TRUPANION INC., 10-K filed on 2/14/2018
Annual Report
Document and Entity Information Document (USD $)
12 Months Ended
Dec. 31, 2017
Feb. 7, 2018
Jun. 30, 2017
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, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
30,128,277 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 521,061,388 
Consolidated Statement of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Statement [Abstract]
 
 
 
Revenue
$ 242,667 
$ 188,230 
$ 146,963 
Veterinary invoice expense
170,122 
133,534 
103,324 
Other cost of revenue
29,495 
21,408 
18,410 
Gross profit
43,050 
33,288 
25,229 
Technology Services Costs
9,768 
9,534 
11,215 
General and administrative
16,820 
15,205 
15,558 
Sales and marketing
19,104 
15,247 
15,231 
Total operating expenses
45,692 
39,986 
42,004 
Operating loss
(2,642)
(6,698)
(16,775)
Interest expense
533 
218 
325 
Other (income) expense, net
(1,244)
(58)
(9)
Loss before income taxes
(1,931)
(6,858)
(17,091)
Income tax (benefit) expense
(428)
38 
114 
Net loss
$ (1,503)
$ (6,896)
$ (17,205)
Net loss per share: Basic and diluted (per share)
$ (0.05)
$ (0.24)
$ (0.62)
Weighted Average Number of Shares Outstanding, Basic and Diluted
29,588,324 
28,527,602 
27,638,443 
Consolidated Statement of Comprehensive Income Statement (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net loss
$ (1,503)
$ (6,896)
$ (17,205)
Foreign currency translation adjustments
277 
79 
(517)
Net unrealized gain on available-for-sale debt securities
8 
46 
4 
Other comprehensive income (loss), net of taxes
285 
125 
(513)
Comprehensive loss
$ (1,218)
$ (6,771)
$ (17,718)
Consolidated Balance Sheet (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Assets [Abstract]
 
 
Cash and cash equivalents
$ 25,706 
$ 23,637 
Short-term Investments
37,590 
29,570 
Accounts and other receivables
20,367 
10,118 
Prepaid expenses and other assets
2,895 
2,062 
Total current assets
86,558 
65,387 
Restricted Cash and Cash Equivalents
600 
600 
Investments in fixed maturities, at fair value
3,237 
2,579 
Equity Method Investments
0 
271 
Property and equipment, net
7,868 
8,464 
Intangible assets, net
4,972 
4,910 
Other Assets, Noncurrent
2,624 
134 
Total assets
105,859 
82,345 
Liabilities and Equity [Abstract]
 
 
Accounts payable
2,716 
2,006 
Accrued liabilities and other current liabilities
7,660 
5,416 
Reserve for veterinary invoices
12,756 
9,521 
Deferred Revenue, Current
22,734 
13,463 
Total current liabilities
45,866 
30,406 
Long-term debt
9,324 
4,767 
Deferred tax liabilities
1,002 
1,623 
Other liabilities
1,233 
834 
Total liabilities
57,425 
37,630 
Common stock: $0.00001 par value per share
0 
0 
Preferred Stock, Value, Outstanding
0 
0 
Additional Paid-in Capital
134,511 
129,574 
Accumulated other comprehensive loss
(92)
(377)
Accumulated deficit
(82,784)
(81,281)
Treasury stock, at cost
(3,201)
(3,201)
Total stockholders' deficit
48,434 
44,715 
Liabilities and Equity
$ 105,859 
$ 82,345 
Consolidated Balance Sheet Condensed Consolidated Balance Sheet Parentheticals (USD $)
Dec. 31, 2017
Dec. 31, 2016
Common Stock, Shares Authorized
100,000,000 
 
Common Stock, Shares, Outstanding
30,121,496 
 
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 
100,000,000 
Common Stock, Shares, Issued
30,778,796 
30,156,247 
Common Stock, Shares, Outstanding
30,121,496 
29,498,947 
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
657,300 
657,300 
Consolidated Statement of Stockholders' Equity Statement (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings [Member]
Accumulated Other Comprehensive Loss
Treasury Stock [Member]
Beginning Balance at Dec. 31, 2014
$ 59,275 
$ 0 
$ 119,045 
$ (57,180)
$ 11 
$ (2,601)
Stock Issued During Period, Shares, Share-based Compensation, Net of Tax Withholdings
 
565,248 
 
 
 
 
Stock Issued During Period, Value, Share-based Compensation, Net of Tax Withholdings
692 
 
692 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Common Stock, Shares, Outstanding
 
28,396,189 
 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
3,107 
 
3,107 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
(513)
 
 
 
(513)
 
Net loss
(17,205)
 
 
(17,205)
 
 
Ending Balance at Dec. 31, 2015
45,356 
0 
122,844 
(74,385)
(502)
(2,601)
Stock Issued During Period, Shares, Share-based Compensation, Net of Tax Withholdings
 
1,079,080 
 
 
 
 
Stock Issued During Period, Value, Share-based Compensation, Net of Tax Withholdings
3,083 
 
3,083 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Common Stock, Shares, Outstanding
 
29,498,947 
 
 
 
 
Redemption of warrants
 
59,999 
 
 
 
 
Settlement of warrant liabilities
600 
 
600 
 
 
 
Treasury Stock, Value, Acquired, Cost Method
(600)
 
 
 
 
(600)
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
3,047 
 
3,047 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
125 
 
 
 
125 
 
Net loss
(6,896)
 
 
(6,896)
 
 
Treasury Stock, Shares, Acquired
 
(36,321)
 
 
 
 
Ending Balance at Dec. 31, 2016
44,715 
0 
129,574 
(81,281)
(377)
(3,201)
Stock Issued During Period, Shares, Share-based Compensation, Net of Tax Withholdings
 
622,549 
 
 
 
 
Stock Issued During Period, Value, Share-based Compensation, Net of Tax Withholdings
1,375 
 
1,375 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Common Stock, Shares, Outstanding
30,121,496 
30,121,496 
 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
3,562 
 
3,562 
 
 
 
Other Comprehensive Income (Loss), Net of Tax
285 
 
 
 
285 
 
Net loss
(1,503)
 
 
(1,503)
 
 
Ending Balance at Dec. 31, 2017
$ 48,434 
$ 0 
$ 134,511 
$ (82,784)
$ (92)
$ (3,201)
Consolidated Statement of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Net Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Net loss
$ (1,503)
$ (6,896)
$ (17,205)
Depreciation, Depletion and Amortization
4,232 
3,846 
2,542 
Stock-based compensation expense
3,419 
2,946 
3,002 
Gain on sale of equity method investment
(1,036)
0 
0 
Other Operating Income (Expense), Net
(383)
104 
(68)
Increase (Decrease) in Operating Assets [Abstract]
 
 
 
Accounts and other receivables
(10,219)
(1,830)
(328)
Prepaid expenses and other assets
(179)
48 
(905)
Accounts payable, accrued liabilities, and other liabilities
3,019 
1,164 
(483)
Reserve for veterinary invoices
3,149 
3,226 
1,241 
Deferred revenue
9,167 
2,398 
1,779 
Net cash provided by (used in) operating activities
9,666 
5,006 
(10,425)
Net Cash Provided by (Used in) Investing Activities [Abstract]
 
 
 
Purchases of investment securities
(31,920)
(31,616)
(24,800)
Maturities of investment securities
23,372 
27,247 
20,180 
Proceeds from Sale of Equity Method Investments
1,402 
0 
0 
Purchases of property and equipment
(3,131)
(1,941)
(4,894)
Payments for (Proceeds from) Investments
(2,779)
(198)
(409)
Net cash used in investing activities
(13,056)
(6,508)
(9,923)
Net Cash Provided by (Used in) Financing Activities [Abstract]
 
 
 
Proceeds from exercise of stock options
2,545 
3,745 
1,335 
Payments Related to Tax Withholding for Share-based Compensation
(1,170)
(662)
(643)
Proceeds from debt financing, net of financing fees
4,400 
4,988 
(14,900)
Payments of Financing Costs
(694)
(399)
0 
Net cash provided by (used in) financing activities
5,081 
7,672 
(14,208)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net
378 
111 
(586)
Net change in cash, cash equivalents, and restricted cash
2,069 
6,281 
(35,142)
Cash, Cash Equivalents, and Restricted Cash, Carrying Value
24,237 
17,956 
53,098 
Cash, Cash Equivalents, and Restricted Cash, Carrying Value, End of Period
26,306 
24,237 
17,956 
Supplemental Cash Flow Information [Abstract]
 
 
 
Income taxes paid
177 
19 
139 
Interest paid
333 
153 
155 
Purchases of property and equipment included in accounts payable and accrued liabilities
390 
104 
98 
Redemption of Warrants Non-Cash; Common Stock
0 
600 
0 
Capital Lease Obligations Incurred
$ 689 
$ 559 
$ 0 
Condensed Consolidated Balance Sheet Parentheticals (USD $)
Dec. 31, 2017
Dec. 31, 2016
Common Stock, Shares Authorized
100,000,000 
 
Common Stock, Shares, Outstanding
30,121,496 
 
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 
100,000,000 
Common Stock, Shares, Issued
30,778,796 
30,156,247 
Common Stock, Shares, Outstanding
30,121,496 
29,498,947 
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
657,300 
657,300 
Parent Company |
Common Stock
 
 
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
30,778,796 
30,156,247 
Common Stock, Shares, Outstanding
30,121,496 
29,498,947 
Parent Company |
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 
Parent Company |
Treasury Stock [Member]
 
 
Treasury Stock, Shares
657,300 
657,300 
Net Loss per Share
Earnings Per Share [Text Block]
Net Loss per Share
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated using the weighted-average number of shares of common stock plus, when dilutive, potential common shares outstanding using the treasury-stock method. Potential common shares outstanding include stock options, unvested restricted stock awards and restricted stock units, and warrants.
The following potentially dilutive equity securities were not included in the diluted earnings per common share calculation because they would have had an antidilutive effect:
 
As of December 31,
 
2017
 
2016
 
2015
Stock options
4,006,399

 
4,123,023

 
4,871,949

Restricted stock awards and restricted stock units
256,842

 
352,996

 
472,384

Warrants
810,000

 
810,000

 
869,999

Property Plant and Equipment (Notes)
Property and Equipment, Net
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
December 31,
 
2017
 
2016
Software
$
17,221

 
$
14,340

Computer equipment and other
3,022

 
2,470

Property and equipment, at cost
20,243

 
16,810

Less: Accumulated depreciation
(12,375
)
 
(8,346
)
Property and equipment, net
$
7,868

 
$
8,464


Depreciation expense related to property and equipment, inclusive of assets purchased on capital lease, was $4.2 million, $3.8 million and $2.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.
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, 2017.
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 gains and 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, 2017 and 2016 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2017
 
 
 
 
 
 
 
       Available-for-sale:
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
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


Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2017
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due after one year through five years
2,237

 
2,237

Due after five years through ten years
1,000

 
1,000

 
$
3,237

 
$
3,237


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 the recovery of the amortized cost basis which may be at maturity.
Fair Value
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 December 31, 2017
 
Fair Value
 
Level 1
 
Level 2
Assets
 
 
 
 
 
Restricted cash
$
600

 
$
600

 
$
—

Foreign deposits
2,237

 
2,237

 
—

Municipal bond
1,000

 
—

 
1,000

Money market funds
5,167

 
5,167

 
—

Total
$
9,004

 
$
8,004

 
$
1,000

 
 
 
 
 
 
 
As of December 31, 2016
 
Fair Value
 
Level 1
 
Level 2
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


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.
Fair Value Disclosures
As of December 31, 2017, the Company's other long-term assets balance included a $2.5 million note receivable, recorded at its estimated collectible amount. The Company estimates that the carrying value of the note receivable approximates the 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 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, 2017.
Commitment and Contingencies
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies

The following summarizes the Company's contractual commitments as of December 31, 2017 (in thousands):
 
Year Ending December 31,
 
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Long-term debt obligations(1)
$
—

 
$
9,500

 
$
—

 
$
—

 
$
—

 
$
—

 
$
9,500

Operating lease obligations(2)
1,876

 
2,035

 
2,116

 
2,197

 
2,258

 
8,719

 
19,201

Capital leases(3)
519

 
—

 
—

 
—

 
—

 
—

 
519

Other obligations(4)
927

 
562

 
119

 
17

 
—

 
—

 
1,625

Total
$
3,322

 
$
12,097

 
$
2,235

 
$
2,214

 
$
2,258

 
$
8,719

 
$
30,845

 
 
 
 
 
(1) Consists of a revolving line of credit. Excludes interest of the greater of 4.5% or 1.25% plus the prime rate (5.75% as of December 31, 2017).
(2) Consists of contractual obligations from non-cancellable office space under operating lease.
(3) Consists of contractual obligations from property and equipment purchased under capital lease.
(4) Consists of contractual obligations from non-cancellable vendor service agreements.


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. 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 $1.8 million, $1.2 million and $1.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Legal Proceedings
From time to time, the Company is subject to litigation matters and claims arising from the ordinary course of business, including, but not limited to, claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; coverage disputes with policyholders; disputes regarding general contracts; and regulatory or governmental investigations or disputes. The Company records an estimated liability relating to such matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The outcomes of legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company's operating results for a particular period. The Company reviews its estimates at least quarterly and makes adjustments to reflect the outcome of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.
Claims Reserve (Notes)
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 are 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):
 
 
Year Ended December 31,
Subscription
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
8,538

 
$
5,384

 
$
4,278

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
155,623

 
123,823

 
95,390

Prior years
 
(69
)
 
813

 
30

Total veterinary invoice expense
 
155,554

 
124,636

 
95,420

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
144,802

 
115,314

 
89,768

Prior years
 
7,777

 
5,832

 
4,239

Total paid
 
152,579

 
121,146

 
94,007

Non-cash expenses
 
454

 
336

 
307

Reserve at end of period
 
$
11,059

 
$
8,538

 
$
5,384


The Company's reserve for the subscription business segment increased $2.6 million from $8.5 million at December 31, 2016 to $11.1 million at December 31, 2017. This change was comprised of $155.6 million in expense recorded during the period less $152.6 million in payments of veterinary invoices. This $155.6 million in veterinary invoice expense incurred includes a reduction of $0.1 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to increase prior year reserves were $0.8 million and less than $0.1 million as a result of analysis of payment trends in the years ended December 31, 2016 and 2015, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
983

 
$
890

 
$
829

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
14,739

 
9,027

 
7,983

Prior years
 
(171
)
 
(129
)
 
(79
)
Total veterinary invoice expense
 
14,568

 
8,898

 
7,904

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
13,053

 
8,048

 
7,095

Prior years
 
801

 
757

 
748

Total paid
 
13,854

 
8,805

 
7,843

Non-cash expenses
 
—

 
—

 
—

Reserve at end of period
 
$
1,697

 
$
983

 
$
890



The Company’s reserve for the other business segment increased $0.7 million from $1.0 million at December 31, 2016 to $1.7 million at December 31, 2017. This change was comprised of $14.6 million in expense recorded during the period less $13.9 million in payments of veterinary invoices. This $14.6 million in veterinary invoice expense incurred includes a reduction of $0.2 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.1 million as a result of analysis of payment trends in each of the years ended December 31, 2016 and 2015.
Veterinary invoice expenses

In the following tables, cumulative number of veterinary invoices represents the total number received as of December 31, 2017, by year the veterinary invoice relates to, referred to as the year of occurrence. If a pet is injured or becomes ill, multiple trips to the veterinarian may result in several invoices. Each of these veterinary invoices is included in the cumulative number, regardless of whether the veterinary invoice was paid. Information for years 2014 through 2016 is provided as required supplementary information. Amounts in these tables are presented on a constant currency basis to remove the impact of changes in the foreign currency exchange rate on development. The cumulative expenses as of the end of each year are revalued using the currency exchange rate as of December 31, 2017.

