Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
Entity Registrant Name | Inovalon Holdings, Inc. | |
Entity Central Index Key | 1,619,954 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Class A Common | ||
Entity Common Stock, Shares Outstanding (in shares) | 64,657,899 | |
Class B Common | ||
Entity Common Stock, Shares Outstanding (in shares) | 81,215,212 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 232,555 | $ 127,683 |
Short-term investments | 293,101 | 445,315 |
Accounts receivable (net of allowances of $2,669 and $5,865 at September 30, 2017 and December 31, 2016, respectively) | 83,818 | 85,591 |
Prepaid expenses and other current assets | 11,747 | 12,100 |
Income tax receivable | 4,104 | 15,165 |
Total current assets | 625,325 | 685,854 |
Non-current assets: | ||
Property, equipment and capitalized software, net | 101,419 | 76,420 |
Goodwill | 184,932 | 184,557 |
Intangible assets, net | 93,176 | 103,549 |
Other assets | 5,706 | 2,964 |
Total assets | 1,010,558 | 1,053,344 |
Current liabilities: | ||
Accounts payable | 30,509 | 16,474 |
Accrued compensation | 21,297 | 15,211 |
Other current liabilities | 7,708 | 9,468 |
Deferred revenue | 8,807 | 11,850 |
Deferred rent | 1,520 | 1,016 |
Credit facilities | 41,250 | 30,000 |
Capital lease obligation | 108 | 115 |
Total current liabilities | 111,199 | 84,134 |
Non-current liabilities: | ||
Credit facilities, less current portion | 202,500 | 236,250 |
Capital lease obligation, less current portion | 136 | 215 |
Deferred rent | 261 | 1,457 |
Other liabilities | 11,932 | 13,158 |
Deferred income taxes | 32,440 | 34,553 |
Total liabilities | 358,468 | 369,767 |
Commitments and contingencies (Note 5) | ||
Stockholders' equity: | ||
Common stock | 0 | 0 |
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, zero shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 0 | 0 |
Additional paid-in-capital | 532,084 | 516,300 |
Retained earnings | 291,456 | 274,087 |
Other comprehensive loss | (234) | (580) |
Total stockholders' equity | 652,090 | 683,577 |
Total liabilities and stockholders' equity | 1,010,558 | 1,053,344 |
Class A Common | ||
Stockholders' equity: | ||
Common stock | 0 | 0 |
Treasury stock, Class A common stock, at cost, 12,744,489 and 7,508,985 shares at September 30, 2017 and December 31, 2016, respectively | (171,217) | (106,231) |
Class B Common | ||
Stockholders' equity: | ||
Common stock | $ 1 | $ 1 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts receivable, allowances | ||
Accounts receivable, allowances (in dollars) | $ 2,669 | $ 5,865 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.000005 | $ 0.000005 |
Common stock, authorized (in shares) | 900,000,000 | 900,000,000 |
Common stock, issued (in shares) | 0 | 0 |
Common stock, outstanding (in shares) | 0 | 0 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Class A Common | ||
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.000005 | $ 0.000005 |
Common stock, authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, issued (in shares) | 77,425,861 | 72,271,298 |
Common stock, outstanding (in shares) | 64,681,372 | 64,786,705 |
Treasury stock | ||
Treasury stock (in shares) | 12,744,489 | 7,508,985 |
Class B Common | ||
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.000005 | $ 0.000005 |
Common stock, authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued (in shares) | 81,215,212 | 83,303,628 |
Common stock, outstanding (in shares) | 81,215,212 | 83,303,628 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Income Statement [Abstract] | |||||
Revenue | $ 115,855 | $ 105,013 | $ 334,739 | $ 331,495 | |
Expenses: | |||||
Cost of revenue | [1] | 38,431 | 35,433 | 113,914 | 120,570 |
Sales and marketing | [1] | 7,929 | 7,037 | 24,365 | 19,712 |
Research and development | [1] | 5,780 | 7,404 | 20,850 | 21,047 |
General and administrative | [1] | 36,283 | 37,209 | 108,002 | 105,222 |
Depreciation and amortization | 13,550 | 8,904 | 38,514 | 25,794 | |
Total operating expenses | 101,973 | 95,987 | 305,645 | 292,345 | |
Income from operations | 13,882 | 9,026 | 29,094 | 39,150 | |
Other income and (expenses): | |||||
Realized gains on short-term investments | 0 | 9 | 0 | 4 | |
(Loss) Gain on disposal of equipment | (243) | 0 | (381) | 534 | |
Interest income | 1,365 | 1,450 | 4,045 | 4,424 | |
Interest expense | (1,617) | (1,302) | (4,549) | (3,806) | |
Income before taxes | 13,387 | 9,183 | 28,209 | 40,306 | |
Provision for income taxes | 5,146 | 1,376 | 10,840 | 13,883 | |
Net income | 8,241 | 7,807 | 17,369 | 26,423 | |
Net income attributable to common stockholders, basic and diluted | $ 7,968 | $ 7,771 | $ 16,905 | $ 26,308 | |
Net income per share attributable to common stockholders, basic and diluted: | |||||
Basic net income per share (in dollars per share) | $ 0.06 | $ 0.05 | $ 0.12 | $ 0.17 | |
Diluted net income per share (in dollars per share) | $ 0.06 | $ 0.05 | $ 0.12 | $ 0.17 | |
Weighted average shares of common stock outstanding: | |||||
Basic (in shares) | 141,226 | 150,732 | 142,861 | 151,240 | |
Diluted (in shares) | 141,699 | 151,562 | 143,327 | 152,122 | |
[1] | (1)Includes stock-based compensation expense as follows: Cost of revenue$474 $94 $1,189 $334 Sales and marketing561 140 1,456 446 Research and development349 186 929 927 General and administrative3,597 1,704 8,751 4,645 Total stock-based compensation expense$4,981 $2,124 $12,325 $6,352 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Includes stock-based compensation expense as follows: | ||||
Total stock-based compensation expense | $ 4,981 | $ 2,124 | $ 12,325 | $ 6,352 |
Cost of revenue | ||||
Includes stock-based compensation expense as follows: | ||||
Total stock-based compensation expense | 474 | 94 | 1,189 | 334 |
Sales and marketing | ||||
Includes stock-based compensation expense as follows: | ||||
Total stock-based compensation expense | 561 | 140 | 1,456 | 446 |
Research and development | ||||
Includes stock-based compensation expense as follows: | ||||
Total stock-based compensation expense | 349 | 186 | 929 | 927 |
General and administrative | ||||
Includes stock-based compensation expense as follows: | ||||
Total stock-based compensation expense | $ 3,597 | $ 1,704 | $ 8,751 | $ 4,645 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 8,241 | $ 7,807 | $ 17,369 | $ 26,423 |
Other comprehensive income: | ||||
Realized gains on short-term investments reclassified from accumulated other comprehensive income, net of tax of $0, $5, $0 and $3, respectively | 0 | (10) | 0 | (7) |
Net change in unrealized gains on available-for-sale investments, net of tax of ($61), ($380), ($274) and ($2,182), respectively | 135 | 832 | 346 | 3,350 |
Comprehensive income | $ 8,376 | $ 8,629 | $ 17,715 | $ 29,766 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Realized gains on short-term investments reclassified from accumulated other comprehensive income, tax | $ 0 | $ 5 | $ 0 | $ 3 |
