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(Mark One)
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[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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|
94-3351864
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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1100 Park Place, 4th Floor
San Mateo, California
(Address of principal executive offices)
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94403
(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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WAGE
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The New York Stock Exchange
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Large accelerated filer
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[X]
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Accelerated filer
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[ ]
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Non-accelerated filer
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[ ]
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(Do not check if a smaller reporting company)
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Smaller reporting company
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[ ]
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Emerging growth company
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[ ]
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Page No.
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March 31, 2019
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December 31, 2018
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||||
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(Unaudited)
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Derived from
Audited Financial
Statements
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||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
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$
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782,766
|
|
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$
|
898,426
|
|
Restricted cash
|
333
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|
|
333
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|
||
Short-term investments
|
183,603
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|
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222,205
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|
||
Receivables, net
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114,426
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101,297
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|
||
Prepaid expenses and other current assets
|
30,822
|
|
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23,662
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|
||
Total current assets
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1,111,950
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|
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1,245,923
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||
Property and equipment, net
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74,378
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76,920
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|
||
Operating lease right-of-use assets
|
24,095
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—
|
|
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Goodwill
|
297,409
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|
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297,409
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|
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Acquired intangible assets, net
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123,762
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130,095
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|
||
Deferred tax assets, net
|
1,305
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|
|
1,482
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|
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Other assets
|
33,300
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|
|
33,324
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|
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Total assets
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$
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1,666,199
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$
|
1,785,153
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Liabilities and Stockholders’ Equity
|
|
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||||
Current liabilities:
|
|
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|
||||
Accounts payable and accrued expenses
|
$
|
87,812
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|
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$
|
97,347
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Customer obligations
|
660,437
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|
|
762,100
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|
||
Short-term operating lease liabilities
|
8,069
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|
|
—
|
|
||
Other current liabilities
|
19,197
|
|
|
4,264
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|
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Total current liabilities
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775,515
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|
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863,711
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|
||
Long-term debt, net of issuance costs
|
184,769
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|
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244,693
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|
||
Long-term operating lease liabilities
|
28,455
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|
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—
|
|
||
Other long-term liabilities
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4,773
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|
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11,608
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|
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Total liabilities
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993,512
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1,120,012
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|
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Commitments and Contingencies (Note 10)
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|
||||
Stockholders’ Equity:
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|
||||
Common stock, par value $0.001 per share (1,000,000 shares authorized; 40,333 shares issued and 39,853 shares outstanding at March 31, 2019 and December 31, 2018)
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41
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|
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41
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|
||
Additional paid-in capital
|
585,478
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|
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582,521
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|
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Treasury stock at cost (480 shares at March 31, 2019 and December 31, 2018)
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(22,309
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)
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(22,309
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)
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Accumulated other comprehensive loss
|
(222
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)
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(754
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)
|
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Retained earnings
|
109,699
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105,642
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|
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Total stockholders’ equity
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672,687
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|
|
665,141
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|
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Total liabilities and stockholders’ equity
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$
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1,666,199
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$
|
1,785,153
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Three Months Ended March 31,
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||||||
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2019
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2018
|
||||
Revenues:
|
|
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|
||||
Healthcare
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$
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71,974
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$
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75,256
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COBRA
|
23,589
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28,835
|
|
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Commuter
|
19,340
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18,878
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Other
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3,322
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3,671
