Castlight Health Announces Second Quarter 2018 Results
SAN FRANCISCO, July 30, 2018 /PRNewswire/ -- Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its second quarter ended June 30, 2018.
"We've seen strong validation over the last two quarters that our health navigation solution is penetrating the market efficiently, which demonstrates the strategic value to us of our platform and channel collaborations," said John Doyle, chief executive officer of Castlight Health. "Based on these results, we will increase our focus on adding new channel partners and align our costs accordingly. We will reduce operating expenses by 10 to 15 percent, which will position us to break even beginning in Q4, while continuing to make the critical platform investments needed to lead the health navigation market."
Financial performance for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 includes:
-- GAAP total revenue of $37.8 million, representing an increase of 16%
-- GAAP gross margin of 58.4%, compared to 62.2%
-- Non-GAAP gross margin of 62.2% compared to 67.4%
-- GAAP operating loss of $14.1 million, compared to a loss of $17.6
million
-- Non-GAAP operating loss of $6.9 million, compared to a loss of $8.7
million
-- GAAP net loss per basic and diluted share of $0.10, compared to a net
loss per basic and diluted share of $0.09
-- Non-GAAP net loss per basic and diluted share of $0.05, compared to a
net loss per basic and diluted share of $0.07
-- Cash used in operations of $1.1 million, compared to $4.1 million
Total cash, cash equivalents and marketable securities was $74.5 million as of June 30, 2018.
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."
Restructuring Program
Today, the Company is announcing a restructuring program to align its operations with its evolving business needs. This is also due, in part, to the recent unexpected churn of a large customer. Under this program, the Company intends to reduce operating expenses by 10 to 15 percent. The actions associated with this program are expected to be largely completed by September 30, 2018. The Company expects to take a restructuring charge in the third quarter of 2018, which will be excluded from its full year 2018 non-GAAP operating loss and non-GAAP net loss per share calculation.
Business Outlook
The Company is reiterating its previously-issued 2018 outlook. 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 second quarter 2018 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 3899475.
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, amortization of intangibles, amortization of internal-use software, lease exit and related charges, changes in fair value of contingent consideration liability, restructuring charges and charges related to the acquisition of Jiff 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, success of our strategy, impact of the restructuring program 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. 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)
(unaudited)
As of
June 30, December 31,
2018 2017
---- ----
(as adjusted)(1)
Assets
Current assets:
Cash and cash
equivalents $44,642 $61,319
Marketable
securities 29,833 32,025
Accounts
receivable
and other,
net 28,184 21,933
Prepaid
expenses and
other current
assets 5,742 3,991
----- -----
Total current
assets 108,401 119,268
Property and
equipment,
net 5,247 5,263
Restricted
cash, non-
current 1,325 1,325
Deferred
commissions 24,691 27,512
Deferred
professional
service costs 11,855 12,480
Intangible
assets, net 18,144 20,253
Goodwill 91,785 91,785
Other assets 2,141 1,997
----- -----
Total assets $263,589 $279,883
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts
payable $4,619 $3,907
Accrued
expenses and
other current
liabilities 17,829 13,178
Accrued
compensation 9,530 13,941
Deferred
revenue 26,509 25,985
------ ------
Total current
liabilities 58,487 57,011
Deferred
revenue, non-
current 2,723 4,457
Debt, non-
current 4,183 4,958
Other
liabilities,
non-current 2,964 1,900
----- -----
Total
liabilities 68,357 68,326
Stockholders'
equity 195,232 211,557
------- -------
Total
liabilities
and
stockholders'
equity $263,589 $279,883
======== ========
_______________
(1) Prior-period information has
been adjusted for the adoption
of ASU No. 2014-09, Revenue
from Contracts with Customers
(ASC 606), which we adopted in
the first quarter of 2018.
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,
2018 2017 2018 2017
(as adjusted)(1) (as adjusted)(1)
Revenue:
Subscription $34,802 $30,382 $67,791 $56,279
Professional services and
other 2,982 2,250 6,472 4,056
----- ----- ----- -----
Total revenue, net 37,784 32,632 74,263 60,335
------ ------ ------ ------
Cost of revenue:
Cost of subscription(2) 9,140 7,706 18,314 11,952
Cost of professional
services and other(2) 6,590 4,628 12,359 8,437
----- ----- ------ -----
Total cost of revenue 15,730 12,334 30,673 20,389
------ ------ ------ ------
Gross profit 22,054 20,298 43,590 39,946
------ ------ ------ ------
Operating expenses:
Sales and marketing(2) 13,306 15,935 27,218 30,081
Research and development(2) 16,425 15,194 31,796 26,265
General and
administrative(2) 6,382 6,766 13,207 15,764
----- ----- ------ ------
Total operating expenses 36,113 37,895 72,221 72,110
------ ------ ------ ------
Operating loss (14,059) (17,597) (28,631) (32,164)
Other income, net 101 12 229 205
--- --- --- ---
Income before income taxes (13,958) (17,585) (28,402) (31,959)
Income tax benefit - (5,206) - (5,206)
--- ------ --- ------
Net loss $(13,958) $(12,379) $(28,402) $(26,753)
======== ======== ======== ========
Net loss per share, basic
and diluted $(0.10) $(0.09) $(0.21) $(0.23)
====== ====== ====== ======
Weighted-average shares
used to compute basic and
diluted net loss per share 136,682 130,537 135,843 117,807
======= ======= ======= =======
_______________________
(1) Prior-period information has been adjusted for the
adoption of ASU No. 2014-09, Revenue from
Contracts with Customers (ASC 606), which we
adopted in the first quarter of 2018.
