CASTLIGHT HEALTH, INC. - FORM 8-K - EX-99.1 - July 28, 2020

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Castlight Health Announces Second Quarter 2020 Results



SAN FRANCISCO - July 28, 2020 - Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its second quarter ended June 30, 2020.

“We made meaningful headway against our strategic plan in the second quarter, delivering strong financial results, demonstrating progress toward our goal of adding an additional health plan partner, and supporting our customers with rapid innovation during COVID-19. Over the past year, we made two major strategic decisions: our focus on health plan as a key go-to-market strategy, and investment in high-tech, high-touch solutions. Our momentum in the first half of 2020 validates these decisions, and I’m confident that Castlight is strategically well positioned in the marketplace”, said Maeve O’Meara, chief executive officer of Castlight Health.

Financial performance for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 includes:
•GAAP total revenue of $35.5 million, compared to $35.9 million
•GAAP gross margin of 64.1%, compared to 60.6%
•Non-GAAP gross margin of 68.3%, compared to 63.4%
•GAAP operating loss of $4.3 million, compared to $8.6 million
•Non-GAAP operating income of $2.1 million, compared to an operating loss of $2.9 million
•GAAP net loss per basic and diluted share of $0.03, compared to a net loss per basic and diluted share of $0.06


•Non-GAAP net income per basic and diluted share of $0.01, compared to a net loss per basic and diluted share of $0.02
•Cash provided by operations of $3.1 million, compared to cash used in operations of $1.8 million

Total cash, cash equivalents and marketable securities was $44.3 million as of June 30, 2020.

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
For the full year 2020, the Company continues to expect:
•GAAP revenue in the range of $127 million to $135 million
•Non-GAAP operating loss between $17 million to $24 million
•Non-GAAP net loss per share between $0.11 and $0.16, based on approximately 150 million to 151 million shares

Quarterly Conference Call
Castlight Health senior management will host a conference call to discuss its second quarter 2020 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. Registration for the conference call can be completed by visiting the following website prior to, or on the day of, the conference call: http://www.directeventreg.com/registration/event/3238128.




About Castlight Health
Castlight is on a mission to make it as easy as humanly possible for its users to navigate the healthcare system and live happier, healthier, more productive lives. Our health navigation platform connects hundreds of health vendors, benefits resources, and plan designs into one comprehensive health and wellbeing experience. 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. Castlight transforms the employee benefit experience into a deeply personalized, yet simple, guided one, empowering better-informed patient decisions to unlock better healthcare outcomes and maximizing return on healthcare investments.

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 income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share. Non-GAAP gross profit and margin, non-GAAP operating expense, non-GAAP operating income (loss), and non-GAAP net income (loss) exclude goodwill impairment, stock-based compensation, certain legal expenses, amortization of intangibles, restructuring charges, capitalization and amortization of internal-use software, and lease exit and related charges.



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 2020 to comparable GAAP measures 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. 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 second quarter performance and 2020 full year projections, impact of COVID-19, the success of our strategy 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, including the risks set forth in our annual report on Form 10-K filed on February 28, 2020, and our quarterly report on Form 10-Q for the three months ended June 30, 2020, when filed. All forward-looking statements in this press release are expressly qualified in their entirety by these cautionary statements and 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 2020 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, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$44,274  $43,017  
Marketable securities—  16,411  
Accounts receivable and other, net33,175  31,397  
Prepaid expenses and other current assets5,643  4,645  
Total current assets83,092  95,470  
Property and equipment, net6,353  4,856  
Restricted cash, non-current1,144  1,144  
Deferred commissions11,719  14,718  
Deferred professional service costs5,717  6,711  
Intangible assets, net10,046  12,178  
Goodwill41,485  91,785  
Operating lease right-of-use assets, net11,122  13,906  
Other assets1,595  2,016  
Total assets$172,273  $242,784  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$8,606  $19,596  
Accrued expenses and other current liabilities8,887  10,454  
Accrued compensation5,656  8,770  
Deferred revenue12,930  10,173  
Operating lease liabilities5,429  5,914  
Total current liabilities41,508  54,907  
Deferred revenue, non-current577  572  
Debt, non-current465  1,395  
Operating lease liabilities, non-current9,290  11,823  
Other liabilities, non-current1,269  1,213  
Total liabilities53,109  69,910  
Stockholders’ equity 119,164  172,874  
Total liabilities and stockholders’ equity $172,273  $242,784  




