SAN FRANCISCO, April 26, 2017 /PRNewswire/ --
Total Revenue of $27.7 Million,
Up 22% Y-o-Y
GAAP & Non-GAAP Gross Margin Increased by 1,100 Basis
Points Y-o-Y
GAAP & Non-GAAP Operating Loss Reduced by $6 Million and $7
Million Y-o-Y, Respectively
Castlight Health, Inc. (NYSE:CSLT), a leading health benefits
platform provider, today announced results for its first quarter
ended March 31, 2017.
"With the completion of the Jiff acquisition, Castlight now
offers employers healthcare decision support, wellness, and a
benefits hub in the most comprehensive health benefits platform on
the market," said John Doyle, chief
executive officer of Castlight. "With more than 240 customers,
Castlight is leading the way to digital health solutions that lower
costs and improve employee well-being. We are in a great position
to achieve our growth and cash flow objectives for the year."
Financial Performance for the Three Months Ended March 31, 2017
- Total revenue for the first quarter of 2017 was $27.7 million, an increase of 22% from the first
quarter of 2016. Subscription revenue was $25.8 million, an increase of 22% on a
year-over-year basis.
- Gross margin for the first quarter of 2017 was 70.3%, compared
to a gross margin of 59.3% in the first quarter of 2016. Non-GAAP
gross margin for the first quarter of 2017 was 73.9% compared to a
non-GAAP gross margin of 62.9% in the first quarter of 2016.
- Operating loss for the first quarter of 2017 was $15.0 million, compared to an operating loss of
$21.4 million in the first quarter of
2016. Non-GAAP operating loss for the first quarter of 2017 was
$5.5 million, compared to a non-GAAP
operating loss of $13.0 million in
the first quarter of 2016.
- Net loss per basic and diluted share was $0.14 in the first quarter of 2017, compared to a
net loss per basic and diluted share of $0.22 in the first quarter of 2016. Non-GAAP net
loss per basic and diluted share for the first quarter of 2017 was
$0.05, compared to a net loss per
basic and diluted share of $0.13 in
the first quarter of 2016. For both GAAP and non-GAAP purposes, the
weighted average basic and diluted share count for the first
quarter of 2017 was 104.9 million compared to 96.3 million in the
first quarter of 2016.
- Total cash, cash equivalents and marketable securities were
$103.2 million at the end of the
first quarter of 2017. Cash used in operations for the first
quarter of 2017 was $10.9 million,
compared to $14.0 million used in
operations in the first quarter of 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."
Business Outlook
Castlight provided 2017 non-GAAP pro forma revenue guidance of
$138 to $142 million when the Company
announced its strategic acquisition of Jiff on January 4, 2017. The Jiff transaction closed on
April 3, 2017, and the Company is now
providing 2017 GAAP revenue outlook for the combined company based
on Jiff's inclusion in Castlight's financial results beginning the
second quarter and incorporating the impact of the write down of
deferred revenue associated with purchase accounting.
For the full year 2017, the Company expects GAAP revenue in the
range of $132 million to $136 million
dollars. A table included in this press release reconciles
the full year GAAP revenue guidance with the previously-issued
non-GAAP pro forma revenue range. Castlight expects full year 2017
non-GAAP operating loss in the range of $31
to $35 million and non-GAAP net loss per share of
approximately $0.24 to $0.28 based on
approximately 125 to 127 million shares.
Quarterly Conference Call
Castlight Health will host a conference call to discuss its
first quarter 2017 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. The conference call can also be accessed by dialing
(877) 201-0168. The conference ID number is 5616869. A replay will
be available for one week at (800)585-8367, passcode
5616869.
About Castlight Health
Our mission is to empower people to make the best choices for
their health and to help companies make the most of their health
benefits. We offer a health benefits platform that engages
employees to make better healthcare decisions and can guide them to
the right program, care, and provider. The platform also enables
benefit leaders to communicate and measure their programs while
driving employee engagement with targeted, relevant communications.
Castlight has partnered with enterprise customers, spanning
millions of lives, to improve healthcare outcomes, lower costs, and
increase benefits satisfaction.
