CASTLIGHT HEALTH, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 5, 2015

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Castlight Health Announces Second Quarter 2015 Results

Total Revenue of $18.5 Million, Up 76% Year Over Year
  
SAN FRANCISCO - August 5, 2015 - Castlight Health, Inc. (NYSE:CSLT), the leader in enterprise healthcare management (EHM), today announced results for its second quarter ended June 30, 2015.

“Castlight continues to gain momentum among large enterprises and we are pleased to now count 10% of the Fortune 500 as our customers. Importantly, we are also seeing our customers expand their relationship with Castlight as we build out our platform,” said Giovanni Colella, M.D., co-founder and chief executive officer of Castlight Health. “This quarter we continued to further our leadership position with the introductions of Castlight Elevate, which enables employees to access behavioral health resources, and Castlight Pulse, our first employer-facing analytics solution.”
    
Financial Performance for the Three Months Ended June 30, 2015

•
Total revenue for the second quarter of 2015 was $18.5 million, an increase of 76% from the second quarter of 2014. Subscription revenue was $17.3 million, an increase of 80% on a year-over-year basis.

•
Gross margin for the second quarter of 2015 was 55.4%, compared to a gross margin of 29.6% in the second quarter of 2014. Non-GAAP gross margin for the second quarter of 2015 was 58.3% compared to a non-GAAP gross margin of 32.6% in the second quarter of 2014.

•
Operating loss for the second quarter of 2015 was $21.3 million, compared to an operating loss of $21.8 million in the second quarter of 2014. Non-GAAP operating loss for the second quarter of 2015 was $17.6 million, compared to a non-GAAP operating loss of $18.8 million in the second quarter of 2014.





•
Net loss per basic and diluted share was $0.23 in the second quarter of 2015, compared to a net loss per basic and diluted share of $0.24 in the second quarter of 2014. The non-GAAP net loss per basic and diluted share for the second quarter of 2015 was $0.19, compared to a net loss per basic and diluted share of $0.21 in the second quarter of 2014. For both GAAP and non-GAAP purposes, the weighted average basic and diluted share count for the second quarter of 2015 was 93.8 million compared to 89.5 million in the second quarter of 2014.

•
Total cash, cash equivalents and marketable securities were $164.4 million at the end of the second quarter of 2015. Cash used in operations for the second quarter of 2015 was $17.2 million, compared to $19.6 million used in operations in the second 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

Q3 2015 Guidance: Revenue for the company’s third quarter is expected to be $19.2 million to $19.5 million, representing growth of 57% to 60% on a year-over-year basis. We expect to generate a non-GAAP operating loss in the range of $16.0 million to $17.0 million and a non-GAAP net loss per share of $0.17 to $0.18 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 $74.0 million to $77.0 million, an increase of 62% to 69% year-over-year. Non-GAAP operating loss is expected to be in the range of $64.0 million to $67.0 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 million to 97 million weighted average basic and diluted common shares outstanding.

For both the third 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 second 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 80918941. A replay will be available for one week at 1-855-859-2056, passcode 80918941.

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 third 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 third 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
 
June 30, 2015
 
December 31, 2014
 
 (unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
31,533

 
$
17,425

Marketable securities
132,905

 
175,057

Accounts receivable, net
11,048

 
11,097

Deferred commissions
3,956

 
3,675

Prepaid expenses and other current assets
5,960

 
3,476

Total current assets
185,402

 
210,730

Property and equipment, net
4,515

 
3,630

Marketable securities, noncurrent
—

 
6,220

Restricted cash, noncurrent
1,000

 
—

Deferred commissions, noncurrent
2,374

 
2,563

Other assets
3,692

 
131

Total assets
$
196,983

 
$
223,274

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
4,180

 
$
3,217

Accrued expenses and other current liabilities
4,702

 
5,791

Accrued compensation
8,730

 
10,455

Deferred revenue
24,125

 
20,708

Total current liabilities
41,737

 
40,171

Deferred revenue, noncurrent
7,638

 
6,652

Other liabilities, noncurrent
1,208

 
261

Total liabilities
50,583

 
47,084

Commitments and contingencies
 
 
 
Stockholders’ equity
146,400

 
176,190

Total liabilities and stockholders’ equity
$
196,983

 
$
223,274






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,
 
2015
 
2014
 
2015
 
2014
Revenue:
 
 
 
 
 
 
 
Subscription
$
17,278

 
$
9,576

 
$
32,184

 
$
17,039

Professional services
1,232

 
957

 
2,277

 
1,870

Total revenue
18,510

 
10,533

 
34,461

 
18,909

Cost of revenue:
 
 
 
 
 
 
 
