Shares of benefits software vendor Benefitfocus, Inc. (NASDAQ:BNFT) detracted from fourth quarter performance. The company provided modestly lower-than-expected guidance for the fourth quarter of 2016. The company’s management team addressed several short-term headwinds, including longer-than-expected implementation periods for new national accounts (these larger and more complex accounts will go live in the first half of 2017 rather than the second half of 2016), slower employer signings because of a sales restructuring to create a team focused on national accounts, and a revenue share with traditional brokers of BenefitStore voluntary benefit commissions. While these headwinds will likely weigh on reported growth through mid-2017, we don’t believe they impact the significant long-term opportunity. In fact, we believe the company’s success winning large national accounts is a major long-term positive, as these accounts are far larger and typically purchase multiple products. Indeed, in the third quarter, the company signed six national accounts with between 10,000-120,000 employees (vs. typical accounts that average around 3,000 employees). (Neal Rosenberg)
From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.
