Shares of healthcare information company Castlight Health Inc. (NYSE:CSLT) plummeted 24% yesterday after it announced a “restructuring program to align its operations with its evolving business needs.”
But in detail what this means is that the company announced it would be losing the business of one of its biggest customers by the end of the contract year. The unexpected departure of major retailer Walmart (NYSE:WMT) from the company’s listings means a restructuring program is underway to rescue the company from this blow.
And stocks were down a whopping 24% on the news. They continue to fall at present.
Castlight Health Earnings Call
During an earnings call on Monday afternoon, Castlight Health said it was informed by Walmart Inc. that it will let its contract expire at the end of the year.
Company CEO John Doyle said, “This headwind was compounded recently when one of our largest customers Wal-Mart informed us that they will not migrate to Castlight Complete in 2019 and will instead let their contract with us expire at the end of this year.”
Moving forward, the health benefits platform provider said it would reduce operating expenses by 10% to 15%, and that all “actions associated with this program” would be largely completed by September 30.
Despite the loss of a major customer in Walmart, Castlight does have positives to show for itself; it achieved a record high revenue of almost $38 million in the quarter and 17 new customer signings – an increase from 11 in the same period last year. Alongside that, it also boasted a 55% increase in new logos that translated into a 40% increase in ARR for new customers compared to the same period a year ago.
John Doyle continued: “Net of churn, we ended Q2 with $166.4 million in ARR and more than 260 total customers for the first time. Approximately 30% of which are Fortune 500 companies. These results underscore the progress we’ve made with our efforts to improve new business momentum and we’re well positioned to continue the trend.”
Featured Image: Google Images/ Andrew Bacon