TRUPANION INC., 10-K filed on 2/15/2017
Annual Report
Document and Entity Information Document (USD $)
12 Months Ended
Dec. 31, 2016
Feb. 8, 2017
Jun. 30, 2016
Entity [Abstract]
 
 
 
Entity Registrant Name
TRUPANION INC. 
 
 
Entity Central Index Key
0001371285 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
29,509,841 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 280,565,040 
Consolidated Statement of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Statement [Abstract]
 
 
 
Revenue
$ 188,230 
$ 146,963 
$ 115,910 
Claims expenses
133,534 
103,324 
79,913 
Other cost of revenue
21,408 
18,410 
16,123 
Gross profit
33,288 
25,229 
19,874 
Sales and marketing
15,247 
15,231 
11,608 
Technology Services Costs
9,534 
11,215 
9,899 
General and administrative
15,205 
15,558 
14,312 
Total operating expenses
39,986 
42,004 
35,819 
Operating loss
(6,698)
(16,775)
(15,945)
Interest expense
218 
325 
6,726 
Other income, net
(58)
(9)
(1,487)
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest
(6,858)
(17,091)
(21,184)
Income tax expense (benefit)
38 
114 
(7)
Net loss
$ (6,896)
$ (17,205)
$ (21,177)
Net loss per share: Basic and diluted (per share)
$ (0.24)
$ (0.62)
$ (1.64)
Weighted Average Number of Shares Outstanding, Basic and Diluted
28,527,602 
27,638,443 
12,934,477 
Consolidated Statement of Comprehensive Income Statement (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
Net loss
$ (6,896)
$ (17,205)
$ (21,177)
Foreign currency translation adjustments
79 
(517)
65 
Change in unrealized losses on available-for-sale securities
46 
110 
Other comprehensive income (loss), net of taxes
125 
(513)
175 
Comprehensive loss
$ (6,771)
$ (17,718)
$ (21,002)
Consolidated Balance Sheet (USD $)
Dec. 31, 2016
Dec. 31, 2015
Assets [Abstract]
 
 
Cash and cash equivalents
$ 23,637,000 
$ 17,956,000 
Short-term Investments
29,570,000 
25,288,000 
Accounts and other receivables
10,118,000 
8,196,000 
Prepaid expenses and other assets
2,062,000 
2,193,000 
Total current assets
65,387,000 
53,633,000 
Restricted Cash
600,000 
 
Restricted Cash and Cash Equivalents
600,000 
Investments in fixed maturities, at fair value
2,579,000 
2,388,000 
Equity Method Investments
271,000 
300,000 
Property and equipment, net
8,464,000 
9,719,000 
Intangible assets, net
4,910,000 
4,854,000 
Other Assets, Noncurrent
134,000 
23,000 
Total assets
82,345,000 
70,917,000 
Liabilities and Equity [Abstract]
 
 
Accounts payable
2,006,000 
1,289,000 
Accrued liabilities
4,322,000 
4,189,000 
Claims reserve
9,521,000 
6,274,000 
Deferred Revenue, Current
13,463,000 
11,042,000 
Other payables
1,094,000 
654,000 
Deferred tax liabilities
251,000 
169,000 
Total current liabilities
30,657,000 
23,617,000 
Long-term debt
4,767,000 
Deferred tax liabilities
1,372,000 
1,433,000 
Other liabilities
834,000 
511,000 
Total liabilities
37,630,000 
25,561,000 
Common stock: $0.00001 par value per share
Preferred Stock, Value, Outstanding
Additional paid-in capital
129,574,000 
122,844,000 
Accumulated other comprehensive loss
(377,000)
(502,000)
Accumulated deficit
(81,281,000)
(74,385,000)
Treasury stock, at cost
3,201,000 
2,601,000 
Total stockholders' deficit
44,715,000 
45,356,000 
Liabilities and Equity
$ 82,345,000 
$ 70,917,000 
Consolidated Balance Sheet Condensed Consolidated Balance Sheet Parentheticals (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Investment in fixed maturities, at amortized cost (fair value)
$ 29,570 
$ 25,288 
Investments in fixed maturities, at fair value (amortized cost)
$ 2,587 
$ 2,442 
Common Stock, Shares Authorized
100,000,000 
 
Common Stock, Shares, Outstanding
29,498,947 
 
Preferred Stock, Shares Authorized
10,000,000 
 
Common Stock
 
 
Common Stock, Par or Stated Value Per Share
$ 0.00001 
$ 0.00001 
Common Stock, Shares Authorized
100,000,000 
200,000,000 
Common Stock, Shares, Issued
30,156,247 
29,017,168 
Common Stock, Shares, Outstanding
29,498,947 
28,396,189 
Preferred Stock [Member]
 
 
Preferred Stock, Par or Stated Value Per Share
$ 0.00001 
$ 0.00001 
Preferred Stock, Shares Authorized
10,000,000 
10,000,000 
Preferred Stock, Shares Issued
Preferred Stock, Shares Outstanding
Treasury Stock [Member]
 
 
Treasury Stock, Shares
657,300 
620,979 
Consolidated Statement of Stockholders' Equity Statement (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Redeemable Convertible Preferred Stock
Common Stock
Special Voting Shares
Additional Paid-in Capital
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss)
Treasury Stock [Member]
Beginning Balance at Dec. 31, 2013
$ (32,999)
$ 31,724 
$ 0 
$ 0 
$ 5,769 
$ (36,003)
$ (164)
$ (2,601)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Issuance of stock, shares
 
 
8,193,750 
 
 
 
 
 
Stock Issued During Period, Value, New Issues
72,722 
 
 
 
72,722 
 
 
 
Conversion of Stock, Special Voting Shares to Common Stock
 
 
2,247,130 
(2,247,130)
 
 
 
 
Conversion of Stock, Shares Converted
 
(14,944,945)
14,944,945 
 
 
 
 
 
Conversion of Stock, Amount Converted
32,724 
(32,724)
 
 
32,724 
 
 
 
Redemption of warrants
 
86,956 
25,170 
 
 
 
 
 
Settlement of warrant liabilities
270 
1,000 
 
 
270 
 
 
 
Warrant reclassification from liability to equity
3,180 
 
 
 
3,180 
 
 
 
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures
 
 
183,305 
 
 
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
181 
 
 
 
181 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
4,199 
 
 
 
4,199 
 
 
 
Common Stock, Shares, Outstanding
 
27,830,941 
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
175 
 
 
 
 
 
175 
 
Net loss
(21,177)
 
 
 
 
(21,177)
 
 
Ending Balance at Dec. 31, 2014
59,275 
119,045 
(57,180)
11 
(2,601)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures
 
 
4,616 
 
 
 
 
 
Shares Paid for Tax Withholding for Share Based Compensation
 
 
(72,197)
 
 
 
 
 
Adjustment to Additional Paid in Capital, Income Tax Effect from Share-based Compensation, Net
(643)
 
 
 
(643)
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Warrant reclassification from liability to equity
 
 
 
 
 
 
 
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures
 
 
632,829 
 
 
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
1,335 
 
 
 
1,335 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
3,107 
 
 
 
3,107 
 
 
 
Common Stock, Shares, Outstanding
 
28,396,189 
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
(513)
 
 
 
 
 
(513)
 
Net loss
(17,205)
 
 
 
 
(17,205)
 
 
Ending Balance at Dec. 31, 2015
45,356 
122,844 
(74,385)
(502)
 
Beginning Balance at Sep. 30, 2015
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Common Stock, Shares, Outstanding
 
 
 
 
 
 
Net loss
(3,001)
 
 
 
 
 
 
 
Ending Balance at Dec. 31, 2015
45,356 
122,844 
(74,385)
(502)
(2,601)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures
 
 
2,511 
 
 
 
 
 
Shares Paid for Tax Withholding for Share Based Compensation
 
 
(42,798)
 
 
 
 
 
Adjustment to Additional Paid in Capital, Income Tax Effect from Share-based Compensation, Net
(662)
 
 
 
(662)
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Redemption of warrants
 
 
59,999 
 
 
 
 
 
Settlement of warrant liabilities
600 
 
 
 
600 
 
 
 
Treasury Stock, Shares, Acquired
 
 
(36,321)
 
 
 
 
 
Treasury Stock, Value, Acquired, Par Value Method
(600)
 
 
 
 
 
 
(600)
Warrant reclassification from liability to equity
 
 
 
 
 
 
 
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures
 
 
1,119,367 
 
 
 
 
 
Stock Issued During Period, Value, Stock Options Exercised
3,745 
 
 
 
3,745 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
3,047 
 
 
 
3,047 
 
 
 
Common Stock, Shares, Outstanding
29,498,947 
29,498,947 
 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
125 
 
 
 
 
 
125 
 
Net loss
(6,896)
 
 
 
 
(6,896)
 
 
Ending Balance at Dec. 31, 2016
44,715 
129,574 
(81,281)
(377)
(3,201)
Beginning Balance at Sep. 30, 2016
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Common Stock, Shares, Outstanding
29,498,947 
 
 
 
 
 
Net loss
(1,723)
 
 
 
 
 
 
 
Ending Balance at Dec. 31, 2016
$ 44,715 
$ 0 
 
$ 0 
 
 
 
 
Consolidated Statement of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Net Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Net loss
$ (6,896)
$ (17,205)
$ (21,177)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Depreciation, Depletion and Amortization
3,846 
2,542 
1,674 
Amortization of Financing Costs and Discounts
58 
21 
5,033 
Warrant income
(1,574)
Stock-based compensation expense
2,946 
3,002 
4,084 
Other Operating Income (Expense), Net
46 
(89)
57 
Increase (Decrease) in Operating Assets [Abstract]
 
 
 
Accounts and other receivable
(1,830)
(328)
(126)
Prepaid expenses and other current assets
48 
(905)
(369)
Accounts payable
652 
(347)
449 
Accrued liabilities
175 
51 
551 
Claims reserve
3,226 
1,241 
(505)
Deferred revenue
2,398 
1,779 
877 
Other payables
337 
(187)
225 
Net cash provided by (used in) operating activities
5,006 
(10,425)
(10,801)
Net Cash Provided by (Used in) Investing Activities [Abstract]
 
 
 
Purchases of investment securities
(31,616)
(24,800)
(34,894)
Maturities of investment securities
27,247 
20,180 
28,601 
Payments to Acquire Equity Method Investments
(300)
Purchases of property and equipment
(1,941)
(4,894)
(5,633)
Payments for (Proceeds from) Investments
(198)
(109)
Net cash used in investing activities
(6,508)
(9,923)
(11,926)
Net Cash Provided by (Used in) Financing Activities [Abstract]
 
 
 
Payments Related to Tax Withholding for Share-based Compensation
(662)
(643)
Proceeds from exercise of stock options
3,745 
1,335 
211 
Proceeds from (repayment of) debt financing
4,988 
(14,900)
(15,000)
Repayments of Long-term Capital Lease Obligations
(204)
Payments of Financing Costs
(195)
(103)
Net proceeds from IPO
72,755 
Net cash provided by (used in) financing activities
7,672 
(14,208)
57,863 
Effect of foreign exchange rates on cash, net
111 
(586)
23 
Net change in cash, cash equivalents, and restricted cash
6,281 
(35,142)
35,159 
Cash, cash equivalents, and restricted cash at beginning of period
17,956 
53,098 
17,939 
Cash, Cash Equivalents, and Restricted Cash, Carrying Value, End of Period
24,237 
17,956 
53,098 
Supplemental Cash Flow Information [Abstract]
 
 
 
Income taxes paid
19 
139 
Interest paid
153 
155 
1,494 
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
 
 
 
Warrants issued in conjunction with debt issuance
1,124 
Increase in payables for property and equipment
104 
98 
911 
Redemption of Warrants Non-Cash; Preferred Stock
1,270 
Redemption of Warrants Non-Cash; Common Stock
600 
Warrant reclassification from liability to equity
3,180 
Capital Lease Obligations Incurred
$ 559 
$ 0 
$ 0 
Net Loss per Share
Earnings Per Share [Text Block]
Net Loss per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Excluded from the weighted-average number of shares outstanding are shares that have been issued and are subject to future vesting and unvested restricted stock. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. Potentially dilutive common stock equivalents are comprised of unvested restricted stock, stock options and warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.
The following potentially dilutive equity securities were not included in the diluted net loss per common share calculation because they would have had an antidilutive effect:
 
As of December 31,
 
2016
 
2015
 
2014
Stock options
4,123,023

 
4,871,949

 
5,112,556

Restricted stock awards and units
352,996

 
472,384

 
592,625

Warrants
810,000

 
869,999

 
869,999

Property Plant and Equipment (Notes)
Property and Equipment, Net
Property and Equipment, Net
Property and equipment, along with their useful lives, were as follows for the years ended December 31, 2016 and 2015 (in thousands):
 
Years Ended December 31,
 
2016
 
2015
Office and telephone equipment (5 years)
$
129

 
$
127

PC and networking hardware (3–4 years)
1,191

 
1,177

Software (3–5 years)
14,340

 
12,547

Furniture and fixtures (5 years)
618

 
711

Vehicles (5 years)
54

 
54

Fixed assets under capital lease (over less of expected useful life or life of lease)
478

 

Leasehold improvement (over less of expected useful life or life of lease)

 
621

Property and equipment
16,810

 
15,237

Accumulated depreciation
(8,346
)
 
(5,518
)
Property and equipment, net
$
8,464

 
$
9,719


Depreciation expense for property and equipment was $3.8 million, $2.5 million and $1.6 million for 2016, 2015 and 2014, respectively.
The Company capitalized interest of $0.2 million in 2016, 2015 and 2014 related to software developed for internal use.
Intangible Assets (Notes)
Intangible Assets Disclosure [Text Block]
Intangible Assets
The Company acquired an insurance company in 2007, which originally included licenses in 23 states. These licenses were valued at $4.8 million. The Company is currently licensed in all 50 states, the District of Columbia and Puerto Rico. Most licenses are renewed annually upon payment of various fees assessed by the issuing state. Renewal costs are expensed as incurred. This is considered an indefinite-lived intangible asset given the planned renewal of the certificates of authority and applicable licenses for the foreseeable future. No impairments have been recorded on this asset as of December 31, 2016.
Investment Securities (Notes)
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
Investment Securities
The amortized cost, gross unrealized holding losses, and fair value of available-for-sale and short-term investments by major security type and class of security were as follows as of December 31, 2016 and 2015 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2016
 
 
 
 
 
       Available-for-sale:
 
 
 
 
 
Foreign deposits
$
1,587

 
$

 
$
1,587

Municipal bond
1,000

 
(8
)
 
$
992

 
$
2,587

 
$
(8
)
 
$
2,579

Short-term investments:
 
 
 
 
 
              U.S. Treasury securities
$
5,791

 
$

 
$
5,791

              Certificates of deposit
707

 

 
707

              U.S. government funds
23,072

 

 
23,072

 
$
29,570


$


$
29,570

 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2015
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
Foreign deposits
$
1,442

 
$

 
$
1,442

Municipal bond
1,000

 
(54
)
 
946

 
$
2,442


$
(54
)

$
2,388

Short-term investments:
 
 
 
 
 
U.S. Treasury securities
$
5,683

 
$

 
$
5,683

Certificates of deposit
1,551

 

 
$
1,551

U.S. government funds
18,054

 

 
$
18,054

 
$
25,288


$


$
25,288



Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2016
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due under one year
$

 
$

Due after one year through five years
1,587

 
1,587

Due after five years through ten years
1,000

 
992

Due after ten years

 

 
$
2,587

 
$
2,579


The Company had one investment with an unrealized loss of less than $0.1 million and a fair value of $1.0 million at December 31, 2016 and an unrealized loss of $0.1 million and a fair value of $0.9 million at December 31, 2015. This investment has been in an unrealized loss position for more than 12 months. The Company assessed the bond for credit impairment and determined that there is no intent to sell this bond and it is likely that it will hold the investment for a period of time sufficient to allow for recovery. Furthermore, future payments on this bond are insured by a financial guarantee insurer. Therefore, the Company believes that the unrealized loss on this bond constitutes a temporary impairment.
Fair Value
Fair Value Disclosures [Text Block]
Fair Value
The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.
When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 inputs: Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis (in thousands):
 
As of December 31, 2016
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
600

 
$
600

 
$

 
$

Foreign deposits
1,587

 
1,587

 

 

Municipal bond
992

 

 
992

 

Money market funds
7,033

 
7,033

 

 

Total
$
10,212

 
$
9,220

 
$
992

 
$

 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Foreign deposits
$
1,442

 
$
1,442

 
$

 
$

Municipal bond
946

 

 
946

 

Money market funds
7,545

 
7,545

 

 

Total
$
9,933

 
$
8,987

 
$
946

 
$


Long-term investments classified as available-for-sale are measured using quoted market prices when quoted market prices are available. If quoted market prices in active markets for identical assets are not available to determine fair value, then the Company uses quoted prices of similar instruments and other significant inputs derived from observable market data obtained from third-party data providers. Short-term investments are carried at amortized cost and the fair value is disclosed in Note 3. Fair value is determined in the same manner as available-for-sale securities and is considered a Level 1 measurement.

