Form 10-K - Annual Report

For purposes of this Annual Report, the terms “TriNet," "the” “the Company,"” “we,” “us” and “our"“our” refer to TriNet Group, Inc., and its subsidiaries. This Annual Report on Form 10-K (Form 10-K) contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as, but not limited to, “ability,” “anticipate,” “believe,” “can,” “continue,” “could,” “design,” “estimate,” “expect,” “forecast,” “hope,” “impact,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “value,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. Examples of forward-looking statements include, among others, TriNet’s expectations regarding: the impact of our vertical approach, our ability to leverage our scale and industry HR experience to deliver vertical product and service offerings; the growth of our customer base,base; planned improvements to our technology platform; our ability to roll out additional productdrive operating efficiencies and improve the customer experience; the impact of our customer service initiatives; the volume and severity of insurance claims; metrics that may be indicators of future financial performance; the relative value of our benefit offerings as and when planned, our ability to make enhancements to our technology platform, our ability to remediateversus those SMBs can independently obtain; the material weaknessprincipal competitive drivers in our internal controls over financial reporting,market; our ability to execute on our vertical market strategy, our abilityplans to retain clients and penetratemanage client attrition; our investment strategy and its impact on our ability to generate future interest income, net income, and Adjusted EBITDA; seasonal trends and their impact on our business; fluctuations in the market for human resources (HR) solutions for smallperiod-to-period timing of when we incur certain operating expenses; the estimates and assumptions we use to midsize businesses,prepare our financial statements; and other expectations, outlooks and forecasts on our future business, operational and financial performance.

Forward-looking statements are not guarantees of future performance, but are based on management’s expectations as of the date of this Form 10-K and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past results, performance or achievements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The information provided in this Form 10-K is based upon the facts and circumstances known at this time, and any forward-looking statements made by us in this Form 10-K speak only as of the date of this Form 10-K. We undertake no obligation to revise or update any of the information provided in this Form 10-K, except as required by law.

PART I

Item 1. Business

TriNet is a leading provider of human resources (HR) solutions for small to midsize businesses (SMBs). Under our co-employment model, we assume certain of the responsibilities of being an employer and help our clients mitigate certain employer-related risks and manage many of the complex and burdensome administrative and compliance responsibilities associated with employment.

Our Products and Services

We deliver a comprehensive suite of products and services, which allows our clients to administerthat facilitates the administration and managemanagement of various HR-related functions for our clients, including compensation and benefits, payroll processing, employee data, health insurance and workers' compensation programs, and other transactional HR needs using our technology platform and HR, benefits and compliance expertise.

Our comprehensive HR products and solutions include the following common capabilities:

We use the collective insightsknowledge and experience of our teams of HR, benefits, risk management and compliance professionals to help clients mitigatemanage many of the administrative, regulatory and practical risksrequirements associated with their responsibilities asbeing employers. We assist ourOur HR professionals and services help clients in running their business by providingaddress a variety of HR services, from widely used services like employee onboardingissues, including consulting on talent management, retention and terminations, benefits enrollment, immigration and support, employment practices risk managementvisas, payroll tax credits, labor law and administration, talent management, recruitingregulatory developments and training,many other industry-specific and performance management to more specialized services like immigration services. Each ofgeneral HR topics. Depending on their needs, our clients and WSEs have access to varying levels of service and support from our HR expertsprofessionals ranging from call center support for basic questions, to pooled specializedHR resources, and to onsite consulting and services, depending on the needs of the client and WSEs. In addition, our teams of in-houseservices. Our HR professionals can also provide additional incrementalspecialized HR consulting and other services upon request.

We utilize our vertical strategy, we seek to design our product and service offerings for specific industries by identifying common needs and leveraging scale and shared experience to provide more efficientour clients and relevant offerings. For example, our fifth vertical product, TriNet Main Street, supports hospitality, retail, property management, and other similar industries. These industries are labor intensive and often operate from many disparate taxing and geographic locations. Based on the common needs of these industries, we have created time and attendance expertise, hiring and termination expertise, workers’ compensation safety consultants, and a compelling suite of benefit plans that are attractive to both our clients' executives and hourly workers.

Under our benefit and insurance programs, we pay premiums to third-party insurance carriers for WSE insurance benefits and reimburse the insurance carriers andor third-party administrators for claims payments made on our behalf within our insurance deductible layer, where applicable.