The following table summarizes the development of veterinary invoice expense, on a constant currency basis, for the Company's subscription business segment by year of occurrence (in thousands, except for cumulative number of veterinary invoices data):
 
 
Cumulative veterinary invoice expenses
 
Reserve
 
Cumulative number of veterinary invoices
 
 
 
 
 
 
As of December 31,
 
As of December 31,
Subscription
 
2014
 
2015
 
2016
 
2017
 
2017
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2014
 
$
72,100

 
$
72,039

 
$
72,204

 
$
72,222

 
$
27

 
379,078

2015
 
 
 
$
95,661

 
$
96,217

 
$
96,276

 
$
130

 
475,626

2016
 
 
 
 
 
$
125,127

 
$
124,910

 
$
535

 
587,007

2017
 
 
 
 
 
 
 
$
156,580

 
$
10,367

 
656,490

 
 
 
 
 
 
 
 
$
449,988

 
$
11,059

 
 

The following table summarizes the development of veterinary invoice expense, on a constant currency basis, for the Company's other business segment by year of occurrence (in thousands, except for cumulative number of veterinary invoices data):
 
 
Cumulative veterinary invoice expenses
 
Reserve
 
Cumulative number of veterinary invoices
 
 
 
 
 
 
As of December 31,
 
As of December 31,
Other Business
 
2014
 
2015
 
2016
 
2017
 
2017
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2014
 
$
5,966

 
$
5,889

 
$
5,888

 
$
5,895

 
$
—

 
34,587

2015
 
 
 
$
7,974

 
$
7,846

 
$
7,850

 
$
—

 
46,900

2016
 
 
 
 
 
$
9,028

 
$
8,844

 
$
11

 
59,243

2017
 
 
 
 
 
 
 
$
14,741

 
$
1,686

 
95,182

 
 
 
 
 
 
 
 
$
37,330

 
$
1,697

 
 


Cumulative paid veterinary invoice expense

In the following tables, amounts are by year the veterinary invoice relates to, referred to as the year of occurrence. Amounts in these tables are presented on a constant currency basis to remove the impact of changes in the foreign currency exchange rate. The cumulative amounts paid as of the end of each year are revalued using the currency exchange rate as of December 31, 2017. Information for years 2014 through 2016 is provided as required supplementary information.

The following table summarizes the amounts paid for veterinary invoices, inclusive of related internal processing costs and reported on a constant currency basis, for the subscription segment (in thousands):
 
 
Year Ended December 31,
Subscription
 
2014
 
2015
 
2016
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2014
 
$
67,886

 
$
71,969

 
$
72,132

 
$
72,196

2015
 
 
 
$
90,261

 
$
95,928

 
$
96,145

2016
 
 
 
 
 
$
116,879

 
$
124,375

2017
 
 
 
 
 
 
 
$
146,213


 
 
 
 
 
 
 
$
438,929

Total amounts unpaid and recorded as a liability
 
 
$
11,059



The following table summarizes the amounts paid for veterinary invoices, inclusive of related internal processing costs and reported on a constant currency basis, for the other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2014
 
2015
 
2016
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2014
 
$
5,137

 
$
5,887

 
$
5,887

 
$
5,895

2015
 
 
 
$
7,086

 
$
7,842

 
$
7,850

2016
 
 
 
 
 
$
8,049

 
$
8,833

2017
 
 
 
 
 
 
 
$
13,055

 
 
 
 
 
 
 
 
$
35,633

Total amounts unpaid and recorded as a liability
 
 
$
1,697

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block] 
Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):
 
 
Year Ended December 31,
Subscription
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
8,538

 
$
5,384

 
$
4,278

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
155,623

 
123,823

 
95,390

Prior years
 
(69
)
 
813

 
30

Total veterinary invoice expense
 
155,554

 
124,636

 
95,420

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
144,802

 
115,314

 
89,768

Prior years
 
7,777

 
5,832

 
4,239

Total paid
 
152,579

 
121,146

 
94,007

Non-cash expenses
 
454

 
336

 
307

Reserve at end of period
 
$
11,059

 
$
8,538

 
$
5,384


The Company's reserve for the subscription business segment increased $2.6 million from $8.5 million at December 31, 2016 to $11.1 million at December 31, 2017. This change was comprised of $155.6 million in expense recorded during the period less $152.6 million in payments of veterinary invoices. This $155.6 million in veterinary invoice expense incurred includes a reduction of $0.1 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to increase prior year reserves were $0.8 million and less than $0.1 million as a result of analysis of payment trends in the years ended December 31, 2016 and 2015, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
983

 
$
890

 
$
829

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
14,739

 
9,027

 
7,983

Prior years
 
(171
)
 
(129
)
 
(79
)
Total veterinary invoice expense
 
14,568

 
8,898

 
7,904

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
13,053

 
8,048

 
7,095

Prior years
 
801

 
757

 
748

Total paid
 
13,854

 
8,805

 
7,843

Non-cash expenses
 
—

 
—

 
—

Reserve at end of period
 
$
1,697

 
$
983

 
$
890



The Company’s reserve for the other business segment increased $0.7 million from $1.0 million at December 31, 2016 to $1.7 million at December 31, 2017. This change was comprised of $14.6 million in expense recorded during the period less $13.9 million in payments of veterinary invoices. This $14.6 million in veterinary invoice expense incurred includes a reduction of $0.2 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.1 million as a result of analysis of payment trends in each of the years ended December 31, 2016 and 2015.
Debt
Debt Disclosure [Text Block]
Debt
The Company has a revolving line of credit of up to $30.0 million, 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 (5.75% at December 31, 2017). The borrowing agreement includes other ancillary services and letters of credit of up to $4.5 million as of December 31, 2017. The facility also requires a deposit of restricted cash of $0.6 million. The agreement was amended during the current year to extend the maturity date to December 2019. The credit agreement requires the Company to comply with various financial and non-financial covenants. As of December 31, 2017, the Company was in compliance with all covenants.
Borrowings on the revolving line of credit were limited to the lesser of $30.0 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 December 31, 2017 and 2016. As of December 31, 2017, available borrowing capacity on the line of credit was $18.7 million, with an outstanding balance of $1.8 million for ancillary services and letters of credit, and borrowings under the facility of $9.5 million, recorded net of financing fees of $0.2 million.
Stock-based Compensation
Stock-based Compensation
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 each category of the consolidated statement of operations for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Veterinary invoice expense
$
355

 
$
234

 
$
219

Other cost of revenue
239

 
41

 
44

Technology and development
216

 
246

 
404

General and administrative
1,887

 
1,893

 
1,889

Sales and marketing
722

 
532

 
446

Total stock-based compensation
$
3,419

 
$
2,946

 
$
3,002

As of December 31, 2017, for all employees, the Company had 991,754 unvested stock options and 256,842 restricted stock awards and restricted stock units that are expected to vest. Total stock-based compensation expense of $5.7 million related to unvested stock options and $0.9 million related to unvested restricted stock awards and restricted stock units is expected to be recognized over a weighted-average period of approximately 2.7 years and 1.3 years, respectively.
Stock Options
The grant date fair value of stock option awards are estimated on the date of grant using the Black-Scholes option-pricing model. Valuation assumptions for the years ended December 31, 2017, 2016 and 2015 are presented in the following table:
 
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Valuation assumptions:
 
 
 
 
 
 
Expected term (in years)
 
6.25
 
5.04-6.25
 
3.0-6.25
Expected volatility
 
37.1%-39.8%
 
37.6%-42.1%
 
37.2%–49.4%
Risk-free interest rate
 
1.8%-2.2%
 
1.1%-2.0%
 
1.1%–2.0%
Expected dividend yield
 
—%
 
—%
 
—%

The following table presents information regarding stock options granted, exercised and forfeited for the periods presented:
 
Number
of
Options
 
Weighted Average
Exercise
Price per Share
 
Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of 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

 
—

Outstanding as of 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

 
—

Outstanding as of December 31, 2016
4,123,023

 
5.06

 
43,185

Granted
657,339

 
17.74

 
—

Exercised
(670,823
)
 
3.80

 
10,392

Forfeited
(103,140
)
 
12.25

 
—

Outstanding as of December 31, 2017
4,006,399

 
7.16

 
88,578

 
 
 
 
 
 
Exercisable at December 31, 2017
2,998,099

 
$
4.50

 
$
74,278

As of December 31, 2017, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 5.4 years and 4.3 years, respectively.

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, 2017, 2016, and 2015:
 
 
Weighted Average Grant Date Fair Value per Share
 
Fair Value
of Options
Vested (in thousands)
Year:
 
 
 
 
2015
 
$
3.46

 
$
3,276

2016
 
$
5.64

 
$
4,645

2017
 
$
7.25

 
$
6,313



Restricted Stock Awards and Restricted Stock Units
The below table summarizes the Company’s restricted stock award and restricted stock unit activity for the years ending December 31, 2017, 2016 and 2015:
 
 
Number of 
Shares
 
Weighted Average
Grant Date Fair Value per
Share
Unvested shares as of December 31, 2014
 
584,385

 
$
4.77

Granted
 
2,385

 
7.26

Vested
 
(119,262
)
 
4.80

Forfeited
 
—

 
—

Unvested shares as of December 31, 2015
 
467,508

 
4.77

Granted
 
—

 
—

Vested
 
(116,877
)
 
4.77

Forfeited
 
—

 
—

Unvested shares as of December 31, 2016
 
350,631

 
4.77

Granted
 
23,659

 
30.19

Vested
 
(116,877
)
 
4.77

Forfeited
 
(571
)
 
30.19

Unvested shares as of December 31, 2017
 
256,842

 
$
4.77

Stockholder's Equity (Notes)
Stockholders' Equity Note Disclosure [Text Block]
Stockholders’ Equity
As of December 31, 2017, the Company had 100,000,000 shares of common stock authorized and 30,121,496 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, 2017, 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, 2017 due to restrictions in its credit agreements.
Warrants
At December 31, 2017 and 2016, warrants to purchase 810,000 shares of the Company's common stock at $10.00 per share remained outstanding. The warrants expire in 2018 and 2019.
Segments
Segment Reporting Disclosure [Text Block]
Segments
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscriptions 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):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
Subscription business
$
218,354

 
$
173,356

 
$
133,406

Other business
24,313

 
14,874

 
13,557

 
242,667

 
188,230

 
146,963

Veterinary invoice expense:
 
 
 
 
 
Subscription business
155,554

 
124,636

 
95,420

Other business
14,568

 
8,898

 
7,904

 
170,122

 
133,534

 
103,324

Other cost of revenue:
 
 
 
 
 
Subscription business
21,329

 
16,685

 
14,008

Other business
8,166

 
4,723

 
4,402

 
29,495

 
21,408

 
18,410

Gross profit:
 
 
 
 
 
Subscription business
41,471

 
32,035

 
23,978

Other business
1,579

 
1,253

 
1,251

 
43,050

 
33,288

 
25,229

 
 
 
 
 
 
Technology and development
9,768

 
9,534

 
11,215

General and administrative
16,820

 
15,205

 
15,558

Sales and marketing:
 
 
 
 
 
Subscription business
18,886

 
15,029

 
15,151

Other business
218

 
218

 
80

 
19,104

 
15,247

 
15,231

Operating loss
$
(2,642
)
 
$
(6,698
)
 
$
(16,775
)


The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
United States
$
195,297

 
$
151,361

 
$
116,585

Canada
47,370

 
36,869

 
30,378

Total revenue
$
242,667

 
$
188,230

 
$
146,963


Substantially all of the Company’s long-lived assets were located in the United States as of December 31, 2017 and 2016.
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, American Pet Insurance Company, and one of 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.
New York law restricts the ability of the Company's insurance subsidiary in New York to pay dividends to its holding company parent. These restrictions are based in part on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval, and dividends in larger amounts, or extraordinary dividends, are subject to approval by the New York State Department of Financial Services, the subsidiary's primary regulator. An extraordinary dividend or distribution is defined as a dividend or distribution that, in the aggregate in any 12-month period, exceeds the lesser of (i) 10% of surplus as of the preceding December 31 or (ii) the insurer’s adjusted net investment income for such 12-month period, not including realized capital gains. Under regulatory requirements at December 31, 2017, 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 $0.2 million. This insurance subsidiary did not pay dividends to the Company during the years ended December 31, 2017, 2016, and 2015.
The Company's insurance subsidiary in Bermuda is regulated by the Bermuda Monetary Authority. Under the Bermuda Companies Act of 1981, as amended, a Bermuda company may not declare or pay a dividend or make a distribution out of contributed surplus if there are reasonable grounds for believing that: (a) the company is, or would be after the payment, unable to pay its liabilities as they become due; or (b) the realizable value of the company’s assets would thereby be less than its liabilities. The Segregated Accounts Company Act of 2000 further requires that dividends out of a segregated account can only be paid to the extent that the cell remains solvent. The value of its assets must remain greater than the aggregate of its liabilities, issued share capital, and share premium accounts. Per our contractual agreements with Wyndham Insurance Company (SAC) Limited, the allowable dividend is equivalent to the positive undistributed profit attributable to the shares. This insurance subsidiary paid the Company a dividend of $2.7 million during the year ended December 31, 2017. No dividends were paid during the years ended December 31, 2016 and 2015.
The statutory net income for 2017, 2016 and 2015 and statutory capital and surplus at December 31, 2017, 2016 and 2015, for the Company’s insurance subsidiary in New York were as follows (in thousands):
 
