|
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
94-3351864
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
San Mateo, California
|
|
|
1100 Park Place, 4th Floor
San Mateo, California
(Address of principal executive offices
|
|
94403
(Zip Code)
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☐
|
|
|
|
Page No.
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
September 30, 2016
|
||||
|
Derived from
Audited Financial
Statements
|
|
(Unaudited)
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
500,918
|
|
|
$
|
666,634
|
|
Restricted cash
|
332
|
|
|
332
|
|
||
Accounts receivable, net
|
72,271
|
|
|
85,135
|
|
||
Prepaid expenses and other current assets
|
13,254
|
|
|
21,258
|
|
||
Total current assets
|
586,775
|
|
|
773,359
|
|
||
Property and equipment, net
|
47,955
|
|
|
55,451
|
|
||
Goodwill
|
157,109
|
|
|
157,109
|
|
||
Acquired intangible assets, net
|
82,616
|
|
|
86,426
|
|
||
Deferred tax assets
|
9,837
|
|
|
10,261
|
|
||
Other assets
|
4,447
|
|
|
4,497
|
|
||
Total assets
|
$
|
888,739
|
|
|
$
|
1,087,103
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
60,541
|
|
|
$
|
69,177
|
|
Customer obligations
|
400,821
|
|
|
549,316
|
|
||
Short-term contingent consideration
|
739
|
|
|
—
|
|
||
Other current liabilities
|
2,893
|
|
|
359
|
|
||
Total current liabilities
|
464,994
|
|
|
618,852
|
|
||
Long-term debt
|
78,996
|
|
|
78,907
|
|
||
Other non-current liabilities
|
7,780
|
|
|
9,626
|
|
||
Total liabilities
|
551,770
|
|
|
707,385
|
|
||
Stockholders' Equity:
|
|
|
|
||||
Common stock, $0.001 par value (authorized 1,000,000 shares; 36,055 shares issued and 35,936 shares outstanding at December 31, 2015 and 36,981 shares issued and 36,636 shares outstanding at September 30, 2016)
|
36
|
|
|
38
|
|
||
Additional paid-in capital
|
343,166
|
|
|
380,741
|
|
||
Treasury stock at cost (119 shares at December 31, 2015 and 345 shares at September 30, 2016)
|
(5,003
|
)
|
|
(14,374
|
)
|
||
Retained earnings (accumulated deficit)
|
(1,230
|
)
|
|
13,313
|
|
||
Total stockholders’ equity
|
336,969
|
|
|
379,718
|
|
||
Total liabilities and stockholders’ equity
|
$
|
888,739
|
|
|
$
|
1,087,103
|
|
|
Three Months Ended September 30,
|
|
Nine months Ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
$
|
42,204
|
|
|
$
|
48,478
|
|
|
$
|
133,307
|
|
|
$
|
146,918
|
|
Commuter
|
16,003
|
|
|
17,580
|
|
|
47,928
|
|
|
52,339
|
|
||||
COBRA
|
12,229
|
|
|
18,670
|
|
|
37,112
|
|
|
51,955
|
|
||||
Other
|
12,724
|
|
|
4,196
|
|
|
32,866
|
|
|
12,439
|
|
||||
Total revenues
|
83,160
|
|
|
88,924
|
|
|
251,213
|
|
|
263,651
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues (excluding amortization of internal use software)
|
26,364
|
|
|
30,566
|
|
|
88,210
|
|
|
90,237
|
|
||||
Technology and development
|
11,560
|
|
|
11,668
|
|
|
33,928
|
|
|
32,656
|
|
||||
Sales and marketing
|
12,824
|
|
|
14,012
|
|
|
38,445
|
|
|
42,317
|
|
||||
General and administrative
|
12,875
|
|
|
16,130
|
|
|
39,559
|
|
|
47,875
|
|
||||
Amortization and change in contingent consideration
|
6,935
|
|
|
6,944
|
|
|
19,946
|
|
|
26,084
|
|
||||
Employee termination and other charges
|
(112
|
)
|
|
162
|
|
|
1,968
