Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | BNFT | |
Entity Registrant Name | Benefitfocus,Inc. | |
Entity Central Index Key | 1,576,169 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,750,839 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 50,800 | $ 48,074 |
Marketable securities | 4,510 | 40,448 |
Accounts receivable, net | 27,538 | 27,616 |
Accounts receivable, related party | 3,527 | 2,082 |
Prepaid expenses and other current assets | 5,610 | 5,725 |
Total current assets | 91,985 | 123,945 |
Property and equipment, net | 57,874 | 55,037 |
Intangible assets, net | 472 | 665 |
Goodwill | 1,634 | 1,634 |
Other non-current assets | 1,394 | 838 |
Total assets | 153,359 | 182,119 |
Current liabilities: | ||
Accounts payable | 4,189 | 7,953 |
Accrued expenses | 14,403 | 10,449 |
Accrued compensation and benefits | 17,224 | 20,684 |
Deferred revenue, current portion | 34,899 | 37,858 |
Revolving line of credit, current portion | 15,000 | 25,000 |
Financing and capital lease obligations, current portion | 2,017 | 3,648 |
Total current liabilities | 87,732 | 105,592 |
Deferred revenue, net of current portion | 44,811 | 55,671 |
Revolving line of credit, net of current portion | 20,246 | 5,246 |
Financing and capital lease obligations, net of current portion | 33,038 | 31,183 |
Other non-current liabilities | 2,974 | 2,436 |
Total liabilities | 188,801 | 200,128 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Preferred stock, par value $0.001, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2016 and December 31, 2015 | ||
Common stock, par value $0.001, 50,000,000 shares authorized, 29,673,292 and 29,194,332 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 30 | 29 |
Additional paid-in capital | 325,829 | 310,304 |
Accumulated deficit | (361,301) | (328,342) |
Total stockholders' deficit | (35,442) | (18,009) |
Total liabilities and stockholders' deficit | $ 153,359 | $ 182,119 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 29,673,292 | 29,194,332 |
Common stock, shares outstanding | 29,673,292 | 29,194,332 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 58,022 | $ 45,426 | $ 170,688 | $ 130,803 |
Cost of revenue | 29,112 | 26,265 | 88,159 | 72,368 |
Gross profit | 28,910 | 19,161 | 82,529 | 58,435 |
Operating expenses: | ||||
Sales and marketing | 13,607 | 14,218 | 41,942 | 45,497 |
Research and development | 14,081 | 12,958 | 43,276 | 38,006 |
General and administrative | 7,746 | 6,777 | 24,415 | 18,581 |
Total operating expenses | 35,434 | 33,953 | 109,633 | 102,084 |
Loss from operations | (6,524) | (14,792) | (27,104) | (43,649) |
Other income (expense): | ||||
Interest income | 25 | 56 | 117 | 130 |
Interest expense on building lease financing obligations | (1,704) | (1,727) | (5,130) | (5,371) |
Interest expense on other borrowings | (262) | (195) | (691) | (685) |
Other (expense) income | (133) | (1) | (136) | 3 |
Total other expense, net | (2,074) | (1,867) | (5,840) | (5,923) |
Loss before income taxes | (8,598) | (16,659) | (32,944) | (49,572) |
Income tax expense | 5 | 5 | 15 | 25 |
Net loss | (8,603) | (16,664) | (32,959) | (49,597) |
Comprehensive loss | $ (8,603) | $ (16,664) | $ (32,959) | $ (49,597) |
Net loss per common share: | ||||
Basic and diluted | $ (0.29) | $ (0.58) | $ (1.12) | $ (1.77) |
Weighted-average common shares outstanding: | ||||
Basic and diluted | 29,651,230 | 28,847,493 | 29,442,023 | 28,083,343 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Deficit - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Common Stock, $0.001 Par Value | Additional Paid-in Capital | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2015 | 29,194,332 | |||
Balance at Dec. 31, 2015 | $ (18,009) | $ 29 | $ 310,304 | $ (328,342) |
Exercise of stock options (in shares) | 278,907 | |||
Exercise of stock options | 2,118 | $ 1 | 2,117 | |
Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes | (202) | (202) | ||
Issuance of common stock upon vesting of restricted stock units, net of shares surrendered for taxes (in shares) | 200,053 | |||
Stock-based compensation expense | 13,610 | 13,610 | ||
Net loss | (32,959) | (32,959) | ||
Balance (in shares) at Sep. 30, 2016 | 29,673,292 | |||
Balance at Sep. 30, 2016 | $ (35,442) | $ 30 | $ 325,829 | $ (361,301) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (32,959) | $ (49,597) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||
Depreciation and amortization | 9,619 | 8,686 |
Stock-based compensation expense | 13,610 | 7,631 |
Interest accrual on financing obligation | 5,130 | 5,371 |
Loss on disposal or impairment of property and equipment | 140 | 10 |
Provision for doubtful accounts | 287 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,655) | (814) |
Accrued interest on short-term investments | 217 | 165 |
Prepaid expenses and other current assets | 465 | (1,900) |
Other non-current assets | 142 | 1,047 |
Accounts payable | (3,844) | 117 |
Accrued expenses | 4,726 | 1,780 |
Accrued compensation and benefits | (3,460) | 3,445 |
Deferred revenue | (13,819) | (1,849) |
Other non-current liabilities | 538 | 222 |
Net cash and cash equivalents used in operating activities | (20,863) | (25,686) |
Cash flows from investing activities | ||
Purchases of short-term investments held to maturity | (2,004) | (59,141) |
Proceeds from maturity of short-term investments held to maturity | 37,725 | 21,867 |
Purchases of property and equipment | (10,861) | (11,018) |
Net cash and cash equivalents provided by (used in) investing activities | 24,860 | (48,292) |
Cash flows from financing activities | ||
Draws on revolving line of credit | 64,000 | 32,492 |
Payments on revolving line of credit | (59,000) | (34,902) |
Proceeds from exercises of stock options | 2,118 | 2,944 |
Proceeds from issuance of common stock and warrant, net of issuance costs | 74,538 | |
Payment of deferred financing costs and debt issuance costs | (566) | |
Remittance of taxes upon vesting of restricted stock units | (202) | (1,224) |
Payments on financing and capital lease obligations | (8,187) | (7,386) |
Net cash and cash equivalents (used in) provided by financing activities | (1,271) | 65,896 |
Net increase (decrease) in cash and cash equivalents | 2,726 | (8,082) |
Cash and cash equivalents, beginning of period | 48,074 | 51,074 |
Cash and cash equivalents, end of period | 50,800 | 42,992 |
Supplemental disclosure of non-cash investing and financing activities | ||
Property and equipment purchases in accounts payable and accrued expenses | 856 | 1,797 |
Property and equipment purchased with financing and capital lease obligations | 2,233 | 914 |
Post contract support purchased with financing obligations | $ 1,048 | 272 |
