Company Quick10K Filing
Castlight Health
Price1.46 EPS-0
Shares146 P/E-7
MCap213 P/FCF-10
Net Debt-34 EBIT-32
TEV179 TEV/EBIT-6
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-01
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-10-27
10-Q 2017-06-30 Filed 2017-08-04
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-12
10-K 2014-12-31 Filed 2015-03-12
10-Q 2014-09-30 Filed 2014-11-12
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-12
8-K 2020-06-03
8-K 2020-05-04
8-K 2020-05-03
8-K 2020-04-22
8-K 2020-03-30
8-K 2020-02-25
8-K 2020-01-08
8-K 2019-12-15
8-K 2019-10-19
8-K 2019-07-26
8-K 2019-06-05
8-K 2019-05-02
8-K 2019-02-28
8-K 2018-11-06
8-K 2018-07-30
8-K 2018-06-20
8-K 2018-06-08
8-K 2018-05-10
8-K 2018-02-21

CSLT 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1. Organization and Description of Business
Note 2. Accounting Standards and Significant Accounting Policies
Note 3. Revenue, Deferred Revenue, Contract Balances and Performance Obligations
Note 4. Deferred Costs
Note 5. Goodwill and Intangible Assets
Note 6. Marketable Securities
Note 7. Fair Value Measurements
Note 8. Property and Equipment
Note 9. Debt
Note 10. Contingencies
Note 11. Stock Compensation
Note 12. Income Taxes
Note 13. Net Loss per Share
Note 14. Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 ex311q12010-qxceo302ce.htm
EX-31.2 ex312q12010-qxcfo302ce.htm
EX-32.1 ex321q12010-qxceo906ce.htm
EX-32.2 ex322q12010-qxcfo906ce.htm

Castlight Health Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.30.20.20.10.10.02014201620182020
Assets, Equity
0.10.10.0-0.0-0.1-0.12014201620182020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22014201620182020
Ops, Inv, Fin

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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020

or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______ to ______
Commission File Number: 001-36330
CASTLIGHT HEALTH, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
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, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class B Common Stock, par value $0.0001 per shareCSLTNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Not applicable

Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer
Non-accelerated filer ☐
Smaller reporting company
Emerging growth company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No ☒

As of May 5, 2020, there were 35,032,053 shares of the Registrant’s Class A common stock outstanding and 114,484,826 shares of the Registrant’s Class B common stock outstanding.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)
As of
 March 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$37,681  $43,017  
Marketable securities
6,009  16,411  
Accounts receivable and other, net38,073  31,397  
Prepaid expenses and other current assets
5,256  4,645  
Total current assets
87,019  95,470  
Property and equipment, net
6,823  4,856  
Restricted cash, non-current1,144  1,144  
Deferred commissions12,653  14,718  
Deferred professional service costs6,220  6,711  
Intangible assets, net11,104  12,178  
Goodwill41,485  91,785  
Operating lease right-of-use assets, net12,334  13,906  
Other assets
1,900  2,016  
Total assets
$180,682  $242,784  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$13,299  $19,596  
Accrued expenses and other current liabilities
10,445  10,454  
Accrued compensation
4,305  8,770  
Deferred revenue
13,730  10,173  
Operating lease liabilities5,430  5,914  
Total current liabilities
47,209  54,907  
Deferred revenue, non-current588  572  
Debt, non-current930  1,395  
Operating lease liabilities, non-current10,618  11,823  
Other liabilities, non-current1,241  1,213  
Total liabilities
60,586  69,910  
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.0001 par value; 200,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 35,032,053 shares and 35,032,053 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
4  4  
Class B common stock, $0.0001 par value; 800,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 114,485,591 shares and 113,177,162 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
11  11  
Additional paid-in capital
631,445  627,899  
Accumulated other comprehensive income13  2  
Accumulated deficit
(511,377) (455,042) 
Total stockholders’ equity 120,096  172,874  
Total liabilities and stockholders’ equity $180,682  $242,784  
See Notes to Condensed Consolidated Financial Statements.
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CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
 
