Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 09, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | Inovalon Holdings, Inc. | ||
Entity Central Index Key | 1,619,954 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 683.2 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A Common | |||
Entity Common Stock, Shares Outstanding | 63,445,573 | ||
Class B Common | |||
Entity Common Stock, Shares Outstanding | 80,957,495 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 208,944 | $ 127,683 |
Short-term investments | 267,288 | 445,315 |
Accounts receivable (net of allowances of $2,038 and $3,782 at December 31, 2017 and 2016, respectively) | 90,054 | 85,591 |
Prepaid expenses and other current assets | 10,441 | 12,100 |
Income tax receivable | 11,987 | 15,165 |
Total current assets | 588,714 | 685,854 |
Non-current assets: | ||
Property, equipment and capitalized software, net | 125,768 | 76,420 |
Goodwill | 184,932 | 184,557 |
Intangible assets, net | 89,326 | 103,549 |
Other assets | 6,338 | 2,964 |
Total assets | 995,078 | 1,053,344 |
Current liabilities: | ||
Accounts payable | 34,109 | 16,474 |
Accrued compensation | 18,592 | 15,211 |
Other current liabilities | 15,277 | 9,468 |
Deferred revenue | 6,954 | 11,850 |
Deferred rent | 1,818 | 1,016 |
Credit facilities | 45,000 | 30,000 |
Capital lease obligation | 336 | 115 |
Total current liabilities | 122,086 | 84,134 |
Non-current liabilities: | ||
Credit facilities, less current portion | 191,250 | 236,250 |
Capital lease obligation, less current portion | 12,109 | 215 |
Deferred rent | 219 | 1,457 |
Other liabilities | 0 | 13,158 |
Deferred income taxes | 26,642 | 34,553 |
Total liabilities | 352,306 | 369,767 |
Commitments and contingencies (Note 10) | ||
Stockholders’ equity: | ||
Common stock | 0 | 0 |
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, zero shares issued and outstanding at December 31, 2017 and 2016, respectively | 0 | 0 |
Additional paid-in-capital | 534,159 | 516,300 |
Retained earnings | 308,905 | 274,087 |
Treasury stock, at cost, 14,620,175 and 7,508,985 shares at December 31, 2017 and 2016, respectively | (199,817) | (106,231) |
Other comprehensive loss, net of tax | (476) | (580) |
Total stockholders’ equity | 642,772 | 683,577 |
Total liabilities and stockholders’ equity | 995,078 | 1,053,344 |
Class A Common | ||
Stockholders’ equity: | ||
Common stock | 0 | 0 |
Class B Common | ||
Stockholders’ equity: | ||
Common stock | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, allowances | ||
Accounts receivable, allowances | $ 2,038 | $ 3,782 |
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 |
Treasury stock | ||
Treasury stock (in shares) | 14,620,175 | 7,508,985 |
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) | 77,588,018 | 72,271,298 |
Common stock, outstanding (in shares) | 62,967,843 | 64,786,705 |
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) | 80,957,495 | 83,303,628 |
Common stock, outstanding (in shares) | 80,957,495 | 83,303,628 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Consolidated Statements of Operations | ||||
Revenue | $ 449,358 | $ 427,588 | $ 437,271 | |
Expenses: | ||||
Cost of revenue | [1] | 151,046 | 159,169 | 146,140 |
Sales and marketing | [1] | 34,103 | 27,078 | 14,684 |
Research and development | [1] | 27,383 | 29,148 | 22,329 |
General and administrative | [1] | 149,948 | 137,275 | 115,029 |
Depreciation and amortization | 53,089 | 37,284 | 22,633 | |
Total operating expenses | 415,569 | 389,954 | 320,815 | |
Income from operations | 33,789 | 37,634 | 116,456 | |
Other income and (expenses): | ||||
Realized gains (losses) on short-term investments | 0 | 4 | (328) | |
(Loss) Gain on disposal of equipment | (406) | 534 | 0 | |
Interest income | 5,429 | 5,792 | 3,003 | |
Interest expense | (6,225) | (5,065) | (4,420) | |
Income before taxes | 32,587 | 38,899 | 114,711 | |
(Benefit from) Provision for income taxes | (2,231) | 11,795 | 48,648 | |
Net income | 34,818 | 27,104 | 66,063 | |
Net income attributable to common stockholders, basic and diluted | $ 33,828 | $ 26,943 | $ 66,014 | |
Net income per share attributable to common stockholders, basic and diluted: | ||||
Basic net income per share (in dollars per share) | $ 0.24 | $ 0.18 | $ 0.45 | |
Diluted net income per share (in dollars per share) | $ 0.24 | $ 0.18 | $ 0.45 | |
Weighted average shares of common stock outstanding: | ||||
Basic (in shares) | 142,225 | 150,048 | 145,745 | |
Diluted (in shares) | 142,737 | 150,955 | 148,275 | |
[1] | (1) Includes stock-based compensation expense as follows: Cost of revenue$1,652 $483 $164Sales and marketing2,011 613 173Research and development1,293 1,184 1,212General and administrative12,362 7,774 5,866Total stock-based compensation expense$17,318 $10,054 $7,415 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Includes stock-based compensation expense as follows: | |||
Total stock-based compensation expense | $ 17,318 | $ 10,054 | $ 7,415 |
Cost of revenue | |||
Includes stock-based compensation expense as follows: | |||
Total stock-based compensation expense | 1,652 | 483 | 164 |
Sales and marketing | |||
Includes stock-based compensation expense as follows: | |||
Total stock-based compensation expense | 2,011 | 613 | 173 |
Research and development | |||
Includes stock-based compensation expense as follows: | |||
Total stock-based compensation expense | 1,293 | 1,184 | 1,212 |
General and administrative | |||
Includes stock-based compensation expense as follows: | |||
Total stock-based compensation expense | $ 12,362 | $ 7,774 | $ 5,866 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 34,818 | $ 27,104 | $ 66,063 |
Other comprehensive income (loss): | |||
Realized (gains) losses on short-term investments reclassified from accumulated other comprehensive income, net of tax of $0, $4 and $(139), respectively | 0 | (6) | 191 |
Net change in unrealized gains and (losses) on available-for-sale investments, net of tax of $(94), $(682) and $1,269, respectively | 104 | 1,008 | (1,773) |
Comprehensive income | $ 34,922 | $ 28,106 | $ 64,481 |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Realized (gains) losses on short-term investments reclassified from accumulated other comprehensive income, tax | $ 0 | $ 4 | $ (139) |
Net change in unrealized gains and (losses) on available-for-sale investments, tax | $ (94) | $ (682) | $ 1,269 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Class A Common | Class A CommonCommon Stock | Class B CommonCommon Stock |
Balance (in shares) at Dec. 31, 2014 | (11,109,285) | 11,109,285 | 122,257,145 | |||||
Balance at Dec. 31, 2014 | $ (8,222) | $ (300,017) | $ 110,317 | $ 181,477 | $ 0 | $ 0 | $ 1 | |
Consolidated Statements of Stockholders' Equity (Deficit) | ||||||||
Issuance of common stock upon initial public offering, net of offering costs (in shares) | 14,255,518 | |||||||
Issuance of common stock upon initial public offering, net of offering costs | 359,170 | 359,170 | ||||||
Issuance of treasury stock upon initial public offering, net of offering costs (in shares) | 11,109,285 | |||||||
Issuance of treasury stock upon initial public offering, net of offering costs | 279,902 | $ 300,017 | (20,115) | |||||
Stock-based compensation expense | 7,259 | 7,259 | ||||||
Issuance of common stock related to business combination (in shares) | 235,737 | |||||||
Issuance of common stock related to business combination | 3,847 | 3,847 | ||||||
Exercise of stock options (in shares) | (3,222,201) | |||||||
Exercise of stock options | 14,652 | 14,652 | ||||||
Tax benefit from exercise of non-qualified stock options | 18,608 | 18,608 | ||||||
Conversion Class B to Class A common stock (in shares) | (27,313,057) | (27,313,057) | ||||||
Issuance of shares for Employee Stock Purchase Plan (in shares) | 30,689 | |||||||
Issuance of shares for Employee Stock Purchase Plan | 8 | 8 | ||||||
Issuance of shares related to restricted stock units and awards (in shares) | 538,383 | 94,784 | ||||||
Shares withheld for employee taxes upon conversion of restricted stock units (in shares) | (30,710) | |||||||
Shares withheld for employee taxes upon conversion of restricted stock units | (549) | (549) | ||||||
Other comprehensive loss | (1,582) | (1,582) | ||||||
Net income | 66,063 | 66,063 | ||||||
Balance (in shares) at Dec. 31, 2015 | 0 | 53,482,669 | 98,230,363 | |||||
Balance at Dec. 31, 2015 | 739,156 | $ 0 | 493,197 | 247,540 | (1,582) | $ 0 | $ 1 | |
Consolidated Statements of Stockholders' Equity (Deficit) | ||||||||
Adjustment to adopt ASU 2016-09 | 200 | 757 | (557) | |||||
Repurchase of common stock (in shares) | (7,508,985) | (7,508,985) | ||||||
Repurchase of common stock | (106,231) | $ (106,231) | $ (106,200) | |||||
Stock-based compensation expense | 9,914 | 9,914 | ||||||
Issuance of common stock related to business combination (in shares) | 651,355 | |||||||
Issuance of common stock related to business combination | 7,764 | 7,764 | ||||||
Exercise of stock options (in shares) | (660,156) | (158,753) | ||||||
Exercise of stock options | 6,200 | 6,200 | ||||||
Conversion Class B to Class A common stock (in shares) | (15,085,488) | (15,085,488) | ||||||
Issuance of shares for Employee Stock Purchase Plan | (34) | (34) | ||||||
Issuance of shares related to restricted stock units and awards (in shares) | 2,453,593 | |||||||
Shares withheld for employee taxes upon conversion of restricted stock units (in shares) | (61,963) | |||||||
Shares withheld for employee taxes upon conversion of restricted stock units | (1,498) | (1,498) | ||||||
Other comprehensive loss | 1,002 | 1,002 | ||||||
Net income | 27,104 | 27,104 | ||||||
Balance (in shares) at Dec. 31, 2016 | (7,508,985) | 72,271,298 | 83,303,628 | |||||
Balance at Dec. 31, 2016 | 683,577 | $ (106,231) | 516,300 | 274,087 | (580) | $ 0 | $ 1 | |
Consolidated Statements of Stockholders' Equity (Deficit) | ||||||||
Repurchase of common stock (in shares) | (7,111,190) | (7,111,190) | ||||||
Repurchase of common stock | (93,586) | $ (93,586) | $ (93,600) | |||||
Stock-based compensation expense | 17,164 | 17,164 | ||||||
Exercise of stock options (in shares) | (654,035) | (6,833) | ||||||
Exercise of stock options | 4,967 | 4,967 | ||||||
Conversion Class B to Class A common stock (in shares) | (2,352,966) | (2,352,966) | ||||||
Issuance of shares related to restricted stock units and awards (in shares) | 2,546,426 | |||||||
Shares withheld for employee taxes upon conversion of restricted stock units (in shares) | (236,707) | |||||||
Shares withheld for employee taxes upon conversion of restricted stock units | (4,272) | (4,272) | ||||||
Other comprehensive loss | 104 | 104 | ||||||
Net income | 34,818 | 34,818 | ||||||
Balance (in shares) at Dec. 31, 2017 | (14,620,175) | 77,588,018 | 80,957,495 | |||||
Balance at Dec. 31, 2017 | $ 642,772 | $ (199,817) | $ 534,159 | $ 308,905 | $ (476) | $ 0 | $ 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 34,818 | $ 27,104 | $ 66,063 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 17,318 | 10,054 | 7,415 |
Depreciation | 37,853 | 28,078 | 19,221 |
Amortization of intangibles | 15,236 | 9,206 | 3,412 |
Amortization of premiums or discounts on short-term investments | 1,958 | 3,163 | 2,212 |
Realized (gains) losses on short-term investments | 0 | (4) | 328 |
Tax payments for equity award issuances | 0 | 127 | 697 |
Deferred income taxes | (6,665) | (1,740) | 5,786 |
Excess tax benefits from stock-based compensation | 0 | 0 | (18,608) |
Loss (Gain) on disposal of equipment and long-lived assets | 406 | (534) | 52 |
Change in fair value of contingent consideration | (5,200) | 706 | 0 |
Bargain purchase gain | (1,434) | 0 | 0 |
Bad debt expense | 0 | 79 | 0 |
Changes in assets and liabilities: | |||
Accounts receivable | (977) | 4,683 | (24,475) |
Prepaid expenses and other current assets | 3,346 | (6,198) | (1,110) |
Income taxes receivable | 3,293 | 3,639 | 7,825 |
Other assets | (3,355) | 4,071 | (1,776) |
Accounts payable | 8,252 | (3,463) | 4,474 |
Accrued compensation | 3,030 | 243 | (6,178) |
Other liabilities | (5,373) | 10,479 | 2,788 |
Deferred rent | (440) | (770) | (575) |
Deferred revenue | (4,360) | 3,907 | 3 |
Net cash provided by operating activities | 97,706 | 92,830 | 67,554 |
Cash flows from investing activities: | |||
Acquisition, net of cash acquired of $1,535, $861 and $4,037, respectively | (3,490) | (88,509) | (114,718) |
Escrow funding associated with acquisition | 0 | 0 | (7,875) |
Maturities of short-term investments | 174,416 | 300,524 | 177,723 |
Sales of short-term investments | 1,175 | 31,549 | 166,930 |
Purchases of short-term investments | 0 | (164,737) | (964,037) |
Purchases of property and equipment | (32,565) | (19,360) | (6,486) |
Investment in capitalized software | (32,977) | (19,668) | (19,951) |
Proceeds from sale of property and equipment | 0 | 0 | 94 |
Net cash provided by (used in) investing activities | 106,559 | 39,799 | (768,320) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock, net of underwriters’ discount | 0 | 0 | 362,082 |
Proceeds from issuance of treasury stock, net of underwriters’ discount | 0 | 0 | 282,172 |
Payment of offering costs | 0 | 0 | (5,182) |
Repurchase of common stock | (93,586) | (106,231) | 0 |
Repayment of credit facility borrowings | (30,000) | (15,000) | (18,750) |
Acquisition-related contingent consideration | 0 | (2,300) | 0 |
Proceeds from exercise of stock options | 4,967 | 6,165 | 14,660 |
Capital lease obligations paid | (113) | (116) | (112) |
Tax payments for equity award issuances | (4,272) | (1,498) | (1,245) |
Excess tax benefits from stock-based compensation | 0 | 0 | 18,608 |
Net cash (used in) provided by financing activities | (123,004) | (118,980) | 652,233 |
Increase (decrease) in cash and cash equivalents | 81,261 | 13,649 | (48,533) |
Cash and cash equivalents, beginning of period | 127,683 | 114,034 | 162,567 |
Cash and cash equivalents, end of period | 208,944 | 127,683 | 114,034 |
Supplemental cash flow disclosure: | |||
Cash paid during the period for: Income taxes, net of refunds | 962 | 11,117 | 35,038 |
Cash paid during the period for: Interest | 5,972 | 4,835 | 4,359 |
Non-cash investing activities: | |||
Capital lease obligations incurred | 12,231 | 0 | 249 |
Accruals of purchases of property, equipment | 7,924 | 816 | 3,189 |
Accruals for investment in capitalized software | $ 2,711 | $ 913 | $ 567 |
Consolidated Statements of Ca10
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from investing activities: | |||
Acquisition, cash acquired | $ 1,535 | $ 861 | $ 4,037 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | Inovalon Holdings, Inc., (the “Company”), is a leading technology company providing cloud-based platforms empowering a data-driven transformation from volume-based to value-based models throughout the healthcare industry. Through the Inovalon ONE™ Platform, Inovalon brings to the marketplace a national-scale capability to interconnect with the healthcare ecosystem on a very large scale, aggregate and analyze data in petabyte volumes to arrive at sophisticated insights in real-time, drive impact wherever it is analytically identified best to intervene, and intuitively visualize data and information to inform business strategy and execution. Leveraging its platform capabilities, large proprietary data sets, and industry-leading subject matter expertise, Inovalon enables the assessment and improvement of clinical and quality outcomes and financial performance across the healthcare ecosystem. From health plans and provider organizations, to pharmaceutical, medical device, and diagnostics companies, Inovalon’s unique achievement of value is delivered through the effective progression of “Turning Data into Insight, and Insight into Action ® .” On September 17, 2014, Inovalon, Inc. implemented a holding company reorganization, pursuant to which Inovalon Holdings, Inc. (together with its wholly owned subsidiaries, Inovalon or the Company) became the new parent company of Inovalon, Inc. and Inovalon, Inc. became the direct, wholly owned subsidiary of the Company. The Company was incorporated in the state of Delaware on September 11, 2014. Inovalon, Inc. was incorporated in the state of Delaware on November 18, 2005. The impact of the holding company reorganization is retrospectively presented in the accompanying consolidated financial statements by recognizing the entity as Inovalon Holdings, Inc. The consolidated balance sheet and consolidated statement of stockholders’ equity (deficit) depict the authorized classes of stock. Additionally, earnings per share is calculated based upon the authorized, issued and outstanding shares of Class A and Class B common stock (refer to Notes 4 and 13 for additional information). On January 14, 2015, the Company’s board of directors approved a five -for-one stock split of the Company’s Class A common stock and Class B common stock. Effective January 16, 2015 the Company amended its certificate of incorporation to give effect to the stock split and to change the Company’s authorized common equity capital to 900,000,000 shares of common stock, 750,000,000 shares of Class A common stock, and 150,000,000 shares of Class B common stock, par value $0.000005 per share. All share data included in these financial statements give retroactive effect to the stock split and related amendment to the Company’s certificate of incorporation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Principles of Consolidation —The accompanying 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. Basis of Presentation and Use of Estimates —These consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Certain prior period amounts have been reclassified on the statements of stockholders' equity, within the operating section of the statements of cash flows, and within the investing section of the statements of cash flows to conform with current period presentation. Such reclassifications had no impact on total equity, net cash provided by operating activities or net cash provided by (used in) investing activities as previously reported. Significant estimates made by management include, but are not limited to: revenue recognition, including selling prices associated with the individual elements in multiple element arrangements; accounts receivable allowances; estimates of the fair value of stock-based awards; fair value of intangibles and goodwill; depreciable lives of property, equipment and capitalized software; and useful lives of intangible assets. Actual results could differ from management’s estimates, and such differences could be material to the Company’s consolidated financial position and results of operations. Cash and Cash Equivalents —Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase, and demand deposits with financial institutions. Short-term investments —Short-term investments consists of investment grade debt securities. The Company classifies short-term investments as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. All short-term investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive loss, a component of stockholders’ equity. The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered to be other-than-temporary if they are related to deterioration in credit risk, if it is more likely than not that the Company will be required to sell or intends to sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported as components of other income and (expenses), in the consolidated statements of operations. Interest, amortization of premiums, and accretion of discount on short-term investments classified as available for sale are included as a component of interest income, in the consolidated statements of operations. There were no other-than-temporary impairments during 2017 . The Company may sell short-term investments at any time, without significant penalty, for use in current operations or for other purposes, even if the short-term investments have not yet reached maturity. As a result, the Company classifies these investments, including securities with maturities beyond 12 months , as current assets in the accompanying consolidated balance sheets. Gains or losses realized from the sale of securities are reclassified out of other comprehensive income (loss) into earnings using the specific identification method. Concentrations of Credit Risk —Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. Although the Company deposits its cash and cash equivalents with multiple financial institutions, the Company’s deposits may exceed federally insured limits. The Company has not experienced any losses on cash and cash equivalent accounts to date, and management believes the Company is not exposed to any significant credit risk related to cash and cash equivalents. The Company sells services to clients without requiring collateral, based on an evaluation of the client’s financial condition. Exposure to losses on receivables is principally dependent on each client’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Revenue from a significant client, representing 10% or more of total revenue for the respective periods, is summarized as follows: Year Ended December 31, 2017 2016 2015 Client A 12 % 17 % 12 % Accounts receivable from a significant client, representing 10% or more of total accounts receivable for the respective dates, is summarized below: December 31, 2017 2016 Client A * 14 % _______________________________________ *Less than 10% Accounts Receivable and Allowances —Accounts receivable consists primarily of amounts due to the Company from its normal business activities. The Company provides an allowance for estimated losses resulting from the failure of clients to make required payments (credit losses) and a sales allowance for estimated future billing adjustments resulting from client concessions or resolutions of billing disputes. The provision for sales allowances are charged against revenue while credit losses are recorded in general and administrative expenses. Fair Value Measurements —The Company applies the Accounting Standards Codifications (“ASC”) 820-10, Fair Value Measurements and Disclosures . ASC 820-10 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and expands required disclosures about fair value measurements. