SOURCE: Castlight Health

Large Grey-Orange Logo

November 04, 2015 16:07 ET

Castlight Health Announces Third Quarter 2015 Results

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

SAN FRANCISCO, CA--(Marketwired - November 04, 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  

Contact Information