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

October 21, 2017
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)

Not Applicable
(Former name or former address, if changed since last report)

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 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 October 25, 2017, Castlight Health, Inc. (“ Castlight ”) issued a press release announcing its results for the three and nine months ended September 30, 2017. 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 Castlight with the U.S. Securities and Exchange Commission (“ SEC ”), 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)
Each of Giovanni Colella and James Currier, each a member of the Board of Directors (the “ Board ”) of Castlight, notified Castlight of his decision to resign from the Board, effective as of October 25, 2017. Dr. Colella serves as Chairman of the Board and Mr. Currier serves on the Audit Committee. Each of Dr. Colella’s and Mr. Currier’s decision to resign, to the knowledge of Castlight’s executive officers, was not the result of any disagreement with Castlight on any matter relating to Castlight’s operations, policies or practices.
In connection with Mr. Colella’s and Mr. Currier’s resignations, Dr. Roberts was appointed as Chairman of the Board and Michael Eberhard was appointed to serve on the Audit Committee of the Board, in each case effective as of October 25, 2017.
(d)
On October 21, 2017, the Board appointed Seth Cohen as a member of the Board, effective as of January 1, 2018. Mr. Cohen will serve as a Class I director whose current term will expire at Castlight’s 2018 Annual Meeting of Stockholders when the Class I directors will next be elected by Castlight’s stockholders. Mr. Cohen will be compensated on the same basis as all other non-employee directors of Castlight, including (i) an annual cash retainer as described in more detail in Castlight’s definitive proxy statement filed with the SEC on May 1, 2017, (ii) an initial award upon such individual joining the Board, consisting of restricted stock units (“ RSU s”) to acquire shares of Castlight’s Class B common stock calculated by dividing $210,000 by the closing price of Castlight’s Class B Common stock on the date of grant of the RSUs, and (iii) an equity award following each annual meeting of Castlight’s stockholders consisting of RSUs to acquire shares of Castlight’s Class B common stock calculated by dividing $140,000 by the closing price of the Class B Common stock on the date of grant of the RSUs. Pursuant to the terms of Mr. Cohen’s outstanding equity award grants, he will continue to vest in his current equity for as long as he continues to serve as a director.
Castlight intends to enter into its standard form of indemnity agreement with Mr. Cohen, in substantially in the form filed as Exhibit 10.1 to Castlight’s Registration Statement on Form S-1, as amended (File No. 333-193840), filed with the SEC on March 3, 2014, which form of agreement is incorporated by reference herein.
There are no arrangements or understandings pursuant to which Mr. Cohen is to be elected as a director, and there are no related party transactions between Castlight and Mr. Cohen reportable under Item 404(a) of Regulation S-K.
(e)
In connection with the departure of Dr. Colella and Mr. Currier from the Board, the Board has approved 100% acceleration of each of Dr. Colella’s and Mr. Currier’s outstanding unvested options to purchase Class B Common Stock and outstanding unvested Restricted Stock Units as of October 25, 2017.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

	

 	 	
Exhibit	Description	
99.1	Press Release, dated October 25, 2017, entitled “Castlight Health Announces Third Quarter 2017 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: October 25, 2017	By:	 	/s/ Siobhan Nolan Mangini	
 	 	 	Siobhan Nolan Mangini	
 	 	 	Chief Financial Officer (Principal Financial Officer)	

EXHIBIT INDEX

	

 	 	
Exhibit	Description	
99.1	Press Release, dated October 25, 2017, entitled “Castlight Health Announces Third Quarter 2017 Results”	

Castlight Health Announces Third Quarter 2017 Results
Total Revenue of $34.6 million, Up 36% Year-over-Year

SAN FRANCISCO - October 25, 2017 - Castlight Health, Inc. (NYSE:CSLT), a leading health benefits platform provider, today announced results for its third quarter ended September 30, 2017.

“We are encouraged by our second consecutive quarter of solid financial performance after closing the Jiff acquisition, with new business momentum, continued operating efficiencies and a broadening product footprint across our customer base,” said John Doyle, chief executive officer of Castlight Health. “With our comprehensive platform that simplifies healthcare navigation, we believe we help employers achieve more with their benefits spending and help their employees lead healthier, happier, and more productive lives.”

