EX-99.1 2 exh991-pressreleaseq417.htm EXHIBIT 99.1 Exhibit

castlightlogoa04.jpg
Castlight Health Announces Fourth Quarter and Full Year 2017 Results
Full Year 2017 Total Revenue of $131.4 million, Up 29% Year-over-Year

SAN FRANCISCO - February 21, 2018 - Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its fourth quarter and full year ended December 31, 2017.

“2017 was a transformative year for Castlight. We expanded our capabilities into wellbeing, re-accelerated growth of annualized recurring revenues compared to 2016, and positioned the business to reach breakeven in the fourth quarter of this year,” said John Doyle, chief executive officer of Castlight Health. “As we look ahead, we believe Castlight is in a great position to address the critical needs of employers and employees as individuals play an increasingly central role in the health care system.”

Financial performance for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 includes:
•
GAAP total revenue of $37.0 million, representing an increase of 24%
•
GAAP gross margin of 63.7%, compared to 71.9%
•
Non-GAAP gross margin of 67.7% compared to 74.8%
•
GAAP operating loss of $8.9 million, compared to a loss of $9.2 million
•
Non-GAAP operating loss of $5.8 million, compared to a loss of $1.5 million
•
GAAP net loss per basic and diluted share of $0.06, compared to a net loss per basic and diluted share of $0.09



•
Non-GAAP net loss per basic and diluted share of $0.04, compared to a net loss per basic and diluted share of $0.01
•
Cash used in operations of $0.1 million, compared to $1.7 million used in operations

Financial performance for the twelve months ended December 31, 2017 compared to the twelve months ended December 31, 2016 includes:

•
GAAP total revenue of $131.4 million, representing an increase of 29%
•
GAAP gross margin of 64.1%, compared to 66.0%
•
Non-GAAP gross margin of 68.6% compared to 69.5%
•
GAAP operating loss of $61.4 million, compared to a loss of $59.0 million
•
Non-GAAP operating loss of $27.7 million, compared to a loss of $30.6 million
•
GAAP net loss per basic and diluted share of $0.44, compared to a net loss per basic and diluted share of $0.58
•
Non-GAAP net loss per basic and diluted share of $0.22, compared to a net loss per basic and diluted share of $0.30
•
Cash used in operations of $23.5 million, compared to $37.0 million used in operations

Total cash, cash equivalents and marketable securities was $93.3 million as of December 31, 2017.

The financial performance of Jiff, Inc., which Castlight acquired on April 3, 2017, is not included in the metrics for fiscal year and fourth quarter ended December 31, 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.”




Castlight adopted the new accounting standard ASC 606, effective January 1, 2018, and will use the full retrospective method of adoption. As such, Castlight will restate its historical financial information for fiscal years 2016 and 2017, as well as quarterly 2017. The Company expects to provide these restatements next quarter. Based on our preliminary review of ASC 606’s impact, the Company currently expects to see a reduction of 2018 revenue by approximately $2 million compared to what it would have expected under the former ASC 605 standard.

Business Outlook
The Company’s outlook is based on the new revenue recognition standard ASC 606. 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 fourth quarter 2017 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 5381456.

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, charges related to a reduction in workforce, amortization of intangibles, capitalization and amortization of internal-use software, gain on the sale of investment in related party, expense related to expiration of SAP



warrant, changes in fair value of contingent consideration and charges related to the acquisition 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, 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)


 
As of
 
December 31, 2017
 
December 31, 2016
 
 (unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
61,319

 
$
48,722

Marketable securities
32,025

 
65,882

Accounts receivable, net
20,761

 
14,806

Deferred commissions
6,403

 
8,218

Prepaid expenses and other current assets
3,991

 
3,382

Total current assets
124,499

 
141,010

Property and equipment, net
5,263

 
5,285

Restricted cash, non-current
1,325

 
1,144

Goodwill
91,785

 
—

Intangible assets, net
20,253

 
—

Deferred commissions, non-current
4,180

 
5,050

Other assets
1,997

 
4,677

Total assets
$
249,302

 
$
157,166

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3,907

 
$
2,288

Accrued expenses and other current liabilities
13,178

 
6,369

Accrued compensation
13,941

 
9,443

Deferred revenue
29,410

 
30,623

Total current liabilities
60,436

 
48,723

Deferred revenue, non-current
6,686

 
5,245

Debt, non-current
4,958

 
—

Other liabilities, non-current
1,900

 
1,236

Total liabilities
73,980

 
55,204

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Class A and Class B common stock
13