Net change in unrealized gains on available-for-sale investments, tax | $ 61 | $ 380 | $ 274 | $ 2,182 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 17,369 | $ 26,423 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 12,325 | 6,352 |
Depreciation | 27,129 | 20,368 |
Amortization of intangibles | 11,385 | 5,426 |
Amortization of premiums on short-term investments | 1,571 | 2,502 |
Realized gains on short-term investments | 0 | (4) |
Tax payments for equity award issuances | 0 | 95 |
Deferred income taxes | (1,540) | (3,110) |
Excess tax benefits from stock-based compensation | 0 | (1,135) |
Loss (Gain) on disposal of equipment | 381 | (534) |
Change in fair value of contingent consideration | (2,900) | 706 |
Bad debt expense | 0 | 79 |
Changes in assets and liabilities: | ||
Accounts receivable | 5,259 | 1,332 |
Prepaid expenses and other current assets | 1,931 | (3,604) |
Income taxes receivable | 11,174 | 7,677 |
Other assets | (2,722) | 4,189 |
Accounts payable | 5,653 | (5,903) |
Accrued compensation | 1,346 | 2,090 |
Other liabilities | (4,210) | 5,866 |
Deferred rent | (696) | (557) |
Deferred revenue | (2,507) | 361 |
Net cash provided by operating activities | 80,948 | 68,619 |
Cash flows from investing activities: | ||
Maturities of short-term investments | 150,696 | 248,998 |
Sales of short-term investments | 0 | 31,549 |
Purchases of short-term investments | 0 | (164,737) |
Purchases of property and equipment | (17,544) | (11,267) |
Investment in capitalized software | (21,741) | (14,220) |
Acquisitions, net of cash acquired of $1,535 | (3,490) | 0 |
Net cash provided by investing activities | 107,921 | 90,323 |
Cash flows from financing activities: | ||
Repurchase of common stock | (64,986) | (51,118) |
Repayment of credit facility borrowings | (22,500) | (11,250) |
Proceeds from exercise of stock options | 3,781 | 5,111 |
Acquisition-related contingent consideration | 0 | (2,300) |
Capital lease obligations paid | (84) | (31) |
Tax payments for equity award issuances | (208) | (137) |
Excess tax benefits from stock-based compensation | 0 | 1,135 |
Net cash used in financing activities | (83,997) | (58,590) |
Increase in cash and cash equivalents | 104,872 | 100,352 |
Cash and cash equivalents, beginning of period | 127,683 | 114,034 |
Cash and cash equivalents, end of period | 232,555 | 214,386 |
Supplementary cash flow disclosure: | ||
Cash paid during the period for: Income taxes, net of refunds | 725 | 10,014 |
Cash paid during the period for: Interest | 4,416 | 3,600 |
Non-cash investing activities: | ||
Accruals for purchases of property, equipment | 8,295 | 816 |
Accruals for investment in capitalized software | $ 3,892 | $ 492 |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Cash Acquired from Acquisition | $ 1,535 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared by Inovalon Holdings, Inc. (the "Company") in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2016 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company's financial position as of September 30, 2017 , the results of operations and comprehensive income for the three and nine month periods ended September 30, 2017 and 2016 , and cash flows for the nine months ended September 30, 2017 and 2016 . The results of operations for the three and nine month periods ended September 30, 2017 and 2016 are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenue and expenses reported during the period. Actual results could differ from estimates. The information contained herein should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"). The accompanying unaudited condensed consolidated financial statements include the accounts of Inovalon Holdings, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. Recently Issued Accounting Standards There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company's consolidated financial statements and note disclosures, from those disclosed in the 2016 Form 10-K, that would be expected to impact the Company except for the following: In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers and subsequent clarifying guidance ("ASU 2014-09"). This revenue recognition guidance supersedes existing GAAP guidance, including most industry-specific guidance. The core principle is 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 guidance identifies five steps to apply in achieving this principle. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. The Company currently expects to adopt the new standard using a modified retrospective approach on January 1, 2018. The Company is currently evaluating the impacts of the application of the new standard to its existing customer contracts and will continue to review new contracts entered into prior to the adoption of the new standard. The Company is currently in the process of finalizing policies and implementing changes to our processes, including a process for future contract reviews, and internal control over financial reporting. The potential impacts of the new standard are still being assessed related to the accounting arrangements that include variable consideration, capitalization of costs of commissions that were previously expensed as incurred, upfront contract costs and contract fulfillment costs. The Company will provide additional disclosures as required by the new standard upon adoption. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard narrows the definition of a business and provides a framework for evaluation. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the requirements of the new standard in the fourth quarter of 2017 on a prospective basis. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This ASU will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017 and the Company early adopted the requirements of the new standard in the fourth quarter of 2017 as it performs its annual impairment analysis. The Company is in the process of evaluating each of its reporting units based on current and forecasted financial information and will finalize the valuations and impairment analysis during the fourth quarter of 2017. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Holders of all outstanding classes of common stock participate ratably in earnings on an identical per share basis as if all shares were a single class. Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock (Class A common stock and Class B common stock) outstanding during the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period under the treasury stock method. Potentially dilutive securities include stock options, restricted stock units ("RSUs") and restricted stock awards ("RSAs"). Under the treasury stock method, dilutive securities are assumed to be exercised at the beginning of the periods and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Securities are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive to EPS. The Company has issued RSAs under the 2015 Omnibus Incentive Plan. The Company considers issued and unvested RSAs to be participating securities as the holders of these RSAs have a non-forfeitable right to dividends in the event of the Company's declaration of a dividend on shares of Class A and Class B common stock. Subsequent to the issuance of the participating securities, the Company applied the two-class method required in calculating net income per share of Class A and Class B common stock. Under the two-class method, net income attributable to common stockholders is determined by allocating undistributed earnings, calculated as net income, less earnings attributable to participating securities. The net income per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the period has been distributed. As the liquidation and dividend rights are identical for both classes of common stock, the net income attributable to common stockholders is allocated on a proportionate basis. The following table reconciles the weighted average shares outstanding for basic and diluted EPS for the periods indicated (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Basic Numerator: Net income $ 8,241 $ 7,807 $ 17,369 $ 26,423 Undistributed earnings allocated to participating securities (273 ) (36 ) (464 ) (115 ) Net income attributable to common stockholders $ 7,968 $ 7,771 $ 16,905 $ 26,308 Denominator: Weighted average shares used in computing net income per share attributable to common stockholders—basic 141,226 150,732 142,861 151,240 Net income per share attributable to common stockholders—basic $ 0.06 $ 0.05 $ 0.12 $ 0.17 Diluted Numerator: Net income attributable to common stockholders $ 7,968 $ 7,771 $ 16,905 $ 26,308 Denominator: Number of shares used for basic EPS computation 141,226 150,732 142,861 151,240 Effect of dilutive securities 473 830 466 882 Weighted average shares used in computing net income per share attributable to common stockholders—diluted 141,699 151,562 143,327 152,122 Net income per share attributable to common stockholders—diluted $ 0.06 $ 0.05 $ 0.12 $ 0.17 The computation of diluted EPS does not include certain awards, on a weighted average basis, for the three and nine months ended September 30, 2017 and 2016 , respectively, because their inclusion would have an anti-dilutive effect on EPS. The awards excluded because of their anti-dilutive effect are as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive 42 240 138 138 |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
SHORT-TERM INVESTMENTS | SHORT-TERM INVESTMENTS As of September 30, 2017 , short-term investments consisted of the following (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Corporate notes and bonds $ 257,468 $ 61 $ (313 ) $ 257,216 U.S. agency obligations 15,322 — (55 ) 15,267 U.S. treasury securities 20,725 — (107 ) 20,618 Total available-for-sale securities $ 293,515 $ 61 $ (475 ) $ 293,101 As of December 31, 2016 , short-term investments consisted of the following (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Corporate notes and bonds $ 349,571 $ 36 $ (918 ) $ 348,689 U.S. agency obligations 34,864 22 (78 ) 34,808 U.S. treasury securities 53,681 6 (100 ) 53,587 Commercial paper 6,312 — (3 ) 6,309 Certificates of deposit 1,921 1 — 1,922 Total available-for-sale securities $ 446,349 $ 65 $ (1,099 ) $ 445,315 The following table summarizes the estimated fair value of our short-term investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of the dates shown (in thousands): September 30, December 31, Due in one year or less $ 181,387 $ 176,696 Due after one year through three years 111,714 268,619 Total $ 293,101 $ 445,315 The Company has certain available-for-sale securities in a gross unrealized loss position. The Company reviews its debt securities classified as short-term investments on a regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in fair value. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial position and near-term prospects of the issuer and the Company's intent to sell, or whether it is more likely than not the Company will be required to sell the investment before recovery of the investment's amortized-cost basis. If the Company determines that an other-than-temporary decline exists, or if write downs related to credit losses are necessary, in one of these securities, the unrealized losses attributable to the respective investment would be reclassified to realized losses on short-term investments within the statement of operations. There were no impairments considered other-than-temporary as of September 30, 2017 . The following table shows the fair values and the gross unrealized losses of available-for-sale securities that were in a gross unrealized loss position, as of September 30, 2017 , aggregated by investment category (in thousands): Estimated Fair Value Gross Unrealized Losses Corporate notes and bonds $ 186,286 $ (313 ) U.S. agency obligations 15,267 (55 ) U.S. treasury securities 20,618 (107 ) $ 222,171 $ (475 ) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 160,828 $ — $ — $ 160,828 Short-term investments: Corporate notes and bonds — 257,216 — 257,216 U.S. agency obligations — 15,267 — 15,267 U.S. treasury securities — 20,618 — 20,618 Certificates of deposit — — — — Liabilities: Contingent consideration — — (9,700 ) (9,700 ) Total $ 160,828 $ 293,101 $ (9,700 ) $ 444,229 The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 44,108 — — $ 44,108 Short-term investments: Corporate notes and bonds — 348,689 — 348,689 U.S. agency obligations — 34,808 — 34,808 U.S. treasury securities — 53,587 — 53,587 Commercial paper — 6,309 — 6,309 Certificates of deposit — 1,922 — 1,922 Other Current Liabilities: Contingent consideration — — (12,600 ) (12,600 ) Total $ 44,108 $ 445,315 $ (12,600 ) $ 476,823 The Company determines the fair value of its security holdings based on pricing from its pricing vendors. The valuation techniques used to measure the fair value of financial instruments having Level 2 inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs). The Company performs procedures to ensure that appropriate fair values are recorded such as comparing prices obtained from other sources. The following table presents our financial instruments measured at fair value using unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Unobservable Inputs (Level 3) September 30, December 31, Balance, beginning of period $ (12,600 ) $ (2,300 ) Accretion expense (recognized in general and administrative expenses) 2,900 (706 ) Settlement (payment) of liability — 3,006 Contingent consideration attributable to Creehan acquisition — (12,600 ) Total $ (9,700 ) $ (12,600 ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings —From time to time the Company is involved in various litigation matters arising out of the normal course of business. The Company consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on the Company's business, financial condition, results of operations, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. The