PR Newswire | Nov 2, 2021 04:06PM EDT

11/02 15:05 CDT

Castlight Health Announces Third Quarter 2021 ResultsThird Straight Quarter of Sequential ARR Growth SAN FRANCISCO, Nov. 2, 2021

SAN FRANCISCO, Nov. 2, 2021 /PRNewswire/ -- Castlight Health, Inc. (NYSE: CSLT), a leading health navigation platform provider, today announced results for its third quarter ended September 30, 2021.

"We delivered a solid third quarter reflecting continued progress across both our employer and health plan businesses," said Maeve O'Meara, chief executive officer of Castlight Health. "This quarter our team produced our highest direct-to-employer bookings in over three years, which led to our third straight quarter of sequential ARR growth, and our health plan pipeline grew substantially in Q3. The momentum we are seeing is a direct result of the strong product-market fit of our next generation navigation solution that seamlessly blends technology and service to produce results for our customers."

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

* Total revenue of $34.8 million, compared to $35.1 million * GAAP gross margin of 66.2%, compared to 66.1% * Non-GAAP gross margin of 69.1%, compared to 69.0% * GAAP operating loss of $1.9 million, compared to $0.5 million * Non-GAAP operating income of $2.5 million, compared to $3.7 million * GAAP net loss per basic and diluted share of $0.01, compared to a net loss per basic and diluted share of $0.00 * Non-GAAP net income per basic and diluted share of $0.01, compared to net income per basic and diluted share of $0.02 * Cash provided by operations of $5.8 million, compared to $2.7 million

Total cash was $65.8 million as of September 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 expects:

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

For the fourth 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 third 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 7079838.

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 September 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

September 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $65,768 $49,242

Accounts receivable and other, net 23,284 31,740

Prepaid expenses and other current assets 7,053 3,800

Total current assets 96,105 84,782

Property and equipment, net 4,331 5,321

Restricted cash, non-current - 1,144

Deferred commissions 7,092 9,556

Deferred professional service costs 3,624 4,462

Intangible assets, net 4,756 7,930

Goodwill 41,485 41,485

Operating lease right-of-use assets, net 6,860 10,238

Other assets 106 1,855

Total assets $164,359 $166,773

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $4,543 $5,145

Accrued expenses and other current 3,997 7,898 liabilities

Accrued compensation 9,398 8,633

Deferred revenue 9,703 6,848

Operating lease liabilities 5,004 5,789

Total current liabilities 32,645 34,313

Deferred revenue, non-current 188 663

Operating lease liabilities, non-current 3,950 7,446

Other liabilities, non-current 485 485

Total liabilities 37,268 42,907

Stockholders' equity 127,091 123,866

Total liabilities and stockholders' equity$164,359 $166,773

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

Three Months Ended September 30,Nine Months Ended September 30,

2021 2020 2021 2020

Revenue:

Subscription $31,613 $ 34,069 $94,851 $106,741

Professional services and other 3,163 1,009 10,587 2,882

Total revenue, net 34,776 35,078 105,438 109,623

Cost of revenue:

Cost of subscription^(1) 8,081 8,013 24,157 27,064

Cost of professional services and other^(1) 3,675 3,874 12,513 12,057

Total cost of revenue 11,756 11,887 36,670 39,121

Gross profit 23,020 23,191 68,768 70,502

Operating expenses:

Sales and marketing^(1) 7,079 6,158 21,200 24,313

Research and development^(1) 11,631 11,182 36,060 38,047

General and administrative^(1) 6,195 6,341 18,927 19,257

Goodwill impairment - - - 50,300

Total operating expenses 24,905 23,681 76,187 131,917

Operating loss (1,885) (490) (7,419) (61,415)

Other income, net 132 43 281 429

Income before income taxes (1,753) (447) (7,138) (60,986)

Provision for income taxes 279 - 279 -

Net loss $(2,032) $ (447) $(7,417) $(60,986)

Net loss per share, basic and diluted $(0.01) $ - $(0.05) $(0.41)

Weighted-average shares used to compute basic and diluted net loss per share161,103 152,146 158,961 150,372

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Cost of revenue:

Cost of subscription $ 256 $224 $735 $598

Cost of professional services and other145 171 565 431

Sales and marketing 483 282 1,275 1,702

Research and development 1,001 1,026 3,130 3,503

General and administrative 1,315 1,401 3,772 3,325

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

Three Months Ended September 30,Nine Months Ended September 30,

2021 2020 2021 2020

Operating activities:

Net loss $(2,032) $ (447) $(7,417) $(60,986)

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

Depreciation and amortization 1,674 1,763 4,913 4,907

Goodwill impairment - - - 50,300

Stock-based compensation 3,200 3,104 9,477 9,559

Amortization of deferred commissions 1,372 1,598 3,940 5,517

Amortization of deferred professional service costs 568 760 1,715 2,417

Non-cash operating lease expense 1,145 1,134 3,377 3,765

Other 13 - 32 2

Changes in operating assets and liabilities:

Accounts receivable and other, net (1,549) 2,704 8,456 926

Deferred commissions (1,283) (476) (1,476) (1,396)

Deferred professional service costs (298) (289) (819) (918)

Prepaid expenses and other assets 1,663 1,066 (360) 242

Accounts payable 808 (3,847) (650) (14,048)

Operating lease liabilities (1,476) (1,570) (4,281) (4,186)

Accrued expenses and other liabilities (73) (1,065) (2,016) (2,576)

Deferred revenue (189) (2,862) 2,380 (100)

Accrued compensation 2,294 1,165 765 (1,949)

Net cash provided by (used in) operating activities 5,837 2,738 18,036 (8,524)

Investing activities:

Purchase of property and equipment (456) (132) (701) (3,431)