 
As of December 31,
 
 
2017
 
2016
 
2015
Statutory net income
 
$
7,507

 
$
4,081

 
$
1,386

Statutory capital and surplus
 
37,190

 
30,451

 
26,068


As of December 31, 2017, the Company’s insurance subsidiary in New York maintained $37.2 million of statutory capital and surplus which was above the required amount of $22.2 million of statutory capital and surplus to avoid additional regulatory oversight. As of December 31, 2017 and 2016, the Company had $6.6 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 sometimes party to arrangements with the father and brother of the Company’s Chief Executive Officer, who both serve as independent contractors to develop veterinary relationships. The terms of the independent contractor agreements are consistent with the terms of other similar independent contractors that do business with the Company. Total amounts paid to the related parties were less than $0.5 million for each year ended December 31, 2017, 2016, and 2015.
Income Taxes (Notes)
Income Taxes
Income Taxes
Loss before income taxes was as follows for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
United States
 
$
(1,965
)
 
$
(6,906
)
 
$
(17,222
)
Foreign
 
34

 
48

 
131

 
 
$
(1,931
)
 
$
(6,858
)
 
$
(17,091
)

The components of income tax (benefit) expense were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
183

 
$
25

 
$
31

Foreign
 
15

 
13

 
84

 
 
198

 
38

 
115

Deferred:
 
 
 
 
 
 
U.S. federal & state
 
(620
)
 
—

 
—

Foreign
 
(6
)
 
—

 
(1
)
 
 
(626
)
 
—

 
(1
)
Income tax (benefit) expense
 
$
(428
)
 
$
38

 
$
114



On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code, including, but not limited to, a corporate tax rate decrease to 21% effective January 1, 2018. The Company has calculated its best estimate of the impact of the Tax Act for the year ended December 31, 2017, based on its understanding of the Tax Act and guidance available as of the date of filing, and recorded an income tax benefit of $0.6 million.

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, the Company has determined that the $0.6 million income tax benefit recorded in connection with the remeasurement of its deferred tax liabilities was a provisional amount and a reasonable estimate as of December 31, 2017. Any necessary subsequent adjustments will be recorded in 2018.

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:
 
 
Year Ended December 31,    
 
 
2017
 
2016
 
2015
Federal income taxes at statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
U.S. state income taxes
 
(9.5
)
 
(0.6
)
 
(0.7
)
Equity compensation
 
189.1

 
7.7

 
(1.2
)
Change in valuation allowance
 
(229.6
)
 
(40.5
)
 
(34.2
)
Meals and entertainment
 
(3.0
)
 
(0.9
)
 
(0.4
)
Other, net
 
2.0

 
(0.3
)
 
1.8

Change in federal tax rate
 
32.1

 
—

 
—

Credits
 
7.1

 
—

 
—

Effective income tax rate
 
22.2
 %
 
(0.6
)%
 
(0.7
)%

The principal components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
 
 
Year Ended December 31,         
 
 
2017
 
2016
Deferred tax assets:
 
 
 
 
Unearned premium reserves
 
$
966

 
$
918

Accruals and reserves
 
606

 
782

Net operating loss carryforwards
 
18,211

 
22,632

Depreciation and amortization
 
317

 
535

Equity compensation
 
1,024

 
1,137

Credits
 
208

—

—

Other
 
270

 
101

Total deferred tax assets
 
21,602

 
26,105

Deferred tax liabilities:
 
 
 
 
Deferred costs
 
(183
)
 
(226
)
Intangible assets
 
(1,002
)
 
(1,623
)
Total deferred tax liabilities
 
(1,185
)
 
(1,849
)
Total deferred taxes
 
20,417

 
24,256

Less deferred tax asset valuation allowance
 
(21,419
)
 
(25,879
)
Net deferred tax liability
 
$
(1,002
)
 
$
(1,623
)

At December 31, 2017, the Company had federal net operating loss carryforwards of $86.7 million and federal credits of $0.2 million. Use of the carryforwards is limited based on the future income of the Company. The federal net operating loss carryforwards currently would begin to expire in 2026. 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, 2017, 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 as of December 31, 2017 and 2016 because the Company’s management has determined that it is more likely than not that these assets will not be fully realized.
The Company intends to reinvest all foreign earnings indefinitely outside of the U.S.
The Company is open to examination by the U.S. federal tax jurisdiction for the years ended December 31, 2014 through 2017. 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, 2013 through 2017 for all corporate tax matters, and open for the years ended December 31, 2009 through 2017 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. 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):
  
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Balance, beginning of year
 
$
120

 
$
80

 
$
65

Increases to tax positions related to prior periods
 
91

 
—

 
—

Increases to tax positions related to the current year
 
116

 
40

 
15

Balance, end of year
 
$
327

 
$
120

 
$
80

Retirement Plan (Notes)
Compensation and Employee Benefit Plans [Text Block]
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]

The following table contains quarterly financial data for the years ended December 31, 2017 and 2016 (in thousands, except per share data). The unaudited quarterly information has been prepared on a basis consistent with the audited consolidated financial statements and includes all adjustments that the Company considers necessary for a fair presentation of the information shown. The operating results for any fiscal quarter are not necessarily indicative of the operating results for a full fiscal year or any future period and there can be no assurances that any trend reflected in such results will continue in the future.
 
Three Months Ended
 
Dec. 31, 2017(1)
 
Sept. 30, 2017
 
Jun. 30, 2017(2)
 
Mar. 31, 2017
 
Dec. 31, 2016
 
Sept. 30, 2016
 
Jun. 30, 2016
 
Mar. 31, 2016
Total revenues
$
66,545

 
$
63,118

 
$
58,275

 
$
54,729

 
$
51,340

 
$
48,359

 
$
45,832

 
$
42,699

Gross profit
11,737

 
11,807

 
10,351

 
9,155

 
9,218

 
8,500

 
8,266

 
7,304

Net (loss) income
(838
)
 
406

 
411

 
(1,482
)
 
(1,723
)
 
(1,637
)
 
(964
)
 
(2,572
)
Net (loss) income per share:
Basic and diluted
(0.03
)

0.01


0.01


(0.05
)

(0.06
)

(0.06
)

(0.03
)

(0.09
)
Weighted-average common shares outstanding:
Basic
29,847,574

 
30,037,282

 
29,510,907

 
29,254,681

 
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

Diluted
29,847,574

 
33,113,981

 
32,734,624

 
29,254,681

 
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

 
 
 
 
 
(1) The Company recorded a tax benefit as of December 31, 2017, as a result of the Tax Act. See "Note 15" for additional information regarding this tax benefit.
(2) The Company sold an equity method investment during the second quarter of 2017. See "Note 1" for additional information regarding the sale.
Schedule 1-Parent Only Disclosures [Schedule] (Notes)
Condensed Financial Information of Parent Company Only Disclosure
Trupanion, Inc.
Condensed Statements of Comprehensive Loss
(Parent Company Only, in thousands)
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Expenses:
 
 
Veterinary invoice expense
 
$
354

 
$
269

 
$
226

Other cost of revenue
 
239

 
41

 
44

Technology and development
 
528

 
531

 
628

General and administrative
 
4,204

 
3,627

 
3,852

Sales and marketing
 
889

 
871

 
621

Total expenses
 
6,214

 
5,339

 
5,371

Operating loss
 
(6,214
)
 
(5,339
)
 
(5,371
)
Interest expense
 
529

 
218

 
325

Other (income) expense, net
 
(4,101
)
 
23

 
(2
)
Loss before equity in undistributed earnings of subsidiaries
 
(2,642
)
 
(5,580
)
 
(5,694
)
Income tax benefit (expense)
 
5,302

 
—

 
—

Equity in undistributed earnings of subsidiaries
 
(4,163
)
 
(1,316
)
 
(11,511
)
Net loss
 
$
(1,503
)
 
$
(6,896
)
 
$
(17,205
)
Other comprehensive income (loss), net of taxes:
 
 
 
 
 
 
Other comprehensive income (loss) of subsidiaries
 
285

 
125

 
(513
)
Other comprehensive income (loss)
 
285

 
125

 
(513
)
Comprehensive loss
 
$
(1,218
)
 
$
(6,771
)
 
$
(17,718
)





























Trupanion, Inc.
Condensed Balance Sheets
(Parent Company Only)
(In thousands, except per share data)
 
 
December 31,
 
 
2017
 
2016
Assets
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
1,105

 
$
3,401

Accounts and other receivables
 
2,261

 
1,492

Prepaid expenses and other assets
 
295

 
106

Total current assets
 
3,661

 
4,999

Restricted cash
 
600

 
600

Equity method investment
 
—

 
271

Property and equipment, net
 
661

 
1,070

Intangible assets, net
 
4,795

 
4,773

Other long term assets
 
2,488

 
—

Advances to and investments in subsidiaries
 
47,209

 
40,086

Total assets
 
$
59,414

 
$
51,799

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable, accrued liabilities, and other liabilities
 
$
654

 
$
492

Total current liabilities
 
654

 
492

Long-term debt
 
9,324

 
4,767

Deferred tax liabilities
 
1,002

 
1,622

Other liabilities
 
—

 
203

Total liabilities
 
10,980

 
7,084

Stockholders’ equity:
 
 
 
 
Common stock: $0.00001 par value per share, 100,000,000 shares authorized at December 31, 2017 and December 31, 2016, 30,778,796 and 30,121,496 shares issued and outstanding at December 31, 2017; 30,156,247 and 29,498,947 shares issued and outstanding at December 31, 2016
 
—

 
—

Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized at December 31, 2017 and December 31, 2016, and 0 shares issued and outstanding at December 31, 2017 and December 31, 2016
 
—

 
—

Additional paid-in capital
 
134,511

 
129,574

Accumulated other comprehensive loss
 
(92
)
 
(377
)
Accumulated deficit
 
(82,784
)
 
(81,281
)
Treasury stock, at cost: 657,300 shares at December 31, 2017 and December 31, 2016
 
(3,201
)
 
(3,201
)
Total stockholders’ equity
 
48,434

 
44,715

Total liabilities and stockholders’ equity
 
$
59,414

 
$
51,799




Trupanion, Inc.
Condensed Statements of Cash Flows
(Parent Company Only, in thousands)
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Operating activities
 
 
Net loss
 
$
(1,503
)
 
$
(6,896
)
 
$
(17,205
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
 
 
 
Loss attributable to investments in subsidiaries
 
4,163

 
1,316

 
11,511

Depreciation and amortization
 
697

 
251

 
126

Stock-based compensation expense
 
3,419

 
2,946

 
3,002

Gain on sale of equity method investment
 
(1,036
)
 
—

 
—

Other, net
 
(380
)
 
58

 
21

Changes in operating assets and liabilities
 
743

 
1,742

 
(1,383
)
Net cash provided by (used in) operating activities
 
6,103

 
(583
)
 
(3,928
)
Investing activities
 
 
 
 
 
 
Proceeds from sale of equity method investment
 
1,402

 
—

 
—

Purchases of property and equipment
 
(135
)
 
1

 
(149
)
Advances to and investments in subsidiaries
 
(12,168
)
 
(9,333
)
 
(19,900
)
Other investments
 
(2,668
)
 
—

 
(300
)
Net cash used in investing activities
 
(13,570
)
 
(9,332
)
 
(20,349
)
Financing activities
 
 
 
 
 
 
Proceeds from exercise of stock options
 
2,545

 
3,745

 
1,335

Taxes paid related to net share settlement of equity awards
 
(1,170
)
 
(662
)
 
(643
)
Proceeds from (repayment of) debt financing, net of financing fees
 
4,400

 
4,988

 
(14,900
)
Other financing
 
(604
)
 
(195
)
 
—

Net cash provided by (used in) financing activities
 
5,170

 
7,876

 
(14,208
)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net
 
—

 
—

 
(517
)
Net change in cash, cash equivalents, and restricted cash
 
(2,296
)
 
(2,039
)
 
(39,002
)
Cash, cash equivalents, and restricted cash at beginning of period
 
4,001

 
6,040

 
45,042

Cash, cash equivalents, and restricted cash at end of period
 
$
1,705

 
$
4,001

 
$
6,040

Supplemental disclosures
 
 
 
 
 
 
Interest paid
 
333

 
153

 
155

Noncash investing and financing activities:
 
 
 
 
 
