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This $3 Stock Generated $7.5 Million in Cash Flow

This $3 Stock Generated $7.5 Million in Cash Flow

Castlight Health, Inc. (NYSE: CSLT), a leading health benefits platform provider, recently announced earnings and investors are impressed. The company’s full year 2018 total revenue was $156.4 million, up 18% year-over-year. The company also generated $7.5 million in cash flow from operations in the fourth quarter.

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  • This company struggled last year after losing a big customer. However, the first signs of a financial turnaround are emerging, with the first operational profit and positive cash flow in Q4. The stock is up 100% from its December lows.

    PR Newswire reported financial performance highlights for the three months ended December 31, 2018 compared to the three months ended December 31, 2017:

    • GAAP total revenue of $42.1 million, representing an increase of 13%
    • GAAP subscription revenue of $39.4 million, representing an increase of 17%
    • Non-GAAP gross margin of 68.0% compared to 68.0%
    • Cash provided by operations of $7.5 million, compared to $0.1 million used in operations.

    It’s important to note that the company reported positive cash flow from operations. As long as this metric is positive, a company could continue operating even as losses accrue on an accounting basis.

    Financial performance for the twelve months ended December 31, 2018 compared to the twelve months ended December 31, 2017 also showed improvements.

    • GAAP total revenue of $156.4 million, representing an increase of 18%
    • Non-GAAP gross margin of 65.3% compared to 68.8%
    • Non-GAAP operating loss of $12.7 million, compared to a loss of $24.6 million
    • Non-GAAP net loss per basic and diluted share of $0.09, compared to a net loss per basic and diluted share of $0.19. Analysts often use non-GAAP numbers and this metric shows a significant improvement in the company’s operations.
    • Cash used in operations of $18.6 million, compared to $23.5 million used in operations.
    • Total cash, cash equivalents and marketable securities was $77.3 million as of December 31, 2018. This is enough cash for several years of operations at the company’s current burn rate.

    John Doyle, CEO, Castlight Health, commented: “In 2018, we executed on the final chapter of our transformation into a health navigation platform through launching our Complete flagship product, proving out our channels strategy and generating cash flow from operations this quarter.

    Our industrial strength products enable users to navigate healthcare with a deeply personalized and integrated experience and make Castlight the clear leader in digital health navigation.”

    Analysts and investors also seem impressed by the company’s recent earnings report, as the chart indicates.

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  • CSLT daily chart

    CSLT should be considered a buy if recent momentum continues.

    Look for an entry at $3.96 with a price target of at least $4.71 based on the pattern in the chart.

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