On page 41, the first and second paragraphs are amended and restated as follows (new language
underlined):
William Blair utilized the Forecasts to perform a discounted cash flow analysis of Castlights projected future free cash flows for
the fiscal years ending December 31, 2021 through December 31, 2026. The Forecasts were utilized by William Blair to calculate unlevered free cash flows for such years, and using the discounted cash flow methodology, William
Blair calculated the present values of the projected after-tax unlevered free cash flows for Castlight. In this analysis, William Blair exercised its professional judgment, based on its experience and
expertise, and calculated the assumed terminal value of Castlight by utilizing a perpetuity growth rate ranging from 2.0% to 4.0%. To discount the projected unlevered free cash flows and assumed terminal value to present value, William Blair used
discount rates ranging from 10.0% to 12.0%, using William Blairs professional judgement. The discount rate range was derived based upon a weighted average cost of capital using the capital asset pricing model. In performing its
analysis, as directed by the management of the Company, William Blair assumed a 24% effective tax rate.
William Blair aggregated the present value of
the after-tax unlevered free cash flows over the applicable forecast period, the present value of the potential tax savings expected to result from the utilization of Castlights federal net operating
losses ($50-$57 million), and the present value of the assumed terminal value. William Blair then derived a range of implied equity values per share by adding Castlights net cash of
$65.8 million as of September 30, 2021 and dividing such amount by Castlights total diluted shares outstanding as of September 30, 2021 (consisting of 28,397,210 Class A Shares,
133,733,905 Class B Shares, 5,334,943 stock options, 16,751,156 RSUs, and 810,075 PRSUs as provided by the management of the Company), as adjusted to take into account the impact of dilutive securities based on the treasury
stock method at the implied share price. This analysis resulted in a range of implied equity values of $1.33 to $2.13 per share, as compared to the Offer Price of $2.05 per share.
On page 42, eighth full sentence is amended and restated as follows (new language underlined):
In addition, William Blair has from time to time, within the past two years, acted as a member of the underwriting syndicate for two
completed public offerings by certain affiliates an affiliate of CD&R for which William Blair has received customary approximately $3 million of compensation in the aggregate.
Item 8. Additional Information
Item 8 of the Schedule 14D-9 is hereby amended as follows:
On page 54, the following is added immediately after the subsection entitled Annual and Quarterly Reports:
Certain Litigation
On January 25, 2022, a
stockholder complaint was filed in the United States District Court, Northern District of California, against Castlight and the individual members of Castlights Board, captioned Shah v. Castlight Health, Inc., et al., 3:22-cv-00494 (the Shah Complaint). On January 26, 2022, a stockholder complaint was filed in the United States District Court, Southern District of
New York, against Castlight and the individual members of Castlights Board, captioned Justice v. Castlight Health, Inc., et al., Case No. 1:22-cv-00686 (the
Justice Complaint). On January 27, 2022, a stockholder complaint was filed in the United States District Court, Eastern District of New York, against Castlight and the individual members of Castlights Board, captioned
Conway v. Castlight Health, Inc., et al., Case No. 1:22-cv-00489 (the Conway Complaint). On January 31, 2022, a stockholder complaint was filed
in the United States District Court, Southern District of New York, against Castlight and the individual members of Castlights Board, captioned Lawrence v. Castlight Health, Inc., et al., Case No. 1:22-cv-00808 (the Lawrence Complaint). On February 1, 2022, a stockholder complaint was filed in the United States District Court, Eastern District of Pennsylvania, against Castlight
and the individual members of Castlights Board, captioned Whitfield v. Castlight Health, Inc., et al., Case No. 2:22-cv-00421 (the Whitfield
Complaint and together with the Shah Complaint, the Justice Complaint, the Conway Complaint, and the Lawrence Complaint, the Federal Stockholder Complaints).
Each of the Federal Stockholder Complaints assert that defendants violated Section 14(e), Section 14(d)(4) and 20(a) of the Exchange Act and certain
rules and regulations promulgated thereunder by allegedly making false and misleading statements, or failing to disclose allegedly material facts necessary to make the statements made not misleading, relating to the Merger in this Schedule 14D-9, including allegations relating to the background of the Merger, financial projections, and analyses of Castlights financial advisor.
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