Nov 4, 2015

Castlight Health Announces Third Quarter 2015 Results

Total Revenue of $19.5 Million, Up 60% Year Over Year

 

SAN FRANCISCO November 4, 2015 – Castlight Health, Inc. (NYSE:CSLT), the leader in enterprise healthcare management (EHM), today announced results for its third quarter ended September 30, 2015.

 

“Among the new customers Castlight added during the quarter were four Fortune 500 businesses. We also signed an exciting collaboration with Anthem Inc. to accelerate adoption of Castlight technologies,” said Giovanni Colella, M.D., co-founder and chief executive officer of Castlight Health. “We significantly expanded our product leadership with the addition of Castlight Action, a new product that gives benefits leaders simple and effective new ways to proactively identify and connect employees who need care with the benefits that can help them.”

 

Financial Performance for the Three Months Ended September 30, 2015

 

  • Total revenue for the third quarter of 2015 was $19.5 million, an increase of 60% from the third quarter of 2014. Subscription revenue was $18.2 million, an increase of 62% on a year-over-year basis.

 

  • Gross margin for the third quarter of 2015 was 55.5%, compared to a gross margin of 41.4% in the third quarter of 2014. Non-GAAP gross margin for the third quarter of 2015 was 59.3% compared to a non-GAAP gross margin of 44.4% in the third quarter of 2014.

 

  • Operating loss for the third quarter of 2015 was $20.1 million, compared to an operating loss of $20.3 million in the third quarter of 2014. Non-GAAP operating loss for the third quarter of 2015 was $15.9 million, compared to a non-GAAP operating loss of $16.2 million in the third quarter of 2014.

 

  • Net loss per basic and diluted share was $0.21 in the third quarter of 2015, compared to a net loss per basic and diluted share of $0.23 in the third quarter of 2014. The non-GAAP net loss per basic and diluted share for the third quarter of 2015 was $0.17, compared to a net loss per basic and diluted share of $0.18 in the third quarter of 2014. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the third quarter of 2015 was 94.4 million compared to 89.7 million in the third quarter of 2014.

 

  • Total cash, cash equivalents and marketable securities were $147.2 million at the end of the third quarter of 2015. Cash used in operations for the third quarter of 2015 was $14.5 million, compared to $7.5 million used in operations in the third quarter of 2014.

 

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

 

Q4 2015 Guidance: Revenue for the company’s fourth quarter is expected to be $20.7 million to $21.0 million. We expect to generate a non-GAAP operating loss in the range of $15.4 million to $16.4 million and a non-GAAP net loss per share of $0.16 to $0.17 based on 95 million weighted average basic and diluted shares outstanding.

 

Full Year 2015 Guidance: Revenue for the company’s full year 2015 is expected to be in the range of $74.7 million to $75.0 million, an increase of 64% year-over-year. Non-GAAP operating loss is expected to be in the range of $65.0 million to $66.0 million. Non-GAAP basic and diluted loss per share is expected to be in the range of $0.68 to $0.70 based on 94 million to 95 million weighted average basic and diluted common shares outstanding.

 

For both the fourth quarter and the full year 2015, non-GAAP guidance excludes the effects of stock-based compensation expense and capitalization and amortization of internal-use software.

 

Quarterly Conference Call

 

Castlight Health will host a conference call to discuss its third quarter 2015 results today at 1:30 p.m. Pacific Time (4:30 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 57888376. A replay will be available for one week at 1-855-859-2056, passcode 57897700.

 

About Castlight Health

 

Castlight Health, Inc. (NYSE:CSLT) is a leader in Enterprise Healthcare Management. We believe great healthcare builds great business and U.S. enterprises can gain control over the $620 billion spent annually on healthcare, transforming a crippling cost into a strategic business advantage. Recognized as a top 2014 software platform by the HR Technology Conference & Exposition, the Castlight Enterprise Healthcare Cloud enables employers to understand and manage all their healthcare investments while helping employees make the best possible healthcare decisions. Castlight is a great place to work, honored with a Glassdoor Employees’ Choice award and recognized by Rock Health for Diversity in Leadership. For more information visit www.castlighthealth.com. Follow us on Twitter and LinkedIn and Like us on Facebook. Source: Castlight Health.