 
10

Additional paid-in capital
586,900

 
457,596

Accumulated other comprehensive loss
(22
)
 
—

Accumulated deficit
(411,569
)
 
(355,644
)
Total stockholders’ equity
175,322

 
101,962

Total liabilities and stockholders’ equity
$
249,302

 
$
157,166





CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Subscription
$
33,533

 
$
28,157

 
$
120,496

 
$
95,016

Professional services and other
3,480

 
1,740

 
10,933

 
6,684

Total revenue, net
37,013

 
29,897

 
131,429

 
101,700

Cost of revenue:
 
 
 
 
 
 
 
Cost of subscription (1)
8,335

 
4,245

 
28,410

 
16,463

Cost of professional services and other (1)
5,095

 
4,157

 
18,774

 
18,098

Total cost of revenue
13,430

 
8,402

 
47,184

 
34,561

Gross profit
23,583

 
21,495

 
84,245

 
67,139

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing (1)
15,289

 
13,923

 
62,313

 
58,800

Research and development (1)
14,428

 
9,841

 
54,502

 
40,460

General and administrative (1)
2,754

 
6,957

 
28,825

 
26,859

Total operating expenses
32,471

 
30,721

 
145,640

 
126,119

Operating loss
(8,888
)
 
(9,226
)
 
(61,395
)
 
(58,980
)
Other income, net
330

 
128

 
618

 
432

Loss before income tax benefit
(8,558
)
 
(9,098
)
 
(60,777
)
 
(58,548
)
Income tax benefit
—

 
—

 
5,206

 
—

Net loss
$
(8,558
)
 
$
(9,098
)
 
$
(55,571
)
 
$
(58,548
)
Net loss per share, basic and diluted
$
(0.06
)
 
$
(0.09
)
 
$
(0.44
)
 
$
(0.58
)
Weighted-average shares used to compute basic and diluted net loss per share
134,018

 
103,976

 
125,534

 
100,798

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

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Cost of revenue:
 
 
 
 
 
 
 
Cost of subscription
$
250

 
$
139

 
$
888

 
$
506

Cost of professional services and other
256

 
493

 
1,656

 
1,961

Sales and marketing
1,960

 
2,199

 
9,665

 
8,843

Research and development
1,740

 
1,659

 
7,415

 
5,959

General and administrative
1,368

 
1,267

 
4,954

 
4,743




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


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016 Adjusted *
 
2017
 
2016 Adjusted *
Operating activities:
 
 
 
 
 
 
 
Net loss
$
(8,558
)
 
$
(9,098
)
 
$
(55,571
)
 
$
(58,548
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
2,041

 
762

 
6,613

 
3,168

Stock-based compensation
5,574

 
5,757

 
24,578

 
22,012

Amortization of deferred commissions
4,331

 
1,913

 
12,453

 
5,070

Release of deferred tax valuation allowance due to business combination
—

 
—

 
(5,206
)
 
—

Change in fair value of contingent consideration liability
(3,959
)
 
—

 
(671
)
 
—

Accretion and amortization of marketable securities
(103
)
 
75

 
(83
)
 
481

Expense related to expiration of SAP warrant
1,132

 
—

 
1,132

 
—

Gain on sale of investment in related party
(1,375
)
 
—

 
(1,375
)
 
—

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
5,256

 
1,082

 
(2,522
)
 
(2,055
)
Deferred commissions
(3,090
)
 
(3,574
)
 
(9,768
)
 
(7,977
)
Prepaid expenses and other assets
2,038

 
515

 
1,645

 
448

Accounts payable
363

 
(1,335
)
 
764

 
(1,035
)
Accrued expenses and other liabilities
3,560

 
3,755

 
6,183

 
(291
)
Deferred revenue
(7,290
)
 
(1,562
)
 
(1,629
)
 
1,756

Net cash used in operating activities
(80
)
 
(1,710
)
 
(23,457
)
 
(36,971
)
Investing activities:
 
 
 
 
 
 
 
Proceeds from sale of investment in related party
5,500

 
—

 
5,500

 
—

Purchase of property and equipment
(268
)
 
(115
)
 
(2,544
)
 
(1,702
)
Purchase of marketable securities
(5,806
)
 
(25,021
)
 
(62,658
)
 
(98,184
)
Maturities of marketable securities
15,943

 
20,351

 
96,576

 
146,508

Business combination, net of cash acquired
—

 
—

 
(2,264
)
 
