Digital Health Unicorns After ZIRP: Who’s Thriving, Who’s Fading, and What Comes Next

During the height of the COVID-19 pandemic, when interest rates hovered near zero and investor optimism soared, the digital health sector exploded. Between 2020 and 2022, more than three-quarters of all healthcare unicorns—startups valued at $1 billion or more—were minted. But the subsequent rise in interest rates and macroeconomic tightening have left many wondering: what happened to the class of ZIRP-born unicorns?

A new analysis tracking 65 digital health unicorns that emerged during the zero-interest-rate period (ZIRP) paints a mixed picture. While nearly 90% are still in operation, only one has gone public, four have been acquired or merged, and two have shut down entirely. Many are now scrambling to raise capital at lower valuations or seeking strategic buyers as funding conditions grow increasingly unforgiving.

Funding Drought and Market Realignment

According to Rock Health, digital health funding dropped from $29.2 billion in 2021 to just $10.1 billion in 2024—a nearly 65% contraction. The market correction has forced founders to shift from aggressive growth to profitability, laying off staff, shelving product expansions, and raising unlabeled or down rounds to preserve runway. In 2023, 44% of funding rounds were unlabeled—a marked increase from 7% in 2020 (Rock Health, 2024).

Still, one-third of unicorns in the cohort managed to secure fresh capital in 2023–2024, defying the odds in a constrained environment. These include:

• Devoted Health, which raised a $287 million Series E, reaching $1.9 billion in 2023 revenue
• Sword Health, now valued at $3 billion, leveraging AI to expand virtual physical therapy
• Aledade, with a $250 million Series F, pushing further into value-based care
• Maven Clinic, the largest virtual clinic for women’s health, raising a $125 million Series F

The Unicorn Graveyard

Two notable failures illustrate the dangers of hype-fueled growth. Olive AI, once valued at $4 billion, shut down in late 2023 after layoffs, asset sales, and a failed automation strategy. Forward, a no-insurance clinic chain backed by $650 million, collapsed following technical malfunctions in its flagship “CarePod” devices and a stalled expansion model.

Olive’s fate is especially instructive for healthcare IT observers. Despite raising nearly $900 million from prominent venture and PE firms, the company struggled to scale, failed to integrate into hospital workflows, and overpromised on its AI capabilities. It was ultimately dismantled and sold in pieces to firms like Waystar and Humata.

Acquisitions and Quiet Restructuring

While IPOs have remained elusive, M&A activity has offered some founders an exit. ClassPass, a fitness marketplace unicorn, was acquired by Mindbody in an all-stock deal, and CareBridge was sold to Elevance Health for $2.7 billion—making it one of the largest private digital health acquisitions ever.

Many others, including Carbon Health, Elemy, and Cityblock, have quietly downsized operations or divested business lines to weather the downturn. Several, such as Commure and Athelas, pursued roll-ups to consolidate market share and reduce overhead.

IPO Watchlist: Who Might Go Public Next?

Despite the IPO freeze that followed the 2021 boom, two unicorns have recently filed S-1 paperwork: Hinge Health and Omada Health, both of which focus on virtual care and chronic disease management. These companies are being closely watched by public investors looking for demonstrated clinical outcomes and sustainable margins.

Analysts speculate that Maven Clinic, Ro, and Devoted Health may also be eyeing IPOs in 2025 or 2026—though they’ll need to show a clearer path to profitability before attracting significant institutional interest.

Implications for Health Systems and IT Partners

Hospital CIOs and digital strategy teams must tread carefully in vendor selection. Many unicorns are cutting costs, reducing implementation support, or pivoting business models—creating potential continuity risks for health systems that rely on their platforms. Strategic diligence now means not just assessing product capabilities, but examining the financial durability and leadership discipline of vendor partners.

From ZIRP to Scrutiny

The ZIRP-era unicorn cohort emerged during one of the most exuberant funding cycles in healthcare history. Now, as capital tightens and margins matter, these companies face a new test: proving that they can deliver lasting value—not just impressive valuations.