 

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 (loss), 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, 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 fourth quarter of 2015 and full year 2015 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 fourth quarter and 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 2015 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
September 30, 2015 December 31, 2014
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 25,671 $ 17,425
Marketable securities 121,525 175,057
Accounts receivable, net 13,645 11,097
Deferred commissions 3,864 3,675
Prepaid expenses and other current assets 5,134 3,476
Total current assets 169,839 210,730
Property and equipment, net 6,269 3,630
Marketable securities, noncurrent 6,220
Restricted cash, noncurrent 1,000
Deferred commissions, noncurrent 3,145 2,563
Other assets 4,670 131
Total assets $ 184,923 $ 223,274
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,057 $ 3,217
Accrued expenses and other current liabilities 4,975 5,791
Accrued compensation 9,457 10,455
Deferred revenue 24,592 20,708
Total current liabilities 43,081 40,171
Deferred revenue, noncurrent 8,538 6,652
Other liabilities, noncurrent 1,455 261
Total liabilities 53,074 47,084
Commitments and contingencies
Stockholders’ equity 131,849 176,190
Total liabilities and stockholders’ equity $ 184,923 $ 223,274

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,
2015 2014 2015 2014
Revenue:
Subscription $ 18,233 $ 11,254 $ 50,417 $ 28,293
Professional services 1,306 955 3,583 2,825
Total revenue 19,539 12,209 54,000 31,118
Cost of revenue:
Cost of subscription (1) 3,081 2,596 8,532 8,223
Cost of professional services (1) 5,606 4,559 15,581 12,932
Total cost of revenue 8,687 7,155 24,113 21,155
Gross profit 10,852 5,054 29,887 9,963
Operating expenses:
Sales and marketing (1) 16,731 14,760 50,835 46,267
Research and development (1) 7,868 5,630 21,853 16,633
General and administrative (1) 6,311 4,944 18,291 13,473
Total operating expenses 30,910 25,334 90,979 76,373
Operating loss (20,058 ) (20,280 ) (61,092 ) (66,410 )
Other income, net 51 81 230 154
Net loss $ (20,007 ) $ (20,199 ) $ (60,862 ) $ (66,256 )
Net loss per share, basic and diluted $ (0.21 ) $ (0.23 ) $ (0.65 ) $ (0.96 )
Weighted-average shares used to compute basic and diluted net loss per share 94,409 89,698 93,343 68,960
1. Includes stock-based compensation expense as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
Cost of revenue:
Cost of subscription $ 96 $ 60 $ 196 $ 99
Cost of professional services 647 306 1,522 726
Sales and marketing 2,058 2,013 5,883 4,339
Research and development 981 561 2,344 1,475
General and administrative 1,177 1,169 3,100 2,963

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
Operating activities:
Net loss $ (20,007 ) $ (20,199 ) $ (60,862 ) $ (66,256 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 468 340 1,378 944
Stock-based compensation 4,959 4,109 13,045 9,602
Amortization of deferred commissions 917 875 2,576 3,119
Accretion and amortization of marketable securities 299 524 1,126 1,021
Expense related to warrant 160 2,659
Changes in operating assets and liabilities:
Accounts receivable (2,597 ) (886 ) (2,548 ) (6,213 )
Deferred commissions (1,595 ) (2,257 ) (3,346 ) (3,626 )
Prepaid expenses and other assets 792 (245 ) (1,026 ) (1,922 )
Accounts payable (542 ) (191 ) 716 193
Accrued expenses and other liabilities 1,429 3,956 (1,740 ) 2,753
Deferred revenue 1,367 6,356 5,770 14,633
Net cash used in operating activities (14,510 ) (7,458 ) (44,911 ) (43,093 )
Investing activities:
Restricted cash (1,000 ) 101
Investment in related party (1,000 ) (4,125 )
Purchase of property and equipment (1,806 ) (431 ) (3,499 ) (1,398 )
Purchase of marketable securities (67,366 ) (48,213 ) (86,324 ) (210,388 )
Sales of marketable securities 5,000 13,000
Maturities of marketable securities 78,466 45,765 140,019 53,765
Net cash provided by (used in) investing activities 8,294 (2,879 ) 50,071 (144,920 )
Financing activities:
Proceeds from the exercise of stock options 354 300 3,180 1,928
Payments of deferred financing costs (94 )
Net proceeds from initial public offering 186,162
Net cash provided by financing activities 354 300 3,086 188,090
Net increase (decrease) in cash and cash equivalents (5,862 ) (10,037 ) 8,246 77
Cash and cash equivalents at beginning of period 31,533 35,268 17,425 25,154
Cash and cash equivalents at end of period $ 25,671 $ 25,231 $ 25,671 $ 25,231

