Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 05, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-35811 | |
Entity Registrant Name | Benefytt Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-1282634 | |
Entity Address, Address Line One | 3450 Buschwood Park Drive | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Tampa | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33618 | |
City Area Code | 813 | |
Local Phone Number | 397-1187 | |
Title of 12(b) Security | Class A Common Stock, $0.001 par value | |
Trading Symbol | BFYT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001561387 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,579,927 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 687,667 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 13,640 | $ 3,771 |
Restricted cash | 15,591 | 17,788 |
Accounts receivable, net, prepaid expenses and other current assets | 4,187 | 2,911 |
Income taxes receivable | 22,858 | 18,210 |
Advanced commissions, net | 32,379 | 45,250 |
Contract asset | 177,567 | 184,474 |
Total current assets | 266,222 | 272,404 |
Long-term contract asset | 190,861 | 209,239 |
Property and equipment, net | 5,376 | 5,415 |
Deferred tax asset, net | 4,290 | 0 |
Right-of-use assets | 16,089 | 496 |
Goodwill | 94,814 | 135,182 |
Intangible assets, net | 21,733 | 28,963 |
Other assets | 1,805 | 159 |
Total assets | 601,190 | 651,858 |
Current liabilities: | ||
Accounts payable and accrued expenses | 42,663 | 51,477 |
Commissions payable | 85,631 | 97,785 |
Contingent consideration, current | 3,611 | 0 |
Current portion of long-term debt, net | 10,446 | 10,684 |
Operating lease liabilities, current | 1,907 | 237 |
Other current liabilities | 644 | 557 |
Total current liabilities | 144,902 | 160,740 |
Commissions payable, long-term | 65,208 | 82,369 |
Contingent consideration, long-term | 64,234 | 65,171 |
Debt, net, long-term | 195,709 | 167,947 |
Due to member | 34,496 | 29,121 |
Deferred tax liability, net | 0 | 5,722 |
Operating lease liabilities, long-term | 14,454 | 224 |
Other liabilities | 298 | 590 |
Total liabilities | 519,301 | 511,884 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Preferred stock (par value $0.001 per share, 5,000,000 shares authorized; no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively) | 0 | 0 |
Additional paid-in capital | 132,623 | 118,465 |
Treasury stock, at cost (3,907,705 and 3,945,587 shares as of June 30, 2020 and December 31, 2019, respectively) | (124,740) | (127,400) |
Retained earnings | 58,759 | 110,418 |
Total Benefytt Technologies, Inc. stockholders’ equity | 66,660 | 101,501 |
Noncontrolling interests | 15,229 | 38,473 |
Total stockholders’ equity | 81,889 | 139,974 |
Total liabilities and stockholders' equity | $ 601,190 | $ 651,858 |
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 3,907,705 | 3,945,587 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 17 | $ 16 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 17,141,345 | 16,219,217 |
Common stock, shares outstanding (in shares) | 13,233,640 | 12,273,630 |
Class B Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 1 | $ 2 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 1,016,667 | 1,916,667 |
Common stock, shares outstanding (in shares) | 1,016,667 | 1,916,667 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 3,907,705 | 3,945,587 |
Class A Common Stock | ||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 17,141,345 | 16,219,217 |
Common stock, shares outstanding (in shares) | 13,233,640 | 12,273,630 |
Class B Common Stock | ||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 1,016,667 | 1,916,667 |
Common stock, shares outstanding (in shares) | 1,016,667 | 1,916,667 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 52,106 | $ 58,356 | $ 123,667 | $ 145,682 |
Operating expenses: | ||||
Third-party commissions | 20,480 | 26,910 | 53,250 | 87,581 |
Selling, general and administrative | 20,309 | 18,586 | 48,255 | 34,183 |
Loss on impairment | 0 | 0 | 41,076 | 0 |
Marketing and advertising | 14,262 | 2,787 | 32,715 | 5,849 |
Credit card and ACH fees | 1,316 | 1,582 | 2,733 | 3,105 |
Depreciation and amortization | 4,807 | 1,639 | 9,152 | 2,771 |
Total operating expenses | 61,174 | 51,504 | 187,181 | 133,489 |
(Loss) income from operations | (9,068) | 6,852 | (63,514) | 12,193 |
Other expense: | ||||
Interest expense | 1,830 | 1,349 | 3,924 | 1,694 |
TRA expense | 370 | 0 | 370 | 0 |
Fair value adjustment to acquisition contingent consideration | (207) | 0 | 2,674 | 0 |
Other expense | 0 | (17) | 0 | 0 |
Net (loss) income before income taxes | (11,061) | 5,520 | (70,482) | 10,499 |
(Benefit) provision for income taxes | (3,434) | 2,290 | (13,040) | 5,087 |
Net loss | (7,627) | 3,230 | (57,442) | 5,412 |
Net (loss) income attributable to noncontrolling interests | (234) | 943 | (5,783) | 1,794 |
Net (loss) income attributable to Benefytt Technologies, Inc. | $ (7,393) | $ 2,287 | $ (51,659) | $ 3,618 |
Net (loss) income per share attributable to Benefytt Technologies, Inc. | ||||
Basic (in USD per share) | $ (0.60) | $ 0.22 | $ (4.24) | $ 0.33 |
Diluted (in USD per share) | $ (0.60) | $ 0.20 | $ (4.24) | $ 0.30 |
Weighted average Class A common shares outstanding | ||||
Basic (in shares) | 12,353,320 | 10,596,833 | 12,188,220 | 10,990,474 |
Diluted (in shares) | 12,353,320 | 11,487,774 | 12,188,220 | 11,978,065 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) $ in Thousands | Total | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Noncontrolling Interests | Class A Common Stock | Class A Common StockCommon Stock | Class A Common StockAdditional Paid-in Capital | Class A Common StockTreasury Stock | Class B Common StockCommon Stock | Restricted StockCommon Stock | Restricted StockAdditional Paid-in Capital | Restricted StockTreasury Stock |
Beginning balance at Dec. 31, 2018 | $ 143,468 | $ 94,194 | $ (67,185) | $ 80,804 | $ 35,638 | $ 14 | $ 3 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Class A common stock in a private offering | 1,848 | 1 | |||||||||||
Issuance of Class A common stock for acquisition consideration | 11,783 | 1 | |||||||||||
Exchange of Series B Membership interests and exchange and cancellation of Class B common stock | (1,757) | (1) | |||||||||||
Issuance of shares from treasury | $ (402) | $ 402 | $ (5,196) | $ 5,196 | |||||||||
Forfeitures of restricted stock held in treasury | 587 | 587 | |||||||||||
Stock-based compensation | 4,967 | ||||||||||||
Repurchases of Class A common stock | (63,916) | ||||||||||||
Class A common stock withheld in Treasury from restricted share vesting | (1,889) | ||||||||||||
Net (loss) income | 5,412 | 3,618 | 1,794 | ||||||||||
(Distributions) contributions | (2,568) | ||||||||||||
Ending balance at Jun. 30, 2019 | 97,349 | 107,781 | $ (127,979) | 84,422 | 33,107 | $ 16 | $ 2 | ||||||
Beginning balance (in shares) at Dec. 31, 2018 | 2,038,475 | 12,387,349 | 2,541,667 | ||||||||||
Increase (Decrease) In Stockholders' Equity, Shares [Roll Forward] | |||||||||||||
Repurchases of Class A common stock (in shares) | (1,981,241) | (1,981,241) | (1,981,241) | ||||||||||
Issuance of Class A common stock in private offering (in shares) | 125,000 | ||||||||||||
Issuance of Class A common stock for acquisition consideration (in shares) | 630,000 | ||||||||||||
Issuance of Class A common stock under equity compensation plans (in shares) | 538,393 | ||||||||||||
Issuance of shares from treasury (in shares) | 169,236 | 12,236 | 157,000 | ||||||||||
Class A common stock withheld in treasury from restricted share vesting (in shares) | 68,545 | 68,545 | |||||||||||
Forfeitures of restricted stock held in treasury (in shares) | 21,939 | 21,939 | |||||||||||
Exchange of Series B Membership interest and exchange and cancellation of Class B common stock (in shares) | (125,000) | ||||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 3,940,964 | 11,778,253 | 2,416,667 | ||||||||||
Beginning balance at Mar. 31, 2019 | 99,224 | 93,340 | $ (108,758) | 82,135 | 32,490 | $ 15 | $ 2 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Class A common stock for acquisition consideration | 11,783 | 1 | |||||||||||
Issuance of shares from treasury | (395) | 395 | 1 | $ (1) | |||||||||
Stock-based compensation | 3,052 | ||||||||||||
Repurchases of Class A common stock | (18,644) | ||||||||||||
Class A common stock withheld in Treasury from restricted share vesting | (971) | ||||||||||||
Net (loss) income | 3,230 | 2,287 | 943 | ||||||||||
(Distributions) contributions | (326) | ||||||||||||
Ending balance at Jun. 30, 2019 | 97,349 | 107,781 | $ (127,979) | 84,422 | 33,107 | $ 16 | $ 2 | ||||||
Beginning balance (in shares) at Mar. 31, 2019 | 3,288,137 | 11,512,687 | 2,416,667 | ||||||||||
Increase (Decrease) In Stockholders' Equity, Shares [Roll Forward] | |||||||||||||
Repurchases of Class A common stock (in shares) | (630,000) | (630,000) | (630,000) | ||||||||||
Issuance of Class A common stock for acquisition consideration (in shares) | 630,000 | ||||||||||||
Issuance of Class A common stock under equity compensation plans (in shares) | 288,393 | ||||||||||||
Issuance of shares from treasury (in shares) | 12,018 | 12,018 | |||||||||||
Class A common stock withheld in treasury from restricted share vesting (in shares) | 34,845 | 34,845 | |||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 3,940,964 | 11,778,253 | 2,416,667 | ||||||||||
Beginning balance at Dec. 31, 2019 | 139,974 | 118,465 | $ (127,400) | 110,418 | 38,473 | $ 16 | $ 2 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Class A common stock in a private offering | 14,119 | 1 | |||||||||||
Exchange of Series B Membership interests and exchange and cancellation of Class B common stock | (17,464) | (1) | |||||||||||
Issuance of shares from treasury | (3,055) | 3,055 | (2,246) | $ 2,246 | |||||||||
Forfeitures of restricted stock held in treasury | 227 | 227 | |||||||||||
Stock-based compensation | 5,018 | ||||||||||||
Class A common stock withheld in Treasury from restricted share vesting | (2,414) | ||||||||||||
Net (loss) income | (57,442) | (51,659) | (5,783) | ||||||||||
(Distributions) contributions | 95 | 3 | |||||||||||
Ending balance at Jun. 30, 2020 | 81,889 | 132,623 | $ (124,740) | 58,759 | 15,229 | $ 17 | $ 1 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 3,945,587 | 12,273,630 | 1,916,667 | ||||||||||
Increase (Decrease) In Stockholders' Equity, Shares [Roll Forward] | |||||||||||||
Repurchases of Class A common stock (in shares) | 0 | ||||||||||||
Issuance of Class A common stock in private offering (in shares) | 900,000 | ||||||||||||
Issuance of Class A common stock under equity compensation plans (in shares) | 22,128 | ||||||||||||
Issuance of shares from treasury (in shares) | 165,242 | 95,242 | 70,000 | ||||||||||
Class A common stock withheld in treasury from restricted share vesting (in shares) | 117,597 | 117,597 | |||||||||||
Forfeitures of restricted stock held in treasury (in shares) | 9,763 | 9,763 | |||||||||||
Exchange of Series B Membership interest and exchange and cancellation of Class B common stock (in shares) | (900,000) | ||||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 3,907,705 | 13,233,640 | 1,016,667 | ||||||||||
Beginning balance at Mar. 31, 2020 | 87,933 | 131,943 | $ (125,643) | 66,152 | 15,463 | $ 17 | $ 1 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Class A common stock in a private offering | 147 | ||||||||||||
Issuance of shares from treasury | $ (1,538) | $ 1,538 | $ (480) | $ 480 | |||||||||
Forfeitures of restricted stock held in treasury | 227 | 227 | |||||||||||
Stock-based compensation | 2,314 | ||||||||||||
Class A common stock withheld in Treasury from restricted share vesting | (888) | ||||||||||||
Net (loss) income | (7,627) | (7,393) | (234) | ||||||||||
(Distributions) contributions | 10 | ||||||||||||
Ending balance at Jun. 30, 2020 | $ 81,889 | $ 132,623 | $ (124,740) | $ 58,759 | $ 15,229 | $ 17 | $ 1 | ||||||
Beginning balance (in shares) at Mar. 31, 2020 | 3,915,690 | 13,203,527 | 1,016,667 | ||||||||||
Increase (Decrease) In Stockholders' Equity, Shares [Roll Forward] | |||||||||||||
Repurchases of Class A common stock (in shares) | 0 | ||||||||||||
Issuance of Class A common stock under equity compensation plans (in shares) | 22,128 | ||||||||||||
Issuance of shares from treasury (in shares) | 62,955 | 47,955 | 15,000 | ||||||||||
Class A common stock withheld in treasury from restricted share vesting (in shares) | 45,207 | 45,207 | |||||||||||
Forfeitures of restricted stock held in treasury (in shares) | 9,763 | 9,763 | |||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 3,907,705 | 13,233,640 | 1,016,667 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities: | ||
Net (loss) income | $ (57,442) | $ 5,412 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Stock-based compensation | 4,834 | 4,733 |
Fair value adjustment to contingent acquisition consideration | 2,674 | 0 |
Loss on disposal of assets | 459 | 0 |
Provision for allowance for doubtful accounts | 277 | 0 |
Impairment of assets | 41,076 | 0 |
Depreciation and amortization | 9,152 | 2,771 |
Deferred financing costs | 274 | 0 |
Deferred income taxes | (8,257) | 346 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable, prepaid expenses and other assets | (2,922) | 22 |
Decrease in advanced commissions | 12,594 | 1,916 |
Increase in income taxes receivable | (4,648) | 0 |
Increase in right-of-use asset | (15,593) | (625) |
Decrease in contract asset | 24,577 | 5,213 |
Increase (decrease) in lease liability | 15,823 | (544) |
Decrease in accounts payable, accrued expenses and other liabilities | (7,942) | (5,025) |
Decrease in commission payable | (29,315) | (19,439) |
Decrease in income taxes payable, net | 0 | (3,739) |
Increase in due to member pursuant to tax receivable agreement | 275 | 0 |
Net cash used in operating activities | (14,104) | (8,959) |
Investing activities: | ||
Business acquisition: release of hold-back | (1,000) | 0 |
Business acquisition, net of cash acquired | 0 | (47,319) |
Capitalized internal-use software and website development costs | (1,218) | (854) |
Purchases of property and equipment | (940) | (285) |
Net cash used in investing activities | (3,158) | (48,458) |
Financing activities: | ||
Proceeds from borrowings under credit agreement | 33,000 | 198,094 |
Payments on borrowings under credit agreement | (5,750) | (65,000) |
Payments related to tax withholding for share-based compensation | (2,414) | (1,889) |
Purchases of Class A common stock pursuant to share repurchase plan | 0 | (63,916) |
Contributions (distributions) | (98) | 2,333 |
Net cash provided by financing activities | 24,934 | 64,956 |
Net increase in cash and cash equivalents, and restricted cash | 7,672 | 7,539 |
Cash and cash equivalents, and restricted cash at beginning of period | 21,559 | 25,999 |
Cash and cash equivalents, and restricted cash at end of period | 29,231 | 33,538 |
Cash paid during the period for: | ||
Income taxes, net | 47 | 8,490 |
Interest | 3,619 | 1,328 |
Non-cash investing activities: | ||
Capitalized stock-based compensation | 184 | 234 |
Non-cash financing activities: | ||
Change in due to member related to Exchange Agreement | 5,100 | 517 |
Change in deferred tax asset related to Exchange Agreement | (1,755) | (609) |
Issuance of Class A common stock in a private offering related to Exchange Agreement | 14,120 | 1,849 |
Exchange of Class B membership interests related to Exchange Agreement | (17,465) | (1,758) |