Financial performance for the three months ended September 30, 2017 compared to the three months ended September 30, 2016:
		
•	Total revenue of $34.6 million, an increase of 36%	
		
•	Subscription revenue of $31.4 million, an increase of 31%	
		
•	Gross margin of 62.3%, compared to 68.8%	
		
•	Non-GAAP gross margin of 66.9% compared to 72.1%	
		
•	Operating loss of $18.6 million, compared to a loss of $11.5 million	
		
•	Non-GAAP operating loss of $6.6 million, compared to a loss of $5.5 million	
		
•	Net loss per diluted share of $0.14, compared to a net loss per diluted share of $0.11	
		
•	Non-GAAP net loss per diluted share of $0.05, compared to a net loss per diluted share of $0.05	

		
•	Cash used in operations of $8.4 million, compared to $9.4 million used in operations	

Total cash, cash equivalents and marketable securities was $87.1 million as of September 30, 2017.

The financial performance of Jiff, Inc., which Castlight acquired on April 3, 2017, is not included in the year-ago period metrics. 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.”

Board of Directors Changes
Castlight Health today also announced changes to its board of directors. Castlight co-founder and executive chairperson Dr. Giovanni M. Colella and Jiff, Inc. co-founder Mr. James Currier, have stepped down from the Castlight board, effective today. Dr. Bryan Roberts, currently serving as lead independent director, assumed the chairperson role which he previously held from 2010 to April 2017. Additionally, Mr. Seth Cohen, an experienced senior sales leader at Castlight, will be joining the board, effective January 1, 2018.

“We would like to thank Gio and James for helping create two of the most revolutionary and successful companies in digital health that, combined, simplify healthcare for both employers and their employees. The board and the Castlight team are indebted to Gio and James for their vision, leadership and valuable contributions, and I would like to thank Gio personally for his mentorship over the years.” said John Doyle, chief executive officer of Castlight Health. “The board and I look forward to working with Seth, who brings a valuable, customer-centric perspective to our board that I believe will help us accelerate the adoption of our health navigation platform.”

“With Castlight’s increased focus on execution across its go-to-market, product integration and sustainability initiatives, James and I concluded it is the right time to step down from the board,”

said Dr. Giovanni M. Colella. “We are incredibly proud of the Castlight family and believe the company, under its excellent leadership from John and Derek, is in a strong position to deliver on its strategy. James and I wish the entire Castlight team continued success.”

About Seth Cohen
A sales leader with the company since November 2010, Mr. Cohen is currently Castlight’s vice president, sales and alliances, and has extensive experience in digital healthcare go-to-market execution. Prior to joining Castlight, Mr. Cohen was a consultant for McKinsey & Company as a member of their healthcare payer and provider practice, and an adjudicator for the Beacon Community Grant program within the U.S. Department of Health and Human Services. Mr. Cohen holds a MBA from the Harvard Business School, an MPH from the Harvard Kennedy School, and a BA in International Relations from Stanford University.

Business Outlook
For the full year 2017, the Company expects GAAP revenue to be above $130 million. Based on operating expense synergies, Castlight expects to beat its previously-issued full year 2017 non-GAAP operating loss guidance range of $31 to $35 million. The company also expects to beat its previously-issued full year 2017 non-GAAP net loss per share guidance range of approximately $0.24 to $0.28, based on approximately 125 to 127 million shares. Non-GAAP guidance metrics exclude the effects of stock-based compensation, amortization of intangibles, capitalization and amortization of internal-use software, changes in fair value of contingent consideration, and charges related to the acquisition.

Quarterly Conference Call
Castlight Health senior management will host a conference call to discuss its third quarter 2017 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. The conference ID number is 93260120. A replay will be available for one week at (855) 859-2056, passcode 93260120.

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 net loss and non-GAAP net loss per share. Non-GAAP gross profit and margin, non-GAAP operating expense, non-GAAP operating loss and non-GAAP net loss exclude stock-based compensation, litigation

settlement, charges related to a reduction in workforce, amortization of intangibles, capitalization and amortization of internal-use software, changes in fair value of contingent consideration and charges related to the acquisition 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 2017 to comparable GAAP operating loss and net loss per share guidance because we do not provide guidance for stock-based compensation expense, capitalization and amortization of internal-use software, changes in fair value of contingent consideration and charges related to the acquisition, 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 and charges related to the proposed acquisition for the year.

