Connecture (CNXR) Misses Q4 EPS by 7c; Enters Agreement for $52M Investment

Connecture (NASDAQ: CNXR) reported Q4 EPS of $0.19, $0.07 worse than the analyst estimate of $0.26. Revenue for the quarter came in at $29.1 million versus the consensus estimate of $30.32 million.

The company also announced that it has executed a definitive agreement for a $52 million investment to strengthen its financial profile through reduced leverage and accelerate its growth opportunities. The investment will be led by Francisco Partners, a leading global private equity firm. The transaction, which is subject to customary closing conditions, including approval by the Company’s shareholders, also includes an investment from existing shareholder Chrysalis Ventures, which will increase its investment in the Company. At closing, Connecture will issue and sell Series A preferred stock, which shall be convertible into the Company’s common stock.

“Francisco Partners’ investment in Connecture validates the Company’s compelling platform capabilities and growth opportunities,” said Jeff Surges, CEO of Connecture. “Francisco Partners brings a wealth of relevant healthcare experience and resources to the table, and their health information technology expertise and broad industry relationships will be of great value as we continue to innovate and add capabilities. In addition, we are pleased with the continued support of our strategy and vision by Chrysalis Ventures.”

Connecture provides software and related service solutions to health insurance and ancillary carriers, brokers and other related retail distribution entities, health care providers, and government agencies. Connecture helps organizations grow and retain their membership, while improving efficiency and reducing technology costs.

“Connecture is playing a crucial role in the continued evolution of health insurance distribution,” said Ezra Perlman, Co-President of Francisco Partners. “The Company is on the forefront of providing technology solutions that enable consumers to find and purchase the best health insurance and ancillary benefits policies for them and their dependents. We believe Connecture’s platform is well-positioned for future growth.”

At the closing of Francisco Partners’ investment in the Company, Perlman will join the Connecture Board of Directors.

“Ezra is an excellent addition to the Connecture board," said David A. Jones, Jr., chairman of Connecture's board of directors and chairman of Chrysalis Ventures. “Ezra joins a great team that is dedicated to providing leading technology solutions and is prepared to move Connecture forward in a meaningful way. Both Jeff and I are excited about completing this important step for the Company and our new partnership with Francisco Partners."

Connecture was advised by Raymond James and DLA Piper LLP (US), and Francisco Partners was advised by Kirkland & Ellis LLP.

The securities described herein will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from such registration requirements. Connecture will agree to file one or more registration statements with the Securities and Exchange Commission covering the resale of the shares of Series A preferred stock and the common stock issuable upon conversion the preferred stock.

No Offer or Solicitation

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

For earnings history and earnings-related data on Connecture (CNXR) click here.

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