Declared but unpaid distribution to member of Health Plan Intermediaries Holdings, LLC | $ 0 | $ 235 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Summary of Significant Accounting Policies | Organization, Basis of Presentation and Summary of Significant Accounting Policies Benefytt Technologies, Inc. ("BFYT") is a Delaware corporation that was incorporated on October 26, 2012 under the name Health Insurance Innovations, Inc. and that changed its name to Benefytt Technologies, Inc, on March 6, 2020. In this quarterly report, unless the context suggests otherwise, references to the "Company," "we," "us" and "our" refer to Benefytt Technologies, Inc. (formerly known as Health Insurance Innovations, Inc.) and its consolidated subsidiaries. The term "HPIH" refers to our majority owned subsidiary, Health Plan Intermediaries Holdings, LLC, on a stand-alone basis. The terms "HealthPocket" or "HP" refer to HealthPocket, Inc., which was acquired by HPIH on July 14, 2014 (and is now wholly owned by Health Insurance Innovations Holdings, LLC, or "HIIH," a wholly owned subsidiary of HPIH formed on December 17, 2018). The term "Benefytt Reinsurance" refers to Benefytt, LLC, a wholly owned subsidiary of HIIH which was formed on May 1, 2019. The term "TogetherHealth" collectively refers to the three subsidiaries TogetherHealth PAP LLC, TogetherHealth Insurance LLC, and Rx Helpline LLC, which were acquired by HPIH on June 5, 2019, and are all wholly owned subsidiaries of HPIH. The term "TIB" refers to Total Insurance Brokers, LLC which was acquired on August 5, 2019 and is wholly owned by HPIH. The term "ASIA" refers to American Service Insurance Agency LLC, a wholly owned subsidiary which was acquired by HPIH on August 8, 2014. HP, HIIH, Benefytt Reinsurance, TogetherHealth, TIB, and ASIA are consolidated subsidiaries of HPIH, which is a consolidated subsidiary of BFYT. Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC for quarterly reports on Form 10-Q. Accordingly, they do not include all of the financial information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The information included in this quarterly report, including the interim condensed consolidated financial statements and the accompanying notes, should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, stockholders' equity, and cash flows of the Company. The condensed consolidated results for th e three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2020. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements. These estimates also affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimates, and any such differences may be material to our financial statements. We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained. Any such changes will be recognized in the condensed consolidated financial statements. Reclassifications Right of use assets and operating lease liabilities are now reported as separate line items on the condensed consolidated balance sheets. As of December 31, 2019, right of use assets were reported as a component of other assets and operating lease liabilities were reported as a component of other liabilities . These amounts have been reclassified to conform to the current period presentation. Summary of Significant Accounting Policies The following is an update to our significant accounting policies described in Note 1, Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies, in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. Financial Instruments - Credit Losses (Topic 326) Allowance for Credit Losses - Advanced Commissions: The allowance for credit losses is a valuation account that is deducted from the gross amount of advanced commissions to present the net amount expected to be collected. Advanced Commissions are charged against the allowance when management believes that it is no longer collectible based on future collections of premium from each distributor's book of business. This allowance for credit losses is netted against our long-term advanced commissions which are classified within other assets on the condensed consolidated balance sheets. Management estimates the allowance balance using relevant available information, from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments are made for differences such as lower than estimated persistency of a distributor's book of business, changes in conditions, or other relevant factors. The allowance for credit loss is measured on a collective basis as similar risks characteristics exists. The adoption of this standard did not have a material impact on our condensed consolidated financial statements. Recent Accounting Pronouncements Recently adopted accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which amends the guidance for evaluating impairment of financial assets subject to risks such as contract assets, loans, receivables, and other financial assets. The amendments affect contract assets, loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 became effective for us on January 1, 2020. See Summary of Significant Accounting Polices within this Note 1 for further information. Accounting pronouncements not yet adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The objective of this ASU is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (LIBOR). The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this pronouncement on our financial statements and related disclosures and have not adopted any of the temporary optional guidance. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this pronouncement on our financial statements and related disclosures. The Company has reviewed all other issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combination | Business Combinations TogetherHealth On June 5, 2019, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with RxHelpline, LLC ("RXH"), TogetherHealth PAP, LLC ("THP"), TogetherHealth Insurance, LLC ("THI" and, collectively with RXH and THP, "TogetherHealth"), TogetherHealth Soup, L.P. ("Seller") and certain principals of TogetherHealth, pursuant to which HPIH purchased 100% of the outstanding limited liability company interests of TogetherHealth (the "Interests"). The closing of the transactions contemplated by the Purchase Agreement occurred on June 5, 2019, simultaneous with the signing of the Purchase Agreement. The purchase price for the Interests under the Purchase Agreement was approximately $50.0 million in cash, subject to certain closing and post-closing adjustments (the "Cash Consideration"), the issuance of 630,000 shares of the Company's Class A common stock, and an earn-out agreement pursuant to which the Seller will receive payments over a five-year post-closing period equal to a percentage of the TogetherHealth's gross margin above specified thresholds. Pursuant to the Purchase Agreement, a portion of the cash consideration consisting of $2.5 million was held back by HPIH in order to fund payment of post-closing adjustments to the cash consideration and post-closing indemnification obligations of the parties. The Company has subsequently released $1.5 million, of which $1.0 million was released during the six months ended June 30, 2020. The shares issued pursuant to the Purchase Agreement are subject to lock-up agreements pursuant to which the holders thereof are restricted from selling or transferring such shares for a three-year period, subject to a release from the lock-up of one-third of the subject shares on each of the first three anniversary dates of the Purchase Agreement and subject to other release-acceleration provisions and customary exceptions. The following table summarizes the fair value of the consideration paid for the acquisition as of June 5, 2019 ($ in thousands): Cash consideration (1) $ 49,852 Class A common stock, at fair value (2) 11,784 Earnout consideration, at fair value (3) 49,298 Settlement of intercompany balances (560) Total consideration $ 110,374 (1) Cash consideration was $50.0 million, of which $2.5 million was withheld by HPIH for the payment of post-closing adjustments. Measurement period adjustments resulted in $148,000 for working capital adjustments. (2) The fair value of the Class A common stock derived from the market price of the stock, adjusted to include a discount for lack of marketability due to the trading restrictions pursuant to the Purchase Agreement. (3) Represents the fair value estimate of income-based contingent consideration, which may be realized by the sellers incrementally over five years after the closing date of the acquisition. The fair value of the contingent consideration arrangement as of the acquisition date was estimated using a risk-adjusted probability analysis. As of June 5th, 2019, management estimated the payments to be approximately $97.6 million over the five years however the maximum cash payout is unlimited. The assets acquired and the liabilities assumed in the final purchase price allocation are stated at fair value based on estimates of fair value using information and assumptions available which management believes are reasonable. The following table summarizes the allocation of the total purchase price for the acquisition ($ in thousands): Cash $ 179 Accounts receivable and other assets (1) 333 Contract asset (1)(2) 12,798 Property, plant and equipment (1) 34 Intangible asset - brand 430 Intangible asset - BPO relationship 24,700 Goodwill 72,660 Accounts payable, accrued expenses, and other liabilities (1) (760) Total $ 110,374 (1) The carrying value of accounts receivable, contract asset, property, plant and equipment, accounts payable and accrued expenses approximated fair value; as such, no adjustments to the accounts were recorded in association with the acquisition. (2) Final adjustments of $708,000 were made during the first quarter of 2020 due to revisions of collection estimates of policies in force. No adjustments were made during the three months ended June 30, 2020. The goodwill allocated to the purchase price was calculated as the fair value of the consideration less the assets acquired and liabilities assumed. This value of goodwill is primarily related to the expected results of future operations of TogetherHealth, its existing operational processes, and the experience of the acquired executives. The amount of goodwill that is expected to be deductible for tax purposes is $48.5 million. As a result of acquiring TogetherHealth, our condensed consolidated results of operations include the results of TogetherHealth since the acquisition date. TogetherHealth's revenues for the three and six months ended June 30, 2020 were $9.9 million and $26.3 million, respectively. For the three and six months ended June 30, 2020 pre-tax net loss was $4.3 million and $6.8 million, respectively. Pre-tax net loss for three and six months ended June 30, 2020 includes $3.1 million and $6.2 million of amortization expense, respectively, associated with the acquired intangible assets noted above. Other Acquisitions On July 29, 2019, the Company entered into a Stock Purchase Agreement to acquire the interests of a corporation, which owned and operated HealthInsurance.com. The acquisition was accounted for as a purchase of an asset and classified as an intangible asset on the condensed consolidated balance sheet. On August 5, 2019, the Company entered into a Membership Interest Purchase Agreement with TIB Florida Holdco, Inc. to acquire 100% of the outstanding limited liability company interests of TIB, a distribution company, to complement our entrance into the business of distributing Medicare. The $22.3 million purchase price of TIB was allocated to the identifiable assets acquired and liabilities assumed based on estimates of their fair value with the excess purchase price of $22.2 million recorded as goodwill. This value of goodwill is primarily related to the expected results of future operations of TIB. The purchase price included an earnout, with an estimated fair value as of August 5, 2019, of $19.3 million, estimated using a risk-based probability analysis. The earnout agreement stipulates payments of $1.0 million per year for the first three years, if certain gross margin thresholds are met, plus a percentage of the acquired company's gross margin above specified thresholds for the first five years. As of August 5, 2019, management estimated the payments to be approximately $72.5 million if all conditions are satisfied; however the maximum payout is unlimited. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Except for items detailed below there have been no material changes to goodwill and intangible assets as reported within the Company's Annual Report on Form 10-K for the year ended December 31, 2019. During the first quarter of 2020, in conjunction with the preparation of the 2020 annual guidance, the Board of Directors approved a significant change in our overall business strategy to accelerate growth within the Medicare segment. The Company planned to de-emphasize its IFP segment while maximizing cash flows and enhancing e-commerce capabilities within IFP. By decreasing emphasis on new IFP business, the Company plans to use cash flows from the IFP segment to invest in accelerating growth of the Medicare segment. As the Company progressed with its plans to shift toward Medicare and away from IFP, the Company decreased the number and amount of advance commissions made to certain third-party distributors while redeploying that capital to a limited number of our highest-quality IFP third-party distributors. This action in conjunction with the planned decrease in forecasted IFP revenue was deemed to be a triggering event for impairment testing. The Company performed a quantitative analysis as of February 29, 2020 using both market and income approaches (comparative company and discounted cash flow, respectively) to estimate the fair value of our reporting units. Forecasts of future cash flows were based on our best estimate of future revenues and operating expenses, based primarily on expected Company growth, pricing, market share, and general economic conditions, which at the time did not consider an estimate for the impact of COVID-19, if any. As a result of the impairment analysis, the Company determined that the carrying value of the IFP segment exceeded its fair value, such that the Company recorded a $41.1 million impairment charge to reduce goodwill which is recorded as loss on impairment on the condensed consolidated statement of operations for the six months ended June 30, 2020. The loss on impairment has no impact on operating cash flows, debt covenants or on the metrics for which the Company evaluates itself. The changes in the carrying amounts of goodwill were as follows ($ in thousands): IFP Medicare Total Balance as of December 31, 2019 $ 41,076 $ 94,106 $ 135,182 Purchase accounting measurement period adjustment — 708 708 Goodwill impairment adjustment (41,076) — (41,076) Balance as of June 30, 2020 $ — $ 94,814 $ 94,814 Amortization expense for the three and six months ended June 30, 2020 was $3.7 million and $7.2 million, respectively. No impairment was present for definite lived intangibles as of June 30, 2020 or December 31, 2019. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for real estate and certain equipment. Our leases have remaining lease terms of one As of June 30, 2020 and December 31, 2019, the Company had right of use assets of approximately $16.1 million and $496,000, respectively, on the condensed consolidated balance sheet. As of June 30, 2020, current and non-current lease liabilities were approximately $1.9 million and $14.5 million, respectively. As of December 31, 2019, current and non-current lease liabilities were approximately $237,000 and $224,000, respectively. Operating lease expense was $777,000 and $173,000 for the three months ended June 30, 2020 and 2019, respectively. Operating lease expense was $1,282,000 and $347,000 for the six months ended June 30, 2020 and 2019, respectively. Short-term lease expense was immaterial for the three and six months ended June 30, 2020 and 2019. The difference between the undiscounted cash flows and the operating lease liabilities recorded on the condensed consolidated balance sheet as of June 30, 2020 is approximately $2.4 million compared to $30,000 as of December 31, 2019. Supplemental cash flow information related to operating leases were as follows ($ in thousands): Six Months Ended June 30, 2020 2019 Cash paid within operating cash flows $ 919 $ 370 The following table summarizes the maturities of operating lease liabilities as of June 30, 2020 ($ in thousands): Remainder of 2020 $ 1,120 2021 2,792 2022 2,876 2023 2,654 2024 2,695 2025 2,760 Thereafter 3,789 Total lease payments $ 18,686 The weighted-average remaining lease term and discount rates are as follows: June 30, 2020 December 31, 2019 Weighted-average remaining lease term 6.6 years 1.8 years Weighted-average discount rate 3.95 % 4.31 % |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following ($ in thousands): June 30, 2020 December 31, 2019 Carriers and vendors payable $ 15,499 $ 17,876 Marketing and advertising costs 6,936 11,732 Professional fees 2,635 2,022 Customer care and enrollment costs 4,106 4,501 Legal fees and contingencies 8,812 5,511 Compensation and benefits 2,203 5,905 Acquisition costs 66 1,305 Other 2,406 2,625 Total accounts payable and accrued expenses $ 42,663 $ 51,477 Accrued marketing and advertising costs decreased significantly due to the seasonality of the business surrounding Medicare's Annual Election Period. Legal fees increased as a result of the Company's heightened efforts to resolve several outstanding matters. Legal fees are now presented as a separate line item within the above table. These fees were previously reported as a component of professional fees and have been reclassified to conform to current period presentation. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Except for items detailed below there have been no material changes to debt as reported within the Company's Annual Report on Form 10-K for the year ended December 31, 2019. As of June 30, 2020, we had a $207.5 million outstanding balance from draws on the Credit Facility and there was nothing available to be drawn upon. As of December 31, 2019, we had a $180.3 million outstanding balance from draws on the Credit Facility. As of June 30, 2020, and December 31, 2019, there was $254,000 and $246,000, respectively, of accrued interest included in accounts payable and accrued expenses on the condensed consolidated balance sheets. The Company requested and the lender agreed to amend the financial covenants of the Credit Facility to increase the Consolidated Total Leverage Ratio, as defined within the Credit Facility, to 3.5:1 from 3.0:1 through September 30, 2020. The Company is in compliance with all debt covenants. For further information on the Credit Facility see Note 9 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The debt maturity schedule for our long-term debt is as follows ($ in thousands): As of Issuance Date Maturity Date June 30, 2020 December 31, 2019 Rate Non-current portion of line of credit June 2019 2022 $ 65,000 $ 32,000 2.62 % Non-current portion of term loan June 2019 2021 - 2022 131,250 136,875 2.52 % Non-current portion of unamortized debt issuance costs (541) (928) 195,709 167,947 Current portion of term loan June 2019 2020 - 2021 11,250 9,375 2.41 % Current portion of line of credit June 2019 2020 — 2,000 — % Current portion of unamortized debt issuance costs (804) (691) $ 206,155 $ 178,631 The aggregate contractual maturities of debt for each of the five fiscal years are as follows ($ in thousands): Remainder of 2020 2021 2022 2023 2024 2025 Debt repayments $ 5,625 $ 13,125 $ 188,750 $ — $ — $ — |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Except for the items detailed below, there have been no material changes to Stockholders' Equity as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Tax Obligation Settlements and Treasury Stock Transactions Treasury stock is recorded pursuant to the surrender of shares by certain employees to satisfy statutory tax withholding obligations on vested restricted stock awards and the exercise of stock appreciation rights ("SARs"). In addition, certain forfeited stock-based awards are transferred to and recorded as treasury stock, and certain restricted stock awards may have been granted from shares in Treasury. During the three and six months ended June 30, 2020, there were 45,207 and 117,597 shares, respectively, transferred to Treasury for statutory tax withholding obligations as a result of SARs exercises or vested restricted stock awards. During the three and six months ended June 30, 2019, there were 34,845 and 68,545 shares, respectively, transferred to Treasury for statutory tax withholding obligations as a result of SARs exercises or vested restricted stock awards. During the three and six months ended June 30, 2020, there were 62,955 and 165,242 shares, respectively, that were reissued out of Treasury for issuances of stock related to a combination of exercises and grants under our Long Term Incentive Plan. During the three and six months ended June 30, 2019, there were 12,018 and 169,236 shares, respectively, that were reissued out of Treasury for issuances of stock related to a combination of exercises and grants under our Long Term Incentive Plan. During the three and six months ended June 30, 2020, there were 9,763 shares transferred to Treasury as a result of forfeitures of stock awards. During the three months ended June 30, 2019, there were no shares transferred to Treasury as a result of forfeitures of stock awards. During the six months ended June 30, 2019, there were 21,939 shares transferred to Treasury as a result of forfeitures of stock awards For the six months ended June 30, 2020 and 2019, there were cash outflows of $2.4 million and $1.9 million, respectively, to cover the tax obligations for the settlement of share vesting and exercises under the Company's Long Term Incentive Plan. Share Repurchase Program During the three and six months ended June 30, 2020, there were no repurchases of our registered Class A common stock. During the three and six months ended June 30, 2019, we repurchased 630,000 and 1,981,241 shares, respectively, of our registered Class A common stock under the share repurchase program at an average price per share of $29.57 and $32.23, respectively. Exchange Agreement On January 22, 2020, the sole holders of our Class B common stock, Health Plan Intermediaries, LLC (“HPI”) and Health Plan Intermediaries Sub, LLC (“HPIS”), two companies owned and controlled by our founder Michael Kosloske, exchanged a total of 900,000 shares of Class B common stock and an equal number of Series B membership interests for 900,000 shares of Class A common stock. This transaction contributed to a 6.4% decrease in HPI and HPIS' collective economic interest in HPIH since December 31, 2019. See Note 16 within this quarterly report and Note 10 of our Annual Report on Form 10-K for the year ended December 31, 2019 for further information as it relates to the Exchange Agreement. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregated Revenue The following tables present our revenue, disaggregated by major product type and timing of revenue recognition ($ in thousands): Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Sales and Marketing Services Member Management Total Sales and Marketing Services Member Management Total Revenue by Source Commission revenue (1) STM (2) $ 13,204 $ 946 $ 14,150 $ 21,758 $ 1,014 $ 22,772 HBIP 8,323 907 9,230 14,152 1,691 15,843 Supplemental (2) 10,119 968 11,087 15,522 1,143 16,665 Medicare 15,710 — 15,710 1,203 — 1,203 Services revenue — 567 567 — 957 957 Consumer engagement revenue 801 — 801 916 — 916 Other revenues 561 — 561 — — — Total revenue $ 48,718 $ 3,388 $ 52,106 $ 53,551 $ 4,805 $ 58,356 Timing of Revenue Recognition Transferred at a point in time $ 48,718 $ — $ 48,718 $ 53,551 $ — $ 53,551 Transferred over time — 3,388 3,388 — 4,805 4,805 Total revenue $ 48,718 $ 3,388 $ 52,106 $ 53,551 $ 4,805 $ 58,356 (1) For the purposes of disaggregated revenue presentation, when additional Discount Benefit products are sold with an STM, HBIP, or supplemental product, the associated revenue for the Discount Benefit products are reported within the STM, HBIP, or supplemental product category depicted within the table. (2) The Company changed its presentation of brokerage revenue during the fourth quarter of 2019. Previously brokerage revenue was reported as a separate line item with the disaggregated revenue table however the Company has reclassified the revenue into the respective STM or supplemental category that the brokerage sales were associated with. The following table presents our revenue, disaggregated by major product type and timing of revenue recognition ($ in thousands): Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Sales and Marketing Services Member Management Total Sales and Marketing Services Member Management Total Revenue by Source Commission revenue (1) STM (2) $ 33,341 $ 1,881 $ 35,222 $ 53,857 $ 1,898 $ 55,755 HBIP 20,729 2,112 22,841 42,480 3,488 45,968 Supplemental (2) 25,985 1,998 27,983 37,137 2,255 39,392 Medicare 32,452 — 32,452 1,203 — 1,203 Services revenue — 1,198 1,198 — 2,125 2,125 Consumer engagement revenue 3,082 — 3,082 1,239 — 1,239 Other revenues 889 — 889 — — — Total revenue $ 116,478 $ 7,189 $ 123,667 $ 135,916 $ 9,766 $ 145,682 Timing of Revenue Recognition Transferred at a point in time $ 116,478 $ — $ 116,478 $ 135,916 $ — $ 135,916 Transferred over time — 7,189 7,189 — 9,766 9,766 Total revenue $ 116,478 $ 7,189 $ 123,667 $ 135,916 $ 9,766 $ 145,682 (1) For the purposes of disaggregated revenue presentation, when additional Discount Benefit products are sold with an STM, HBIP, or supplemental product, the associated revenue for the Discount Benefit products are reported within the STM, HBIP, or supplemental product category depicted within the table. (2) The Company changed its presentation of brokerage revenue during the fourth quarter of 2019. Previously brokerage revenue was reported as a separate line item with the disaggregated revenue table however the Company has reclassified the revenue into the respective STM or supplemental category that the brokerage sales were associated with. Reassessment of Variable Consideration After our initial estimate and constraint of variable consideration is made, in accordance with ASC 606 the Company reassesses its estimate and constraint at the end of each reporting period. As more information about the underlying uncertainties becomes known, the Company will make adjustments as required. For IFP product sales, during the three months ended June 30, 2020, we recognized a $1.1 million increase in revenue primarily as a result of longer than expected durations related to the reassessment of variable consideration. During the six months ended June 30, 2020, we recognized a $1.9 million decrease in revenue primarily as a result of changes in estimates due to lower retention of Health Benefit Insurance Plans ("HBIP") and positive reassessments as previously described. For Medicare product sales, adjustments to revenue during the three months ended June 30, 2020 were immaterial. During the six months ended June 30, 2020, we recognized a $1.8 million decrease in revenue due to adjusting significant measurement estimates as a result of actual amounts received on plans sold during the 2019 Medicare Annual Election Period. Commissions Expense - In connection with the reassessment of variable consideration, the Company also had a change in estimate for the three and six months ended June 30, 2020 which decreased previously recorded commissions expense by $2.9 million and $6.1 million, respectively. The change in estimate related to lower retention on HBIP and supplemental products and the positive impact of lifetime value calculations within the prepaid commission arrangements. Remaining Performance Obligations As of June 30, 2020, approximately $14.5 million of member management revenue is expected to be recognized over the next 60 months from the remaining performance obligations for IFP and supplemental contracts. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation No SARs or stock options were granted during the three and six months ended June 30, 2020 or 2019. The following table summarizes restricted shares granted (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares 37 224 92 484 The following table summarizes stock-based compensation expense ($ in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares $ 2,120 $ 2,857 $ 4,667 $ 4,624 SARs 194 195 351 343 Less amounts capitalized for internal-use software (107) (135) (184) (234) Total $ 2,207 $ 2,917 $ 4,834 $ 4,733 The following table summarizes unrecognized stock-based compensation expense and the remaining weighted average period over which such stock-based compensation expense is expected to be recognized as of June 30, 2020 ($ in thousands): Unrecognized Expense Weighted Average Remaining Years Restricted shares $ 11,285 2.0 SARs 736 1.7 Total $ 12,021 The amounts in the table above do not include the cost of any additional awards that may be granted in future periods nor any changes in our forfeiture rate. During the three and six months ended June 30, 2020, there were 63,472 and 157,222 SARs exercised resulting in respective increases of 47,955 and 95,242 issued shares of Class A common stock. During the three and six months ended June 30, 2019 there were 152,007 and 152,632 SARs exercised resulting in respective increases of 74,195 and 74,334 shares of issued Class A common stock. During the three and six months ended June 30, 2020 there were 500 and 1,000 SARs forfeited, respectively. During the three and six months ended June 30, 2019, there were 1,500 and 9,000 SARs forfeited, respectively. During the three and six months ended June 30, 2020 and 2019, there were no options exercised or forfeited. During the three and six months ended June 30, 2020, there were no restricted stock awards issued for performance shares. During the three months ended June 30, 2019, there were no restricted stock awards issued for performance shares. During the six months ended June 30, 2019 there were 147,000 restricted stock awards issued for performance shares. These awards were previously granted in which the performance metrics were contractually satisfied during the respective period. We recognized $595,000 and $1.2 million respectively, in income tax benefits from stock-based activity for the three and six months ended June 30, 2020. We recognized income tax benefits of $293,000 and $367,000 respectively from stock-based activity for the three and six months ended June 30, 2019. For the three and six months ended June 30, 2020, we capitalized $107,000 and $184,000, respectively, of stock-based compensation expense related to the development of internal-use software. For the three and six months ended June 30, 2019, we capitalized $135,000 and $234,000, respectively, of stock-based compensation expense related to the development of internal-use software. |
