Castlight Health Announces Third Quarter 2018 Results

 

SAN FRANCISCO,  /PRNewswire/ -- Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its third quarter ended September 30, 2018.

Castlight Logo (PRNewsfoto/Castlight Health)

"Our team executed exceptionally well this quarter, which resulted in the successful launch of our Complete health navigation offering, record revenue, and the achievement of non-GAAP operating profitability one quarter ahead of our goal," said John Doyle, chief executive officer of Castlight Health. "We are excited that our most powerful offering to-date is now generally available, and believe we now have the right products, go-to-market strategy, and model in place for future success as the leader in health navigation."

Financial performance for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 includes:

  • GAAP total revenue of $40.0 million, representing an increase of 16%
  • GAAP gross margin of 63.1%, compared to 62.6%
  • Non-GAAP gross margin of 67.7%, compared to 66.9%
  • GAAP operating loss of $7.5 million, compared to a loss of $18.1 million
  • Non-GAAP operating income of $0.3 million, compared to a loss of $6.2 million
  • GAAP net loss per basic and diluted share of $0.05, compared to a net loss per basic and diluted share of $0.14
  • Non-GAAP net income per basic and diluted share of $0.00, compared to a net loss per basic and diluted share of $0.05
  • Cash used in operations of $6.0 million, compared to $8.4 million

Total cash, cash equivalents and marketable securities was $68.4 million as of September 30, 2018.

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."

Restructuring Program

On July 30, 2018, the Company announced a restructuring program to align its operations with its evolving business needs, due in part to the unexpected churn of a large customer. Under this program, the Company reduced its workforce by approximately 12 percent, resulting in severance costs totaling approximately $2.1 million for the three months ended September 30, 2018.  These expenses are excluded from the Company's non-GAAP results.

Business Outlook

The Company is providing an update to its previously-issued 2018 outlook. For the full year 2018, the Company now expects:

  • GAAP revenue toward the high-end of the range of $150 million to $155 million
  • Non-GAAP operating loss to outperform the loss range of $15 million to $20 million
  • Non-GAAP net loss per share to outperform the loss per share range of $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 third 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 (833) 238-7953 and the replay will be available for one week at (800) 585-8367.  The conference ID number for the live call and replay is 8532429.

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, amortization of internal-use software, lease exit and related charges, changes in fair value of contingent consideration liability, restructuring charges 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, success of our strategy, impact of the restructuring program and 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

 

September 30,
2018

 

December 31,
2017

     

(as adjusted)(1)

Assets

     

Current assets:

     

Cash and cash equivalents

$

46,900

   

$

61,319

 

Marketable securities

21,513

   

32,025

 

Accounts receivable and other, net

30,235

   

21,933

 

Prepaid expenses and other current assets

4,973

   

3,991

 

Total current assets

103,621

   

119,268

 

Property and equipment, net

4,767

   

5,263

 

Restricted cash, non-current

1,325

   

1,325

 

Deferred commissions

23,675

   

27,512

 

Deferred professional service costs

11,373

   

12,480

 

Intangible assets, net

17,177

   

20,253

 

Goodwill

91,785

   

91,785

 

Other assets

2,134

   

1,997

 

Total assets

$

255,857

   

$

279,883

 

Liabilities and stockholders' equity

     

Current liabilities:

     

Accounts payable

$

5,464

   

$

3,907

 

Accrued expenses and other current liabilities

17,014

   

13,178

 

Accrued compensation

5,861

   

13,941

 

Deferred revenue

26,420

   

25,985

 

Total current liabilities

54,759

   

57,011

 

Deferred revenue, non-current

1,707

   

4,457

 

Debt, non-current

3,719

   

4,958

 

Other liabilities, non-current

3,008

   

1,900

 

Total liabilities

63,193

   

68,326

 

Stockholders' equity

192,664

   

211,557

 

Total liabilities and stockholders' equity

$

255,857

   

$

279,883

 
           

(1)

Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.

