Latest news with #NewMountain
Business Insider
16-06-2025
- Business
- Business Insider
'Order the New Mountain special': How one private equity firm is bringing big exits back to healthcare VC
Private equity, and its slash-and-burn routine, doesn't always play nice with healthcare companies. $55 billion New Mountain Capital wants to win big in healthtech with a different playbook. In May, New Mountain announced the creation of Smarter Technologies, an audacious healthcare AI rollup. The company combines legacy player Access Healthcare, which New Mountain acquired in January, with its newly acquired venture-backed startups SmarterDx and Thoughtful AI to go after hospital revenue management. It's the latest in a string of aggressive healthcare bets spearheaded by Matthew Holt, New Mountain managing director and president of private equity, who's been a fixture at the firm for 23 years. He's taking hints from venture capital for an approach to healthcare PE that prioritizes growth and tech innovation, and VCs are loving it. "They're great deals for investors," said a healthcare banker who asked to remain anonymous because they weren't authorized to speak to the media. "If your company can't get to an IPO, order the New Mountain special." To date, healthcare PE has largely been marked by firms buying and combining in-person physician practices, everything from hospitals to dentists' offices to medspas. Holt has eschewed physician group rollups to dig deep into healthtech instead, with numerous megadeals behind his thesis, from New Mountain's $7 billion merger of Datavant and Ciox Health in 2021 to its $5 billion healthcare payments rollup of Machinify, The Rawlings Group, Apixio, and Varis in January. And Holt isn't afraid to pay up for a fast-growing asset. For its Smarter Technologies rollup, New Mountain paid around $1 billion in cash and stock just to acquire SmarterDx, multiple people with knowledge of the deal told BI. It's been a rough few years for healthcare private markets, with only a handful of IPOs and few acquisitions, as public healthcare companies tumble and buyers in Big Tech and health insurance take a step back from healthtech M&A. That's made liquidity especially hard to come by for healthcare investors, and all the more surprising that New Mountain is leaning in where many other buyers are leaning out. New Mountain Capital is offering an exit ramp that VCs are craving, with a favorable return on their investment and the assurance that Holt won't submit companies to private equity's profit-at-all-costs mentality. "Matt is taking very bold bets around great people. I think the whole sector has perked up because of that," said Michael Greeley, cofounder and general partner at Flare Capital Partners and an investor in SmarterDx, as well as Aetion, another healthtech startup that New Mountain's Datavant acquired in April. "How he approached those deals and valued them, it was very affirming for a lot of us to see those transactions." Holt is undeterred by the volatility. Despite announcing several large healthtech deals already this year, he told Business Insider he has no plans to slow down. "We're at a breaking point in the US healthcare system with the costs and the unhappiness of its constituents," he said. "The time is now for further investment." Multiple investors and bankers told BI that New Mountain's healthcare returns are impressive. While those returns aren't public, Holt has led some of the biggest healthcare deals of the last few years. Signify Health, created inside New Mountain in 2017, saw one such blockbuster deal; the home healthtech company went public in 2021 and was acquired in 2023 by CVS Health for $8 billion. In the biopharma and medtech category, New Mountain sold manufacturing company ILC Dover to Ingersoll Rand in 2024 for $2.3 billion. A few years back, in 2019, the firm saw its life sciences tools company Avantor go public at over a $14 billion valuation, and sold health payments company Equian to UnitedHealth Group's Optum for $3.2 billion the same year. Those returns have given Holt further license to deviate from PE tradition. By his own admission, he's adopted a model for building companies that's part PE, part venture studio. "We identify a problem statement in the industry, and then we put a blueprint together of what would be the company that we would build to best go after that problem," he said. "So what we're really doing is we're taking a page out of the venture studio playbook and applying the same process, but with the advantage of starting with a large-scale private equity fund." Like many private equity firms, New Mountain uses its funds to buy or build a stable underlying business and then acquire additional companies to achieve scale. Unlike most private equity funds, profitability isn't the main focus of getting that scale, at least not at first. "Aggregating different pieces like they've done with [Smarter Technologies] isn't unusual. Private equity rollups are the first 10 pages of the playbook," said Bryan Roberts, a partner at Venrock. "Applying technology and data, and going for growth rather than just EBITDA, is the interesting twist." That twist has led Holt to buy several younger, venture-backed startups, a rare feat for PE, since venture-backed startups often focus more on achieving blockbuster growth than profitability. SmarterDx last raised a $50 million Series B funding round in May 2024, while Thoughtful AI last raised a $20 million