The Company estimates fair value for its long-term debt based upon rates currently available to the Company for debt with similar terms and remaining maturities. This is a Level 3 measurement. Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at December 31, 2016.
The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers between levels for the twelve months ended December 31, 2016 and 2015.
Equity Method Investment (Notes)
Equity Method Investments and Joint Ventures Disclosure [Text Block]
Equity Method Investments
During 2015, the Company invested $0.3 million in a software development company in exchange for 300,000 units of Series A preferred stock resulting in a 13% equity interest. This agreement was amended and restated on September 12, 2016 to increase Series A preferred stock from 300,000 units to 750,000 units resulting in a 20% equity interest. The Company’s equity interest is accounted for under the equity method as the Company has the ability to exert significant influence. The equity method investment balance is adjusted each period on a one quarter lag to recognize the proportionate share of net income or loss, including adjustments to recognize certain differences between the carrying value and the equity in net assets.
Commitment and Contingencies
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies
During the third quarter of 2015, the Company entered into a lease agreement for a building located in Seattle, Washington. The initial 10-year term of the lease commenced in the third quarter of 2016.
The Company has operating leases, related to equipment and office facilities, which expire over the next three years with various renewal options. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. Rental expense for operating leases was $1.2 million, $1.0 million and $0.8 million during 2016, 2015 and 2014, respectively.
Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2016, are as follows (in thousands):
 
Year ending December 31:
 
2017
$
1,510

2018
1,860

2019
2,020

2020
2,101

2021
2,182

Thereafter
11,029

Total minimum lease payments
$
20,702


The Company has entered into agreements for strategic marketing initiatives, as well as with independent contractors to provide services for a period of time. Future commitments related to these contracts are as follows (in thousands):
 
Year ending December 31:
 
2017
$
3,624

2018
1,681

2019
764

2020
119

2021
17

Thereafter

Total minimum commitment
$
6,205



During 2016, the Company entered into a capital lease agreement. As of December 31, 2016, this agreement resulted in an increase in future commitments of $0.4 million for 2017 and $0.2 million in 2018.
From time to time, the Company may be subject to various legal proceedings and claims in the ordinary course of business activities, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights; employment claims; coverage disputes with policyholders; and general contract or other claims. The Company may, from time to time, also be subject to various other legal or government claims, disputes or investigations.
The outcomes of the Company’s legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company’s operating results and cash flows for a particular period. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability beyond previously accrued amounts has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.
Claims Reserve (Notes)
Activity in the subscription business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - subscription business
 
$
5,384

 
$
4,278

 
$
4,573

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - subscription business
 
123,823

 
95,390

 
74,471

Prior years - subscription business
 
813

 
30

 
(132
)
Total claims incurred
 
124,636

 
95,420

 
74,339

Claims paid during year related to:
 
 
 
 
 
 
Current year - subscription business
 
115,314

 
89,768

 
69,956

Prior years - subscription business
 
5,832

 
4,239

 
4,442

Total claims paid
 
121,146

 
94,007

 
74,398

Non-cash claims expense - subscription business
 
336

 
307

 
236

Claims reserve at end of year - subscription business
 
$
8,538

 
$
5,384

 
$
4,278


The increase in subscription business claims for prior years in the years ended December 31, 2016 and December 31, 2015 is primarily due to more claims incurred than expected relating to prior year claims. The decrease in subscription business claims for prior years in the year ended December 31, 2014 is primarily due to less incurred claims than expected relating to prior year claims.
Activity in the other business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - other business
 
$
890

 
$
829

 
$
1,039

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - other business
 
9,027

 
7,983

 
5,967

Prior years - other business
 
(129
)
 
(79
)
 
(393
)
Total claims incurred
 
8,898

 
7,904

 
5,574

Claims paid during year related to:
 
 
 
 
 
 
Current year - other business
 
8,048

 
7,095

 
5,138

Prior years - other business
 
757

 
748

 
646

Total claims paid
 
8,805

 
7,843

 
5,784

Non-cash claims expense - other business
 

 

 

Claims reserve at end of year - other business
 
$
983

 
$
890

 
$
829

Claims Reserve
The Company provides a reserve for claims incurred but not reported (IBNR). This liability is primarily based on, but not limited to, patterns of claims being paid, patterns of claims being received, seasonality patterns and historical experience. As the Company grows, the IBNR claim liability is expected to increase. Additionally, if expected claims paying completion patterns extend, the IBNR claim liability further increases. The Company reviews estimates for reported but unpaid claims and IBNR claims quarterly. Any necessary adjustments are reflected in earnings.
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscriptions related to the Company’s medical plan which are marketed directly to consumers, while the other business segment includes all other business that is not directly marketed to consumers.
Claims Reserve
Activity in the subscription business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - subscription business
 
$
5,384

 
$
4,278

 
$
4,573

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - subscription business
 
123,823

 
95,390

 
74,471

Prior years - subscription business
 
813

 
30

 
(132
)
Total claims incurred
 
124,636

 
95,420

 
74,339

Claims paid during year related to:
 
 
 
 
 
 
Current year - subscription business
 
115,314

 
89,768

 
69,956

Prior years - subscription business
 
5,832

 
4,239

 
4,442

Total claims paid
 
121,146

 
94,007

 
74,398

Non-cash claims expense - subscription business
 
336

 
307

 
236

Claims reserve at end of year - subscription business
 
$
8,538

 
$
5,384

 
$
4,278


The increase in subscription business claims for prior years in the years ended December 31, 2016 and December 31, 2015 is primarily due to more claims incurred than expected relating to prior year claims. The decrease in subscription business claims for prior years in the year ended December 31, 2014 is primarily due to less incurred claims than expected relating to prior year claims.
Activity in the other business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - other business
 
$
890

 
$
829

 
$
1,039

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - other business
 
9,027

 
7,983

 
5,967

Prior years - other business
 
(129
)
 
(79
)
 
(393
)
Total claims incurred
 
8,898

 
7,904

 
5,574

Claims paid during year related to:
 
 
 
 
 
 
Current year - other business
 
8,048

 
7,095

 
5,138

Prior years - other business
 
757

 
748

 
646

Total claims paid
 
8,805

 
7,843

 
5,784

Non-cash claims expense - other business
 

 

 

Claims reserve at end of year - other business
 
$
983

 
$
890

 
$
829


The decrease in other business claims for prior years in the years ended December 31, 2016, December 31, 2015 and December 31, 2014 is primarily due to less claims incurred than expected relating to prior year claims.
Incurred claims and claim adjustment expenses
The Company measures claims frequency using individual claims submissions at the claim event level. A certain claim event may result in multiple reported claims if it involves multiple visits to the veterinarian resulting in multiple invoices. At the end of each reporting period, the cumulative number of claims reported includes all claims submitted (excluding those included in the reserve for incurred but not reported claims), regardless of whether it resulted in an incurred loss. The following table summarizes the activity for incurred claims and claim adjustment expenses for the Company's subscription business segment (in thousands, except for cumulative number of claims data; includes non-cash expenses incurred during the period).
 
 
Years Ended December 31,
 
As of December 31, 2016
 
 
Incurred claims and claim adjustment expenses
 
Total of IBNR plus expected development on reported claims
 
Cumulative number of reported claims
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2013
 
$
49,595

 
$
49,475

 
$
49,593

 
$
49,629

 
$
8

 
269,849

2014
 
 
 
$
71,008

 
$
70,954

 
$
71,118

 
$
71

 
377,083

2015
 
 
 
 
 
$
94,354

 
$
94,908

 
$
286

 
469,815

2016
 
 
 
 
 
 
 
$
123,478

 
$
8,173

 
538,427

 
 
$
339,133

 
 
 
 
The following table summarizes the activity for incurred claims and claim adjustment expenses for the Company's other business segment (in thousands, except for cumulative number of claims data; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
 
As of December 31, 2016
 
 
Incurred claims and claim adjustment expenses
 
Total of IBNR plus expected development on reported claims
 
Cumulative number of reported claims
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2013
 
$
3,294

 
$
2,841

 
$
2,849

 
$
2,849

 
$

 
18,169

2014
 
 
 
$
5,966

 
$
5,888

 
$
5,887

 
$
1

 
34,535

2015
 
 
 
 
 
$
7,973

 
$
7,845

 
$
3

 
46,713

2016
 
 
 
 
 
 
 
$
9,027

 
$
979

 
53,723

 
 
$
25,608

 
 
 
 

Cumulative paid claims and claim adjustment expenses
The following table summarizes the activity for cumulative claims paid and claim adjustment expenses (CAE) for the Company's subscription business segment (in thousands; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2013
 
$
45,276

 
$
49,475

 
$
49,593

 
$
49,621

2014
 
 
 
$
66,845

 
$
70,885

 
$
71,047

2015
 
 
 
 
 
$
89,012

 
$
94,622

2016
 
 
 
 
 
 
 
$
115,305

Total
 
 
$
330,595

Total outstanding liabilities for unpaid claims and CAE
 
 
$
8,538

The following table summarizes the activity for cumulative claims paid and claim adjustment expenses for the Company's other business segment (in thousands; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2013
 
$
2,196

 
$
2,841

 
$
2,849

 
$
2,850

2014
 
 
 
$
5,137

 
$
5,886

 
$
5,886

2015
 
 
 
 
 
$
7,085

 
$
7,841

2016
 
 
 
 
 
 
 
$
8,048

Total
 
 
$
24,625

Total outstanding liabilities for unpaid claims and CAE
 
 
$
983

Debt
Debt Disclosure [Text Block]
. Debt
The Company has a revolving line of credit with a bank, which is secured by any and all interest the Company has in assets that are not otherwise restricted. On December 16, 2016, the Company replaced its previous line of credit agreement and entered into a syndicated loan agreement with Pacific Western Bank and Western Alliance Bank increasing its facility from $20.0 million to $30.0 million. The revolving line of credit bore a variable interest rate as of December 31, 2016 equal to the greater of 4.5% or 1.25% plus the prime rate, and as of December 31, 2015 equal to the greater of 5.0% or 1.5% plus the prime rate. Interest expense is due monthly on the outstanding principal amount with all amounts outstanding under the revolving line of credit due upon maturity in December 2018, or December 2019 if the revolving line of credit is renewed. The revolving line of credit automatically renews January 2018 unless canceled by the bank. The credit agreement requires the Company to comply with various financial and non-financial covenants. As of December 31, 2016 and December 31, 2015, the Company was in compliance with all covenants. This facility had a requirement that $0.6 million be held as restricted cash with the bank as of December 31, 2016. This facility also had a compensating balance requirement of $0.5 million as of December 31, 2016 and December 31, 2015.
Borrowings on the revolving line of credit were limited to the lesser of $30.0 million in 2016 and $20.0 million in 2015, and the total amount of cash and securities held by the Company's insurance subsidiaries (APIC and WICL), less up to $3.0 million, for obligations the Company may have outstanding for other ancillary services in the future. As of December 31, 2016, the Company's outstanding borrowings under this facility were $5.0 million. During 2015, the Company repaid its borrowings under this facility, and as of December 31, 2015, the Company had no outstanding borrowings under this facility.
The Company entered into a lease agreement during 2015 which required the Company to issue a security deposit in the form of an irrevocable standby letter of credit totaling $1.1 million which expires in August 2017 and renews annually thereafter. This amount reduces the Company’s available revolving line of credit. As of December 31, 2016 and 2015, the Company had $21.6 million and $18.4 million, respectively, available under its revolving line of credit.
Interest expense during 2016, 2015 and 2014 related to all loans was $0.2 million, $0.3 million and $6.7 million, respectively.
Stock-based Compensation
Stock-based Compensation
Stock-Based Compensation

In June 2014, the Company’s Board of Directors adopted the 2014 Equity Incentive Plan (2014 Plan), which succeeded the 2007 Equity Compensation Plan upon the Company’s IPO. The 2014 Plan authorizes the award of stock options or restricted stock to directors, officers, employees, and non-employees. All awards have 10-year contractual terms. At December 31, 2016, there were 3,901,594 additional shares available for the Company to grant under the 2014 Plan.
Stock Options
The grant date fair value of stock option awards are estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Valuation assumptions for the years ended December 31, 2016, 2015 and 2014 are presented in the following table:
 
 
 
Years Ended
December 31,
 
 
2016
 
2015
 
2014
Valuation assumptions:
 
 
 
 
 
 
Expected term (in years)
 
5.04-6.25
 
3.0-6.25
 
6.25
Expected volatility
 
37.6%-42.1%
 
37.2%–49.4%
 
54.3%–59.3%
Risk-free interest rate
 
1.1%-2.0%
 
1.1%–2.0%
 
1.8%–2.0%
Expected dividend yield
 
—%
 
—%
 
—%

Expected term: The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of stock-based awards granted, the expected term for awards issued to employees is based on the simplified method, which represents the average period from vesting to the expiration of the stock option.
Expected volatility: As the Company does not have significant trading history for common stock, the expected stock price volatility for common stock is estimated by taking the average historical price volatility for identified peers based on daily price observations over a period equivalent to the expected term of the stock option grants. The Company does not rely on implied volatilities of traded options in identified peers’ common stock because the volume of activity is relatively low. The Company intends to continue to consistently apply this process using these or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s common stock price becomes available.
Risk-free interest rate: The risk-free interest rate for the expected term of the stock option is based on the U.S. Treasury yield curve at the date of grant.
Expected dividend yield: The Company does not expect to pay any dividends in the foreseeable future.
Stock option activity for the years ended December 31, 2016, 2015 and 2014 was as follows:
 
Number
of
Options
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
(in thousands)
December 31, 2013
4,663,445

 
2.12

 
30,406

Granted
754,200

 
9.64

 

Exercised
(176,595
)
 
1.20

 
1,428

Forfeited
(128,494
)
 
5.40

 

December 31, 2014
5,112,556

 
3.19

 
21,116

Granted
698,764

 
7.84

 

Exercised
(632,829
)
 
2.12

 
3,703

Forfeited
(306,542
)
 
7.65

 

December 31, 2015
4,871,949

 
3.71

 
29,644

Granted
666,664

 
13.37

 

Exercised
(1,119,367
)
 
3.35

 
11,980

Forfeited
(296,223
)
 
8.14

 

December 31, 2016
4,123,023

 
5.06

 
43,185

 
 
 
 
 
 
Vested and exercisable at December 31, 2016
3,119,438

 
$
3.06

 
$
38,856

As of December 31, 2016, stock options outstanding had a weighted average remaining contractual life of 5.7 years and vested and exercisable options had a weighted average remaining contractual life of 4.6 years.

The weighted-average grant date fair value of stock options granted and the fair value of options vested were as follows for the years ending December 31, 2016, 2015, and 2014:
 
 
Weighted- Average Grant Date Fair Value
 
Fair Value
of Options
Vested
 
 
(per share)
 
(in thousands)
Year:
 
 
 
 
2014
 
$
5.33

 
$
2,203

2015
 
$
3.46

 
$
3,796

2016
 
$
5.64

 
$
6,688



Restricted Stock Awards and Restricted Stock Units
The below table summarizes the Company’s restricted stock award activity for the years ending December 31, 2016, 2015 and 2014:
 
 
Number of 
Shares
 
Weighted- Average
Grant Date Fair Value Per
Restricted Stock
Nonvested stock award balance at December 31, 2013
 
722,226

 
$
4.77

Restricted stock awards granted
 
6,126

 
5.79

Awards upon which restrictions lapsed
 
(143,967
)
 
4.81

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2014
 
584,385

 
4.77

Restricted stock awards granted
 
2,385

 
7.26

Awards upon which restrictions lapsed
 
(119,262
)
 
4.80

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2015
 
467,508

 
4.77

Restricted stock awards granted
 

 

Awards upon which restrictions lapsed
 
(116,877
)
 
4.77

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2016
 
350,631

 
4.77


During the third quarters of 2016, 2015 and 2014, 116,877 shares of restricted stock, which were subject to a performance condition relating to the Company’s IPO, vested and resulted in $0.5 million, $0.9 million and $1.6 million of expense, respectively, included in general and administrative expense in the consolidated statement of operations. The fair value of these vested shares was approximately $1.8 million, $0.9 million and $1.2 million, respectively. The remaining 350,631 shares of unvested restricted stock related to this agreement are expected to vest over the remaining service term of approximately 3.0 years.
Stock-based compensation expense includes stock options, restricted stock units and restricted stock awards granted to employees and non-employees, and is reported in the Company’s consolidated statement of operations in claims expenses, other cost of revenue, sales and marketing, technology and development, and general and administrative expenses depending on the function performed by the employee or non-employee. Stock-based compensation expense recognized in each category of the consolidated statement of operations for the years ended December 31, 2016, 2015 and 2014 was as follows (in thousands):
 
