Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Jun. 30, 2013 | Mar. 14, 2014 | Mar. 14, 2014 |
Class A common stock | Class B common stock | |||
Entity Information [Line Items] | ' | ' | ' | ' |
Document Type | '10-K | ' | ' | ' |
Amendment Flag | 'false | ' | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' | ' |
Trading Symbol | 'HIIQ | ' | ' | ' |
Entity Registrant Name | 'Health Insurance Innovations, Inc. | ' | ' | ' |
Entity Central Index Key | '0001561387 | ' | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' | ' |
Entity Voluntary Filers | 'No | ' | ' | ' |
Entity Common Stock, Shares Outstanding | ' | ' | 5,309,594 | 8,566,667 |
Entity Public Float | ' | $50.80 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $17,054,000 | $750,000 |
Cash held on behalf of others | 4,591,000 | 3,839,000 |
Investment proceeds receivable | 15,000,000 | ' |
Short-term investments | 6,877,000 | ' |
Advanced commissions | 2,468,000 | 297,000 |
Income taxes receivable | 395,000 | ' |
Accounts receivable, prepaid expenses and other current assets | 1,091,000 | 1,078,000 |
Total current assets | 47,476,000 | 5,964,000 |
Property and equipment, net of accumulated depreciation | 389,000 | 213,000 |
Capitalized offering costs | ' | 1,819,000 |
Goodwill | 18,014,000 | 5,906,000 |
Intangible assets, net of accumulated amortization | 5,281,000 | 3,959,000 |
Other assets | 489,000 | 100,000 |
Total assets | 71,649,000 | 17,961,000 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 2,311,000 | 2,062,000 |
Carriers and vendors payable | 3,310,000 | 2,790,000 |
Commissions payable | 1,453,000 | 1,533,000 |
Deferred revenue | 882,000 | 268,000 |
Due to member | 916,000 | 773,000 |
Current portion of long-term debt | ' | 813,000 |
Other current liabilities | 187,000 | 232,000 |
Total current liabilities | 11,004,000 | 8,471,000 |
Long-term debt, less current portion | ' | 2,481,000 |
Due to member pursuant to tax receivable agreement | 423,000 | ' |
Other liabilities | 51,000 | 45,000 |
Total liabilities | 13,872,000 | 11,623,000 |
Commitments and contingencies | ' | ' |
Stockholdersb/memberbs equity: | ' | ' |
Preferred stock (par value $0.001 per share, 5,000,000 shares authorized; 0 shares issued and outstanding) | ' | ' |
Additional paid-in capital | 28,787,000 | ' |
Treasury stock, at cost (129,881 shares) | -1,563,000 | ' |
Accumulated deficit | -3,355,000 | ' |
Memberbs equity | ' | 6,335,000 |
Total Health Insurance Innovations, Inc. stockholders' equity/Health Plan Intermediaries, LLC and Subsidiaries member's equity | 23,883,000 | 6,335,000 |
Noncontrolling interests | 33,894,000 | 3,000 |
Total stockholders'/member's equity | 57,777,000 | 6,338,000 |
Total liabilities and stockholders'/member's equity | 71,649,000 | 17,961,000 |
Current | ' | ' |
Current liabilities: | ' | ' |
Contingent acquisition consideration | 1,945,000 | ' |
Noncurrent | ' | ' |
Current liabilities: | ' | ' |
Contingent acquisition consideration | 1,931,000 | ' |
Noncompete Agreements | ' | ' |
Current liabilities: | ' | ' |
Noncompete obligation | 463,000 | 626,000 |
Class A common stock | ' | ' |
Stockholdersb/memberbs equity: | ' | ' |
Common stock | 5,000 | ' |
Total stockholders'/member's equity | 5,000 | ' |
Class B common stock | ' | ' |
Stockholdersb/memberbs equity: | ' | ' |
Common stock | 9,000 | ' |
Total stockholders'/member's equity | $9,000 | ' |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 |
Preferred stock, par value | $0.00 |
Preferred stock, shares authorized | 5,000,000 |
Preferred stock, shares issued | 0 |
Preferred stock, shares outstanding | 0 |
Treasury stock, shares | 129,881 |
Class A common stock | ' |
Common stock, par value | $0.00 |
Common stock, shares authorized | 100,000,000 |
Common stock, shares issued | 5,309,594 |
Common stock, shares outstanding | 5,179,713 |
Class B common stock | ' |
Common stock, par value | $0.00 |
Common stock, shares authorized | 20,000,000 |
Common stock, shares issued | 8,566,667 |
Common stock, shares outstanding | 8,566,667 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues (premium equivalents of $100,002 and $75,872 for the years ended December 31, 2013 and 2012, respectively) | $56,639 | $41,940 |
Operating expenses: | ' | ' |
Third-party commissions | 32,244 | 27,858 |
Credit cards and ACH fees | 1,173 | 963 |
Contract termination | 5,500 | ' |
Selling, general and administrative | 23,959 | 8,611 |
Depreciation and amortization | 1,313 | 1,012 |
Total operating expenses | 64,189 | 38,444 |
(Loss) income from operations | -7,550 | 3,496 |
Other expense (income): | ' | ' |
Interest expense | 1 | 271 |
Other expense (income) | 850 | -35 |
Net (loss) income before income taxes | -8,401 | 3,260 |
Provision for income taxes | 18 | ' |
Net (loss) income | -8,419 | 3,260 |
Net loss attributable to noncontrolling interests | -5,064 | -89 |
Net (loss) income attributable to Health Insurance Innovations, Inc. and Health Plan Intermediaries, LLC | ($3,355) | $3,349 |
Net loss per share attributable to Health Insurance Innovations, Inc. | ' | ' |
Basic | ($0.70) | ' |
Diluted | ($0.70) | ' |
Weighted average Class A shares outstanding | ' | ' |
Basic | 4,813,222 | ' |
Diluted | 4,813,222 | ' |
Recovered_Sheet1
Consolidated Statements Of Operations (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Premium equivalent amount | $100,002 | $75,872 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders'/Member's Equity (USD $) | Total | Class A common stock | Class B common stock | Noncontrolling Interests | Additional Paid-in Capital | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Pre IPO | Pre IPO | Initial public offering | Initial public offering | Initial public offering | Initial public offering | Initial public offering | Initial public offering | Underwriters exercise of over-allotment option | Underwriters exercise of over-allotment option | Underwriters exercise of over-allotment option |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Class A common stock | USD ($) | USD ($) | Health Plan Intermediaries, LLC and Subsidiaries | Noncontrolling Interests | USD ($) | Class A common stock | Class B common stock | Noncontrolling Interests | Additional Paid-in Capital | Additional Paid-in Capital | USD ($) | Class A common stock | Additional Paid-in Capital | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Class A common stock | Class B common stock | Class A common stock | |||||||||||
USD ($) | USD ($) | USD ($) | |||||||||||||||||
Beginning balance at Dec. 31, 2011 | $6,996,000 | ' | ' | ' | ' | ' | ' | ' | $6,996,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | 3,260,000 | ' | ' | ' | ' | ' | ' | ' | 3,349,000 | -89,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contribution from minority partner | 92,000 | ' | ' | ' | ' | ' | ' | ' | ' | 92,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Distributions | -4,010,000 | ' | ' | ' | ' | ' | ' | ' | -4,010,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending balance at Dec. 31, 2012 | 6,338,000 | ' | ' | ' | ' | ' | ' | ' | 6,335,000 | 3,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | -259,000 | ' | ' | ' | ' | ' | ' | ' | -248,000 | -11,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contribution from minority partner | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Distributions | -171,000 | ' | ' | ' | ' | ' | ' | ' | -171,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending balance at Feb. 11, 2013 | 5,918,000 | ' | ' | ' | ' | ' | ' | ' | 5,916,000 | 2,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effects of initial public offering and reorganization | ' | ' | ' | 5,918,000 | ' | ' | ' | ' | -5,916,000 | -2,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending balance at Feb. 13, 2013 | 5,918,000 | ' | ' | 5,918,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | -8,160,000 | ' | ' | -4,805,000 | ' | ' | ' | -3,355,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 57,755,000 | 5,000 | 9,000 | 36,444,000 | 57,750,000 | -36,453,000 | 1,400,000 | ' | 1,400,000 |
Issuance of common stock, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,666,667 | 8,666,667 | ' | ' | ' | ' | 100,000 | ' |
Purchase of Series B Membership interests and exchange and cancellation of Class B common stock | -1,400,000 | ' | ' | -1,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase of Series B Membership interests and exchange and cancellation of Class B common stock, shares | ' | ' | -100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of Class A common stock under equity compensation plans | 6,296,000 | ' | ' | ' | ' | 6,296,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of Class A common stock under equity compensation plans, shares | ' | 542,927 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Forfeiture of restricted stock held in treasury, shares | ' | ' | ' | ' | ' | ' | 160,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition of noncontrolling interest in consolidated subsidiary | -90,000 | ' | ' | -52,000 | -38,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contribution from minority partner | 6,000 | ' | ' | 6,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Distributions | -2,217,000 | ' | ' | -2,217,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of restricted shares from treasury | ' | ' | ' | ' | -2,408,000 | ' | 2,408,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of restricted shares from treasury, shares | ' | ' | ' | ' | ' | ' | -182,964 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class A common stock transferred to treasury | -1,731,000 | ' | ' | ' | ' | ' | -1,731,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class A common stock transferred to treasury, shares | ' | -129,881 | ' | ' | ' | ' | 152,845 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Forfeiture of restricted stock held in treasury | ' | ' | ' | ' | 2,240,000 | ' | -2,240,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending balance at Dec. 31, 2013 | $57,777,000 | $5,000 | $9,000 | $33,894,000 | $28,787,000 | ' | ($1,563,000) | ($3,355,000) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending balance, Shares at Dec. 31, 2013 | ' | 5,179,713 | 8,566,667 | ' | ' | ' | 129,881 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Operating activities: | ' | ' |
Net (loss) income | ($8,419,000) | $3,260,000 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ' | ' |
Stock-based compensation | 6,296,000 | ' |
Depreciation and amortization | 1,313,000 | 1,012,000 |
Loss on extinguishment of debt | 71,000 | ' |
Fair value adjustments to contingent acquisition consideration | 453,000 | ' |
Amortization of deferred financing costs | 7,000 | 44,000 |
Changes in operating assets and liabilities: | ' | ' |
Increase in cash held on behalf of others | -752,000 | -809,000 |
Increase in advanced commissions | -2,171,000 | -273,000 |
Increase in income taxes receivable | -395,000 | ' |
Decrease in gateway processor deposit | ' | 400,000 |
Decrease (increase) in accounts receivable, prepaid expenses and other assets | 488,000 | -157,000 |
Increase in accounts payable, accrued expenses and other liabilities | 390,000 | 919,000 |
Increase in carriers and vendors payable | 520,000 | 536,000 |
(Decrease) increase in commissions payable | -80,000 | 277,000 |
Increase in deferred revenue | 614,000 | 259,000 |
Decrease in due to member | ' | -126,000 |
Increase in due to member pursuant to tax receivable agreement | 423,000 | ' |
Net cash (used in) provided by operating activities | -1,242,000 | 5,342,000 |
Investing activities: | ' | ' |
Business acquisition, net of cash acquired | -9,909,000 | ' |
Acquisition of available-for-sale security | -15,000,000 | ' |
Purchases of property and equipment | -143,000 | -141,000 |
Loans to distributors | 156,000 | -245,000 |
Proceeds from repayment of loans to distributors | -174,000 | 135,000 |
Payments for deposits | -158,000 | ' |
Net cash used in investing activities | -32,565,000 | -251,000 |
Financing activities: | ' | ' |
Class A common stock withheld in treasury from restricted share vesting | -1,731,000 | ' |
Payments for equity issuance | -1,643,000 | -1,009,000 |
Repayments of long-term debt | -3,294,000 | -768,000 |
Proceeds from note payable | ' | 100,000 |
Repayments of notes payable | -54,000 | -67,000 |
Payments under noncompete obligation | -155,000 | -62,000 |
Payment of contingent acquisition consideration | -1,450,000 | ' |
Payments under capital leases | -3,000 | -8,000 |
Distributions to member | -2,245,000 | -3,237,000 |
Acquisition of noncontrolling interest in subsidiary | -90,000 | ' |
Contributions from noncontrolling interests | 16,000 | 92,000 |
Net cash provided by (used in) financing activities | 50,111,000 | -4,959,000 |
Net increase in cash and cash equivalents | 16,304,000 | 132,000 |
Cash and cash equivalents at beginning of period | 750,000 | 618,000 |
Cash and cash equivalents at end of period | 17,054,000 | 750,000 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 17,000 | 198,000 |
Cash paid for income taxes | 413,000 | ' |
Supplemental Disclosure of non-cash investing activities: | ' | ' |
Proceeds receivable from sale of available-for-sale security | 15,000,000 | ' |
Contingent consideration for business acquisition | 3,876,000 | ' |
Declared but unpaid distribution to member of Health Plan Intermediaries, LLC | 916,000 | 773,000 |
Capitalized offering costs in accounts payable and accrued expenses | ' | 810,000 |
Purchase of insurance through premium financing agreement | ' | 21,000 |
Acquired | ' | ' |
Investing activities: | ' | ' |
Maturities of held-to-maturity investments | -9,863,000 | ' |
Held To Maturity | ' | ' |
Investing activities: | ' | ' |
Maturities of held-to-maturity investments | 2,526,000 | ' |
Noncompete Agreements | ' | ' |
Supplemental Disclosure of non-cash investing activities: | ' | ' |
Intangible assets acquired | ' | 843,000 |
Software | ' | ' |
Supplemental Disclosure of non-cash investing activities: | ' | ' |
Intangible assets acquired | ' | 45,000 |
Class A common stock | ' | ' |
Financing activities: | ' | ' |
Issuance of common stock in initial public offering | 60,760,000 | ' |
Common Stock Issuance Over Allotment Option | Class A common stock | ' | ' |
Financing activities: | ' | ' |
Issuance of common stock in initial public offering | 1,400,000 | ' |
Series B Membership Interests | ' | ' |
Financing activities: | ' | ' |
Purchase of Series B Membership interests | ($1,400,000) | ' |
Organization_Basis_of_Presenta
Organization, Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Organization, Basis of Presentation and Summary of Significant Accounting Policies | ' | ||
1 | Organization, Basis of Presentation, and Summary of Significant Accounting Policies | ||
Unless the context suggests otherwise, references to the “Company,” “we,” “us” and “our” refer (1) prior to the February 13, 2013 initial public offering (“IPO”) of the Class A common stock of Health Insurance Innovations, Inc. and related transactions, to Health Plan Intermediaries, LLC (“HPI”) and its consolidated subsidiaries and (2) after our IPO and related transactions, to Health Insurance Innovations, Inc. and its consolidated subsidiaries. The terms “HII”, “HPIH” and “ICE” refer to the stand-alone entities Health Insurance Innovations, Inc., Health Plan Intermediaries Holdings, LLC, and Insurance Center for Excellence, LLC, respectively. HPIH and ICE are consolidated subsidiaries of HII. The term “Secured” refers to (a) prior to or at the time of their July 17, 2013 acquisition by us, Sunrise Health Plans, Inc., Sunrise Group Marketing, Inc. and Secured Software Solutions, Inc., collectively, and (b) following our July 17, 2013 acquisition, the entities described in (a) and the limited liability companies into which such entities were converted shortly following such acquisition. The term “SIL” refers to Simple Insurance Leads, LLC, a partially owned venture we formed on October 7, 2013, which is a consolidated subsidiary. | |||
Description of the Company | |||
Our business | |||
We are a developer and administrator of affordable individual health insurance and discount benefit plans that are sold throughout the United States. The main product we sell, Short Term Medical (“STM”) insurance, is an alternative to Patient Protection and Affordable Care Act (“PPACA”)-qualified individual major medical plans and generally offers comparable benefits for qualifying individuals. The Company also offers guaranteed-issue hospital indemnity plans for individuals under the age of 65 and a variety of ancillary products that are frequently purchased together with the STM and hospital indemnity plans as supplements. We design and structure insurance products on behalf of our contracted insurance carrier companies; market them to individuals through a network of distributors; and manage the member relationship through customer service agents. Our sales are primarily executed online and offer real-time fulfillment through a proprietary web-based technology platform, through which we receive credit card and automated clearing house (“ACH”) payments directly from the purchasing customers, whom are referred to as “members,” at the time of sale. In certain cases, premiums are collected from the distributor. The plans are underwritten by contracted insurance carrier companies, and we assume no underwriting or insurance risk. | |||
Our History | |||
Our business began operations in 2008, and historically we operated through HPI. In August 2008, the Naylor Group Partners, LLC (“Naylor”) made a capital contribution to HPI in exchange for a 50% ownership interest. In September 2011, we purchased all of the membership units owned by Naylor for $5.3 million, plus deferred financing costs of $135,000. We financed a portion of the purchase by entering into a loan agreement with a bank for $4.3 million. The remaining purchase price was funded with cash and a capital contribution from Michael Kosloske, our founder, Chairman, Chief Executive Officer and President. | |||
Our Reorganization and IPO | |||
HII was incorporated in the State of Delaware in October 2012 to facilitate the IPO and to become a holding company owning as its principal asset membership interests in HPIH. Since November 2012, we have operated our business through HPIH and its consolidated subsidiaries. See Note 8 for more information about the IPO. | |||
In anticipation of the IPO, in November 2012, HPI assigned the operating assets of our business through a series of transactions to HPIH, and HPIH assumed the operating liabilities of HPI. | |||
HII sold 4,666,667 shares of common stock for $14.00 per share in the IPO on February 13, 2013. Simultaneous with the offering, HII obtained a 35% membership interest, 35% economic interest and 100% of the voting interest in HPIH. | |||
Upon completion of the offering, HII became a holding company the principal asset of which is its interest in HPIH. All of HII’s business is conducted through HPIH and its subsidiaries. HII is the sole managing member of HPIH and has 100% of the voting rights and control. | |||
HII has two classes of outstanding capital stock: Class A common stock and Class B common stock. Class A shares represent 100% of the economic rights of the holders of all classes of our common stock to share in our distributions. Class B shares do not entitle their holders to any dividends paid by, or rights upon liquidation of, HII. Shares of our Class A common stock vote together with shares of our Class B common stock as a single class, except as otherwise required by law. Each share of our Class A common stock and our Class B common stock entitles its holder to one vote. As of December 31, 2013, Mr. Kosloske beneficially owns 62.3% of our outstanding Class A common stock and Class B common stock on a combined basis, which equals his combined economic interest in the Company, and has effective control over the outcome of votes on all matters requiring approval by our stockholders. | |||
