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
November 5, 2020
Date of Report (Date of earliest event reported)
CASTLIGHT HEALTH, INC.
(Exact name of registrant as specified in its charter)

Delaware
	001-36330	26-1989091
	
(State or other jurisdiction of
incorporation)	(Commission File Number)	(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)

(Former name, former address and former fiscal year, if changed since last report)
Not applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Class B Common Stock, par value $0.0001 per share	CSLT	New York Stock Exchange	

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 ☐
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. ☐

Item 2.02.    Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.

On November 5, 2020, Castlight Health, Inc. (the "Company") issued a press release announcing its financial results for the three months ended September 30, 2020. A copy of the press release is furnished herewith as Exhibit 99.1.

The Company's senior management will host a conference call to discuss its third quarter 2020 results and business outlook on Thursday, November 5, 2020, 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 8774374.

Item 9.01.     Financial Statements and Exhibits.

(d) Exhibits

Exhibit        Description

99.1 Press Release, dated November 5, 2020, entitled “Castlight Health Announces Third Quarter 2020 Results”.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

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:	November 5, 2020	By:		/s/ Will Bondurant	
				Will Bondurant	
				Chief Financial Officer	

Castlight Health Announces Third Quarter 2020 Results

SAN FRANCISCO - November 5, 2020 - Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its third quarter ended September 30, 2020.

"In the third quarter, we made progress on our strategic priorities, meeting our goal of signing a new health plan partner in 2020, making the high-touch Care Guides solution that launched last year generally available to the market, and achieving strong financial results that allow us to increase our 2020 financial outlook,” said Maeve O'Meara, chief executive officer of Castlight Health. “We also delivered significant product innovation in the quarter, aligning our solutions to employer priorities like enablement of virtual care. We are competitively well positioned in the growing navigation market due to the complement of our high-touch capabilities, alongside our high-tech platform. As we look towards 2021, our two national health plan partnerships and the strength of our pipeline provide a foundation for growth through health plans."

Financial performance for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 includes:
•GAAP total revenue of $35.1 million, compared to $35.5 million
•GAAP gross margin of 66.1%, compared to 59.1%
•Non-GAAP gross margin of 69.0%, compared to 62.1%
•GAAP operating loss of $0.5 million, compared to $9.6 million
•Non-GAAP operating income of $3.7 million, compared to an operating loss of $5.4 million

•GAAP net loss per basic and diluted share of $0.00, compared to a net loss per basic and diluted share of $0.06
•Non-GAAP net income per basic and diluted share of $0.02, compared to a net loss per basic and diluted share of $0.04
•Cash provided by operations of $2.7 million, compared to cash used in operations of $7.4 million

Total cash and cash equivalents were $46.8 million as of September 30, 2020.

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
The Company is updating its previously-issued 2020 outlook. For the full year 2020, the Company now expects:
•GAAP revenue in the range of $140 million to $143 million
•Non-GAAP operating income between $0 to $3 million
•Non-GAAP net income per share between $0.00 and $0.02, based on approximately 151 million shares

Quarterly Conference Call
Castlight Health senior management will host a conference call to discuss its third quarter 2020 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 8774374.

About Castlight Health
Castlight is on a mission to make it as easy as humanly possible for its users to navigate the healthcare system and live happier, healthier, more productive lives. Our health navigation platform connects hundreds of health vendors, benefits resources, and plan designs into one comprehensive health and wellbeing experience. 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. Castlight transforms the employee benefit experience into a deeply personalized, yet simple, guided one, empowering better-informed patient decisions to unlock better healthcare outcomes and maximizing return 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 2020 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 Castlight Health’s third quarter 2020 performance and 2020 full year projections, the impact of COVID-19, the success of our strategy, 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, 2019 as filed with the SEC on February 28, 2020, and our quarterly reports on Form 10-Q, including the quarterly report for the three