Our productstechnology platform includes online and services are designed to helpmobile tools that allow our clients comply with local, state and federal employmentWSEs to store, view, and benefit laws. We monitor employment-related developmentsmanage HR information and assist clients in complying with changing regulations and requirements at all levels, from changes in state and local employment laws, such as minimum wage and family leave ordinances, to sweeping federal reforms such as the 2017 Tax Cuts and Jobs Act (TCJA) and the Patient Protection and Affordable Care Act (ACA). Often these changes are staggered and require additional guidance fromadminister a variety of local, state or federal agencies, or resultHR transactions, such as payroll processing, tax administration, employee onboarding and termination, compensation reporting, expense management, and benefits enrollment and administration. Our online tools also incorporate workforce analytics, allowing clients to generate HR data, payroll, total compensation and other custom reports.

In 2019, we continued to make significant investments in complementary or responsive changes, making compliance a continuous challenge. Each componentour technology platform on projects intended to provide our users with improved functionality, HR management options, and security. We intend to continue to invest in our technology platform to improve its functionality, ease of use, security and the overall user experience for our clients and WSEs. We believe the continued investment in and improvement of our HR solutions is designed with compliance in mind, whether it is payroll processingtechnology platform will drive operating efficiencies and tax administration, HR services focused on creating a compliant workplace, or offering ACA-compliant benefit plans.improve the client experience.

Our Co-Employment Model

We operate underusing a co-employment business model, under which employment-related responsibilities are contractually allocated by contract between us and our clients. This model allows WSEs to receive the full benefit of our services, including ouraccess to TriNet-sponsored employee benefit plan offerings. Each of our clients enters into a client service agreement with us that defines the suite of professional and insurance services and benefits to be provided by us, the fees payable to us, and the division of responsibilities between us and our clients as co-employers. WSEs also separately acknowledge the co-employment relationship and the allocation of employment-related responsibilities between TriNet and our clients. The division of responsibilities under our client service agreements is typically as follows:

We generally assume responsibility for, and manage certain risks associated with:

Our clients are responsible for employment-related responsibilities that we do not specifically assume, generally including:

As a result of our co-employment relationship with each of our WSEs,relationships, we are liable for payment of salary, wages and certain other compensation to the WSEs as reported and paid to us by the client, and are responsible for providing specified employee benefits to such persons to the extent provided in each client service agreement and under federal and state law. In most instances, clients are required to remit payment prior to the applicable payroll date by wire transfer or automated clearinghouse transaction (ACH).ACH.

We also assume responsibility for payment and liability for the withholding and remittance of federal and state income and employment taxes with respect to salaries, wages and certain other compensation paid to WSEs, although we reserve the right to seek recourse against our clients for any liabilities arising out of their conduct. We perform these functions as the statutory employer for federal employment tax purposes, since our clients transfer legal control over these payroll functions to us. The laws that govern the payment of salaries, wages and related payroll taxes for our WSEs are very complex and the various federal, state and local laws that govern such payments can have significant differences. For example, except to the extentvary significantly. Based on applicable federal and state laws otherwise provide, thelaw in any jurisdiction, we or our client may be held ultimately liable for those obligations if we fail to remit taxes and the bonding security provided by the Employer Services Assurance Corporation (ESAC) or other surety is not sufficient to satisfy the obligation.taxes. 

Sales and Marketing

We sell our solutions primarily through our direct sales organization. We have aligned our sales organization by industry vertical with the goal of growing profitable market share in our targeted industries. This vertical approach deepens our network of relationships and gives us an understanding of the unique HR needs facing SMBs in those industries.

We sponsor and participate in associations and events around the country and utilize these forums to target specific vertical and geographic markets. We also generate sales opportunities within key industry verticals, through marketing alliances and other indirect channels, such as accounting firms, venture capital firms, incubators, insurance brokers, and other vertical market industry associations. Additionally, we utilize digital marketing programs, including digital advertising, search and email marketing, to create awareness and interest in our products.