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
pro forma revenue, non-GAAP gross margin, non-GAAP operating
expense, non-GAAP operating loss, non-GAAP net loss and non-GAAP
net loss per share. Non-GAAP pro forma revenue excludes the impact
of the deferred revenue write-down and includes Jiff first quarter
2017 revenue. Non-GAAP gross margin, non-GAAP operating expense,
and non-GAAP operating loss exclude stock-based compensation,
litigation settlement, charges related to a reduction in workforce,
capitalization and amortization of internal-use software and
charges related to the acquisition and the associated tax impact of
these items, where applicable. For a detailed explanation of these
non-GAAP measures, refer to Appendix A.
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 2017 to comparable
GAAP operating loss and net loss per share guidance because we do
not provide guidance for stock-based compensation expense,
capitalization and amortization of internal-use software and
charges related to the acquisition, 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 and charges related to the proposed
acquisition for the year.
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 2017 full year projections, estimates of purchase
accounting adjustments, 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 2017 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
|
|
March 31,
2017
|
|
December 31,
2016
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
56,198
|
|
|
$
|
48,722
|
|
Marketable
securities
|
47,007
|
|
|
65,882
|
|
Accounts receivable,
net
|
16,497
|
|
|
14,806
|
|
Deferred
commissions
|
7,861
|
|
|
8,218
|
|
Prepaid expenses and
other current assets
|
4,578
|
|
|
3,382
|
|
Total current
assets
|
132,141
|
|
|
141,010
|
|
Property and
equipment, net
|
5,106
|
|
|
5,285
|
|
Restricted cash,
noncurrent
|
1,144
|
|
|
1,144
|
|
Deferred commissions,
noncurrent
|
3,734
|
|
|
5,050
|
|
Other
assets
|
5,276
|
|
|
4,677
|
|
Total
assets
|
$
|
147,401
|
|
|
$
|
157,166
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
2,462
|
|
|
$
|
2,288
|
|
Accrued expenses and
other current liabilities
|
5,344
|
|
|
6,369
|
|
Accrued
compensation
|
6,111
|
|
|
9,443
|
|
Deferred
revenue
|
33,576
|
|
|
30,623
|
|
Total current
liabilities
|
47,493
|
|
|
48,723
|
|
Deferred revenue,
noncurrent
|
5,379
|
|
|
5,245
|
|
Other liabilities,
noncurrent
|
1,193
|
|
|
1,236
|
|
Total
liabilities
|
54,065
|
|
|
55,204
|
|
Stockholders'
equity
|
93,336
|
|
|
101,962
|
|
Total liabilities and
stockholders' equity
|
$
|
147,401
|
|
|
$
|
157,166
|
|
CASTLIGHT HEALTH,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands,
except per share data)
(unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Revenue:
|
|
|
|
Subscription
|
$
|
25,766
|
|
|
$
|
21,037
|
|
Professional
services
|
1,979
|
|
|
1,680
|
|
Total
revenue
|
27,745
|
|
|
22,717
|
|
Cost of
revenue:
|
|
|
|
Cost of subscription
(1)
|
4,246
|
|
|
4,136
|
|
Cost of professional
services (1)
|
3,988
|
|
|
5,113
|
|
Total cost of
revenue
|
8,234
|
|
|
9,249
|
|
Gross
profit
|
19,511
|
|
|
13,468
|
|
Operating
expenses:
|
|
|
|
Sales and marketing
(1)
|
14,443
|
|
|
16,282
|
|
Research and
development (1)
|
11,071
|
|
|
10,085
|
|
General and
administrative (1)
|
8,998
|
|
|
8,545
|
|
Total operating
expenses
|
34,512
|
|
|
34,912
|
|
Operating
loss
|
(15,001)
|
|
|
(21,444)
|
|
Other income,
net
|
192
|
|
|
89
|
|
Net loss
|
$
|
(14,809)
|
|
|
$
|
(21,355)
|
|
Net loss per share,
