Uh... You do realize that the splash damage is less than the direct damage, right? Direct is AD + 20/30/40/50/60 + 40%AP, splash is 20/30/40/50/60 + 40%AP + 20/25/30/35/40% AD. The splash is only relevant for waveclear and teamfighting, and even then the Flare would still give you a big boost to your single-target damage alongside the damage, and the healing is pretty darned good. My point is that if you're playing Kayle in the jungle, the Flare is going to be better than Lizard Elder flat out, and probably better than Spectral Wraith as well.
A max-stack Spectral Wraith adds 20 magic damage to your E-empowered autoattacks (or 32 damage with max stacks , plus an additional 9.6 damage if you have a deathcap). A Flare gives you 15 + 33 mixed damage on E-empowered AAs with no stacks and has no cap on stacks, and the AD scales better for the Q than AP would. Additionally, the other stats are important: Wraith gives you 10% CDR, but Flare gives you 35% AS. The Flare is practically built for Kayle, it gives her a ton of things she loves: AS, AD, on-hit damage, on-hit healing. For a jungler, the gold gain is also better because it isn't capped like Conservation is, and the long-range ward is icing.
I don't think that there are many champions that would do better with Flare than Wraith or Lizard, but Kayle is one of them. Maybe back when the Q was a more important part of your single-target damage I would have seen it differently, but as it is, for jungle Kayle, Flare looks very nice.