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below. The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value: Level 1—Financial assets and liabilities whose values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2—Financial assets and liabilities whose values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3—Financial assets and liabilities whose values are based on unobservable inputs for the asset or liability. The carrying amounts of accounts receivable, other current assets, accounts payable, and accrued liabilities approximate fair value due to their short-term nature. The Company’s Credit Facilities (as defined in Note 9) approximate fair value because of their floating rate structure. Property, Equipment and Capitalized Software, net —Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property, leasehold improvements, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Useful Life Office and computer equipment 3 - 5 years Purchased software 5 years Capitalized software 3 - 5 years Furniture and fixtures 7 years Building * Leasehold improvements * Assets under capital leases * _______________________________________ *Lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of property and equipment are expensed as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. In accordance with ASC 350-40, Internal-use Software , the Company capitalizes certain software development costs while in the application development stage related to software developed for internal use. All other costs to develop software for internal use, either in the preliminary project stage or post implementation stage, are expensed when incurred. Software development costs are amortized on a straight-line basis over a three to five year period, which management believes represents the useful life of these capitalized costs. In accordance with ASC 985-20, Software to be Sold, Leased, or Marketed , certain software development costs are expensed as incurred until technological feasibility has been established. Thereafter, all software development costs incurred through the software’s general release date are capitalized and subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs are amortized based on current and expected future revenue for each software solution with minimum annual amortization equal to the straight-line amortization over the estimated economic life, which is typically over a three to five year period. Intangible Assets —Intangible assets consist of acquired technology, including developed and core technology, databases, trade names, and customer relationships. Intangible assets are initially recorded at fair value and amortized on a straight line basis over their estimated useful lives. Acquired intangible assets are being amortized over the following periods: Useful Life Proprietary software technology 3 - 10 years Trademark 3 - 10 years Database 10 years Customer relationships 8 - 15.75 years Non-compete agreements Contractual term In-process research and development Indefinite On an annual basis, the Company reviews its intangible assets for impairment based on estimated future undiscounted cash flows attributable to the assets. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their net realizable values. There were no impairment charges on intangible assets for the years ended December 31, 2017 and 2016 . Goodwill —Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of businesses acquired. Goodwill is not amortized and is subject to impairment testing annually, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. In January 2017, the FASB issued Accounting Standards Update (“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. The Company early adopted the requirements of the new standard in the fourth quarter of 2017. As a result, the amendments modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the Company will record an impairment loss in the amount equal to the difference between the fair value and the carrying value. The Company performs the goodwill impairment testing annually as of December 31st, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Significant judgment in testing goodwill for impairment includes assigning assets and liabilities to the reporting unit and assessing or determining the fair value of each reporting unit based on the Company’s best estimates and assumptions, as well as other information including valuations that utilize customary valuation procedures and techniques. The Company tests its goodwill for impairment at the reporting unit level which is one level below the operating segment and has identified three reporting units: Inovalon, Avalere and Creehan. Based on the Company’s annual impairment evaluation performed as of December 31, 2017 , the Company concluded that there was no impairment of goodwill. Refer to Note 8 for a summary of changes in goodwill. Valuation of Long-Lived Assets —The Company reviews long-lived assets for events or changes in circumstances that would indicate potential impairment. If the Company determines that an asset may not be recoverable, an impairment charge is recorded. There were no impairment charges on long-lived assets for the years ended December 31, 2017 , 2016 and 2015 . Revenue Recognition —The Company recognizes revenue when it is realized (or realizable) and earned (i.e., when services have been rendered or delivery of applicable deliverables has occurred). This occurs when persuasive evidence of an arrangement exists, the product or service has been performed or delivered, fees are fixed or determinable, and collection is reasonably assured. When collectability is not reasonably assured, revenue is recognized when cash is collected. Cash collections and invoices generated in excess of revenue recognized are recorded as deferred revenue until the revenue recognition criteria are met. The Company primarily derives its revenue from multiple-element arrangement sales of its cloud-based data analytics and data-driven intervention platform services. Revenue from these multiple element arrangements are recognized in accordance with ASC 605-25, Revenue Recognition—Multiple Element Arrangements . The Company allocates revenue to its cloud-based data analytics and data-driven intervention platform services using the relative selling price method. The Company has generally been unable to establish vendor-specific objective evidence of fair value, and while the Company routinely seeks third party evidence of fair value, meaningful data has generally been unavailable as the Company’s services are unique and visibility into competitors pricing is unavailable. As a result, the Company uses its best estimate of selling price to allocate arrangement consideration to its contractual service elements. The Company has determined a best estimate of selling price by considering several external and internal factors including, but not limited to, pricing practices, profitability objectives, competition, customer demand, internal costs, and overall economic trends. Generally, the best estimate of selling price is consistent with the contractual arrangement fee for each element. Revenue is recognized as cloud-based data analytics and data-driven intervention services are performed and information is delivered to clients, which generally align with the Company’s right to invoice its clients. Cloud- based data analytics services are considered performed when gaps in care, quality, data integrity, or financial performance, and summarized key analytics and benchmarking analytics reports are delivered to its clients, provided that all contractual performance requirements and other revenue recognition criteria are met. Cloud-based data-driven intervention services are considered performed upon completion, provided that all contractual performance requirements and other revenue recognition criteria are met. The Company also generates revenue from data-driven advisory services and recognizes revenue for these services when persuasive evidence of an arrangement exists, services have been rendered, the contract price is fixed or determinable, and collectability is reasonably assured. The Company enters into arrangements for data-driven advisory services under time and materials, fixed-price, or retainer based contracts. Revenue for time and material contracts is recognized based upon contractually agreed upon billing rates applied to direct labor hours expended plus the costs of other items used in the performance of the contract. Revenues under fixed-price and retainer-based contracts are recognized ratably over the contract period or upon contract completion. Invoices to clients are generated in accordance with the terms of the applicable contract, which may not be directly related to the performance of services. Unbilled receivables are invoiced when the achievement of specific events as defined by each contract occurs. Unbilled receivables, if any, are classified as a current asset. Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the aforementioned revenue recognition criteria are met. The Company also enters into multiple-element software arrangements, which are recognized under ASC 985-605, Software Revenue Recognition, when a software subscription license is provided to customers. Under these arrangements, post-contract support is provided, including help desk support and unspecified upgrades. Vendor-specific objective evidence of fair value has not been established for maintenance as maintenance is not renewed separately from the license fees. As a result, under these subscription software license agreements, revenue is recognized from the license of software ratably over the life of the agreement. The Company begins to recognize revenue upon execution of a signed agreement and delivery of the software, provided that the software license fees are fixed and determinable, and collection of the resulting receivable is reasonably assured. Certain of the Company’s arrangements entitle a client to receive a refund if the Company fails to satisfy contractually specified performance obligations. The refund is limited to a portion or all of the consideration paid. In this case, revenue is recognized when performance obligations are satisfied. The Company maintains an allowance, charged to revenue, which reflects the Company’s estimated future billing adjustments resulting from client concessions or resolutions of billing disputes. Cost of Revenue —Cost of revenue consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, equity compensation costs, and severance for employees that provide direct revenue-generating services to clients. Cost of revenue also includes expenses associated with the integration and verification of data and other service costs incurred to fulfill the Company’s revenue contracts. Cost of revenue does not include allocated amounts for occupancy expense, depreciation and amortization. Research and Development —Research and development expenses consist primarily of employee-related expenses. All such costs are expensed as incurred, except for certain internal use software development costs that are capitalized. Research and development excludes any allocation of occupancy expense, depreciation and amortization. Selling and Marketing —Sales and marketing expense consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance and equity compensation costs for employees engaged in sales, sales support, business development, and marketing. Sales and marketing expense also includes operating expenses for marketing programs, research, trade shows and brand messages, and public relations costs. Sales and marketing expense excludes any allocation of occupancy expense, depreciation and amortization. General and Administrative —General and administrative expense consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance and equity compensation costs, for employees who are responsible for management information systems, administration, human resources, finance, legal, and executive management. General and administrative expense also includes occupancy expenses (including rent, utilities, communications, and facilities maintenance), professional fees, consulting fees, insurance, travel, and other expenses. General and administrative expense excludes any allocation of depreciation and amortization. Segments —The Company operates its business as one operating segment. The Company develops cloud-based data analytics and data-driven intervention platforms and provides related services to its clients in order to achieve meaningful insight and improvement in clinical and quality outcomes, utilization, and financial performance. The Company derives substantially all of its revenue from the sale and support of one group of similar products and related services—proprietary datasets, advanced integration technologies, sophisticated predictive analytics, and deep subject matter expertise that enable the Company to provide seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to clients. Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. In the process of allocating resources and assessing performance, the Company’s CODM, its chief executive officer, reviews financial information presented on a consolidated basis. Income Taxes —The Company accounts for income taxes in accordance with ASC 740, Income Taxes , which prescribes the use of the asset and liability approach to the recognition of deferred tax assets and liabilities related to the expected future tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established, when necessary, to reduce deferred tax assets when it is more likely than not that a portion or all of a given deferred tax asset will not be realized. In accordance with ASC 740, income tax expense includes (i) deferred tax expense, which represents the net change in the deferred tax asset or liability balance during the period and any change in valuation allowances and (ii) current tax expense, which represents the amount of tax currently payable to or receivable from a taxing authority and amounts accrued for expected tax contingencies (including both tax and interest). ASC 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those positions to be recognized in the financial statements. The Company continually reviews tax laws, regulations and related guidance in order to properly record any uncertain tax liability positions. The Company adjusts these reserves in light of changing facts and circumstances. As a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was signed into law on December 22, 2017 and is effective January 1, 2018, the Company remeasured the ending deferred tax assets to reflect the decrease in the federal corporate tax rate resulting in a tax benefit. Refer to Note 14, “Income Taxes.” Stock-Based Compensation —All stock-based awards, including employee stock option grants, restricted stock unit (“RSU”) grants, and restricted stock award (“RSA”) grants, are recorded at fair value as of the grant date in accordance with ASC 718, Compensation—Stock Compensation , and recognized in the statement of operations over the service period of the applicable award using the straight-line method. The Company determines the fair value of its stock option awards on the date of grant, using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates. The Company measures RSUs and RSAs that vest upon satisfaction of a service condition, a performance condition, or a liquidity condition, if such conditions are applicable, based on the fair market values of the underlying common stock on the dates of grant. RSUs are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. Compensation expense is recognized based upon the satisfaction of the requisite service, liquidity condition as of that date, and or the probability of achievement of the specified performance conditions following the straight-line method. Treasury Stock —The Company records treasury stock activities under the cost method whereby the cost of the acquired stock is recorded as treasury stock. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct the par value from common stock and to reflect any excess of cost over par value as a reduction to additional paid-in capital (to the extent created by previous issuances of the shares) and then retained earnings. Deferred Rent —Deferred rent consists of rent escalation payment terms, tenant improvement allowances and other incentives received from landlords related to the Company’s operating leases for its facilities. Rent escalation represents the difference between actual operating lease payments due and straight-line rent expense, which is recorded by the Company over the term of the lease, including any construction period. The excess is recorded as a deferred credit in the early periods of the lease, when cash payments are generally lower than straight-line rent expense, and is reduced in the later periods of the lease when payments begin to exceed the straight-line expense. Tenant allowances from landlords for tenant improvements are generally comprised of cash received from the landlord as part of the negotiated terms of the lease or reimbursements of moving costs. These cash payments are recorded as deferred rent from landlords and are amortized as a reduction of periodic rent expense, over the term of the applicable lease. Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies and intends to improve and simplify several aspects of the accounting for share-based payment awards, including income tax consequences, and classification on the statement of cash flows, therefore the Company early adopted ASU 2016-09 during the fourth quarter of 2016. Early adoption of ASU 2016-09 required the Company to apply its provisions as of January 1, 2016. Amendments related to accounting for excess tax benefits have been adopted prospectively, resulting in recognition of excess tax benefits against income tax expenses rather than additional paid-in capital of approximately $0.9 million for the year ended December 31, 2016. Excess tax benefits for stock-based payments are now included in net operating cash rather than net financing cash. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. The Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative effect adjustment to retained earnings of approximately $0.6 million , net of tax of approximately $0.2 million , as of January 1, 2016. The adoption of ASU 2016-09 did not materially impact the Company’s consolidated financial position, results of operations, equity or cash flows. 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 beginning 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. The Company early adopted the requirements of the new standard in the fourth quarter of 2017 as it performed its annual impairment analysis. The Company evaluated each of its reporting units based on current and forecasted financial information and finalized the valuations and impairment analysis during the fourth quarter of 2017, resulting in no impairment. Recently Issued Accounting Standards 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 adopted the new standard as of January 1, 2018 using the modified retrospective approach. The Company evaluated existing contracts and implemented policies and changes to our processes, including a process for future contract reviews, and internal control over financial reporting. The impacts of the new standard include accounting for 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 is finalizing the calculation of the adjustment to retained earnings and currently expects the impact to be immaterial as the revenue recognition for our subscription licensing of our cloud-based data analytics, intervention and reporting platforms and related support services is materially consistent with our current revenue recognition model. The Company will provide additional disclosures as required by the new standard in the first quarter of 2018. In February 2016, the FASB issued ASU. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. In general, for lease arrangements exceeding a twelve month term, these arrangements will be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense fo |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | 2017 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. The final purchase price was allocated 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 $9.8 million of assets, including approximately $1.5 million of cash, and approximately $3.9 million of liabilities. The net assets acquired exceeded the consideration paid by approximately $1.4 million , and as such the Company recorded a bargain purchase gain in general and administrative expenses. 2016 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 $130.0 million , which was comprised of $120.0 million in cash and $10.0 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 The Company finalized the working capital adjustment in the third quarter of 2017 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 The Company finalized the fair value of acquired assets, assumed liabilities and tax related matters in the third quarter of 2017. 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 Acquisition-related costs were expensed as incurred. For the year ended December 31, 2016 , the Company incurred acquisition-related costs of $1.6 million recognized within “General and administrative” expenses in the accompanying consolidated statements of operations. Creehan Results and Pro Forma Impact of Acquisition The following table presents revenue and loss before taxes of Creehan since the acquisition date, October 3, 2016, included in the consolidated statements of operations and includes amortization expense related to acquired intangible assets (in thousands): Year Ended December 31, Revenue $ 8,106 Loss before taxes $ (976 ) The following table presents pro forma information, based on estimates and assumptions that the Company believes to be reasonable, for the Company as if the acquisition of Creehan had occurred at the beginning of the earliest period presented (unaudited, in thousands): Year Ended December 31, 2016 2015 Pro forma revenue $ 453,613 $ 464,646 Pro forma income before taxes $ 44,203 $ 115,331 The pro forma information provided in the table above is not necessarily indicative of the consolidated results of operations for future periods or the results that actually would have been realized had the acquisition been completed at the beginning of the periods presented. The pro forma impact of the Creehan acquisition on current and prior quarters, subsequent to its acquisition for the three months ended December 31, 2016 , were not material. The results of operations of Creehan have been included in our consolidated results from the date of acquisition. 2015 Acquisition On September 1, 2015, pursuant to the provisions of the Share Purchase Agreement, between the Company and Avalere Health Inc. (“Avalere”), the Company acquired all of the issued and outstanding capital stock of Avalere. Avalere is a provider of data-driven advisory services and business intelligence solutions primarily to the pharmaceutical and life sciences industry, as well as within their extensive array of client relationships with payers, providers and research institutions. Certain portions of the stated purchase price of $140.0 million were contingent upon the achievement of financial and operational objectives, and other portions were subject to continued employment provisions. The Company completed the acquisition of Avalere through the use of cash on hand and the issuance of 235,737 shares of Class A common stock, subject to sale restrictions. The addition of Avalere, with its more than 200 pharmaceutical and life sciences clients, as well as an extensive array of client relationships with payers, providers and research institutions, is expected to expand Inovalon’s capabilities and client base into the expansive and adjacent markets of the pharmaceutical and life sciences industry. A summary of the composition of the stated purchase price and fair value of the stated purchase price is as follows (in thousands): Share Purchase Agreement purchase price $ 140,000 Working capital adjustment 3,112 Subtotal 143,112 Fair Value Adjustments: Restricted stock marketability discount (1,153 ) Performance objectives discount from maximum value (700 ) Post-acquisition compensation expense (16,357 ) Total fair value purchase price $ 124,902 The composition of the fair value of the consideration transferred is as follows (in thousands): Cash $ 118,755 Issuance of Class A common stock 3,847 Contingent consideration 2,300 Total fair value purchase price $ 124,902 Recording of Assets Acquired and Liabilities Assumed Estimates of fair value included in the consolidated financial statements, in conformity with ASC 820, Fair Value Measurements and Disclosures, represent the Company’s best estimates and valuations. In accordance with ASC 805, Business Combinations, the 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, which was September 1, 2015, to provide the Company with the time to complete the valuation of its assets and liabilities. As of December 31, 2015 , the Company completed and finalized its analysis and allocation of the consideration value to assets acquired and liabilities assumed. In addition, as discussed in Note 2, the Company early adopted the provisions of ASU 2015-16 and recorded measurement period adjustments that were identified in the process of finalizing the aforementioned analysis and allocation. The following table summarizes the final purchase price allocation to assets acquired and liabilities assumed, including identification of measurement period adjustments (in thousands): Preliminary Recorded Value Measurement Period Adjustments Final Recorded Value Cash and cash equivalents $ 4,037 $ — $ 4,037 Accounts receivable 13,011 (120 ) 12,891 Current assets 1,958 — 1,958 Property, equipment and capitalized software 3,248 — 3,248 Intangible assets (1) 57,520 300 57,820 Goodwill (2) 74,238 1,226 75,464 Deferred income taxes 947 (224 ) 723 Other assets 224 — 224 Total assets acquired 155,183 1,182 156,365 Current liabilities (11,054 ) 108 (10,946 ) Deferred tax liability (17,677 ) (686 ) (18,363 ) Deferred revenue (1,600 ) — (1,600 ) Other liabilities (554 ) — (554 ) Total liabilities assumed (30,885 ) (578 ) (31,463 ) Net assets acquired $ 124,298 $ 604 $ 124,902 _______________________________________ (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 and is not deductible for tax purposes. The amounts attributed to identified intangible assets are summarized in the table below (in thousands): Weighted Average Useful Life Preliminary Recorded Value Measurement Period Adjustments Final Recorded Value Customer relationships 10 years $ 45,800 $ — $ 45,800 Tradename 10 years 8,300 — 8,300 Technology 5 years 2,600 300 2,900 Non-compete agreements 3 years 820 — 820 Total intangible assets $ 57,520 $ 300 $ 57,820 Acquisition-related costs were expensed as incurred. For the year ended December 31, 2015 , the Company incurred acquisition-related costs of $1.5 million , respectively, recognized within “General and administrative” expenses in the accompanying consolidated statements of operations. Avalere Results and Pro Forma Impact of Acquisition The following table presents revenue and loss before taxes of Avalere since the acquisition date, September 1, 2015, included in the consolidated statements of operations (in thousands): Year Ended December 31, Revenue $ 17,492 Loss before taxes $ (29 ) The following table presents pro forma information, based on estimates and assumptions that the Company believes to be reasonable, for the Company as if the acquisition of Avalere had occurred at the beginning of the earliest period presented (unaudited, in thousands): Year Ended December 31, 2015 Pro forma revenue $ 469,784 Pro forma income before taxes $ 108,977 The pro forma information provided in the table above is not necessarily indicative of the consolidated results of operations for future periods or the results that actually would have been realized had the acquisition been completed at the beginning of the periods presented. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | During September 2014, the Company completed a holding company reorganization. As part of the reorganization, the Company implemented a multi-class stock structure. The Company presents the impact on net income per share (“EPS”) by calculating EPS based on the authorized, issued and outstanding shares of Class A and Class B common stock. 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. The Company has issued RSAs of Class A common stock 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. Undistributed net income for a given period is apportioned to participating securities based on the weighted-average shares of each class of common stock outstanding during the applicable period as a percentage of the total weighted-average shares outstanding during the same period. 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 Company has issued Class A common stock and Class B common stock. Holders of Class A common stock generally have the same rights, including rights to dividends, as holders of Class B common stock, except that holders of Class A common stock have one vote per share while holders of Class B common stock have ten votes per share. Each share of Class B common stock will convert into one share of Class A common stock immediately upon its sale or transfer. As such, basic and fully diluted earnings per share for Class A common stock and Class B common stock are the same. Basic net income per share of common stock is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. All participating securities are excluded from the basic weighted-average shares of common stock outstanding. Unvested RSAs are excluded from the calculation of the weighted-average shares of common stock until vesting occurs, as the restricted shares are subject to forfeiture and cancellation until vested. For purposes of the diluted net income per share attributable to common stockholders calculation, unvested shares of common stock resulting from RSAs are considered to be potentially dilutive shares of common stock. Diluted net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average shares outstanding, including potentially dilutive shares of common stock assuming the dilutive effect of potential shares of common stock for the period determined using the treasury stock method. Potentially dilutive securities also include stock options, restricted stock units, and shares to be purchased under the employee stock purchase plan. 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 net income per share if their effect would be anti-dilutive to earnings per share. The numerators and denominators of the basic and diluted EPS computations, reconciliations of the weighted average shares outstanding, and resulting basic and diluted earnings per share for our common stock are calculated as follows (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 Basic Numerator: Net income $ 34,818 $ 27,104 $ 66,063 Undistributed earnings allocated to participating securities (990 ) (161 ) (49 ) Net income attributable to common stockholders—basic $ 33,828 $ 26,943 $ 66,014 Denominator: Weighted average shares used in computing net income per share attributable to common stockholders—basic 142,225 150,048 145,745 Net income per share attributable to common stockholders—basic $ 0.24 $ 0.18 $ 0.45 Diluted Numerator: Net income attributable to common stockholders—diluted $ 33,828 $ 26,943 $ 66,014 Denominator: Number of shares used for basic EPS computation 142,225 150,048 145,745 Effect of dilutive securities 512 907 2,530 Weighted average shares used in computing net income per share attributable to common stockholders—diluted 142,737 150,955 148,275 Net income per share attributable to common stockholders—diluted $ 0.24 $ 0.18 $ 0.45 The computation of diluted EPS does not include certain awards, on a weighted average basis, for the years ended December 31, 2017 , 2016 , and 2015 , 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): Year Ended December 31, 2017 2016 2015 Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive 88 44 645 |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
SHORT-TERM INVESTMENTS | As of December 31, 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 $ 232,048 $ 3 $ (572 ) $ 231,479 U.S. agency obligations 15,341 — (99 ) 15,242 U.S. treasury securities 20,735 — (168 ) 20,567 Total available-for-sale securities $ 268,124 $ 3 $ (839 ) $ 267,288 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): December 31, 2017 2016 Due in one year or less $ 204,725 $ 176,696 Due after one year through two years 62,563 268,619 Total $ 267,288 $ 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 December 31, 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 December 31, 2017 , aggregated by investment category (in thousands): Estimated Fair Value Gross Unrealized Losses Corporate notes and bonds $ 223,088 $ (572 ) U.S. agency obligations 15,242 (99 ) U.S. treasury securities 20,567 (168 ) $ 258,897 $ (839 ) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
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 December 31, 2017 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 162,347 $ — $ — $ 162,347 Short-term investments: Corporate notes and bonds — 231,479 — 231,479 U.S. agency obligations — 15,242 — 15,242 U.S. treasury securities — 20,567 — 20,567 Other Current Liabilities: Contingent consideration — — (7,400 ) (7,400 ) Total $ 162,347 $ 267,288 $ (7,400 ) $ 422,235 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) as of the years ended December 31 (in thousands): Fair Value Measurements Using Unobservable Inputs (Level 3) 2017 2016 Balance, beginning of period $ (12,600 ) $ (2,300 ) Fair value adjustment (recognized in general and administrative expenses) 5,200 — Accretion expense (recognized in general and administrative expenses) — (706 ) Settlement (payment) of liability — 3,006 Contingent consideration attributable to Creehan acquisition — (12,600 ) Total $ (7,400 ) $ (12,600 ) |
PROPERTY, EQUIPMENT AND CAPITAL
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | Property, equipment and capitalized software consisted of the following (in thousands): December 31, 2017 2016 Office and computer equipment $ 55,840 $ 42,530 Leasehold improvements 10,096 12,480 Purchased software 26,425 14,421 Capitalized software 114,569 83,877 Furniture and fixtures 4,670 5,403 Land 390 390 Buildings 14,028 1,797 Work in process 16,323 3,966 Total 242,341 164,864 Less: accumulated depreciation and amortization (116,573 ) (88,444 ) Property, equipment and capitalized software, net $ 125,768 $ 76,420 The Company leases certain office equipment under capital lease agreements, with bargain purchase options at the end of the lease term. Leased office equipment included in property and equipment at December 31, 2017 and 2016 was $0.6 million and $0.7 million , respectively. The Company leases certain office space under a lease agreement that was determined to be a capital lease. This capital lease is classified as buildings within property and equipment. The total net amount of the capital lease as of December 31, 2017 was $12.0 million . There were no leases of office spaces that were determined to be capital leases in 2016. Depreciation expense for the years ended December 31, 2017 , 2016 , and 2015 was $37.9 million , $28.1 million , and $19.2 million , respectively. Amortization of the capital leases included in depreciation expense was $0.3 million , $0.1 million , and $0.1 million , for the years ended December 31, 2017 , 2016 , and 2015 , respectively. At December 31, 2017 and 2016 , the Company had unamortized capitalized software costs, including costs classified as work in progress, of $54.2 million and $40.9 million , respectively. At December 31, 2017 and 2016 , work in process consisted primarily of purchased software licenses, computer equipment, and capitalized software, which was not placed into service. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | Goodwill Goodwill is primarily derived from the Company’s acquisitions of Creehan in 2016, Avalere in 2015, Catalyst Information Technologies, Inc. in 2009, and Medical Reliance Group, Inc. in 2006. Refer to Note 2 for a discussion of our accounting policy. Refer to Note 3 for further information regarding the goodwill that arose from the Company’s acquisition of Creehan during 2016 and Avalere during 2015. The following table summarizes the activity related to the carrying value of our goodwill during the years ended December 31, 2017 and 2016 (in thousands): Goodwill as of January 1, 2016 $ 137,733 Adjustments recorded in connection with the acquisition of Avalere (1) (4,163 ) Goodwill recorded in connection with the acquisition of Creehan 50,987 Goodwill as of December 31, 2016 184,557 Adjustments recorded in connection with the acquisition of Creehan (2) 375 Goodwill as of December 31, 2017 $ 184,932 ______________________________________ (1) During 2016, the Company adjusted certain assets and liabilities related to the finalization of tax returns for Avalere and prefunded escrow-related amounts related to the settlement of a contingent consideration earn-out that was successfully achieved by Avalere. The adjustments had no impact on the Company’s revenues or expenses. Based on our assessments of qualitative and quantitative factors, the adjustments were not considered to be material to our consolidated financial statements, individually or in the aggregate, to any previously issued consolidated financial statements. (2) During 2017, the Company finalized the working capital adjustments for Creehan. The adjustments had no impact on the Company’s revenues or expenses. Based on our assessments of qualitative and quantitative factors, the adjustments were not considered to be material to our consolidated financial statements, individually or in the aggregate, to any previously issued consolidated financial statements. Intangible Assets Intangible assets at December 31, 2017 and 2016 were as follows (in thousands): December 31, 2017 Gross Accumulated Amortization Net Weighted Average Remaining Useful Life (years) Proprietary software technologies $ 16,077 $ (16,077 ) $ — — Trademark 360 (360 ) — — Database 6,500 (5,362 ) 1,138 1.8 Customer relationships 13,650 (10,698 ) 2,952 7.4 Avalere acquisition (see Note 3): Customer Relationships 45,800 (10,687 ) 35,113 7.8 Tradename 8,300 (1,937 ) 6,363 7.8 Technology 2,900 (1,353 ) 1,547 2.7 Non-compete agreements 820 (638 ) 182 0.7 Creehan acquisition (see Note 3): Customer Relationships 36,500 (5,703 ) 30,797 6.9 Tradename 4,000 (1,250 ) 2,750 2.8 Technology 8,800 (2,750 ) 6,050 2.8 In-Process R&D 1,600 — 1,600 Indefinite CCS acquisition (see Note 3): Technology 800 (133 ) 667 2.5 Tradename 200 (33 ) 167 2.5 Total $ 146,307 $ (56,981 ) $ 89,326 December 31, 2016 Gross Accumulated Amortization Net Weighted Average Remaining Useful Life (years) Proprietary software technologies $ 16,077 $ (16,077 ) $ — — Trademark 360 (360 ) — — Database 6,500 (4,713 ) 1,787 2.8 Customer relationships 13,650 (10,304 ) 3,346 8.4 Avalere acquisition (see Note 3): Customer Relationships 45,800 (6,107 ) 39,693 8.8 Tradename 8,300 (1,107 ) 7,193 8.8 Technology 2,900 (773 ) 2,127 3.7 Non-compete agreements 820 (364 ) 456 1.7 Creehan acquisition (see Note 3): Customer Relationships 36,500 (1,147 ) 35,353 7.9 Tradename 4,000 (250 ) 3,750 3.8 Technology 8,800 (556 ) 8,244 3.8 In-Process R&D 1,600 — 1,600 Indefinite Total $ 145,307 $ (41,758 ) $ 103,549 Amortization expense for the years ended December 31, 2017 , 2016 , and 2015 was $15.2 million , $9.2 million , and $3.4 million , respectively. Estimated future amortization expense of intangible assets, based upon the Company’s intangible assets at December 31, 2017 , is as follows (in thousands): Amount Year ending December 31: 2018 $ 15,312 2019 14,967 2020 13,320 2021 10,366 2022 10,366 Thereafter 23,395 Total $ 87,726 |
CREDIT FACILITIES
