Datavant Buys a Brain: Why New Mountain Folded SmarterDx Into Its Health Data Pipe
Private equity firm New Mountain Capital is merging SmarterDx, its clinical AI revenue-integrity company, into Datavant, its health data exchange platform. The move combines a company that moves medical records with one that analyzes their clinical content for payment accuracy.
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According to sources cited by Octus, KKR and Neuberger Berman are providing $2.7 billion in preferred equity. An earlier report from Axios, also citing sources, said the merger would follow a planned $2.5 billion debt recapitalization for Datavant arranged by JPMorgan. In a September announcement, Datavant confirmed that KKR and Neuberger Berman would acquire a significant minority stake, with New Mountain retaining its majority control position.
In May 2025, the firm had combined SmarterDx, Access Healthcare, and Thoughtful.ai to create a broad revenue cycle management platform called Smarter Technologies, according to a Fierce Healthcare report. That platform was part of a larger package of companies involved in a proposed sale that later fell apart, Axios reported.
SmarterDx, led by co-founder and CEO Michael Gao, provides a clinical AI platform that reviews patient charts to find missing or incorrect diagnoses, according to the company. SmarterDx states on its website that it serves over 60 health systems, including Novant Health and McLaren Health Care. In a social media post, the company reported that its software helped McLaren Health Care uncover $11.3 million in realized annual net new revenue. According to reports from Axios and Octus, SmarterDx generates about $150 million in revenue, up from $50 million when New Mountain acquired it in 2025, but is not yet profitable.
Datavant, led by CEO Kyle Armbrester, operates a health data exchange for providers, payers, and life sciences companies. The company states it moves more than 60 million healthcare records annually and connects more than 80,000 providers. According to the same news reports, Datavant is on track to generate approximately $500 million in EBITDA this year.
Why it matters: A report from Signify Research noted that this is an increasingly important space, with established competitors including Cotiviti, Waystar, R1 RCM, and Optum. The same report observed that Datavant would be taking on significant debt and integrating an unprofitable unit, whereas some competitors entered the market from stronger financial positions.