Series A in July. While PE deals often take the form of leveraged buyouts, wherein a firm invests borrowed money with the company's assets as collateral, New Mountain can't and doesn't fund those startup deals with debt, since startups don't usually have the stable cash flows or other assets to derisk the loans. In fact, the LBO-light approach is part of New Mountain's strategy in every sector, not just healthcare — New Mountain's website says the firm "emphasizes business building and growth, rather than debt, as it pursues long-term capital appreciation." The performance of New Mountain's previous healthcare bets has also given the firm freedom to hold onto assets past when they'd generally be expected to generate a return, usually within a ten-year period. Holt said he's rolled several of New Mountain's largest healthcare investments, including Datavant, Swoop, and Real Chemistry, into continuation funds to allow them to continue growing without strict time constraints. Those returns may be around the corner, though, as at least one of New Mountain's portfolio companies looks to be preparing for an IPO. Datavant CEO Kyle Armbrester told BI in January that he expected to make multiple healthcare acquisitions this year, rounding out the company with more features and revenue in a strategy that could make it more attractive for a public market debut. "We're certainly at a size and scale where going public could be something that we contemplate," Armbrester said at the time. Healthcare PE's rocky reputation In the Venn diagram of private equity and venture capital, more firms on both sides are making bets in the center. VC firms, including General Catalyst and Thrive Capital, are buying up accounting firms and other businesses in PE-like rollups that rely on AI to make the combined companies more efficient. And, as venture-backed startups desperate for an exit face a volatile IPO market and antitrust concerns from Big Tech buyers, PE firms from KKR to Thoma Bravo are scooping them up. In healthcare, most PE investment still goes toward care delivery companies. But New Mountain isn't the only PE firm interested in new health technologies. TowerBrook Capital and CD&R bought AI-powered revenue cycle management company R1 RCM last year for $8.9 billion. In March, Clearlake Capital bought a majority stake in ModMed, an electronic health records and health AI software maker, in a deal valuing the company at $5.3 billion. Private equity's rising interest in healthtech means more competition for New Mountain and Holt. New Mountain bid on then-public R1 RCM itself in early 2024, before TowerBrook and CD&R's buyout. The firm took a 32% stake in R1 RCM in 2022 after investing $400 million in revenue cycle tech company CloudMed and selling it to R1 RCM for $4.1 billion. Holt said the firm sold its full stake in R1 RCM as part of the buyout at a "significant premium." Then, New Mountain bought Access Technologies, along with SmarterDx and Thoughtful AI, to build its own competitor. Still, private equity's rocky track record in healthcare looms. The industry has frequently faced criticisms that its cost-cutting priorities, when applied to healthcare, can put patient health at risk. Steward Health Care even drew a congressional inquiry into its operations last year after the hospital system formerly owned by a PE firm declared bankruptcy last year. And return potentials in healthtech VC don't look as attractive as they did in 2021 at digital health's fundraising peak. The first digital health company to IPO this year, Hinge Health, went public at a $2.6 billion valuation after last being privately valued at $6.2 billion in 2021. The second, Omada Health, went public at a $1.1 billion valuation, roughly flat with its last private valuation of over $1 billion, notched in 2022. Holt said New Mountain's ability to combine PE and VC sensibilities, its focus on technology, and its close collaboration with founders have helped the firm gain ground in healthcare, where other investors have misstepped. "There are a number of PE firms that don't really know how to maintain a growth-oriented culture with a founder-led business," Holt said. "We make a point to treat everyone well and execute what we say we're going to execute." Holt estimates he's built close relationships with 50-plus healthcare founders and executives, a talent bench he's repeatedly drawn on when launching new ventures. Datavant's Armbrester, who Holt previously brought on as the CEO of Signify Health, said Holt has notched partnerships, co-invested with, or forged relationships with every major health insurer, hospital system, and pharma company. He doesn't cold-call founders; he already knows them. "I don't think the guy has ever had a meal alone," Armbrester said. And New Mountain sees so much opportunity in new healthcare AI applications, like using AI to manage hospital billing and claims, that it's less concerned with the recent exit drought, said Jeremy Delinsky, the new CEO of Smarter Technologies. "If you're working in a very narrow use case where the return on investment isn't as clear cut, you're worried about, are you buying an asset at the point where it's worth the most?" Delinsky said. "But [revenue cycle] might be one of the single biggest and best business opportunities in America, given how much money is spent on it and how little innovation has occurred. The numbers are just so big that it allows for the ability to survive making mistakes."
