Investor Relations

NYSE: CSLT
$2.41
(Common Stock)
Change (%): +0.06 (+2.34%)
Volume: 435,495
December 10, 2018
20 minute delay
Castlight Health Announces Fourth Quarter and Full Year 2017 Results
02/21/2018

Full Year 2017 Total Revenue of $131.4 million, Up 29% Year-over-Year

SAN FRANCISCO, Feb. 21, 2018 /PRNewswire/ -- Castlight Health, Inc. (NYSE: CSLT), a leading health benefits platform provider, today announced results for its fourth quarter and full year ended December 31, 2017.

Castlight Logo (PRNewsfoto/Castlight Health)

"2017 was a transformative year for Castlight. We expanded our capabilities into wellbeing, re-accelerated growth of annualized recurring revenues compared to 2016, and positioned the business to reach breakeven in the fourth quarter of this year," said John Doyle, chief executive officer of Castlight Health. "As we look ahead, we believe Castlight is in a great position to address the critical needs of employers and employees as individuals play an increasingly central role in the health care system."

Financial performance for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 includes:

  • GAAP total revenue of $37.0 million, representing an increase of 24%
  • GAAP gross margin of 63.7%, compared to 71.9%
  • Non-GAAP gross margin of 67.7% compared to 74.8%
  • GAAP operating loss of $8.9 million, compared to a loss of $9.2 million
  • Non-GAAP operating loss of $5.8 million, compared to a loss of $1.5 million
  • GAAP net loss per basic and diluted share of $0.06, compared to a net loss per basic and diluted share of $0.09
  • Non-GAAP net loss per basic and diluted share of $0.04, compared to a net loss per basic and diluted share of $0.01
  • Cash used in operations of $0.1 million, compared to $1.7 million used in operations

Financial performance for the twelve months ended December 31, 2017 compared to the twelve months ended December 31, 2016 includes:

  • GAAP total revenue of $131.4 million, representing an increase of 29%
  • GAAP gross margin of 64.1%, compared to 66.0%
  • Non-GAAP gross margin of 68.6% compared to 69.5%
  • GAAP operating loss of $61.4 million, compared to a loss of $59.0 million
  • Non-GAAP operating loss of $27.7 million, compared to a loss of $30.6 million
  • GAAP net loss per basic and diluted share of $0.44, compared to a net loss per basic and diluted share of $0.58
  • Non-GAAP net loss per basic and diluted share of $0.22, compared to a net loss per basic and diluted share of $0.30
  • Cash used in operations of $23.5 million, compared to $37.0 million used in operations

Total cash, cash equivalents and marketable securities was $93.3 million as of December 31, 2017.

The financial performance of Jiff, Inc., which Castlight acquired on April 3, 2017, is not included in the metrics for fiscal year and fourth quarter ended December 31, 2016. 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 will use the full retrospective method of adoption. As such, Castlight will restate its historical financial information for fiscal years 2016 and 2017, as well as quarterly 2017. The Company expects to provide these restatements next quarter. Based on our preliminary review of ASC 606's impact, the Company currently expects to see a reduction of 2018 revenue by approximately $2 million compared to what it would have expected under the former ASC 605 standard.

Business Outlook

The Company's outlook is based on the new revenue recognition standard ASC 606. 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 fourth quarter 2017 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 5381456.

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, charges related to a reduction in workforce, amortization of intangibles, capitalization and amortization of internal-use software, gain on the sale of investment in related party, expense related to expiration of SAP warrant, changes in fair value of contingent consideration and charges related to the acquisition 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)



As of


December 31,
2017


December 31,
2016


 (unaudited)



Assets




Current assets:




Cash and cash equivalents

$

61,319



$

48,722


Marketable securities

32,025



65,882


Accounts receivable, net

20,761



14,806


Deferred commissions

6,403



8,218


Prepaid expenses and other current assets

3,991



3,382


Total current assets

124,499



141,010


Property and equipment, net

5,263



5,285


Restricted cash, non-current

1,325



1,144


Goodwill

91,785




Intangible assets, net

20,253




Deferred commissions, non-current

4,180



5,050


Other assets

1,997



4,677


Total assets

$

249,302



$

157,166


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

3,907



$

2,288


Accrued expenses and other current liabilities

13,178



6,369


Accrued compensation

13,941



9,443


Deferred revenue

29,410



30,623


Total current liabilities

60,436



48,723


Deferred revenue, non-current

6,686



5,245


Debt, non-current

4,958




Other liabilities, non-current

1,900



1,236


Total liabilities

73,980



55,204


Commitments and contingencies




Stockholders' equity:




Class A and Class B common stock

13



10


Additional paid-in capital

586,900



457,596


Accumulated other comprehensive loss

(22)




Accumulated deficit

(411,569)



(355,644)


Total stockholders' equity

175,322



101,962


Total liabilities and stockholders' equity

$

249,302



$

157,166


 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2017


2016


2017


2016

Revenue:








