Q3 2020 Castlight Health Inc Earnings Call

For his business does in their decisions to buy certain benefits or institute workforce reductions retention of existing customers gross margin and operating expense trenton's cashews future cash position and the changes in the growth strategy on the company's performance. These statements are made as of November 520, 20, and reflect management's views and expectations at.

This time at our subject to <unk> various risks uncertainties and assumptions if any of these risks or uncertainty certainties develop or if any of this assumptions prove incorrect actual results could differ materially from those expressed or implied by are forward looking statements accompanied exclaims all obligation to update revise any forward looking statements. This call contains financial.

Lots of the largest and most strategic engage clients, where we will showcase client case studies recent product innovation and outline our future roadmap in partnership with anthem.

Importantly, we have a strong pipeline of health plan prospects. In addition to having met our goal of signing a new health plan customer we have exceeded our expectations and developing pipeline. We believe that our foundation of two national plan partnerships provides opportunity to grow validates our strategy and ultimate.

Lee will accelerate bringing navigation to people who need our solutions. We look forward to updating you on our progress turn.

Awareness access and affordability leveraging our data to develop personalized user journeys that connect to both the bricks and mortar health system as well as tell a therapy and other newer tech enabled solution.

Players engaging in discussions to inform their strategic planning next year, but acknowledge uncertainty due to co bid. We are laser focused on preparation for 2021 and have already hired and Onboarded. Our new sales reps. We are pulling our sales kick off event into December for the first time, given the importance of training on the full solution.

To meet this whole in the market with the same high quality service at a competitive price point.

The navigation market is expanding but the high touch capability has increased in importance in rfps. Thus it is critical we ensure our customers prospects and consultants are aware of our capabilities training enablement in marketing care guidance are core to the market writing. This work I mentioned earlier I feel confident in our decision to.

Build care guidance, which was one of the first strategic decisions I made an addition to our health plan focus and I'm confident in the product we have built and now we need to execute against the market opportunity.

The anticipated risk of employer churn in Q3 and churn was the principal driver of the sequential decline.

Our subscription gross margin of 79% was in line with the expectations, we shared earlier in the year.

We anticipate that we will generate a positive cash flow for the second half of 2020.

We ended the third quarter with approximately $47 million in cash.

At this time, we are updating our outlook for 2020 and expect revenue in the range of 140 million to $143 million.

Non-GAAP operating profit between zero million and $3 million and non-GAAP earnings per share between zero cents and two cents based on a 151 million shares.

We now expect our full year gross margins to be in the mid 60% range, even as our Q4 gross margins are typically lower given the ramp up to support one one customer activity.

In terms of just a little bit of color on churn. So I think it's important to spend some time there.

As we had kind of foreshadowed and discussed last quarter. The economic downturn did indeed create financial pressure, which contributed to churn both through terminations and pricing concessions.

That said I think it is important to paas because churn has been really different this year. When we've lost customers in the past it was due to operational issues or insufficient value that didn't contribute to any of our churn in 2020.

Really the secondary impact of co bid was creating a more difficult environment to reset certain relationships, where there was a dated understanding of what we do.

Lift her a more comprehensive offering Ken can you just remind us about where expectations should be in terms of.

Potential lift to contracts by adding care guys for existing customers are or maybe more broadly just how to think of the the ROI as here.

We even care guidance into these renewal conversations.

Sure absolutely so taking a step back I would say that we feel really good about the strategic decision to invest in care guides having.

Having a high tech plus high touch solution is becoming increasingly important in navigation and what we've all I think observed is that this is a market that is having a rapid acceleration. So we're really pleased to have met our goal of delivering care guidance as GA in Q3.

In terms of your question on expectations, So as I mentioned growing market and one of the things that we're really excited about is that our technology Foundation allows us to access the full market in ways that others can't because of our ability to provide scalable high quality service.

So we certainly kind of acknowledge that we're in year one of selling care guide. So we have work to do on enablement and market awareness, but we do view it to be a critical factor in allowing us to win and grow in the navigation market in 2021.

Got it that helps as well.

Last one from me squeeze within on the health plan pipeline more.

More positive comments on the health plan pipeline and do those comments reflect.

Yes, Steve progressing through the pipeline or is it more that theres more deals entering the top of the funnel and.

I'll leave at that.

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