Inside OpenEvidence: The Art of Selling a $500M Company for $15B
Short summary
A journalist investigates OpenEvidence's $15B valuation after the company signaled openness to acquisition, arguing the "ChatGPT for doctors" startup is worth roughly one-third that amount based on comparable healthtech deals and its claimed $300M ARR.
- OpenEvidence claims $300M in annual recurring revenue but comparable healthtech acquisitions suggest a $500M valuation maximum; founder Daniel Nadler is seeking 30x that amount, relying on his Goldman Sachs network and investor clout to pull it off.
- Livongo's acquisition by Teladoc for $18.5B followed by a $340M writedown serves as a cautionary tale for OpenEvidence's valuation, showing how healthtech M&A can collapse post-acquisition when growth claims don't materialize.
- The author's Part 2 investigation will examine OpenEvidence's actual technology, its lack of proprietary content (publishers can pull it anytime), and accuracy issues ranging from 100% on standardized tests to 27% on real-world medical cases.
Full summary
OpenEvidence just raised $250M at a $15B valuation from Andreessen Horowitz and hospital systems, but the real story buried in the Business Insider coverage is that the company is shopping itself for acquisition—specifically looking for a buyer with computing resources. The founder Daniel Nadler, a Goldman Sachs veteran, is asking for roughly 30 times what the company is actually worth. By any standard metric the author can find, OpenEvidence's claimed $300M in annual recurring revenue translates to a business valued around $500M, not $15B. The author has been investigating OpenEvidence for over a year and still can't get a straight answer about what the company actually does—Nadler refused multiple requests for comment, so the author relied on confidential sources, court filings, and public records instead.
The investigation uses OpenEvidence as a case study in healthtech M&A economics, with Livongo serving as the cautionary precedent. Livongo sold to Teladoc for $18.5B in 2020, generating massive returns for founders and VCs, but the company later took a $340M writedown and faced serious questions about its actual market value. The author is asking whether Nadler can pull off a similar trick in an even more expensive sector. Part of his appeal to potential acquirers seems to rest on his Wall Street credentials—he's a deal guy like Ali Parsa, the Livongo founder—but the author notes that OpenEvidence's recent hires from Doximity lasted only 10 to 14 months, which raises red flags about retention and internal dynamics.
Next week's follow-up will examine what's actually under OpenEvidence's hood: whether it has any real competitive advantage, who owns the medical content it uses (spoiler: not OpenEvidence), and some uncomfortable accuracy numbers—the company claims 100% performance on USMLE exams but only 27% accuracy on real-world cases. There's also a Nature Medicine paper that apparently triggered a PR crisis. The author's tone makes clear he thinks there's a significant gap between OpenEvidence's valuation story and its actual capabilities, and he's structured this as a two-part investigation specifically to dig into whether the technology itself holds up.