Shares in Castlight Health rose sharply Wednesday morning after the announcement that Vera Whole Health bought Castlight for $ 370 million, thereby taking it privately.
One of the early digital healthcare companies that went public, the San Francisco-based healthcare navigation platform aims to help consumers better understand what their own costs are so they can save money on care. The company’s goal was literally to shed light on the opaque world of medical costs.
However, after a much-publicized IPO in 2014, Castlight never lived up to the hype. After briefly touching, $ 40 per. share at the time of listing, the share has disappeared. On Tuesday, before the announcement, the stock closed at just $ 1.64. In the last quarter, which ended Sept. 30, the company had a loss of $ 1.9 million compared to a loss of about $ 500,000 in the previous quarter a year ago.
Vera, a value-based primary care provider headquartered in Seattle, all outstanding shares in Castlight for $ 2.05 per share. share, a premium of 25% relative to the closing price on Tuesday and a premium of 35% relative to the 30-day weighted average stock price. The stock essentially matched that price per share on Wednesday afternoon trading on the New York Stock Exchange.
The agreement, which was unanimously given the green light by Castlight’s board, must still be reviewed by regulators. Castlight’s competitors are many, ranging from PokitDot, which helps consumers buy treatment and medical services, to another cloud-based platform focusing on transparency related to health quality, MPIRICA Health Analytics.
Insurance companies and self-insured employers work with healthcare navigation platforms to reduce costs while helping patients optimize treatment in a fragmented healthcare system. With the Castlight and Vera pairing, investors are betting on being able to scale these efforts in a way that better serves consumers and expands the reach of the combined entity.
Vera’s largest shareholders Clayton, Dubilier & Rice have committed to invest up to $ 338 million in the new company, and the key customer at Castlight Anthem also plans to invest in the combined company. Former Aetna chairman and CEO Ron Williams will serve as the new company’s chairman.
“We believe the combined company has a unique opportunity to deliver large-scale innovation to the commercial customer segment and accelerate the restructuring of the healthcare market to a stronger focus on value,” said Williams, who is also an operations consultant for CD&R funds. in a press release announcing the merger.
Morgan Health, a JP Morgan Chase & Co company seeking to transform employee health care, and the nation’s largest physician-owned primary care group, Central Ohio Primary Care, have also been named strategic partners in the combined company.
In a statement, Maeve O’Meara, who took over Castlight as the company’s CEO in 2019, hailed the merger as an opportunity to provide a personalized patient experience while helping providers improve results and reduce costs.
While Castlight has been able to document medical cost savings, it has struggled to communicate those savings in a clear, easy-to-understand way. And again, when it comes to helping consumers shop around, it’s a crowded field; and many options are free. It has made it a challenge to grow its business, but Castlight has still found its way into strategic partnerships, such as that with longtime customer Anthem.
O’Meara has previously stressed the importance of having relationships at all levels of an organization from benefit consultants to health plans to having a healthy, growing business. And the merger with Vera will greatly expand these relationships to expand its reach as part of a combined company.
One PR person declined to elaborate on details of the release, including what O’Meara’s role is or what position Ryan Schmid, founder and CEO of Vera, will have in the combined company.
“We believe this is a milestone for the healthcare system because of the way it combines benefits and care navigation, including digital touch points, in a patient’s primary care setting,” added Ravi Sachdev, CD&R partner and member of Vera’s board, in the news release. “We believe that a combination of these two innovative companies will transform care in local markets across the country.”
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