CREDIT FACILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | On September 19, 2014, the Company entered into a Credit and Guaranty Agreement (“Credit Agreement”), with a group of lenders including Goldman Sachs Bank USA, as administrative agent, to provide credit facilities in the aggregate maximum principal amount of $400.0 million , consisting of a senior unsecured term loan facility in the original principal amount of $300.0 million (the “Term Loan Facility”), and a senior unsecured revolving credit facility in the maximum principal amount of $100.0 million (the “Revolving Credit Facility” and, the “Credit Facilities”). The Credit Facilities consisted of the following (in thousands): December 31, 2017 December 31, 2016 Revolving Credit Facility $ — $ — Term Loan Facility 236,250 266,250 Total Credit Facilities 236,250 266,250 Less: current portion 45,000 30,000 Non-current Credit Facilities $ 191,250 $ 236,250 The revolving credit facility became available to the Company on February 18, 2015, upon the consummation of its IPO. The Company’s borrowing rate under the Credit Facilities is dependent on whether the Company elects Eurodollar loans or base rate loans. Interest accrues on Eurodollar loans at a defined Eurodollar rate, defined as the London Interbank Offer Rate (“LIBOR”) plus the applicable margin of 1.25% , as defined in the Credit Agreement. Interest is payable monthly in arrears. The Credit Facility requires the Company to comply with specified financial covenants, including the maintenance of a $50.0 million minimum cash and cash equivalents balance as of each calendar quarter end. The minimum cash and cash equivalents balance is not required to be held with any of the group of lenders and may be commingled with the Company’s operating funds. The Credit Facility also contains various covenants, including affirmative covenants with respect to certain reporting requirements and maintaining certain business activities, and negative covenants that, among other things, may limit or impose restrictions on the Company’s ability to incur liens, incur additional indebtedness, make investments, make acquisitions and undertake certain additional actions. As of, and during, the year ended December 31, 2017 , the Company was in compliance with the financial covenants under the Credit Agreement. Scheduled maturity of the Credit Facilities follows (in thousands): Amount 2018 $ 45,000 2019 191,250 Total $ 236,250 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Operating Leases —The Company leases office space and co-located data center facilities under operating lease arrangements, some of which contain renewal options. Future non-cancellable lease payments as of December 31, 2017 are as follows (in thousands): Amount Year ending December 31, 2018 $ 7,286 2019 6,571 2020 3,200 2021 1,939 2022 1,939 Thereafter 12,602 Total $ 33,537 Total expense under operating leases was $11.3 million , $8.9 million , and $7.2 million , during the years ended December 31, 2017 , 2016 , and 2015 , respectively. Certain operating leases contain rent escalation clauses, which are recorded on a straight-line basis over the initial term of the lease, with the difference between the rent paid and the straight-line rent recorded as a deferred rent liability. Lease incentives received from landlords are recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense. The deferred rent liability was $2.0 million and $2.5 million at December 31, 2017 and 2016 , respectively. Capital Leases —The total capital lease liability at December 31, 2017 and 2016 was $12.4 million and $0.3 million , respectively. Future minimum lease payments as of December 31, 2017 are as follows (in thousands): Amount Year ending December 31, 2018 $ 458 2019 1,015 2020 1,051 2021 1,090 2022 1,182 Thereafter 10,091 Total minimum lease payments 14,887 Less amount representing interest (2,442 ) Present value of minimum lease payments $ 12,445 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. On January 22, 2018, lead plaintiff filed its motion for class certification, and on February 12, 2018, defendants filed an opposition to such motion for class certification, which motion remains pending. The parties presently are engaged in discovery. The court has set October 22, 2018 as the deadline for the completion of all discovery. 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. As directed by the court, the parties submitted memoranda of law concerning only the forum selection provision contained in the Company’s Second Amended and Restated Certificate of Incorporation. On December 27, 2017, the court issued a decision and order granting the defendants’ joint motion to dismiss plaintiff’s Derivative Complaint on the basis of the forum selection provision. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | On December 31, 2006, the Company and its stockholders established the 2007 Long-Term Incentive Plan (the “2007 Plan”), under which the Company’s Board of Directors, at its discretion, could grant stock options to employees and certain directors of the Company. During 2009, the Plan was amended and currently authorizes the grant of stock options or other equity instruments for up to 10,275,000 shares of common stock. The stock-based awards granted under the Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Board of Directors at the date of grant, but not more than ten years from such grant date. Stock issued as a result of exercised stock options will be issued from the Company’s authorized available stock. Effective June 5, 2012, the 2007 Long-Term Incentive Plan changed its name to the Inovalon, Inc. 2007 Long-Term Incentive Plan. Options granted under the Plan may be incentive stock options or non-qualified stock options under the applicable provisions of the Internal Revenue Code. The 2007 Long-Term Incentive Plan was terminated upon completion of the IPO. Awards granted under the 2007 Long-Term Incentive Plan will remain outstanding until the earlier of exercise, forfeiture, cancellation or expiration. On February 18, 2015, the date of the completion of the Company’s IPO, the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”) became effective. The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), to the Company’s employees and any parent and subsidiary employees, and for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSAs, RSUs, dividend equivalent rights, cash-based awards (including annual cash incentives and long-term cash incentives), and any combination thereof to the Company’s employees, directors, and consultants and to employees, directors, and consultants of certain affiliated entities. The Company reserved for issuance under the 2015 Plan shares of its Class A common stock equal to the sum of: (i) 7,335,430 shares of Class A common stock; and (ii) the number of shares of its Class A common stock underlying awards granted under the Company’s 2007 Long-Term Incentive Plan, which was terminated upon completion of the IPO, that are forfeited, canceled, or expire (whether voluntarily or involuntarily). Stock Options The Company uses the Black-Scholes option-pricing model to determine the estimated fair value for stock option awards. The Black-Scholes option-pricing model requires the use of estimates, including the fair market value of the Company’s common stock prior to the Company’s IPO, expected stock price volatility, expected term, estimated forfeitures and the risk-free interest rate. The fair value of stock option awards is amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Prior to the Company’s IPO, determining the fair value of the Company’s common stock required complex and subjective judgment and estimates. There is inherent uncertainty in making these judgments and estimates. Since the Company’s share price was not publicly quoted and lacked an active trading market prior to the Company’s IPO in February 2015, the Company’s Compensation Committee was required to estimate the fair value of the common stock at each meeting at which options were granted based on factors including, but not limited to, contemporaneous valuations of the Company’s common stock performed by an unrelated third-party specialist, the lack of marketability of the Company’s common stock, developments in the business, share repurchase arrangements, the status of the Company’s development and sales efforts, revenue growth, valuations of comparable companies, and additional objective and subjective factors relating to the Company’s business. Expected volatility was calculated as of each grant date based on reported data for several unrelated public companies within the Company’s industry that are considered to be comparable to the Company and for which historical information was available. The average expected term was determined under the simplified calculation as provided by the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107, Share-Based Payment , which is the mid-point between the vesting date and the end of the contractual term. The dividend yield assumption of zero was based upon the fact that the Company does not have a formal dividend payment policy, the Company does not intend to pay cash dividends on its common stock in the future, and, to the extent the Company pays dividends in the future, there is no assurance that any such dividends will be comparable to those previously declared. Any declarations of dividends and the establishment of future record and payment dates are subject to the final determination of the Company’s Board of Directors. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve rates with the remaining term commensurate with the expected life assumed at the date of grant. Forfeitures are recorded as adjustments to expense as they occur. The Company did not grant any options during the years ended December 31, 2017 , 2016 and 2015 . Stock option activity is as follows: Number of Shares Outstanding Weighted- Average Exercise Price Weighted- Average Grant-date Fair Value of Underlying Common Stock Weighted- Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Balance at January 1, 2017 2,184,281 $ 7.32 5.7 $ 6,514 Stock options granted — $ — — Stock options exercised (660,868 ) $ 7.13 Stock options cancelled (210,103 ) $ 6.97 Balance at December 31, 2017 1,313,310 $ 7.47 5.4 $ 9,895 Exercisable at December 31, 2017 782,710 $ 7.48 4.7 $ 5,886 Vested and expected to vest at December 31, 2017 1,313,310 $ 7.47 5.4 $ 9,895 As of December 31, 2017 , there is $2.8 million of total unrecognized compensation expense related to unvested stock options, and this expense is expected to be recognized over a weighted-average period of 1.4 years . The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair value of the Company’s common stock and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options. This amount is subject to change based on changes to the fair market value of the Company’s common stock. The total intrinsic value of options exercised during the years ended December 31, 2017 , 2016 and 2015 was $4.2 million , $7.7 million , and $53.4 million , respectively. Restricted Stock Units In November 2014, the Company began issuing RSUs pursuant to the 2007 Plan. The Company uses the fair market value of the underlying common stock on the date of grant to determine the fair value of RSUs. The RSUs vest upon the satisfaction of both a service condition and a liquidity condition. The service condition for these awards is satisfied over five years. The liquidity condition is satisfied upon the occurrence of a qualifying event, defined as a change of control transaction or six months following the completion of the Company’s IPO. As of December 31, 2014, no stock-based compensation expense had been recognized for these RSUs because the qualifying events (described above) had not occurred. This six-month period following the IPO is not a substantive service condition and, accordingly, in 2015, the year in which the Company consummated its IPO, the Company recognized cumulative stock-based compensation expense for the portion of the RSUs that had met the service condition as of that date, following the straight-line method, net of estimated forfeitures. All remaining unrecognized stock-based compensation expense related to these RSUs is recorded over the remaining requisite service period using the straight-line method. During 2015, the Company began granting RSUs pursuant to the 2015 Plan. These awards vest ratably over five years on each anniversary of the grant date. Upon vesting, the Company will deliver to the holder shares of the Company’s Class A common stock under the 2015 Plan. Pursuant to the terms of the awards, any unvested shares terminate upon the RSU holders’ separation from the Company. The Company recognizes stock-based compensation expense ratably over the requisite service period and records adjustments related to forfeitures as they occur. A summary of RSU activity is as follows: Number of RSUs Weighted Average Fair Value Per Unit RSUs granted and unvested at January 1, 2017 293,489 $ 21.85 RSUs granted during 2017 45,625 13.70 RSUs vested during 2017 (87,444 ) 21.54 RSUs forfeited during 2017 (30,732 ) 24.42 RSUs granted and unvested at December 31, 2017 220,938 $ 19.94 The weighted-average fair value of RSUs granted during the years ended December 31, 2017 , 2016 and 2015 was $13.70 , $0.00 and $30.64 , respectively. During the years ended December 31, 2017 , 2016 and 2015 , these awards had an aggregate grant date fair value of $0.6 million , $0.0 million and $2.3 million , respectively. The total fair value of RSUs vested during the years ended December 31, 2017 , 2016 and 2015 was $1.3 million , $1.5 million and $1.7 million , respectively. As of December 31, 2017 , there was a total of $3.6 million in unrecognized compensation cost related to unvested RSUs, which are expected to be recognized over a weighted-average period of approximately 1.8 years . Restricted Stock Awards During 2015, the Company began granting RSAs pursuant to the 2015 Plan. RSAs granted to directors fully vest upon the one year anniversary of the award grant date, and RSAs granted to employees vest ratably over five years on each anniversary of the grant date. Upon vesting, the Company will deliver shares of the Company’s Class A common stock to the holders. Pursuant to the terms of the awards, any unvested shares terminate upon the RSA holders’ separation from the Company. The Company recognizes stock-based compensation expense for the RSAs following the straight-line method over the requisite service period. The Company records adjustments related to forfeitures as they occur. In March 2017, the Company began issuing RSAs with performance conditions under the 2015 Plan. The awards have vesting conditions tied to the achievement of specified performance conditions, which have target performance levels that span from three to five years. Upon the conclusion of the performance period, the performance level achieved will be measured and the ultimate number of shares that vest will be determined. Stock-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and the probability of achievement of the specified performance conditions. During 2017, the Company granted 2.6 million RSAs, of which 1.2 million had performance vesting conditions. A summary of RSA activity is as follows: Number of RSAs Weighted Average Fair Value Per Unit RSAs granted and unvested at January 1, 2017 2,836,860 $ 14.47 RSAs granted during 2017 2,648,102 12.64 RSAs vested during 2017 (621,851 ) 14.42 RSAs forfeited during 2017 (261,479 ) 14.35 RSAs granted and unvested at December 31, 2017 4,601,632 $ 13.43 The weighted-average fair value of an RSA granted during the years ended December 31, 2017 , 2016 and 2015 was $12.64 , $13.81 and $18.79 , respectively. During the years ended December 31, 2017 , 2016 and 2015 , these awards had an aggregate grant date fair value of $33.5 million , $36.9 million and $11.2 million , respectively. The total fair value of RSAs vested during the years ended December 31, 2017 , 2016 and 2015 was $9.3 million , $3.0 million and $0 , respectively. As of December 31, 2017 , there was a total of $56.0 million in unrecognized compensation cost, net of estimated forfeitures, related to unvested RSAs, which are expected to be recognized over a weighted-average period of approximately 3.7 years. Employee Stock Purchase Plan On February 18, 2015, the date of the completion of the Company’s IPO, the 2015 Employee Stock Purchase Plan (“2015 ESPP”) became effective. The 2015 ESPP provides (i) for six months purchase periods (commencing each March 1 and September 1) and (ii) that the purchase price for shares of Class A common stock purchased under the 2015 ESPP will be 85% of the fair market value of the Company’s Class A common stock on the last day of the applicable offering period. Eligible employees are able to select a rate of payroll deduction between 1% and 15% of their base cash compensation subject to a maximum payroll deduction per offering period of $7,500 . The 2015 ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code. The Company reserved 1,833,857 shares of Class A common stock for issuance under the 2015 ESPP. The following table summarizes the ESPP activity during the years shown: Year Ended December 31, 2017 2016 2015 Shares purchased and issued 49,247 61,184 30,689 Weighted average discounted price per share $ 11.08 $ 14.03 $ 18.61 Stock-based compensation expense (in thousands) $ 154 $ 140 $ 156 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLANS | On June 1, 2007, the Company adopted a 401(k) Profit Sharing Plan and Trust (“401(k) Plan”). The 401(k) Plan was amended on February 1, 2010. The amended 401(k) Plan allows employees to become eligible to participate upon the completion of 30 days of service. The Company matches employee contributions up to 4.0% of their compensation and the employer contributions vest immediately. During the years ended December 31, 2017 , 2016 , and 2015 , total expense recorded for the Company’s matching 401(k) contributions were $5.2 million , $5.2 million , and $4.2 million , respectively. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY (DEFICIT) | On February 18, 2015, the Company completed its initial public offering of 22,222,222 shares of Class A common stock and, upon the underwriters’ exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued (the “IPO”). All of the shares issued in the IPO were primary shares offered by the Company as none of the Company’s stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $ 27.00 per share, resulting in net proceeds to the Company, after the underwriters’ discounts and commissions and other expenses, payable by the Company, of approximately $639.1 million . On May 4, 2016, the Company announced that its Board of Directors authorized a program to repurchase up to $100.0 million of Inovalon’s Class A common stock through December 31, 2017 . Repurchases under the Company’s share repurchase program have been made in open-market or privately negotiated transactions. The Company funded 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 $100.0 million of shares of Inovalon’s Class A Common Stock (bringing the total to $200.0 million ) through December 31, 2017. The share repurchase program did not obligate the Company to acquire any particular amount of Class A common stock. During the years ended December 31, 2017 and 2016 , the Company repurchased 7,111,190 and 7,508,985 Class A common shares for $93.6 million and $106.2 million , respectively, at an average cost of $13.16 and $14.15 per share, respectively, excluding commissions. The share repurchase program expired on December 31, 2017 . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | In December 2017, the Tax Act was enacted which includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. The Tax Act also provides for the acceleration of depreciation for certain assets placed into service after September 27, 2017 and prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, the Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a $15.5 million tax benefit in the Company’s consolidated statement of operations for the year ended December 31, 2017. The tax benefit recognized may be impacted if additional guidance is released. The provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2017 2016 2015 Current: Federal $ 2,194 $ 7,480 $ 31,351 State 2,162 5,788 10,937 Foreign (Puerto Rico) 78 267 574 Total current provision 4,434 13,535 42,862 Deferred: Federal (8,333 ) (1,533 ) 4,708 State 1,668 (207 ) 1,078 Total deferred provision (6,665 ) (1,740 ) 5,786 Total provision for income taxes $ (2,231 ) $ 11,795 $ 48,648 The provision for income taxes reconciles to the amount computed by applying the federal statutory rate, 35.0% , to income before income taxes as follows (in thousands, except percentages): Year Ended December 31, 2017 2016 2015 Expected federal income tax 35.0 % $ 11,406 35.0 % $ 13,650 35.0 % $ 40,149 State income taxes, net of federal income tax effect 8.0 % 2,606 7.4 % 2,859 6.8 % 7,753 Permanent items 0.3 % 88 (0.9 )% (357 ) 0.3 % 390 Research and development tax credits (2.6 )% (850 ) (1.9 )% (756 ) (0.8 )% (864 ) Excess tax benefits and stock-based compensation (0.7 )% (243 ) (3.0 )% (1,165 ) — % — Acquisition-related tax adjustments (1.4 )% (445 ) (4.3 )% (1,686 ) — % — Enactment of the Tax Act (47.4 )% (15,461 ) — % — — % — Other 2.0 % 668 (2.0 )% (750 ) 1.1 % 1,220 Income tax expense (6.8 )% $ (2,231 ) 30.3 % $ 11,795 42.4 % $ 48,648 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): December 31, 2017 2016 Components of deferred tax assets and liabilities Deferred tax assets: Accrued expenses and reserves $ 313 $ 3,135 Stock-based compensation 3,040 2,849 Deferred rent 581 987 Net operating loss carryforwards 2,654 1,047 Other 758 904 Total deferred tax assets 7,346 8,922 Deferred tax liabilities: Intangibles 9,568 18,046 Property, equipment and capitalized software 21,564 23,108 Prepaids and other 2,639 2,083 Total deferred tax liabilities 33,771 43,237 Net deferred tax liabilities before valuation allowance 26,425 34,315 Valuation Allowance 217 238 Net deferred tax liabilities $ 26,642 $ 34,553 Uncertain Tax Positions —During the years ended December 31, 2017 , 2016 , and 2015 , changes in the liability for gross uncertain tax position, including interest, totaled $0.1 million , $0.1 million , and $0.0 million , respectively. The following table presents the changes in uncertain tax position (in thousands). 2017 2016 2015 Uncertain tax position January 1 $ 80 $ — $ — Gross increase in tax positions in prior period 291 80 — Gross decrease in tax positions in prior period (160 ) — — Gross increase in tax positions from acquisitions — — — Settlement (211 ) — — Lapse of statute of limitations — — — Uncertain tax position at December 31 $ — $ 80 $ — Net Operating Losses (“NOL”) carryforwards —At December 31, 2017 and 2016 , we had U.S. federal and state NOL carryforwards of approximately $3.3 million and $1.0 million , respectively. These NOL carryforwards will expire by 2037. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could differ from the Company’s accrued position. Accordingly, additional provisions on federal, state and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. The Company is subject to taxation by the United States of America, various United States of America jurisdictions, and Puerto Rico. The number of years with open tax audits varies depending on the tax jurisdiction. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts and Reserves | INOVALON HOLDINGS, INC. Schedule II Valuation and Qualifying Accounts and Reserves (in thousands) Allowance for Accounts Receivable Balance at Beginning of Year Additions Charged Against Revenue Additions Charged to Cost and Expense Deductions Balance at End of Year Year Ended December 31, 2017 $ 3,782 $ 8,886 $ — $ (10,630 ) $ 2,038 Year Ended December 31, 2016 $ 1,022 $ 3,792 $ — $ (1,032 ) $ 3,782 Year Ended December 31, 2015 $ 1,827 $ 1,126 $ — $ (1,931 ) $ 1,022 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation —The accompanying 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. |