|
|
|
475
|
|
||||
Total operating expenses
|
70,446
|
|
|
79,482
|
|
|
222,056
|
|
|
239,644
|
|
||||
Income from operations
|
12,714
|
|
|
9,442
|
|
|
29,157
|
|
|
24,007
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
66
|
|
|
117
|
|
|
85
|
|
|
300
|
|
||||
Interest expense
|
(339
|
)
|
|
(465
|
)
|
|
(1,523
|
)
|
|
(1,279
|
)
|
||||
Other income (expense)
|
(8
|
)
|
|
22
|
|
|
280
|
|
|
24
|
|
||||
Income before income taxes
|
12,433
|
|
|
9,116
|
|
|
27,999
|
|
|
23,052
|
|
||||
Income tax provision
|
(4,835
|
)
|
|
(3,222
|
)
|
|
(11,244
|
)
|
|
(8,509
|
)
|
||||
Net income
|
$
|
7,598
|
|
|
$
|
5,894
|
|
|
$
|
16,755
|
|
|
$
|
14,543
|
|
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.21
|
|
|
$
|
0.16
|
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.21
|
|
|
$
|
0.16
|
|
|
$
|
0.46
|
|
|
$
|
0.39
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
35,880
|
|
|
36,605
|
|
|
35,733
|
|
|
36,312
|
|
||||
Diluted
|
36,516
|
|
|
37,454
|
|
|
36,595
|
|
|
37,078
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
16,755
|
|
|
$
|
14,543
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
4,810
|
|
|
6,202
|
|
||
Amortization and change in contingent consideration
|
19,946
|
|
|
25,986
|
|
||
Stock-based compensation expense
|
14,674
|
|
|
22,373
|
|
||
Loss on disposal of fixed assets
|
519
|
|
|
185
|
|
||
Provision for doubtful accounts
|
220
|
|
|
1,238
|
|
||
Deferred taxes
|
5,317
|
|
|
(424
|
)
|
||
Excess tax benefit related to stock-based compensation arrangements
|
(5,260
|
)
|
|
(8,824
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(7,852
|
)
|
|
(14,102
|
)
|
||
Prepaid expenses and other current assets
|
(512
|
)
|
|
919
|
|
||
Other assets
|
2,225
|
|
|
(50
|
)
|
||
Accounts payable and accrued expenses
|
6,953
|
|
|
81
|
|
||
Customer obligations
|
27,952
|
|
|
148,495
|
|
||
Other liabilities
|
4,088
|
|
|
(777
|
)
|
||
Net cash provided by operating activities
|
89,835
|
|
|
195,845
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(24,200
|
)
|
|
(20,529
|
)
|
||
Cash paid for acquisition of intangible assets
|
(9,445
|
)
|
|
(20,777
|
)
|
||
Net cash used in investing activities
|
(33,645
|
)
|
|
(41,306
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of common stock options
|
4,695
|
|
|
10,705
|
|
||
Proceeds from issuance of common stock under Employee Stock Purchase Plan
|
1,793
|
|
|
1,672
|
|
||
Payment of contingent consideration
|
(3,247
|
)
|
|
(653
|
)
|
||
Payment for treasury stock acquired
|
—
|
|
|
(9,371
|
)
|
||
Excess tax benefit related to stock-based compensation arrangements
|
5,260
|
|
|
8,824
|
|
||
Net cash provided by financing activities
|
8,501
|
|
|
11,177
|
|
||
Net increase in cash and cash equivalents
|
64,691
|
|
|
165,716
|
|
||
Cash and cash equivalents at beginning of period
|
413,301
|
|
|
500,918
|
|
||
Cash and cash equivalents at end of period
|
$
|
477,992
|
|
|
$
|
666,634
|
|
Supplemental cash flow disclosure:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
2,079
|
|
|
$
|
1,139
|
|
Income Taxes
|
822
|
|
|
5,216
|
|
||
Noncash financing and investing activities:
|
|
|
|
||||
Accrued capital expenditures
|
371
|
|
|
2,882
|
