UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

May 10, 2018
Date of Report (Date of earliest event reported)

CASTLIGHT HEALTH, INC.
(Exact name of registrant as specified in its charter)
______________________________________

			
Delaware
(State or other jurisdiction of
incorporation or organization)	001-36330
(Commission File Number)	26-1989091
(I.R.S. Employer
Identification Number)	
 
______________________________________
150 Spear Street, Suite 400
San Francisco, CA 94105
(Address of principal executive offices)

(415) 829-1400
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [x]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [x]

Item 2.02 Results of Operations and Financial Condition.

On  May 10, 2018 , Castlight Health, Inc. (“the Company”) issued a press release announcing its results for the three months ended March 31, 2018 . The press release is attached to this current report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 2.02, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any registration statement or other document filed by the Company with the Securities and Exchange Commission, whether made before or after the date of this Current Report on Form 8-K, regardless of any general incorporation language in such filing (or any reference to this Current Report on Form 8-K generally), except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

	
		
Exhibit	Description	
99.1      Press Release, dated May 10, 2018, entitled “Castlight Health Announces First Quarter 2018 Results”

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
					
 	 	CASTLIGHT HEALTH, INC.	
Date:	May 10, 2018	By:	 	/s/ Siobhan Nolan Mangini	
 	 	 	 	Siobhan Nolan Mangini	
 	 	 	 	Chief Financial Officer (Principal Financial Officer)	

 

Castlight Health Announces First Quarter 2018 Results

Total Revenue of $36.5 million , Up 32% Year-over-Year

SAN FRANCISCO - May 10, 2018 - Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its first quarter ended  March 31, 2018 .

“We launched a record number of new customers in the first quarter, including more than twenty on Engage, our first product that combines wellbeing and care guidance functionality into a single user experience,” said John Doyle, chief executive officer of Castlight Health. “With the solid start to the year, we are pleased to be reiterating our 2018 outlook.”

Financial performance for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 includes:
		
•	GAAP total revenue of $36.5 million , representing an increase of 32%	
		
•	GAAP gross margin of 59.0% , compared to 70.9%	
		
•	Non-GAAP gross margin of 63.0% compared to 73.7%	
		
•	GAAP operating loss of $14.6 million for both quarters	
		
•	Non-GAAP operating loss of $7.7 million , compared to a loss of $5.3 million	
		
•	GAAP net loss per basic and diluted share of $0.11 , compared to a net loss per basic and diluted share of $ 0.14	
		
•	Non-GAAP net loss per basic and diluted share of $0.06 , compared to a net loss per basic and diluted share of $0.05	
		
•	Cash used in operations of $19.0 million , compared to $10.9 million	

Total cash, cash equivalents and marketable securities was $74.6 million as of March 31, 2018 .

The financial performance of Jiff, Inc., which Castlight acquired on April 3, 2017, is not included in the metrics for first quarter ended March 31, 2017. 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 used the full retrospective method of adoption. As such, all historical financial information has been adjusted to reflect the impact of adoption of ASC 606. For more information, please refer to a supplemental presentation available on the company’s investor relations website at http://ir.castlighthealth.com.

Business Outlook
The Company is reiterating its previously-issued 2018 outlook. 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 first quarter 2018 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 5669898.

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 live s.  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, amortization of intangibles, capitalization and amortization of internal-use software, loss on sublease, gain on sale of investment in related party, expense related to expiration of SAP warrant, changes in fair value of contingent consideration liability, and charges related to the acquisition of Jiff 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)
(unaudited)

	
								
 	As of	
 	March 31, 2018	 	December 31, 2017	
 		 	(as adjusted) (1)	
Assets	 	 	 	
Current assets:	 	 	 	
Cash and cash equivalents	$	48,174		 	$	61,319		
Marketable securities	26,433		 	32,025		
Accounts receivable and other, net	33,129		 	21,933		
Prepaid expenses and other current assets	3,632		 	3,991		
Total current assets	111,368		 	119,268		
Property and equipment, net	4,791		 	5,263		
Restricted cash, non-current	1,325		 	1,325		
Deferred commissions	25,830		 	27,512		
Deferred professional service costs	12,318		 	12,480		
Intangible assets, net	19,111		 	20,253		
Goodwill	91,785		 	91,785		
Other assets	2,150		 	1,997		
Total assets	$	268,678		 	$	279,883		
Liabilities and stockholders’ equity	 	 	 	
Current liabilities:	 	 	 	
Accounts payable	$	5,549		 	$	3,907		
Accrued expenses and other current liabilities	12,473		 	13,178		
Accrued compensation	7,551		 	13,941		
Deferred revenue	30,050		 	25,985		
Total current liabilities	55,623		 	57,011		
Deferred revenue, non-current	3,575		 	4,457		
Debt, non-current	4,648		 	4,958		
Other liabilities, non-current	2,594		 	1,900		
Total liabilities	66,440		 	68,326		
Stockholders’ equity	202,238		 	211,557		
Total liabilities and stockholders’ equity	$	268,678		 	$	279,883		
_______________
		
(1)	Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.	

