Connecture Inc. (NASDAQ: CNXR) is acquiring competitor ConnectedHealth for an undisclosed amount. But the management of Connecture is not trying to be vague about what they expect from the acquisition. According to Connecture’s CEO, Jeff Surges, combining the two entities will create a benefits marketplace provider that is capable of rendering end-to-end solutions that the market demands at this point.
The acquisition of ConnectedHealth is also expected to fuel Connecture Inc. (NASDAQ: CNXR)’s topline growth and perhaps also create a cost-cutting opportunity for the company. Connecture generated revenue of $96 million in 2015 and it is hoping of topping $110 million in revenue in 2016. Connecture is still struggling with losses as it logged a net loss of $7.2 million in 1Q201, wider than $5.1 million in the comparable quarter a year ago.
Filing a gap
Connecture and ConnectedHealth possess complementary platforms and capabilities. As such, their union will help fill a gap in the benefits marketplace and enable the combined company to significantly increase its competitive advantages.
According to Connecture, employees and consumers will enjoy faster and better choices when it comes to selecting their benefits after it adds ConnectedHealth to its portfolio. As such, Connecture is hoping to attract more customers to its platform through comprehensive benefits solutions.
Some ConnectedHealth executives are set to join Connecture Inc. (NASDAQ: CNXR) after the completion of the acquisition. In particular, ConnectedHealth’s CEO, John Fiacco and another senior executive called Joe Donlan will join the management team of Connecture as part of the transaction deal.
According to Connecture, Fiacco will join its management team as SVP of corporate and business development. On the other hand, Donlan will serve in the management team as SVP and leader of broker solutions.
Fiacco said they were excited about the opportunity of joining Connecture, saying he believed that would allow them to continue the work of helping consumers and employees access holistic view of their benefits.
A massive opportunity for Connecture Inc. (NASDAQ: CNXR)
The fact that private exchanges such as Connecture Inc. (NASDAQ: CNXR) only account for a small fraction of the privately insured market means a massive opportunities lies ahead. According to Accenture, 6 million employees purchased plans through private exchanges in 2015.