Allocation of proceeds to deferred revenue from issuance of common stock based on relative selling price | $ 207 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business Benefitfocus, Inc. (the “Company”) provides a leading cloud-based benefits management platform for consumers, employers, insurance carriers and brokers under a software-as-a-service (“SaaS”) model. The financial statements of the Company include the financial position and operations of its wholly owned subsidiaries, Benefitfocus.com, Inc., Benefit Informatics, Inc. and BenefitStore, Inc. Benefit Informatics, Inc. was dissolved on December 31, 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity. Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and footnotes have been prepared in accordance with GAAP as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information, and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the three- and nine-month periods ended September 30, 2016 are not necessarily indicative of the results for the full year or for any other future period. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on February 25, 2016. Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Such estimates include revenue recognition and the customer relationship period, allowances for doubtful accounts and returns, valuations of deferred income taxes, long-lived assets, warrants, capitalizable software development costs and the related amortization, stock-based compensation, the determination of the useful lives of assets and the recognition and impairment assessment of acquired intangibles and goodwill. Determination of these transactions and account balances are based on the Company’s estimates and judgments. These estimates are based on the Company’s knowledge of current events and actions it may undertake in the future as well as on various other assumptions that it believes to be reasonable. Actual results could differ materially from these estimates. Revenue and Deferred Revenue The Company derives the majority of its revenue from software services, which consist primarily of monthly subscription fees paid by customers for access to and usage of the Company’s cloud-based benefits software solutions for a specified contract term. The Company also derives revenue from professional services, which primarily includes fees related to the integration of customers’ systems with the Company’s platform, typically including discovery, configuration, deployment, testing, and training. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided, the fees to be paid by the customer are fixed and determinable and collectability is reasonably assured. The Company considers delivery of its cloud-based software services has commenced once it has granted the customer access to its platform. The Company’s arrangements generally contain multiple elements comprised of software services and professional services. The Company evaluates each element in an arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE is not available, third-party evidence (“TPE”) is used to establish the selling price if it exists. VSOE and TPE do not currently exist for any of the Company’s deliverables. Accordingly, for arrangements with multiple deliverables that can be separated into different units of accounting, the arrangement consideration is allocated to the separate units of accounting based on the Company’s best estimate of selling price. The amount of arrangement consideration allocated is limited by contingent revenues, if any. Effective July 1, 2015, the Company determined it had established standalone value for Benefitfocus Marketplace implementation services in the Employer segment because beginning then they could be sold separately from the software services. This was primarily due to the system integrators that have been trained and certified to perform these implementation services, the successful completion of an implementation by a trained system integrator, and the sale of several software subscription arrangements to customers in the Employer segment without the Company’s implementation services. Accordingly, revenues related to implementation services for the Benefitfocus Marketplace solution in the Employer segment delivered after July 1, 2015 are recognized separately from the revenues earned from the Employer software subscription services. Revenues related to such implementation services are recognized at the time that the professional services have been completed and the related software services have commenced. Prior to July 1, 2015, the Company did not have standalone value for implementation services related to the Benefitfocus Marketplace solution as the Company had historically performed these services to support the customers’ implementation of this solution. Revenue from implementation services with standalone value was $1,058 and $697 for the three-month periods ended September 30, 2016 and 2015, respectively, and $1,700 for the nine-month period ended September 30, 2016. Certain of the Company’s other professional services, including implementation services related to the Carrier segment, are not sold separately from the software services and there is no alternative use for them. As such, the Company has determined that those professional services do not have standalone value. Accordingly, software services and professional services are combined and recognized as a single unit of accounting. The Company generally recognizes software services fees monthly based on the number of employees covered by the relevant benefits plans at contracted rates for a specified period of time, once the criteria for revenue recognition described above have been satisfied. The Company defers recognition of revenue for fees from professional services that do not have standalone value and begins recognizing such revenue once the services are delivered and the related software services have commenced, ratably over the longer of the contract term or the estimated expected life of the customer relationship. Costs incurred by the Company in connection with providing such professional services are charged to expense as incurred and are included in “Cost of revenue.” Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents, marketable securities and accounts receivable. All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The bank deposits of the Company might, at times, exceed federally insured limits and are generally uninsured and uncollateralized. The Company has not experienced any losses on cash and cash equivalents to date. To manage credit risk related to marketable securities, the Company invests in various types of highly rated corporate bonds, commercial paper, and various United States backed securities with maturities of less than two years. The weighted average maturity of the portfolio of investments must not exceed nine months, per the Company’s investment policy. To manage accounts receivable risk, the Company evaluates the creditworthiness of its customers and maintains an allowance for doubtful accounts. Accounts receivable are unsecured and derived from revenue earned from customers located in the United States. One customer, North Carolina State Health Plan, represented 22.2% of the total accounts receivable at December 31, 2015. Another customer, Aetna, represented 9.6% and 10.0% of total revenue for the three- and nine-month periods ended September 30, 2015, respectively. Mercer, a related party, represented 10.3% and 10.7% of total revenue for the three- and nine-month periods ended September 30, 2016, respectively. For more information regarding Mercer revenue, please see Note 11. Accounts Receivable and Allowance for Doubtful Accounts and Returns Accounts receivable are stated at realizable value, net of allowances for doubtful accounts and returns. The Company utilizes the allowance method to provide for doubtful accounts based on management’s evaluation of the collectability of amounts due, and other relevant factors. Bad debt expense is recorded in general and administrative expense on the consolidated statements of operations and comprehensive loss. The Company’s estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, actual write-offs for uncollectible accounts have not significantly differed from the Company’s estimates. The Company removes recorded receivables and the associated allowances when they are deemed permanently uncollectible. However, if bad debts are higher than expected future write-offs will be greater than the Company’s estimates. The allowance for doubtful accounts was $311 and $32 as of September 30, 2016 and December 31, 2015, respectively. The allowances for returns are accounted for as reductions of revenue and are estimated based on the Company’s periodic assessment of historical experience and trends. The