Our marketing organization is charged with driving overall brand awareness, managing lead generation, creating and managing our focus on various channel relationshipswebsite and alliances that drive referrals toother online properties, creating content for our direct sales force. Finally,outbound and inbound marketing efforts, media relations, and managing our sales representatives benefit from building strong relationships with prospects during the salessponsorships, major marketing events, and client service processes, resultingcommunications. In 2019 our marketing team focused on strategic marketing, communications and branding initiatives, in referrals to new prospects as well as direct support through providing reference calls in regard topart by augmenting our productscomprehensive company re-branding campaign, Incredible Starts Here, with our marketing campaign, People Matter, that included social media and services.advertising across digital, television, radio and out-of-home media.

Legal and Regulatory

We must also comply with the federal and state payroll tax and unemployment tax requirements that apply where our clients are located. Tax reform efforts, and other payroll tax changes, at the federal, state and local level can impact our payroll tax reporting obligations for our clients and the products and services we can provide. State unemployment taxes are based on taxable wages and tax rates assigned by each state. The tax rates vary by state and are determined,based, in part, based on our prior years’ compensation and unemployment claims experience in each state. Certain ratesand may also vary based on the overall claims experience of a PEO. As a result, depending on where clients are located, the fees we charge for unemployment taxes can be higher or lower than a client could obtain alone. In some cases, the unemployment taxes we pay can also determined, in part, by each client’s own compensation and unemployment claims experience. In addition, states have the ability under law to increase unemployment tax rates, includingbe retroactively increased to cover deficiencies in the unemployment tax funds.

Strategic Acquisitions

Historically, we have pursued strategic acquisitions to both expand our product capabilities and supplement our growth across geographies and certain industry verticals. Our acquisition targets have included PEOs and other HR solution providers as well as technology companies or technology product offerings to supplement or enhance our existing HR solutions. We intend to continue to pursue strategic acquisitions, where appropriate, that will enable us to add new clients and WSEs, expand our presence in certain geographies or industry verticals and offer our clients and WSEs more attractive products and services.

Client Industries and Geographies

Our clients are distributed across a variety of industries, including technology, life sciences, not-for-profit, professional services, financial services, life sciences, not-for-profit, property management, retail, manufacturing, and hospitality. Our clients execute annual service contracts with us that automatically renew. Generally, our clients may cancel these contracts with thirty days' notice to us and we may cancel these contracts with thirty days' notice.

We conductNearly all of our business primarily inrevenues are generated within the United States of America (U.S.), with more than 99% of our total revenues being attributable to WSEs in the U.S. and the remainder being attributable to WSEs in Canada. Substantiallyits territories and substantially all our long-lived assets are located in the U.S.United States.

Seasonality

Our business is affected by seasonality in client business activity and WSE product selection, during benefits open enrollment. health claims costs and payroll taxes:

Competition

We face significant competition in the form of companies serving their HR needs in both traditional and non-traditional manners. These forms of competition include:from:

Our competitors include large PEOs such as the TotalSource unit of Automatic Data Processing, Inc., the PEO operations of Paychex, Inc. and Insperity, Inc., as well as specialized and smaller PEOs and similar HR service providers with PEO operations. If, and toTo the extent that we and other companies providing these services are successful in growing our businesses, we anticipate that future competitors will enter this industry.

We believe that our services are attractive to many SMBs in part because of our ability to provide access to a broad range of TriNet-sponsored workers' compensation, health insurance and other benefits programs on a cost-effective basis. We compete with insurance brokers and other providers of thisinsurance and benefits coverage, in this regard, and our offerings must be priced competitively with those provided by these competitors in order for us to attract and retain our clients.

Intellectual Property

We own or license from third parties various computer software, as well as other intellectual property rights, used in our business. Generally, we protect our intellectual property rights through the use of confidentiality and non-disclosure agreements and policies with our employees and third-party partners and vendors, although we currently have one pending U.S. patent application covering our technology.vendors. We also own registered trademarks in the U.S.,United States, Canada and the European Union covering our name and other trademarks and logos that we believe are materially important to our operations.

Corporate Employees

We refer to our employees that are not co-employed with our clients as our corporate employees. We had approximately 2,7002,900 corporate employees as of December 31, 2017. None of our2019. Our corporate employees are not covered by a collective bargaining agreement.

