May 10, 2018

Castlight Health Announces First Quarter 2018 Results

Total Revenue of $36.5 million, Up 32% Year-over-Year

SAN FRANCISCO, May 10, 2018 /PRNewswire/ — Castlight Health, Inc. (NYSE: CSLT), a leading health benefits platform provider, today announced results for its first quarter ended March 31, 2018.

“We launched a record number of new customers in the first quarter, including more than twenty on Engage, our first product that combines wellbeing and care guidance functionality into a single user experience,” said John Doyle, chief executive officer of Castlight Health. “With the solid start to the year, we are pleased to be reiterating our 2018 outlook.”

Financial performance for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 includes:

  • GAAP total revenue of $36.5 million, representing an increase of 32%
  • GAAP gross margin of 59.0%, compared to 70.9%
  • Non-GAAP gross margin of 63.0% compared to 73.7%
  • GAAP operating loss of $14.6 million for both quarters
  • Non-GAAP operating loss of $7.7 million, compared to a loss of $5.3 million
  • GAAP net loss per basic and diluted share of $0.11, compared to a net loss per basic and diluted share of $0.14
  • Non-GAAP net loss per basic and diluted share of $0.06, compared to a net loss per basic and diluted share of $0.05
  • Cash used in operations of $19.0 million, compared to $10.9 million

Total cash, cash equivalents and marketable securities was $74.6 million as of March 31, 2018.

The financial performance of Jiff, Inc., which Castlight acquired on April 3, 2017, is not included in the metrics for first quarter ended March 31, 2017. A reconciliation of GAAP to non-GAAP results has been provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Castlight adopted the new accounting standard ASC 606, effective January 1, 2018, and used the full retrospective method of adoption. As such, all historical financial information has been adjusted to reflect the impact of adoption of ASC 606. For more information, please refer to a supplemental presentation available on the company’s investor relations website at http://ir.castlighthealth.com.

Business Outlook

The Company is reiterating its previously-issued 2018 outlook. For the full year 2018, the Company expects:

  • GAAP revenue in the range of $150 million to $155 million
  • Non-GAAP operating loss in the range of $15 million to $20 million
  • Non-GAAP net loss per share of approximately $0.11 to $0.15 based on approximately 137 million to 138 million shares

Quarterly Conference Call

Castlight Health senior management will host a conference call to discuss its first quarter 2018 results and business outlook today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations website at http://ir.castlighthealth.com. An archive of the webcast can also be accessed through the same link. The live conference call can be accessed by dialing (866) 393-4306 and the replay will be available for one week at (855) 859-2056.  The conference ID number for the live call and replay is 5669898.

About Castlight Health

Castlight is on a mission to make it as easy as humanly possible to navigate healthcare and live happier, healthier, more productive lives. Our health navigation platform connects with hundreds of health vendors, benefits resources, and plan designs, giving rise to the world’s first comprehensive app for all health needs. We guide individuals – based on their unique profile – to the best resources available to them, whether they are healthy, chronically ill, or actively seeking medical care. In doing so, we help companies regain control over rising healthcare costs and get more value from their benefits investments. Castlight revolutionized the healthcare sector with the introduction of data-driven price transparency tools in 2008 and the first consumer-grade wellbeing platform in 2012. Today, Castlight serves as the health navigation platform for millions of people and is a trusted partner to many of the largest employers in the world.

For more information visit www.castlighthealth.com. Follow us on Twitter and LinkedIn and Like us on Facebook.

Non-GAAP Financial Measures

To supplement Castlight Health’s financial statements presented in accordance with generally accepted accounting principles (GAAP), we also use and provide investors and others with non-GAAP measures of certain components of financial performance, including non-GAAP gross profit and margin, non-GAAP operating expense, non-GAAP operating loss, non-GAAP other income, net, non-GAAP net loss and non-GAAP net loss per share. Non-GAAP gross profit and margin, non-GAAP operating expense, non-GAAP operating loss, non-GAAP other income, net and non-GAAP net loss exclude stock-based compensation, litigation settlement,  amortization of intangibles, capitalization and amortization of internal-use software, loss on sublease, gain on sale of investment in related party, expense related to expiration of SAP warrant, changes in fair value of contingent consideration liability, and charges related to the acquisition of Jiff and the associated tax impact of these items, where applicable.

