TRUPANION, INC., 10-Q filed on 11/9/2018
Quarterly Report
v3.10.0.1
Document and Entity Information Document - shares
9 Months Ended
Sep. 30, 2018
Nov. 01, 2018
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-Q  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   33,419,934
v3.10.0.1
Consolidated Statement of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
Revenue $ 78,164 $ 63,118 $ 221,316 $ 176,122
Cost of Revenue [Abstract]        
Veterinary invoice expense 54,303 43,453 156,196 123,649
Other cost of revenue 10,117 7,858 27,959 21,160
Gross profit 13,744 11,807 37,161 31,313
Operating Expenses [Abstract]        
Technology and Development 2,299 2,471 6,761 7,196
General and administrative 4,174 4,017 13,242 12,274
Sales and marketing 6,365 4,862 18,005 13,323
Total operating expenses 12,838 11,350 38,008 32,793
Operating income (loss) 906 457 (847) (1,480)
Interest expense 336 124 887 370
Other (income) expense, net (628) (99) (1,071) (1,239)
Income (Loss) before income taxes 1,198 432 (663) (611)
Income tax (benefit) expense (7) 26 (11) 54
Net income (loss) $ 1,205 $ 406 $ (652) $ (665)
Net income (loss) per share [Abstract]        
Earnings Per Share, Basic $ 0.04 $ 0.01 $ (0.02) $ (0.02)
Earnings Per Share, Diluted $ 0.03 $ 0.01 $ (0.02) $ (0.02)
Weighted Average Number of Shares Outstanding, Basic 33,129,416 30,037,282 31,376,239 29,500,958
Weighted Average Number of Shares Outstanding, Diluted 36,385,360 33,113,981 31,376,239 29,500,958
v3.10.0.1
Consolidated Statement of Comprehensive Income Statement - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 1,205 $ 406 $ (652) $ (665)
Foreign currency translation adjustments 77 193 (242) 317
Net unrealized gain on available-for-sale debt securities 0 1 0 9
Other comprehensive income (loss), net of taxes 77 194 (242) 326
Comprehensive Income (Loss) $ 1,282 $ 600 $ (894) $ (339)
v3.10.0.1
Consolidated Balance Sheet - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Assets [Abstract]    
Cash and cash equivalents $ 34,677 $ 25,706
Short-term Investments 39,422 37,590
Accounts and other receivables 31,985 20,367
Prepaid expenses and other assets 4,184 2,895
Total current assets 110,268 86,558
Restricted Cash 1,400 600
Long-Term Investments, at fair value 3,545 3,237
Property and equipment, net 69,998 7,868
Intangible assets, net 8,084 4,972
Other Long-Term Assets 6,580 2,624
Total assets 199,875 105,859
Liabilities and Equity [Abstract]    
Accounts payable 2,163 2,716
Accrued liabilities and other current liabilities 12,006 7,660
Reserve for veterinary invoices 14,216 12,756
Deferred Revenue 32,848 22,734
Total current liabilities 61,233 45,866
Long-term debt 8,604 9,324
Deferred tax liabilities 1,002 1,002
Other liabilities 1,174 1,233
Total liabilities 72,013 57,425
Common stock 0 0
Preferred Stock 0 0
Additional paid-in capital 217,833 134,511
Accumulated other comprehensive loss (334) (92)
Accumulated deficit (83,436) (82,784)
Treasury stock, at cost (6,201) (3,201)
Stockholders' Equity Attributable to Parent 127,862 48,434
Total liabilities and stockholders' equity $ 199,875 $ 105,859
v3.10.0.1
Consolidated Balance Sheet Condensed Consolidated Balance Sheet Parentheticals - $ / shares
Sep. 30, 2018
Dec. 31, 2017
Common Stock [Member]    
Common Stock, Par or Stated Value Per Share $ 0.00001 $ 0.00001
Common Stock, Shares Authorized 100,000,000 100,000,000
Common Stock, Shares, Issued 34,171,653 30,778,796
Common Stock, Shares, Outstanding 33,415,668 30,121,496
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 0 0
Preferred Stock, Shares Outstanding 0 0
Treasury Stock [Member]    
Treasury Stock, Shares 755,985 657,300
v3.10.0.1
Consolidated Statement of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Net Cash Provided by Operating Activities [Abstract]    
Net loss $ (652) $ (665)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]    
Depreciation and Amortization 3,027 3,208
Stock-based compensation expense 3,553 2,564
Gain (Loss) on Sale of Equity Investments 0 (1,036)
Other, Net (237) 243
Increase (Decrease) in Operating Assets [Abstract]    
Accounts and other receivables 11,592 10,164
Prepaid expenses and other assets 549 297
Accounts Payable, Accrued Liabilities, and Other Liabilities 3,849 2,122
Claims Reserve 1,484 1,639
Deferred revenue 10,133 9,075
Net cash provided by operating activities 9,016 6,689
Net Cash Provided by Investing Activities [Abstract]    
Payments to Acquire Investments (29,567) (20,704)
Maturities of Investment Securities 27,405 15,878
Payments to Acquire Other Investments (3,000) 0
Payments to Acquire Intangible Assets (2,959) 0
Proceeds from Sale of Equity Method Investments 0 1,402
Purchases of property and equipment (55,856) (2,247)
Payments for (Proceeds from) Other Investing Activities (852) (2,762)
Net cash used in investing activities (64,829) (8,433)
Net Cash Provided by Financing Activities [Abstract]    
Proceeds from Issuance or Sale of Equity 65,690 0
Proceeds from exercise of stock options 2,872 2,082
Payments Related to Tax Withholding for Share-based Compensation (1,839) (1,170)
Proceeds from Warrant Exercises 300 0
Proceeds from Debt, Net of Issuance Costs 9,189 2,420
Repayments of Long-term Debt (10,000) 0
Proceeds from (Payments for) Other Financing Activities (535) (412)
Net cash provided by financing activities 65,677 2,920
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net (93) 436
Net Increase in Cash, Cash Equivalents, and Restricted Cash 9,771 1,612
Cash, Cash Equivalents, and Restricted Cash at beginning of period 26,306 24,237
Cash, Cash Equivalents, and Restricted Cash, End of Period 36,077 25,849
Supplemental Cash Flow Information [Abstract]    
Redemption of Warrants Non-Cash; Common Stock 3,000 0
Acquisition of Corporate Real Estate Non-Cash, Common Stock 9,640 0
Purchases of property and equipment included in accounts payable and accrued liabilities 165 531
Property and Equipment Acquired Under Capital Leases $ 917 $ 689
v3.10.0.1
Nature of Operations and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] Rental Income
The Company records rental income within general and administrative expense in the Consolidated Statements of Operations. The Company recorded rental income of $0.4 million for the three and nine months ended September 30, 2018.
The following table summarizes the Company's future rental payments from non-cancellable leases in place as of September 30, 2018 (in thousands):
Year ending December 31:
 