Years Ended December 31,
 
2016
 
2015
 
2014
Claims expenses
$
234

 
$
219

 
$
236

Other cost of revenue
41

 
44

 
79

Sales and marketing
532

 
446

 
553

Technology and development
246

 
404

 
461

General and administrative
1,893

 
1,889

 
2,755

Total stock-based compensation
$
2,946

 
$
3,002

 
$
4,084


As of December 31, 2016, the Company had unrecognized stock-based compensation expense of $5.2 million, which is expected to vest over a weighted-average period of approximately 2.7 years. As of December 31, 2016, the Company had 953,406 unvested stock options and 352,996 restricted stock awards and units that are expected to vest. No net tax benefits related to the stock-based compensation costs have been recognized since the Company’s inception.
Stockholder's Equity (Notes)
Stockholders' Equity Note Disclosure [Text Block]
Stockholders Equity
On July 23, 2014 the Company completed an IPO pursuant to which 8,193,750 shares of common stock were sold to the public at a price of $10.00 per share. The Company received net proceeds of approximately $72.8 million from the IPO. Upon the closing of the IPO, all shares of outstanding convertible preferred stock and exchangeable shares automatically converted into 14,944,945 and 2,247,130 shares of common stock, respectively. If this transaction had taken place on January 1, 2014, the Company’s weighted-average shares outstanding for the twelve months ended December 31, 2014 would have been 27,067,167.
As of December 31, 2016, the Company had 100,000,000 shares of common stock authorized and 29,498,947 shares of common stock outstanding. Holders of common stock are entitled to one vote on each matter properly submitted to the stockholders of the Company except those related to matters concerning possible outstanding preferred stock. At December 31, 2016, the Company had 10,000,000 shares of undesignated shares of preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock. The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company, whenever funds are legally available. These rights are subordinate to the dividend rights of holders of all classes of stock outstanding at the time. The Company is unable to pay dividends to stockholders as of December 31, 2016 due to restrictions in its credit agreements.
Warrants
At December 31, 2016 and 2015, the Company had warrants to purchase 810,000 shares and 869,999 shares of common stock, respectively, at $10.00 per share, which begin to expire in 2018. At the end of each reporting period prior to the July 23, 2014, warrants were subject to contractual modification provisions and the Company adjusted the fair value of the warrants. For periods subsequent to July 23, 2014, these warrants were no longer subject to contractual modification provisions and were reclassified from a liability classification to an equity classification on the consolidated balance sheet.
Segments
Segment Reporting Disclosure [Text Block]
Segments
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscriptions related to the Company’s medical plan which are marketed directly to consumers, while the other business segment includes all other business that is not directly marketed to consumers.
The chief operating decision maker uses two measures to evaluate segment performance: revenue and gross profit. Additionally, other operating expenses, such as sales and marketing expenses, are allocated to each segment and evaluated when material. Interest and other expenses and income taxes are not allocated to the segments, nor included in the measure of segment profit or loss. The Company does not analyze discrete segment balance sheet information related to long-term assets.
Revenue and gross profit of the Company’s segments were as follows (in thousands):
 
Years Ended December 31,
 
2016
 
2015
 
2014
Revenue:
 
 
 
 
 
Subscription business
$
173,356

 
$
133,406

 
$
103,502

Other business
14,874

 
13,557

 
12,408

 
188,230

 
146,963

 
115,910

Claims expenses:
 
 
 
 
 
Subscription business
124,636

 
95,420

 
74,206

Other business
8,898

 
7,904

 
5,707

 
133,534

 
103,324

 
79,913

Other cost of revenue:
 
 
 
 
 
Subscription business
16,685

 
14,008

 
10,963

Other business
4,723

 
4,402

 
5,160

 
21,408

 
18,410

 
16,123

Gross profit:
 
 
 
 
 
Subscription business
32,035

 
23,978

 
18,333

Other business
1,253

 
1,251

 
1,541

 
33,288

 
25,229

 
19,874

Sales and marketing:
 
 
 
 
 
Subscription business
15,029

 
15,151

 
11,484

Other business
218

 
80

 
124

 
15,247

 
15,231

 
11,608

Technology and development
9,534

 
11,215

 
9,899

General and administrative
15,205

 
15,558

 
14,312

Operating loss
$
(6,698
)
 
$
(16,775
)
 
$
(15,945
)


The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
 
Years Ended December 31,
 
2016
 
2015
 
2014
United States
$
151,361

 
$
116,585

 
$
86,494

Canada
36,869

 
30,378

 
29,416

Total revenue
$
188,230

 
$
146,963

 
$
115,910


Substantially all of the Company’s long-lived assets were located in the United States as of December 31, 2016 and 2015.
Dividend Restrictions Statutory Surplus (Notes)
Dividend Restrictions And Statutory Suprlus [Text Block]
Dividend Restrictions and Statutory Surplus
The Company’s business operations are conducted through subsidiaries, one of which is an insurance company domiciled in New York, and one which is a segregated cell business, Wyndham Segregated Account AX, located in Bermuda. In addition to general state law restrictions on payments of dividends and other distributions to stockholders applicable to all corporations, insurance companies are subject to further regulations that, among other things, may require such companies to maintain certain levels of equity and restrict the amount of dividends and other distributions that may be paid to their parent corporations.
Under regulatory requirements at December 31, 2016, the amount of dividends that may be paid by the Company’s insurance subsidiary in New York to the Company without prior approval by regulatory authorities was $0.1 million. During 2016, 2015 and 2014, the Company’s insurance subsidiaries did not pay any dividends to the Company. Subsequent to December 31, 2016, the Company received a dividend of $2.7 million from Wyndham Insurance Company (SAC) Limited (WICL) Segregated Account AX as allowed under the Company's agreements with WICL.
The statutory net income for 2016, 2015 and 2014 and statutory capital and surplus at December 31, 2016, 2015 and 2014, for the Company’s insurance subsidiary were as follows (in thousands):
 
 
 
As of December 31,
 
 
2016
 
2015
 
2014
Statutory net income
 
$
4,081

 
$
1,386

 
$
990

Statutory capital and surplus
 
30,451

 
26,068

 
23,661


As of December 31, 2016, the Company’s insurance subsidiary (American Pet Insurance Company) maintained $30.5 million of statutory capital and surplus which was above the required amount of $25.8 million of statutory capital and surplus to avoid additional regulatory oversight. As of December 31, 2016 and 2015, the Company had $6.5 million on deposit with various states in which it writes policies.
Related Parties (Notes)
Related Party Transactions Disclosure [Text Block]
Related Parties
The Company is party to arrangements with the father of the Company’s Chief Executive Officer, who serves as an independent contractor to develop veterinary relationships and build referrals. The terms of the independent contractor agreement are consistent with the terms of other similar independent contractors that do business with the Company. Total amounts paid to the related party were less than $0.1 million, $0.3 million and $0.3 million in 2016, 2015 and 2014, respectively.
Income Taxes (Notes)
Income Taxes
Income Taxes
Loss before income taxes was as follows for the years ended December 31, 2016, 2015 and 2014 (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
United States
 
$
(6,906
)
 
$
(17,222
)
 
$
(21,371
)
Foreign
 
48

 
131

 
187

 
 
$
(6,858
)
 
$
(17,091
)
 
$
(21,184
)

The components of income tax expense (benefit) were as follows (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
25

 
$
31

 
$
26

Foreign
 
13

 
84

 
(30
)
 
 
38

 
115

 
(4
)
Deferred:
 
 
 
 
 
 
U.S. federal & state
 

 

 

Foreign
 

 
(1
)
 
(3
)
 
 

 
(1
)
 
(3
)
Income tax expense (benefit)
 
$
38

 
$
114

 
$
(7
)


A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is presented below:
 
 
 
Years Ended December 31,    
 
 
2016
 
2015
 
2014
Federal income taxes at statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
Equity compensation
 
7.7

 
(1.2
)
 
(0.9
)
Change in valuation allowance
 
(41.1
)
 
(34.9
)
 
(32.5
)
Other, net
 
(1.2
)
 
1.4

 
(0.5
)
Effective income tax rate
 
(0.6
)%
 
(0.7
)%
 
0.1
 %

The principal components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
 
 
 
Years Ended December 31,         
 
 
2016
 
2015
Deferred tax assets:
 
 
 
 
Current:
 
 
 
 
Unearned premium reserves
 
$
918

 
$
745

Loss reserves
 
27

 
167

Other
 
782

 
690

Noncurrent:
 
 
 
 
Net operating loss carryforwards
 
22,632

 
20,514

Depreciation and amortization
 
535

 
451

Equity compensation
 
1,137

 
713

Other
 
156

 
96

Total deferred tax assets
 
26,187

 
23,376

Deferred tax liabilities:
 
 
 
 
Current:
 
 
 
 
Deferred costs
 
(226
)
 
(189
)
Noncurrent:
 
 
 
 
Intangible assets
 
(1,623
)
 
(1,623
)
Other
 
(77
)
 
(72
)
Total deferred tax liabilities
 
(1,926
)
 
(1,884
)
Total deferred taxes
 
24,261

 
21,492

Less deferred tax asset valuation allowance
 
(25,879
)
 
(23,110
)
Net deferred taxes
 
$
(1,618
)
 
$
(1,618
)

At December 31, 2016, the Company had federal net operating loss carryforwards of $79.0 million. Use of the carryforwards is limited based on the future income of the Company. The federal net operating loss carryforwards will begin to expire in 2027. Approximately $12.7 million of the net operating loss (NOL) carryforwards relate to tax deductible stock-based compensation in excess of amounts recognized for financial statement purposes. Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of the Company’s net operating loss carryforwards and credit carryforwards may be limited if the Company experiences an ownership change. As of December 31, 2016, the utilization of approximately $0.5 million of net operating losses are subject to limitation as a result of prior ownership changes; however, subsequent ownership changes may further affect the limitation in future years.
A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2016 and 2015, because the Company’s management has determined that it is more likely than not that these assets will not be fully realized.
The Company is open to examination by the U.S. federal tax jurisdiction for the years ended December 31, 2013 through 2016. The Company is also open to examination for 2007 and forward with respect to net operating loss carryforwards generated and carried forward from those years in the United States. The Company is open to examination by the Canada Revenue Agency for the years ended December 31, 2012 through 2016 for all corporate tax matters, and open for the years ended December 31, 2009 through 2016 for transactions with non-arm’s length non-Canadian residents.
The Company accounts for uncertain tax positions based on a two-step process of evaluating recognition and measurement criteria. The first step assesses whether the tax position is more likely than not to be sustained upon examination by the taxing authority, including resolution of any appeals or litigation, on the basis of the technical merits of the position. If the tax position meets the more-likely-than-not criteria, the portion of the tax benefit greater than 50% likely to be realized upon settlement with the relevant tax authority is recognized in the financial statements. Net unrecognized tax benefits, interest, and penalties not expected to be settled within one year are included in other long-term liabilities on the consolidated balance sheets. No significant changes in uncertain tax positions are expected in the next twelve months.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
 
  
 
Years Ended
December 31,
 
 
2016
 
2015
 
2014
Balance, beginning of year
 
$
80

 
$
65

 
$
390

Decreases to tax positions related to prior periods
 

 

 
(346
)
Increases to tax positions related to the current year
 
40

 
15

 
21

Balance, end of year
 
$
120

 
$
80

 
$
65

Retirement Plan (Notes)
Compensation and Employee Benefit Plans [Text Block]
Employee Benefits
The Company has a 401(k) plan for its U.S. employees. The plan allows employees to contribute a percentage of their pretax earnings annually, subject to limitations imposed by the Internal Revenue Service. The plan also allows the Company to make a matching contribution, subject to certain limitations. To date, the Company has made no contributions to the 401(k) plan.
Quarterly Financial Information (Notes)
Quarterly Financial Information [Text Block]
Quarterly Financial Information (Unaudited)

The following table contains selected unaudited financial data for each quarter of 2016 and 2015. The unaudited information should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report. The Company believes that the following unaudited information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

 
Three Months Ended
 
Dec. 31, 2016
 
Sept. 30, 2016
 
Jun. 30, 2016
 
Mar. 31, 2016
 
Dec. 31, 2015
 
Sept. 30, 2015
 
Jun. 30, 2015
 
Mar. 31, 2015
 
(in thousands, except share amounts)
Total revenues
$
51,340

 
$
48,359

 
$
45,832

 
$
42,699

 
$
40,201

 
$
37,865

 
$
35,587

 
$
33,310

Gross profit
9,218

 
8,500

 
8,266

 
7,304

 
7,270

 
6,591

 
5,786

 
5,582

Net loss
(1,723
)
 
(1,637
)
 
(964
)
 
(2,572
)
 
(3,001
)
 
(4,643
)
 
(4,625
)
 
(4,936
)
Net loss per share attributable to common stockholders:
Basic and diluted
(0.06
)

(0.06
)

(0.03
)

(0.09
)

(0.11
)

(0.17
)

(0.17
)

(0.18
)
Weighted average shares used to compute net loss per share attributable to common stockholders:
Basic and diluted
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

 
27,856,450

 
27,755,310

 
27,597,721

 
27,337,302

Schedule 1-Parent Only Disclosures [Schedule] (Notes)
Condensed Financial Information of Parent Company Only Disclosure
Trupanion, Inc.
Condensed Balance Sheets
(Parent Company Only)
(In thousands, except for share and per share data)
 
 
As of December 31,
 
 
2016
 
2015
Assets
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
3,401

 
$
6,040

Accounts and other receivable
 
1,492

 
517

Prepaid expenses and other assets
 
106

 
364

Total current assets
 
4,999

 
6,921

Restricted cash
 
600

 

Equity method investment
 
271

 
300

Property and equipment, net
 
1,070

 
641

Intangible assets, net
 
4,773

 
4,784

Advances to and investments in subsidiaries
 
40,086

 
34,488

Total assets
 
$
51,799

 
$
47,134

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
19

 
$
11

Accrued liabilities
 
145

 
144

Deferred tax liabilities
 
250

 
169

Other liabilities
 
328

 

Total current liabilities
 
742

 
324

Long-term debt
 
4,767

 

Deferred tax liabilities
 
1,372

 
1,454

Other liabilities
 
203

 

Total liabilities
 
7,084

 
1,778

Stockholders’ equity:
 
 
 
 
Common stock, $0.00001 par value per share, 100,000,000 shares authorized at December 31, 2016 and 200,000,000 shares authorized at December 31, 2015, 30,156,247 and 29,498,947 shares issued and outstanding at December 31, 2016; 29,017,168 and 28,396,189 shares issued and outstanding at December 31, 2015.
 

 

Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized at December 31, 2016 and December 31, 2015, and 0 shares issued and outstanding at December 31, 2016 and December 31, 2015.
 

 

Additional paid-in capital
 
129,574

 
122,844

Accumulated other comprehensive (loss) income
 
(377
)
 
(502
)
Accumulated deficit
 
(81,281
)
 
(74,385
)
Treasury stock, at cost: 657,300 shares at December 31, 2016, and 620,979 shares at December 31, 2015.
 
(3,201
)
 
(2,601
)
Total stockholders’ equity
 
44,715

 
45,356

Total liabilities and stockholders’ equity
 
$
51,799

 
$
47,134











Trupanion, Inc.
Condensed Statements of Cash Flows
(Parent Company Only)
(In thousands)

 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Operating activities
 
 
Net loss
 
$
(6,896
)
 
$
(17,205
)
 
(21,177
)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
 
 
 
 
 
 
Loss attributable to equity method investments
 
1,316

 
11,511

 
10,519

Depreciation and amortization
 
251

 
126

 
67

Amortization of debt discount and prepaid loan fees
 
58

 
21

 
5,033

Warrant expense
 

 

 
(1,574
)
Stock-based compensation expense
 
2,946

 
3,002

 
4,084

Changes in operating assets and liabilities
 
1,742

 
(1,383
)
 
465

Net cash (used in) provided by operating activities
 
(583
)
 
(3,928
)
 
(2,583
)
Investing activities
 
 
 
 
 
 
Purchases of property and equipment
 
1

 
(149
)
 
(243
)
Equity method investment
 

 
(300
)
 

Advances to and investments in subsidiaries
 
(9,333
)
 
(19,900
)
 
(22,209
)
Net cash used in investing activities
 
(9,332
)
 
(20,349
)
 
(22,452
)
Financing activities
 
 
 
 
 
 
Tax withholding on restricted stock
 
(662
)
 
(643
)
 

Proceeds from exercise of stock options
 
3,745

 
1,335

 
211

Proceeds from (repayment of) debt financing
 
4,988

 
(14,900
)
 
(15,000
)
Other financing costs
 
(195
)
 

 
(103
)
Net Proceeds from IPO
 

 

 
72,755

Net cash (used in) provided by financing activities
 
7,876

 
(14,208
)
 
57,863

Effect of foreign exchange rates on cash, net
 

 
(517
)
 
175

Net (decrease) increase in cash, cash equivalents, and restricted cash
 
(2,039
)
 
(39,002
)
 
33,003

Cash, cash equivalents, and restricted cash at beginning of year
 
6,040

 
45,042

 
12,039

Cash, cash equivalents, and restricted cash at end of year
 
$
4,001

 
$
6,040

 
45,042

Supplemental disclosures
 
 
 
 
 
 
Interest paid
 
(153
)
 
(155
)
 
(1,494
)
Noncash investing and financing activities:
 
 
 
 
 
 
Warrants issued in conjunction with debt issuance
 

 

 
1,124

Cashless exercise of preferred stock warrants
 

 

 
1,270

Cashless exercise of common stock warrants
 
600

 

 

Common stock warrant reclassification to equity
 

 

 
3,180


 
1. Organization and Presentation
The accompanying condensed financial statements present the financial position, results of operations and cash flows for Trupanion, Inc. These condensed unconsolidated financial statements should be read in conjunction with the consolidated financial statements of Trupanion, Inc. and its subsidiaries and the notes thereto (the Consolidated Financial Statements). Investments in subsidiaries are accounted for using the equity method of accounting. Certain prior year amounts have been reclassified within the accompanying condensed financial statements from their original presentation to conform to the current period presentation.
Additional information about Trupanion, Inc.’s accounting policies pertaining to intangible assets, commitments and contingencies, debt financing, stock-based compensation, and stockholders’ equity are set forth in Notes 4, 8, 10, 11 and 12, respectively, to the Consolidated Financial Statements.
Nature of Operations and Summary of Significant Accounting Policies (Policies)
Nature of Operations and Summary of Significant Accounting Policies
Description of Business
The Company provides medical insurance plans for cats and dogs throughout the United States, Canada and Puerto Rico. The Company’s data-driven, vertically-integrated approach enables us to provide pet owners with what the Company believes is the highest value medical plan for their pets, priced specifically for each pet’s unique characteristics. The Company strives to operate the business similar to other subscription-based businesses, with a focus on maximizing the lifetime value of each pet while sustaining a favorable ratio of lifetime value relative to pet acquisition cost.
Reclassifications
Certain prior year amounts have been reclassified within the Company’s consolidated financial statements from their original presentation to conform to the current period presentation.

Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies and the reported amounts of revenue and expenses. Significant items subject to such estimates and assumptions include the valuation of deferred tax assets, stock-based compensation, claims reserve, useful lives of software developed for internal use, allowance for doubtful accounts, and income tax uncertainties. Actual results could differ from the estimates used in preparing the consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash totaled $24.2 million at December 31, 2016 and was comprised of $23.6 million cash and cash equivalents and $0.6 million restricted cash. There was no restricted cash as of December 31, 2015 and 2014.
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At times, cash on deposit may be in excess of the applicable federal deposit insurance corporation limits.
The Company considers any cash account that is restricted to withdrawal or use under the terms of certain financing agreements as restricted cash. Cash will be considered restricted for so long as the line of credit it relates to is open. Restricted cash pledged as collateral for its credit facility totaled $0.6 million at December 31, 2016.
Accounts and Other Receivable
Receivables are comprised of trade receivables and other miscellaneous receivables. As of December 31, 2016 and 2015, receivables included $8.0 million and $7.2 million, respectively, for one-year policies written by an unaffiliated general agent. Accounts and other receivable are carried at their estimated collectible amounts.
No single customer made up more than 5% of accounts receivable as of December 31, 2016 or 2015.
Deferred Acquisition Costs
The Company incurs certain costs related to the successful acquisition of new and renewal customer contracts, which are capitalized. These costs include premium taxes, fees and enrollment-based bonuses, and referral fees that directly relate to the successful acquisition of new or renewal customer contracts. Deferred acquisition costs are included in prepaid expenses and other assets on the consolidated balance sheet and are amortized over the related policy term to the applicable financial statement line item, including sales and marketing expenses and other cost of revenue. Total deferred acquisition costs for the years ended December 31, 2016, 2015 and 2014 are summarized below (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Deferred acquisition costs capitalized
 
$
12,251

 
$
10,184

 
$
7,995

Deferred acquisition costs amortized:
 

 

 

Sales and marketing
 
1,401

 
1,490

 
858

Other cost of revenue
 
10,743

 
8,606

 
7,052

Total amortization
 
12,144

 
10,096

 
7,910

Balance at December 31,
 
$
664

 
$
557

 
$
469


Investments
The Company recognizes the following classifications of investments:
Short-term-investments—Investments with an initial maturity of less than one year are reported at amortized cost, which approximates fair value.
Available-for-Sale—Investments in fixed maturities not classified as short-term-investments are reported at fair value, and the temporary declines or increases from amortized cost are included as a component of other comprehensive income.
Available-for-sale securities are classified based upon the availability to be used in current operations.
Premiums and discounts on fixed maturity securities are amortized or accreted over the life of the security. Such amortization expense and accretion is included in interest income. Interest income is recognized in other income, net when earned.
A decline in the fair value of any available-for-sale security below amortized cost that is deemed to be other than temporary results in an impairment to reduce the amortized cost to fair value or recovery value. To determine whether an impairment is other than temporary, the Company considers its intent to sell the security, intent and ability to hold the security, as well as all available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable forecasts, when developing estimates of cash flows expected to be collected. Realized capital gains and losses are determined on a specific identification basis and recorded as a part of other expense, net in the statement of operations.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from three to five years. Leasehold improvements are depreciated over the less of their expected useful life or the remaining term of the related lease. Fixed assets under capital lease are depreciated over the lesser of their expected useful life or the remaining term of the related lease.
Costs related to software developed for internal use are primarily related to the Company’s website, internal support systems, and proprietary billing and claims systems. Costs are capitalized during the application development stage of the project and depreciated on a straight-line basis over the estimated useful lives of the related assets, estimated to be three years, once the software is placed into service.
Intangible Assets
Indefinite-lived intangible assets, which are not amortized, are assessed for impairment at least annually and more frequently if circumstances indicate a possible impairment. The Company first performs a qualitative analysis to assess whether it is more likely than not the asset is impaired and, if necessary, a quantitative analysis is performed to measure impairment.
Assets with finite lives are amortized over their estimated remaining useful life.
Asset Impairment
Long-lived assets, such as property and equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.
Claims Reserve
The claims reserve includes unpaid claims and claims adjustment expenses, which includes an estimate, based on past experience, for claims incurred but not reported. Such liabilities are necessarily based on assumptions and estimates, and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in the period in which they become known.
Warrants
The Company issued warrants to purchase common or convertible preferred stock to third parties as a part of certain business and financing transactions. The Company values warrants using the Black-Scholes-Merton option-pricing model. Certain warrants were considered liability awards and were remeasured each reporting period until exercised, settled or reclassified to stockholders’ equity. See Note 12 for additional information.

Revenue Recognition
The Company generates revenue primarily from subscription fees for its medical insurance plan and other policies the Company writes, which is earned pro rata over the terms of the customer contracts.
No single customer accounted for more than 5% of the Company’s revenue in 2016, 2015 or 2014.
Claims Expense
Claims expenses include claims incurred, the cost of personnel administering the claims and providing member service relating to claims, and other operating expenses directly or indirectly related to claims administration.
Other Cost of Revenue
Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, renewal fees, credit card transaction fees and premium tax expenses. Other cost of revenue for the other business segment includes the commission the Company pays to the unaffiliated general agent and premium taxes on other policies in this segment.
Sales and Marketing
Sales and marketing expenses consist of costs to educate veterinarians and policy holders about the Company’s policy, converting leads to enrolled pets, print, online and promotional advertising costs and employee compensation and related costs.
Technology and Development
Technology and development expenses consist primarily of personnel costs and related expenses for the Company’s operations staff, which includes information technology development and infrastructure support, third-party services and depreciation of hardware and capitalized software and amortization of intangible assets.
General and Administrative
General and administrative expenses consist primarily of personnel costs and related expenses for the Company’s finance, actuarial, human resources, legal and general management functions, as well as facilities and professional services.
Other Income, Net
Other income, net was comprised of the following (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Interest income
 
$
(119
)
 
$
(75
)
 
$
(73
)
Foreign exchange loss
 

 
36

 
41

Loss on disposal of fixed assets
 
24

 
20

 
111

Warrant remeasurement
 

 

 
(1,574
)
Other
 
37

 
10

 
8

Other income, net
 
$
(58
)
 
$
(9
)
 
$
(1,487
)

Insurance Operations
Effective January 1, 2015, the Company formed a segregated account in Bermuda as part of Wyndham Insurance Company (SAC) Limited (WICL), and entered into a revised fronting and reinsurance arrangement with Omega General Insurance Company (Omega) to include its newly formed segregated account. The Company maintains all risk with the business written in Canada and consolidates the entity in its financial statements. Contractual requirements restrict dividends from this entity until after 2016, at which time dividends will be allowed subject to the Segregated Accounts Company Act of 2000, which allows for dividends only to the extent that the entity remains solvent and the value of its assets remain greater than the aggregate of its liabilities and its issued share capital and share premium accounts.

For the Company’s Canadian business, all plans are written by Omega General Insurance Company (Omega) and the risk is assumed by the Company through a fronting and reinsurance agreement. Premiums are recognized and earned pro rata over the terms of the related customer contracts. Premiums recognized from the agreement in 2016, 2015 and 2014 were $36.5 million, $30.9 million and $29.1 million, respectively and deferred revenue relating to this arrangement at December 31, 2016 and 2015 was $1.3 million and $0.9 million, respectively. Reinsurance revenue was 19%, 21% and 25% of total revenue in 2016, 2015 and 2014, respectively. Cash designated for the purpose of paying claims related to this reinsurance agreement was $2.1 million and $2.0 million at December 31, 2016 and 2015, respectively. In addition, as required by the Office of the Superintendent of Financial institutions regulations related to the Company’s reinsurance agreement with Omega, the Company is required to fund a Canadian Trust account with the greater of CAD $2.0 million or 115% of unearned Canadian premium plus 15% of outstanding Canadian claims, including all incurred but not reported claims. As of December 31, 2016, the Company was in compliance with all requirements.
The Company has not transferred any risk to third-party reinsurers.
In November 2012, the Company began writing one-year pet insurance policies for an unaffiliated general agent. Revenue during 2016, 2015 and 2014 totaled $10.8 million, $9.9 million and $10.0 million, respectively, and deferred revenue relating to this arrangement at December 31, 2016 and 2015 was $6.1 million and $5.5 million, respectively.
Advertising
Advertising costs are expensed as incurred, with the exception of television advertisements, which are expensed the first time each advertisement is aired. Advertising costs amounted to $4.0 million, $5.3 million and $3.2 million, in 2016, 2015 and 2014, respectively.
Stock-Based Compensation
The Company measures compensation expense for stock-based transactions to employees at fair value on the date of grant and recognizes such cost, on a straight-line basis over the requisite service period (generally four years) net of estimated forfeitures, except for the restricted stock with a performance condition which is measured on a graded vesting schedule. Many factors are considered when estimating forfeitures, including types of awards, employee class and historical experience. Stock options are valued using the Black-Scholes-Merton option-pricing model. The fair value of restricted stock units (RSUs) and restricted stock awards is based on the fair value of the Company’s stock on the date of the grant.
The Company measures compensation cost for stock-based compensation to non-employees at fair value and remeasures the award each period until the award vests.
Income Taxes
Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided for when it is considered more likely than not that deferred tax assets will not be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Penalties and interest are classified as a component of income taxes.
Foreign Currency
The Company’s consolidated financial statements are reported in U.S. dollars. Assets and liabilities of international subsidiaries with non-U.S. dollar functional currencies are translated to U.S. dollars at the exchange rates in effect on the balance sheet date. Revenue and expenses for each subsidiary are translated to U.S. dollars using a weighted-average rate for the relevant reporting period. Translation adjustments resulting from this process are included in accumulated other comprehensive loss, and totaled $0.4 million, $0.4 million and $0.1 million as of December 31, 2016, 2015 and 2014, respectively. Gains and losses that arise from exchange rate fluctuations for monetary asset and liability balances that are not denominated in an entity’s functional currency are included within other income.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. The Company manages its risk by investing cash equivalents and investment securities in money market instruments and securities of the U.S. government, U.S. government agencies and high-credit-quality issuers of debt securities.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers. In addition, the Company’s credit risk is mitigated by the relatively short collection period.
Accounting Pronouncements Adopted during Period
In May 2015, the FASB issued an ASU amending short-term insurance contract disclosures and requiring more detailed disclosures to enable users of financial statements to understand information relating to liabilities for unpaid claims and claims adjustment expenses. Additionally, the amendments will also require insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate these liabilities. The Company adopted this ASU as of December 31, 2016 and has provided the required disclosures in Note 9.
In November 2016, the FASB issued an ASU which requires amounts determined to be restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This ASU is effective for fiscal periods beginning after December 15, 2018 including interim periods within that reporting period, with early adoption permitted. The Company adopted this ASU as of December 31, 2016 and has retrospectively applied all provisions by providing comparative disclosures for each period presented.
Recent Accounting Pronouncements
In November 2015, the FASB issued an ASU amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the consolidated balance sheet. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The ASU may be adopted either prospectively or retrospectively. The Company adopted this guidance retrospectively as of January 1, 2017. The Company anticipates that this guidance will not have a material impact on the financial statements resulting from the reclassification of deferred taxes to non-current.
In February 2016, the FASB issued an ASU amending the lease presentation guidance. The ASU requires organizations that lease assets to recognize the rights and obligations created by those leases on the balance sheet. This ASU is effective for fiscal years beginning after December 15, 2018 including interim periods within that reporting period, with early adoption permitted. The Company plans to adopt this guidance as of January 1, 2019. The Company has determined this guidance will require recognition of a lease liability and corresponding asset on the balance sheet equal to the present value of minimum lease payments. The carrying amount of the asset is derived from the amount of the lease liability at the end of each reporting period.
In March 2016, the FASB issued an ASU amending the accounting for employee share-based payments, including income tax recognition and classification. The entity may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. Additionally, tax withholding of shares will be allowed up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. Finally, under the new guidance, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital on the balance sheet. Instead, companies will record all excess tax benefits and deficiencies as income tax expense or benefit in the income statement. This ASU is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period, with early adoption permitted. The Company adopted this guidance as of January 1, 2017. The Company has determined the guidance for estimating forfeitures does not currently have a material impact to the financial statements. The guidance for tax withholding on RSU's may have a material impact on cash flow from financing activities to the extent individual employees elect to withhold shares at rates higher than the statutory minimum. The guidance related to the accounting for excess tax benefits and deficiencies will result in an initial adjustment as of January 1, 2017 to the Company's net operating loss deferred tax asset to eliminate the Company's existing APIC pool amounting to $4.3 million, which will be offset by an adjustment to the company's valuation allowance.
In August 2016, the FASB issued an ASU which addresses eight specific cash flow issues intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal periods beginning after December 15, 2017 including interim periods within that reporting period, with early adoption permitted. The Company plans to adopt this guidance as of January 1, 2018. The Company is in the process of assessing the impact of this guidance.
Description of Business
The Company provides medical insurance plans for cats and dogs throughout the United States, Canada and Puerto Rico. The Company’s data-driven, vertically-integrated approach enables us to provide pet owners with what the Company believes is the highest value medical plan for their pets, priced specifically for each pet’s unique characteristics. The Company strives to operate the business similar to other subscription-based businesses, with a focus on maximizing the lifetime value of each pet while sustaining a favorable ratio of lifetime value relative to pet acquisition cost.
Reclassifications
Certain prior year amounts have been reclassified within the Company’s consolidated financial statements from their original presentation to conform to the current period presentation
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies and the reported amounts of revenue and expenses. Significant items subject to such estimates and assumptions include the valuation of deferred tax assets, stock-based compensation, claims reserve, useful lives of software developed for internal use, allowance for doubtful accounts, and income tax uncertainties. Actual results could differ from the estimates used in preparing the consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash totaled $24.2 million at December 31, 2016 and was comprised of $23.6 million cash and cash equivalents and $0.6 million restricted cash. There was no restricted cash as of December 31, 2015 and 2014.
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At times, cash on deposit may be in excess of the applicable federal deposit insurance corporation limits.
The Company considers any cash account that is restricted to withdrawal or use under the terms of certain financing agreements as restricted cash. Cash will be considered restricted for so long as the line of credit it relates to is open. Restricted cash pledged as collateral for its credit facility totaled $0.6 million at December 31, 2016.
Accounts and Other Receivable
Receivables are comprised of trade receivables and other miscellaneous receivables. As of December 31, 2016 and 2015, receivables included $8.0 million and $7.2 million, respectively, for one-year policies written by an unaffiliated general agent. Accounts and other receivable are carried at their estimated collectible amounts.
No single customer made up more than 5% of accounts receivable as of December 31, 2016 or 2015.
single customer made up more than 5% of accounts receivable as of December 31, 2016 or 2015.
Deferred Acquisition Costs
The Company incurs certain costs related to the successful acquisition of new and renewal customer contracts, which are capitalized. These costs include premium taxes, fees and enrollment-based bonuses, and referral fees that directly relate to the successful acquisition of new or renewal customer contracts. Deferred acquisition costs are included in prepaid expenses and other assets on the consolidated balance sheet and are amortized over the related policy term to the applicable financial statement line item, including sales and marketing expenses and other cost of revenue. Total deferred acquisition costs for the years ended December 31, 2016, 2015 and 2014 are summarized below (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Deferred acquisition costs capitalized
 
$
12,251

 
$
10,184

 
$
7,995

Deferred acquisition costs amortized:
 

 

 