Company's management does not presently expect any litigation matters to have a material adverse impact on the condensed consolidated financial statements of the Company. On June 24, 2016, a purported securities class action complaint ( Xiang v. Inovalon Holdings, Inc., et.al ., No. 1:16-cv-04923) was filed in the United States District Court for the Southern District of New York against the Company, certain officers, directors and underwriters in the Company's initial public offering (the "Complaint"). The Complaint was brought on behalf of a purported class consisting of all persons or entities who purchased shares of the Company's Class A common stock pursuant or traceable to the Registration Statement relating to the Company's initial public offering on February 18, 2015. The Complaint asserted violations of Sections 11 and 15 of the Securities Act based on allegedly false or misleading statements and omissions with respect to, among other things, the Company's revenues from sales in the city and state of New York and the Company's effective tax rate. The Complaint sought certification as a class action and unspecified compensatory damages plus interest and attorneys' fees. On June 28, 2016, a nearly identical complaint was filed in the same court captioned Patel v. Inovalon Holdings, Inc., et. al ., No. 1:16-cv-05065. On July 5, 2016, the court consolidated the Xiang and Patel actions. On September 20, 2016, the court appointed a lead plaintiff and lead counsel. On December 21, 2016, lead plaintiff filed a consolidated class action complaint (the "Amended Complaint") purporting to assert violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, based on allegedly false or misleading statements and omissions with respect to substantially the same topics as alleged in the Complaint. On February 21, 2017, and as required by the court's individual practices, the Company invoked the pre-motion process required prior to filing a motion to dismiss. On May 23, 2017, the court issued a decision and order construing the pre-motion letter submitted by the defendants as a motion to dismiss, granting dismissal of the Section 12 claims against the individual defendants, but denying dismissal of the remaining claims. On June 6, 2017, defendants filed a joint motion for reconsideration and supporting memorandum of law seeking reconsideration of the court’s decision and arguing that plaintiff’s claims are time-barred. Also on June 6, 2017, defendants submitted a letter to the court requesting, in the alternative to the motion for reconsideration, a pre-motion conference concerning defendants’ anticipated motion for certification of an interlocutory appeal to resolve a controlling question of law. On July 11, 2017, the Company and its officers and directors filed their answer to the Amended Complaint denying that plaintiffs are entitled to any relief. On July 28, 2017, the court issued a decision and order denying both the motion for reconsideration and defendant’s request for an interlocutory appeal. In light of, among other things, the early stage of the litigation, the Company is unable to predict the outcome of these consolidated actions and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from this proceeding. On June 29, 2017, Virginia Rodriquez filed a putative shareholder derivative suit in the Supreme Court of the State of New York, County of Westchester, against certain of the Company’s present and former directors and officers (the “Derivative Complaint”). The Company was named as a nominal defendant. The Derivative Complaint makes allegations similar to the allegations in the securities class action Amended Complaint described above and asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control and gross mismanagement, and seeks unspecified damages, an order directing the Company "to reform and improve" certain corporate governance and internal procedures, restitution from the defendants and disgorgement of all profits, benefits and other compensation received and costs and disbursements incurred in connection with the action, including attorneys' fees. On September 12, 2017, the Company and the individual defendants filed a joint motion to dismiss the Derivative Complaint solely, as directed by the court, on the basis of a binding forum selection provision contained in the Company’s Second Amended and Restated Certificate of Incorporation, which motion is pending before the court. The Company is a nominal defendant in the derivative action and, in light of, among other things, the early stage of the litigation, the Company is unable to predict the outcome of this action and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from this proceeding. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS ComplexCare Solutions Acquisition On July 6, 2017, the Company completed the acquisition of ComplexCare Solutions, Inc. and ComplexCare Solutions IPA, LLC (together, "CCS"). CCS is a company which provides technology-enabled interventions and member engagement coordination services for a number of payers and employers throughout the United States. The fair value included in the consolidated financial statements, in conformity with ASC No. 820, Fair Value Measurements and Disclosures , represent the Company's best estimates and valuations. In accordance with ASC No. 805, Business Combinations , the preliminary allocation of the consideration value is subject to adjustment until the Company has completed its analysis, but not to exceed one year after the date of acquisition. The total purchase price has been allocated on a preliminary basis to identifiable assets acquired and liabilities assumed based upon valuation procedures performed to-date. The Company acquired all of the capital stock of CCS for approximately $4.5 million in cash and the settlement of an existing payable to CCS of $2.3 million . The Company acquired approximately $9.3 million of assets, including approximately $1.5 million of cash, and approximately $4.8 million of liabilities. Creehan Acquisition On October 3, 2016, the Company completed its acquisition of Creehan Holding Co., Inc. ("Creehan"). Creehan, through its subsidiary Creehan & Company Corporation, is a leading provider of specialty pharmacy software solutions to the pharmaceutical industry. Pursuant to the terms of the Stock Purchase Agreement between the Company and Creehan (the "Stock Purchase Agreement"), Creehan became a wholly owned subsidiary of Inovalon. Pursuant to the terms of the Stock Purchase Agreement, Inovalon acquired all of the issued and outstanding capital stock of Creehan for an aggregate purchase price of $130 million , which was comprised of $120 million in cash and $10 million in shares of Class A common stock of the Company. The Company completed the acquisition of Creehan through the use of cash on hand and the issuance of 651,355 shares of Class A common stock, subject to resale