 
 
 
 
 
2018
 
 
 
 
 
$
497

2019
 
 
 
 
 
1,972

2020
 
 
 
 
 
1,224

2021
 
 
 
 
 
1,210

2022
 
 
 
 
 
1,173

2023
 
 
 
 
 
1,210

Thereafter
 
 
 
 
 
3,238

Total rental payments
 
 
 
 
 
$
10,524

Nature of Operations and Summary of Significant Accounting Policies Nature of Operations and Significant Accounting Policies
Description of Business and Basis of Presentation
Trupanion, Inc. (collectively with its wholly-owned subsidiaries, the Company) provides medical insurance for cats and dogs throughout the United States, Canada and Puerto Rico.
The financial data as of December 31, 2017 was derived from the Company's audited consolidated financial statements. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and, in management's opinion, have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations, comprehensive (loss) income, and cash flows for the interim periods. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S Securities and Exchange Commission (SEC) on February 13, 2018 (the 2017 10-K). The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2017 10-K. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.
Follow-on Common Stock Offerings
In June 2018, the Company completed a follow-on public offering (the June 2018 follow-on public offering) whereby the Company sold 2,090,909 shares of common stock (inclusive of 272,727 shares of common stock sold by the Company pursuant to the full exercise of the underwriters' option to purchase additional shares) at a price to the public of $33.00 per share. The Company received aggregate net proceeds from the June 2018 follow-on public offering of $65.7 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. The proceeds were primarily used to lower expenses through the purchase of real estate consisting of properties in use as corporate offices and leased to third parties. In addition, in August 2018, the Company issued 303,030 shares of common stock via a private placement to an accredited investor as a portion of the purchase price of the real estate. See Note 6, Acquisition of Corporate Real Estate.
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 amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from such estimates. See Note 1 to the audited financial statements included in the 2017 10-K for additional discussion of these estimates and assumptions.
Acquisition of Real Estate
The Company’s real estate acquisition was determined to be an asset acquisition, with the purchase price allocated based on relative fair value of the assets acquired. Additionally, acquisition-related expenses were capitalized as part of the purchase price.
The Company assessed fair value based on Level 3 inputs within the fair value framework, which included estimated cash flow projections that utilized appropriate discount rates, capitalization rates, renewal probability and available market information, which included market rental rates and market rent growth rates. Estimates of future cash flows were based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of tangible assets of the acquired property considers the value of the property as if it were vacant. The fair value of acquired “above- and below-” market leases was based on the estimated cash flow projections utilizing discount rates that reflected the risks associated with the leases acquired. The amount recorded was based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended term for any leases with below-market renewal options. Other intangible assets acquired included amounts for in-place lease values that were based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company included estimates of lost rents at market rates during the hypothetical expected lease-up periods, which were dependent on local market conditions. In estimating costs to execute similar leases, the Company considered leasing commissions, legal and other related costs.
The results of operations related to our ownership of the building are included in the Company’s Consolidated Statements of Operations from the date of acquisition.
Rental Income
The Company records rental income within general and administrative expense in the Consolidated Statements of Operations. The Company recorded rental income of $0.4 million for the three and nine months ended September 30, 2018.
The following table summarizes the Company's future rental payments from non-cancellable leases in place as of September 30, 2018 (in thousands):
Year ending December 31:
 
 
 
 
 
 
2018
 
 
 
 
 
$
497

2019
 
 
 
 
 
1,972

2020
 
 
 
 
 
1,224

2021
 
 
 
 
 
1,210

2022
 
 
 
 
 
1,173

2023
 
 
 
 
 
1,210

Thereafter
 
 
 
 
 
3,238

Total rental payments
 
 
 
 
 