 
Property and equipment acquired under capital lease
 
471

 
—

 
—

Cashless exercise of common stock warrants
 
—

 
600

 
—


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. For the year ended December 31, 2017, Trupanion, Inc. recorded a cash dividend received from a subsidiary of $2.7 million within other income. This dividend is eliminated within the consolidated financial statements of Trupanion, Inc.
Additional information about Trupanion, Inc.’s accounting policies pertaining to intangible assets, commitments and contingencies, debt financing, stock-based compensation, stockholders’ equity, and income taxes are set forth in Notes 4, 7, 9, 10, 11 and 15, respectively, to the Consolidated Financial Statements.
Nature of Operations and Summary of Significant Accounting Policies (Policies)
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] 
Asset Impairment
Long-lived assets, including property and equipment, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured as the amount the asset's carrying value exceeds its fair value. The Company has recognized no impairment loss on long-lived assets for the years ended December 31, 2017, 2016, and 2015.
Description of Business and Basis of Presentation 
Description of Business
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 Company believes its data-driven, vertically-integrated approach makes its subscription the highest value for pet owners, with pricing specific to 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, based on the Company's desired return on investment.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates [Policy Text Block] 
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 and related disclosures. Actual results could differ from such estimates.
Reclassification, Policy [Policy Text Block] 
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.
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] 
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less 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 contractually restricted to withdrawal or use to be restricted cash. The Company is party to a financing agreement requiring a restricted cash balance. As of December 31, 2017, the Company was in compliance with all requirements.
Trade and Other Accounts Receivable, Policy [Policy Text Block] 
Accounts and Other Receivables
Receivables are comprised of trade receivables and other miscellaneous receivables. Accounts and other receivables are carried at their estimated collectible amounts.
Deferred Policy Acquisition Costs, Policy [Policy Text Block] 
Deferred Acquisition Costs
The Company incurs certain costs, including premium taxes, fees and enrollment-based bonuses, and referral fees that directly relate to the successful acquisition of new or renewal customer contracts. These costs are deferred and are included in prepaid expenses and other assets on the consolidated balance sheet and amortized over the related policy term to the applicable financial statement line item, either sales and marketing expense or other cost of revenue.
Investment, Policy [Policy Text Block] 
Investments
The Company invests in investment grade fixed income securities of varying maturities. Long-term investments are classified as available-for-sale and reported at fair value with unrealized gains and losses included in accumulated other comprehensive loss. Short-term investments are classified as held-to-maturity and reported at amortized cost. Premiums or discounts on fixed income securities are amortized or accreted over the life of the security and included in interest income. There have been no realized gains and losses on sales of fixed income securities.
The Company evaluates whether declines in the fair value of its investments below book value are other-than-temporary. This evaluation includes the Company's ability and intent to hold the security until an expected recovery occurs, the severity and duration of the unrealized loss, 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.
Fair Value Measurement, Policy [Policy Text Block] 
Fair Value of Financial Instruments
The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:
Level 1 - Quoted prices in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly
Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability
The Company's financial instruments, in addition to those presented in Note 6, Fair Value, include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. The carrying amounts of accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term nature of these instruments.
Property, Plant and Equipment, Policy [Policy Text Block] 
Property and Equipment
Property and equipment primarily consists of internally-developed software related to the Company’s website, and internal support systems, capitalized during the application development stage of the project. Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the respective asset, estimated to be between three and five years, once the asset is placed into service.
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] 
Intangible Assets
Indefinite-lived intangible assets are not amortized. The Company reviews these assets for impairment at least annually or if indicators of potential impairment exist.
Liability Reserve Estimate, Policy [Policy Text Block] 
Reserve for Veterinary Invoices
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. To determine the accrual, the Company makes assumptions based on its historical experience, including the number of veterinary invoices it expects to receive, the average cost of those veterinary invoices, the length of time between the date of the veterinary invoice and the date the Company receives it, the member's chosen deductible, and the Company's expected cost to process and administer the payments.
Deferred Revenue, Policy [Policy Text Block] 
Deferred Revenue
Deferred revenue consists of subscription fees received or billed in advance of the subscription services within the Company's subscription business, and the unexpired term of premiums related to the Company's unaffiliated general agents within the other business segment.
Revenue Recognition, Policy [Policy Text Block] 
Revenue Recognition
The Company generates revenue primarily from subscription fees and through underwriting policies for unaffiliated general agents. Revenue is recognized pro-rata over the terms of the customer contracts.
Cost of Sales, Policy [Policy Text Block] 
Veterinary Invoice Expense
Veterinary invoice expense includes the Company’s costs to review veterinary invoices, administer the payments, and provide member services, and other operating expenses directly or indirectly related to this process. The Company also accrues for veterinary invoices that have been incurred but not yet received. This also includes amounts paid by unaffiliated general agents, and an estimate of amounts incurred and not yet paid for the other business segment.
Other Costs of Revenue, Policy [Policy Text Block] 
Other Cost of Revenue
Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner renewal fees, credit card transaction fees and premium tax expenses. Other cost of revenue for the other business segment includes the commissions the Company pays to unaffiliated general agents, costs to administer the programs in the other business segment and premium taxes on the sales in this segment.
Selling, General and Administrative Expenses, Policy [Policy Text Block] 
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.
Sales and Marketing
Sales and marketing expenses consist of costs to educate veterinarians and consumers about the benefits of Trupanion, to generate leads, and to convert leads to enrolled pets, as well as print, online and promotional advertising costs, and employee compensation and related costs.
Research and Development Expense, Policy [Policy Text Block] 
Technology and Development
Technology and development expenses consist primarily of personnel costs and related expenses for the Company’s technology staff, which includes information technology development and infrastructure support, third-party services and depreciation of hardware and capitalized software.
Advertising Costs, Policy [Policy Text Block] 
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 $4.9 million, $4.0 million and $5.3 million, in the years ended December 31, 2017, 2016 and 2015, respectively.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] 
Stock-Based Compensation
Compensation expense related to stock-based transactions, including employee and non-employee stock option awards, and restricted stock awards, and restricted stock units, is measured and recognized in the financial statements based on fair value. The fair value of restricted stock awards and restricted stock units is the common stock price as of the measurement date. The fair value of stock options is estimated on the measurement date using the Black-Scholes option-pricing model that requires management to apply judgment and make estimates, including:

•
Expected volatility —The Company estimates the expected volatility based on the historical volatility of a representative group of publicly traded companies with similar characteristics to the Company, and its own historical volatility;
•
Expected term for awards granted to employees —The Company has based its expected term for awards issued to employees on the simplified method, as permitted by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment, as the Company has insufficient historical information regarding its stock options to provide a basis for an estimate;
•
Risk-free interest rate—The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options; and
•
Expected dividend yield—The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero.
Stock-based compensation expense for stock options, restricted stock awards, and restricted stock units is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The Company recognizes forfeitures when they occur.
Income Tax, Policy [Policy Text Block] 
Income Taxes
The Company uses the asset and liability approach for accounting and reporting income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases, 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 of a tax rate change 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 Transactions and Translations Policy [Policy Text Block] 
Foreign Currency Translation
The Company’s consolidated financial statements are reported in U.S. dollars. Assets and liabilities denominated in foreign currencies were translated to U.S. dollars, the reporting currency, at the exchange rates in effect on the balance sheet date. Revenue and expenses denominated in foreign currencies were translated to U.S. dollars using a weighted-average rate for the relevant reporting period. Cumulative translation adjustments of $0.1 million, $0.4 million, and $0.4 million were recorded in accumulated other comprehensive loss as of December 31, 2017, 2016, and 2015, respectively.
Reinsurance Accounting Policy [Policy Text Block] 
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. Revenue recognized from the agreement in 2017, 2016 and 2015 was $47.1 million,
$36.5 million and $30.9 million, respectively and deferred revenue relating to this arrangement at December 31, 2017, 2016 and 2015 was $1.8 million, $1.3 million and $0.9 million, respectively. Reinsurance revenue was 19%, 19% and 21% of total revenue in 2017, 2016 and 2015, respectively. Cash designated for the purpose of paying claims related to this reinsurance agreement was $2.8 million, $2.1 million and $2.0 million at December 31, 2017, 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, 2017, the account balance was $2.2 million and the Company was in compliance with all requirements.

The Company has not transferred any risk to third-party reinsurers.
Concentration Risk, Credit Risk, Policy [Policy Text Block] 
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, and investments. 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.
New Accounting Pronouncements, Policy [Policy Text Block] 
Accounting Pronouncements Adopted during Period
In November 2015, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) amending the accounting for income taxes and requiring all deferred tax assets and liabilities be classified as non-current in the consolidated balance sheets. The Company adopted this ASU as of January 1, 2017 and has retrospectively applied the provisions of this standard.
In March 2016, the FASB issued an ASU amending the accounting for employee share-based payments, including income tax recognition and classification. The Company adopted this ASU as of January 1, 2017. As a result, the Company has elected to use actual forfeitures in the estimate of stock-based compensation expense. Additionally, the guidance related to the accounting for excess tax benefits and deficiencies resulted 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 windfall pool amounting to $4.3 million, which was offset by an adjustment to the Company's valuation allowance. Finally, tax withholding of shares will be allowed up to the employee's maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award, subject to the Company's internal policies for making this election.
Recent Accounting Pronouncements
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 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 has determined this guidance will require recognition of a lease liability and corresponding asset on the consolidated balance sheets 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. The Company plans to adopt this guidance as of January 1, 2019, and is in the process of evaluating the impact on its consolidated financial statements.
Nature of Operations and Summary of Significant Accounting Policies 
1. Nature of Operations and Summary of Significant Accounting Policies
Description of Business
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 Company believes its data-driven, vertically-integrated approach makes its subscription the highest value for pet owners, with pricing specific to 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, based on the Company's desired return on investment.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and 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 and related disclosures. Actual results could differ from such estimates.
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.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less 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 contractually restricted to withdrawal or use to be restricted cash. The Company is party to a financing agreement requiring a restricted cash balance. As of December 31, 2017, the Company was in compliance with all requirements.
Accounts and Other Receivables
Receivables are comprised of trade receivables and other miscellaneous receivables. Accounts and other receivables are carried at their estimated collectible amounts.
Deferred Acquisition Costs
The Company incurs certain costs, including premium taxes, fees and enrollment-based bonuses, and referral fees that directly relate to the successful acquisition of new or renewal customer contracts. These costs are deferred and are included in prepaid expenses and other assets on the consolidated balance sheet and amortized over the related policy term to the applicable financial statement line item, either sales and marketing expense or other cost of revenue. Deferred acquisition costs for the years ended December 31, 2017, 2016 and 2015 were $1.0 million, $0.7 million and $0.6 million, respectively. Amortized deferred acquisition costs classified within sales and marketing amounted to $1.7 million, $1.4 million and $1.5 million, and amortized deferred acquisition costs classified within other cost of revenue amounted to $13.2 million, $10.7 million and $8.6 million, for the years ended December 31, 2017, 2016 and 2015, respectively.
Investments
The Company invests in investment grade fixed income securities of varying maturities. Long-term investments are classified as available-for-sale and reported at fair value with unrealized gains and losses included in accumulated other comprehensive loss. Short-term investments are classified as held-to-maturity and reported at amortized cost. Premiums or discounts on fixed income securities are amortized or accreted over the life of the security and included in interest income. There have been no realized gains and losses on sales of fixed income securities.
The Company evaluates whether declines in the fair value of its investments below book value are other-than-temporary. This evaluation includes the Company's ability and intent to hold the security until an expected recovery occurs, the severity and duration of the unrealized loss, 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.
Fair Value of Financial Instruments
The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:
Level 1 - Quoted prices in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly
Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability
The Company's financial instruments, in addition to those presented in Note 6, Fair Value, include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. The carrying amounts of accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term nature of these instruments.
Property and Equipment
Property and equipment primarily consists of internally-developed software related to the Company’s website, and internal support systems, capitalized during the application development stage of the project. Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the respective asset, estimated to be between three and five years, once the asset is placed into service.
Intangible Assets
Indefinite-lived intangible assets are not amortized. The Company reviews these assets for impairment at least annually or if indicators of potential impairment exist.
Asset Impairment
Long-lived assets, including property and equipment, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured as the amount the asset's carrying value exceeds its fair value. The Company has recognized no impairment loss on long-lived assets for the years ended December 31, 2017, 2016, and 2015.
Reserve for Veterinary Invoices
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. To determine the accrual, the Company makes assumptions based on its historical experience, including the number of veterinary invoices it expects to receive, the average cost of those veterinary invoices, the length of time between the date of the veterinary invoice and the date the Company receives it, the member's chosen deductible, and the Company's expected cost to process and administer the payments.
Deferred Revenue
Deferred revenue consists of subscription fees received or billed in advance of the subscription services within the Company's subscription business, and the unexpired term of premiums related to the Company's unaffiliated general agents within the other business segment.
Revenue Recognition
The Company generates revenue primarily from subscription fees and through underwriting policies for unaffiliated general agents. Revenue is recognized pro-rata over the terms of the customer contracts.
Veterinary Invoice Expense
Veterinary invoice expense includes the Company’s costs to review veterinary invoices, administer the payments, and provide member services, and other operating expenses directly or indirectly related to this process. The Company also accrues for veterinary invoices that have been incurred but not yet received. This also includes amounts paid by unaffiliated general agents, and an estimate of amounts incurred and not yet paid for the other business segment.
Other Cost of Revenue
Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner renewal fees, credit card transaction fees and premium tax expenses. Other cost of revenue for the other business segment includes the commissions the Company pays to unaffiliated general agents, costs to administer the programs in the other business segment and premium taxes on the sales in this segment.
Technology and Development
Technology and development expenses consist primarily of personnel costs and related expenses for the Company’s technology staff, which includes information technology development and infrastructure support, third-party services and depreciation of hardware and capitalized software.
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.
Sales and Marketing
Sales and marketing expenses consist of costs to educate veterinarians and consumers about the benefits of Trupanion, to generate leads, and to convert leads to enrolled pets, as well as print, online and promotional advertising costs, and employee compensation and related costs.
Other (Income) Expense, Net
Other income of $1.2 million for the year ended December 31, 2017 included the gain of $1.0 million from the sale of the Company's equity method investment in June 2017. Interest income of $0.2 million, $0.1 million, and $0.1 million was recorded in other income for the years ended December 31, 2017, 2016, and 2015, 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 $4.9 million, $4.0 million and $5.3 million, in the years ended December 31, 2017, 2016 and 2015, respectively.
Stock-Based Compensation
Compensation expense related to stock-based transactions, including employee and non-employee stock option awards, and restricted stock awards, and restricted stock units, is measured and recognized in the financial statements based on fair value. The fair value of restricted stock awards and restricted stock units is the common stock price as of the measurement date. The fair value of stock options is estimated on the measurement date using the Black-Scholes option-pricing model that requires management to apply judgment and make estimates, including:

•
Expected volatility —The Company estimates the expected volatility based on the historical volatility of a representative group of publicly traded companies with similar characteristics to the Company, and its own historical volatility;
•
Expected term for awards granted to employees —The Company has based its expected term for awards issued to employees on the simplified method, as permitted by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment, as the Company has insufficient historical information regarding its stock options to provide a basis for an estimate;
•
Risk-free interest rate—The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options; and
•
Expected dividend yield—The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero.
Stock-based compensation expense for stock options, restricted stock awards, and restricted stock units is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The Company recognizes forfeitures when they occur.
Income Taxes
The Company uses the asset and liability approach for accounting and reporting income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases, 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 of a tax rate change 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 Translation
The Company’s consolidated financial statements are reported in U.S. dollars. Assets and liabilities denominated in foreign currencies were translated to U.S. dollars, the reporting currency, at the exchange rates in effect on the balance sheet date. Revenue and expenses denominated in foreign currencies were translated to U.S. dollars using a weighted-average rate for the relevant reporting period. Cumulative translation adjustments of $0.1 million, $0.4 million, and $0.4 million were recorded in accumulated other comprehensive loss as of December 31, 2017, 2016, and 2015, respectively.

