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Castlight Health, Inc. (CSLT)

NYSE - Nasdaq Real Time Price. Currency in USD
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2.1000-0.1000 (-4.55%)
As of 3:56PM EDT. Market open.
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  • M
    Michael
    CSLT is being added to the Russell 2000 as of June 25, 2021. My research indicates that index funds need to buy 10 million CSLT shares in June.

    This should be positive for the stock, especially because fundamentals are significantly improving, in my view.

    Attached is the website for the Russell Index additions. CSLT is listed on page 3.

    https://content.ftserussell.com/sites/default/files/russell_3000_index_additions_-_2021.pdf
    Bullish
  • M
    Michael
    I expect CSLT to be added to the Russell 2000 and for the announcement to be made in early June.

    There will likely be around 9-11 million shares that Russell 2000 index funds need to buy from early June until the end of June, so June should be a good month for CSLT stock.
    Bullish
  • M
    Michael
    Very interesting study described in the press release below. CSLT reduces medical spend by 9.1%. This is an insanely good reduction in medical spend.

    $814 per year in reduced medical spend per employee and CSLT costs employers about $50 per employee per year.

    This was before Care Guides too. I think a reduction of $125 to $150 per year is the target of employers to make health navigation very worth the investment, so $814 per year is enormously successful.

    This study should help convert CSLT’s record pipeline prospects to customers over the rest of 2021.

    https://finance.yahoo.com/news/report-castlight-healths-navigation-solution-120000410.html
    Castlight Health, Inc. (NYSE: CSLT), a leader in healthcare navigation, announced today results of a study by actuarial firm Santa Barbara Actuaries Inc. (SBA), which found that employers who implemented Castlight's navigation solution experienced si
    Castlight Health, Inc. (NYSE: CSLT), a leader in healthcare navigation, announced today results of a study by actuarial firm Santa Barbara Actuaries Inc. (SBA), which found that employers who implemented Castlight's navigation solution experienced si
    finance.yahoo.com
    Bullish
  • Y
    Yahoo Finance Insights
    Castlight Health is up 12.09% to 2.04
  • M
    Michael
    CSLT keeps hiring in key areas of sales, customer success, Care Guides and tech products. My sense is most of the new employees are growth in employees (I.e. not replacement).

    Business appears to be starting to improve and accelerate. All of the anecdotal data points are there:

    1) Hiring up (compared to layoffs last year).
    2) employee reviews turned markedly positive (and were very negative last year).
    3) pipeline at 130% of plan (it appeared to be well below plan last year)
    4) quality executives and strategic advisors choosing to join CSLT
    5) Board of directors more engaged to ensure company success.
    6) company beating and raising financial guidance for 3 quarters in a row.
    Bullish
  • M
    Michael
    Several high profile executives have joined CSLT as advisors over the last few months. They seem to think CSLT will be the winner in health navigation.

    Interestingly, there was a Wall Street Journal article this week mentioning this PepsiCo exec and his views of telehealth. This PepsiCo’s exec view and PepsiCo action of adding cancelling TDOC and adding AMWL appeared to drive a several hundred million market cap change between TDOC and AMWL.

    If these strategic advisors are correct that CSLT will be a major winner in health navigation, CSLT shares should increase enormously, in my view.

    https://finance.yahoo.com/news/former-pepsico-vp-global-benefits-120000594.html
    Castlight Health, Inc. (NYSE: CSLT), a leader in healthcare navigation, announced today the addition of Erik Sossa, former vice president of Global Benefits and Wellness at PepsiCo, as a strategic advisor. Sossa brings decades of HR benefits and indu
    Castlight Health, Inc. (NYSE: CSLT), a leader in healthcare navigation, announced today the addition of Erik Sossa, former vice president of Global Benefits and Wellness at PepsiCo, as a strategic advisor. Sossa brings decades of HR benefits and indu
    finance.yahoo.com
  • M
    Michael
    Here are some very recent (May, 2021) additions to CSLT’s 2021 pipeline (based on my research):

    Alorica (25,000 to 100,000 employees)
    Discovery Financial (20,000 employees)
    Polaris (15,000 employees)
    Microchip Technologies (20,000 employees)

    Based on my research, these companies were not included in CSLT’s April 29, 2021 pipeline stats that stated CSLT’s pipeline was already 130% of its plan.

    I expect the majority of employer deals to be signed in July through September, with the majority of Health Plan deals to be signed from August through October.

    This is shaping up to have the potential to be a very strong growth year for CSLT for the first time since 2016.
    Bullish
  • D
    Deez
    $ACCD conversation
    No organic growth here.
    Guiding to $260M in 2022FY revenue. 2 acquisitions posted $70M revenue in 2021 (Plushcare, 2ndMD). Even if these acquisitions stay flat in 2022, that implies organic revenue of $190M in '22 vs. $176M in '21. No growth.
    Stronger growth coming from Grand Rounds / Doctor On Demand (will be public soon), $CSLT, and Quantum (just did PE recap).
    Bearish
  • M
    Michael
    Very strong Q. beat and raise on All metrics.

    ARR grew sequentially for first time in over a year.

    RFP proposals are up 5x from last year, which means June and September Qs could be HUGE ARR quarters.

