SOURCE: Castlight Health

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August 05, 2015 16:08 ET

Castlight Health Announces Second Quarter 2015 Results

Total Revenue of $18.5 Million, up 76% Year Over Year

SAN FRANCISCO, CA--(Marketwired - August 05, 2015) - Castlight Health, Inc. (NYSE: CSLT), the leader in enterprise healthcare management (EHM), today announced results for its second quarter ended June 30, 2015.

"Castlight continues to gain momentum among large enterprises and we are pleased to now count 10% of the Fortune 500 as our customers. Importantly, we are also seeing our customers expand their relationship with Castlight as we build out our platform," said Giovanni Colella, M.D., co-founder and chief executive officer of Castlight Health. "This quarter we continued to further our leadership position with the introductions of Castlight Elevate, which enables employees to access behavioral health resources, and Castlight Pulse, our first employer-facing analytics solution."

Financial Performance for the Three Months Ended June 30, 2015

  • Total revenue for the second quarter of 2015 was $18.5 million, an increase of 76% from the second quarter of 2014. Subscription revenue was $17.3 million, an increase of 80% on a year-over-year basis.
  • Gross margin for the second quarter of 2015 was 55.4%, compared to a gross margin of 29.6% in the second quarter of 2014. Non-GAAP gross margin for the second quarter of 2015 was 58.3% compared to a non-GAAP gross margin of 32.6% in the second quarter of 2014.
  • Operating loss for the second quarter of 2015 was $21.3 million, compared to an operating loss of $21.8 million in the second quarter of 2014. Non-GAAP operating loss for the second quarter of 2015 was $17.6 million, compared to a non-GAAP operating loss of $18.8 million in the second quarter of 2014.
  • Net loss per basic and diluted share was $0.23 in the second quarter of 2015, compared to a net loss per basic and diluted share of $0.24 in the second quarter of 2014. The non-GAAP net loss per basic and diluted share for the second quarter of 2015 was $0.19, compared to a net loss per basic and diluted share of $0.21 in the second quarter of 2014. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the second quarter of 2015 was 93.8 million compared to 89.5 million in the second quarter of 2014.
  • Total cash, cash equivalents and marketable securities were $164.4 million at the end of the second quarter of 2015. Cash used in operations for the second quarter of 2015 was $17.2 million, compared to $19.6 million used in operations in the second 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

Q3 2015 Guidance: Revenue for the company's third quarter is expected to be $19.2 million to $19.5 million, representing growth of 57% to 60% on a year-over-year basis. We expect to generate a non-GAAP operating loss in the range of $16.0 million to $17.0 million and a non-GAAP net loss per share of $0.17 to $0.18 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 $74.0 million to $77.0 million, an increase of 62% to 69% year-over-year. Non-GAAP operating loss is expected to be in the range of $64.0 million to $67.0 million. Non-GAAP basic and diluted loss per share is expected to be in the range of $0.66 to $0.71 based on 95 million to 97 million weighted average basic and diluted common shares outstanding.

For both the third 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 second quarter 2015 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 80918941. A replay will be available for one week at 1-855-859-2056, passcode 80918941.

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 third quarter of 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 third 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
   June 30, 2015  December 31, 2014
   (unaudited)   
Assets      
Current assets:      
 Cash and cash equivalents  $31,533  $17,425
 Marketable securities   132,905   175,057
 Accounts receivable, net   11,048   11,097
 Deferred commissions   3,956   3,675
 Prepaid expenses and other current assets   5,960   3,476
Total current assets   185,402   210,730
Property and equipment, net   4,515   3,630
Marketable securities, noncurrent   -   6,220
Restricted cash, noncurrent   1,000   -
Deferred commissions, noncurrent   2,374   2,563
Other assets   3,692   131
Total assets  $196,983  $223,274
Liabilities and stockholders' equity        
Current liabilities:        
 Accounts payable  $4,180  $3,217
 Accrued expenses and other current liabilities   4,702   5,791
 Accrued compensation   8,730   10,455
 Deferred revenue   24,125   20,708
Total current liabilities   41,737   40,171
Deferred revenue, noncurrent   7,638   6,652
Other liabilities, noncurrent   1,208   261
Total liabilities   50,583   47,084
Commitments and contingencies        
Stockholders' equity   146,400   176,190
Total liabilities and stockholders' equity  $196,983  $223,274
  