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. Revenue recognized from the agreement in 2017, 2016 and 2015 was $47.1 million,
$36.5 million and $30.9 million, respectively and deferred revenue relating to this arrangement at December 31, 2017, 2016 and 2015 was $1.8 million, $1.3 million and $0.9 million, respectively. Reinsurance revenue was 19%, 19% and 21% of total revenue in 2017, 2016 and 2015, respectively. Cash designated for the purpose of paying claims related to this reinsurance agreement was $2.8 million, $2.1 million and $2.0 million at December 31, 2017, 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, 2017, the account balance was $2.2 million and the Company was in compliance with all requirements.

The Company has not transferred any risk to third-party reinsurers.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, and investments. 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.
Accounting Pronouncements Adopted during Period
In November 2015, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) amending the accounting for income taxes and requiring all deferred tax assets and liabilities be classified as non-current in the consolidated balance sheets. The Company adopted this ASU as of January 1, 2017 and has retrospectively applied the provisions of this standard.
In March 2016, the FASB issued an ASU amending the accounting for employee share-based payments, including income tax recognition and classification. The Company adopted this ASU as of January 1, 2017. As a result, the Company has elected to use actual forfeitures in the estimate of stock-based compensation expense. Additionally, the guidance related to the accounting for excess tax benefits and deficiencies resulted 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 windfall pool amounting to $4.3 million, which was offset by an adjustment to the Company's valuation allowance. Finally, tax withholding of shares will be allowed up to the employee's maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award, subject to the Company's internal policies for making this election.
Recent Accounting Pronouncements
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 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 has determined this guidance will require recognition of a lease liability and corresponding asset on the consolidated balance sheets 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. The Company plans to adopt this guidance as of January 1, 2019, and is in the process of evaluating the impact on its consolidated financial statements.
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 earnings per common share calculation because they would have had an antidilutive effect:
 
As of December 31,
 
2017
 
2016
 
2015
Stock options
4,006,399

 
4,123,023

 
4,871,949

Restricted stock awards and restricted stock units
256,842

 
352,996

 
472,384

Warrants
810,000

 
810,000

 
869,999

Property Plant and Equipment (Tables)
Property, Plant and Equipment
Property and equipment, net consisted of the following (in thousands):
 
December 31,
 
2017
 
2016
Software
$
17,221

 
$
14,340

Computer equipment and other
3,022

 
2,470

Property and equipment, at cost
20,243

 
16,810

Less: Accumulated depreciation
(12,375
)
 
(8,346
)
Property and equipment, net
$
7,868

 
$
8,464

Investment Securities Available-for-Sale (Tables)
Investment [Table Text Block] 
Investment Securities
The amortized cost, gross unrealized holding gains and 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, 2017 and 2016 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2017
 
 
 
 
 
 
 
       Available-for-sale:
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
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

Available-for-sale Securities [Table Text Block] 
Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2017
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due after one year through five years
2,237

 
2,237

Due after five years through ten years
1,000

 
1,000

 
$
3,237

 
$
3,237

Fair Value (Tables)
Fair value, asset & liabilities measured on recurring basis [Table Text Block]
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 December 31, 2017
 
Fair Value
 
Level 1
 
Level 2
Assets
 
 
 
 
 
Restricted cash
$
600

 
$
600

 
$
—

Foreign deposits
2,237

 
2,237

 
—

Municipal bond
1,000

 
—

 
1,000

Money market funds
5,167

 
5,167

 
—

Total
$
9,004

 
$
8,004

 
$
1,000

 
 
 
 
 
 
 
As of December 31, 2016
 
Fair Value
 
Level 1
 
Level 2
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

Commitment and Contingencies (Tables)
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]
The following summarizes the Company's contractual commitments as of December 31, 2017 (in thousands):
 
Year Ending December 31,
 
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Long-term debt obligations(1)
$
—

 
$
9,500

 
$
—

 
$
—

 
$
—

 
$
—

 
$
9,500

Operating lease obligations(2)
1,876

 
2,035

 
2,116

 
2,197

 
2,258

 
8,719

 
19,201

Capital leases(3)
519

 
—

 
—

 
—

 
—

 
—

 
519

Other obligations(4)
927

 
562

 
119

 
17

 
—

 
—

 
1,625

Total
$
3,322

 
$
12,097

 
$
2,235

 
$
2,214

 
$
2,258

 
$
8,719

 
$
30,845

Claims Reserve (Tables)
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block] 
Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):
 
 
Year Ended December 31,
Subscription
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
8,538

 
$
5,384

 
$
4,278

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
155,623

 
123,823

 
95,390

Prior years
 
(69
)
 
813

 
30

Total veterinary invoice expense
 
155,554

 
124,636

 
95,420

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
144,802

 
115,314

 
89,768

Prior years
 
7,777

 
5,832

 
4,239

Total paid
 
152,579

 
121,146

 
94,007

Non-cash expenses
 
454

 
336

 
307

Reserve at end of period
 
$
11,059

 
$
8,538

 
$
5,384


The Company's reserve for the subscription business segment increased $2.6 million from $8.5 million at December 31, 2016 to $11.1 million at December 31, 2017. This change was comprised of $155.6 million in expense recorded during the period less $152.6 million in payments of veterinary invoices. This $155.6 million in veterinary invoice expense incurred includes a reduction of $0.1 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to increase prior year reserves were $0.8 million and less than $0.1 million as a result of analysis of payment trends in the years ended December 31, 2016 and 2015, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2017
 
2016
 
2015
Reserve at beginning of year
 
$
983

 
$
890

 
$
829

Veterinary invoices during the period related to:
 
 
 
 
 
 
Current year
 
14,739

 
9,027

 
7,983

Prior years
 
(171
)
 
(129
)
 
(79
)
Total veterinary invoice expense
 
14,568

 
8,898

 
7,904

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
13,053

 
8,048

 
7,095

Prior years
 
801

 
757

 
748

Total paid
 
13,854

 
8,805

 
7,843

Non-cash expenses
 
—

 
—

 
—

Reserve at end of period
 
$
1,697

 
$
983

 
$
890



The Company’s reserve for the other business segment increased $0.7 million from $1.0 million at December 31, 2016 to $1.7 million at December 31, 2017. This change was comprised of $14.6 million in expense recorded during the period less $13.9 million in payments of veterinary invoices. This $14.6 million in veterinary invoice expense incurred includes a reduction of $0.2 million to the reserves relating to prior years, which is the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.1 million as a result of analysis of payment trends in each of the years ended December 31, 2016 and 2015.
Short-duration Insurance Contracts, Claims Development [Table Text Block] 
The following table summarizes the development of veterinary invoice expense, on a constant currency basis, for the Company's subscription business segment by year of occurrence (in thousands, except for cumulative number of veterinary invoices data):
 
 
Cumulative veterinary invoice expenses
 
Reserve
 
Cumulative number of veterinary invoices
 
 
 
 
 
 
As of December 31,
 
As of December 31,
Subscription
 
2014
 
2015
 
2016
 
2017
 
2017
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2014
 
$
72,100

 
$
72,039

 
$
72,204

 
$
72,222

 
$
27

 
379,078

2015
 
 
 
$
95,661

 
$
96,217

 
$
96,276

 
$
130

 
475,626

2016
 
 
 
 
 
$
125,127

 
$
124,910

 
$
535

 
587,007

2017
 
 
 
 
 
 
 
$
156,580

 
$
10,367

 
656,490

 
 
 
 
 
 
 
 
$
449,988

 
$
11,059

 
 

The following table summarizes the development of veterinary invoice expense, on a constant currency basis, for the Company's other business segment by year of occurrence (in thousands, except for cumulative number of veterinary invoices data):
 
 
Cumulative veterinary invoice expenses
 
Reserve
 
Cumulative number of veterinary invoices
 
 
 
 
 
 
As of December 31,
 
As of December 31,
Other Business
 
2014
 
2015
 
2016
 
2017
 
2017
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2014
 
$
5,966

 
$
5,889

 
$
5,888

 
$
5,895

 
$
—

 
34,587

2015
 
 
 
$
7,974

 
$
7,846

 
$
7,850

 
$
—

 
46,900

2016
 
 
 
 
 
$
9,028

 
$
8,844

 
$
11

 
59,243

2017
 
 
 
 
 
 
 
$
14,741

 
$
1,686

 
95,182

 
 
 
 
 
 
 
 
$
37,330

 
$
1,697

 
 
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Table Text Block] 
The following table summarizes the amounts paid for veterinary invoices, inclusive of related internal processing costs and reported on a constant currency basis, for the subscription segment (in thousands):
 
 
Year Ended December 31,
Subscription
 
2014
 
2015
 
2016
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2014
 
$
67,886

 
$
71,969

 
$
72,132

 
$
72,196

2015
 
 
 
$
90,261

 
$
95,928

 
$
96,145

2016
 
 
 
 
 
$
116,879

 
$
124,375

2017
 
 
 
 
 
 
 
$
146,213


 
 
 
 
 
 
 
$
438,929

Total amounts unpaid and recorded as a liability
 
 
$
11,059



The following table summarizes the amounts paid for veterinary invoices, inclusive of related internal processing costs and reported on a constant currency basis, for the other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2014
 
2015
 
2016
 
2017
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2014
 
$
5,137

 
$
5,887

 
$
5,887

 
$
5,895

2015
 
 
 
$
7,086

 
$
7,842

 
$
7,850

2016
 
 
 
 
 
$
8,049

 
$
8,833

2017
 
 
 
 
 
 
 
$
13,055

 
 
 
 
 
 
 
 
$
35,633

Total amounts unpaid and recorded as a liability
 
 
$
1,697

Stock-based Compensation (Tables)
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs 
Stock-based compensation expense recognized in each category of the consolidated statement of operations for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Veterinary invoice expense
$
355

 
$
234

 
$
219

Other cost of revenue
239

 
41

 
44

Technology and development
216

 
246

 
404

General and administrative
1,887

 
1,893

 
1,889

Sales and marketing
722

 
532

 
446

Total stock-based compensation
$
3,419

 
$
2,946

 
$
3,002

As of December 31, 2017, for all employees, the Company had 991,754 unvested stock options and 256,842 restricted stock awards and restricted stock units that are expected to vest. Total stock-based compensation expense of $5.7 million related to unvested stock options and $0.9 million related to unvested restricted stock awards and restricted stock units is expected to be recognized over a weighted-average period of approximately 2.7 years and 1.3 years, respectively.
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block] 
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, 2017, 2016, and 2015:
 
 
Weighted Average Grant Date Fair Value per Share
 
Fair Value
of Options
Vested (in thousands)
Year:
 
 
 
 
2015
 
$
3.46

 
$
3,276

2016
 
$
5.64

 
$
4,645

2017
 
$
7.25

 
$
6,313

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 
Stock Options
The grant date fair value of stock option awards are estimated on the date of grant using the Black-Scholes option-pricing model. Valuation assumptions for the years ended December 31, 2017, 2016 and 2015 are presented in the following table:
 
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Valuation assumptions:
 
 
 
 
 
 
Expected term (in years)
 
6.25
 
5.04-6.25
 
3.0-6.25
Expected volatility
 
37.1%-39.8%
 
37.6%-42.1%
 
37.2%–49.4%
Risk-free interest rate
 
1.8%-2.2%
 
1.1%-2.0%
 
1.1%–2.0%
Expected dividend yield
 
—%
 
—%
 
—%
Schedule of Share-based Compensation, Stock Options, Activity 
 
Number
of
Options
 
Weighted Average
Exercise
Price per Share
 
Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of 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

 
—

Outstanding as of 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

 
—

Outstanding as of December 31, 2016
4,123,023

 
5.06

 
43,185

Granted
657,339

 
17.74

 
—

Exercised
(670,823
)
 
3.80

 
10,392

Forfeited
(103,140
)
 
12.25

 
—

Outstanding as of December 31, 2017
4,006,399

 
7.16

 
88,578

 
 
 
 
 
 
Exercisable at December 31, 2017
2,998,099

 
$
4.50

 
$
74,278

As of December 31, 2017, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 5.4 years and 4.3 years, respectively.

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity 
The below table summarizes the Company’s restricted stock award and restricted stock unit activity for the years ending December 31, 2017, 2016 and 2015:
 
 
Number of 
Shares
 
Weighted Average
Grant Date Fair Value per
Share
Unvested shares as of December 31, 2014
 
584,385

 
$
4.77

Granted
 
2,385

 
7.26

Vested
 
(119,262
)
 
4.80

Forfeited
 
—

 
—

Unvested shares as of December 31, 2015
 
467,508

 
4.77

Granted
 
—

 
—

Vested
 
(116,877
)
 
4.77

Forfeited
 
—

 
—

Unvested shares as of December 31, 2016
 
350,631

 
4.77

Granted
 
23,659

 
30.19

Vested
 
(116,877
)
 
4.77

Forfeited
 
(571
)
 
30.19

Unvested shares as of December 31, 2017
 
256,842

 
$
4.77

Segments (Tables)
Revenue and Gross Profit from Segments [Table Text Block] 
Revenue and gross profit of the Company’s segments were as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
Subscription business
$
218,354

 
$
173,356

 
$
133,406

Other business
24,313

 
14,874

 
13,557

 
242,667

 
188,230

 
146,963

Veterinary invoice expense:
 
 
 
 
 
Subscription business
155,554

 
124,636

 
95,420

Other business
14,568

 
8,898

 
7,904

 
170,122

 
133,534

 
103,324

Other cost of revenue:
 
 
 
 
 
Subscription business
21,329

 
16,685

 
14,008

Other business
8,166

 
4,723

 
4,402

 
29,495

 
21,408

 
18,410

Gross profit:
 
 
 
 
 
Subscription business
41,471

 
32,035

 
23,978

Other business
1,579

 
1,253

 
1,251

 
43,050

 
33,288

 
25,229

 
 
 
 
 
 
Technology and development
9,768

 
9,534

 
11,215

General and administrative
16,820

 
15,205

 
15,558

Sales and marketing:
 
 
 
 
 
Subscription business
18,886

 
15,029

 
15,151

Other business
218

 
218

 
80

 
19,104

 
15,247

 
15,231

Operating loss
$
(2,642
)
 
$
(6,698
)
 
$
(16,775
)
Revenue from External Customers by Geographic Areas [Table Text Block] 
The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
United States
$
195,297

