- Value-based primary care provider Vera Whole Health has announced plans to acquire health data and navigation company Castlight in a deal valued at approximately $370 million.
- The transaction, which will bring a value-based care model to the employer healthcare market by integrating Castlight's technology with Vera's clinical network and medical workers, is structured as an all-cash tender offer under which Vera will acquire all of Castlight's outstanding shares.
- Vera's majority equity holder, Clayton, Dubilier & Rice, has committed to invest up to $338 million in the combination, while major health insurer Anthem (a long-time Castlight customer) has also pledged to make an investment, the size of which has yet to be disclosed. The deal's announcement early Wednesday sent Castlight's stock soaring 24% over the day's trade.
Combining a value-based primary care provider with a digital platform helping patients and employers navigate the healthcare system is meant to offer more personalized care, while enabling providers to better outcomes and lower costs, management of both companies said in a release.
Employer clients will also be able to participate in full risk-sharing for their commercial populations, hopefully pushing the healthcare market toward a stronger focus on value, Vera said.
The Seattle-based network is snapping up Castlight at a premium, acquiring all of Castlight's outstanding shares of common stock for $2.05 in cash per share. That represents a 25% premium to Tuesday's closing price, and a 35% premium to Castlight's monthly weighted average share price.
The transaction has already been approved by Castlight's board of directors, but is subject to regulatory approval and other customary closing conditions. After close, Castlight will become a privately held company and will operate as a wholly-owned subsidiary of Vera.
Castlight and Vera anticipate the transaction to be completed in the first quarter this year.
With its investment in the combined company, Anthem is joining J.P. Morgan Chase's health-focused venture arm, Morgan Health, which invested $50 million in Vera in August. Central Ohio Primary Care, the largest independent physician-owned primary care group in the U.S., is another strategic partner.
Vera's model revolves around whole-person care, including a team of primary care physicians and nurses backed by clinics, a technology platform and health coaching. Unlike many other primary care startups, Vera operates entirely at risk, with its customers paying a flat per-member, per-month fee for its services. Vera then retains any cost savings for managing their members' health.
Currently, Vera operates 26 clinics in 10 states.
For its part, San Francisco-based Castlight offers a digital platform combining health benefits and care navigation to employers and health plans. Castlight was founded in 2008, before going public in March 2014 during a red-hot tech market in an initial public offering at $16 a share, valuing the startup at over $1 billion. Its stock has fallen 95% since.
Merging care navigation, including digital touchpoints, into a primary care isn't an entirely new idea, especially as more players looking to tamp down on health costs while improving preventative care turn to primary care models.
For example, Castlight benefits competitors Accolade and Grand Rounds both took significant steps to integrate with digitally enabled primary care companies in 2021. Grand Rounds merged with telehealth player Doctor on Demand in March to create a powerhouse offering primary care, mental and behavioral healthcare, chronic care, specialty care, care for LGBTQ individuals and patient navigation tools all under the same roof; while Accolade acquired virtual primary care company PlushCare for $450 million in April.