Net (Loss) Income per Share
Net (Loss) Income per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net (Loss) Income Per Share | Net (Loss) Income per Share The computations of basic and diluted net income per share attributable to BFYT were as follows ($ in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Basic net (loss) income attributable to Benefytt Technologies, Inc. $ (7,393) $ 2,287 $ (51,659) $ 3,618 Weighted average shares—basic 12,353,320 10,596,833 12,188,220 10,990,474 Effect of dilutive securities: Restricted shares — 516,900 — 537,021 SARs — 372,202 — 448,482 Stock options — 1,839 — 2,088 Weighted average shares—diluted 12,353,320 11,487,774 12,188,220 11,978,065 Basic net (loss) income per share attributable to Benefytt Technologies, Inc. $ (0.60) $ 0.22 $ (4.24) $ 0.33 Diluted net (loss) income per share attributable to Benefytt Technologies, Inc. $ (0.60) $ 0.20 $ (4.24) $ 0.30 Potential common shares are included in the diluted per share calculation when dilutive. Potential common shares consist of Class A common stock issuable through unvested restricted stock grants and stock appreciation rights and are calculated using the treasury stock method. The following securities were not included in the calculation of diluted net income per share because such inclusion would be anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares 672 45 697 83 SARs 246 5 285 12 Stock options 4 — 4 — |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes BFYT is organized as a corporation and as of June 30, 2020, is a 92.9% owner of HPIH, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a result, HPIH is not subject to federal and in most state jurisdictions entity level income taxation; however, any taxable income or loss generated by HPIH is passed through to and included in the taxable income or loss of its members, including BFYT, on a pro rata basis. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law. The CARES Act includes several provisions for corporations including allowing companies to carryback certain Net Operating Losses (“NOLs”), increasing the amount of deductible interest, and increasing the amount of NOLs that corporations can use to offset income. The benefit and provision for income taxes for BFYT, inclusive of its allocable share of net taxable loss from HPIH, for the three and six months ended June 30, 2020 was $3.4 million and $13.0 million, respectively, resulting in an effective tax rate of 31.0% and 18.5%, respectively. The provision for income taxes for BFYT, inclusive of its allocable share of net taxable income from HPIH, for the three and six months ended June 30, 2019 was $2.3 million and $5.1 million, respectively, resulting in an effective tax provision rate of 41.5% and 48.5%, respectively. The effective tax rate decreased primarily due to the change in the valuation allowance during three and six months ended June 30, 2020. The effective tax rate for the three and six months ended June 30, 2020 is also different than the federal statutory rate of 21% primarily due to the benefit received from the NOL carrybacks from the CARES Act and changes in the valuation allowance of HIIH. HPIH wholly-owns HIIH, a corporation that reports its U.S. federal and state income taxes separate from BFYT due to the Company’s ownership structure. Consequently, its federal and state tax jurisdictions are separate from those of BFYT, which prevents deferred tax assets and liabilities of BFYT and HIIH from offsetting one another. The effective tax rate for each of the three and six months ended June 30, 2020 and 2019 for HIIH was 0.0%, as we continue to maintain a full valuation allowance against the net HIIH deferred tax assets. On a standalone basis, excluding the effects of HIIH’s effective tax rate, the effective tax rate for the three and six months ended June 30, 2020 for BFYT is 27.3% and 34.2%, respectively. On a standalone basis, excluding the effects of HIIH’s effective tax rate, the effective tax rate for three and six months ended June 30, 2019 for BFYT is 39.4% and 41.2%, respectively. The decrease compared to prior year primarily relates to the change in the valuation allowance during the three and six months ended June 30, 2020 that increased the rate off set by the Company’s discrete tax benefits primarily related to the provisions of the CARES Act, including changes allowing for NOL carryback. Deferred taxes on our investment in HPIH are measured on the difference between the carrying amount of our investment in HPIH and the corresponding tax basis of this investment. We do not measure deferred taxes on differences within HPIH, as those differences inherently comprise our deferred taxes on our external investment in HPIH. Book to tax timing differences that exist in HPIH inherently affect BFYT’s deferred taxes as the outside basis difference changes. For the three and six months ended June 30, 2020 and 2019, respectively, we did not have a balance of gross unrecognized tax benefits, and as such, no amount would favorably affect the effective income tax rate in any future periods. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We measure and report financial assets and liabilities at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (referred to as an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value of our financial assets and liabilities is determined by using three levels of input, which are defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3: Unobservable inputs for the asset or liability. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. We utilize the income approach to measure the fair value of our financial liabilities. As subjectivity exists with respect to many of the valuation techniques, the fair value estimates we have disclosed may not equal prices that we may ultimately realize if the assets are sold or the liabilities are settled with third parties. Below is a description of our valuation methods. Contingent consideration for business acquisitions . Contingent consideration is related to the acquisitions of TogetherHealth and TIB as described in Note 2. The inputs include forecasts of future results, discount rates reflecting the credit risk, and the probability of the underlying outcome of the results required by TogetherHealth and TIB for us to make payments and the nature of such payments. The underlying outcomes are subject to the target results in the respective agreements. These liabilities are included in Level 3 of the fair value hierarchy. The fair values of our contingent consideration arrangements are sensitive to changes in forecasts and discount rates. The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, advanced commissions, carriers and vendors payable, commissions payable, accounts payable and accrued expenses, and debt as of June 30, 2020 and December 31, 2019, respectively, approximate fair value because of the short-term duration of these instruments. As of June 30, 2020, our liabilities measured at fair value were as follows ($ in thousands): Carrying Value Fair Value Measurement as of June 30, 2020 as of June 30, 2020 Level 1 Level 2 Level 3 Liabilities: Contingent acquisition consideration $ 67,845 $ — $ — $ 67,845 $ 67,845 $ — $ — $ 67,845 The following table sets forth changes in Level 3 financial liabilities ($ in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Beginning balance $ 68,052 $ — $ 65,171 $ — Fair value adjustment (207) — 2,674 — Ending balance $ 67,845 $ — $ 67,845 $ — Changes in the fair value of contingent consideration were driven by forecasted changes in the number of agents and marketing cost expectations. The change in fair value is included in fair value adjustment to contingent acquisition consideration on the accompanying condensed consolidated statements of operations. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our President and Chief Executive Officer is our named CODM. The CODM reviews our Company information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has two reportable operating segments within our operating platform: Medicare and IFP. To determine the Company's reportable operating segments, we consider the nature of operating activities, economic characteristics, existence of separate senior management teams and the type of information used by the CODM to evaluate the results of operations. Components with similar economic characteristics, products and services, customers, distribution methods, and operational processes that operate in a similar regulatory environment are combined. The accounting policies of the segments are the same as those described in Note 1, “Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2019. The Company evaluates the performance of its reportable segments based on segment sales and segment operating income. Operating income for each segment includes sales to third parties and related operating expenses directly attributable to the segment. SG&A expenses are included in the segment in which the expenditures are incurred. Operating income for each segment excludes certain expenses managed outside the reportable segments which include various expenses such as corporate expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes. The following table presents a summary of our operating results by segment ($ in thousands): Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Revenue Medicare revenue $ 16,452 $ 35,425 IFP revenue 35,654 88,242 Total revenue 52,106 123,667 Segment Profit Medicare loss (2,631) (4,227) IFP profit 8,869 17,244 Total segment profit 6,238 13,017 Corporate (4,335) (10,182) Interest expense (1,830) (3,924) Depreciation and amortization (4,807) (9,152) Provision for income taxes 3,434 13,040 Loss on impairment — (41,076) Stock-based compensation and related costs (2,309) (5,016) Fair value adjustment to contingent consideration 207 (2,674) Transaction costs (23) (151) Tax receivable agreement liability adjustment (370) (370) Indemnity and other legal costs (3,588) (10,679) Severance, restructuring and other (244) (275) Net loss $ (7,627) $ (57,442) For the three and six months ended June 30, 2019, the Company did not have material operations within the Medicare segment due to the timing of the Company's entrance into Medicare associated with the acquisition of TogetherHealth on June 5, 2019. Accordingly, such profit and loss allocations by segment were not made due to immateriality. There are no material internal revenue transactions between our operating segments. Our CODM does not separately evaluate assets by segment, and therefore assets by segment are not presented. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Health Plan Intermediaries, LLC HPI and its subsidiary HPIS, which are beneficially owned by Mr. Kosloske, a former director of the Company, are deemed to be related parties of the Company by virtue of their Series B Membership Interests in HPIH, of which we are the managing member. During the six months ended June 30, 2020, HPIH did not make any cash distributions for these entities related to estimated federal or state income taxes, pursuant to the operating agreement entered into by HPIH and HPI. No amounts were accrued for estimated federal and state taxes as of June 30, 2020 or December 31, 2019. For the six months ended June 30, 2019, $677,000 in cash distributions were made for estimated federal and state income taxes. Pursuant to the operating agreement of HPIH, we determine when distributions will be made to the members of HPIH and the amount of any such distributions, except that HPIH is required by the operating agreement to make certain pro rata distributions to each member of HPIH quarterly on the basis of the assumed tax liabilities of the members. See Note 16 within this quarterly report and Note 17 of our Annual Report on Form 10-K for the year ended December 31, 2019 for further information as it relates to HPI and HPIS. Tax Receivable Agreement As of June 30, 2020, Series B Membership Interests, together with an equal number of shares of Class B common stock have been exchanged for a total of 7,650,000 shares of Class A common stock subsequent to the IPO. As of June 30, 2020, as a result of these exchanges, we have recorded a liability of $34.5 million pursuant to the Tax Receivable Agreement ("TRA") and is included in long-term liabilities on the accompanying condensed consolidated balance sheets. We have determined that this amount is probable of being paid based on our estimates of future taxable income. This liability represents the share of tax benefits payable to the entities beneficially owned by Mr. Kosloske, if we generate sufficient taxable income in the future. As of June 30, 2020, we have made $3.7 million of cumulative payments under the TRA. See Note 16 within this quarterly report and Note 17 of our Annual Report on Form 10-K for the year ended December 31, 2019 for further information as it relates to the TRA. Legal Proceedings The Company is subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. The Company accrues losses associated with legal claims when such losses are probable and reasonably estimable. If the Company determines that a loss is probable and cannot estimate a specific amount for that loss, but can estimate a range of loss, the best estimate within the range is accrued. If no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. Estimates are adjusted as additional information becomes available or circumstances change. Legal defense costs associated with loss contingencies are expensed in the period incurred. In addition to ordinary-course litigation that the Company does not believe to be material, the Company is a party to the proceedings and matters described below: State Regulatory Examinations Massachusetts Regulatory Inquiry The Company received notification of a civil investigative demand from the Massachusetts Attorney General's Office ("MAG") on June 16, 2016. The MAG requested certain information and documents from the Company to review the Company's practices relating to its compliance with Massachusetts laws and regulations to ensure that they are neither deceptive nor constitute unfair trade practices. The Company has made various personnel available for depositions with the MAG. The MAG asked the Company to certify the completeness of the discovery responses provided to the MAG, and while the Company believes it has complied, the MAG nevertheless moved to compel additional documents and testimony from the Company. The court agreed with the MAG and ordered the Company to produce additional documents and provide further depositions. The Company's appeal against this decision was declined on administrative grounds. The Company otherwise continues to cooperate with the MAG in the interest of bringing the matter to an agreeable conclusion. It is still too early to assess whether the MAG's investigation will result in a material impact on the Company. The Company believes that based on the nature of the allegations raised by the MAG, a loss arising from the future assessment of a civil penalty against the Company is probable. Notwithstanding, due to the procedural stage of the investigative process, the settlement of another party (a carrier) for the same set of allegations, and the fact that the Company has not received evidentiary material from the MAG, the Company is currently unable to estimate the amount of any potential civil penalty or determine a range of potential loss under the MAG's investigation of the Company. California Regulatory Action