 Three Months Ended March 31,
 20202019
Revenue:
Subscription
$38,383  $33,806  
Professional services and other662  1,684  
Total revenue, net39,045  35,490  
Cost of revenue:
Cost of subscription (1)
10,232  8,166  
Cost of professional services and other (1)
4,241  5,944  
Total cost of revenue
14,473  14,110  
Gross profit
24,572  21,380  
Operating expenses:
Sales and marketing (1)
10,472  9,215  
Research and development (1)
13,822  15,725  
General and administrative (1)
6,576  7,293  
Goodwill impairment
50,300    
Total operating expenses
81,170  32,233  
Operating loss
(56,598) (10,853) 
Other income, net
263  314  
Net loss
$(56,335) $(10,539) 
Net loss per share, basic and diluted$(0.38) $(0.07) 
Weighted-average shares used to compute basic and diluted net loss per share
148,872  143,000  

(1) Includes stock-based compensation expense as follows:
 Three Months Ended March 31,
 20202019
Cost of revenue:
Cost of subscription$169  $219  
Cost of professional services and other116  265  
Sales and marketing672  627  
Research and development1,163  1,704  
General and administrative1,066  1,162  

See Notes to Condensed Consolidated Financial Statements.
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CASTLIGHT HEALTH, INC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)
 Three Months Ended March 31,
 20202019
Net loss$(56,335) (10,539) 
Other comprehensive income:
Net change in unrealized gain on available-for-sale marketable securities
11    
Other comprehensive income11    
Comprehensive loss$(56,324) $(10,539) 

See Notes to Condensed Consolidated Financial Statements.

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CASTLIGHT HEALTH, INC
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(unaudited)

 Class A and B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balances as of December 31, 2019148,209,215  $15  $627,899  $2  $(455,042) $172,874  
Vesting of restricted stock units923,693  —  —  —  —  —  
Issuance of common stock upon exercise of stock options142,729  —  155  —  —  155  
Issuance of common stock under the ESPP242,007  —  186  —  —  186  
Stock-based compensation—  —  3,205  —  —  3,205  
Comprehensive loss—  —  —  11  (56,335) (56,324) 
Balances as of March 31, 2020149,517,644  $15  $631,445  $13  $(511,377) $120,096  
Balance as of December 31, 2018141,927,205  $14  $609,697  $  $(415,040) $194,671  
Vesting of restricted stock units967,712  —  —  —  —  —  
Issuance of common stock upon exercise of stock options1,060,870  —  1,680  —  —  1,680  
Stock-based compensation—  —  4,017  —  —  4,017  
Comprehensive loss—  —  —  —  (10,539) (10,539) 
Balances as of March 31, 2019143,955,787  $14  $615,394  $  $(425,579) $189,829  

See Notes to Condensed Consolidated Financial Statements.

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CASTLIGHT HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Three Months Ended March 31,
 20202019
Operating activities:
Net loss$(56,335) $(10,539) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,535  1,344  
Goodwill impairment50,300    
Stock-based compensation3,186  3,977  
Amortization and impairment of deferred commissions2,383  2,491  
Amortization and impairment of deferred professional service costs925  969  
Non-cash operating lease expense1,400  1,282  
Accretion and amortization of marketable securities2  (126) 
Changes in operating assets and liabilities:
Accounts receivable and other, net(6,676) (7,883) 
Deferred commissions(318) (1,416) 
Deferred professional service costs(416) (469) 
Prepaid expenses and other assets(494) (751) 
Accounts payable(7,462) (849) 
Operating lease liabilities(1,516) (1,382) 
Accrued expenses and other liabilities19  (1,304) 
Deferred revenue3,573  3,495  
Accrued compensation(4,465) (970) 
Net cash used in operating activities(14,359) (12,131) 
Investing activities:
Purchase of property and equipment(1,264) (204) 
Purchase of marketable securities(1,989)   
Maturities of marketable securities12,400  11,453  
Net cash provided by investing activities9,147  11,249  
Financing activities:
Proceeds from exercise of stock options155  1,680  
Proceeds from ESPP offering186    
Principal payments on long-term debt(465) (465) 
Net cash (used in) provided by financing activities(124) 1,215  
Net (decrease) increase in cash, cash equivalents and restricted cash(5,336) 333  
Cash, cash equivalents and restricted cash at beginning of period44,342  67,330  
Cash, cash equivalents and restricted cash at end of period$39,006  $67,663  
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$37,681  $66,338  
Restricted cash included in Prepaid expenses and other current assets181    
Restricted cash, non-current1,144  1,325  
Total cash, cash equivalents and restricted cash$39,006  $67,663  
See Notes to Condensed Consolidated Financial Statements.
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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Note 1. Organization and Description of Business
Castlight Health, Inc. (“Castlight” or “the Company”) provides health navigation solutions for large U.S. employers and health plans (“customers”) and their respective employees and members (“users”). Castlight’s offerings deliver a personalized and simplified user experience that helps connect individuals with the right provider or available benefit at the right time. Castlight’s navigation offerings have demonstrated measurable results, driving increased levels of user satisfaction and program utilization and lower healthcare costs for its customers and millions of users. The Company was incorporated in the State of Delaware in January 2008. The Company's principal executive offices are located in San Francisco, California.

