castlight health, inc (nyse: cslt)s1.q4cdn.com/.../cslt-january-2020-investor-presentation.pdf ·...

Proprietary and confidential © 2020, C astlight Health | 1Proprietary and confidential © 2020, C astlight Health | 1

Castlight Health, Inc (NYSE: CSLT)

J anuary 2020

Proprietary and confidential © 2020, C astlight Health | 2

Safe Harbor Statement• This presentation contains forward-looking statements within the meaning of the federal securities

laws about Castlight Health’s expectations, plans, intentions, and strategies which include, but arenot limited to, statements regarding C astlight Health’s third quarter 2020 performance and 2020 fullyear projections, the impact of C O VID-19, the success of our strategy, and our expectations for ourfuture business and financial performance. Statements including words such as “anticipate,”“believe,” “estimate,” “will,” “continue,” “expect,” or “future,” and statements in the future tense areforward-looking statements. These forward-looking statements involve risks and uncertainties, aswell as assumptions, which, if they do not fully materialize or prove incorrect, could cause our resultsto differ materially from those expressed or implied by such forward-looking statements. The risksand uncertainties include those described in Castlight Health’s documents filed with or furnished tothe Securities and E xchange Commission, including the risks set forth in our annual report on Form10-K for the year ended December 31, 2019 as filed with the S E C on February 28, 2020, and ourquarterly reports on Form 10-Q, including the quarterly report for the three months endedS eptember 30, 2020 as filed with the S E C on November 6, 2020. All forward-looking statements inthis presentation are expressly qualified in their entirety by these cautionary statements and arebased on information available to Castlight Health as of the date hereof. Castlight Health assumes noobligation to update thes e forward-looking statements, except as required by law.

• We provide guidance in this presentation, but we will not provide any further guidance or updates onour performance during the quarter unless we do so in a Regulation FD compliant forum. Pleaserefer to the Company’s Q3 2020 press release from November 5, 2020 and the risk factors includedin the company’s filings with the Securities and Exchange Commission for discussion of importantfactors that may cause actual events or results to differ materially from those contained in ourforward-looking statements.


Agenda1 Bus iness Overview

2 F inancial Overview


Business Overview


Company Highlights

A leading prov ider of health nav ig ation s olutions to employers and health plans

Operating in a larg e and growing market driven by consumer adoption of digital healthcare and need for navigation solutions

Launched new hig h-touc h offering to capitalize on growing hig h -tec h / hig h-touc h market demand and support customers and users (C are G uides )

Multiple way s to grow

Manag ement team bridges outside healthcare expertise with company experience, delivered on first year commitments

Non-G A A P profit and pos itiv e cas h flow in Q2 & Q3 2020; expect cash flow breakeven in H2 2020 and non-G AAP operating profit for F Y 20201

• E mployers

• Health plans • C O VID -19 related

1 2020 Financial outlook provided in Q3 2020 Earnings R esult Press R elease on November 5, 2020


C astlight provides a nav ig ation s olution that guides members to high value providers and virtual

care solutions , leveraging a coordinated hig h -tec h + hig h-

touc h approac h.

3B + rec ords in

data as s et20M+

C ov ered liv es

2 national

health plan

cus tomers

67 Mobile

User NP S

$143M FY 19

R ev enue$


E x pert C are Guides

A I/ML Powered Dig ital P latform

Inbound + outbound

Benefits, claims and billing questions

Find a provider and schedule an appointment

C are facilitation

E nroll in virtual / digital benefit solutions

Navigation requires coordinated digital and services approach with the ability for members to both self-serve, but also connect with experts when needed. Castlight’s deep data and AI- based solution allows us to more efficiently deliver a high-tech + high-touch model that drives medical

cost savings.

Navigation: high-tech + high-touch

Integrated Point S olutions

P ersonalized C are J ourneys

S teerage, Advanced Network S upport

Behavioral Health


Powered by Data Aggregation & Integration

at Scale

34 Medical payors10 Pharmacy Benefit Managers (PB Ms)16 Dental payors15 Behavioral / E AP programs

113 E ligibility Vendors 60 Bank integrations

100+ distinct AP I integrations150+ distinct single sign-on (S S O ) integrations

AI and machine learningS ingle stack architecture

E c os y s tem Vendor

Medic al Pay ors

PB MsDental Pay ors

Cons umer Trac kers

E nrollment Vendors

Cus tomer Vendors

User B ehav ior

HSA vendors

Medical ClaimsProvider DirectoryUnit PricesNarrow Networks AccumulatorsBenefit Des ignIns urance card

