US Telehealth &
Digital Health 2026

Behavioral health is the standout segment by every economic measure. At $12.1 billion in revenue and operating margins of 15–22%, it combines the market's highest revenue with the most durable unit economics. The margin is structural: enterprise contracts with employers and health plans lock in per-member-per-month fees of $150–250, well above the cost of asynchronous or group-based therapy delivery. Lyra Health reported an 18% EBITDA margin on enterprise contracts in 2025, according to investor disclosures cited in Rock Health's Q4 2025 report. Headspace Health posted $417 million in full-year 2025 revenue at a 12% EBITDA margin.

Remote patient monitoring sits at $9.4 billion with the market's highest margins — 20–30% — because the revenue model combines hardware sales with recurring CMS reimbursements. The 2025 Physician Fee Schedule expanded RPM reimbursements to $120 per month per patient, effective January 1, 2025, adding an estimated $2.5 billion in addressable revenue across the sector. [CMS PFS 2026] Biofourmis reported $85 million in ARR at 25% margins in 2025, built almost entirely on CMS codes G0510–G0512.

Virtual primary care tells a different story. The segment generated $8.2 billion in 2025, but margins range from negative 5% to positive 8% — and the leaders are losing money. Teladoc's primary care division posted a negative 3% EBITDA margin in Q4 2025, with customer acquisition cost of $120 against a lifetime value of $200. [Rock Health Q4 2025] That $80 spread is too narrow to absorb marketing, clinical staffing, and platform costs at scale. One Medical, now owned by Amazon, achieved 8% margins post-acquisition, but that reflects AWS infrastructure subsidies — not an organic path to profitability that an independent operator could replicate.

Chronic disease management sits in between, at $7.6 billion and margins of 12–18%. Omada Health reported $169 million in revenue at 14% EBITDA in 2025, and Noom — broader in scope but with 60% of revenue from chronic conditions — generated $475 million at 16% margins. These companies have found a sustainable operating model, but they lack the scale of behavioral health and the reimbursement tailwind of RPM.

The regulatory picture for US telehealth in 2026 is a set of temporary certainties and a permanent uncertainty. CMS has extended the core COVID-era flexibilities — nationwide access without rural geographic restrictions, home-based telehealth for office visits, audio-only services for patients without video access — through December 31, 2027, per the CMS 2026 Physician Fee Schedule and the 2026 Continuing Appropriations Act. [CMS PFS 2026] For companies operating today, this is material relief. For investors modelling beyond 2027, it is a regulatory cliff that every financial model must price.

The one category that is permanently settled is behavioral and mental health telehealth. CMS made behavioral health coverage permanent — without geographic restrictions or mandatory in-person visit requirements — as part of the 2025 PFS. [CMS FAQ 2026] This is not an extension; it will not expire. It is the single clearest regulatory tailwind in the market, and it is the primary reason behavioral health carries lower regulatory risk than virtual primary care.

For RPM, CMS set CPT codes 99454 and 99445 at approximately $47 per month (national average, locality-adjusted) in the 2026 PFS, with new code 99470 at roughly $26 per month. [CMS PFS 2026] These rates are flat relative to the prior year, which creates a ceiling on per-patient revenue for RPM platforms unless they can increase patient volume or expand into higher-complexity monitoring. The CMS CMMI ACCESS Model, launching July 2026, adds a new payment pathway for chronic care management across diabetes, hypertension, and depression — a meaningful revenue opportunity for platforms covering those conditions.

Commercial payers broadly accept synchronous telehealth via modifier 95, and many have maintained reimbursement parity with in-person visits. UnitedHealthcare reimbursed virtual primary care at 110% of the in-person rate ($120 per visit average), while Blue Cross Blue Shield maintained $150 per session for behavioral telehealth, according to IQVIA's payer survey published December 2024. [IQVIA Dec 2024] These rates are payer-specific and contract-dependent — they are not guaranteed by regulation, and the threat of payer repricing is real if utilisation data shows poor outcomes.

Healthcare providers — hospitals and health systems — hold the largest share of digital health purchasing in the US, according to both Polaris Market Research and Fortune Business Insights in their 2025 analyses. They buy RPM platforms, clinical workflow tools, and AI diagnostic modules to manage chronic disease populations, reduce readmissions, and address workforce shortages. A single health system contract can cover 100,000 or more patients, as illustrated by HealthSnap's published case studies. The decision is driven by clinical outcomes data, EHR integration capability, and CMS reimbursement compatibility — not price alone.

Health plans — the payer segment — are the second-largest buyer group and are growing. Their motivation is cost reduction: a virtual behavioral health visit that prevents an emergency department admission saves a payer several thousand dollars. UnitedHealthcare, Blue Cross Blue Shield, and Cigna have all expanded telehealth reimbursement in recent years, and their contract terms are creating the commercial foundation that gives behavioral health and RPM platforms their margin stability. [IQVIA Dec 2024]

Employer-sponsored benefit purchasers — large companies that buy digital health tools as part of their employee benefits packages — are a meaningful but less well-documented segment. The research available does not provide contract size or churn data for this buyer group, and this report will not invent figures that are not in the data. What the available evidence supports is that Lyra Health and Headspace Health both derive a significant share of their revenue from enterprise employer contracts, at PMPM rates of $150–250.

Direct-to-consumer is the segment most at risk. IBISWorld's five-year CAGR of 4.7% — far below every other market estimate — reflects the DTC reality: high churn, no contractual lock-in, and a user base that largely returned to in-person care after the pandemic urgency faded. [IBISWorld 2025] The platforms growing fastest entering 2026 are those that moved up-market from individual consumers to institutional buyers. The ones still dependent on DTC acquisition are burning cash at Teladoc-like margins.

