TRUPANION, INC., 10-K filed on 2/14/2020
Annual Report
v3.19.3.a.u2
Cover Page Document - USD ($)
12 Months Ended
Dec. 31, 2019
Feb. 06, 2020
Jun. 30, 2019
Cover Page [Abstract]      
Entity Central Index Key 0001371285    
Document Annual Report true    
Document Period End Date Dec. 31, 2019    
Document Transition Report false    
Entity Filer Category Large Accelerated Filer    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Title of 12(b) Security Common stock, $0.00001 par value per share    
City Area Code (855)    
Entity Address, Address Line One 6100 4th Avenue S, Suite 200    
Entity Incorporation, State or Country Code DE    
Entity File Number 001-36537    
Entity Registrant Name TRUPANION, INC.    
Entity Tax Identification Number 83-0480694    
Entity Address, City or Town Seattle,    
Entity Address, State or Province WA    
Entity Address, Postal Zip Code 98108    
Local Phone Number 727 - 9079    
Trading Symbol TRUP    
Security Exchange Name NASDAQ    
Entity Interactive Data Current Yes    
Entity Shell Company false    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Public Float     $ 1,174,944,132
Current Fiscal Year End Date --12-31    
Document Type 10-K    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Common Stock, Shares Outstanding   34,958,851  
v3.19.3.a.u2
Consolidated Statement of Operations - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]      
Revenue $ 383,936 $ 303,956 $ 242,667
Veterinary invoice expense 270,947 214,539 170,122
Other Cost of Services Sold 48,065 38,051 29,495
Gross profit 64,924 51,366 43,050
Technology and Development Expense 10,074 9,248 9,768
General and administrative 20,967 18,164 16,820
Sales and marketing 35,451 24,999 19,104
Total operating expenses 66,492 52,411 45,692
Income (Loss) from Equity Method Investments (352) 0 0
Operating loss (1,920) (1,045) (2,642)
Interest expense 1,349 1,198 533
Other income, net (1,629) (1,309) (1,244)
Loss before income taxes (1,640) (934) (1,931)
Income tax (benefit) expense 169 (7) (428)
Net loss $ (1,809) $ (927) $ (1,503)
Earnings Per Share, Basic and Diluted $ (0.05) $ (0.03) $ (0.05)
Weighted Average Number of Shares Outstanding, Basic and Diluted 34,645,345 31,961,192 29,588,324
v3.19.3.a.u2
Consolidated Statement of Comprehensive Income Statement - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Net loss $ (1,809) $ (927) $ (1,503)
Foreign currency translation adjustments 359 (642) 277
Net unrealized gain (loss) on available-for-sale debt securities 644 (19) 8
Other comprehensive income (loss), net of taxes 1,003 (661) 285
Comprehensive loss $ (806) $ (1,588) $ (1,218)
v3.19.3.a.u2
Consolidated Balance Sheet - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Assets [Abstract]    
Cash and cash equivalents $ 29,168 $ 26,552
Short-term Investments 69,732 54,559
Accounts and other receivables 54,408 31,565
Prepaid expenses and other assets 5,513 5,300
Total current assets 158,821 117,976
Restricted Cash and Cash Equivalents 1,400 1,400
Investments in fixed maturities, at fair value 4,323 3,554
Property and equipment, net 70,372 69,803
Intangible assets, net 7,731 8,071
Other Assets, Noncurrent 14,553 6,706
Total assets 257,200 207,510
Liabilities and Equity [Abstract]    
Accounts payable 4,087 2,767
Accrued liabilities and other current liabilities 13,798 11,347
Reserve for veterinary invoices 21,194 16,062
Deferred Revenue, Current 52,546 33,027
Total current liabilities 91,625 63,203
Long-term debt 26,086 12,862
Deferred tax liabilities 1,118 1,002
Other liabilities 1,611 1,270
Total liabilities 120,440 78,337
Common stock: $0.00001 par value per share 0 0
Preferred Stock, Value, Outstanding 0 0
Additional Paid-in Capital 232,731 219,838
Accumulated other comprehensive loss 250 (753)
Accumulated deficit (85,520) (83,711)
Treasury stock, at cost (10,701) (6,201)
Total stockholders' deficit 136,760 129,173
Liabilities and Equity $ 257,200 $ 207,510
v3.19.3.a.u2
Consolidated Balance Sheet Condensed Consolidated Balance Sheet Parentheticals - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Common Stock, Shares Authorized 100,000,000  
Common Stock, Shares, Outstanding 34,947,017  
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 35,876,882 34,781,121
Common Stock, Shares, Outstanding 34,947,017 34,025,136
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 929,865 755,985
v3.19.3.a.u2
Consolidated Statement of Stockholders' Equity Statement - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss)
Treasury Stock [Member]
Treasury Stock, Common [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding   29,498,947          
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        
Beginning Balance at Dec. 31, 2016 44,715 $ 0 129,574 $ (81,281) $ (377) $ (3,201)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 3,562   3,562        
Other comprehensive income (loss), net of taxes 285       285    
Net loss (1,503)     (1,503)      
Ending Balance at Dec. 31, 2017 $ 48,434 $ 0 134,511 (82,784) (92) (3,201)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding   30,121,496          
Stock Issued During Period, Shares, New Issues 2,090,909 2,090,909          
Proceeds from issuance of common stock, follow-on public offering $ 65,638   65,638        
Payments to Acquire Buildings, Shares   303,030          
Payment to Acquire Corporate Building, Fair Value of Shares 9,633   9,633        
Stock Issued During Period, Shares, Share-based Compensation, Net of Tax Withholdings   1,278,386          
Stock Issued During Period, Value, Share-based Compensation, Net of Tax Withholdings 1,806   1,806        
Redemption of warrants   231,315          
Settlement of warrant liabilities 300   3,300       $ (3,000)
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 4,950   4,950        
Other comprehensive income (loss), net of taxes (661)       (661)    
Net loss (927)     (927)      
Ending Balance at Dec. 31, 2018 129,173 $ 0 219,838 (83,711) (753) (6,201)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding   34,025,136          
Stock Issued During Period, Shares, Share-based Compensation, Net of Tax Withholdings   615,761          
Stock Issued During Period, Value, Share-based Compensation, Net of Tax Withholdings 1,043   1,043        
Redemption of warrants   306,120          
Settlement of warrant liabilities 300   4,800       $ (4,500)
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 7,050   7,050        
Other comprehensive income (loss), net of taxes 1,003            
Net loss (1,809)            
Ending Balance at Dec. 31, 2019 $ 136,760 $ 0 $ 232,731 $ (85,520) $ 250 $ (10,701)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Common Stock, Shares, Outstanding 34,947,017 34,947,017          
v3.19.3.a.u2
Consolidated Statement of Cash Flows
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Net Cash Provided by (Used in) Operating Activities [Abstract]      
Net loss $ (1,809) $ (927) $ (1,503)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]      
Depreciation, Depletion and Amortization 5,632 4,512 4,232
Stock-based compensation expense 6,846 4,775 3,419
Gain on sale of equity method investment 0 0 (1,036)
Other Operating Income (Expense), Net 105 (240) (383)
Increase (Decrease) in Operating Assets [Abstract]      
Accounts and other receivables (22,772) (11,248) (10,219)
Prepaid expenses and other assets (432) (2,628) (179)
Accounts payable, accrued liabilities, and other liabilities 4,110 4,531 3,019
Reserve for veterinary invoices 5,059 3,440 3,149
Deferred revenue 19,418 10,465 9,167
Net cash provided by operating activities 16,157 12,680 9,666
Net Cash Provided by (Used in) Investing Activities [Abstract]      
Purchases of investment securities (65,506) (52,862) (31,920)
Maturities of investment securities 49,762 35,413 23,372
Payments for (Proceeds from) Investments (4,000) (3,000) 0
Payments to Acquire Intangible Assets 0 (2,959) 0
Proceeds from Sale of Equity Method Investments 0 0 1,402
Purchases of property and equipment (5,373) (56,936) (3,131)
Payments for (Proceeds from) Other Investing Activities (2,891) (1,107) (2,779)
Net cash used in investing activities (28,008) (81,451) (13,056)
Net Cash Provided by (Used in) Financing Activities [Abstract]      
Proceeds from Issuance or Sale of Equity 0 65,671 0
Proceeds from exercise of stock options 2,982 3,601 2,545
Payments Related to Tax Withholding for Share-based Compensation (1,667) (1,839) (1,170)
Proceeds from debt financing, net of financing fees 13,167 13,431 4,400
Repayments of Long-term Debt 0 (10,000) 0
Proceeds from (Payments for) Other Financing Activities (438) 365 (694)
Net cash provided by financing activities 14,044 71,229 5,081
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash, net 423 (812) 378
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect 2,616 1,646 2,069
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents 30,568 27,952 26,306
Supplemental Cash Flow Information [Abstract]      
Income taxes paid 158 216 177
Interest Paid, Excluding Capitalized Interest, Operating Activities 1,188 1,019 333
Redemption of Warrants Non-Cash; Common Stock 4,500 3,000 0
Acquisition of Corporate Real Estate Non-Cash, Common Stock 0 9,640 0
Purchases of property and equipment included in accounts payable and accrued liabilities 485 106 390
Capital Lease Obligations Incurred $ 0 $ 0 $ 689
v3.19.3.a.u2
Condensed Consolidated Balance Sheet Parentheticals - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Common Stock, Shares Authorized 100,000,000  
Common Stock, Shares, Outstanding 34,947,017  
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 35,876,882 34,781,121
Common Stock, Shares, Outstanding 34,947,017 34,025,136
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 929,865 755,985
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 35,876,882 34,781,121
Common Stock, Shares, Outstanding 34,947,017 34,025,136
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 929,865 755,985
v3.19.3.a.u2
Net Loss per Share
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
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,
 
2019
 
2018
 
2017
Stock options
2,097,978

 
2,621,503

 
4,006,399

Restricted stock awards and restricted stock units
581,943

 
451,160

 
256,842

Warrants

 
480,000

 
810,000


v3.19.3.a.u2
Property Plant and Equipment (Notes)
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
December 31,
 
2019
 
2018
Land and improvements
$
15,854

 
$
15,833

Building and improvements
47,558

 
46,561

Software
22,976

 
20,338

Office equipment and other
3,384

 
2,772

Construction in progress
247

 

Property and equipment, at cost
90,019

 
85,504

Less: Accumulated depreciation
(19,647
)
 
(15,701
)
Property and equipment, net
$
70,372

 
$
69,803


Depreciation expense related to property and equipment was $4.7 million, $4.3 million and $4.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Acquisition of Real Estate
In August 2018, the Company purchased a real property that houses the company headquarters located at 6100 Fourth Avenue South, Seattle, Washington. The real estate acquisition was determined to be an asset acquisition, with the purchase price allocated based on relative fair value of the assets acquired. Additionally, acquisition-related expenses were capitalized as part of the purchase price. The purchase price was $65.2 million, consisting of $55.0 million in cash, 303,030 shares of common stock with an estimated fair value of $9.6 million, and transaction costs totaling $0.6 million. The issued shares are subject to a lock-up period that continues to and includes June 25, 2020. The fair value of the issued shares was estimated as of the closing date for the real estate acquisition using the Black-Scholes option pricing model and the following assumptions:
 
 
 
 
 
 
August 9, 2018
Assumptions
 
 
 
 
 
Fair Value
Risk free interest rate
 
 
 
 
 
2.5
%
Expected volatility
 
 
 
 
 
36.72
%
Expected life (years)
 
 
 
 
 
1.88

Expected dividend yield
 
 
 
 
 
%


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

Land and improvements
 
 
 
 
 
15,833

Lease-related intangible assets
 
 
 
 
 
2,959

Total purchase price
 
 
 
 
 
$
65,171


The Company assessed fair value on the date of the acquisition based on Level 3 inputs within the fair value framework, which included estimated cash flow projections that utilized appropriate discount rates, capitalization rates, renewal probability and available market information, which included market rental rates and market rent growth rates. Estimates of future cash flows were based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of tangible assets of the acquired property considers the value of the property as if it were vacant. The fair value of acquired “above- and below-” market leases was based on the estimated cash flow projections utilizing discount rates that reflected the risks associated with the leases acquired. The amount recorded was based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended term for any leases with below-market renewal options. Other intangible assets acquired included amounts for in-place lease values that were based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company included estimates of lost rents at market rates during the hypothetical expected lease-up periods, which were dependent on local market conditions. In estimating costs to execute similar leases, the Company considered leasing commissions, legal and other related costs.
The results of operations related to our ownership of the building are included in the Company’s consolidated statements of operations from the date of acquisition.
v3.19.3.a.u2
Intangible Assets (Notes)
12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Disclosure [Text Block] Intangible Assets, Net
The following table presents the detail of intangible assets for the periods presented (in thousands):
 
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Carrying Value
December 31, 2019:
 
 
 
 
 
 
Licenses
 
$
4,773

 
$

 
$
4,773

Leases
 
2,959

 
(1,084
)
 
1,875

Patents, trademarks, and other
 
1,287

 
(204
)
 
1,083

Total Intangibles
 
$
9,019

 
$
(1,288
)
 
$
7,731

December 31, 2018:
 
 
 
 
 
 
Licenses
 
$
4,773

 
$

 
$
4,773

Leases
 
2,959

 
(213
)
 
2,746

Patents, trademarks, and other
 
743

 
(191
)
 
552

Total Intangibles
 
$
8,475

 
$
(404
)
 
$
8,071

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.
The lease-related intangible assets relate to in-place lease agreements associated with the building acquisition in August 2018 and have a remaining weighted-average useful life of 3.4 years. Patents, trademarks, and other intangible assets have a remaining weighted-average useful life of 9.9 years.
Amortization expense associated with intangible assets was $0.9 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively. There was no amortization expense associated with intangible assets in 2017.
As of December 31, 2019, expected amortization expense relating to purchased intangible assets for each of the next five years and thereafter is as follows (in thousands):
Year ending December 31:
 
2020
$
949

2021
714

2022
245

2023
245

2024
245

Thereafter
493

Total
$
2,891


v3.19.3.a.u2
Investment Securities (Notes)
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
The amortized cost, gross unrealized holding gains and losses, and fair value of long-term and short-term investments by major security type and class of security were as follows as of December 31, 2019 and 2018 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2019
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
3,323

 
$

 
$

 
$
3,323

Municipal bond
1,000

 

 

 
1,000

 
$
4,323

 
$

 
$

 
$
4,323

Short-term investments:
 
 
 
 
 
 
 
              U.S. Treasury securities
$
6,156

 
$

 
$
(1
)
 
$
6,155

              Certificates of deposit
440

 

 