We believe that these non-GAAP financial measures provide useful supplemental information to investors and others, facilitate the analysis of the company’s core operating results and comparison of operating results across reporting periods, and can help enhance overall understanding of the company’s historical financial performance.

We have provided a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, except that we have not reconciled our non-GAAP operating loss and net loss per share guidance for the full year 2018 to comparable GAAP operating loss and net loss per share guidance because we do not provide guidance for stock-based compensation expense, and capitalization and amortization of internal-use software, which are reconciling items between GAAP and non-GAAP operating loss. The factors that may impact our future stock-based compensation expense, and capitalization and amortization of internal-use software are out of our control and/or cannot be reasonably predicted, and therefore we are unable to provide such guidance without unreasonable effort. Factors include our market capitalization and related volatility of our stock price and our inability to project the cost or scope of internally produced software.

These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP.

Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Castlight Health encourages investors and others to review the company’s financial information in its entirety and not rely on a single financial measure.

Safe Harbor For Forward-Looking Statements

This press release contains forward-looking statements about Castlight Health’s expectations, plans, intentions, and strategies, including, but not limited to, statements regarding Castlight Health’s 2018 full year projections, our expectations for our future business and financial performance. Statements including words such as “anticipate,” “believe,” “estimate,” “will,” “continue,” “expect,” or “future,” and statements in the future tense are forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions, which, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include those described in Castlight Health’s documents filed with or furnished to the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available to Castlight Health as of the date hereof. Castlight Health assumes no obligation to update these forward-looking statements.

Copyright 2018 Castlight Health, Inc. Castlight Health® is the registered trademark of Castlight Health, Inc. Other company and product names may be trademarks of the respective companies with which they are associated.

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

As of

March 31,
2018

December 31,
2017

(as adjusted)(1)

Assets

Current assets:

Cash and cash equivalents

$

48,174

$

61,319

Marketable securities

26,433

32,025

Accounts receivable and other, net

33,129

21,933

Prepaid expenses and other current assets

3,632

3,991

Total current assets

111,368

119,268

Property and equipment, net

4,791

5,263

Restricted cash, non-current

1,325

1,325

Deferred commissions

25,830

27,512

Deferred professional service costs

12,318

12,480

Intangible assets, net

19,111

20,253

Goodwill

91,785

91,785

Other assets

2,150

1,997

Total assets

$

268,678

$

279,883

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

5,549

$

3,907

Accrued expenses and other current liabilities

12,473

13,178

Accrued compensation

7,551

13,941

Deferred revenue

30,050

25,985

Total current liabilities

55,623

57,011

Deferred revenue, non-current

3,575

4,457

Debt, non-current

4,648

4,958

Other liabilities, non-current

2,594

1,900

Total liabilities

66,440

68,326

Stockholders’ equity

202,238

211,557

Total liabilities and stockholders’ equity

$

268,678

$

279,883

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Revenue:

Subscription

$

31,363

$

23,867

$

86,963

$

66,859

Professional services and other

3,209

1,634

7,453

4,944

Total revenue, net

34,572

25,501

94,416

71,803

Cost of revenue:

Cost of subscription (1)

8,123

3,988

20,075

12,218

Cost of professional services and other (1)

4,898

3,978

13,679

13,941

Total cost of revenue

13,021

7,966

33,754

26,159

Gross profit

21,551

17,535

60,662

45,644

Operating expenses:

Sales and marketing (1)

16,006

13,143

47,024

44,877

Research and development (1)

13,809

10,573

40,074

30,619

General and administrative (1)

10,307

5,338

26,071

19,902

Total operating expenses

40,122

29,054

113,169

95,398

Operating loss

(18,571)

(11,519)

(52,507)

(49,754)