restrictions. Certain components, which are referred to below as contingent consideration, of the aggregate purchase price are subject to the achievement of financial performance objectives. The Company acquired Creehan for the assembled workforce, technology platform, client base, and to accelerate entry into the specialty pharmacy software market. Transaction costs in connection with the acquisition are expensed as incurred and are included in general and administrative expenses. The results of operations related to Creehan are included in our consolidated statements of operations beginning from the date of acquisition. A summary of the final composition of the stated purchase price and fair value of the stated purchase price is as follows (in thousands): Share Purchase Agreement purchase price $ 130,000 Working capital adjustment 755 Subtotal 130,755 Fair value adjustments: Marketability restrictions on equity consideration (2,236 ) Contingent consideration probability of achievement adjustment. (12,400 ) Post-acquisition compensation expense (5,952 ) Total fair value purchase price $ 110,167 During the nine months ended September 30, 2017, the Company finalized the working capital adjustment resulting in an increase of approximately $0.4 million to the initial purchase price allocation. After adjusting for this difference the composition of the fair value of the consideration transferred is as follows (in thousands): Cash $ 89,803 Issuance of Class A common stock 7,764 Contingent consideration 12,600 Total fair value purchase price $ 110,167 Recording of Assets Acquired and Liabilities Assumed As of September 30, 2017, the Company had finalized the fair value of acquired assets, assumed liabilities and tax related matters. The following table summarizes the purchase price allocation to assets acquired and liabilities assumed, including identification of measurement period adjustments (in thousands): Recorded Value Cash and cash equivalents $ 861 Accounts receivable 9,048 Other current assets 171 Property, equipment and capitalized software 641 Intangible assets (1) 50,900 Goodwill (2) 51,362 Total assets acquired 112,983 Current liabilities (916 ) Deferred revenue (1,900 ) Total liabilities assumed (2,816 ) Net assets acquired $ 110,167 ______________________________________ (1) Identifiable intangible assets were measured using a combination of an income approach and a market approach. (2) Goodwill is the excess of the consideration transferred over the net assets recognized and represents the future economic benefits, primarily as a result of other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized. The goodwill attributable to the Creehan acquisition is deductible for tax purposes. The amounts attributed to identified intangible assets are summarized in the table below (in thousands): Weighted Average Useful Life Recorded Value Customer relationships 8 years $ 36,500 Tradename 4 years 4,000 Technology 4 years 8,800 In-process Research and Development indefinite 1,600 Total intangible assets $ 50,900 The following table summarizes the activity related to the carrying value of our goodwill during the nine months ended September 30, 2017 (in thousands): Goodwill as of January 1, 2017 $ 184,557 Measurement period adjustments 375 Goodwill as of September 30, 2017 $ 184,932 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Treasury Stock —On May 4, 2016, the Company announced that its Board of Directors authorized a program to repurchase up to $100 million of Inovalon's Class A common stock through December 31, 2016. Repurchases under the Company's share repurchase program have been made in open-market or privately negotiated transactions. The Company has and expects to continue to fund repurchases through a combination of cash on hand, cash generated by operations and sales of short-term investments, if needed. On November 2, 2016, the Company announced that its Board of Directors authorized an expansion of the share repurchase program to repurchase up to an additional $100 million of shares of Inovalon's Class A Common Stock (bringing the total to $200 million ) through December 31, 2017. The share repurchase program does not obligate the Company to acquire any particular amount of Class A common stock. During the three months ended September 30, 2017 , the Company repurchased 1,538,497 shares of Class A common stock for an aggregate cost of $19.8 million at an average cost of $12.88 per share, excluding commissions. During the nine months ended September 30, 2017 , the Company repurchased 5,235,504 shares of Class A common stock, for an aggregate cost of $65.0 million at an average cost of $12.41 per share, excluding commissions. At September 30, 2017 , approximately $28.8 million remained available to repurchase shares under the share repurchase program. Shares that are repurchased under the repurchase program were recorded as treasury stock, based on the stock trading dates, and are available for future issuance, until retired. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared by Inovalon Holdings, Inc. (the "Company") in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2016 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company's financial position as of September 30, 2017 , the results of operations and comprehensive income for the three and nine month periods ended September 30, 2017 and 2016 , and cash flows for the nine months ended September 30, 2017 and 2016 . The results of operations for the three and nine month periods ended September 30, 2017 and 2016 are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenue and expenses reported during the period. Actual results could differ from estimates. The information contained herein should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"). The accompanying unaudited condensed consolidated financial statements include the accounts of Inovalon Holdings, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company's consolidated financial statements and note disclosures, from those disclosed in the 2016 Form 10-K, that would be expected to impact the Company except for the following: In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers and subsequent clarifying guidance ("ASU 2014-09"). This revenue recognition guidance supersedes existing GAAP guidance, including most industry-specific guidance. The core principle is 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 guidance identifies five steps to apply in achieving this principle. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. The Company currently expects to adopt the new standard using a modified retrospective approach on January 1, 2018. The Company is currently evaluating the impacts of the application of the new standard to its existing customer contracts and will continue to review new contracts entered into prior to the adoption of the new standard. The Company is currently in the process of finalizing policies and implementing changes to our processes, including a process for future contract reviews, and internal control over financial reporting. The potential impacts of the new standard are still being assessed related to the accounting arrangements that include variable consideration, capitalization of costs of commissions that were previously expensed as incurred, upfront contract costs and contract fulfillment costs. The Company will provide additional disclosures as required by the new standard upon adoption. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard narrows the definition of a business and provides a framework for evaluation. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the requirements of the new standard in the fourth quarter of 2017 on a prospective basis. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This ASU will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017 and the Company early adopted the requirements of the new standard in the fourth quarter of 2017 as it performs its annual impairment analysis. The Company is in the process of evaluating each of its reporting units based on current and forecasted financial information and will finalize the valuations and impairment analysis during the fourth quarter of 2017. |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of numerators and denominators of the basic and diluted EPS | The following table reconciles the weighted average shares outstanding for basic and diluted EPS for the periods indicated (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Basic Numerator: Net income $ 8,241 $ 7,807 $ 17,369 $ 26,423 Undistributed earnings allocated to participating securities (273 ) (36 ) (464 ) (115 ) Net income attributable to common stockholders $ 7,968 $ 7,771 $ 16,905 $ 26,308 Denominator: Weighted average shares used in computing net income per share attributable to common stockholders—basic 141,226 150,732 142,861 151,240 Net income per share attributable to common stockholders—basic $ 0.06 $ 0.05 $ 0.12 $ 0.17 Diluted Numerator: Net income attributable to common stockholders $ 7,968 $ 7,771 $ 16,905 $ 26,308 Denominator: Number of shares used for basic EPS computation 141,226 150,732 142,861 151,240 Effect of dilutive securities 473 830 466 882 Weighted average shares used in computing net income per share attributable to common stockholders—diluted 141,699 151,562 143,327 152,122 Net income per share attributable to common stockholders—diluted $ 0.06 $ 0.05 $ 0.12 $ 0.17 |
Schedule of antidilutive securities excluded from computation of earnings per share | The awards excluded because of their anti-dilutive effect are as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive 42 240 138 138 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of short-term investments | As of September 30, 2017 , short-term investments consisted of the following (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Corporate notes and bonds $ 257,468 $ 61 $ (313 ) $ 257,216 U.S. agency obligations 15,322 — (55 ) 15,267 U.S. treasury securities 20,725 — (107 ) 20,618 Total available-for-sale securities $ 293,515 $ 61 $ (475 ) $ 293,101 As of December 31, 2016 , short-term investments consisted of the following (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Corporate notes and bonds $ 349,571 $ 36 $ (918 ) $ 348,689 U.S. agency obligations 34,864 22 (78 ) 34,808 U.S. treasury securities 53,681 6 (100 ) 53,587 Commercial paper 6,312 — (3 ) 6,309 Certificates of deposit 1,921 1 — 1,922 Total available-for-sale securities $ 446,349 $ 65 $ (1,099 ) $ 445,315 |
Summary of estimated fair value of short-term investments, designated as available-for-sale and classified by the contractual maturity | The following table summarizes the estimated fair value of our short-term investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of the dates shown (in thousands): September 30, December 31, Due in one year or less $ 181,387 $ 176,696 Due after one year through three years 111,714 268,619 Total $ 293,101 $ 445,315 |
Schedule of fair values and gross unrealized losses of available-for-sale securities aggregated by investment category | The following table shows the fair values and the gross unrealized losses of available-for-sale securities that were in a gross unrealized loss position, as of September 30, 2017 , aggregated by investment category (in thousands): Estimated Fair Value Gross Unrealized Losses Corporate notes and bonds $ 186,286 $ (313 ) U.S. agency obligations 15,267 (55 ) U.S. treasury securities 20,618 (107 ) $ 222,171 $ (475 ) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis | The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 160,828 $ — $ — $ 160,828 Short-term investments: Corporate notes and bonds — 257,216 — 257,216 U.S. agency obligations — 15,267 — 15,267 U.S. treasury securities — 20,618 — 20,618 Certificates of deposit — — — — Liabilities: Contingent consideration — — (9,700 ) (9,700 ) Total $ 160,828 $ 293,101 $ (9,700 ) $ 444,229 The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 44,108 — — $ 44,108 Short-term investments: Corporate notes and bonds — 348,689 — 348,689 U.S. agency obligations — 34,808 — 34,808 U.S. treasury securities — 53,587 — 53,587 Commercial paper — 6,309 — 6,309 Certificates of deposit — 1,922 — 1,922 Other Current Liabilities: Contingent consideration — — (12,600 ) (12,600 ) Total $ 44,108 $ 445,315 $ (12,600 ) $ 476,823 |
Schedule of financial instruments measured at fair value using unobservable inputs (Level 3) | The following table presents our financial instruments measured at fair value using unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Unobservable Inputs (Level 3) September 30, December 31, Balance, beginning of period $ (12,600 ) $ (2,300 ) Accretion expense (recognized in general and administrative expenses) 2,900 (706 ) Settlement (payment) of liability — 3,006 Contingent consideration attributable to Creehan acquisition — (12,600 ) Total $ (9,700 ) $ (12,600 ) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of preliminary composition of stated purchase price and fair value of stated purchase price | A summary of the final composition of the stated purchase price and fair value of the stated purchase price is as follows (in thousands): Share Purchase Agreement purchase price $ 130,000 Working capital adjustment 755 Subtotal 130,755 Fair value adjustments: Marketability restrictions on equity consideration (2,236 ) Contingent consideration probability of achievement adjustment. (12,400 ) Post-acquisition compensation expense (5,952 ) Total fair value purchase price $ 110,167 |
Schedule of composition of the fair value of the consideration transferred | After adjusting for this difference the composition of the fair value of the consideration transferred is as follows (in thousands): Cash $ 89,803 Issuance of Class A common stock 7,764 Contingent consideration 12,600 Total fair value purchase price $ 110,167 |