 
440

              U.S. government funds
63,136

 

 

 
63,136

 
$
69,732

 
$


$
(1
)

$
69,731

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2018
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,573

 
$

 
$

 
$
2,573

Municipal bond
1,000

 

 
(19
)
 
981

 
$
3,573

 
$


$
(19
)

$
3,554

Short-term investments:
 
 
 
 
 
 
 
U.S. Treasury securities
$
6,645

 
$

 
$
(3
)
 
$
6,642

Certificates of deposit
437

 

 

 
437

U.S. government funds
47,477

 

 

 
47,477

 
$
54,559

 
$


$
(3
)

$
54,556


Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2019
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due after one year through five years
$
4,323

 
$
4,323

 
$
4,323

 
$
4,323


The Company evaluated its securities for other-than-temporary impairment and considers the decline in market value for the securities to be primarily attributable to current economic and market conditions. For debt securities, the Company does not intend to sell, nor is it more likely than not that the Company will be required to sell, the securities prior to maturity or prior to the recovery of the amortized cost basis.
v3.19.3.a.u2
Other Investments (Notes)
12 Months Ended
Dec. 31, 2019
Other Investments [Abstract]  
Investments and Other Noncurrent Assets [Text Block] Other Investments
Investment in Variable Interest Entity
In July 2018, the Company purchased $3.0 million in preferred stock of a privately held corporation with a complementary business line. The Company does not have power over the activities that most significantly impact the economic performance of this variable interest entity and is, therefore, not the primary beneficiary. In October 2019, the Company purchased an additional $4.0 million in preferred stock upon the exercise of an option by the variable interest entity. The Company has an option to purchase all the outstanding common shares issued by the variable interest entity on the fifth anniversary of the initial preferred stock purchase.
Additionally, the Company has extended a $2.5 million revolving line of credit to the variable interest entity to fund its inventory purchases. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on the consolidated balance sheet. Outstanding loan balance under the line of credit was $2.5 million and $0.6 million as of December 31, 2019 and 2018, respectively. The Company has also entered into a series of agreements to provide ancillary services to the variable interest entity at cost. The Company provided $1.4 million and $0.6 million of these services for the years ended December 31, 2019 and 2018, respectively, which were recorded against its operating expenses.
Investment in Joint Venture
In September 2018, the Company acquired a non-controlling equity interest in a joint venture, whereby it has committed to licensing certain intellectual property and contributing up to $2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date. As of December 31, 2019, the Company has contributed $0.5 million AUD. This equity investment is accounted for using the equity method and is classified in other long-term assets on the Company's consolidated balance sheet. The Company's share of income and losses from this equity method investment is included in gain (loss) from investment in joint venture on its consolidated statement of operations. Also included in this line item are income and expenses associated with administrative services provided to the joint venture.
v3.19.3.a.u2
Fair Value
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block] Fair Value
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, 2019
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
1,400

 
$
1,400

 
$

 
$

Money market funds
1,050

 
1,050

 

 

Fixed maturities:
 
 
 
 
 
 
 
Foreign deposits
3,323

 
3,323

 

 

Municipal bond
1,000

 

 
1,000

 

Investment in variable interest entity
7,625

 

 

 
7,625

Total
$
14,398

 
$
5,773

 
$
1,000

 
$
7,625

 
 
 
 
 
 
 
 
 
As of December 31, 2018
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
1,400

 
$
1,400

 
$

 
$

Money market funds
2,010

 
2,010

 

 

Fixed maturities:
 
 
 
 
 
 
 
Foreign deposits
2,573

 
2,573

 

 

Municipal bond
981

 

 
981

 

Investment in variable interest entity
3,000

 

 

 
3,000

Total
$
9,964

 
$
5,983

 
$
981

 
$
3,000


The Company measures the fair value of restricted cash, money market funds, and foreign deposits 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. Short-term investments are carried at amortized cost and the fair value is disclosed in Note 5, Investments. The fair value of these investments is determined in the same manner as for available-for-sale securities and is considered a Level 1 measurement.
The Company purchased $4.0 million and $3.0 million in preferred stock in the variable interest entity for the year ended December 31, 2019 and 2018, respectively. The preferred stock investment is accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date. The estimated fair value of the preferred stock investment is a Level 3 measurement, and is based on certain unobservable inputs such as the value of the underlying enterprise, volatility, time to liquidity, and market interest rates. An increase or decrease in any of these unobservable inputs would result in a change in the fair value measurement. Fair value was $7.6 million and $3.0 million as of December 31, 2019 and 2018, respectively. The Company recognized a $0.6 million unrealized gain in other comprehensive income (loss) for the year ended December 31, 2019.
Fair Value Disclosures
The Company's other long-term assets balance included notes receivable of $6.1 million and $3.0 million as of December 31, 2019 and 2018, respectively, recorded at their estimated collectible amount. The Company estimates that the carrying value of the notes 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, 2019 and December 31, 2018.
The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers between levels for the year ended December 31, 2019 and 2018.
v3.19.3.a.u2
Commitment and Contingencies
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block] Commitments and Contingencies

The following summarizes the Company's contractual commitments as of December 31, 2019 (in thousands):
 
Year Ending December 31,
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Long-term debt obligations(1)
$

 
$

 
$
26,200

 
$

 
$

 
$

 
$
26,200

Lease obligations
40

 
40

 
10

 

 

 

 
90

Other obligations(2)
3,320

 
1,053

 
520

 
237

 
168

 
2,296

 
7,594

Total
$
3,360

 
$
1,093

 
$
26,730

 
$
237

 
$
168

 
$
2,296

 
$
33,884

 
 
 
 
 
(1) Consists of a revolving line of credit. Excludes interest of the greater of 4.5% or 0.75% plus the prime rate (5.50% as of December 31, 2019).
(2) Consists of contractual obligations from non-cancellable vendor service agreements.
Legal Proceedings
Certain state insurance regulators in the United States have contacted the Company regarding whether employees who had helped prospective members enroll by telephone in prior years were required to have an insurance license to conduct such telephone conversations. To date, the Company has resolved each of these matters in non-material amounts and believes it is compliant with the applicable regulations. The Company is currently engaged with a limited number of state insurance regulators to resolve this same legacy issue and believes it has adequately reserved for these matters.
In addition, from time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings against members, other entities or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. At this time, the Company does not believe any such matters to be material individually or in the aggregate. These views are subject to change following the outcome of future events or the results of future developments.
v3.19.3.a.u2
Claims Reserve (Notes)
12 Months Ended
Dec. 31, 2019
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract]  
Supplementary Insurance Information, for Insurance Companies Disclosure [Text Block] Reserve for Veterinary Invoices

The reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary invoices that are dated as of, or prior to, its balance sheet date. The reserve also includes the Company's estimate of related internal processing costs. The reserve estimate involves actuarial projections, and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns. 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
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
13,875

 
$
11,059

 
$
8,538

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
231,831

 
190,642

 
155,623

Prior years
 
585

 
409

 
(69
)
Total veterinary invoice expense
 
232,416

 
191,051

 
155,554

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
217,538

 
177,418

 
144,802

Prior years
 
12,494

 
10,130

 
7,777

Total paid
 
230,032

 
187,548

 
152,579

Non-cash expenses
 
718

 
687

 
454

Reserve at end of period
 
$
15,541

 
$
13,875

 
$
11,059


The Company's reserve for the subscription business segment increased $1.6 million from $13.9 million at December 31, 2018 to $15.5 million at December 31, 2019. This change was comprised of $232.4 million in expense recorded during the period less $230.0 million in payments of veterinary invoices. This $232.4 million in veterinary invoice expense incurred included an increase of $0.6 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to prior year reserves were an increase of $0.4 million and a reduction of $0.1 million as a result of analysis of payment trends in the years ended December 31, 2018 and 2017, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
2,187

 
$
1,697

 
$
983

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
38,881

 
23,784

 
14,739

Prior years
 
(350
)
 
(296
)
 
(171
)
Total veterinary invoice expense
 
38,531

 
23,488

 
14,568

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
33,254

 
21,615

 
13,053

Prior years
 
1,811

 
1,383

 
801

Total paid
 
35,065

 
22,998

 
13,854

Non-cash expenses
 

 

 

Reserve at end of period
 
$
5,653

 
$
2,187

 
$
1,697



The Company’s reserve for the other business segment increased $3.5 million from $2.2 million at December 31, 2018 to $5.7 million at December 31, 2019. This change was comprised of $38.5 million in expense recorded during the period less $35.1 million in payments of veterinary invoices. This $38.5 million in veterinary invoice expense incurred included a reduction of $0.4 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.3 million and $0.2 million as a result of analysis of payment trends in each of the years ended December 31, 2018 and 2017, respectively.
Veterinary invoice expenses

In the following tables, the cumulative number of veterinary invoices represents the total number received as of December 31, 2019, 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 2016 through 2018 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, 2019.

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
 
2016
 
2017
 
2018
 
2019
 
2019
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2016
 
$
124,169

 
$
123,954

 
$
124,035

 
$
124,040

 
$
137

 
600,143

2017
 
 
 
$
155,398

 
$
155,678

 
$
155,681

 
$
464

 
725,796

2018
 
 
 
 
 
$
190,316

 
$
190,804

 
$
1,365

 
870,806

2019
 
 
 
 
 
 
 
$
232,552

 
$
13,575

 
965,768

 
 
 
 
 
 
 
 
$
703,077

 
$
15,541

 
 

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
 
2016
 
2017
 
2018
 
2019
 
2019
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2016
 
$
9,027

 
$
8,843

 
$
8,855

 
$
8,862

 
$
1

 
59,665

2017
 
 
 
$
14,738

 
$
14,420

 
$
14,471

 
$
5

 
105,891

2018
 
 
 
 
 
$
23,782

 
$
23,371

 
$
20

 
173,778

2019
 
 
 
 
 
 
 
$
38,883

 
$
5,627

 
262,083

 
 
 
 
 
 
 
 
$
85,587

 
$
5,653

 
 


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, 2019. Information for years 2016 through 2018 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
 
2016
 
2017
 
2018
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2016
 
$
115,965

 
$
123,422

 
$
123,764

 
$
123,902

2017
 
 
 
$
145,087

 
$
154,679

 
$
155,217

2018
 
 
 
 
 
$
177,714

 
$
189,439

2019
 
 
 
 
 
 
 
$
218,977


 
 
 
 
 
 
 
$
687,535

Total amounts unpaid and recorded as a liability
 
 
$
15,541



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
 
2016
 
2017
 
2018
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2016
 
$
8,048

 
$
8,832

 
$
8,852

 
$
8,861

2017
 
 
 
$
13,053

 
$
14,408

 
$
14,466

2018
 
 
 
 
 
$
21,613

 
$
23,351

2019
 
 
 
 
 
 
 
$
33,256

 
 
 
 
 
 
 
 
$
79,934

Total amounts unpaid and recorded as a liability
 
 
$
5,653


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
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
13,875

 
$
11,059

 
$
8,538

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
231,831

 
190,642

 
155,623

Prior years
 
585

 
409

 
(69
)
Total veterinary invoice expense
 
232,416

 
191,051

 
155,554

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
217,538

 
177,418

 
144,802

Prior years
 
12,494

 
10,130

 
7,777

Total paid
 
230,032

 
187,548

 
152,579

Non-cash expenses
 
718

 
687

 
454

Reserve at end of period
 
$
15,541

 
$
13,875

 
$
11,059


The Company's reserve for the subscription business segment increased $1.6 million from $13.9 million at December 31, 2018 to $15.5 million at December 31, 2019. This change was comprised of $232.4 million in expense recorded during the period less $230.0 million in payments of veterinary invoices. This $232.4 million in veterinary invoice expense incurred included an increase of $0.6 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to prior year reserves were an increase of $0.4 million and a reduction of $0.1 million as a result of analysis of payment trends in the years ended December 31, 2018 and 2017, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
2,187

 
$
1,697

 
$
983

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
38,881

 
23,784

 
14,739

Prior years
 
(350
)
 
(296
)
 
(171
)
Total veterinary invoice expense
 
38,531

 
23,488

 
14,568

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
33,254

 
21,615

 
13,053

Prior years
 
1,811

 
1,383

 
801

Total paid
 
35,065

 
22,998

 
13,854

Non-cash expenses
 

 

 

Reserve at end of period
 
$
5,653

 
$
2,187

 
$
1,697



The Company’s reserve for the other business segment increased $3.5 million from $2.2 million at December 31, 2018 to $5.7 million at December 31, 2019. This change was comprised of $38.5 million in expense recorded during the period less $35.1 million in payments of veterinary invoices. This $38.5 million in veterinary invoice expense incurred included a reduction of $0.4 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.3 million and $0.2 million as a result of analysis of payment trends in each of the years ended December 31, 2018 and 2017, respectively.
v3.19.3.a.u2
Debt
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block] Debt
The Company has a revolving line of credit of up to $50.0 million, maturing in June 2022. The facility is secured by any and all interests in the Company's assets that are not otherwise restricted. Interest on the revolving line of credit is payable monthly at the greater of 4.5% or 0.75% plus the prime rate (5.50% at December 31, 2019). The credit agreement includes other ancillary services and letters of credit of up to $4.5 million. It also requires a deposit of restricted cash of $1.4 million and a minimum cash or investment balance of $2.1 million. The credit agreement requires the Company to comply with various financial and non-financial covenants. As of December 31, 2019, the Company was in compliance with all financial and non-financial covenants required by the credit agreement.
Borrowings on the revolving line of credit were limited to the lesser of $50.0 million or 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), less amounts outstanding relating to other ancillary services and letters of credit. As of December 31, 2019, available borrowing capacity on the line of credit was $23.3 million, with an outstanding balance of $0.5 million for ancillary services and letters of credit, and borrowings under the facility of $26.2 million, recorded net of financing fees of $0.1 million.
v3.19.3.a.u2
Stock-based Compensation
12 Months Ended
Dec. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
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, 2019, 2018 and 2017 was as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Veterinary invoice expense
$
697

 
$
571

 
$
355

Other cost of revenue
353

 
356

 
239

Technology and development
364

 
209

 
216

General and administrative
3,312

 
2,304

 
1,887

Sales and marketing
2,120

 
1,335

 
722

Total expensed stock-based compensation
6,846

 
4,775

 
3,419

Capitalized stock-based compensation
204

 
175

 
143

Total stock-based compensation
$
7,050

 
$
4,950

 
$
3,562

As of December 31, 2019, the Company had 206,387 unvested stock options and 581,943 unvested restricted stock awards and restricted stock units. Total stock-based compensation expense of $1.4 million related to unvested stock options and $14.6 million related to unvested restricted stock awards and restricted stock units is expected to be recognized over a weighted-average period of approximately 1.1 years and 3.0 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. The Company did not grant any stock options during the years ended December 31, 2019 and 2018. For the year ended December 31, 2017, valuation assumptions are presented in the following table:
 
 
Year Ended December 31,
 
2017
Valuation assumptions:
 
Expected term (in years)
6.25
Expected volatility
37.1%-39.8%
Risk-free interest rate
1.8%-2.2%
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 January 1, 2017
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

Granted

 

 

Exercised
(1,292,037
)
 
2.82

 
36,625

Forfeited
(92,859
)
 
15.36

 

Outstanding as of December 31, 2018
2,621,503

 
9.01

 
43,136

Granted

 

 

Exercised
(510,268
)
 
5.28

 
13,151

Forfeited
(13,257
)
 
18.23

 

Outstanding as of December 31, 2019
2,097,978

 
9.86

 
57,907

 
 
 
 
 
 
Exercisable at December 31, 2019
1,891,591

 
$
9.04

 
$
53,760

As of December 31, 2019, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 5.1 years and 4.8 years, respectively.