 
$
151,361

 
$
116,585

Canada
47,370

 
36,869

 
30,378

Total revenue
$
242,667

 
$
188,230

 
$
146,963

Dividend Restrictions Statutory Surplus (Tables)
Statutory Accounting Practices Disclosure [Table Text Block]
The statutory net income for 2017, 2016 and 2015 and statutory capital and surplus at December 31, 2017, 2016 and 2015, for the Company’s insurance subsidiary in New York were as follows (in thousands):
 
 
As of December 31,
 
 
2017
 
2016
 
2015
Statutory net income
 
$
7,507

 
$
4,081

 
$
1,386

Statutory capital and surplus
 
37,190

 
30,451

 
26,068

Income Taxes (Tables)
Schedule of Income before Income Tax, Domestic and Foreign 
Loss before income taxes was as follows for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
United States
 
$
(1,965
)
 
$
(6,906
)
 
$
(17,222
)
Foreign
 
34

 
48

 
131

 
 
$
(1,931
)
 
$
(6,858
)
 
$
(17,091
)
Schedule of Components of Income Tax Expense (Benefit) 
The components of income tax (benefit) expense were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
183

 
$
25

 
$
31

Foreign
 
15

 
13

 
84

 
 
198

 
38

 
115

Deferred:
 
 
 
 
 
 
U.S. federal & state
 
(620
)
 
—

 
—

Foreign
 
(6
)
 
—

 
(1
)
 
 
(626
)
 
—

 
(1
)
Income tax (benefit) expense
 
$
(428
)
 
$
38

 
$
114

Schedule of Effective Income Tax Rate Reconciliation 
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:
 
 
Year Ended December 31,    
 
 
2017
 
2016
 
2015
Federal income taxes at statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
U.S. state income taxes
 
(9.5
)
 
(0.6
)
 
(0.7
)
Equity compensation
 
189.1

 
7.7

 
(1.2
)
Change in valuation allowance
 
(229.6
)
 
(40.5
)
 
(34.2
)
Meals and entertainment
 
(3.0
)
 
(0.9
)
 
(0.4
)
Other, net
 
2.0

 
(0.3
)
 
1.8

Change in federal tax rate
 
32.1

 
—

 
—

Credits
 
7.1

 
—

 
—

Effective income tax rate
 
22.2
 %
 
(0.6
)%
 
(0.7
)%
Schedule of Deferred Tax Assets and Liabilities 
The principal components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
 
 
Year Ended December 31,         
 
 
2017
 
2016
Deferred tax assets:
 
 
 
 
Unearned premium reserves
 
$
966

 
$
918

Accruals and reserves
 
606

 
782

Net operating loss carryforwards
 
18,211

 
22,632

Depreciation and amortization
 
317

 
535

Equity compensation
 
1,024

 
1,137

Credits
 
208

—

—

Other
 
270

 
101

Total deferred tax assets
 
21,602

 
26,105

Deferred tax liabilities:
 
 
 
 
Deferred costs
 
(183
)
 
(226
)
Intangible assets
 
(1,002
)
 
(1,623
)
Total deferred tax liabilities
 
(1,185
)
 
(1,849
)
Total deferred taxes
 
20,417

 
24,256

Less deferred tax asset valuation allowance
 
(21,419
)
 
(25,879
)
Net deferred tax liability
 
$
(1,002
)
 
$
(1,623
)
Schedule of Unrecognized Tax Benefits Roll Forward 
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
  
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Balance, beginning of year
 
$
120

 
$
80

 
$
65

Increases to tax positions related to prior periods
 
91

 
—

 
—

Increases to tax positions related to the current year
 
116

 
40

 
15

Balance, end of year
 
$
327

 
$
120

 
$
80

Quarterly Financial Information (Tables)
Quarterly Financial Information [Table Text Block]
The following table contains quarterly financial data for the years ended December 31, 2017 and 2016 (in thousands, except per share data). The unaudited quarterly information has been prepared on a basis consistent with the audited consolidated financial statements and includes all adjustments that the Company considers necessary for a fair presentation of the information shown. The operating results for any fiscal quarter are not necessarily indicative of the operating results for a full fiscal year or any future period and there can be no assurances that any trend reflected in such results will continue in the future.
 
Three Months Ended
 
Dec. 31, 2017(1)
 
Sept. 30, 2017
 
Jun. 30, 2017(2)
 
Mar. 31, 2017
 
Dec. 31, 2016
 
Sept. 30, 2016
 
Jun. 30, 2016
 
Mar. 31, 2016
Total revenues
$
66,545

 
$
63,118

 
$
58,275

 
$
54,729

 
$
51,340

 
$
48,359

 
$
45,832

 
$
42,699

Gross profit
11,737

 
11,807

 
10,351

 
9,155

 
9,218

 
8,500

 
8,266

 
7,304

Net (loss) income
(838
)
 
406

 
411

 
(1,482
)
 
(1,723
)
 
(1,637
)
 
(964
)
 
(2,572
)
Net (loss) income per share:
Basic and diluted
(0.03
)

0.01


0.01


(0.05
)

(0.06
)

(0.06
)

(0.03
)

(0.09
)
Weighted-average common shares outstanding:
Basic
29,847,574

 
30,037,282

 
29,510,907

 
29,254,681

 
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

Diluted
29,847,574

 
33,113,981

 
32,734,624

 
29,254,681

 
29,020,559

 
28,732,417

 
28,348,348

 
27,999,248

 
 
 
 
 
(1) The Company recorded a tax benefit as of December 31, 2017, as a result of the Tax Act. See "Note 15" for additional information regarding this tax benefit.
(2) The Company sold an equity method investment during the second quarter of 2017. See "Note 1" for additional information regarding the sale.
Nature of Operations and Summary of Significant Accounting Policies Narrative (Details)
12 Months Ended
Dec. 31, 2017
USD ($)
Dec. 31, 2017
CAD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Accounting Policies [Abstract]
 
 
 
 
Impairment, Amount, License Intangibles
$ 0 
 
$ 0 
$ 0 
Realized Investment Gains (Losses)
0 
 
 
 
Other Nonoperating Income (Expense)
1,244,000 
 
58,000 
9,000 
Equity Method Investment, Realized Gain (Loss) on Disposal
1,000,000 
 
 
 
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax
100,000 
 
400,000 
400,000 
Premiums Recognized from Fronting Agreement
47,100,000 
 
36,500,000 
30,900,000 
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets
 
 
4,300,000 
 
Deferred Policy Acquisition Costs
1,000,000 
 
700,000 
600,000 
Advertising Expense
4,900,000 
 
4,000,000 
5,300,000 
Deferred Revenue from Fronting Agreement
1,800,000 
 
1,300,000 
900,000 
Concentration Risk, Percentage
19.00% 
19.00% 
19.00% 
21.00% 
Cash Designated for Paying Reinsurance Claims
2,800,000 
 
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% 
 
 
Reinsurance Trust Balance
2,200,000 
 
 
 
Interest Income, Other
$ 200,000 
 
$ 100,000 
$ 100,000 
Net Loss per Share (Details) Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number
4,006,399 
4,123,023 
4,871,949 
5,112,556 
Common shares attributable to dilutive effect of warrants
810,000 
810,000 
 
 
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
4,006,399 
4,123,023 
4,871,949 
 
Restricted stock
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Restricted stock, outstanding
256,842 
352,996 
472,384 
 
Warrants
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Common shares attributable to dilutive effect of warrants
810,000 
810,000 
869,999 
 
Property Plant and Equipment (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
$ 20,243,000 
$ 16,810,000 
 
Less: Accumulated depreciation
(12,375,000)
(8,346,000)
 
Property and equipment, net
7,868,000 
8,464,000 
 
Depreciation and amortization expense
4,200,000 
3,800,000 
2,500,000 
Software
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
17,221,000 
14,340,000 
 
Computer Equipment [Member]
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, Plant and Equipment, Gross
$ 3,022,000 
$ 2,470,000 
 
Nature of Operations and Summary of Significant Accounting Policies Deferred Acquisition Costs (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Selling and Marketing Expense [Member]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs
$ 1.7 
$ 1.4 
$ 1.5 
Cost of Sales [Member]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items]
 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs
$ 13.2 
$ 10.7 
$ 8.6 
Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Intangible Assets, Gross (Excluding Goodwill)
$ 4.8 
 
 
Impairment, Amount, License Intangibles
$ 0 
$ 0 
$ 0 
Investment Securities (Details) Investment Schedule (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
$ 3,237 
$ 2,587 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
0 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
0 
8 
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
3,237 
2,579 
Held-to-maturity securities, amortized cost
37,590 
29,570 
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain
1 
0 
Held-to-maturity securities, gross unrealized holding losses
(4)
0 
Held-to-maturity Securities, Fair Value
37,587 
29,570 
Deposits [Member]
 
 
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
2,237 
1,587 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
0 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
0 
0 
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
2,237 
1,587 
Municipal bond
 
 
Investment [Line Items]
 
 
Available-for-sale securities, amortized cost
1,000 
1,000 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
0 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
0 
8 
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value
1,000 
992 
U.S. Treasury securities
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
5,783 
5,791 
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain
0 
0 
Held-to-maturity securities, gross unrealized holding losses
(4)
0 
Held-to-maturity Securities, Fair Value
5,779 
5,791 
Certificates of deposit
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
690 
707 
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain
1 
0 
Held-to-maturity securities, gross unrealized holding losses
0 
0 
Held-to-maturity Securities, Fair Value
691 
707 
US government debt securities
 
 
Investment [Line Items]
 
 
Held-to-maturity securities, amortized cost
31,117 
23,072 
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain
0 
0 
Held-to-maturity securities, gross unrealized holding losses
0 
0 
Held-to-maturity Securities, Fair Value
$ 31,117 
$ 23,072 
Investment Securities (Details) Available-for-Sale (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
 
 
Available-for-sale securities, due after one year through five years, amortized cost basis
$ 2,237 
 
Available-for-sale securities, due after one year through five years, fair value
2,237 
 
Available-for-sale securities, due after five years through ten years, amortized cost basis
1,000 
 
Available-for-sale securities, due after five years through ten years, fair value
1,000 
 
Available-for-sale securities, amortized cost
3,237 
2,587 
Available-for-sale securities, debt maturities, fair value
$ 3,237 
 
Fair Value (Details) Unobservable (USD $)
Dec. 31, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
$ 3,237,000 
$ 2,579,000 
Assets, Fair Value Disclosure
9,004,000 
10,212,000 
Notes Receivable, Fair Value Disclosure
2,500,000 
 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Assets, Fair Value Disclosure
8,004,000 
9,220,000 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Assets, Fair Value Disclosure
1,000,000 
992,000 
Cash and Cash Equivalents [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Restricted Cash and Cash Equivalents, Noncurrent
600,000 
600,000 
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
600,000 
600,000 
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
0 
0 
Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
2,237,000 
1,587,000 
Deposits [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
2,237,000 
1,587,000 
Deposits [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
0 
0 
Municipal bond
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
1,000,000 
992,000 
Municipal bond |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
0 
0 
Municipal bond |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable Securities, Noncurrent
1,000,000 
992,000 
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash and Cash Equivalents, Fair Value Disclosure
5,167,000 
7,033,000 
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
5,167,000 
7,033,000 
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
$ 0 
$ 0 
Commitment and Contingencies (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Line of Credit Facility, Interest Rate Description
greater of 4.5% or 1.25% plus the prime rate 
 
 
Line of Credit Facility, Interest Rate During Period
5.75% 
 
 
Lessee Leasing Arrangements, Operating Leases, Term of Contract
10 years 
 
 
Operating Leases, Rent Expense, Net
$ 1,800,000 
$ 1,200,000 
$ 1,000,000 
Capital Leases, Future Minimum Payments Due, Next Twelve Months
519,000 
 
 
Capital Leases, Future Minimum Payments Due in Two Years
$ 0 
 
 
Commitment and Contingencies Commitments and Contingencies (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Other Commitments [Line Items]
 
Other Commitment, Due in Next Twelve Months
$ 927 
Other Commitment, Due in Second Year
562 
Other Commitment, Due in Third Year
119 
Other Commitment, Due in Fourth Year
17 
Other Commitment, Due in Fifth Year
0 
Other Commitment, Due after Fifth Year
0 
Other Commitment
1,625 
Operating Leases, Future Minimum Payments Due, Next Twelve Months
1,876 
Operating Leases, Future Minimum Payment Due in Two Years
2,035 
Operating Leases, Future Minimum Payments Due in Three Years
2,116 
Operating Leases, Future Minimum Payments, Due in Four Years
2,197 
Operating Leases, Future Minimum Payments, Due in Five Years
2,258 
Operating Leases, Future Minimum Payments, Due Thereafter
8,719 
Total minimum lease payments
19,201 
Capital Leases, Future Minimum Payments Due, Next Twelve Months
519 
Capital Leases, Future Minimum Payments Due in Two Years
0 
Capital Leases, Future Minimum Payments Due in Three Years
0 
Capital Leases, Future Minimum Payments Due in Four Years
0 
Capital Leases, Future Minimum Payments Due in Five Years
0 
Capital Leases, Future Minimum Payments Due Thereafter
0 
Capital Leases, Future Minimum Payments Due
519 
total future commitments due in next twelve months
3,322 
total future commitments due in two years
12,097 
total future commitments due in three years
2,235 
total future commitments due in four years
2,214 
total future commitments due in five years
2,258 
total future commitments due thereafter
8,719 
Total future commitments payments due
30,845 
Debt [Member]
 
Other Commitments [Line Items]
 
Other Commitment, Due in Next Twelve Months
0 
Other Commitment, Due in Second Year
9,500 
Other Commitment, Due in Third Year
0 
Other Commitment, Due in Fourth Year
0 
Other Commitment, Due in Fifth Year
0 
Other Commitment, Due after Fifth Year
0 
Other Commitment
$ 9,500 
Claims Reserve (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Subscription business [Member]
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
Change in Liability for Unpaid Claims and Claims Adjustment Expense, Net
$ 2,600,000 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
438,929,000 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
449,988,000 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
11,059,000 
 
 
Liability for Claims and Claims Adjustment Expense [Abstract]
 
 
 