Basis of Presentation | Basis of Presentation and Use of Estimates —These consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. |
Use of Estimates | Significant estimates made by management include, but are not limited to: revenue recognition, including selling prices associated with the individual elements in multiple element arrangements; accounts receivable allowances; estimates of the fair value of stock-based awards; fair value of intangibles and goodwill; depreciable lives of property, equipment and capitalized software; and useful lives of intangible assets. Actual results could differ from management’s estimates, and such differences could be material to the Company’s consolidated financial position and results of operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents —Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase, and demand deposits with financial institutions. |
Short-term investments | Short-term investments —Short-term investments consists of investment grade debt securities. The Company classifies short-term investments as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. All short-term investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive loss, a component of stockholders’ equity. The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered to be other-than-temporary if they are related to deterioration in credit risk, if it is more likely than not that the Company will be required to sell or intends to sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported as components of other income and (expenses), in the consolidated statements of operations. Interest, amortization of premiums, and accretion of discount on short-term investments classified as available for sale are included as a component of interest income, in the consolidated statements of operations. There were no other-than-temporary impairments during 2017 . The Company may sell short-term investments at any time, without significant penalty, for use in current operations or for other purposes, even if the short-term investments have not yet reached maturity. As a result, the Company classifies these investments, including securities with maturities beyond 12 months , as current assets in the accompanying consolidated balance sheets. Gains or losses realized from the sale of securities are reclassified out of other comprehensive income (loss) into earnings using the specific identification method. |
Concentrations of Credit Risk | Concentrations of Credit Risk —Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. Although the Company deposits its cash and cash equivalents with multiple financial institutions, the Company’s deposits may exceed federally insured limits. The Company has not experienced any losses on cash and cash equivalent accounts to date, and management believes the Company is not exposed to any significant credit risk related to cash and cash equivalents. The Company sells services to clients without requiring collateral, based on an evaluation of the client’s financial condition. Exposure to losses on receivables is principally dependent on each client’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. |
Accounts Receivable and Allowances | Accounts Receivable and Allowances —Accounts receivable consists primarily of amounts due to the Company from its normal business activities. The Company provides an allowance for estimated losses resulting from the failure of clients to make required payments (credit losses) and a sales allowance for estimated future billing adjustments resulting from client concessions or resolutions of billing disputes. The provision for sales allowances are charged against revenue while credit losses are recorded in general and administrative expenses. |
Fair Value Measurements | Fair Value Measurements —The Company applies the Accounting Standards Codifications (“ASC”) 820-10, Fair Value Measurements and Disclosures . ASC 820-10 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and expands required disclosures about fair value measurements. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below. The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value: Level 1—Financial assets and liabilities whose values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2—Financial assets and liabilities whose values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3—Financial assets and liabilities whose values are based on unobservable inputs for the asset or liability. The carrying amounts of accounts receivable, other current assets, accounts payable, and accrued liabilities approximate fair value due to their short-term nature. The Company’s Credit Facilities (as defined in Note 9) approximate fair value because of their floating rate structure. |
Property, Equipment and Capitalized Software, net | Property, Equipment and Capitalized Software, net —Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property, leasehold improvements, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Useful Life Office and computer equipment 3 - 5 years Purchased software 5 years Capitalized software 3 - 5 years Furniture and fixtures 7 years Building * Leasehold improvements * Assets under capital leases * _______________________________________ *Lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of property and equipment are expensed as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. In accordance with ASC 350-40, Internal-use Software , the Company capitalizes certain software development costs while in the application development stage related to software developed for internal use. All other costs to develop software for internal use, either in the preliminary project stage or post implementation stage, are expensed when incurred. Software development costs are amortized on a straight-line basis over a three to five year period, which management believes represents the useful life of these capitalized costs. In accordance with ASC 985-20, Software to be Sold, Leased, or Marketed , certain software development costs are expensed as incurred until technological feasibility has been established. Thereafter, all software development costs incurred through the software’s general release date are capitalized and subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs are amortized based on current and expected future revenue for each software solution with minimum annual amortization equal to the straight-line amortization over the estimated economic life, which is typically over a three to five year period. |
Intangible Assets | Intangible Assets —Intangible assets consist of acquired technology, including developed and core technology, databases, trade names, and customer relationships. Intangible assets are initially recorded at fair value and amortized on a straight line basis over their estimated useful lives. Acquired intangible assets are being amortized over the following periods: Useful Life Proprietary software technology 3 - 10 years Trademark 3 - 10 years Database 10 years Customer relationships 8 - 15.75 years Non-compete agreements Contractual term In-process research and development Indefinite On an annual basis, the Company reviews its intangible assets for impairment based on estimated future undiscounted cash flows attributable to the assets. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their net realizable values. There were no impairment charges on intangible assets for the years ended December 31, 2017 and 2016 . |
Goodwill | Goodwill —Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of businesses acquired. Goodwill is not amortized and is subject to impairment testing annually, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. In January 2017, the FASB issued Accounting Standards Update (“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. The Company early adopted the requirements of the new standard in the fourth quarter of 2017. As a result, the amendments modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the Company will record an impairment loss in the amount equal to the difference between the fair value and the carrying value. The Company performs the goodwill impairment testing annually as of December 31st, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Significant judgment in testing goodwill for impairment includes assigning assets and liabilities to the reporting unit and assessing or determining the fair value of each reporting unit based on the Company’s best estimates and assumptions, as well as other information including valuations that utilize customary valuation procedures and techniques. The Company tests its goodwill for impairment at the reporting unit level which is one level below the operating segment and has identified three reporting units: Inovalon, Avalere and Creehan. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets —The Company reviews long-lived assets for events or changes in circumstances that would indicate potential impairment. If the Company determines that an asset may not be recoverable, an impairment charge is recorded. There were no impairment charges on long-lived assets for the years ended December 31, 2017 , 2016 and 2015 . |
Revenue Recognition | Revenue Recognition —The Company recognizes revenue when it is realized (or realizable) and earned (i.e., when services have been rendered or delivery of applicable deliverables has occurred). This occurs when persuasive evidence of an arrangement exists, the product or service has been performed or delivered, fees are fixed or determinable, and collection is reasonably assured. When collectability is not reasonably assured, revenue is recognized when cash is collected. Cash collections and invoices generated in excess of revenue recognized are recorded as deferred revenue until the revenue recognition criteria are met. The Company primarily derives its revenue from multiple-element arrangement sales of its cloud-based data analytics and data-driven intervention platform services. Revenue from these multiple element arrangements are recognized in accordance with ASC 605-25, Revenue Recognition—Multiple Element Arrangements . The Company allocates revenue to its cloud-based data analytics and data-driven intervention platform services using the relative selling price method. The Company has generally been unable to establish vendor-specific objective evidence of fair value, and while the Company routinely seeks third party evidence of fair value, meaningful data has generally been unavailable as the Company’s services are unique and visibility into competitors pricing is unavailable. As a result, the Company uses its best estimate of selling price to allocate arrangement consideration to its contractual service elements. The Company has determined a best estimate of selling price by considering several external and internal factors including, but not limited to, pricing practices, profitability objectives, competition, customer demand, internal costs, and overall economic trends. Generally, the best estimate of selling price is consistent with the contractual arrangement fee for each element. Revenue is recognized as cloud-based data analytics and data-driven intervention services are performed and information is delivered to clients, which generally align with the Company’s right to invoice its clients. Cloud- based data analytics services are considered performed when gaps in care, quality, data integrity, or financial performance, and summarized key analytics and benchmarking analytics reports are delivered to its clients, provided that all contractual performance requirements and other revenue recognition criteria are met. Cloud-based data-driven intervention services are considered performed upon completion, provided that all contractual performance requirements and other revenue recognition criteria are met. The Company also generates revenue from data-driven advisory services and recognizes revenue for these services when persuasive evidence of an arrangement exists, services have been rendered, the contract price is fixed or determinable, and collectability is reasonably assured. The Company enters into arrangements for data-driven advisory services under time and materials, fixed-price, or retainer based contracts. Revenue for time and material contracts is recognized based upon contractually agreed upon billing rates applied to direct labor hours expended plus the costs of other items used in the performance of the contract. Revenues under fixed-price and retainer-based contracts are recognized ratably over the contract period or upon contract completion. Invoices to clients are generated in accordance with the terms of the applicable contract, which may not be directly related to the performance of services. Unbilled receivables are invoiced when the achievement of specific events as defined by each contract occurs. Unbilled receivables, if any, are classified as a current asset. Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the aforementioned revenue recognition criteria are met. The Company also enters into multiple-element software arrangements, which are recognized under ASC 985-605, Software Revenue Recognition, when a software subscription license is provided to customers. Under these arrangements, post-contract support is provided, including help desk support and unspecified upgrades. Vendor-specific objective evidence of fair value has not been established for maintenance as maintenance is not renewed separately from the license fees. As a result, under these subscription software license agreements, revenue is recognized from the license of software ratably over the life of the agreement. The Company begins to recognize revenue upon execution of a signed agreement and delivery of the software, provided that the software license fees are fixed and determinable, and collection of the resulting receivable is reasonably assured. Certain of the Company’s arrangements entitle a client to receive a refund if the Company fails to satisfy contractually specified performance obligations. The refund is limited to a portion or all of the consideration paid. In this case, revenue is recognized when performance obligations are satisfied. The Company maintains an allowance, charged to revenue, which reflects the Company’s estimated future billing adjustments resulting from client concessions or resolutions of billing disputes. |
Cost of Revenue | Cost of Revenue —Cost of revenue consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, equity compensation costs, and severance for employees that provide direct revenue-generating services to clients. Cost of revenue also includes expenses associated with the integration and verification of data and other service costs incurred to fulfill the Company’s revenue contracts. Cost of revenue does not include allocated amounts for occupancy expense, depreciation and amortization. |
Research and Development | Research and Development —Research and development expenses consist primarily of employee-related expenses. All such costs are expensed as incurred, except for certain internal use software development costs that are capitalized. Research and development excludes any allocation of occupancy expense, depreciation and amortization. |
Selling and Marketing and General and Administrative | Selling and Marketing —Sales and marketing expense consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance and equity compensation costs for employees engaged in sales, sales support, business development, and marketing. Sales and marketing expense also includes operating expenses for marketing programs, research, trade shows and brand messages, and public relations costs. Sales and marketing expense excludes any allocation of occupancy expense, depreciation and amortization. General and Administrative —General and administrative expense consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance and equity compensation costs, for employees who are responsible for management information systems, administration, human resources, finance, legal, and executive management. General and administrative expense also includes occupancy expenses (including rent, utilities, communications, and facilities maintenance), professional fees, consulting fees, insurance, travel, and other expenses. General and administrative expense excludes any allocation of depreciation and amortization. |
Segments | Segments —The Company operates its business as one operating segment. The Company develops cloud-based data analytics and data-driven intervention platforms and provides related services to its clients in order to achieve meaningful insight and improvement in clinical and quality outcomes, utilization, and financial performance. The Company derives substantially all of its revenue from the sale and support of one group of similar products and related services—proprietary datasets, advanced integration technologies, sophisticated predictive analytics, and deep subject matter expertise that enable the Company to provide seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to clients. Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. In the process of allocating resources and assessing performance, the Company’s CODM, its chief executive officer, reviews financial information presented on a consolidated basis. |
Income Taxes | Income Taxes —The Company accounts for income taxes in accordance with ASC 740, Income Taxes , which prescribes the use of the asset and liability approach to the recognition of deferred tax assets and liabilities related to the expected future tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established, when necessary, to reduce deferred tax assets when it is more likely than not that a portion or all of a given deferred tax asset will not be realized. In accordance with ASC 740, income tax expense includes (i) deferred tax expense, which represents the net change in the deferred tax asset or liability balance during the period and any change in valuation allowances and (ii) current tax expense, which represents the amount of tax currently payable to or receivable from a taxing authority and amounts accrued for expected tax contingencies (including both tax and interest). ASC 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those positions to be recognized in the financial statements. The Company continually reviews tax laws, regulations and related guidance in order to properly record any uncertain tax liability positions. The Company adjusts these reserves in light of changing facts and circumstances. |
Stock-Based Compensation | Stock-Based Compensation —All stock-based awards, including employee stock option grants, restricted stock unit (“RSU”) grants, and restricted stock award (“RSA”) grants, are recorded at fair value as of the grant date in accordance with ASC 718, Compensation—Stock Compensation , and recognized in the statement of operations over the service period of the applicable award using the straight-line method. The Company determines the fair value of its stock option awards on the date of grant, using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates. The Company measures RSUs and RSAs that vest upon satisfaction of a service condition, a performance condition, or a liquidity condition, if such conditions are applicable, based on the fair market values of the underlying common stock on the dates of grant. RSUs are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. Compensation expense is recognized based upon the satisfaction of the requisite service, liquidity condition as of that date, and or the probability of achievement of the specified performance conditions following the straight-line method. |