Schedule of purchase price allocation to assets acquired and liabilities assumed | The following table summarizes the purchase price allocation to assets acquired and liabilities assumed, including identification of measurement period adjustments (in thousands): Recorded Value Cash and cash equivalents $ 861 Accounts receivable 9,048 Other current assets 171 Property, equipment and capitalized software 641 Intangible assets (1) 50,900 Goodwill (2) 51,362 Total assets acquired 112,983 Current liabilities (916 ) Deferred revenue (1,900 ) Total liabilities assumed (2,816 ) Net assets acquired $ 110,167 ______________________________________ (1) Identifiable intangible assets were measured using a combination of an income approach and a market approach. (2) Goodwill is the excess of the consideration transferred over the net assets recognized and represents the future economic benefits, primarily as a result of other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized. The goodwill attributable to the Creehan acquisition is deductible for tax purposes. |
Schedule of identified intangible assets | The amounts attributed to identified intangible assets are summarized in the table below (in thousands): Weighted Average Useful Life Recorded Value Customer relationships 8 years $ 36,500 Tradename 4 years 4,000 Technology 4 years 8,800 In-process Research and Development indefinite 1,600 Total intangible assets $ 50,900 |
Summary of the activity related to the carrying value of goodwill | The following table summarizes the activity related to the carrying value of our goodwill during the nine months ended September 30, 2017 (in thousands): Goodwill as of January 1, 2017 $ 184,557 Measurement period adjustments 375 Goodwill as of September 30, 2017 $ 184,932 |
NET INCOME PER SHARE - Tabular
NET INCOME PER SHARE - Tabular Disclosure (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic | ||||
Net income | $ 8,241 | $ 7,807 | $ 17,369 | $ 26,423 |
Undistributed earnings allocated to participating securities | (273) | (36) | (464) | (115) |
Net income attributable to common stockholders | $ 7,968 | $ 7,771 | $ 16,905 | $ 26,308 |
Weighted average shares used in computing net income per share attributable to common stockholders - basic (in shares) | 141,226 | 150,732 | 142,861 | 151,240 |
Net income per share attributable to common stockholders - basic (in dollars per share) | $ 0.06 | $ 0.05 | $ 0.12 | $ 0.17 |
Diluted | ||||
Net income attributable to common stockholders | $ 7,968 | $ 7,771 | $ 16,905 | $ 26,308 |
Effect of dilutive securities (in shares) | 473 | 830 | 466 | 882 |
Weighted average shares used in computing net income per share attributable to common stockholders - diluted (in shares) | 141,699 | 151,562 | 143,327 | 152,122 |
Net income per share attributable to common stockholders - diluted (in dollars per share) | $ 0.06 | $ 0.05 | $ 0.12 | $ 0.17 |
NET INCOME PER SHARE - Anti-dil
NET INCOME PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Equity awards | ||||
NET INCOME PER SHARE | ||||
Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive (in shares) | 42 | 240 | 138 | 138 |
SHORT-TERM INVESTMENTS - Availa
SHORT-TERM INVESTMENTS - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Available-for-sale securities: | ||
Amortized Cost | $ 293,515 | $ 446,349 |
Gross Unrealized Gains | 61 | 65 |
Gross Unrealized Losses | (475) | (1,099) |
Estimated Fair Value | 293,101 | 445,315 |
Corporate notes and bonds | ||
Available-for-sale securities: | ||
Amortized Cost | 257,468 | 349,571 |
Gross Unrealized Gains | 61 | 36 |
Gross Unrealized Losses | (313) | (918) |
Estimated Fair Value | 257,216 | 348,689 |
U.S. agency obligations | ||
Available-for-sale securities: | ||
Amortized Cost | 15,322 | 34,864 |
Gross Unrealized Gains | 0 | 22 |
Gross Unrealized Losses | (55) | (78) |
Estimated Fair Value | 15,267 | 34,808 |
U.S. treasury securities | ||
Available-for-sale securities: | ||
Amortized Cost | 20,725 | 53,681 |
Gross Unrealized Gains | 0 | 6 |
Gross Unrealized Losses | (107) | (100) |
Estimated Fair Value | $ 20,618 | 53,587 |
Commercial paper | ||
Available-for-sale securities: | ||
Amortized Cost | 6,312 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (3) | |
Estimated Fair Value | 6,309 | |
Certificates of deposit | ||
Available-for-sale securities: | ||
Amortized Cost | 1,921 | |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | $ 1,922 |
SHORT-TERM INVESTMENTS - Estima
SHORT-TERM INVESTMENTS - Estimated Fair Value by Contractual Maturity Date (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investments, Debt and Equity Securities [Abstract] | ||
Due in one year or less | $ 181,387 | $ 176,696 |
Due after one year through three years | 111,714 | 268,619 |
Total | $ 293,101 | $ 445,315 |
SHORT-TERM INVESTMENTS - Other-
SHORT-TERM INVESTMENTS - Other-than-temporary Impairments (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |
Other-than-temporary impairments | $ 0 |
SHORT-TERM INVESTMENTS - Fair V
SHORT-TERM INVESTMENTS - Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | $ 222,171 |
Gross Unrealized Losses | (475) |
Corporate notes and bonds | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 186,286 |
Gross Unrealized Losses | (313) |
U.S. agency obligations | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 15,267 |
Gross Unrealized Losses | (55) |
U.S. treasury securities | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 20,618 |
Gross Unrealized Losses | $ (107) |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Short-term investments: | ||
Short-term investments | $ 293,101 | $ 445,315 |
Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 257,216 | 348,689 |
U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 15,267 | 34,808 |
U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 20,618 | 53,587 |
Commercial paper | ||
Short-term investments: | ||
Short-term investments | 6,309 | |
Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 1,922 | |
Recurring | ||
Total | ||
Total | 444,229 | 476,823 |
Recurring | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 160,828 | 44,108 |
Recurring | Level 1 | ||
Total | ||
Total | 160,828 | 44,108 |
Recurring | Level 1 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 160,828 | 44,108 |
Recurring | Level 2 | ||
Total | ||
Total | 293,101 | 445,315 |
Recurring | Level 2 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 0 | 0 |
Recurring | Level 3 | ||
Total | ||
Total | (9,700) | (12,600) |
Recurring | Level 3 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 0 | 0 |
Recurring | Contingent consideration | ||
Liabilities / Other Current Liabilities: | ||
Contingent consideration | (9,700) | (12,600) |
Recurring | Contingent consideration | Level 1 | ||
Liabilities / Other Current Liabilities: | ||
Contingent consideration | 0 | 0 |
Recurring | Contingent consideration | Level 2 | ||
Liabilities / Other Current Liabilities: | ||