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 2017 full year projections, our expectations for future performance of our business, market growth and business conditions, future innovation by the company and future developments with respect to the digital healthcare industry. 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 2017 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)

	
								
 	As of	
 	September 30, 2017	 	December 31, 2016	
 	 (unaudited)	 	 	
Assets	 	 	 	
Current assets:	 	 	 	
Cash and cash equivalents	$	44,986		 	$	48,722		
Marketable securities	42,074		 	65,882		
Accounts receivable, net	26,017		 	14,806		
Deferred commissions	7,805		 	8,218		
Prepaid expenses and other current assets	5,712		 	3,382		
Total current assets	126,594		 	141,010		
Property and equipment, net	5,670		 	5,285		
Restricted cash, non-current	1,325		 	1,144		
Goodwill	91,785		 	—		
Intangible assets, net	21,469		 	—		
Deferred commissions, non-current	4,021		 	5,050		
Other assets	7,338		 	4,677		
Total assets	$	258,202		 	$	157,166		
Liabilities and stockholders’ equity	 	 	 	
Current liabilities:	 	 	 	
Accounts payable	$	3,393		 	$	2,288		
Accrued expenses and other current liabilities	14,615		 	6,369		
Accrued compensation	12,151		 	9,443		
Deferred revenue	34,974		 	30,623		
Total current liabilities	65,133		 	48,723		
Deferred revenue, non-current	8,412		 	5,245		
Debt, non-current	5,423		 	—		
Other liabilities, non-current	1,955		 	1,236		
Total liabilities	80,923		 	55,204		
Commitments and contingencies	 	 	 	
Stockholders’ equity:	 	 	 	
Class A and Class B common stock	13		 	10		
Additional paid-in capital	580,282		 	457,596		
Accumulated other comprehensive loss	(5	)	 	—		
Accumulated deficit	(403,011	)	 	(355,644	)	
Total stockholders’ equity	177,279		 	101,962		
Total liabilities and stockholders’ equity	$	258,202		 	$	157,166		

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,	
 	2017	 	2016	 	2017	 	2016	
Revenue:	 	 	 	 	 	 	 	
Subscription	$	31,363		 	$	23,867		 	$	86,963		 	$	66,859		
Professional services and other	3,209		 	1,634		 	7,453		 	4,944		
Total revenue, net	34,572		 	25,501		 	94,416		 	71,803		
Cost of revenue:	 	 	 	 	 	 	 	
Cost of subscription (1)	8,123		 	3,988		 	20,075		 	12,218		
Cost of professional services and other (1)	4,898		 	3,978		 	13,679		 	13,941		
Total cost of revenue	13,021		 	7,966		 	33,754		 	26,159		
Gross profit	21,551		 	17,535		 	60,662		 	45,644		
Operating expenses:	 	 	 	 	 	 	 	
Sales and marketing (1)	16,006		 	13,143		 	47,024		 	44,877		
Research and development (1)	13,809		 	10,573		 	40,074		 	30,619		
General and administrative (1)	10,307		 	5,338		 	26,071		 	19,902		
Total operating expenses	40,122		 	29,054		 	113,169		 	95,398		
Operating loss	(18,571	)	 	(11,519	)	 	(52,507	)	 	(49,754	)	
Other income, net	84		 	116		 	288		 	304		
Loss before income tax benefit	$	(18,487	)	 	(11,403	)	 	$	(52,219	)	 	(49,450	)	
Income tax benefit	—		 	—		 	5,206		 	—		
Net loss	$	(18,487	)	 	$	(11,403	)	 	$	(47,013	)	 	$	(49,450	)	
Net loss per Class A and B share, basic and diluted	$	(0.14	)	 	$	(0.11	)	 	$	(0.38	)	 	$	(0.50	)	
Weighted-average shares used to compute basic and diluted net loss per Class A and B share	132,251		 	103,147		 	122,675		 	99,734		
_______________________
		
(1)	Includes stock-based compensation expense as follows:	

	
																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2017	 	2016	 	2017	 	2016	
Cost of revenue:	 	 	 	 	 	 	 	
Cost of subscription	$	258		 	$	139		 	$	638		 	$	367		
Cost of professional services and other	342		 	456		 	1,400		 	1,468		
Sales and marketing	3,110		 	2,190		 	7,705		 	6,644		
Research and development	1,631		 	1,631		 	5,675		 	4,300		
General and administrative	1,121		 	1,236		 	3,586		 	3,476		