HPIH has two series of outstanding equity: Series A Membership Interests, which may only be issued to HII, as sole managing member, and Series B Membership Interests. The Series B Membership Interests are held by HPI and Health Plan Intermediaries Sub, LLC (“HPIS”), a subsidiary of HPI, and these entities are beneficially owned by Mr. Kosloske. As of December 31, 2013, (i) the Series A Membership Interests held by HII represent 37.7% of the outstanding membership interests, 37.7% of the economic interests and 100% of the voting interests in HPIH and (ii) the Series B Membership Interests held by the entities beneficially owned by Mr. Kosloske represent 62.3% of the outstanding membership interests, 62.3% of the economic interests and no voting interest in HPIH. | |||
Exchange Agreement | |||
On February 13, 2013, we entered into an exchange agreement (the “Exchange Agreement”) with the holders of Series B Membership Interests. Pursuant to and subject to the terms of the exchange agreement and the amended and restated limited liability company agreement of HPIH, holders of Series B Membership Interests, at any time and from time to time, may exchange one or more Series B Membership Interests, together with an equal number of shares of our Class B common stock, for shares of our Class A common stock on a one-for-one basis, subject to equitable adjustments for stock splits, stock dividends and reclassifications. | |||
Holders will not have the right to exchange Series B Membership Interests if we determine that such exchange would be prohibited by law or regulation or would violate other agreements to which we may be subject. We may impose additional restrictions on exchanges that we determine necessary or advisable so that HPIH is not treated as a “publicly traded partnership” for U.S. federal income tax purposes. If the Internal Revenue Service were to contend successfully that HPIH should be treated as a “publicly traded partnership” for U.S. federal income tax purposes, HPIH would be treated as a corporation for U.S. federal income tax purposes and thus would be subject to entity-level tax on its taxable income. | |||
A holder that exchanges Series B Membership Interests will also be required to deliver an equal number of shares of our Class B common stock. In connection with each exchange, HPIH will cancel the delivered Series B Membership Interests and issue to us Series A Membership Interests on a one-for-one basis. Thus, as holders exchange their Series B Membership Interests for Class A common stock, our interest in HPIH will increase. | |||
Tax Receivable Agreement | |||
Exchanges of Series B Membership Interests, together with an equal number of shares of our Class B common stock, for shares of our Class A common stock, are expected to increase our tax basis in our share of HPIH’s tangible and intangible assets. These increases in tax basis are expected to increase our depreciation and amortization deductions and create other tax benefits and therefore may reduce the amount of tax that we would otherwise be required to pay in the future. | |||
On February 13, 2013, we entered into a tax receivable agreement with the holders of Series B Membership Interests. The agreement requires us to pay to such holders 85% of the cash savings, if any, in U.S. federal, state and local income tax we realize (or are deemed to realize in the case of an early termination payment, a change in control or a material breach by us of our obligations under the tax receivable agreement) as a result of any possible future increases in tax basis described above and of certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement itself. This is HII’s obligation and not an obligation of HPIH. HII will benefit from the remaining 15% of any realized cash savings. For purposes of the tax receivable agreement, cash savings in income tax is computed by comparing our actual income tax liability with our hypothetical liability had we not been able to utilize the tax benefits subject to the tax receivable agreement itself. The tax receivable agreement became effective upon completion of the IPO and will remain in effect until all such tax benefits have been used or expired, unless HII exercises its right to terminate the tax receivable agreement for an amount based on the agreed payments remaining to be made under the agreement or HII breaches any of its material obligations under the tax receivable agreement in which case all obligations will generally be accelerated and due as if HII had exercised its right to terminate the agreement. Any potential future payments will be calculated using the market value of our Class A common stock at the time of the relevant exchange and prevailing tax rates in future years and will be dependent on us generating sufficient future taxable income to realize the benefit. Payments are generally due under the tax receivable agreement within a specified period of time following the filing of our tax return for the taxable year with respect to which payment of the obligation arises. For further information on the tax receivable agreement, see Note 16. | |||
The consolidated financial statements reflect the results of operations of HPI through the closing of the IPO on February 13, 2013, and HII subsequent to the IPO. Intercompany accounts and transactions have been eliminated in consolidation. | |||
Noncontrolling interests are included in the consolidated balance sheets as a component of stockholders’ equity that is not attributable to the equity of HII. We report separately the amounts of consolidated net loss or income attributable to us and noncontrolling interests. | |||
As an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we intend to take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have also elected to delay the adoption of new and revised accounting standards until those standards would otherwise apply to nonpublic entities. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. These exemptions will apply for a period of five years following the completion of our IPO although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31. | |||
Reclassifications | |||
Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications are to include accounts receivable and credit card transactions receivable in accounts receivable, prepaid expenses and other current assets on the accompanying consolidated balance sheets and to include the current portion of noncompete obligation in other current liabilities. | |||
Use of Estimates | |||
The preparation of the financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. These estimates also affect the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. | |||
Summary of Significant Accounting Policies | |||
Revenue Recognition | |||
Our revenues consist of commissions earned for health insurance policies and discount benefit plans issued to members, enrollment fees paid by members, and administration fees paid by members as a direct result of our enrollment services. The members’ payments includes a combination of risk premium, fees for discount benefit plans and an enrollment fee, which are collectively referred to as “Premium equivalents.” Revenues reported by the Company are net of premiums remitted to insurance carriers and fees paid for discount benefit plans. Revenues are net of an allowance for policies expected to be cancelled by members during a limited cancellation period. We establish an allowance for estimated policy cancellations through a charge to revenues. The allowance is estimated using historical data to project future experience. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported. We periodically review the adequacy of the allowance and record adjustments as necessary. The net allowance for estimated policy cancellations as of December 31, 2013 and 2012 was $191,000 and $77,000, respectively. | |||
Revenue is earned at the time of sale. Commission rates for our products are agreed to in advance with the relevant insurance carrier and vary by carrier and policy type. Under our carrier compensation arrangements, the commission rate schedule that is in effect on the policy effective date governs the commissions over the life of the policy. In addition, we earn enrollment and administration fees on policies issued. All amounts due to insurance carriers and discount benefit vendors are reported and paid to them according to the procedures provided for in the contractual agreements between the individual carrier or vendor and us. Risk premiums are typically reported and remitted to insurance carriers on the 15th of the month following the end of the month in which they are collected. | |||
In concluding that revenues should be reported on a net basis, we considered Financial Accounting Standards Board (“FASB”) requirements and whether we have the responsibility to provide the goods or services to the customer or if we rely on a supplier to provide the goods or services to the customer. We are not the ultimate party responsible for providing the insurance coverage or discount benefits to the member and, therefore, we are not the primary obligor in the arrangement. The supplier, or insurance carrier, bears the risk for that insurance coverage. We therefore report our revenues net of amounts paid to the contracted insurance carrier companies and discount benefit vendors. | |||
Third-Party Commissions and Advanced Commissions | |||
We utilize a broad network of licensed third-party distributors, in addition to our internal distributors to sell the plans that we develop. We pay commissions to these distributors based on a percentage of the policy premium that varies by type of policy. We pay fees to the distributors for discount benefit plans issued. | |||
Advanced commissions consist of amounts advanced to certain third-party distributors. We perform ongoing credit evaluations of our distributors, all of which are located in the United States. We recover the advanced commissions from future commissions earned on premiums collected. We have not experienced any credit losses from commission advances and, accordingly, have not recognized any provision for bad debt expense for the periods presented. A fee for the advanced commission of up to 2% of the insurance premium sold is charged to the distributors and recognized as interest income as earned. The interest income earned from advanced commissions for the year ended December 31, 2013 and 2012 were $93,000 and $35,000, respectively. Advanced commissions outstanding as of December 31, 2013 and 2012 totaled $2.5 million and $297,000. | |||
Cash and cash equivalents and investments | |||
We account for cash on hand and demand deposits with banks and other financial institutions as cash. Short-term, highly liquid investments with original maturities of three months or less are considered cash equivalents. Investments in cash equivalents include, but are not limited to, demand deposit accounts, money market accounts and certificates of deposit with original maturities of three months or less. | |||
Periodically, we invest cash on hand in other highly-liquid investments. Such investments that have maturities greater than three months up to one year are classified as short-term investments and include, but are not limited to, certificates of deposit with maturities greater than three months, but less than one year. Certain certificates of deposits have maturities beyond one year from the balance sheet date; these are classified as long-term and are included in other assets on the accompanying consolidated balance sheets. | |||
Cash Held on Behalf of Others | |||
In our capacity as the policy administrator, we collect premiums from members and distributors and, after deducting our earned commission and fees, remit these premiums to our contracted insurance carriers, discount benefit vendors and distributors. We hold the unremitted funds in a fiduciary capacity until they are disbursed, and the use of such funds is restricted. We hold these funds in bank accounts. These unremitted amounts are reported as cash held on behalf of others in the accompanying consolidated balance sheets with the related liabilities reported as carriers and vendors payable and commissions payable. Cash held on behalf of others at December 31, 2013 and 2012 was $4.6 million and $3.8 million, respectively. | |||
Investments | |||
We have invested a portion of the proceeds from the IPO in certain investment securities. As of December 31, 2013, all such investments are certificates of deposit and are classified as held-to-maturity. Certificates of deposit with original maturities of three months are less are classified as cash equivalents. Certificates of deposits with maturities greater than three months to 12 months are classified as short-term investments. Certificates of deposits with maturities greater than twelve months are considered long term assets until such time that the remaining maturities of the certificates of deposit are 12 months or less, in which case they are reclassified to short-term investments. | |||
As of December 31, 2013, we had two certificates of deposit with maturities of 15 months with a balance of $460,000 which is included in other assets on the accompanying consolidated balance sheets. | |||
During the year ended December 31, 2013, we had also invested $15.0 million in a fixed-income mutual fund which was classified as available for sale. We sold this mutual fund in December 2013 for $15.0 million. The transaction settled and we received the proceeds on January 2, 2014; as such, the proceeds are included in investment proceeds receivable on the accompanying consolidated balance sheets. | |||
Accounts Receivable | |||
Accounts receivable represent amounts due to us for premiums collected by a third party and are generally considered delinquent 15 days after the due date. The underlying insurance contracts are cancelled retroactively if the payment remains delinquent. We have not experienced any credit losses from accounts receivable and have not recognized a provision for uncollectible accounts receivable. | |||
Capitalization of Offering Costs | |||
Capitalized offering costs are costs directly attributable to the IPO. Prior to the IPO, we had capitalized $3.0 million of offering costs. Upon closing of the IPO in February 2013, these costs were netted against the proceeds of the IPO; as such, there was no balance of capitalized offering costs as of December 31, 2013. Our capitalized offering costs as of December 31, 2012 were $1.8 million. | |||
Property and Equipment | |||
Property and equipment is recorded at cost, less accumulated depreciation, in the accompanying consolidated balance sheets. Depreciation expense for property and equipment is computed using the straight-line method over the following estimated useful lives: | |||
Computer equipment | 5 years | ||
Furniture and fixtures | 7 years | ||
Leasehold improvements | Shorter of the lease term or estimated useful life | ||
The Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. No impairment losses were recognized for the periods presented. | |||
Goodwill and Other Intangible Assets | |||
Goodwill | |||
Under FASB guidance, the process of evaluating the potential impairment of goodwill involves a two-step process and requires significant judgment at many points during the analysis. In the first step, we determine whether there is an indication of impairment by considering relevant quantitative factors or comparing the fair value of the reporting unit to its carrying amount, including goodwill. Our annual impairment test is performed with a measurement date of October 1. If, based on the first step, we determine that there is a quantitative indication of goodwill impairment, we assess the impairment in step two in accordance with FASB guidance. | |||
We determine the fair value using a combination of three valuation approaches: the cost approach, the market approach and the income approach. The cost approach uses multiples from publicly available transactional data of acquired comparable target companies. | |||
The market approach uses a guideline company methodology, which is based upon a comparison of the reporting unit to similar publicly-traded companies within our industry. We derive a market value of invested capital or business enterprise value for each comparable company by multiplying the price per share of common stock of the publicly traded companies by their total common shares outstanding and adding each company’s current level of debt. We calculate a business enterprise multiple based on revenue and earnings from each company, then apply those multiples to our revenue and earnings to calculate a business enterprise value. Assumptions regarding the selection of comparable companies are made based on, among other factors, capital structure, operating environment and industry. As the comparable companies were typically larger and more diversified than our business, multiples were adjusted prior to application to our revenues and earnings to reflect differences in margins, long-term growth prospects and market capitalization. | |||
The income approach uses a discounted debt-free cash flow analysis to measure fair value by estimating the present value of future economic benefits. To perform the discounted debt-free cash flow analysis, we develop a pro forma analysis of the reporting unit to estimate future available debt-free cash flow and discounting estimated debt-free cash flow by an estimated industry weighted average cost of capital based on the same comparable companies used in the market approach. Per FASB guidance, the weighted average cost of capital is based on inputs (e.g., capital structure, risk, etc.) from a market participant’s perspective and not necessarily from the reporting unit’s perspective. Future cash flow is projected based on assumptions for our economic growth, industry expansion, future operations and the discount rate, all of which require significant judgments by management. | |||
After computing a separate business enterprise value under the above approaches, we apply a weighting to them to derive the business enterprise value of the reporting unit. The weightings are evaluated each time a goodwill impairment assessment is performed and give consideration to the relative reliability of each approach at that time. Based on these weightings, we calculated a business enterprise value for the reporting unit. The implied fair value is then compared to the reporting unit’s carrying value. Upon completion of the analysis in step one as of October 1, 2013, we determined that the fair value of the business exceeded its respective carrying value. As such, a step two analysis was not required. | |||
Our goodwill balance arose from the acquisition of the Naylor units of HPI and from our acquisition of Secured in July 2013. See Note 2 and Note 5 for further information on the acquisitions and our goodwill balances as of December 31, 2013 and 2012, respectively. | |||
Other Intangible Assets | |||
Our other intangible assets arose primarily from the acquisitions described above and consist of a brand, the carrier network, distributor relationships, customer relationships, noncompete agreements and capitalized software. Finite-lived intangible assets are amortized over their useful lives from two to fifteen years. | |||
Advertising Costs | |||
Advertising costs include internet advertising costs, promotional costs and events and sponsorships and are expensed as incurred. Advertising costs for the years ended December 31, 2013 and 2012 were $513,000 and $192,000, respectively. | |||
Accounting for Stock-Based Compensation | |||
Expense for stock-based compensation is recognized based upon estimated grant date fair value and is amortized over the service period of the awards using the accelerated method. For grants of stock appreciation rights (“SARs”), we apply the Black-Scholes option-pricing model in determining the fair value of share-based payments to employees. The resulting compensation expense is recognized over the requisite service period. The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. Compensation expense is recognized only for those awards expected to vest. All stock-based compensation expense is classified within Selling, general and administrative expense in the consolidated statements of operations. | |||
