13D Filing: Great Point Partners and Connecture Inc (CNXR)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Schedule 13D

Under the Securities Exchange Act of
1934
(Amendment No. _____________)*

Connecture, Inc.

(Name of Issuer)

Common Stock

(Title of Class of Securities)

20786J106

(CUSIP Number)

Ron Panzier
Great Point Partners, LLC
165 Mason Street, 3^rd Floor
Greenwich, CT 06830
(203) 971-3300

(Name, Address and Telephone Number of Person
Authorized to
Receive Notices and Communications)

February 6, 2017

(Date of Event which
Requires Filing of this Statement)

If the
filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. x

Note: Schedule filed in paper format
shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties
to whom copies are to be sent.

*The remainder of this
cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required
in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities
Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).

¹Consists
of 4,127,232 shares of Common Stock of the Issuer held directly by GPP-Connecture, LLC.

²Based
on a total of 22,344,764 shares outstanding, as reported by the Issuer on a Form 10-Q filed with the SEC on November 9, 2016.

³ Consists of (x) 55,411 shares
of Common Stock of the Issuer held directly by Dr. Jay, and (y) 11,341 shares of Common Stock of the Issuer held by a trust of
which Dr. Jay is a trustee and of which beneficiaries may be considered members of Dr. Jay’s family.

⁴ Consists of (x) 4,127,232
shares of Common Stock of the Issuer held directly by GPP-Connecture, LLC, and (y) 45,672 shares of Common Stock of the Issuer
held by a trust of which Dr. Jay is not the trustee and of which beneficiaries may be considered members of Dr. Jay’s family
(see Item 5 for additional information).

⁵ Consists of (w) 4,127,232
shares of Common Stock of the Issuer held directly by GPP-Connecture, LLC, (x) 45,672 shares of Common Stock of the Issuer held
by a trust of which Dr. Jay is not the trustee and of which beneficiaries may be considered members of Dr. Jay’s family
(see Item 5 for additional information), (y) 55,411 shares of Common Stock of the Issuer held directly by Dr. Jay, and (z) 11,341
shares of Common Stock of the Issuer held by a trust of which Dr. Jay is a trustee and of which beneficiaries may be considered
members of Dr. Jay’s family.

⁶ Consists of 29,703 shares
of Common Stock of the Issuer directly owned by Mr. Kroin.

⁷ Consists of (x) 29,703 shares
of Common Stock of the Issuer directly owned by Mr. Kroin and (y) 4,127,232 shares of Common Stock of the Issuer held directly
by GPP-Connecture, LLC.

The title and class
of equity securities to which this statement relates is Common Stock, par value $.001 per share.

The name and address of
the principal executive office of the Issuer is Connecture, Inc., 18500 West Corporate Drive, Suite 250, Brookfield, WI 53045.

This Statement is being
filed jointly on behalf of the following persons (collectively, the “Reporting Persons”): (i) Great Point Partners,
LLC, a Delaware limited liability company (“Great Point”); (ii) GPP-Connecture LLC, a Delaware limited liability
company (“GPPC”); (iii) Great Point Partners I, LP, a Delaware limited partnership (“GPP I LP”);
(iv) Great Point Partners I GP, LLC, a Delaware limited liability company (“GPP I GP”); (v) Dr. Jeffrey R. Jay,
an individual (“Dr. Jay”), and (vi) Mr. David Kroin, an individual (“Mr. Kroin”).

The business address
of each Reporting Person is 165 Mason Street, 3rd Floor, Greenwich, CT 06830.

The principal business
of GPP I LP is to invest directly or indirectly in various companies. The principal business of GPP I GP is to serve as the general
partner of GPP I LP. The principal business of Great Point is to provide management services to GPP I LP and other limited partnerships.
The principal business of GPPC is to hold equity interests in Issuer. GPP I LP is the sole manager and controlling member of GPPC.
GPP I GP is the general partner of GPP I LP. Great Point is the investment manager of GPP I LP.

During the last five
years, none of the Reporting Persons has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors).

During the last five
years, none of the Reporting Persons has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Each of Dr. Jay and
Mr. Kroin is a United States citizen.

GPPC currently owns
4,127,232 shares of Common Stock of the Issuer (the “GPPC Shares”). GPPC used its own funds to acquire the GPPC
Shares and the source of such funds was capital contributions from investors in GPP I LP and other investors in GPPC, in each case
in the ordinary course of business.