|
•
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
|
•
|
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
•
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
|
Contingent
Consideration
BCI
|
||
Balance at December 31, 2015
|
$
|
739
|
|
Gains or losses included in earnings:
|
|
||
Losses on revaluation of contingent consideration
|
11
|
|
|
Payment of contingent consideration
|
(750
|
)
|
|
Balance at September 30, 2016
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Numerator for basic net income per share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
7,598
|
|
|
$
|
5,894
|
|
|
$
|
16,755
|
|
|
$
|
14,543
|
|
Denominator for basic net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
35,880
|
|
|
36,605
|
|
|
35,733
|
|
|
36,312
|
|
||||
Basic net income per share
|
$
|
0.21
|
|
|
$
|
0.16
|
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator for diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
7,598
|
|
|
$
|
5,894
|
|
|
$
|
16,755
|
|
|
$
|
14,543
|
|
Denominator for diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
35,880
|
|
|
36,605
|
|
|
35,733
|
|
|
36,312
|
|
||||
Dilutive stock options and restricted stock units
|
636
|
|
|
849
|
|
|
862
|
|
|
733
|
|
||||
Dilutive vested performance restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Diluted weighted-average common shares outstanding
|
36,516
|
|
|
37,454
|
|
|
36,595
|
|
|
37,078
|
|
||||
Diluted net income per share
|
$
|
0.21
|
|
|
$
|
0.16
|
|
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
December 31, 2015
|
|
September 30, 2016
|
||||||||||||||||||||
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Client contracts and broker relationships
|
$
|
124,261
|
|
|
$
|
47,013
|
|
|
$
|
77,248
|
|
|
$
|
138,319
|
|
|
$
|
56,028
|
|
|
$
|
82,291
|
|
Trade names
|
3,880
|
|
|
2,405
|
|
|
1,475
|
|
|
3,880
|
|
|
2,916
|
|
|
964
|
|
||||||
Technology
|
13,846
|
|
|
11,039
|
|
|
2,807
|
|
|
13,846
|
|
|
11,635
|
|
|
2,211
|
|
||||||
Noncompete agreements
|
2,232
|
|
|
1,870
|
|
|
362
|
|
|
2,232
|
|
|
1,923
|
|
|
309
|
|
||||||
Favorable lease
|
1,136
|
|
|
412
|
|
|
724
|
|
|
1,136
|
|
|
485
|
|
|
651
|
|
||||||
Total
|
$
|
145,355
|
|
|
$
|
62,739
|
|
|
$
|
82,616
|
|
|
$
|
159,413
|
|
|
$
|
72,987
|
|
|
$
|
86,426
|
|
Remainder of 2016
|
$
|
4,045
|
|
2017
|
15,790
|
|
|
2018
|
15,164
|
|
|
2019
|
14,604
|
|
|
2020
|
12,620
|
|
|
Thereafter
|
24,203
|
|
|
Total
|
$
|
86,426
|
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
Trade receivables
|
$
|
37,999
|
|
|
$
|
50,599
|
|
Unpaid amounts for benefit services
|
35,343
|
|
|
36,656
|
|
||
|
73,342
|
|
|
87,255
|
|
||
Less allowance for doubtful accounts
|
(1,071
|
)
|
|
(2,120
|
)
|
||
Accounts receivable, net
|
$
|
72,271
|
|
|
$
|
85,135
|
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
Computers and equipment
|
$
|
14,461
|
|
|
$
|
16,985
|
|
Software and software development costs
|
92,898
|
|
|
105,056
|
|
||
Furniture and fixtures
|
5,083
|
|
|
6,263
|
|
||
Leasehold improvements
|
13,594
|
|
|
18,169
|
|
||
|
$
|
126,036
|
|
|
$
|
146,473
|
|
Less accumulated depreciation and amortization
|
(78,081
|
)
|
|
(91,022
|
)
|
||
Property and equipment, net