basic and diluted
|
$
|
(0.14)
|
|
|
$
|
(0.22)
|
|
Weighted-average
shares used to compute basic and diluted net loss
per share
|
104,935
|
|
|
96,291
|
|
_______________________
|
(1)
Includes stock-based compensation expense as follows:
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Cost of
revenue:
|
|
|
|
Cost of
subscription
|
$
|
127
|
|
|
$
|
108
|
|
Cost of professional
services
|
461
|
|
|
477
|
|
Sales and
marketing
|
2,154
|
|
|
2,235
|
|
Research and
development
|
1,790
|
|
|
1,405
|
|
General and
administrative
|
1,295
|
|
|
1,269
|
|
CASTLIGHT HEALTH,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
(unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Operating
activities:
|
|
|
|
Net loss
|
$
|
(14,809)
|
|
|
$
|
(21,355)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
698
|
|
|
783
|
|
Stock-based
compensation
|
5,827
|
|
|
5,494
|
|
Amortization of
deferred commissions
|
2,089
|
|
|
1,162
|
|
Accretion and
amortization of marketable securities
|
64
|
|
|
176
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(1,691)
|
|
|
(1,282)
|
|
Deferred
commissions
|
(416)
|
|
|
(289)
|
|
Prepaid expenses and
other assets
|
(1,183)
|
|
|
36
|
|
Accounts
payable
|
177
|
|
|
605
|
|
Accrued expenses and
other liabilities
|
(4,755)
|
|
|
(3,732)
|
|
Deferred
revenue
|
3,087
|
|
|
4,412
|
|
Net cash used in
operating activities
|
(10,912)
|
|
|
(13,990)
|
|
Investing
activities:
|
|
|
|
Purchase of property
and equipment
|
(166)
|
|
|
(466)
|
|
Purchase of
marketable securities
|
(16,007)
|
|
|
(29,486)
|
|
Maturities of
marketable securities
|
34,799
|
|
|
58,637
|
|
Net cash provided by
investing activities
|
18,626
|
|
|
28,685
|
|
Financing
activities:
|
|
|
|
Proceeds from the
exercise of stock options
|
374
|
|
|
1,266
|
|
Payments of issuance
costs related to equity
|
(612)
|
|
|
—
|
|
Net cash used in
(provided by) financing activities
|
(238)
|
|
|
1,266
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
7,476
|
|
|
15,961
|
|
Cash and cash
equivalents at beginning of period
|
48,722
|
|
|
19,150
|
|
Cash and cash
equivalents at end of period
|
$
|
56,198
|
|
|
$
|
35,111
|
|
CASTLIGHT HEALTH,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands,
except per share data)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
2017
|
|
2016
|
|
2016
|
Gross
profit:
|
|
|
|
|
|
GAAP gross profit
subscription
|
$
|
21,520
|
|
|
$
|
23,912
|
|
|
$
|
16,901
|
|
Stock-based
compensation
|
127
|
|
|
139
|
|
|
108
|
|
Amortization of
internal-use software
|
244
|
|
|
244
|
|
|
244
|
|
Non-GAAP gross profit
subscription
|
$
|
21,891
|
|
|
$
|
24,295
|
|
|
$
|
17,253
|
|
GAAP gross margin
subscription
|
83.5
|
%
|
|
84.9
|
%
|
|
80.3
|
%
|
Non-GAAP gross margin
subscription
|
85.0
|
%
|
|
86.3
|
%
|
|
81.9
|
%
|
|
|
|
|
|
|
GAAP gross loss
professional services
|
$
|
(2,009)
|
|
|
$
|
(2,417)
|
|
|
$
|
(3,433)
|
|
Stock-based
compensation
|
461
|
|
|
493
|
|
|
477
|
|
Acquisition related
costs
|
147
|
|
|
—
|
|
|
—
|
|
Non-GAAP gross loss
professional services
|
$
|
(1,401)
|
|
|
$
|
(1,924)
|
|
|
$
|
(2,956)
|
|
GAAP gross margin
professional services
|
(102)%
|
|
|
(139)%
|
|
|
(204)%
|
|
Non-GAAP gross margin
professional services
|
(71)%
|
|
|
(111)%
|
|
|
(176)%
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
|
19,511
|
|
|
$
|
21,495
|
|
|
$
|
13,468
|
|
Impact of non-GAAP
adjustments
|
979
|
|
|
876
|
|
|
829
|
|
Non-GAAP gross
profit
|
$
|
20,490
|
|
|
$
|
22,371
|
|
|
$
|
14,297
|