Claims reserve at beginning of year
8,538,000 
5,384,000 
4,278,000 
Current Year Claims and Claims Adjustment Expense
155,623,000 
123,823,000 
95,390,000 
Prior Year Claims and Claims Adjustment Expense
(69,000)
813,000 
30,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year
144,802,000 
115,314,000 
89,768,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years
7,777,000 
5,832,000 
4,239,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid
152,579,000 
121,146,000 
94,007,000 
Claims expense non-cash
454,000 
336,000 
307,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims
155,554,000 
124,636,000 
95,420,000 
Claims reserve at end of year
11,059,000 
8,538,000 
5,384,000 
Other Segments [Member]
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
Change in Liability for Unpaid Claims and Claims Adjustment Expense, Net
700,000 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
35,633,000 
 
 
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net
37,330,000 
 
 
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net
1,697,000 
 
 
Liability for Claims and Claims Adjustment Expense [Abstract]
 
 
 
Claims reserve at beginning of year
983,000 
890,000 
829,000 
Current Year Claims and Claims Adjustment Expense
14,739,000 
9,027,000 
7,983,000 
Prior Year Claims and Claims Adjustment Expense
(171,000)
(129,000)
(79,000)
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year
13,053,000 
8,048,000 
7,095,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years
801,000 
757,000 
748,000 
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid
13,854,000 
8,805,000 
7,843,000 
Claims expense non-cash
0 
0 
0 
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims
14,568,000 
8,898,000 
7,904,000 
Claims reserve at end of year
$ 1,697,000 
$ 983,000 
$ 890,000 
Claims Reserve Incurred claims and claim adjustment expense (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Other Segments [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
$ 35,633 
 
 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Net
1,697 
983 
890 
829 
Other Segments [Member] |
Short duration insurance contracts accident year 2017 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
13,055 
 
 
 
Other Segments [Member] |
Short-duration Insurance Contracts, Accident Year 2016 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
8,833 
8,049 
 
 
Other Segments [Member] |
Short-duration Insurance Contracts, Accident Year 2015 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
7,850 
7,842 
7,086 
 
Other Segments [Member] |
Short-duration Insurance Contracts, Accident Year 2014 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
5,895 
5,887 
5,887 
5,137 
Subscription business [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
438,929 
 
 
 
Liability for Unpaid Claims and Claims Adjustment Expense, Net
11,059 
8,538 
5,384 
4,278 
Subscription business [Member] |
Short duration insurance contracts accident year 2017 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
146,213 
 
 
 
Subscription business [Member] |
Short-duration Insurance Contracts, Accident Year 2016 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
124,375 
116,879 
 
 
Subscription business [Member] |
Short-duration Insurance Contracts, Accident Year 2015 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
96,145 
95,928 
90,261 
 
Subscription business [Member] |
Short-duration Insurance Contracts, Accident Year 2014 [Member]
 
 
 
 
Liability for Claims and Claims Adjustment Expense [Line Items]
 
 
 
 
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net
$ 72,196 
$ 72,132 
$ 71,969 
$ 67,886 
Debt (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Debt Disclosure [Abstract]
 
 
Line of credit facility, maximum borrowing capacity
$ 30,000,000 
$ 30,000,000 
Line of Credit Facility, Interest Rate Description
greater of 4.5% or 1.25% plus the prime rate 
 
Line of Credit Facility, Interest Rate During Period
5.75% 
 
Maximum Contractual Balance Restriction
4,500,000 
 
Restricted Cash and Cash Equivalents
600,000 
600,000 
Line of Credit Facility, Current Borrowing Capacity
18,700,000 
 
Contractual Balance Restriction
1,800,000 
 
Long-term Line of Credit
9,500,000 
 
Debt Issuance Costs, Line of Credit Arrangements, Net
$ 200,000 
 
Stock-based Compensation (Details) Narrative (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Fair Value of Options Vested (in thousands)
$ 6,313,000 
$ 4,645,000 
$ 3,276,000 
Options outstanding, weighted average remaining contractual term
5 years 5 months 0 days 
 
 
Employee Stock Option [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Nonvested options, number of shares
991,754 
 
 
Compensation cost not yet recognized
5,700,000 
 
 
Weighted average remaining vesting period
2 years 8 months 0 days 
 
 
Restricted stock
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Restricted stock, outstanding
256,842 
352,996 
472,384 
Compensation cost not yet recognized
$ 900,000 
 
 
Weighted average remaining vesting period
1 year 4 months 0 days 
 
 
Stock-based Compensation Expense Category (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Stock-based Compensation
 
 
 
Total stock-based compensation
$ 3,419,000 
$ 2,946,000 
$ 3,002,000 
Claims expenses
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
355,000 
234,000 
219,000 
Other cost of revenue
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
239,000 
41,000 
44,000 
Sales and marketing
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
722,000 
532,000 
446,000 
Technology and development
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
216,000 
246,000 
404,000 
General and administrative
 
 
 
Stock-based Compensation
 
 
 
Total stock-based compensation
1,887,000 
1,893,000 
1,889,000 
Restricted Stock Units (RSUs) [Member]
 
 
 
Stock-based Compensation
 
 
 
Restricted stock, outstanding
256,842 
352,996 
472,384 
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized
$ 900,000 
 
 
Share-based Compensation Arrangement , Non-employee, Weighted Average Remaining Vesting Period
1 year 4 months 0 days 
 
 
Stock-based Compensation Valuation Assumptions (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
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
6 years 3 months 0 days 
5 years 0 months 15 days 
3 years 
Expected volatility Minimum
37.10% 
37.60% 
37.20% 
Expected volatility Maximum
39.80% 
42.10% 
49.40% 
Expected dividends
0.00% 
0.00% 
0.00% 
Risk-free minimum
1.80% 
1.10% 
1.10% 
Risk-free maximum
2.20% 
2.00% 
2.00% 
Stock-based Compensation Option Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
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, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term
4 years 3 months 0 days 
 
 
 
Number of Options
 
 
 
 
Beginning balance
4,123,023 
4,871,949 
5,112,556 
 
Granted
657,339 
666,664 
698,764 
 
Exercised
670,823 
1,119,367 
632,829 
 
Forfeited
103,140 
296,223 
306,542 
 
Ending Balance
4,006,399 
4,123,023 
4,871,949 
 
Exercisable at December 31, 2017
2,998,099 
 
 
 
Weighted Average Exercise Price per Share
 
 
 
 
Beginning Balance (usd per share)
$ 5.06 
$ 3.71 
$ 3.19 
 
Granted (usd per share)
$ 17.74 
$ 13.37 
$ 7.84 
 
Exercised (usd per share)
$ 3.80 
$ 3.35 
$ 2.12 
 
Forfeited (usd per share)
$ 12.25 
$ 8.14 
$ 7.65 
 
Ending Balance (usd per share)
$ 7.16 
$ 5.06 
$ 3.71 
 
Vested and exercisable at December 31, 2014 (usd per share)
$ 4.50 
 
 
 
Aggregate Intrinsic Value (in thousands)
 
 
 
 
Outstanding
$ 88,578 
$ 43,185 
$ 29,644 
$ 21,116 
Exercised
10,392 
11,980 
3,703 
 
Exercisable at December 31, 2017
$ 74,278 
 
 
 
Stock-based Compensation Options Granted (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
WEIGHTED-AVERAGE GRANT DATE FAIR VALUE
$ 7.25 
$ 5.64 
$ 3.46 
Fair Value of Options Vested (in thousands)
$ 6,313 
$ 4,645 
$ 3,276 
Stock-based Compensation Restricted Stock Awards (Details) (Restricted Stock, USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Restricted Stock
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Beginning balance
350,631 
467,508 
584,385 
Granted
23,659 
0 
2,385 
Vested
(116,877)
(116,877)
(119,262)
Forfeited
(571)
0 
0 
Ending balance
256,842 
350,631 
467,508 
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)
$ 30.19 
$ 0.00 
$ 7.26 
Awards upon which restrictions lapsed (usd per share)
$ 4.77 
$ 4.77 
$ 4.80 
Restricted stock awards forfeited (usd per share)
$ 30.19 
$ 0.00 
$ 0.00 
Ending balance (usd per share)
$ 4.77 
$ 4.77 
$ 4.77 
Stockholder's Equity Narrative (Details) (USD $)
Dec. 31, 2017
Dec. 31, 2016
Class of Stock Disclosures [Abstract]
 
 
Common Stock, Shares Authorized
100,000,000 
 
Common Stock, Shares, Outstanding
30,121,496 
 
Preferred Stock, Shares Authorized
10,000,000 
 
Warrants outstanding
810,000 
810,000 
Class of Warrant or Right, Exercise Price of Warrants or Rights
$ 10.00 
$ 10.00 
Segments (Details) Business Segment (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 66,545 
$ 63,118 
$ 58,275 
$ 54,729 
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 242,667 
$ 188,230 
$ 146,963 
Veterinary invoice expense
46,473 
43,453,000 
41,009 
39,187 
36,211 
34,253 
32,466 
30,604 
170,122 
133,534 
103,324 
Other cost of revenue
8,335 
7,858,000 
6,915,000 
6,387 
5,910 
5,606 
5,100 
4,791 
29,495 
21,408 
18,410 
Gross profit
11,737 
11,807 
10,351 
9,155 
9,218 
8,500 
8,266 
7,304 
43,050 
33,288 
25,229 
Technology Services Costs
 
 
 
 
 
 
 
 
9,768 
9,534 
11,215 
General and administrative
 
 
 
 
 
 
 
 
16,820 
15,205 
15,558 
Sales and marketing
 
 
 
 
 
 
 
 
19,104 
15,247 
15,231 
Operating loss
 
 
 
 
 
 
 
 
(2,642)
(6,698)
(16,775)
Subscription business
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
218,354 
173,356 
133,406 
Veterinary invoice expense
41,806 
39,761,000 
37,664 
36,323 
33,927 
32,088 
30,111 
28,510 
155,554 
124,636 
95,420 
Other cost of revenue
6,024 
5,454,000 
4,927,000 
4,923 
4,601 
4,344 
4,047 
3,693 
21,329 
16,685 
14,008 
Gross profit
 
 
 
 
 
 
 
 
41,471 
32,035 
23,978 
Sales and marketing
 
 
 
 
 
 
 
 
18,886 
15,029 
15,151 
Other business
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
24,313 
14,874 
13,557 
Veterinary invoice expense
4,667 
3,692,000 
3,345 
2,864 
2,284 
2,165 
2,355 
2,094 
14,568 
8,898 
7,904 
Other cost of revenue
2,311 
2,404,000 
1,988,000 
1,464 
1,309 
1,262 
1,053 
1,098 
8,166 
4,723 
4,402 
Gross profit
 
 
 
 
 
 
 
 
1,579 
1,253 
1,251 
Sales and marketing
 
 
 
 
 
 
 
 
$ 218 
$ 218 
$ 80 
Segments (Details) Revenue by Geography (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 66,545 
$ 63,118 
$ 58,275 
$ 54,729 
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 242,667 
$ 188,230 
$ 146,963 
UNITED STATES
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
195,297 
151,361 
116,585 
CANADA
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
$ 47,370 
$ 36,869 
$ 30,378 
Dividend Restrictions Statutory Surplus (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Insurance [Abstract]
 
 
 
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval
$ 200,000 
 
 
Proceeds from Dividends Received
2,700,000 
0 
0 
Statutory Accounting Practices, Statutory Net Income Amount
7,507,000 
4,081,000 
1,386,000 
Statutory Accounting Practices, Statutory Capital and Surplus, Balance
37,200,000 
30,451,000 
26,068,000 
Statutory Accounting Practices, Statutory Capital and Surplus Required
22,200,000 
 
 
Deposit Assets
$ 6,600,000 
 
 
Related Parties (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Related Party Transactions [Abstract]
 
 
 
Related Party Transaction, Amounts of Transaction
$ 500 
$ 500 
$ 500 
Income Taxes Income before taxes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
United States
$ (1,965)
$ (6,906)
$ (17,222)
Foreign
34 
48 
131 
Loss before income taxes
$ (1,931)
$ (6,858)
$ (17,091)
Income Taxes Income tax benefits (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
Corporate Tax Rate
0.00% 
 
 
U.S. federal & state
$ 183 
$ 25 
$ 31 
Foreign
15 
13 
84 
Current income tax expense (benefit)
198 
38 
115 
Foreign
(6)
0 
(1)
Deferred Income Tax Expense (Benefit)
(626)
0 
(1)
Income tax (benefit) expense
(428)
38 
114 
Deferred Federal Income Tax Expense (Benefit)
$ (620)
$ 0 
$ 0 
Income Taxes Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
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, US State Income Taxes, Percent
(9.50%)
(0.60%)
(0.70%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent
(3.00%)
(0.90%)
(0.40%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent
189.10% 
7.70% 
(1.20%)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent
(229.60%)
(40.50%)
(34.20%)
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent
2.00% 
(0.30%)
1.80% 
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent
32.10% 
0.00% 
0.00% 
Effective Income Tax Rate Reconciliation, Tax Credit, Percent
7.10% 
0.00% 
0.00% 
Effective income tax rate
22.20% 
(0.60%)
(0.70%)
Income Taxes Deferred tax assets and liabilities (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent
34.00% 
34.00% 
34.00% 
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Unearned Premiums Reserve
$ 966 
$ 918 
 
Deferred tax assets:
 
 
 
Accruals and reserves
606 
782 
 
Noncurrent:
 
 
 
Net operating loss carryforwards
18,211 
22,632 
 
Depreciation and amortization
317 
535 
 
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost
1,024 
1,137 
 
Deferred Tax Assets, Tax Credit Carryforwards
208 
0 
 
Deferred tax asset, noncurrent, other
270 
101 
 
Total deferred tax assets
21,602 
26,105 
 
Deferred Tax Liabilities, Gross [Abstract]
 
 
 
Deferred costs
(183)
(226)
 
Intangible assets
(1,002)
(1,623)
 
Total deferred tax liabilities
(1,185)
(1,849)
 
Deferred Tax Assets, Net
20,417 
24,256 
 
Less deferred tax asset valuation allowance
(21,419)
(25,879)
 
Net deferred tax liability
$ (1,002)
$ (1,623)
 
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent
(9.50%)
(0.60%)
(0.70%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent
189.10% 
7.70% 
(1.20%)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent
(229.60%)
(40.50%)
(34.20%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent
(3.00%)
(0.90%)
(0.40%)
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent
2.00% 
(0.30%)
1.80% 
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent
32.10% 
0.00% 
0.00% 
Effective Income Tax Rate Reconciliation, Tax Credit, Percent
7.10% 
0.00% 
0.00% 
Effective income tax rate
22.20% 
(0.60%)
(0.70%)
Income Taxes Unrecognized Tax Benefits (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
 