Accounting for Income Taxes | |||
Our former operating entity, HPI, was taxed as an S corporation for income tax purposes. Therefore, we were not subject to entity-level federal or state income taxation prior to the IPO. HPIH is taxed as a partnership for federal income tax purposes; as a result, it is not subject to entity-level federal or state income taxation but its members are liable for taxes with respect to their allocable shares of each company’s respective net taxable income. | |||
We are subject to U.S. corporate federal, state and local income taxes that are attributable to HII as reflected in our consolidated financial statements. We use the liability method of accounting for income taxes. Significant management judgment is required in determining the provision for income taxes and, in particular, any valuation allowance that is recorded or released against our deferred tax assets. | |||
We evaluate quarterly the positive and negative evidence regarding the realization of net deferred tax assets. The carrying value of our net deferred tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets. | |||
We account for uncertainty in income taxes using a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Such amounts are subjective, as a determination must be made on the probability of various possible outcomes. We reevaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition and measurement could result in recognition of a tax benefit or an additional tax provision. | |||
Basic and Diluted Earnings (Loss) per Share | |||
Basic earnings (loss) per share is determined by dividing the net (loss) attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings (loss) per share calculation when dilutive. Diluted earnings (loss) per share is determined by dividing the net (loss) attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings (loss) per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding SARs are computed using the treasury stock method. | |||
The Company has two classes of common stock: class A common stock and class B common stock. Holders of each of class A common stock and class B common stock are entitled to one vote per share on all matters to be voted upon by the shareholders, and holders of each class will vote together as a single class on matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. For more information on our classes of stock, see Note 8. | |||
Fair Value Measurements | |||
We measure and report financial assets and liabilities at fair value on a recurring basis. 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 | ||
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 market approach to measure the fair value of our financial assets. 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. See Note 12 for a description of our valuation methods. | |||
Recent Accounting Pronouncements | |||
In the following summary of recent accounting pronouncements, all references to effective dates of FASB guidance relate to nonpublic entities. As noted above, we have elected to delay the adoption of new and revised accounting standards until those standards would otherwise apply to nonpublic companies under provisions of the JOBS Act. | |||
In July 2013, the FASB issued guidance which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available as of the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. We plan to adopt this guidance during the quarter ended March 31, 2015 and are assessing the potential impact to our consolidated financial statements. | |||
In February 2013, the FASB issued guidance that expanded disclosures for items reclassified out of accumulated other comprehensive income (loss). The standard requires presentation of information about reclassification adjustments from accumulated other comprehensive income (loss) in a single note to or on the face of the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We plan to adopt the guidance during the quarter ended March 31, 2014, and do not expect it to have a significant impact our consolidated financial statements. | |||
Business_Acquisitions
Business Acquisitions | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Business Acquisitions | ' | |||||||
2 | Business Acquisitions | |||||||
Acquisition of Sunrise Health Plans, Inc. and Affiliates | ||||||||
On July 17, 2013, we consummated a Stock Purchase Agreement (the “Purchase Agreement”) with Joseph Safina, Howard Knaster and Jorge Saavedra (collectively, the “Sellers”), pursuant to which we acquired from the Sellers all of the outstanding equity of each in Sunrise Health Plans, Inc., a licensed insurance broker, Sunrise Group Marketing, Inc., a call center and sales lead management company, and Secured Software Solutions, Inc., an intellectual property holding company, each of which was converted to a limited liability company shortly after closing, for a cash payment of $10.0 million plus approximately $6.6 million of contingent consideration which included contingent stock awards and a note payable. The funding of the $10.0 million cash portion of the purchase price was provided primarily from net proceeds from the IPO. | ||||||||
In November 2013, HPIH and the Sellers reached an agreement to modify the contingent consideration, including the thresholds to earn such contingent consideration, and to terminate the contingent stock awards and note payable. Instead, the contingent consideration is payable in cash only. The contingent consideration included a one-time payment of $1.0 million, which was paid in November 2013. A fixed component in the aggregate of $250,000 will be paid quarterly if certain levels of policies in force, as defined by the amendment, are achieved, up to a maximum of $3.0 million. A variable component of no more than $200,000 per quarter will be paid if certain levels of growth in policies in force are achieved, up to a maximum of $2.4 million. In addition, one of the principals severed his employment with the Company and entered into a consulting arrangement with the Company. In November 2013, we paid $1.45 million to the Sellers as the first payment under the contingent consideration agreement, which represented a one-time payment of $1.0 million and $450,000 for thresholds met in the third quarter of 2013. Contingent consideration also includes a potential payment of $150,000 to compensate the Sellers for personal income tax liability triggered by the acquisition. The estimated range of potential total contingent consideration is approximately $1.45 million to $6.6 million, which takes into account the $1.45 million paid as of December 31, 2013. | ||||||||
The fair value of contingent consideration is $3.9 million as of December 31, 2013 and is included in contingent acquisition consideration on the accompanying consolidated balance sheets. During the year ended December 31, 2013, we recorded $453,000 in adjustments to fair value of the contingent consideration, which is included in other expense on the accompanying consolidated statements of operations. | ||||||||
The following table summarizes the fair value of the consideration for the acquisition as of July 17, 2013 ($ in thousands). The fair values are derived using discount rates related to the probability of the Sellers meeting the thresholds for payment and other risk factors including credit risk. | ||||||||
Cash paid at closing | $ | 10,000 | ||||||
Contingent consideration | 4,872 | |||||||
Total consideration | $ | 14,872 | ||||||
The following table summarizes the allocation of the total purchase price for the acquisition as of July 17, 2013 ($ in thousands): | ||||||||
Cash | $ | 91 | ||||||
Accounts receivable and other assets (1) | 332 | |||||||
Property and equipment (1) | 128 | |||||||
Accounts payable and accrued expenses (1) | (326 | ) | ||||||
Intangible asset – brand | 76 | |||||||
Intangible asset – noncompete agreements | 99 | |||||||
Intangible asset – customer relationships-distributors | 1,050 | |||||||
Intangible asset – customer relationships-direct | 788 | |||||||
Intangible asset – capitalized software | 526 | |||||||
Goodwill (2) | 12,108 | |||||||
$ | 14,872 | |||||||
-1 | The carrying value of accounts receivable, property and equipment and accounts payable and accrued expenses acquired approximated fair value; as such, no adjustments to these accounts were recorded in association with the acquisition. | |||||||
-2 | The useful lives for the brand, noncompete agreement, customer relationships-distributors, customer relations-direct and capitalized software are two years, three years, fifteen years, two years and two years, respectively. | |||||||
-3 | As of December 31, 2013, the amount of goodwill acquired that we expect to be deductible for income tax purposes is $7.5 million. | |||||||
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 is primarily related to expected results of future operations of Secured and the operational and technological synergies we expect to realize as a result of the acquisition. | ||||||||
Related to the acquisition of Secured, during the year ended December 31, 2013, we recognized $301,000 in transaction costs. Transaction costs were expensed as incurred and are included in Selling, general and administrative expenses in the accompanying consolidated statement of operations. | ||||||||
As a result of acquiring Secured, our consolidated results of operations include the results of Secured since the acquisition date. Secured’s revenues and pre-tax net loss included in our results of operations since the acquisition were $3.3 million and $204,000, respectively, for the year ended December 31, 2013. Net loss before taxes included $366,000 of amortization expense related to the identified intangible assets recorded as a result of the acquisition. | ||||||||
This transaction is expected to provide us with additional benefits such as reduced enterprise risk from enhanced oversight of our distribution, addition of sales lead management expertise to maximize the number of new insurance policies produced by each dollar invested in sales leads, and opportunities through technological and cost-saving synergies. In connection with the Purchase Agreement, on July 17, 2013, we also entered into employment agreements with the Sellers. | ||||||||
The following table presents unaudited pro forma information for the Company assuming the acquisition of Secured had occurred as of January 1, 2012 ($ in thousands, except per share data). This pro forma information does not purport to represent what our actual results would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods. | ||||||||
Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
Revenues | $ | 58,363 | $ | 45,558 | ||||
Net (loss) income before income taxes | (6,775 | ) | 2,783 | |||||
Net (loss) income | (6,788 | ) | 2,783 | |||||
Net (loss) income attributable to Health Insurance Innovations, Inc. and Health Plan | ||||||||
Intermediaries, LLC | (2,932 | ) | 2,872 | |||||
Loss per share – basic | (0.61 | ) | - | |||||
Loss per share – diluted | (0.61 | ) | - | |||||
Acquisition of Insurance Center for Excellence, LLC (ICE) | ||||||||
On June 1, 2012, HPI and TSG acquired ICE. ICE is a licensed call center and a call center training facility for our distributors. In connection with the transaction, HPI received an 80% controlling interest in ICE. We made contributions to ICE of $40,000 and $320,000 during the years ended December 31, 2013 and 2012, respectively. TSG received a 20% noncontrolling interest in ICE and contributed $16,000 and $80,000 to ICE during the years ended December 31, 2013 and 2012, respectively. On June 30, 2013, we purchased TSG’s 20% interest in ICE for $90,000 and, as a result, ICE is our wholly-owned subsidiary. | ||||||||
Additionally, concurrent with its formation, ICE entered into an Agent Producer Agreement and an Assignment of Commissions Agreement with The Amacore Group, Inc. (“Amacore”) (collectively referred to as “Agent Agreement”). Under the Agent Agreement, ICE assigned its commissions with respect to Assurant dental sales to Amacore in return for production incentives, training, marketing materials, commission payments and reporting, advances on commissions and ongoing sales support. |
Variable_Interest_Entities
Variable Interest Entities | 12 Months Ended | |
Dec. 31, 2013 | ||
Variable Interest Entities | ' | |
3 | Variable Interest Entities | |
As of December 31, 2013, we are the primary beneficiary of two entities that each constitute a variable interest entity (“VIE”) pursuant to FASB guidance. | ||
HPIH | ||
As of December 31, 2013, we had a variable interest in HPIH, and HPIH is a VIE. HPIH is a VIE as the voting rights of the investors are not proportional to their obligations to absorb the expected losses of HPIH. We hold 100% of the voting power in HPIH, but own less than 50% of the total membership and economic interest, and the other members of HPIH hold no voting rights in HPIH, but own more than 50% of the membership and economic interest. Further, substantially all of the activities of HPIH are conducted on behalf of a membership with disproportionately few voting rights. We have concluded that we are the primary beneficiary of HPIH, and, therefore, should consolidate HPIH since we have both power and benefits over HPIH. We have the power to direct the activities of HPIH that most significantly impact its economic performance. Our minority equity interest in HPIH obligates us to absorb losses of HPIH and gives us the right to receive benefits from HPIH related to the day-to-day operations of the entity, both of which could potentially be significant to HPIH. As such, our maximum exposure to loss as a result of our involvement in this VIE is 100% of the operating income or loss of the VIE. | ||
Simple Insurance Leads, LLC | ||
On October 7, 2013, HPIH entered into a Limited Liability Company Operating Agreement (the “SIL LLC Agreement”) with Health Benefits One, LLC (“HBO”) to form Simple Insurance Leads, LLC (“SIL”), a venture intended to procure sales leads to distribute to us and to our distributors. We had made $163,000 in contributions to SIL as of December 31, 2013, and may be required to make total contributions of $492,000 under our related agreement. HBO had no obligations to make any initial capital contributions. | ||
Per the LLC Agreement, so long as HPIH’s unreturned capital contributions have not been reduced to zero, HPIH may, without the consent of HBO, cause SIL to take any significant actions affecting SIL’s day-to-day operations, including, the sale or disposition of SIL assets and entrance into voluntary liquidation or receivership of SIL. As such, we determined that we have the power to control the day-to-day activities of SIL. | ||
We have concluded that we are the primary beneficiary of SIL, and therefore, should consolidate HPIH since we have both power and benefits over SIL. We have the power to direct the activities of SIL that most significantly impact its economic performance. Per terms of the SIL LLC Agreement, we have determined that 100% of the operating income or loss of the VIE should be allocated to us. As of December 31, 2013, our maximum exposure to loss as a result of our involvement is VIE, is 100% of our capital contributions to SIL, or $163,000, plus 100% of the operating income or loss of the VIE, as noted above. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property and Equipment | ' | ||||||||
4 | Property and Equipment | ||||||||
Property and equipment, net, are comprised of the following ($ in thousands): | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computer equipment | $ | 188 | $ | 85 | |||||
Furniture and fixtures | 207 | 102 | |||||||
Leasehold improvements | 147 | 84 | |||||||
Total property and equipment | 542 | 271 | |||||||
Less accumulated depreciation | (153 | ) | (58 | ) | |||||
Total property and equipment, net | $ | 389 | $ | 213 | |||||
Depreciation expense, including depreciation related to assets acquired through capital leases, was approximately $96,000 and $52,000, respectively, for the year ended December 31, 2013 and 2012. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||
5 | Goodwill and Intangible Assets | |||||||||||||||
Goodwill | ||||||||||||||||
Our goodwill balance as of January 1, 2012 was a result of the acquisition of the Naylor units of HPI as described in Note 1. Our goodwill balance as of December 31, 2013 was a result of the Secured acquisition as described in Note 2 as well as our goodwill balance existing prior to such acquisition. | ||||||||||||||||
The changes in the carrying amounts of goodwill were as follows ($ in thousands): | ||||||||||||||||
Balance as of January 1, 2012 | $ | 5,906 | ||||||||||||||
Goodwill acquired | - | |||||||||||||||
Impairment of goodwill | - | |||||||||||||||
Balance as of December 31, 2012 | 5,906 | |||||||||||||||
Goodwill acquired | 12,108 | |||||||||||||||
Impairment of goodwill | - | |||||||||||||||
Balance as of December 31, 2013 | $ | 18,014 | ||||||||||||||
Other intangible assets | ||||||||||||||||
Our other intangible assets arose primarily from the acquisitions described above and consist of a brand, the carrier network, distributor relationships, customer relationships, noncompete agreements and capitalized software. Finite-lived intangible assets are amortized over their useful lives from two to fifteen years. | ||||||||||||||||
Major classes of intangible assets as of December 31, 2013 consisted of the following ($ in thousands): | ||||||||||||||||
Weighted-average | Gross Carrying | Accumulated | Intangible | |||||||||||||
Amortization | Amount | Amortization | Asset, net | |||||||||||||
Brand | 2 | $ | 76 | (17 | ) | $ | 59 | |||||||||
Carrier network | 5 | 40 | (18 | ) | 22 | |||||||||||
Distributor relationships | 8.8 | 4,660 | (1,192 | ) | 3,468 | |||||||||||
Noncompete agreements | 4.8 | 942 | (254 | ) | 688 | |||||||||||
Customer relationships | 2 | 788 | (181 | ) | 607 | |||||||||||
Capitalized software | 2.2 | 571 | (134 | ) | 437 | |||||||||||
Total intangible assets | 6.9 | $ | 7,077 | (1,796 | ) | $ | 5,281 | |||||||||
Major classes of intangible assets as of December 31, 2012 consisted of the following ($ in thousands): | ||||||||||||||||
Weighted-average | Gross Carrying | Accumulated | Intangible | |||||||||||||
Amortization | Amount | Amortization | Asset, net | |||||||||||||
Brand | 2 | $ | 400 | $ | (250 | ) | $ | 150 | ||||||||
Capitalized software | 5 | 45 | (4 | ) | 41 | |||||||||||
Carrier network | 5 | 40 | (10 | ) | 30 | |||||||||||
Distributor relationships | 7 | 3,610 | (645 | ) | 2,965 | |||||||||||
Noncompete agreement | 5 | 843 | (70 | ) | 773 | |||||||||||
Total intangible assets | 6.2 | $ | 4,938 | $ | (979 | ) | $ | 3,959 | ||||||||
Amortization expense for year ended December 31, 2013 and 2012 was $1.2 million and $960,000, respectively. | ||||||||||||||||
Estimated annual pretax amortization for intangibles assets for 2014 and in each of the next five years are as follows ($ in thousands): | ||||||||||||||||
2014 | 1,499 | |||||||||||||||
2015 | 1,181 | |||||||||||||||
2016 | 787 | |||||||||||||||
2017 | 689 | |||||||||||||||
2018 | 457 | |||||||||||||||
Thereafter | 668 | |||||||||||||||
Total | 5,281 | |||||||||||||||
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Accounts Payable and Accrued Expenses | ' | |||||||
6 | Accounts Payable and Accrued Expenses | |||||||
Accounts payable and accrued expenses consisted of the following as of ($ in thousands): | ||||||||
31-Dec-13 | 31-Dec-12 | |||||||
Accounts payable | $ | 588 | $ | 735 | ||||
Accrued wages | 793 | 90 | ||||||
Accrued refunds | 715 | 467 | ||||||
Accrued credit card/ACH fees | 80 | 56 | ||||||
Accrued interest | 35 | 12 | ||||||
Accrued professional fees | 34 | 683 | ||||||