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,
2020201920202019
Revenue:
Subscription$34,289  $33,964  $72,672  $67,770  
Professional services and other1,211  1,946  1,873  3,630  
Total revenue, net35,500  35,910  74,545  71,400  
Cost of revenue:
Cost of subscription(1)
8,819  8,234  19,051  16,400  
Cost of professional services and other(1)
3,942  5,929  8,183  11,873  
Total cost of revenue12,761  14,163  27,234  28,273  
Gross profit 22,739  21,747  47,311  43,127  
Operating expenses:
Sales and marketing(1)
7,683  8,889  18,155  18,104  
Research and development(1)
13,043  14,487  26,865  30,212  
General and administrative(1)
6,340  7,010  12,916  14,303  
Goodwill impairment—  —  50,300  —  
Total operating expenses27,066  30,386  108,236  62,619  
Operating loss(4,327) (8,639) (60,925) (19,492) 
Other income, net123  258  386  572  
Net loss$(4,204) $(8,381) $(60,539) $(18,920) 
Net loss per share, basic and diluted$(0.03) $(0.06) $(0.41) $(0.13) 
Weighted-average shares used to compute basic and diluted net loss per share
150,078  144,572  149,475  143,790  

(1)Includes stock-based compensation expense as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Cost of revenue:
Cost of subscription$205  $196  $374  $415  
Cost of professional services and other144  236  260  501  
Sales and marketing748  662  1,420  1,289  
Research and development1,314  1,733  2,477  3,437  
General and administrative858  2,030  1,924  3,192  




CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Operating activities:
Net loss$(4,204) $(8,381) $(60,539) $(18,920) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,609  1,343  3,144  2,687  
Goodwill impairment—  —  50,300  —  
Stock-based compensation3,269  4,857  6,455  8,834  
Amortization of deferred commissions1,536  2,365  3,919  4,856  
Amortization of deferred professional service costs732  1,045  1,657  2,014  
Non-cash operating lease expense1,231  1,298  2,631  2,580  
Accretion and amortization of marketable securities—  (87) 2  (213) 
Changes in operating assets and liabilities:
Accounts receivable and other, net4,898  2,088  (1,778) (5,795) 
Deferred commissions(602) (1,254) (920) (2,670) 
Deferred professional service costs(213) (432) (629) (901) 
Prepaid expenses and other assets(330) (1,113) (824) (1,864) 
Accounts payable(2,739) 2,713  (10,201) 1,864  
Operating lease liabilities(1,100) (1,413) (2,616) (2,795) 
Accrued expenses and other liabilities(1,530) (1,827) (1,511) (3,131) 
Deferred revenue(811) (3,183) 2,762  312  
Accrued compensation1,351  164  (3,114) (806) 
Net cash provided by (used in) operating activities3,097  (1,817) (11,262) (13,948) 
Investing activities:
Purchase of property and equipment(2,035) (389) (3,299) (593) 
Purchase of marketable securities(1,005) (13,780) (2,994) (13,780) 
Sales of marketable securities2,001  —  2,001  —  
Maturities of marketable securities5,000  —  17,400  11,453  
Net cash provided by (used in) investing activities3,961  (14,169) 13,108  (2,920) 
Financing activities:
Proceeds from exercise of stock options—  165  155  1,845  
Proceeds from ESPP offering—  —  186  —  
Principal payments on long-term debt(465) (465) (930) (930) 
Net cash (used in) provided by financing activities(465) (300) (589) 915  
Net increase (decrease) in cash, cash equivalents and restricted cash
6,593  (16,286) 1,257  (15,953) 
Cash, cash equivalents and restricted cash at beginning of period
39,006  67,663  44,342  67,330  
Cash, cash equivalents and restricted cash at end of period$45,599  $51,377  $45,599  $51,377  
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$44,274  $50,052  $44,274  $50,052  
Restricted cash included in Prepaid expenses and other current assets181  —  181  —  
Restricted cash, non-current1,144  1,325  1,144  1,325  
Total cash, cash equivalents and restricted cash$45,599  $51,377  $45,599  $51,377  




CASTLIGHT HEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)


