Shares of Castlight Health stock rose sharply Wednesday on the morning’s announcement of Vera Whole Health purchasing Castlight for $370 million, thereby taking it private.

One of the early digital health companies to go public, the San Francisco-based healthcare navigation platform aims to help consumers better understand what their out-of-pocket costs are, so they can save money on care. The company’s aim was to literally shed light on the opaque world of medical costs.

However, after a much touted initial public offering in 2014, Castlight never lived up to the hype. After briefly touching, $40 per share at the time of the IPO, it’s stock has languished. On Tuesday, before the announcement, the stock closed at a mere $1.64. In the last quarter, ended Sep 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 of Castlight for $2.05 per share, a 25% premium to the closing price Tuesday, and a 35% premium to the 30-day weighted average share price. The stock essentially matched that price per share Wednesday afternoon in trading on the New York Stock Exchange.

The deal, which got the unanimous greenlight from Castlight’s board of directors, still must be reviewed by regulators. Castlight’s competitors are many, ranging from PokitDot, which helps consumers shop for treatment and medical services, to another cloud-based platform focused on transparency related to healthcare quality, MPIRICA Health Analytics.

Insurance companies and self-insured employers are partnering 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 banking on being able to scale those efforts in a way that better serves consumers and expands the combined entity’s reach.

Vera’s major equity holder Clayton, Dubilier & Rice has committed to investing up to $338 million in the new enterprise, and key Castlight customer 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,” Williams, who is also the operating advisor to CD&R funds, said in a news release announcing the merger.

Morgan Health, a JP Morgan Chase & Co business seeking to transform employee healthcare, and the nation’s largest doctor-owned primary care group, Central Ohio Primary Care, have also been named as strategic partners in the combined company.

In a statement, Maeve O’Meara, who took over Castlight as the company’s CEO in 2019, touted the merger as an opportunity provide a provide a personalized patient experience, while helping providers improve outcomes and lower costs.

While Castlight has been able to document medical cost savings, it’s struggled to communicate those savings in a clear way that’s understood easily. And, again, when it comes to helping consumers shop around, it’s a crowded field; and many options are free. That’s made it a challenge to grow its business, but Castlight has still found its way to strategic partnerships, like that with longtime customer Anthem.

O’Meara has stressed previously the importance of having relationships with every level of an organization from benefits consultants to health plans to have a healthy, growing business. And the merger with Vera will greatly expand those relationships to extend its reach as part of a combined company.

A PR person declined to elaborate on details in the release, including what O’Meara’s role be or what position Ryan Schmid, founder and CEO of Vera, will hold in the combined company.

“We believe this is a milestone for the healthcare system because of the way it merges benefits and care navigation, including digital touchpoints, into a patient’s primary care relationship,” added Ravi Sachdev, CD&R Partner, and member of Vera’s board of directors, in the news release. “We believe a combination of these two innovative companies will transform care in local markets across the country.”

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