Deferred salaries | - | 19 | ||||||
Other accruals | 66 | - | ||||||
Total accounts payable and accrued expenses | $ | 2,311 | $ | 2,062 | ||||
Debt
Debt | 12 Months Ended | |
Dec. 31, 2013 | ||
Debt | ' | |
7 | Debt | |
During September 2011, HPI entered into a bank loan agreement with a principal balance of $4.3 million. The purpose of this loan was to finance a portion of the acquisition of the remaining 50% interest in HPI as discussed in Note 1. In February 2013, we repaid the $3.2 million outstanding balance of the loan using a portion of the proceeds of the IPO. The remaining deferred financing costs of $71,000 were written-off to other expense (income) on the accompanying consolidated statements of operations when the loan was repaid. | ||
Interest expense incurred on the loan for year ended 2013 and 2012 was $17,000 and $198,000, respectively. Amortization expense for the year ended 2013 and 2012 was $7,000 and $44,000, respectively. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | |
Dec. 31, 2013 | ||
Stockholders' Equity | ' | |
8 | Stockholders’ Equity | |
Refer to Note 1 for further information regarding the current capital structure of the Company. | ||
On February 13, 2013, we completed our IPO by issuing 4,666,667 shares of our Class A common stock, par value $0.001 per share, at a price to the public of $14.00 per share of common stock. In addition, we issued 8,666,667 shares of our Class B common stock, of which 8,580,000 shares of Class B common stock were obtained by HPI and 86,667 shares of Class B common stock were obtained by Health Plan Intermediaries Sub, LLC (“HPIS”), of which HPI is the managing member. In addition, we granted the underwriters of the IPO the right to purchase additional shares of Class A common stock to cover over-allotments (the “over-allotment option”). | ||
Holders of each of Class A common stock and Class B common stock are entitled to one vote per share on all matters to be voted upon by the shareholders, and holders of each class will vote together as a single class on all such matters. Holders of shares of our Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. As of December 31, 2013, Class A common stockholders have 37.7% of the voting power in HII and Class B common stockholders have 62.3% of the voting power of HII. Holders of shares of our Class A common stock have 100% of the economic interest in HII. Holders of Class B common stock do not have an economic interest in HII. | ||
In accordance with the Exchange Agreement, in March 2013, we received a net amount of $1.4 million in proceeds from the issuance of 100,000 shares of Class A common stock through the over-allotment option. We immediately used the proceeds to acquire Series B Membership Interests, together with an equal number of shares of our Class B common stock, from HPI. These Series B Membership Interests were immediately recapitalized into Series A Membership Interests in HPIH. | ||
Upon completion of the IPO, HII became a holding company, the principal asset of which is our interest in HPIH. All of our business is conducted through HPIH. We are the sole managing member of HPIH and have 100% of its voting rights and control. | ||
Our authorized capital stock consists of 100,000,000 shares of Class A common stock, par value $0.001 per share, 20,000,000 shares of Class B common stock, par value $0.001 per share and 5,000,000 shares of preferred stock, par value $0.001 per share. | ||
Class A Common Stock | ||
The determination to pay dividends, if any, to our Class A common stockholders will be made by our board of directors. We do not, however, expect to declare or pay any cash or other dividends in the foreseeable future on our Class A common stock, as we intend to reinvest any cash flow generated by operations in our business. We may enter into credit agreements or other borrowing arrangements in the future that prohibit or restrict our ability to declare or pay dividends on our Class A common stock. In the event of liquidation, dissolution or winding up of HII, the holders of Class A common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. The holders of our Class A common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Class A common stock. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future. | ||
Class B Common Stock | ||
Class B common stockholders will not be entitled to any dividend payments. In the event of any dissolution, liquidation, or winding up of our affairs, whether voluntary or involuntary, after payment of our debts and other liabilities and making provision for any holders of our preferred stock that have a liquidation preference, our Class B common stockholders will not be entitled to receive any of our assets. In the event of our merger or consolidation with or into another company in connection with which shares of Class A common stock and Class B common stock (together with the related membership interests) are converted into, or become exchangeable for, shares of stock, other securities or property (including cash), each Class B common stockholder will be entitled to receive the same number of shares of stock as is received by Class A stockholders for each share of Class A stock, and will not be entitled, for each share of Class B stock, to receive other securities or property (including cash). No holders of Class B common stock will have preemptive rights to purchase additional shares of Class B common stock. | ||
Preferred Stock | ||
Our board of directors has the authority to issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the stockholders. | ||
The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of HII without further action by the stockholders and may adversely affect the voting and other rights of the holders of Class A common stock. At present, we have no plans to issue any preferred stock. | ||
Treasury Stock | ||
Treasury stock is recorded at cost and arises pursuant to the surrender of shares by certain employees to satisfy statutory tax withholding obligations on vested restricted stock awards. In addition, certain restricted stock awards have been granted from shares in Treasury. During the year ended December 31, 2013, 312,845 shares were transferred to Treasury as a result of surrendered shares of vested restricted stock awards, and 182,964 shares were granted to certain employees from Treasury as restricted stock awards. As of December 31, 2013, we had 129,881 shares of treasury stock, carried at an aggregate cost of $1.6 million. |
Stockbased_Compensation
Stock-based Compensation | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Stock-based Compensation | ' | |||||||||||||||
9 | Stock-based Compensation | |||||||||||||||
We maintain one stock-based incentive plan, the Health Insurance Innovations, Inc. Long Term Incentive Plan (the “LTIP”), which became effective February 7, 2013, under which SARs, restricted stock, restricted stock units and other types of equity and cash incentive awards may be granted to employees, non-employee directors and service providers. The LTIP expires after ten years, unless prior to that date the maximum number of shares available for issuance under the plan has been issued or our board of directors terminates this plan. There are 1,250,000 shares of common stock reserved for issuance under the LTIP. | ||||||||||||||||
Restricted Stock | ||||||||||||||||
The vesting periods for grant recipients are at the discretion of the Compensation Committee of the Board of Directors and may be vested upon grant in whole or in part but generally have used a four-year period. Restricted stock units are amortized using the accelerated method over the vesting period. | ||||||||||||||||
The table below summarizes activity regarding unvested restricted stock under the Plan during the year ended December 31, 2013 ($ in thousands, except per share data): | ||||||||||||||||
Number of Shares Outstanding | Weighted-Average | Aggregate Intrinsic Value | ||||||||||||||
Grant Date Fair | ||||||||||||||||
Value (per share) | ||||||||||||||||
Restricted stock unvested at February 7, 2013 | - | $ | - | |||||||||||||
2013 activity: | ||||||||||||||||
Granted | 806 | $ | 12.97 | |||||||||||||
Vested | (408 | ) | $ | 12.21 | ||||||||||||
Forfeited | (240 | ) | $ | 14 | ||||||||||||
Restricted stock unvested at December 31, 2013 | 158 | $ | 13.38 | $ | 1,601 | |||||||||||
Stock Appreciation Rights | ||||||||||||||||
The SARs activity for the year ended December 31, 2013 is as follows ($ in thousands, except per share data): | ||||||||||||||||
SARs | Weighted- | Weighted- | Aggregate Intrinsic Value (a) | |||||||||||||
Average | Average | |||||||||||||||
Exercise Price | Remaining Contractual | |||||||||||||||
Term (in years) | ||||||||||||||||
Outstanding at February 7, 2013 | - | $ | - | - | $ | - | ||||||||||
Granted | 439 | 12.71 | - | - | ||||||||||||
Exercised (b)(c) | - | - | - | - | ||||||||||||
Forfeited or expired | 60 | 13.97 | - | - | ||||||||||||
Outstanding at December 31, 2013 | 379 | 12.51 | 6.3 years | - | ||||||||||||
Exercisable at December 31, 2013 | 50 | $ | 13.97 | 3.7 years | $ | - | ||||||||||
(a) | The intrinsic value of a SAR is the amount by which the market value of the underlying stock as of December 31, 2013 exceeds the exercise price of the option multiplied by the number of shares represented by such SAR. | |||||||||||||||
(b) | Shares issued upon the exercise of SARs are treated as newly issued shares. There were no shares issued during the period related to exercises of SARs. | |||||||||||||||
(c) | There was no tax benefit recognized in 2013 related to stock-based compensation for SARs. | |||||||||||||||
During the year ended December 31, 2013, the weighted-average grant date fair value per share of stock-based compensation granted to employees during the period above was $4.90. The total fair value of SARs that vested for the year ended December 31, 2013 was $268,000. | ||||||||||||||||
During the year ended December 31, 2013, cash was not used to settle any equity instruments previously granted. | ||||||||||||||||
Accounting for Stock-Based Compensation | ||||||||||||||||
Expense for stock-based compensation is recognized based upon estimated grant date fair value and is amortized over the service period of the awards using the accelerated method. For grants of SARs, we apply the Black-Scholes option-pricing model in determining the fair value of share-based payments to employees. The resulting compensation expense is recognized over the requisite service period. The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. Compensation expense is recognized only for those awards expected to vest, with forfeitures estimated based on our historical experience and future expectations. All stock-based compensation expense is classified within Selling, general and administrative expense in the consolidated statements of operations. None of the stock-based compensation was capitalized during the year ended December 31, 2013. | ||||||||||||||||
The fair value of SARs granted during 2013 was based upon the Black-Scholes option-pricing model. The expected term of the awards represents the estimated period of time until exercise, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. For 2013, the expected stock price volatility was determined using a peer group of public companies within our industry as it is not practicable for us to estimate our own volatility due to the lack of a liquid market and active market trades. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. We have not paid dividends in the past and do not currently plan to pay any dividends in the foreseeable future. | ||||||||||||||||
The Black-Scholes option-pricing model was used with the following weighted average assumptions: | ||||||||||||||||
Risk-free rate | 1.2 | % | ||||||||||||||
Expected life | 4.7 years | |||||||||||||||
Volatility | 44 | % | ||||||||||||||
Expected dividend | none | |||||||||||||||
The following table summarizes stock-based compensation expense for the year ended December 31, 2013 ($ in thousands): | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2013 | ||||||||||||||||
SARs | $ | 525 | ||||||||||||||
Restricted shares | 5,771 | |||||||||||||||
$ | 6,296 | |||||||||||||||
The following table summarizes unrecognized stock-based compensation and the remaining period over which such stock-based compensation is expected to be recognized as of December 31, 2013 ($ in thousands): | ||||||||||||||||
Remaining | ||||||||||||||||
years | ||||||||||||||||
SARs | $ | 1,302 | 2.48 | |||||||||||||
Restricted shares | 1,323 | 2.21 | ||||||||||||||
$ | 2,625 | |||||||||||||||
These amounts do not include the cost of any additional awards that may be granted in future periods nor any changes in our forfeiture rate. There were no SARs exercised during the year ended December 31, 2013. | ||||||||||||||||
We realized income tax benefits of approximately $550,000 from activity involving restricted shares for the year ended December 31, 2013. We did not have any income tax benefits from activity involving stock appreciation rights for the year ended December 31, 2013. |
Income_Tax
Income Tax | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Income Tax | ' | |||||
10 | Income Tax | |||||
The provision for income tax for the year ended December 31, 2013 consisted of the following components ($ in thousands): | ||||||
Current: | ||||||
Federal | $ | - | ||||
State | 18 | |||||
Total current taxes | $ | 18 | ||||
Deferred: | ||||||
Federal | - | |||||
State | - | |||||
Total deferred taxes | - | |||||
Income taxes | $ | 18 | ||||
The items accounting for differences between the income tax provision or benefit computed at the federal statutory rate and the provision for income tax for the year ended December 31, 2013 was as follows: | ||||||
U.S. federal income tax rate | 35 | % | ||||
State income taxes, net of federal tax benefits | 0.2 | |||||
Valuation allowance | (6.7 | ) | ||||
Operations of nontaxable subsidiary | (21.0 | ) | ||||
Stock-based compensation contribution | (7.0 | ) | ||||
Non-deductible or non-taxable items | (0.7 | ) | ||||
Income taxes | (0.2 | )% | ||||
The deferred income tax assets consisted of the following as of December 31, 2013 ($ in thousands): | ||||||
Deferred tax assets: | ||||||
Investment in subsidiary | $ | 277 | ||||
Tax receivable agreement | 158 | |||||
Net operating loss carryforwards | 127 | |||||
Total deferred tax assets | 562 | |||||
Less valuation allowances | (562 | ) | ||||
Deferred tax assets, net of valuation allowance | $ | - | ||||
We have federal net operating loss carryforwards of approximately $338,000, and varying amounts of state net operating loss carryforwards. These carryforwards remain available for utilization through the 2033 tax year. | ||||||
Our former operating entity, HPI, was taxed as an S corporation for income tax purposes. Therefore, we were not subject to entity-level federal or state income taxation prior to the IPO. HPIH is taxed as a partnership for income tax purposes; as a result, it is not subject to entity-level federal or state income taxation but its members are liable for taxes with respect to their allocable shares of each company’s respective net taxable income. We are subject to U.S. corporate federal, state and local income taxes on our allocable share of net taxable income that is reflected in our consolidated financial statements. Additionally, certain state jurisdictions tax HPIH instead of its members, the effects of which are reflected in our consolidated provision for income taxes. | ||||||
The effective tax rate for the year ended December 31, 2013 was (0.2)%; we incurred a provision for income taxes of $18,000. 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. Additionally, certain state jurisdictions tax HPIH and HPIS instead of their members, the effects of which are reflected in our consolidated provision for income taxes. | ||||||
Our effective tax rate includes a rate detriment attributable to the fact that certain of our subsidiaries operate as limited liability companies which are not subject to federal or state income tax. Accordingly, a portion of our earnings or losses attributable to noncontrolling interests are not subject to corporate level taxes. Additionally, our effective tax rate includes a valuation allowance placed on all of our deferred tax assets, as our belief is more likely than not that our deferred tax assets will not be realized to offset future taxable income. | ||||||
We evaluate quarterly the positive and negative evidence regarding the expected realization of net deferred tax assets. The carrying value of our net deferred tax assets is based on our assessment as to whether it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets. We concluded that it is more likely than not that our deferred tax assets will not be realized due to the presence of losses during the only year in which we measured deferred tax assets and because there are limited means by which our deferred tax asset on our investment in HPIH can be realized. For these reasons, we provided a valuation allowance of $562,000 against all of our deferred tax assets for the year ended December 31, 2013. | ||||||
We account for uncertainty in income taxes using a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Such amounts are subjective, as a determination must be made on the probability of various possible outcomes. We reevaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition and measurement could result in recognition of a tax benefit or an additional tax provision. | ||||||
As of December 31, 2013, we did not have any balance of gross unrecognized tax benefits, and as such, no amount would favorably affect the effective income tax rate in any future periods. For the year ended December 31, 2013, there was no change to our total gross unrecognized tax benefit. We believe that there will not be a significant increase or decrease to the uncertain tax positions within 12 months of the reporting date. The Company accounts for interest and penalties associated with uncertain tax positions as a component of tax expense, and none were included in the Company’s financial statements as there are not uncertain tax positions outstanding as of December 31, 2013. The Company’s 2012 and 2013 tax years remain subject to examination by tax authorities. |
Net_Loss_per_Share
Net Loss per Share | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Net Loss per Share | ' | ||||
11 | Net Loss per Share | ||||
The computations of basic and diluted net loss per share attributable to Health Insurance Innovations, Inc. for the year ended December 31, 2013 were as follows ($ in thousands, except share data): | |||||
Year Ended December 31, 2013 | |||||
Basic net loss attributable to Health Insurance Innovations, Inc. | $ | (3,355 | ) | ||
Average shares—basic | 4,813,222 | ||||
Effect of dilutive securities: | |||||
Restricted shares | - | ||||
SARs | - | ||||
Average shares—diluted | 4,813,222 | ||||
Basic net loss per share attributable to Health Insurance Innovations, Inc. | $ | (0.70 | ) | ||
Diluted net loss per share attributable to Health Insurance Innovations, Inc. | $ | (0.70 | ) | ||
Potential common shares are included in the diluted net loss per share calculation when dilutive. Potential common shares consist of Class A common stock issuable through 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 loss per share because such inclusion would be anti-dilutive (in thousands): | |||||
Year Ended | |||||
December | |||||
31, 2013 | |||||
Restricted shares | 158 | ||||
SARs | 379 | ||||
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
12 | Fair Value Measurements | ||||||||||||||||
We measure and report financial assets and liabilities at fair value on a recurring basis. 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 | ||||||||||||||||
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 market approach to measure the fair value of our financial assets. 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. | |||||||||||||||||