 

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,

 

2018

 

2017

 

2018

 

2017

     

(as adjusted)(1)

     

(as adjusted)(1)

Revenue:

             

Subscription

$

36,702

   

$

31,378

   

$

104,493

   

$

87,657

 

Professional services and other

3,339

   

3,114

   

9,811

   

7,170

 

Total revenue, net

40,041

   

34,492

   

114,304

   

94,827

 

Cost of revenue:

             

Cost of subscription(2)

8,558

   

8,123

   

26,872

   

20,075

 

Cost of professional services and other(2)

6,237

   

4,791

   

18,596

   

13,228

 

Total cost of revenue

14,795

   

12,914

   

45,468

   

33,303

 

Gross profit

25,246

   

21,578

   

68,836

   

61,524

 

Operating expenses:

             

Sales and marketing(2)

11,497

   

15,538

   

38,715

   

45,618

 

Research and development(2)

15,028

   

13,809

   

46,824

   

40,074

 

General and administrative(2)

6,193

   

10,307

   

19,400

   

26,071

 

Total operating expenses

32,718

   

39,654

   

104,939

   

111,763

 

Operating loss

(7,472)

   

(18,076)

   

(36,103)

   

(50,239)

 

Other income, net

207

   

84

   

436

   

288

 

Income before income taxes

(7,265)

   

(17,992)

   

(35,667)

   

(49,951)

 

Income tax benefit

   

   

   

(5,206)

 

Net loss

$

(7,265)

   

$

(17,992)

   

$

(35,667)

   

$

(44,745)

 

Net loss per share, basic and diluted

$

(0.05)

   

$

(0.14)

   

$

(0.26)

   

$

(0.36)

 

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

138,490

   

132,251

   

136,735

   

122,675

 
           

(1)

Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.

(2)

Includes stock-based compensation expense as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

     

(as adjusted)(1)

     

(as adjusted)(1)

Cost of revenue:

             

Cost of subscription

$

322

   

$

258

   

$

795

   

$

638

 

Cost of professional services and other

322

   

244

   

938

   

853

 

Sales and marketing

699

   

3,110

   

3,155

   

7,705

 

Research and development

1,798

   

1,631

   

5,360

   

5,675

 

General and administrative

1,129

   

1,121

   

3,761

   

3,585

 
           

(1)

Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

       
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

     

(as adjusted)(1)

     

(as adjusted)(1)

Operating activities:

             

Net loss

$

(7,265)

   

$

(17,992)

   

$

(35,667)

   

$

(44,745)

 

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

             

Depreciation and amortization

1,698

   

1,814

   

5,271

   

4,572

 

Stock-based compensation

4,270

   

6,364

   

14,009

   

18,456

 

Amortization of deferred commissions

3,217

   

2,516

   

9,017

   

6,805

 

Amortization of deferred professional service costs

1,254

   

1,011

   

3,351

   

2,969

 

Lease exit and related charges

253

   

   

2,070

   

 

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

(126)

   

(64)

   

(392)

   

22

 

Changes in operating assets and liabilities:

             

Accounts receivable and other, net

(2,050)

   

(4,661)

   

(8,302)

   

(7,778)

 

Deferred commissions

(2,201)

   

(3,316)

   

(5,180)

   

(6,769)

 

Deferred professional service costs

(721)

   

(1,019)

   

(2,110)

   

(2,872)

 

Prepaid expenses and other assets

777

   

467

   

(1,119)

   

(393)

 

Accounts payable

1,234

   

909

   

1,745

   

401

 

Accrued expenses and other liabilities

(5,206)

   

3,148

   

(6,435)

   

2,623

 

Deferred revenue

(1,105)

   

(1,459)

   

(2,315)

   

5,250

 

Net cash used in operating activities

(5,971)

   

(8,351)

   

(26,057)

   

(23,377)

 

Investing activities:

             

Purchase of property and equipment

(591)

   

(1,346)

   

(1,895)

   

(2,276)

 

Purchase of marketable securities

(1,451)

   

(25,077)

   

(25,430)

   

(56,852)

 

Maturities of marketable securities

9,900

   

16,896

   

36,350

   

80,633

 

Business combination, net of cash acquired

   