Pharmacy ClaimsFormulariesPreventive Drug ListsPharmacy NetworksAdherence AlertsIns urance cardAccumulators

Dental ClaimsDental DirectoryPricesAnnual Accumulator Ortho Accumulator

Program Actions completedProgram completionKey results and outcomes (e.g ., biometrics , HS A balance)

Fitness , sleep, or nutrition data

Member E ligibility information (social, demographic, human info) E mbedded registration enrollment integration

Program Actions completedProgram completionKey results and outcomes

S earch Pulse S urveysGoal selectorHealth Assess ment

Account BalancesS S O

3B+data points

Proprietary and confidential © 2020, Castlight Health | 99

E lig ibility file data(s oc ial,

demog raphic s )

Medic al & R x Claims

B iometric s & Health R is k As s es s ment

Health Goals

S earc h, Pag e Views , Etc .

Ingest DataAI/Machine Learning

Models Applied

Over 116 S eg ments

Across 35 Categ ories in both Clinical Conditions and Health & Wellbeing

S ourced from Claims, S earch History, E -file, Health Assessment, Health Goals , IBM Watson and Biometrics results

Prioritize and S egment Users

so they receive campaigns with the most relevant, timely mes s ag ing and content, based on their segmentation.

In App R ec ommendation

sTarg eted

E mails

Data Asset Drives Personalization


*

*

Making it Simple to Adopt, Manage, Access

and Use SolutionsB es t-in-Clas sVetted, curated and procured digital and clinical solutions

Comprehens iv eAcross wellbeing as well as phys ical and mental health

P ers onalizationS urface the right programs for each individual member

P re-B uilt Integ rationsS elect solutions that best fit member needs (200+ exis ting partners)

Turnk ey E c os y s tem4 – 6 weeks to turn on program integration

New or ex panded in 2020


Pers onalized home pag e provides key information and promotes relevant programs ,

benefits and services to the user

Provider searc h res ults unique to us er, incorporating proprietary

clinical quality score, cost, and the user’s health profile

Machine-learning bas ed pers onalization rec ommends relevant benefits or “next best

action” to the user, updated daily

Integration with dozens of ec os ys tem vendors to power

health improvement and corporate wellnes s programs

Delivered in Castlight Complete


High-Touch Care GuidesF irst & last mile support to unlock full power of plan and partner ecosystem

Mis tiHospital S urgical

Unit

R yanBilling E xpert

DonnaHospice & Homecare

S c ottBenefit Program

E xpert

P amBehavioral

Health

CarenWellness &

Health Coach

• Opened S alt Lake City Customer Center of E xcellence in March 2020

• Managed by former VP of S ervice Transformation at T-Mobile, with clinical overs ight from CMO

• 8-week training, including motivational interviewing techniques

• Training includes company culture, benefit des ign, and programs

S ome of our Care G uides B uilt Care G uides to S c ale

F requent Use Cases

• Am I being overcharged?

• How do I pay for my specialty drug?

• How do I best manage my chronic condition?

R outed to the appropriate

team member

• Advocate

• Nursing

• Clinical


High-tech, high-touch drives client savings

and high user satisfaction

2-3x R O I1

1 S pend reduction for Castlight Complete users utilizing both Care Guidance and Wellnes s features ; excludes high-cost outliers (members with more than $75k in annual medical claims cost incurred). 2 Us er NP S for Castlight mobile application, evaluated with random sample of users (~5% sampling each month). S ample of user submitted feedback in Dec. 2020

• Analys is of Castlight Complete customers live for full-year 2019

• Medic al s pend reduc ed by ~2% for low-risk members and ~7% for high-risk members

• $179 or 5.4% median user

savings per member per year

(“PMPY”)

67 Us er NP S2

Dec ember 2020 Us er NP S verbatim comments

• “I love it, this app teaches you a commitment to yourself. It makes you realize how important is keep track of your health and how you need to improve in order to achieve personal and financial goals .”

• “E asy to navigate. All of the information needed is eas ily access ible.”

• “This app has tons of information, regarding eating and exercis ing, people are sharing ways they keep fit. I find that to be very motivational.

• “Everything in one place and we’ll organized.”• “The tool offers easy navigation, is intuitive and

als o provides good “help” / educational tools .”