  
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,  
   2015   2014   2015   2014  
Revenue:                 
 Subscription  $17,278   $9,576   $32,184   $17,039  
 Professional services   1,232    957    2,277    1,870  
Total revenue   18,510    10,533    34,461    18,909  
Cost of revenue:                     
 Cost of subscription (1)   2,932    2,915    5,451    5,627  
 Cost of professional services (1)   5,322    4,502    9,975    8,373  
Total cost of revenue   8,254    7,417    15,426    14,000  
Gross profit   10,256    3,116    19,035    4,909  
Operating expenses:                     
 Sales and marketing (1)   17,641    14,947    34,104    31,507  
 Research and development (1)   7,391    5,476    13,985    11,003  
 General and administrative (1)   6,517    4,519    11,980    8,529  
Total operating expenses   31,549    24,942    60,069    51,039  
Operating loss   (21,293 )  (21,826 )  (41,034 )  (46,130 )
Other income, net   81    50    179    73  
Net loss  $(21,212 ) $(21,776 ) $(40,855 ) $(46,057 )
Net loss per share, basic and diluted  $(0.23 ) $(0.24 ) $(0.44 ) $(0.86 )
Weighted-average shares used to compute basic and diluted net loss per share   93,804    89,520    92,801    53,284  
                 
(1)  Includes stock-based compensation expense as follows:
     
   Three Months Ended June 30,  Six Months Ended June 30,
   2015  2014  2015  2014
Cost of revenue:            
 Cost of subscription  $67  $35  $100  $39
 Cost of professional services   450   280   875   420
Sales and marketing   2,074   1,152   3,825   2,326
Research and development   730   493   1,363   914
General and administrative   896   980   1,923   1,794
             
  
  
CASTLIGHT HEALTH, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
(unaudited) 
  
   Three Months Ended June 30,   Six Months Ended June 30,  
   2015   2014   2015   2014  
Operating activities:                 
Net loss  $(21,212 ) $(21,776 ) $(40,855 ) $(46,057 )
Adjustments to reconcile net loss to net cash used in operating activities:                     
 Depreciation   456    322    910    604  
 Stock-based compensation   4,217    2,940    8,086    5,493  
 Amortization of deferred commissions   802    868    1,659    2,244  
 Accretion and amortization of marketable securities   384    373    827    497  
 Expense related to warrant   -    70    -    2,499  
 Changes in operating assets and liabilities:                     
  Accounts receivable   (560 )  (4,077 )  49    (5,327 )
  Deferred commissions   (1,113 )  (1,087 )  (1,751 )  (1,369 )
  Prepaid expenses and other assets   (1,848 )  (596 )  (1,818 )  (1,677 )
  Accounts payable   (254 )  (375 )  1,258    384  
  Accrued expenses and other liabilities   1,234    2,173    (3,169 )  (1,203 )
  Deferred revenue   682    1,591    4,403    8,277  
Net cash used in operating activities   (17,212 )  (19,574 )  (30,401 )  (35,635 )
Investing activities:                     
 (Increase) decrease in restricted cash   (1,000 )  101    (1,000 )  101  
 Investment in related party   (3,125 )  -    (3,125 )  -  
 Purchase of property and equipment   (806 )  (311 )  (1,693 )  (967 )
 Purchase of marketable securities   (5,924 )  (126,442 )  (18,958 )  (162,175 )
 Sales of marketable securities   -    -    5,000    13,000  
 Maturities of marketable securities   31,373    3,000    61,553    8,000  
Net cash provided by (used in) investing activities   20,518    (123,652 )  41,777    (142,041 )
Financing activities:                     
 Proceeds from the exercise of stock options   1,186    106    2,826    1,628  
 Payments of deferred financing costs   -    (1,679 )  (94 )  (3,781 )
 Net proceeds from initial public offering   -    -    -    189,943  
Net cash provided by (used in) financing activities   1,186    (1,573 )  2,732    187,790  
                      
Net increase (decrease) in cash and cash equivalents   4,492    (144,799 )  14,108    10,114  
Cash and cash equivalents at beginning of period   27,041    180,067    17,425    25,154  
Cash and cash equivalents at end of period  $31,533   $35,268   $31,533   $35,268  
                 