Business Wire
05-05-2025
- Business
- Business Wire
New Mountain Finance Corporation Announces Financial Results for the Quarter Ended March 31, 2025
NEW YORK--(BUSINESS WIRE)--New Mountain Finance Corporation (NASDAQ: NMFC) ('New Mountain,' 'New Mountain Finance' or the 'Company') today announced its financial results for the quarter ended March 31, 2025. First Quarter and Recent Highlights 1 Net investment income of $34.5 million, or $0.32 per weighted average share Net asset value of $12.45 per share compared to $12.55 per share as of December 31, 2024 Sustained strong credit performance with ~96.5% of the portfolio rated green Reduced cost of debt from SOFR + 2.15% to SOFR + 1.95% on our Holdings Credit Facility Increased senior oriented asset mix to 77%, compared to 75% as of December 31, 2024 Declared a second quarter 2025 distribution of $0.32 per share, payable on June 30, 2025, to holders of record as of June 16, 2025 March 31, 2025 December 31, 2024 Investment Portfolio 5 $ 3,047.7 $ 3,104.5 NAV per Share $ 12.45 $ 12.55 Statutory Debt/Equity 3 1.15x 1.15x Statutory Debt/Equity (Net of Available Cash) 3 1.09x 1.11x Expand Management Comments on First Quarter Performance 'New Mountain's strategy of investing in defensive sectors positions NMFC for continued success in what has become a more volatile operating environment,' said Steven B. Klinsky, NMFC Chairman and New Mountain Capital CEO. 'We believe that, relative to other credit funds, NMFC is notably well positioned for tariff and other political issues.' John R. Kline, NMFC CEO, added: 'NMFC maintained strong credit performance in Q1, with over 96% of the portfolio rated green. Looking ahead, we remain confident in NMFC's ability to deliver consistent yield with an enhanced margin of safety. Additionally, we have made meaningful progress on our strategic priorities including PIK reduction, diversifying our top investments and reducing the cost of our liabilities.' Portfolio and Investment Activity 5 As of March 31, 2025, the Company's NAV 1 was $1,342.2 million and its portfolio had a fair value of $3,047.7 million of investments in 119 portfolio companies, with a weighted average YTM at Cost 6 of approximately 10.2%. For the three months ended March 31, 2025, the Company originated $120.8 million of investments 2, offset by $160.4 million of repayments 2 and $26.3 million of asset sales. Portfolio and Asset Quality NMFC's mandate is to primarily target businesses in the middle market that, consistent with New Mountain's private equity platform, are high quality, defensive growth companies in industries that are well-researched by New Mountain. The Company's focus is on defensive growth businesses that generally exhibit the following characteristics: (i) acyclicality, (ii) sustainable secular growth drivers, (iii) niche market dominance and high barriers to competitive entry, (iv) recurring revenue and strong free cash flow, (v) flexible cost structures and (vi) seasoned management teams. Portfolio Industry Composition based on Fair Value 8 The Company monitors the performance and financial trends of its portfolio companies on at least a quarterly basis. The Company attempts to identify any developments within the portfolio company, the industry, or the macroeconomic environment that may alter any material element of the Company's original investment strategy. As described more fully in the Company's Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission, the portfolio monitoring procedures are designed to provide a simple, yet comprehensive analysis of the Company's portfolio companies based on their operating performance and underlying business characteristics, which in turn forms the basis of its Risk Rating. The Risk Rating is expressed in categories of Green, Yellow, Orange and Red with Green reflecting an investment that is in-line with or above expectations and Red reflecting an investment performing materially below expectations. The following table shows the Risk Rating of the Company's portfolio companies as of March 31, 2025: As of March 31, 2025, all investments in