$
10,524


Accumulated Other Comprehensive Loss
There were no reclassifications out of accumulated other comprehensive loss during the three and nine months ended September 30, 2018 and 2017.
Income Taxes
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act), making broad and complex changes to the Internal Revenue Code. The Company has made significant judgments and estimates in accordance with its interpretation of the Tax Act. As additional guidance on the Tax Act becomes available, the Company may adjust its interpretation of the requirements, which may result in a material change to income tax benefit or expense in the period in which the adjustment is made.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) amending the accounting for leases. The ASU requires recognition of lease assets and liabilities for operating leases on the consolidated balance sheets. 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 and is currently evaluating the impact the ASU will have on its consolidated financial statements pursuant to the purchase of real estate described in Note 6.
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. This final rule is effective on November 5, 2018, for interim filings submitted thereafter. The SEC has provided relief to registrants that file Form 10-Q shortly after the final rule’s effective date, allowing presentation changes to take effect in the subsequent interim period. As such, the Company plans to adopt this guidance as of January 1, 2019 and is currently evaluating the impact the ruling will have on its consolidated financial statements.
v3.10.0.1
Net Loss per Share
9 Months Ended
Sep. 30, 2018
Earnings Per Share, Basic and Diluted [Abstract]  
Earnings Per Share [Text Block] Net Income (Loss) per Share
Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is calculated using the weighted average number of shares of common stock plus, when dilutive, potential shares of common stock outstanding using the treasury-stock method. Potential shares of common stock outstanding include stock options, unvested restricted stock awards and restricted stock units, and warrants.
The components of basic and diluted earnings per share were as follows (in thousands, except share and per share information):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Basic earnings per share:
 
 
 
 
 
 
 
Net income (loss)
$
1,205

 
$
406

 
$
(652
)
 
$
(665
)
Shares used in computation:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
33,129,416

 
30,037,282

 
31,376,239

 
29,500,958

Basic earnings per share
$
0.04

 
$
0.01

 
$
(0.02
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
 
Net income (loss)
$
1,205

 
$
406

 
$
(652
)
 
$
(665
)
Shares used in computation:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
33,129,416

 
30,037,282

 
31,376,239

 
29,500,958

Stock options
2,663,375

 
2,618,567

 

 

Restricted stock awards and units
236,932

 
919

 

 

Warrants
355,637

 
457,213

 

 

Weighted average number of shares
36,385,360

 
33,113,981

 
31,376,239

 
29,500,958

Diluted earnings per share
$
0.03

 
$
0.01

 
$
(0.02
)
 
$
(0.02
)

The following potentially dilutive equity securities were not included in the diluted earnings per share of common stock calculation because they would have had an antidilutive effect:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Stock options
3,647

 
480,360

 
3,234,932

 
4,118,884

Restricted stock awards and restricted stock units

 

 
439,798

 
234,758

Warrants

 

 
480,000

 
810,000

v3.10.0.1
Investment Securities (Notes)
9 Months Ended
Sep. 30, 2018
Investments [Abstract]  
Investment [Text Block]
Long-term investments are classified as available-for-sale and short-term investments are classified as held-to-maturity. The following table summarizes the amortized cost, gross unrealized holding gains and losses, and estimates of fair value of fixed maturity investments (in thousands) as of September 30, 2018 and December 31, 2017:
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of September 30, 2018
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,545

 
$

 
$

 
$
2,545

Municipal bond
1,000

 

 

 
1,000

 
$
3,545

 
$

 
$

 
$
3,545

       Short-term investments:
 
 
 
 
 
 
 
              U.S. Treasury securities
$
6,646

 
$

 
$
(3
)
 
$
6,643

              Certificates of deposit
439

 
1

 

 
440

              U.S. government funds
32,337

 

 

 
32,337

 
$
39,422


$
1

 
$
(3
)

$
39,420

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2017
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,237

 
$

 
$

 
$
2,237

Municipal bond
1,000

 

 

 
1,000

 
$
3,237


$

 
$


$
3,237

Short-term investments:
 
 
 
 
 
 
 
U.S. Treasury securities
$
5,783

 
$

 
$
(4
)
 
$
5,779

Certificates of deposit
690

 
1

 

 
691

U.S. government funds
31,117

 

 

 
31,117

 
$
37,590


$
1

 
$
(4
)

$
37,587


Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
September 30, 2018
 
Amortized
Cost
 
Fair
Value
Available-for-sale:
 
 
 
Due after one year through five years
$
3,545

 
$
3,545

 
$
3,545

 
$
3,545


The Company evaluated its securities for other-than-temporary impairment and considers the decline in market value for the securities to be primarily attributable to current economic and market conditions. For debt securities, the Company does not intend to sell, nor is it more likely than not that the Company will be required to sell, the securities prior to maturity or prior to the recovery of the amortized cost basis.
Investments [Text Block] The following table summarizes the amortized cost, gross unrealized holding gains and losses, and estimates of fair value of fixed maturity investments (in thousands) as of September 30, 2018 and December 31, 2017:
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of September 30, 2018
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,545

 
$

 
$

 
$
2,545

Municipal bond
1,000

 

 

 
1,000

 
$
3,545

 
$

 
$

 
$
3,545

       Short-term investments:
 
 
 
 
 
 
 
              U.S. Treasury securities
$
6,646

 
$

 
$
(3
)
 
$
6,643

              Certificates of deposit
439

 
1

 

 
440

              U.S. government funds
32,337

 

 

 
32,337

 
$
39,422


$
1

 
$
(3
)

$
39,420

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2017
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,237

 
$

 
$

 
$
2,237

Municipal bond
1,000

 

 

 
1,000

 
$
3,237


$

 
$


$
3,237

Short-term investments:
 
 
 
 
 
 
 
U.S. Treasury securities
$
5,783

 
$

 
$
(4
)
 
$
5,779

Certificates of deposit
690

 
1

 

 
691

U.S. government funds
31,117

 

 

 
31,117

 
$
37,590


$
1

 
$
(4
)