Mr. Kroin currently
owns 29,703 shares of Common Stock of the Issuer (the “Kroin Shares”). Mr. Kroin used his own funds to purchase
the Kroin Shares.

Dr. Jay currently owns
55,411 shares of Common Stock of the Issuer (the “Jay Shares”). Dr. Jay used his own funds to purchase the Jay
Shares. A trust of which Dr. Jay is a trustee and of which beneficiaries may be considered members of Dr. Jay’s family currently
owns 11,341 shares of Common Stock of the Issuer (the “Trust 1 Shares”) and such trust used its own funds to
purchase the Trust 1 Shares. A trust of which Dr. Jay is not the trustee and of which beneficiaries may be considered members of
Dr. Jay’s family currently owns 45,672 shares of Common Stock of the Issuer (the “Trust 2 Shares”) and such
trust used its own funds to purchase the Trust 2 Shares.

See Item 5 below for
information with respect to Great Point, Dr. Jay and Mr. Kroin.

The securities of the
Issuer were acquired for investment. Each of the Reporting Persons has recently determined to seek to influence the board of directors
of the Issuer to take more affirmative steps designed to maximize shareholder value, including encouraging management to make operational
changes and encouraging the Issuer to, if appropriate, evaluate strategic alternatives, as indicated by the letter dated February
6, 2017 from Great Point to the Issuer filed as Exhibit B hereto. None of the Reporting Persons has yet formulated any specific
plan to implement such new determination.

GPPC is the record holder
of the GPPC Shares. GPP I LP is the sole manager and controlling member of GPPC. GPP I GP is the general partner of GPP I LP. Great
Point is the investment manager of GPP I LP and by virtue of such status may be deemed to be the beneficial owner of the GPPC Shares.
The GPPC Shares constitute 18.47% of the aggregate shares of Common Stock outstanding, computed in accordance with Rule 13d-3.
Each of Great Point, GPP I LP, GPP I GP and GPPC shares voting and dispositive power with respect to the GPPC Shares. Notwithstanding
the above, each of Great Point, GPP I LP and GPP I GP disclaims beneficial ownership of the GPPC Shares, except to the extent of
its respective pecuniary interest therein.

Dr. Jay is the record
holder of the Jay Shares. Dr. Jay may be deemed to be the beneficial owner of the Trust 1 Shares because he is trustee of the trust
of which beneficiaries are members of his family. With respect to the Trust 2 Shares, Dr. Jay is not trustee of such trust but
the beneficiaries may be considered members of Dr. Jay’s family and these shares are being reported as beneficially owned
by Dr. Jay to comply with applicable rules to the extent, if any, that Dr. Jay may be deemed to indirectly influence the voting
or disposition of such shares. Dr. Jay, as senior managing member of Great Point, has voting and investment power with respect
to the GPPC shares, and therefore may be deemed to be the beneficial owner of the GPPC Shares. The Jay Shares, the Trust 1 Shares,
the Trust 2 Shares and the GPPC Shares collectively constitute 18.97% of the aggregate shares of Common Stock outstanding, computed
in accordance with Rule 13d-3. Dr. Jay has sole voting and dispositive power with respect to the Jay Shares and the Trust 1 Shares.
Dr. Jay shares voting and dispositive power with respect to the GPPC Shares. To the extent that Dr. Jay is deemed to indirectly
influence the voting or

disposition of the Trust
2 Shares, Dr. Jay may be deemed to share voting and dispositive power with respect to the Trust 2 Shares. Notwithstanding the above,
Dr. Jay disclaims beneficial ownership of the GPPC Shares, the Trust 1 Shares and the Trust 2 Shares, except to the extent of his
pecuniary interest therein.

Mr. Kroin is the record
holder of the Kroin Shares. Mr. Kroin, as special managing member of Great Point, has voting and investment power with respect
to the GPPC shares, and therefore may be deemed to be the beneficial owner of the GPPC Shares. The Kroin Shares and the GPPC Shares
collectively constitute 18.60% of the aggregate shares of Common Stock outstanding, computed in accordance with Rule 13d-3. Mr.
Kroin has sole voting and dispositive power with respect to the Kroin Shares and shares voting and dispositive power with respect
to the GPPC Shares. Notwithstanding the above, Mr. Kroin disclaims beneficial ownership of the GPPC Shares, except to the extent
of his pecuniary interest therein.

