Investor Overview NYSE: CSLT

Transcription

1 Investor Overview NYSE: CSLT June 2017

2 This presentation contains forward-looking statements regarding our trends, our strategies and the anticipated performance of our business, including our guidance for the full year of These statements, other than references to our prior guidance, are made as of today, and reflect management s current views and expectations, and are subject to various risks, uncertainties and assumptions. If this presentation is viewed after today, the information in the presentation may no longer be current or accurate. We disclaim any obligation to update or revise any forwardlooking statements. Please refer to the Company s first quarter 2017 financial results press release dated April 26, 2017, and the risk factors included in the company s filings with the Securities and Exchange Commission for discussion of important factors that may cause actual events or results to differ materially from those contained in our forward-looking statements. The guidance provided in this presentation was made on April 26, 2017 and speaks only as of that date. The Company does not update its guidance intra-quarter through investor presentations such as this. If the company updates its guidance beyond what was provided on April 26, it will do so only in a public forum. In addition, please note the close date of the Jiff acquisition was April 3rd. Accordingly, the deferred revenue fair value adjustment discussed in this presentation is a preliminary estimate and is subject to change upon the completion of purchase price accounting. Safe Harbor Statement This presentation also includes certain non-gaap metrics, such as non- GAAP gross margin, pro forma revenue, operating expenses, and operating loss, that we believe aid in the understanding of our financial results and future expectations. A reconciliation to comparable GAAP metrics, on a historical basis, can be found in the appendix section of this presentation. 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. 2

3 Castlight is a health benefits platform that engages employees to make better health decisions and enables benefit leaders to communicate and measure their programs 3

4 Investment Highlights LARGE MARKET OPPORTUNITY WITH CONSUMERISM TAILWINDS MOST COMPREHENSIVE HEALTH BENEFITS PLATFORM BLUE CHIP CUSTOMER BASE 70+ F500 HIGH GROWTH SAAS BUSINESS MODEL 4

5 73% of employees don t fully understand their health benefits Program utilization is typically lower than 10% Employees pay up to 10X more for the same service Health Benefits Today: low engagement & poor health decisions Up to 20% of surgeries are unnecessary 5-6% increase in health spending each year for employers 5

6 Why aren t employees engaged? Explosion of vendors Soaring consumer expectations Convoluted healthcare system 6

7 The Solution: One End-to-End Platform 1 All-in-one wellbeing Comprehensive decision support 1 2 Deep partner integrations Data-driven personalization 2 3 Motivating user experience Multi-channel outreach 3 Health Benefits Platform For employees Improve every aspect of their health experience: from staying healthy, to accessing care, to managing a condition For employers More efficient than ever before to engage with employees, purchase and deploy a wide range of benefit technologies, and measure impact 7

8 The Castlight Health Benefits Platform One end-to-end platform Integrate Engage Evaluate Simple, integrated way to help UNDERSTAND & ACCESS benefits Personalized content and timely outreach and to GUIDE employees to better decisions Real-time INSIGHT into engagement with benefits and programs 8

9 Integrate Across medical, pharmacy, dental, behavioral health and third party programs Example Decision Areas Getting the most out a benefits plan Learning how to manage a chronic condition Cost Personalized cost estimates for the employee based on their specific plan design, network, and amount spent to date Quality 17 nationally endorsed sources of clinical quality for hospitals and physicians, including condition and procedure specific information Picking a doctor Deciding where to get urgent care Tracking finances (e.g. HSA spend, claims) Education Content Consumer-oriented content, written by expert clinicians, that supports procedures, conditions, vaccines, labs, imaging, and more 9

10 Engage Personalized employee experience based on their health journey Predict Health Risk Claims, demographics, and employee activity data drive identification of employee health status and potential future health conditions Recommend Best Options Individualized presentation of services and programs drives the employee to the right care and program at the right time Multi-Channel Outreach Proactive connection with employees where they are, via the channels most applicable to them 10

11 Evaluate Back Pain Diabetes Adult Preventative Care About the Campaign Individuals with lower back pain (who aren t using PT or chiropractic care) Individuals with or at risk for diabetes (who have not had a glucose test) Adults who have not had a preventive service within one year Campaign Recommendation Start PT or chiropractic care Take a glucose test Complete a preventive service Impact on Preventive Services 2.7x increase 1.8x increase 1.7x increase Note: Early results from claims-based analysis aggregated from customers that have been deployed on Castlight Action for over 6 months 11

12 The Jiff Wellbeing Platform Central hub for wellbeing that drives employee engagement App store approach integrates with over 50+ solutions that sync seamlessly Mobile-first technology with a world-class user experience Rewards Layer: Personalized incentives drive desired micro-behaviors Model: PEPM-based subscription and service fees, contract terms typically three-years paid monthly, quarterly or annually 12

13 Jiff s Ecosystem & Deep Partner Integrations Activity Tracking Food Tracking Sleep Tracking Fitness Tracking Biometrics HRA Health Coaching Nutritional Coaching Resilience Smoking Cessation Fertility / Pregnancy Parenting Cardiovascular Health Financial Health Bi-directional flow of data Scalable Integration Framework Reseller Contracts Incentivize specific targeted behavior deep within third party solutions Collect digital exhaust on users for personalization and reporting Purchase a wide range of solutions directly thru Jiff 13

14 Castlight-Jiff Joint Value Proposition Simplify navigation for all benefit resources, globally Improve Health Access Care Manage a Condition Interact with employees throughout the year Real time intercept when your employee is about to become a patient Target most expensive conditions and employees Increase employee happiness while decreasing risk Improve efficiency of the health care system and quality of care Lower costs for most expensive population 14