—

Net cash provided by (used in) investing activities
15,369

 
(4,785
)
 
34,610

 
46,622

Financing activities:
 
 
 
 
 
 
 
Proceeds from the exercise of stock options
1,044

 
253

 
2,356

 
2,829

Proceeds from issuance of common stock and warrants
—

 
—

 
—

 
17,358

Payments of deferred financing costs
—

 
—

 
(731
)
 
(122
)
Net cash provided by financing activities
1,044

 
253

 
1,625

 
20,065

 
 
 
 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and restricted cash
16,333

 
(6,242
)
 
12,778

 
29,716

Cash, cash equivalents and restricted cash at beginning of period
46,311

 
56,108

 
49,866

 
20,150

Cash, cash equivalents and restricted cash at end of period
$
62,644

 
$
49,866

 
$
62,644

 
$
49,866

 
 
 
 
 
 
 
 
* Prior-period information has been restated for the adoption of Accounting Standards Update 2016-18, “Statement of Cash Flows” which was adopted in the fourth quarter of 2017.



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


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016 Adjusted *
 
2017
 
2016 Adjusted *
Non-cash investing and financing activity:
 
 
 
 
 
 
 
Non-cash purchase consideration related to acquisition of Jiff
$
—

 
$
—

 
$
101,692

 
$
—

Purchase of property and equipment, accrued but not paid
(151
)
 
(20
)
 
(188
)
 
(20
)
 
 
 
 
 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash:







Cash and cash equivalents




$
61,319


$
48,722

Restricted cash




1,325


1,144

Total cash, cash equivalents and restricted cash




$
62,644


$
49,866

 
 
 
 
 
 
 
 
* Prior-period information has been restated for the adoption of Accounting Standards Update 2016-18, “Statement of Cash Flows” which was 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
 
Year Ended
 
December 31,
 
September 30,
 
December 31,
 
December 31,
 
December 31,
 
2017
 
2017
 
2016
 
2017
 
2016
Gross profit:
 
 
 
 
 
 
 
 
 
GAAP gross profit subscription
$
25,198

 
$
23,240

 
$
23,912

 
$
92,086

 
$
78,553

Stock-based compensation
250

 
258

 
139

 
888

 
506

Amortization of internal-use software
236

 
244

 
244

 
968

 
976

Amortization of intangibles
751

 
751

 
—

 
2,253

 
—

Reduction in workforce
—

 
—

 
—

 
—

 
5

Acquisition related costs
—

 
—

 
—

 
52

 
—

Non-GAAP gross profit subscription
$
26,435


$
24,493


$
24,295

 
$
96,247

 
$
80,040

GAAP gross margin subscription
75.1
 %
 
74.1
 %
 
84.9
 %
 
76.4
 %
 
82.7
 %
Non-GAAP gross margin subscription
78.8
 %
 
78.1
 %
 
86.3
 %
 
79.9
 %
 
84.2
 %
 
 
 
 
 
 
 
 
 
 
GAAP gross loss professional services and other
$
(1,615
)
 
$
(1,689
)
 
$
(2,417
)
 
$
(7,841
)
 
$
(11,414
)
Stock-based compensation
256

 
342

 
493

 
1,656

 
1,961

Reduction in workforce
—

 
—

 
—

 
—

 
103

Acquisition related costs
—

 
(4
)
 
—

 
160

 
—

Non-GAAP gross loss professional services
$
(1,359
)

$
(1,351
)

$
(1,924
)
 
$
(6,025
)
 
$
(9,350
)
GAAP gross margin professional services and other
(46.4
)%
 
(53.0
)%
 
(139
)%
 
(71.7
)%
 
(171
)%
Non-GAAP gross margin professional services and other
(39.1
)%
 
(42.0
)%
 
(111
)%
 
(55.1
)%
 
(140
)%
 
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
23,583

 
$
21,551

 
$
21,495

 
$
84,245

 
$
67,139

Impact of non-GAAP adjustments
1,493

 
1,591

 
876

 
5,977

 
3,551

Non-GAAP gross profit
$
25,076


$
23,142


$
22,371

 
$
90,222

 
$
70,690

GAAP gross margin
63.7
 %
 
62.3
 %
 
71.9
 %
 
64.1
 %
 
66.0
 %
Non-GAAP gross margin
67.7
 %
 
66.9
 %
 
74.8
 %
 
68.6
 %
 
69.5
 %
Operating expense:
 
 
 
 
 
