Though it might not look like it, Benefitfocus Inc. envisions itself as similar to the business models at Airbnb and Uber.
They are all part of the platform economy. Airbnb is a major lodging provider but doesn't own any hotels. Uber sells transportation but doesn't own a fleet of cars. Ray August sees little difference between them and Benefitfocus.
“If you look at Benefitfocus, we have the opportunity to be the world’s largest provider of health and health-related benefits, but we don’t own any health care," the CEO said in a recent interview.
August, after almost exactly one year at the helm and four strong quarters, said he thinks a new platform the company announced in 2018 could be potentially bigger than Uber or Airbnb. He is keeping his focus on earning a larger cut of the money flowing from the insurers and other carriers that sell their products to users of Benefitfocus' cloud-based software platforms.
The Daniel-Island based company is among the region's largest technology employers and one of two that are publicly traded, with the other being neighboring Blackbaud Inc. It sells a subscription-based software that employers provide workers so they can enroll in and manage their health insurance and other on-the-job benefits.
When Benefitfocus reported its latest quarterly results in late October, August noted to investors that the company, which has yet to turn a profit, hit its target four quarters in a row. He also said he expected that 2019 annual revenue would "accelerate" and "improve to the mid- to high-teens" compared to last year. Sales through the 2018 third quarter were up 8 percent to $184 million.
Core to the new growth strategy is the new Benefitsplace offering unveiled in March. Described as a "multi-dimensional platform," it's designed to generate more transaction fees for the company. While providing brokers a cut of insurance sales to entice them to bring their clients to Benefitfocus, it also enables end users to purchase products for their personal well-being.
"We feel like we're really at an inflection point right now, and our business is taking on a new shape, a new dimension," August told investors. "It's been really great."
More recently, Benefitfocus announced on Dec. 19 a private $200 million sale of five-year notes that either can be repaid in cash or converted into shares.
August said the company made the move at a time the stock was doing well — shares tumbled about 18 percent after the announcement but have since rebounded — and to raise funds for potential acquisitions or to pay down existing higher-cost debt.
"We're going to use that money very strategically to further grow our company," he said.
Today, one in 13 American workers are using Benfitfocus products. It recently announced deals with two more big insurers, Aetna and MetLife. The company also counts UnitedHealthcare and CVS/Aetna among its nine major carrier customers.
August arrived at Benefitfocus as chief operating officer in 2014, just months after its stock went public on the Nasdaq. He replaced Shawn Jenkins as CEO last January.
Under his leadership, the company is trying to engage employees and Wall Street more in its earnings calls and financial results. It recently held its first "investor day" and it gave every associate some skin the game by awarding them shares of BNFT in 2018.
Benefitfocus' stock also has been on a run. The share price climbed 71 percent in 2018, making it the top performer for the year among South Carolina-based public companies. As of late last week, the stock was trading at more than $53 and approaching a 52-week high.