PR Newswire | Aug 3, 2021 04:06PM EDT

08/03 15:05 CDT

Castlight Health Announces Second Quarter 2021 ResultsCompany Demonstrates Sequential Increase in ARR SAN FRANCISCO, Aug. 3, 2021

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(r) 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, 2021December 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 liabilities5,175 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 basic158,951 150,078 157,872 149,475 and diluted net loss per share



(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 other184 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,(19) - (19) - and restricted cash



Net increase (decrease) in cash, cash equivalents and 4,205 6,593 11,464 1,257 restricted cash

Cash, cash equivalents and restricted cash at beginning of 57,645 39,006 50,386 44,342 period

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 1,144 181 1,144 181 current assets

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 software79 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$ 294 $ (1,708) $ (2,731) $ (1,414) $ (6,310) services

Stock-based compensation 184 236 144 420 260

Reduction in workforce - - 317 - 317

Non-GAAP gross profit (loss) $ 478 $ (1,472) $ (2,270) $ (994) $ (5,733) professional services

GAAP gross margin professional 6.6 % (57.9) % (226) % (19.0) % (337) % services

Non-GAAP gross margin professional 10.7 % (49.9) % (187) % (13.4) % (306) % services



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 - - - - 21 developed software

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 4,307 4,244 6,433 8,551 60,808 adjustments

Non-GAAP net income $ 1,918 $ 1,248 $ 2,229 $ 3,166 $ 269

GAAP net loss per share, basic and $ (0.02) $ (0.02) $ (0.03) $ (0.03) $ (0.41) diluted

Non-GAAP net income per share, $ 0.01 $ 0.01 $ 0.01 $ 0.02 $ - basic and diluted

Shares used in basic and diluted net 158,951 156,781 150,078 157,872 149,475 loss per share computation

Castlight Media Contact:Caroline Kawashimapress@castlighthealth.com415-246-0313

Castlight Investor Contact:ir@castlighthealth.com443-213-0500

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SOURCE Castlight Health, Inc.