Treasury Stock | Treasury Stock —The Company records treasury stock activities under the cost method whereby the cost of the acquired stock is recorded as treasury stock. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct the par value from common stock and to reflect any excess of cost over par value as a reduction to additional paid-in capital (to the extent created by previous issuances of the shares) and then retained earnings. |
Deferred Rent | Deferred Rent —Deferred rent consists of rent escalation payment terms, tenant improvement allowances and other incentives received from landlords related to the Company’s operating leases for its facilities. Rent escalation represents the difference between actual operating lease payments due and straight-line rent expense, which is recorded by the Company over the term of the lease, including any construction period. The excess is recorded as a deferred credit in the early periods of the lease, when cash payments are generally lower than straight-line rent expense, and is reduced in the later periods of the lease when payments begin to exceed the straight-line expense. Tenant allowances from landlords for tenant improvements are generally comprised of cash received from the landlord as part of the negotiated terms of the lease or reimbursements of moving costs. These cash payments are recorded as deferred rent from landlords and are amortized as a reduction of periodic rent expense, over the term of the applicable lease. |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies and intends to improve and simplify several aspects of the accounting for share-based payment awards, including income tax consequences, and classification on the statement of cash flows, therefore the Company early adopted ASU 2016-09 during the fourth quarter of 2016. Early adoption of ASU 2016-09 required the Company to apply its provisions as of January 1, 2016. Amendments related to accounting for excess tax benefits have been adopted prospectively, resulting in recognition of excess tax benefits against income tax expenses rather than additional paid-in capital of approximately $0.9 million for the year ended December 31, 2016. Excess tax benefits for stock-based payments are now included in net operating cash rather than net financing cash. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. The Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative effect adjustment to retained earnings of approximately $0.6 million , net of tax of approximately $0.2 million , as of January 1, 2016. The adoption of ASU 2016-09 did not materially impact the Company’s consolidated financial position, results of operations, equity or cash flows. 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 beginning 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. The Company early adopted the requirements of the new standard in the fourth quarter of 2017 as it performed its annual impairment analysis. The Company evaluated each of its reporting units based on current and forecasted financial information and finalized the valuations and impairment analysis during the fourth quarter of 2017, resulting in no impairment. Recently Issued Accounting Standards 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 adopted the new standard as of January 1, 2018 using the modified retrospective approach. The Company evaluated existing contracts and implemented policies and changes to our processes, including a process for future contract reviews, and internal control over financial reporting. The impacts of the new standard include accounting for 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 is finalizing the calculation of the adjustment to retained earnings and currently expects the impact to be immaterial as the revenue recognition for our subscription licensing of our cloud-based data analytics, intervention and reporting platforms and related support services is materially consistent with our current revenue recognition model. The Company will provide additional disclosures as required by the new standard in the first quarter of 2018. In February 2016, the FASB issued ASU. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. In general, for lease arrangements exceeding a twelve month term, these arrangements will be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 will be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and note disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The update amends the guidance in Accounting Standards Codification 230, Statement of Cash Flows , and clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company plans to adopt the requirements of the new standard in the first quarter of 2018 and does not currently expect the adoption to have a material impact on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of concentration risk by factor | Revenue from a significant client, representing 10% or more of total revenue for the respective periods, is summarized as follows: Year Ended December 31, 2017 2016 2015 Client A 12 % 17 % 12 % Accounts receivable from a significant client, representing 10% or more of total accounts receivable for the respective dates, is summarized below: December 31, 2017 2016 Client A * 14 % _______________________________________ *Less than 10% |
Schedule of the useful life of property, plant and equipment | Depreciation and amortization on property, leasehold improvements, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Useful Life Office and computer equipment 3 - 5 years Purchased software 5 years Capitalized software 3 - 5 years Furniture and fixtures 7 years Building * Leasehold improvements * Assets under capital leases * _______________________________________ *Lesser of lease term or economic life |
Schedule of amortized life of acquired intangible assets | Acquired intangible assets are being amortized over the following periods: Useful Life Proprietary software technology 3 - 10 years Trademark 3 - 10 years Database 10 years Customer relationships 8 - 15.75 years Non-compete agreements Contractual term In-process research and development Indefinite |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of composition of the fair value of the consideration transferred | 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 The composition of the fair value of the consideration transferred is as follows (in thousands): Cash $ 118,755 Issuance of Class A common stock 3,847 Contingent consideration 2,300 Total fair value purchase price $ 124,902 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 final purchase price allocation to assets acquired and liabilities assumed, including identification of measurement period adjustments (in thousands): Preliminary Recorded Value Measurement Period Adjustments Final Recorded Value Cash and cash equivalents $ 4,037 $ — $ 4,037 Accounts receivable 13,011 (120 ) 12,891 Current assets 1,958 — 1,958 Property, equipment and capitalized software 3,248 — 3,248 Intangible assets (1) 57,520 300 57,820 Goodwill (2) 74,238 1,226 75,464 Deferred income taxes 947 (224 ) 723 Other assets 224 — 224 Total assets acquired 155,183 1,182 156,365 Current liabilities (11,054 ) 108 (10,946 ) Deferred tax liability (17,677 ) (686 ) (18,363 ) Deferred revenue (1,600 ) — (1,600 ) Other liabilities (554 ) — (554 ) Total liabilities assumed (30,885 ) (578 ) (31,463 ) Net assets acquired $ 124,298 $ 604 $ 124,902 _______________________________________ (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 and is not deductible for tax purposes. 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 Preliminary Recorded Value Measurement Period Adjustments Final Recorded Value Customer relationships 10 years $ 45,800 $ — $ 45,800 Tradename 10 years 8,300 — 8,300 Technology 5 years 2,600 300 2,900 Non-compete agreements 3 years 820 — 820 Total intangible assets $ 57,520 $ 300 $ 57,820 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 revenue and net loss attributable to acquisition | The following table presents revenue and loss before taxes of Avalere since the acquisition date, September 1, 2015, included in the consolidated statements of operations (in thousands): Year Ended December 31, Revenue $ 17,492 Loss before taxes $ (29 ) The following table presents pro forma information, based on estimates and assumptions that the Company believes to be reasonable, for the Company as if the acquisition of Avalere had occurred at the beginning of the earliest period presented (unaudited, in thousands): Year Ended December 31, 2015 Pro forma revenue $ 469,784 Pro forma income before taxes $ 108,977 The following table presents revenue and loss before taxes of Creehan since the acquisition date, October 3, 2016, included in the consolidated statements of operations and includes amortization expense related to acquired intangible assets (in thousands): Year Ended December 31, Revenue $ 8,106 Loss before taxes $ (976 ) |
Schedule of pro forma acquisition | The following table presents pro forma information, based on estimates and assumptions that the Company believes to be reasonable, for the Company as if the acquisition of Creehan had occurred at the beginning of the earliest period presented (unaudited, in thousands): Year Ended December 31, 2016 2015 Pro forma revenue $ 453,613 $ 464,646 Pro forma income before taxes $ 44,203 $ 115,331 |
Schedule of preliminary composition of stated purchase price and fair value of stated purchase price | A summary of the composition of the stated purchase price and fair value of the stated purchase price is as follows (in thousands): Share Purchase Agreement purchase price $ 140,000 Working capital adjustment 3,112 Subtotal 143,112 Fair Value Adjustments: Restricted stock marketability discount (1,153 ) Performance objectives discount from maximum value (700 ) Post-acquisition compensation expense (16,357 ) Total fair value purchase price $ 124,902 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of numerators and denominators of the basic and diluted EPS | The numerators and denominators of the basic and diluted EPS computations, reconciliations of the weighted average shares outstanding, and resulting basic and diluted earnings per share for our common stock are calculated as follows (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 Basic Numerator: Net income $ 34,818 $ 27,104 $ 66,063 Undistributed earnings allocated to participating securities (990 ) (161 ) (49 ) Net income attributable to common stockholders—basic $ 33,828 $ 26,943 $ 66,014 Denominator: Weighted average shares used in computing net income per share attributable to common stockholders—basic 142,225 150,048 145,745 Net income per share attributable to common stockholders—basic $ 0.24 $ 0.18 $ 0.45 Diluted Numerator: Net income attributable to common stockholders—diluted $ 33,828 $ 26,943 $ 66,014 Denominator: Number of shares used for basic EPS computation 142,225 150,048 145,745 Effect of dilutive securities 512 907 2,530 Weighted average shares used in computing net income per share attributable to common stockholders—diluted 142,737 150,955 148,275 Net income per share attributable to common stockholders—diluted $ 0.24 $ 0.18 $ 0.45 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The computation of diluted EPS does not include certain awards, on a weighted average basis, for the years ended December 31, 2017 , 2016 , and 2015 , 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): Year Ended December 31, 2017 2016 2015 Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive 88 44 645 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of short-term investments | As of December 31, 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 $ 232,048 $ 3 $ (572 ) $ 231,479 U.S. agency obligations 15,341 — (99 ) 15,242 U.S. treasury securities 20,735 — (168 ) 20,567 Total available-for-sale securities $ 268,124 $ 3 $ (839 ) $ 267,288 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): December 31, 2017 2016 Due in one year or less $ 204,725 $ 176,696 Due after one year through two years 62,563 268,619 Total $ 267,288 $ 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 December 31, 2017 , aggregated by investment category (in thousands): Estimated Fair Value Gross Unrealized Losses Corporate notes and bonds $ 223,088 $ (572 ) U.S. agency obligations 15,242 (99 ) U.S. treasury securities 20,567 (168 ) $ 258,897 $ (839 ) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2017 (in thousands): Level 1 Level 2 Level 3 Total Cash Equivalents: Money market funds $ 162,347 $ — $ — $ 162,347 Short-term investments: Corporate notes and bonds — 231,479 — 231,479 U.S. agency obligations — 15,242 — 15,242 U.S. treasury securities — 20,567 — 20,567 Other Current Liabilities: Contingent consideration — — (7,400 ) (7,400 ) Total $ 162,347 $ 267,288 $ (7,400 ) $ 422,235 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) as of the years ended December 31 (in thousands): Fair Value Measurements Using Unobservable Inputs (Level 3) 2017 2016 Balance, beginning of period $ (12,600 ) $ (2,300 ) Fair value adjustment (recognized in general and administrative expenses) 5,200 — Accretion expense (recognized in general and administrative expenses) — (706 ) Settlement (payment) of liability — 3,006 Contingent consideration attributable to Creehan acquisition — (12,600 ) Total $ (7,400 ) $ (12,600 ) |
PROPERTY, EQUIPMENT AND CAPIT32
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, equipment and capitalized software | Property, equipment and capitalized software consisted of the following (in thousands): December 31, 2017 2016 Office and computer equipment $ 55,840 $ 42,530 Leasehold improvements 10,096 12,480 Purchased software 26,425 14,421 Capitalized software 114,569 83,877 Furniture and fixtures 4,670 5,403 Land 390 390 Buildings 14,028 1,797 Work in process 16,323 3,966 Total 242,341 164,864 Less: accumulated depreciation and amortization (116,573 ) (88,444 ) Property, equipment and capitalized software, net $ 125,768 $ 76,420 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
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 years ended December 31, 2017 and 2016 (in thousands): Goodwill as of January 1, 2016 $ 137,733 Adjustments recorded in connection with the acquisition of Avalere (1) (4,163 ) Goodwill recorded in connection with the acquisition of Creehan 50,987 Goodwill as of December 31, 2016 184,557 Adjustments recorded in connection with the acquisition of Creehan (2) 375 Goodwill as of December 31, 2017 $ 184,932 ______________________________________ (1) During 2016, the Company adjusted certain assets and liabilities related to the finalization of tax returns for Avalere and prefunded escrow-related amounts related to the settlement of a contingent consideration earn-out that was successfully achieved by Avalere. The adjustments had no impact on the Company’s revenues or expenses. Based on our assessments of qualitative and quantitative factors, the adjustments were not considered to be material to our consolidated financial statements, individually or in the aggregate, to any previously issued consolidated financial statements. (2) During 2017, the Company finalized the working capital adjustments for Creehan. The adjustments had no impact on the Company’s revenues or expenses. Based on our assessments of qualitative and quantitative factors, the adjustments were not considered to be material to our consolidated financial statements, individually or in the aggregate, to any previously issued consolidated financial statements. |
Schedule of intangible assets | Intangible assets at December 31, 2017 and 2016 were as follows (in thousands): December 31, 2017 Gross Accumulated Amortization Net Weighted Average Remaining Useful Life (years) Proprietary software technologies $ 16,077 $ (16,077 ) $ — — Trademark 360 (360 ) — — Database 6,500 (5,362 ) 1,138 1.8 Customer relationships 13,650 (10,698 ) 2,952 7.4 Avalere acquisition (see Note 3): Customer Relationships 45,800 (10,687 ) 35,113 7.8 Tradename 8,300 (1,937 ) 6,363 7.8 Technology 2,900 (1,353 ) 1,547 2.7 Non-compete agreements 820 (638 ) 182 0.7 Creehan acquisition (see Note 3): Customer Relationships 36,500 (5,703 ) 30,797 6.9 Tradename 4,000 (1,250 ) 2,750 2.8 Technology 8,800 (2,750 ) 6,050 2.8 In-Process R&D 1,600 — 1,600 Indefinite CCS acquisition (see Note 3): Technology 800 (133 ) 667 2.5 Tradename 200 (33 ) 167 2.5 Total $ 146,307 $ (56,981 ) $ 89,326 December 31, 2016 Gross Accumulated Amortization Net Weighted Average Remaining Useful Life (years) Proprietary software technologies $ 16,077 $ (16,077 ) $ — — Trademark 360 (360 ) — — Database 6,500 (4,713 ) 1,787 2.8 Customer relationships 13,650 (10,304 ) 3,346 8.4 Avalere acquisition (see Note 3): Customer Relationships 45,800 (6,107 ) 39,693 8.8 Tradename 8,300 (1,107 ) 7,193 8.8 Technology 2,900 (773 ) 2,127 3.7 Non-compete agreements 820 (364 ) 456 1.7 Creehan acquisition (see Note 3): Customer Relationships 36,500 (1,147 ) 35,353 7.9 Tradename 4,000 (250 ) 3,750 3.8 Technology 8,800 (556 ) 8,244 3.8 In-Process R&D 1,600 — 1,600 Indefinite Total $ 145,307 $ (41,758 ) $ 103,549 |
Schedule of estimated future amortization expense of intangible assets | Estimated future amortization expense of intangible assets, based upon the Company’s intangible assets at December 31, 2017 , is as follows (in thousands): Amount Year ending December 31: 2018 $ 15,312 2019 14,967 2020 13,320 2021 10,366 2022 10,366 Thereafter 23,395 Total $ 87,726 |
CREDIT FACILITIES (Tables)
CREDIT FACILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of credit facilities | The Credit Facilities consisted of the following (in thousands): December 31, 2017 December 31, 2016 Revolving Credit Facility $ — $ — Term Loan Facility 236,250 266,250 Total Credit Facilities 236,250 266,250 Less: current portion 45,000 30,000 Non-current Credit Facilities $ 191,250 $ 236,250 |
Schedule showing maturity of the credit facilities | Scheduled maturity of the Credit Facilities follows (in thousands): Amount 2018 $ 45,000 2019 191,250 Total $ 236,250 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future non cancellable lease payments | Future non-cancellable lease payments as of December 31, 2017 are as follows (in thousands): Amount Year ending December 31, 2018 $ 7,286 2019 6,571 2020 3,200 2021 1,939 2022 1,939 Thereafter 12,602 Total $ 33,537 |
Schedule of future minimum lease payments for capital leases | Future minimum lease payments as of December 31, 2017 are as follows (in thousands): Amount Year ending December 31, 2018 $ 458 2019 1,015 2020 1,051 2021 1,090 2022 1,182 Thereafter 10,091 Total minimum lease payments 14,887 Less amount representing interest (2,442 ) Present value of minimum lease payments $ 12,445 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | Stock option activity is as follows: Number of Shares Outstanding Weighted- Average Exercise Price Weighted- Average Grant-date Fair Value of Underlying Common Stock Weighted- Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Balance at January 1, 2017 2,184,281 $ 7.32 5.7 $ 6,514 Stock options granted — $ — — Stock options exercised (660,868 ) $ 7.13 Stock options cancelled (210,103 ) $ 6.97 Balance at December 31, 2017 1,313,310 $ 7.47 5.4 $ 9,895 Exercisable at December 31, 2017 782,710 $ 7.48 4.7 $ 5,886 Vested and expected to vest at December 31, 2017 1,313,310 $ 7.47 5.4 $ 9,895 |
Schedule of RSUs granted and unvested | A summary of RSU activity is as follows: Number of RSUs Weighted Average Fair Value Per Unit RSUs granted and unvested at January 1, 2017 293,489 $ 21.85 RSUs granted during 2017 45,625 13.70 RSUs vested during 2017 (87,444 ) 21.54 RSUs forfeited during 2017 (30,732 ) 24.42 RSUs granted and unvested at December 31, 2017 220,938 $ 19.94 |
Schedule of RSAs granted and unvested | A summary of RSA activity is as follows: Number of RSAs Weighted Average Fair Value Per Unit RSAs granted and unvested at January 1, 2017 2,836,860 $ 14.47 RSAs granted during 2017 2,648,102 12.64 RSAs vested during 2017 (621,851 ) 14.42 RSAs forfeited during 2017 (261,479 ) 14.35 RSAs granted and unvested at December 31, 2017 4,601,632 $ 13.43 |
Schedule of ESPP Activity | The following table summarizes the ESPP activity during the years shown: Year Ended December 31, 2017 2016 2015 Shares purchased and issued 49,247 61,184 30,689 Weighted average discounted price per share $ 11.08 $ 14.03 $ 18.61 Stock-based compensation expense (in thousands) $ 154 $ 140 $ 156 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2017 2016 2015 Current: Federal $ 2,194 $ 7,480 $ 31,351 State 2,162 5,788 10,937 Foreign (Puerto Rico) 78 267 574 Total current provision 4,434 13,535 42,862 Deferred: Federal (8,333 ) (1,533 ) 4,708 State 1,668 (207 ) 1,078 Total deferred provision (6,665 ) (1,740 ) 5,786 Total provision for income taxes $ (2,231 ) $ 11,795 $ 48,648 |