the Company's portfolio had a Green Risk Rating, with the exception of five portfolio companies that had a Yellow Risk Rating and six portfolio companies that had an Orange Risk Rating. As of March 31, 2025, there were no portfolio companies that had a Red Risk Rating. The following table shows the Company's investment portfolio composition as of March 31, 2025: Liquidity and Capital Resources As of March 31, 2025, the Company had cash and cash equivalents of $85.5 million and total statutory debt outstanding of $1,543.7 million 3. The Company's statutory debt to equity was 1.15x (or 1.09x net of available cash) as of March 31, 2025. Additionally, the Company had $262.5 million of SBA-guaranteed debentures outstanding as of March 31, 2025. As of March 31, 2025, the Company had $1,168.8 million of available capacity on its Holdings Credit Facility, NMFC Credit Facility and Unsecured Management Company Revolver. First Quarter 2025 Conference Call New Mountain Finance Corporation will host an earnings conference call and webcast at 10:00 am Eastern Time on Tuesday, May 6, 2025. To participate in the live earning conference call, please use the following dial-in numbers or visit the audio webcast link. To avoid any delays, please join at least fifteen minutes prior to the start of the call. United States: +1 (877) 443-9109 International: +1 (412) 317-1082 Live Audio Webcast A replay of the conference call can be accessed one hour after the end of the conference call through August 6, 2025. The full webcast replay will be available through May 6, 2026. To access the earnings webcast replay please visit the New Mountain Investor Relations website. United States: +1 (877) 344-7529 International: +1 (412) 317-0088 Access Code: 7848158 For additional details related to the quarter ended March 31, 2025, please refer to the New Mountain Finance Corporation Quarterly Report on Form 10-Q filed with the SEC and the supplemental investor presentation which can be found on the Company's website at ____________________________________________ (1) Excludes non-controlling interest in New Mountain Net Lease Corporation ('NMNLC'). (2) Originations exclude payment-in-kind ('PIK'); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses. (3) Excludes the Company's United States Small Business Administration ('SBA') guaranteed debentures. (4) Dividend yield calculation uses the closing stock price of $9.97 on May 2, 2025 and $12.72 on April 29, 2024 and includes regular dividends for Q1 2025 and regular and supplemental dividends for Q1 2024. (5) Includes collateral for securities purchased under collateralized agreements to resell. (6) References to 'YTM at Cost' assume the accruing investments, including secured collateralized agreements, in the Company's portfolio as of a certain date, the ''Portfolio Date'', are purchased at cost on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. This calculation excludes the impact of existing leverage. YTM at Cost uses the Sterling Overnight Interbank Average Rate ("SONIA'), Euro Interbank Offered Rate ("EURIBOR") and Secured Overnight Financing Rate ('SOFR') curves at each quarter's respective end date. The actual yield to maturity may be higher or lower due to the future selection of SONIA, EURIBOR and SOFR contracts by the individual companies in the Company's portfolio or other factors. (7) Includes investments held in NMNLC. (8) Excludes NMFC Senior Loan Program III LLC ("SLP III"), NMFC Senior Loan Program IV LLC ("SLP IV") and NMNLC. (9) Includes investments classified as structured finance obligations. Expand New Mountain Finance Corporation Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) (unaudited) December 31, 2024 Assets Investments at fair value Non-controlled/non-affiliated investments (cost of $2,276,008 and $2,298,083, respectively) $ 2,260,728 $ 2,277,352 Non-controlled/affiliated investments (cost of $126,927 and $124,254, respectively) 110,558 112,776 Controlled investments (cost of $690,008 and $679,587, respectively) 662,925 700,896 Total investments at fair value (cost of $3,092,943 and $3,101,924, respectively) 3,034,211 3,091,024 Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively) 13,500 13,500 Cash and cash equivalents 85,496 80,320 Interest and dividend receivable 41,239 42,379 Derivative asset at fair value 3,117 — Receivable from affiliates 247 213 Other assets 18,841 19,265 Total assets $ 3,196,651 $ 3,246,701 Liabilities Borrowings Unsecured Notes $ 985,227 $ 978,503 Holdings Credit Facility 270,563 294,363 SBA-guaranteed debentures 262,500 300,000 2022 Convertible Notes 258,846 260,091 NMFC Credit Facility 29,059 27,944 Deferred financing costs (net of accumulated amortization of $66,182 and $63,971, respectively) (23,343 ) (24,191 ) Net borrowings 1,782,852 1,836,710 Interest payable 18,437 17,109 Payable for unsettled securities purchased 12,022 — Payable to broker 10,130 3,230 Management fee payable 9,945 10,467 Incentive fee payable 6,714 8,625 Derivative liability at fair value 3,368 7,423 Deferred tax liability 1,432 1,410 Other liabilities 3,573 2,436 Total liabilities 1,848,473 1,887,410 Commitments and contingencies Net assets Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued — — Common stock, par value $0.01 per share, 200,000,000 shares authorized, and 107,851,415 and 107,851,415 shares issued and outstanding, respectively 1,079 1,079 Paid in capital in excess of par 1,365,824 1,365,852 Accumulated undistributed earnings (24,691 ) (13,592 ) Total net assets of New Mountain Finance Corporation $ 1,342,212 $ 1,353,339 Non-controlling interest in New Mountain Net Lease Corporation 5,966 5,952 Total net assets $ 1,348,178 $ 1,359,291 Total liabilities and net assets $ 3,196,651 $ 3,246,701 Number of shares outstanding 107,851,415 107,851,415 Net asset value per share of New Mountain Finance Corporation $ 12.45 $ 12.55 Expand New Mountain Finance Corporation Consolidated Statements of Operations (in thousands, except shares and per share data) (unaudited) Three Months Ended March 31, 2025 March 31, 2024 Investment income From non-controlled/non-affiliated investments: Interest income (excluding Payment-in-kind ("PIK") interest income) $ 52,113 $ 56,237 PIK interest income 2,913 4,683 Dividend income 557 293 Non-cash dividend income 4,434 4,684 Other income 1,312 1,600 From non-controlled/affiliated investments: Interest income (excluding PIK interest income) 331 368 PIK interest income 987 836 Non-cash dividend income 1,683 1,244 Other income 63 63 From controlled investments: Interest income (excluding PIK interest income) 1,485 1,361 PIK interest income 3,688 4,135 Dividend income 12,198 12,683 Non-cash dividend income 2,071 1,496 Other income 1,828 873 Total investment income 85,663 90,556 Expenses Interest and other financing expenses 31,374 31,016 Management fee 10,233 10,997 Incentive fee 8,247 9,389 Professional fees 1,389 1,067 Administrative expenses 1,104 968 Other general and administrative expenses 516 465 Total expenses 52,863 53,902 Less: management and incentive fees waived (1,822 ) (901 ) Net expenses 51,041 53,001 Net investment income before income taxes 34,622 37,555 Income tax (benefit) expense (19 ) 1 Net investment income 34,641 37,554 Net realized (losses) gains: Non-controlled/non-affiliated investments (1,074 ) (11,858 ) Controlled investments 38,899 31 Net change in unrealized appreciation (depreciation): Non-controlled/non-affiliated investments 4,206 23,160 Non-controlled/affiliated investments (4,891 ) (22,463 ) Controlled investments (48,392 ) 2,320 Foreign currency 150 (23 ) Provision for taxes (22 ) (637 ) Net realized and unrealized losses (11,124 ) (9,470 ) Net increase in net assets resulting from operations 23,517 28,084 Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation (104 ) (676 ) Net increase in net assets resulting from operations related to New Mountain Finance Corporation $ 23,413 $ 27,408 Basic earnings per share $ 0.22 $ 0.26 Weighted average shares of common stock outstanding - basic 107,851,415 103,660,370 Diluted earnings per share $ 0.22 $ 0.26 Weighted average shares of common stock outstanding - diluted 126,852,911 122,443,478 Distributions declared