Company considers factors such as the time lag since the initiation of revenue recognition, historical reasons for adjustments, new customer volume, complexity of billing arrangements, timing of software availability, and past due customer billings. The allowance for returns was $2,782 and $2,553 as of September 30, 2016 and December 31, 2015, respectively. Capitalized Software Development Costs The Company capitalizes certain costs related to its software developed or obtained for internal use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal and external costs incurred during the application development stage, including upgrades and enhancements representing modifications that will result in significant additional functionality, are capitalized. Software maintenance and training costs are expensed as incurred. Capitalized costs are recorded as part of property and equipment and are amortized on a straight-line basis to cost of revenue over the software’s estimated useful life, which is three years. The Company evaluates these assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. In the three months ended September 30, 2016 and 2015, the Company capitalized software development costs of $1,129 and $496, respectively, and amortized capitalized software development costs of $762 and $638, respectively. In the nine months ended September 30, 2016 and 2015, respectively, the Company capitalized software development costs of $4,114 and $1,547, and amortized capitalized software development costs of $2,081 and $1,985, respectively. The net book value of capitalized software development costs was $6,082 and $4,049 at September 30, 2016 and December 31, 2015, respectively. Comprehensive Loss The Company’s net loss equals comprehensive loss for all periods presented. Accounting Standards Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13: Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of this ASU is to require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09: Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning January 1, 2017, but early adoption is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. ASU 2016-02 will be effective for the Company beginning January 1, 2019, but early adoption is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the update specifies that the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. The update further specifies that the customer should account for a cloud computing arrangement as a service contract if the arrangement does not include a software license. The Company adopted ASU 2015-05 as of January 1, 2016 on a prospective basis. The adoption of this standard did not materially impact the Company’s consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03: Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this standard as of January 1, 2016. The adoption of this standard did not materially impact the Company’s consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40). ASU 2015-11 provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the Company beginning January 1, 2017. The Company does not believe the adoption of this standard will have a material effect on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606), which amends the revenue recognition requirements in the FASB Accounting Standards Codification, and various clarifying updates. This statement requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The statement shall be applied using one of two methods: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying this statement recognized at the date of initial application. The Company has not yet determined which method it will apply. This guidance will be effective for the Company beginning January 1, 2018, with an option to early adopt. The Company is currently evaluating the impact of this guidance on its consolidated financial position and results of operations. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 3. Net Loss Per Common Share Diluted loss per common share is the same as basic loss per common share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. The following common share equivalent securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, Anti-Dilutive Common Share Equivalents 2016 2015 2016 2015 Restricted stock units 1,522,718 1,001,656 1,522,718 1,001,656 Stock options 1,393,358 1,883,631 1,393,358 1,883,631 Warrant to purchase common stock 580,813 580,813 580,813 580,813 Total anti-dilutive common share equivalents 3,496,889 3,466,100 3,496,889 3,466,100 Basic and diluted net loss per common share is calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net loss $ (8,603 ) $ (16,664 ) $ (32,959 ) $ (49,597 ) Net loss attributable to common stockholders $ (8,603 ) $ (16,664 ) $ (32,959 ) $ (49,597 ) Denominator: Weighted-average common shares outstanding, basic and diluted 29,651,230 28,847,493 29,442,023 28,083,343 Net loss per common share, basic and diluted $ (0.29 ) $ (0.58 ) $ (1.12 ) $ (1.77 ) |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | 4. Fair Value Measurement The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and other accrued liabilities, and accrued compensation and benefits, approximate fair value due to their short-term nature. The carrying value of the Company’s financing obligations and revolving line of credit approximates fair value, considering the borrowing rates currently available to the Company with similar terms and credit risks. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2. Other inputs that are directly or indirectly observable in the marketplace. Level 3. Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above categories, as of September 30, 2016 and December 31, 2015. September 30, 2016 Description Level 1 Level 2 Level 3 Total Cash Equivalents: Money market mutual funds (1) $ 46,859 $ — $ — $ 46,859 Total assets $ 46,859 $ — $ — $ 46,859 December 31, 2015 Description Level 1 Level 2 Level 3 Total Cash Equivalents: Money market mutual funds (1) $ 46,905 $ — $ — $ 46,905 Total assets $ 46,905 $ — $ — $ 46,905 (1) Money market funds are classified as cash equivalents in the Company’s unaudited consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash with remaining maturities of three months or less at the time of purchase, the Company’s cash equivalent money market funds have carrying values that approximate fair value. |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2016 | |
Investments Debt And Equity Securities [Abstract] | |
Marketable Securities | 5. Marketable Securities Marketable securities consist of corporate bonds, commercial paper, U.S. Treasury and agency bonds and are classified as held-to-maturity. Investments held in marketable securities had contractual maturities of between 2 and 4 months as of September 30, 2016. The following presents information about the Company’s marketable securities as of: September 30, 2016 December 31, 2015 Aggregate cost basis and net carrying amount $ 4,510 $ 40,448 Gross unrealized holding gains 3 1 Gross unrealized holding losses - (26 ) Aggregate fair value determined by Level 2 inputs $ 4,513 $ 40,423 The following table presents information about the Company’s investments that were in an unrealized loss position and for which an other-than-temporary impairment has not been recognized in earnings as of: September 30, 2016 December 31, 2015 Aggregate fair value of investments with unrealized losses (1) $ - $ 27,070 Aggregate amount of unrealized losses - (26 ) (1) Investments have been in a continuous loss position for less than 12 months. |
Revolving Line of Credit
