Aug 8, 2016

Castlight Health Announces Second Quarter 2016 Results

Total Revenue of $23.6 Million, Up 27% Year Over Year

 

SAN FRANCISCO August 8, 2016 – Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its second quarter ended June 30, 2016.

“In the second quarter Castlight added nearly $7 million of signed annual recurring revenue and continued to gain traction among large enterprises, including notable customers such as Caterpillar and Genentech,” said Giovanni Colella, M.D., co-founder and chief executive officer of Castlight Health. “We had strong adoption of Castlight’s health benefits platform across our new customers and saw increased contribution from our channel relationships, in particular Anthem, which provide validation of both our expanding value proposition and the evolution of our go-to-market strategy.”

Financial Performance for the Three Months Ended June 30, 2016

  • Total revenue for the second quarter of 2016 was $23.6 million, an increase of 27% from the second quarter of 2015. Subscription revenue was $22.0 million, an increase of 27% on a year-over-year basis.
  • Gross margin for the second quarter of 2016 was 62.1%, compared to a gross margin of 55.4% in the second quarter of 2015. Non-GAAP gross margin for the second quarter of 2016 was 66.3% compared to a non-GAAP gross margin of 58.3% in the second quarter of 2015.
  • Operating loss for the second quarter of 2016 was $16.8 million, compared to an operating loss of $21.3 million in the second quarter of 2015. Non-GAAP operating loss for the second quarter of 2016 was $10.6 million, compared to a non-GAAP operating loss of $17.6 million in the second quarter of 2015.
  • Net loss per basic and diluted share was $0.17 in the second quarter of 2016, compared to a net loss per basic and diluted share of $0.23 in the second quarter of 2015. The non-GAAP net loss per basic and diluted share for the second quarter of 2016 was $0.11, compared to a net loss per basic and diluted share of $0.19 in the second quarter of 2015. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the second quarter of 2016 was 99.7 million compared to 93.8 million in the second quarter of 2015.
  • Total cash, cash equivalents and marketable securities were $125.7 million at the end of the second quarter of 2016. Cash used in operations for the second quarter of 2016 was $11.9 million, compared to $17.2 million used in operations in the second quarter of 2015.

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”.

Business Outlook

Full Year 2016 Guidance: Revenue for the company’s full year 2016 is expected to be tracking to the midpoint of the range of $99.0 million to $102.0 million, an increase of 31% – 35% year-over-year. Non-GAAP operating loss is expected to be at the low end or below the range of $40.0 million to $42.0 million. Non-GAAP net loss per share is expected to be at the low end or below the range of $0.40 to $0.42 based on 100 million to 101 million weighted average basic and diluted common shares outstanding.

For the full year 2016, non-GAAP guidance excludes the effects of stock-based compensation expense, charge related to reduction in workforce and the capitalization and amortization of internal-use software.

Quarterly Conference Call

Castlight Health will host a conference call to discuss its second quarter 2016 results 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. In addition, an archive of the webcast can be accessed through the same link. Participants who choose to call in to the conference call can do so by dialing 1-877-201-0168. The conference ID number is 46202160. A replay will be available for one week at 1-855-859-2056, passcode 46202160.

About Castlight Health

Our mission is to empower people to make the best choices for their health and to help companies make the most of their health benefits. We offer a health benefits platform that engages employees to make better healthcare decisions and can guide them to the right program, care, and provider. The platform also enables benefit leaders to communicate and measure their programs while driving employee engagement with targeted, relevant communications. Castlight has partnered with enterprise customers, spanning millions of lives, to improve healthcare outcomes, lower costs, and increase benefits satisfaction.

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 margin, non-GAAP operating expense, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share. These non-GAAP financial measures differ from GAAP financial measures in that they exclude stock-based compensation, warrant expense, litigation settlement, charges related to a reduction in workforce, and capitalization and amortization of internal-use software 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 2016 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.

