CASTLIGHT HEALTH, INC. - FORM 8-K - EX-99.1 - Q1'15 PRESS RELEASE - May 6, 2015

Attached files

file filename
8-K - 8-K - CASTLIGHT HEALTH, INC.q115form8-k.htm



Castlight Health Announces First Quarter 2015 Results

Total Revenue of $16.0 Million, Up 90% Year Over Year

SAN FRANCISCO – May 6, 2015 – Castlight Health, Inc. (NYSE:CSLT), a pioneer of the Enterprise Healthcare Cloud, today announced results for its first quarter ended March 31, 2015.

“We executed well across the business in the first quarter. Renewals were very strong and included our two largest, non-governmental customers that were up for renewal in 2015. Both signed renewals with us that increased their investments in Castlight solutions,” said Giovanni Colella, president and chief executive officer of Castlight Health. “In addition to these renewals and upsells, we were pleased to continue adding new large employers as customers in the first quarter, including Viacom, McKesson, and the State of Mississippi.”

Financial Performance for the Three Months Ended March 31, 2015

•
Total revenue for the first quarter of 2015 was $16.0 million, an increase of 90% from the first quarter of 2014. Subscription revenue was $14.9 million, an increase of 100% on a year-over-year basis.

•
Gross margin for the first quarter of 2015 was 55.0%, compared to a gross margin of 21.4% in the first quarter of 2014. Non-GAAP gross margin for the first quarter of 2015 was 58.1% compared to a non-GAAP gross margin of 23.1% in the first quarter of 2014.

•
Operating loss for the first quarter of 2015 was $19.7 million, compared to an operating loss of $24.3 million in the first quarter of 2014. Non-GAAP operating loss for the first quarter of 2015 was $16.1 million, compared to a non-GAAP operating loss of $19.3 million in the first quarter of 2014.

•
Net loss per basic and diluted share was $0.21 in the first quarter of 2015, compared to a net loss per share of $0.90 in the first quarter of 2014. The non-GAAP net loss per share for the first quarter of 2015 was $0.17, compared to a net loss per share of $0.72 in the first quarter of 2014. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the first quarter of 2015 was 91.8 million compared to 27.0 million in the first quarter of 2014.

•
Total cash, cash equivalents and marketable securities were $185.8 million at the end of the first quarter of 2015. Cash used in operations for the first quarter of 2015 was $13.2 million, compared to $16.1 million used in operations in the first 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





Q2 2015 Guidance: Revenue for the company’s second quarter is expected to be $17.6 million to $17.9 million, representing growth of 67% to 70% on a year-over-year basis. We expect to generate a non-GAAP operating loss in the range of $16.5 million to $17.5 million and a non-GAAP net loss per share of $0.18 to $0.19 based on 94 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 million to $77 million, an increase of 62% to 69% year-over-year. Non-GAAP operating loss is expected to be in the range of $64 million to $67 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 to 97 million weighted average basic and diluted common shares outstanding.

For both the second 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 first 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 29812154. A replay will be available for one week at 1-855-859-2056, passcode 29812154.

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 second 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 second 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
 
March 31, 2015
 
December 31, 2014
 
 (unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
27,041

 
$
17,425

Marketable securities
158,730

 
175,057

Accounts receivable, net
10,488

 
11,097

Deferred commissions
3,642

 
3,675

Prepaid expenses and other current assets
3,499

 
3,476

Total current assets
203,400

 
210,730

Property and equipment, net
3,497

 
3,630

Marketable securities, noncurrent
—

 
6,220

Deferred commissions, noncurrent
2,377

 
2,563

Other assets
78

 
131

Total assets
$
209,352

 
$
223,274

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
4,169

 
$
3,217

Accrued expenses and other current liabilities
4,365

 
5,791

Accrued compensation
7,378

 
10,455

Deferred revenue
24,002

 
20,708

Total current liabilities
39,914

 
40,171

Deferred revenue, noncurrent
7,079

 
6,652

Other liabilities, noncurrent
226

 
261

Total liabilities
47,219

 
47,084

Commitments and contingencies
 
 
 
Stockholders’ equity
162,133

 
176,190

Total liabilities and stockholders’ equity
$
209,352

 
$
223,274






CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 
 
Three Months Ended March 31,
 
2015
 
2014
Revenue:
 
 
 
Subscription
$
14,906

 
$
7,463

Professional services
1,045

 
913

Total revenue
15,951

 
8,376

Cost of revenue:
 
 
 
Cost of subscription (1)
2,519

 
2,712

Cost of professional services (1)
4,653

 
3,871

Total cost of revenue
7,172

 
6,583

Gross profit
8,779

 
1,793

Operating expenses:
 
 
 
Sales and marketing (1)
16,463

 
16,560

Research and development (1)
6,594

 
5,527

General and administrative (1)
5,463

 
4,010

Total operating expenses
28,520

 
26,097

Operating loss
(19,741
)
 
(24,304
)
Other income, net
98

 
23

Net loss
$
(19,643
)
 
$
(24,281
)
Net loss per share, basic and diluted
$
(0.21
)
 
$
(0.90
)
Weighted-average shares used to compute basic and diluted net loss per share
91,786

 
26,970

_______________________
(1)
Includes stock-based compensation expense as follows:

 
Three Months Ended March 31,
 
2015
 
2014
Cost of revenue:
 
 
 
Cost of subscription
$
33

 
$
4

Cost of professional services
425

 
140

Sales and marketing
1,751

 
1,174

Research and development
633

 
421

General and administrative
1,027

 
814





CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

 
 
Three Months Ended March 31,
 
2015
 
2014
Operating activities:
 
 
 
Net loss
$
(19,643
)
 