The weighted-average grant date fair value per share and the fair value of options vested were as follows for the years ended December 31, 2019, 2018, and 2017:
 
 
Weighted Average Grant Date Fair Value per Share
 
Fair Value
of Options
Vested (in thousands)
Year:
 
 
 
 
2017
 
$
7.25

 
$
6,313

2018
 
$

 
$
2,665

2019
 
$

 
$
1,591



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 ended December 31, 2019, 2018 and 2017:
 
 
Number of 
Shares
 
Weighted Average
Grant Date Fair Value per
Share
Unvested shares as of January 1, 2017
 
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

Granted
 
375,313

 
28.10

Vested
 
(149,213
)
 
9.74

Forfeited
 
(31,782
)
 
28.57

Unvested shares as of December 31, 2018
 
451,160

 
22.16

Granted
 
459,523

 
30.03

Vested
 
(276,184
)
 
18.20

Forfeited
 
(52,556
)
 
29.85

Unvested shares as of December 31, 2019
 
581,943

 
$
29.56


v3.19.3.a.u2
Leases (Notes)
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases of Lessor Disclosure [Text Block] Leases
The Company leases certain office space and equipment from third parties and recognizes lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on its consolidated balance sheets. 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 $0.4 million, $1.4 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The Company also leases a portion of its building acquired in August 2018 to third parties and records related rental income within general and administrative expense in the consolidated statements of operations. These leases have remaining initial lease terms of 2 years to 8 years, some of which give the tenants options to renew the leases for up to an additional 10 years, and options to terminate the leases after 3 years of the initial lease terms, with early termination fees required. The Company recorded rental income of $2.2 million and $0.9 million for the years ended December 31, 2019 and December 31, 2018, respectively.
The following table summarizes the Company's future rental payments to be received from non-cancellable leases in place as of December 31, 2019 (in thousands):
Year ending December 31:
 
 
 
 
 
 
2020
 
 
 
 
 
$
2,002

2021
 
 
 
 
 
1,632

2022
 
 
 
 
 
1,325

2023
 
 
 
 
 
1,367

2024
 
 
 
 
 
1,410

Thereafter
 
 
 
 
 
1,800

Total rental payments
 
 
 
 
 
$
9,536


v3.19.3.a.u2
Stockholder's Equity (Notes)
12 Months Ended
Dec. 31, 2019
Equity [Abstract]  
Stockholders' Equity Note Disclosure [Text Block] Stockholders Equity
Common Stock and Preferred Stock
As of December 31, 2019, the Company had 100,000,000 shares of common stock authorized and 34,947,017 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, 2019, 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, 2019 due to restrictions in its credit agreements.
Follow-on Common Stock Offering
In June 2018, the Company completed a follow-on public offering (the June 2018 follow-on public offering) whereby the Company sold 2,090,909 shares of common stock at a price to the public of $33.00 per share. The Company received aggregate net proceeds from the June 2018 follow-on public offering of $65.7 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. The proceeds were primarily used to purchase real estate consisting of properties in use as the Company's home office. In addition, in August 2018, the Company issued 303,030 shares of common stock via a private placement to an accredited investor as a portion of the purchase price of the real estate. See Note 3, Property and Equipment.
Warrants
During the year ended December 31, 2019, 480,000 of the Company's outstanding warrants were exercised. As of December 31, 2019, no warrants remained outstanding.
Share Repurchase Program
In November 2019, the Company's board of directors authorized a share repurchase program, pursuant to which the Company may repurchase up to $15.0 million of its outstanding shares over the next 12 months. The Company did not repurchase shares during the year ended December 31, 2019.
v3.19.3.a.u2
Segments
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block] Segments
The Company has two segments: subscription business and other business. The subscription business segment includes monthly subscription fees related to the Company’s medical insurance which is marketed directly to consumers, while the other business segment includes all other business that is not directly marketed to consumers.
The chief operating decision maker reviews revenue, gross profit, and operating income (loss) to evaluate segment performance. Revenue, veterinary invoice expense, other cost of revenue, and sales and marketing expenses are generally directly attributed to each segment. Other operating expenses, such as technology and development expense and general and administrative expense, are allocated proportionately based on revenue in each segment. 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.
Operating income (loss) of the Company’s segments were as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Subscription business:
 
 
 
 
 
Revenue
$
321,163

 
$
263,738

 
$
218,354

Veterinary invoice expense
232,415

 
191,051

 
155,554

Other cost of revenue
29,724

 
24,941

 
21,329

Gross profit
59,024

 
47,746

 
41,471

Technology and development
8,427

 
8,024

 
8,789

General and administrative
17,539

 
15,761

 
15,135

Sales and marketing
35,037

 
24,622

 
18,886

Subscription business operating income (loss)
(1,979
)
 
(661
)
 
(1,339
)
 
 
 
 
 
 
Other business:
 
 
 
 
 
Revenue
62,773

 
40,218

 
24,313

Veterinary invoice expense
38,532

 
23,488

 
14,568

Other cost of revenue
18,341

 
13,110

 
8,166

Gross profit
5,900

 
3,620

 
1,579

Technology and development
1,647

 
1,224

 
979

General and administrative
3,428

 
2,403

 
1,685

Sales and marketing
414

 
377

 
218

Other business operating income (loss)
411

 
(384
)
 
(1,303
)
Gain (loss) from investment in joint venture
(352
)
 

 

Total operating income (loss)
$
(1,920
)
 
$
(1,045
)
 
$
(2,642
)


The following table presents the Company’s revenue by geographic region of the member (in thousands):
 
 
Year Ended December 31,
 
2019
 
2018
 
2017
United States
$
316,138

 
$
246,280

 
$
195,297

Canada
67,798

 
57,676

 
47,370

Total revenue
$
383,936

 
$
303,956

 
$
242,667


Substantially all of the Company’s long-lived assets were located in the United States as of December 31, 2019 and 2018.
v3.19.3.a.u2
Dividend Restrictions Statutory Surplus (Notes)
12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
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, 2019, 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 $1.5 million. This insurance subsidiary did not pay dividends to the Company during the years ended December 31, 2019, 2018, and 2017.
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 $3.9 million, $2.2 million, and $2.7 million during the years ended December 31, 2019, 2018 and 2017, respectfully.
The statutory net income for 2019, 2018 and 2017 and statutory capital and surplus at December 31, 2019, 2018 and 2017, for the Company’s insurance subsidiary in New York were as follows (in thousands):
 
 
As of December 31,
 
 
2019
 
2018
 
2017
Statutory net income
 
$
16,311

 
$
11,021

 
$
7,507

Statutory capital and surplus
 
$
73,810

 
$
56,244

 
$
37,190


As of December 31, 2019, the Company’s insurance subsidiary in New York maintained $73.8 million of statutory capital and surplus which was above the required amount of $55.3 million of statutory capital and surplus to avoid additional regulatory oversight.
As of December 31, 2019, the Company had $6.7 million on deposit with various states in which it writes policies.
v3.19.3.a.u2
Income Taxes (Notes)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Loss before income taxes was as follows for the years ended December 31, 2019, 2018 and 2017 (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
United States
 
$
(1,783
)
 
$
(1,054
)
 
$
(1,965
)
Foreign
 
143

 
120

 
34

 
 
$
(1,640
)
 
$
(934
)
 
$
(1,931
)

The components of income tax expense (benefit) were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
12

 
$
(10
)
 
$
183

Foreign
 
52

 
37

 
15

 
 
64

 
27

 
198

Deferred:
 
 
 
 
 
 
U.S. federal & state
 
116

 
(32
)
 
(620
)
Foreign
 
(11
)
 
(2
)
 
(6
)
 
 
105

 
(34
)
 
(626
)
Income tax expense (benefit)
 
$
169

 
$
(7
)
 
$
(428
)


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. In accordance with Staff Accounting Bulletin No. 118 ("SAB 118"), the Company recorded a $0.6 million income tax benefit in the year ended December 31, 2017 in relation to the remeasurement of its deferred tax liabilities.

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,    
 
 
2019
 
2018
 
2017
Federal income taxes at statutory rate
 
21.0
 %
 
21.0
 %
 
34.0
 %
U.S. state income taxes
 
(7.8
)
 
4.6

 
(9.5
)
Equity compensation
 
177.2

 
828.5

 
189.1

Change in valuation allowance
 
(184.2
)
 
(857.4
)
 
(229.6
)
Meals and entertainment
 
(4.9
)
 
(5.4
)
 
(3.0
)
Nondeductible fines and settlements
 
(9.2
)
 
(2.1
)
 

Other, net
 
(11.6
)
 
(8.6
)
 
2.0

Change in federal tax rate
 

 

 
32.1

Credits
 
9.2

 
20.2

 
7.1

Effective income tax rate
 
(10.3
)%
 
0.8
 %
 
22.2
 %

The principal components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
 
 
Year Ended December 31,         
 
 
2019
 
2018
Deferred tax assets:
 
 
 
 
Deferred revenue
 
$
2,219

 
$
1,371

Accruals and reserves
 
885

 
475

Net operating loss carryforwards
 
30,569

 
26,566

Depreciation and amortization
 
240

 
346

Equity compensation
 
2,102

 
1,690

Credits
 
547

 
397

Other
 
243

 
430

Total deferred tax assets
 
36,805

 
31,275

Deferred tax liabilities:
 
 
 
 
Deferred costs
 
(398
)
 
(279
)
Intangible assets
 
(1,117
)
 
(1,002
)
Other
 
(775
)
 
(250
)
Total deferred tax liabilities
 
(2,290
)
 
(1,531
)
Total deferred taxes
 
34,515

 
29,744

Less deferred tax asset valuation allowance
 
(35,609
)
 
(30,701
)
Net deferred tax liability
 
$
(1,094
)
 
$
(957
)

At December 31, 2019, the Company had U.S. federal and state net operating loss carryforwards of $30.6 million (tax-effected) and U.S. federal income tax credits of $0.5 million. Use of carryforwards is limited based on the future income of the Company. The federal net operating loss carryforwards will begin to expire in 2027. 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, 2019, 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 U.S. Federal deferred tax assets as of December 31, 2019 and 2018 because the Company’s management has determined that it is more likely than not that these assets will not be fully realized.
For the year ended December 31, 2019, the Company recognized a net increase of $4.9 million in valuation allowance against its net deferred tax assets associated with U.S. federal and certain state jurisdictions, primarily attributable to current year activity.
The Company is open to examination by the U.S. federal tax jurisdiction for the years ended December 31, 2016 through 2019. 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, 2015 through 2019 for all corporate tax matters, and open for the years ended December 31, 2012 through 2019 for transactions with non-arm’s length non-Canadian residents.
For the year ended December 31, 2019, the Company considers its foreign earnings to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. While, following the enactment of the Tax Act, distributions from majority owned foreign affiliates are, generally, not subject to U.S. income tax, such distributions may be subject to non-U.S. withholding taxes. A deferred tax liability related to such withholding taxes, and U.S. taxes related to non-majority owned foreign investments have not been recorded.
The Tax Act implemented a new tax on foreign subsidiary income. The Company books Global Intangible Low-Taxed Income ("GILTI") on a current basis and does not book deferred taxes related to GILTI.

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,
 
 
2019
 
2018
 
2017
Balance, beginning of year
 
$
89

 
$
327

 
$
120

Increases (decreases) to tax positions related to prior periods
 
19

 
(243
)
 
91

Increases to tax positions related to the current year
 
5

 
5

 
116

Balance, end of year
 
$
113

 
$
89

 
$
327


v3.19.3.a.u2
Retirement Plan (Notes)
12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
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.
v3.19.3.a.u2
Quarterly Financial Information (Notes)
12 Months Ended
Dec. 31, 2019
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Information [Text Block]

The following table contains quarterly financial data for the years ended December 31, 2019 and 2018 (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, 2019
 
Sept. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sept. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
Total revenues
$
105,483

 
$
99,276

 
$
92,199

 
$
86,978

 
$
82,640

 
$
78,164

 
$
73,392

 
$
69,760

Gross profit
17,734

 
17,445

 
14,713

 
15,032

 
14,205

 
13,744

 
12,353

 
11,064

Net income (loss)
$
636

 
$
782

 
$
(1,931
)
 
$
(1,296
)
 
$
(275
)
 
$
1,205

 
$
(377
)
 
$
(1,480
)
Net income (loss) per share:
Basic
$
0.02

 
$
0.02

 
$
(0.06
)
 
$
(0.04
)
 
$
(0.01
)
 
$
0.04

 
$
(0.01
)
 
$
(0.05
)
Diluted
$
0.02

 
$
0.02

 
$
(0.06
)
 
$
(0.04
)
 
$
(0.01
)
 
$
0.03

 
$
(0.01
)
 
$
(0.05
)
Weighted-average common shares outstanding:
Basic
34,876,438

 
34,876,782

 
34,610,709

 
34,292,367

 
33,716,975

 
33,129,416

 
30,721,037

 
30,246,585

Diluted
36,354,620

 
36,399,136

 
34,610,709

 
34,292,367

 
33,716,975

 
36,385,360

 
30,721,037

 
30,246,585


v3.19.3.a.u2
Schedule 1-Parent Only Disclosures [Schedule] (Notes)
12 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Condensed Financial Information of Parent Company Only Disclosure
Trupanion, Inc.
Condensed Statements of Operations and Comprehensive Loss
(Parent Company Only, in thousands)
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Expenses:
 
 
Veterinary invoice expense
 
$
697

 
$
571

 
$
354

Other cost of revenue
 
353

 
357

 
239

Technology and development
 
1,085

 
512

 
528

General and administrative
 
5,974

 
4,879

 
4,204

Sales and marketing
 
2,137

 
1,355

 
889

Total expenses
 
10,246

 
7,674

 
6,214

Gain (loss) from investment in joint venture
 
(205
)
 