Corporate and Other Available Information

We were incorporated in 1988 as TriNet Employer Group, Inc., a California corporation. We reincorporated as TriNet Merger Corporation, a Delaware corporation, in 2000 and during that year changed our name to TriNet Group, Inc. Our principal executive offices areoffice is located at 1100 San Leandro Blvd.,One Park Place, Suite 400, San Leandro,600, Dublin, CA 9457794568 and our telephone number is (510) 352-5000. Our website address is www.trinet.com. Information contained in or accessible through our website is not a part of this report.

On the Investor Relations page of our Internet website at http://www.trinet.com, we make available, free of charge, ourOur Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge at investor.trinet.com as soon as reasonably practicable after we file such material is electronically filed with, or furnishedfurnish it to, the SEC.

Item 1A. Risk Factors

Our business is subject to numerous complex laws, and changes in, uncertainty regarding, or adverse application of these laws could negatively affect our business.

The products and services we provide to our clients are subject to numerous complex federal, state and local laws and regulations, including those described under the heading "Legal and Regulatory" in Part I, Item 11. Business, of this Form10-K. Many of these laws (such as ERISA, the ACA and state healthcareForm 10-K. These laws and other federalregulations cover a diverse range of topics, including employer, employee and stateindependent contractor classifications, employee benefit, health and retirement plan laws, workers' compensation laws, employment and payroll tax laws, such asworksite safety laws, insurance and banking laws, wage and hour laws, anti-discrimination laws, etc.) mayand many laws specific to the industries of our clients. Many of these laws do not result in a consistent approachspecifically address PEOs or co-employment relationships, and regulators are often unfamiliar with the PEO industry and co-employment relationships, which can lead to unpredictable application, interpretation and enforcement of these laws and regulations at the federal, state and local level, may not specifically address PEOs and co-employment relationships or may allow significant regulatory interpretation and discretionlevels in enforcement. As a result, there is uncertainty in how they might be appliedrelation to our operations and those of our clients and WSEs.business.

Any such new laws,of these changes in laws or adverse application or interpretation of laws could have a material adverse effect on our financial condition and results of operations. Changes

The laws that apply in our industry and to employers and co-employers have in the past, and could in the future, be changed, replaced or uncertainty regarding, the TCJA, ACA and other health care reforms or tax reforms could materially impactinterpreted in a manner adverse to our businessoperations and we are not able to predict the occurrence, direction or ultimate impact of these events. Any such reforms onnew laws, change in laws or adverse application or interpretation of laws could reduce or eliminate the attractiveness of our business operations.

If we are not recognized as an employer of worksite employees under federal and state regulations, or are deemed to be an insurance agent or third-party administrator, we and our clients could be adversely impacted.

In order to sponsor our employee benefit plan offerings for WSEs, we must qualify as an employer of WSEs for certain purposes under the Code and ERISA. In addition, our status as an employer is important for purposes of ERISA’s preemption of certain state laws. The definition of employer under various laws is not uniform, and under both the Code and ERISA, the term is defined in part by complex multi-factor tests.

Generally, these tests are designed to evaluate whether an individual is an independent contractor or employee and they provide substantial weight to whether a purported employer has the right to direct and control the details of an individual's work. Some factors that the IRS has considered important in the past in evaluating this issue have included the employer’s degree of behavioral control (the(for example the extent of instructions, training and the natureevaluation of the work), financial control and the economic aspects of the work relationship, the intenttype of the parties,relationship, as evidenced by the specific benefit,

If we were found not to be an employer for ERISA purposes, it could adversely affect the manner in which we are able to provide employee benefits to WSEs. Similarly, to qualify for favorable tax treatment under the Code, certain employee benefit plans, such as 401(k) retirement plans and cafeteria plans must be established and maintained by an employer for the exclusive benefit of its employees. All of our 401(k) retirement plans are operated pursuant to guidance provided by the IRS and we have received favorable determination letters from the IRS confirming the qualified status of thethese plans. However, the IRS uses its own complex, multi-factor test to ascertain whether an employment relationship exists between a worker and a purported employer. Although we believe that we qualify as an employer of WSEs under the Code, we cannot assure you that the IRS will not challenge thisour position or continue to provide favorable determination letters. Moreover, the IRS' 401(k) guidance and qualification requirements are not applicable to the operation of our cafeteria plans.

If we are not recognized as an employer under the Code or ERISA, we may be required to change the method by which we report and remit payroll taxes to the tax authorities and the method by which we provide, or discontinue providing, certain employee benefits to WSEs, whichWSEs. Such changes could have a material adverse effect on our business and results of operations.