 
 
 
 
GAAP sales and marketing
$
15,289

 
$
16,006

 
$
13,923

 
$
62,313

 
$
58,800

Stock-based compensation
(1,960
)
 
(3,110
)
 
(2,199
)
 
(9,665
)
 
(8,843
)
Amortization of intangibles
(448
)
 
(448
)
 
—

 
(1,344
)
 
—

Reduction in workforce
—

 
—

 
—

 
—

 
(422
)
Acquisition related costs
—

 
14

 
—

 
(909
)
 
—

Non-GAAP sales and marketing
$
12,881


$
12,462


$
11,724

 
$
50,395

 
$
49,535

GAAP research and development
$
14,428

 
$
13,809

 
$
9,841

 
$
54,502

 
$
40,460

Stock-based compensation
(1,740
)
 
(1,631
)
 
(1,659
)
 
(7,415
)
 
(5,959
)
Reduction in workforce
—

 
—

 
—

 
—

 
(136
)
Acquisition related costs
—

 
—

 
—

 
(393
)
 
—

Non-GAAP research and development
$
12,688


$
12,178


$
8,182

 
$
46,694

 
$
34,365

GAAP general and administrative
$
2,754

 
$
10,307

 
$
6,957

 
$
28,825

 
$
26,859

Stock-based compensation
(1,368
)
 
(1,121
)
 
(1,267
)
 
(4,954
)
 
(4,743
)
Litigation settlement
—

 
—

 
—

 
(250
)
 
(2,876
)


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


Amortization of intangibles
(17
)
 
(17
)
 
—

 
(50
)
 
—

Change in fair value of contingent consideration liability
3,959

 
(3,931
)
 
—

 
671

 
—

Reduction in workforce
—

 
—

 
—

 
—

 
(90
)
Acquisition related costs
(58
)
 
(126
)
 
(1,731
)
 
(3,423
)
 
(1,731
)
Non-GAAP general and administrative
$
5,270


$
5,112


$
3,959

 
$
20,819

 
$
17,419

GAAP operating expense
$
32,471

 
$
40,122

 
$
30,721

 
$
145,640

 
$
126,119

Impact of non-GAAP adjustments
(1,632
)

(10,370
)

(6,856
)

(27,732
)
 
(24,800
)
Non-GAAP operating expense
$
30,839


$
29,752


$
23,865

 
$
117,908

 
$
101,319

Operating loss:
 
 
 
 
 
 
 
 
 
GAAP operating loss
$
(8,888
)
 
$
(18,571
)
 
$
(9,226
)
 
$
(61,395
)
 
$
(58,980
)
Impact of non-GAAP adjustments
3,125


11,961


7,732


33,709


28,351

Non-GAAP operating loss
$
(5,763
)

$
(6,610
)

$
(1,494
)
 
$
(27,686
)
 
$
(30,629
)
Other income, net:
 
 
 
 
 
 
 
 
 
GAAP other income, net
$
330

 
$
84

 
$
128

 
$
618

 
$
432

Gain on sale of investment in related party
(1,375
)
 
—

 
—

 
(1,375
)
 
—

Expense related to expiration of SAP warrant
1,132

 
—

 
—

 
1,132

 
—

Non-GAAP other income, net
$
87

 
$
84

 
$
128

 
$
375

 
$
432

Net loss and net loss per share:
 
 
 
 
 
 
 
 
 
GAAP net loss
$
(8,558
)
 
$
(18,487
)
 
$
(9,098
)
 
$
(55,571
)
 
$
(58,548
)
Total pre-tax impact of non-GAAP adjustments
2,882

 
11,961

 
7,732

 
33,466

 
28,351

Release of deferred tax valuation allowance due to business combination
—

 
—

 
—

 
(5,206
)
 
—

Non-GAAP net loss
$
(5,676
)

$
(6,526
)

$
(1,366
)
 
$
(27,311
)
 
$
(30,197
)
GAAP net loss per share, basic and diluted
$
(0.06
)

$
(0.14
)

$
(0.09
)
 
$
(0.44
)
 
$
(0.58
)
Non-GAAP net loss per share, basic and diluted
$
(0.04
)

$
(0.05
)

$
(0.01
)
 
$
(0.22
)
 
$
(0.30
)
Shares used in basic and diluted net loss per share computation
134,018

 
132,251

 
103,976

 
125,534

 
100,798










Castlight Media Contact:
Shannon Magill
press@castlighthealth.com
415-829-1500


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