On August 29, 2018, the Company received an Order to Show Cause and Notice of Hearing from the California Department of Insurance (the "Department") and following proactive engagement by the Company, the Department withdrew its order and issued a subpoena to the Company and certain insurers to allow it to gather more information. The subpoenas relate to whether certain policyholders were eligible to purchase hospital benefit plans. The Company has provided data and documents and continues to cooperate with the Department's inquiry. Claims by individuals that involve independently licensed third-party insurance agencies and their agents, and independent insurance carriers, in which the Company is named as a co-defendant In a case styled as Charles M. Butler, III and Chloe Butler v. Unified Life Ins. Co., et al., Case No. 17-cv-00050-SPW-TJC, U.S. District Court for the District of Montana (Billings Div.) ("Butler case"), in which allegations of misrepresentation and claims handling were made against an independent third-party insurance agency and an insurance carrier, the plaintiff also named the Company as a party. The Company was served on May 11, 2017 and is vigorously asserting defenses against the claims. In a case styled as Carter v. Companion Life Insurance Company et al., Case No. 18-cv-350, U.S. District Court for the District of Alabama ("Carter complaint"), in which allegations were made against an insurance carrier relating to the handling of claims where the plaintiff also named the Company as a party. The Carter complaint was received on March 20, 2018. The Company is vigorously asserting defenses against the claims. In a case styled as David Diaz, et al. v. Health Plan Intermediaries Holdings, LLC, et al., Case No. 18-cv-04240, U.S. District Court for the District of Arizona, filed on August 21, 2018, the two plaintiffs allege misrepresentation relating to the sale of an insurance policy that later allegedly did not cover hospital bills. The insurance agent who sold the policy was an employee of the Company's wholly-owned subsidiary, ASIA, and that agent is also named as a co-defendant. The Company and the individual defendant have answered a subsequently amended complaint and rejected the substantive allegations. Discovery is ongoing. The Company is vigorously asserting defenses against the claims. In a case styled as Aiello v. Lifeshield National Insurance Company, et al., Case No. 19-020396, in the Circuit Court of the 17th Judicial Circuit, Broward County, Florida, dated October 10, 2019, the plaintiff alleges that needed medical care was declined, requiring him to pay out-of-pocket medical bills, and seeks reimbursement for the alleged unpaid bills and unspecified damages. The Company’s prevailed on its Motion to Dismiss on June 29, 2020 with the Court dismissing the Amended Complaint. The plaintiff has 30 days to file a second amended complaint if he wants to proceed. The Company will continue to vigorously assert defenses against any future claims. In a case styled as Ketayi, et. al. v. Health Enrollment Group, et. al., Case No. 20-cv-01198, in the U.S. District Court for the Southern District of California, dated June 26, 2020, styled as a class action but not yet certified, plaintiffs allege misrepresentation, RICO, conspiracy and other state law claims relating to the sale of an insurance policy that allegedly did not cover hospital bills. Once served, the Company will vigorously assert defenses against the claims. In a similar case styled as Griffin, et. al. v. Benefytt Technologies, Inc. et. al., Case No. 20-cv-00630, in the U.S. District Court for the Northern District of Alabama, dated May 5, 2020, styled as a class action but not yet certified, the plaintiffs allege similar claims, and the Company will vigorously asset defenses against them. In a case styled as Griffin, et al., v. Benefytt Technologies, Inc., Case No. 20-cv-00630, U.S. District Court for the Northern District of Alabama, dated May 5, 2020, styled as a class action but not yet certified, two plaintiffs allege misrepresentation, RICO, other claims relating to the sale of an insurance policy that allegedly did not cover medical bills. The Company is vigorously asserting defenses against the claims. The Company has also received claims from insureds relating to lack of carrier coverage, claims handling, and alleged deceptive sales practices relating to carriers with which we do business. In each of these individual insureds' claims, the Company attempts to dismiss, challenge, or resolve the claims as quickly as possible. While it is reasonably possible that a loss may arise from any of the above matters, the amount of such loss is not known or estimable at this time. Other Purported Securities Class Action Lawsuits In September 2017, three putative securities class action lawsuits were filed against the Company and certain of its current and former executive officers. The cases were styled Cioe Investments Inc. v. Health Insurance Innovations, Inc., Gavin Southwell, and Michael Hershberger, Case No. 1:17-cv-05316-NG-ST, filed in the U.S. District Court for the Eastern District of New York on September 11, 2017; Michael Vigorito v. Health Insurance Innovations, Inc., Gavin Southwell, and Michael Hershberger, Case No. 1:17-cv-06962, filed in the U.S. District Court for the Southern District of New York on September 13, 2017; and Shilpi Kavra v. Health Insurance Innovations, Inc., Patrick McNamee, Gavin Southwell, and Michael Hershberger, Case No. 8:17-cv-02186-EAK-MAP, filed in the U.S. District Court for the Middle District of Florida on September 21, 2017. All three of the foregoing actions (the "Securities Actions") were filed after a decline in the trading price of the Company's common stock following the release of a report authored by a short-seller of the Company's common stock raising questions about, among other things, the Company's public disclosures relating to the Company's regulatory examinations and regulatory compliance. All three of the Securities Actions contained substantially similar allegations to those raised in the short-seller report alleging that the Company made materially false or misleading statements or omissions relating to regulatory compliance matters, particularly regarding the Company's application for a third-party administrator license in the State of Florida, which was issued by the State on February 14, 2018. In November and December 2017, the Cioe Investments and Vigorito cases were transferred to the U.S. District Court for the Middle District of Florida, and on December 28, 2017, they were consolidated with the Kavra matter under the case caption, In re Health Insurance Innovations Securities Litigation, Case No. 8:17-cv-02186-EAK-MAP (M.D. Fla.). On February 6, 2018, the court appointed Robert Rector as lead plaintiff and appointed lead counsel, and lead plaintiff filed a consolidated complaint on March 23, 2018. The consolidated complaint, which dropped Patrick McNamee as a defendant and added Michael Kosloske as a defendant, largely sets forth the same factual allegations as the initially filed Securities Actions filed in September 2017 and added allegations relating to alleged materially false statements and omissions relating to the regulatory proceeding previously initiated against the Company by the Montana State Auditor, Commissioner of Securities and Insurance (the "CSI") which proceeding was dismissed on October 31, 2017. The complaint also adds allegations regarding insider stock sales by Messrs. Kosloske and Hershberger. The consolidated complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), SEC Rule 10b-5, and Section 20(a) of the Exchange Act. According to the consolidated complaint, the lead plaintiff in the action is seeking an undetermined amount of damages, interest, attorneys' fees and costs on behalf of a putative class of individuals and entities that acquired shares of the Company's common stock during a period ending September 11, 2017. On May 7, 2018, the Company and co-defendants filed a motion to dismiss all claims. On March 29, 2019, the court sua sponte ordered mandatory mediation before United States Magistrate Judge Christopher Tuite, which did not result in a settlement. On June 28, 2019, the court granted in part, and denied in part, the motion to dismiss, and dismissed all claims against Messrs. Southwell and Kosloske. Discovery commenced, and the Company opposed Plaintiff’s motion to certify the putative class. The parties reached an agreement to resolve the matter without any admission of liability or fault on the part of the Company or any of its current or former personnel for a settlement payment of $2.8 million funded by the Company’s insurers. On February 18, 2019, a putative class action lawsuit styled Julian Keippel v. Health Insurance Innovations, Inc., Gavin Southwell, and Michael D. Hershberger, Case No. 8:19-cv-00421, was filed against the Company, its chief executive officer, and chief financial officer in the U.S. District Court for the Middle District of Florida. According to the complaint, the plaintiff in the action is seeking an undetermined amount of damages, interest, attorneys' fees, and costs on behalf of a putative class of individuals and entities that acquired shares of the Company's common stock during the period February 28, 2018 through November 27, 2018. The complaint alleges that the Company made materially false and/or misleading statements and/or material omissions during the purported class period relating to the Company's relationship with third parties, particularly Health Benefits One LLC/Simple Health Plans and affiliates. The complaint alleges that, among other things, the Company failed to disclose to investors that a substantial portion of the Company's revenues were derived from third parties who allegedly used deceptive tactics to sell the Company's products and that regulatory scrutiny of such third parties would materially impact the Company's operations. The complaint alleges violations of Section 10(b) and Section 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated under the Securities Exchange Act. On May 13, 2019, the court appointed lead plaintiff Oklahoma Municipal Retirement Fund and City of Birmingham Retirement and Relief System and lead counsel Saxena White P.A. The lead plaintiff filed a consolidated amended complaint on July 19, 2019. The consolidated complaint incorporated the allegations from the first complaint and added allegations of alleged materially false or misleading statements or material omissions relating to alleged deficiencies in the Company's compliance and customer service programs and the number of complaints the Company received from consumers relating to third parties, particularly Health Benefits One LLC/Simple Health and affiliates. The complaint also adds allegations regarding insider stock sales by Messrs. Southwell and Hershberger. The plaintiffs are seeking an undetermined amount of damages, interest, attorneys' fees and costs on behalf of putative classes of individuals and entities that acquired shares of the Company's common stock during a purported class period of September 25, 2017 through April 11, 2019. On August 28, 2019, the Company moved to dismiss the action, which the court denied on November 4, 2019. The case is currently in discovery. The lead plaintiffs filed a motion for class certification on May 21, 2020, Defendants filed a response on July 2, 2020, and the lead plaintiffs’ reply is due on August 13, 2020. The Company intends to vigorously defend against these claims. While it is reasonably possible that a loss may arise from this matter, the amount of such loss is not known or estimable at this time. In July 2020, two putative securities class actions were filed against the Company and certain of its current executive officers. The cases are styled Patrick Plumley v. Benefytt Technologies, Inc., Paul E. Avery, Robert Murley, Anthon J. Barkett, John Fichthorn, Peggy B. Scott, Gavin Southwell, Paul Gabos, Daylight Beta Parent Corp, and Daylight Beta Corp., Case No. 20-cv-01017, filed on July 28, 2020, in the United States District Court District of Delaware; and Shine v. Benefytt Technologies, Inc., Paul E. Avery, Robert Murley, Anthony J. Barkett, John Fichthorn, Peggy B. Scott, Gavin Southwell and Paul Gabos, Case No. 20-cv-05976, filed on July 31, 2020, in United States District Court Southern District of New York. Both of the foregoing actions (the “July Securities Actions”) were filed after the July 13, 2020 announcement that the Company had entered into an agreement and plan of merger with Daylight Beta Parent Corp. and Daylight Beta Corp., affiliates of Madison Dearborn Partners, LLC (collectively, “MDP”), pursuant to which, among other things, MDP has commenced a tender offer to purchase all of the Company’s outstanding Class A common stock at a price of $31.00 per share in cash, which is scheduled to expire on August 20, 2020 (the “Proposed Transaction”). Both complaints allege, among other things, violation of the Exchange Act and that the Schedule 14D-9 recommendation statement filed by the Company with the United States Securities and Exchange Commission on or about July 24, 2020 (the “Recommendation Statement”) contains material misstatements and omissions concerning the Proposed Transaction in violation of the federal securities laws. The Company intends to vigorously defend against these claims. Putative Derivative Action Lawsuits and Stockholder Matters Two individuals, Ian DiFalco and Dayle Daniels, filed separate but similar derivative action complaints on April 5 and April 6, 2018, respectively, in the U.S. District Court for the District of Delaware (Case No. Case No. 1:18-cv-00519) naming most of the Company's directors and executive officers at such time as defendants. The derivative complaints assert alleged violations of Section 14(a) of the Exchange Act, Section 10(b) of the Exchange Act and Rule 10b-5, and Section 20(a) of the Exchange Act, and claims for alleged breach of fiduciary duties, alleged unjust enrichment, alleged abuse of control, alleged gross mismanagement, and alleged waste of corporate assets. The factual allegations in the complaints are based largely on the allegations in the above-described In re Health Insurance Innovations Securities Litigation. The plaintiffs are seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, and an undetermined amount of damages, restitution, interest, and attorneys' fees and costs. The DiFalco and Daniels cases have been consolidated, and on June 5, 2018, the court entered an order staying the litigation pending resolution of the In re Health Insurance Innovations Securities Litigation. As a result of the agreement in principle to settle the Securities Litigation, a mediation was held in the Derivative Actions on May 27, 2020. The matter has not been resolved. Certain plaintiffs have moved to lift the stay and to be appointed lead plaintiff/lead counsel. Defendants’ responses to those motions are due August 31, 2020. Otherwise, defendants intend to vigorously defend against these claims. While it is reasonably possible that a loss may arise from this matter, the amount of such loss is not known or estimable at this time. An individual stockholder, Melvyn Klein, filed a derivative action complaint on June 26, 2019, in the U.S. District Court for the District of Delaware naming as defendants Gavin D. Southwell, former director Michael W. Kosloske, director Paul E. Avery, director Anthony J. Barkett, director Paul