Revolving Line of Credit | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Revolving Line of Credit | 6. Revolving Line of Credit As of September 30, 2016 and December 31, 2015, the amount outstanding under the Company’s revolving line of credit was $35,246 and $30,246, respectively. The amount available to borrow, adjusted by the borrowing base limit, was $24,754 and the interest rate was 4.5% as of September 30, 2016. In January 2016, the Company repaid $25,000 of the amount outstanding under this line of credit. In June 2016, the Company borrowed $34,000 for general operating purposes . On September 1, 2016, the Company entered into a waiver to its revolving line of credit agreement for failure to comply with its minimum required cash balance as of July 31, 2016. From time to time the Company draws down and repays its borrowings under the revolving line of credit agreement. In part to opportunistically reduce interest expense, during July 2016, the Company repaid a significant portion of its borrowings under the revolving line of credit. As a result, as of July 31, 2016, the Company’s cash balance was approximately $400 below the minimum required amount. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | 7. Stock-based Compensation Restricted Stock Units During January 2016, the Company granted 31,233 restricted stock units to employees with an aggregate grant date fair value of $1,091. During April 2016, the Company granted 425,183 restricted stock units to employees with an aggregate grant date fair value of $13,776. During the three months ended September 30, 2016, the Company granted 83,599 restricted stock units to employees with an aggregate grant date fair value of $3,206. During the nine months ended September 30, 2016, the Company granted 252,167 performance restricted stock units to officers and certain employees with an aggregate grant date fair value of $7,871. Vesting is contingent upon meeting various financial targets to support growth initiatives through December 31, 2017. The actual number of shares issued upon vesting could range from 0% to 100% of the number granted. During March 2016, the Company granted 26,376 performance restricted stock units to officers and certain employees with an aggregate grant date fair value of $875. The awards were granted in lieu of a portion of the target cash bonus that would otherwise be payable under the Company’s Management Incentive Bonus Program for the calendar year ended 2016. The awards vest upon achievement of annual financial targets for 2016. The actual number of shares issued upon vesting could range from 0% to 100% of the number granted. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Deficit | 8. Stockholders’ Deficit Common Stock The holders of common stock are entitled to one vote for each share. The voting, dividend and liquidation rights of the holders of common stock are subject to and qualified by the rights, powers and preferences of the holders of preferred stock. At the Company’s annual stockholder meeting held in June 2016, the Company’s stockholders approved the Benefitfocus, Inc. 2016 Employee Stock Purchase Plan (“ESPP”) pursuant to which 150,000 shares of the Company’s common stock is available for purchase by its employees (and employees of its subsidiaries) who meet certain criteria. The Company’s board of directors approved the ESPP in March 2016. Under the ESPP, eligible employees may purchase the Company’s common stock through accumulated payroll deductions. Options to purchase shares are granted twice yearly on or about January 1 and July 1 and exercisable on or about the succeeding June 30 and December 31, respectively, of each year. Shares are purchased at purchase prices equal to 95% of the fair market value of the Company’s common stock at the purchase date. No participant may purchase more than $12,500 worth of the Company’s common stock in a six-month offering period. The ESPP's initial purchase period began in July 2016. Accordingly, no shares of the Company common stock had been purchased or distributed pursuant to the ESPP as of September 30, 2016. At September 30, 2016, the Company had reserved a total of 4,489,964 of its authorized 50,000,000 shares of common stock for future issuance as follows: Outstanding stock options 1,393,358 Restricted stock units 1,522,718 Available for future issuance under stock award plans 843,075 Available for future issuance under ESPP 150,000 Warrant to purchase common stock 580,813 Total common shares reserved for future issuance 4,489,964 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The Company’s effective federal tax rate for the three and nine months ended September 30, 2016 was less than one percent, primarily as a result of estimated tax losses for the fiscal year offset by the increase in the valuation allowance in the net operating loss carryforwards. Current tax expense relates to estimated state income taxes. |
Segments and Geographic Informa
Segments and Geographic Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segments and Geographic Information | 10. Segments and Geographic Information Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by information about operating segments, for purposes of allocating resources and evaluating financial performance. The Company’s reportable segments are based on the type of customer. The Company determined its operating segments to be: Employer, which derives substantially all of its revenue from customers that use the Company’s services for the provision of benefits to their employees, and administrators acting on behalf of employers; and Carrier, which derives substantially all of its revenue from insurance companies that provide coverage at their own risk. Segments are evaluated based on gross profit. The Company does not allocate interest income, interest expense or income tax expense by segment. Accordingly, the Company does not report such information. Additionally, Employer and Carrier segments share the majority of the Company’s assets. Therefore, no segment asset information is reported. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue from external customers by segment: Employer $ 35,371 $ 22,808 $ 103,825 $ 64,485 Carrier 22,651 22,618 66,863 66,318 Total net revenue from external customers $ 58,022 $ 45,426 $ 170,688 $ 130,803 Depreciation and amortization by segment: Employer $ 2,071 $ 1,567 $ 5,838 $ 4,359 Carrier 1,238 1,393 3,781 4,327 Total depreciation and amortization $ 3,309 $ 2,960 $ 9,619 $ 8,686 Gross profit by segment: Employer $ 13,881 $ 7,367 $ 41,432 $ 23,492 Carrier 15,029 11,794 41,097 34,943 Total gross profit $ 28,910 $ 19,161 $ 82,529 $ 58,435 |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Parties | 11. Related Parties Related Party Leasing Arrangements The Company leases the buildings and office space on its Charleston, South Carolina campus from entities with which two of the Company’s directors, significant stockholders, and executives are affiliated. The leasing arrangements have 15-year terms which started in 2006, 2009 and 2015. The Company has an option to renew the 2006 and 2009 arrangements for one five-year period and an option to renew the 2015 arrangement for up to five one-year periods. The arrangements provide for 3.0% fixed annual rent increases. Payments under these agreements were $2,430 and $2,356 for the three months ended September 30, 2016 and 2015, respectively, and $8,096 and $9,528 for the nine months ended September 30, 2016 and 2015, respectively. Amounts due to the related parties were $1,654 and $1,116 as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016 and December 31, 2015 amounts due to the related parties were recorded in “Accrued expenses.” Other Related Party Expenses The Company utilizes the services of three companies that are owned and controlled by a Company director, significant stockholder, and executive. The companies provide private