Castlight Health’s $135 million acquisition of Jiff in January was not just a merger. It was a strategy shift, even an identity change for the company— from a healthcare cost transparency vendor to a comprehensive employee wellness company. On the company’s second quarter earnings call, CEO John Doyle updated investors on that transition.
“In our view, the new Castlight is the only health benefits platform that covers the full spectrum of wellbeing, healthcare decision support, and benefits hub all in one complete package,” Doyle said. “Our integrated solutions are purpose built to help human resources leaders and employees successfully manage the complexity of healthcare and the highly fragmented ecosystem of healthcare and wellbeing programs. And while it’s still very early in the evolution of our merged business, we are pleased to report solid financial results for Q2 because they indicate to us that our customers are excited about where we're headed together.”
Coming out of the acquisition, Castlight posted a quarter with an operating loss of $18 million, up from $16 million in Q2 2016. But revenue — at $32.1 million was up 36 percent year over year. The company is predicting cash flow break even next year.
Castlight’s leadership believes that a combined Jiff-Castlight product won’t just be easier to use than other offerings on the market, it will also be easier to sell.
“For years now, as the digital health ecosystem has kind of exploded in number and variety of companies and offerings, we've overwhelmed, as a group, the ability of HR departments to process through all that functionality, to form independent contractual relationships with a whole bunch of small vendors, and then to manage those relationships over time. We’ve seen incredible fatigue on the part of our buyer,” Doyle said during the Q&A. “… In a lot of cases we’re bringing functionality that they are already committed to as organizations. But now we’re bringing it to them under the umbrella of a single relationship.”
So far, Castlight and Jiff’s combined functionality has been sold into 10 percent of the customers Castlight works with — just under 25 accounts. That’s up from six accounts at the end of Q1.
Doyle talked about a new app Castlight launched during the quarter, one that was in the works even before the acquisition.
“In addition to integrating our businesses and product roadmaps, we have continued to innovate aggressively our existing products that our customers and users rely on. In May, Castlight launched a new mobile application that represents a step change improvement for end users. This launch was more than a year in the making and the team delivered a top-notch result as registrations, engagement metrics and net promoter scores have all been trending higher week by week,” Doyle said. “We believe this new app is delivering a world class user experience and we will continue to invest aggressively in data quality, design infrastructure, and customer research so we can continue to set the standard for product innovation and quality of delivery in the world of digital health.”
In 2018, the company plans to create a new, "fully integrated" app leveraging both Castlight and Jiffs' core competencies.
“We will be giving employers the product they’re asking for: A single app that engages employees with the right benefit, at the right time— whether they are accessing care, managing a condition, or focused on their own wellbeing,” Doyle said.