$
37,587

v3.10.0.1
Other Investments (Notes)
9 Months Ended
Sep. 30, 2018
Investments, All Other Investments [Abstract]  
Investments and Other Noncurrent Assets [Text Block] Other Investments
Investment in Variable Interest Entity
In July 2018, the Company purchased $3.0 million in preferred stock of a privately held corporation with a complementary business line. The Company does not have power over the activities that most significantly impact the economic performance of the variable interest entity and is, therefore, not the primary beneficiary. The Company's preferred stock is accounted for as an available-for-sale debt security. Through January 2020, the Company has agreed to purchase an additional $4.0 million in preferred stock of the variable interest entity, contingent upon the exercise of this option by the variable interest entity. The Company has the option to purchase the variable interest entity on the fifth anniversary of the initial preferred stock purchase. Additionally, the Company has extended a $2.5 million revolving line of credit to the variable interest entity. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on the consolidated balance sheet.
Investment in Joint Venture
In September 2018, the Company acquired a non-controlling equity interest in a joint venture, whereby it has committed to licensing certain intellectual property and contributing up to $2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date.
v3.10.0.1
Fair Value
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block] Fair Value
Investments
The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis, and placement within the fair value hierarchy (in thousands):
 
As of September 30, 2018
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
1,400

 
$
1,400

 
$

 
$

Money market funds
4,741

 
4,741

 

 

Fixed maturities:


 
 
 
 
 
 
Foreign deposits
2,545

 
2,545

 

 

Municipal bond
1,000

 

 
1,000

 

Investment in variable interest entity
3,000

 

 

 
3,000

Total
$
12,686


$
8,686


$
1,000


$
3,000

 
 
 
 
 
 
 
 
 
As of December 31, 2017
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
600

 
$
600

 
$

 
$

Money market funds
5,167

 
5,167

 

 

Fixed maturities:
 
 
 
 
 
 
 
Foreign deposits
2,237

 
2,237

 

 

Municipal bond
1,000

 

 
1,000

 

Total
$
9,004

 
$
8,004

 
$
1,000

 
$


The Company measures the fair value of restricted cash, foreign deposits, and money market funds based on quoted prices in active markets for identical assets. The fair value of the municipal bond is based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. The estimated fair value of the Company's investment in the variable interest entity is a Level 3 measurement, and is based on market interest rates, the assessed creditworthiness of the entity, and the estimated fair value of the entity's common stock. As of September 30, 2018, the Company estimates that the purchase price approximates the fair value. Short-term investments are carried at amortized cost and the fair value is disclosed in Note 3, Investment Securities. The fair value of these investments is determined in the same manner as for available-for-sale securities and is considered a Level 1 measurement.
Fair Value Disclosures
The Company's other long-term assets balance included $3.1 million of notes receivable as of September 30, 2018 and $2.5 million of notes receivable as of December 31, 2017, recorded at its estimated collectible amount. The Company estimates that the carrying value of the note receivable approximates its fair value. The estimated fair value represents a Level 3 measurement within the fair value hierarchy, and is based on market interest rates and the assessed creditworthiness of the third party.
The Company estimates the fair value of 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 September 30, 2018 and December 31, 2017.
v3.10.0.1
Acquisition of Corporate Real Estate (Notes)
9 Months Ended
Sep. 30, 2018
Acquisition of Corporate Real Estate [Abstract]  
Real Estate Disclosure [Text Block] Acquisition of Corporate Real Estate
In June 2018, the Company entered into a Real Estate Purchase and Sale Agreement (Real Estate Purchase Agreement) with Benaroya Capital Company, L.L.C to purchase certain properties (Properties) as defined within the Real Estate Purchase Agreement, located at 6100 Fourth Avenue South, Seattle, Washington, which is the site of the Company's corporate headquarters. The purchase closed in August 2018 and the Company paid consideration consisting of $55.0 million in cash and 303,030 shares of common stock with an estimated fair value of $9.6 million. The issued shares carry registration rights (as to which the Company filed a registration statement on Form S-3, File No. 333-226752) and are subject to a lock-up period that continues to and includes June 25, 2020. The fair value of the issued shares was estimated as of the closing date for the real estate acquisition using the Black-Scholes option pricing model and the following assumptions:
 
 
 
 
 
 
August 9, 2018
Assumptions
 
 
 
 
 
Fair Value
Risk free interest rate
 
 
 
 
 
2.5
%
Expected volatility
 
 
 
 
 
36.72
%
Expected life (years)
 
 
 
 
 
1.88

Expected dividend yield
 
 
 
 
 
%

The purchase price was allocated to the following assets based on estimates of their relative fair value (in thousands):
Building and improvements
 
 
 
 
 
$
46,379

Land and improvements
 
 
 
 
 
15,833

Lease-related intangible assets
 
 
 
 
 