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

																
 	Three Months Ended	 	Nine Months Ended	
 	September 30, 2017	 	September 30, 2016	 	September 30, 2017	 	September 30, 2016	
Operating activities:	 	 	 	 	 	 	 	
Net loss	$	(18,487	)	 	$	(11,403	)	 	$	(47,013	)	 	$	(49,450	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	
Depreciation and amortization	1,814		 	822		 	4,572		 	2,407		
Stock-based compensation	6,463		 	5,652		 	19,004		 	16,255		
Amortization of deferred commissions	2,950		 	1,042		 	8,120		 	3,157		
Release of deferred tax valuation allowance due to business combination	—		 	—		 	(5,206	)	 	—		
Change in fair value of contingent consideration liability	3,931		 	—		 	3,288		 	—		
Accretion and amortization of marketable securities	(64	)	 	101		 	22		 	406		
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	
Accounts receivable	(4,661	)	 	(3,397	)	 	(7,778	)	 	(3,137	)	
Deferred commissions	(3,280	)	 	(1,479	)	 	(6,678	)	 	(4,403	)	
Prepaid expenses and other assets	467		 	745		 	(393	)	 	(68	)	
Accounts payable	909		 	410		 	401		 	300		
Accrued expenses and other liabilities	3,148		 	(3,583	)	 	2,623		 	(4,046	)	
Deferred revenue	(1,541	)	 	1,733		 	5,661		 	3,318		
Net cash used in operating activities	(8,351	)	 	(9,357	)	 	(23,377	)	 	(35,261	)	
Investing activities:	 	 	 	 	 	 	 	
Restricted cash	181		 	—		 	(181	)	 	—		
Purchase of property and equipment	(1,345	)	 	(345	)	 	(2,276	)	 	(1,587	)	
Purchase of marketable securities	(25,077	)	 	(11,971	)	 	(56,852	)	 	(73,163	)	
Maturities of marketable securities	16,896		 	35,570		 	80,633		 	126,157		
Business combination, net of cash acquired	—		 	—		 	(2,264	)	 	—		
Net cash provided by (used in) investing activities	(9,345	)	 	23,254		 	19,060		 	51,407		
Financing activities:	 	 	 	 	 	 	 	
Proceeds from the exercise of stock options	481		 	636		 	1,312		 	2,576		
Proceeds from issuance of common stock and warrants	—		 	—		 	—		 	17,358		
Payments of issuance costs related to equity	—		 	(76	)	 	(731	)	 	(122	)	
Net cash provided by financing activities	481		 	560		 	581		 	19,812		
 	 	 	 	 	 	 	 	
Net (decrease) increase in cash and cash equivalents	(17,215	)	 	14,457		 	(3,736	)	 	35,958		
Cash and cash equivalents at beginning of period	62,201		 	40,651		 	48,722		 	19,150		
Cash and cash equivalents at end of period	$	44,986		 	$	55,108		 	$	44,986		 	$	55,108		
 	 	 	 	 	 	 	 	
Non-cash investing and financing activity:	 	 	 	 	 	 	 	
Non-cash purchase consideration related to acquisition of Jiff	$	—		 	$	—		 	$	101,692		 	$	—		

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,	
 	2017	 	2017	 	2016	 	2017	 	2016	
Gross profit:	 	 	 	 	 	 	 	 	 	
GAAP gross profit subscription	$	23,240		 	$	22,128		 	$	19,879		 	$	66,888		 	$	54,641		
Stock-based compensation	258		 	253		 	139		 	638		 	367		
Amortization of internal-use software	244		 	244		 	244		 	732		 	732		
Amortization of intangibles	751		 	751		 	—		 	1,502		 	—		
Reduction in workforce	—		 	—		 	—		 	—		 	5		
Acquisition related costs	—		 	52		 	—		 	52		 	—		
Non-GAAP gross profit subscription	$	24,493			$	23,428			$	20,262		 	$	69,812		 	$	55,745		
GAAP gross margin subscription	74.1	 %	 	74.2	 %	 	83.3	 %	 	76.9	 %	 	81.7	 %	
Non-GAAP gross margin subscription	78.1	 %	 	78.5	 %	 	84.9	 %	 	80.3	 %	 	83.4	 %	
 	 	 	 	 	 	 	 	 	 	
GAAP gross loss professional services and other	$	(1,689	)	 	$	(2,528	)	 	$	(2,344	)	 	$	(6,226	)	 	$	(8,997	)	
Stock-based compensation	342		 	597		 	456		 	1,400		 	1,468		
Reduction in workforce	—		 	—		 	4		 	—		 	103		
Acquisition related costs	(4	)	 	17		 	—		 	160		 	—		
Non-GAAP gross loss professional services	$	(1,351	)		$	(1,914	)		$	(1,884	)	 	$	(4,666	)	 	$	(7,426	)	
GAAP gross margin professional services and other	(53	)%	 	(112	)%	 	(143	)%	 	(84	)%	 	(182	)%	
Non-GAAP gross margin professional services and other	(42	)%	 	(85	)%	 	(115	)%	 	(63	)%	 	(150	)%	
 	 	 	 	 	 	 	 	 	 	