Not applicable.

The following documents
are filed as exhibits and are incorporated herein.

EXHIBIT A: Joint Filing Agreement, dated as of February
6, 2017.

EXHIBIT B: Letter dated February 6, 2017, from Great
Point Partners, LLC to Issuer (Attention: Jeff Surges)

Signature

After reasonable inquiry
and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: February 6, 2017

Exhibit A

AGREEMENT REGARDING THE JOINT FILING
OF SCHEDULE 13D

The undersigned hereby agree as follows:

Date:  February 6, 2017

Exhibit B

February 6, 2017

Connecture, Inc.
18500 W. Corporate Drive, Suite 250
Brookfield, WI 53045, USA
Attn: Jeffery Surges, President & CEO

cc: Board of Directors

Dear Jeffery,

Great Point Partners I, LP, together with
its affiliates (“GPP”), has an ownership interest of approximately 18.5% of the outstanding shares of common stock
of Connecture, Inc. (“Connecture” or the “Company”), making us one of the Company’s largest shareholders.
Based on our analysis of the Company’s public information and our knowledge of the markets which it serves, we believe both
that Connecture is deeply undervalued and that multiple avenues exist for the management team and Board of Directors to create
value for all shareholders. Furthermore, it is self-evident that changes need to be made and actions taken to reverse the trajectory
of poor operating and financial performance. It is our view that such actions are necessary to either reposition Connecture for
future success or position the Company for an outright sale to one of the many potential strategic acquirers that operate either
in, or adjacent to, the Company’s product and service offerings and end markets. Many of those acquirers have been active
consolidators throughout their history.

We are sharing our thoughts with you and
simultaneously with the Board, in writing, because you have repeatedly rebuffed our prior efforts to highlight to you, first, what
we believe have been poor management decisions and woeful execution, both of which resulted in the destruction of enormous equity
value, and second, opportunities we see for improvement in these areas. The views and analyses contained in this letter were arrived
at based solely on publicly available information. We are not in possession of any material non-public information and under no
circumstances do we wish to receive any material non-public information from you, the Company or the Board of Directors.

In December of 2014, Connecture completed
an initial public offering (“IPO”) designed to enable it to execute on its advertised strategic plan and achieve the
tactical goals of: (a) building a robust private exchange software platform, (b) making strategic acquisitions, and (c) funding
continued organic growth in core markets like commercial insurance carriers and public exchanges. At the time of the IPO, management
and the Board publicly communicated certain expectations of revenue growth, expanding profitability and operational targets that
were used to support a valuation of the Company at a level that created ample investor demand.

Since the time of Connecture’s IPO
at a price of $8.00 per share, however, the Company has traded down to $1.80,⁸ representing a loss of 78% of the IPO
per share value, making Connecture the third worst performing IPO of the 14 December 2014 IPOs. Furthermore, of over 260 IPOs
in calendar year 2014⁹, Connecture’s performance since going public is in the bottom 12^th percentile
of those public offerings.

⁸ As of 01/31/17.

⁹ Excludes microcap IPOs and performance of companies that were subsequently acquired.

That stock price performance, moreover,
represents an 87% loss of value from the Company’s stock price high of $13.82 per share on April 16, 2015. Since that time,
Connecture’s financial results have significantly underperformed versus the objectives you discussed with the investment
community.

CNXR Stock Price Performance Since IPO

We believe these poor results are the product
of a series of management operational missteps, poor managerial judgement, and miscommunications with the public. Unfortunately
these mistakes happened under both previous and current executive leadership.

Failure to Achieve your
Own Forecasts and Destruction of Value

While the Company initially achieved its
financial and operational targets through the first three quarters of reporting after the IPO (FYE 2014, Q1’15, Q2’15),
subsequent results have materially underperformed stated targets. In addition, management has continued to display an inability
to achieve its own benchmarks set with public investors, which clearly and significantly, impair management’s and the Company’s
credibility. That loss of reliability, in our view, has eroded investor confidence. The first instance of this occurred on August
6, 2015, within eight months of the IPO, when management revised its 2015 revenue and EBITDA guidance downward by approximately
four percent (4%) and nine percent (9%), respectively. Following this announcement, the Company’s share price fell by 22.2%
in one day, and continued on a downward trend in the ensuing weeks. Since that time management has continued to both obfuscate
its historical financial performance with unclear but continuous “one-time adjustments” and has provided nebulous and
inconsistent perspective on its financial prospects.

