Financial Contrast: Inovalon (INOV) & Castlight Health (CSLT)

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 businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Insider & Institutional 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 company insiders. Comparatively, 22.6% of Castlight Health shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Inovalon and Castlight Health, as reported 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 currently has a consensus price target of $12.00, suggesting a potential upside of 18.81%. Castlight Health has a consensus price target of $5.70, suggesting a potential upside of 145.69%. Given Castlight Health’s stronger consensus rating and higher possible upside, analysts plainly believe Castlight Health is more favorable than Inovalon.

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 3.43 $34.81 million $0.23 43.91
Castlight Health $131.43 million 2.43 -$55.57 million ($0.26) -8.92

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%

Volatility and Risk

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

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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