Castlight Health Acquires Jiff for $135 Million to Strengthen Employee Health Benefits Platform

On January 5, Castlight Health, a platform offering consumers personalized and highly transparent price comparison services, announced its strategic acquisition of Jiff, another digital health benefits platform. Castlight will pay approximately $135 million, including 27 million shares of Castlight stock and options issued to Jiff’s shareholders. Both companies, based in California, were relatively early entrants into the employee health management sector. Castlight was founded in 2008, and Jiff was established in 2016.

As for the reasons behind the merger, Jiff and Castlight’s products (not to mention their existing customer bases) are highly complementary. Castlight provides a suite of transparency tools that enable employers to help employees save on healthcare costs, while Jiff offers a platform connecting employees with various vendors for health and wellness programs.Health data are primarily collected from employees through wearable devices and their associated mobile applications, with results derived from data analysis. By implementing Jiff’s health management solution, employee health levels can be improved, and healthcare expenditures will be significantly reduced.Regarding the merged platform, the two parties stated in a press release: “We will seek to improve every aspect of the employee health experience: from staying healthy, to accessing care, to managing conditions.”

In the era of big health, where value-based healthcare is gaining prominence, Castlight has demonstrated strong momentum in its business model and profitability in recent years. After launching a series of well-known subscription services, the company achieved simultaneous growth in revenue and cash flow in the second quarter of 2016. Furthermore, the company is integrating its health benefits platform into its sales model, leveraging the dataset provided by the Castlight Elevate platform to identify employees who may have behavioral health issues and connect them with appropriate medical services.

In its third-quarter earnings announcement, Dr. Giovanni Colella, Co-Founder and CEO of Castlight Health, announced a $7 million increase in the company’s contractually recurring revenue, maintaining its dominant position among large enterprises such as Caterpillar, Genentech, and Amsino.

“Jiff harnesses the power of digital health solutions and related ecosystems, integrating them to drive employee engagement. By combining Castlight’s robust data assets with personalized messaging capabilities, we have already transformed how employees make health decisions. I believe that together we will become the industry leader in corporate health management,” said Derek Newell, CEO of Jiff.

In terms of personnel changes, Newell will become the president of the new company, while John Doyle, current President and Chief Operating Officer of Castlight, will assume the role of CEO. Dr. Giovanni Colella, currently Castlight’s Chief Executive Officer, will serve as Executive Chairman of the Board, focusing on deepening key partnerships and customer relationships. A veteran in the healthcare entrepreneurship sector, Dr. Colella previously founded RelayHealth, a health information technology company aimed at improving clinical communication, which was ultimately acquired by McKesson Corporation in 2006. Subsequently, driven by concerns over the lack of transparency in healthcare pricing, Dr. Colella conceived the idea of establishing a “transparent healthcare” company.

“Employers are calling for integrated products and more comprehensive health benefits solutions, and our portfolio of plans responds to that call. The deep integration of our leadership teams reflects our firm belief in complementary win-win partnerships and is essential to our transformation. In fact, we believe that the combination of Castlight and Jiff will enable us to achieve our goals more rapidly, expanding our platform and accelerating growth on a larger revenue base. The union of Castlight and Jiff will create significant value for our shareholders and substantial growth opportunities for our talented employees,” Doyle said in a statement.

Prior to the acquisition, Jiff’s total funding amounted to less than $68 million, indicating a relatively favorable valuation for this transaction. According to Castlight, the company aims to realize investment returns by the end of 2018, leveraging its scale to address operational inefficiencies and resource waste within Jiff.

Colella stated in a press release, “Despite all the changes that have occurred in healthcare, one thing remains constant: employers continue to offer health care benefits.” Both companies are deeply committed to employee well-being, and this market offers substantial return on investment. It is a significant challenge, and we believe that the combination of Castlight and Jiff represents an effective approach and an excellent solution to address this issue.