and paid per share $ 0.32 $ 0.36 Expand ABOUT NEW MOUNTAIN FINANCE CORPORATION New Mountain Finance Corporation (NASDAQ: NMFC) is focused on providing direct lending solutions to U.S. upper middle market companies backed by top private equity sponsors. Our investment objective is to generate current income and capital appreciation through the sourcing and origination of senior secured loans and select junior capital positions, to growing businesses in defensive industries that offer attractive risk-adjusted returns. Our differentiated investment approach leverages the deep sector knowledge and operating resources of New Mountain Capital, a global investment firm with over $55 billion of assets under management. ABOUT NEW MOUNTAIN CAPITAL New Mountain Capital ("NMC") is a New York-based investment firm that emphasizes business building and growth, rather than debt, as it pursues long-term capital appreciation. The firm currently manages private equity, credit and net lease investment strategies with over $55 billion in assets under management. New Mountain seeks out what it believes to be the highest quality growth leaders in carefully selected industry sectors and then works intensively with management to build the value of these companies. For more information on New Mountain Capital, please visit Statements included herein may contain 'forward-looking statements', which relate to our future operations, future performance or our financial condition. Forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including changes in base interest rates and significant volatility on our business, portfolio companies, our industry and the global economy. Actual results and outcomes may differ materially from those anticipated in the forward-looking statements as a result of a variety of factors, including those described from time to time in our filings with the Securities and Exchange Commission or factors that are beyond our control. New Mountain Finance Corporation undertakes no obligation to publicly update or revise any forward-looking statements made herein, except as may be required by law. All forward-looking statements speak only as of the time of this press release.
Yahoo
24-03-2025
- Business
- Yahoo
DNA testing firm 23andMe files for bankruptcy to sell itself; CEO leaves after failed bids
(Reuters) - Genetic testing firm 23andMe said on Sunday it filed for Chapter 11 bankruptcy protection in the U.S. to help the $50 million company sell itself and that CEO Anne Wojcicki had resigned after multiple failed takeover bids. 23andMe, whose saliva-based test kits help customers learn about their ancestry, had cut about 40%, or 200 employees, of its workforce and stopped development of all its therapies as part of a restructuring program announced in November. Wojcicki, to be replaced by CFO Joe Selsavage on an interim basis, has been pushing for a buyout since April last year but 23andMe's board has rejected all offers. The latest offer was for $0.41 per share earlier this month, an 84% cut to a $2.53-per-share offer the previous month since her partner in that bid, private equity firm New Mountain, had walked away after the board rejected the proposal. The latest offer valued 23andMe at about $11 million, below its current value of $50 million, per LSEG data, and a far cry from the $3.5 billion market capitalization when it went public in 2021. "After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business," Chair Mark Jensen said in a statement. 23andMe said it has secured a debtor-in-possession (DIP) financing commitment for about $35 million and expects to continue operating during the sale process. It did not say if it had any other buyout interest or offers. It listed both assets and estimated liabilities in a range of $100 million to $500 million in the court filing. A month before its restructuring program, 23andMe agreed to pay $30 million and give three years of security monitoring to settle a lawsuit accusing it of failing to protect the privacy of 6.9 million customers whose personal information was exposed in a data breach in 2023.