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,
2015 2015 2014 2015 2014
Gross profit:
GAAP gross profit subscription $ 15,152 $ 14,346 $ 8,658 $ 41,885 $ 20,070
GAAP gross margin subscription 83.1 % 83 % 76.9 % 83.1 % 70.9 %
Stock-based compensation expense 96 67 60 196 99
Amortization of internal-use software 24 24 72
Non-GAAP gross profit subscription $ 15,272 $ 14,437 $ 8,718 $ 42,153 $ 20,169
Non-GAAP gross margin subscription 83.8 % 83.6 % 77.5 % 83.6 % 71.3 %
GAAP gross loss professional services $ (4,300 ) $ (4,090 ) $ (3,604 ) $ (11,998 ) $ (10,107 )
GAAP gross loss percentage professional services (329 )% (332 )% (377 )% (335 )% (358 )%
Stock-based compensation expense 647 450 306 1,522 726
Capitalization of internal-use software (33 ) (33 )
Non-GAAP gross loss professional services $ (3,686 ) $ (3,640 ) $ (3,298 ) $ (10,509 ) $ (9,381 )
Non-GAAP gross loss percentage professional services (282 )% (295 )% (345 )% (293 )% (332 )%
GAAP gross profit $ 10,852 $ 10,256 $ 5,054 $ 29,887 $ 9,963
GAAP gross margin 55.5 % 55.4 % 41.4 % 55.3 % 32.0 %
Impact of non-GAAP adjustments 734 541 366 1,757 825
Non-GAAP gross profit $ 11,586 $ 10,797 $ 5,420 $ 31,644 $ 10,788
Non-GAAP gross margin 59.3 % 58.3 % 44.4 % 58.6 % 34.7 %
Operating expense:
GAAP sales and marketing $ 16,731 $ 17,641 $ 14,760 $ 50,835 $ 46,267
Expense related to warrant (160 ) (2,659 )
Stock-based compensation expense (2,058 ) (2,074 ) (2,013 ) (5,883 ) (4,339 )
Non-GAAP sales and marketing $ 14,673 $ 15,567 $ 12,587 $ 44,952 $ 39,269
GAAP research and development $ 7,868 $ 7,391 $ 5,630 $ 21,853 $ 16,633
Stock-based compensation expense (981 ) (730 ) (561 ) (2,344 ) (1,475 )
Capitalization of internal-use software 841 513 162 1,636 162
Non-GAAP research and development $ 7,728 $ 7,174 $ 5,231 $ 21,145 $ 15,320
GAAP general and administrative $ 6,311 $ 6,517 $ 4,944 $ 18,291 $ 13,473
Stock-based compensation expense (1,177 ) (896 ) (1,169 ) (3,100 ) (2,963 )
Non-GAAP general and administrative $ 5,134 $ 5,621 $ 3,775 $ 15,191 $ 10,510
GAAP operating expense $ 30,910 $ 31,549 $ 25,334 $ 90,979 $ 76,373
Impact of non-GAAP adjustments (3,375 ) (3,187 ) (3,741 ) (9,691 ) (11,274 )
Non-GAAP operating expense $ 27,535 $ 28,362 $ 21,593 $ 81,288 $ 65,099
Operating loss:
GAAP operating loss $ (20,058 ) $ (21,293 ) $ (20,280 ) $ (61,092 ) $ (66,410 )
Impact of non-GAAP adjustments 4,109 3,728 4,107 11,448 12,099
Non-GAAP operating loss $ (15,949 ) $ (17,565 ) $ (16,173 ) $ (49,644 ) $ (54,311 )
Net loss and net loss per share:
GAAP net loss $ (20,007 ) $ (21,212 ) $ (20,199 ) $ (60,862 ) $ (66,256 )
Total pre-tax impact of non-GAAP adjustments 4,109 3,728 4,107 11,448 12,099
Income tax impact of non-GAAP adjustments
Non-GAAP net loss $ (15,898 ) $ (17,484 ) $ (16,092 ) $ (49,414 ) $ (54,157 )
Basic and Diluted net loss per share
GAAP $ (0.21 ) $ (0.23 ) $ (0.23 ) $ (0.65 ) $ (0.96 )
Non-GAAP $ (0.17 ) $ (0.19 ) $ (0.18 ) $ (0.53 ) $ (0.79 )
Shares used in basic and diluted net loss per share computation 94,409 93,804 89,698 93,343 68,960

Investor Contact: Charles Butler[email protected]
415-829-1400

Media Contact: Jim Rivas[email protected]
415-515-8780

Source: Castlight Health

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