|
$
|
47,955
|
|
|
$
|
55,451
|
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
Accounts payable
|
$
|
2,542
|
|
|
$
|
2,860
|
|
Payable to benefit providers and transit agencies
|
23,169
|
|
|
26,634
|
|
||
Accrued payables
|
11,198
|
|
|
12,751
|
|
||
Accrued compensation and related benefits
|
18,538
|
|
|
20,435
|
|
||
Other accrued expenses
|
2,891
|
|
|
2,926
|
|
||
Deferred revenue
|
2,203
|
|
|
3,571
|
|
||
Accounts payable and accrued expenses
|
$
|
60,541
|
|
|
$
|
69,177
|
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
Amounts borrowed
|
$
|
79,600
|
|
|
$
|
79,600
|
|
Outstanding letters of credit
|
2,700
|
|
|
2,700
|
|
||
Amounts available to borrow
(1)
|
67,700
|
|
|
167,700
|
|
(1)
|
Amounts available to borrow at December 31, 2015 excludes
$100 million
increase option
|
|
Amount
|
||
Beginning balance as of December 31, 2015
|
$
|
183
|
|
Employee termination and other charges
|
263
|
|
|
Cash paid
|
(412
|
)
|
|
Ending balance as of September 30, 2016
|
$
|
34
|
|
|
Three Months Ended September 30,
|
|
Nine months Ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Stock options granted (in thousands)
|
413
|
|
|
27
|
|
|
464
|
|
|
804
|
|
||||
Weighted-average fair value at date of grant
|
$
|
18.70
|
|
|
$
|
22.86
|
|
|
$
|
19.09
|
|
|
$
|
18.30
|
|
|
Shares
|
|
Weighted-average
exercise price
|
|
Remaining
contractual term
(in years)
|
|
Aggregate
intrinsic value
(in thousands)
|
|||||
Outstanding at December 31, 2015
|
3,037
|
|
|
$
|
25.18
|
|
|
6.41
|
|
$
|
65,229
|
|
Granted
|
804
|
|
|
48.10
|
|
|
|
|
|
|||
Exercised
|
(673
|
)
|
|
15.90
|
|
|
|
|
|
|||
Forfeited
|
(79
|
)
|
|
46.24
|
|
|
|
|
|
|||
Outstanding as of September 30, 2016
|
3,089
|
|
|
$
|
32.62
|
|
|
7.06
|
|
$
|
87,400
|
|
Vested and expected to vest at September 30, 2016
|
2,951
|
|
|
$
|
31.99
|
|
|
6.98
|
|
$
|
85,367
|
|
Exercisable at September 30, 2016
|
1,638
|
|
|
$
|
20.63
|
|
|
5.48
|
|
$
|
66,006
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||
Expected volatility
|
43.43
|
%
|
|
41.87
|
%
|
|
43.49
|
%
|
|
42.69
|
%
|
Risk-free interest rate
|
1.55
|
%
|
|
1.07
|
%
|
|
1.55
|
%
|
|
1.17
|
%
|
Expected term (in years)
|
4.74
|
|
|
4.87
|
|
|
4.74
|
|
|
4.87
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Achievement of Revenue Growth Objective
|
Percentage of Restricted Stock Unit Vesting
|
20% and Greater
|
200% will vest
|
Between 15% but less than 20%
|
Between 100% and 200% will vest
|
Between 10% but less than 15%
|
Between 50% and 100% will vest
|
Below 10%
|
None will vest
|
|
Shares
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Unvested at December 31, 2015
|
763
|
|
|
$
|
44.83
|
|
Granted
(1)
|
502
|
|
|
39.22
|
|
|
Vested
(2)
|
(344
|
)
|
|
21.62
|
|
|
Forfeited
|
(17
|
)
|
|
51.57
|
|
|
Unvested at September 30, 2016
|
904
|
|
|
$
|
50.41
|
|
(1)
|
Includes additional shares granted as specified financial metrics for the performance-based restricted stock units, granted to certain executives in 2013, during the performance period of January 1, 2013 through December 31, 2015 were met, resulting in actual shares vesting at
150%
of the target number of shares originally granted.