2,959


The building, building improvements, and land are recorded within property and equipment, net, on the consolidated balance sheet. The properties are generally carried at cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using the straight-line method over the estimated useful lives of the assets. The Company believes the useful lives of the building and building improvements is 39 years and the land improvements will be depreciated over a useful life of 10 years. The lease-related intangible assets relate to in-place lease agreements and will be amortized over a weighted-average useful life of 5.1 years. Amortization is expected to be approximately $0.5 million in each of the five succeeding years.
v3.10.0.1
Debt
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block] Debt
In June 2018, the Company amended its credit agreement, increasing its borrowing capacity from $30.0 million to $50.0 million, extending the maturity date to June 2021, and increasing the required amount of restricted cash. The facility is secured by any and all interests in the Company's assets that are not otherwise restricted. Interest on the revolving line of credit is payable monthly at the greater of 4.5%, or 1.25% plus the prime rate (6.50% at September 30, 2018). The credit agreement includes other ancillary services and letters of credit of up to $4.5 million, and requires a deposit of restricted cash of $1.4 million. As of September 30, 2018, the Company was in compliance with all financial and non-financial covenants required by the credit agreement.
Borrowings on the revolving line of credit are limited to the lesser of $50.0 million and the total amount of cash and securities held by the Company's insurance subsidiaries (American Pet Insurance Company and Wyndham Insurance Company (SAC) Limited Segregated Account AX). As of September 30, 2018, available borrowing capacity on the line of credit was $28.9 million, with an outstanding balance of $0.4 million for ancillary services and letters of credit, and borrowings under the facility of $8.8 million, recorded net of financing fees of $0.2 million.
v3.10.0.1
Commitment and Contingencies
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block] Commitments and Contingencies
Litigation
From time to time, the Company is subject to litigation matters and claims arising from the ordinary course of business. The Company records a provision for a liability relating to legal matters when it is both probable that a material liability has been incurred and the amount of the loss can be reasonably estimated. At this time, the Company does not believe any such matters to be material individually or in the aggregate. These views are subject to change following the outcome of future events or the results of future developments.
Obligation to Purchase Additional Preferred Stock of Variable Interest Entity
In connection with its July 2018 investment in a variable interest entity (see Note 4), the Company agreed to invest an additional $4.0 million in equity of the variable interest entity, contingent upon the exercise of this option by the variable interest entity.
v3.10.0.1
Claims Reserve
9 Months Ended
Sep. 30, 2018
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract]  
Supplementary Insurance Information, for Insurance Companies Disclosure [Text Block] Reserve for Veterinary Invoices
The reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary invoices that are dated as of, or prior to, its balance sheet date. The reserve also includes the Company's estimate of related internal processing costs. The reserve estimate involves actuarial projections, and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns, including expected future trends in the number of veterinary invoices the Company will receive and the average cost of those veterinary invoices. The reserve is made for each of the Company's segments, subscription and other business, and is continually refined as the Company receives and pays veterinary invoices. Changes in management's assumptions and estimates may have a relatively large impact to the reserve and associated expense.
Reserve for veterinary invoices
Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):
 
 
Nine Months Ended September 30,
Subscription
 
2018
 
2017
Reserve at beginning of year
 
$
11,059

 
$
8,538

Veterinary invoices during the period related to:
 
 
 
 
Current year
 
139,504

 
113,833

Prior years
 
364

 
(85
)
Total veterinary invoice expense
 
139,868

 
113,748

Amounts paid during the period related to:
 
 
 
 
Current year
 
128,233

 
104,501

Prior years
 
9,836

 
7,533

Total paid
 
138,069

 
112,034

Non-cash expenses
 
497

 
306

Reserve at end of period
 
$
12,361

 
$
9,946

The Company's reserve for the subscription business segment increased from $11.1 million at December 31, 2017 to $12.4 million at September 30, 2018. This change was comprised of $139.9 million in expense recorded during the period less $138.1 million in payments of veterinary invoices. The $139.9 million in veterinary invoice expense incurred includes an adjustment of $0.4 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. For the nine months ended September 30, 2017, the Company decreased prior year reserves by $0.1 million as a result of analysis of payment trends.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Nine Months Ended September 30,
Other Business
 
2018
 
2017
Reserve at beginning of year
 
$
1,697

 
$
983

Veterinary invoices during the period related to:
 
 
 
 
Current year
 
16,632

 
10,074

Prior years
 
(304
)
 
(173
)
Total veterinary invoice expense
 
16,328

 
9,901

Amounts paid during the period related to:
 
 
 
 
Current year
 
14,822

 
8,786

Prior years
 
1,348

 
789

Total paid
 
16,170

 
9,575

Non-cash expenses
 

 

Reserve at end of period
 
$
1,855

 
$
1,309

The Company’s reserve for the other business segment increased from $1.7 million at December 31, 2017 to $1.9 million at September 30, 2018. This change was comprised of $16.3 million in expense recorded during the period less $16.2 million in payments of veterinary invoices. The $16.3 million in veterinary invoice expense incurred includes a reduction of $0.3 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. For the nine months ended September 30, 2017, the Company decreased prior year reserves by $0.2 million as a result of analysis of payment trends.
Reserve for veterinary invoices, by year of occurrence
In the following tables, the reserve for veterinary invoices for each segment is presented as the amount (in thousands) by year the veterinary invoice relates to, referred to as the year of occurrence.
Subscription
As of September 30, 2018
Year of Occurrence
 
2016
$
408

2017
1,179

2018
10,774

 
$
12,361

Other Business
As of September 30, 2018
Year of Occurrence
 
2017
$
44

2018
1,811

 
$
1,855

v3.10.0.1
Stock-based Compensation
9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] Stock-Based Compensation and Stockholders' Equity
Stock-based Compensation
Stock-based compensation expense includes stock options, restricted stock awards, and restricted stock units granted to employees and non-employees and has been reported in the Company’s consolidated statements of operations depending on the function performed by the employee or non-employee. Stock-based compensation expense recognized in the consolidated statements of operations was as follows (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Veterinary invoice expense
$
153

