Investor Relations

Castlight Health Announces Second Quarter 2020 Results
07/28/2020

SAN FRANCISCO, July 28, 2020 /PRNewswire/ -- Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its second quarter ended June 30, 2020.

"We made meaningful headway against our strategic plan in the second quarter, delivering strong financial results, demonstrating progress toward our goal of adding an additional health plan partner, and supporting our customers with rapid innovation during COVID-19. Over the past year, we made two major strategic decisions: our focus on health plan as a key go-to-market strategy, and investment in high-tech, high-touch solutions. Our momentum in the first half of 2020 validates these decisions, and I'm confident that Castlight is strategically well positioned in the marketplace," said Maeve O'Meara, chief executive officer of Castlight Health.

Financial performance for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 includes:

  • GAAP total revenue of $35.5 million, compared to $35.9 million
  • GAAP gross margin of 64.1%, compared to 60.6%
  • Non-GAAP gross margin of 68.3%, compared to 63.4%
  • GAAP operating loss of $4.3 million, compared to $8.6 million
  • Non-GAAP operating income of $2.1 million, compared to an operating loss of $2.9 million
  • GAAP net loss per basic and diluted share of $0.03, compared to a net loss per basic and diluted share of $0.06
  • Non-GAAP net income per basic and diluted share of $0.01, compared to a net loss per basic and diluted share of $0.02
  • Cash provided by operations of $3.1 million, compared to cash used in operations of $1.8 million

Total cash, cash equivalents and marketable securities was $44.3 million as of June 30, 2020.

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

For the full year 2020, the Company continues to expect:

  • GAAP revenue in the range of $127 million to $135 million
  • Non-GAAP operating loss between $17 million to $24 million
  • Non-GAAP net loss per share between $0.11 and $0.16, based on approximately 150 million to 151 million shares

Quarterly Conference Call

Castlight Health senior management will host a conference call to discuss its second quarter 2020 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. Registration for the conference call can be completed by visiting the following website prior to, or on the day of, the conference call: http://www.directeventreg.com/registration/event/3238128.

About Castlight Health

Castlight is on a mission to make it as easy as humanly possible for its users to navigate the healthcare system and live happier, healthier, more productive lives. Our health navigation platform connects hundreds of health vendors, benefits resources, and plan designs into one comprehensive health and wellbeing experience. 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. Castlight transforms the employee benefit experience into a deeply personalized, yet simple, guided one, empowering better-informed patient decisions to unlock better healthcare outcomes and maximizing return on healthcare investments.

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 income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share. Non-GAAP gross profit and margin, non-GAAP operating expense, non-GAAP operating income (loss), and non-GAAP net income (loss) exclude goodwill impairment, stock-based compensation, certain legal expenses, amortization of intangibles, restructuring charges, capitalization and amortization of internal-use software, and lease exit and related charges.

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 2020 to comparable GAAP measures 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. 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 second quarter performance and 2020 full year projections, impact of COVID-19, the success of our strategy 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, including the risks set forth in our annual report on Form 10-K filed on February 28, 2020, and our quarterly report on Form 10-Q for the three months ended June 30, 2020, when filed. All forward-looking statements in this press release are expressly qualified in their entirety by these cautionary statements and 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 2020 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


June 30, 2020


December 31, 2019

Assets




Current assets:




Cash and cash equivalents

$

44,274



$

43,017


Marketable securities



16,411


Accounts receivable and other, net

33,175



31,397


Prepaid expenses and other current assets

5,643



4,645


Total current assets

83,092



95,470


Property and equipment, net

6,353



4,856


Restricted cash, non-current

1,144



1,144


Deferred commissions

11,719



14,718


Deferred professional service costs

5,717



6,711


Intangible assets, net

10,046



12,178


Goodwill

41,485



91,785


Operating lease right-of-use assets, net

11,122



13,906


Other assets

1,595



2,016


Total assets

$

172,273



$

242,784


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

8,606



$

19,596


Accrued expenses and other current liabilities

8,887



10,454


Accrued compensation

5,656



8,770


Deferred revenue

12,930



10,173


Operating lease liabilities

5,429



5,914


Total current liabilities

41,508



54,907


Deferred revenue, non-current

577



572


Debt, non-current

465



1,395


Operating lease liabilities, non-current

9,290



11,823


Other liabilities, non-current

1,269



1,213


Total liabilities

53,109



69,910


Stockholders' equity

119,164



172,874


Total liabilities and stockholders' equity

$

172,273



$

242,784


 

 

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,


2020


2019


2020


2019

Revenue:








Subscription

$

34,289



$

33,964



$

72,672



$

67,770


Professional services and other

1,211



1,946



1,873



3,630


Total revenue, net

35,500



35,910



74,545



71,400


Cost of revenue:








Cost of subscription(1)

8,819



8,234



19,051



16,400


Cost of professional services and other(1)

3,942



5,929



8,183



11,873


Total cost of revenue

12,761



14,163



27,234



28,273


Gross profit

22,739



21,747



47,311



43,127


Operating expenses:








Sales and marketing(1)

7,683



8,889



18,155



18,104


Research and development(1)

13,043



14,487



26,865



30,212


General and administrative(1)

6,340



7,010



12,916



14,303


Goodwill impairment





50,300




Total operating expenses

27,066



30,386



108,236



62,619


Operating loss

(4,327)



(8,639)



(60,925)



(19,492)


Other income, net

123



258



386



572


Net loss

$

(4,204)



$

(8,381)



$

(60,539)



$

(18,920)


Net loss per share, basic and diluted

$

(0.03)



$

(0.06)



$

(0.41)



$

(0.13)


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

150,078



144,572



149,475



143,790




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




Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Cost of revenue:








Cost of subscription

$

205



$

196



$

374



$

415


Cost of professional services and other

144



236



260



501


Sales and marketing

748



662



1,420



1,289


Research and development

1,314



1,733



2,477



3,437


General and administrative

858



2,030



1,924



3,192


 

 

CASTLIGHT HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Operating activities:








Net loss

$

(4,204)



$

(8,381)



$

(60,539)



$

(18,920)


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








Depreciation and amortization

1,609



1,343



3,144



2,687


Goodwill impairment





50,300




Stock-based compensation

3,269



4,857



6,455



8,834


Amortization of deferred commissions

1,536



2,365



3,919



4,856


Amortization of deferred professional service costs

732



1,045



1,657



2,014


Non-cash operating lease expense

1,231



1,298



2,631



2,580


Accretion and amortization of marketable securities



(87)



2



(213)


Changes in operating assets and liabilities:








Accounts receivable and other, net

4,898



2,088



(1,778)



(5,795)


Deferred commissions

(602)



(1,254)



(920)



(2,670)


Deferred professional service costs

(213)



(432)



(629)



(901)


Prepaid expenses and other assets

(330)



(1,113)



(824)



(1,864)


Accounts payable

(2,739)



2,713



(10,201)



1,864


Operating lease liabilities

(1,100)



(1,413)



(2,616)



(2,795)


Accrued expenses and other liabilities

(1,530)



(1,827)



(1,511)



(3,131)


Deferred revenue

(811)



(3,183)



2,762



312


Accrued compensation

1,351



164



(3,114)



(806)


Net cash provided by (used in) operating activities

3,097



(1,817)



(11,262)



(13,948)


Investing activities:








Purchase of property and equipment

(2,035)



(389)



(3,299)



(593)


Purchase of marketable securities

(1,005)



(13,780)



(2,994)



(13,780)


Sales of marketable securities

2,001





2,001




Maturities of marketable securities

5,000





17,400



11,453


Net cash provided by (used in) investing activities

3,961



(14,169)



13,108



(2,920)


Financing activities:








Proceeds from exercise of stock options



165



155



1,845


Proceeds from ESPP offering





186




Principal payments on long-term debt

(465)



(465)



(930)



(930)


Net cash (used in) provided by financing activities

(465)



(300)



(589)



915










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

6,593



(16,286)



1,257



(15,953)


Cash, cash equivalents and restricted cash at beginning of period

39,006



67,663



44,342



67,330


Cash, cash equivalents and restricted cash at end of
period

$

45,599



$

51,377



$

45,599



$

51,377










Reconciliation of cash, cash equivalents and restricted cash:








Cash and cash equivalents

$

44,274



$

50,052



$

44,274



$

50,052


Restricted cash included in Prepaid expenses and other
current assets

181





181




Restricted cash, non-current

1,144



1,325



1,144



1,325


Total cash, cash equivalents and restricted cash

$

45,599



$

51,377



$

45,599



$

51,377


 

 

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, 2020


March 31, 2020


June 30, 2019


June 30, 2020


June 30, 2019

Gross profit:










GAAP gross profit subscription

$

25,470



$

28,151



$

25,730



$

53,621



$

51,370


Stock-based compensation

205



169



196



374



415


Amortization of internal-use software

79



26





105




Amortization of intangibles

530



530



587



1,060



1,174


Reduction in workforce

221







221




Non-GAAP gross profit subscription

$

26,505



$

28,876



$

26,513



$

55,381



$

52,959


GAAP gross margin subscription

74.3

%


73.3

%


75.8

%


73.8

%


75.8

%

Non-GAAP gross margin subscription

77.3

%


75.2

%


78.1

%


76.2

%


78.1

%











GAAP gross loss professional services

$

(2,731)



$

(3,579)



$

(3,983)



$

(6,310)



$

(8,243)


Stock-based compensation

144



116



236



260



501


Reduction in workforce

317







317




Non-GAAP gross loss professional services

$

(2,270)



$

(3,463)



$

(3,747)



$

(5,733)



$

(7,742)


GAAP gross margin professional services

(226)

%


(541)

%


(205)

%


(337)

%


(227)

%

Non-GAAP gross margin professional services

(187)

%


(523)

%


(193)

%


(306)

%


(213)

%











GAAP gross profit

$

22,739



$

24,572



$

21,747



$

47,311



$

43,127


Impact of non-GAAP adjustments

1,496



841



1,019



2,337



2,090


Non-GAAP gross profit

$

24,235



$

25,413



$

22,766



$

49,648



$

45,217


GAAP gross margin

64.1

%


62.9

%


60.6

%


63.5

%


60.4

%

Non-GAAP gross margin

68.3

%


65.1

%


63.4

%


66.6

%


63.3

%











Operating expense:










GAAP sales and marketing

$

7,683



$

10,472



$

8,889



$

18,155



$

18,104


Stock-based compensation

(748)



(672)



(662)



(1,420)



(1,289)


Amortization of intangibles

(528)



(528)



(272)



(1,056)



(544)


Reduction in workforce

(334)







(334)




Non-GAAP sales and marketing

$

6,073



$

9,272



$

7,955



$

15,345



$

16,271












GAAP research and development

$

13,043



$

13,822



$

14,487



$

26,865



$

30,212


Stock-based compensation

(1,314)



(1,163)



(1,733)



(2,477)



(3,437)


Reduction in workforce

(658)







(658)




Certain legal expenses



191





191



(191)


Capitalization of internally developed software



21





21




Non-GAAP research and development

$

11,071



$

12,871



$

12,754



$

23,942



$

26,584












GAAP general and administrative

$

6,340



$

6,576



$

7,010



$

12,916



$

14,303


Stock-based compensation

(858)



(1,066)



(2,030)



(1,924)



(3,192)


Amortization of intangibles



(17)



(17)



(17)



(34)


Certain legal expenses









(533)


Reduction in workforce

(497)







(497)




Non-GAAP general and administrative

$

4,985



$

5,493



$

4,963



$

10,478



$

10,544












GAAP goodwill impairment

$



$

50,300



$



$

50,300



$


Goodwill impairment



(50,300)





(50,300)




Non-GAAP goodwill impairment

$



$



$



$



$












GAAP operating expense

$

27,066



$

81,170



$

30,386



$

108,236



$

62,619


Impact of non-GAAP adjustments

(4,937)



(53,534)



(4,714)



(58,471)



(9,220)


Non-GAAP operating expense

$

22,129



$

27,636



$

25,672



$

49,765



$

53,399












Operating loss:










GAAP operating loss

$

(4,327)



$

(56,598)



$

(8,639)



$

(60,925)



$

(19,492)


Impact of non-GAAP adjustments

6,433



54,375



5,733



60,808



11,310


Non-GAAP operating income (loss)

$

2,106



$

(2,223)



$

(2,906)



$

(117)



$

(8,182)












Net loss and net loss per share:










GAAP net loss

$

(4,204)



$

(56,335)



$

(8,381)



$

(60,539)



$

(18,920)


Total pre-tax impact of non-GAAP adjustments

6,433



54,375



5,733



60,808



11,310


Non-GAAP net income (loss)

$

2,229



$

(1,960)



$

(2,648)



$

269



$

(7,610)


GAAP net loss per share, basic and diluted

$

(0.03)



$

(0.38)



$

(0.06)



$

(0.41)



$

(0.13)


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

$

0.01



$

(0.01)



$

(0.02)



$



$

(0.05)


Shares used in basic and diluted net loss per share computation

150,078



148,872



144,572



149,475



143,790


 

Castlight Media Contact:
Caroline Kawashima
press@castlighthealth.com
415-246-0313

Castlight Investor Contact:
ir@castlighthealth.com
415-829-1680

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SOURCE Castlight Health, Inc.

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