Sales and marketing
 
1,401

 
1,490

 
858

Other cost of revenue
 
10,743

 
8,606

 
7,052

Total amortization
 
12,144

 
10,096

 
7,910

Balance at December 31,
 
$
664

 
$
557

 
$
469

Investments
The Company recognizes the following classifications of investments:
Short-term-investments—Investments with an initial maturity of less than one year are reported at amortized cost, which approximates fair value.
Available-for-Sale—Investments in fixed maturities not classified as short-term-investments are reported at fair value, and the temporary declines or increases from amortized cost are included as a component of other comprehensive income.
Available-for-sale securities are classified based upon the availability to be used in current operations.
Premiums and discounts on fixed maturity securities are amortized or accreted over the life of the security. Such amortization expense and accretion is included in interest income. Interest income is recognized in other income, net when earned.
A decline in the fair value of any available-for-sale security below amortized cost that is deemed to be other than temporary results in an impairment to reduce the amortized cost to fair value or recovery value. To determine whether an impairment is other than temporary, the Company considers its intent to sell the security, intent and ability to hold the security, as well as all available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable forecasts, when developing estimates of cash flows expected to be collected. Realized capital gains and losses are determined on a specific identification basis and recorded as a part of other expense, net in the statement of operations.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from three to five years. Leasehold improvements are depreciated over the less of their expected useful life or the remaining term of the related lease. Fixed assets under capital lease are depreciated over the lesser of their expected useful life or the remaining term of the related lease.
Costs related to software developed for internal use are primarily related to the Company’s website, internal support systems, and proprietary billing and claims systems. Costs are capitalized during the application development stage of the project and depreciated on a straight-line basis over the estimated useful lives of the related assets, estimated to be three years, once the software is placed into service.
Intangible Assets
Indefinite-lived intangible assets, which are not amortized, are assessed for impairment at least annually and more frequently if circumstances indicate a possible impairment. The Company first performs a qualitative analysis to assess whether it is more likely than not the asset is impaired and, if necessary, a quantitative analysis is performed to measure impairment.
Assets with finite lives are amortized over their estimated remaining useful life.
Asset Impairment
Long-lived assets, such as property and equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.
Claims Reserve
The claims reserve includes unpaid claims and claims adjustment expenses, which includes an estimate, based on past experience, for claims incurred but not reported. Such liabilities are necessarily based on assumptions and estimates, and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in the period in which they become known.
Warrants
The Company issued warrants to purchase common or convertible preferred stock to third parties as a part of certain business and financing transactions. The Company values warrants using the Black-Scholes-Merton option-pricing model. Certain warrants were considered liability awards and were remeasured each reporting period until exercised, settled or reclassified to stockholders’ equity. See Note 12 for additional information.
Revenue Recognition
The Company generates revenue primarily from subscription fees for its medical insurance plan and other policies the Company writes, which is earned pro rata over the terms of the customer contracts.
No single customer accounted for more than 5% of the Company’s revenue in 2016, 2015 or 2014.
Claims Expense
Claims expenses include claims incurred, the cost of personnel administering the claims and providing member service relating to claims, and other operating expenses directly or indirectly related to claims administration.
Other Cost of Revenue
Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, renewal fees, credit card transaction fees and premium tax expenses. Other cost of revenue for the other business segment includes the commission the Company pays to the unaffiliated general agent and premium taxes on other policies in this segment.
Sales and Marketing
Sales and marketing expenses consist of costs to educate veterinarians and policy holders about the Company’s policy, converting leads to enrolled pets, print, online and promotional advertising costs and employee compensation and related costs.
General and Administrative
General and administrative expenses consist primarily of personnel costs and related expenses for the Company’s finance, actuarial, human resources, legal and general management functions, as well as facilities and professional services.
Technology and Development
Technology and development expenses consist primarily of personnel costs and related expenses for the Company’s operations staff, which includes information technology development and infrastructure support, third-party services and depreciation of hardware and capitalized software and amortization of intangible assets.
Insurance Operations
Effective January 1, 2015, the Company formed a segregated account in Bermuda as part of Wyndham Insurance Company (SAC) Limited (WICL), and entered into a revised fronting and reinsurance arrangement with Omega General Insurance Company (Omega) to include its newly formed segregated account. The Company maintains all risk with the business written in Canada and consolidates the entity in its financial statements. Contractual requirements restrict dividends from this entity until after 2016, at which time dividends will be allowed subject to the Segregated Accounts Company Act of 2000, which allows for dividends only to the extent that the entity remains solvent and the value of its assets remain greater than the aggregate of its liabilities and its issued share capital and share premium accounts.

For the Company’s Canadian business, all plans are written by Omega General Insurance Company (Omega) and the risk is assumed by the Company through a fronting and reinsurance agreement. Premiums are recognized and earned pro rata over the terms of the related customer contracts. Premiums recognized from the agreement in 2016, 2015 and 2014 were $36.5 million, $30.9 million and $29.1 million, respectively and deferred revenue relating to this arrangement at December 31, 2016 and 2015 was $1.3 million and $0.9 million, respectively. Reinsurance revenue was 19%, 21% and 25% of total revenue in 2016, 2015 and 2014, respectively. Cash designated for the purpose of paying claims related to this reinsurance agreement was $2.1 million and $2.0 million at December 31, 2016 and 2015, respectively. In addition, as required by the Office of the Superintendent of Financial institutions regulations related to the Company’s reinsurance agreement with Omega, the Company is required to fund a Canadian Trust account with the greater of CAD $2.0 million or 115% of unearned Canadian premium plus 15% of outstanding Canadian claims, including all incurred but not reported claims. As of December 31, 2016, the Company was in compliance with all requirements.
The Company has not transferred any risk to third-party reinsurers.
In November 2012, the Company began writing one-year pet insurance policies for an unaffiliated general agent. Revenue during 2016, 2015 and 2014 totaled $10.8 million, $9.9 million and $10.0 million, respectively, and deferred revenue relating to this arrangement at December 31, 2016 and 2015 was $6.1 million and $5.5 million, respectively.
Advertising
Advertising costs are expensed as incurred, with the exception of television advertisements, which are expensed the first time each advertisement is aired. Advertising costs amounted to $4.0 million, $5.3 million and $3.2 million, in 2016, 2015 and 2014, respectively.
Stock-Based Compensation
The Company measures compensation expense for stock-based transactions to employees at fair value on the date of grant and recognizes such cost, on a straight-line basis over the requisite service period (generally four years) net of estimated forfeitures, except for the restricted stock with a performance condition which is measured on a graded vesting schedule. Many factors are considered when estimating forfeitures, including types of awards, employee class and historical experience. Stock options are valued using the Black-Scholes-Merton option-pricing model. The fair value of restricted stock units (RSUs) and restricted stock awards is based on the fair value of the Company’s stock on the date of the grant.
The Company measures compensation cost for stock-based compensation to non-employees at fair value and remeasures the award each period until the award vests.
Income Taxes
Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided for when it is considered more likely than not that deferred tax assets will not be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Penalties and interest are classified as a component of income taxes.
Foreign Currency
The Company’s consolidated financial statements are reported in U.S. dollars. Assets and liabilities of international subsidiaries with non-U.S. dollar functional currencies are translated to U.S. dollars at the exchange rates in effect on the balance sheet date. Revenue and expenses for each subsidiary are translated to U.S. dollars using a weighted-average rate for the relevant reporting period. Translation adjustments resulting from this process are included in accumulated other comprehensive loss, and totaled $0.4 million, $0.4 million and $0.1 million as of December 31, 2016, 2015 and 2014, respectively. Gains and losses that arise from exchange rate fluctuations for monetary asset and liability balances that are not denominated in an entity’s functional currency are included within other income.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. The Company manages its risk by investing cash equivalents and investment securities in money market instruments and securities of the U.S. government, U.S. government agencies and high-credit-quality issuers of debt securities.
Credit risk with respect to accounts receivable is dispersed due to the large number of customers. In addition, the Company’s credit risk is mitigated by the relatively short collection period.
Accounting Pronouncements Adopted during Period
In May 2015, the FASB issued an ASU amending short-term insurance contract disclosures and requiring more detailed disclosures to enable users of financial statements to understand information relating to liabilities for unpaid claims and claims adjustment expenses. Additionally, the amendments will also require insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate these liabilities. The Company adopted this ASU as of December 31, 2016 and has provided the required disclosures in Note 9.
In November 2016, the FASB issued an ASU which requires amounts determined to be restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This ASU is effective for fiscal periods beginning after December 15, 2018 including interim periods within that reporting period, with early adoption permitted. The Company adopted this ASU as of December 31, 2016 and has retrospectively applied all provisions by providing comparative disclosures for each period presented.
Recent Accounting Pronouncements
In November 2015, the FASB issued an ASU amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the consolidated balance sheet. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The ASU may be adopted either prospectively or retrospectively. The Company adopted this guidance retrospectively as of January 1, 2017. The Company anticipates that this guidance will not have a material impact on the financial statements resulting from the reclassification of deferred taxes to non-current.
In February 2016, the FASB issued an ASU amending the lease presentation guidance. The ASU requires organizations that lease assets to recognize the rights and obligations created by those leases on the balance sheet. This ASU is effective for fiscal years beginning after December 15, 2018 including interim periods within that reporting period, with early adoption permitted. The Company plans to adopt this guidance as of January 1, 2019. The Company has determined this guidance will require recognition of a lease liability and corresponding asset on the balance sheet equal to the present value of minimum lease payments. The carrying amount of the asset is derived from the amount of the lease liability at the end of each reporting period.
In March 2016, the FASB issued an ASU amending the accounting for employee share-based payments, including income tax recognition and classification. The entity may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. Additionally, tax withholding of shares will be allowed up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. Finally, under the new guidance, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital on the balance sheet. Instead, companies will record all excess tax benefits and deficiencies as income tax expense or benefit in the income statement. This ASU is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period, with early adoption permitted. The Company adopted this guidance as of January 1, 2017. The Company has determined the guidance for estimating forfeitures does not currently have a material impact to the financial statements. The guidance for tax withholding on RSU's may have a material impact on cash flow from financing activities to the extent individual employees elect to withhold shares at rates higher than the statutory minimum. The guidance related to the accounting for excess tax benefits and deficiencies will result in an initial adjustment as of January 1, 2017 to the Company's net operating loss deferred tax asset to eliminate the Company's existing APIC pool amounting to $4.3 million, which will be offset by an adjustment to the company's valuation allowance.
In August 2016, the FASB issued an ASU which addresses eight specific cash flow issues intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal periods beginning after December 15, 2017 including interim periods within that reporting period, with early adoption permitted. The Company plans to adopt this guidance as of January 1, 2018. The Company is in the process of assessing the impact of this guidance.
Net Loss per Share (Tables)
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]
The following potentially dilutive equity securities were not included in the diluted net loss per common share calculation because they would have had an antidilutive effect:
 
As of December 31,
 
2016
 
2015
 
2014
Stock options
4,123,023

 
4,871,949

 
5,112,556

Restricted stock awards and units
352,996

 
472,384

 
592,625

Warrants
810,000

 
869,999

 
869,999

Property Plant and Equipment (Tables)
Property, Plant and Equipment
Property and equipment, along with their useful lives, were as follows for the years ended December 31, 2016 and 2015 (in thousands):
 
Years Ended December 31,
 
2016
 
2015
Office and telephone equipment (5 years)
$
129

 
$
127

PC and networking hardware (3–4 years)
1,191

 
1,177

Software (3–5 years)
14,340

 
12,547

Furniture and fixtures (5 years)
618

 
711

Vehicles (5 years)
54

 
54

Fixed assets under capital lease (over less of expected useful life or life of lease)
478

 

Leasehold improvement (over less of expected useful life or life of lease)

 
621

Property and equipment
16,810

 
15,237

Accumulated depreciation
(8,346
)
 
(5,518
)
Property and equipment, net
$
8,464

 
$
9,719

Nature of Operations and Summary of Significant Accounting Policies (Tables)
Total deferred acquisition costs for the years ended December 31, 2016, 2015 and 2014 are summarized below (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Deferred acquisition costs capitalized
 
$
12,251

 
$
10,184

 
$
7,995

Deferred acquisition costs amortized:
 

 

 

Sales and marketing
 
1,401

 
1,490

 
858

Other cost of revenue
 
10,743

 
8,606

 
7,052

Total amortization
 
12,144

 
10,096

 
7,910

Balance at December 31,
 
$
664

 
$
557

 
$
469

Other Income, Net
Other income, net was comprised of the following (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Interest income
 
$
(119
)
 
$
(75
)
 
$
(73
)
Foreign exchange loss
 

 
36

 
41

Loss on disposal of fixed assets
 
24

 
20

 
111

Warrant remeasurement
 

 

 
(1,574
)
Other
 
37

 
10

 
8

Other income, net
 
$
(58
)
 
$
(9
)
 
$
(1,487
)
Investment Securities Available-for-Sale (Tables)
Investment Securities
The amortized cost, gross unrealized holding losses, and fair value of available-for-sale and short-term investments by major security type and class of security were as follows as of December 31, 2016 and 2015 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2016
 
 
 
 
 
       Available-for-sale:
 
 
 
 
 
Foreign deposits
$
1,587

 
$

 
$
1,587

Municipal bond
1,000

 
(8
)
 
$
992

 
$
2,587

 
$
(8
)
 
$
2,579

Short-term investments:
 
 
 
 
 
              U.S. Treasury securities
$
5,791

 
$

 
$
5,791

              Certificates of deposit
707

 

 
707

              U.S. government funds
23,072

 

 
23,072

 
$
29,570


$


$
29,570

 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2015
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
Foreign deposits
$
1,442

 
$

 
$
1,442

Municipal bond
1,000

 
(54
)
 
946

 
$
2,442


$
(54
)

$
2,388

Short-term investments:
 
 
 
 
 
U.S. Treasury securities
$
5,683

 
$

 
$
5,683

Certificates of deposit
1,551

 

 
$
1,551

U.S. government funds
18,054

 

 
$
18,054

 
$
25,288


$


$
25,288

Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2016
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due under one year
$

 
$

Due after one year through five years
1,587

 
1,587

Due after five years through ten years
1,000

 
992

Due after ten years

 

 
$
2,587

 
$
2,579

Fair Value (Tables)
Fair value, asset & liabilities measured on recurring basis [Table Text Block]
The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis (in thousands):
 
As of December 31, 2016
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
600

 
$
600

 
$

 
$

Foreign deposits
1,587

 
1,587

 

 

Municipal bond
992

 

 
992

 

Money market funds
7,033

 
7,033

 

 

Total
$
10,212

 
$
9,220

 
$
992

 
$

 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Foreign deposits
$
1,442

 
$
1,442

 
$

 
$

Municipal bond
946

 

 
946

 

Money market funds
7,545

 
7,545

 

 

Total
$
9,933

 
$
8,987

 
$
946

 
$

Commitment and Contingencies (Tables)
Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2016, are as follows (in thousands):
 
Year ending December 31:
 
2017
$
1,510

2018
1,860

2019
2,020

2020
2,101

2021
2,182

Thereafter
11,029

Total minimum lease payments
$
20,702

Future commitments related to these contracts are as follows (in thousands):
 
Year ending December 31:
 
2017
$
3,624

2018
1,681

2019
764

2020
119

2021
17

Thereafter

Total minimum commitment
$
6,205

Claims Reserve (Tables)
Activity in the subscription business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - subscription business
 
$
5,384

 
$
4,278

 
$
4,573

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - subscription business
 
123,823

 
95,390

 
74,471

Prior years - subscription business
 
813

 
30

 
(132
)
Total claims incurred
 
124,636

 
95,420

 
74,339

Claims paid during year related to:
 
 
 
 
 
 
Current year - subscription business
 
115,314

 
89,768

 
69,956

Prior years - subscription business
 
5,832

 
4,239

 
4,442

Total claims paid
 
121,146

 
94,007

 
74,398

Non-cash claims expense - subscription business
 
336

 
307

 
236

Claims reserve at end of year - subscription business
 
$
8,538

 
$
5,384

 
$
4,278


The increase in subscription business claims for prior years in the years ended December 31, 2016 and December 31, 2015 is primarily due to more claims incurred than expected relating to prior year claims. The decrease in subscription business claims for prior years in the year ended December 31, 2014 is primarily due to less incurred claims than expected relating to prior year claims.
Activity in the other business claims reserve is summarized as follows (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Claims reserve at beginning of year - other business
 
$
890

 
$
829

 
$
1,039

Claims incurred during the year related to:
 
 
 
 
 
 
Current year - other business
 
9,027

 
7,983

 
5,967

Prior years - other business
 
(129
)
 
(79
)
 
(393
)
Total claims incurred
 
8,898

 
7,904

 
5,574

Claims paid during year related to:
 
 
 
 
 
 
Current year - other business
 
8,048

 
7,095

 
5,138

Prior years - other business
 
757

 
748

 
646

Total claims paid
 
8,805

 
7,843

 
5,784

Non-cash claims expense - other business
 

 

 

Claims reserve at end of year - other business
 
$
983

 
$
890

 
$
829

The following table summarizes the activity for incurred claims and claim adjustment expenses for the Company's subscription business segment (in thousands, except for cumulative number of claims data; includes non-cash expenses incurred during the period).
 