months ended September 30, 2020, when filed. 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 2020 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	
	September 30, 2020		December 31, 2019	
Assets				
Current assets:				
Cash and cash equivalents	$	46,804 			$	43,017 		
Marketable securities	— 			16,411 		
Accounts receivable and other, net	30,471 			31,397 		
Prepaid expenses and other current assets	4,399 			4,645 		
Total current assets	81,674 			95,470 		
Property and equipment, net	5,721 			4,856 		
Restricted cash, non-current	1,144 			1,144 		
Deferred commissions	10,597 			14,718 		
Deferred professional service costs	5,277 			6,711 		
Intangible assets, net	8,988 			12,178 		
Goodwill	41,485 			91,785 		
Operating lease right-of-use assets, net	11,383 			13,906 		
Other assets	1,687 			2,016 		
Total assets	$	167,956 			$	242,784 		
Liabilities and stockholders’ equity				
Current liabilities:				
Accounts payable	$	4,698 			$	19,596 		
Accrued expenses and other current liabilities	8,184 			10,454 		
Accrued compensation	6,821 			8,770 		
Deferred revenue	10,202 			10,173 		
Operating lease liabilities	5,687 			5,914 		
Total current liabilities	35,592 			54,907 		
Deferred revenue, non-current	443 			572 		
Debt, non-current	— 			1,395 		
Operating lease liabilities, non-current	8,954 			11,823 		
Other liabilities, non-current	909 			1,213 		
Total liabilities	45,898 			69,910 		
Stockholders’ equity	122,058 			172,874 		
Total liabilities and stockholders’ equity	$	167,956 			$	242,784 		

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,	
	2020		2019		2020		2019	
Revenue:								
Subscription	$	34,069 			$	34,900 			$	106,741 			$	102,670 		
Professional services and other	1,009 			561 			2,882 			4,191 		
Total revenue, net	35,078 			35,461 			109,623 			106,861 		
Cost of revenue:								
Cost of subscription(1)	8,013 			8,517 			27,064 			24,917 		
Cost of professional services and other(1)	3,874 			5,984 			12,057 			17,857 		
Total cost of revenue	11,887 			14,501 			39,121 			42,774 		
Gross profit	23,191 			20,960 			70,502 			64,087 		
Operating expenses:								
Sales and marketing(1)	6,158 			9,829 			24,313 			27,933 		
Research and development(1)	11,182 			14,295 			38,047 			44,507 		
General and administrative(1)	6,341 			6,440 			19,257 			20,743 		
Goodwill impairment	— 			— 			50,300 			— 		
Total operating expenses	23,681 			30,564 			131,917 			93,183 		
Operating loss	(490)			(9,604)			(61,415)			(29,096)		
Other income, net	43 			268 			429 			840 		

Net loss	$	(447)			$	(9,336)			$	(60,986)			$	(28,256)		
Net loss per share, basic and diluted	$	— 			$	(0.06)			$	(0.41)			$	(0.20)		
Weighted-average shares used to compute basic and diluted net loss per share	152,146 			145,701 			150,372 			144,434 		

(1)Includes stock-based compensation expense as follows:
																								
 	Three Months Ended September 30,		Nine Months Ended September 30,	
 	2020		2019		2020		2019	
Cost of revenue:								
Cost of subscription	$	224 			$	180 			$	598 			$	595 		
Cost of professional services and other	171 			236 			431 			737 		
Sales and marketing	282 			678 			1,702 			1,967 		
Research and development	1,026 			1,294 			3,503 			4,731 		
General and administrative	1,401 			625 			3,325 			3,817 		

CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
																								
 	Three Months Ended September 30,		Nine Months Ended September 30,	
 	2020		2019		2020		2019	
Operating activities:								
Net loss	$	(447)			$	(9,336)			$	(60,986)			$	(28,256)		
Adjustments to reconcile net loss to net cash used in operating activities:								
Depreciation and amortization	1,763 			1,681 			4,907 			4,368 		
Goodwill impairment	— 			— 			50,300 			— 		
Stock-based compensation	3,104 			3,013 			9,559 			11,847 		
Amortization of deferred commissions	1,598 			2,547 			5,517 			7,403 		
Amortization of deferred professional service costs	760 			1,096 			2,417 			3,110 		
Non-cash operating lease expense	1,134 			1,339 			3,765 			3,919 		