Key 2020 Strategic Priorities

Deliv er Care G uides hig h -touc h capabilities to capitalize on growing mark et demand for nav ig ation

A c c elerate growth throug h health plans


2020 Strategic Priorities Update

• Met 2020 goal of s ig ning a health plan cus tomer:S igned agreement with Cigna in Q3 to support Taft-Hartley & F ederal government employees

• E x panded E ng ag e footprint within A nthem , which signed more than 15 large employers onto E ngage launching in early 2021

• S trong pipeline of health plan prospects

• Believe foundation of two national plan partners hips validates s trateg ic dec is ion to invest in health plan bus iness and demonstrates growth opportunity through health plans

A c c elerate growth throug h health plans


Cigna Agreement Details

• S igned ag reement with Cig na to serve its Taft-Hartley and federal government population

• Initial population is s ev eral hundred thous and federal government and Taft-Hartley employees

• Implementation on-track for launch J anuary 1, 2021

• E x pec t A R R of approx imately $2 million*

* P lease see Castlight 8-K filed August 4th, 2020 for additional information


Health Plan Partnership Case Study: Anthem

Relationship

White-labeled health nav ig ation offering called Engage for Anthem’s National A c c ounts s eg ment

• Currently supports more than 100 large National Account customers and ~1.5 million members

• E quivalent functionality as CastlightComplete offered to direct employer customers

E mbedded tec hnolog y and AP Is to s upport A nthem’s tec hnolog y s olutions in broader commerc ial bus ines s

S olutions Offered Today

A nthem A nnualized R ec urring R ev enue (A R R )

G rowth

Initial relationship signed in 2015; renewed & expanded in fall 2019

$168M, 30 month renewal went into effect on January 1, 2020

Growth driven principally by membership expansion

$7M as of 12/31/2016

$69M as of 12/31/2019

S olution Trajec tory

Trans parenc y

White-labeled E ng ag e offering

Cas tlig ht B uy -Up for National

A c c ounts

E mbedded tec hnolog y &

A P Is

2019


2020 Strategic Priorities Update

Deliv er Care G uides hig h -touc h capabilities to capitalize on growing mark et demand for nav ig ation

• Delivered on goal of mak ing hig h -touc h Care G uides offering generally av ailable in Q3 2020, on-time & below budget, with learnings from early customers

• Confident Care Guides responds to ac c elerating market demand for hig h-tec h / hig h-touc h nav ig ation offerings

• Address ing ‘hole in the market’ for hig h quality s erv ic e at competitive pric e point, enabled by tec hnolog y and data foundation

• In 2H 2020, focused on ensuring customers, prospects, and consultants are aware of Castlight capabilities


COVID-19 Impact at Castlight

• COV ID -19 R es ourc e Center for Customers & us ers

• E xpanded B ehav ioral Health product support

• Work ing Well return-to-workplace solution

• Community Flu S hot Finders

• P roactive outreach to vulnerable populations guiding care options

For Cus tomers For Community For E mployees

• National COVID -19 Tes t S ite Finder available on public webs ite (~5M unique us ers to-date)

• National & local reopening guidelines databas e

• Cost-of-Care and Deferred Care analy s is publis hed in J A MA

• Tes t-s ite equity res earc h, publis hed in F iveThirtyE ight (AB C News)

• Trans itioned to fully work -from-home in March 2020 with no bus iness disruption

• P has ed re-opening of offic es , guided by science & public health orders ; ~50 employees in-office

• Inc orporating employ ee input & s entiment: 86% of employees feel “very supported” or “supported” by Castlight during COV ID -19

Proprietary and confidential © 2020, Castlight Health | 20Proprietary and confidential © 2020, Castlight Health | 20

VaccineFinder.Org Overview• Announced agreement in Q4’20 with Boston Children’s Hos pital to provide support services

for the US COVID -19 vaccine program, through Boston Children’s exis ting relationship with the CDC

• Developed a vaccination provider platform to help providers regis ter and report vaccine inventory and public vaccine and public provider search experience

Designates jurisdictions and providers to enroll as eligible COV ID -19 vaccine distributors.

Vaccination provider platform collects inventory data from jurisdictions and vaccination providers for public VaccineF inder display and CDC for inventory management and reporting.

E xisting VaccineF inder.orgprovides accurate guide to find COV ID -19 vaccine location & availability.