Cost of subscription (1)
2,932

 
2,915

 
5,451

 
5,627

Cost of professional services (1)
5,322

 
4,502

 
9,975

 
8,373

Total cost of revenue
8,254

 
7,417

 
15,426

 
14,000

Gross profit
10,256

 
3,116

 
19,035

 
4,909

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing (1)
17,641

 
14,947

 
34,104

 
31,507

Research and development (1)
7,391

 
5,476

 
13,985

 
11,003

General and administrative (1)
6,517

 
4,519

 
11,980

 
8,529

Total operating expenses
31,549

 
24,942

 
60,069

 
51,039

Operating loss
(21,293
)
 
(21,826
)
 
(41,034
)
 
(46,130
)
Other income, net
81

 
50

 
179

 
73

Net loss
$
(21,212
)
 
$
(21,776
)
 
$
(40,855
)
 
$
(46,057
)
Net loss per share, basic and diluted
$
(0.23
)
 
$
(0.24
)
 
$
(0.44
)
 
$
(0.86
)
Weighted-average shares used to compute basic and diluted net loss per share
93,804

 
89,520

 
92,801

 
53,284

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

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenue:
 
 
 
 
 
 
 
Cost of subscription
$
67

 
$
35

 
$
100

 
$
39

Cost of professional services
450

 
280

 
875

 
420

Sales and marketing
2,074

 
1,152

 
3,825

 
2,326

Research and development
730

 
493

 
1,363

 
914

General and administrative
896

 
980

 
1,923

 
1,794





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

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Operating activities:
 
 
 
 
 
 
 
Net loss
$
(21,212
)
 
$
(21,776
)
 
$
(40,855
)
 
$
(46,057
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
Depreciation
456

 
322

 
910

 
604

Stock-based compensation
4,217

 
2,940

 
8,086

 
5,493

Amortization of deferred commissions
802

 
868

 
1,659

 
2,244

Accretion and amortization of marketable securities
384

 
373

 
827

 
497

Expense related to warrant
—

 
70

 
—

 
2,499

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(560
)
 
(4,077
)
 
49

 
(5,327
)
Deferred commissions
(1,113
)
 
(1,087
)
 
(1,751
)
 
(1,369
)
Prepaid expenses and other assets
(1,848
)
 
(596
)
 
(1,818
)
 
(1,677
)
Accounts payable
(254
)
 
(375
)
 
1,258

 
384

Accrued expenses and other liabilities
1,234

 
2,173

 
(3,169
)
 
(1,203
)
Deferred revenue
682

 
1,591

 
4,403

 
8,277

Net cash used in operating activities
(17,212
)
 
(19,574
)
 
(30,401
)
 
(35,635
)
Investing activities:
 
 
 
 
 
 
 
(Increase) decrease in restricted cash
(1,000
)
 
101

 
(1,000
)
 
101

Investment in related party
(3,125
)
 
—

 
(3,125
)
 
—

Purchase of property and equipment
(806
)
 
(311
)
 
(1,693
)
 
(967
)
Purchase of marketable securities
(5,924
)
 
(126,442
)
 
(18,958
)
 
(162,175
)
Sales of marketable securities
—

 
—

 
5,000

 
13,000

Maturities of marketable securities
31,373

 
3,000

 
61,553

 
8,000

Net cash provided by (used in) investing activities
20,518

 
(123,652
)
 
41,777

 
(142,041
)
Financing activities:
 
 
 
 
 
 
 
Proceeds from the exercise of stock options
1,186

 
106

 
2,826

 
1,628

Payments of deferred financing costs
—

 
(1,679
)
 
(94
)
 
(3,781
)
Net proceeds from initial public offering
—

 
—

 
—

 
189,943

Net cash provided by (used in) financing activities
1,186

 
(1,573
)
 
2,732

 
187,790

 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
4,492

 
(144,799
)
 
14,108

 
10,114

Cash and cash equivalents at beginning of period
27,041

 
180,067

 
17,425

 
25,154

Cash and cash equivalents at end of period
$
31,533

 
$
35,268

 
$
31,533

 
$
35,268






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,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
 
2015
 
2015
 
2014
 
2015
 
2014
Gross profit:
 
 
 
 
 
 
 
 
 
 
GAAP gross profit subscription
$
14,346

 
$
12,387

 
$
6,661

 
$
26,733

 
$
11,412

 
  GAAP gross margin subscription
83.0
 %
 
83.1
 %
 
69.6
 %
 
83.1
 %
 
67.0
 %
 
 
Stock-based compensation expense
67

 
33

 
35

 
100

 
39

 
 
Amortization of internal-use software
24

 
24

 
—

 
48

 
—

 
Non-GAAP gross profit subscription
$
14,437

 
$
12,444

 
$
6,696

 
$
26,881

 
$
11,451

 
  Non-GAAP gross margin subscription
83.6
 %
 
83.5
 %
 
69.9
 %
 
83.5
 %
 
67.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP gross loss professional services
$
(4,090
)
 