air transportation and construction project management services. Expenses related to these companies were $13 and $53 for the three months ended September 30, 2016 and 2015 and $50 and $135 for the nine months ended September 30, 2016 and 2015, respectively. No amounts were due to these companies as of September 30, 2016 and December 31, 2015. Related Party Revenues Mercer became a related party when the Company sold it over 10% beneficial ownership of the Company’s outstanding common stock in February 2015. Revenue from Mercer was $5,960 and $3,532 for the three months ended September 30, 2016 and 2015, respectively and $18,218 and $8,147 for the nine months ended September 30, 2016 and 2015, respectively, from the time they became a related party and was reflected in “Revenues,” within the accompanying statements of operations. The amounts due from Mercer were $3,527 and $2,082 as of September 30, 2016 and December 31, 2015, respectively. The amount of deferred revenue associated with Mercer was $8,141 and $9,128 as of September 30, 2016 and December 31, 2015, respectively, and was reflected in the balances of deferred revenue in the consolidated balance sheets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Restricted Stock Units During October 2016, the Company granted 42,907 restricted stock units to employees with an aggregate grant date fair value of $1,705. Generally, these restricted stock units vest in equal annual installments over 4 years from the grant date. The Company amortizes the fair value of the stock subject to the restricted stock units at the time of grant on a straight-line basis over the period of vesting. The Company recognizes the income tax benefits resulting from vesting of restricted stock units in the period they vest, to the extent the compensation expense has been recognized. Common Stock During October 2016, employees exercised stock options and restricted stock units vested resulting in the issuance of 77,547 shares. Revolving Line of Credit In October 2016, the Company repaid $15,000 under its revolving line of credit. It also amended its revolving line of credit agreement. The amendment increases the borrowing capacity to $95,000, extends the termination date to February 20, 2020, and includes the addition of Goldman Sachs Lending Partners LLC is part of the lending syndicate. The amendment alters definitions in the revolving line of credit agreement including Alternate Base Rate, Applicable Margin, Consolidated EBITDA, and Liquidity and changes liquidity thresholds on the Commitment Fee Rate. It revises certain covenants of the Company and its subsidiaries (“Borrowers”), including, but not limited to, those related to accounts receivable, Minimum Consolidated EBITDA requirements, Indebtedness, and certain capital expenditure limits. The amendment also waives any default that may have occurred as a result of certain Indebtedness incurred by the Borrowers and the disclosure to the lenders of registered intellectual property. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity. |
Interim Unaudited Consolidated Financial Information | Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and footnotes have been prepared in accordance with GAAP as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information, and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the three- and nine-month periods ended September 30, 2016 are not necessarily indicative of the results for the full year or for any other future period. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on February 25, 2016. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Such estimates include revenue recognition and the customer relationship period, allowances for doubtful accounts and returns, valuations of deferred income taxes, long-lived assets, warrants, capitalizable software development costs and the related amortization, stock-based compensation, the determination of the useful lives of assets and the recognition and impairment assessment of acquired intangibles and goodwill. Determination of these transactions and account balances are based on the Company’s estimates and judgments. These estimates are based on the Company’s knowledge of current events and actions it may undertake in the future as well as on various other assumptions that it believes to be reasonable. Actual results could differ materially from these estimates. |
Revenue and Deferred Revenue | Revenue and Deferred Revenue The Company derives the majority of its revenue from software services, which consist primarily of monthly subscription fees paid by customers for access to and usage of the Company’s cloud-based benefits software solutions for a specified contract term. The Company also derives revenue from professional services, which primarily includes fees related to the integration of customers’ systems with the Company’s platform, typically including discovery, configuration, deployment, testing, and training. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided, the fees to be paid by the customer are fixed and determinable and collectability is reasonably assured. The Company considers delivery of its cloud-based software services has commenced once it has granted the customer access to its platform. The Company’s arrangements generally contain multiple elements comprised of software services and professional services. The Company evaluates each element in an arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE is not available, third-party evidence (“TPE”) is used to establish the selling price if it exists. VSOE and TPE do not currently exist for any of the Company’s deliverables. Accordingly, for arrangements with multiple deliverables that can be separated into different units of accounting, the arrangement consideration is allocated to the separate units of accounting based on the Company’s best estimate of selling price. The amount of arrangement consideration allocated is limited by contingent revenues, if any. Effective July 1, 2015, the Company determined it had established standalone value for Benefitfocus Marketplace implementation services in the Employer segment because beginning then they could be sold separately from the software services. This was primarily due to the system integrators that have been trained and certified to perform these implementation services, the successful completion of an implementation by a trained system integrator, and the sale of several software subscription arrangements to customers in the Employer segment without the Company’s implementation services. Accordingly, revenues related to implementation services for the Benefitfocus Marketplace solution in the Employer segment delivered after July 1, 2015 are recognized separately from the revenues earned from the Employer software subscription services. Revenues related to such implementation services are recognized at the time that the professional services have been completed and the related software services have commenced. Prior to July 1, 2015, the Company did not have standalone value for implementation services related to the Benefitfocus Marketplace solution as the Company had historically performed these services to support the customers’ implementation of this solution. Revenue from implementation services with standalone value was $1,058 and $697 for the three-month periods ended September 30, 2016 and 2015, respectively, and $1,700 for the nine-month period ended September 30, 2016. Certain of the Company’s other professional services, including implementation services related to the Carrier segment, are not sold separately from the software services and there is no alternative use for them. As such, the Company has determined that those professional