Gabos, director Robert Murley, former director Bruce Telkamp, former director Sheldon Wang, and former officer Michael D. Hershberger (Case No. 1:19-cv-01206). The derivative complaint asserts alleged violations of Section 14(a) of the Securities Exchange Act, Section 10(b) of the Exchange Act and Rule 10b-5, and Section 20(a) of the Exchange Act, and claims for alleged breach of fiduciary duties, alleged unjust enrichment, and alleged waste of corporate assets. The factual allegations in the complaint are largely the same as the allegations in the above-described DiFalco and Daniels derivative action. The Plaintiff is seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, and an undetermined amount of damages, interest, and attorneys' fees and costs. This action has been consolidated with the above-described DiFalco and Daniels actions (collectively “Consolidated Derivative matter”) and is subject to the stay entered into on June 5, 2018. A mediation was held on May 27,2020. The matter has not been resolved. Certain plaintiffs have moved to lift the stay and to be appointed lead plaintiff/lead counsel. Defendants’ responses to those motions are due August 31, 2020. Otherwise the Company intends to vigorously defend against these claims. While it is reasonably possible that a loss may arise from this matter, the amount of such loss is not known or estimable at this time. In November 2019, the Company received a demand letter on behalf of stockholder Rebecca Leary demanding under Section 220 of the Delaware General Corporation Law that the Company allow Ms. Leary the right to inspect certain Company documents. The letter states that Ms. Leary is making the demand to, inter alia, investigate whether the members of the Company’s Board of Directors breached their fiduciary duties in connection with an alleged failure to ensure that the Company’s sales practices complied with applicable laws and regulations. On December 6, 2019, counsel to the Company responded to the demand by, inter alia, denying that the stockholder had demonstrated a proper purpose for the inspection but agreeing to produce a limited set of documents, which were delivered to counsel to the stockholder in February 2020. On May 15, 2020, Leary filed a putative shareholder derivative complaint asserting alleged violations of Section 14(a) of the Securities Exchange Act, Section 10(b) of the Exchange Act and Rule 10b-5, and Section 20(a) of the Exchange Act, and claims for alleged insider trading, breach of fiduciary duties, and for contribution and indemnification. The Plaintiff is seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, disgorgement of profits realized from allegedly illegal stock sales, and an undetermined amount of damages, restitution, interest, and attorneys’ fees and costs (Rebecca Leary, derivatively on behalf of Benefytt Technologies Inc., formerly known as Health Insurance Innovations, Inc.,v. Paul E. Avery, Anthony J. Barkett, Ellen M. Duffield, John A. Fichthorn, Paul G. Gabos, Michael D. Hershberger, Michael W. Kosloske, Patrick R. McNamee, Robert S. Murley, Peggy B. Scott, Gavin D. Southwell, Bruce A. Telkamp and Sheldon Wang, Case No. 20-664 (D. Del.)). On May 19, 2020 Plaintiff in the action filed a motion for an Order Consolidating the case with the Consolidated Derivative Action, Appointing co-lead and local counsel and lifting the stay in the action. A mediation was held on May 27. 2020. The action has not been resolved. Opposition papers to Plaintiff’s motion are due August 31, 2020. Defendants intend to vigorously defend against these claims. While it is reasonably possible that a loss may arise from this matter, the amount of such loss is not known or estimable at this time. Telephone Consumer Protection Act The Company has received a number of private-party claims relating to telephonic-sales calls allegedly conducted by independent third-party distributors. Generally, these claims assert that the Company violated the Telephone Consumer Protection Act ("TCPA"), although the Company does not engage in the alleged activities. In fact, the Company maintains internal and external compliance staff and processes to monitor independent third-party distributor compliance. Historically, the Company has been successful at obtaining dismissals or settling the claims for immaterial amounts. The Company continues to vigorously defend itself in pending cases, some styled as purported class-actions, filed by what has been determined to be serial-professional plaintiffs or serial TCPA attorneys such as those cases filed by Kenneth Moser, Robert Hossfeld, Mary Bilek, Barbara Mohon, Hanna Thuo (filed June 4, 2020), Anthony Reo (filed April 3, 2020), and Bryan Reo (filed April 3, 2020). On August 7, 2019, the U.S. District Court for the Southern District of California (Case No. 17-CV-1127) certified two classes in the Moser case, and the Company timely appealed the Court’s Order on the Motion for Class Certification. The parties are awaiting a ruling on such. The Company has received other complaints for alleged TCPA violations from other claimants, the majority of which are not lawsuits. The Company believes many of these individuals to be professional plaintiffs and not common consumers. The Company maintains an internal legal department that, among other things, reviews these claims as they arise, coordinates the Company’s response to such, and supports outside counsel when litigation defense is required. While these types of claims have previously settled, been dismissed, or resolved without any material effect on the Company, there is a possibility in the future that one or more of the above cases could have a material effect. The Company commonly uses outside legal counsel to defend against such claims and requires that the independent third-party distributors who are related to any such claims provide indemnification and reimbursement to the Company for the costs associated with these Claims. Health Benefits One, LLC (Simple Health) On November 1, 2018, the Company received notice that a lawsuit styled as Federal Trade Commission v. Simple Health Plans, et al. was filed against an independent third-party distributor and its principal, along with their related companies. The Company is not a party to this case. A temporary restraining order ("TRO") was granted by the United States District Court, Southern District of Florida, against Simple Health Plans, LLC and certain of its affiliates, appointing a receiver (the "Receiver") and imposing other restrictions against the defendants in this case. On November 1, 2018, the Company terminated its relationship with all of the defendants, has been in communication and working cooperatively with the appointed Receiver and the FTC. In coordination with the FTC and the appointed Receiver, the Company continues to transfer funds to the Receiver that would otherwise be due to Simple Health, and the Company and FTC successfully notified all consumers of their ongoing insurance options. Separate from the FTC case against Simple Health, a proposed class action, but not yet certified, styled as Belin et. al. v. Health Insurance Innovations, Inc., et. al., Case No. 19-cv-61430, was filed in the U.S. District Court for the Southern District of Florida on June 7, 2019. The case alleges that the Company conspired with Simple Health using a theory of the Racketeer Influenced and Corrupt Organizations Act along with other claims and seeks unspecified damages. The Company's Motion to Dismiss was partially denied and the Company intends to vigorously defend against the claims. The Company filed its Answer and Affirmative Defenses on June 22, 2020, and mediation is scheduled for August 18, 2020. The Company continues to vigorously defend against the Claims. While it is reasonably possible that a loss may arise from this matter, the amount of such loss is not known or estimable at this time. Other matters We enter into agreements in the ordinary course of business that may require us to indemnify other parties for claims brought by a third-party. From time to time, we have received requests for indemnification. Presently the Company is managing and responding to both formal demands and informal requests for indemnification and defense from a number of carriers related to the Company's settled market conduct examination, states' investigations into carriers relating to agent licensing, private party lawsuits, and the TCPA claims identified above. Management cannot reasonably estimate any potential losses, but these claims could result in a material liability for us. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsThere have been no material changes to the Related Party Transaction disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2019. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Class B Share Exchange On July 8, 2020, HPI and HPIS exchanged a collective total of 329,000 shares of Class B common stock and an equal number of Series B membership interests for 329,000 shares of Class A common stock. This transaction resulted in a 2.3% decrease in HPI and HPIS' collective economic interest in HPIH. Merger Agreement On July 12, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Daylight Beta Parent Corp., a Delaware corporation (“Parent”), and Daylight Beta Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), each affiliates of certain investment funds advised by Madison Dearborn Partners, LLC pursuant to which Merger Sub will, on the terms and subject to the conditions set forth therein, conduct a tender offer for all of the Company’s Class A Common Stock and Class B Common Stock and, following acceptance of the tendered shares, merge with and into the Company. Pursuant to the Merger Agreement, upon the terms and subject to the conditions set forth therein, Parent will cause Merger Sub to commence a cash tender offer (the “Offer”) to purchase all of (i) the shares of the Company’s Class A Common Stock, par value $0.001 per share (the “Class A Shares”), at a price per Class A Share of $31.00, payable net to the seller in cash, without interest, subject to any required withholding taxes and (ii) the shares of the Company’s Class B Common Stock, par value $0.001 per share, at a price per Class B Share of $0.00. Exchange Agreement On July 12, 2020, the Company entered into an Exchange Agreement (the “2020 Exchange Agreement”) with Parent, HPI, HPIS, and together with HPI, (the “Series B Members”) and HPIH pursuant to which, among other things, on or prior to the expiry of the Offer, (i) (A) the Series B Membership Interests of HPIH held by each Series B Member will be exchanged for Class A Shares and such holders’ Class B Shares will be automatically cancelled and (B) each Series B Member will thereafter tender all Shares held or controlled by such Series B Member and its affiliates pursuant to the Offer (which Shares following such exchange will be comprised solely of Class A Shares) and (ii) the Registration Rights Agreement, dated as of February 13, 2013, between the Company and the Series B Members will be terminated pursuant to the terms of the 2020 Exchange Agreement. TRA Termination Agreement On July 12, 2020, the Company entered into a TRA Termination Agreement (the “TRA Termination Agreement”) with HPI, HPIS and HPIH pursuant to which, among other things, at the effective time of the merger, the TRA, dated as of February 13, 2013, among the Company, HPIH and the Series B Members will be terminated and the amount payable in connection with the merger pursuant to the TRA, which has been mutually agreed to be $40.0 million, will become payable, in each case, pursuant to the terms of the TRA Termination Agreement. Under the TRA, the Company previously agreed to make certain payments to the Series B Members based upon the reduction of the Company’s liability for U.S. federal, state and local income taxes arising from adjustments to the Company’s basis in its assets and imputed interest. For further information on the Merger Agreement, the 2020 Exchange Agreement, or the TRA Termination Agreement, see the Company's Current Report on Form 8-K filed with the Securities Exchange Commission on July 13, 2020. |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC for quarterly reports on Form 10-Q. Accordingly, they do not include all of the financial information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The information included in this quarterly report, including the interim condensed consolidated financial statements and the accompanying notes, should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, stockholders' equity, and cash flows of the Company. The condensed consolidated results for th e three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2020. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements. These estimates also affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimates, and any such differences may be material to our financial statements. |
Reclassifications | Reclassifications Right of use assets and operating lease liabilities are now reported as separate line items on the condensed consolidated balance sheets. As of December 31, 2019, right of use assets were reported as a component of other assets and operating lease liabilities were reported as a component of other liabilities . These amounts have been reclassified to conform to the current period presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently adopted accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which amends the guidance for evaluating impairment of financial assets subject to risks such as contract assets, loans, receivables, and other financial assets. The amendments affect contract assets, loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 became effective for us on January 1, 2020. See Summary of Significant Accounting Polices within this Note 1 for further information. Accounting pronouncements not yet adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The objective of this ASU is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (LIBOR). The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this pronouncement on our financial statements and related disclosures and have not adopted any of the temporary optional guidance. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this pronouncement on our financial statements and related disclosures. The Company has reviewed all other issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements. |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of the Consideration Paid | The following table summarizes the fair value of the consideration paid for the acquisition as of June 5, 2019 ($ in thousands): Cash consideration (1) $ 49,852 Class A common stock, at fair value (2) 11,784 Earnout consideration, at fair value (3) 49,298 Settlement of intercompany balances (560) Total consideration $ 110,374 (1) Cash consideration was $50.0 million, of which $2.5 million was withheld by HPIH for the payment of post-closing adjustments. Measurement period adjustments resulted in $148,000 for working capital adjustments. (2) The fair value of the Class A common stock derived from the market price of the stock, adjusted to include a discount for lack of marketability due to the trading restrictions pursuant to the Purchase Agreement. (3) Represents the fair value estimate of income-based contingent consideration, which may be realized by the sellers incrementally over five years after the closing date of the acquisition. The fair value of the contingent consideration arrangement as of the acquisition date was estimated using a risk-adjusted probability analysis. As of June 5th, 2019, management estimated the payments to be approximately $97.6 million over the five years however the maximum cash payout is unlimited. |