$
(24,281
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation
454

 
282

Stock-based compensation
3,869

 
2,553

Amortization of deferred commissions
857

 
1,376

Accretion and amortization of marketable securities
443

 
124

Expense related to warrant
—

 
2,429

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
609

 
(1,250
)
Deferred commissions
(638
)
 
(282
)
Prepaid expenses and other assets
30

 
(1,081
)
Accounts payable
1,512

 
759

Accrued expenses and other liabilities
(4,403
)
 
(3,376
)
Deferred revenue
3,721

 
6,686

Net cash used in operating activities
(13,189
)
 
(16,061
)
Investing activities:
 
 
 
Purchase of property and equipment
(887
)
 
(656
)
Purchase of marketable securities
(13,034
)
 
(35,733
)
Sales of marketable securities
5,000

 
13,000

Maturities of marketable securities
30,180

 
5,000

Net cash provided by (used in) investing activities
21,259

 
(18,389
)
Financing activities:
 
 
 
Proceeds from the exercise of stock options
1,640

 
1,522

Payments of deferred financing costs
(94
)
 
(2,102
)
Net proceeds from initial public offering
—

 
189,943

Net cash provided by financing activities
1,546

 
189,363

 
 
 
 
Net increase in cash and cash equivalents
9,616

 
154,913

Cash and cash equivalents at beginning of period
17,425

 
25,154

Cash and cash equivalents at end of period
$
27,041

 
$
180,067






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,
 
 
 
2015
 
2014
 
2014
Gross profit:
 
 
 
 
 
 
GAAP gross profit subscription
$
12,387

 
$
11,060

 
$
4,751

 
  GAAP gross margin subscription
83.1
 %
 
83.1
 %
 
63.7
 %
 
 
Stock-based compensation expense
33

 
81

 
4

 
 
Amortization of internal-use software
24

 
8

 
—

 
Non-GAAP gross profit subscription
$
12,444

 
$
11,149

 
$
4,755

 
  Non-GAAP gross margin subscription
83.5
 %
 
83.8
 %
 
63.7
 %
 
 
 
 
 
 
 
 
 
GAAP gross loss professional services
$
(3,608
)
 
$
(3,190
)
 
$
(2,958
)
 
  GAAP gross loss percentage professional services
(345
)%
 
(271
)%
 
(324
)%
 
 
Stock-based compensation expense
425

 
494

 
140

 
Non-GAAP gross loss professional services
$
(3,183
)
 
$
(2,696
)
 
$
(2,818
)
 
  Non-GAAP gross loss percentage professional services
(305
)%
 
(229
)%
 
(309
)%
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
8,779

 
$
7,870

 
$
1,793

 
  GAAP gross margin
55.0
 %
 
54.3
 %
 
21.4
 %
 
 
Impact of non-GAAP adjustments
482

 
583

 
144

 
Non-GAAP gross profit
$
9,261

 
$
8,453

 
$
1,937

 
  Non-GAAP gross margin
58.1
 %
 
58.3
 %
 
23.1
 %
 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
GAAP sales and marketing
$
16,463

 
$
15,798

 
$
16,560

 
 
Expense related to warrant
—

 
20

 
(2,429
)
 
 
Stock-based compensation expense
(1,751
)
 
(1,594
)
 
(1,174
)
 
Non-GAAP sales and marketing
$
14,712

 
$
14,224

 
$
12,957

 
 
 
 
 
 
 
 
 
GAAP research and development
$
6,594

 
$
6,284

 
$
5,527

 
 
Stock-based compensation expense
(633
)
 
(1,081
)
 
(421
)
 
 
Capitalization of internal-use software
282

 
129

 
—

 
Non-GAAP research and development
$
6,243

 
$
5,332

 
$
5,106

 
 
 
 
 
 
 
 
 
GAAP general and administrative
$
5,463

 
$
5,536

 
$
4,010

 
 
Stock-based compensation expense
(1,027
)
 
(1,349
)
 
(814
)
 
Non-GAAP general and administrative
$
4,436

 
$
4,187

 
$
3,196

 
 
 
 
 
 
 
 
 
GAAP operating expense
$
28,520

 
$
27,618

 
$
26,097

 
 
Impact of non-GAAP adjustments
(3,129
)
 
(3,875
)
 
(4,838
)
 
Non-GAAP operating expense
$
25,391

 
$
23,743

 
$
21,259

 
 
 
 
 
 
 
 
Operating loss:
 
 
 
 
 
 
GAAP operating loss
$
(19,741
)
 
$
(19,748
)
 
$
(24,304
)
 
 
Impact of non-GAAP adjustments
3,611

 
4,458

 
4,982

 
Non-GAAP operating loss
$
(16,130
)
 
$
(15,290
)
 
$
(19,322
)
Net loss and net loss per share:
 
 
 
 
 
 
GAAP net loss
$
(19,643
)
 
$
(19,684
)
 
$
(24,281
)
 
 
Total pre-tax impact of non-GAAP adjustments
3,611

 
4,458

 
4,982

 
 
Income tax impact of non-GAAP adjustments
—

 
—

 
—

 
Non-GAAP net loss
$
(16,032
)
 
$
(15,226
)
 
$
(19,299
)
 
Basic and Diluted net loss per share
 
 
 
 
 
 
 
GAAP
$
(0.21
)
 
$
(0.22
)
 
$
(0.90
)
 
 
Non-GAAP
$
(0.17
)
 
$
(0.17
)
 
$
(0.72
)
 
 
 
 
 
 
 
 
 
Shares used in basic and diluted net loss per share computation
91,786

 
90,467

 
26,970




Investor Contact:
Charles Butler
ir@castlighthealth.com
415-829-1400
Media Contact:
Jim Rivas
press@castlighthealth.com
415-515-8780




CASTLIGHT HEALTH, INC. Reports