 
Years Ended December 31,
 
As of December 31, 2016
 
 
Incurred claims and claim adjustment expenses
 
Total of IBNR plus expected development on reported claims
 
Cumulative number of reported claims
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2013
 
$
49,595

 
$
49,475

 
$
49,593

 
$
49,629

 
$
8

 
269,849

2014
 
 
 
$
71,008

 
$
70,954

 
$
71,118

 
$
71

 
377,083

2015
 
 
 
 
 
$
94,354

 
$
94,908

 
$
286

 
469,815

2016
 
 
 
 
 
 
 
$
123,478

 
$
8,173

 
538,427

 
 
$
339,133

 
 
 
 
The following table summarizes the activity for incurred claims and claim adjustment expenses for the Company's other business segment (in thousands, except for cumulative number of claims data; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
 
As of December 31, 2016
 
 
Incurred claims and claim adjustment expenses
 
Total of IBNR plus expected development on reported claims
 
Cumulative number of reported claims
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2013
 
$
3,294

 
$
2,841

 
$
2,849

 
$
2,849

 
$

 
18,169

2014
 
 
 
$
5,966

 
$
5,888

 
$
5,887

 
$
1

 
34,535

2015
 
 
 
 
 
$
7,973

 
$
7,845

 
$
3

 
46,713

2016
 
 
 
 
 
 
 
$
9,027

 
$
979

 
53,723

 
 
$
25,608

 
 
 
 
The following table summarizes the activity for cumulative claims paid and claim adjustment expenses (CAE) for the Company's subscription business segment (in thousands; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2013
 
$
45,276

 
$
49,475

 
$
49,593

 
$
49,621

2014
 
 
 
$
66,845

 
$
70,885

 
$
71,047

2015
 
 
 
 
 
$
89,012

 
$
94,622

2016
 
 
 
 
 
 
 
$
115,305

Total
 
 
$
330,595

Total outstanding liabilities for unpaid claims and CAE
 
 
$
8,538

The following table summarizes the activity for cumulative claims paid and claim adjustment expenses for the Company's other business segment (in thousands; includes non-cash expenses incurred during the period):
 
 
Years Ended December 31,
Year Incurred
 
2013
 
2014
 
2015
 
2016
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2013
 
$
2,196

 
$
2,841

 
$
2,849

 
$
2,850

2014
 
 
 
$
5,137

 
$
5,886

 
$
5,886

2015
 
 
 
 
 
$
7,085

 
$
7,841

2016
 
 
 
 
 
 
 
$
8,048

Total
 
 
$
24,625

Total outstanding liabilities for unpaid claims and CAE
 
 
$
983

Stock-based Compensation (Tables)
The weighted-average grant date fair value of stock options granted and the fair value of options vested were as follows for the years ending December 31, 2016, 2015, and 2014:
 
 
Weighted- Average Grant Date Fair Value
 
Fair Value
of Options
Vested
 
 
(per share)
 
(in thousands)
Year:
 
 
 
 
2014
 
$
5.33

 
$
2,203

2015
 
$
3.46

 
$
3,796

2016
 
$
5.64

 
$
6,688

Stock Options
The grant date fair value of stock option awards are estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Valuation assumptions for the years ended December 31, 2016, 2015 and 2014 are presented in the following table:
 
 
 
Years Ended
December 31,
 
 
2016
 
2015
 
2014
Valuation assumptions:
 
 
 
 
 
 
Expected term (in years)
 
5.04-6.25
 
3.0-6.25
 
6.25
Expected volatility
 
37.6%-42.1%
 
37.2%–49.4%
 
54.3%–59.3%
Risk-free interest rate
 
1.1%-2.0%
 
1.1%–2.0%
 
1.8%–2.0%
Expected dividend yield
 
—%
 
—%
 
—%
 
Number
of
Options
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
(in thousands)
December 31, 2013
4,663,445

 
2.12

 
30,406

Granted
754,200

 
9.64

 

Exercised
(176,595
)
 
1.20

 
1,428

Forfeited
(128,494
)
 
5.40

 

December 31, 2014
5,112,556

 
3.19

 
21,116

Granted
698,764

 
7.84

 

Exercised
(632,829
)
 
2.12

 
3,703

Forfeited
(306,542
)
 
7.65

 

December 31, 2015
4,871,949

 
3.71

 
29,644

Granted
666,664

 
13.37

 

Exercised
(1,119,367
)
 
3.35

 
11,980

Forfeited
(296,223
)
 
8.14

 

December 31, 2016
4,123,023

 
5.06

 
43,185

 
 
 
 
 
 
Vested and exercisable at December 31, 2016
3,119,438

 
$
3.06

 
$
38,856

As of December 31, 2016, stock options outstanding had a weighted average remaining contractual life of 5.7 years and vested and exercisable options had a weighted average remaining contractual life of 4.6 years.

The below table summarizes the Company’s restricted stock award activity for the years ending December 31, 2016, 2015 and 2014:
 
 
Number of 
Shares
 
Weighted- Average
Grant Date Fair Value Per
Restricted Stock
Nonvested stock award balance at December 31, 2013
 
722,226

 
$
4.77

Restricted stock awards granted
 
6,126

 
5.79

Awards upon which restrictions lapsed
 
(143,967
)
 
4.81

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2014
 
584,385

 
4.77

Restricted stock awards granted
 
2,385

 
7.26

Awards upon which restrictions lapsed
 
(119,262
)
 
4.80

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2015
 
467,508

 
4.77

Restricted stock awards granted
 

 

Awards upon which restrictions lapsed
 
(116,877
)
 
4.77

Restricted stock awards forfeited
 

 

Nonvested stock award balance at December 31, 2016
 
350,631

 
4.77

Stock-based compensation expense recognized in each category of the consolidated statement of operations for the years ended December 31, 2016, 2015 and 2014 was as follows (in thousands):
 
Years Ended December 31,
 
2016
 
2015
 
2014
Claims expenses
$
234

 
$
219

 
$
236

Other cost of revenue
41

 
44

 
79

Sales and marketing
532

 
446

 
553

Technology and development
246

 
404

 
461

General and administrative
1,893

 
1,889

 
2,755

Total stock-based compensation
$
2,946

 
$
3,002

 
$
4,084

Segments (Tables)
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscriptions related to the Company’s medical plan which are marketed directly to consumers, while the other business segment includes all other business that is not directly marketed to consumers.
The chief operating decision maker uses two measures to evaluate segment performance: revenue and gross profit. Additionally, other operating expenses, such as sales and marketing expenses, are allocated to each segment and evaluated when material. Interest and other expenses and income taxes are not allocated to the segments, nor included in the measure of segment profit or loss. The Company does not analyze discrete segment balance sheet information related to long-term assets.
Revenue and gross profit of the Company’s segments were as follows (in thousands):
 
Years Ended December 31,
 
2016
 
2015
 
2014
Revenue:
 
 
 
 
 
Subscription business
$
173,356

 
$
133,406

 
$
103,502

Other business
14,874

 
13,557

 
12,408

 
188,230

 
146,963

 
115,910

Claims expenses:
 
 
 
 
 
Subscription business
124,636

 
95,420

 
74,206

Other business
8,898

 
7,904

 
5,707

 
133,534

 
103,324

 
79,913

Other cost of revenue:
 
 
 
 
 
Subscription business
16,685

 
14,008

 
10,963

Other business
4,723

 
4,402

 
5,160

 
21,408

 
18,410

 
16,123

Gross profit:
 
 
 
 
 
Subscription business
32,035

 
23,978

 
18,333

Other business
1,253

 
1,251

 
1,541

 
33,288

 
25,229

 
19,874

Sales and marketing:
 
 
 
 
 
Subscription business
15,029

 
15,151

 
11,484

Other business
218

 
80

 
124

 
15,247

 
15,231

 
11,608

Technology and development
9,534

 
11,215

 
9,899

General and administrative
15,205

 
15,558

 
14,312

Operating loss
$
(6,698
)
 
$
(16,775
)
 
$
(15,945
)
The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
 
Years Ended December 31,
 
2016
 
2015
 
2014
United States
$
151,361

 
$
116,585

 
$
86,494

Canada
36,869

 
30,378

 
29,416

Total revenue
$
188,230

 
$
146,963

 
$
115,910

Dividend Restrictions Statutory Surplus (Tables)
Statutory Accounting Practices Disclosure [Table Text Block]
The statutory net income for 2016, 2015 and 2014 and statutory capital and surplus at December 31, 2016, 2015 and 2014, for the Company’s insurance subsidiary were as follows (in thousands):
 
 
 
As of December 31,
 
 
2016
 
2015
 
2014
Statutory net income
 
$
4,081

 
$
1,386

 
$
990

Statutory capital and surplus
 
30,451

 
26,068

 
23,661

Income Taxes (Tables)
oss before income taxes was as follows for the years ended December 31, 2016, 2015 and 2014 (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
United States
 
$
(6,906
)
 
$
(17,222
)
 
$
(21,371
)
Foreign
 
48

 
131

 
187

 
 
$
(6,858
)
 
$
(17,091
)
 
$
(21,184
)
The components of income tax expense (benefit) were as follows (in thousands):
 
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
25

 
$
31

 
$
26

Foreign
 
13

 
84

 
(30
)
 
 
38

 
115

 
(4
)
Deferred:
 
 
 
 
 
 
U.S. federal & state
 

 

 

Foreign
 

 
(1
)
 
(3
)
 
 

 
(1
)
 
(3
)
Income tax expense (benefit)
 
$
38

 
$
114

 
$
(7
)
A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is presented below:
 
 
 
Years Ended December 31,    
 
 
2016
 
2015
 
2014
Federal income taxes at statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
Equity compensation
 
7.7

 
(1.2
)
 
(0.9
)
Change in valuation allowance
 
(41.1
)
 
(34.9
)
 
(32.5
)
Other, net
 
(1.2
)
 
1.4

 
(0.5
)
Effective income tax rate
 
(0.6
)%
 
(0.7
)%
 
0.1
 %
The principal components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
 
 
 
Years Ended December 31,         
 
 
2016
 
2015
Deferred tax assets:
 
 
 
 
Current:
 
 
 
 
Unearned premium reserves
 
$
918

 
$
745

Loss reserves
 
27

 
167

Other
 
782

 
690

Noncurrent:
 
 
 
 
Net operating loss carryforwards
 
22,632

 
20,514

Depreciation and amortization
 
535

 
451

Equity compensation
 
1,137

 
713

Other
 
156

 
96

Total deferred tax assets
 
26,187

 
23,376

Deferred tax liabilities:
 
 
 
 
Current:
 
 
 
 
Deferred costs
 
(226
)
 
(189
)
Noncurrent:
 
 
 
 
Intangible assets
 
(1,623
)
 
(1,623
)
Other
 
(77
)
 
(72
)
Total deferred tax liabilities
 
(1,926
)
 
(1,884
)
Total deferred taxes
 
24,261

 
21,492

Less deferred tax asset valuation allowance
 
(25,879
)
 
(23,110
)
Net deferred taxes
 
$
(1,618
)
 
$
(1,618
)
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
 
  
 
Years Ended
December 31,
 
 
2016
 
2015
 
2014
Balance, beginning of year
 
$
80

 
$
65

 
$
390

Decreases to tax positions related to prior periods
 

 

 
(346
)
Increases to tax positions related to the current year
 
40

 
15

 
21

Balance, end of year
 
$
120

 
$
80

 
$
65

Quarterly Financial Information (Tables)
Schedule of Quarterly Financial Information [Table Text Block]
The operating results for any quarter are not necessarily indicative of results for any future period.

 
Three Months Ended
 
Dec. 31, 2016
 
Sept. 30, 2016
 
Jun. 30, 2016
 
Mar. 31, 2016
 
Dec. 31, 2015
 
Sept. 30, 2015
 
Jun. 30, 2015
 
Mar. 31, 2015
 
(in thousands, except share amounts)
Total revenues
$
51,340

 
$
48,359

 
$
45,832

 
$
42,699

 
$
40,201

 
$
37,865

 
$
35,587

 
$
33,310

Gross profit
9,218

 
8,500

 
8,266

 
7,304

 
7,270

 
6,591

 
5,786

 
5,582

Net loss
(1,723
)
 
(1,637
)
 
(964
)
 
(2,572
)
 
(3,001
)
 
(4,643
)
 
(4,625
)
 
(4,936
)
Net loss per share attributable to common stockholders:
Basic and diluted
(0.06
)

(0.06
)

(0.03
)

(0.09
)

(0.11
)

(0.17
)

(0.17
)

(0.18
)
Weighted average shares used to compute net loss per share attributable to common stockholders:
Basic and diluted
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

 
27,856,450

 
27,755,310

 
27,597,721

 
27,337,302

Net Loss per Share (Details) Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number
4,123,023 
4,871,949 
5,112,556 
4,663,445 
Common shares attributable to dilutive effect of warrants
810,000 
869,999 
 
 
Stock options
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number
 
4,871,949 
5,112,556 
 
Restricted stock
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Restricted stock, outstanding
352,996 
472,384 
592,625 
 
Warrants
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Common shares attributable to dilutive effect of warrants
810,000 
869,999 
869,999 
 
Property Plant and Equipment (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment [Line Items]
 
 
 
Depreciation
$ 3,800,000 
$ 2,500,000 
$ 1,600,000 
Property, Plant and Equipment, Gross
16,810,000 
15,237,000 
 
Accumulated depreciation
(8,346,000)
(5,518,000)
 
Property and equipment, net
8,464,000 
9,719,000 
 
Depreciation and amortization expense
3,846,000 
2,542,000 
1,674,000 
Capitalized Interest
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Interest Costs Capitalized
200,000 
200,000 
200,000 
Office and telephone equipment (5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
5 years 
 
 
Property, Plant and Equipment, Gross
129,000 
127,000 
 
PC and networking hardware (3–4 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
1,191,000 
1,177,000 
 
Software (3–5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
14,340,000 
12,547,000 
 
Furniture and fixtures (5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
5 years 
 
 
Property, Plant and Equipment, Gross
618,000 
711,000 
 
Vehicles (5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
5 years 
 
 
Property, Plant and Equipment, Gross
54,000 
54,000 
 
Assets Held under Capital Leases [Member]
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
478,000 
 
Leasehold improvement (over less of expected useful life of life of lease)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
$ 0 
$ 621,000 
 
Minimum [Member] |
PC and networking hardware (3–4 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
3 years 
 
 
Minimum [Member] |
Software (3–5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
3 years 
 
 
Maximum [Member] |
PC and networking hardware (3–4 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
4 years 
 
 
Maximum [Member] |
Software (3–5 years)
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Useful Life
5 years 
 
 
Nature of Operations and Summary of Significant Accounting Policies Deferred acquisition costs (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Acquisition Costs, Cumulative
$ 12,251 
$ 10,184 
$ 7,995 
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs
12,144 
10,096 
7,910 
Deferred Policy Acquisition Costs
664 
557 
469 
Sales and marketing
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs
1,401 
1,490 
858 
Cost of Sales [Member]
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs
$ 10,743 
$ 8,606 
$ 7,052 
Nature of Operations and Summary of Significant Accounting Policies Other income, net (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Accounting Policies [Abstract]
 
 
 
Interest Income, Other
$ (119)
$ (75)
$ (73)
Foreign Currency Transaction Gain (Loss), before Tax
36 
41 
Gain (Loss) on Disposition of Assets
24 
20 
111 
Warrant expense
(1,574)
Other Income
37 
10 
Other Operating Income (Expense), Net
(46)
89 
(57)
Other Nonoperating Income (Expense)
$ 58 
$ 9 
$ 1,487 
Nature of Operations and Summary of Significant Accounting Policies Narrative (Details)
12 Months Ended
Dec. 31, 2016
USD ($)
Dec. 31, 2016
CAD ($)
Dec. 31, 2015
USD ($)
Dec. 31, 2014
USD ($)
Dec. 31, 2016
Accounts Receivable [Member]
Dec. 31, 2015
Accounts Receivable [Member]
Dec. 31, 2016
Sales Revenue, Net [Member]
Dec. 31, 2015
Sales Revenue, Net [Member]
Concentration Risk [Line Items]
 
 
 
 
 
 
 
 
Concentration Risk, Percentage
19.00% 
19.00% 
21.00% 
25.00% 
 
 
 
 
Concentration Risk, Customer
 
 
 
 
Cash
$ 24,200,000 
 
 
 
 
 
 
 
Cash Equivalents, at Carrying Value
23,600,000 
 
 
 
 
 
 
 
Restricted Cash and Cash Equivalents
600,000 
 
 
 
 
 
Accounts and other receivables
8,000,000 
 
7,200,000 
 
 
 
 
 
Premiums Recognized from Fronting Agreement
36,500,000 
 
30,900,000 
29,100,000 
 
 
 
 
Deferred Revenue from Fronting Agreement
1,300,000 
 
900,000 
 
 
 
 
 
Cash Designated for Paying Reinsurance Claims
2,100,000 
 
2,000,000 
 
 
 
 
 
Reinsurance Trust Minimum Payment
 
2,000,000 
 
 
 
 
 
 
Reinsurance Trust Payment Unearned Premium Percentage
115.00% 
115.00% 
 
 
 
 
 
 
Reinsurance Payment of Percentage of Canadian Claims outstanding
15.00% 
15.00% 
 
 
 
 
 
 
Revenue from Unaffiliated General Agent
10,800,000 
 
9,900,000 
10,000,000 
 
 
 
