Castlight Health Announces Fourth Quarter and Full Year 2017 Results
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.
"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, December 31,
2017 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.
