Brookfield, Wisconsin-based Connecture, an online health insurance marketplace platform, has raised $17.5 million in new financing, according to an SEC filing, with San Francisco-based Francisco Partners leading the round. This brings the company’s total funding to nearly $132 million.
Founded in 1999, Connecture makes a variety of SaaS products to connect health plans, payers and government agencies. The latest investment from Francisco Partners also brought the firm a new level of operating management power – the investors now control more than half of Connecture’s common stock equivalents.
During the fourth quarter earnings announcement, Connecture President and CEO Jeff Surges noted that even though the company added new customers and went through another open and annual enrollment phase, certain political forces made 2016 a tough year for Connecture.
“[T]he uncertain political status of the Affordable Care Act and proposed health plan merger activity created market headwinds which impacted our growth expectations,” Surges said in a statement. “Additionally, our profitability significantly suffered from greater than expected resources required to support certain customers through the 2016 enrollment period and disappointing volume in our variable revenue arrangements.”
To recoup those losses, Surges said the company implemented “substantial cost reductions” in the fourth quarter, from which they expect to see improvements soon. They will also get a new member to their board of directors along with the investment from Francisco Partners.
“The investment will provide us with the necessary capital to execute our 2017 operating plan and grow our Private Exchange, Enterprise Commercial, and market-leading Medicare business,” Surges stated. “With a new leadership team, a laser focus on achieving profitability through an emphasis on fixing our pricing and cost structure, and an expected improvement in the general market conditions, we expect to build upon our customer successes while also improving our financial performance.”