Why Castlight Health Inc Is Surging Today

By Brian FeroldiMarketsFool.com

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What: Shares of Castlight Health(NYSE: CSLT),a softwarecompany primarily focused on employee health benefits,are up nearly 30% as of 11:15 a.m. EST today in response to the company reporting second-quarter sales that topped expectations.

So what:Castlight Health reported second-quarter revenue of $23.6 million, which was up 27% over the year-ago period. That was slightly ahead of the $23.1 million analysts were expecting.

Gross margins for the period also showed improvements, growing to 62.1% on a non-GAAP basis. That was a nice gain from the 58.3% displayed in the same quarter last year.

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The higher revenue and margins allowed the company to shrink its non-GAAP net loss to $10.5 million, or $0.11 per share, which is an improvement from the $12.8 million net loss, or $0.13 per share, it showed in the second quarter of 2015. That result also compared favorably to the $0.13 net loss the markets expected.

John Doyle, Caslight's CFO, offered up a lot of positive commentary on the company's quarterly performance:

Now what: Giovanni Coletta, Caslight's CEO, offered up someadditionalcoloron the company's strong quarterly performance, stating:

He also credited the company's recently announcedstrategic relationshipwith tech giant SAP as a catalyst for growth, which lends a lot of credibility to Castlight's platform. From here, the company reaffirmed its plans to be an early partner of SAP's Connected Health platform and tointegrate Castlight's health benefits platform into SAP's HR Suite.

For the full year, Castlight is guiding for revenue of $99 million to $102 million, the midpoint of which would represent growth of roughly 33%. That should translate into a net loss per share between $0.40 and $0.42.

Given the better-than-expected results and upbeat forecast, it's hard to blame the markets for bidding up shares today.

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Brian Feroldi has no position in any stocks mentioned.Like this article? Follow him onTwitter where he goes by the handle@Longtermmindsetor connect with him on LinkedIn to see more articles like this.

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