 

Operating loss
 
(10,451
)
 
(7,674
)
 
(6,214
)
Interest expense
 
1,327

 
1,184

 
529

Other (income) expense, net
 
(4,156
)
 
(2,557
)
 
(4,101
)
Loss before equity in undistributed earnings of subsidiaries
 
(7,622
)
 
(6,301
)
 
(2,642
)
Income tax benefit
 
5,423

 
4,042

 
5,302

Equity (loss) in undistributed earnings of subsidiaries
 
390

 
1,332

 
(4,163
)
Net loss
 
$
(1,809
)
 
$
(927
)
 
$
(1,503
)
Other comprehensive income (loss), net of taxes:
 
 
 
 
 
 
Other comprehensive income (loss) of subsidiaries
 
1,003

 
(661
)
 
285

Other comprehensive income (loss)
 
1,003

 
(661
)
 
285

Comprehensive loss
 
$
(806
)
 
$
(1,588
)
 
$
(1,218
)

Trupanion, Inc.
Condensed Balance Sheets
(Parent Company Only)
(In thousands, except share data)
 
 
December 31,
 
 
2019
 
2018
Assets
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
1,242

 
$
2,133

Accounts and other receivables
 
2,933

 
2,094

Prepaid expenses and other assets
 
361

 
661

Total current assets
 
4,536

 
4,888

Restricted cash
 
1,400

 
1,400

Property and equipment, net
 
663

 
568

Intangible assets, net
 
5,356

 
5,076

Other long-term assets
 
14,146

 
6,515

Advances to and investments in subsidiaries
 
138,174

 
125,475

Total assets
 
$
164,275

 
$
143,922

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable, accrued liabilities, and other current liabilities
 
$
311

 
$
885

Total current liabilities
 
311

 
885

Long-term debt
 
26,086

 
12,862

Deferred tax liabilities
 
1,118

 
1,002

Total liabilities
 
27,515

 
14,749

Stockholders’ equity:
 
 
 
 
Common stock: $0.00001 par value per share, 100,000,000 shares authorized at December 31, 2019 and December 31, 2018, 35,876,882 and 34,947,017 shares issued and outstanding at December 31, 2019; 34,781,121 and 34,025,136 shares issued and outstanding at December 31, 2018
 

 

Preferred stock: $0.00001 par value per share, 10,000,000 shares authorized at December 31, 2019 and December 31, 2018, and 0 shares issued and outstanding at December 31, 2019 and December 31, 2018
 

 

Additional paid-in capital
 
232,731

 
219,838

Accumulated other comprehensive income (loss)
 
250

 
(753
)
Accumulated deficit
 
(85,520
)
 
(83,711
)
Treasury stock, at cost: 929,865 shares at December 31, 2019 and 755,985 shares at December 31, 2018
 
(10,701
)
 
(6,201
)
Total stockholders’ equity
 
136,760

 
129,173

Total liabilities and stockholders’ equity
 
$
164,275

 
$
143,922




Trupanion, Inc.
Condensed Statements of Cash Flows
(Parent Company Only, in thousands)
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Operating activities
 
 
Net loss
 
$
(1,809
)
 
$
(927
)
 
$
(1,503
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
 
 
 
(Income) loss attributable to investments in subsidiaries
 
(390
)
 
(1,332
)
 
4,163

Depreciation and amortization
 
211

 
436

 
697

Stock-based compensation expense
 
6,846

 
4,775

 
3,419

Gain on sale of equity method investment
 

 

 
(1,036
)
Other, net
 
48

 
108

 
(380
)
Changes in operating assets and liabilities
 
(601
)
 
(97
)
 
743

Net cash provided by (used in) operating activities
 
4,305

 
2,963

 
6,103

Investing activities
 
 
 
 
 
 
Proceeds from sale of equity method investment
 

 

 
1,402

Purchases of property and equipment
 
(728
)
 
(164
)
 
(135
)
Advances to and investments in subsidiaries
 
(11,931
)
 
(67,884
)
 
(12,168
)
Other investments
 
(7,019
)
 
(4,237
)
 
(2,668
)
Net cash used in investing activities
 
(19,678
)
 
(72,285
)
 
(13,570
)
Financing activities
 
 
 
 
 
 
Proceeds from public offering of common stock, net of offering costs
 

 
65,671

 

Proceeds from exercise of stock options
 
2,982

 
3,601

 
2,545

Taxes paid related to net share settlement of equity awards
 
(1,667
)
 
(1,839
)
 
(1,170
)
Proceeds from debt financing, net of financing fees
 
13,167

 
13,430

 
4,400

Repayments of debt financing
 

 
(10,000
)
 

Other financing
 

 
287

 
(604
)
Net cash provided by financing activities
 
14,482

 
71,150

 
5,170

Net change in cash, cash equivalents, and restricted cash
 
(891
)
 
1,828

 
(2,297
)
Cash, cash equivalents, and restricted cash at beginning of period
 
3,533

 
1,705

 
4,001

Cash, cash equivalents, and restricted cash at end of period
 
$
2,642

 
$
3,533

 
$
1,705

Supplemental disclosures
 
 
 
 
 
 
Interest paid
 
$
1,166

 
$
1,007

 
$
333

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

 

 
471

Cashless exercise of common stock warrants
 
4,500

 
3,000

 

Issuance of common stock for acquisition of corporate real estate
 
$

 
$
9,640

 
$


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. Trupanion, Inc. received cash dividends from a subsidiary of $3.9 million, $2.2 million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. These cash dividends were recorded within Trupanion, Inc.'s other income and were 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, 8, 10, 11, 13, and 16, respectively, to the Consolidated Financial Statements.
v3.19.3.a.u2
Nature of Operations and Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]
Asset Impairment
Long-lived assets, including property, equipment, and intangible assets, 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, 2019, 2018, and 2017.
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.
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.
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, 2019, 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 7, 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 building, land and land improvements, office equipment, 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:
Land
Not depreciable
Land improvements
10 years
Building
39 years
Software
3 to 5 years
Office equipment
3 to 5 years
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]
Intangible Assets
Acquired finite-lived intangibles are amortized on a straight-line basis over the estimated useful lives of the 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. As of each balance sheet date, the Company reevaluates its reserve and may adjust the estimate for new information.
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, regulatory, 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 primarily consist of personnel costs and related expenses for the Company's technology staff, which includes information technology development and infrastructure support and third-party services, as well as 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 $7.8 million, $6.3 million and $4.9 million, in the years ended December 31, 2019, 2018 and 2017, 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, 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 Topic 14, Share-Based Payment;
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 $0.4 million, $0.7 million, and $0.1 million were recorded in accumulated other comprehensive loss as of December 31, 2019, 2018, and 2017, 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. Dividends are 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 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 2019, 2018, and 2017 was $67.5 million, $57.4 million and $47.1 million, respectively, and deferred revenue relating to this arrangement at December 31, 2019 and 2018 was $2.7 million and $2.1 million, respectively. Reinsurance revenue was 18% of total revenue in 2019 and was 19% in 2018 and 2017. Cash designated for the purpose of paying claims related to this reinsurance agreement was $4.6 million and $3.9 million at December 31, 2019 and 2018, 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, 2019, the account balance was CAD $4.3 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]
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB) issued an ASU amending the measurement of credit losses on financial instruments. The ASU requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
In August 2018, the FASB issued an ASU that eliminates certain disclosure requirements for fair value measurements, requires new disclosures regarding significant unobservable inputs used to develop Level 3 fair value measurements, and modifies certain existing disclosure requirements for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The Company does not expect the adoption of this standard to have a material 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.
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, 2019, 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. Accounts receivable balance is primarily related to the Company’s other business segment where the Company generates revenue from underwriting policies through unaffiliated general agents. These policies are typically annual policies, with monthly payment terms through the end of the twelve-month period. The Company had $50.0 million and $27.6 million accounts receivable associated with underwriting these policies as of December 31, 2019 and 2018, respectively.
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 as of December 31, 2019 and December 31, 2018 were $1.8 million and $1.3 million, respectively. Amortized deferred acquisition costs classified within sales and marketing amounted to $2.5 million, $2.1 million, and $1.7 million and amortized deferred acquisition costs classified within other cost of revenue amounted to $19.2 million, $15.9 million, and $13.2 million, for the years ended December 31, 2019, 2018, and 2017, 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 7, 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 building, land and land improvements, office equipment, 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:
Land
Not depreciable
Land improvements
10 years
Building
39 years
Software
3 to 5 years
Office equipment
3 to 5 years
Intangible Assets
Acquired finite-lived intangibles are amortized on a straight-line basis over the estimated useful lives of the 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, equipment, and intangible assets, 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, 2019, 2018, and 2017.
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. As of each balance sheet date, the Company reevaluates its reserve and may adjust the estimate for new information.
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 primarily consist of personnel costs and related expenses for the Company's technology staff, which includes information technology development and infrastructure support and third-party services, as well as 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, regulatory, 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, net, was $1.6 million, $1.3 million, and $1.2 million, including interest income of $1.7 million, $0.9 million, and $0.2 million for the years ended December 31, 2019, 2018, and 2017, respectively. Other income in the year ended December 31, 2017 included a gain of $1.0 million from the sale of the Company's equity method investment.
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 $7.8 million, $6.3 million and $4.9 million, in the years ended December 31, 2019, 2018 and 2017, respectively.
Stock-Based Compensation
Compensation expense related to stock-based transactions, including employee and non-employee stock option awards, 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 Topic 14, Share-Based Payment;
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 $0.4 million, $0.7 million, and $0.1 million were recorded in accumulated other comprehensive loss as of December 31, 2019, 2018, and 2017, 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. Dividends are 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 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 2019, 2018, and 2017 was $67.5 million, $57.4 million and $47.1 million, respectively, and deferred revenue relating to this arrangement at December 31, 2019 and 2018 was $2.7 million and $2.1 million, respectively. Reinsurance revenue was 18% of total revenue in 2019 and was 19% in 2018 and 2017. Cash designated for the purpose of paying claims related to this reinsurance agreement was $4.6 million and $3.9 million at December 31, 2019 and 2018, 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, 2019, the account balance was CAD $4.3 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.
Recently Adopted Accounting Pronouncements
The Company adopted Accounting Standards Update (ASU) No. 2016-02 Leases (Topic 842), as amended, using the modified retrospective approach under which the transition provisions were applied as of January 1, 2019. In addition, the Company elected the “package of practical expedients” under the transition guidance within the new standard to not reassess prior conclusions about lease identification, lease classification, and initial direct costs for existing lease contracts. The Company also elected the practical expedient to not separate lease and non-lease components, if any, for all lease contracts.
Upon adoption of this standard, the Company recorded approximately $0.1 million right-of-use assets and lease liabilities for operating leases. They were classified as other long-term assets and other liabilities on the Company's consolidated balance sheets. The standard did not have a material impact on the Company's consolidated statements of operations, stockholders' equity, or cash flows.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB) issued an ASU amending the measurement of credit losses on financial instruments. The ASU requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
In August 2018, the FASB issued an ASU that eliminates certain disclosure requirements for fair value measurements, requires new disclosures regarding significant unobservable inputs used to develop Level 3 fair value measurements, and modifies certain existing disclosure requirements for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The following summarizes the Company's contractual commitments as of December 31, 2019 (in thousands):
 
Year Ending December 31,
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Long-term debt obligations(1)
$

 
$

 
$
26,200

 
$

 
$

 
$

 
$
26,200

Lease obligations
40

 
40

 
10

 

 

 

 
90

Other obligations(2)
3,320

 
1,053

 
520

 
237

 
168

 
2,296

 
7,594

Total
$
3,360

 
$
1,093

 
$
26,730

 
$
237

 
$
168

 
$
2,296

 
$
33,884

v3.19.3.a.u2
Other Investments details (Policies)
12 Months Ended
Dec. 31, 2019
Other Investments [Abstract]  
Variable Interest Entity Disclosure [Text Block]
Investment in Variable Interest Entity
In July 2018, the Company purchased $3.0 million in preferred stock of a privately held corporation with a complementary business line. The Company does not have power over the activities that most significantly impact the economic performance of this variable interest entity and is, therefore, not the primary beneficiary. In October 2019, the Company purchased an additional $4.0 million in preferred stock upon the exercise of an option by the variable interest entity. The Company has an option to purchase all the outstanding common shares issued by the variable interest entity on the fifth anniversary of the initial preferred stock purchase.
Additionally, the Company has extended a $2.5 million revolving line of credit to the variable interest entity to fund its inventory purchases. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on the consolidated balance sheet.
Equity Method Investments and Joint Ventures Disclosure [Text Block]
Investment in Joint Venture
In September 2018, the Company acquired a non-controlling equity interest in a joint venture, whereby it has committed to licensing certain intellectual property and contributing up to $2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date. As of December 31, 2019, the Company has contributed $0.5 million AUD. This equity investment is accounted for using the equity method and is classified in other long-term assets on the Company's consolidated balance sheet. The Company's share of income and losses from this equity method investment is included in gain (loss) from investment in joint venture on its consolidated statement of operations. Also included in this line item are income and expenses associated with administrative services provided to the joint venture.
v3.19.3.a.u2
Net Loss per Share (Tables)
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
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,
 
2019
 
2018
 
2017
Stock options
2,097,978

 
2,621,503

 
4,006,399

Restricted stock awards and restricted stock units
581,943

 
451,160

 
256,842

Warrants

 
480,000

 
810,000


v3.19.3.a.u2
Property Plant and Equipment (Tables)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Property, Plant and Equipment [Abstract]    
Business Combination Disclosure [Text Block]  

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

Land and improvements
 
 
 
 
 
15,833

Lease-related intangible assets
 
 
 
 
 
2,959

Total purchase price
 
 
 
 
 
$
65,171


Business Combination, Consideration Transferred [Table Text Block]  
In August 2018, the Company purchased a real property that houses the company headquarters located at 6100 Fourth Avenue South, Seattle, Washington. The real estate acquisition was determined to be an asset acquisition, with the purchase price allocated based on relative fair value of the assets acquired. Additionally, acquisition-related expenses were capitalized as part of the purchase price. The purchase price was $65.2 million, consisting of $55.0 million in cash, 303,030 shares of common stock with an estimated fair value of $9.6 million, and transaction costs totaling $0.6 million. The issued shares are subject to a lock-up period that continues to and includes June 25, 2020. The fair value of the issued shares was estimated as of the closing date for the real estate acquisition using the Black-Scholes option pricing model and the following assumptions:
 
 
 
 
 
 
August 9, 2018
Assumptions
 
 
 