|
GAAP gross
margin
|
70.3
|
%
|
|
71.9
|
%
|
|
59.3
|
%
|
Non-GAAP gross
margin
|
73.9
|
%
|
|
74.8
|
%
|
|
62.9
|
%
|
Operating
expense:
|
|
|
|
|
|
GAAP sales and
marketing
|
$
|
14,443
|
|
|
$
|
13,923
|
|
|
$
|
16,282
|
|
Stock-based
compensation
|
(2,154)
|
|
|
(2,199)
|
|
|
(2,235)
|
|
Acquisition related
costs
|
(405)
|
|
|
—
|
|
|
—
|
|
Non-GAAP sales and
marketing
|
$
|
11,884
|
|
|
$
|
11,724
|
|
|
$
|
14,047
|
|
GAAP research and
development
|
$
|
11,071
|
|
|
$
|
9,841
|
|
|
$
|
10,085
|
|
Stock-based
compensation
|
(1,790)
|
|
|
(1,659)
|
|
|
(1,405)
|
|
Acquisition related
costs
|
(267)
|
|
|
—
|
|
|
—
|
|
Non-GAAP research and
development
|
$
|
9,014
|
|
|
$
|
8,182
|
|
|
$
|
8,680
|
|
GAAP general and
administrative
|
$
|
8,998
|
|
|
$
|
6,957
|
|
|
$
|
8,545
|
|
Stock-based
compensation
|
(1,295)
|
|
|
(1,267)
|
|
|
(1,269)
|
|
Litigation
settlement
|
(250)
|
|
|
—
|
|
|
(2,735)
|
|
Acquisition related
costs
|
(2,340)
|
|
|
(1,731)
|
|
|
—
|
|
Non-GAAP general and
administrative
|
$
|
5,113
|
|
|
$
|
3,959
|
|
|
$
|
4,541
|
|
GAAP operating
expense
|
$
|
34,512
|
|
|
$
|
30,721
|
|
|
$
|
34,912
|
|
Impact of non-GAAP
adjustments
|
(8,501)
|
|
|
(6,856)
|
|
|
(7,644)
|
|
Non-GAAP operating
expense
|
$
|
26,011
|
|
|
$
|
23,865
|
|
|
$
|
27,268
|
|
Operating
loss:
|
|
|
|
|
|
GAAP operating
loss
|
$
|
(15,001)
|
|
|
$
|
(9,226)
|
|
|
$
|
(21,444)
|
|
Impact of non-GAAP
adjustments
|
9,480
|
|
|
7,732
|
|
|
8,473
|
|
Non-GAAP operating
loss
|
$
|
(5,521)
|
|
|
$
|
(1,494)
|
|
|
$
|
(12,971)
|
|
Net loss and net
loss per share:
|
|
|
|
|
|
GAAP net
loss
|
$
|
(14,809)
|
|
|
$
|
(9,098)
|
|
|
$
|
(21,355)
|
|
Total pre-tax impact
of non-GAAP adjustments
|
9,480
|
|
|
7,732
|
|
|
8,473
|
|
Income tax impact of
non-GAAP adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Non-GAAP net
loss
|
$
|
(5,329)
|
|
|
$
|
(1,366)
|
|
|
$
|
(12,882)
|
|
GAAP net loss per
share, basic and diluted
|
$
|
(0.14)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.22)
|
|
Non-GAAP net loss per
share, basic and diluted
|
$
|
(0.05)
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.13)
|
|
Shares used in basic
and diluted net loss per share computation
|
104,935
|
|
|
103,976
|
|
|
96,291
|
|
CASTLIGHT HEALTH,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP PRO FORMA REVENUE
(In
millions)
(unaudited)
|
|
|
Annual
Guidance
|
|
2017
|
|
|
GAAP revenue
guidance
|
$132-136
|
Add back:
|
|
Deferred revenue fair
value adjustment (1)
|
1.9
|
Jiff revenue Q1'17
(2)
|
3.7
|
Non-GAAP pro forma
revenue guidance (3)
|
$138-142
|
|
|
(1) The close date of the Jiff acquisition occurred on
April 3, 2017, subsequent to our
fiscal quarter end. Accordingly, the deferred revenue fair value
adjustment is a preliminary estimate and is subject to change upon
the completion of purchase accounting. The impact on revenue
related to purchase accounting as a result of these transactions
limits the comparability of revenue between periods. While the
deferred revenue written down in connection with Castlight's
acquisition of Jiff will never be recognized as revenue under GAAP,
we do not expect the acquisition to have an impact on future
renewal rates of the contracts included within the deferred revenue
write-down, nor do we expect revenue generated from new service and
subscription contracts to be similarly impacted by purchase
accounting adjustments. If this adjustment was not made,
Castlight's future revenue growth rates could appear
overstated.
