Inovalon (INOV) versus Castlight Health (CSLT) Financial Analysis

Inovalon (NASDAQ:INOV) and Castlight Health (NYSE:CSLT) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, valuation, analyst recommendations, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Inovalon and Castlight Health, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Inovalon 1 1 0 0 1.50
Castlight Health 0 1 4 0 2.80

Inovalon presently has a consensus target price of $12.00, indicating a potential upside of 17.65%. Castlight Health has a consensus target price of $5.70, indicating a potential upside of 128.92%. Given Castlight Health’s stronger consensus rating and higher probable upside, analysts clearly believe Castlight Health is more favorable than Inovalon.

Volatility and Risk

Inovalon has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500. Comparatively, Castlight Health has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Institutional & Insider Ownership

34.0% of Inovalon shares are owned by institutional investors. Comparatively, 49.8% of Castlight Health shares are owned by institutional investors. 50.9% of Inovalon shares are owned by insiders. Comparatively, 22.6% of Castlight Health shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Inovalon and Castlight Health’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Inovalon $449.36 million 3.47 $34.81 million $0.23 44.35
Castlight Health $131.43 million 2.61 -$55.57 million ($0.26) -9.58

Inovalon has higher revenue and earnings than Castlight Health. Castlight Health is trading at a lower price-to-earnings ratio than Inovalon, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Inovalon and Castlight Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Inovalon -0.40% 3.69% 1.98%
Castlight Health -38.02% -22.89% -16.51%

Summary

Inovalon beats Castlight Health on 9 of the 14 factors compared between the two stocks.

About Inovalon

Inovalon Holdings, Inc., a technology company, provides cloud-based platforms empowering a data-driven transformation from volume-based to value-based models in the healthcare industry. The company's platform enables the assessment and enhancement of clinical and quality outcomes and financial performance. It serves health plans and provider organizations, as well as pharmaceutical, medical device, and diagnostics companies. The company provides technology that supports approximately 500 healthcare organizations. Its platforms are informed by data pertaining to approximately 932,000 physicians; 455,000 clinical facilities; and approximately 240 million individuals and 37 billion medical events. Inovalon Holdings, Inc. was founded in 1998 and is headquartered in Bowie, Maryland.

About Castlight Health

Castlight Health, Inc. provides a software-as-a-service platform used for health benefits navigation for employees in the United States. Its platform matches employees to the resources their employers make available to them; managing a condition; and assists them to manage their benefits. The company also offers communication and testing, implementation, and user customer support services. It serves customers in a range of industries, including education, manufacturing, retail, technology, and government. The company was formerly known as Ventana Health Services and changed its name to Castlight Health, Inc. in April 2010. Castlight Health, Inc. was founded in 2008 and is headquartered in San Francisco, California.

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