	
Accretion and amortization of marketable securities	— 			(31)			2 			(244)		
Changes in operating assets and liabilities:								
Accounts receivable and other, net	2,704 			(2,831)			926 			(8,626)		
Deferred commissions	(476)			(1,833)			(1,396)			(4,503)		
Deferred professional service costs	(289)			(400)			(918)			(1,301)		
Prepaid expenses and other assets	1,066 			1,042 			242 			(822)		
Accounts payable	(3,847)			514 			(14,048)			2,378 		
Operating lease liabilities	(1,570)			(1,472)			(4,186)			(4,267)		
Accrued expenses and other liabilities	(1,065)			59 			(2,576)			(3,072)		
Deferred revenue	(2,862)			(3,202)			(100)			(2,890)		
Accrued compensation	1,165 			378 			(1,949)			(428)		
Net cash provided by (used in) operating activities	2,738 			(7,436)			(8,524)			(21,384)		
Investing activities:								
Purchase of property and equipment	(132)			(119)			(3,431)			(712)		
Purchase of marketable securities	— 			(9,289)			(2,994)			(23,069)		
Sales of marketable securities	— 			— 			2,001 			— 		
Maturities of marketable securities	— 			3,217 			17,400 			14,670 		
	
Net cash (used in) provided by investing activities	(132)			(6,191)			12,976 			(9,111)		
Financing activities:								
	
Proceeds from exercise of stock options	23 			79 			178 			1,924 		
Proceeds from ESPP offering	185 			— 			371 			— 		
Principal payments on long-term debt	(465)			(464)			(1,395)			(1,394)		
Net cash (used in) provided by financing activities	(257)			(385)			(846)			530 		
								
Net increase (decrease) in cash, cash equivalents and restricted cash	2,349 			(14,012)			3,606 			(29,965)		
Cash, cash equivalents and restricted cash at beginning of period	45,599 			51,377 			44,342 			67,330 		
Cash, cash equivalents and restricted cash at end of period	$	47,948 			$	37,365 			$	47,948 			$	37,365 		
								
Reconciliation of cash, cash equivalents and restricted cash:								
Cash and cash equivalents	$	46,804 			$	36,040 			$	46,804 			$	36,040 		
	
Restricted cash, non-current	1,144 			1,325 			1,144 			1,325 		
Total cash, cash equivalents and restricted cash	$	47,948 			$	37,365 			$	47,948 			$	37,365 		

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, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019	
Gross profit:										
GAAP gross profit subscription	$	26,056 			$	25,470 			$	26,383 			$	79,677 			$	77,753 		
Stock-based compensation	224 			205 			180 			598 			595 		
Amortization of internal-use software	79 			79 			— 			184 			— 		
Amortization of intangibles	530 			530 			660 			1,590 			1,834 		
Reduction in workforce	— 			221 			— 			221 			— 		
	
Non-GAAP gross profit subscription	$	26,889 			$	26,505 			$	27,223 			$	82,270 			$	80,182 		
GAAP gross margin subscription	76.5 	%		74.3 	%		75.6 	%		74.6 	%		75.7 	%	
Non-GAAP gross margin subscription	78.9 	%		77.3 	%		78.0 	%		77.1 	%		78.1 	%	
										
GAAP gross loss professional services	$	(2,865)			$	(2,731)			$	(5,423)			$	(9,175)			$	(13,666)		
Stock-based compensation	171 			144 			236 			431 			737 		
Reduction in workforce	— 			317 			— 			317 			— 		
	
Non-GAAP gross loss professional services	$	(2,694)			$	(2,270)			$	(5,187)			$	(8,427)			$	(12,929)		
GAAP gross margin professional services	(284)	%		(226)	%		(967)	%		(318)	%		(326)	%	
Non-GAAP gross margin professional services	(267)	%		(187)	%		(925)	%		(292)	%		(308)	%	
										