We must also qualify as co-employers of WSEs and comply with state licensing, certification and registration requirements for the regulation of PEOs. Forty-twoPEOs at the federal level and in nearly every state. We expect states have passed such laws and other states may implement suchwithout these regulations to adopt similar requirements in the future.future and states without these regulations today often still have laws and regulations applicable to PEOs. While we believe that we satisfy theseapplicable state regulations, these requirements vary from state to state, they have changed frequently in the past, and could change frequently and ifagain in the future, with potentially material impact on our operations. If we are not able to satisfy existing or future licensing requirements or other applicable regulations in any state, we may be prohibited from doing business in that state, including having any clients within that state.

In addition, stateState regulatory authorities generally impose licensing requirements on companies acting as insurance agents or third-party administrators, such as those that handle health or retirement plan funding and claim processing. Other state regulatory authorities impose licensing requirements on companies involved in the transmission of cash, such as banks, and other money transmitters. We do not believe that our current activities require any such licensing,licenses, but ifwe and others in our industry have received inquiries from regulatory authorities in the past and could receive them in the future. If regulatory authorities in any state determine that we are acting as an insurance agent, third-party administrator, money transmitter, or as any other regulated industry other than a third-party administrator,PEO, we may need to hire additional personnel to manage regulatory compliance and become obligated to pay annual regulatory fees, which could have a material adverse effect on our financial condition and results of operations.

Our co-employment relationship with our worksite employees exposes usWe are subject to business risks.legal and tax proceedings that may result in adverse outcomes.

We are subject to claims, suits, government investigations, and proceedings arising from the co-employerordinary course of our WSEs. Asbusiness. Refer to Note 10 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for additional information about the co-employer of our WSEs, we assume certain obligations and responsibilities of an employer. For instance,legal proceedings we are responsiblecurrently involved in and future proceedings that we may face. Current and future legal proceedings may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, results of operations, financial condition and liquidity.

In addition, the tax authorities in the U.S. regularly examine our income and other tax returns. Refer to Note 13 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for providing health benefits toadditional details regarding our WSEs regardlesson-going tax examinations and disputes. The ultimate outcome of whethertax examinations and disputes cannot be predicted with certainty. Should the costIRS or other tax authorities assess additional taxes as a result of providing benefits exceeds the fees received from our clients. However, the extent of our responsibility forthese or other aspects of our co-employer relationship with our WSEs remains subject to regulatory uncertainty at the state and federal level. For example, under certain circumstances,examinations, we may be foundrequired to be responsible for paying salaries, wages and related payroll taxesrecord charges to operations that could have a material impact on our results of our WSEs, even if our clients have not timely remitted payments to us.operations, financial position or cash flows.

Our results of operations and stock price may fluctuate as a result of numerous factors, many of which are outside of our control.

Our future operating results and stock price are subject to fluctuations and quarterly variations based upon a variety of factors, many of which are not within our control, including, without limitation:

Many of the above factors are discussed in more detail elsewhere in this “Risk Factors”Risk Factors section and in Part II, Item 77. MD&A, of this Form 10-K. Many of these factors are outside our control, and the variability and unpredictability of these factors have in the past and could in the future cause us to fail to meet our expectations and the expectations of investors and any industry analysts who cover our shares, which could result in a decline in our share price and reduced liquidity in our shares. In addition, the occurrence of one or more of these factors might cause our results of operations to vary widely, which could lead to negative impacts on our margins, short-term liquidity, orand our ability to retain or attract key personnel, and could cause other unanticipated issues, including a downgrade of our shares by or change in opinion of industry analysts and a related decline in our share price. Accordingly, we believe that quarter-to-quarter and annual comparisons of our revenues, results of operations and cash flows may not be meaningful and should not be relied upon as an indication of our future performance.

The terms of our credit facility may restrict our current and future operations, which would impair our ability to respond to changes in our business and to manage our business.

Our credit facility contains, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us subject to customary exceptions, including restricting our ability to:

Our failure to comply with these restrictions and the other terms and conditions under our credit facility could result in a default, which in turn could result in the termination of the lenders’ commitments to extend further credit to us under our credit facility and acceleration of a substantial portion of our indebtedness then outstanding under our credit facility. If that were to happen, we may not be able to repay all of the amounts that would become due under our indebtedness or refinance our debt, which could materially harm our business and force us to seek bankruptcy protection.

