Castlight Health IPO could be worth $2B

Will market be bullish on enabling cost transparency?
By Mike Miliard
11:12 AM
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Giovanni Colella, MD, co-founder and CEO of Castlight.

Castlight Health, whose technology aims to bring better clarity to healthcare pricing, has quietly filed with the Securities Exchange Commission for an initial public offering anticipated to be valued around $2 billion.

First reported by Forbes on Feb. 1, the IPO would be a big one – not just for the size of the valuation, but, potentially, what it says for market's appetite for new species of health information technology.

Goldman Sachs has been chosen to spearhead the IPO, with Morgan Stanley also expected to underwrite, according to Forbes.

Castlight Health was founded in 2008 by Todd Park, co-founder of athenahealth and current U.S. chief technology officer; Giovanni Colella former CEO of RelayHealth (now a McKesson subsidiary) and Bryan Roberts, partner at Venrock, the VC arm of the Rockefeller family.

Its technology helps consumers make price- and quality-based comparisons of physicians, hospitals and specific medical procedures.

Castlight has already seen some big successes on its path to growth. Back in 2012, the whopping $100 million it raised in Series D funding was the top total of the year for a health IT company.

"Castlight has the opportunity to dramatically improve the efficiency of the U.S. healthcare system, providing employers and consumers with the information required to make good cost and quality healthcare decisions," said Roberts in a press statement at the time.

Commenting on that round of funding, Graham McPhail, equity analyst at T. Rowe Price, agreed that the company looked "poised to dominate the segment and transform how users consume health care."

Now the hope is that market investors will be similarly bullish on companies set to capitalize on a fast-evolving healthcare environment, where cost transparency and consumer empowerment are coming to the fore.

"For the last five year or so, digital health has been the Rodney Dangerfield of investment sectors, getting more attention than respect, and garnering more page views than dollars," writes Forbes columnist David Shaywitz.

Castlight's "astonishing valuation," he adds, points to "impressive growth and serious money, and suggests it’s possible to win – and win big – in digital health."

[See also: Castlight lands $100M in funding]