Investments. Our short-term investments include certificates of deposit of varying maturities. The certificates of deposit are classified as held to maturity and have maturities ranging from greater than three to fifteen months. The investments are classified within Level 1 of the fair value hierarchy. Because the carrying values of the investments approximate the fair values, there are no holding gains or losses on these securities. | |||||||||||||||||
Contingent consideration for business acquisition. The contingent consideration related to the acquisition of Secured includes periodic cash payments, as described in Note 2, and are valued using external valuation specialists. The inputs include discount rates reflecting the credit risk, risk and the probability of the underlying outcome of the results required by Secured to receive payment and the nature of such payments. The underlying outcomes are subject to actual revenues and earnings relative to the target results in the respective instruments or agreement. These liabilities are included in Level 3 of the fair value hierarchy. | |||||||||||||||||
Noncompete obligation. Our noncompete obligation, an exclusivity agreement with the developer of A.R.I.E.S as described in Note 15 are primarily valued using nonbinding market prices as stated in the agreement that are corroborated by observable market data. The inputs and fair value are reviewed for reasonableness and may be further validated by comparison to publicly available information or compared to multiple independent valuation sources. The noncompete obligation is classified within Level 2 of the fair value hierarchy. | |||||||||||||||||
The carrying amounts of financial assets and liabilities reported in the accompanying consolidated balance sheets for cash and cash equivalents, cash held on behalf of others, credit card transactions receivable, accounts receivable, advanced commissions, carriers and vendors payable, commissions payable, and accounts payable and accrued expenses as of December 31, 2013 approximate fair value because of the short-term duration of these instruments. | |||||||||||||||||
We recognize transfers between levels within the fair value hierarchy on the date of the change in circumstances that requires such transfer. We began classifying all of our contingent acquisition consideration as Level 3 in the fourth quarter of 2013 . | |||||||||||||||||
As of December 31, 2013, our assets and liabilities measured at fair value were as follows ($ in thousands): | |||||||||||||||||
Fair Value Measurement as of December 31, 2013 | |||||||||||||||||
Carrying Value as of December 31, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | |||||||||||||||||
Certificates of deposit | $ | 7,337 | $ | 7,337 | $ | - | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Noncompete obligation, including current portion | $ | 626 | $ | - | $ | 613 | $ | - | |||||||||
Contingent acquisition consideration | 3,876 | - | 3,876 | ||||||||||||||
$ | 4,502 | $ | - | $ | 613 | $ | 3,876 | ||||||||||
As of December 31, 2012, liabilities measured at fair value were as follows ($ in thousands): | |||||||||||||||||
Fair Value Measurement as of December 31, 2012 | |||||||||||||||||
Carrying Value as of December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt, including current portion | $ | 3,314 | $ | - | $ | 3,314 | $ | - | |||||||||
Noncompete obligation, including current portion | 779 | - | 779 | - | |||||||||||||
$ | 4,093 | $ | - | $ | 4,093 | $ | - | ||||||||||
A summary of the changes in the fair value of liabilities carried at fair value that have been classified in Level 3 of the fair value hierarchy was as follows ($ in thousands): | |||||||||||||||||
Contingent Acquisition Consideration | |||||||||||||||||
Balance as of January 1, 2013 | $ | - | |||||||||||||||
Issuances and settlements, net | 3,423 | ||||||||||||||||
Realized loss included in income | 29 | ||||||||||||||||
Unrealized loss included in income | 424 | ||||||||||||||||
Total realized and unrealized loss | 453 | ||||||||||||||||
Balance as of December 31, 2013 | $ | 3,876 | |||||||||||||||
Realized and unrealized loss on the contingent acquisition consideration are included in other expense (income) on the accompanying consolidated statements of operations. |
Operating_Leases
Operating Leases | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Operating Leases | ' | ||||
13 | Operating Leases | ||||
We lease office facilities under operating leases, which expire in 2015, 2016 and 2017, respectively. The operating lease agreements contains rent holidays and rent escalation provisions. Rent holidays and rent escalation provisions are considered in determining straight-line rent expense to be recorded over the lease terms. The difference between cash rent payments and straight-line rent expense was approximately $70,000 and $63,000 as of December 31, 2013 and 2012, respectively. | |||||
Total rent expense under all operating leases, which includes equipment was approximately $308,000 and $193,000 for year ended December 31, 2013 and 2012, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. | |||||
As of December 31, 2013, the future minimum lease payments under noncancellable operating leases were as follows ($ in thousands): | |||||
2014 | $ | 398 | |||
2015 | 350 | ||||
2016 | 192 | ||||
2017 | 89 | ||||
Total minimum lease payments | $ | 1,029 | |||
Segments
Segments | 12 Months Ended | |
Dec. 31, 2013 | ||
Segments | ' | |
14 | Segments | |
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, or decision-making group, in deciding how to allocate resources and in assessing our performance. Our chief operating decision-maker is considered to be the chief executive officer (“CEO”). The CEO reviews our financial information in a manner substantially similar to the accompanying consolidated financial statements. In addition, our operations, revenues, and decision-making functions are based entirely in the United States and are not evaluated by state or region. Therefore, management has concluded that we operate in one operating and geographic segment. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |
Dec. 31, 2013 | ||
Commitments and Contingencies | ' | |
15 | Commitments and Contingencies | |
BimSym Agreements | ||
On August 1, 2012, the Company entered into a software assignment agreement with BimSym eBusiness Solutions, Inc. (“BimSym”) for our exclusive ownership of all rights, title and interest in the technology platform (“A.R.I.E.S. System”) developed by BimSym and utilized by us. As a result of the agreement, we purchased the A.R.I.E.S. System for $45,000 and this purchase was capitalized and recorded as an intangible asset. In connection with this agreement, we simultaneously entered into a master services agreement for the technology, under which we are required to make monthly payments of $26,000 for 5 years. After the five-year term, this agreement automatically renews for one-year terms unless we give 60 days’ notice. | ||
Additionally, we also entered into an exclusivity agreement with BimSym whereby neither BimSym nor any of its affiliates will create, market or sell a software, system or service with the same or similar functionality as that of A.R.I.E.S. System under which we are required to make monthly payments of $16,000 for 5 years. The present value of these payments has been capitalized and recorded as an intangible asset with a corresponding liability, on the accompanying consolidated balance sheet as of December 31, 2013. | ||
Legal Proceedings | ||
As of December 31, 2013, we had no significant outstanding legal proceedings. We are subject to certain legal proceedings and claims that may arise in the ordinary course of business. In the opinion of management, we do not have a potential liability related to any current legal proceedings and claims that would individually, or in the aggregate, have a material adverse effect on our financial condition, liquidity, results of operations, or cash flows. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | |
Dec. 31, 2013 | ||
Related Party Transactions | ' | |
16 | Related-Party Transactions | |
Health Plan Intermediaries, LLC | ||
HPI and its subsidiary HPIS, which are beneficially owned by Mr. Kosloske, are related parties by virtue of their Series B Membership interests in HPIH, of which we are managing member. During the year ended December 31, 2013, HPIH paid cash distributions of $2.2 million to these entities related to estimated federal and state income taxes, pursuant to the operating agreement entered into by HPIH and HPI, including $944,000 which was paid prior to the IPO. As of December 31, 2013, an accrued distribution of $916,000 was recorded related to distributions of estimated federal income taxes relating to HPI and HPIS and is included in due to member on the accompanying consolidated balance sheets. | ||
Tax Receivable Agreement | ||
On February 13, 2013, we entered into a tax receivable agreement with the holders of Series B Membership Interests, which are beneficially owned by Mr. Kosloske. See Note 1 for further description of the tax receivable agreement. | ||
As of December 31, 2013, we have made no such payments under the tax receivable agreement. As of December 31, 2013, we would be obligated to pay Mr. Kosloske $423,000 if our taxes payable on our subsequent annual tax return filings are shown to be reduced as result of an increase in our tax basis due to the issuance of 100,000 shares of Class A common stock subsequent to the IPO under the IPO underwriters’ option. See Note 8 for further information on this issuance of Class A common stock. | ||
TSG Agency, LLC | ||
In August 2012, we entered into a promissory note with Ivan Spinner, who controls TSG, in the amount of $100,000 for the purpose of funding advanced commissions. The note was non-interest bearing and required equal monthly payments of $25,000 beginning September 20, 2012 and ending December 20, 2012. This loan was modified on October 18, 2012 whereby the November and December payments were deferred to January 2, 2013 and February 1, 2013, respectively. The note had a balance of $50,000 at December 31, 2012 and was repaid during the first quarter of 2013. | ||
On March 14, 2013, the Company terminated its contract rights with TSG for an aggregate cash price of $5.5 million. In conjunction with the transaction, Ivan Spinner joined HII as an employee. | ||
On June 30, 2013, we purchased TSG’s interest in ICE for a cash payment to TSG of $90,000. See Note 2 for further information on this transaction. | ||
Health Benefits One, LLC | ||
In October 2013, HPIH formed SIL with HBO, one of our distributors. See Note 3 for more information on this joint venture. HBO is a related party by virtue of its 50% ownership of membership interests in SIL. During 2013, we made net advanced commissions payments of $801,000, and recognized $906,000 of commission expense related to HBO. As of December 31, 2013, the advanced commissions balance related to HBO included in the accompanying consolidated balance sheets was $457,000. | ||
Concentrations_of_Credit_Risk_
Concentrations of Credit Risk and Significant Customers | 12 Months Ended | |
Dec. 31, 2013 | ||
Concentrations of Credit Risk and Significant Customers | ' | |
17 | Concentrations of Credit Risk and Significant Customers | |
Accounts receivable were approximately $630,000 and $273,000 as of December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, a single distributor made up 21% and 83% of the accounts receivable balance, respectively. | ||
Revenues consist of commissions earned for health insurance policies and discount benefit plans issued to members, enrollment fees paid by members, and monthly administration fees paid by members as a direct result of enrollment services provided by us. None of our members individually accounted for 10% or more of the Company’s revenue for the year ended December 31, 2013 and 2012 | ||
During the years ended December 31, 2013 and 2012, three carriers represented 41%, 22% and 20% and 46%, 25% and 22% of premium equivalents, respectively. |
Subsequent_Event
Subsequent Event | 12 Months Ended | |
Dec. 31, 2013 | ||
Subsequent Event | ' | |
18 | Subsequent Event | |
Registration of Class A Common Stock | ||
On February 14, 2014, a registration statement on Form S-3 became effective under which we registered 8,566,667 shares of our Class A common stock for resale from time to time by the selling stockholders, of which all such shares are issuable upon the exchange of an equivalent number of Series B Membership Interests in HPIH (together with an equal number of shares of our Class B common stock). Mr. Kosloske beneficially owns all outstanding Series B Membership Interests in HPIH and Class B common stock. | ||
As of March 14, 2014, no shares of Class A common stock have been resold pursuant to this registration statement. |
Organization_Basis_of_Presenta1
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Reclassifications | ' | ||
Reclassifications | |||
Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications are to include accounts receivable and credit card transactions receivable in accounts receivable, prepaid expenses and other current assets on the accompanying consolidated balance sheets and to include the current portion of noncompete obligation in other current liabilities. | |||
Use of Estimates | ' | ||
Use of Estimates | |||
The preparation of the financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. These estimates also affect the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. | |||
Revenue Recognition | ' | ||
Revenue Recognition | |||
Our revenues consist of commissions earned for health insurance policies and discount benefit plans issued to members, enrollment fees paid by members, and administration fees paid by members as a direct result of our enrollment services. The members’ payments includes a combination of risk premium, fees for discount benefit plans and an enrollment fee, which are collectively referred to as “Premium equivalents.” Revenues reported by the Company are net of premiums remitted to insurance carriers and fees paid for discount benefit plans. Revenues are net of an allowance for policies expected to be cancelled by members during a limited cancellation period. We establish an allowance for estimated policy cancellations through a charge to revenues. The allowance is estimated using historical data to project future experience. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported. We periodically review the adequacy of the allowance and record adjustments as necessary. The net allowance for estimated policy cancellations as of December 31, 2013 and 2012 was $191,000 and $77,000, respectively. | |||
Revenue is earned at the time of sale. Commission rates for our products are agreed to in advance with the relevant insurance carrier and vary by carrier and policy type. Under our carrier compensation arrangements, the commission rate schedule that is in effect on the policy effective date governs the commissions over the life of the policy. In addition, we earn enrollment and administration fees on policies issued. All amounts due to insurance carriers and discount benefit vendors are reported and paid to them according to the procedures provided for in the contractual agreements between the individual carrier or vendor and us. Risk premiums are typically reported and remitted to insurance carriers on the 15th of the month following the end of the month in which they are collected. | |||
In concluding that revenues should be reported on a net basis, we considered Financial Accounting Standards Board (“FASB”) requirements and whether we have the responsibility to provide the goods or services to the customer or if we rely on a supplier to provide the goods or services to the customer. We are not the ultimate party responsible for providing the insurance coverage or discount benefits to the member and, therefore, we are not the primary obligor in the arrangement. The supplier, or insurance carrier, bears the risk for that insurance coverage. We therefore report our revenues net of amounts paid to the contracted insurance carrier companies and discount benefit vendors. | |||
Third-Party Commissions and Advanced Commissions | ' | ||
Third-Party Commissions and Advanced Commissions | |||
We utilize a broad network of licensed third-party distributors, in addition to our internal distributors to sell the plans that we develop. We pay commissions to these distributors based on a percentage of the policy premium that varies by type of policy. We pay fees to the distributors for discount benefit plans issued. | |||
Advanced commissions consist of amounts advanced to certain third-party distributors. We perform ongoing credit evaluations of our distributors, all of which are located in the United States. We recover the advanced commissions from future commissions earned on premiums collected. We have not experienced any credit losses from commission advances and, accordingly, have not recognized any provision for bad debt expense for the periods presented. A fee for the advanced commission of up to 2% of the insurance premium sold is charged to the distributors and recognized as interest income as earned. The interest income earned from advanced commissions for the year ended December 31, 2013 and 2012 were $93,000 and $35,000, respectively. Advanced commissions outstanding as of December 31, 2013 and 2012 totaled $2.5 million and $297,000. | |||
Cash and Cash Equivalents and Investments | ' | ||
Cash and cash equivalents and investments | |||
We account for cash on hand and demand deposits with banks and other financial institutions as cash. Short-term, highly liquid investments with original maturities of three months or less are considered cash equivalents. Investments in cash equivalents include, but are not limited to, demand deposit accounts, money market accounts and certificates of deposit with original maturities of three months or less. | |||
Periodically, we invest cash on hand in other highly-liquid investments. Such investments that have maturities greater than three months up to one year are classified as short-term investments and include, but are not limited to, certificates of deposit with maturities greater than three months, but less than one year. Certain certificates of deposits have maturities beyond one year from the balance sheet date; these are classified as long-term and are included in other assets on the accompanying consolidated balance sheets. | |||
Cash Held on Behalf of Others | ' | ||
Cash Held on Behalf of Others | |||
In our capacity as the policy administrator, we collect premiums from members and distributors and, after deducting our earned commission and fees, remit these premiums to our contracted insurance carriers, discount benefit vendors and distributors. We hold the unremitted funds in a fiduciary capacity until they are disbursed, and the use of such funds is restricted. We hold these funds in bank accounts. These unremitted amounts are reported as cash held on behalf of others in the accompanying consolidated balance sheets with the related liabilities reported as carriers and vendors payable and commissions payable. Cash held on behalf of others at December 31, 2013 and 2012 was $4.6 million and $3.8 million, respectively. | |||
Investments | ' | ||
Investments | |||
We have invested a portion of the proceeds from the IPO in certain investment securities. As of December 31, 2013, all such investments are certificates of deposit and are classified as held-to-maturity. Certificates of deposit with original maturities of three months are less are classified as cash equivalents. Certificates of deposits with maturities greater than three months to 12 months are classified as short-term investments. Certificates of deposits with maturities greater than twelve months are considered long term assets until such time that the remaining maturities of the certificates of deposit are 12 months or less, in which case they are reclassified to short-term investments. | |||