Purchase of marketable securities - - - (2,994)

Sales of marketable securities - - - 2,001

Maturities of marketable securities - - - 17,400

Net cash (used in) provided by investing activities (456) (132) (701) 12,976

Financing activities:

Proceeds from exercise of stock options 259 23 485 178

Proceeds from ESPP offering 390 185 623 371

Principal payments on long-term debt (465) (465) (1,395) (1,395)

Final payment on term loan (490) - (490) -

Net cash used in financing activities (306) (257) (777) (846)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash(13) - (32) -



Net increase in cash, cash equivalents and restricted cash 5,062 2,349 16,526 3,606

Cash, cash equivalents and restricted cash at beginning of period 61,850 45,599 50,386 44,342

Cash, cash equivalents and restricted cash at end of period $66,912 $ 47,948 $66,912 $47,948



Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents $65,768 $ 46,804 $65,768 $46,804

Restricted cash included in Prepaid expenses and other current assets 1,144 - 1,144 -

Restricted cash, non-current - 1,144 - 1,144

Total cash, cash equivalents and restricted cash $66,912 $ 47,948 $66,912 $47,948

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

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020

Gross profit:

GAAP gross profit subscription $ 23,532 $23,151 $ 26,056 $ 70,694 $ 79,677

Stock-based compensation 256 222 224 735 598

Amortization of internal-use 79 79 79 237 184 software

Amortization of intangibles 530 530 530 1,590 1,590

Reduction in workforce - - - - 221

Non-GAAP gross profit subscription $ 24,397 $23,982 $ 26,889 $ 73,256 $ 82,270

GAAP gross margin subscription 74.4 % 74.4 %76.5 % 74.5 % 74.6 %

Non-GAAP gross margin subscription 77.2 % 77.0 %78.9 % 77.2 % 77.1 %



GAAP gross profit (loss) professional$ (512) $294 $ (2,865) $ (1,926) $ (9,175) services

Stock-based compensation 145 184 171 565 431

Reduction in workforce - - - - 317

Non-GAAP gross profit (loss) $ (367) $478 $ (2,694) $ (1,361) $ (8,427) professional services

GAAP gross margin professional (16.2) % 6.6 %(284) % (18.2) % (318) % services

Non-GAAP gross margin professional (11.6) % 10.7 %(267) % (12.9) % (292) % services



GAAP gross profit $ 23,020 $23,445 $ 23,191 $ 68,768 $ 70,502

Impact of non-GAAP adjustments 1,010 1,015 1,004 3,127 3,341

Non-GAAP gross profit $ 24,030 $24,460 $ 24,195 $ 71,895 $ 73,843

GAAP gross margin 66.2 % 65.9 %66.1 % 65.2 % 64.3 %

Non-GAAP gross margin 69.1 % 68.7 %69.0 % 68.2 % 67.4 %



Operating expense:

GAAP sales and marketing $ 7,079 $7,208 $ 6,158 $ 21,200 $ 24,313

Stock-based compensation (483) (442) (282) (1,275) (1,702)

Amortization of intangibles (528) (528) (528) (1,584) (1,584)

Reduction in workforce - - 2 - (332)

Non-GAAP sales and marketing $ 6,068 $6,238 $ 5,350 $ 18,341 $ 20,695



GAAP research and development $ 11,631 $12,316 $ 11,182 $ 36,060 $ 38,047

Stock-based compensation (1,001) (1,060) (1,026) (3,130) (3,503)

Reduction in workforce - - (5) - (663)

Certain legal expenses - - - - 191

Capitalization of internally - - - - 21 developed software

Non-GAAP research and development $ 10,630 $11,256 $ 10,151 $ 32,930 $ 34,093



GAAP general and administrative $ 6,195 $6,366 $ 6,341 $ 18,927 $ 19,257

Stock-based compensation (1,315) (1,262) (1,401) (3,772) (3,325)

Amortization of intangibles - - - - (17)

Reduction in workforce - - 15 - (482)

Non-GAAP general and $ 4,880 $5,104 $ 4,955 $ 15,155 $ 15,433 administrative



GAAP goodwill impairment $ - $- $ - $ - $ 50,300

Goodwill impairment - - - - (50,300)

Non-GAAP goodwill impairment $ - $- $ - $ - $ -



GAAP operating expense $ 24,905 $25,890 $ 23,681 $ 76,187 $ 131,917

Impact of non-GAAP adjustments (3,327) (3,292) (3,225) (9,761) (61,696)

Non-GAAP operating expense $ 21,578 $22,598 $ 20,456 $ 66,426 $ 70,221



Operating income (loss):

GAAP operating loss $ (1,885) $(2,445) $ (490) $ (7,419) $ (61,415)

Impact of non-GAAP adjustments 4,337 4,307 4,229 12,888 65,037

Non-GAAP operating income $ 2,452 $1,862 $ 3,739 $ 5,469 $ 3,622



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

GAAP net loss $ (2,032) $(2,389) $ (447) $ (7,417) $ (60,986)

Total pre-tax impact of non-GAAP 4,337 4,307 4,229 12,888 65,037 adjustments

Non-GAAP net income $ 2,305 $1,918 $ 3,782 $ 5,471 $ 4,051

GAAP net loss per share, basic and $ (0.01) $(0.02) $ - $ (0.05) $ (0.41) diluted

Non-GAAP net income per share, $ 0.01 $0.01 $ 0.02 $ 0.03 $ 0.03 basic and diluted

Shares used in basic and diluted net 161,103 158,951 152,146 158,961 150,372 loss per share computation

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

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

View original content to download multimedia: https://www.prnewswire.com/news-releases/castlight-health-announces-third-quarter-2021-results-301414448.html

SOURCE Castlight Health, Inc.