(2) Includes stock-based compensation expense as
follows:
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
(as (as
adjusted)(1) adjusted)(1)
------------ ------------
Cost of revenue:
Cost of subscription $231 $253 $473 $380
Cost of professional
services and other 315 363 616 609
Sales and marketing 1,318 2,441 2,456 4,595
Research and development 1,908 2,254 3,562 4,044
General and
administrative 1,375 1,169 2,632 2,464
_______________________
(1) Prior-period information has been adjusted for the
adoption of ASU No. 2014-09, Revenue from
Contracts with Customers (ASC 606), which we
adopted in the first quarter of 2018.
CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
(as adjusted)(1) (as adjusted)(1)
Operating activities:
Net loss $(13,958) $(12,379) $(28,402) $(26,753)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,713 2,060 3,573 2,758
Stock-based compensation 5,147 6,480 9,739 12,092
Amortization of deferred commissions 2,947 2,356 5,800 4,289
Amortization of deferred
professional service costs 1,151 1,071 2,097 1,958
Lease exit and related charges 901 - 1,817
Release of deferred tax valuation
allowance due to business
combination - (5,206) - (5,206)
Change in fair value of contingent
consideration liability - (643) - (643)
Accretion and amortization of
marketable securities (135) 20 (266) 84
Changes in operating assets and liabilities:
Accounts receivable and other, net 4,944 (1,426) (6,252) (3,117)
Deferred commissions (1,808) (2,895) (2,979) (3,452)
Deferred professional service costs (647) (1,002) (1,389) (1,853)
Prepaid expenses and other assets (2,102) 323 (1,896) (859)
Accounts payable (1,272) (685) 511 (508)
Accrued expenses and other
liabilities 6,398 4,230 (1,229) (527)
Deferred revenue (4,393) 3,582 (1,210) 6,711
------ ----- ------ -----
Net cash used in operating
activities (1,114) (4,114) (20,086) (15,026)
------ ------ ------- -------
Investing activities:
Purchase of property and equipment (916) (764) (1,304) (930)
Purchase of marketable securities (13,954) (15,768) (23,979) (31,775)
Maturities of marketable securities 10,700 28,938 26,450 63,737
Business combination, net of cash
acquired - (2,264) - (2,264)
--- ------ --- ------
Net cash (used in) provided by
investing activities (4,170) 10,142 1,167 28,768
------ ------ ----- ------
Financing activities:
Proceeds from exercise of stock
options 1,752 457 2,242 831
Payments of issuance costs related
to equity - (119) - (731)
Net cash provided by financing
activities 1,752 338 2,242 100
----- --- ----- ---
Net (decrease) increase in cash,
cash equivalents and restricted
cash (3,532) 6,366 (16,677) 13,842
Cash, cash equivalents and
restricted cash at beginning of
period 49,499 57,342 62,644 49,866
Cash, cash equivalents and
restricted cash at end of period $45,967 $63,708 $45,967 $63,708
======= ======= ======= =======
Reconciliation of cash, cash equivalents and
restricted cash:
Cash and cash equivalents $44,642 $62,201 $44,642 $62,201
Restricted cash 1,325 1,507 1,325 1,507
-----
Total cash, cash equivalents and
restricted cash $45,967 $63,708 $45,967 $63,708
======= ======= ======= =======
_______________________
(1) Prior-period information has been adjusted for the
adoption of ASU No. 2014-09, Revenue from
Contracts with Customers (ASC 606), which we
adopted in the first quarter of 2018, and ASU No.