$
(3,608
)
 
$
(3,545
)
 
$
(7,698
)
 
$
(6,503
)
 
  GAAP gross loss percentage professional services
(332
)%
 
(345
)%
 
(370
)%
 
(338
)%
 
(348
)%
 
 
Stock-based compensation expense
450

 
425

 
280

 
875

 
420

 
Non-GAAP gross loss professional services
$
(3,640
)
 
$
(3,183
)
 
$
(3,265
)
 
$
(6,823
)
 
$
(6,083
)
 
  Non-GAAP gross loss percentage professional services
(295
)%
 
(305
)%
 
(341
)%
 
(300
)%
 
(325
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
10,256

 
$
8,779

 
$
3,116

 
$
19,035

 
$
4,909

 
  GAAP gross margin
55.4
 %
 
55.0
 %
 
29.6
 %
 
55.2
 %
 
26.0
 %
 
 
Impact of non-GAAP adjustments
541

 
482

 
315

 
1,023

 
459

 
Non-GAAP gross profit
$
10,797

 
$
9,261

 
$
3,431

 
$
20,058

 
$
5,368

 
  Non-GAAP gross margin
58.3
 %
 
58.1
 %
 
32.6
 %
 
58.2
 %
 
28.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
 
 
 
GAAP sales and marketing
$
17,641

 
$
16,463

 
$
14,947

 
$
34,104

 
$
31,507

 
 
Expense related to warrant
—

 
—

 
(70
)
 
—

 
(2,499
)
 
 
Stock-based compensation expense
(2,074
)
 
(1,751
)
 
(1,152
)
 
(3,825
)
 
(2,326
)
 
Non-GAAP sales and marketing
$
15,567

 
$
14,712

 
$
13,725

 
$
30,279

 
$
26,682

 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP research and development
$
7,391

 
$
6,594

 
$
5,476

 
$
13,985

 
$
11,003

 
 
Stock-based compensation expense
(730
)
 
(633
)
 
(493
)
 
(1,363
)
 
(914
)
 
 
Capitalization of internal-use software
513

 
282

 
—

 
795

 
—

 
Non-GAAP research and development
$
7,174

 
$
6,243

 
$
4,983

 
$
13,417

 
$
10,089

 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP general and administrative
$
6,517

 
$
5,463

 
$
4,519

 
$
11,980

 
$
8,529

 
 
Stock-based compensation expense
(896
)
 
(1,027
)
 
(980
)
 
(1,923
)
 
(1,794
)
 
Non-GAAP general and administrative
$
5,621

 
$
4,436

 
$
3,539

 
$
10,057

 
$
6,735

 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating expense
$
31,549

 
$
28,520

 
$
24,942

 
$
60,069

 
$
51,039

 
 
Impact of non-GAAP adjustments
(3,187
)
 
(3,129
)
 
(2,695
)
 
(6,316
)
 
(7,533
)
 
Non-GAAP operating expense
$
28,362

 
$
25,391

 
$
22,247

 
$
53,753

 
$
43,506

 
 
 
 
 
 
 
 
 
 
 
 
Operating loss:
 
 
 
 
 
 
 
 
 
 
GAAP operating loss
$
(21,293
)
 
$
(19,741
)
 
$
(21,826
)
 
$
(41,034
)
 
$
(46,130
)
 
 
Impact of non-GAAP adjustments
3,728

 
3,611

 
3,010

 
7,339

 
7,992

 
Non-GAAP operating loss
$
(17,565
)
 
$
(16,130
)
 
$
(18,816
)
 
$
(33,695
)
 
$
(38,138
)
Net loss and net loss per share:
 
 
 
 
 
 
 
 
 
 
GAAP net loss
$
(21,212
)
 
$
(19,643
)
 
$
(21,776
)
 
$
(40,855
)
 
$
(46,057
)
 
 
Total pre-tax impact of non-GAAP adjustments
3,728

 
3,611

 
3,010

 
7,339

 
7,992

 
 
Income tax impact of non-GAAP adjustments
—

 
—

 
—

 
—

 
—

 
Non-GAAP net loss
$
(17,484
)
 
$
(16,032
)
 
$
(18,766
)
 
$
(33,516
)
 
$
(38,065
)
 
Basic and Diluted net loss per share
 
 
 
 
 
 
 
 
 
 
 
GAAP
$
(0.23
)
 
$
(0.21
)
 
$
(0.24
)
 
$
(0.44
)
 
$
(0.86
)
 
 
Non-GAAP
$
(0.19
)
 
$
(0.17
)
 
$
(0.21
)
 
$
(0.36
)
 
$
(0.71
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in basic and diluted net loss per share computation
93,804

 
91,786

 
89,520

 
92,801

 
53,284





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




CASTLIGHT HEALTH, INC. Reports