services do not have standalone value. Accordingly, software services and professional services are combined and recognized as a single unit of accounting. The Company generally recognizes software services fees monthly based on the number of employees covered by the relevant benefits plans at contracted rates for a specified period of time, once the criteria for revenue recognition described above have been satisfied. The Company defers recognition of revenue for fees from professional services that do not have standalone value and begins recognizing such revenue once the services are delivered and the related software services have commenced, ratably over the longer of the contract term or the estimated expected life of the customer relationship. Costs incurred by the Company in connection with providing such professional services are charged to expense as incurred and are included in “Cost of revenue.” |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents, marketable securities and accounts receivable. All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The bank deposits of the Company might, at times, exceed federally insured limits and are generally uninsured and uncollateralized. The Company has not experienced any losses on cash and cash equivalents to date. To manage credit risk related to marketable securities, the Company invests in various types of highly rated corporate bonds, commercial paper, and various United States backed securities with maturities of less than two years. The weighted average maturity of the portfolio of investments must not exceed nine months, per the Company’s investment policy. To manage accounts receivable risk, the Company evaluates the creditworthiness of its customers and maintains an allowance for doubtful accounts. Accounts receivable are unsecured and derived from revenue earned from customers located in the United States. One customer, North Carolina State Health Plan, represented 22.2% of the total accounts receivable at December 31, 2015. Another customer, Aetna, represented 9.6% and 10.0% of total revenue for the three- and nine-month periods ended September 30, 2015, respectively. Mercer, a related party, represented 10.3% and 10.7% of total revenue for the three- and nine-month periods ended September 30, 2016, respectively. For more information regarding Mercer revenue, please see Note 11. |
Accounts Receivable and Allowance for Doubtful Accounts and Returns | Accounts Receivable and Allowance for Doubtful Accounts and Returns Accounts receivable are stated at realizable value, net of allowances for doubtful accounts and returns. The Company utilizes the allowance method to provide for doubtful accounts based on management’s evaluation of the collectability of amounts due, and other relevant factors. Bad debt expense is recorded in general and administrative expense on the consolidated statements of operations and comprehensive loss. The Company’s estimate is based on historical collection experience and a review of the current status of accounts receivable. Historically, actual write-offs for uncollectible accounts have not significantly differed from the Company’s estimates. The Company removes recorded receivables and the associated allowances when they are deemed permanently uncollectible. However, if bad debts are higher than expected future write-offs will be greater than the Company’s estimates. The allowance for doubtful accounts was $311 and $32 as of September 30, 2016 and December 31, 2015, respectively. The allowances for returns are accounted for as reductions of revenue and are estimated based on the Company’s periodic assessment of historical experience and trends. The Company considers factors such as the time lag since the initiation of revenue recognition, historical reasons for adjustments, new customer volume, complexity of billing arrangements, timing of software availability, and past due customer billings. The allowance for returns was $2,782 and $2,553 as of September 30, 2016 and December 31, 2015, respectively. |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company capitalizes certain costs related to its software developed or obtained for internal use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal and external costs incurred during the application development stage, including upgrades and enhancements representing modifications that will result in significant additional functionality, are capitalized. Software maintenance and training costs are expensed as incurred. Capitalized costs are recorded as part of property and equipment and are amortized on a straight-line basis to cost of revenue over the software’s estimated useful life, which is three years. The Company evaluates these assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. In the three months ended September 30, 2016 and 2015, the Company capitalized software development costs of $1,129 and $496, respectively, and amortized capitalized software development costs of $762 and $638, respectively. In the nine months ended September 30, 2016 and 2015, respectively, the Company capitalized software development costs of $4,114 and $1,547, and amortized capitalized software development costs of $2,081 and $1,985, respectively. The net book value of capitalized software development costs was $6,082 and $4,049 at September 30, 2016 and December 31, 2015, respectively. |
Comprehensive Loss | Comprehensive Loss The Company’s net loss equals comprehensive loss for all periods presented. |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13: Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of this ASU is to require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09: Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning January 1, 2017, but early adoption is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. ASU 2016-02 will be effective for the Company beginning January 1, 2019, but early adoption is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the update specifies that the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. The update further specifies that the customer should account for a cloud computing arrangement as a service contract if the arrangement does not include a software license. The Company adopted ASU 2015-05 as of January 1, 2016 on a prospective basis. The adoption of this standard did not materially impact the Company’s consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03: Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this standard as of January 1, 2016. The adoption of this standard did not materially impact the Company’s consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40). ASU 2015-11 provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the Company beginning January 1, 2017. The Company does not believe the adoption of this standard will have a material effect on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606), which amends the revenue recognition requirements in the FASB Accounting Standards Codification, and various clarifying updates. This statement requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The statement shall be applied using one of two methods: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying this statement recognized at the date of initial application. The Company has not yet determined which method it will apply. This guidance will be effective for the Company beginning January 1, 2018, with an option to early adopt. The Company is currently evaluating the impact of this guidance on its consolidated financial position and results of operations. |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Common Share Equivalent Securities Excluded from Calculation of Weighted-Average Common Shares Outstanding | The following common share equivalent securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, Anti-Dilutive Common Share Equivalents 2016 2015 2016 2015 Restricted stock units 1,522,718 1,001,656 1,522,718 1,001,656 Stock options 1,393,358 1,883,631 1,393,358 1,883,631 Warrant to purchase common stock 580,813 580,813 580,813 580,813 Total anti-dilutive common share equivalents 3,496,889 3,466,100 3,496,889 3,466,100 |
