Castlight Health shares soared in its initial public offering on Friday morning, shooting up as high as 162 percent out of the gate and briefly putting the total valuation above $3 billion.
The San Francisco company, which provides online software to help businesses manage health care costs, offered 11.1 million shares of Class B common stock at $16 on the New York Stock Exchange, trading under the ticker CSLT. The stock climbed to $41.95, before settling back to around $38.00 in midday trading.
“We are honored and humbled by the reception of the market,” said Giovanni Colella, chief executive and co-founder of the company. “We are tackling the biggest problem for the American enterprise, which is the rising cost of health care. So the opportunities are big in front of us and we think the market is seeing that.”
With the $16 offering price, Castlight raised $177.6 million through the IPO — but that also means it left a considerable amount of money on the table. Castlight had initially priced shares at between $9 and $11.
Whatever the opportunities in front of the company, a valuation near $3 billion is pretty lofty compared to its current financials. Castlight posted $13 million in revenue last year, up from $4.2 million in 2012, according to filings with the Securities and Exchange Commission. Castlight’s net losses grew, too, however, from $35 million to $62.2 million in that same time period.
“I think people are very excited about what Castlight could become in terms of helping to reshape the healthcare system and specifically giving employers both information and knowledge,” said Bryan Roberts, the company’s co-founder and chairman as well as a partner at Venrock, which held 20.6 percent of Castlight prior to the offering. “They really had no visibility into it and no means by which to try and guide spending at all.”
The company has more than 100 employers using its products.
Goldman Sachs and Morgan Stanley acted as joint book-running managers for the offering.
The market enthusiasm on Friday also underscores growing interest in the broader digital health space. A number of companies have emerged to improve efficiency or lower costs in the industry, including Practice Fusion, Oscar and the bevy of businesses rolling out of the Rock Health incubator.
Update: This story has been updated with the latest stock price, additional background information and quotes from Giovanni Colella and Bryan Roberts.
This article originally appeared on Recode.net.