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

	
								
 	Three Months Ended March 31,	
 	2018	 	2017	
 	 	 	(as adjusted) (1)	
Revenue:	 	 	 	
Subscription	$	32,989		 	$	25,897		
Professional services and other	3,490		 	1,806		
Total revenue, net	36,479		 	27,703		
Cost of revenue:	 	 	 	
Cost of subscription (2)	9,174		 	4,246		
Cost of professional services and other (2)	5,769		 	3,809		
Total cost of revenue	14,943		 	8,055		
Gross profit	21,536		 	19,648		
Operating expenses:	 	 	 	
Sales and marketing (2)	13,912		 	14,145		
Research and development (2)	15,371		 	11,071		
General and administrative (2)	6,825		 	8,998		
Total operating expenses	36,108		 	34,214		
Operating loss	(14,572	)	 	(14,566	)	
Other income, net	128		 	192		
Net loss	$	(14,444	)	 	$	(14,374	)	
Net loss per share, basic and diluted	$	(0.11	)	 	$	(0.14	)	
Weighted-average shares used to compute basic and diluted net loss per share	134,994		 	104,935		
_______________________
		
(1)	Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.	
		
(2)	Includes stock-based compensation expense as follows:	

								
 	Three Months Ended March 31,	
 	2018	 	2017	
 	 	 	(as adjusted)	
Cost of revenue:	 	 	 	
Cost of subscription	$	242		 	$	127		
Cost of professional services and other	301		 	246		
Sales and marketing	1,138		 	2,154		
Research and development	1,654		 	1,790		
General and administrative	1,257		 	1,295		

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

								
 	Three Months Ended March 31,	
 	2018	 	2017	
 	 	 	(as adjusted) (1)	
Operating activities:	 	 	 	
Net loss	$	(14,444	)	 	$	(14,374	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	
Depreciation and amortization	1,860		 	698		
Stock-based compensation	4,592		 	5,612		
Amortization of deferred commissions	2,853		 	1,933		
Amortization of deferred professional service costs	946		 	887		
Loss on sublease	916		 	—		
Accretion and amortization of marketable securities	(131	)	 	64		
Changes in operating assets and liabilities:	 	 	 	
Accounts receivable and others, net	(11,196	)	 	(1,691	)	
Deferred commissions	(1,171	)	 	(557	)	
Deferred professional service costs	(742	)	 	(852	)	
Prepaid expenses and other assets	206		 	(1,183	)	
Accounts payable	1,783		 	177		
Accrued expenses and other liabilities	(7,627	)	 	(4,755	)	
Deferred revenue	3,183		 	3,129		
Net cash used in operating activities	(18,972	)	 	(10,912	)	
Investing activities:	 	 	 	
Purchase of property and equipment	(388	)	 	(166	)	
Purchase of marketable securities	(10,025	)	 	(16,007	)	
Maturities of marketable securities	15,750		 	34,799		
Net cash provided by investing activities	5,337		 	18,626		
Financing activities:	 	 	 	
Proceeds from the exercise of stock options	490		 	374		
Payments of issuance costs related to equity	—		 	(612	)	
Net cash provided by (used in) financing activities	490		 	(238	)	
 	 	 	 	
Net (decrease) increase in cash, cash equivalents and restricted cash	(13,145	)	 	7,476		
Cash, cash equivalents and restricted cash at beginning of period	62,644		 	49,866		
Cash, cash equivalents and restricted cash at end of period	$	49,499		 	$	57,342		
 	 	 	 	
Reconciliation of cash, cash equivalents and restricted cash:	 	 	 	
Cash and cash equivalents	$	48,174		 	$	56,198		
Restricted cash	1,325		 	1,144		
Total cash, cash equivalents and restricted cash	$	49,499		 	$	57,342		
_______________________
		
(1)	Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018, and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (ASC 230), which we 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	
 	March 31, 2018	 	December 31, 2017	 	March 31, 2017	
 		 	(as adjusted) (1)	 	(as adjusted) (1)	
Gross profit:	 	 	 	 	 	
GAAP gross profit subscription	$	23,815		 	$	25,376		 	$	21,651		
Stock-based compensation	242		 	250		 	127		
Amortization of internal-use software	219		 	236		 	244		
Amortization of intangibles	678		 	751		 	—		
Non-GAAP gross profit subscription	$	24,954		 	$	26,613		 	$	22,022		
GAAP gross margin subscription	72.2	 %	 	75.3	 %	 	83.6	 %	
Non-GAAP gross margin subscription	75.6	 %	 	78.9	 %	 	85.0	 %	
 	 	 	 	 	 	