Three Months EndedSix Months Ended
June 30, 2020March 31, 2020June 30, 2019June 30, 2020June 30, 2019
Gross profit:
GAAP gross profit subscription$25,470  $28,151  $25,730  $53,621  $51,370  
Stock-based compensation205  169  196  374  415  
Amortization of internal-use software79  26  —  105  —  
Amortization of intangibles530  530  587  1,060  1,174  
Reduction in workforce221  —  —  221  —  
Non-GAAP gross profit subscription$26,505  $28,876  $26,513  $55,381  $52,959  
GAAP gross margin subscription74.3 %73.3 %75.8 %73.8 %75.8 %
Non-GAAP gross margin subscription77.3 %75.2 %78.1 %76.2 %78.1 %
GAAP gross loss professional services$(2,731) $(3,579) $(3,983) $(6,310) $(8,243) 
Stock-based compensation144  116  236  260  501  
Reduction in workforce317  —  —  317  —  
Non-GAAP gross loss professional services$(2,270) $(3,463) $(3,747) $(5,733) $(7,742) 
GAAP gross margin professional services(226)%(541)%(205)%(337)%(227)%
Non-GAAP gross margin professional services(187)%(523)%(193)%(306)%(213)%
GAAP gross profit $22,739  $24,572  $21,747  $47,311  $43,127  
Impact of non-GAAP adjustments1,496  841  1,019  2,337  2,090  
Non-GAAP gross profit $24,235  $25,413  $22,766  $49,648  $45,217  
GAAP gross margin 64.1 %62.9 %60.6 %63.5 %60.4 %
Non-GAAP gross margin 68.3 %65.1 %63.4 %66.6 %63.3 %
Operating expense:
GAAP sales and marketing$7,683  $10,472  $8,889  $18,155  $18,104  
Stock-based compensation(748) (672) (662) (1,420) (1,289) 
Amortization of intangibles(528) (528) (272) (1,056) (544) 
Reduction in workforce(334) —  —  (334) —  
Non-GAAP sales and marketing$6,073  $9,272  $7,955  $15,345  $16,271  
GAAP research and development$13,043  $13,822  $14,487  $26,865  $30,212  
Stock-based compensation(1,314) (1,163) (1,733) (2,477) (3,437) 
Reduction in workforce(658) —  —  (658) —  
Certain legal expenses—  191  —  191  (191) 
Capitalization of internally developed software—  21  —  21  —  
Non-GAAP research and development$11,071  $12,871  $12,754  $23,942  $26,584  
GAAP general and administrative$6,340  $6,576  $7,010  $12,916  $14,303  
Stock-based compensation(858) (1,066) (2,030) (1,924) (3,192) 
Amortization of intangibles—  (17) (17) (17) (34) 
Certain legal expenses—  —  —  —  (533) 
Reduction in workforce(497) —  —  (497) —  
Non-GAAP general and administrative$4,985  $5,493  $4,963  $10,478  $10,544  
GAAP goodwill impairment$—  $50,300  $—  $50,300  $—  
Goodwill impairment—  (50,300) —  (50,300) —  
Non-GAAP goodwill impairment$—  $—  $—  $—  $—  

CASTLIGHT HEALTH, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)

GAAP operating expense$27,066  $81,170  $30,386  $108,236  $62,619  
Impact of non-GAAP adjustments(4,937) (53,534) (4,714) (58,471) (9,220) 
Non-GAAP operating expense$22,129  $27,636  $25,672  $49,765  $53,399  
Operating loss:
GAAP operating loss$(4,327) $(56,598) $(8,639) $(60,925) $(19,492) 
Impact of non-GAAP adjustments6,433  54,375  5,733  60,808  11,310  
Non-GAAP operating income (loss) $2,106  $(2,223) $(2,906) $(117) $(8,182) 
Net loss and net loss per share:
GAAP net loss$(4,204) $(56,335) $(8,381) $(60,539) $(18,920) 
Total pre-tax impact of non-GAAP adjustments6,433  54,375  5,733  60,808  11,310  
Non-GAAP net income (loss)$2,229  $(1,960) $(2,648) $269  $(7,610) 
GAAP net loss per share, basic and diluted$(0.03) $(0.38) $(0.06) $(0.41) $(0.13) 
Non-GAAP net income (loss) per share, basic and diluted$0.01  $(0.01) $(0.02) $—  $(0.05) 
Shares used in basic and diluted net loss per share computation150,078  148,872  144,572  149,475  143,790  




Castlight Media Contact:
Caroline Kawashima
press@castlighthealth.com
415-246-0313



Castlight Investor Contact:
ir@castlighthealth.com
415-829-1680






CASTLIGHT HEALTH, INC. Reports