Subscription

$

33,533



$

28,157



$

120,496



$

95,016


Professional services and other

3,480



1,740



10,933



6,684


Total revenue, net

37,013



29,897



131,429



101,700


Cost of revenue:








Cost of subscription (1)

8,335



4,245



28,410



16,463


Cost of professional services and other (1)

5,095



4,157



18,774



18,098


Total cost of revenue

13,430



8,402



47,184



34,561


Gross profit

23,583



21,495



84,245



67,139


Operating expenses:








Sales and marketing (1)

15,289



13,923



62,313



58,800


Research and development (1)

14,428



9,841



54,502



40,460


General and administrative (1)

2,754



6,957



28,825



26,859


Total operating expenses

32,471



30,721



145,640



126,119


Operating loss

(8,888)



(9,226)



(61,395)



(58,980)


Other income, net

330



128



618



432


Loss before income tax benefit

(8,558)



(9,098)



(60,777)



(58,548)


Income tax benefit





5,206




Net loss

$

(8,558)



$

(9,098)



$

(55,571)



$

(58,548)


Net loss per share, basic and diluted

$

(0.06)



$

(0.09)



$

(0.44)



$

(0.58)


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

134,018



103,976



125,534



100,798



(1)       Includes stock-based compensation expense as follows:



Three Months Ended December 31,


Year Ended December 31,


2017


2016


2017


2016

Cost of revenue:








Cost of subscription

$

250



$

139



$

888



$

506


Cost of professional services and other

256



493



1,656



1,961


Sales and marketing

1,960



2,199



9,665



8,843


Research and development

1,740



1,659



7,415



5,959


General and administrative

1,368



1,267



4,954



4,743


 

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2017


2016 Adjusted *


2017


2016 Adjusted *

Operating activities:








Net loss

$

(8,558)



$

(9,098)



$

(55,571)



$

(58,548)


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








Depreciation and amortization

2,041



762



6,613



3,168


Stock-based compensation

5,574



5,757



24,578



22,012


Amortization of deferred commissions

4,331



1,913



12,453



5,070


Release of deferred tax valuation allowance due to business combination





(5,206)




Change in fair value of contingent consideration liability

(3,959)





(671)




Accretion and amortization of marketable securities

(103)



75



(83)



481


Expense related to expiration of SAP warrant

1,132





1,132




Gain on sale of investment in related party

(1,375)





(1,375)




Changes in operating assets and liabilities:








Accounts receivable

5,256



1,082



(2,522)



(2,055)


Deferred commissions

(3,090)



(3,574)



(9,768)



(7,977)


Prepaid expenses and other assets

2,038



515



1,645



448


Accounts payable

363



(1,335)



764



(1,035)


Accrued expenses and other liabilities

3,560



3,755



6,183



(291)


Deferred revenue

(7,290)



(1,562)



(1,629)



1,756


Net cash used in operating activities

(80)



(1,710)



(23,457)



(36,971)


Investing activities:








Proceeds from sale of investment in related party

5,500





5,500




Purchase of property and equipment

(268)



(115)



(2,544)



(1,702)


Purchase of marketable securities

(5,806)



(25,021)



(62,658)



(98,184)


Maturities of marketable securities

15,943



20,351



96,576



146,508


Business combination, net of cash acquired





(2,264)




Net cash provided by (used in) investing activities

15,369



(4,785)



34,610



46,622


Financing activities:








Proceeds from the exercise of stock options

1,044



253



2,356



2,829


Proceeds from issuance of common stock and warrants







17,358


Payments of deferred financing costs





(731)



(122)


Net cash provided by financing activities

1,044



253



1,625



20,065










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

16,333



(6,242)



12,778



29,716


Cash, cash equivalents and restricted cash at beginning of period

46,311



56,108



49,866



20,150


Cash, cash equivalents and restricted cash at end of period

$

62,644



$

49,866



$

62,644



$

49,866










* Prior-period information has been restated for the adoption of Accounting Standards Update 2016-18, "Statement of Cash Flows" which was adopted in the fourth quarter of 2017.

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2017


2016 Adjusted *


2017


2016 Adjusted *

Non-cash investing and financing activity:








Non-cash purchase consideration related to acquisition of Jiff

$



$



$

101,692



$


Purchase of property and equipment, accrued but not paid

(151)



(20)



(188)



(20)










Reconciliation of cash, cash equivalents and restricted cash:








Cash and cash equivalents





$

61,319



$

48,722


Restricted cash





1,325



1,144


Total cash, cash equivalents and restricted cash





$

62,644



$

49,866










* Prior-period information has been restated for the adoption of Accounting Standards Update 2016-18, "Statement of Cash Flows" which was 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


Year Ended


December 31,


September 30,


December 31,


December 31,


December 31,


2017


2017


2016


2017


2016

Gross profit:










GAAP gross profit subscription

$

25,198



$

23,240



$

23,912



$

92,086



$

78,553


Stock-based compensation

250



258



139



888



506


Amortization of internal-use software

236



244



244



968



976


Amortization of intangibles

751



751





2,253




Reduction in workforce









5


Acquisition related costs







52




Non-GAAP gross profit subscription

$

26,435



$

24,493



$

24,295



$

96,247



$

80,040


GAAP gross margin subscription

75.1

%


74.1

%


84.9

%


76.4

%


82.7

%

Non-GAAP gross margin subscription

78.8

%


78.1

%


86.3

%


79.9

%


84.2

%











GAAP gross loss professional services and other

$

(1,615)



$

(1,689)



$

(2,417)



$

(7,841)



$

(11,414)


Stock-based compensation

256



342



493



1,656



1,961


Reduction in workforce









103


Acquisition related costs



(4)





160




Non-GAAP gross loss professional services

$

(1,359)



$

(1,351)



$

(1,924)



$

(6,025)



$

(9,350)


GAAP gross margin professional services and other

(46.4)%



(53.0)%



(139)%



(71.7)%



(171)%


Non-GAAP gross margin professional services and other

(39.1)%



(42.0)%



(111)%



(55.1)%



(140)%












GAAP gross profit

$

23,583



$

21,551



$

21,495



$

84,245



$

67,139


Impact of non-GAAP adjustments

1,493



1,591



876



5,977



3,551


Non-GAAP gross profit

$

25,076



$

23,142



$

22,371



$

90,222



$

70,690


GAAP gross margin

63.7

%


62.3

%


71.9

%


64.1

%


66.0

%

Non-GAAP gross margin

67.7

%


66.9

%


74.8

%


68.6

%


69.5

%

Operating expense:










GAAP sales and marketing

$

15,289



$

16,006



$

13,923



$

62,313



$

58,800


Stock-based compensation

(1,960)



(3,110)



(2,199)



(9,665)



(8,843)


Amortization of intangibles

(448)



(448)





(1,344)




Reduction in workforce









(422)


Acquisition related costs



14





(909)




Non-GAAP sales and marketing

$

12,881



$

12,462



$

11,724



$

50,395



$

49,535


GAAP research and development

$

14,428



$

13,809



$

9,841



$

54,502



$

40,460


Stock-based compensation

(1,740)



(1,631)



(1,659)



(7,415)



(5,959)


Reduction in workforce









(136)


Acquisition related costs







(393)




Non-GAAP research and development

$

12,688



$

12,178



$

8,182



$

46,694



$

34,365


GAAP general and administrative

$

2,754



$

10,307



$

6,957



$

28,825



$

26,859


Stock-based compensation

(1,368)



(1,121)



(1,267)



(4,954)



(4,743)


Litigation settlement







(250)



(2,876)


Amortization of intangibles

(17)



(17)





(50)




Change in fair value of contingent consideration liability

3,959



(3,931)





671




Reduction in workforce









(90)


Acquisition related costs

(58)



(126)



(1,731)



(3,423)



(1,731)


Non-GAAP general and administrative

$

5,270



$

5,112



$

3,959



$

20,819



$

17,419


GAAP operating expense

$

32,471



$

40,122



$

30,721



$

145,640



$

126,119


Impact of non-GAAP adjustments

(1,632)



(10,370)



(6,856)



(27,732)



(24,800)


Non-GAAP operating expense

$

30,839



$

29,752



$

23,865



$

117,908



$

101,319


Operating loss:










GAAP operating loss

$

(8,888)



$

(18,571)



$

(9,226)



$

(61,395)



$

(58,980)


Impact of non-GAAP adjustments

3,125



11,961



7,732



33,709



28,351


Non-GAAP operating loss

$

(5,763)



$

(6,610)



$

(1,494)



$

(27,686)



$

(30,629)


Other income, net:










GAAP other income, net

$

330



$

84



$

128



$

618



$

432


Gain on sale of investment in related party

(1,375)







(1,375)




Expense related to expiration of SAP warrant

1,132







1,132




Non-GAAP other income, net

$

87



$

84



$

128



$

375



$

432


Net loss and net loss per share:










GAAP net loss

$

(8,558)



$

(18,487)



$

(9,098)



$

(55,571)



$

(58,548)


Total pre-tax impact of non-GAAP adjustments

2,882



11,961



7,732



33,466



28,351


Release of deferred tax valuation allowance due to business combination







(5,206)




Non-GAAP net loss

$

(5,676)



$

(6,526)



$

(1,366)



$

(27,311)



$

(30,197)


GAAP net loss per share, basic and diluted

$

(0.06)



$

(0.14)



$

(0.09)



$

(0.44)



$

(0.58)


Non-GAAP net loss per share, basic and diluted

$

(0.04)



$

(0.05)



$

(0.01)



$

(0.22)



$

(0.30)


Shares used in basic and diluted net loss per share computation

134,018



132,251



103,976



125,534



100,798


 

Castlight Media Contact:
Shannon Magill
press@castlighthealth.com 
415-829-1500

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

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SOURCE Castlight Health, Inc.

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