'Order the New Mountain special': How one private equity firm is bringing big exits back to healthcare VC

In a landscape where private equity's reputation in healthcare has been rocky, New Mountain Capital is taking a different approach to revitalize the sector. With a hefty investment of $55 billion, the firm is making waves in healthtech by adopting a strategy that blends traditional private equity with venture capital insights. In May, New Mountain unveiled Smarter Technologies, an ambitious initiative aimed at revolutionizing healthcare through artificial intelligence. This new venture integrates the established Access Healthcare, acquired earlier in January, with innovative startups like SmarterDx and Thoughtful AI, focusing on enhancing hospital revenue management. Matthew Holt, the managing director and president of private equity at New Mountain, is spearheading this aggressive push into healthtech. With over two decades at the firm, Holt is shifting the focus from typical physician practice rollups to technology-driven solutions. His bold investments, such as the $7 billion merger of Datavant and Ciox Health in 2021, showcase his commitment to growth and modernization in the healthcare space. Industry insiders are noticing the appeal of Holt's strategy. A healthcare banker noted, "They’re great deals for investors. If your company can't get to an IPO, order the New Mountain special." This reflects a growing trend where venture capitalists are increasingly interested in New Mountain's offerings, especially given the challenging environment for healthcare IPOs and acquisitions. New Mountain's strategy diverges from conventional private equity practices that often prioritize immediate profitability. Instead, Holt is committed to nurturing growth, even if it means delaying returns. The firm’s recent investments—like the $1 billion deal for SmarterDx—highlight this more flexible approach. Investors are keenly watching as New Mountain continues to make significant strides, with the potential for multiple companies within its portfolio to prepare for public offerings. Despite a downturn in healthcare IPO activity, New Mountain is not backing down. Holt argues that the current state of the U.S. healthcare system necessitates increased investment, stating, "We're at a breaking point in the US healthcare system with the costs and the unhappiness of its constituents. The time is now for further investment." The firm’s innovative strategies are reshaping the private equity landscape. By combining established practices with a venture studio mindset, New Mountain is positioning itself as a leader in the burgeoning healthtech field. As the competition heats up, with other private equity firms also eyeing health technologies, New Mountain's ability to maintain relationships with healthcare founders and executives could give it a critical edge in this evolving market.