 
$
101

 
$
421

 
$
260

Other cost of revenue
96

 
69

 
277

 
172

Technology and development
58

 
57

 
167

 
166

General and administrative
634

 
503

 
1,708

 
1,416

Sales and marketing
358

 
165

 
980

 
550

Total stock-based compensation
$
1,299

 
$
895

 
$
3,553

 
$
2,564


As of September 30, 2018, for all employees, the Company had 564,647 unvested stock options and 439,798 unvested restricted stock awards and restricted stock units that are expected to vest. Stock-based compensation expense of $3.6 million related to unvested stock options and $8.0 million related to unvested restricted stock awards and restricted stock units, expected to be recognized over a weighted average period of approximately 2.1 years and 2.7 years, respectively.
Stock Options
A summary of the Company's stock option activity is as follows:
 
Number Of Options
 
Weighted Average Exercise Price per Share
 
Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2017
4,006,399

 
$
7.16

 
$
88,578

Granted

 

 
 
Exercised
(695,452
)
 
4.19

 
22,213

Forfeited
(76,015
)
 
15.26

 
 
Outstanding as of September 30, 2018
3,234,932

 
$
7.61

 
$
90,967

 
 
 
 
 
 
Exercisable as of September 30, 2018
2,666,951

 
$
5.88

 
$
79,606

As of September 30, 2018, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 4.9 years and 4.2 years, respectively.
Restricted Stock Awards and Restricted Stock Units
A summary of the Company’s restricted stock award and restricted stock unit activity is as follows:
 
Number of 
Shares
 
Weighted Average
Grant Date Fair Value per Share
Unvested shares as of December 31, 2017
256,842

 
$
4.77

Granted
339,856

 
28.33

Vested
(136,330
)
 
8.05

Forfeited
(20,570
)
 
28.25

Unvested shares as of September 30, 2018
439,798

 
$
22.20



Stockholders’ Equity
In the June 2018 follow-on public offering, the Company sold 2,090,909 shares of common stock (inclusive of 272,727 shares of common stock sold by the Company pursuant to the full exercise of the underwriters' option to purchase additional shares) at a price to the public of $33.00 per share. The Company received aggregate net proceeds of $65.7 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. As a part of the purchase of real estate described in Note 6, an additional 303,030 shares of common stock were issued via a private placement during August 2018.
During the nine months ended September 30, 2018, 330,000 of the Company's outstanding warrants were exercised. As of September 30, 2018, warrants to purchase 480,000 shares of the Company's common stock at $10.00 per share remained outstanding. The warrants automatically convert to common stock in 2019.
v3.10.0.1
Segments
9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block] Segments
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscription fees related to the Company’s medical insurance which is 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):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Subscription business
$
67,421

 
$
56,493

 
$
192,805

 
$
159,363

Other business
10,743

 
6,625

 
28,511

 
16,759

 
78,164

 
63,118

 
221,316

 
176,122

Veterinary invoice expense:
 
 
 
 
 
 
 
Subscription business
48,285

 
39,761

 
139,868

 
113,748

Other business
6,018

 
3,692

 
16,328

 
9,901

 
54,303

 
43,453

 
156,196

 
123,649

Other cost of revenue:
 
 
 
 
 
 
 
Subscription business
6,468

 
5,454

 
18,232

 
15,304

Other business
3,649

 
2,404

 
9,727

 
5,856

 
10,117

 
7,858

 
27,959

 
21,160

Gross profit:
 
 
 
 
 
 
 
Subscription business
12,668

 
11,278

 
34,705

 
30,311

Other business
1,076


529

 
2,456

 
1,002

 
13,744


11,807

 
37,161

 
31,313

 
 
 
 
 
 
 
 
Technology and development
2,299

 
2,471

 
6,761

 
7,196

General and administrative
4,174

 
4,017

 
13,242

 
12,274

Sales and marketing:
 
 
 
 
 
 
 
Subscription business
6,266

 
4,811

 
17,730

 
13,161

Other business
99

 
51

 
275

 
162

 
6,365

 
4,862

 
18,005

 
13,323

Operating income (loss)
$
906


$
457

 
$
(847
)
 
$
(1,480
)