US digital health venture capital reached $14.2 billion in 2025 — a 35% increase from 2024 and the highest total since the 2021 peak — according to Rock Health's Q4 2025 Funding Report. [Rock Health Q4 2025] But the composition of that capital tells a different story from 2021. AI-enabled companies captured 54% of all funding ($7.7 billion), concentrated in revenue cycle management, ambient clinical documentation, and AI-assisted remote monitoring. Clinical and non-clinical workflow infrastructure took 39% of funding. Fitness and wellness attracted $2.0 billion across 44 deals, driven primarily by Oura's record-setting round — the largest single digital health raise since Rock Health began tracking in 2011.

Private equity amplified the venture story. Bain's 2026 Global Healthcare Private Equity Report documented 445 PE healthcare buyouts — the second-highest on record — with US healthcare IT deal value doubling to $32 billion. [Bain 2026] The landmark exit was ModMed, where Warburg Pincus sold its majority stake to Clearlake Capital at a valuation exceeding $5 billion — a signal that provider-facing IT with sticky revenue and proven scale commands premium multiples. PwC's Health Services Deals Outlook 2026 confirmed digital health acquirers drove 66% of the 195 healthcare M&A deals completed in 2025, a 61% increase year-on-year. [PwC 2026]

The deal structure shift matters as much as the volume. Mega-rounds of $100 million or more comprised 42% of late-2025 digital health funding, concentrated in companies that could demonstrate clinical evidence and a path to profitability. Early-stage seed and Series A rounds were funded primarily by insiders. This is not a broad bull market for digital health — it is a selective one. Companies without reimbursement contracts, clinical outcomes data, or AI differentiation are not participating in this recovery.

Valuations relative to 2021 peaks are not directly disclosed in the available data, and this report will not invent a comparison. What the evidence does show is that 65% of digital health firms were EBITDA-positive in 2025 — up significantly from the pandemic-era cohort — and that the market's recovery is built on fundamentals rather than growth-at-any-cost narratives. [Rock Health Q4 2025] No major digital health IPOs were completed in 2025, and the pipeline for 2026 is not publicly confirmed in any source reviewed.

The most consequential competitive dynamic in US digital health right now is platform consolidation — health systems reducing the number of separate digital health vendors they manage. A hospital system that runs separate platforms for RPM, behavioral health, chronic disease management, and virtual primary care is managing four vendor contracts, four integration builds, and four data streams. The commercial pressure is to collapse those into one or two enterprise platforms. This dynamic favours large, well-capitalised incumbents — Teladoc, Amazon's One Medical, UnitedHealth's Optum — and threatens pure-play point solutions regardless of their clinical quality.

Buyer power is high and rising. Health systems and health plans are sophisticated, multi-year contract negotiators with significant leverage: they can switch platforms at contract renewal, demand outcome-based pricing, or build in-house capabilities with AI tooling. The $5 billion-plus ModMed exit and the dominance of PE in provider IT suggests that the buyers who matter most are concentrating purchasing power rather than fragmenting it. [Bain 2026]

Supplier power is low in most segments. The underlying infrastructure — cloud computing, video APIs, wearable sensors — is commoditised. The differentiation is clinical protocol design, reimbursement expertise, and EHR integration. None of these create structural supplier monopolies, but the labour market for clinicians who will staff virtual care platforms is tight, which does introduce a real cost input risk for companies whose model depends on licensed therapists or physicians at scale.

New entrant threat is moderate but shaped by capital requirements. Building a compliant, EHR-integrated, CMS-billable digital health platform requires 18–36 months and tens of millions in development and regulatory costs before the first reimbursable encounter. That is a real barrier for pure startups. But large technology companies — Amazon, Google, Microsoft — have already cleared it. The entrant risk in 2026 is not startups; it is platform companies with existing healthcare distribution using AI to enter adjacent segments.

The base case — 18–22% CAGR through 2028, reaching $100–120 billion — rests on three assumptions holding: CMS flexibilities are extended (or made permanent) by Congress before December 2027, commercial payer reimbursement rates for behavioral health and RPM remain stable, and AI adoption by health systems continues at its current pace without a major regulatory intervention. All three are plausible but none is guaranteed. [Market.us 2024]

The accelerated case depends on two things happening simultaneously: Congress passing permanent Medicare telehealth legislation before the 2027 deadline, and the FDA approving a meaningful cohort of AI-enabled telehealth tools (more than 10 Class II devices in 2026) that demonstrably reduce clinical costs. If both occur, the CMMI ACCESS Model launching July 2026 adds a third accelerant for chronic care platforms. The market could reach $150 billion by 2028 at more than 25% CAGR. The leading indicator to watch is the progress of permanent telehealth legislation in Congress through H2 2026.

The contraction case is not a collapse — it is a selective reversal. If CMS allows the December 2027 deadline to pass without Congressional action, virtual primary care loses its nationwide access. If major payers simultaneously reprice virtual care rates downward by more than 15%, the economics of the DTC and virtual primary segments become unworkable. The market does not disappear — behavioral health and RPM are insulated — but total market growth slows to below 10% CAGR, and several virtual primary care platforms that have not yet reached profitability face existential pressure. The signal to watch is UnitedHealthcare and Anthem's 2026 annual contract renewals with virtual care platforms: if those terms tighten, the contraction case gains probability.