Other income, net

84

116

288

304

Loss before income tax benefit

$

(18,487)

(11,403)

$

(52,219)

(49,450)

Income tax benefit

5,206

Net loss

$

(18,487)

$

(11,403)

$

(47,013)

$

(49,450)

Net loss per Class A and B share, basic and diluted

$

(0.14)

$

(0.11)

$

(0.38)

$

(0.50)

Weighted-average shares used to compute basic and diluted net loss per Class A and B share

132,251

103,147

122,675

99,734

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Cost of revenue:

Cost of subscription

$

258

$

139

$

638

$

367

Cost of professional services and other

342

456

1,400

1,468

Sales and marketing

3,110

2,190

7,705

6,644

Research and development

1,631

1,631

5,675

4,300

General and administrative

1,121

1,236

3,586

3,476

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September
30, 2017

September
30, 2016

September
30, 2017

September
30, 2016

Operating activities:

Net loss

$

(18,487)

$

(11,403)

$

(47,013)

$

(49,450)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,814

822

4,572

2,407

Stock-based compensation

6,463

5,652

19,004

16,255

Amortization of deferred commissions

2,950

1,042

8,120

3,157

Release of deferred tax valuation allowance due to business combination

(5,206)

Change in fair value of contingent consideration liability

3,931

3,288

Accretion and amortization of marketable securities

(64)

101

22

406

Changes in operating assets and liabilities:

Accounts receivable

(4,661)

(3,397)

(7,778)

(3,137)

Deferred commissions

(3,280)

(1,479)

(6,678)

(4,403)

Prepaid expenses and other assets

467

745

(393)

(68)

Accounts payable

909

410

401

300

Accrued expenses and other liabilities

3,148

(3,583)

2,623

(4,046)

Deferred revenue

(1,541)

1,733

5,661

3,318

Net cash used in operating activities

(8,351)

(9,357)

(23,377)

(35,261)

Investing activities:

Restricted cash

181

(181)

Purchase of property and equipment

(1,345)

(345)

(2,276)

(1,587)

Purchase of marketable securities

(25,077)

(11,971)

(56,852)

(73,163)

Maturities of marketable securities

16,896

35,570

80,633

126,157

Business combination, net of cash acquired

(2,264)

Net cash provided by (used in) investing activities

(9,345)

23,254

19,060

51,407

Financing activities:

Proceeds from the exercise of stock options

481

636

1,312

2,576

Proceeds from issuance of common stock and warrants

17,358

Payments of issuance costs related to equity

(76)

(731)

(122)

Net cash provided by financing activities

481

560

581

19,812

Net (decrease) increase in cash and cash equivalents

(17,215)

14,457

(3,736)

35,958

Cash and cash equivalents at beginning of period

62,201

40,651

48,722

19,150

Cash and cash equivalents at end of period

$

44,986

$

55,108

$

44,986

$

55,108

Non-cash investing and financing activity:

Non-cash purchase consideration related to acquisition of Jiff

$

$

$

101,692

$

 

CASTLIGHT HEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)

Three Months Ended

Nine Months Ended

September
30,

June 30,

September
30,

September
30,

September
30,

2017

2017

2016

2017

2016

Gross profit:

GAAP gross profit subscription

$

23,240

$

22,128

$

19,879

$

66,888

$

54,641

Stock-based compensation

258

253

139

638

367

Amortization of internal-use software

244

244

244

732

732

Amortization of intangibles

751

751

1,502

Reduction in workforce

5

Acquisition related costs

52

52

Non-GAAP gross profit subscription

$

24,493

$

23,428

$

20,262

$

69,812

$

55,745

GAAP gross margin subscription

74.1%

74.2%

83.3%

76.9%

81.7%

Non-GAAP gross margin subscription

78.1%

78.5%

84.9%

80.3%

83.4%

GAAP gross loss professional services

$

(1,689)

$

(2,528)

$

(2,344)

$

(6,226)

$

(8,997)