 
Deferred Revenue from Arrangement with Unaffiliated General Agent
6,100,000 
 
5,500,000 
 
 
 
 
 
Advertising Expense
4,000,000 
 
5,300,000 
3,200,000 
 
 
 
 
Foreign Currency Transaction Gain (Loss), before Tax
(400,000)
 
(400,000)
100,000 
 
 
 
 
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification
$ 4,300,000 
 
 
 
 
 
 
 
Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
 
Impairment, Amount, License Intangibles
$ 0 
Insurance Company
 
Finite-Lived Intangible Assets [Line Items]
 
Intangible Assets, Gross (Excluding Goodwill)
$ 4.8 
Investment Securities (Details) Investment Schedule (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
$ 2,587 
$ 2,442 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
(8)
(54)
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
2,579 
2,388 
Held-to-maturity securities, amortized cost
29,570 
25,288 
Held-to-maturity securities, gross unrealized holding losses
Held-to-maturity Securities, Fair Value
29,570 
25,288 
Deposits [Member]
 
 
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
1,587 
1,442 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
1,587 
1,442 
Municipal bond
 
 
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
1,000 
1,000 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
(8)
(54)
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
992 
946 
U.S. Treasury securities
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
5,791 
5,683 
Held-to-maturity securities, gross unrealized holding losses
Held-to-maturity Securities, Fair Value
5,791 
5,683 
Certificates of deposit
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
707 
1,551 
Held-to-maturity securities, gross unrealized holding losses
Held-to-maturity Securities, Fair Value
707 
1,551 
US government debt securities
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
23,072 
18,054 
Held-to-maturity securities, gross unrealized holding losses
Held-to-maturity Securities, Fair Value
$ 23,072 
$ 18,054 
Investment Securities (Details) Narrative (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss
$ 0.1 
$ 0.1 
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
$ 1.0 
$ 0.9 
Investment Securities (Details) Available-for-Sale (USD $)
Dec. 31, 2016
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
$ 1,000,000 
$ 900,000 
Available-for-sale securities,due under one year, amortized cost basis
 
Available-for-sale securities, due under one year, fair value
 
Available-for-sale securities, due after one year through five years, amortized cost basis
1,587,000 
 
Available-for-sale securities, due after one year through five years, fair value
1,587,000 
 
Available-for-sale securities, due after five years through ten years, amortized cost basis
1,000,000 
 
Available-for-sale securities, due after five years through ten years, fair value
992,000 
 
Available-for-sale securities, due after ten years, amortized cost basis
 
Available-for-sale securities, due after ten years, fair value
 
Available-for-sale securities, amortized cost
2,587,000 
2,442,000 
Available-for-sale securities, debt maturities, fair value
$ 2,579,000 
 
Fair Value (Details) Unobservable (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
$ 600 
 
Marketable Securities, Noncurrent
2,579 
2,388 
Assets, Fair Value Disclosure
10,212 
9,933 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Assets, Fair Value Disclosure
9,220 
8,987 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Assets, Fair Value Disclosure
992 
946 
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Assets, Fair Value Disclosure
Cash and Cash Equivalents [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
600 
 
Cash and Cash Equivalents [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
600 
 
Cash and Cash Equivalents [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
 
Cash and Cash Equivalents [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
 
Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
1,587 
1,442 
Deposits [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
1,587 
1,442 
Deposits [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
Deposits [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
Municipal bond
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
992 
946 
Municipal bond |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
Municipal bond |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
992 
946 
Municipal bond |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash and Cash Equivalents, Fair Value Disclosure
7,033 
7,545 
Money Market Funds [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash and Cash Equivalents, Fair Value Disclosure
7,033 
7,545 
Money Market Funds [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash and Cash Equivalents, Fair Value Disclosure
Money Market Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash and Cash Equivalents, Fair Value Disclosure
$ 0 
$ 0 
Fair Value (Details) Additional Information (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net
$ 0 
$ 0 
Equity Method Investment (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Equity Method Investments and Joint Ventures [Abstract]
 
 
Equity Method Investments
$ 271 
$ 300 
Equity Method Investment, Ownership Percentage
20.00% 
13.00% 
Equity Method Investment, Additional Information
750000 
300000 
Commitment and Contingencies Minimum Lease Payments (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
 
Lessee Leasing Arrangements, Operating Leases, Term of Contract
10 years 
2015
$ 1,510 
2016
1,860 
2017
2,020 
Operating Leases, Future Minimum Payments, Due in Four Years
2,101 
Operating Leases, Future Minimum Payments, Due in Five Years
2,182 
Other Commitment, Due after Fifth Year
11,029 
Total minimum lease payments
$ 20,702 
Commitment and Contingencies (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Capital Leases, Future Minimum Payments Due, Next Twelve Months
$ 400,000 
 
 
Capital Leases, Future Minimum Payments Due in Two Years
200,000 
 
 
Operating Leases, Rent Expense, Net
1,200,000 
1,000,000 
800,000 
Operating Leases, Future Minimum Payments Due
$ 20,702,000 
 
 
Commitment and Contingencies Purchase commitment (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
 
Other Commitment, Due in Next Twelve Months
$ 3,624 
Other Commitment, Due in Second Year
1,681 
Other Commitment, Due in Third Year
764 
Other Commitment, Due in Fourth Year
119 
Other Commitment, Due in Fifth Year
17 
Other Commitment, Due after Fifth Year
Total minimum commitment
$ 6,205 
Commitment and Contingencies Other, Marketing (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Other Commitments [Line Items]
 
Other Commitment, Due in Next Twelve Months
$ 3,624 
Other Commitment, Due in Second Year
1,681 
Other Commitment, Due in Third Year
764 
Other Commitment, Due in Fourth Year
119 
Other Commitment, Due in Fifth Year
17 
Other Commitment, Due after Fifth Year
Other Commitment
$ 6,205 
Claims Reserve (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Subscription business [Member]
 
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
 
Claims reserve at beginning of year
$ 8,538 
$ 5,384 
$ 4,278 
$ 4,573 
Current Year Claims and Claims Adjustment Expense
123,823 
95,390 
74,471 
 
Prior Year Claims and Claims Adjustment Expense
813 
30 
(132)
 
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims
124,636 
95,420 
74,339 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year
115,314 
89,768 
69,956 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years
5,832 
4,239 
4,442 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid
121,146 
94,007 
74,398 
 
Claims expense non-cash
336 
307 
236 
 
Claims reserve at end of year
8,538 
5,384 
4,278 
4,573 
Other business
 
 
 
 
Supplementary Insurance Information, by Segment [Line Items]
 
 
 
 
Claims reserve at beginning of year
983 
890 
829 
1,039 
Current Year Claims and Claims Adjustment Expense
9,027 
7,983 
5,967 
 
Prior Year Claims and Claims Adjustment Expense
(129)
(79)
(393)
 
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims
8,898 
7,904 
5,574 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year
8,048 
7,095 
5,138 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years
757 
748 
646 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid
8,805 
7,843 
5,784 
 
Claims expense non-cash
 
Claims reserve at end of year
$ 983 
$ 890 
$ 829 
$ 1,039 
Claims Reserve Incurred claims and claim adjustment expense (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
$ 339,133 
 
 
 
Other business
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
25,608 
 
 
 
Short-duration Insurance Contracts, Accident Year 2016 [Member] |
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
123,478 
 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
8,173 
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
538,427 
 
 
 
Short-duration Insurance Contracts, Accident Year 2016 [Member] |
Other business
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
9,027 
 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
979 
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
53,723 
 
 
 
Short-duration Insurance Contracts, Accident Year 2015 [Member] |
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
94,908 
94,354 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
286 
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
469,815 
 
 
 
Short-duration Insurance Contracts, Accident Year 2015 [Member] |
Other business
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
7,845 
7,973 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
46,713 
 
 
 
Short-duration Insurance Contracts, Accident Year 2014 [Member] |
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
71,118 
70,954 
71,008 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
71 
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
377,083 
 
 
 
Short-duration Insurance Contracts, Accident Year 2014 [Member] |
Other business
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
5,887 
5,888 
5,966 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
34,535 
 
 
 
Short-duration Insurance Contracts, Accident Year 2013 [Member] |
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
49,629 
49,593 
49,475 
49,595 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
269,849 
 
 
 
Short-duration Insurance Contracts, Accident Year 2013 [Member] |
Other business
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
2,849 
2,849 
2,841 
3,294 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
$ 0 
 
 
 
Short-duration Insurance Contracts, Number of Reported Claims
18,169 
 
 
 
Debt (Details) Schedule of Debt (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
Maximum Contractual Balance Restriction
$ 3.0 
$ 3.0 
Letters of Credit Outstanding, Amount
1.1 
1.1 
Compensating Balance, Amount
0.5 
0.5 
Line of Credit Facility, Remaining Borrowing Capacity
21.6 
18.4 
Line of Credit, Current
$ 5.0 
$ 0 
Debt (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Debt Instrument [Line Items]
 
 
 
Line of Credit Facility, Remaining Borrowing Capacity
$ 21,600,000 
$ 18,400,000 
 
Line of credit facility, interest rate description
greater of 4.5% or 1.25% plus the prime rate 
greater of 5.0% or 1.5% plus the prime rate 
 
Restricted Cash and Cash Equivalents
600,000 
Compensating Balance, Amount
500,000 
500,000 
 
Letters of Credit Outstanding, Amount
1,100,000 
1,100,000 
 
Line of credit facility, maximum borrowing capacity
30,000,000 
20,000,000 
 
Interest expense
218,000 
325,000 
6,726,000 
Long-term debt
4,767,000 
 
Maximum Contractual Balance Restriction
$ 3,000,000 
$ 3,000,000 
 
Stock-based Compensation (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss
$ 100,000 
$ 100,000 
 
Available-for-sale Securities, Debt Maturities, Year Six Through Ten, Fair Value
992,000 
 
 
Number of shares available for grant
3,901,594 
 
 
Options outstanding, weighted average remaining contractual term
5 years 8 months 0 days 
 
 
Weighted-average remaining contractual term (in years)
4 years 7 months 
 
 
Restricted shares vested contingent on initial public offering
116,877 
116,877 
116,877 
Restricted stock expense on contingent on performance condition
500,000 
900,000 
1,600,000 
Fair Value of Options Vested
6,688,000 
3,796,000 
2,203,000 
Restricted Share-based Compensation Arrangement by Restricted Share-based Payment Award, Options, Vested in Period, Fair Value
1,800,000 
900,000 
1,200,000 
Unvested portion of restricted stock grant with IPO performance condition
350,631 
 
 
Compensation cost not yet recognized
$ 5,200,000 
 
 
Weighted average remaining vesting period
2 years 8 months 0 days 
 
 
Nonvested options, number of shares
953,406 
 
 
Share-based Compensation Arrangement, Restricted Stock Award, Weighted Average Remaining Vesting Period
3 years 
 
 
Restricted stock
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Restricted stock, outstanding
352,996 
472,384 
592,625 
Stock-based Compensation Valuation Assumptions (Details)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award Fair Value Assumptions, Expected Term, Maximum
6 years 3 months 0 days 
6 years 3 months 0 days 
6 years 3 months 0 days 
Share-based Compensation Arrangement by Share-based Payment Fair Value Assumptions, Expected Term, Minimum
5 years 0 months 15 days 
3 years 
6 years 3 months 
Expected volatility Minimum
37.60% 
37.20% 
54.30% 
Expected volatility Maximum
42.10% 
49.40% 
59.30% 
Expected dividends
0.00% 
0.00% 
0.00% 
Risk-free minimum
1.10% 
1.10% 
1.80% 
Risk-free maximum
2.00% 
2.00% 
2.00% 
Restricted Shares Vested Contingent on Initial Public Offering
116,877 
116,877 
116,877 
Stock-based Compensation Option Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Number of Options
 
 
 
 
Beginning balance
4,871,949 
5,112,556 
4,663,445 
 
Granted
666,664 
698,764 
754,200 
 
Exercised
1,119,367 
632,829 
176,595 
 
Forfeited
296,223 
306,542 
128,494 
 
Ending Balance
4,123,023 
4,871,949 
5,112,556 
 
Vested and exercisable at December 31, 2016
3,119,438 
 
 
 
Weighted- Average Exercise Price
 
 
 
 
Beginning Balance (usd per share)
$ 3.71 
$ 3.19 
$ 2.12 
 
Granted (usd per share)
$ 13.37 
$ 7.84 
$ 9.64 
 
Exercised (usd per share)
$ 3.35 
$ 2.12 
$ 1.20 
 
Forfeited (usd per share)
$ 8.14 
$ 7.65 
$ 5.40 
 
Ending Balance (usd per share)
$ 5.06 
$ 3.71 
$ 3.19 
 
Vested and exercisable at December 31, 2014 (usd per share)
$ 3.06 
 
 
 
Aggregate Intrinsic Value (in thousands)
 
 
 
 
Exercised
$ 11,980 
$ 3,703 
$ 1,428 
 
Outstanding
43,185 
29,644 
21,116 
30,406 
Vested and exercisable at December 31, 2016
$ 38,856 
 
 
 
Stock-based Compensation Options Granted (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
WEIGHTED-AVERAGE GRANT DATE FAIR VALUE
$ 5.64 
$ 3.46 
$ 5.33 
Fair Value of Options Vested
$ 6,688 
$ 3,796 
$ 2,203 
Stock-based Compensation Restricted Stock Awards (Details) (Restricted Stock, USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Restricted Stock
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Beginning balance
467,508 
584,385 
722,226 
Restricted stock awards granted
2,385 
6,126 
Awards upon which restrictions lapsed
(116,877)
(119,262)
(143,967)
Restricted stock awards forfeited
Ending balance
350,631 
467,508 
584,385 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Beginning balance (usd per share)
$ 4.77 
$ 4.77 
$ 4.77 
Restricted stock awards granted (usd per share)
$ 0.00 
$ 7.26 
$ 5.79 
Awards upon which restrictions lapsed (usd per share)
$ 4.77 
$ 4.80 
$ 4.81 
Restricted stock awards forfeited (usd per share)
$ 0.00 
$ 0.00 
$ 0.00 
Ending balance (usd per share)
$ 4.77 
$ 4.77 
$ 4.77 
Stock-based Compensation Expense Category (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Stock-based Compensation
 
 
 
Total stock-based compensation
$ 2,946 
$ 3,002 
$ 4,084 
Claims expenses
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
234 
219 
236 
Other cost of revenue
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
41 
44 
79 
Sales and marketing
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
532 
446 
553 
Technology and development
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
246 
404 
461 
General and administrative
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
$ 1,893 
$ 1,889 
$ 2,755 
Stockholder's Equity Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Jul. 23, 2014
Class of Warrant or Right [Line Items]
 
 
 
Class of Warrant or Right, Exercise Price of Warrants or Rights
$ 10.00 
$ 10.00 
$ 10.00 
Class of Stock [Line Items]
 
 
 
Shares of Common Stock Issued in Initial Public Offering
 
 
8,193,750 
Per Share Offer Price in Initial Public Offering
 
 
$ 10.00 
Net Proceeds from IPO
 
 
$ 72.8 
Preferred Shares Converted into Common Shares
 
 
14,944,945 
Exchangeable Shares Converted into Common Shares
 
 
2,247,130 
Weighted-average shares, if-converted with initial public offering
 
 
27,067,167 
Common Stock, Shares Authorized
100,000,000 
 
 
Common Stock, Shares, Outstanding
29,498,947 
 
 
Preferred Stock, Shares Authorized
10,000,000 
 
 
Warrants outstanding
810,000 
869,999 
 
Common Stock
 
 
 
Class of Stock [Line Items]
 
 
 
Common Stock, Shares Authorized
100,000,000 
200,000,000 
 
Common Stock, Shares, Outstanding
29,498,947 
28,396,189 
 
Segments (Details) Business Segment (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 40,201 
$ 37,865 
$ 35,587 
$ 33,310 
$ 188,230 
$ 146,963 
$ 115,910 
Claims expenses
36,211 
34,253 
32,466 
30,604 
27,882 
26,604 
25,487 
23,351 
133,534 
103,324 
79,913 
Other cost of revenue
5,911 
5,606 
5,100 
4,791 
5,049 
4,670 
4,314 
4,377 
21,408 
18,410 
16,123 
Gross profit
9,218 
8,500 
8,266 
7,304 
7,270 
6,591 
5,786 
5,582 
33,288 
25,229 
19,874 
Sales and marketing
 
 
 
 
 
 
 
 
15,247 
15,231 
11,608 
Technology Services Costs
 
 
 
 
 
 
 
 
9,534 
11,215 
9,899 
General and administrative
 
 
 
 
 
 
 
 
15,205 
15,558 
14,312 
Operating loss
 
 
 
 
 
 
 
 
(6,698)
(16,775)
(15,945)
Subscription business
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
173,356 
133,406 
103,502 
Claims expenses
33,927 
32,088 
30,111 
28,510 
26,067 
24,455 
23,396 
21,502 
124,636 
95,420 
74,206 
Other cost of revenue
4,601 
4,344 
4,047 
3,693 
3,788 
3,691 
3,265 
3,264 
16,685 
14,008 
10,963 
Gross profit
 