    This is pretty much the first really good tangible sign that the company is making enormous progress on the turnaround.

    I think ARR grows tremendously the next couple of quarters.
    Bullish
  • M
    Michael
    CSLT’s extended CDC/BCS contract for the COVID vaccine website is from the new and improved Vaccines.gov website which essentially replaces VaccineFinder.org. CSLT will work with BCS and the CDC through mid-2022 (and increase in time from the previous expected ending of mid-2021).

    I think there is potential that this website remains operational indefinitely (well past 2022), making this recurring revenue for CSLT.

    CSLT is entering a period of potentially explosive growth after years of being a stalled company. I believe the next 6-18 months will be very exciting for the company and the stock price.

    As seen with the rest of the stock market, the stock usually appreciates 6 -9 months before the financials accelerate, which implies the next 6-9 months should be huge for the stock, in my view.
    Bullish
  • M
    Michael
    Walmart is acquiring telehealth provider MeMD. This seems to reinforce the recent WSJ article in which the former PepsiCo health benefits Exec (now CSLT strategic advisor), Erik Sossa, stated that he viewed telehealth as a commoditized solution.

    If telehealth is being commoditized, then the key for telehealth providers will be to work with health navigation companies to drive patient volumes to their telehealth company versus another commoditized telehealth company.

    Because of this, there have been M&A between managed care companies and telehealth companies and health navigation and telehealth companies.

    1. Cigna acquired MDLive
    2. DoctorOnDemand merged with GrandRounds
    3. Accolade acquired PlushCare.

    I view CSLT as a key (if not necessary) acquisition target for TDOC or AMWL as CSLT can drive market share to TDOC or AMWL.

    There a other private health navigation companies (Quantum Health, VirginPulse, soon to be public Sharecare), but their valuations are over 10x that of CSLT and, in my view, their products are inferior and less scalable.

    The continued M&A in digital health favors the smaller market cap companies as they have been the companies being acquired over the last few months, as long as they have a scalable platform (as CSLT clearly does).
    Bullish
  • M
    Michael
    AT&T and Warner Media are long time and very happy customers of CSLT.

    $T and $DISCA are combining entertainment assists. When the combination closes, I expect CSLT solutions to be provided to DISCA employees, creating revenue for CSLT.
    Bullish
  • M
    Michael
    HealthFirst, a leading health plan in NY, rolled out CSLT to all of its employees recently.

    I believe HealthFirst is in CSLT’s pipeline for a 2021 health plan deal. Currently Castlight is juste available to HealthFirst employees, not members, but I expect CSLT to be rolled out to HealthFirst members over the next few quarters.

    This may be one of a couple health plan deals CSLT expects in 2021.
    Bullish
  • M
    Michael
    I re-read the CSLT quarterly conference call transcript this weekend. CSLT’s CEO discusses that CSLT is entering a period of acceleration in its business on the health plan side of its business and the employer business returning to growth as the pipeline is over 130% of its initial plan already.

    I think there are a lot of investors who are looking for companies which are accelerating growth and whose stock prices are still very cheap.

    With the stock market up enormously over the 5 years, it’s hard to find this combination.

    5 years ago, CSLT’s stock was over $5 and 6 years ago, CSLT was a $10 stock.

    CSLT has higher revenue and higher EPS than it did 5 and 6 years ago and its major public competitors, ACCD and FCAC (which is Sharecare) still trade at 8-10x revenues.

    At 10x revenues, CSLT ‘s stock would be approx. $10 per share and at 5x revenues, CSLT would be roughly $5 per share.

    If CSLT executes its plan, there is a ton of upside for the share price.
    Bullish
  • P
    Parth
    With a strong quarter is this stock going to see a surge at any point soon?
  • M
    Michael
    When looking at CSLT, you also need to out the quarter and future growth they can have in perspective relative to the company’s valuation.

    This quarter and CSLT’s prospects are as good as many of the companies valued 10X higher.

    CSLT will have positive free cash flow this year, while most other digital health companies are burning a lot of cash.

    At the end of the day, I think CSLT executes in 2021 to get the stock price much higher and then gets acquired in 2022 by a larger health care, digital health or benefits administration company.

    I think an acquisition would have to be done above $7-8 per share because of the cost basis of many of the largest holders, which means CSLT has to get the stock to $5 through execution and growth to sell for $7-8, in my view.
    Bullish
  • M
    Michael
    A friend told me that it is likely that CSLT will be added to the Russell 2000 in June and there will be huge index buying. This is not my area of expertise as I am a fundamental investor, but I will be happy if this happens.
    Bullish
  • M
    Michael
    My research suggest significant expansion of Cigna contract likely in next few months.

    Cigna first signed a relative small $2 million pilot contract with CSLT in August, 2020.

    I expect by August, 2021, that contract will increase significantly.
    Bullish
  • M
    Michael
    CSLT recent sell off possibly because investors are worried about the upcoming quarter as CSLT has disappointed with ARR declines the last several quarters.

    I expect CSLT to report ARR growth when it reports this Thursday, which should be a very welcome positive surprise.
    Bullish
  • P
    Parth
    Thanks to Michael, for sharing all the information!