Stock-based compensation

342

597

456

1,400

1,468

Reduction in workforce

4

103

Acquisition related costs

(4)

17

160

Non-GAAP gross loss professional services

$

(1,351)

$

(1,914)

$

(1,884)

$

(4,666)

$

(7,426)

GAAP gross margin professional services

(53)%

(112)%

(143)%

(84)%

(182)%

Non-GAAP gross margin professional services

(42)%

(85)%

(115)%

(63)%

(150)%

GAAP gross profit

$

21,551

$

19,600

$

17,535

$

60,662

$

45,644

Impact of non-GAAP adjustments

1,591

1,914

843

4,484

2,675

Non-GAAP gross profit

$

23,142

$

21,514

$

18,378

$

65,146

$

48,319

GAAP gross margin

62.3%

61.1%

68.8%

64.2%

63.6%

Non-GAAP gross margin

66.9%

67.0%

72.1%

69.0%

67.3%

Operating expense:

GAAP sales and marketing

$

16,006

$

16,575

$

13,143

$

47,024

$

44,877

Stock-based compensation

(3,110)

(2,441)

(2,190)

(7,705)

(6,644)

Amortization of intangibles

(448)

(448)

(896)

Reduction in workforce

(48)

(422)

Acquisition related costs

14

(518)

(909)

Non-GAAP sales and marketing

$

12,462

$

13,168

$

10,905

$

37,514

$

37,811

GAAP research and development

$

13,809

$

15,194

$

10,573

$

40,074

$

30,619

Stock-based compensation

(1,631)

(2,254)

(1,631)

(5,675)

(4,300)

Capitalization of internal-use software

Reduction in workforce

(18)

(136)

Acquisition related costs

(126)

(393)

Non-GAAP research and development

$

12,178

$

12,814

$

8,924

$

34,006

$

26,183

GAAP general and administrative

$

10,307

$

6,766

$

5,338

$

26,071

$

19,902

Stock-based compensation

(1,121)

(1,169)

(1,236)

(3,586)

(3,476)

Litigation settlement

(250)

(2,876)

Amortization of intangibles

(17)

(17)

(34)

Change in fair value of contingent consideration liability

(3,931)

643

(3,288)

Reduction in workforce

(10)

(90)

Acquisition related costs

(126)

(899)

(3,365)

Non-GAAP general and administrative

$

5,112

$

5,324

$

4,092

$

15,548

$

13,460

GAAP operating expense

$

40,122

$

38,535

$

29,054

$

113,169

$

95,398

Impact of non-GAAP adjustments

(10,370)

(7,229)

(5,133)

(26,101)

(17,944)

Non-GAAP operating expense

$

29,752

$

31,306

$

23,921

$

87,068

$

77,454

Operating loss:

GAAP operating loss

$

(18,571)

$

(18,935)

$

(11,519)

$

(52,507)

$

(49,754)

Impact of non-GAAP adjustments

11,961

9,143

5,976

30,585

20,619

Non-GAAP operating loss

$

(6,610)

$

(9,792)

$

(5,543)

$

(21,922)

$

(29,135)

Net loss and net loss per share:

GAAP net loss

$

(18,487)

$

(13,717)

$

(11,403)

$

(47,013)

$

(49,450)

Total pre-tax impact of non-GAAP adjustments

11,961

9,143

5,976

30,585

20,619

Release of deferred tax valuation allowance due to business combination

(5,206)

(5,206)

Income tax impact of non-GAAP adjustments

Non-GAAP net loss

$

(6,526)

$

(9,780)

$

(5,427)

$

(21,634)

$

(28,831)

GAAP net loss per share, basic and diluted

$

(0.14)

$

(0.11)

$

(0.11)

$

(0.38)

$

(0.50)

Non-GAAP net loss per share, basic and diluted

$

(0.05)

$

(0.07)

$

(0.05)

$

(0.18)

$

(0.29)

Shares used in basic and diluted net loss per share computation

132,251

130,537

103,147

122,675

99,734

Press Information

Shannon Magill

press@castlighthealth.com

415-829-1500