Contingent consideration | 0 | 0 |
Recurring | Contingent consideration | Level 3 | ||
Liabilities / Other Current Liabilities: | ||
Contingent consideration | (9,700) | (12,600) |
Recurring | Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 257,216 | 348,689 |
Recurring | Corporate notes and bonds | Level 1 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Corporate notes and bonds | Level 2 | ||
Short-term investments: | ||
Short-term investments | 257,216 | 348,689 |
Recurring | Corporate notes and bonds | Level 3 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 15,267 | 34,808 |
Recurring | U.S. agency obligations | Level 1 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | U.S. agency obligations | Level 2 | ||
Short-term investments: | ||
Short-term investments | 15,267 | 34,808 |
Recurring | U.S. agency obligations | Level 3 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 20,618 | 53,587 |
Recurring | U.S. treasury securities | Level 1 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | U.S. treasury securities | Level 2 | ||
Short-term investments: | ||
Short-term investments | 20,618 | 53,587 |
Recurring | U.S. treasury securities | Level 3 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Commercial paper | ||
Short-term investments: | ||
Short-term investments | 6,309 | |
Recurring | Commercial paper | Level 1 | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Commercial paper | Level 2 | ||
Short-term investments: | ||
Short-term investments | 6,309 | |
Recurring | Commercial paper | Level 3 | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 0 | 1,922 |
Recurring | Certificates of deposit | Level 1 | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Certificates of deposit | Level 2 | ||
Short-term investments: | ||
Short-term investments | 0 | 1,922 |
Recurring | Certificates of deposit | Level 3 | ||
Short-term investments: | ||
Short-term investments | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Unobs
FAIR VALUE MEASUREMENTS - Unobservable Inputs (Level 3) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Measurements Using Unobservable Inputs (Level 3) | ||
Balance, beginning of period | $ (12,600) | $ (2,300) |
Accretion expense (recognized in general and administrative expenses) | 2,900 | (706) |
Settlement (payment) of liability | 0 | 3,006 |
Contingent consideration attributable to Creehan acquisition | 0 | (12,600) |
Total | $ (9,700) | $ (12,600) |
BUSINESS COMBINATIONS - General
BUSINESS COMBINATIONS - General Disclosures (Details) - USD ($) $ in Thousands | Jul. 06, 2017 | Oct. 03, 2016 | Sep. 30, 2017 |
ComplexCare Solutions, Inc. | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses, gross | $ 4,500 | ||
Liabilities incurred | 2,300 | ||
Assets acquired | 9,300 | ||
Cash acquired | 1,500 | ||
Liabilities assumed | $ 4,800 | ||
Creehan Holding Co., Inc. | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses, gross | $ 89,803 | ||
Liabilities incurred | 12,600 | ||
Assets acquired | 112,983 | ||
Cash acquired | 861 | ||
Liabilities assumed | 2,816 | ||
Stated purchase price | 130,000 | ||
Consideration paid in cash before working capital adjustments | 120,000 | ||
Issuance of Class A common stock before working capital adjustments | $ 10,000 | ||
Issuance of Class A common stock (in shares) | 651,355 | ||
Working capital adjustments | $ 375 |
BUSINESS COMBINATIONS BUSINESS
BUSINESS COMBINATIONS BUSINESS COMBINATIONS - Composition of the Stated Purchase Price and Fair Value of the Stated Purchase Price (Details) - Creehan Holding Co., Inc. $ in Thousands | Oct. 03, 2016USD ($) |
Business Acquisition [Line Items] | |
Share Purchase Agreement purchase price | $ 130,000 |
Working capital adjustment | 755 |
Subtotal | 130,755 |
Fair value adjustments: | |
Marketability restrictions on equity consideration | (2,236) |
Contingent consideration probability of achievement adjustment. | (12,400) |
Post-acquisition compensation expense | (5,952) |
Total fair value purchase price | $ 110,167 |
BUSINESS COMBINATIONS - Fair Va
BUSINESS COMBINATIONS - Fair Value of Consideration Transferred (Details) - Creehan Holding Co., Inc. $ in Thousands | Oct. 03, 2016USD ($) |
Composition of the purchase price | |
Cash | $ 89,803 |
Issuance of Class A common stock | 7,764 |
Contingent consideration | 12,600 |
Total fair value purchase price | $ 110,167 |
BUSINESS COMBINATIONS - Purchas
BUSINESS COMBINATIONS - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Oct. 03, 2016 |
Preliminary Recording of Assets Acquired and Liabilities Assumed | |||
Goodwill | $ 184,932 | $ 184,557 | |
Creehan Holding Co., Inc. | |||
Preliminary Recording of Assets Acquired and Liabilities Assumed | |||
Cash and cash equivalents | $ 861 | ||
Accounts receivable | 9,048 | ||
Other current assets | 171 | ||
Property, equipment and capitalized software | 641 | ||
Intangible assets | 50,900 | ||
Goodwill | $ 184,932 | $ 184,557 | 51,362 |
Total assets acquired | 112,983 | ||
Current liabilities | (916) | ||
Deferred revenue | (1,900) | ||
Total liabilities assumed | (2,816) | ||
Net assets acquired | $ 110,167 |
BUSINESS COMBINATIONS - Identif
BUSINESS COMBINATIONS - Identified Intangible Assets (Details) - Creehan Holding Co., Inc. $ in Thousands | Oct. 03, 2016USD ($) |
Identified intangible assets | |
Recorded Value | $ 50,900 |
Customer relationships | |
Identified intangible assets | |
Weighted Average Useful Life (in years) | 8 years |
Recorded Value | $ 36,500 |
Tradename | |
Identified intangible assets | |
Weighted Average Useful Life (in years) | 4 years |
Recorded Value | $ 4,000 |
Technology | |
Identified intangible assets | |
Weighted Average Useful Life (in years) | 4 years |
Recorded Value | $ 8,800 |
In-process Research and Development | |
Identified intangible assets | |
Recorded Value | $ 1,600 |
BUSINESS COMBINATIONS - Goodwil
BUSINESS COMBINATIONS - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Summary of the activity related to the carrying value of goodwill | |
Goodwill at the beginning of the period | $ 184,557 |
Goodwill at the end of the period | 184,932 |
Creehan Holding Co., Inc. | |
Summary of the activity related to the carrying value of goodwill | |
Goodwill at the beginning of the period | 184,557 |
Measurement period adjustments | 375 |
Goodwill at the end of the period | $ 184,932 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Class A Common - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2017 | Nov. 02, 2016 | May 04, 2016 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Share repurchase authorized amount | $ 200,000,000 | $ 100,000,000 | ||
Amount of additional shares authorized | $ 100,000,000 | |||
Number of shares repurchased (in shares) | 1,538,497 | 5,235,504 | ||
Amount of shares repurchased | $ 19,800,000 | $ 65,000,000 | ||
Average cost of shares repurchased (in dollars per share) | $ 12.88 | $ 12.41 | ||
Share repurchase remaining authorized amount | $ 28,800,000 | $ 28,800,000 |