Schedule of reconciliation of the provision for income taxes to the amount computed by applying the federal statutory rate to income before income taxes | The provision for income taxes reconciles to the amount computed by applying the federal statutory rate, 35.0% , to income before income taxes as follows (in thousands, except percentages): Year Ended December 31, 2017 2016 2015 Expected federal income tax 35.0 % $ 11,406 35.0 % $ 13,650 35.0 % $ 40,149 State income taxes, net of federal income tax effect 8.0 % 2,606 7.4 % 2,859 6.8 % 7,753 Permanent items 0.3 % 88 (0.9 )% (357 ) 0.3 % 390 Research and development tax credits (2.6 )% (850 ) (1.9 )% (756 ) (0.8 )% (864 ) Excess tax benefits and stock-based compensation (0.7 )% (243 ) (3.0 )% (1,165 ) — % — Acquisition-related tax adjustments (1.4 )% (445 ) (4.3 )% (1,686 ) — % — Enactment of the Tax Act (47.4 )% (15,461 ) — % — — % — Other 2.0 % 668 (2.0 )% (750 ) 1.1 % 1,220 Income tax expense (6.8 )% $ (2,231 ) 30.3 % $ 11,795 42.4 % $ 48,648 |
Schedule of components of the Company's deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): December 31, 2017 2016 Components of deferred tax assets and liabilities Deferred tax assets: Accrued expenses and reserves $ 313 $ 3,135 Stock-based compensation 3,040 2,849 Deferred rent 581 987 Net operating loss carryforwards 2,654 1,047 Other 758 904 Total deferred tax assets 7,346 8,922 Deferred tax liabilities: Intangibles 9,568 18,046 Property, equipment and capitalized software 21,564 23,108 Prepaids and other 2,639 2,083 Total deferred tax liabilities 33,771 43,237 Net deferred tax liabilities before valuation allowance 26,425 34,315 Valuation Allowance 217 238 Net deferred tax liabilities $ 26,642 $ 34,553 |
Schedule of unrecognized tax benefits | The following table presents the changes in uncertain tax position (in thousands). 2017 2016 2015 Uncertain tax position January 1 $ 80 $ — $ — Gross increase in tax positions in prior period 291 80 — Gross decrease in tax positions in prior period (160 ) — — Gross increase in tax positions from acquisitions — — — Settlement (211 ) — — Lapse of statute of limitations — — — Uncertain tax position at December 31 $ — $ 80 $ — |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) | Jan. 14, 2015 | Dec. 31, 2017$ / sharesshares | Dec. 31, 2016$ / sharesshares | Jan. 16, 2015$ / sharesshares |
NATURE OF OPERATIONS | ||||
Common stock, authorized (in shares) | shares | 900,000,000 | 900,000,000 | 900,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000005 | $ 0.000005 | $ 0.000005 | |
Class A Common | ||||
NATURE OF OPERATIONS | ||||
Conversion ratio | 5 | |||
Common stock, authorized (in shares) | shares | 750,000,000 | 750,000,000 | 750,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000005 | $ 0.000005 | ||
Class B Common | ||||
NATURE OF OPERATIONS | ||||
Conversion ratio | 5 | |||
Common stock, authorized (in shares) | shares | 150,000,000 | 150,000,000 | 150,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000005 | $ 0.000005 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)operating_segmentgroup | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Highly liquid investments, maximum maturity term | 3 months | ||
Other-than-temporary impairments | $ 0 | ||
Certain short-term investments, term | 12 months | ||
Impairment of intangible assets | $ 0 | $ 0 | |
Impairment of goodwill | 0 | ||
Impairment charge on long-lived assets | $ 0 | 0 | $ 0 |
Number of operating segments | operating_segment | 1 | ||
Number of groups of similar products and related services | group | 1 | ||
Excess tax benefits and stock-based compensation | $ (243,000) | (1,165,000) | 0 |
Cumulative effect of new accounting principle in period of adoption | (200,000) | ||
Retained Earnings | |||
Property, Plant and Equipment [Line Items] | |||
Cumulative effect of new accounting principle in period of adoption | 557,000 | ||
Accounting Standards Update 2016-09 | |||
Property, Plant and Equipment [Line Items] | |||
Excess tax benefits and stock-based compensation | $ 900,000 | ||
Accounting Standards Update 2016-09 | Retained Earnings | |||
Property, Plant and Equipment [Line Items] | |||
Cumulative effect of new accounting principle in period of adoption | 600,000 | ||
Cumulative effect of new accounting principle in period of adoption, tax | $ 200,000 | ||
Minimum | Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Maximum | Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations of Credit Risk - Revenue (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Credit Concentration Risk | Revenue | Client A | |||
Concentration Risk [Line Items] | |||
Concentration risk | 12.00% | 17.00% | 12.00% |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations of Credit Risk - Accounts Receivable (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Credit Concentration Risk | Accounts Receivable | Client A | |
Concentration Risk [Line Items] | |
Concentration risk | 14.00% |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment and Capitalized Software, Net (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Office and computer equipment | Minimum | |
Property, Equipment and Capitalized Software, net | |
Useful life | 3 years |
Office and computer equipment | Maximum | |
Property, Equipment and Capitalized Software, net | |
Useful life | 5 years |
Purchased software | |
Property, Equipment and Capitalized Software, net | |
Useful life | 5 years |
Capitalized software | Minimum | |
Property, Equipment and Capitalized Software, net | |
Useful life | 3 years |
Capitalized software | Maximum | |
Property, Equipment and Capitalized Software, net | |
Useful life | 5 years |
Furniture and fixtures | |
Property, Equipment and Capitalized Software, net | |
Useful life | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets - Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Database | |
Intangible Assets | |
Useful life | 10 years |
Minimum | Proprietary software technologies | |
Intangible Assets | |
Useful life | 3 years |
Minimum | Trademark | |
Intangible Assets | |
Useful life | 3 years |
Minimum | Customer relationships | |
Intangible Assets | |
Useful life | 8 years |
Maximum | Proprietary software technologies | |
Intangible Assets | |
Useful life | 10 years |
Maximum | Trademark | |
Intangible Assets | |
Useful life | 10 years |
Maximum | Customer relationships | |
Intangible Assets | |
Useful life | 15 years 9 months |
BUSINESS COMBINATIONS - Additio
BUSINESS COMBINATIONS - Additional Information (Details) $ in Thousands | Jul. 06, 2017USD ($) | Oct. 03, 2016USD ($)shares | Sep. 01, 2015USD ($)Clientshares | Sep. 30, 2017USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
BUSINESS COMBINATIONS | ||||||||
Bargain purchase gain | $ 1,400 | $ 1,434 | $ 0 | $ 0 | ||||
ComplexCare Solutions, Inc. | ||||||||
BUSINESS COMBINATIONS | ||||||||
Consideration paid in cash | 4,500 | |||||||
Contingent consideration | 2,300 | |||||||
Assets acquired | 9,800 | |||||||
Cash and cash equivalents | 1,500 | |||||||
Liabilities assumed | $ 3,900 | |||||||
Creehan Holding Co., Inc. | ||||||||
BUSINESS COMBINATIONS | ||||||||
Consideration paid in cash | $ 89,803 | |||||||
Contingent consideration | 12,600 | |||||||
Assets acquired | 112,983 | |||||||
Cash and cash equivalents | 861 | |||||||
Liabilities assumed | 2,816 | |||||||
Purchase price | 130,000 | |||||||
Payments to acquire businesses, gross before working capital adjustments | 120,000 | |||||||
Equity interests issued and issuable before working capital adjustments | $ 10,000 | |||||||
Issuance of Class A common stock (in shares) | shares | 651,355 | |||||||
Goodwill, adjustments | $ 400 | |||||||
Acquisition related costs | $ 1,600 | |||||||
Avalere Health Inc | ||||||||
BUSINESS COMBINATIONS | ||||||||
Consideration paid in cash | $ 118,755 | |||||||
Contingent consideration | 2,300 | |||||||
Assets acquired | 155,183 | $ 156,365 | 156,365 | |||||
Cash and cash equivalents | 4,037 | 4,037 | 4,037 | |||||
Liabilities assumed | 30,885 | 31,463 | 31,463 | |||||
Purchase price | $ 140,000 | |||||||
Goodwill, adjustments | $ 1,226 | |||||||
Acquisition related costs | $ 1,500 | |||||||
Issuance of common stock related to business combination (in shares) | shares | 235,737 | |||||||
Number of pharmaceutical and life sciences clients (more than) | Client | 200 |
BUSINESS COMBINATIONS - Stated
BUSINESS COMBINATIONS - Stated Purchase Price and Fair Value of the Stated Purchase Price (Details) - USD ($) $ in Thousands | Oct. 03, 2016 | Sep. 01, 2015 |
Creehan Holding Co., Inc. | ||
Composition of the stated purchase price and fair value of the stated purchase price | ||
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 | |
Avalere Health Inc | ||
Composition of the stated purchase price and fair value of the stated purchase price | ||
Share Purchase Agreement purchase price | $ 140,000 | |
Working capital adjustment | 3,112 | |
Subtotal | 143,112 | |
Fair value adjustments: | ||
Restricted stock marketability discount | (1,153) | |
Performance objectives discount from maximum value | (700) | |
Post-acquisition compensation expense | (16,357) | |
Total fair value purchase price | $ 124,902 |
BUSINESS COMBINATIONS - Fair Va
BUSINESS COMBINATIONS - Fair Value of Consideration Transferred (Details) - USD ($) $ in Thousands | Oct. 03, 2016 | Sep. 01, 2015 |
Creehan Holding Co., Inc. | ||
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 | |
Avalere Health Inc | ||
Composition of the purchase price | ||
Cash | $ 118,755 | |
Issuance of Class A common stock | 3,847 | |
Contingent consideration | 2,300 | |
Total fair value purchase price | $ 124,902 |
BUSINESS COMBINATIONS - Purchas
BUSINESS COMBINATIONS - Purchase Price Allocation (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | ||||
Sep. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 03, 2016 | Sep. 01, 2015 | |
Preliminary Recording of Assets Acquired and Liabilities Assumed | ||||||
Goodwill | $ 137,733 | $ 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 | 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 Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||||
Goodwill | $ 400 | |||||
Avalere Health Inc | ||||||
Preliminary Recording of Assets Acquired and Liabilities Assumed | ||||||
Cash and cash equivalents | 4,037 | $ 4,037 | ||||
Accounts receivable | 12,891 | 13,011 | ||||
Current assets | 1,958 | 1,958 | ||||
Property, equipment and capitalized software | 3,248 | 3,248 | ||||
Intangible assets | 57,820 | 57,520 | ||||
Goodwill | 75,464 | 74,238 | ||||
Deferred income taxes | 723 | 947 | ||||
Other assets | 224 | 224 | ||||
Total assets acquired | 156,365 | 155,183 | ||||
Current liabilities | (10,946) | (11,054) | ||||
Deferred tax liability | (18,363) | (17,677) | ||||
Deferred revenue | (1,600) | (1,600) | ||||
Other liabilities | (554) | (554) | ||||
Total liabilities assumed | (31,463) | (30,885) | ||||
Net assets acquired | 124,902 | $ 124,298 | ||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments [Abstract] | ||||||
Accounts receivable | (120) | |||||
Intangible assets | 300 | |||||
Goodwill | 1,226 | |||||
Deferred income taxes | (224) | |||||
Total assets acquired | 1,182 | |||||
Current liabilities | 108 | |||||
Deferred tax liability | (686) | |||||
Total liabilities assumed | 578 | |||||
Net assets acquired | $ 604 |
BUSINESS COMBINATIONS - Identif
BUSINESS COMBINATIONS - Identified Intangible Assets (Details) - USD ($) $ in Thousands | Oct. 03, 2016 | Sep. 01, 2015 | Dec. 31, 2015 |
Creehan Holding Co., Inc. | |||
Identified intangible assets | |||
Total intangible assets | $ 50,900 | ||
Creehan Holding Co., Inc. | Customer relationships | |||
Identified intangible assets | |||
Weighted Average Useful Life | 8 years | ||
Total intangible assets | $ 36,500 | ||
Creehan Holding Co., Inc. | Tradename | |||
Identified intangible assets | |||
Weighted Average Useful Life | 4 years | ||
Total intangible assets | $ 4,000 | ||
Creehan Holding Co., Inc. | Technology | |||
Identified intangible assets | |||
Weighted Average Useful Life | 4 years | ||
Total intangible assets | $ 8,800 | ||
Creehan Holding Co., Inc. | In-Process R&D | |||
Identified intangible assets | |||
Total intangible assets | $ 1,600 | ||
Avalere Health Inc | |||
Identified intangible assets | |||
Total intangible assets | $ 57,520 | $ 57,820 | |
Measurement Period Adjustments | 300 | ||
Avalere Health Inc | Customer relationships | |||
Identified intangible assets | |||
Weighted Average Useful Life | 10 years | ||
Total intangible assets | $ 45,800 | 45,800 | |
Measurement Period Adjustments | 0 | ||
Avalere Health Inc | Tradename | |||
Identified intangible assets | |||
Weighted Average Useful Life | 10 years | ||
Total intangible assets | $ 8,300 | 8,300 | |
Measurement Period Adjustments | 0 | ||
Avalere Health Inc | Technology | |||
Identified intangible assets | |||
Weighted Average Useful Life | 5 years | ||
Total intangible assets | $ 2,600 | 2,900 | |
Measurement Period Adjustments | 300 | ||
Avalere Health Inc | Non-compete agreements | |||
Identified intangible assets | |||
Weighted Average Useful Life | 3 years | ||
Total intangible assets | $ 820 | 820 | |
Measurement Period Adjustments | $ 0 |
BUSINESS COMBINATIONS - Results
BUSINESS COMBINATIONS - Results of Acquiree (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended |
Dec. 31, 2016 | Dec. 31, 2015 | |
Creehan Holding Co., Inc. | ||
Avalere Results | ||
Revenue | $ 8,106 | |
Loss before taxes | $ (976) | |
Avalere Health Inc | ||
Avalere Results | ||
Revenue | $ 17,492 | |
Loss before taxes | $ (29) |
BUSINESS COMBINATIONS - Pro For
BUSINESS COMBINATIONS - Pro Forma Impact (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Creehan Holding Co., Inc. | ||
Pro Forma Impact of Acquisition | ||
Pro forma revenue | $ 453,613 | $ 464,646 |
Pro forma income before taxes | $ 44,203 | 115,331 |
Avalere Health Inc | ||
Pro Forma Impact of Acquisition | ||
Pro forma revenue | 469,784 | |
Pro forma income before taxes | $ 108,977 |
NET INCOME PER SHARE - General
NET INCOME PER SHARE - General Information (Details) | 12 Months Ended |
Dec. 31, 2017Vote | |
Class A Common | |
Common stock | |
Votes per share | 1 |
Class B Common | |
Common stock | |
Votes per share | 10 |
NET INCOME PER SHARE - Tabular
NET INCOME PER SHARE - Tabular Disclosure (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic | |||
Net income | $ 34,818 | $ 27,104 | $ 66,063 |
Undistributed earnings allocated to participating securities | (990) | (161) | (49) |
Net income attributable to common stockholders—basic | $ 33,828 | $ 26,943 | $ 66,014 |
Weighted average shares used in computing net income per share attributable to common stockholders - basic (in shares) | 142,225 | 150,048 | 145,745 |
Net income per share attributable to common stockholders - basic (in dollars per share) | $ 0.24 | $ 0.18 | $ 0.45 |
Diluted | |||
Net income attributable to common stockholders—diluted | $ 33,828 | $ 26,943 | $ 66,014 |
Weighted average shares used in computing net income per share attributable to common stockholders - basic (in shares) | 142,225 | 150,048 | 145,745 |
Effect of dilutive securities (in shares) | 512 | 907 | 2,530 |
Weighted average shares used in computing net income per share attributable to common stockholders - diluted (in shares) | 142,737 | 150,955 | 148,275 |
Net income per share attributable to common stockholders - diluted (in dollars per share) | $ 0.24 | $ 0.18 | $ 0.45 |
NET INCOME PER SHARE - Anti-dil
NET INCOME PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
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) | 88 | 44 | 645 |
SHORT-TERM INVESTMENTS - Availa
SHORT-TERM INVESTMENTS - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-sale securities: | ||
Amortized Cost | $ 268,124 | $ 446,349 |
Gross Unrealized Gains | 3 | 65 |
Gross Unrealized Losses | (839) | (1,099) |
Estimated Fair Value | 267,288 | 445,315 |
Corporate notes and bonds | ||
Available-for-sale securities: | ||
Amortized Cost | 232,048 | 349,571 |
Gross Unrealized Gains | 3 | 36 |
Gross Unrealized Losses | (572) | (918) |
Estimated Fair Value | 231,479 | 348,689 |
U.S. agency obligations | ||
Available-for-sale securities: | ||
Amortized Cost | 15,341 | 34,864 |
Gross Unrealized Gains | 0 | 22 |
Gross Unrealized Losses | (99) | (78) |
Estimated Fair Value | 15,242 | 34,808 |
U.S. treasury securities | ||
Available-for-sale securities: | ||
Amortized Cost | 20,735 | 53,681 |
Gross Unrealized Gains | 0 | 6 |
Gross Unrealized Losses | (168) | (100) |
Estimated Fair Value | $ 20,567 | 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 | Dec. 31, 2017 | Dec. 31, 2016 |
Investments, Debt and Equity Securities [Abstract] | ||
Due in one year or less | $ 204,725 | $ 176,696 |
Due after one year through two years | 62,563 | 268,619 |
Total | $ 267,288 | $ 445,315 |
SHORT-TERM INVESTMENTS - Other-
SHORT-TERM INVESTMENTS - Other-than-temporary Impairments (Details) | 12 Months Ended |
Dec. 31, 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 | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | $ 258,897 |
Gross Unrealized Losses | (839) |
Corporate notes and bonds | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 223,088 |
Gross Unrealized Losses | (572) |
U.S. agency obligations | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 15,242 |
Gross Unrealized Losses | (99) |
U.S. treasury securities | |
Fair Values and Gross Unrealized Losses of Available-for-sale Securities in a Gross Loss Position | |
Estimated Fair Value | 20,567 |
Gross Unrealized Losses | $ (168) |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term investments: | ||
Short-term investments | $ 267,288 | $ 445,315 |
Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 231,479 | 348,689 |
U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 15,242 | 34,808 |
U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 20,567 | 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 | 422,235 | 476,823 |
Recurring | Contingent consideration | ||
Other Current Liabilities: | ||
Other current liabilities | (7,400) | (12,600) |
Recurring | Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 231,479 | 348,689 |
Recurring | U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 15,242 | 34,808 |
Recurring | U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 20,567 | 53,587 |
Recurring | Commercial paper | ||
Short-term investments: | ||
Short-term investments | 6,309 | |
Recurring | Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 1,922 | |
Recurring | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 162,347 | 44,108 |
Recurring | Level 1 | ||
Total | ||
Total | 162,347 | 44,108 |
Recurring | Level 1 | Contingent consideration | ||
Other Current Liabilities: | ||
Other current liabilities | 0 | 0 |
Recurring | Level 1 | Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 1 | U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 1 | U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 1 | Commercial paper | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Level 1 | Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Level 1 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 162,347 | 44,108 |
Recurring | Level 2 | ||
Total | ||
Total | 267,288 | 445,315 |
Recurring | Level 2 | Contingent consideration | ||
Other Current Liabilities: | ||
Other current liabilities | 0 | 0 |
Recurring | Level 2 | Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 231,479 | 348,689 |
Recurring | Level 2 | U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 15,242 | 34,808 |
Recurring | Level 2 | U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 20,567 | 53,587 |
Recurring | Level 2 | Commercial paper | ||
Short-term investments: | ||
Short-term investments | 6,309 | |
Recurring | Level 2 | Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 1,922 | |
Recurring | Level 2 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | 0 | 0 |
Recurring | Level 3 | ||
Total | ||
Total | (7,400) | (12,600) |
Recurring | Level 3 | Contingent consideration | ||
Other Current Liabilities: | ||
Other current liabilities | (7,400) | (12,600) |
Recurring | Level 3 | Corporate notes and bonds | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 3 | U.S. agency obligations | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 3 | U.S. treasury securities | ||
Short-term investments: | ||
Short-term investments | 0 | 0 |
Recurring | Level 3 | Commercial paper | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Level 3 | Certificates of deposit | ||
Short-term investments: | ||
Short-term investments | 0 | |
Recurring | Level 3 | Money market funds | ||
Cash Equivalents: | ||
Cash equivalents | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Unobs
FAIR VALUE MEASUREMENTS - Unobservable Inputs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements Using Unobservable Inputs (Level 3) | |||
Acquisition-related contingent consideration | $ 0 | $ (2,300) | $ 0 |
Level 3 | |||
Fair Value Measurements Using Unobservable Inputs (Level 3) | |||
Balance, beginning of period | (12,600) | (2,300) | |
