An established but growing player in the health insurance technology space is looking to get big and serious.
Connecture, a Brookfield, Wisconsin-based firm with IT contracts for Medicare.gov, insurance exchanges and many commercial insurers, is planning an initial public offering, in an attempt to ride the stock market's digital health wave.
Founded as Simply Health in 1999, until 2013 Connecture was led by co-founder Dan Maynard, who left to head up a seniors health tech company. With a new CEO, former Thomson Reuters executive Doug Schneider, the company now processes some $130 billion in premiums for 70 insurers, including WellPoint and Kaiser Permanente, manages online platforms for 20 million insurance shoppers, and supports 30 public and private exchanges.
After a $20 million funding round for growth recapitalization led by Great Point Partners, Connecture is growing, with revenue doubling to $58 million between 2012 and 2013. Profits have not been seen lately, with losses of $12 million posted for the first half of 2014, according to the company's Securities and Exchange Commission filing.
But the company currently has $88 million in backlogged business, and its leaders and venture backers are bullish on growth prospects, estimating that government and private insurers spent $3.4 billion last year on health plan distribution and comparison technology -- and that will grow to more than $5 billion by 2017.
Already, the company's IT for Medicare.gov and the 1-800-Medicare call hotline are reaching 52 million seniors, which is one growing population. Another growing segment is exchanges.
Connecture is banking on the migration to government-subsidized individual insurance and defined contributions in group insurance insurance as big opportunities. Ahead of its announced IPO plans, the company unveiled what it bills as a comprehensive private exchange and health benefits portal solution, called OnRamp, to support both multi-insurer and single-insurer exchange models.
"The nation's brokers and benefits consultants are keenly aware of the dramatic changes shaping the health insurance landscape and the growing role that technology will play in helping Americans make sound decisions that lead to happier and healthier lives," Schneider said in a media release.
The company has yet to determine pricing for its stock. Though optimistic and growing, Connecture could still see a number of pitfalls and uncertainties -- including whether the market can continue to support such high valuations of technology and social media companies.
Castlight Health, a healthcare transparency company, was one of the most recent and much-anticipated digital health IPOs. While it has continued to gain business with large companies and make news with its pricing research, its stock has been gradually falling from $39 at its IPO this past March to about $12 in October and not exceeding $20 since April.