As of December 31, 2013, we had two certificates of deposit with maturities of 15 months with a balance of $460,000 which is included in other assets on the accompanying consolidated balance sheets. | |||
During the year ended December 31, 2013, we had also invested $15.0 million in a fixed-income mutual fund which was classified as available for sale. We sold this mutual fund in December 2013 for $15.0 million. The transaction settled and we received the proceeds on January 2, 2014; as such, the proceeds are included in investment proceeds receivable on the accompanying consolidated balance sheets. | |||
Accounts Receivable | ' | ||
Accounts Receivable | |||
Accounts receivable represent amounts due to us for premiums collected by a third party and are generally considered delinquent 15 days after the due date. The underlying insurance contracts are cancelled retroactively if the payment remains delinquent. We have not experienced any credit losses from accounts receivable and have not recognized a provision for uncollectible accounts receivable. | |||
Capitalization of Offering Costs | ' | ||
Capitalization of Offering Costs | |||
Capitalized offering costs are costs directly attributable to the IPO. Prior to the IPO, we had capitalized $3.0 million of offering costs. Upon closing of the IPO in February 2013, these costs were netted against the proceeds of the IPO; as such, there was no balance of capitalized offering costs as of December 31, 2013. Our capitalized offering costs as of December 31, 2012 were $1.8 million. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment is recorded at cost, less accumulated depreciation, in the accompanying consolidated balance sheets. Depreciation expense for property and equipment is computed using the straight-line method over the following estimated useful lives: | |||
Computer equipment | 5 years | ||
Furniture and fixtures | 7 years | ||
Leasehold improvements | Shorter of the lease term or estimated useful life | ||
The Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. No impairment losses were recognized for the periods presented. | |||
Goodwill and Other Intangible Assets | ' | ||
Goodwill and Other Intangible Assets | |||
Goodwill | |||
Under FASB guidance, the process of evaluating the potential impairment of goodwill involves a two-step process and requires significant judgment at many points during the analysis. In the first step, we determine whether there is an indication of impairment by considering relevant quantitative factors or comparing the fair value of the reporting unit to its carrying amount, including goodwill. Our annual impairment test is performed with a measurement date of October 1. If, based on the first step, we determine that there is a quantitative indication of goodwill impairment, we assess the impairment in step two in accordance with FASB guidance. | |||
We determine the fair value using a combination of three valuation approaches: the cost approach, the market approach and the income approach. The cost approach uses multiples from publicly available transactional data of acquired comparable target companies. | |||
The market approach uses a guideline company methodology, which is based upon a comparison of the reporting unit to similar publicly-traded companies within our industry. We derive a market value of invested capital or business enterprise value for each comparable company by multiplying the price per share of common stock of the publicly traded companies by their total common shares outstanding and adding each company’s current level of debt. We calculate a business enterprise multiple based on revenue and earnings from each company, then apply those multiples to our revenue and earnings to calculate a business enterprise value. Assumptions regarding the selection of comparable companies are made based on, among other factors, capital structure, operating environment and industry. As the comparable companies were typically larger and more diversified than our business, multiples were adjusted prior to application to our revenues and earnings to reflect differences in margins, long-term growth prospects and market capitalization. | |||
The income approach uses a discounted debt-free cash flow analysis to measure fair value by estimating the present value of future economic benefits. To perform the discounted debt-free cash flow analysis, we develop a pro forma analysis of the reporting unit to estimate future available debt-free cash flow and discounting estimated debt-free cash flow by an estimated industry weighted average cost of capital based on the same comparable companies used in the market approach. Per FASB guidance, the weighted average cost of capital is based on inputs (e.g., capital structure, risk, etc.) from a market participant’s perspective and not necessarily from the reporting unit’s perspective. Future cash flow is projected based on assumptions for our economic growth, industry expansion, future operations and the discount rate, all of which require significant judgments by management. | |||
After computing a separate business enterprise value under the above approaches, we apply a weighting to them to derive the business enterprise value of the reporting unit. The weightings are evaluated each time a goodwill impairment assessment is performed and give consideration to the relative reliability of each approach at that time. Based on these weightings, we calculated a business enterprise value for the reporting unit. The implied fair value is then compared to the reporting unit’s carrying value. Upon completion of the analysis in step one as of October 1, 2013, we determined that the fair value of the business exceeded its respective carrying value. As such, a step two analysis was not required. | |||
Our goodwill balance arose from the acquisition of the Naylor units of HPI and from our acquisition of Secured in July 2013. See Note 2 and Note 5 for further information on the acquisitions and our goodwill balances as of December 31, 2013 and 2012, respectively. | |||
Other Intangible Assets | |||
Our other intangible assets arose primarily from the acquisitions described above and consist of a brand, the carrier network, distributor relationships, customer relationships, noncompete agreements and capitalized software. Finite-lived intangible assets are amortized over their useful lives from two to fifteen years. | |||
Advertising Costs | ' | ||
Advertising Costs | |||
Advertising costs include internet advertising costs, promotional costs and events and sponsorships and are expensed as incurred. Advertising costs for the years ended December 31, 2013 and 2012 were $513,000 and $192,000, respectively. | |||
Accounting for Stock-Based Compensation | ' | ||
Accounting for Stock-Based Compensation | |||
Expense for stock-based compensation is recognized based upon estimated grant date fair value and is amortized over the service period of the awards using the accelerated method. For grants of stock appreciation rights (“SARs”), we apply the Black-Scholes option-pricing model in determining the fair value of share-based payments to employees. The resulting compensation expense is recognized over the requisite service period. The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. Compensation expense is recognized only for those awards expected to vest. All stock-based compensation expense is classified within Selling, general and administrative expense in the consolidated statements of operations. | |||
Accounting for Income Taxes | ' | ||
Accounting for Income Taxes | |||
Our former operating entity, HPI, was taxed as an S corporation for income tax purposes. Therefore, we were not subject to entity-level federal or state income taxation prior to the IPO. HPIH is taxed as a partnership for federal income tax purposes; as a result, it is not subject to entity-level federal or state income taxation but its members are liable for taxes with respect to their allocable shares of each company’s respective net taxable income. | |||
We are subject to U.S. corporate federal, state and local income taxes that are attributable to HII as reflected in our consolidated financial statements. We use the liability method of accounting for income taxes. Significant management judgment is required in determining the provision for income taxes and, in particular, any valuation allowance that is recorded or released against our deferred tax assets. | |||
We evaluate quarterly the positive and negative evidence regarding the realization of net deferred tax assets. The carrying value of our net deferred tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets. | |||
We account for uncertainty in income taxes using a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Such amounts are subjective, as a determination must be made on the probability of various possible outcomes. We reevaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition and measurement could result in recognition of a tax benefit or an additional tax provision. | |||
Basic and Diluted Earnings (Loss) per Share | ' | ||
Basic and Diluted Earnings (Loss) per Share | |||
Basic earnings (loss) per share is determined by dividing the net (loss) attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings (loss) per share calculation when dilutive. Diluted earnings (loss) per share is determined by dividing the net (loss) attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings (loss) per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding SARs are computed using the treasury stock method. | |||
The Company has two classes of common stock: class A common stock and class B common stock. Holders of each of class A common stock and class B common stock are entitled to one vote per share on all matters to be voted upon by the shareholders, and holders of each class will vote together as a single class on matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. For more information on our classes of stock, see Note 8. | |||
Fair Value Measurements | ' | ||
Fair Value Measurements | |||
We measure and report financial assets and liabilities at fair value on a recurring basis. 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 | ||
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 market approach to measure the fair value of our financial assets. 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. See Note 12 for a description of our valuation methods. | |||
Recent Accounting Pronouncements | ' | ||
Recent Accounting Pronouncements | |||
In the following summary of recent accounting pronouncements, all references to effective dates of FASB guidance relate to nonpublic entities. As noted above, we have elected to delay the adoption of new and revised accounting standards until those standards would otherwise apply to nonpublic companies under provisions of the JOBS Act. | |||
In July 2013, the FASB issued guidance which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available as of the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. We plan to adopt this guidance during the quarter ended March 31, 2015 and are assessing the potential impact to our consolidated financial statements. | |||
In February 2013, the FASB issued guidance that expanded disclosures for items reclassified out of accumulated other comprehensive income (loss). The standard requires presentation of information about reclassification adjustments from accumulated other comprehensive income (loss) in a single note to or on the face of the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We plan to adopt the guidance during the quarter ended March 31, 2014, and do not expect it to have a significant impact our consolidated financial statements. | |||
Organization_Basis_of_Presenta2
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary of Estimated Useful Lives | ' | ||
Property and equipment is recorded at cost, less accumulated depreciation, in the accompanying consolidated balance sheets. Depreciation expense for property and equipment is computed using the straight-line method over the following estimated useful lives: | |||
Computer equipment | 5 years | ||
Furniture and fixtures | 7 years | ||
Leasehold improvements | Shorter of the lease term or estimated useful life | ||
Business_Acquisitions_Tables
Business Acquisitions (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Summary of Fair Value of Consideration for Acquisition | ' | |||||||
The following table summarizes the fair value of the consideration for the acquisition as of July 17, 2013 ($ in thousands). The fair values are derived using discount rates related to the probability of the Sellers meeting the thresholds for payment and other risk factors including credit risk. | ||||||||
Cash paid at closing | $ | 10,000 | ||||||
Contingent consideration | 4,872 | |||||||
Total consideration | $ | 14,872 | ||||||
Summary of Allocation of Total Purchase Prices of Acquisition | ' | |||||||
The following table summarizes the allocation of the total purchase price for the acquisition as of July 17, 2013 ($ in thousands): | ||||||||
Cash | $ | 91 | ||||||
Accounts receivable and other assets (1) | 332 | |||||||
Property and equipment (1) | 128 | |||||||
Accounts payable and accrued expenses (1) | (326 | ) | ||||||
Intangible asset – brand | 76 | |||||||
Intangible asset – noncompete agreements | 99 | |||||||
Intangible asset – customer relationships-distributors | 1,050 | |||||||
Intangible asset – customer relationships-direct | 788 | |||||||
Intangible asset – capitalized software | 526 | |||||||
Goodwill (2) | 12,108 | |||||||
$ | 14,872 | |||||||
-1 | The carrying value of accounts receivable, property and equipment and accounts payable and accrued expenses acquired approximated fair value; as such, no adjustments to these accounts were recorded in association with the acquisition. | |||||||
-2 | The useful lives for the brand, noncompete agreement, customer relationships-distributors, customer relations-direct and capitalized software are two years, three years, fifteen years, two years and two years, respectively. | |||||||
-3 | As of December 31, 2013, the amount of goodwill acquired that we expect to be deductible for income tax purposes is $7.5 million. | |||||||
Unaudited Pro Forma Information for Company Assuming Acquisition | ' | |||||||
The following table presents unaudited pro forma information for the Company assuming the acquisition of Secured had occurred as of January 1, 2012 ($ in thousands, except per share data). This pro forma information does not purport to represent what our actual results would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods. | ||||||||
Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
Revenues | $ | 58,363 | $ | 45,558 | ||||
Net (loss) income before income taxes | (6,775 | ) | 2,783 | |||||
Net (loss) income | (6,788 | ) | 2,783 | |||||
Net (loss) income attributable to Health Insurance Innovations, Inc. and Health Plan | ||||||||
Intermediaries, LLC | (2,932 | ) | 2,872 | |||||
Loss per share – basic | (0.61 | ) | - | |||||
Loss per share – diluted | (0.61 | ) | - | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Summary of Property and Equipment, Net | ' | ||||||||
Property and equipment, net, are comprised of the following ($ in thousands): | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computer equipment | $ | 188 | $ | 85 | |||||
Furniture and fixtures | 207 | 102 | |||||||
Leasehold improvements | 147 | 84 | |||||||
Total property and equipment | 542 | 271 | |||||||
Less accumulated depreciation | (153 | ) | (58 | ) | |||||
Total property and equipment, net | $ | 389 | $ | 213 | |||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Summary of Changes in Carrying Amounts of Goodwill | ' | |||||||||||||||
Our goodwill balance as of January 1, 2012 was a result of the acquisition of the Naylor units of HPI as described in Note 1. Our goodwill balance as of December 31, 2013 was a result of the Secured acquisition as described in Note 2 as well as our goodwill balance existing prior to such acquisition. | ||||||||||||||||
The changes in the carrying amounts of goodwill were as follows ($ in thousands): | ||||||||||||||||
Balance as of January 1, 2012 | $ | 5,906 | ||||||||||||||
Goodwill acquired | - | |||||||||||||||
Impairment of goodwill | - | |||||||||||||||
Balance as of December 31, 2012 | 5,906 | |||||||||||||||
Goodwill acquired | 12,108 | |||||||||||||||
Impairment of goodwill | - | |||||||||||||||
Balance as of December 31, 2013 | $ | 18,014 | ||||||||||||||
Schedule of Major Classes of Intangible Assets | ' | |||||||||||||||
Major classes of intangible assets as of December 31, 2013 consisted of the following ($ in thousands): | ||||||||||||||||
Weighted-average | Gross Carrying | Accumulated | Intangible | |||||||||||||
Amortization | Amount | Amortization | Asset, net | |||||||||||||
Brand | 2 | $ | 76 | (17 | ) | $ | 59 | |||||||||
Carrier network | 5 | 40 | (18 | ) | 22 | |||||||||||
Distributor relationships | 8.8 | 4,660 | (1,192 | ) | 3,468 | |||||||||||
Noncompete agreements | 4.8 | 942 | (254 | ) | 688 | |||||||||||
Customer relationships | 2 | 788 | (181 | ) | 607 | |||||||||||
Capitalized software | 2.2 | 571 | (134 | ) | 437 | |||||||||||
Total intangible assets | 6.9 | $ | 7,077 | (1,796 | ) | $ | 5,281 | |||||||||
Major classes of intangible assets as of December 31, 2012 consisted of the following ($ in thousands): | ||||||||||||||||
Weighted-average | Gross Carrying | Accumulated | Intangible | |||||||||||||
Amortization | Amount | Amortization | Asset, net | |||||||||||||
Brand | 2 | $ | 400 | $ | (250 | ) | $ | 150 | ||||||||
Capitalized software | 5 | 45 | (4 | ) | 41 | |||||||||||
Carrier network | 5 | 40 | (10 | ) | 30 | |||||||||||
Distributor relationships | 7 | 3,610 | (645 | ) | 2,965 | |||||||||||
Noncompete agreement | 5 | 843 | (70 | ) | 773 | |||||||||||
Total intangible assets | 6.2 | $ | 4,938 | $ | (979 | ) | $ | 3,959 | ||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | |||||||||||||||
Estimated annual pretax amortization for intangibles assets for 2014 and in each of the next five years are as follows ($ in thousands): | ||||||||||||||||
2014 | 1,499 | |||||||||||||||
2015 | 1,181 | |||||||||||||||
2016 | 787 | |||||||||||||||
2017 | 689 | |||||||||||||||
2018 | 457 | |||||||||||||||
Thereafter | 668 | |||||||||||||||
Total | 5,281 | |||||||||||||||
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Summary of Accounts Payable and Accrued Expenses | ' | |||||||
Accounts payable and accrued expenses consisted of the following as of ($ in thousands): | ||||||||
31-Dec-13 | 31-Dec-12 | |||||||
Accounts payable | $ | 588 | $ | 735 | ||||
Accrued wages | 793 | 90 | ||||||
Accrued refunds | 715 | 467 | ||||||
Accrued credit card/ACH fees | 80 | 56 | ||||||
Accrued interest | 35 | 12 | ||||||
Accrued professional fees | 34 | 683 | ||||||
Deferred salaries | - | 19 | ||||||
Other accruals | 66 | - | ||||||
Total accounts payable and accrued expenses | $ | 2,311 | $ | 2,062 | ||||
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Summary of Unvested Restricted Stock Units Activity | ' | |||||||||||||||
The table below summarizes activity regarding unvested restricted stock under the Plan during the year ended December 31, 2013 ($ in thousands, except per share data): | ||||||||||||||||
Number of Shares Outstanding | Weighted-Average | Aggregate Intrinsic Value | ||||||||||||||
Grant Date Fair | ||||||||||||||||
Value (per share) | ||||||||||||||||
Restricted stock unvested at February 7, 2013 | - | $ | - | |||||||||||||
2013 activity: | ||||||||||||||||
Granted | 806 | $ | 12.97 | |||||||||||||
Vested | (408 | ) | $ | 12.21 | ||||||||||||
Forfeited | (240 | ) | $ | 14 | ||||||||||||
Restricted stock unvested at December 31, 2013 | 158 | $ | 13.38 | $ | 1,601 | |||||||||||
Summary of Weighted Average Assumptions | ' | |||||||||||||||
The Black-Scholes option-pricing model was used with the following weighted average assumptions: | ||||||||||||||||