Note 2. Accounting Standards and Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include Castlight and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. In the opinion of management, the information herein reflects all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations, financial position, stockholders’ equity and cash flows. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 

Other than as described below, there have been no changes to the Company's significant accounting policies described in the Company's Annual Report that have had a material impact on the Company's consolidated financial statements and related notes.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to the determination of:

Variable consideration included in the transaction price of the Company’s contracts with customers;
The standalone selling price of the performance obligations in the Company’s contracts with customers;
Assumptions used in the valuation of certain equity awards; and
Assumptions used in the calculation of goodwill impairment, including the forecast of future cash flows and discount rate.

Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations.

Marketable Securities

The Company's marketable securities consist of U.S. agency obligations and U.S. treasury securities, with maturities at the time of purchase of greater than three months. Marketable securities with remaining maturities in excess of one year are classified as non-current. The Company classifies its marketable securities as available-for-sale at the time of purchase based on its intent and are recorded at their estimated fair value. Unrealized gains for available-for-sale securities are recorded in other comprehensive income/loss. Unrealized losses for available-for-sale securities are recorded in other comprehensive income/loss, unless the losses relate to deterioration in credit risk or if it is likely securities will be sold before the recovery of their cost basis. In these cases, the unrealized losses are reported in other income, net in the consolidated statement of operations.
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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Realized gains and losses are determined based on the specific identification method and are reported in other income, net in the consolidated statements of operations.

Concentrations of Risk and Significant Customers

The Company had one customer, Anthem Inc. ("Anthem"), that accounted for 44% of total revenue during the three months ended March 31, 2020 and 28% of accounts receivable as of March 31, 2020. Additionally, the Company had two customers that each accounted for approximately 11% of accounts receivable as of March 31, 2020.

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASC 326”). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The adoption of this standard did not have a material impact on the Company’s financial statements. The Company will continue to actively monitor the impact of the current coronavirus (“COVID-19”) pandemic on expected credit losses.

Effective January 1, 2020, the Company adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued by the FASB. The Company determined that the ASUs issued by the FASB during the three months ended March 31, 2020 are either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.
Note 3. Revenue, Deferred Revenue, Contract Balances and Performance Obligations

The Company sells to customers based in the United States. Starting January 1, 2020, the effective date of the Anthem enterprise license agreement, the Company began treating Anthem as a direct health plan customer rather than a channel partner. As a result, substantially all of the Company's revenues are generated through direct sales.

Deferred revenue as of March 31, 2020 and December 31, 2019 was $14.3 million and $10.7 million, respectively. Contract assets as of March 31, 2020 and December 31, 2019 were $2.7 million and $0.4 million, respectively. The increase in contract assets is primarily due to the Anthem enterprise license agreement.

Revenue of $6.5 million and $11.2 million was recognized during the three months ended March 31, 2020 and 2019, respectively, that was included in the Company’s deferred revenue balances at the beginning of the respective periods.

The Company recorded favorable cumulative catch-up adjustments to revenue of $1.7 million and $1.4 million during the three months ended March 31, 2020 and 2019, respectively, arising from changes in estimates of transaction price.

The aggregate balance of remaining performance obligations from non-cancelable contracts with customers as of March 31, 2020 was $229.2 million. The Company expects to recognize approximately 50% of this balance over the next 12 months, with the remaining balance recognized thereafter. Remaining performance obligations are defined as deferred revenue and amounts yet to be billed for the non-cancelable portion of contracts.