15 Financial Update

16 Financial Highlights STRONG GROWTH HEALTHY MARGIN PROFILE SCALING BUSINESS $107M IN LTM REVENUE 74% 1Q 2017 GROSS MARGINS REDUCTION IN Y/Y OPERATING LOSSES $82 30% Growth $107 63% 74% -$5.5 -$13.0 1Q'16 1Q'17 1Q '16 1Q'17 1Q'16 1Q'17 16

17 Cash Balance Castlight expects to reach cash flow breakeven by the end of 2018 with at least $60 million of cash Cash as of 03/31/17 Q Cash Flow from Operations $103.2 M $(10.9) M* * Includes $4.0 million in Jiff-related transaction costs 17

18 2017 Guidance & Key Initiatives FY 2017 outlook includes Jiff starting in 2Q FY 2017 Guidance* 2017 Key Initiatives GAAP Revenue Non-GAAP Operating Income (Loss) $132mm to $136mm $(35)mm to $(31)mm Drive faster platform adoption by new customers Non-GAAP EPS $(0.28) to $(0.24) Basic & Diluted Avg. Wgt. Shares O/S 125mm to 127mm Drive customer stickiness * Guidance as of 04/26/17. Non-GAAP operating expenses exclude in the impact of stock-based compensation, litigation settlements, workforce reduction expenses, capitalization and amortization of internal-use software, and acquisition related costs. Integrate Castlight & Jiff to unlock the strategic value of combined company 18

19 Investor Overview NYSE: CSLT June 2017

20 Appendix June 2017

21 Business Model Platform sold on a price per employee per month (PEPM) basis Typically three-year contracts Long-term gross margin target range of 70%-75% Target Customers Targets US self-insured employers Platform purchased by health benefits manager/hr 240 customers, including 70+ Fortune 500 Castlight s Business Model & Go-To-Market Go-To-Market Direct sales team/channel partner approach Strategic relationships with Anthem and SAP Expanding relationships with health benefits consultants 21

22 Gross Profit: Reconciliation of GAAP to Non-GAAP 22

23 Operating Expense: Reconciliation of GAAP to Non-GAAP 23

24 Reconciliation of GAAP to non-gaap Revenue Annual Guidance 2017 GAAP revenue guidance $ Add back: Deferred revenue fair value adjustment (1) 1.9 Jiff revenue Q1 17 (2) 3.7 Non-GAAP pro forma revenue guidance (3) $ (1) The close date of the Jiff acquisition occurred on April 3, 2017, subsequent to our fiscal quarter end. Accordingly, the deferred revenue fair value adjustment is a preliminary estimate and is subject to change upon the completion of purchase accounting. The impact on revenue related to purchase accounting as a result of these transactions limits the comparability of revenue between periods. While the deferred revenue written down in connection with Castlight s acquisition of Jiff will never be recognized as revenue under GAAP, we do not expect the acquisition to have an impact on future renewal rates of the contracts included within the deferred revenue write-down, nor do we expect revenue generated from new service and subscription contracts to be similarly impacted by purchase accounting adjustments. If this adjustment was not made, Castlight s future revenue growth rates could appear overstated. (2) Non-GAAP pro forma revenue guidance combines the results of Jiff and Castlight as if Jiff was acquired at the beginning of our fiscal year 2017 and, therefore, includes Jiff s first quarter 2017 revenue as conformed to Castlight accounting policy. (3) We believe presenting non-gaap pro forma revenue guidance to include the impact of Jiff s first quarter revenue as if the transaction had been completed at the beginning of our fiscal year 2017, and excluding the impact of deferred revenue write-down, will aid in the comparability between periods and in assessing our overall operating performance. We have performed an initial review of Jiff s accounting policies, upon comprehensive review, we may identify other differences among the accounting policies of Castlight and Jiff that, when conformed, could have an impact on future revenue. Non- GAAP pro forma revenue has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for GAAP revenue. Other companies in our industry may calculate this measure differently, which may limit its usefulness as a comparative measure. 24

25 Explanation of Non-GAAP Financial Measures Deferred revenue fair value adjustment: In connection with the acquisition of Jiff, the deferred revenue balances from Jiff products were required to be written down due to purchase accounting in accordance with GAAP. While the deferred revenue written down in connection with the acquisitions will never be recognized as revenues under GAAP, we do not expect the acquisition of Jiff to have an impact on future renewal rates of the contracts included within the deferred revenue write-down, nor do we expect revenues generated from new service and subscription contracts to be similarly impacted by purchase accounting adjustments. Jiff revenue Q1 17: An adjustment to Jiff s revenue to adhere to Castlight s accounting policies, in connection with the acquisition of Jiff. Stock-based compensation: A non-cash expense arising from the grant of stock-based awards to employees. Litigation settlement: Represents settlements of lawsuits related to Castlight s initial public offering and the acquisition of Jiff in the first quarter of 2016 and 2017, respectively. Reduction in workforce: Expenses associated with the program Castlight undertook in the second quarter of 2016 to reduce the Company's workforce by fourteen percent. Capitalization and amortization of internal-use software: Development costs incurred during the application development stage of our cloud-based service that we capitalize. Capitalized software development costs are included as part of property, plant and equipment and are amortized on a straight-line basis over the technology's estimated useful life. Acquisition related costs: Transaction and integration costs associated with the Jiff acquisition. These costs include all incremental expenses incurred to effect a business combination. Acquisition costs include advisory, legal, accounting, valuation, and other professional or consulting fees. Integration costs include expenses directly related to integration of business and facility operations, information technology systems and infrastructure and other employee related costs. 25