Risk-free rate | 1.2 | % | ||||||||||||||
Expected life | 4.7 years | |||||||||||||||
Volatility | 44 | % | ||||||||||||||
Expected dividend | none | |||||||||||||||
Summary of Stock Based Compensation Expenses | ' | |||||||||||||||
The following table summarizes stock-based compensation expense for the year ended December 31, 2013 ($ in thousands): | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2013 | ||||||||||||||||
SARs | $ | 525 | ||||||||||||||
Restricted shares | 5,771 | |||||||||||||||
$ | 6,296 | |||||||||||||||
Summary of Unrecognized Stock Based Compensation | ' | |||||||||||||||
The following table summarizes unrecognized stock-based compensation and the remaining period over which such stock-based compensation is expected to be recognized as of December 31, 2013 ($ in thousands): | ||||||||||||||||
Remaining | ||||||||||||||||
years | ||||||||||||||||
SARs | $ | 1,302 | 2.48 | |||||||||||||
Restricted shares | 1,323 | 2.21 | ||||||||||||||
$ | 2,625 | |||||||||||||||
Stock Appreciation Rights (SARs) | ' | |||||||||||||||
Summary of Stock-Based Incentive Activity | ' | |||||||||||||||
The SARs activity for the year ended December 31, 2013 is as follows ($ in thousands, except per share data): | ||||||||||||||||
SARs | Weighted- | Weighted- | Aggregate Intrinsic Value (a) | |||||||||||||
Average | Average | |||||||||||||||
Exercise Price | Remaining Contractual | |||||||||||||||
Term (in years) | ||||||||||||||||
Outstanding at February 7, 2013 | - | $ | - | - | $ | - | ||||||||||
Granted | 439 | 12.71 | - | - | ||||||||||||
Exercised (b)(c) | - | - | - | - | ||||||||||||
Forfeited or expired | 60 | 13.97 | - | - | ||||||||||||
Outstanding at December 31, 2013 | 379 | 12.51 | 6.3 years | - | ||||||||||||
Exercisable at December 31, 2013 | 50 | $ | 13.97 | 3.7 years | $ | - | ||||||||||
(a) | The intrinsic value of a SAR is the amount by which the market value of the underlying stock as of December 31, 2013 exceeds the exercise price of the option multiplied by the number of shares represented by such SAR. | |||||||||||||||
(b) | Shares issued upon the exercise of SARs are treated as newly issued shares. There were no shares issued during the period related to exercises of SARs. | |||||||||||||||
(c) | There was no tax benefit recognized in 2013 related to stock-based compensation for SARs. | |||||||||||||||
Income_Tax_Tables
Income Tax (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Components of Income Tax Expense (Benefit) | ' | |||||
The provision for income tax for the year ended December 31, 2013 consisted of the following components ($ in thousands): | ||||||
Current: | ||||||
Federal | $ | - | ||||
State | 18 | |||||
Total current taxes | $ | 18 | ||||
Deferred: | ||||||
Federal | - | |||||
State | - | |||||
Total deferred taxes | - | |||||
Income taxes | $ | 18 | ||||
Differences between Income Tax Expense (Benefit) at the U.S. Federal Statutory Income Tax Rate and the Provision for Income Taxes | ' | |||||
The items accounting for differences between the income tax provision or benefit computed at the federal statutory rate and the provision for income tax for the year ended December 31, 2013 was as follows: | ||||||
U.S. federal income tax rate | 35 | % | ||||
State income taxes, net of federal tax benefits | 0.2 | |||||
Valuation allowance | (6.7 | ) | ||||
Operations of nontaxable subsidiary | (21.0 | ) | ||||
Stock-based compensation contribution | (7.0 | ) | ||||
Non-deductible or non-taxable items | (0.7 | ) | ||||
Income taxes | (0.2 | )% | ||||
Schedule of Deferred Income Tax Assets and Liabilities | ' | |||||
The deferred income tax assets consisted of the following as of December 31, 2013 ($ in thousands): | ||||||
Deferred tax assets: | ||||||
Investment in subsidiary | $ | 277 | ||||
Tax receivable agreement | 158 | |||||
Net operating loss carryforwards | 127 | |||||
Total deferred tax assets | 562 | |||||
Less valuation allowances | (562 | ) | ||||
Deferred tax assets, net of valuation allowance | $ | - | ||||
Net_Loss_per_Share_Tables
Net Loss per Share (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Summary of Reconciliation of Numerators and Denominators of Basic and Diluted Net Loss | ' | ||||
The computations of basic and diluted net loss per share attributable to Health Insurance Innovations, Inc. for the year ended December 31, 2013 were as follows ($ in thousands, except share data): | |||||
Year Ended December 31, 2013 | |||||
Basic net loss attributable to Health Insurance Innovations, Inc. | $ | (3,355 | ) | ||
Average shares—basic | 4,813,222 | ||||
Effect of dilutive securities: | |||||
Restricted shares | - | ||||
SARs | - | ||||
Average shares—diluted | 4,813,222 | ||||
Basic net loss per share attributable to Health Insurance Innovations, Inc. | $ | (0.70 | ) | ||
Diluted net loss per share attributable to Health Insurance Innovations, Inc. | $ | (0.70 | ) | ||
Summary of Securities Not Included in Calculation of Diluted Net Loss | ' | ||||
The following securities were not included in the calculation of diluted net loss per share because such inclusion would be anti-dilutive (in thousands): | |||||
Year Ended | |||||
December | |||||
31, 2013 | |||||
Restricted shares | 158 | ||||
SARs | 379 | ||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary of Assets and Liabilities Measured at Fair Value | ' | ||||||||||||||||
As of December 31, 2013, our assets and liabilities measured at fair value were as follows ($ in thousands): | |||||||||||||||||
Fair Value Measurement as of December 31, 2013 | |||||||||||||||||
Carrying Value as of December 31, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | |||||||||||||||||
Certificates of deposit | $ | 7,337 | $ | 7,337 | $ | - | $ | - | |||||||||
Liabilities: | |||||||||||||||||
Noncompete obligation, including current portion | $ | 626 | $ | - | $ | 613 | $ | - | |||||||||
Contingent acquisition consideration | 3,876 | - | 3,876 | ||||||||||||||
$ | 4,502 | $ | - | $ | 613 | $ | 3,876 | ||||||||||
As of December 31, 2012, liabilities measured at fair value were as follows ($ in thousands): | |||||||||||||||||
Fair Value Measurement as of December 31, 2012 | |||||||||||||||||
Carrying Value as of December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt, including current portion | $ | 3,314 | $ | - | $ | 3,314 | $ | - | |||||||||
Noncompete obligation, including current portion | 779 | - | 779 | - | |||||||||||||
$ | 4,093 | $ | - | $ | 4,093 | $ | - | ||||||||||
Summary of the Changes in the Fair Value of Liabilities Carried at Fair Value | ' | ||||||||||||||||
A summary of the changes in the fair value of liabilities carried at fair value that have been classified in Level 3 of the fair value hierarchy was as follows ($ in thousands): | |||||||||||||||||
Contingent Acquisition Consideration | |||||||||||||||||
Balance as of January 1, 2013 | $ | - | |||||||||||||||
Issuances and settlements, net | 3,423 | ||||||||||||||||
Realized loss included in income | 29 | ||||||||||||||||
Unrealized loss included in income | 424 | ||||||||||||||||
Total realized and unrealized loss | 453 | ||||||||||||||||
Balance as of December 31, 2013 | $ | 3,876 | |||||||||||||||
Operating_Leases_Tables
Operating Leases (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Schedule of Future Minimum Operating Lease Payments | ' | ||||
As of December 31, 2013, the future minimum lease payments under noncancellable operating leases were as follows ($ in thousands): | |||||
2014 | $ | 398 | |||
2015 | 350 | ||||
2016 | 192 | ||||
2017 | 89 | ||||
Total minimum lease payments | $ | 1,029 | |||
Organization_Basis_of_Presenta3
Organization, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||||||||||
Jul. 17, 2013 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 13, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | Feb. 13, 2013 | Feb. 13, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | Sep. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Feb. 13, 2013 | |
Certificate | Long term | Minimum | Maximum | Post IPO | Pre IPO | Class A common stock | Class A common stock | Class B common stock | Class B common stock | Beneficial Owner | Series B Equity Units | Membership Interest | Economic Interest | Initial public offering | Initial public offering | Naylor Acquisition | Naylor Acquisition | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Insurance Innovations, Inc. | |||||
Vote | Vote | Tax Receivable Agreement | Economic Interest | Voting Interest | Initial public offering | Initial public offering | Initial public offering | Initial public offering | |||||||||||||||||||||
Series B | Membership Interest | Membership Interest | Economic Interest | Voting Interest | |||||||||||||||||||||||||
Series B | Series A Equity Units | Series A Equity Units | Series A Equity Units | ||||||||||||||||||||||||||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | 100.00% |
Units purchased | $10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $5,300,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Financing costs of purchase of ownership interests | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 135,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Financed a portion of purchase price by entering into a loan agreement with a bank | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,300,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,309,594 | 4,666,667 | 8,566,667 | 8,666,667 | ' | ' | ' | ' | ' | 4,666,667 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share price | ' | ' | ' | ' | $14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $14 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest owned | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | 35.00% | ' | ' | ' | ' | 62.30% | 100.00% | 62.30% | 37.70% | 37.70% | 100.00% | ' |
Date of sale of stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13-Feb-13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of economic rights of holders of all classes of our common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of votes for common stock holders per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of outstanding common stock owned after IPO | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 62.30% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of cash savings required to pay under tax receivable agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 85.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash savings in tax receivable agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period of exemptions under JOBS Act | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Market value of common stock held by non-affiliates | ' | 700,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allowance for estimated policy cancellations, net | ' | ' | 191,000 | 77,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fee for the advanced commission | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest income earned from advanced commissions | ' | ' | 93,000 | 35,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Advanced commission outstanding | ' | ' | 2,500,000 | 297,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash held on behalf of others | ' | ' | 4,591,000 | 3,839,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capitalized offering costs | ' | ' | ' | 1,819,000 | ' | ' | ' | ' | 0 | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Finite lived intangible asset useful life | ' | ' | ' | ' | ' | ' | '2 years | '15 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Advertising expense | ' | ' | 513,000 | 192,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of certificates of deposits | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Certificate of deposits, included in other assets | ' | ' | ' | ' | ' | 460,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment in fixed-income mutual fund | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of mutual fund | ' | ' | $15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Organization_Basis_of_Presenta4
Organization, Basis of Presentation and Summary of Significant Accounting Policies - Summary of Estimated Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Computer Equipment | ' |
Property Plant And Equipment Estimated Useful Lives [Line Items] | ' |
Estimated useful life | '5 years |
Furniture and Fixtures | ' |
Property Plant And Equipment Estimated Useful Lives [Line Items] | ' |
Estimated useful life | '7 years |
Leasehold Improvements | ' |
Property Plant And Equipment Estimated Useful Lives [Line Items] | ' |
Estimated useful life | 'Shorter of the lease term or estimated useful life |
Business_Acquisitions_Addition
Business Acquisitions - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||||||
Jul. 17, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2013 | Jun. 30, 2013 | Jun. 01, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 01, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jul. 17, 2013 | Nov. 30, 2013 | Dec. 31, 2013 | Nov. 30, 2013 | |
TSG | Controlling Interest | Controlling Interest | Controlling Interest | Noncontrolling Interests | Noncontrolling Interests | Noncontrolling Interests | Secured | Identified Intangible Assets | Note Payable | Note Payable | One Time Payment | Compensation To Income Tax Liability | Maximum | |||||||
ICE | ICE | TSG | TSG | |||||||||||||||||
Business Acquisition Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash paid at closing | $10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent acquisition consideration | 4,872,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,900,000 | 6,600,000 | ' | ' | ' |
Fixed component contingent consideration | ' | ' | ' | ' | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 |
Variable component contingent consideration | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,400,000 |
Potential total contingent consideration, minimum | ' | ' | ' | ' | ' | 1,450,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Potential total contingent consideration, maximum | ' | ' | ' | ' | ' | 6,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Business Acquisition Consideration Cash Payment | ' | ' | 450,000 | 1,450,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | 150,000 | ' |
Business combination contingent consideration adjustments | ' | ' | ' | 453,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transaction costs related to the acquisition | ' | ' | ' | 301,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues | ' | ' | ' | 56,639,000 | 41,940,000 | ' | ' | ' | ' | ' | ' | ' | ' | 3,300,000 | ' | ' | ' | ' | ' | ' |
Pre-tax net loss | ' | ' | ' | -8,401,000 | 3,260,000 | ' | ' | ' | ' | ' | ' | ' | ' | 204,000 | ' | ' | ' | ' | ' | ' |
Amortization of income included in net income | ' | ' | ' | 1,200,000 | 960,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 366,000 | ' | ' | ' | ' | ' |
The Company received controlling interest at the time of acquisition | ' | ' | ' | ' | ' | ' | 20.00% | 80.00% | ' | ' | 20.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capital Contribution | ' | ' | ' | ' | ' | ' | ' | ' | 40,000 | 320,000 | ' | 16,000 | 80,000 | ' | ' | ' | ' | ' | ' | ' |
Purchase of outstanding membership units from TSG | ' | $90,000 | ' | $90,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Business_Acquisitions_Summary_
Business Acquisitions - Summary of Fair Value of Consideration for Acquisition (Detail) (USD $) | 1 Months Ended |
Jul. 17, 2013 | |
Business Acquisition Information [Line Items] | ' |
Cash paid at closing | $10,000,000 |
Contingent acquisition consideration | 4,872,000 |
Total consideration | $14,872,000 |
Business_Acquisitions_Summary_1
Business Acquisitions - Summary of Allocation of Total Purchase Prices for Acquisition (Detail) (USD $) | 1 Months Ended | |
In Thousands, unless otherwise specified | Jul. 17, 2013 | |
Business Acquisition Information [Line Items] | ' | |
Cash | $91 | |
Accounts receivable and other assets | 332 | [1] |
Property and equipment | 128 | [1] |
Accounts payable and accrued expenses | -326 | [1] |
Goodwill | 12,108 | [2] |
Total consideration | 14,872 | |
Brand | ' | |
Business Acquisition Information [Line Items] | ' | |
Intangible asset | 76 | |
Noncompete Agreements | ' | |
Business Acquisition Information [Line Items] | ' | |
Intangible asset | 99 | |
Customer Relationships-Distributors | ' | |
Business Acquisition Information [Line Items] | ' | |
Intangible asset | 1,050 | |
Customer Relationships-Direct | ' | |
Business Acquisition Information [Line Items] | ' | |
Intangible asset | 788 | |
Internally-Developed Software | ' | |
Business Acquisition Information [Line Items] | ' | |
Intangible asset | $526 | |
[1] | The carrying value of accounts receivable, property and equipment and accounts payable and accrued expenses acquired approximated fair value; as such, no adjustments to these accounts were recorded in association with the acquisition. | |
[2] | The useful lives for the brand, noncompete agreement, customer relationships-distributors, customer relations-direct and capitalized software are two years, three years, fifteen years, two years and two years, respectively. |
Business_Acquisitions_Summary_2
Business Acquisitions - Summary of Allocation of Total Purchase Prices for Acquisition (Parenthetical) (Detail) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Business Acquisition Information [Line Items] | ' |
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 7.5 |
Brand | ' |
Business Acquisition Information [Line Items] | ' |
Finite lived intangible asset useful life | '2 years |
Noncompete Agreements | ' |
Business Acquisition Information [Line Items] | ' |
Finite lived intangible asset useful life | '3 years |
Customer Relationships-Distributors | ' |
Business Acquisition Information [Line Items] | ' |
Finite lived intangible asset useful life | '15 years |
Customer Relationships-Direct | ' |
Business Acquisition Information [Line Items] | ' |
Finite lived intangible asset useful life | '2 years |
Internally-Developed Software | ' |
Business Acquisition Information [Line Items] | ' |
Finite lived intangible asset useful life | '2 years |
Business_Acquisitions_Unaudite
Business Acquisitions - Unaudited Pro Forma Information for Company Assuming Acquisition (Detail) (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisition Information [Line Items] | ' | ' |
Revenues | $58,363 | $45,558 |
Net (loss) income before income taxes | -6,775 | 2,783 |
Net (loss) income | -6,788 | 2,783 |
Net (loss) income attributable to Health Insurance Innovations, Inc. and Health Plan Intermediaries, LLC | ($2,932) | $2,872 |
Loss per share b basic | ($0.61) | ' |
Loss per share b diluted | ($0.61) | ' |
Variable_Interest_Entities_Add
Variable Interest Entities - Additional Information (Detail) (USD $) | 12 Months Ended | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 07, 2013 | |
Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Simple Insurance Leads L L C | Simple Insurance Leads L L C | ||
Minimum | Maximum | Maximum | ||||
Variable Interest Entity [Line Items] | ' | ' | ' | ' | ' | ' |
Voting power in entity | ' | 100.00% | ' | ' | ' | ' |
Total membership interest with voting right | ' | ' | 50.00% | ' | ' | ' |
Total membership interest without voting right | ' | ' | ' | 50.00% | ' | ' |
Income or loss exposure percentage in VIE | ' | 100.00% | ' | ' | ' | ' |
Capital contribution | ' | ' | ' | ' | $163,000 | $492,000 |
Capital contribution percentage to SIL | 100.00% | ' | ' | ' | ' | ' |
Property_and_Equipment_Summary
Property and Equipment - Summary of Property and Equipment, Net (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Property Plant And Equipment [Line Items] | ' | ' |
Property and equipment | $542 | $271 |
Less accumulated depreciation | -153 | -58 |
Total property and equipment, net | 389 | 213 |
Computer Equipment | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and equipment | 188 | 85 |
Furniture and Fixtures | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and equipment | 207 | 102 |