 
 
Fair Value
Risk free interest rate
 
 
 
 
 
2.5
%
Expected volatility
 
 
 
 
 
36.72
%
Expected life (years)
 
 
 
 
 
1.88

Expected dividend yield
 
 
 
 
 
%

Property, Plant and Equipment
Property and equipment, net consisted of the following (in thousands):
 
December 31,
 
2019
 
2018
Land and improvements
$
15,854

 
$
15,833

Building and improvements
47,558

 
46,561

Software
22,976

 
20,338

Office equipment and other
3,384

 
2,772

Construction in progress
247

 

Property and equipment, at cost
90,019

 
85,504

Less: Accumulated depreciation
(19,647
)
 
(15,701
)
Property and equipment, net
$
70,372

 
$
69,803


 
v3.19.3.a.u2
Investment Securities Available-for-Sale (Tables)
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment [Table Text Block]
The amortized cost, gross unrealized holding gains and losses, and fair value of long-term and short-term investments by major security type and class of security were as follows as of December 31, 2019 and 2018 (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2019
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
3,323

 
$

 
$

 
$
3,323

Municipal bond
1,000

 

 

 
1,000

 
$
4,323

 
$

 
$

 
$
4,323

Short-term investments:
 
 
 
 
 
 
 
              U.S. Treasury securities
$
6,156

 
$

 
$
(1
)
 
$
6,155

              Certificates of deposit
440

 

 

 
440

              U.S. government funds
63,136

 

 

 
63,136

 
$
69,732

 
$


$
(1
)

$
69,731

 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Holding
Gains
 
Gross
Unrealized
Holding
Losses
 
Fair
Value
As of December 31, 2018
 
 
 
 
 
 
 
Long-term investments:
 
 
 
 
 
 
 
Foreign deposits
$
2,573

 
$

 
$

 
$
2,573

Municipal bond
1,000

 

 
(19
)
 
981

 
$
3,573

 
$


$
(19
)

$
3,554

Short-term investments:
 
 
 
 
 
 
 
U.S. Treasury securities
$
6,645

 
$

 
$
(3
)
 
$
6,642

Certificates of deposit
437

 

 

 
437

U.S. government funds
47,477

 

 

 
47,477

 
$
54,559

 
$


$
(3
)

$
54,556


Available-for-sale Securities [Table Text Block]
Maturities of debt securities classified as available-for-sale were as follows (in thousands):
 
December 31, 2019
 
Amortized
Cost
 
Fair
Value
Available-for-sale:

 

Due after one year through five years
$
4,323

 
$
4,323

 
$
4,323

 
$
4,323


v3.19.3.a.u2
Fair Value (Tables)
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
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, 2019
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
1,400

 
$
1,400

 
$

 
$

Money market funds
1,050

 
1,050

 

 

Fixed maturities:
 
 
 
 
 
 
 
Foreign deposits
3,323

 
3,323

 

 

Municipal bond
1,000

 

 
1,000

 

Investment in variable interest entity
7,625

 

 

 
7,625

Total
$
14,398

 
$
5,773

 
$
1,000

 
$
7,625

 
 
 
 
 
 
 
 
 
As of December 31, 2018
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Restricted cash
$
1,400

 
$
1,400

 
$

 
$

Money market funds
2,010

 
2,010

 

 

Fixed maturities:
 
 
 
 
 
 
 
Foreign deposits
2,573

 
2,573

 

 

Municipal bond
981

 

 
981

 

Investment in variable interest entity
3,000

 

 

 
3,000

Total
$
9,964

 
$
5,983

 
$
981

 
$
3,000


v3.19.3.a.u2
Commitment and Contingencies (Tables)
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The following summarizes the Company's contractual commitments as of December 31, 2019 (in thousands):
 
Year Ending December 31,
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Long-term debt obligations(1)
$

 
$

 
$
26,200

 
$

 
$

 
$

 
$
26,200

Lease obligations
40

 
40

 
10

 

 

 

 
90

Other obligations(2)
3,320

 
1,053

 
520

 
237

 
168

 
2,296

 
7,594

Total
$
3,360

 
$
1,093

 
$
26,730

 
$
237

 
$
168

 
$
2,296

 
$
33,884

v3.19.3.a.u2
Claims Reserve (Tables)
12 Months Ended
Dec. 31, 2019
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract]  
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
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
13,875

 
$
11,059

 
$
8,538

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
231,831

 
190,642

 
155,623

Prior years
 
585

 
409

 
(69
)
Total veterinary invoice expense
 
232,416

 
191,051

 
155,554

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
217,538

 
177,418

 
144,802

Prior years
 
12,494

 
10,130

 
7,777

Total paid
 
230,032

 
187,548

 
152,579

Non-cash expenses
 
718

 
687

 
454

Reserve at end of period
 
$
15,541

 
$
13,875

 
$
11,059


The Company's reserve for the subscription business segment increased $1.6 million from $13.9 million at December 31, 2018 to $15.5 million at December 31, 2019. This change was comprised of $232.4 million in expense recorded during the period less $230.0 million in payments of veterinary invoices. This $232.4 million in veterinary invoice expense incurred included an increase of $0.6 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to prior year reserves were an increase of $0.4 million and a reduction of $0.1 million as a result of analysis of payment trends in the years ended December 31, 2018 and 2017, respectively.
Summarized below are the changes in total liability for the Company's other business segment (in thousands):
 
 
Year Ended December 31,
Other Business
 
2019
 
2018
 
2017
Reserve at beginning of year
 
$
2,187

 
$
1,697

 
$
983

Veterinary invoice expense during the period related to:
 
 
 
 
 
 
Current year
 
38,881

 
23,784

 
14,739

Prior years
 
(350
)
 
(296
)
 
(171
)
Total veterinary invoice expense
 
38,531

 
23,488

 
14,568

Amounts paid during the period related to:
 
 
 
 
 
 
Current year
 
33,254

 
21,615

 
13,053

Prior years
 
1,811

 
1,383

 
801

Total paid
 
35,065

 
22,998

 
13,854

Non-cash expenses
 

 

 

Reserve at end of period
 
$
5,653

 
$
2,187

 
$
1,697



The Company’s reserve for the other business segment increased $3.5 million from $2.2 million at December 31, 2018 to $5.7 million at December 31, 2019. This change was comprised of $38.5 million in expense recorded during the period less $35.1 million in payments of veterinary invoices. This $38.5 million in veterinary invoice expense incurred included a reduction of $0.4 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. The Company's adjustments to decrease prior year reserves were $0.3 million and $0.2 million as a result of analysis of payment trends in each of the years ended December 31, 2018 and 2017, respectively.
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
 
2016
 
2017
 
2018
 
2019
 
2019
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2016
 
$
124,169

 
$
123,954

 
$
124,035

 
$
124,040

 
$
137

 
600,143

2017
 
 
 
$
155,398

 
$
155,678

 
$
155,681

 
$
464

 
725,796

2018
 
 
 
 
 
$
190,316

 
$
190,804

 
$
1,365

 
870,806

2019
 
 
 
 
 
 
 
$
232,552

 
$
13,575

 
965,768

 
 
 
 
 
 
 
 
$
703,077

 
$
15,541

 
 

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
 
2016
 
2017
 
2018
 
2019
 
2019
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
2016
 
$
9,027

 
$
8,843

 
$
8,855

 
$
8,862

 
$
1

 
59,665

2017
 
 
 
$
14,738

 
$
14,420

 
$
14,471

 
$
5

 
105,891

2018
 
 
 
 
 
$
23,782

 
$
23,371

 
$
20

 
173,778

2019
 
 
 
 
 
 
 
$
38,883

 
$
5,627

 
262,083

 
 
 
 
 
 
 
 
$
85,587

 
$
5,653

 
 

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
 
2016
 
2017
 
2018
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2016
 
$
115,965

 
$
123,422

 
$
123,764

 
$
123,902

2017
 
 
 
$
145,087

 
$
154,679

 
$
155,217

2018
 
 
 
 
 
$
177,714

 
$
189,439

2019
 
 
 
 
 
 
 
$
218,977


 
 
 
 
 
 
 
$
687,535

Total amounts unpaid and recorded as a liability
 
 
$
15,541



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
 
2016
 
2017
 
2018
 
2019
Year of Occurrence
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
2016
 
$
8,048

 
$
8,832

 
$
8,852

 
$
8,861

2017
 
 
 
$
13,053

 
$
14,408

 
$
14,466

2018
 
 
 
 
 
$
21,613

 
$
23,351

2019
 
 
 
 
 
 
 
$
33,256

 
 
 
 
 
 
 
 
$
79,934

Total amounts unpaid and recorded as a liability
 
 
$
5,653


v3.19.3.a.u2
Stock-based Compensation (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
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, 2019, 2018 and 2017 was as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Veterinary invoice expense
$
697

 
$
571

 
$
355

Other cost of revenue
353

 
356

 
239

Technology and development
364

 
209

 
216

General and administrative
3,312

 
2,304

 
1,887

Sales and marketing
2,120

 
1,335

 
722

Total expensed stock-based compensation
6,846

 
4,775

 
3,419

Capitalized stock-based compensation
204

 
175

 
143

Total stock-based compensation
$
7,050

 
$
4,950

 
$
3,562

As of December 31, 2019, the Company had 206,387 unvested stock options and 581,943 unvested restricted stock awards and restricted stock units. Total stock-based compensation expense of $1.4 million related to unvested stock options and $14.6 million related to unvested restricted stock awards and restricted stock units is expected to be recognized over a weighted-average period of approximately 1.1 years and 3.0 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 per share and the fair value of options vested were as follows for the years ended December 31, 2019, 2018, and 2017:
 
 
Weighted Average Grant Date Fair Value per Share
 
Fair Value
of Options
Vested (in thousands)
Year:
 
 
 
 
2017
 
$
7.25

 
$
6,313

2018
 
$

 
$
2,665

2019
 
$

 
$
1,591



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. The Company did not grant any stock options during the years ended December 31, 2019 and 2018. For the year ended December 31, 2017, valuation assumptions are presented in the following table:
 
 
Year Ended December 31,
 
2017
Valuation assumptions:
 
Expected term (in years)
6.25
Expected volatility
37.1%-39.8%
Risk-free interest rate
1.8%-2.2%
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 January 1, 2017
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

Granted

 

 

Exercised
(1,292,037
)
 
2.82

 
36,625

Forfeited
(92,859
)
 
15.36

 

Outstanding as of December 31, 2018
2,621,503

 
9.01

 
43,136

Granted

 

 

Exercised
(510,268
)
 
5.28

 
13,151

Forfeited
(13,257
)
 
18.23

 

Outstanding as of December 31, 2019
2,097,978

 
9.86

 
57,907

 
 
 
 
 
 
Exercisable at December 31, 2019
1,891,591

 
$
9.04

 
$
53,760

As of December 31, 2019, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 5.1 years and 4.8 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 ended December 31, 2019, 2018 and 2017:
 
 
Number of 
Shares
 
Weighted Average
Grant Date Fair Value per
Share
Unvested shares as of January 1, 2017
 
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

Granted
 
375,313

 
28.10

Vested
 
(149,213
)
 
9.74

Forfeited
 
(31,782
)
 
28.57

Unvested shares as of December 31, 2018
 
451,160

 
22.16

Granted
 
459,523

 
30.03

Vested
 
(276,184
)
 
18.20

Forfeited
 
(52,556
)
 
29.85

Unvested shares as of December 31, 2019
 
581,943

 
$
29.56


v3.19.3.a.u2
Segments (Tables)
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Revenue and Gross Profit from Segments [Table Text Block] of the Company’s segments were as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Subscription business:
 
 
 
 
 
Revenue
$
321,163

 
$
263,738

 
$
218,354

Veterinary invoice expense
232,415

 
191,051

 
155,554

Other cost of revenue
29,724

 
24,941

 
21,329

Gross profit
59,024

 
47,746

 
41,471

Technology and development
8,427

 
8,024

 
8,789

General and administrative
17,539

 
15,761

 
15,135

Sales and marketing
35,037

 
24,622

 
18,886

Subscription business operating income (loss)
(1,979
)
 
(661
)
 
(1,339
)
 
 
 
 
 
 
Other business:
 
 
 
 
 
Revenue
62,773

 
40,218

 
24,313

Veterinary invoice expense
38,532

 
23,488

 
14,568

Other cost of revenue
18,341

 
13,110

 
8,166

Gross profit
5,900

 
3,620

 
1,579

Technology and development
1,647

 
1,224

 
979

General and administrative
3,428

 
2,403

 
1,685

Sales and marketing
414

 
377

 
218

Other business operating income (loss)
411

 
(384
)
 
(1,303
)
Gain (loss) from investment in joint venture
(352
)
 

 

Total operating income (loss)
$
(1,920
)
 
$
(1,045
)
 
$
(2,642
)


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,
 
2019
 
2018
 
2017
United States
$
316,138

 
$
246,280

 
$
195,297

Canada
67,798

 
57,676

 
47,370

Total revenue
$
383,936

 
$
303,956

 
$
242,667


v3.19.3.a.u2
Dividend Restrictions Statutory Surplus (Tables)
12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
Statutory Accounting Practices Disclosure [Table Text Block]
The statutory net income for 2019, 2018 and 2017 and statutory capital and surplus at December 31, 2019, 2018 and 2017, for the Company’s insurance subsidiary in New York were as follows (in thousands):
 
 
As of December 31,
 
 
2019
 
2018
 
2017
Statutory net income
 
$
16,311

 
$
11,021

 
$
7,507

Statutory capital and surplus
 
$
73,810

 
$
56,244

 
$
37,190


v3.19.3.a.u2
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Tax, Domestic and Foreign
Loss before income taxes was as follows for the years ended December 31, 2019, 2018 and 2017 (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
United States
 
$
(1,783
)
 
$
(1,054
)
 
$
(1,965
)
Foreign
 
143

 
120

 
34

 
 
$
(1,640
)
 
$
(934
)
 
$
(1,931
)

Schedule of Components of Income Tax Expense (Benefit)
The components of income tax expense (benefit) were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Current:
 
 
 
 
 
 
U.S. federal & state
 
$
12

 
$
(10
)
 
$
183

Foreign
 
52

 
37

 
15

 
 
64

 
27

 
198

Deferred:
 
 
 
 
 
 
U.S. federal & state
 
116

 
(32
)
 
(620
)
Foreign
 
(11
)
 
(2
)
 
(6
)
 
 
105

 
(34
)
 
(626
)
Income tax expense (benefit)
 
$
169

 
$
(7
)
 
$
(428
)

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,    
 
 
2019
 
2018
 
2017
Federal income taxes at statutory rate
 
21.0
 %
 
21.0
 %
 
34.0
 %
U.S. state income taxes
 
(7.8
)
 