Basic and Diluted Net Loss per Common Share | Basic and diluted net loss per common share is calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net loss $ (8,603 ) $ (16,664 ) $ (32,959 ) $ (49,597 ) Net loss attributable to common stockholders $ (8,603 ) $ (16,664 ) $ (32,959 ) $ (49,597 ) Denominator: Weighted-average common shares outstanding, basic and diluted 29,651,230 28,847,493 29,442,023 28,083,343 Net loss per common share, basic and diluted $ (0.29 ) $ (0.58 ) $ (1.12 ) $ (1.77 ) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above categories, as of September 30, 2016 and December 31, 2015. September 30, 2016 Description Level 1 Level 2 Level 3 Total Cash Equivalents: Money market mutual funds (1) $ 46,859 $ — $ — $ 46,859 Total assets $ 46,859 $ — $ — $ 46,859 December 31, 2015 Description Level 1 Level 2 Level 3 Total Cash Equivalents: Money market mutual funds (1) $ 46,905 $ — $ — $ 46,905 Total assets $ 46,905 $ — $ — $ 46,905 (1) Money market funds are classified as cash equivalents in the Company’s unaudited consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash with remaining maturities of three months or less at the time of purchase, the Company’s cash equivalent money market funds have carrying values that approximate fair value. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Marketable Securities | The following presents information about the Company’s marketable securities as of: September 30, 2016 December 31, 2015 Aggregate cost basis and net carrying amount $ 4,510 $ 40,448 Gross unrealized holding gains 3 1 Gross unrealized holding losses - (26 ) Aggregate fair value determined by Level 2 inputs $ 4,513 $ 40,423 |
Investments In Unrealized Loss Position For Which Other-Than-Temporary Impairment not Recognized in Earnings | The following table presents information about the Company’s investments that were in an unrealized loss position and for which an other-than-temporary impairment has not been recognized in earnings as of: September 30, 2016 December 31, 2015 Aggregate fair value of investments with unrealized losses (1) $ - $ 27,070 Aggregate amount of unrealized losses - (26 ) (1) Investments have been in a continuous loss position for less than 12 months. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Shares of Common Stock Reserved for Future Issuance | At September 30, 2016, the Company had reserved a total of 4,489,964 of its authorized 50,000,000 shares of common stock for future issuance as follows: Outstanding stock options 1,393,358 Restricted stock units 1,522,718 Available for future issuance under stock award plans 843,075 Available for future issuance under ESPP 150,000 Warrant to purchase common stock 580,813 Total common shares reserved for future issuance 4,489,964 |
Segments and Geographic Infor24
Segments and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segments and Geographic Information | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue from external customers by segment: Employer $ 35,371 $ 22,808 $ 103,825 $ 64,485 Carrier 22,651 22,618 66,863 66,318 Total net revenue from external customers $ 58,022 $ 45,426 $ 170,688 $ 130,803 Depreciation and amortization by segment: Employer $ 2,071 $ 1,567 $ 5,838 $ 4,359 Carrier 1,238 1,393 3,781 4,327 Total depreciation and amortization $ 3,309 $ 2,960 $ 9,619 $ 8,686 Gross profit by segment: Employer $ 13,881 $ 7,367 $ 41,432 $ 23,492 Carrier 15,029 11,794 41,097 34,943 Total gross profit $ 28,910 $ 19,161 $ 82,529 $ 58,435 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Line Items] | |||||
Revenue from implementation services | $ 1,058 | $ 697 | $ 1,700 | ||
Allowance for doubtful accounts | 311 | 311 | $ 32 | ||
Capitalized software cost gross | 1,129 | 496 | 4,114 | $ 1,547 | |
Amortization of capitalized software cost | 762 | $ 638 | 2,081 | $ 1,985 | |
Capitalized software cost net | 6,082 | $ 6,082 | 4,049 | ||
Capitalized Software Development Costs | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Useful lives for property and equipment | 3 years | ||||
Allowance for Returns | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Allowance for returns | $ 2,782 | $ 2,782 | $ 2,553 | ||
Customer Concentration Risk | Accounts Receivable | North Carolina State Health Plan | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 22.20% | ||||
Customer Concentration Risk | Total Revenue | Aetna | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 9.60% | 10.00% | |||
Customer Concentration Risk | Total Revenue | Mercer | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Concentration risk, percentage | 10.30% | 10.70% | |||
Maximum | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Highly rated marketable securities | 2 years | ||||
Weighted average maturity of portfolio of investments | 9 months |
Common Share Equivalents Securi
Common Share Equivalents Securities Excluded From Calculation of Weighted Average Common Share Outstanding (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common share equivalents | 3,496,889 | 3,466,100 | 3,496,889 | 3,466,100 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common share equivalents | 1,522,718 | 1,001,656 | 1,522,718 | 1,001,656 |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common share equivalents | 1,393,358 | 1,883,631 | 1,393,358 | 1,883,631 |
Warrant to Purchase Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive common share equivalents | 580,813 | 580,813 | 580,813 | 580,813 |
Basic and Diluted Net Loss per
Basic and Diluted Net Loss per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator: | ||||
Net loss | $ (8,603) | $ (16,664) | $ (32,959) | $ (49,597) |
Net loss attributable to common stockholders | $ (8,603) | $ (16,664) | $ (32,959) | $ (49,597) |
Denominator: | ||||
Weighted-average common shares outstanding, basic and diluted | 29,651,230 | 28,847,493 | 29,442,023 | 28,083,343 |
Net loss per common share, basic and diluted | $ (0.29) | $ (0.58) | $ (1.12) | $ (1.77) |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets | $ 46,859 | $ 46,905 | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets | 46,859 | 46,905 | |
Money market mutual funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash Equivalents | [1] | 46,859 | 46,905 |
Money market mutual funds | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash Equivalents | [1] | $ 46,859 | $ 46,905 |
[1] | Money market funds are classified as cash equivalents in the Company’s unaudited consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash with remaining maturities of three months or less at the time of purchase, the Company’s cash equivalent money market funds have carrying values that approximate fair value. |
Marketable Securities - Additio
Marketable Securities - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016 | |
Minimum | |
Gain (Loss) on Investments [Line Items] | |
Held-to-maturity securities, contractual maturity period | 2 months |
Maximum | |
Gain (Loss) on Investments [Line Items] | |
Held-to-maturity securities, contractual maturity period | 4 months |
Schedule of Marketable Securiti
Schedule of Marketable Securities (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investments Debt And Equity Securities [Abstract] | ||
Aggregate cost basis and net carrying amount | $ 4,510 | $ 40,448 |
Gross unrealized holding gains | 3 | 1 |