Leasehold Improvements | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and equipment | $147 | $84 |
Property_and_Equipment_Additio
Property and Equipment - Additional Information (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property Plant And Equipment [Line Items] | ' | ' |
Depreciation expense | $96,000 | $52,000 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets - Summary of Changes in Carrying Amounts of Goodwill (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill [Line Items] | ' | ' |
Goodwill Beginning Balance | $5,906 | $5,906 |
Goodwill acquired | 12,108 | ' |
Impairment of goodwill | ' | ' |
Goodwill Ending Balance | $18,014 | $5,906 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets - Schedule of Major Classes of Intangible Assets (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '6 years 10 months 24 days | '6 years 2 months 12 days |
Gross Carrying Amount | $7,077 | $4,938 |
Accumulated Amortization | -1,796 | -979 |
Intangible Asset, net | 5,281 | 3,959 |
Brand | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '2 years | '2 years |
Gross Carrying Amount | 76 | 400 |
Accumulated Amortization | -17 | -250 |
Intangible Asset, net | 59 | 150 |
Carrier network | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '5 years | '5 years |
Gross Carrying Amount | 40 | 40 |
Accumulated Amortization | -18 | -10 |
Intangible Asset, net | 22 | 30 |
Distributor relationships | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '8 years 9 months 18 days | '7 years |
Gross Carrying Amount | 4,660 | 3,610 |
Accumulated Amortization | -1,192 | -645 |
Intangible Asset, net | 3,468 | 2,965 |
Noncompete Agreements | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '4 years 9 months 18 days | '5 years |
Gross Carrying Amount | 942 | 843 |
Accumulated Amortization | -254 | -70 |
Intangible Asset, net | 688 | 773 |
Customer Relationships-Direct | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '2 years | ' |
Gross Carrying Amount | 788 | ' |
Accumulated Amortization | -181 | ' |
Intangible Asset, net | 607 | ' |
Internally-Developed Software | ' | ' |
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
Weighted-average Amortization | '2 years 2 months 12 days | '5 years |
Gross Carrying Amount | 571 | 45 |
Accumulated Amortization | -134 | -4 |
Intangible Asset, net | $437 | $41 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Acquired Finite Lived Intangible Assets [Line Items] | ' | ' |
2014 | $1,499 | ' |
2015 | 1,181 | ' |
2016 | 787 | ' |
2017 | 689 | ' |
2018 | 457 | ' |
Thereafter | 668 | ' |
Intangible Asset, net | $5,281 | $3,959 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets - Additional Information (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill and Intangible Assets Disclosure [Line Items] | ' | ' |
Amortization of income included in net income | $1,200,000 | $960,000 |
Minimum | ' | ' |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Finite lived intangible asset useful life | '2 years | ' |
Maximum | ' | ' |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Finite lived intangible asset useful life | '15 years | ' |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses - Summary of Accounts Payable and Accrued Expenses (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Accounts payable and accrued expenses | ' | ' |
Accounts payable | $588 | $735 |
Accrued wages | 793 | 90 |
Accrued refunds | 715 | 467 |
Accrued credit card/ACH fees | 80 | 56 |
Accrued interest | 35 | 12 |
Accrued professional fees | 34 | 683 |
Deferred salaries | ' | 19 |
Other accruals | 66 | ' |
Total accounts payable and accrued expenses | $2,311 | $2,062 |
Debt_Additional_Information_De
Debt - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2013 | Sep. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Bank loan agreement with a principal amount | ' | $4,300,000 | ' | ' |
Outstanding balance amount repaid | 3,200,000 | ' | ' | ' |
Loss on extinguishment of debt | ' | ' | 71,000 | ' |
Interest expense incurred | ' | ' | 17,000 | 198,000 |
Amortization expense on deferred financing costs | ' | ' | $7,000 | $44,000 |
HPI | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
The Company received controlling interest at the time of acquisition | ' | 50.00% | ' | ' |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Feb. 13, 2013 | |
Class Of Stock [Line Items] | ' | ' |
Common stock price | ' | $14 |
Common stock voting rights percentage | 100.00% | ' |
Proceeds from the issuance Class A common stock, amount | $1,400,000 | ' |
Proceeds from the issuance Class A common stock, shares | 100,000 | ' |
Preferred stock, shares authorized | 5,000,000 | ' |
Preferred stock, par value | $0.00 | ' |
Treasury stock, shares | 129,881 | ' |
Treasury stock, at cost (129,881 shares) | ($1,563,000) | ' |
Restricted Stock | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Number of shares transferred to Treasury | 312,845 | ' |
Shares granted from Treasury as restricted stock awards | 182,964 | ' |
Class A common stock | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock shares | 5,309,594 | 4,666,667 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | ' |
Class B common stock | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock shares | 8,566,667 | 8,666,667 |
Common stock, par value | $0.00 | ' |
Common stock, shares authorized | 20,000,000 | ' |
HPI | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock shares | ' | 8,580,000 |
HPIS | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock shares | ' | 86,667 |
HII | Class A common stock | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock voting rights percentage | 37.70% | ' |
Economic interest | 100.00% | ' |
HII | Class B common stock | ' | ' |
Class Of Stock [Line Items] | ' | ' |
Common stock voting rights percentage | 62.30% | ' |
Stockbased_Compensation_Summar
Stock-based Compensation - Summary of Unvested Restricted Stock Units Activity (Detail) (Restricted Stock, USD $) | 11 Months Ended |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 |
Restricted Stock | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Beginning Balance, Unvested | ' |
Granted | 806 |
Vested | -408 |
Forfeited | -240 |
Ending Balance, Unvested | 158 |
Beginning Balance, Unvested, Weighted-Average Grant Date Fair Value (per share) | ' |
Granted, Weighted-Average Grant Date Fair Value (per share) | $12.97 |
Vested, Weighted-Average Grant Date Fair Value (per share) | $12.21 |
Forfeited, Weighted-Average Grant Date Fair Value (per share) | $14 |
Ending Balance, Unvested, Weighted-Average Grant Date Fair Value (per share) | $13.38 |
Ending Balance, Unvested, Aggregate Intrinsic Value | $1,601 |
Stockbased_Compensation_Stockb
Stock-based Compensation - Stock-based Incentive Activity (Detail) (Stock Appreciation Rights (SARs), USD $) | 11 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | |
Stock Appreciation Rights (SARs) | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | |
Beginning Balance, Outstanding, Options | ' | |
Granted, Options | 439 | |
Exercised, Options | ' | [1],[2] |
Forfeited or expired, Options | 60 | |
Ending Balance, Outstanding, Options | 379 | |
Ending Balance, Exercisable, Options | 50 | |
Beginning Balance, Outstanding, Weighted-Average Exercise Price | ' | |
Granted, Weighted-Average Exercise Price | $12.71 | |
Exercised, Weighted-Average Exercise Price | ' | [1],[2] |
Forfeited or expired, Weighted-Average Exercise Price | $13.97 | |
Ending Balance, Outstanding, Weighted-Average Exercise Price | $12.51 | |
Ending Balance, Exercisable, Weighted-Average Exercise Price | $13.97 | |
Ending Balance, Outstanding, Weighted-Average Remaining Contractual Term (in years) | '6 years 3 months 18 days | |
Ending Balance, Exercisable, Weighted-Average Remaining Contractual Term (in years) | '3 years 8 months 12 days | |
Beginning Balance, Outstanding, Aggregate Intrinsic Value | ' | [3] |
Ending Balance, Outstanding, Aggregate Intrinsic Value | ' | [3] |
Ending Balance, Exercisable, Aggregate Intrinsic Value | ' | [3] |
[1] | Shares issued upon the exercise of SARs are treated as newly issued shares. There were no shares issued during the period related to exercises of SARs. | |
[2] | There was no tax benefit recognized in 2013 related to stock-based compensation for SARs. | |
[3] | The intrinsic value of a SAR is the amount by which the market value of the underlying stock as of DecemberB 31, 2013 exceeds the exercise price of the option multiplied by the number of shares represented by such SAR. |
Stockbased_Compensation_Summar1
Stock-based Compensation - Summary of Weighted Average Assumptions (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award Weighted Average Assumption [Line Items] | ' |
Risk-free rate | 1.20% |
Expected life | '4 years 8 months 12 days |
Volatility | 44.00% |
Expected dividend | 0.00% |
Stockbased_Compensation_Summar2
Stock-based Compensation - Summary of Stock-based Compensation Expenses (Detail) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Stock-based compensation expense | $6,296 |
Stock Appreciation Rights (SARs) | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Stock-based compensation expense | 525 |
Restricted Shares | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Stock-based compensation expense | $5,771 |
Stockbased_Compensation_Summar3
Stock-based Compensation - Summary of Unrecognized Stock-based Compensation (Detail) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Unrecognized Stock Based Compensation Expense [Line Items] | ' |
Unrecognized stock-based compensation amount | $2,625 |
Stock Appreciation Rights (SARs) | ' |
Unrecognized Stock Based Compensation Expense [Line Items] | ' |
Unrecognized stock-based compensation amount | 1,302 |
Stock-based compensation expense amount expected to be recognized | '2 years 5 months 23 days |
Restricted Shares | ' |
Unrecognized Stock Based Compensation Expense [Line Items] | ' |
Unrecognized stock-based compensation amount | $1,323 |
Stock-based compensation expense amount expected to be recognized | '2 years 2 months 16 days |
Stockbased_Compensation_Additi
Stock-based Compensation - Additional Information (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Stock Based Compensation [Line Items] | ' |
Common stock reserved for issuance | 1,250,000 |
Stock Appreciation Rights (SARs) | ' |
Stock Based Compensation [Line Items] | ' |
Weighted average grant date fair value per share | $4.90 |
Total fair value of SARs | $268,000 |
Restricted Shares | ' |
Stock Based Compensation [Line Items] | ' |
Income tax benefits from activity involving restricted shares | $550,000 |
Income_Tax_Components_of_Incom
Income Tax - Components of Income Tax Expense (Benefit) (Detail) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Current: | ' |
Federal | ' |
State | 18 |
Total current taxes | 18 |
Deferred: | ' |
Federal | ' |
State | ' |
Total deferred taxes | ' |
Income taxes | $18 |
Income_Tax_Differences_between
Income Tax - Differences between Income Tax Expense (Benefit) at the U.S. Federal Statutory Income Tax Rate and the Provision for Income Taxes (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Income Taxes [Line Items] | ' |
U.S. federal income tax rate | 35.00% |
State income taxes, net of federal tax benefits | 0.20% |
Valuation allowance | -6.70% |
Operations of nontaxable subsidiary | -21.00% |
Stock-based compensation contribution | -7.00% |
Non-deductible or non-taxable items | -0.70% |
Income taxes | -0.20% |
Income_Tax_Schedule_of_Deferre
Income Tax - Schedule of Deferred Income Tax Assets and Liabilities (Detail) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Deferred tax assets: | ' |
Investment in subsidiary | $277 |
Tax receivable agreement | 158 |
Net operating loss carryforwards | 127 |
Total deferred tax assets | 562 |
Less valuation allowances | -562 |
Deferred tax assets, net of valuation allowance | ' |
Income_Tax_Additional_Informat
Income Tax - Additional Information (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Operating Loss Carryforwards | $338,000 |
Effective tax rate | -0.20% |
Provision for income taxes | 18,000 |
Deferred tax assets valuation allowance | $562,000 |
Minimum percentage that is likely to be realized of the largest amount of tax benefit to be measured upon settlement of an uncertain tax position | 50.00% |
Net_Loss_per_Share_Computation
Net Loss per Share - Computations of Basic and Diluted Net Loss Per Share (Detail) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings Loss Per Share [Line Items] | ' | ' |
Basic net loss attributable to Health Insurance Innovations, Inc. | ($3,355) | $3,349 |
Average sharesbbasic | 4,813,222 | ' |
Effect of dilutive securities: | ' | ' |
Average sharesbdiluted | 4,813,222 | ' |
Basic net loss per share attributable to Health Insurance Innovations, Inc. | ($0.70) | ' |
Diluted net loss per share attributable to Health Insurance Innovations, Inc. | ($0.70) | ' |
Restricted Shares | ' | ' |
Effect of dilutive securities: | ' | ' |
Dilutive securities | ' | ' |
Stock Appreciation Rights (SARs) | ' | ' |
Effect of dilutive securities: | ' | ' |
Dilutive securities | ' | ' |
Net_Loss_per_Share_Securities_
Net Loss per Share - Securities Not Included in Diluted Net Loss per Share (Detail) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Restricted Shares | ' |
Earnings Loss Per Share [Line Items] | ' |
Anti-dilutive securities | 158 |
Stock Appreciation Rights (SARs) | ' |
Earnings Loss Per Share [Line Items] | ' |
Anti-dilutive securities | 379 |
Fair_Value_Measurements_Summar
Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value (Detail) (USD $) | Jul. 17, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value Measurement Level 1 | Fair Value Measurement Level 2 | Fair Value Measurement Level 2 | Fair Value Measurement Level 3 | Carrying Value | Carrying Value | ||
Assets | ' | ' | ' | ' | ' | ' | ' |
Certificate of deposits, included in other assets | ' | $7,337,000 | ' | ' | ' | $7,337,000 | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' |
Noncompete obligation, including current portion | ' | ' | 613,000 | 779,000 | ' | 626,000 | 779,000 |
Contingent acquisition consideration | 4,872,000 | ' | ' | ' | 3,876,000 | 3,876,000 | ' |
Liabilities | ' | ' | 613,000 | 4,093,000 | 3,876,000 | 4,502,000 | 4,093,000 |
Long-term debt, including current portion | ' | ' | ' | $3,314,000 | ' | ' | $3,314,000 |
Fair_Value_Measurements_Summar1
Fair Value Measurements - Summary of the Changes in the Fair Value of Liabilities Carried at Fair Value (Detail) (Fair Value Measurement Level 3, Contingent Acquisition Consideration, USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Fair Value Measurement Level 3 | Contingent Acquisition Consideration | ' |
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ' |
Beginning Balance | ' |
Issuances and settlements, net | 3,423 |
Realized loss included in income | 29 |
Unrealized loss included in income | 424 |
Total realized and unrealized loss | 453 |
Ending Balance | $3,876 |
Operating_Leases_Schedule_of_F
Operating Leases - Schedule of Future Minimum Operating Lease Payments (Detail) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Operating Leased Assets [Line Items] | ' |
2014 | $398 |
2015 | 350 |
2016 | 192 |
2017 | 89 |
Total minimum lease payments | $1,029 |
Operating_Leases_Additional_In
Operating Leases - Additional Information (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Operating Leased Assets [Line Items] | ' | ' |
Difference between operating lease cash rent payments and straight-line rent expense | $70,000 | $63,000 |
Operating lease expiration year | '2015 | ' |
Operating lease expiration year | '2016 | ' |
Operating lease expiration year | '2017 | ' |
Total rent expense | $308,000 | $193,000 |
Segments_Additional_Informatio
Segments - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Segment | |
Segment Reporting Information [Line Items] | ' |
Number of Operating Segments | 1 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Exclusive Option Agreement | ' |
Commitment And Contingencies [Line Items] | ' |
Monthly payment for services agreement for the technology | $16,000 |
Exclusive option agreement maturity term | '5 years |
Bimsym Agreements | Software | ' |
Commitment And Contingencies [Line Items] | ' |
Amount capitalized for software | 45,000 |
Bimsym Agreements | Master Service Agreements | ' |
Commitment And Contingencies [Line Items] | ' |
Monthly payment for services agreement for the technology | $26,000 |
Service agreement term | '5 years |
Agreement renewal | 'one-year terms unless we give 60 daysb notice |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2013 | Mar. 14, 2013 | Feb. 11, 2013 | Aug. 31, 2012 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 01, 2013 | Jan. 02, 2013 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 31, 2013 | Dec. 31, 2013 | |
IPO Underwriters' Option | Health Plan Intermediaries Holdings, LLC | Health Plan Intermediaries Holdings, LLC | Health Benefits One, LLC | Health Benefits One, LLC | Tax Receivable Agreement | |||||||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of distributions paid | ' | ' | $171,000 | ' | ' | $2,217,000 | ' | $4,010,000 | ' | ' | ' | $944,000 | $2,200,000 | ' | ' | ' |
Accrued distribution recorded | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 916,000 | ' | ' | ' |
Amount granted to related parties supported by promissory note | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments due under note payable | ' | ' | ' | ' | ' | ' | ' | ' | 25,000 | 25,000 | ' | ' | ' | ' | ' | ' |
Due to related parties | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Repayment of due to related parties | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate cash price of assets | ' | 5,500,000 | ' | ' | ' | ' | 5,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase of outstanding membership units from TSG | 90,000 | ' | ' | ' | ' | ' | 90,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership of membership interests | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' |
Advanced commissions payments, net | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 801,000 | ' | ' |
Commission expense, recognized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 906,000 | ' | ' |
Advanced commissions | ' | ' | ' | ' | ' | 2,468,000 | 2,468,000 | 297,000 | ' | ' | ' | ' | ' | 457,000 | ' | ' |
Amount paid under agreement | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | 0 |
Increase in due to member pursuant to tax receivable agreement | ' | ' | ' | ' | ' | ' | $423,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' |
Concentrations_of_Credit_Risk_1
Concentrations of Credit Risk and Significant Customers - Additional Information (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Customer | Customer | |
Concentration Risk [Line Items] | ' | ' |
Accounts receivable | $630,000 | $273,000 |
Accounts receivable balance distributors percentage | 21.00% | 83.00% |
Number of customers accounted for more than 10% of company's revenue | 0 | 0 |
Companion Life | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of premium equivalents of carriers | 41.00% | 46.00% |
Starr Indemnity & Liability Company | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of premium equivalents of carriers | 22.00% | 25.00% |
United States Fire | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of premium equivalents of carriers | 20.00% | 22.00% |
Revenue from services | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of revenue accounted to members | 10.00% | 10.00% |
Subsequent_Event_Additional_In
Subsequent Event - Additional Information (Detail) (Class A common stock) | Mar. 14, 2014 | Dec. 31, 2013 | Feb. 13, 2013 | Mar. 14, 2014 | Feb. 14, 2014 |
Subsequent Event | Subsequent Event | ||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' |
Entity Common Stock, Shares Outstanding | 5,309,594 | ' | ' | ' | 8,566,667 |
Common stock, shares issued | ' | 5,309,594 | 4,666,667 | 0 | ' |