4.6

 
(9.5
)
Equity compensation
 
177.2

 
828.5

 
189.1

Change in valuation allowance
 
(184.2
)
 
(857.4
)
 
(229.6
)
Meals and entertainment
 
(4.9
)
 
(5.4
)
 
(3.0
)
Nondeductible fines and settlements
 
(9.2
)
 
(2.1
)
 

Other, net
 
(11.6
)
 
(8.6
)
 
2.0

Change in federal tax rate
 

 

 
32.1

Credits
 
9.2

 
20.2

 
7.1

Effective income tax rate
 
(10.3
)%
 
0.8
 %
 
22.2
 %

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,         
 
 
2019
 
2018
Deferred tax assets:
 
 
 
 
Deferred revenue
 
$
2,219

 
$
1,371

Accruals and reserves
 
885

 
475

Net operating loss carryforwards
 
30,569

 
26,566

Depreciation and amortization
 
240

 
346

Equity compensation
 
2,102

 
1,690

Credits
 
547

 
397

Other
 
243

 
430

Total deferred tax assets
 
36,805

 
31,275

Deferred tax liabilities:
 
 
 
 
Deferred costs
 
(398
)
 
(279
)
Intangible assets
 
(1,117
)
 
(1,002
)
Other
 
(775
)
 
(250
)
Total deferred tax liabilities
 
(2,290
)
 
(1,531
)
Total deferred taxes
 
34,515

 
29,744

Less deferred tax asset valuation allowance
 
(35,609
)
 
(30,701
)
Net deferred tax liability
 
$
(1,094
)
 
$
(957
)

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,
 
 
2019
 
2018
 
2017
Balance, beginning of year
 
$
89

 
$
327

 
$
120

Increases (decreases) to tax positions related to prior periods
 
19

 
(243
)
 
91

Increases to tax positions related to the current year
 
5

 
5

 
116

Balance, end of year
 
$
113

 
$
89

 
$
327


v3.19.3.a.u2
Quarterly Financial Information (Tables)
12 Months Ended
Dec. 31, 2019
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Information [Table Text Block]

The following table contains quarterly financial data for the years ended December 31, 2019 and 2018 (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, 2019
 
Sept. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sept. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
Total revenues
$
105,483

 
$
99,276

 
$
92,199

 
$
86,978

 
$
82,640

 
$
78,164

 
$
73,392

 
$
69,760

Gross profit
17,734

 
17,445

 
14,713

 
15,032

 
14,205

 
13,744

 
12,353

 
11,064

Net income (loss)
$
636

 
$
782

 
$
(1,931
)
 
$
(1,296
)
 
$
(275
)
 
$
1,205

 
$
(377
)
 
$
(1,480
)
Net income (loss) per share:
Basic
$
0.02

 
$
0.02

 
$
(0.06
)
 
$
(0.04
)
 
$
(0.01
)
 
$
0.04

 
$
(0.01
)
 
$
(0.05
)
Diluted
$
0.02

 
$
0.02

 
$
(0.06
)
 
$
(0.04
)
 
$
(0.01
)
 
$
0.03

 
$
(0.01
)
 