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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Note 4. Deferred Costs

Changes in the balance of total deferred commissions and total deferred professional service costs during the three months ended March 31, 2020 are as follows (in thousands):

As of December 31, 2019Expense recognizedAs of March 31, 2020
Additions
Deferred commissions$14,718  $318  $(2,383) $12,653  
Deferred professional service costs  6,711  434  (925) 6,220  
Total deferred commissions and professional service costs
$21,429  $752  $(3,308) $18,873  

 These costs are reviewed for impairment quarterly. Impairment charges were $1.1 million for the three months ended March 31, 2020. Impairment charges for the three months ended March 31, 2019 were immaterial.
Note 5. Goodwill and Intangible Assets

Impairment

The Company determined that the significant decline in the U.S. economy as a result of the COVID-19 pandemic, together with the decline in the Company’s stock price, constituted a triggering event, which required the Company to perform interim impairment analyses related to its long-lived assets and goodwill during the first quarter of 2020. The impairment analysis for long-lived assets indicated that the assets were recoverable; therefore, no impairment was recorded. After assessing long-lived assets, the Company performed a goodwill impairment analysis and determined that the fair value of its only reporting unit exceeded its carrying value by approximately $50.3 million. The fair value was determined using the income approach. The Company believes that the income approach is the most reliable indication of fair value since it incorporates future estimated revenues and expenses for the reporting unit that the market approach may not directly incorporate. In addition to future estimated revenue and expenses, the determination of fair value included assumptions related to a discount rate.

The Company will continue to monitor its goodwill on a quarterly basis for indicators of impairment, including but not limited to, further declines in the stock price. Accordingly, there may be future impairments.

Goodwill

The Company’s goodwill relates entirely to the acquisition of Jiff in 2017. As of March 31, 2020, the gross amount of goodwill was $91.8 million and accumulated goodwill impairment was $50.3 million, all of which was recorded in the first quarter of 2020. The goodwill impairment did not involve any cash expenditures.

Intangible assets, net

Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. Backlog and Other acquired intangible assets were fully amortized and written off during the three months ended March 31, 2020.

The following tables set forth the fair value components of identifiable acquired intangible assets (dollars in thousands):
As of March 31, 2020
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(4,036) $6,864  
Developed technology510,600  (6,360) 4,240  
Total identifiable intangible assets$21,500  $(10,396) $11,104  

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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


As of December 31, 2019
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(3,509) $7,391  
Developed technology510,600  (5,830) 4,770  
Backlog2.51,500  (1,500)   
Other acquired intangible assets1-3900  (883) 17  
Total identifiable intangible assets$23,900  $(11,722) $12,178  

Amortization expense from acquired intangible assets for the three months ended March 31, 2020 and 2019 was $1.1 million and $0.9 million and is included in cost of subscription, sales and marketing, and general and administrative expenses.

Future estimated amortization expense for acquired intangible assets is as follows (in thousands):
Remainder of 2020$3,174  
20214,232  
20222,642  
20231,056  
Total amortization expense$11,104  

Note 6. Marketable Securities

Marketable securities consisted of the following (in thousands):

As of March 31, 2020
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities $2,002  $3  $  $2,005  
U.S. agency obligations11,644  10    11,654  
Money market mutual funds12,337      12,337  
25,983  13    25,996  
Included in cash and cash equivalents19,983  4    19,987  
Included in marketable securities$6,000  $9  $  $6,009  

As of December 31, 2019
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities$13,602  $1  $  $13,603  
U.S. agency obligations6,400  1    6,401  
Money market mutual funds8,736      8,736  
28,738  2    28,740  
Included in cash and cash equivalents12,329      12,329  
Included in marketable securities$16,409  $2  $  $16,411  

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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Note 7. Fair Value Measurements
The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
The fair value of marketable securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from a third-party pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established third party pricing vendors and broker-dealers.
There have been no changes in valuation techniques in the periods presented. There were no significant transfers between fair value measurement levels as of March 31, 2020 and December 31, 2019. As of March 31, 2020 and December 31, 2019, there were no securities within Level 3 of the fair value hierarchy.
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands):
As of March 31, 2020
Level 1Level 2Total
Cash equivalents:
U.S. agency obligations$  $7,650  $7,650  
Money market mutual funds12,337    12,337  
Marketable securities:
U.S. treasury securities  2,005  2,005  
U.S. agency obligations  4,004  4,004  
$12,337  $13,659  $25,996  