Operating loss carryforwards
$ 86,700,000 
 
 
Operating Loss Carryforwards, Expiration Date
Jan. 01, 2026 
 
 
Operating Loss Carryforwards, Limitations on Use
500 
 
 
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Balance, beginning of year
120,000 
80,000 
65,000 
Increases to tax positions related to prior periods
91,000 
0 
0 
Increases to tax positions related to the current year
116,000 
40,000 
15,000 
Balance, end of year
$ 327,000 
$ 120,000 
$ 80,000 
Retirement Plan Details (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
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, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 66,545 
$ 63,118 
$ 58,275 
$ 54,729 
$ 51,340 
$ 48,359 
$ 45,832 
$ 42,699 
$ 242,667 
$ 188,230 
$ 146,963 
Gross profit
11,737 
11,807 
10,351 
9,155 
9,218 
8,500 
8,266 
7,304 
43,050 
33,288 
25,229 
Net loss
(838)
406 
411 
(1,482)
(1,723)
(1,637)
(964)
(2,572)
(1,503)
(6,896)
(17,205)
Net loss per share: Basic and diluted (per share)
$ (0.03)
$ 0.01 
$ 0.01 
$ (0.05)
$ (0.06)
$ (0.06)
$ (0.03)
$ (0.09)
$ (0.05)
$ (0.24)
$ (0.62)
Weighted Average Number of Shares Outstanding, Basic and Diluted
29,847,574 
 
 
29,254,681 
29,020,559 
28,732,417 
28,348,348 
27,999,248 
29,588,324 
28,527,602 
27,638,443 
Weighted Average Number of Shares Outstanding, Basic
 
30,037,282 
29,510,907 
 
 
 
 
 
 
 
 
Weighted Average Number of Shares Outstanding, Diluted
 
33,113,981 
32,734,624 
 
 
 
 
 
 
 
 
Claims Expense
46,473 
43,453,000 
41,009 
39,187 
36,211 
34,253 
32,466 
30,604 
170,122 
133,534 
103,324 
Other Cost of Services
8,335 
7,858,000 
6,915,000 
6,387 
5,910 
5,606 
5,100 
4,791 
29,495 
21,408 
18,410 
Other Segments [Member]
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
24,313 
14,874 
13,557 
Gross profit
 
 
 
 
 
 
 
 
1,579 
1,253 
1,251 
Claims Expense
4,667 
3,692,000 
3,345 
2,864 
2,284 
2,165 
2,355 
2,094 
14,568 
8,898 
7,904 
Other Cost of Services
2,311 
2,404,000 
1,988,000 
1,464 
1,309 
1,262 
1,053 
1,098 
8,166 
4,723 
4,402 
Subscription business [Member]
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
218,354 
173,356 
133,406 
Gross profit
 
 
 
 
 
 
 
 
41,471 
32,035 
23,978 
Claims Expense
41,806 
39,761,000 
37,664 
36,323 
33,927 
32,088 
30,111 
28,510 
155,554 
124,636 
95,420 
Other Cost of Services
$ 6,024 
$ 5,454,000 
$ 4,927,000 
$ 4,923 
$ 4,601 
$ 4,344 
$ 4,047 
$ 3,693 
$ 21,329 
$ 16,685 
$ 14,008 
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statement of Comprehensive Loss (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Technology Services Costs
$ 9,768 
$ 9,534 
$ 11,215 
 
General and administrative
16,820 
15,205 
15,558 
 
Sales and marketing
19,104 
15,247 
15,231 
 
Operating loss
(2,642)
(6,698)
(16,775)
 
Interest expense
533 
218 
325 
 
Other (income) expense, net
(1,244)
(58)
(9)
 
Income Tax (Benefit) Expense, Attributable to Parent
5,302 
0 
0 
 
Other Comprehensive Income (Loss), Net of Tax
285 
125 
(513)
 
Comprehensive loss
(1,218)
(6,771)
(17,718)
 
Accounts and other receivables
20,367 
10,118 
 
 
Prepaid expenses and other assets
2,895 
2,062 
 
 
Assets, Current
86,558 
65,387 
 
 
Restricted Cash and Cash Equivalents
600 
600 
 
 
Equity Method Investments
0 
271 
 
 
Property and equipment, net
7,868 
8,464 
 
 
Intangible assets, net
4,972 
4,910 
 
 
Other Assets, Noncurrent
2,624 
134 
 
 
Assets
105,859 
82,345 
 
 
Liabilities, Current
45,866 
30,406 
 
 
Long-term Debt, Excluding Current Maturities
9,324 
4,767 
 
 
Deferred tax liabilities
1,002 
1,623 
 
 
Other liabilities
1,233 
834 
 
 
Liabilities
57,425 
37,630 
 
 
Common Stock, Value, Outstanding
0 
0 
 
 
Preferred Stock, Value, Outstanding
0 
0 
 
 
Additional Paid-in Capital
134,511 
129,574 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(92)
(377)
 
 
Retained Earnings (Accumulated Deficit)
(82,784)
(81,281)
 
 
Treasury stock, at cost
(3,201)
(3,201)
 
 
Stockholders' Equity Attributable to Parent
48,434 
44,715 
45,356 
59,275 
Liabilities and Equity
105,859 
82,345 
 
 
Parent Company
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash Equivalents, at Carrying Value
1,105 
3,401 
 
 
Veterinary invoice expense
354 
269 
226 
 
Other costs of revenue
239 
41 
44 
 
Technology Services Costs
528 
531 
628 
 
General and administrative
4,204 
3,627 
3,852 
 
Sales and marketing
889 
871 
621 
 
Total expenses
6,214 
5,339 
5,371 
 
Operating loss
(6,214)
(5,339)
(5,371)
 
Interest expense
529 
218 
325 
 
Other (income) expense, net
4,101 
(23)
2 
 
Loss before equity in undistributed earnings of subsidiaries
(2,642)
(5,580)
(5,694)
 
Equity in undistributed earnings of subsidiaries
4,163 
1,316 
11,511 
 
Net loss
(1,503)
(6,896)
(17,205)
 
Other comprehensive income (loss) of subsidiaries
285 
125 
(513)
 
Other Comprehensive Income (Loss), Net of Tax
285 
125 
(513)
 
Comprehensive loss
(1,218)
(6,771)
(17,718)
 
Accounts and other receivables
2,261 
1,492 
 
 
Prepaid expenses and other assets
295 
106 
 
 
Assets, Current
3,661 
4,999 
 
 
Restricted Cash and Cash Equivalents
600 
600 
 
 
Equity Method Investments
0 
271 
 
 
Property and equipment, net
661 
1,070 
 
 
Intangible assets, net
4,795 
4,773 
 
 
Other Assets, Noncurrent
2,488 
0 
 
 
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures
47,209 
40,086 
 
 
Assets
59,414 
51,799 
 
 
Accounts Payable and Accrued Liabilities, Current
654 
492 
 
 
Liabilities, Current
654 
492 
 
 
Long-term Debt, Excluding Current Maturities
9,324 
4,767 
 
 
Deferred tax liabilities
1,002 
1,622 
 
 
Other liabilities
0 
203 
 
 
Liabilities
10,980 
7,084 
 
 
Common Stock, Value, Outstanding
0 
0 
 
 
Preferred Stock, Value, Outstanding
0 
0 
 
 
Additional Paid-in Capital
134,511 
129,574 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(92)
(377)
 
 
Retained Earnings (Accumulated Deficit)
(82,784)
(81,281)
 
 
Treasury stock, at cost
(3,201)
(3,201)
 
 
Stockholders' Equity Attributable to Parent
48,434 
44,715 
 
 
Liabilities and Equity
$ 59,414 
$ 51,799 
 
 
Schedule 1-Parent Only Disclosures [Schedule] Condensed Balance Sheet (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Accounts and other receivables
$ 20,367 
$ 10,118 
 
 
Prepaid expenses and other assets
2,895 
2,062 
 
 
Total current assets
86,558 
65,387 
 
 
Restricted Cash and Cash Equivalents
600 
600 
 
 
Equity Method Investments
0 
271 
 
 
Property and equipment, net
7,868 
8,464 
 
 
Intangible assets, net
4,972 
4,910 
 
 
Other Assets, Noncurrent
2,624 
134 
 
 
Total assets
105,859 
82,345 
 
 
Accrued Liabilities, Current
7,660 
5,416 
 
 
Total current liabilities
45,866 
30,406 
 
 
Long-term Debt, Excluding Current Maturities
9,324 
4,767 
 
 
Deferred tax liabilities
1,002 
1,623 
 
 
Other liabilities
1,233 
834 
 
 
Total liabilities
57,425 
37,630 
 
 
Common Stock, Value, Outstanding
0 
0 
 
 
Preferred Stock, Value, Outstanding
0 
0 
 
 
Additional Paid-in Capital
134,511 
129,574 
 
 
Accumulated other comprehensive loss
(92)
(377)
 
 
Accumulated deficit
(82,784)
(81,281)
 
 
Treasury stock, at cost
(3,201)
(3,201)
 
 
Total stockholders' deficit
48,434 
44,715 
45,356 
59,275 
Liabilities and Equity
105,859 
82,345 
 
 
Parent Company
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash Equivalents, at Carrying Value
1,105 
3,401 
 
 
Accounts and other receivables
2,261 
1,492 
 
 
Prepaid expenses and other assets
295 
106 
 
 
Total current assets
3,661 
4,999 
 
 
Restricted Cash and Cash Equivalents
600 
600 
 
 
Equity Method Investments
0 
271 
 
 
Property and equipment, net
661 
1,070 
 
 
Intangible assets, net
4,795 
4,773 
 
 
Other Assets, Noncurrent
2,488 
0 
 
 
Advances to subsidiaries
47,209 
40,086 
 
 
Total assets
59,414 
51,799 
 
 
Accounts Payable and Accrued Liabilities, Current
654 
492 
 
 
Total current liabilities
654 
492 
 
 
Long-term Debt, Excluding Current Maturities
9,324 
4,767 
 
 
Deferred tax liabilities
1,002 
1,622 
 
 
Other liabilities
0 
203 
 
 
Total liabilities
10,980 
7,084 
 
 
Common Stock, Value, Outstanding
0 
0 
 
 
Preferred Stock, Value, Outstanding
0 
0 
 
 
Additional Paid-in Capital
134,511 
129,574 
 
 
Accumulated other comprehensive loss
(92)
(377)
 
 
Accumulated deficit
(82,784)
(81,281)
 
 
Treasury stock, at cost
(3,201)
(3,201)
 
 
Total stockholders' deficit
48,434 
44,715 
 
 
Liabilities and Equity
$ 59,414 
$ 51,799 
 
 
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statements of Cash Flows (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
 
 
 
Proceeds from Dividends Received
$ 2,700 
$ 0 
$ 0 
Equity Method Investment, Realized Gain (Loss) on Disposal
1,000 
 
 
Warrant expense
(1,036)
0 
0 
Stock-based compensation expense
3,419 
2,946 
3,002 
Other Operating Income (Expense), Net
(383)
104 
(68)
Net cash used in operating activities
9,666 
5,006 
(10,425)
Proceeds from Sale of Equity Method Investments
1,402 
0 
0 
Purchases of property and equipment
(3,131)
(1,941)
(4,894)
Payments for (Proceeds from) Investments
2,779 
198 
409 
Net cash used in investing activities
(13,056)
(6,508)
(9,923)
Payments Related to Tax Withholding for Share-based Compensation
(1,170)
(662)
(643)
Proceeds from exercise of stock options
2,545 
3,745 
1,335 
Proceeds from debt financing, net of financing fees
4,400 
4,988 
(14,900)
Other financing costs
(694)
(399)
0 
Net cash provided by (used in) financing activities
5,081 
7,672 
(14,208)
Effect of Exchange Rate on Cash and Cash Equivalents
378 
111 
(586)
Cash, Cash Equivalents, and Restricted Cash, Period Increase (Decrease)
2,069 
6,281 
(35,142)
Cash, cash equivalents, and restricted cash at beginning of period
23,637 
 
 
Cash, cash equivalents, and restricted cash at end of period
25,706 
23,637 
 
Interest paid
(333)
(153)
(155)
Capital Lease Obligations Incurred
689 
559 
0 
Redemption of Warrants Non-Cash; Common Stock
0 
600 
0 
Parent Company
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net loss
(1,503)
(6,896)
(17,205)
Loss attributable to equity method investments
4,163 
1,316 
11,511 
Depreciation and amortization
697 
251 
126 
Equity Method Investment, Realized Gain (Loss) on Disposal
(1,036)
0 
0 
Stock-based compensation expense
3,419 
2,946 
3,002 
Other Operating Income (Expense), Net
(380)
58 
21 
Increase (Decrease) in Operating Assets
743 
1,742 
(1,383)
Net cash used in operating activities
6,103 
(583)
(3,928)
Proceeds from Sale of Equity Method Investments
1,402 
0 
0 
Purchases of property and equipment
(135)
1 
(149)
Payments to Acquire Interest in Subsidiaries and Affiliates
(12,168)
(9,333)
(19,900)
Payments for (Proceeds from) Investments
(2,668)
0 
(300)
Net cash used in investing activities
(13,570)
(9,332)
(20,349)
Payments Related to Tax Withholding for Share-based Compensation
(1,170)
(662)
(643)
Proceeds from exercise of stock options
2,545 
3,745 
1,335 
Proceeds from debt financing, net of financing fees
4,400 
4,988 
(14,900)
Other financing costs
(604)
(195)
0 
Net cash provided by (used in) financing activities
5,170 
7,876 
(14,208)
Effect of Exchange Rate on Cash and Cash Equivalents
0 
0 
(517)
Cash, Cash Equivalents, and Restricted Cash, Period Increase (Decrease)
(2,296)
(2,039)
(39,002)
Cash, cash equivalents, and restricted cash at beginning of period
4,001 
6,040 
45,042 
Cash, cash equivalents, and restricted cash at end of period
1,705 
4,001 
6,040 
Interest paid
333 
153 
155 
Capital Lease Obligations Incurred
471 
0 
0 
Redemption of Warrants Non-Cash; Common Stock
$ 0 
$ 600 
$ 0