Worse, management repeatedly failed even
to achieve the lowered reset targets that the Company previously announced. For example, shortly after management guided
2015 estimates down, Connecture reported disappointing full year 2015 revenue and Adjusted EBITDA figures of $95.8M and $8.3M,

respectively. Both of those results were
below management’s revised guidance range and below consensus estimates of $97.7M of revenue and $9.6M of Adj. EBITDA¹⁰.
The figures below illustrate examples of deviations between actual results and initial, and subsequent, guidance provided by management

(1) Charts show midpoint of guidance figures.

¹⁰ Consensus estimates based
on equity research published by Morgan Stanley, JP Morgan, Raymond James, First Analysis, Wells Fargo and William Blair.

The below table illustrates Connecture’s
performance on a quarterly basis versus Wall Street¹¹ estimates since the Company went public.

Examples of Poor Executive
Decisions and Operational Execution

¹¹ Estimates based on equity research published by Morgan Stanley, JP Morgan, Raymond James, First Analysis, Wells Fargo and William
Blair.

specific, experienced and credible
investor to you who would have invested through such a structure. However, you refused to meet with them and other interested parties.

Underperformance of Connecture’s
Stock Versus Peers and the Market

Based on Wall Street research published
at the time of the Company’s IPO, Connecture was expected to achieve approximately $100M of revenue in 2016 and be on pace
to achieve upwards of $135M of revenue in 2017. In comparison, management is now guiding towards $85M – $88M of revenue in 2016
and Wall Street analysts¹² expect 2017 results of approximately $96M of revenue. This deceleration of growth has
obviously, and significantly, impaired the valuation of the business and is a direct result of management’s lack of ability
to execute on its plans.

Connecture is now, as a result, trading
at a significant valuation discount to its peers in the benefit management and HCIT landscape. While many of its peers achieve
valuations that represent multiples of forward revenue in the range of approximately 3.0x, Connecture’s stock trades at approximately
1.0x forward revenue, representing a 65% discount to comparable companies.

It is clear from the relative performance
of the Company versus the general market and the S&P health care index since the date of Connecture’s IPO, that the Company’s
poor operational and market performance has been a result of mismanagement. While the broader market has risen by 14% over this

¹² Based on equity research published
by Morgan Stanley, JP Morgan,Raymond James, First Analysis, Wells Fargo and William Blair.

period, and the health care market has
remained stable, growing 3% over this time, the value of Connecture’s share price has tumbled by nearly 80%.

Call to Action to Drive
Stock Price Improvement

As a result of Connecture’s continued
execution issues and operational missteps, shareholders have greatly suffered. We view the status quo as unacceptable to shareholders
and it should be unacceptable to you and the Board as well. It is imperative that you plan to materially alter Connecture’s
strategy and improve execution for the benefit of the Company and all its shareholders or, failing that, seek a sale of the Company.
Connecture needs real improvements and can no longer work in half-measures. We believe that there are several actions which could
be undertaken in order to drive such performance, including the following:

Exchange revenue of $29.5M¹³,
this portion of the business has the potential to generate standalone, fully burdened EBITDA of $6M to $9M and has much better
growth prospects. Given its scale, the inherent value of that business is depressed by the burdens of funding the other operations.
We do not discount the complexity of separating the business operations, but with creative management and planning it can be done
and would, we think, unlock enormous value. We have performed various sum-of-the-parts analyses with a range of allocation assumptions
between the two businesses and each scenario results in an equity value and price per share greater than two times (2x+) the current
equity value and price per share today.

¹³ As per the Company’s September 30, 2016 reported results.

¹⁴ Based on 9/30/16 publicly reported financials.

These are challenging times for Connecture,
and we strongly believe that material change is necessary. For the Company to improve its growth trajectory and regain its appropriate
multiple, immediate and aggressive actions are required from management and the Board. We look forward to you altering course and
finding the most effective path to substantial value creation for all shareholders.

Respectfully,