   

   

(2,264)

 

Net cash provided by (used in) investing activities

7,858

   

(9,527)

   

9,025

   

19,241

 

Financing activities:

             

Proceeds from exercise of stock options

371

   

481

   

2,613

   

1,312

 

Payments of issuance costs related to equity

   

   

   

(731)

 

Net cash provided by financing activities

371

   

481

   

2,613

   

581

 
               

Net increase (decrease) in cash, cash equivalents and restricted cash

2,258

   

(17,397)

   

(14,419)

   

(3,555)

 

Cash, cash equivalents and restricted cash at beginning of period

45,967

   

63,708

   

62,644

   

49,866

 

Cash, cash equivalents and restricted cash at end of period

$

48,225

   

$

46,311

   

$

48,225

   

$

46,311

 
               

Reconciliation of cash, cash equivalents and restricted cash:

             

Cash and cash equivalents

$

46,900

   

$

44,986

   

$

46,900

   

$

44,986

 

Restricted cash

1,325

   

1,325

   

1,325

   

1,325

 

Total cash, cash equivalents and restricted cash

$

48,225

   

$

46,311

   

$

48,225

   

$

46,311

 
           

(1)

Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of  2018, and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (ASC 230), which we adopted in the fourth quarter of 2017.

 

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,
2018

 

June 30, 2018

 

September 30,
2017

 

September 30,
2018

 

September 30,
2017

         

(as adjusted)(1)

     

(as adjusted)(1)

Gross profit:

                 

GAAP gross profit subscription

$

28,144

   

$

25,662

   

$

23,255

   

$

77,621

   

$

67,582

 

Stock-based compensation

322

   

231

   

258

   

795

   

638

 

Amortization of internal-use software

220

   

219

   

244

   

658

   

732

 

Amortization of intangibles

678

   

678

   

751

   

2,034

   

1,502

 

Reduction in workforce

130

   

   

   

130

   

 

Acquisition related costs

   

   

   

   

52

 

Non-GAAP gross profit subscription

$

29,494

   

$

26,790

   

$

24,508

   

$

81,238

   

$

70,506

 

GAAP gross margin subscription

76.7

%

 

73.7

%

 

74.1

%

 

74.3

%

 

77.1

%

Non-GAAP gross margin subscription

80.4

%

 

77.0

%

 

78.1

%

 

77.7

%

 

80.4

%

                   

GAAP gross loss professional services

$

(2,898)

   

$

(3,608)

   

$

(1,677)

   

$

(8,785)

   

$

(6,058)

 

Stock-based compensation

322

   

315

   

244

   

938

   

853

 

Reduction in workforce

173

   

   

   

173

   

 

Acquisition related costs

   

   

(4)

   

   

160

 

Non-GAAP gross loss professional services

$

(2,403)

   

$

(3,293)

   

$

(1,437)

   

$

(7,674)

   

$

(5,045)

 

GAAP gross margin professional services

(86.8)%

   

(121)%

   

(53.9)%

   

(89.5)%

   

(84.5)%

 

Non-GAAP gross margin professional services

(72.0)%

   

(110)%

   

(46.1)%

   

(78.2)%

   

(70.4)%

 
                   

GAAP gross profit

$

25,246

   

$

22,054

   

$

21,578

   

$

68,836

   

$

61,524

 

Impact of non-GAAP adjustments

1,845

   

1,443

   

1,493

   

4,728

   

3,937

 

Non-GAAP gross profit

$

27,091

   

$

23,497

   

$

23,071

   

$

73,564

   

$

65,461

 

GAAP gross margin

63.1

%

 

58.4

%

 

62.6

%

 

60.2

%

 

64.9

%

Non-GAAP gross margin

67.7

%

 

62.2

%

 

66.9

%

 

64.4

%

 

69.0

%

                   

Operating expense:

                 

GAAP sales and marketing

$

11,497

   

$

13,306

   

$

15,538

   

$

38,715

   

$

45,618

 

Stock-based compensation

(699)

   

(1,318)

   

(3,110)

   

(3,155)

   