Gross unrealized holding losses | (26) | |
Aggregate fair value determined by Level 2 inputs | $ 4,513 | $ 40,423 |
Unrealized Loss Position of Inv
Unrealized Loss Position of Investments Other-Than-Temporary Impairment not Recognized in Earnings (Detail) $ in Thousands | Dec. 31, 2015USD ($) | |
Investments Debt And Equity Securities [Abstract] | ||
Aggregate fair value of investments with unrealized losses | $ 27,070 | [1] |
Aggregate amount of unrealized losses | $ (26) | |
[1] | Investments have been in a continuous loss position for less than 12 months. |
Revolving Line of Credit - Addi
Revolving Line of Credit - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Jul. 31, 2016 | Jun. 30, 2016 | Jan. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Line Of Credit Facility [Line Items] | |||||||
Amount outstanding under credit facility | $ 35,246 | $ 35,246 | $ 30,246 | ||||
Amount available to borrow under line of credit | $ 24,754 | $ 24,754 | |||||
Line of credit, interest rate | 4.50% | 4.50% | |||||
Payments on revolving line of credit | $ 59,000 | $ 34,902 | |||||
Proceeds from line of credit borrowing | $ 64,000 | $ 32,492 | |||||
Cash balance | $ 400 | ||||||
Hardware And Software | |||||||
Line Of Credit Facility [Line Items] | |||||||
Payments on revolving line of credit | $ 34,000 | $ 25,000 | |||||
Proceeds from line of credit borrowing | $ 30,000 | $ 34,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2016 | Jan. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2016 | |
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of restricted stock units, granted | 425,183 | 31,233 | 83,599 | ||
Restricted stock units, aggregate grant date fair value | $ 13,776 | $ 1,091 | $ 3,206 | ||
Vesting period of restricted stock awards | 4 years | 4 years | 4 years | ||
Performance Based Restricted Stock Units R S Us | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of restricted stock units, granted | 26,376 | 252,167 | |||
Restricted stock units, aggregate grant date fair value | $ 875 | $ 7,871 | |||
Awards vesting date | Dec. 31, 2017 | ||||
Performance Based Restricted Stock Units R S Us | Vest on December 31,2017 | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares issued vesting range | 0.00% | 0.00% | |||
Performance Based Restricted Stock Units R S Us | Vest on December 31,2017 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares issued vesting range | 100.00% | 100.00% |
Stockholders' Deficit - Additio
Stockholders' Deficit - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | |
Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule Of Stockholders Equity [Line Items] | |||
Common stock, authorized shares reserved for future issuance | 4,489,964 | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 | |
Employee Stock Purchase Plan | |||
Schedule Of Stockholders Equity [Line Items] | |||
Common stock shares available for purchase | 150,000 | 150,000 | |
Percentage of common stock shares purchased on fair market value | 95.00% | ||
Maximum value of stock to be purchased per employee during the offering period | $ 12,500 | ||
Number of common stock shares purchased or distributed to employees | 0 |
Common Stock for Future Issuanc
Common Stock for Future Issuance (Detail) - shares | Sep. 30, 2016 | Jun. 30, 2016 |
Class Of Stock [Line Items] | ||
Outstanding stock options | 1,393,358 | |
Restricted stock units | 1,522,718 | |
Warrant to purchase common stock | 580,813 | |
Total common shares reserved for future issuance | 4,489,964 | |
Stock Award Plans | ||
Class Of Stock [Line Items] | ||
Common stock available for future issuance | 843,075 | |
ESPP | ||
Class Of Stock [Line Items] | ||
Common stock available for future issuance | 150,000 | 150,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Maximum | ||
Income Taxes [Line Items] | ||
Effective federal tax rate | 1.00% | 1.00% |
Segments and Geographic Infor37
Segments and Geographic Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net revenue from external customers | $ 58,022 | $ 45,426 | $ 170,688 | $ 130,803 |
Depreciation and amortization | 3,309 | 2,960 | 9,619 | 8,686 |
Gross profit | 28,910 | 19,161 | 82,529 | 58,435 |
Employer | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from external customers | 35,371 | 22,808 | 103,825 | 64,485 |
Depreciation and amortization | 2,071 | 1,567 | 5,838 | 4,359 |
Gross profit | 13,881 | 7,367 | 41,432 | 23,492 |
Carrier | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue from external customers | 22,651 | 22,618 | 66,863 | 66,318 |
Depreciation and amortization | 1,238 | 1,393 | 3,781 | 4,327 |
Gross profit | $ 15,029 | $ 11,794 | $ 41,097 | $ 34,943 |
Related Parties - Additional In
Related Parties - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2015 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Option | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Related Party Transaction [Line Items] | ||||||
Accounts receivable, related party | $ 3,527,000 | $ 3,527,000 | $ 2,082,000 | |||
Stockholders and Executives | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related party, current | 0 | 0 | 0 | |||
Transportation service from related party | 13,000 | $ 53,000 | 50,000 | $ 135,000 | ||
Mercer LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Revenue from related parties | 5,960,000 | 3,532,000 | 18,218,000 | 8,147,000 | ||
Accounts receivable, related party | 3,527,000 | 3,527,000 | 2,082,000 | |||
Deferred revenue | 8,141,000 | $ 8,141,000 | 9,128,000 | |||
Mercer LLC | Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Percentage of ownership interest sold by parent | 10.00% | |||||
Related Party Leasing Arrangements | ||||||
Related Party Transaction [Line Items] | ||||||
Lease agreement period | 15 years | |||||
Percentage of fixed annual rent increases | 3.00% | |||||
Lease operating expenses | 2,430,000 | $ 2,356,000 | $ 8,096,000 | $ 9,528,000 | ||
Due to related party, current | $ 1,654,000 | $ 1,654,000 | $ 1,116,000 | |||
Related Party Leasing Arrangements | 2006 and 2009 Arrangements | ||||||
Related Party Transaction [Line Items] | ||||||
Lease renewal option, number of renewal options | Option | 1 | |||||
Lease renewal option term | 5 years | |||||
Related Party Leasing Arrangements | 2015 Arrangement | ||||||
Related Party Transaction [Line Items] | ||||||
Lease renewal option, number of renewal options | Option | 5 | |||||
Lease renewal option term | 1 year |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2016 | Apr. 30, 2016 | Jan. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Subsequent Event [Line Items] | ||||||
Payments on revolving line of credit | $ 59,000,000 | $ 34,902,000 | ||||
Restricted Stock Units (RSUs) | ||||||
Subsequent Event [Line Items] | ||||||
Number of restricted stock units, granted | 425,183 | 31,233 | 83,599 | |||
Restricted stock units, aggregate grant date fair value | $ 13,776,000 | $ 1,091,000 | $ 3,206,000 | |||
Vesting period of restricted stock awards | 4 years | 4 years | 4 years | |||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Issuance of common stock upon exercise of stock options and vesting of restricted stock units | 77,547 | |||||
Subsequent Event | Revolving Line of Credit | ||||||
Subsequent Event [Line Items] | ||||||
Payments on revolving line of credit | $ 15,000,000 | |||||
Line of credit facility maximum borrowing capacity | $ 95,000,000 | |||||
Line of credit facility termination date | Feb. 20, 2020 | |||||
Subsequent Event | Restricted Stock Units (RSUs) | ||||||
Subsequent Event [Line Items] | ||||||
Number of restricted stock units, granted | 42,907 | |||||
Restricted stock units, aggregate grant date fair value | $ 1,705,000 | |||||
Vesting period of restricted stock awards | 4 years |