Fair value adjustment (recognized in general and administrative expenses) | 5,200 | 0 | |
Accretion expense (recognized in general and administrative expenses) | 0 | (706) | |
Settlement (payment) of liability | 0 | 3,006 | |
Acquisition-related contingent consideration | 0 | (12,600) | |
Balance, end of period | $ (7,400) | $ (12,600) | $ (2,300) |
PROPERTY, EQUIPMENT AND CAPIT60
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE - Tabular Information (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | $ 242,341 | $ 164,864 |
Less: accumulated depreciation and amortization | (116,573) | (88,444) |
Property, equipment and capitalized software, net | 125,768 | 76,420 |
Office and computer equipment | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 55,840 | 42,530 |
Leasehold improvements | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 10,096 | 12,480 |
Purchased software | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 26,425 | 14,421 |
Capitalized software | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 114,569 | 83,877 |
Furniture and fixtures | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 4,670 | 5,403 |
Land | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 390 | 390 |
Building | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | 14,028 | 1,797 |
Work in process | ||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | ||
Total | $ 16,323 | $ 3,966 |
PROPERTY, EQUIPMENT AND CAPIT61
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | |||
Property, equipment and capitalized software, net | $ 125,768 | $ 76,420 | |
Depreciation | 37,853 | 28,078 | $ 19,221 |
Amortization of capital leases | 300 | 100 | $ 100 |
Property, equipment and capitalized software, gross | 242,341 | 164,864 | |
Assets held under capital leases | |||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | |||
Property, equipment and capitalized software, net | 600 | 700 | |
Building | |||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | |||
Capital leases | 12,000 | ||
Property, equipment and capitalized software, gross | 14,028 | 1,797 | |
Capitalized software and work in process | |||
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | |||
Property, equipment and capitalized software, gross | $ 54,200 | $ 40,900 |
GOODWILL AND INTANGIBLE ASSET62
GOODWILL AND INTANGIBLE ASSETS - Goodwill - Tabular Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of the activity related to the carrying value of goodwill | ||
Goodwill at beginning of period | $ 184,557 | $ 137,733 |
Goodwill adjustments in connection with the acquisition | 375 | (4,163) |
Goodwill recorded in connection with the acquisition | 50,987 | |
Goodwill at end of period | $ 184,932 | $ 184,557 |
GOODWILL AND INTANGIBLE ASSET63
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets - Tabular Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets | ||
Gross | $ 146,307 | $ 145,307 |
Accumulated Amortization | (56,981) | (41,758) |
Net | 89,326 | 103,549 |
In-Process R&D | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Gross | 1,600 | |
Accumulated Amortization | 0 | |
Net | 1,600 | |
Proprietary software technologies | ||
Intangible Assets | ||
Gross | 16,077 | 16,077 |
Accumulated Amortization | (16,077) | (16,077) |
Net | 0 | 0 |
Trademark | ||
Intangible Assets | ||
Gross | 360 | 360 |
Accumulated Amortization | (360) | (360) |
Net | 0 | 0 |
Database | ||
Intangible Assets | ||
Gross | 6,500 | 6,500 |
Accumulated Amortization | (5,362) | (4,713) |
Net | $ 1,138 | $ 1,787 |
Database | Weighted average | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 1 year 9 months 18 days | 2 years 9 months 18 days |
Customer relationships | ||
Intangible Assets | ||
Gross | $ 13,650 | $ 13,650 |
Accumulated Amortization | (10,698) | (10,304) |
Net | 2,952 | 3,346 |
Customer relationships | Avalere Health Inc | ||
Intangible Assets | ||
Gross | 45,800 | 45,800 |
Accumulated Amortization | (10,687) | (6,107) |
Net | 35,113 | 39,693 |
Customer relationships | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Gross | 36,500 | 36,500 |
Accumulated Amortization | (5,703) | (1,147) |
Net | $ 30,797 | $ 35,353 |
Customer relationships | Weighted average | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 7 years 4 months 24 days | 8 years 4 months 24 days |
Customer relationships | Weighted average | Avalere Health Inc | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 7 years 9 months 18 days | 8 years 9 months 18 days |
Customer relationships | Weighted average | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 6 years 10 months 24 days | 7 years 10 months 24 days |
Tradename | Avalere Health Inc | ||
Intangible Assets | ||
Gross | $ 8,300 | $ 8,300 |
Accumulated Amortization | (1,937) | (1,107) |
Net | 6,363 | 7,193 |
Tradename | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Gross | 4,000 | 4,000 |
Accumulated Amortization | (1,250) | (250) |
Net | 2,750 | $ 3,750 |
Tradename | ComplexCare Solutions, Inc. | ||
Intangible Assets | ||
Gross | 200 | |
Accumulated Amortization | (33) | |
Net | $ 167 | |
Tradename | Weighted average | Avalere Health Inc | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 7 years 9 months 18 days | 8 years 9 months 18 days |
Tradename | Weighted average | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 2 years 9 months 18 days | 3 years 9 months 18 days |
Tradename | Weighted average | ComplexCare Solutions, Inc. | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 2 years 6 months | |
Technology | Avalere Health Inc | ||
Intangible Assets | ||
Gross | $ 2,900 | $ 2,900 |
Accumulated Amortization | (1,353) | (773) |
Net | 1,547 | 2,127 |
Technology | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Gross | 8,800 | 8,800 |
Accumulated Amortization | (2,750) | (556) |
Net | 6,050 | $ 8,244 |
Technology | ComplexCare Solutions, Inc. | ||
Intangible Assets | ||
Gross | 800 | |
Accumulated Amortization | (133) | |
Net | $ 667 | |
Technology | Weighted average | Avalere Health Inc | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 2 years 8 months 12 days | 3 years 8 months 12 days |
Technology | Weighted average | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 2 years 9 months 18 days | 3 years 9 months 18 days |
Technology | Weighted average | ComplexCare Solutions, Inc. | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 2 years 6 months | |
Non-compete agreements | Avalere Health Inc | ||
Intangible Assets | ||
Gross | $ 820 | $ 820 |
Accumulated Amortization | (638) | (364) |
Net | $ 182 | $ 456 |
Non-compete agreements | Weighted average | Avalere Health Inc | ||
Intangible Assets | ||
Weighted Average Remaining Useful Life (years) | 8 months 12 days | 1 year 8 months 12 days |
In-Process R&D | Creehan Holding Co., Inc. | ||
Intangible Assets | ||
Gross | $ 1,600 | |
Accumulated Amortization | 0 | |
Net | $ 1,600 |
GOODWILL AND INTANGIBLE ASSET64
GOODWILL AND INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangibles | $ 15,236 | $ 9,206 | $ 3,412 |
GOODWILL AND INTANGIBLE ASSET65
GOODWILL AND INTANGIBLE ASSETS - Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Estimated future amortization expense of intangible assets | ||
Net | $ 89,326 | $ 103,549 |
Excluding In-process R&D | ||
Estimated future amortization expense of intangible assets | ||
2,018 | 15,312 | |
2,019 | 14,967 | |
2,020 | 13,320 | |
2,021 | 10,366 | |
2,022 | 10,366 | |
Thereafter | 23,395 | |
Net | $ 87,726 |
CREDIT FACILITIES - Additional
CREDIT FACILITIES - Additional Information (Details) - Unsecured debt - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Sep. 19, 2014 | |
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Maximum principal amount | $ 400,000,000 | |
Minimum cash and cash equivalents balance | $ 50,000,000 | |
Line of Credit | LIBOR | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 1.25% | |
Term Loan | ||
Line of Credit Facility [Line Items] | ||
Maximum principal amount | 300,000,000 | |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Maximum principal amount | $ 100,000,000 |
CREDIT FACILITIES - Schedule of
CREDIT FACILITIES - Schedule of Credit Facilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Credit Facilities | ||
Total | $ 236,250 | $ 266,250 |
Less: current portion | 45,000 | 30,000 |
Non-current Credit Facilities | 191,250 | 236,250 |
Revolving Credit Facility | ||
Credit Facilities | ||
Total | 0 | 0 |
Unsecured debt | Term Loan | ||
Credit Facilities | ||
Total | $ 236,250 | $ 266,250 |
CREDIT FACILITIES - Scheduled M
CREDIT FACILITIES - Scheduled Maturity of Credit Facilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Scheduled maturity of the Credit Facilities | ||
Total | $ 236,250 | $ 266,250 |
Unsecured debt | Line of Credit | ||
Scheduled maturity of the Credit Facilities | ||
2,018 | 45,000 | |
2,019 | 191,250 | |
Total | $ 236,250 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future Non-cancellable Lease Payment Schedule (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future non cancellable lease payments | |
2,018 | $ 7,286 |
2,019 | 6,571 |
2,020 | 3,200 |
2,021 | 1,939 |
2,022 | 1,939 |
Thereafter | 12,602 |
Total | $ 33,537 |
COMMITMENTS AND CONTINGENCIES70
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 11.3 | $ 8.9 | $ 7.2 |
Deferred Rent Credit and Incentive from Lessor | 2 | 2.5 | |
Capital Lease Obligations | $ 12.4 | $ 0.3 |
COMMITMENTS AND CONTINGENCIES71
COMMITMENTS AND CONTINGENCIES - Capital Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 458 |
2,019 | 1,015 |
2,020 | 1,051 |
2,021 | 1,090 |
2,022 | 1,182 |
Thereafter | 10,091 |
Total minimum lease payments | 14,887 |
Less amount representing interest | (2,442) |
Present value of minimum lease payments | $ 12,445 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) | Feb. 18, 2015 | Nov. 30, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2009 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercises in period, intrinsic value | $ 4,200,000 | $ 7,700,000 | $ 53,400,000 | ||||
Stock-based compensation | $ 17,318,000 | $ 10,054,000 | $ 7,415,000 | ||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized (in shares) | 10,275,000 | ||||||
Purchase period | 10 years | ||||||
Expected dividend rate | 0.00% | ||||||
Unrecognized stock compensation | $ 2,800,000 | ||||||
Expected weighted-average recognition period for compensation expense | 1 year 4 months 24 days | ||||||
Restricted stock units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected weighted-average recognition period for compensation expense | 1 year 9 months 18 days | ||||||
Service period | 5 years | ||||||
Period following IPO required for satisfaction of liquidity condition | 6 months | ||||||
Stock-based compensation | $ 0 | ||||||
Vesting period | 5 years | ||||||
Granted (in dollars per share) | $ 13.70 | $ 0 | $ 30.64 | ||||
Grant date fair value | $ 600,000 | $ 0 | $ 2,300,000 | ||||
Vested in period, fair value | 1,300,000 | $ 1,500,000 | $ 1,700,000 | ||||
Unrecognized compensation cost | $ 3,600,000 | ||||||
Granted (in shares) | 45,625 | ||||||
Restricted stock awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected weighted-average recognition period for compensation expense | 3 years 8 months 12 days | ||||||
Granted (in dollars per share) | $ 12.64 | $ 13.81 | $ 18.79 | ||||
Grant date fair value | $ 33,500,000 | $ 36,900,000 | $ 11,200,000 | ||||
Vested in period, fair value | 9,300,000 | 3,000,000 | $ 0 | ||||
Unrecognized compensation cost | $ 56,000,000 | ||||||
Granted (in shares) | 2,648,102 | ||||||
Restricted stock awards | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Target performance term | 3 years | ||||||
Restricted stock awards | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Target performance term | 5 years | ||||||
Restricted stock awards | Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Restricted stock awards | Directors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years | ||||||
Performance Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 1,200,000 | ||||||
Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Purchase period | 6 months | ||||||
Stock-based compensation | $ 154,000 | $ 140,000 | $ 156,000 | ||||
Fair value of the company's stock taken for purchase price calculation | 85.00% | ||||||
Amount to be deducted from the payroll, minimum | 1.00% | ||||||
Amount to be deducted from the payroll, maximum | 15.00% | ||||||
Maximum amount of deduction from payroll | $ 7,500 | ||||||
Employee Stock Purchase Plan | Class A Common | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares reserved for future issuance (in shares) | 1,833,857 | ||||||
Omnibus Incentive Plan 2015 | Class A Common | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares reserved for future issuance (in shares) | 7,335,430 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Stock options - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares Outstanding | ||
Beginning balance (in shares) | 2,184,281 | |
Stock options granted (in shares) | 0 | |
Stock options exercised (in shares) | (660,868) | |
Stock options cancelled (in shares) | (210,103) | |
Ending balance (in shares) | 1,313,310 | 2,184,281 |
Exercisable (in shares) | 782,710 | |
Vested and expected to vest (in shares) | 1,313,310 | |
Weighted-Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 7.32 | |
Stock options granted (in dollars per share) | $ 0 | |
Stock options exercised (in dollars per share) | 7.13 | |
Stock options cancelled (in dollars per share) | 6.97 | |
Ending balance (in dollars per share) | 7.47 | $ 7.32 |
Exercisable (in dollars per share) | 7.48 | |
Vested and expected to vest (in dollars per share) | $ 7.47 | |
Stock option activity | ||
Stock options granted, Weighted-Average Grant-date Fair Value of Underlying Common Stock | $ 0 | |
Balance, Weighted-Average Remaining Contractual Life | 5 years 4 months 24 days | 5 years 8 months 12 days |
Exercisable, Weighted-Average Remaining Contractual Life | 4 years 8 months 12 days | |
Vested and expected to vest, Weighted-Average Remaining Contractual Life | 5 years 4 months 24 days | |
Balance, Aggregate Intrinsic Value | $ 9,895,000 | $ 6,514,000 |
Exercisable, Aggregate Intrinsic Value | 5,886,000 | |
Vested and expected to vest, Aggregate Intrinsic Value | $ 9,895,000 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit Activity (Details) - Restricted stock units - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of RSUs | |||
Granted and unvested (in shares) | 293,489 | ||
Granted (in shares) | 45,625 | ||
Vested (in shares) | (87,444) | ||
Forfeited (in shares) | (30,732) | ||
Granted and unvested (in shares) | 220,938 | 293,489 | |
Weighted Average Fair Value Per Unit | |||
Granted and unvested (in dollars per share) | $ 21.85 | ||
Granted (in dollars per share) | 13.70 | $ 0 | $ 30.64 |
Vested (in dollars per share) | 21.54 | ||
Forfeited (in dollars per share) | 24.42 | ||
Granted and unvested (in dollars per share) | $ 19.94 | $ 21.85 |
STOCK-BASED COMPENSATION - Re75
STOCK-BASED COMPENSATION - Restricted Stock Award Activity (Details) - Restricted stock awards - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of RSAs | |||
Granted and unvested (in shares) | 2,836,860 | ||
Granted (in shares) | 2,648,102 | ||
Vested (in shares) | (621,851) | ||
Forfeited (in shares) | (261,479) | ||
Granted and unvested (in shares) | 4,601,632 | 2,836,860 | |
Weighted Average Fair Value Per Unit | |||
Granted and unvested (in dollars per share) | $ 14.47 | ||
Granted (in dollars per share) | 12.64 | $ 13.81 | $ 18.79 |
Vested (in dollars per share) | 14.42 | ||
Forfeited (in dollars per share) | 14.35 | ||
Granted and unvested (in dollars per share) | $ 13.43 | $ 14.47 |
STOCK-BASED COMPENSATION - Empl
STOCK-BASED COMPENSATION - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Stock Purchase Plan | |||
Stock-based compensation | $ 17,318 | $ 10,054 | $ 7,415 |
Employee Stock Purchase Plan | |||
Employee Stock Purchase Plan | |||
Shares purchased (in shares) | 49,247 | 61,184 | 30,689 |
Shares issued (in shares) | 49,247 | 61,184 | 30,689 |
Discounted price (in dollars per share) | $ 11.08 | $ 14.03 | $ 18.61 |
Stock-based compensation | $ 154 | $ 140 | $ 156 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLANS | |||
Eligibility term | 30 days | ||
Employer's match percentage of employees deferrals | 4.00% | ||
Matching contributions | $ 5.2 | $ 5.2 | $ 4.2 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 18, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 02, 2016 | May 04, 2016 |
Equity, Class of Treasury Stock [Line Items] | |||||
Amount of shares repurchased | $ 93,586 | $ 106,231 | |||
Class A Common | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Share repurchase authorized amount (in shares) | $ 200,000 | $ 100,000 | |||
Amount of additional shares authorized | $ 100,000 | ||||
Number of shares repurchased (in shares) | 7,111,190 | 7,508,985 | |||
Amount of shares repurchased | $ 93,600 | $ 106,200 | |||
Average cost of shares repurchased (in dollars per shares) | $ 13.16 | $ 14.15 | |||
IPO | Class A Common | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares issued (in shares) | 22,222,222 | ||||
Share price (in dollars per share) | $ 27 | ||||
Over-Allotment Option | Class A Common | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares issued (in shares) | 3,142,581 | ||||
IPO and Over-Allotment Option | Class A Common | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares issued (in shares) | 25,364,803 | ||||
Proceeds after the underwriters' discounts and commissions and other expenses | $ 639,100 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 2,194 | $ 7,480 | $ 31,351 |
State | 2,162 | 5,788 | 10,937 |
Foreign (Puerto Rico) | 78 | 267 | 574 |
Total current provision | 4,434 | 13,535 | 42,862 |
Deferred: | |||
Federal | (8,333) | (1,533) | 4,708 |
State | 1,668 | (207) | 1,078 |
Total deferred provision | (6,665) | (1,740) | 5,786 |
Total provision for income taxes | $ (2,231) | $ 11,795 | $ 48,648 |
INCOME TAXES - Provision for 80
INCOME TAXES - Provision for Income Taxes Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income tax expense reconciliation (percent) | |||
Expected federal income tax | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal income tax effect | 8.00% | 7.40% | 6.80% |
State income taxes, net of federal income tax effect | 0.30% | (0.90%) | 0.30% |
Research and development tax credits | (2.60%) | (1.90%) | (0.80%) |
Excess tax benefits and stock-based compensation | (0.70%) | (3.00%) | 0.00% |
Acquisition-related tax adjustments | (1.40%) | (4.30%) | (0.00%) |
Other | 2.00% | (2.00%) | 1.10% |
Income tax expense | (6.80%) | 30.30% | 42.40% |
Income tax expense reconciliation | |||
Expected federal income tax | $ 11,406 | $ 13,650 | $ 40,149 |
State income taxes, net of federal income tax effect | 2,606 | 2,859 | 7,753 |
Permanent items | 88 | (357) | 390 |
Research and development tax credits | (850) | (756) | (864) |
Excess tax benefits and stock-based compensation | (243) | (1,165) | 0 |
Acquisition-related tax adjustments | (445) | (1,686) | 0 |
Other | 668 | (750) | 1,220 |
Total provision for income taxes | $ (2,231) | $ 11,795 | $ 48,648 |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (47.40%) | 0.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ (15,461) | $ 0 | $ 0 |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Accrued expenses and reserves | $ 313 | $ 3,135 |
Stock-based compensation | 3,040 | 2,849 |
Deferred rent | 581 | 987 |
Net operating loss carryforwards | 2,654 | 1,047 |
Other | 758 | 904 |
Total deferred tax assets | 7,346 | 8,922 |
Deferred tax liabilities: | ||
Intangibles | 9,568 | 18,046 |
Property, equipment and capitalized software | 21,564 | 23,108 |
Prepaids and other | 2,639 | 2,083 |
Total deferred tax liabilities | 33,771 | 43,237 |
Net deferred tax liabilities before valuation allowance | 26,425 | 34,315 |
Valuation Allowance | 217 | 238 |
Net deferred tax liabilities | $ 26,642 | $ 34,553 |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Position (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 80 | $ 0 | $ 0 |
Gross increase in tax positions in prior period | 291 | 80 | 0 |
Gross decrease in tax positions in prior period | (160) | 0 | 0 |
Gross increase in tax positions from acquisitions | 0 | 0 | 0 |
Settlement | (211) | 0 | 0 |
Lapse of statute of limitations | 0 | 0 | 0 |
Ending balance | $ 0 | $ 80 | $ 0 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Operating Losses Carryforwards (NOLs) | |||
Provisional income tax benefit | $ 15.5 | ||
Unrecognized tax benefits, period increase (decrease) | 0.1 | $ (0.1) | $ 0 |
Federal | |||
Net Operating Losses Carryforwards (NOLs) | |||
Net operating loss carryforwards | $ 3.3 | $ 1 |
Schedule II - Valuation and Q84
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - Allowance for accounts receivable - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of year | $ 3,782 | $ 1,022 | $ 1,827 |
Additions Charged Against Revenue | 8,886 | 3,792 | 1,126 |
Additions Charged to Cost and Expense | 0 | 0 | 0 |
Deductions | (10,630) | (1,032) | (1,931) |
Balance at end of year | $ 2,038 | $ 3,782 | $ 1,022 |