As of December 31, 2019
Level 1Level 2Total
Cash equivalents:
Money market mutual funds$8,736  $  $8,736  
U.S. treasury securities  3,593  3,593  
Marketable securities:
U.S. agency obligations  6,401  6,401  
U.S. treasury securities  10,010  10,010  
$8,736  $20,004  $28,740  
Gross unrealized gains for cash equivalents and marketable securities as of March 31, 2020 and December 31, 2019 were not material.
There were no realized gains or losses during the three months ended March 31, 2020. All of the Company’s securities as of March 31, 2020 and December 31, 2019 mature within one year.  
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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Note 8. Property and Equipment
Property and equipment consisted of the following (in thousands):
As of
 March 31, 2020December 31, 2019
Leasehold improvements$4,734  $2,834  
Computer equipment8,114  8,126  
Software1,110  1,110  
Internal-use software3,878  2,925  
Furniture and equipment1,668  1,048  
Construction in progress128  1,164  
Total19,632  17,207  
Less: accumulated depreciation(12,809) (12,351) 
Property and equipment, net$6,823  $4,856  
Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was $0.5 million and $0.5 million, respectively. Depreciation and amortization are recorded on a straight-line basis.
Note 9. Debt

Term Loan

The Company has a term loan facility (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”) that provided for a term loan of approximately $5.6 million (the “Term Loan”). Obligations under the Term Loan accrue interest at a floating per annum rate equal to the greater of (A) the prime rate as published in the money rates section of The Wall Street Journal (“Prime Rate”) minus 1% or (B) 0%. Interest on the Term Loan is payable monthly. The maturity date of the Term Loan is September 1, 2021.

In addition to principal and interest payments, the Company is also required to pay $0.5 million as final payment on the earlier of maturity, termination or prepayment of the Term Loan. The Company accrues for the final payment over the life of the Term Loan using the effective interest method.

The future maturities of the Term Loan by year as of March 31, 2020 are as follows (in thousands):

Remainder of 2020$1,394  
2021(1)
1,395  
Total future maturities of debt2,789  
Less current maturities(2)
(1,859) 
Debt, non-current$930  
(1) Excludes the $0.5 million required to be paid as final payment on the earlier of maturity, termination or prepayment of the Term Loan.
(2) Classified within accrued expenses and other current liabilities on the condensed consolidated balance sheet as of March 31, 2020.

Per the Loan Agreement the Company is subject to certain reporting covenants and the debt obligations are secured by a security interest in the assets of the Company, excluding intellectual property and certain other exceptions. The Company was in compliance with all reporting covenants in the Loan Agreement related to the outstanding principal balance as of March 31, 2020.

On May 5, 2020, the Company entered into the Third Amended and Restated Loan and Security Agreement (the "Amended Loan Agreement") with the Bank. The Amended Loan Agreement amended and restated its existing Loan Agreement. Under the Amended Loan Agreement, the Bank agreed to extend a $25.0 million revolving credit facility to the Company (the “Revolving Line”). Borrowings under the Revolving Line accrue interest at a floating per annum rate equal to the Prime Rate plus 1%, and such interest is payable monthly. The Company may request borrowings under the Revolving Line
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CASTLIGHT HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


prior to May 4, 2023, on which date the Revolving Line terminates. In relation to the Revolving Line, the Company is subject to certain financial and reporting covenants.

On April 22, 2020, the Company entered into a Paycheck Protection Program Loan (the “PPP Note”) sponsored by the Small Business Administration (the “SBA”) through the Bank, providing for $10.0 million in proceeds. The PPP Note was issued pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Note was scheduled to mature on April 22, 2022, carried an interest rate of 1% per annum, and was subject to the terms and conditions applicable to all loans made pursuant to the Paycheck Protection Program as administered by the SBA under the CARES Act, including the debt forgiveness provisions contained therein. Following additional guidance issued by the SBA on April 23, 2020 that cast doubt on the ability of public companies to qualify for loans under the Paycheck Protection Program, the Company repaid the PPP Note on April 29, 2020.
Note 10. Contingencies
Legal Matters

From time to time, the Company may become subject to other legal proceedings, claims or litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patents or other intellectual property rights. If an unfavorable outcome were to occur in litigation, the impact could be material to the Company’s business, financial condition, cash flow or results of operations, depending on the specific circumstances of the outcome. The Company accrues for loss contingencies when it is both probable that it will incur the loss and when it can reasonably estimate the amount of the loss or range of loss. 
Note 11. Stock Compensation
Restricted Stock Units (“RSUs”) Activity

A summary of unvested restricted stock unit activity for the three months ended March 31, 2020 is as follows:

Number of
Shares
Weighted-
Average
Grant Date Fair Value
Balance as of December 31, 201911,615,884  $2.44  
Granted3,534,142  $1.21  
Vested(923,693) $2.94  
Forfeited and canceled
(1,679,626) $2.94  
Balance as of March 31, 202012,546,707