Castlight Health (CSLT) Q4 Loss Narrows, Revenues Beat

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Castlight Health, Inc. (CSLT) reported fourth-quarter 2016 loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents per share. The quarterly results compared favorably with the year-ago quarter loss of 21 cents per share.

Castlight's revenues of $29.9 million increased 40.3% on a year-over-year basis, beating the Zacks Consensus Estimate of $28.4 million. The year-over-year growth was driven by an increase in subscription revenues by 41% to $28.2 million.

Castlight Health Inc. - Earnings Surprise | FindTheBest

Quarter Details

Castlight's gross margin in the quarter was 71.9% compared with 54.7% reported in the prior year quarter. The company's operating expenses remained more or less flat year over year at $30.7 million. Operating loss narrowed to $9.2 million from $19.1 million reported year over year.

Castlight exited the quarter with cash equivalents and marketable securities of $114.6 million compared with $120.4 million as on Dec 31, 2015.

Castlight Health, inc. Price, Consensus and EPS Surprise

Castlight Health, inc. Price, Consensus and EPS Surprise | Castlight Health, inc. Quote


Castlight has reiterated its 2017 guidance that it provided in January following the announcement of buyout of Jiff. The company continues to expect pro forma non GAAP revenues (excludes purchase adjustments) from the combined company to be in the range of $138 to $142 million.

Given its impending merger with Jiff and the requisite accounting formalities, Castlight has chosen to refrain from providing any GAAP guidance. The company said it will provide guidance for the combined company along with its first quarter 2017 earnings release.

Our Take

Castlight's cloud-based software platform enables enterprises to gain control over their rapidly escalating health care costs. Reduction in operating expenditure led to the narrower loss in the reported quarter. We believe that stringent cost control will continue to improve the bottom line.

Furthermore, significant investments in growth areas for improving implementation timelines are a positive. The company's platform has been selected by the likes of CSM Bakery, HUB International and more recently by the George Washington University. The growing customer base is positive for the company.

We also note that Castlight's shares have gained 31.14% in the past one year; vastly outperforming the Zacks categorized Internet Software industry, which gained 20.44% during that period.

Currently, Castlight carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader tech space are Applied Optoelectronics, Inc. AAOI , Oclaro, Inc. OCLR and MeetMe, Inc. MEET . While Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy), Oclaro and MeetMe carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

In the trailing four quarters, Applied Optoelectronics, Oclaro and MeetMe delivered an average positive earnings surprise of 106.74%, 75% and 36.07%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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