Castlight Health Announces Second Quarter 2021 Results

Company Demonstrates Sequential Increase in ARR

News provided by

Castlight Health, Inc.

Aug 03, 2021, 16:05 ET

SAN FRANCISCO, Aug. 3, 2021 /PRNewswire/ -- Castlight Health, Inc. (NYSE:CSLT), a leading health navigation platform provider, today announced results for its second quarter ended June 30, 2021.

"We had a strong second quarter, achieving the top-end of our revenue guidance and generating our fifth straight quarter of non-GAAP profitability and positive cash flow," said Maeve O'Meara, chief executive officer of Castlight Health. "We were pleased with pipeline progress, as our late-stage pipeline for the quarter is the largest in four years, we reported a second low churn quarter, and released a third-party study that demonstrated Castlight's clear value across members at every clinical risk level. We continue to be confident that we will deliver ARR growth in 2021 and are excited about opportunities to extend our data and technology to new markets as part of our long-term growth strategy."

Financial performance for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 includes:

  • Total revenue of $35.6 million, compared to $35.5 million
  • GAAP gross margin of 65.9%, compared to 64.1%
  • Non-GAAP gross margin of 68.7%, compared to 68.3%
  • GAAP operating loss of $2.4 million, compared to $4.3 million
  • Non-GAAP operating income of $1.9 million, compared to $2.1 million
  • GAAP net loss per basic and diluted share of $0.02, compared to a net loss per basic and diluted share of $0.03
  • Non-GAAP net income per basic and diluted share of $0.01, compared to net income per basic and diluted share of $0.01
  • Cash provided by operations of $4.6 million, compared to cash provided by operations of $3.1 million

Total cash was $60.7 million as of June 30, 2021.

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 2021, the Company is reiterating its outlook and expects:

  • Revenue in the range of $135 million to $140 million
  • Non-GAAP operating income between income of $1 million and a loss of $4 million
  • Non-GAAP net income per share between income of $0.01 and a loss of $0.03, based on approximately 160 million to 161 million shares

For the third quarter of 2021, the Company expects:

  • Revenue in the range of $33 million to $35 million

Quarterly Conference Call

Castlight Health senior management will host a conference call to discuss its second quarter 2021 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 (833) 238-7953 and the replay will be available for one week at (800) 585-8367. The conference ID number for the live call and replay is 3859414.

About Castlight Health

Castlight is on a mission to make it as easy as humanly possible for people to navigate the healthcare system and live happier, healthier, more productive lives. As a leader in healthcare navigation, we provide a world-class digital platform with a team of clinical and benefits experts to help members easily connect and engage with the right programs and care, at the right time. Castlight partners with Fortune 500 companies and health plans to transform employee and member benefits into one comprehensive health and wellbeing experience to deliver better health outcomes and maximize returns 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. However, 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.

The non-GAAP measures we provide 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.

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 2021 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.

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "seeks," "estimates," "can," "may," "will," "would" and similar expressions identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. The forward-looking statements about Castlight Health's expectations, plans, intentions, and strategies include, but are not limited to, statements regarding certain 2021 financial projections, and our expectations for our future business and financial performance. 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 for the year ended December 31, 2020 as filed with the SEC on February 24, 2021, and our quarterly reports on Form 10-Q, including the quarterly report for the three months ended June 30, 2021, when filed with the SEC. 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, except as required by law. 

Copyright 2021 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, 2021


December 31, 2020

Assets




Current assets:




Cash and cash equivalents

$

60,706



$

49,242


Accounts receivable and other, net

21,735



31,740


Prepaid expenses and other current assets

8,716



3,800


Total current assets

91,157



84,782


Property and equipment, net

4,485



5,321


Restricted cash, non-current

—



1,144


Deferred commissions

7,181



9,556


Deferred professional service costs

3,874



4,462


Intangible assets, net

5,814



7,930


Goodwill

41,485



41,485


Operating lease right-of-use assets, net

8,006



10,238


Other assets

106



1,855


Total assets

$

162,108



$

166,773


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

3,729



$

5,145


Accrued expenses and other current liabilities

5,175



7,898


Accrued compensation

7,104



8,633


Deferred revenue

9,993



6,848


Operating lease liabilities

6,092



5,789


Total current liabilities

32,093



34,313


Deferred revenue, non-current

87



663


Operating lease liabilities, non-current

4,338



7,446


Other liabilities, non-current

335



485


Total liabilities

36,853



42,907


Stockholders' equity

125,255



123,866


Total liabilities and stockholders' equity

$

162,108



$

166,773


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,


2021


2020


2021


2020

Revenue:








Subscription

$

31,128



$

34,289



$

63,238



$

72,672


Professional services and other

4,475



1,211



7,424



1,873


Total revenue, net

35,603



35,500



70,662



74,545


Cost of revenue:








Cost of subscription(1)

7,977



8,819



16,076



19,051


Cost of professional services and other(1)

4,181



3,942



8,838



8,183


Total cost of revenue

12,158



12,761



24,914



27,234


Gross profit

23,445



22,739



45,748



47,311


Operating expenses:








Sales and marketing(1)

7,208



7,683



14,121



18,155


Research and development(1)

12,316



13,043



24,429



26,865


General and administrative(1)

6,366



6,340



12,732



12,916


Goodwill impairment

—



—



—



50,300


Total operating expenses

25,890



27,066



51,282



108,236


Operating loss

(2,445)



(4,327)



(5,534)



(60,925)


Other income, net

56



123



149



386


Net loss

$

(2,389)



$

(4,204)



$

(5,385)



$

(60,539)


Net loss per share, basic and diluted

$

(0.02)



$

(0.03)



$

(0.03)



$

(0.41)


Weighted-average shares used to compute basic
and diluted net loss per share

158,951



150,078



157,872



149,475



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


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Cost of revenue:








Cost of subscription

$

222



$

205



$

479



$

374


Cost of professional services and other

184



144



420



260


Sales and marketing

442



748



792



1,420


Research and development

1,060



1,314



2,129



2,477


General and administrative

1,262



858



2,457



1,924


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



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Operating activities:








Net loss

$

(2,389)



$

(4,204)



$

(5,385)



$

(60,539)


Adjustments to reconcile net loss to net cash provided by
  (used in) operating activities:








Depreciation and amortization

1,616



1,609



3,239



3,144


Goodwill impairment

—



—



—



50,300


Stock-based compensation

3,170



3,269



6,277



6,455


Amortization of deferred commissions

1,228



1,536



2,568



3,919


Amortization of deferred professional service costs

567



732



1,147



1,657


Non-cash operating lease expense

1,125



1,231



2,232



2,631


Other

19



—



19



2


Changes in operating assets and liabilities:








Accounts receivable and other, net

3,300



4,898



10,005



(1,778)


Deferred commissions

(219)



(602)



(193)



(920)


Deferred professional service costs

(221)



(213)



(521)



(629)


Prepaid expenses and other assets

932



(330)



(2,023)



(824)


Accounts payable

(699)



(2,739)



(1,458)



(10,201)


Operating lease liabilities

(1,416)



(1,100)



(2,805)



(2,616)


Accrued expenses and other liabilities

(1,561)



(1,530)



(1,943)



(1,511)


Deferred revenue

(3,177)



(811)



2,569



2,762


Accrued compensation

2,349



1,351



(1,529)



(3,114)


Net cash provided by (used in) operating activities

4,624



3,097



12,199



(11,262)


Investing activities:








Purchase of property and equipment

(33)



(2,035)



(245)



(3,299)


Purchase of marketable securities

—



(1,005)



—



(2,994)


Sales of marketable securities

—



2,001



—



2,001


Maturities of marketable securities

—



5,000



—



17,400


Net cash (used in) provided by investing activities

(33)



3,961



(245)



13,108


Financing activities:








Proceeds from exercise of stock options

98



—



226



155


Proceeds from ESPP offering

—



—



233



186


Principal payments on long-term debt

(465)



(465)



(930)



(930)


Net cash used in financing activities

(367)



(465)



(471)



(589)


Effect of of exchange rate changes on cash, cash equivalents,
and restricted cash

(19)



—



(19)



—










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

4,205



6,593



11,464



1,257


Cash, cash equivalents and restricted cash at beginning of
  period

57,645



39,006



50,386



44,342


Cash, cash equivalents and restricted cash at end of period

$

61,850



$

45,599



$

61,850



$

45,599










Reconciliation of cash, cash equivalents and restricted cash:








Cash and cash equivalents

$

60,706



$

44,274



$

60,706



$

44,274


Restricted cash included in Prepaid expenses and other 
current assets

1,144



181



1,144



181


Restricted cash, non-current

—



1,144



—



1,144


Total cash, cash equivalents and restricted cash

$

61,850



$

45,599



$

61,850



$

45,599


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, 2021


March 31, 2021


June 30, 2020


June 30, 2021


June 30, 2020

Gross profit:










GAAP gross profit subscription

$

23,151



$

24,011



$

25,470



$

47,162



$

53,621


Stock-based compensation

222



257



205



479



374


Amortization of internal-use software

79



79



79



158



105


Amortization of intangibles

530



530



530



1,060



1,060


Reduction in workforce

—



—



221



—



221


Non-GAAP gross profit subscription

$

23,982



$

24,877



$

26,505



$

48,859



$

55,381


GAAP gross margin subscription

74.4

%


74.8

%


74.3

%


74.6

%


73.8

%

Non-GAAP gross margin subscription

77.0

%


77.5

%


77.3

%


77.3

%


76.2

%











GAAP gross profit (loss) professional
services

$

294



$

(1,708)



$

(2,731)



$

(1,414)



$

(6,310)


Stock-based compensation

184



236



144



420



260


Reduction in workforce

—



—



317



—



317


Non-GAAP gross profit (loss)
professional services

$

478



$

(1,472)



$

(2,270)



$

(994)



$

(5,733)


GAAP gross margin professional
services

6.6

%


(57.9)

%


(226)

%


(19.0)

%


(337)

%

Non-GAAP gross margin professional
services

10.7

%


(49.9)

%


(187)

%


(13.4)

%


(306)

%











GAAP gross profit

$

23,445



$

22,303



$

22,739



$

45,748



$

47,311


Impact of non-GAAP adjustments

1,015



1,102



1,496



2,117



2,337


Non-GAAP gross profit

$

24,460



$

23,405



$

24,235



$

47,865



$

49,648


GAAP gross margin

65.9

%


63.6

%


64.1

%


64.7

%


63.5

%

Non-GAAP gross margin

68.7

%


66.8

%


68.3

%


67.7

%


66.6

%











Operating expense:










GAAP sales and marketing

$

7,208



$

6,913



$

7,683



$

14,121



$

18,155


Stock-based compensation

(442)



(350)



(748)



(792)



(1,420)


Amortization of intangibles

(528)



(528)



(528)



(1,056)



(1,056)


Reduction in workforce

—



—



(334)



—



(334)


Non-GAAP sales and marketing

$

6,238



$

6,035



$

6,073



$

12,273



$

15,345












GAAP research and development

$

12,316



$

12,113



$

13,043



$

24,429



$

26,865


Stock-based compensation

(1,060)



(1,069)



(1,314)



(2,129)



(2,477)


Reduction in workforce

—



—



(658)



—



(658)


Certain legal expenses

—



—



—



—



191


Capitalization of internally
developed software

—



—



—



—



21


Non-GAAP research and development

$

11,256



$

11,044



$

11,071



$

22,300



$

23,942












GAAP general and administrative

$

6,366



$

6,366



$

6,340



$

12,732



$

12,916


Stock-based compensation

(1,262)



(1,195)



(858)



(2,457)



(1,924)


Amortization of intangibles

—



—



—



—



(17)


Reduction in workforce

—



—



(497)



—



(497)


Non-GAAP general and administrative

$

5,104



$

5,171



$

4,985



$

10,275



$

10,478












GAAP goodwill impairment

$

—



$

—



$

—



$

—



$

50,300


Goodwill impairment

—



—



—



—



(50,300)


Non-GAAP goodwill impairment

$

—



$

—



$

—



$

—



$

—












GAAP operating expense

$

25,890



$

25,392



$

27,066



$

51,282



$

108,236


Impact of non-GAAP adjustments

(3,292)



(3,142)



(4,937)



(6,434)



(58,471)


Non-GAAP operating expense

$

22,598



$

22,250



$

22,129



$

44,848



$

49,765












Operating income (loss):










GAAP operating loss

$

(2,445)



$

(3,089)



$

(4,327)



$

(5,534)



$

(60,925)


Impact of non-GAAP adjustments

4,307



4,244



6,433



8,551



60,808


Non-GAAP operating income (loss)

$

1,862



$

1,155



$

2,106



$

3,017



$

(117)












Net income (loss) and net income
(loss) per share:










GAAP net loss

$

(2,389)



$

(2,996)



$

(4,204)



$

(5,385)



$

(60,539)


Total pre-tax impact of non-GAAP
adjustments

4,307



4,244



6,433



8,551



60,808


Non-GAAP net income

$

1,918



$

1,248



$

2,229



$

3,166



$

269


GAAP net loss per share, basic and
diluted

$

(0.02)



$

(0.02)



$

(0.03)



$

(0.03)



$

(0.41)


Non-GAAP net income per share,
basic and diluted

$

0.01



$

0.01



$

0.01



$

0.02



$

—


Shares used in basic and diluted net
loss per share computation

158,951



156,781



150,078



157,872



149,475


Castlight Media Contact:
Caroline Kawashima
[email protected]
415-246-0313

Castlight Investor Contact:
[email protected]
443-213-0500

SOURCE Castlight Health, Inc.