$
(0.05
)
Weighted-average common shares outstanding:
Basic
34,876,438

 
34,876,782

 
34,610,709

 
34,292,367

 
33,716,975

 
33,129,416

 
30,721,037

 
30,246,585

Diluted
36,354,620

 
36,399,136

 
34,610,709

 
34,292,367

 
33,716,975

 
36,385,360

 
30,721,037

 
30,246,585


v3.19.3.a.u2
Nature of Operations and Summary of Significant Accounting Policies Narrative (Details)
$ in Thousands, $ in Millions
12 Months Ended
Dec. 31, 2019
CAD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
shares
Dec. 31, 2017
USD ($)
Dec. 31, 2019
USD ($)
Accounting Policies [Abstract]          
Accounts Receivable, Unaffiliated General Agents     $ 27,600   $ 50,000
Operating Lease, Right-of-Use Asset         100
Stock Issued During Period, Shares, New Issues | shares     2,090,909    
Impairment, Amount, License Intangibles     $ 0 $ 0 0
Realized Investment Gains (Losses)   $ 0 0 0  
Other Nonoperating Income (Expense)   1,629 1,309 1,244  
Equity Method Investment, Realized Gain (Loss) on Disposal       1,000  
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax     700 100 400
Premiums Recognized from Fronting Agreement   67,500 57,400 47,100  
Deferred Policy Acquisition Costs     1,300   1,800
Advertising Expense   $ 7,800 6,300 $ 4,900  
Deferred Revenue from Fronting Agreement     $ 2,100   2,700
Concentration Risk, Percentage 18.00% 18.00% 19.00% 19.00%  
Cash Designated for Paying Reinsurance Claims     $ 3,900   $ 4,600
Reinsurance Trust Minimum Payment $ 2.0        
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 $ 4.3        
Interest Income, Other   $ 1,700 900 $ 200  
Proceeds from Issuance or Sale of Equity   0 65,671 $ 0  
Proceeds from Rents Received   $ 2,200 $ 900    
v3.19.3.a.u2
Net Loss per Share (Details) Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share - shares
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 2,097,978 2,621,503 4,006,399 4,123,023
Common shares attributable to dilutive effect of warrants 0      
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 2,097,978 2,621,503 4,006,399  
Restricted stock        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Restricted stock, outstanding 581,943 451,160 256,842  
Warrants        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Common shares attributable to dilutive effect of warrants 0 480,000 810,000  
v3.19.3.a.u2
Property Plant and Equipment (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]      
Property, Plant and Equipment, Gross $ 90,019 $ 85,504  
Construction in Progress, Gross 247 0  
Less: Accumulated depreciation (19,647) (15,701)  
Property and equipment, net 70,372 69,803  
Depreciation and amortization expense 4,700 4,300 $ 4,200
Land and Land Improvements [Member]      
Property, Plant and Equipment [Line Items]      
Property, Plant and Equipment, Gross 15,854 15,833  
Building and Building Improvements [Member]      
Property, Plant and Equipment [Line Items]      
Property, Plant and Equipment, Gross 47,558 46,561  
Software      
Property, Plant and Equipment [Line Items]      
Property, Plant and Equipment, Gross 22,976 20,338  
Computer Equipment [Member]      
Property, Plant and Equipment [Line Items]      
Property, Plant and Equipment, Gross $ 3,384 $ 2,772  
v3.19.3.a.u2
Nature of Operations and Summary of Significant Accounting Policies Deferred Acquisition Costs (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Selling and Marketing Expense [Member]      
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]      
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Cost $ 2.5 $ 2.1 $ 1.7
Cost of Sales [Member]      
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items]      
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Cost $ 19.2 $ 15.9 $ 13.2
v3.19.3.a.u2
Property Plant and Equipment Real Estate Acquisition (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Business Acquisition [Line Items]    
Business Combination, Consideration Transferred $ 65,200  
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate 2.50%  
Payments to Acquire Buildings $ 55,000  
Payments to Acquire Buildings, Shares 303,030  
Payments to Acquire Buildings, Fair Value of Shares $ 9,600  
Transaction costs related to Building Acquisition $ 600  
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate 36.72%  
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term 1 year 10 months 17 days  
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate 0.00% 0.00%
Building and Building Improvements [Member]    
Business Acquisition [Line Items]    
Business Combination, Consideration Transferred $ 46,379  
Land and Land Improvements [Member]    
Business Acquisition [Line Items]    
Business Combination, Consideration Transferred 15,833  
Leases, Acquired-in-Place [Member]    
Business Acquisition [Line Items]    
Business Combination, Consideration Transferred 2,959  
Assets, Total [Member]    
Business Acquisition [Line Items]    
Business Combination, Consideration Transferred $ 65,171  
v3.19.3.a.u2
Nature of Operations and Summary of Significant Accounting Policies Property, Plant, and Equipment, Useful Life (Details)
12 Months Ended
Dec. 31, 2019
Land Improvements [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 10 years
Building [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 39 years
Software and Software Development Costs [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Software and Software Development Costs [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 5 years
Office Equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Office Equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 5 years
v3.19.3.a.u2
Intangible Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]      
Operating Leases, Future Minimum Payments Receivable, Current $ 949    
Indefinite-Lived License Agreements 4,773 $ 4,773  
Finite-Lived Patents, Gross 1,287 743  
Intangible assets, net 7,731 8,071  
Finite-Lived Intangible Assets, Accumulated Amortization (1,288) (404)  
Operating Leases, Future Minimum Payments Receivable, in Two Years 714    
Operating Leases, Future Minimum Payments Receivable, in Three Years 245    
Operating Leases, Future Minimum Payments Receivable, in Four Years 245    
Operating Leases, Future Minimum Payments Receivable, in Five Years 245    
Operating Leases, Future Minimum Payments Receivable, Thereafter 493    
Operating Leases, Future Minimum Payments Receivable 2,891    
Intangible Assets, Gross (Excluding Goodwill) 9,019 8,475  
Finite-Lived Intangible Asset, Acquired-in-Place Leases $ 2,959 2,959  
Intangible Asset, Useful Life 3 years 4 months 24 days    
Patents, trademarks, and other intangible assets, weighted average useful life 9 years 10 months 24 days    
Amortization of Intangible Assets $ 900 200 $ 0
Impairment, Amount, License Intangibles 0 0 $ 0
Patents [Member]      
Finite-Lived Intangible Assets [Line Items]      
Intangible assets, net 1,083 552  
Finite-Lived Intangible Assets, Accumulated Amortization (204) (191)  
Leases, Acquired-in-Place [Member]      
Finite-Lived Intangible Assets [Line Items]      
Intangible assets, net 1,875 2,746  
Finite-Lived Intangible Assets, Accumulated Amortization $ (1,084) $ (213)  
v3.19.3.a.u2
Investment Securities (Details) Investment Schedule - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Investment [Line Items]    
Available-for-sale securities, amortized cost $ 4,323 $ 3,573
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax 0 0
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax 0 19
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value 4,323 3,554
Held-to-maturity securities, amortized cost 69,732 54,559
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain 0 0
Held-to-maturity securities, gross unrealized holding losses (1) (3)
Debt Securities, Held-to-maturity, Fair Value 69,731 54,556
Deposits [Member]    
Investment [Line Items]    
Available-for-sale securities, amortized cost 3,323 2,573
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax 0 0
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax 0 0
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value 3,323 2,573
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 19
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value 1,000 981
U.S. Treasury securities    
Investment [Line Items]    
Held-to-maturity securities, amortized cost 6,156 6,645
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain 0 0
Held-to-maturity securities, gross unrealized holding losses (1) (3)
Debt Securities, Held-to-maturity, Fair Value 6,155 6,642
Certificates of deposit    
Investment [Line Items]    
Held-to-maturity securities, amortized cost 440 437
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain 0 0
Held-to-maturity securities, gross unrealized holding losses 0 0
Debt Securities, Held-to-maturity, Fair Value 440 437
US government debt securities    
Investment [Line Items]    
Held-to-maturity securities, amortized cost 63,136 47,477
Debt Securities, Held-to-maturity, Accumulated Unrecognized Gain 0 0
Held-to-maturity securities, gross unrealized holding losses 0 0
Debt Securities, Held-to-maturity, Fair Value $ 63,136 $ 47,477
v3.19.3.a.u2
Investment Securities (Details) Available-for-Sale - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]    
Available-for-sale securities, due after one year through five years, amortized cost basis $ 4,323  
Available-for-sale securities, due after one year through five years, fair value 4,323  
Available-for-sale securities, amortized cost 4,323 $ 3,573
Available-for-sale securities, debt maturities, fair value $ 4,323  
v3.19.3.a.u2
Other Investments (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Other Investments [Abstract]    
Other Commitment $ 2.2  
Purchase of Equity Interest 4.0 $ 3.0
Increase (Decrease) in Notes Receivables 2.5  
Line of Credit outstanding balance, Variable Interest Entity 2.5 0.6
Payments to Acquire Interest in Joint Venture 0.5  
Services performed for Variable Interest Entity $ 1.4 $ 0.6
v3.19.3.a.u2
Fair Value (Details) Unobservable - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Investment Company, Committed Capital $ 4,000,000.0    
Marketable Securities, Noncurrent 4,323,000 $ 3,554,000  
Assets, Fair Value Disclosure 14,398,000 9,964,000  
Purchase of Equity Interest $ 4,000,000.0 3,000,000.0  
Document Period End Date Dec. 31, 2019    
Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax $ 644,000 (19,000) $ 8,000
Notes Receivable, Fair Value Disclosure 6,100,000 3,000,000.0  
Fair Value, Inputs, Level 1 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Assets, Fair Value Disclosure 5,773,000 5,983,000  
Fair Value, Inputs, Level 2 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Assets, Fair Value Disclosure 1,000,000 981,000  
Fair Value, Inputs, Level 3 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Assets, Fair Value Disclosure 7,625,000 3,000,000  
Cash and Cash Equivalents [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Restricted Cash and Cash Equivalents, Noncurrent 1,400,000 1,400,000  
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 1,400,000 1,400,000  
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  
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 3 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Restricted Cash and Cash Equivalents, Noncurrent 0 0  
Deposits [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Marketable Securities, Noncurrent 3,323,000 2,573,000  
Cash and Cash Equivalents, Fair Value Disclosure 1,050,000 2,010,000  
Deposits [Member] | Fair Value, Inputs, Level 1 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Marketable Securities, Noncurrent 3,323,000 2,573,000  
Cash and Cash Equivalents, Fair Value Disclosure 1,050,000 2,010,000  
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  
Cash and Cash Equivalents, Fair Value Disclosure 0 0  
Deposits [Member] | Fair Value, Inputs, Level 3 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Marketable Securities, Noncurrent 0 0  
Cash and Cash Equivalents, Fair Value Disclosure 0 0  
Municipal bond      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Marketable Securities, Noncurrent 1,000,000 981,000  
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 1,000,000 981,000  
Municipal bond | Fair Value, Inputs, Level 3 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Marketable Securities, Noncurrent 0 0  
Money Market Funds [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Cash and Cash Equivalents, Fair Value Disclosure 7,625,000 3,000,000.0  
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 0 0  
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  
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member]      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Cash and Cash Equivalents, Fair Value Disclosure $ 7,625,000 $ 3,000,000  
v3.19.3.a.u2
Commitment and Contingencies (Details) Narrative - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]      
Line of Credit Facility, Interest Rate Description greater of 4.5% or 0.75% plus the prime rate    
Line of Credit Facility, Interest Rate During Period 5.50%    
Operating Leases, Rent Expense, Net $ 0.4 $ 1.4 $ 1.8
v3.19.3.a.u2
Commitment and Contingencies Commitments and Contingencies (Details)
$ in Thousands
Dec. 31, 2019
USD ($)
Other Commitments [Line Items]  
Other Commitment, Due in Next Twelve Months $ 3,320
Other Commitment, Due in Second Year 1,053
Other Commitment, Due in Third Year 520
Other Commitment, Due in Fourth Year 237
Other Commitment, Due in Fifth Year 168
Other Commitment, Due after Fifth Year 2,296
Other Commitment 7,594
Capital Leases, Future Minimum Payments Due, Next Twelve Months 40
Capital Leases, Future Minimum Payments Due in Two Years 40
Capital Leases, Future Minimum Payments Due in Three Years 10
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 90
total future commitments due in next twelve months 3,360
total future commitments due in two years 1,093
total future commitments due in three years 26,730
total future commitments due in four years 237
total future commitments due in five years 168
total future commitments due thereafter 2,296
Total future commitments payments due 33,884
Debt [Member]  
Other Commitments [Line Items]  
Other Commitment, Due in Next Twelve Months 0
Other Commitment, Due in Second Year 0
Other Commitment, Due in Third Year 26,200
Other Commitment, Due in Fourth Year 0
Other Commitment, Due in Fifth Year 0
Other Commitment, Due after Fifth Year 0
Other Commitment $ 26,200
v3.19.3.a.u2
Claims Reserve (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Subscription business [Member]      
Liability for Claims and Claims Adjustment Expense [Line Items]      
Change in Liability for Unpaid Claims and Claims Adjustment Expense, Net $ 1,600    
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net 687,535    
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net 703,077    
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net 15,541    
Liability for Claims and Claims Adjustment Expense [Abstract]      
Claims reserve at beginning of year 13,875 $ 11,059 $ 8,538
Current Year Claims and Claims Adjustment Expense 231,831 190,642 155,623
Prior Year Claims and Claims Adjustment Expense 585 409 (69)
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year 217,538 177,418 144,802
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years 12,494 10,130 7,777
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid 230,032 187,548 152,579
Claims expense non-cash 718 687 454
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims 232,416 191,051 155,554
Claims reserve at end of year 15,541 13,875 11,059
Other Segments [Member]      
Liability for Claims and Claims Adjustment Expense [Line Items]      
Change in Liability for Unpaid Claims and Claims Adjustment Expense, Net 3,500    
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net 79,934    
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net 85,587    
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net 5,653    
Liability for Claims and Claims Adjustment Expense [Abstract]      
Claims reserve at beginning of year 2,187 1,697 983
Current Year Claims and Claims Adjustment Expense 38,881 23,784 14,739
Prior Year Claims and Claims Adjustment Expense (350) (296) (171)
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Current Year 33,254 21,615 13,053
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid, Prior Years 1,811 1,383 801
Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid 35,065 22,998 13,854
Claims expense non-cash 0 0 0
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims 38,531 23,488 14,568
Claims reserve at end of year $ 5,653 $ 2,187 $ 1,697
v3.19.3.a.u2
Claims Reserve Cumulative claims paid and claims adjustment expenses (Details)
$ in Thousands
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Other Segments [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 85,587      
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 5,653      
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2017 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 105,891      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 14,471 $ 14,420 $ 14,738  
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 5      
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2016 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 59,665      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 8,862 8,855 8,843 $ 9,027
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 1      
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2019 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 262,083      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 38,883      
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 5,627      
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2018 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 173,778      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 23,371 23,782    
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net 20      
Subscription business [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net 703,077      
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 15,541      
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2017 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 725,796      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 155,681 155,678 155,398  
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 464      
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2016 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 600,143      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 124,040 124,035 $ 123,954 $ 124,169
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 137      
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2019 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 965,768      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 232,552      
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 13,575      
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2018 [Member]        
Claims Development [Line Items]        
Short-duration Insurance Contract, Cumulative Number of Reported Claims 870,806      
Short-duration Insurance Contracts, Incurred Claims and Allocated Claim Adjustment Expense, Net $ 190,804 $ 190,316    
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net $ 1,365      
v3.19.3.a.u2
Claims Reserve Incurred claims and claim adjustment expense (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
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 $ 79,934      
Liability for Unpaid Claims and Claims Adjustment Expense, Net 5,653 $ 2,187 $ 1,697 $ 983
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2018 [Member]        
Liability for Claims and Claims Adjustment Expense [Line Items]        
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net 23,351 21,613    
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 8,861 8,852 8,832 8,048
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 14,466 14,408 13,053  
Other Segments [Member] | Short-duration Insurance Contracts, Accident Year 2019 [Member]        
Liability for Claims and Claims Adjustment Expense [Line Items]        
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net 33,256      
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 687,535      
Liability for Unpaid Claims and Claims Adjustment Expense, Net 15,541 13,875 11,059 8,538
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2018 [Member]        
Liability for Claims and Claims Adjustment Expense [Line Items]        
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net 189,439 177,714    
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 123,902 123,764 123,422 $ 115,965
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 155,217 $ 154,679 $ 145,087  
Subscription business [Member] | Short-duration Insurance Contracts, Accident Year 2019 [Member]        
Liability for Claims and Claims Adjustment Expense [Line Items]        
Short-duration Insurance Contracts, Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net $ 218,977      
v3.19.3.a.u2
Debt (Details) Narrative - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Debt Disclosure [Abstract]    
Line of credit facility, maximum borrowing capacity $ 50,000  
Line of Credit Facility, Interest Rate Description greater of 4.5% or 0.75% plus the prime rate  
Line of Credit Facility, Interest Rate at Period End 5.50%  
Line of Credit Facility, Interest Rate During Period 5.50%  
Maximum Contractual Balance Restriction $ 4,500  
Restricted Cash and Cash Equivalents 1,400 $ 1,400
Minimum Cash or Investment Balance Required 2,100  
Line of Credit Facility, Current Borrowing Capacity 23,300  
Contractual Balance Restriction 500  
Long-term Line of Credit 26,200  
Debt Issuance Costs, Line of Credit Arrangements, Net $ 100  
v3.19.3.a.u2
Stock-based Compensation (Details) Narrative - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Fair Value of Options Vested (in thousands) $ 1,591 $ 2,665 $ 6,313
