A digital health company hailed a year ago as "a barometer for the industry" is struggling to find its form.
Castlight Health, a San Francisco-based developer of online tools designed to help employees of self-insured business find healthcare services, has seen its stock price plunge more than 80 percent since it launched an IPO on March 14, 2014. The company started at $16 per share, soared 145 percent on that first day, went as high as $37.25 three days later, and was trading at $7.16 as of 9 a.m. March 10.
Castlight built its foundation on price transparency, pledging to pull back the curtain on negotiations between payers and healthcare providers for healthcare services. But payers have been reluctant to disclose the details about their side of the business, and analysts have said the company's future might be tied too closely to the whims of that market.
The six-year-old company made waves went it went public last year, with founder and CEO Giovanni Colella vowing to build "an iconic company." Its roster of self-insured customers included 45 Fortune 500 firms – like Microsoft, Wal-Mart, CVS Caremark and Honeywell International – and it had seen subscriptions triple between 2012 and 2013, with a $109 million backlog that officials said would be filled over the following four years.
The company includes mobile capabilities on its platform, and formed a partnership last July to offer Teladoc's telehealth services to its customers.
Castlight reported revenues of $45.6 million in 2014, a 252 percent increase over the previous year, with $41.6 million of that in subscriptions. In mid-February, however, the company reported a loss of $86.2 million in operations, posting a net loss per share of $1.16, while projecting sales of $74 million to $77 million for the 2015 year.
Colella, who founded the company with former U.S. Chief Technical Officer Todd Park in 2008, sounded a positive note during a February conference call.
"As we enter 2015, it is worth reflecting of 2014 for Castlight’s which was our first year as a publicly traded company," he said. "In short, we made significant progress executing against our growth strategies last year and we believe that we are well-positioned to continue driving strong growth through 2015 and beyond."
Todd Campbell, writing for the Motley Fool, notes Castlight might have been a victim of an overly optimistic investment market when it went public, and is just now coming back to earth. While the outlook isn't promising, he notes that a forecast of 62 percent year-over-year growth for 2015 is still "enticing."
"The fact that the company expects to lose money again this year is reason enough for me to remain on the sidelines on this stock," he concluded.
Writing in Investorplace.com, meanwhile, Assistant Editor John Divine said the company has "never been profitable" and might not turn the corner until 2018.