 
 
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,
   2015  2015  2014  2015  2014
Gross profit:               
 GAAP gross profit subscription  $14,346   $12,387   $6,661   $26,733   $11,412  
  GAAP gross margin subscription   83.0 %  83.1 %  69.6 %  83.1 %  67.0 %
   Stock-based compensation expense   67    33    35    100    39  
   Amortization of internal-use software   24    24    -    48    -  
 Non-GAAP gross profit subscription  $14,437   $12,444   $6,696   $26,881   $11,451  
  Non-GAAP gross margin subscription   83.6 %  83.5 %  69.9 %  83.5 %  67.2 %
 GAAP gross loss professional services  $(4,090)   $(3,608)   $(3,545)   $(7,698)   $(6,503)  
  GAAP gross loss percentage professional services   (332) %  (345) %  (370) %  (338) %  (348) %
   Stock-based compensation expense   450    425    280    875    420  
 Non-GAAP gross loss professional services  $(3,640)   $(3,183)   $(3,265)   $(6,823)   $(6,083)  
  Non-GAAP gross loss percentage professional services   (295) %  (305) %  (341) %  (300) %  (325) %
 GAAP gross profit  $10,256   $8,779   $3,116   $19,035   $4,909  
  GAAP gross margin   55.4 %  55.0 %  29.6 %  55.2 %  26.0 %
   Impact of non-GAAP adjustments   541    482    315    1,023    459  
 Non-GAAP gross profit  $10,797   $9,261   $3,431   $20,058   $5,368  
  Non-GAAP gross margin   58.3 %  58.1 %  32.6 %  58.2 %  28.4 %
Operating expense:                          
 GAAP sales and marketing  $17,641   $16,463   $14,947   $34,104   $31,507  
  Expense related to warrant   -    -    (70)    -    (2,499)  
  Stock-based compensation expense   (2,074)    (1,751)    (1,152)    (3,825)    (2,326)  
 Non-GAAP sales and marketing  $15,567   $14,712   $13,725   $30,279   $26,682  
 GAAP research and development  $7,391   $6,594   $5,476   $13,985   $11,003  
  Stock-based compensation expense   (730)    (633)    (493)    (1,363)    (914)  
  Capitalization of internal-use software   513    282    -    795    -  
 Non-GAAP research and development  $7,174   $6,243   $4,983   $13,417   $10,089  
 GAAP general and administrative  $6,517   $5,463   $4,519   $11,980   $8,529  
  Stock-based compensation expense   (896)    (1,027)    (980)    (1,923)    (1,794)  
 Non-GAAP general and administrative  $5,621   $4,436   $3,539   $10,057   $6,735  
 GAAP operating expense  $31,549   $28,520   $24,942   $60,069   $51,039  
  Impact of non-GAAP adjustments   (3,187)    (3,129)    (2,695)    (6,316)    (7,533)  
 Non-GAAP operating expense  $28,362   $25,391   $22,247   $53,753   $43,506  
Operating loss:                          
 GAAP operating loss  $(21,293)   $(19,741)   $(21,826)   $(41,034)   $(46,130)  
  Impact of non-GAAP adjustments   3,728    3,611    3,010    7,339    7,992  
 Non-GAAP operating loss  $(17,565)   $(16,130)   $(18,816)   $(33,695)   $(38,138)  
Net loss and net loss per share:                          
 GAAP net loss  $(21,212)   $(19,643)   $(21,776)   $(40,855)   $(46,057)  
  Total pre-tax impact of non-GAAP adjustments   3,728    3,611    3,010    7,339    7,992  
  Income tax impact of non-GAAP adjustments   -    -    -    -    -  
 Non-GAAP net loss  $(17,484)   $(16,032)   $(18,766)   $(33,516)   $(38,065)  
 Basic and Diluted net loss per share                          
  GAAP  $(0.23)   $(0.21)   $(0.24)   $(0.44)   $(0.86)  
  Non-GAAP  $(0.19)   $(0.17)   $(0.21)   $(0.36)   $(0.71)  
 Shares used in basic and diluted net loss per share computation   93,804    91,786    89,520    92,801    53,284  

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