Options outstanding, weighted average remaining contractual term 5 years 1 month 6 days    
Employee Stock Option [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Nonvested options, number of shares 206,387    
Compensation cost not yet recognized $ 1,400    
Weighted average remaining vesting period 1 year 1 month 6 days    
Restricted stock      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Restricted stock, outstanding 581,943 451,160 256,842
Compensation cost not yet recognized $ 14,600    
Weighted average remaining vesting period 3 years    
v3.19.3.a.u2
Stock-based Compensation Expense Category (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Stock-based Compensation      
Total stock-based compensation $ 7,050 $ 4,950 $ 3,562
Share-based Compensation Arrangement by Share-based Payment Award, Capitalized Cost 204 175 143
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 7,050 4,950 3,562
Claims expenses      
Stock-based Compensation      
Total stock-based compensation 697 571 355
Other cost of revenue      
Stock-based Compensation      
Total stock-based compensation 353 356 239
Sales and marketing      
Stock-based Compensation      
Total stock-based compensation 2,120 1,335 722
Technology and development      
Stock-based Compensation      
Total stock-based compensation 364 209 216
General and administrative      
Stock-based Compensation      
Total stock-based compensation 3,312 2,304 1,887
Total Expense [Member]      
Stock-based Compensation      
Total stock-based compensation $ 6,846 $ 4,775 $ 3,419
Restricted Stock Units (RSUs) [Member]      
Stock-based Compensation      
Restricted stock, outstanding 581,943 451,160 256,842
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized $ 14,600    
Share-based Compensation Arrangement , Non-employee, Weighted Average Remaining Vesting Period 3 years    
v3.19.3.a.u2
Stock-based Compensation Valuation Assumptions (Details)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
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
Share-based Compensation Arrangement by Share-based Payment Fair Value Assumptions, Expected Term, Minimum   6 years 3 months
Expected volatility Minimum   37.10%
Expected volatility Maximum   39.80%
Expected dividends 0.00% 0.00%
Risk-free minimum   1.80%
Risk-free maximum   2.20%
v3.19.3.a.u2
Stock-based Compensation Option Activity (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
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 9 months 18 days      
Number of Options        
Beginning balance 2,621,503 4,006,399 4,123,023  
Granted 0 0 657,339  
Exercised 510,268 1,292,037 670,823  
Forfeited 13,257 92,859 103,140  
Ending Balance 2,097,978 2,621,503 4,006,399  
Exercisable at December 31, 2018 1,891,591      
Weighted Average Exercise Price per Share        
Beginning Balance (usd per share) $ 9.01 $ 7.16 $ 5.06  
Granted (usd per share) 0 0 17.74  
Exercised (usd per share) 5.28 2.82 3.80  
Forfeited (usd per share) 18.23 15.36 12.25  
Ending Balance (usd per share) 9.86 $ 9.01 $ 7.16  
Vested and exercisable at December 31, 2014 (usd per share) $ 9.04      
Aggregate Intrinsic Value (in thousands)        
Outstanding $ 57,907 $ 43,136 $ 88,578 $ 43,185
Exercised 13,151 $ 36,625 $ 10,392  
Exercisable at December 31, 2018 $ 53,760      
v3.19.3.a.u2
Stock-based Compensation Options Granted (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]      
WEIGHTED-AVERAGE GRANT DATE FAIR VALUE $ 0 $ 0 $ 7.25
Fair Value of Options Vested (in thousands) $ 1,591 $ 2,665 $ 6,313
v3.19.3.a.u2
Stock-based Compensation Restricted Stock Awards (Details) - Restricted Stock - $ / shares
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]      
Beginning balance 451,160 256,842 350,631
Granted 459,523 375,313 23,659
Vested (276,184) (149,213) (116,877)
Forfeited (52,556) (31,782) (571)
Ending balance 581,943 451,160 256,842
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) $ 22.16 $ 4.77 $ 4.77
Restricted stock awards granted (usd per share) 30.03 28.10 30.19
Awards upon which restrictions lapsed (usd per share) 18.20 9.74 4.77
Restricted stock awards forfeited (usd per share) 29.85 28.57 30.19
Ending balance (usd per share) $ 29.56 $ 22.16 $ 4.77
v3.19.3.a.u2
Leases (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Leases [Abstract]      
Operating Leases, Rent Expense, Net $ 400 $ 1,400 $ 1,800
Operating Leases, Future Minimum Payments Receivable, Current 2,002    
Proceeds from Rents Received 2,200 $ 900  
Operating Leases, Future Minimum Payments Receivable, in Two Years 1,632    
Operating Leases, Future Minimum Payments Receivable, in Three Years 1,325    
Operating Leases, Future Minimum Payments Receivable, in Four Years 1,367    
Operating Leases, Future Minimum Payments Receivable, in Five Years 1,410    
Operating Leases, Future Minimum Payments Receivable, Thereafter 1,800    
Operating Leases, Future Minimum Payments Receivable $ 9,536    
v3.19.3.a.u2
Stockholder's Equity Narrative (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Class of Stock Disclosures [Abstract]      
Common Stock, Shares Authorized 100,000,000    
Common Stock, Shares, Outstanding 34,947,017    
Preferred Stock, Shares Authorized 10,000,000    
Stock Repurchase Program, Authorized Amount $ 15,000    
Redemption of warrants, gross 480,000    
Warrants outstanding 0    
Stock Issued During Period, Shares, New Issues   2,090,909  
Shares Issued, Price Per Share   $ 33.00  
Proceeds from Issuance or Sale of Equity $ 0 $ 65,671 $ 0
Payments to Acquire Buildings, Shares   303,030  
v3.19.3.a.u2
Segments (Details) Business Segment - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]                      
Revenue $ 105,483 $ 99,276 $ 92,199 $ 86,978 $ 82,640 $ 78,164 $ 73,392 $ 69,760 $ 383,936 $ 303,956 $ 242,667
Veterinary invoice expense 58,343 54,303,000 51,780 50,113 46,473 43,453,000 41,009 39,187 270,947 214,539 170,122
Other Cost of Services Sold 10,092 10,117,000 9,259,000 8,583 8,335 7,858,000 6,915,000 6,387 48,065 38,051 29,495
Gross profit 17,734 17,445 14,713 15,032 14,205 13,744 12,353 11,064 64,924 51,366 43,050
Technology and Development Expense                 10,074 9,248 9,768
General and administrative                 20,967 18,164 16,820
Sales and marketing                 35,451 24,999 19,104
Income (Loss) from Equity Method Investments                 (352) 0 0
Operating loss                 (1,920) (1,045) (2,642)
Subscription business                      
Segment Reporting Information [Line Items]                      
Revenue                 321,163 263,738 218,354
Veterinary invoice expense 51,183 48,285,000 46,446 45,137 41,806 39,761,000 37,664 36,323 232,415 191,051 155,554
Other Cost of Services Sold 6,709 6,468,000 5,887,000 5,877 6,024 5,454,000 4,927,000 4,923 29,724 24,941 21,329
Gross profit                 59,024 47,746 41,471
Technology and Development Expense                 8,427 8,024 8,789
General and administrative                 17,539 15,761 15,135
Sales and marketing                 35,037 24,622 18,886
Operating loss                 (1,979) (661) (1,339)
Other business                      
Segment Reporting Information [Line Items]                      
Revenue                 62,773 40,218 24,313
Veterinary invoice expense 7,160 6,018,000 5,334 4,976 4,667 3,692,000 3,345 2,864 38,532 23,488 14,568
Other Cost of Services Sold $ 3,383 $ 3,649,000 $ 3,372,000 $ 2,706 $ 2,311 $ 2,404,000 $ 1,988,000 $ 1,464 18,341 13,110 8,166
Gross profit                 5,900 3,620 1,579
Technology and Development Expense                 1,647 1,224 979
General and administrative                 3,428 2,403 1,685
Sales and marketing                 414 377 218
Operating loss                 $ 411 $ (384) $ (1,303)
v3.19.3.a.u2
Segments (Details) Revenue by Geography - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting Information [Line Items]                      
Revenues $ 105,483 $ 99,276 $ 92,199 $ 86,978 $ 82,640 $ 78,164 $ 73,392 $ 69,760 $ 383,936 $ 303,956 $ 242,667
UNITED STATES                      
Segment Reporting Information [Line Items]                      
Revenues                 316,138 246,280 195,297
CANADA                      
Segment Reporting Information [Line Items]                      
Revenues                 $ 67,798 $ 57,676 $ 47,370
v3.19.3.a.u2
Dividend Restrictions Statutory Surplus (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Insurance [Abstract]      
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval $ 1,500    
Proceeds from Dividends Received 3,900 $ 2,200 $ 2,700
Statutory Accounting Practices, Statutory Net Income Amount 16,311 11,021 7,507
Statutory Accounting Practices, Statutory Capital and Surplus, Balance 73,810 $ 56,244 $ 37,190
Statutory Accounting Practices, Statutory Capital and Surplus Required 55,300    
Deposit Assets $ 6,700    
v3.19.3.a.u2
Income Taxes Income before taxes (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
United States $ (1,783) $ (1,054) $ (1,965)
Foreign 143 120 34
Loss before income taxes $ (1,640) $ (934) $ (1,931)
v3.19.3.a.u2
Income Taxes Income tax benefits (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Corporate Tax Rate 21.00%    
U.S. federal & state $ 12 $ (10) $ 183
Foreign 52 37 15
Current income tax expense (benefit) 64 27 198
Foreign (11) (2) (6)
Deferred Income Tax Expense (Benefit) 105 (34) (626)
Income tax (benefit) expense 169 (7) (428)
Deferred Federal Income Tax Expense (Benefit) $ 116 $ (32) $ (620)
v3.19.3.a.u2
Income Taxes Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 21.00% 21.00% 34.00%
Effective Income Tax Rate Reconciliation, Nondeductible Expense, US State Income Taxes, Percent (7.80%) 4.60% (9.50%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent (4.90%) (5.40%) (3.00%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Fines and Settlements, Percent (9.20%) (2.10%) 0.00%
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent 177.20% 828.50% 189.10%
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent (184.20%) (857.40%) (229.60%)
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent (11.60%) (8.60%) 2.00%
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent 0.00% 0.00% 32.10%
Effective Income Tax Rate Reconciliation, Tax Credit, Percent 9.20% 20.20% 7.10%
Effective income tax rate (10.30%) 0.80% 22.20%
v3.19.3.a.u2
Income Taxes Deferred tax assets and liabilities (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Operating Loss Carryforwards, Limitations on Use, Value $ 500    
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 21.00% 21.00% 34.00%
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Unearned Premiums Reserve $ 2,219 $ 1,371  
Deferred tax assets:      
Accruals and reserves 885 475  
Noncurrent:      
Net operating loss carryforwards 30,569 26,566  
Depreciation and amortization 240 346  
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost 2,102 1,690  
Deferred Tax Assets, Tax Credit Carryforwards 547 397  
Deferred tax asset, noncurrent, other 243 430  
Total deferred tax assets 36,805 31,275  
Deferred Tax Liabilities, Gross [Abstract]      
Deferred costs (398) (279)  
Intangible assets (1,117) (1,002)  
Deferred Tax Liabilities, Other (775) (250)  
Total deferred tax liabilities (2,290) (1,531)  
Deferred Tax Assets, Net 34,515 29,744  
Less deferred tax asset valuation allowance (35,609) (30,701)  
Net deferred tax liability $ (1,094) $ (957)  
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent (7.80%) 4.60% (9.50%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent 177.20% 828.50% 189.10%
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent (184.20%) (857.40%) (229.60%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent (4.90%) (5.40%) (3.00%)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Fines and Settlements, Percent (9.20%) (2.10%) 0.00%
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent (11.60%) (8.60%) 2.00%
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent 0.00% 0.00% 32.10%
Effective Income Tax Rate Reconciliation, Tax Credit, Percent 9.20% 20.20% 7.10%
Effective income tax rate (10.30%) 0.80% 22.20%
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount $ 4,900    
v3.19.3.a.u2
Income Taxes Unrecognized Tax Benefits (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Operating loss carryforwards $ 30,600    
Operating Loss Carryforwards, Expiration Date Jan. 01, 2027    
Operating Loss Carryforwards, Limitations on Use, Value $ 500    
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance, beginning of year 89 $ 327 $ 120
Increases (decreases) to tax positions related to prior periods 19 243 91
Increases to tax positions related to the current year 5 5 116
Balance, end of year $ 113 $ 89 $ 327
v3.19.3.a.u2
Retirement Plan Details (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Retirement Benefits [Abstract]      
Defined Contribution Plan, Employer Discretionary Contribution Amount $ 0.0 $ 0.0 $ 0.0
v3.19.3.a.u2
Quarterly Financial Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenue $ 105,483 $ 99,276 $ 92,199 $ 86,978 $ 82,640 $ 78,164 $ 73,392 $ 69,760 $ 383,936 $ 303,956 $ 242,667
Gross profit 17,734 17,445 14,713 15,032 14,205 13,744 12,353 11,064 64,924 51,366 43,050
Net loss $ 636 $ 782 $ (1,931) $ (1,296) $ (275) $ 1,205 $ (377) $ (1,480) (1,809) (927) (1,503)
Earnings Per Share, Diluted $ 0.02 $ 0.02 $ (0.06) $ (0.04) $ (0.01) $ 0.03 $ (0.01) $ (0.05)      
Earnings Per Share, Basic $ 0.02 $ 0.02 $ (0.06) $ (0.04) $ (0.01) $ 0.04 $ (0.01) $ (0.05)      
Weighted Average Number of Shares Outstanding, Basic 34,876,438 34,876,782 34,610,709 34,292,367 33,716,975 33,129,416 30,721,037 30,246,585      
Weighted Average Number of Shares Outstanding, Diluted 36,354,620 36,399,136 34,610,709 34,292,367 33,716,975 36,385,360 30,721,037 30,246,585      
Claims Expense $ 58,343 $ 54,303,000 $ 51,780 $ 50,113 $ 46,473 $ 43,453,000 $ 41,009 $ 39,187 270,947 214,539 170,122
Other Cost of Services Sold 10,092 10,117,000 9,259,000 8,583 8,335 7,858,000 6,915,000 6,387 48,065 38,051 29,495
Other Segments [Member]                      
Revenue                 62,773 40,218 24,313
Gross profit                 5,900 3,620 1,579
Claims Expense 7,160 6,018,000 5,334 4,976 4,667 3,692,000 3,345 2,864 38,532 23,488 14,568
Other Cost of Services Sold 3,383 3,649,000 3,372,000 2,706 2,311 2,404,000 1,988,000 1,464 18,341 13,110 8,166
Subscription business [Member]                      
Revenue                 321,163 263,738 218,354
Gross profit                 59,024 47,746 41,471
Claims Expense 51,183 48,285,000 46,446 45,137 41,806 39,761,000 37,664 36,323 232,415 191,051 155,554
Other Cost of Services Sold $ 6,709 $ 6,468,000 $ 5,887,000 $ 5,877 $ 6,024 $ 5,454,000 $ 4,927,000 $ 4,923 $ 29,724 $ 24,941 $ 21,329
v3.19.3.a.u2
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statement of Comprehensive Loss (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Condensed Financial Statements, Captions [Line Items]      
Technology and Development Expense $ 10,074 $ 9,248 $ 9,768
General and administrative 20,967 18,164 16,820
Sales and marketing 35,451 24,999 19,104
Income (Loss) from Equity Method Investments (352) 0 0
Operating loss (1,920) (1,045) (2,642)
Interest expense 1,349 1,198 533
Other income, net (1,629) (1,309) (1,244)
Income Tax (Benefit) Expense, Attributable to Parent 5,423 4,042 5,302
Other comprehensive income (loss), net of taxes 1,003 (661) 285
Comprehensive loss (806) (1,588) (1,218)
Parent Company      
Condensed Financial Statements, Captions [Line Items]      
Veterinary invoice expense 697 571 354
Other costs of revenue 353 357 239
Technology and Development Expense 1,085 512 528
General and administrative 5,974 4,879 4,204
Sales and marketing 2,137 1,355 889
Total expenses 10,246 7,674 6,214
Income (Loss) from Equity Method Investments (205) 0 0
Operating loss (10,451) (7,674) (6,214)
Interest expense 1,327 1,184 529
Other income, net 4,156 2,557 4,101
Loss before equity in undistributed earnings of subsidiaries (7,622) (6,301) (2,642)
Equity in undistributed earnings of subsidiaries (390) (1,332) 4,163
Net loss (1,809) (927) (1,503)
Other comprehensive income (loss) of subsidiaries 1,003 (661) 285
Other comprehensive income (loss), net of taxes 1,003 (661) 285
Comprehensive loss $ (806) $ (1,588) $ (1,218)
v3.19.3.a.u2
Schedule 1-Parent Only Disclosures [Schedule] Condensed Balance Sheet (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Condensed Financial Statements, Captions [Line Items]        
Accounts and other receivables $ 54,408 $ 31,565    
Prepaid expenses and other assets 5,513 5,300    
Total current assets 158,821 117,976    
Restricted Cash and Cash Equivalents 1,400 1,400    
Property and equipment, net 70,372 69,803    
Intangible assets, net 7,731 8,071    
Other Assets, Noncurrent 14,553 6,706    
Total assets 257,200 207,510    
Accrued Liabilities, Current 13,798 11,347    
Total current liabilities 91,625 63,203    
Long-term Debt, Excluding Current Maturities 26,086 12,862    
Deferred tax liabilities 1,118 1,002    
Other liabilities 1,611 1,270    
Total liabilities 120,440 78,337    
Common Stock, Value, Outstanding 0 0    
Preferred Stock, Value, Outstanding 0 0    
Additional Paid-in Capital 232,731 219,838    
Accumulated other comprehensive loss 250 (753)    
Accumulated deficit (85,520) (83,711)    
Treasury stock, at cost (10,701) (6,201)    
Total stockholders' deficit 136,760 129,173 $ 48,434 $ 44,715
Liabilities and Equity 257,200 207,510    
Parent Company        
Condensed Financial Statements, Captions [Line Items]        
Cash Equivalents, at Carrying Value 1,242 2,133    
Accounts and other receivables 2,933 2,094    
Prepaid expenses and other assets 361 661    
Total current assets 4,536 4,888    
Restricted Cash and Cash Equivalents 1,400 1,400    
Property and equipment, net 663 568    
Intangible assets, net 5,356 5,076    
Other Assets, Noncurrent 14,146 6,515    
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures 138,174 125,475    
Total assets 164,275 143,922    
Accounts Payable and Accrued Liabilities, Current 311 885    
Total current liabilities 311 885    
Long-term Debt, Excluding Current Maturities 26,086 12,862    
Deferred tax liabilities 1,118 1,002    
Total liabilities 27,515 14,749    
Common Stock, Value, Outstanding 0 0    
Preferred Stock, Value, Outstanding 0 0    
Additional Paid-in Capital 232,731 219,838    
Accumulated other comprehensive loss 250 (753)    
Accumulated deficit (85,520) (83,711)    
Treasury stock, at cost (10,701) (6,201)    
Total stockholders' deficit 136,760 129,173    
Liabilities and Equity $ 164,275 $ 143,922    
v3.19.3.a.u2
Schedule 1-Parent Only Disclosures [Schedule] Condensed Statements of Cash Flows (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Condensed Financial Statements, Captions [Line Items]      
Proceeds from Dividends Received $ 3,900 $ 2,200 $ 2,700
Loss attributable to equity method investments 352 0 0
Equity Method Investment, Realized Gain (Loss) on Disposal     1,000
Warrant expense 0 0 (1,036)
Stock-based compensation expense 6,846 4,775 3,419
Other Operating Income (Expense), Net (105) 240 383
Net cash provided by operating activities 16,157 12,680 9,666
Proceeds from Sale of Equity Method Investments 0 0 1,402
Purchases of property and equipment (5,373) (56,936) (3,131)
Proceeds from (Payments for) Other Financing Activities (438) 365 (694)
Payments for (Proceeds from) Investments 4,000 3,000 0
Net cash used in investing activities (28,008) (81,451) (13,056)
Proceeds from Issuance or Sale of Equity 0 65,671 0
Payments Related to Tax Withholding for Share-based Compensation (1,667) (1,839) (1,170)
Proceeds from exercise of stock options 2,982 3,601 2,545
Proceeds from debt financing, net of financing fees 13,167 13,431 4,400
Repayments of Long-term Debt 0 (10,000) 0
Net cash provided by financing activities 14,044 71,229 5,081
Effect of Exchange Rate on Cash and Cash Equivalents 423 (812) 378
Cash, cash equivalents, and restricted cash at beginning of period 26,552    
Cash, cash equivalents, and restricted cash at end of period 29,168 26,552  
Capital Lease Obligations Incurred 0 0 689
Redemption of Warrants Non-Cash; Common Stock 4,500 3,000 0
Acquisition of Corporate Real Estate Non-Cash, Common Stock 0 9,640 0
Parent Company      
Condensed Financial Statements, Captions [Line Items]      
Cash, Cash Equivalents, and Restricted Cash, Carrying Value, End of Period 2,642 3,533 1,705
Cash, Cash Equivalents, and Restricted Cash, Carrying Value 3,533 1,705 4,001
Net loss (1,809) (927) (1,503)
Loss attributable to equity method investments 205 0 0
Income (Loss) from Subsidiaries, before Tax 390 1,332 (4,163)
Depreciation and amortization 211 436 697
Equity Method Investment, Realized Gain (Loss) on Disposal 0 0 (1,036)
Stock-based compensation expense 6,846 4,775 3,419
Other Operating Income (Expense), Net 48 108 (380)
Increase (Decrease) in Operating Assets (601) (97) 743
Net cash provided by operating activities 4,305 2,963 6,103
Proceeds from Sale of Equity Method Investments 0 0 1,402
Purchases of property and equipment (728) (164) (135)
Payments to Acquire Interest in Subsidiaries and Affiliates (11,931) (67,884) (12,168)
Proceeds from (Payments for) Other Financing Activities (7,019) (4,237) (2,668)
Net cash used in investing activities (19,678) (72,285) (13,570)
Proceeds from Issuance or Sale of Equity 0 65,671 0
Payments Related to Tax Withholding for Share-based Compensation (1,667) (1,839) (1,170)
Proceeds from exercise of stock options 2,982 3,601 2,545
Proceeds from debt financing, net of financing fees 13,167 13,430 4,400
Repayments of Long-term Debt 0 (10,000) 0
Other financing costs 0 287 (604)
Net cash provided by financing activities 14,482 71,150 5,170
Net change in cash, cash equivalents, and restricted cash (891) 1,828 (2,297)
Interest paid 1,166 1,007 333
Capital Lease Obligations Incurred 0 0 471
Redemption of Warrants Non-Cash; Common Stock 4,500 3,000 0
Acquisition of Corporate Real Estate Non-Cash, Common Stock $ 0 $ 9,640 $ 0
v3.19.3.a.u2
Label Element Value
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents $ 24,237,000