(2) Non-GAAP pro forma revenue guidance combines the results of
Jiff and Castlight as if Jiff was acquired at the beginning of our
fiscal year 2017 and, therefore, includes Jiff's first quarter 2017
revenue as conformed to Castlight accounting policy.
(3) We believe presenting non-GAAP pro forma revenue guidance to
include the impact of Jiff's first quarter revenue as if the
transaction had been completed at the beginning of our fiscal year
2017, and excluding the impact of deferred revenue write-down, will
aid in the comparability between periods and in assessing our
overall operating performance. We have performed an initial review
of Jiff's accounting policies, upon comprehensive review, we may
identify other differences among the accounting policies of
Castlight and Jiff that, when conformed, could have an impact on
future revenue. Non-GAAP pro forma revenue has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for GAAP revenue. Other companies in our industry may
calculate this measure differently, which may limit its usefulness
as a comparative measure.
Appendix A: Explanation of Non-GAAP Financial
Measures
Deferred revenue fair value adjustment: In connection with the
acquisition of Jiff, the deferred revenue balances from Jiff
products were required to be written down due to purchase
accounting in accordance with GAAP. While the deferred revenue
written down in connection with the acquisitions will never be
recognized as revenues under GAAP, we do not expect the acquisition
of Jiff to have an impact on future renewal rates of the contracts
included within the deferred revenue writedown, nor do we expect
revenues generated from new service and subscription contracts to
be similarly impacted by purchase accounting adjustments.
Jiff revenue Q1'17: An adjustment to Jiff's revenue to adhere to
Castlight's accounting policies, in connection with the acquisition
of Jiff.
Stock-based compensation: A non-cash expense arising from the
grant of stock-based awards to employees.
Litigation settlement: Represents settlements of lawsuits
related to Castlight's initial public offering and the acquisition
of Jiff in the first quarter of 2016 and 2017, respectively.
Reduction in workforce: Expenses associated with the program
Castlight undertook in the second quarter of 2016 to
reduce the Company's workforce by fourteen percent.
Capitalization and amortization of internal-use software:
Development costs incurred during the application development stage
of our cloud-based service that we capitalize. Capitalized software
development costs are included as part of property, plant and
equipment and are amortized on a straight-line basis over the
technology's estimated useful life.
Acquisition related costs: Transaction and integration costs
associated with the Jiff acquisition. These costs include all
incremental expenses incurred to effect a business combination.
Acquisition costs include advisory, legal, accounting, valuation,
and other professional or consulting fees. Integration costs
include expenses directly related to integration of business and
facility operations, information technology systems and
infrastructure and other employee related costs.
Castlight Investor Contact:
Gary J. Fuges, CFA
ir@castlighthealth.com
415-829-1680
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/castlight-health-announces-first-quarter-2017-results-300446443.html
SOURCE Castlight Health, Inc.