Castlight Health, a company that made a name for itself with making price transparency in healthcare easier for self-insured employers, has acquired Jiff, a health IT company that developed an employee benefits marketplace with the idea of making these benefits easier to manage, according to a company press release. As part of the deal, Castlight will give 27 million shares and options to former Jiff equity holders, when the deal closes in the first half of 2017. Those shares represent about 20 percent of the combined company on a fully-diluted basis.
Castlight’s president and chief operating officer, John Doyle, will be CEO of the combined company and take over from Giovanni Colella, who will serve as executive chairman of the board at Castlight. Jiff’s current CEO, Derek Newell, will be the president. Newell’s responsibilities will include heading up sales and marketing, research and development, and professional services.
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One of the biggest challenges facing employers is underutilization of health benefits by their employees. Both companies have made employee engagement a priority but have taken very different approaches to addressing this hurdle. On a call with investors Wednesday, Doyle explained why combining the two companies makes sense.
“Companies are demanding a simpler way to procure and deliver integrated health benefits solutions and monitor those results. We wanted to move faster to satisfy this need,” Doyle said.
“What is exciting here from Castlight’s perspective is we have focused our engagement efforts very precisely on folks who have an ongoing healthcare need they are trying to address. And that, by definition, tends to be episodic. As a result, you are typically engaging a subset of the employee population and in that subset, you are engaging them at the highest rates when they actually need care.”
Doyle added that Jiff has been able to apply engagement strategies to the broader area of engaging employees in wellness, from people looking to manage active lifestyle challenges from their employer to a whole range of items that go behind healthcare.
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“The benefit of bringing these solutions together is you are top of mind for a range of employees on a more consistent basis.”
Newell noted on the call that underutilization of benefits is a huge problem for employers and has proved challenging to solve. He noted that Jiff improved engagement by creating a more seamless, consumer-focused, mobile-led user experience and a connected ecosystem of solutions from different vendors organized in an app marketplace. Its platform is designed to make it easy to design benefits according to a customer’s priorities and for employees to sign up and register for them. He added that its platform can increase engagement somewhere between two and five times what it was before a company became a customer.
The combined business will bring together strategic partners, such as Jiff’s channel referral relationships with Willis Towers Watson and Mercer. Castlight also has strategic partnerships with Anthem and SAP.
Doyle said the combined company probably would not have products combining their technologies until 2018.
Castlight went public in 2014. Last year, Jiff closed a $41.2 million Series C round with investors Rosemark Smart Capital, GE Ventures, Venrock Associates, Aberdare Ventures and Aeris Capital.
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