• Total contracted payments of $8.5M • Anticipate completion of work and revenue

recognition by Q2 2021, with work beginning in Q4 2020


Senior Management combines company +

healthcare experienceName

Y ears at CS L T

P rev ious E x perienc e

Maeve O’Meara Chief E xecutive Officer 10

A ng el R os aS VP , Customer E xperience 1

Dena B rav ataChief Medical Officer 6

J ay es h Patel S VP , Product and User E xperience 10

Matt MoranS VP of BD, Corp. Dev., & Health P lan 1

R ic ha GuptaChief People Officer 1

Tamar R udnic kS VP , Marketing 6

Vijay AnandE VP , E ngineering 1Will B ondurant

Chief Financial Officer 7A lex S hvarts man

General Counsel 7E ric Chan

Chief Accounting Officer 3


Financials Overview


Financial Highlights

• P MP M-bas ed bus ines s model selling to employers and health plans

• Highly vis ible and recurring revenue with multi-year, non-cancellable contracts

• F avorable S aaS -bas ed gros s margin profile and >65% gross margins

• Sta ble balance sheet, with pos itive cash flow 2Q and 3Q 2020; expect cash flow pos itive 2H 2020

• P rogress against profitability; expect to achieve non-GAAP profit in F Y2020

• E xpect to end 2020 with more than $45m of cas h

(1)

(1) Based on 2020 Q3 Results Press Releas e, dated November 5th, 2020


YTD 2020 Results

$106.9 $109.6

Q1-Q3 '19 Q1-Q3 '20

Revenue

62.9%

67.4%

Q1-Q3 '19 Q1-Q3 '20

Non-GAAP Gross Margin

($13.6)

$3.6

Q1-Q3 '19 Q1-Q3 '20

Non-GAAP Operating Income

A nnualized R ec urring R ev enue (A R R )

• $131.4 million as of 9/30/20


~$47 million

Cash Metrics

Cas h* as of S eptember 30, 2020

A c hiev e cas h-flow break ev en

2H 2020 Outlook

* Cash, cash equivalents and marketable securities

Delivered pos itive cas h flow in 2Q and 3Q 2020E x pec t to end 2020 with more than $45 million in cas h*

(1) Based on 2020 Q3 Results Press Release, dated November 5 th 2020

(1)


2020 Outlook

(1) 2020 Outlook based on 2020 Q3 Results Press Release, dated November 5 th 2020

(1)

MetricP rior (Q1 pos t-COVID)

COV ID)R ev is ed (Q3) Chang e (Q3 from Q1)

GAAP Revenue $127mm – $135mm $140mm - $143mm $10.5mm

Non-GAAP Operating (Loss) Income ($17)mm – ($24)mm $0mm - $3mm $22mm

Non-GAAP E P S ($0.11) – ($0.16) $0.00 - $0.02 $0.13

Cash Used in Operations ($12)mm – ($20)mm ($7)mm – ($10)mm $7.5mm

Weighted Avg. S hares Outstanding 150mm – 151mm Around 151mm N/A

E xpect to achieve pos itive cash flow during 2H 2020 and end 2020 with more than $45mm of cash

Proprietary and confidential © 2020, Castlight Health | 27Proprietary and confidential © 2020, Castlight Health | 27

Appendix


Non-GAAP Financial Measures

• To supplement Castlight Health’s financial statements presented in accordance with generally accepted accountingprinciples (GAA P), we also use and provide investors and others with non-GAA P measures of certain components offinancial performance, including non-GAA P gross profit and margin, non-GAA P operating expense, non-GAA Poperating income (loss), non-GAA P net income (loss) and non-GAA P net income (loss) per share. Non-GAA P grossprofit and margin, non-GAAP operating expense, non-GAA P operating income (loss), and non-GAA P 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-GAA P 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 reportingperiods, and can help enhance overall understanding of the company’s historical financial performance. However,these non- G A A P financial mea sure s should be con sidered in addition to, not a s a substitute for or in i solationfrom, meas ures prepared in ac c ordanc e with GA A P .

• The non-GAA P measures we provide may differ from the non-GAAP information used by other companies, includingpeer companies, and therefore comparability may be limited. Castlight Health encourages investors and others toreview the Company’s financial information in its entirety and not rely on a single financial measure.

• In the third quarter 2020 earnings press release and the appendix to this presentation, we have provided areconciliation of each non-GAA P financial measure to the most directly comparable GAAP financial measure, exceptthat we have not reconciled our non-GAA P operating loss and net loss per share guidance for the full year 2020 tocomparable GAA P measures because we do not provide guidance for stock-based compensation expense, andcapitalization and amortization of internal-use software, which are reconciling items between GAA P and non-GAA P.The factors that may impact our future stock-based compensation expense, and capitalization and amortization ofinternal-use software, are out of our control and/or cannot be reasonably predicted, and therefore we are unable toprovide such guidance without unreasonable effort. Factors include our market capitalization and related volatility ofour stock price and our inability to project the cost or scope of internally produced software.


GAAP to Non-GAAP Reconciliation: Gross profit


GAAP to Non-GAAP Reconciliation:

Operating Expense


GAAP to Non-GAAP Reconciliation:

Operating loss

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