise sales
Employer-funded virtual care	Hinge latest GAAP gross margin: 86%	Institutional distribution plus automated care	Clinical delivery and member activation
Chronic-care platform	Omada latest gross margin: 73%	Recurring payer relationships and improving care-team efficiency	Human care support and partner concentration
Consumer integrated care	Hims & Hers latest gross margin: 64%	High revenue per customer and cross-selling	Marketing, medication, pharmacy and fulfillment
Consumer virtual therapy	BetterHelp latest adjusted EBITDA margin: 0.2%	Direct consumer demand	Heavy customer acquisition plus clinician costs

So what are the main business models in digital health today?

The main digital health business models today are enterprise healthcare software, employer- and payer-funded care, direct-to-consumer integrated healthcare, reimbursed digital care, marketplaces, device-plus-subscription businesses, diagnostics plus data, pharma-funded professional platforms and value-based care.

The strongest models currently share one feature: they connect digital technology to a healthcare budget that already exists.

Enterprise healthcare software sells against administrative labor and clinician time. A hospital buying an AI scribe can compare the cost directly with documentation workload, capacity and revenue-cycle performance.

Employer- and payer-funded care sells against medical claims. Hinge and Omada can ask buyers to compare program costs with spending on musculoskeletal treatment, diabetes, obesity and other chronic conditions. Multi-year relationships and large eligible populations then create recurring revenue.

Consumer healthcare works under tougher rules because the company has to earn every customer's attention. Hims shows how powerful the model can become once the relationship includes prescribing, medication, personalization and repeated treatment. Wearables such as Oura create a different version of recurring consumer healthcare by combining a physical device with continuous data and membership.

Reimbursement-funded models are becoming more interesting now. Remote monitoring already has established billing pathways, digital mental-health treatments have gained new reimbursement options, and ACCESS creates an explicit Medicare route for technology-supported chronic care tied to outcomes.

Marketplaces, professional networks and data businesses make money from assets around healthcare rather than from taking responsibility for the whole clinical service. Zocdoc sells patient demand. Doximity monetizes access to physicians and their workflow. Tempus combines reimbursed diagnostics with data and analytical products sold into life sciences.

Value-based care goes furthest. Companies such as Aledade participate economically in the savings created when technology and better primary care reduce total healthcare spending. The upside can dwarf a normal SaaS contract, although the company accepts far more responsibility for the outcome.

There is no single digital health business model winning the market. The strongest models control an expensive part of the healthcare system and have found a repeatable way to get paid for improving it.

A company with attractive technology but no durable distribution or payment channel remains vulnerable. A company embedded in provider workflow, employer benefits, reimbursement, consumer treatment or pharmaceutical research has a much stronger starting point.

Digital health business model	Main payer	How revenue is generated	Our view today
Enterprise healthcare software and AI	Providers, health systems	Enterprise subscriptions, seats, usage	One of the cleanest models; measurable ROI and strong software margins
Employer / health-plan virtual care	Employers, insurers, PBMs	Contracts, PMPM, enrolled or engaged-member fees	Proven at scale and currently producing some of the sector's best economics
Direct-to-consumer integrated care	Consumers	Consultations, subscriptions, medication, products	Can become very large when recurring health needs support high revenue per customer
Reimbursed digital care	Medicare and insurers	Claims, recurring monitoring payments, treatment reimbursement	Increasingly viable as payment pathways broaden
Digital health marketplace	Providers and suppliers	Booking fees, transactions, sponsored placement	Attractive when the platform owns meaningful consumer demand
Device plus subscription	Consumers, employers, health plans	Hardware plus recurring membership	Strong when engagement stays high after the initial device purchase
Diagnostics plus healthcare data	Insurers, providers, life sciences	Testing, data licenses, research and analytics	One of the most interesting hybrid models because the same infrastructure supports two revenue pools
Pharma-funded professional platform	Pharma and healthcare organizations	Marketing, recruitment, workflow products	Excellent economics once the professional network reaches large scale
Value-based care	Medicare, insurers and other risk-bearing payers	Shared savings and outcomes-linked payments	Potentially the largest economic pool, with much more clinical and financial responsibility

If you want more recent data on this point, please see our latest digital health market report.

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