A possible sale or merger would signal further changes for Revolution Health, which laid off 50 workers in June after its decision to exit its direct-to-employer business.

Revolution Health Group launched in July 2005 hoping, in part, to work with employers to turn employees into health care consumers. The company aggressively tried to persuade employers to use Revolution Health’s Web-based services to help employees make more informed, cost-effective health care decisions.

Unable to cash in on Case’s brand recognition among employers, Revolution said earlier this year that it would refocus on licensing its products to health plans and building a consumer base.

In an effort to raise money, Revolution Health hired investment bank Morgan Stanley to lead a private placement process that began this spring.

The company expanded its strategic alternatives to include a possible sale, according to the source, who was not authorized to speak on the record. Companies generally raise capital to invest in growth initiatives or to allow existing investors to exit.

A Revolution Health spokesman, Brad Burns, said the company was not for sale. He would not comment further on Revolution’s financial strength or strategic goals.

A Morgan Stanley investment banker representing Revolution Health declined to comment.

Case has invested $500 million of his own money in Revolution LLC, his investment company created in April 2005. The investment company is building businesses in multiple sectors such as health care and resorts, the company said. The company would not disclose how much Case has invested in his health care Web portal, Revolutionhealth.com, which was launched in April 2007.

The layoffs in June followed a similar reduction of 60 employees late last year. Headcount stands at 180 people after a string of acquisitions including the December purchase of HealthTalk.com, a provider of chronic care information, and a deal in April 2007 for CarePages, an online community format for families and friends coping with an illness.

Speaking at the EconHealth conference in New York in March, Case said he remained committed to making the health care industry more consumer-friendly by building Revolution Health’s market share.

“We really are taking a long-term view on this,” he said, “rather than just selling our company to one of the traditional incumbents where it might get lost in the shuffle.”

Case, who attributes his involvement in health care to the death of his brother from brain cancer, said at the EconHealth conference that the company would continue to spend aggressively to become a dominant force in the consumer health care market.

At the conference, he predicted Revolution Health would be profitable by the end of the year.

—Jeremy Smerd