|
(2)
|
Includes
264,000
shares vested from performance-based restricted stock units granted to certain executives in 2013 representing
150%
of the target number of shares originally granted.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
Cost of revenue
|
$
|
977
|
|
|
$
|
1,581
|
|
|
$
|
2,676
|
|
|
$
|
4,549
|
|
Technology and development
|
391
|
|
|
671
|
|
|
733
|
|
|
1,815
|
|
||||
Sales and marketing
|
660
|
|
|
789
|
|
|
1,992
|
|
|
2,287
|
|
||||
General and administrative
|
3,397
|
|
|
4,490
|
|
|
9,273
|
|
|
13,722
|
|
||||
Total
|
$
|
5,425
|
|
|
$
|
7,531
|
|
|
$
|
14,674
|
|
|
$
|
22,373
|
|
|
As of
September 30, 2016 |
||
Remainder of 2016
|
$
|
2,054
|
|
2017
|
8,292
|
|
|
2018
|
7,947
|
|
|
2019
|
7,921
|
|
|
2020
|
7,717
|
|
|
Thereafter
|
13,662
|
|
|
Total future minimum lease payments
|
$
|
47,593
|
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
Revenues:
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Healthcare
|
$
|
42,204
|
|
|
$
|
48,478
|
|
|
15
|
%
|
|
$
|
133,307
|
|
|
$
|
146,918
|
|
|
10
|
%
|
Commuter
|
16,003
|
|
|
17,580
|
|
|
10
|
%
|
|
47,928
|
|
|
52,339
|
|
|
9
|
%
|
||||
COBRA
|
12,229
|
|
|
18,670
|
|
|
53
|
%
|
|
37,112
|
|
|
51,955
|
|
|
40
|
%
|
||||
Other
|
12,724
|
|
|
4,196
|
|
|
(67
|
)%
|
|
32,866
|
|
|
12,439
|
|
|
(62
|
)%
|
||||
Total revenues
|
$
|
83,160
|
|
|
$
|
88,924
|
|
|
7
|
%
|
|
$
|
251,213
|
|
|
$
|
263,651
|
|
|
5
|
%
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Cost of revenues (excluding amortization of internal use software)
|
$
|
26,364
|
|
|
$
|
30,566
|
|
|
16
|
%
|
|
$
|
88,210
|
|
|
$
|
90,237
|
|
|
2
|
%
|
Percent of revenue
|
32
|
%
|
|
34
|
%
|
|
|
|
35
|
%
|
|
34
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Technology and development
|
$
|
11,560
|
|
|
$
|
11,668
|
|
|
1
|
%
|
|
$
|
33,928
|
|
|
$
|
32,656
|
|
|
(4
|
)%
|
Percent of revenue
|
14
|
%
|
|
13
|
%
|
|
|
|
14
|
%
|
|
12
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Sales and marketing
|
$
|
12,824
|
|
|
$
|
14,012
|
|
|
9
|
%
|
|
$
|
38,445
|
|
|
$
|
42,317
|
|
|
10
|
%
|
Percent of revenue
|
15
|
%
|
|
16
|
%
|
|
|
|
15
|
%
|
|
16
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
General and administrative
|
$
|
12,875
|
|
|
$
|
16,130
|
|
|
25
|
%
|
|
$
|
39,559
|
|
|
$
|
47,875
|
|
|
21
|
%
|
Percent of revenue
|
16
|
%
|
|
18
|
%
|
|
|
|
16
|
%
|
|
18
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine Months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Amortization and change in contingent consideration
|
$
|
6,935
|
|
|
$
|
6,944
|
|
|
—
|
%
|
|
$
|
19,946
|
|
|
$
|
26,084
|
|
|
31
|
%
|
|
Three Months Ended September 30,
|
|
Change from
|
|
Nine months Ended September 30,
|
|
Change from
|
||||||||||||||
|
2015
|
|
2016
|
|
prior year
|
|
2015
|
|
2016
|
|
prior year
|
||||||||||
|
(In thousands, unaudited)
|
|
|
|
(In thousands, unaudited)
|
|
|
||||||||||||||
Employee termination and other charges
|
$
|
(112
|
)
|
|
$
|
162
|
|
|
(245
|
)%
|
|
$
|
1,968
|
|
|
$