2016-18, Statement of Cash Flows, Restricted Cash
(ASC 230), which we 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 Six Months Ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
------------- -------------- ------------- ------------- -------------
(as adjusted)(1) (as adjusted)(1)
Gross profit:
GAAP gross profit
subscription $25,662 $23,815 $22,676 $49,477 $44,327
Stock-based compensation 231 242 253 473 380
Amortization of internal-
use software 219 219 244 438 488
Amortization of
intangibles 678 678 751 1,356 751
Acquisition related costs - - 52 - 52
--- --- ---
Non-GAAP gross profit
subscription $26,790 $24,954 $23,976 $51,744 $45,998
======= ======= ======= ======= =======
GAAP gross margin
subscription 73.7% 72.2% 74.6% 73.0% 78.8%
Non-GAAP gross margin
subscription 77.0% 75.6% 78.9% 76.3% 81.7%
GAAP gross loss
professional services $(3,608) $(2,279) $(2,378) $(5,887) $(4,381)
Stock-based compensation 315 301 363 616 609
Acquisition related costs - - 17 - 164
--- --- --- --- ---
Non-GAAP gross loss
professional services $(3,293) $(1,978) $(1,998) $(5,271) $(3,608)
======= ======= ======= ======= =======
GAAP gross margin
professional services (121)% (65.3)% (106)% (91.0)% (108)%
Non-GAAP gross margin
professional services (110)% (56.7)% (88.8)% (81.4)% (89.0)%
GAAP gross profit $22,054 $21,536 $20,298 $43,590 $39,946
Impact of non-GAAP
adjustments 1,443 1,440 1,680 2,883 2,444
----- ----- ----- ----- -----
Non-GAAP gross profit $23,497 $22,976 $21,978 $46,473 $42,390
======= ======= ======= ======= =======
GAAP gross margin 58.4% 59.0% 62.2% 58.7% 66.2%
Non-GAAP gross margin 62.2% 63.0% 67.4% 62.6% 70.3%
Operating expense:
GAAP sales and marketing $13,306 $13,912 $15,935 $27,218 $30,081
Stock-based compensation (1,318) (1,138) (2,441) (2,456) (4,595)
Amortization of
intangibles (273) (448) (448) (721) (448)
Acquisition related costs - - (518) - (923)
--- --- ---- --- ----
Non-GAAP sales and
marketing $11,715 $12,326 $12,528 $24,041 $24,115
------- ------- ------- ------- -------
GAAP research and
development $16,425 $15,371 $15,194 $31,796 $26,265
Stock-based compensation (1,908) (1,654) (2,254) (3,562) (4,044)
Acquisition related costs - - (126) - (393)
Lease exit and related
charges (842) (916) - (1,758) -
---- ---- --- ------ ---
Non-GAAP research and
development $13,675 $12,801 $12,814 $26,476 $21,828
------- ------- ------- ------- -------
GAAP general and
administrative $6,382 $6,825 $6,766 $13,207 $15,764
Stock-based compensation (1,375) (1,257) (1,169) (2,632) (2,464)
Litigation settlement - - - - (250)
Amortization of
intangibles (17) (17) (17) (34) (17)
Change in fair value of
contingent consideration
liability - - 643 - 643
Acquisition related costs - - (899) - (3,239)
--- --- ---- --- ------
Non-GAAP general and
administrative $4,990 $5,551 $5,324 $10,541 $10,437
------ ------ ------ ------- -------
GAAP operating expense $36,113 $36,108 $37,895 $72,221 $72,110
Impact of non-GAAP
adjustments (5,733) (5,430) (7,229) (11,163) (15,730)
Non-GAAP operating
expense $30,380 $30,678 $30,666 $61,058 $56,380
======= ======= ======= ======= =======
Operating loss:
GAAP operating loss $(14,059) $(14,572) $(17,597) $(28,631) $(32,164)
Impact of non-GAAP
adjustments 7,176 6,870 8,909 14,046 18,174
----- ----- ----- ------ ------
Non-GAAP operating loss $(6,883) $(7,702) $(8,688) $(14,585) $(13,990)
======= ======= ======= ======== ========
Net loss and net loss per
share:
GAAP net loss $(13,958) $(14,444) $(12,379) $(28,402) $(26,753)
Total pre-tax impact of
non-GAAP adjustments 7,176 6,870 8,909 14,046 18,174
Income tax impact of non-
GAAP adjustments - - (5,206) - (5,206)
--- --- ------ --- ------
Non-GAAP net loss $(6,782) $(7,574) $(8,676) $(14,356) $(13,785)
======= ======= ======= ======== ========
GAAP net loss per share,
basic and diluted $(0.10) $(0.11) $(0.09) $(0.21) $(0.23)
Non-GAAP net loss per
share, basic and diluted $(0.05) $(0.06) $(0.07) $(0.11) $(0.12)
Shares used in basic and
diluted net loss per
share computation 136,682 134,994 130,537 135,843 117,807
_______________________
(1) Prior-period information has been adjusted for the
adoption of ASU No. 2014-09, Revenue from
Contracts with Customers (ASC 606), which we
adopted in the first quarter of 2018.
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.