Schedule of Purchase Price Allocation | The following table summarizes the allocation of the total purchase price for the acquisition ($ in thousands): Cash $ 179 Accounts receivable and other assets (1) 333 Contract asset (1)(2) 12,798 Property, plant and equipment (1) 34 Intangible asset - brand 430 Intangible asset - BPO relationship 24,700 Goodwill 72,660 Accounts payable, accrued expenses, and other liabilities (1) (760) Total $ 110,374 (1) The carrying value of accounts receivable, contract asset, property, plant and equipment, accounts payable and accrued expenses approximated fair value; as such, no adjustments to the accounts were recorded in association with the acquisition. (2) Final adjustments of $708,000 were made during the first quarter of 2020 due to revisions of collection estimates of policies in force. No adjustments were made during the three months ended June 30, 2020. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amounts of goodwill were as follows ($ in thousands): IFP Medicare Total Balance as of December 31, 2019 $ 41,076 $ 94,106 $ 135,182 Purchase accounting measurement period adjustment — 708 708 Goodwill impairment adjustment (41,076) — (41,076) Balance as of June 30, 2020 $ — $ 94,814 $ 94,814 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Supplemental Cash Flow Information | Supplemental cash flow information related to operating leases were as follows ($ in thousands): Six Months Ended June 30, 2020 2019 Cash paid within operating cash flows $ 919 $ 370 The weighted-average remaining lease term and discount rates are as follows: June 30, 2020 December 31, 2019 Weighted-average remaining lease term 6.6 years 1.8 years Weighted-average discount rate 3.95 % 4.31 % |
Future Minimum Lease Payments | The following table summarizes the maturities of operating lease liabilities as of June 30, 2020 ($ in thousands): Remainder of 2020 $ 1,120 2021 2,792 2022 2,876 2023 2,654 2024 2,695 2025 2,760 Thereafter 3,789 Total lease payments $ 18,686 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Summary of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following ($ in thousands): June 30, 2020 December 31, 2019 Carriers and vendors payable $ 15,499 $ 17,876 Marketing and advertising costs 6,936 11,732 Professional fees 2,635 2,022 Customer care and enrollment costs 4,106 4,501 Legal fees and contingencies 8,812 5,511 Compensation and benefits 2,203 5,905 Acquisition costs 66 1,305 Other 2,406 2,625 Total accounts payable and accrued expenses $ 42,663 $ 51,477 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The debt maturity schedule for our long-term debt is as follows ($ in thousands): As of Issuance Date Maturity Date June 30, 2020 December 31, 2019 Rate Non-current portion of line of credit June 2019 2022 $ 65,000 $ 32,000 2.62 % Non-current portion of term loan June 2019 2021 - 2022 131,250 136,875 2.52 % Non-current portion of unamortized debt issuance costs (541) (928) 195,709 167,947 Current portion of term loan June 2019 2020 - 2021 11,250 9,375 2.41 % Current portion of line of credit June 2019 2020 — 2,000 — % Current portion of unamortized debt issuance costs (804) (691) $ 206,155 $ 178,631 |
Schedule of Maturities of Long-term Debt | The aggregate contractual maturities of debt for each of the five fiscal years are as follows ($ in thousands): Remainder of 2020 2021 2022 2023 2024 2025 Debt repayments $ 5,625 $ 13,125 $ 188,750 $ — $ — $ — |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following tables present our revenue, disaggregated by major product type and timing of revenue recognition ($ in thousands): Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Sales and Marketing Services Member Management Total Sales and Marketing Services Member Management Total Revenue by Source Commission revenue (1) STM (2) $ 13,204 $ 946 $ 14,150 $ 21,758 $ 1,014 $ 22,772 HBIP 8,323 907 9,230 14,152 1,691 15,843 Supplemental (2) 10,119 968 11,087 15,522 1,143 16,665 Medicare 15,710 — 15,710 1,203 — 1,203 Services revenue — 567 567 — 957 957 Consumer engagement revenue 801 — 801 916 — 916 Other revenues 561 — 561 — — — Total revenue $ 48,718 $ 3,388 $ 52,106 $ 53,551 $ 4,805 $ 58,356 Timing of Revenue Recognition Transferred at a point in time $ 48,718 $ — $ 48,718 $ 53,551 $ — $ 53,551 Transferred over time — 3,388 3,388 — 4,805 4,805 Total revenue $ 48,718 $ 3,388 $ 52,106 $ 53,551 $ 4,805 $ 58,356 (1) For the purposes of disaggregated revenue presentation, when additional Discount Benefit products are sold with an STM, HBIP, or supplemental product, the associated revenue for the Discount Benefit products are reported within the STM, HBIP, or supplemental product category depicted within the table. (2) The Company changed its presentation of brokerage revenue during the fourth quarter of 2019. Previously brokerage revenue was reported as a separate line item with the disaggregated revenue table however the Company has reclassified the revenue into the respective STM or supplemental category that the brokerage sales were associated with. The following table presents our revenue, disaggregated by major product type and timing of revenue recognition ($ in thousands): Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Sales and Marketing Services Member Management Total Sales and Marketing Services Member Management Total Revenue by Source Commission revenue (1) STM (2) $ 33,341 $ 1,881 $ 35,222 $ 53,857 $ 1,898 $ 55,755 HBIP 20,729 2,112 22,841 42,480 3,488 45,968 Supplemental (2) 25,985 1,998 27,983 37,137 2,255 39,392 Medicare 32,452 — 32,452 1,203 — 1,203 Services revenue — 1,198 1,198 — 2,125 2,125 Consumer engagement revenue 3,082 — 3,082 1,239 — 1,239 Other revenues 889 — 889 — — — Total revenue $ 116,478 $ 7,189 $ 123,667 $ 135,916 $ 9,766 $ 145,682 Timing of Revenue Recognition Transferred at a point in time $ 116,478 $ — $ 116,478 $ 135,916 $ — $ 135,916 Transferred over time — 7,189 7,189 — 9,766 9,766 Total revenue $ 116,478 $ 7,189 $ 123,667 $ 135,916 $ 9,766 $ 145,682 (1) For the purposes of disaggregated revenue presentation, when additional Discount Benefit products are sold with an STM, HBIP, or supplemental product, the associated revenue for the Discount Benefit products are reported within the STM, HBIP, or supplemental product category depicted within the table. (2) The Company changed its presentation of brokerage revenue during the fourth quarter of 2019. Previously brokerage revenue was reported as a separate line item with the disaggregated revenue table however the Company has reclassified the revenue into the respective STM or supplemental category that the brokerage sales were associated with. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Restricted Shares, SARs, and Stock Options Granted | The following table summarizes restricted shares granted (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares 37 224 92 484 |
Summary of Stock-based Compensation Expenses | The following table summarizes stock-based compensation expense ($ in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares $ 2,120 $ 2,857 $ 4,667 $ 4,624 SARs 194 195 351 343 Less amounts capitalized for internal-use software (107) (135) (184) (234) Total $ 2,207 $ 2,917 $ 4,834 $ 4,733 |
Summary of Unrecognized Stock-based Compensation | The following table summarizes unrecognized stock-based compensation expense and the remaining weighted average period over which such stock-based compensation expense is expected to be recognized as of June 30, 2020 ($ in thousands): Unrecognized Expense Weighted Average Remaining Years Restricted shares $ 11,285 2.0 SARs 736 1.7 Total $ 12,021 |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of Numerators and Denominators of Basic and Diluted Net Income | The computations of basic and diluted net income per share attributable to BFYT were as follows ($ in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Basic net (loss) income attributable to Benefytt Technologies, Inc. $ (7,393) $ 2,287 $ (51,659) $ 3,618 Weighted average shares—basic 12,353,320 10,596,833 12,188,220 10,990,474 Effect of dilutive securities: Restricted shares — 516,900 — 537,021 SARs — 372,202 — 448,482 Stock options — 1,839 — 2,088 Weighted average shares—diluted 12,353,320 11,487,774 12,188,220 11,978,065 Basic net (loss) income per share attributable to Benefytt Technologies, Inc. $ (0.60) $ 0.22 $ (4.24) $ 0.33 Diluted net (loss) income per share attributable to Benefytt Technologies, Inc. $ (0.60) $ 0.20 $ (4.24) $ 0.30 |
Summary of Securities Not Included in Calculation of Diluted Net Income | The following securities were not included in the calculation of diluted net income per share because such inclusion would be anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Restricted shares 672 45 697 83 SARs 246 5 285 12 Stock options 4 — 4 — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Liabilities Measured at Fair Value | As of June 30, 2020, our liabilities measured at fair value were as follows ($ in thousands): Carrying Value Fair Value Measurement as of June 30, 2020 as of June 30, 2020 Level 1 Level 2 Level 3 Liabilities: Contingent acquisition consideration $ 67,845 $ — $ — $ 67,845 $ 67,845 $ — $ — $ 67,845 |
Summary of Level 3 Financial Liabilities | The following table sets forth changes in Level 3 financial liabilities ($ in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Beginning balance $ 68,052 $ — $ 65,171 $ — Fair value adjustment (207) — 2,674 — Ending balance $ 67,845 $ — $ 67,845 $ — |
Segment Reporting - (Tables)
Segment Reporting - (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table presents a summary of our operating results by segment ($ in thousands): Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Revenue Medicare revenue $ 16,452 $ 35,425 IFP revenue 35,654 88,242 Total revenue 52,106 123,667 Segment Profit Medicare loss (2,631) (4,227) IFP profit 8,869 17,244 Total segment profit 6,238 13,017 Corporate (4,335) (10,182) Interest expense (1,830) (3,924) Depreciation and amortization (4,807) (9,152) Provision for income taxes 3,434 13,040 Loss on impairment — (41,076) Stock-based compensation and related costs (2,309) (5,016) Fair value adjustment to contingent consideration 207 (2,674) Transaction costs (23) (151) Tax receivable agreement liability adjustment (370) (370) Indemnity and other legal costs (3,588) (10,679) Severance, restructuring and other (244) (275) Net loss $ (7,627) $ (57,442) |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) | Jun. 30, 2020Subsidiaries |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of subsidiaries | 3 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | Aug. 05, 2019 | Jun. 05, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||||||
Cash consideration held back and released | $ 1,000 | $ 0 | |||||
Goodwill | $ 94,814 | 94,814 | $ 94,814 | $ 135,182 | |||
Business combination maximum payment | $ 72,500 | ||||||
Together Health | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 50,000 | ||||||
Issuances of number of shares (in shares) | 630,000 | ||||||
Cash consideration held back | $ 2,500 | ||||||
Cash consideration held back and released | 1,000 | 1,500 | |||||
Earn out agreement period | 3 years | ||||||
Goodwill, expected tax deductible amount | 48,500 | 48,500 | 48,500 | ||||
Revenue | 9,900 | 26,300 | |||||
Pre-tax net income | 4,300 | 6,800 | |||||
Amortization expenses | 3,100 | 6,200 | |||||
Purchase price | $ 110,374 | ||||||
Goodwill | $ 72,660 | $ 72,660 | $ 72,660 | ||||
TIB Florida Holdco, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Acquired percentage | 100.00% | ||||||
Purchase price | $ 22,300 | ||||||
Goodwill | 22,200 | ||||||
Consideration earn out amount fair value | 19,300 | ||||||
Consideration earn out payment amount per year | $ 1,000 | ||||||
Tranche One | TIB Florida Holdco, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Consideration earn out payment period | 3 years | ||||||
Tranche Two | TIB Florida Holdco, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Consideration earn out payment period | 5 years |
Business Combinations - Conside
Business Combinations - Consideration Paid (Details) - USD ($) $ in Thousands | Jun. 05, 2019 | Jun. 30, 2020 |
Business Acquisition [Line Items] | ||
Business combination cash payout period | 5 years | |
Contingent acquisition consideration | $ 67,845 | |
Together Health | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 49,852 | |
Class A common stock, at fair value | 11,784 | |
Earnout consideration, at fair value | 49,298 | |
Settlement of intercompany balances | (560) | |
Total consideration | 110,374 | |
Purchase price | 50,000 | |
Cash consideration held back | 2,500 | |
Working capital adjustments | $ 148 | |
Business combination cash payout period | 5 years | |
Contingent acquisition consideration | $ 97,600 |
Business Combinations - Purchas
Business Combinations - Purchase Price Allocation (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 94,814,000 | $ 135,182,000 | |
Revisions of collection estimates on the block | 0 | $ 708,000 | |
Together Health | |||
Business Acquisition [Line Items] | |||
Cash | 179,000 | ||
Accounts receivable and other assets | 333,000 | ||
Contract asset | 12,798,000 | ||
Property, plant and equipment | 34,000 | ||
Goodwill | 72,660,000 | ||
Accounts payable, accrued expenses, and other liabilities | (760,000) | ||
Total | 110,374,000 | ||
Together Health | Brand | |||
Business Acquisition [Line Items] | |||
Intangible assets | 430,000 | ||
Together Health | BPO Relationship | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 24,700,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment adjustment | $ 0 | $ 41,076,000 | |
Amortization expense | $ 3,700,000 | 7,200,000 | |
Impairment of definite lived assets | $ 0 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Goodwill [Roll Forward] | ||
Balance as of December 31, 2019 | $ 135,182 | |
Purchase accounting measurement period adjustment | 708 | |
Goodwill impairment adjustment | $ 0 | (41,076) |
Balance as of June 30, 2020 | 94,814 | 94,814 |
IFP | ||
Goodwill [Roll Forward] | ||
Balance as of December 31, 2019 | 41,076 | |
Purchase accounting measurement period adjustment | 0 | |
Goodwill impairment adjustment | (41,076) | |
Balance as of June 30, 2020 | 0 | 0 |
Medicare | ||
Goodwill [Roll Forward] | ||
Balance as of December 31, 2019 | 94,106 | |
Purchase accounting measurement period adjustment | 708 | |
Goodwill impairment adjustment | 0 | |
Balance as of June 30, 2020 | $ 94,814 | $ 94,814 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |||||
Lease renewal terms | 5 years | 5 years | |||
Right-of-use assets | $ 16,089 | $ 16,089 | $ 496 | ||
Operating lease liabilities, current | 1,907 | 1,907 | 237 | ||
Operating lease liabilities, long-term | 14,454 | 14,454 | 224 | ||
Operating lease expense | 777 | $ 173 | 1,282 | $ 347 | |
Difference between undiscounted cash flows and operating lease liabilities | $ 2,400 | $ 2,400 | $ 30 | ||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 1 year | 1 year | |||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 7 years | 7 years |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Cash paid within operating cash flows | $ 919 | $ 370 |
Leases - Future Minimum Payment
