Castlight Health (CSLT) markets and sells its Enterprise Healthcare Cloud offering to self-insured companies and is headquartered in San Francisco, CA.
Four other companies are scheduled for the week of March 10, 2014. The full IPO calendar is available at IPOpremium.
The manager and joint managers are Goldman Sachs and Morgan Stanley. The co-managers are Allen & Company, Stifel, Canaccord Genuity, Raymond James. SEC Filings
End of lockup (180 days): Wednesday, September 10, 2014
CSLT scheduled a $111 million IPO a market capitalization of $953 million at a price range midpoint of $10 for Friday, March 14, 2014 on the NYSE. The price range has since been raised to $13-15. The conclusion is the same.
Overview
CSLT markets and sells its Enterprise Healthcare Cloud offering to self-insured companies in a broad range of industries and governmental entities.
As of December 31, 2013, CSLT had 106 signed customers, including 48 customers that had implemented CSLT’s offering, which CSLT refers to as launched customers.
In comparison, CSLT had 47 signed customers, including 15 launched customers, as of December 31, 2012.
For the 2013 year revenue increased 212% to $13 million from $4 million. Losses increased to -$62 million from -$35 million.
2013 Q4 revenue was $5.5 million and losses were $20 million.
Valuation
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Valuation Ratios |
Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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Annualizing Dec atr |
Cap (mm) |
Sls |
Erngs |
BkVlue |
TanBV |
in IPO |
|
Castlight Health (CSLT) |
$755 |
37.0 |
-9.4 |
4.9 |
5.6 |
15% |
Conclusion
This story is all about top line revenue growth in a new enterprise software category. CSLT is betting the farm by spending 237% of revenue on sales & marketing.
Here is the recent quarterly top line revenue performance.
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Quarters |
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March '13 |
June 13 |
Sept 13 |
Dec 13 |
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Rev (mm) |
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$1,907 |
$2,325 |
$3,609 |
$5,132 |
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% gain over prior qtr |
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22% |
55% |
42% |
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Losses are huge ($20 million for Q4 2013), and the price to Q4 annualized revenue is a whopping 37.
Nevertheless, with the market near all time highs and with great sector interest in new enterprise cloud software applications, the rating on CSLT is a buy on the IPO.
Business
CSLT is a pioneer in a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs.
CSLT’s Enterprise Healthcare Cloud allows its customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications.
CSLT’s comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care cost and quality data transparent and useful. CSLT deploys consumer-oriented applications that deliver strong engagement and integration capabilities.
History
Since its inception in 2008, CSLT has been committed to improving the efficiency of the U.S. health care industry.
From 2008 to 2010, CSLT focused its efforts on research and development to build its consumer health care database, its analytic capabilities and the initial version of its cloud-based application, Castlight Medical.
After its release in 2010, CSLT has continued to enhance that application, as well as release Castlight Pharmacy, Castlight Rewards and Castlight Reference-Based Pricing in 2013.
These applications are delivered to its customers, and their employees and families, via its cloud-based offering and leverage consumer-oriented design principles that drive engagement and ease of use.
CSLT markets and sells its Enterprise Healthcare Cloud offering to self-insured companies in a broad range of industries and governmental entities.
Customer growth
As of December 31, 2013, CSLT had 106 signed customers, including 48 customers that had implemented CSLT’s offering, which CSLT refers to as launched customers.
In comparison, CSLT had 47 signed customers, including 15 launched customers, as of December 31, 2012.
CSLT’s current customers as of December 31, 2013 included 26 Fortune 500 companies and collectively represent millions of eligible employees and their adult dependents.
CSLT sells its offering solely in the United States, and CSLT markets to its customers and potential customers primarily through its direct sales force.
Dividend Policy
No dividends are planned
Intellectual Property
Historically, despite a substantial investment in research and development activities, CSLT has not focused on filing patent applications, although this may change in the future.
As of December 31, 2013, CSLT had one issued patent and four patent applications pending in the United States. Its patent expires on July 27, 2031.
Competition
The market for enterprise health care cloud solutions is in an early stage of development, but is rapidly evolving and competitive.
CSLT currently faces competition from independent third-party tool vendors, such as Change Healthcare Corporation, ClearCost Health, Healthcare Blue Book, HealthSparq Inc. and Truven Health Analytics Inc., as well as from health plans, such as Aetna Inc., Cigna Corporation, United Healthcare Group, Inc. and WellPoint, Inc.
5% stockholders
Giovanni M. Colella 8.2%
Ann Lamont 15.8%
Bryan Roberts 20.6%
Use of proceeds
CSLT expects to net $99.3 million from its IPO. Proceeds are allocated as follows:
for working capital and other general corporate purposes, however, as of the date of this prospectus, CSLT cannot specify with certainty the particular uses of the net proceeds for such purposes. Additionally, CSLT may use the net proceeds from this offering to expand its current business through acquisitions of, or investments in, other businesses, products or technologies. CSLT has no commitments with respect to any such acquisitions or investments at this time.
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