 
 
 
 
 
 
 
32,035 
23,978 
18,333 
Sales and marketing
 
 
 
 
 
 
 
 
15,029 
15,151 
11,484 
Other business
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
14,874 
13,557 
12,408 
Claims expenses
2,284 
2,165 
2,355 
2,094 
1,815 
2,149 
2,091 
1,849 
8,898 
7,904 
5,707 
Other cost of revenue
1,310 
1,262 
1,053 
1,098 
1,261 
979 
1,049 
1,113 
4,723 
4,402 
5,160 
Gross profit
 
 
 
 
 
 
 
 
1,253 
1,251 
1,541 
Sales and marketing
 
 
 
 
 
 
 
 
$ 218 
$ 80 
$ 124 
Segments (Details) Revenue by Geography (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 40,201 
$ 37,865 
$ 35,587 
$ 33,310 
$ 188,230 
$ 146,963 
$ 115,910 
UNITED STATES
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
151,361 
116,585 
86,494 
CANADA
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
$ 36,869 
$ 30,378 
$ 29,416 
Dividend Restrictions Statutory Surplus (Details) (USD $)
0 Months Ended 12 Months Ended
Jan. 3, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Insurance [Abstract]
 
 
 
 
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval
 
$ 100,000 
 
 
Statutory Accounting Practices, Statutory Net Income Amount
 
4,081,000 
1,386,000 
990,000 
Statutory Accounting Practices, Statutory Capital and Surplus, Balance
 
30,451,000 
26,068,000 
23,661,000 
Statutory Accounting Practices, Statutory Capital and Surplus Required
 
25,800,000 
 
 
Deposit Assets
 
6,500,000 
6,500,000 
 
Statutory Accounting Practices, Dividends Paid with Approval of Regulatory Agency
$ 2,700,000 
 
 
 
Related Parties (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Related Party Transactions [Abstract]
 
 
 
Related Party Transaction, Amounts of Transaction
$ 0.1 
$ 0.3 
$ 0.3 
Income Taxes Income before taxes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
United States
$ (6,906)
$ (17,222)
$ (21,371)
Foreign
48 
131 
187 
Loss before income taxes
$ (6,858)
$ (17,091)
$ (21,184)
Income Taxes Income tax benefits (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current Income Tax Expense (Benefit), Continuing Operations [Abstract]
 
 
 
U.S. federal & state
$ 25 
$ 31 
$ 26 
Foreign
13 
84 
(30)
Current income tax expense (benefit)
38 
115 
(4)
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract]
 
 
 
U.S. federal & state
Foreign
(1)
(3)
Deferred income tax expense (benefit)
(1)
(3)
Income tax (benefit) expense
$ 38 
$ 114 
$ (7)
Income Taxes Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent
34.00% 
34.00% 
34.00% 
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent
7.70% 
(1.20%)
(0.90%)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent
(41.10%)
(34.90%)
(32.50%)
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent
(1.20%)
1.40% 
(0.50%)
Effective income tax rate
(0.60%)
(0.70%)
0.10% 
Income Taxes Deferred tax assets and liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Unearned Premiums Reserve
$ 918 
$ 745 
Deferred tax assets:
 
 
Loss reserves
27 
167 
Other
782 
690 
Noncurrent:
 
 
Net operating loss carryforwards
22,632 
20,514 
Depreciation and amortization
535 
451 
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost
1,137 
713 
Deferred tax asset, noncurrent, other
156 
96 
Total deferred tax assets
26,187 
23,376 
Deferred Tax Liabilities, Gross [Abstract]
 
 
Deferred costs
(226)
(189)
Intangible assets
(1,623)
(1,623)
Deferred Tax Liabilities, Other
(77)
(72)
Total deferred tax liabilities
(1,926)
(1,884)
Deferred Tax Assets, Net
24,261 
21,492 
Less deferred tax asset valuation allowance
(25,879)
(23,110)
Net deferred taxes
$ (1,618)
$ (1,618)
Income Taxes Unrecognized Tax Benefits (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Operating Loss Carryforwards, Limitations on Use
500 
 
 
Operating loss carryforwards
$ 79,000,000 
 
 
Operating Loss Carryforwards, Expiration Date
Jan. 01, 2027 
 
 
Excess tax benefit from share-based compensation, operating activities
12,700,000 
 
 
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Balance, beginning of year
80,000 
65,000 
390,000 
Decreases to tax positions related to prior periods
(346,000)
Increases to tax positions related to the current year
40,000 
15,000 
21,000 
Balance, end of year
$ 120,000 
$ 80,000 
$ 65,000 
Retirement Plan Details (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
 
 
 
Defined Contribution Plan, Employer Discretionary Contribution Amount
$ 0 
$ 0 
$ 0 
Quarterly Financial Information (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 40,201 
$ 37,865 
$ 35,587 
$ 33,310 
$ 188,230 
$ 146,963 
$ 115,910 
Claims expenses
36,211 
34,253 
32,466 
30,604 
27,882 
26,604 
25,487 
23,351 
133,534 
103,324 
79,913 
Other cost of revenue
5,911 
5,606 
5,100 
4,791 
5,049 
4,670 
4,314 
4,377 
21,408 
18,410 
16,123 
Gross profit
9,218 
8,500 
8,266 
7,304 
7,270 
6,591 
5,786 
5,582 
33,288 
25,229 
19,874 
Net loss
(1,723)
(1,637)
(964)
(2,572)
(3,001)
(4,643)
(4,625)
(4,936)
(6,896)
(17,205)
(21,177)
Net loss per share: Basic and diluted (per share)
$ (0.06)
$ (0.06)
$ (0.03)
$ (0.09)
$ (0.11)
$ (0.17)
$ (0.17)
$ (0.18)
$ (0.24)
$ (0.62)
$ (1.64)
Weighted Average Number of Shares Outstanding, Basic and Diluted
29,020,559 
28,732,417 
28,348,348 
27,999,248 
27,856,450 
27,755,310 
27,597,721 
27,337,302 
28,527,602 
27,638,443 
12,934,477 
Subscription business [Member]
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
173,356 
133,406 
103,502 
Claims expenses
33,927 
32,088 
30,111 
28,510 
26,067 
24,455 
23,396 
21,502 
124,636 
95,420 
74,206 
Other cost of revenue
4,601 
4,344 
4,047 
3,693 
3,788 
3,691 
3,265 
3,264 
16,685 
14,008 
10,963 
Gross profit
 
 
 
 
 
 
 
 
32,035 
23,978 
18,333 
Other business
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
14,874 
13,557 
12,408 
Claims expenses
2,284 
2,165 
2,355 
2,094 
1,815 
2,149 
2,091 
1,849 
8,898 
7,904 
5,707 
Other cost of revenue
1,310 
1,262 
1,053 
1,098 
1,261 
979 
1,049 
1,113 
4,723 
4,402 
5,160 
Gross profit
 
 
 
 
 
 
 
 
$ 1,253 
$ 1,251 
$ 1,541 
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statement of Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Claims expenses
$ 36,211 
$ 34,253 
$ 32,466 
$ 30,604 
$ 27,882 
$ 26,604 
$ 25,487 
$ 23,351 
$ 133,534 
$ 103,324 
$ 79,913 
Sales and marketing
 
 
 
 
 
 
 
 
15,247 
15,231 
11,608 
Technology Services Costs
 
 
 
 
 
 
 
 
9,534 
11,215 
9,899 
General and administrative
 
 
 
 
 
 
 
 
15,205 
15,558 
14,312 
Operating loss
 
 
 
 
 
 
 
 
(6,698)
(16,775)
(15,945)
Interest expense
 
 
 
 
 
 
 
 
218 
325 
6,726 
Other income, net
 
 
 
 
 
 
 
 
(58)
(9)
(1,487)
Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
125 
(513)
175 
Comprehensive loss
 
 
 
 
 
 
 
 
(6,771)
(17,718)
(21,002)
Parent Company
 
 
 
 
 
 
 
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Claims expenses
 
 
 
 
 
 
 
 
269 
226 
240 
Other costs of revenue
 
 
 
 
 
 
 
 
41 
44 
79 
Sales and marketing
 
 
 
 
 
 
 
 
871 
621 
553 
Technology Services Costs
 
 
 
 
 
 
 
 
531 
628 
528 
General and administrative
 
 
 
 
 
 
 
 
3,627 
3,852 
4,108 
Total expenses
 
 
 
 
 
 
 
 
5,339 
5,371 
5,508 
Operating loss
 
 
 
 
 
 
 
 
(5,339)
(5,371)
(5,508)
Interest expense
 
 
 
 
 
 
 
 
218 
325 
6,725 
Other income, net
 
 
 
 
 
 
 
 
23 
(2)
(1,575)
Loss before equity in undistributed earnings of subsidiaries
 
 
 
 
 
 
 
 
(5,580)
(5,694)
(10,658)
Equity in undistributed earnings of subsidiaries
1,316 
 
 
 
11,511 
 
 
 
1,316 
11,511 
10,519 
Net loss
 
 
 
 
 
 
 
 
(6,896)
(17,205)
(21,177)
Other comprehensive income (loss) of subsidiaries
 
 
 
 
 
 
 
 
125 
(513)
175 
Other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
125 
(513)
175 
Comprehensive loss
 
 
 
 
 
 
 
 
$ (6,771)
$ (17,718)
$ (21,002)
Schedule 1-Parent Only Disclosures [Schedule] Condensed Balance Sheet (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash Equivalents, at Carrying Value
$ 23,600 
 
 
 
Accounts and other receivables
10,118 
8,196 
 
 
Prepaid expenses and other assets
2,062 
2,193 
 
 
Total current assets
65,387 
53,633 
 
 
Restricted Cash and Cash Equivalents
600 
 
Equity Method Investments
271 
300 
 
 
Property and equipment, net
8,464 
9,719 
 
 
Intangible assets, net
4,910 
4,854 
 
 
Total assets
82,345 
70,917 
 
 
Accounts Payable, Current
2,006 
1,289 
 
 
Accrued Liabilities, Current
4,322 
4,189 
 
 
Deferred tax liabilities
251 
169 
 
 
Other payables
1,094 
654 
 
 
Total current liabilities
30,657 
23,617 
 
 
Long-term Debt, Excluding Current Maturities
4,767 
 
 
Deferred tax liabilities
1,372 
1,433 
 
 
Other liabilities
834 
511 
 
 
Total liabilities
37,630 
25,561 
 
 
Common Stock, Value, Outstanding
 
 
Preferred Stock, Value, Outstanding
 
 
Additional paid-in capital
129,574 
122,844 
 
 
Accumulated other comprehensive loss
(377)
(502)
 
 
Accumulated deficit
(81,281)
(74,385)
 
 
Treasury Stock, Value
(3,201)
(2,601)
 
 
Total stockholders' deficit
44,715 
45,356 
59,275 
(32,999)
Liabilities and Equity
82,345 
70,917 
 
 
Parent Company
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash Equivalents, at Carrying Value
3,401 
6,040 
 
 
Accounts and other receivables
1,492 
517 
 
 
Prepaid expenses and other assets
106 
364 
 
 
Total current assets
4,999 
6,921 
 
 
Restricted Cash and Cash Equivalents
600 
 
 
Equity Method Investments
271 
300 
 
 
Property and equipment, net
1,070 
641 
 
 
Intangible assets, net
4,773 
4,784 
 
 
Advances to subsidiaries
40,086 
34,488 
 
 
Total assets
51,799 
47,134 
 
 
Accounts Payable, Current
19 
11 
 
 
Accrued Liabilities, Current
145 
144 
 
 
Deferred tax liabilities
250 
169 
 
 
Other payables
328 
 
 
Total current liabilities
742 
324 
 
 
Long-term Debt, Excluding Current Maturities
4,767 
 
 
Deferred tax liabilities
1,372 
1,454 
 
 
Other liabilities
203 
 
 
Total liabilities
7,084 
1,778 
 
 
Common Stock, Value, Outstanding
 
 
Preferred Stock, Value, Outstanding
 
 
Additional paid-in capital
129,574 
122,844 
 
 
Accumulated other comprehensive loss
(377)
(502)
 
 
Accumulated deficit
(81,281)
(74,385)
 
 
Treasury Stock, Value
(3,201)
(2,601)
 
 
Total stockholders' deficit
44,715 
45,356 
 
 
Liabilities and Equity
$ 51,799 
$ 47,134 
 
 
Condensed Consolidated Balance Sheet (Parenthetical) (Details) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Common Stock, Shares Authorized
100,000,000 
 
Common Stock, Shares, Outstanding
29,498,947 
 
Preferred Stock, Shares Authorized
10,000,000 
 
Parent Company
 
 
Common Stock, Par or Stated Value Per Share
$ 0.00001 
$ 0.00001 
Common Stock, Shares Authorized
100,000,000 
200,000,000 
Common Stock, Shares, Issued
30,156,247 
29,017,168 
Common Stock, Shares, Outstanding
29,498,947 
28,396,189 
Preferred Stock, Par or Stated Value Per Share
$ 0.00001 
$ 0.00001 
Preferred Stock, Shares Authorized
10,000,000 
10,000,000 
Preferred Stock, Shares Issued
Preferred Stock, Shares Outstanding
Treasury Stock, Shares
657,300 
620,979 
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statements of Cash Flows (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Amortization of Financing Costs and Discounts
$ 58 
$ 21 
$ 5,033 
Warrant expense
(1,574)
Stock-based compensation expense
2,946 
3,002 
4,084 
Increase (Decrease) in Operating Assets [Abstract]
 
 
 
Net cash (used in) provided by operating activities
5,006 
(10,425)
(10,801)
Net Cash Provided by (Used in) Investing Activities [Abstract]
 
 
 
Purchases of property and equipment
(1,941)
(4,894)
(5,633)
Payments to Acquire Equity Method Investments
(300)
Net cash used in investing activities
(6,508)
(9,923)
(11,926)
Net Cash Provided by (Used in) Financing Activities [Abstract]
 
 
 
Payments Related to Tax Withholding for Share-based Compensation
(662)
(643)
Proceeds from exercise of stock options
3,745 
1,335 
211 
Proceeds from (repayment of) debt financing
4,988 
(14,900)
(15,000)
Other financing costs
(195)
(103)
Proceeds from Issuance Initial Public Offering
(72,755)
Net cash provided by (used in) financing activities
7,672 
(14,208)
57,863 
Effect of Exchange Rate on Cash and Cash Equivalents
111 
(586)
23 
Cash, Cash Equivalents, and Restricted Cash, Period Increase (Decrease)
6,281 
(35,142)
35,159 
Cash, Cash Equivalents, and Restricted Cash, Carrying Value
 
17,956 
53,098 
Supplemental Cash Flow Information [Abstract]
 
 
 
Interest paid
(153)
(155)
(1,494)
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
 
 
 
Warrants issued in conjunction with debt issuance
1,124 
Redemption of Warrants Non-Cash; Preferred Stock
1,270 
Redemption of Warrants Non-Cash; Common Stock
600 
Warrant reclassification from liability to equity
3,180 
Parent Company
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net loss
(6,896)
(17,205)
(21,177)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Loss attributable to equity method investments
1,316 
11,511 
10,519 
Depreciation and amortization
251 
126 
67 
Amortization of Financing Costs and Discounts
58 
21 
5,033 
Warrant expense
(1,574)
Stock-based compensation expense
2,946 
3,002 
4,084 
Increase (Decrease) in Operating Assets [Abstract]
 
 
 
Increase (Decrease) in Operating Assets
1,742 
(1,383)
465 
Net cash (used in) provided by operating activities
(583)
(3,928)
(2,583)
Net Cash Provided by (Used in) Investing Activities [Abstract]
 
 
 
Purchases of property and equipment
(149)
(243)
Payments to Acquire Equity Method Investments
(300)
Payments to Acquire Interest in Subsidiaries and Affiliates
(9,333)
(19,900)
(22,209)
Net cash used in investing activities
(9,332)
(20,349)
(22,452)
Net Cash Provided by (Used in) Financing Activities [Abstract]
 
 
 
Payments Related to Tax Withholding for Share-based Compensation
(662)
(643)
Proceeds from exercise of stock options
3,745 
1,335 
211 
Proceeds from (repayment of) debt financing
4,988 
(14,900)
(15,000)
Other financing costs
(195)
(103)
Proceeds from Issuance Initial Public Offering
(72,755)
Net cash provided by (used in) financing activities
7,876 
(14,208)
57,863 
Effect of Exchange Rate on Cash and Cash Equivalents
(517)
175 
Cash, Cash Equivalents, and Restricted Cash, Period Increase (Decrease)
(2,039)
(39,002)
33,003 
Cash, Cash Equivalents, and Restricted Cash, Carrying Value
4,001 
6,040 
45,042 
Supplemental Cash Flow Information [Abstract]
 
 
 
Interest paid
(153)
(155)
(1,494)
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
 
 
 
Warrants issued in conjunction with debt issuance
1,124 
Redemption of Warrants Non-Cash; Preferred Stock
 
1,270 
Redemption of Warrants Non-Cash; Common Stock
 
Warrant reclassification from liability to equity
 
$ 0 
$ 3,180