A large Charleston software business has made its first acquisition in nearly a decade, buying a Wisconsin firm in a deal aimed at increasing its customer base.
Benefitfocus Inc., which makes a cloud-based platform that helps millions of workers buy and manage their job benefits, said it paid $24 million for certain commercial assets of Connecture. It's the Daniel Island-based company's first buyout since it went public in 2013.
Benefitfocus executives said the acquisition should bring three benefits: more customers, about 100 employees and new technology. The deal, which closed Monday, did not include a Connecture business that focuses on the federal government's Medicare program.
"We see that this is very, very significant and will have a great impact for us, including the number of net benefit eligible lives," CEO Ray August said during an investor call Tuesday.
Connecture works in a similar space as Benefitfocus, selling software to streamline the process of buying health insurance. Its products can recommend a plan to users on their health status and other factors. According to the company's website, 20 million people buy insurance using its technology.
The privately held company was founded in 1999. Its offices in Brookfield, outside Milwaukee, remain operational, Benefitfocus spokesman Drake Manning said.
Connecture targets smaller employers, which should provide some balance for its new Daniel Island parent, which has focused on large employers, with more than 1,000 now paying to use its platform. According to financial disclosures, one unidentified customer accounts for more than 10 percent of Benefitfocus' total revenue, or about $26 million based on 2018 figures.
Manning described Connecture's technology as "highly complementary to our existing product suite."
About 23 million people use Benefitfocus' platform. The firm had about 1,450 employees before the Connecture deal. Its last publicly disclosed business acquisition was in 2010, when it bought BeliefNetworks.
Benefitfocus funded the Connecture purchase with proceeds from a recent $201 million debt issue.
The company, which has yet to turn a profit, also released its 2018 financial results this week.
It said it fourth-quarter revenue was up 10 percent to about $75 million from a year earlier, while its loss widened by $6 million to about $13 million, partly because of an $11.6 million jump in expenses.
August has said he is confident in a new product released last year, BenefitsPlace, and that it is already bringing in revenue.
For the full year, the net loss totaled $52.6 million on revenue of about $259 million.
The company projected that it will surpass $300 million in sales in 2019, a 16 percent boost from last year.