Castlight sees revenue soar in first post-IPO quarter but still reports loss

Castlight Health, a developer of healthcare price transparency technology, logged enough new customers in the first months of 2014 to make its revenue soar but still lost money in its first quarter as a publicly traded company.

Revenue hit $8.4 million, up from $1.9 million in the first quarter of 2013. About 90% of that came from subscriptions and the other 10% from professional services.

But the San-Francisco-based company still reported a $24.3 million operating loss, as sales and marketing expenses nearly tripled, research and development expenses doubled, and general and administrative costs more than doubled. Castlight reported an operating loss of $11.5 million during the year-ago period.

In a call with analysts after the market closed Wednesday, management downplayed being in the red for the quarter. CFO John Doyle said the recent initial public offering put the company in a good position. The company's stock opened at $16 per share and rocketed to $39.80 per share on its first day of trading.

“We targeted the IPO originally to raise sufficient capital to get to cash-flow breakeven, and we ultimately exceeded our target in the financing by $85 million,” Doyle said on the call. “So given that, we feel extremely confident about our ability to drive the business to cash-flow breakeven with the current resources.”

CEO and co-founder Dr. Giovanni Colella echoed Doyle's optimism, calling the first quarter very strong, thanks to demand from large organizations interested in adopting Castlight's price transparency products and services. In the first three months of 2014, Castlight added as customers Comcast, Freescale Semiconductor and the state of Kansas.

Colella also told analysts that he has never seen the company's pipeline as strong as it has been since the IPO.

Doyle, though, said the company expects the first quarter to be the busiest quarter for new customer implementations and anticipates lower numbers for the balance of the year.

Management's revenue guidance for the full year is $40 million to $41 million, an increase of 208% to 216% year over year. The operating loss for the year is expected to be $75.5 million to $76.9 million. According to its registration statement filed with the Securities and Exchange Commission in February, the company had a net loss of $62.2 million last year and an accumulated deficit of $131.2 million.

But investors must have liked the news. At the close of a tough day for tech stocks on Wall Street, Castlight's stock was down 15%. Shares were up 5.5% in after-hours trading on the New York Stock Exchange after the release of the first-quarter results.

Follow Rachel Landen on Twitter: @MHrlanden