GAAP gross profit	$	21,551		 	$	19,600		 	$	17,535		 	$	60,662		 	$	45,644		
Impact of non-GAAP adjustments	1,591		 	1,914		 	843		 	4,484		 	2,675		
Non-GAAP gross profit	$	23,142			$	21,514			$	18,378		 	$	65,146		 	$	48,319		
GAAP gross margin	62.3	 %	 	61.1	 %	 	68.8	 %	 	64.2	 %	 	63.6	 %	
Non-GAAP gross margin	66.9	 %	 	67.0	 %	 	72.1	 %	 	69.0	 %	 	67.3	 %	
Operating expense:	 	 	 	 	 	 	 	 	 	
GAAP sales and marketing	$	16,006		 	$	16,575		 	$	13,143		 	$	47,024		 	$	44,877		
Stock-based compensation	(3,110	)	 	(2,441	)	 	(2,190	)	 	(7,705	)	 	(6,644	)	
Amortization of intangibles	(448	)	 	(448	)	 	—		 	(896	)	 	—		
Reduction in workforce	—		 	—		 	(48	)	 	—		 	(422	)	
Acquisition related costs	14		 	(518	)	 	—		 	(909	)	 	—		
Non-GAAP sales and marketing	$	12,462			$	13,168			$	10,905		 	$	37,514		 	$	37,811		
GAAP research and development	$	13,809		 	$	15,194		 	$	10,573		 	$	40,074		 	$	30,619		
Stock-based compensation	(1,631	)	 	(2,254	)	 	(1,631	)	 	(5,675	)	 	(4,300	)	
Capitalization of internal-use software	—		 	—		 	—		 	—		 	—		
Reduction in workforce	—		 	—		 	(18	)	 	—		 	(136	)	
Acquisition related costs	—		 	(126	)	 	—		 	(393	)	 	—		
Non-GAAP research and development	$	12,178			$	12,814			$	8,924		 	$	34,006		 	$	26,183		
GAAP general and administrative	$	10,307		 	$	6,766		 	$	5,338		 	$	26,071		 	$	19,902		
Stock-based compensation	(1,121	)	 	(1,169	)	 	(1,236	)	 	(3,586	)	 	(3,476	)	

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

	
																				
Litigation settlement	—		 	—		 	—		 	(250	)	 	(2,876	)	
Amortization of intangibles	(17	)	 	(17	)	 	—		 	(34	)	 	—		
Change in fair value of contingent consideration liability	(3,931	)	 	643		 	—		 	(3,288	)	 	—		
Reduction in workforce	—		 	—		 	(10	)	 	—		 	(90	)	
Acquisition related costs	(126	)	 	(899	)	 	—		 	(3,365	)	 	—		
Non-GAAP general and administrative	$	5,112			$	5,324			$	4,092		 	$	15,548		 	$	13,460		
GAAP operating expense	$	40,122		 	$	38,535		 	$	29,054		 	$	113,169		 	$	95,398		
Impact of non-GAAP adjustments	(10,370	)		(7,229	)		(5,133	)		(26,101	)	 	(17,944	)	
Non-GAAP operating expense	$	29,752			$	31,306			$	23,921		 	$	87,068		 	$	77,454		
Operating loss:	 	 	 	 	 	 	 	 	 	
GAAP operating loss	$	(18,571	)	 	$	(18,935	)	 	$	(11,519	)	 	$	(52,507	)	 	$	(49,754	)	
Impact of non-GAAP adjustments	11,961			9,143			5,976			30,585			20,619		
Non-GAAP operating loss	$	(6,610	)		$	(9,792	)		$	(5,543	)	 	$	(21,922	)	 	$	(29,135	)	
Net loss and net loss per share:	 	 	 	 	 	 	 	 	 	
GAAP net loss	$	(18,487	)	 	$	(13,717	)	 	$	(11,403	)	 	$	(47,013	)	 	$	(49,450	)	
Total pre-tax impact of non-GAAP adjustments	11,961		 	9,143		 	5,976		 	30,585		 	20,619		
Release of deferred tax valuation allowance due to business combination	—		 	(5,206	)	 	—		 	(5,206	)	 	—		
Income tax impact of non-GAAP adjustments	—		 	—		 	—		 	—		 	—		
Non-GAAP net loss	$	(6,526	)		$	(9,780	)		$	(5,427	)	 	$	(21,634	)	 	$	(28,831	)	
GAAP net loss per share, basic and diluted	$	(0.14	)		$	(0.11	)		$	(0.11	)	 	$	(0.38	)	 	$	(0.50	)	
Non-GAAP net loss per share, basic and diluted	$	(0.05	)		$	(0.07	)		$	(0.05	)	 	$	(0.18	)	 	$	(0.29	)	
Shares used in basic and diluted net loss per share computation	132,251		 	130,537		 	103,147		 	122,675		 	99,734		

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

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