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 2016 full year projections, our expectations for future performance of our business, market growth and business conditions, future innovation by the company and future developments with respect to the digital healthcare industry. 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 2016 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)
As of
June 30, 2016 December 31, 2015
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 40,651 $ 19,150
Marketable securities 85,042 101,274
Accounts receivable, net 12,491 12,751
Deferred commissions 6,072 5,438
Prepaid expenses and other current assets 5,140 3,772
Total current assets 149,396 142,385
Property and equipment, net 6,476 6,896
Marketable securities, noncurrent 13,335
Restricted cash, noncurrent 1,000 1,000
Deferred commissions, noncurrent 5,098 4,923
Other assets 4,692 4,735
Total assets $ 166,662 $ 173,274
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 3,197 $ 3,384
Accrued expenses and other current liabilities 7,892 4,550
Accrued compensation 7,969 11,477
Deferred revenue 29,200 26,590
Total current liabilities 48,258 46,001
Deferred revenue, noncurrent 6,497 7,522
Other liabilities, noncurrent 1,689 1,397
Total liabilities 56,444 54,920
Stockholders’ equity 110,218 118,354
Total liabilities and stockholders’ equity $ 166,662 $ 173,274
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Revenue:
Subscription $ 21,955 $ 17,278 $ 42,992 $ 32,184
Professional services 1,630 1,232 3,310 2,277
Total revenue 23,585 18,510 46,302 34,461
Cost of revenue:
Cost of subscription (1) 4,094 2,932 8,230 5,451
Cost of professional services (1) 4,850 5,322 9,963 9,975
Total cost of revenue 8,944 8,254 18,193 15,426
Gross profit 14,641 10,256 28,109 19,035
Operating expenses:
Sales and marketing (1) 15,452 17,641 31,734 34,104
Research and development (1) 9,961 7,391 20,046 13,985
General and administrative (1) 6,019 6,517 14,564 11,980
Total operating expenses 31,432 31,549 66,344 60,069
Operating loss (16,791 ) (21,293 ) (38,235 ) (41,034 )
Other income, net 99 81 188 179
Net loss $ (16,692 ) $ (21,212 ) $ (38,047 ) $ (40,855 )
Net loss per share, basic and diluted $ (0.17 ) $ (0.23 ) $ (0.39 ) $ (0.44 )
Weighted-average shares used to compute basic and diluted net loss per share 99,728 93,804 98,009 92,801
1. Includes stock-based compensation expense as follows:
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Cost of revenue:
Cost of subscription $ 120 $ 67 $ 228 $ 100
Cost of professional services 535 450 1,012 875
Sales and marketing 2,219 2,074 4,454 3,825
Research and development 1,264 730 2,669 1,363
General and administrative 971 896 2,240 1,923
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Operating activities:
Net loss $ (16,692 ) $ (21,212 ) $ (38,047 ) $ (40,855 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 802 456 1,585 910
Stock-based compensation 5,109 4,217 10,603 8,086
Amortization of deferred commissions 953 802 2,115 1,659
Accretion and amortization of marketable securities 129 384 305 827
Changes in operating assets and liabilities:
Accounts receivable 1,542 (560 ) 260 49
Deferred commissions (2,635 ) (1,113 ) (2,924 ) (1,751 )
Prepaid expenses and other assets (849 ) (1,848 ) (813 ) (1,818 )
Accounts payable (715 ) (254 ) (110 ) 1,258
Accrued expenses and other liabilities 3,269 1,234 (463 ) (3,169 )
Deferred revenue (2,827 ) 682 1,585 4,403
Net cash used in operating activities (11,914 ) (17,212 ) (25,904 ) (30,401 )
Investing activities:
Restricted cash (1,000 ) (1,000 )
Investment in related party (3,125 ) (3,125 )
Purchase of property and equipment (776 ) (806 ) (1,242 ) (1,693 )
Purchase of marketable securities (31,706 ) (5,924 ) (61,192 ) (18,958 )
Sales of marketable securities 5,000
Maturities of marketable securities 31,950 31,373 90,587 61,553
