This week San Francisco-based Castlight Health, which offers a personalized health care shopping platform that helps employees better understand the price of medical services and the quality of certain providers, announced that it has raised $100 million in its fourth round of funding. That is the largest amount of funding in a single round that MobiHealthNews has ever reported on.
Investors included T. Rowe Price, Redmile Group and two unidentified mutual funds. The round brings the company's total funding to $181 million. The latest investment round included participation from existing investors, which include Morgan Stanley Investment Management, The Wellcome Trust, U.S. Venture Partners, Cleveland Clinic, Maverick Capital, Oak Investment Partners and Venrock, according to Dan Primack over at Fortune.
Castlight Co-founder and CEO Giovanni Colella told Forbes that he expects the company to IPO next. He said that in the face of increasing competition from similar tools coming out from health plans, this "record breaking" amoung of money “signals to the market that we’re here to stay,” he said.
Castlight's other co-founders include Todd Park, the current US Federal CTO and former CTO of HHS, as well as Bryan Roberts, a partner at venture capital firm (and Castlight investor) Venrock.
At the end of March, Castlight Health launched its first mobile app: Castlight Mobile, which is currently available as a native app for Apple iOS and Google Android devices users. The company suggests BlackBerry users and others can access the platform through an optimized mobile site. Of course, the free apps are only available to employees at companies that already use Castlight’s healthcare costs platform.
The company claims to have "dozens of leading organizations" already signed on as customers. They include: Allegis Group, Honeywell, Life Technologies and Regis Corporation. Castlight told Forbes that 70 percent of its customers’ employees use Castlight’s price comparison tool. About 61 percent of them said the tool helped them change their spending habits.
Castlight currently has 100 employees, and it plans to use some of the new funds to build out its sales team and beef up its marketing spend, Forbes reports. Castlight also plans to extend its service to help create more cost transparencies around medications -- according to a report in TechCrunch -- and that's what another startup, called GoodRx, is developing. GoodRx launched its own app for comparing the prices at competing pharmacies earlier this year.
Ethan Prater, vice president of products at Castlight Health told MobiHealthNews in an interview last month that the company's recently launched mobile app will make it easier for Castlight users to engage their primary care providers in discussions about costs and quality measures for specialists the PCP refers them to.
“We call this feature ‘check your referral’,” Prater said at the time. “People don’t generally want to change their primary care physician since that is someone they trust. It’s not where the cost is, anyway. The cost is in downstream referrals like specialists. So we created this feature that enables users at the point of care… to very quickly look up and locate the specialist [the PCP recommends] using the app. Then, [the patient] can view that specialist’s cost and quality metrics and ask [their] provider: Is this the specialist we are talking about?”
Prater said the conversation can then turn to other option that the app calls the patient’s attention to and help start a conversation about higher quality and lower cost options for referrals.
For more on the huge $100 million round of funding, read the press release below:
PRESS RELEASE: May 1, 2012 – SAN FRANCISCO – Castlight Health, the leading provider of health care transparency solutions, today announced it has secured $100 million in Series D funding. With this investment, the company will aggressively capitalize on growing customer demand for health care transparency solutions that improve the quality of health care and deliver savings to customers and users. The round brings Castlight Health’s total funding to $181 million and includes participation from two major unnamed mutual funds, as well as T. Rowe Price, Redmile Group and previous investors.
“As the recognized market leader, we know the vast potential for our health care transparency solutions,” said Giovanni Colella, M.D., co-founder and CEO of Castlight Health. “Castlight Health has achieved tremendous growth in a short period of time and currently maintains a strong cash position. By expanding our funding, we can respond to the growing demand for our solutions, seize major market opportunities, increase the breadth of our offerings and extend our reach. We believe there is a huge opportunity to better engage companies and their employees as they make health care decisions and the latest round of funding will allow us to further innovate the way health care is consumed.”
United States health insurance premiums increased by an average of 8.0 percent between 2000 and 2009, whereas average household income rose by an average of only 2.1 percent[i].To combat this increase, many employers are asking employees to pay a larger portion of their health care. Without the proper tools, employees are forced to make decisions based on limited information and little understanding of options, ultimately resulting in lower quality, higher costs and a decline in overall satisfaction. Founded in 2008, Castlight Health established the health care transparency market to directly address this need.
“The health care industry is in dire need of innovation,” said Bryan Roberts, partner at Venrock and co-founder and chairman of Castlight Health. “Castlight has the opportunity to dramatically improve the efficiency of the U.S. health care system, providing employers and consumers with the information required to make good cost and quality health care decisions. Over the last two years, Castlight Health has created the unique products to drive customer traction and ROI, which sets them on a terrific growth trajectory over the next several years.”
Graham McPhail of T. Rowe Price commented, “We were attracted to Castlight Health’s strong management team and the leadership position it has already established in the market. Castlight appears poised to dominate the segment and transform how users consume health care.”
“Traditionally, individuals have been very passive participants in managing their health care, as they have no insight into the cost and quality of the services,” said Dr. Toby Cosgrove, CEO of the Cleveland Clinic. “Transparency in health care can lead to higher-quality, lower-cost health care, as well as more consumer engagement. With its innovative technology and strong understanding of the market, Castlight is well positioned to make health care transparency a reality and transform how users make decisions.”
With its health care management suite, Castlight Health enables employers to make reliable cost and quality data for medical services available to employees via the Web or mobile devices. Already, dozens of leading organizations including Allegis Group, Honeywell, Life Technologies and Regis Corporation are leveraging Castlight’s advanced technology and unparalleled expertise to engage employees and empower them to make more informed, cost-effective health care decisions.
About Castlight Health
Castlight Health enables employers, their employees, and health plans to take control of health care costs and improve care. Named #1 on The Wall Street Journal’s list of “The Top 50 Venture-Backed Companies” for 2011 and one of Dow Jones’ 50 Most Investment-Worthy Technology Start-Ups, Castlight Health helps the country’s self-insured employers and health plans empower consumers to shop for health care. Castlight Health is headquartered in San Francisco and backed by prominent investors including Allen & Company, Cleveland Clinic, Maverick Capital, Morgan Stanley Investment Management, Oak Investment Partners, Redmile Group, T. Rowe Price, U.S. Venture Partners, Venrock, Wellcome Trust and two unnamed mutual funds. For more information, please visit our web site at http://www.castlighthealth.com or call (415) 829-1400.