Leases - Future Minimum Payments (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 1,120 |
2021 | 2,792 |
2022 | 2,876 |
2023 | 2,654 |
2024 | 2,695 |
2025 | 2,760 |
Thereafter | 3,789 |
Total lease payments | $ 18,686 |
Leases - Weighted-average Lease
Leases - Weighted-average Lease Term and Discount Rate (Details) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Weighted-average remaining lease term | 6 years 7 months 6 days | 1 year 9 months 18 days |
Weighted-average discount rate | 3.95% | 4.31% |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Carriers and vendors payable | $ 15,499 | $ 17,876 |
Marketing and advertising costs | 6,936 | 11,732 |
Professional fees | 2,635 | 2,022 |
Customer care and enrollment costs | 4,106 | 4,501 |
Legal fees and contingencies | 8,812 | 5,511 |
Compensation and benefits | 2,203 | 5,905 |
Acquisition costs | 66 | 1,305 |
Other | 2,406 | 2,625 |
Total accounts payable and accrued expenses | $ 42,663 | $ 51,477 |
Debt - Additional Information (
Debt - Additional Information (Details) $ in Thousands | Jun. 30, 2020USD ($) | Jun. 29, 2020 | Dec. 31, 2019USD ($) |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument covenant maximum total leverage ratio | 3.5 | 3 | |
Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Long-term line of cred | $ 207,500 | $ 180,300 | |
Interest payable | $ 254 | $ 246 |
Debt - Debt Maturities Schedule
Debt - Debt Maturities Schedule (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
Non-current portion of unamortized debt issuance costs | $ (541) | $ (928) |
Non-current portion of debt, net | 195,709 | 167,947 |
Current portion of unamortized debt issuance costs | (804) | (691) |
Debt, total | 206,155 | 178,631 |
Non-current portion of line of credit | ||
Line of Credit Facility [Line Items] | ||
Non-current portion of debt | $ 65,000 | 32,000 |
Debt, effective interest rate | 2.62% | |
Non-current portion of term loan | ||
Line of Credit Facility [Line Items] | ||
Non-current portion of debt | $ 131,250 | 136,875 |
Debt, effective interest rate | 2.52% | |
Current portion of term loan | ||
Line of Credit Facility [Line Items] | ||
Current portion of debt | $ 11,250 | 9,375 |
Debt, effective interest rate | 2.41% | |
Current portion of line of credit | ||
Line of Credit Facility [Line Items] | ||
Current portion of debt | $ 0 | $ 2,000 |
Debt, effective interest rate | 0.00% |
Debt - Aggregate Contractual Ma
Debt - Aggregate Contractual Maturities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 5,625 |
2021 | 13,125 |
2022 | 188,750 |
2023 | 0 |
2024 | 0 |
2025 | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 22, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Class of Stock [Line Items] | |||||
Number of shares transferred to treasury for statutory tax withholding obligations (in shares) | 45,207 | 34,845 | 117,597 | 68,545 | |
Number of stock awards forfeited and transferred to Treasury | 9,763 | 0 | 9,763 | 21,939 | |
Payments related to tax withholding for share-based compensation | $ 2,414 | $ 1,889 | |||
Decrease in economic interest | 6.40% | ||||
Treasury Stock | |||||
Class of Stock [Line Items] | |||||
Issuance of shares from treasury (in shares) | 62,955 | 12,018 | 165,242 | 169,236 | |
Repurchase of common stock (in shares) | 630,000 | 1,981,241 | |||
Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Repurchase of common stock (in shares) | 0 | 630,000 | 0 | 1,981,241 | |
Repurchase of common stock, average price per share (in USD per share) | $ 29.57 | $ 32.23 | |||
Exchange of stock (in shares) | 900,000 | ||||
Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Exchange of stock (in shares) | 900,000 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 52,106 | $ 58,356 | $ 123,667 | $ 145,682 |
Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 48,718 | 53,551 | 116,478 | 135,916 |
Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,388 | 4,805 | 7,189 | 9,766 |
Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 48,718 | 53,551 | 116,478 | 135,916 |
Transferred at a point in time | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 48,718 | 53,551 | 116,478 | 135,916 |
Transferred at a point in time | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Total revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,388 | 4,805 | 7,189 | 9,766 |
Total revenue | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Total revenue | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,388 | 4,805 | 7,189 | 9,766 |
STM | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 14,150 | 22,772 | 35,222 | 55,755 |
STM | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 13,204 | 21,758 | 33,341 | 53,857 |
STM | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 946 | 1,014 | 1,881 | 1,898 |
HBIP | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,230 | 15,843 | 22,841 | 45,968 |
HBIP | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 8,323 | 14,152 | 20,729 | 42,480 |
HBIP | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 907 | 1,691 | 2,112 | 3,488 |
Supplemental | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 11,087 | 16,665 | 27,983 | 39,392 |
Supplemental | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,119 | 15,522 | 25,985 | 37,137 |
Supplemental | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 968 | 1,143 | 1,998 | 2,255 |
Medicare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 15,710 | 1,203 | 32,452 | 1,203 |
Medicare | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 15,710 | 1,203 | 32,452 | 1,203 |
Medicare | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Services revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 567 | 957 | 1,198 | 2,125 |
Services revenue | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Services revenue | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 567 | 957 | 1,198 | 2,125 |
Consumer engagement revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 801 | 916 | 3,082 | 1,239 |
Consumer engagement revenue | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 801 | 916 | 3,082 | 1,239 |
Consumer engagement revenue | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 561 | 0 | 889 | 0 |
Other revenues | Sales and marketing services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 561 | 0 | 889 | 0 |
Other revenues | Member management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Increase (decrease) in revenue from change in estimate | $ 1.1 | $ (1.9) |
Decrease in revenue from adjusting measurement estimates | 1.8 | |
Decrease in commission expense | 2.9 | 6.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Disaggregation of Revenue [Line Items] | ||
Remaining performance obligation | $ 14.5 | $ 14.5 |
Remaining performance obligation, expected timing | 60 months | 60 months |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares exercised (in shares) | 0 | 0 | 0 | 0 |
Performance shares issued for restricted shares (in shares) | 0 | 0 | 0 | 147,000 |
Income tax benefits from stock-based activity | $ 595 | $ 293 | $ 1,200 | $ 367 |
Capitalized stock-based compensation | $ 107 | $ 135 | $ 184 | $ 234 |
Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares exercised (in shares) | 47,955 | 74,195 | 95,242 | 74,334 |
SARs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted (in shares) | 0 | 0 | 0 | 0 |
Shares exercised (in shares) | 63,472 | 152,007 | 157,222 | 152,632 |
Shares forfeited (in shares) | 500 | 1,500 | 1,000 | 9,000 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Restricted Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted during the period (in shares) | 37 | 224 | 92 | 484 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Less amounts capitalized for internal-use software | $ (107) | $ (135) | $ (184) | $ (234) |
Total | 2,207 | 2,917 | 4,834 | 4,733 |
Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 2,120 | 2,857 | 4,667 | 4,624 |
SARs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 194 | $ 195 | $ 351 | $ 343 |
Stock-based Compensation - Su_3
Stock-based Compensation - Summary of Unrecognized Stock-based Compensation (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 12,021 |
Restricted shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 11,285 |
Weighted Average Remaining Years | 2 years |
SARs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 736 |
Weighted Average Remaining Years | 1 year 8 months 12 days |
Net (Loss) Income per Share - S
Net (Loss) Income per Share - Summary of Reconciliation of Numerators and Denominators of Basic and Diluted Net Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Basic securities | ||||
Basic net (loss) income attributable to Benefytt Technologies, Inc. | $ (7,393) | $ 2,287 | $ (51,659) | $ 3,618 |
Weighted average shares—basic (in shares) | 12,353,320 | 10,596,833 | 12,188,220 | 10,990,474 |
Effect of dilutive securities: | ||||
Weighted average shares—diluted (in shares) | 12,353,320 | 11,487,774 | 12,188,220 | 11,978,065 |
Basic net income per share attributable to Health Insurance Innovations, Inc. (in USD per share) | $ (0.60) | $ 0.22 | $ (4.24) | $ 0.33 |
Diluted net income per share attributable to Health Insurance Innovations, Inc. (in USD per share) | $ (0.60) | $ 0.20 | $ (4.24) | $ 0.30 |
Restricted shares | ||||
Effect of dilutive securities: | ||||
Dilutive securities (in shares) | 0 | 516,900 | 0 | 537,021 |
SARs | ||||
Effect of dilutive securities: | ||||
Dilutive securities (in shares) | 0 | 372,202 | 0 | 448,482 |
Stock options | ||||
Effect of dilutive securities: | ||||
Dilutive securities (in shares) | 0 | 1,839 | 0 | 2,088 |
Net (Loss) Income per Share -_2
Net (Loss) Income per Share - Summary of Securities Not Included in Calculation of Diluted Net Income (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 1,016,667 | 2,416,667 | ||
Restricted shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 672,000 | 45,000 | 697,000 | 83,000 |
SARs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 246,000 | 5,000 | 285,000 | 12,000 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 4,000 | 0 | 4,000 | 0 |
Net (Loss) Income Per Share - N
Net (Loss) Income Per Share - Narrative (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive securities (in shares) | 1,016,667 | 2,416,667 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes [Line Items] | ||||
(Benefit) provision for income taxes | $ (3,434,000) | $ 2,290,000 | $ (13,040,000) | $ 5,087,000 |
Effective tax rate | 27.30% | 39.40% | 34.20% | 41.20% |
Unrecognized tax benefits that would impact effective tax rate | $ 0 | $ 0 | $ 0 | $ 0 |
HIIQ, Inclusive Of Allocable Share From HPIH | ||||
Income Taxes [Line Items] | ||||
(Benefit) provision for income taxes | $ 3,400,000 | $ 2,300,000 | $ 13,000,000 | $ 5,100,000 |
Effective tax rate | 31.00% | 41.50% | 18.50% | 48.50% |
HP | ||||
Income Taxes [Line Items] | ||||
Effective tax rate | 0.00% | 0.00% | 0.00% | 0.00% |
HPIH | ||||
Income Taxes [Line Items] | ||||
Ownership percent | 92.90% | 92.90% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Contingent acquisition consideration | $ 67,845 |
Liabilities | 67,845 |
Fair Value, Measurements, Recurring | Level 1 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Contingent acquisition consideration | 0 |
Liabilities | 0 |
Fair Value, Measurements, Recurring | Level 2 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Contingent acquisition consideration | 0 |
Liabilities | 0 |
Fair Value, Measurements, Recurring | Level 3 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Contingent acquisition consideration | 67,845 |
Liabilities | $ 67,845 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Level 3 Financial Liabilities (Details) - Fair Value, Measurements, Recurring - Level 3 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 68,052 | $ 0 | $ 65,171 | $ 0 |
Fair value adjustment | (207) | 0 | 2,674 | 0 |
Ending balance | $ 67,845 | $ 0 | $ 67,845 | $ 0 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2020Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Reporting - Operating S
Segment Reporting - Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 52,106 | $ 58,356 | $ 123,667 | $ 145,682 |
Profit | 6,238 | 13,017 | ||
Corporate | (4,335) | (10,182) | ||
Interest expense | (1,830) | (3,924) | ||
Depreciation and amortization | (4,807) | (9,152) | ||
Provision for income taxes | 3,434 | (2,290) | 13,040 | (5,087) |
Goodwill, Impairment Loss | 0 | (41,076) | ||
Stock-based compensation and related costs | (2,309) | (5,016) | ||
Fair value adjustment to contingent consideration | 207 | 0 | (2,674) | 0 |
Transaction costs | (23) | (151) | ||
TRA expense | (370) | 0 | (370) | 0 |
Indemnity and other legal costs | (3,588) | (10,679) | ||
Severance, restructuring and other | (244) | (275) | ||
Net loss | (7,627) | $ 3,230 | (57,442) | $ 5,412 |
Medicare | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 16,452 | 35,425 | ||
Profit | (2,631) | (4,227) | ||
Goodwill, Impairment Loss | 0 | |||
IFP | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 35,654 | 88,242 | ||
Profit | $ 8,869 | 17,244 | ||
Goodwill, Impairment Loss | $ (41,076) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Apr. 06, 2018plaintiff | Jul. 31, 2020case | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Jul. 12, 2020$ / shares | Dec. 31, 2019USD ($) |
Other Commitments [Line Items] | ||||||
Settlement payment amount | $ 2,800,000 | |||||
Number of plaintiffs | plaintiff | 2 | |||||
Subsequent Event | ||||||
Other Commitments [Line Items] | ||||||
Number of actions filed | case | 2 | |||||
Health Plan Intermediaries, LLC | ||||||
Other Commitments [Line Items] | ||||||
Cash distributions for estimated federal and state income taxes | 0 | $ 677,000 | ||||
Affiliated Entity | Health Plan Intermediaries, LLC | ||||||
Other Commitments [Line Items] | ||||||
Accrued federal and state taxes | 0 | $ 0 | ||||
Tax Receivable Agreement | ||||||
Other Commitments [Line Items] | ||||||
Liability recorded related to stock exchanged | 34,500,000 | |||||
Cumulative payments made | $ 3,700,000 | |||||
Class A Common Stock | ||||||
Other Commitments [Line Items] | ||||||
Number of shares exchanged | shares | 7,650,000 | |||||
Class A Common Stock | Daylight Beta | Subsequent Event | ||||||
Other Commitments [Line Items] | ||||||
Business acquisition, share price (in USD per share) | $ / shares | $ 31 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 08, 2020 | Jan. 22, 2020 | Jul. 12, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||
Decrease in economic interest | (6.40%) | ||||
Class B Common Stock | |||||
Subsequent Event [Line Items] | |||||
Exchange of stock (in shares) | 900,000 | ||||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 | |||
Class A Common Stock | |||||
Subsequent Event [Line Items] | |||||
Exchange of stock (in shares) | 900,000 | ||||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Decrease in economic interest | 2.30% | ||||
TRA Termination Agreement, adjusted account payable amount | $ 40 | ||||
Subsequent Event | Class B Common Stock | |||||
Subsequent Event [Line Items] | |||||
Exchange of stock (in shares) | 329,000 | ||||
Subsequent Event | Class B Common Stock | Daylight Beta | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, share price (in USD per share) | $ 0 | ||||
Subsequent Event | Class A Common Stock | |||||
Subsequent Event [Line Items] | |||||
Exchange of stock (in shares) | 329,000 | ||||
Subsequent Event | Class A Common Stock | Daylight Beta | |||||
Subsequent Event [Line Items] | |||||
Business acquisition, share price (in USD per share) | $ 31 |