GAAP gross loss professional services	$	(2,279	)	 	$	(1,532	)	 	$	(2,003	)	
Stock-based compensation	301		 	228		 	246		
Acquisition related costs	—		 	—		 	147		
Non-GAAP gross loss professional services	$	(1,978	)	 	$	(1,304	)	 	$	(1,610	)	
GAAP gross margin professional services	(65.3	)%	 	(44.0	)%	 	(111	)%	
Non-GAAP gross margin professional services	(56.7	)%	 	(37.4	)%	 	(89.1	)%	
 	 	 	 	 	 	
GAAP gross profit	$	21,536		 	$	23,844		 	$	19,648		
Impact of non-GAAP adjustments	1,440		 	1,465		 	764		
Non-GAAP gross profit	$	22,976		 	$	25,309		 	$	20,412		
GAAP gross margin	59.0	 %	 	64.1	 %	 	70.9	 %	
Non-GAAP gross margin	63.0	 %	 	68.0	 %	 	73.7	 %	
 	 	 	 	 	 	
Operating expense:	 	 	 	 	 	
GAAP sales and marketing	$	13,912		 	$	14,149		 	$	14,145		
Stock-based compensation	(1,138	)	 	(1,960	)	 	(2,154	)	
Amortization of intangibles	(448	)	 	(448	)	 	—		
Acquisition related costs	—		 	—		 	(405	)	
Non-GAAP sales and marketing	$	12,326		 	$	11,741		 	$	11,586		
 	 	 	 	 	 	
GAAP research and development	$	15,371		 	$	14,428		 	$	11,071		
Stock-based compensation	(1,654	)	 	(1,740	)	 	(1,790	)	
Loss on sublease	(916	)	 	—		 	—		
Acquisition related costs	—		 	—		 	(267	)	
Non-GAAP research and development	$	12,801		 	$	12,688		 	$	9,014		
 	 	 	 	 	 	
GAAP general and administrative	$	6,825		 	$	2,754		 	$	8,998		
Stock-based compensation	(1,257	)	 	(1,368	)	 	(1,295	)	
Litigation settlement	—		 	—		 	(250	)	
Amortization of intangibles	(17	)	 	(17	)	 	—		
Change in fair value of contingent consideration liability	—		 	3,959		 	—		
Acquisition related costs	—		 	(58	)	 	(2,340	)	
Non-GAAP general and administrative	$	5,551		 	$	5,270		 	$	5,113		
 	 	 	 	 	 	
GAAP operating expense	$	36,108		 	$	31,331		 	$	34,214		
Impact of non-GAAP adjustments	(5,430	)	 	(1,632	)	 	(8,501	)	
Non-GAAP operating expense	$	30,678		 	$	29,699		 	$	25,713		
 	 	 	 	 	 	
Operating loss:	 	 	 	 	 	
GAAP operating loss	$	(14,572	)	 	$	(7,487	)	 	$	(14,566	)	

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

	
												
Impact of non-GAAP adjustments	6,870		 	3,097		 	9,265		
Non-GAAP operating loss	$	(7,702	)	 	$	(4,390	)	 	$	(5,301	)	
 	 	 	 	 	 	
Other income, net:	 	 	 	 	 	
GAAP other income, net	$	128		 	$	330		 	$	192		
Gain on sale of investment in related party	—		 	(1,375	)	 	—		
Expense related to expiration of SAP warrant	—		 	1,132		 	—		
Non-GAAP other income, net	$	128		 	$	87		 	$	192		
 	 	 	 	 	 	
Net loss and net loss per share:	 	 	 	 	 	
GAAP net loss	$	(14,444	)	 	$	(7,157	)	 	$	(14,374	)	
Total pre-tax impact of non-GAAP adjustments	6,870		 	2,854		 	9,265		
Income tax impact of non-GAAP adjustments	—		 	—		 	—		
Non-GAAP net loss	$	(7,574	)	 	$	(4,303	)	 	$	(5,109	)	
GAAP net loss per share, basic and diluted	$	(0.11	)	 	$	(0.05	)	 	$	(0.14	)	
Non-GAAP net loss per share, basic and diluted	$	(0.06	)	 	$	(0.03	)	 	$	(0.05	)	
Shares used in basic and diluted net loss per share computation	134,994		 	134,018		 	104,935		
_______________________
		
(1)	Prior-period information has been adjusted for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which we adopted in the first quarter of 2018.	

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

 Castlight Investor Contact:
Gary J. Fuges, CFA
ir@castlighthealth.com
415-829-1680