News Stay informed about the latest enterprise technology news and product updates.

Health benefits administration software vendor merger a big deal

Benefits technology company Castlight acquired wellness vendor Jiff to form a combined health benefits and wellness firm that is a leader in the space.

In a major recent HR tech deal, health benefits administration software vendor Castlight Health Inc. acquired wellness...

software firm Jiff Inc. to form a combined company that is an independent leader in the growing segment.

In the April 2017 transaction, the publicly traded company issued about 27 million shares to former Jiff equity holders, which Castlight executives said amounted to 20% of the worth of the combined company. Castlight said another 4 million shares would be issued contingent on Jiff hitting 2017 growth targets.

Castlight shares in May 2017 were trading at about $4 at the time of the acquisition, valuing the deal at about $112 million.

A big deal in the health benefits administration software niche

That puts it among the biggest HR tech deals in 2017 and among the biggest involving HR tech and health benefits administration software startups since outsourcing tech vendor Ceridian HCM Inc.'s $150 million round of equity financing in March 2016.

Also in 2016, Liepen, a Chinese internet recruitment company, announced a $100 million bond financing round, and another Chinese HR tech vendor, FXiaoKe, raised $70 million, according to market research firm CB Insights.

Derek Newell, president, Castlight HealthDerek Newell

Last year, HR tech business activity hit a record level, with 402 deals totaling about $2.2 billion, CB Insights said.

Derek Newell, former CEO at Jiff and now president of Castlight, based in San Francisco, said the new combined company is a sort of hybrid whose software platform combines digital health and HR tech in one system.

"Jiff and Castlight both very much came out of the digital health world," Newell said. "And we both ended up in this HR platform space."

Market still young

One observer of the HR tech category, Josh Bersin, principal and founder of Bersin by Deloitte, said the market for integrated health, wellness and employee performance platforms is just getting started.

"While this deal shows there's a desire for larger platforms, I think it's still in the very early days -- and companies may soon look at wellness and health data in conjunction with job performance data, safety data and other forms of employee data," Bersin said.

Josh Bersin, principal, Bersin by DeloitteJosh Bersin

With Castlight jockeying with the likes of Welltok, Virgin Pulse and Limeade, as well as other innovative HR tech and digital health vendors, big healthcare providers and insurance companies still dominate the space because of their financial relationships through corporate benefits programs, Bersin said.

"There are a lot of small vendors and a few bigger ones. All are growing, but they actually tend to be ahead of the buyers," Bersin said.  "Most HR departments are not sure what to buy and how important these platforms will be yet. And, frankly, some of these solutions are not proven for every role in a company."

Merged health and wellness orientations

Meanwhile, Jiff's approach was to offer consumer health apps, devices and services for HR departments to use in corporate well-being programs, and the company saw itself as an HR tech layer between the digital health world and HR administrators and employee users.

Jiff and Castlight both very much came out of the digital health world. And we both ended up in this HR platform space.
Derek Newellpresident, Castlight Health

Castlight's strategy, meanwhile, has been to use data to approach digital health issues by engaging users with benefits via benefits administration software, Newell said.

"As the ecosystem expanded, what really became necessary was to plug in a variety of digital health solutions into one centralized 'hub,' which people are looking for both to simplify both the user and the administrator experience," Newell said.

Together, the incarnation of Castlight including Jiff calls its main system a "health benefits platform."

Digital transformation of benefits administration

Castlight also sees itself at the forefront of the digitization of benefits processes, which has spawned a still smallish but rapidly expanding space within the HR tech market, and follows the digital transformation of human capital management and talent acquisition and retention.

"The digitization of HR processes -- the things that were formerly manual or paper -- was sort of low-hanging fruit, the first wave," Newell said. "That's been happening over the last decade, and the major players have sort of emerged.

"What we're trying to do in terms of helping people manage their benefits together is to pull all the benefits better in a way that employees can consume them, as well as take advantage of this explosion of new digital health solutions that is occurring," he added.

For example, health and benefit apps and software targeting health and medical issues, such as fertility, maternity, asthma, diabetes, weight control and other conditions, have exploded in recent years.

"The ability of an employer to link all those to benefits design and dynamically adjust the way they interface with their employees and [digitize] the healthcare benefits space is a harder problem to solve," Newell said.

Ten years ago, it wasn't possible at all because smartphones were not ubiquitous and personal health IT applications were few. "But in the last four or five years, that basic technology infrastructure has emerged en masse," Newell said.

"Employers have realized they can do benefits and benefits design in a totally different way, and that has really accelerated both Castlight's business and Jiff's business," he said.

One of the Castlight platform's key functions is to aggregate and analyze employee health, wellness and other data to design incentives and individualize benefits offerings to lower employer health insurance costs and, according to the company, improve healthcare and wellness benefits quality for workers.

Next Steps

Benefits administration and analytics

Macy's uses HCM benefits administration software from Oracle

Wellness wearables on display at Connected Health event

Dig Deeper on SaaS HR

PRO+

Content

Find more PRO+ content and other member only offers, here.

Join the conversation

1 comment

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

How does your company deploy benefits administration software to improve employee health and wellness benefits engagement?
Cancel

-ADS BY GOOGLE

SearchManufacturingERP

SearchSAP

SearchOracle

SearchBusinessAnalytics

SearchContentManagement

SearchDataManagement

SearchCRM

Close