|
475
|
|
|
(76
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
|
(In thousands, unaudited)
|
|
(In thousands, unaudited)
|
||||||||||||
Interest income
|
$
|
66
|
|
|
$
|
117
|
|
|
$
|
85
|
|
|
$
|
300
|
|
Interest expense
|
(339
|
)
|
|
(465
|
)
|
|
(1,523
|
)
|
|
(1,279
|
)
|
||||
Other income
|
(8
|
)
|
|
22
|
|
|
280
|
|
|
24
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2016
|
|
2015
|
|
2016
|
||||||||
|
(In thousands, unaudited)
|
|
(In thousands, unaudited)
|
||||||||||||
Income tax provision
|
$
|
(4,835
|
)
|
|
$
|
(3,222
|
)
|
|
$
|
(11,244
|
)
|
|
$
|
(8,509
|
)
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
Amounts borrowed
|
$
|
79,600
|
|
|
$
|
79,600
|
|
Outstanding letters of credit
|
2,700
|
|
|
2,700
|
|
||
Amounts available to borrow
(1)
|
67,700
|
|
|
167,700
|
|
(1)
|
Amounts available to borrow at December 31, 2015 excludes $100 million increase option
|
|
December 31,
2015 |
|
September 30,
2016 |
||||
|
(In thousands, unaudited)
|
||||||
Cash and cash equivalents, end of period
|
$
|
500,918
|
|
|
$
|
666,634
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2016
|
||||
|
(In thousands, unaudited)
|
||||||
Net cash provided by operating activities
|
$
|
89,835
|
|
|
$
|
195,845
|
|
Net cash used in investing activities
|
(33,645
|
)
|
|
(41,306
|
)
|
||
Net cash provided by financing activities
|
8,501
|
|
|
11,177
|
|
||
Net increase in cash and cash equivalents
|
$
|
64,691
|
|
|
$
|
165,716
|
|
|
Total
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
||||||||||
Long-term debt obligations
(1)
|
$
|
79,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
79,600
|
|
|
$
|
—
|
|
Interest on long-term debt obligations
(2)
|
5,174
|
|
|
1,380
|
|
|
2,759
|
|
|
1,035
|
|
|
—
|
|
|||||
Operating lease obligations
(3)
|
47,593
|
|
|
8,347
|
|
|
15,919
|
|
|
15,266
|
|
|
8,061
|
|
|||||
Total
|
$
|
132,367
|
|
|
$
|
9,727
|
|
|
$
|
18,678
|
|
|
$
|
95,901
|
|
|
$
|
8,061
|
|
(1)
|
As of
September 30, 2016
, maximum borrowings under the revolving credit facility are $250.0 million with a base rate determined in accordance with the credit agreement or, at our option, LIBOR plus a spread of 1.25% to 1.75% per annum, and a maturity date of June 5, 2020. At
September 30, 2016
, we had
$79.6 million
of outstanding principal which is recorded net of debt issuance costs on our consolidated balance sheets. The debt issuance costs are not included in the table above.
|
(2)
|
Estimated interest payments assume the interest rate applicable as of
September 30, 2016
of
1.77%
per annum on a
$79.6 million
principal amount.
|
(3)
|
We lease facilities under non-cancelable operating leases expiring at various dates through 2023.
|
|
|
WAGEWORKS, INC.
|
|
|
|
Date: November 9, 2016
|
By:
|
/s/ COLM M CALLAN
|
|
|
Colm M Callan
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/s/ COLM M CALLAN
|
|
|
Colm M Callan
|
|
|
Chief Financial Officer
|
|
|
(Principal Accounting Officer)
|
|
|
Incorporated by Reference
|
||||
Exhibit No.