(7,705)

 

Amortization of intangibles

(271)

   

(273)

   

(448)

   

(992)

   

(896)

 

Reduction in workforce

(1,055)

   

   

   

(1,055)

   

 

Acquisition related costs

   

   

14

   

   

(909)

 

Non-GAAP sales and marketing

$

9,472

   

$

11,715

   

$

11,994

   

$

33,513

   

$

36,108

 
                   

GAAP research and development

$

15,028

   

$

16,425

   

$

13,809

   

$

46,824

   

$

40,074

 

Stock-based compensation

(1,798)

   

(1,908)

   

(1,631)

   

(5,360)

   

(5,675)

 

Reduction in workforce

(522)

   

   

   

(522)

   

 

Acquisition related costs

   

   

   

   

(393)

 

Lease exit and related charges

(253)

   

(842)

   

   

(2,011)

   

 

Non-GAAP research and development

$

12,455

   

$

13,675

   

$

12,178

   

$

38,931

   

$

34,006

 
                   

GAAP general and administrative

$

6,193

   

$

6,382

   

$

10,307

   

$

19,400

   

$

26,071

 

Stock-based compensation

(1,129)

   

(1,375)

   

(1,121)

   

(3,761)

   

(3,585)

 

Litigation settlement

   

   

   

   

(250)

 

Amortization of intangibles

(16)

   

(17)

   

(17)

   

(50)

   

(34)

 

Change in fair value of contingent consideration liability

   

   

(3,931)

   

   

(3,288)

 

Reduction in workforce

(172)

   

   

   

(172)

   

 

Acquisition related costs

   

   

(126)

   

   

(3,365)

 

Non-GAAP general and administrative

$

4,876

   

$

4,990

   

$

5,112

   

$

15,417

   

$

15,549

 
                   

GAAP operating expense

$

32,718

   

$

36,113

   

$

39,654

   

$

104,939

   

$

111,763

 

Impact of non-GAAP adjustments

(5,915)

   

(5,733)

   

(10,370)

   

(17,078)

   

(26,100)

 

Non-GAAP operating expense

$

26,803

   

$

30,380

   

$

29,284

   

$

87,861

   

$

85,663

 
                   

Operating loss:

                 

GAAP operating loss

$

(7,472)

   

$

(14,059)

   

$

(18,076)

   

$

(36,103)

   

$

(50,239)

 

Impact of non-GAAP adjustments

7,760

   

7,176

   

11,863

   

21,806

   

30,037

 

Non-GAAP operating income (loss)

$

288

   

$

(6,883)

   

$

(6,213)

   

$

(14,297)

   

$

(20,202)

 
                   

Net loss and net loss per share:

                 

GAAP net loss

$

(7,265)

   

$

(13,958)

   

$

(17,992)

   

$

(35,667)

   

$

(44,745)

 

Total pre-tax impact of non-GAAP adjustments

7,760

   

7,176

   

11,863

   

21,806

   

30,037

 

Income tax impact of non-GAAP adjustments

   

   

   

   

(5,206)

 

Non-GAAP net income (loss)

$

495

   

$

(6,782)

   

$

(6,129)

   

$

(13,861)

   

$

(19,914)

 

GAAP net loss per share, basic and diluted

$

(0.05)

   

$

(0.10)

   

$

(0.14)

   

$

(0.26)

   

$

(0.36)

 

Non-GAAP net income (loss) per share, basic and diluted

$

0.00

   

$

(0.05)

   

$

(0.05)

   

$

(0.10)

   

$

(0.16)

 

Shares used in basic and diluted net loss per share computation

138,490

   

136,682

   

132,251

   

136,735

   

122,675

 
           

(1)

 Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.

Castlight Media Contact:
Courtney Lamie
press@castlighthealth.com
276-492-4248

Castlight Investor Contact:
Gary J. Fuges, CFA
ir@castlighthealth.com
415-829-1680

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/castlight-health-announces-third-quarter-2018-results-300745094.html

SOURCE Castlight Health, Inc.

 
 
Company Codes: NYSE:CSLT
 

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