The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
United States
$
63,517

 
$
50,506

 
$
178,957

 
$
141,946

Canada
14,647

 
12,612

 
42,359

 
34,176

Total revenue
$
78,164

 
$
63,118

 
$
221,316

 
$
176,122


Substantially all of the Company’s long-lived assets were located in the United States as of September 30, 2018 and December 31, 2017.
v3.10.0.1
Nature of Operations and Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Description and Basis of Presentation [Text Block] Description of Business and Basis of Presentation
Trupanion, Inc. (collectively with its wholly-owned subsidiaries, the Company) provides medical insurance for cats and dogs throughout the United States, Canada and Puerto Rico.
The financial data as of December 31, 2017 was derived from the Company's audited consolidated financial statements. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and, in management's opinion, have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations, comprehensive (loss) income, and cash flows for the interim periods. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S Securities and Exchange Commission (SEC) on February 13, 2018 (the 2017 10-K). The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2017 10-K. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.
Follow-on Common Stock Offerings
In June 2018, the Company completed a follow-on public offering (the June 2018 follow-on public offering) whereby the Company sold 2,090,909 shares of common stock (inclusive of 272,727 shares of common stock sold by the Company pursuant to the full exercise of the underwriters' option to purchase additional shares) at a price to the public of $33.00 per share. The Company received aggregate net proceeds from the June 2018 follow-on public offering of $65.7 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. The proceeds were primarily used to lower expenses through the purchase of real estate consisting of properties in use as corporate offices and leased to third parties. In addition, in August 2018, the Company issued 303,030 shares of common stock via a private placement to an accredited investor as a portion of the purchase price of the real estate. See Note 6, Acquisition of Corporate Real Estate.
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 amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from such estimates. See Note 1 to the audited financial statements included in the 2017 10-K for additional discussion of these estimates and assumptions.
Acquisition of Real Estate
The Company’s real estate acquisition was determined to be an asset acquisition, with the purchase price allocated based on relative fair value of the assets acquired. Additionally, acquisition-related expenses were capitalized as part of the purchase price.
The Company assessed fair value based on Level 3 inputs within the fair value framework, which included estimated cash flow projections that utilized appropriate discount rates, capitalization rates, renewal probability and available market information, which included market rental rates and market rent growth rates. Estimates of future cash flows were based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of tangible assets of the acquired property considers the value of the property as if it were vacant. The fair value of acquired “above- and below-” market leases was based on the estimated cash flow projections utilizing discount rates that reflected the risks associated with the leases acquired. The amount recorded was based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended term for any leases with below-market renewal options. Other intangible assets acquired included amounts for in-place lease values that were based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company included estimates of lost rents at market rates during the hypothetical expected lease-up periods, which were dependent on local market conditions. In estimating costs to execute similar leases, the Company considered leasing commissions, legal and other related costs.
The results of operations related to our ownership of the building are included in the Company’s Consolidated Statements of Operations from the date of acquisition.
Basis of Accounting, Policy [Policy Text Block] The financial data as of December 31, 2017 was derived from the Company's audited consolidated financial statements. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and, in management's opinion, have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations, comprehensive (loss) income, and cash flows for the interim periods. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S Securities and Exchange Commission (SEC) on February 13, 2018 (the 2017 10-K). The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2017 10-K. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.
Use of Estimates [Policy Text Block] Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from such estimates. See Note 1 to the audited financial statements included in the 2017 10-K for additional discussion of these estimates and assumptions.
Investment, Policy [Policy Text Block] Acquisition of Real Estate
The Company’s real estate acquisition was determined to be an asset acquisition, with the purchase price allocated based on relative fair value of the assets acquired. Additionally, acquisition-related expenses were capitalized as part of the purchase price.
The Company assessed fair value based on Level 3 inputs within the fair value framework, which included estimated cash flow projections that utilized appropriate discount rates, capitalization rates, renewal probability and available market information, which included market rental rates and market rent growth rates. Estimates of future cash flows were based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of tangible assets of the acquired property considers the value of the property as if it were vacant. The fair value of acquired “above- and below-” market leases was based on the estimated cash flow projections utilizing discount rates that reflected the risks associated with the leases acquired. The amount recorded was based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended term for any leases with below-market renewal options. Other intangible assets acquired included amounts for in-place lease values that were based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company included estimates of lost rents at market rates during the hypothetical expected lease-up periods, which were dependent on local market conditions. In estimating costs to execute similar leases, the Company considered leasing commissions, legal and other related costs.
The results of operations related to our ownership of the building are included in the Company’s Consolidated Statements of Operations from the date of acquisition.
Comprehensive Income, Policy [Policy Text Block] Accumulated Other Comprehensive LossThere were no reclassifications out of accumulated other comprehensive loss during the three and nine months ended September 30, 2018 and 2017.
Income Tax, Policy [Policy Text Block] Income TaxesOn December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act), making broad and complex changes to the Internal Revenue Code. The Company has made significant judgments and estimates in accordance with its interpretation of the Tax Act. As additional guidance on the Tax Act becomes available, the Company may adjust its interpretation of the requirements, which may result in a material change to income tax benefit or expense in the period in which the adjustment is made.
New Accounting Pronouncements, Policy [Policy Text Block] Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) amending the accounting for leases. The ASU requires recognition of lease assets and liabilities for operating leases on the consolidated balance sheets. 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 and is currently evaluating the impact the ASU will have on its consolidated financial statements pursuant to the purchase of real estate described in Note 6.
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. This final rule is effective on November 5, 2018, for interim filings submitted thereafter. The SEC has provided relief to registrants that file Form 10-Q shortly after the final rule’s effective date, allowing presentation changes to take effect in the subsequent interim period. As such, the Company plans to adopt this guidance as of January 1, 2019 and is currently evaluating the impact the ruling will have on its consolidated financial statements.
v3.10.0.1
Other Investments Investment in Variable Interest Entity (Policies)
9 Months Ended
Sep. 30, 2018
Investments, All Other Investments [Abstract]  
Variable Interest Entity Disclosure [Text Block] Investment in Variable Interest EntityIn July 2018, the Company purchased $3.0 million in preferred stock of a privately held corporation with a complementary business line. The Company does not have power over the activities that most significantly impact the economic performance of the variable interest entity and is, therefore, not the primary beneficiary. The Company's preferred stock is accounted for as an available-for-sale debt security. Through January 2020, the Company has agreed to purchase an additional $4.0 million in preferred stock of the variable interest entity, contingent upon the exercise of this option by the variable interest entity. The Company has the option to purchase the variable interest entity on the fifth anniversary of the initial preferred stock purchase. Additionally, the Company has extended a $2.5 million revolving line of credit to the variable interest entity. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on the consolidated balance sheet.
v3.10.0.1
Other Investments Investment in Joint Venture (Policies)
9 Months Ended
Sep. 30, 2018
Investments, All Other Investments [Abstract]  
Equity Method Investments and Joint Ventures Disclosure [Text Block] Investment in Joint VentureIn September 2018, the Company acquired a non-controlling equity interest in a joint venture, whereby it has committed to licensing certain intellectual property and contributing up to $2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date.
v3.10.0.1
Fair Value Notes Receivable (Policies)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] The Company's other long-term assets balance included $3.1 million of notes receivable as of September 30, 2018 and $2.5 million of notes receivable as of December 31, 2017, recorded at its estimated collectible amount. The Company estimates that the carrying value of the note receivable approximates its fair value. The estimated fair value represents a Level 3 measurement within the fair value hierarchy, and is based on market interest rates and the assessed creditworthiness of the third party. The Company estimates the fair value of 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 September 30, 2018 and December 31, 2017.
v3.10.0.1
Fair Value Fair Value (Policies)
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments, Policy [Policy Text Block] The Company measures the fair value of restricted cash, foreign deposits, and money market funds based on quoted prices in active markets for identical assets. The fair value of the municipal bond is based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. The estimated fair value of the Company's investment in the variable interest entity is a Level 3 measurement, and is based on market interest rates, the assessed creditworthiness of the entity, and the estimated fair value of the entity's common stock. As of September 30, 2018, the Company estimates that the purchase price approximates the fair value. Short-term investments are carried at amortized cost and the fair value is disclosed in Note 3, Investment Securities. The fair value of these investments is determined in the same manner as for available-for-sale securities and is considered a Level 1 measurement.
v3.10.0.1
Acquisition of Corporate Real Estate Real Estate (Policies)
9 Months Ended
Sep. 30, 2018
Acquisition of Corporate Real Estate [Abstract]  
Property, Plant and Equipment, Policy [Policy Text Block] The building, building improvements, and land are recorded within property and equipment, net, on the consolidated balance sheet. The properties are generally carried at cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using the straight-line method over the estimated useful lives of the assets. The Company believes the useful lives of the building and building improvements is 39 years and the land improvements will be depreciated over a useful life of 10 years. The lease-related intangible assets relate to in-place lease agreements and will be amortized over a weighted-average useful life of 5.1 years. Amortization is expected to be approximately $0.5 million in each of the five succeeding years.
v3.10.0.1
Claims Reserve Claims Reserve (Policies)
9 Months Ended
Sep. 30, 2018
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract]  
Liability Reserve Estimate, Policy [Policy Text Block] Reserve for Veterinary InvoicesThe reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary invoices that are dated as of, or prior to, its balance sheet date. The reserve also includes the Company's estimate of related internal processing costs. The reserve estimate involves actuarial projections, and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns, including expected future trends in the number of veterinary invoices the Company will receive and the average cost of those veterinary invoices. The reserve is made for each of the Company's segments, subscription and other business, and is continually refined as the Company receives and pays veterinary invoices. Changes in management's assumptions and estimates may have a relatively large impact to the reserve and associated expense.
v3.10.0.1
Segments Segments (Policies)
9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Segment Reporting, Policy [Policy Text Block] The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscription fees related to the Company’s medical insurance which is 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.
v3.10.0.1
Net Loss per Share (Tables)
9 Months Ended
Sep. 30, 2018
Earnings Per Share, Basic and Diluted [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] The components of basic and diluted earnings per share were as follows (in thousands, except share and per share information):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Basic earnings per share:
 