|
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
31.1
|
Certification of the Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
31.2
|
Certification of the Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
32.1(1)
|
Certification of the Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
X
|
10.10G
|
First Amendment to the Second Amendment to Credit Agreement, by and among Registrant, MUFG Union Bank, N.A. (formerly Union Bank, N.A.), MHM Resources, LLC and Benefit Concepts, Inc. of Rhode Island, dated August 1, 2016.
|
|
|
|
|
X
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Schema Linkbase Document
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Labels Linkbase Document
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
|
|
|
|
|
(1)
|
The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of WageWorks, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
3.
|
Amendments to Credit Agreement.
|
4.
|
Conditions Precedent
. Borrower understands that this Amendment shall not be effective and shall have no force or effect until each of the following conditions precedent has been satisfied, or waived in writing by Agent (in Agent's sole discretion):
|
c.
|
Borrower shall have duly executed and delivered to Agent and each Lender this Amendment;
|
d.
|
Borrower shall have executed and delivered to MUFG Union Bank, N.A. an amended and restated Note evidencing the amount of its Commitment reflected on
Schedule 2.01
;
|
e.
|
Borrower shall have executed and delivered to Wells Fargo Bank, N.A. an amended and restated Note evidencing the amount of its Commitment reflected on
Schedule 2.01
;
|
f.
|
Borrower shall have delivered to Agent:
|
(i)
|
a certificate of Borrower, dated as of the Increase Effective Date (in
|
g.
|
The representations and warranties of Borrower under the Credit Agreement, the other Loan Documents and this Amendment, as applicable, shall be true and correct in all material respects as of the date hereof (except to the extent such representations and warranties expressly refer to an earlier date, in which case they are true, correct and complete in all material respects as of such earlier date); provided that the foregoing materiality qualifications shall not apply to any representations or warranties that are qualified by materiality in the text thereof, which representations and warranties shall be true in all respects;
|
f.
|
Agent shall have received, in immediately available funds, all out-of-pocket costs and expenses (including reasonable attorneys' fees and costs) incurred by Agent in connection with this Amendment and the transactions contemplated hereby and invoiced to Borrower prior to the date on which this Amendment is otherwise to become effective; provided that the failure to invoice any such amounts to Borrower prior to such date shall not preclude Agent from seeking reimbursement of such amounts, or excuse any Loan Party from paying or reimbursing such amounts, following the effective date of this Amendment; and
|
BORROWER:
WAGEWORKS, INC.
|
|
|
|
|
|
By:
|
|
||
|
|
Name:
|
|
|
|
|
Its:
|
|
|
AGENT:
|
MUFG UNION BANK, N.A., as Agent
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
||
|
|
Title:
|
|
|
AGENT:
|
MUFG UNION BANK, N.A., as Agent
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
||
|
|
Title:
|
|
|
AGENT:
|
MUFG UNION BANK, N.A., as Agent
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
||
|
|
Title:
|
|
|
Lender
|
|
Commitment
|
|
Applicable Percentage
|
|
|
|
|
|
MUFG UNION BANK, N.A.
|
|
$150,000,000
|
|
60.000000000%
|
Attention: James B. Goudy
99 Almaden Blvd., Suite 200
San Jose, CA 95113
Facsimile: (408) 280-7163
|
|
|
|
|
|
|
|
|
|
WELLS FARGO BANK, N.A.
|
|
$100,000,000
|
|
40.000000000%
|
Attention:
|
|
|
|
|
|
|
|
|
|
Total
|
|
$250,000,000
|
|
1.000000000%
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of WageWorks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 9, 2016
|
||
|
|
|
/s/ Joseph L. Jackson
|
||
Name:
|
|
Joseph L. Jackson
|
Title:
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of WageWorks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 9, 2016
|
||
|
|
|
/s/ Colm Callan
|
||
Name:
|
|
Colm Callan
|
Title:
|
|
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 9, 2016
|
||
|
|
|
/s/ Joseph L. Jackson
|
||
Name:
|
|
Joseph L. Jackson
|
Title:
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
/s/ Colm Callan
|
||
Name:
|
|
Colm Callan
|
Title:
|
|
Chief Financial Officer
(Principal Financial Officer)
|