GAAP gross profit	$	23,191 			$	22,739 			$	20,960 			$	70,502 			$	64,087 		
Impact of non-GAAP adjustments	1,004 			1,496 			1,076 			3,341 			3,166 		
Non-GAAP gross profit	$	24,195 			$	24,235 			$	22,036 			$	73,843 			$	67,253 		
GAAP gross margin	66.1 	%		64.1 	%		59.1 	%		64.3 	%		60.0 	%	
Non-GAAP gross margin	69.0 	%		68.3 	%		62.1 	%		67.4 	%		62.9 	%	
										
Operating expense:										
GAAP sales and marketing	$	6,158 			$	7,683 			$	9,829 			$	24,313 			$	27,933 		
Stock-based compensation	(282)			(748)			(678)			(1,702)			(1,967)		
Amortization of intangibles	(528)			(528)			(528)			(1,584)			(1,072)		
Reduction in workforce	2 			(334)			— 			(332)			— 		
Non-GAAP sales and marketing	$	5,350 			$	6,073 			$	8,623 			$	20,695 			$	24,894 		
										
GAAP research and development	$	11,182 			$	13,043 			$	14,295 			$	38,047 			$	44,507 		
Stock-based compensation	(1,026)			(1,314)			(1,294)			(3,503)			(4,731)		
Reduction in workforce	(5)			(658)			— 			(663)			— 		
	
Certain legal expenses	— 			— 			— 			191 			(191)		
Capitalization of internally developed software	— 			— 			— 			21 			— 		
	
Non-GAAP research and development	$	10,151 			$	11,071 			$	13,001 			$	34,093 			$	39,585 		
										
GAAP general and administrative	$	6,341 			$	6,340 			$	6,440 			$	19,257 			$	20,743 		
Stock-based compensation	(1,401)			(858)			(625)			(3,325)			(3,817)		
	
Amortization of intangibles	— 			— 			(16)			(17)			(50)		
	
Certain legal expenses	— 			— 			— 			— 			(533)		
Reduction in workforce	15 			(497)			— 			(482)			— 		
Non-GAAP general and administrative	$	4,955 			$	4,985 			$	5,799 			$	15,433 			$	16,343 		
										
GAAP goodwill impairment	$	— 			$	— 			$	— 			$	50,300 			$	— 		
Goodwill impairment	— 			— 			— 			(50,300)			— 		
Non-GAAP goodwill impairment	$	— 			$	— 			$	— 			$	— 			$	— 		

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

GAAP operating expense	$	23,681 			$	27,066 			$	30,564 			$	131,917 			$	93,183 		
Impact of non-GAAP adjustments	(3,225)			(4,937)			(3,141)			(61,696)			(12,361)		
Non-GAAP operating expense	$	20,456 			$	22,129 			$	27,423 			$	70,221 			$	80,822 		
										
Operating loss:										
GAAP operating loss	$	(490)			$	(4,327)			$	(9,604)			$	(61,415)			$	(29,096)		
Impact of non-GAAP adjustments	4,229 			6,433 			4,217 			65,037 			15,527 		
Non-GAAP operating income (loss)	$	3,739 			$	2,106 			$	(5,387)			$	3,622 			$	(13,569)		

	

	
	
Net loss and net loss per share:										
GAAP net loss	$	(447)			$	(4,204)			$	(9,336)			$	(60,986)			$	(28,256)		
Total pre-tax impact of non-GAAP adjustments	4,229 			6,433 			4,217 			65,037 			15,527 		
	
Non-GAAP net income (loss)	$	3,782 			$	2,229 			$	(5,119)			$	4,051 			$	(12,729)		
GAAP net loss per share, basic and diluted	$	— 			$	(0.03)			$	(0.06)			$	(0.41)			$	(0.20)		
Non-GAAP net income (loss) per share, basic and diluted	$	0.02 			$	0.01 			$	(0.04)			$	0.03 			$	(0.09)		
Shares used in basic and diluted net loss per share computation	152,146 			150,078 			145,701 			150,372 			144,434 		

Castlight Media Contact:
Caroline Kawashima
press@castlighthealth.com
415-246-0313

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