 
 
 
 
 
 
Net income (loss)
$
1,205

 
$
406

 
$
(652
)
 
$
(665
)
Shares used in computation:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
33,129,416

 
30,037,282

 
31,376,239

 
29,500,958

Basic earnings per share
$
0.04

 
$
0.01

 
$
(0.02
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
 
Net income (loss)
$
1,205

 
$
406

 
$
(652
)
 
$
(665
)
Shares used in computation:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
33,129,416

 
30,037,282

 
31,376,239

 
29,500,958

Stock options
2,663,375

 
2,618,567

 

 

Restricted stock awards and units
236,932

 
919

 

 

Warrants
355,637

 
457,213

 

 

Weighted average number of shares
36,385,360

 
33,113,981

 
31,376,239

 
29,500,958

Diluted earnings per share
$
0.03

 
$
0.01

 
$
(0.02
)
 
$
(0.02
)
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 earnings per share of common stock calculation because they would have had an antidilutive effect:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Stock options
3,647

 
480,360

 
3,234,932

 
4,118,884

Restricted stock awards and restricted stock units

 

 
439,798

 
234,758

Warrants

 

 
480,000

 
810,000

v3.10.0.1
Investment Securities Available-for-Sale (Tables)
9 Months Ended
Sep. 30, 2018
Investments [Abstract]  
Investment [Table Text Block] The following table summarizes the amortized cost, gross unrealized holding gains and losses, and estimates of fair value of fixed maturity investments (in thousands) as of September 30, 2018 and December 31, 2017:
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of September 30, 2018
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,545

 
$

 
$

 
$
2,545

Municipal bond
1,000

 

 

 
1,000

 
$
3,545

 
$

 
$

 
$
3,545

       Short-term investments:
 
 
 
 
 
 
 
              U.S. Treasury securities
$
6,646

 
$

 
$
(3
)
 
$
6,643

              Certificates of deposit
439

 
1

 

 
440

              U.S. government funds
32,337

 

 

 
32,337

 
$
39,422


$
1

 
$
(3
)

$
39,420

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2017
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,237

 
$

 
$

 
$
2,237

Municipal bond
1,000

 

 

 
1,000

 
$
3,237


$

 
$


$
3,237

Short-term investments:
 
 
 
 
 
 
 
U.S. Treasury securities
$
5,783

 
$

 
$
(4
)
 
$
5,779

Certificates of deposit
690

 
1

 

 
691

U.S. government funds
31,117

 

 

 
31,117

 
$
37,590


$
1