Net cash used in (provided by) investing activities (532 ) 20,518 28,153 41,777
Financing activities:
Proceeds from the exercise of stock options 674 1,186 1,940 2,826
Proceeds from issuance of common stock and warrants 17,358 17,358
Payments of issuance costs (46 ) (46 ) (94 )
Net cash provided by financing activities 17,986 1,186 19,252 2,732
Net increase in cash and cash equivalents 5,540 4,492 21,501 14,108
Cash and cash equivalents at beginning of period 35,111 27,041 19,150 17,425
Cash and cash equivalents at end of period $ 40,651 $ 31,533 $ 40,651 $ 31,533
CASTLIGHT HEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
Gross profit:
GAAP gross profit subscription $ 17,861 $ 16,901 $ 14,346 $ 34,762 $ 26,733
Stock-based compensation 120 108 67 228 100
Amortization of internal-use software 244 244 24 488 48
Reduction in workforce 5 5
Non-GAAP gross profit subscription 18,230 17,253 14,437 35,483 26,881
GAAP gross margin subscription 81.4 % 80.3 % 83.0 % 80.9 % 83.1 %
Non-GAAP gross margin subscription 83.0 % 81.9 % 83.6 % 82.5 % 83.5 %
GAAP gross loss professional services $ (3,220 ) $ (3,433 ) $ (4,090 ) $ (6,653 ) $ (7,698 )
Stock-based compensation 535 477 450 1,012 875
Reduction in workforce 99 99
Non-GAAP gross loss professional services $ (2,586 ) $ (2,956 ) $ (3,640 ) $ (5,542 ) $ (6,823 )
GAAP gross margin professional services (198 )% (204 )% (332 )% (201 )% (338 )%
Non-GAAP gross margin professional services (159 )% (176 )% (295 )% (167 )% (300 )%
GAAP gross profit $ 14,641 $ 13,468 $ 10,256 $ 28,109 $ 19,035
Impact of non-GAAP adjustments 1,003 829 541 1,832 1,023
Non-GAAP gross profit $ 15,644 $ 14,297 $ 10,797 $ 29,941 $ 20,058
GAAP gross margin 62.1 % 59.3 % 55.4 % 60.7 % 55.2 %
Non-GAAP gross margin 66.3 % 62.9 % 58.3 % 64.7 % 58.2 %
Operating expense:
GAAP sales and marketing $ 15,452 $ 16,282 $ 17,641 $ 31,734 $ 34,104
Stock-based compensation (2,219 ) (2,235 ) (2,074 ) (4,454 ) (3,825 )
Reduction in workforce $ (374 ) $ (374 )
Non-GAAP sales and marketing $ 12,859 $ 14,047 $ 15,567 $ 26,906 $ 30,279
GAAP research and development $ 9,961 $ 10,085 $ 7,391 $ 20,046 $ 13,985
Stock-based compensation (1,264 ) (1,405 ) (730 ) (2,669 ) (1,363 )
Capitalization of internal-use software 513 795
Reduction in workforce $ (118 ) $ (118 )
Non-GAAP research and development $ 8,579 $ 8,680 $ 7,174 $ 17,259 $ 13,417
GAAP general and administrative $ 6,019 $ 8,545 $ 6,517 $ 14,564 $ 11,980
Stock-based compensation (971 ) (1,269 ) (896 ) (2,240 ) (1,923 )
Litigation settlement (141 ) (2,735 ) (2,876 )
Reduction in workforce $ (80 ) $ (80 )
Non-GAAP general and administrative $ 4,827 $ 4,541 $ 5,621 $ 9,368 $ 10,057
GAAP operating expense $ 31,432 $ 34,912 $ 31,549 $ 66,344 $ 60,069
Impact of non-GAAP adjustments (5,167 ) (7,644 ) (3,187 ) (12,811 ) (6,316 )
Non-GAAP operating expense $ 26,265 $ 27,268 $ 28,362 $ 53,533 $ 53,753
Operating loss:
GAAP operating loss $ (16,791 ) $ (21,444 ) $ (21,293 ) $ (38,235 ) $ (41,034 )
Impact of non-GAAP adjustments 6,170 8,473 3,728 14,643 7,339
Non-GAAP operating loss $ (10,621 ) $ (12,971 ) $ (17,565 ) $ (23,592 ) $ (33,695 )
Net loss and net loss per share:
GAAP net loss $ (16,692 ) $ (21,355 ) $ (21,212 ) $ (38,047 ) $ (40,855 )
Total pre-tax impact of non-GAAP adjustments 6,170 8,473 3,728 14,643 7,339
Income tax impact of non-GAAP adjustments
Non-GAAP net loss $ (10,522 ) $ (12,882 ) $ (17,484 ) $ (23,404 ) $ (33,516 )
GAAP net loss per share, basic and diluted $ (0.17 ) $ (0.22 ) $ (0.23 ) $ (0.39 ) $ (0.44 )
Non-GAAP net loss per share, basic and diluted $ (0.11 ) $ (0.13 ) $ (0.19 ) $ (0.24 ) $ (0.36 )
Shares used in basic and diluted net loss per share computation 99,728 96,291 93,804 98,009 92,801

Investor Contact:
Ann Hickey
[email protected]
415-829-1400

Media Contact:
Jim Rivas
[email protected]
415-829-1568

 

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