Atairos, our largest stockholder, may have significant influence over our Company, and the existing ownership of capital stock, and thus the voting control, of our Company remains concentrated in our executive officers, directors and their affiliates, which limits your ability to influence corporate matters.

On February 1, 2017, an entity affiliated with Atairos Group, Inc. (together with its affiliates, “Atairos”) became our largest stockholder when it acquired the shares of TriNet common stock previously held by General Atlantic. In connection with this transaction, we appointed Michael J. Angelakis, the Chairman and CEO of Atairos, to our board of directors and agreed to nominate Mr. Angelakis or another designee of Atairos reasonably acceptable to our Nominating and Corporate Governance Committee for election at future annual meetings until Atairos’ beneficial ownership falls below 15% of our common stock. As of February 20, 2018,January 31, 2020, Atairos beneficially owned approximately 28% of our outstanding common stock, and all of our directors, executive officers and their affiliates, including Atairos, beneficially own, in the aggregate, approximately 38%37% of our outstanding common stock. As a result of the foregoing, Atairos, particularly when acting with our executive officers, directors and their affiliates, who beneficially owned in the aggregate, approximately 38% of our outstanding common stock, will beis able to exert substantial influence on all matters requiring

Item 1B. Unresolved Staff Comments

Item 2. Properties

We lease space for 4954 offices in various U.S. states, in the U.S., including the following:

All of these leases expire at various times up through 2028. We believe that our leases are sufficient for our current purposes and long-term growth and expansion goals.

Item 3. Legal Proceedings

For the information required in this section, refer to Note 1310 in Part II, Item 88. Financial Statements and Supplementary Data, of this Form 10-K.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock has been listedis traded on the New York Stock Exchange under the symbol “TNET” since March 2014. The following table sets forth for the periods indicated the high and low sales prices per share of our common stock as reported on the New York Stock Exchange for the quarters indicated below:.

For information regarding our equity-based incentive plans, please refer to Part III, Item 1212. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Form 10-K.

We did not declare or pay cash dividends in 20172019 or 2016.2018. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions under our credit facility (refer to Note 89 in Part II, Item 88. Financial Statements and Supplementary Data, of this Form 10-K), capital requirements, business prospects and other factors our board of directors may deem relevant.

The following table provides information about our purchases of TriNet common stock during the fourth quarter of 2017:2019:

Our stock repurchases and dividends are subject to certain restrictions under the terms of our credit facility. For more information about our stock repurchases and dividendthe restrictions imposed by our credit facility, refer to Note 812 in Part II, Item 8. Financial Statements and Note 9 in Item 8Supplementary Data, of this Form 10-K.

Item 6. Selected Financial Data

The following selected consolidated financial and other data should be read in conjunction with Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsMD&A, as well as our audited consolidated financial statements and related notes included in Part II, Item 88. Financial Statements and Supplementary Data, of this Form 10-K.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP),GAAP, we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long-term and provide useful information that we use in order to maintain and grow our business.

The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our consolidated results for 2019 reflect our 2017 fiscal year reflect continued progress in attracting new customers to our industry-oriented (vertical) products, serving our existing customers and improving our brand awareness through marketing.

Our efforts to build a successful and enduring company include building and leveraging a strong national brand presence. Our branding strategy, Incredible Starts Here, is being augmented with our 2017 favorable insurance experience,current campaign: People Matter. We place our customers at the center of what we launched a fee credit initiative that was designed to reward certain clients. The total amount of credit was less than 0.5% of total 2017 revenue. Eligible clients will receivedo, including placing our customers at the fee credit in the first quarter of 2018.

OurThese operational achievements drove the financial revenue and earnings performance exceeded our expectations, which was primarily attributableimprovements noted below in 2019 when compared to slower than expected growth in insurance costs. The insurance cost savings were driven by reduced administrative costs and lower than forecast per enrollee medical costs. Our per enrollee aggregate trailing twelve month medical cost trend (medical cost trend) was in the range of 3.5% to 4%. We attribute the lower medical cost trend to both lower medical utilization and reduced prescription drug price increases.2018: