Benefitfocus goes public on Nasdaq

Benefitfocus CEO Shawn Jenkins and employees celebrated the tech firm's IPO this morning in New York. (Photo/Provided)

Benefitfocus CEO Shawn Jenkins and employees celebrated the tech firm's IPO this morning in New York. (Photo/Provided)

By Liz Segrist
lsegrist@scbiznews.com
Published Sept. 18, 2013

Roughly 50 Benefitfocus Inc. employees clapped, cheered and rang cow bells in New York City this morning as Benefitfocus CEO Shawn Jenkins rang the bell to signal that the firm is now public.

Benefitfocus, which provides a cloud-based platform for employee benefits management, began trading its common stock on the Nasdaq today as “BNFT.”

Previous coverage

The Daniel Island-based tech firm anticipates raising up to $131 million. It plans to sell 4.9 million shares of common stock at $26.50 per share.

Benefitfocus is offering 3 million shares, and stockholders are selling 1.9 million shares. Additionally, the selling stockholders have granted the underwriters a 30-day option to purchase up to 740,250 additional shares of common stock at the initial public offering price.

“The principal purposes of this offering are to increase our financial flexibility, increase our visibility in the marketplace and create a public market for our common stock,” according to the company’s filing with the Securities and Exchange Commission.

The company planned to grow, serve its customers and modernize benefits for employers and insurance carriers. Jenkins said as the company saw continued growth in the past few years, it began to consider a public offering as a means to fund the company’s future growth and product development.

The company expects to use the offering’s net proceeds for “working capital purposes and other general corporate purposes, including executing our growth strategy, developing new products and services, and funding additional capital expenditures, potential acquisitions and investments,” according to the SEC filing.

As the tech firm grows, Jenkins said that it remains strongly rooted in Charleston’s culture and that today’s company milestone speaks to the strength of its employees and culture.

“Many of these associates have been here for 10 years. Everyone was so excited to be here, clapping and high-fiving,” Jenkins said.

The company has had three years of net losses, with $2.4 million in 2010, $14.9 million in 2011 and $14.7 million in 2012.

“We cannot predict if we will achieve sustained profitability in the near future or at all. We expect to make significant future expenditures to develop and expand our business,” the SEC filing said.

Jenkins sees continued opportunity as employers continue to transition from a paper-based process of managing benefits to a cloud-based process. The Affordable Care Act has impacted Benefitfocus’ business as more insurers and employers work to be in compliance and educate their employees on their benefits.

“The good news is there’s a lot of opportunity as we modernize employer benefits. It’s a fragmented industry that we’re modernizing,” said Jenkins, noting that the company could expand to new markets or with new products in the future.

Goldman, Sachs & Co., Deutsche Bank Securities Inc. and Jefferies LLC are acting as the book-running managers for the offering. Canaccord Genuity Inc., Piper Jaffray & Co. and Raymond James & Associates Inc. are acting as co-managers.

Jenkins announced plans in May to expand the company internationally over the next year, with plans to target the Canadian market first. The company also opened an 80,000-square-foot design and engineering facility on Daniel Island last year.

Founded in 2000, Benefitfocus employs roughly 800 people. In 2006, the company had 2.5 million consumers using its platforms. As of last year, 20 million consumers signed up, such as Continental Tire, Dannon and UnderArmour. Benefitfocus has offices in Greenville, San Francisco and Tulsa, Okla., as well as Charleston.

Reach Liz Segrist at 843-849-3119.

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