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Total revenues
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118,225
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|
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126,640
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|
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Operating expenses:
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||||
Cost of revenues (excluding amortization of internal use software)
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39,258
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45,242
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Technology and development
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16,340
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13,033
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Sales and marketing
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18,331
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18,338
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General and administrative
|
27,909
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25,249
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Amortization
|
10,851
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9,991
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Total operating expenses
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112,689
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111,853
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|
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Income from operations
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5,536
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|
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14,787
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|
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Interest and other income, net
|
2,649
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1,266
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|
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Interest expense
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(2,709
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)
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(2,182
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)
|
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Income before income taxes
|
5,476
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13,871
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|
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Income tax provision
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(1,419
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)
|
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(2,852
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)
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Net income
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$
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4,057
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$
|
11,019
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Net income per share:
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Basic
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$
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0.10
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$
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0.28
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Diluted
|
$
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0.10
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|
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$
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0.27
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Shares used in computing net income per share:
|
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|
||||
Basic
|
39,853
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39,823
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|
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Diluted
|
40,437
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40,480
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Three Months Ended March 31,
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||||||
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2019
|
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2018
|
|
||||
Net income
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$
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4,057
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$
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11,019
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Other comprehensive income (loss), net of tax:
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||||
Net unrealized gain (loss) on short-term investments, net of tax
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532
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(731
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)
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Other comprehensive income (loss)
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532
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(731
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)
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|
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Total comprehensive income
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$
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4,589
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$
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10,288
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Three Months Ended March 31, 2019
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|||||||||||||||||||||||||
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Common stock
|
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Additional paid-in capital
|
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Treasury stock at cost
|
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Accumulated other comprehensive loss
|
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Retained earnings
|
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Total stockholders’ equity
|
|||||||||||||||
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Shares
|
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Amount
|
|
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|
|
||||||||||||||||||
Balance at December 31, 2018
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39,853
|
|
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$
|
41
|
|
|
$
|
582,521
|
|
|
$
|
(22,309
|
)
|
|
$
|
(754
|
)
|
|
$
|
105,642
|
|
|
$
|
665,141
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
2,904
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,904
|
|
||||||
Capitalized stock-based compensation
|
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
532
|
|
|
—
|
|
|
532
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,057
|
|
|
4,057
|
|
||||||
Balance at March 31, 2019
|
|
39,853
|
|
|
$
|
41
|
|
|
$
|
585,478
|
|
|
$
|
(22,309
|
)
|
|
$
|
(222
|
)
|
|
$
|
109,699
|
|
|
$
|
672,687
|
|
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||
|
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Common stock
|
|
Additional paid-in capital
|
|
Treasury stock at cost
|
|
Accumulated other comprehensive loss
|
|
Retained earnings
|
|
Total stockholders’ equity
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2017
|
|
39,771
|
|
|
$
|
41
|
|
|
$
|
562,131
|
|
|
$
|
(22,309
|
)
|
|
$
|
(354
|
)
|
|
$
|
72,741
|
|
|
$
|
612,250
|
|
Exercise of stock options
|
|
54
|
|
|
—
|
|
|
1,395
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,395
|
|
||||||
Issuance of common stock under Employee Stock Purchase Plan
|
|
18
|
|
|
—
|
|
|
869
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
869
|
|
||||||
Issuance of restricted stock units, net of shares withheld for employee taxes
|
|
10
|
|
|
—
|
|
|
(281
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(281
|
)
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
7,293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,293
|
|
||||||
Capitalized stock-based compensation
|
|
—
|
|
|
—
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(731
|
)
|
|
|
|
(731
|
)
|
|||||||
ASC 606 cumulative-effect adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,955
|
|
|
6,955
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,019
|
|
|
11,019
|
|
||||||
Balance at March 31, 2018
|
|
39,853
|
|
|
$
|
41
|
|
|
$
|
571,598
|
|
|
$
|
(22,309
|
)
|
|
$
|
(1,085
|
)
|
|
$
|
90,715
|
|
|
$
|
638,960
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
4,057
|
|
|
$
|
11,019
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
14,592
|
|
|
13,182
|
|
||
Amortization of debt issuance costs
|
176
|
|
|
120
|
|
||
Amortization of contract costs
|
725
|
|
|
780
|
|
||
Stock-based compensation expense
|
2,904
|
|
|
7,293
|
|
||
Provision for doubtful accounts
|
414
|
|
|
19
|
|
||
Other
|
233
|
|
|
(1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(13,543
|
)
|
|
(18,688
|
)
|
||
Prepaid expenses and other current assets
|
(7,160
|
)
|
|
5,600
|
|
||
Other assets
|
(701
|
)
|
|
(8,341
|
)
|
||
Accounts payable and accrued expenses
|
(10,797
|
)
|
|
(9,556
|
)
|
||
Customer obligations
|
(101,663
|
)
|
|
(35,766
|
)
|
||
Other liabilities
|
20,575
|
|
|
17,465
|
|
||
Net cash used in operating activities
|
(90,188
|
)
|
|
(16,874
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(4,353
|
)
|
|
(7,618
|
)
|
||
Purchases of short-term investments
|
(4,966
|
)
|
|
(99,564
|
)
|
||
Proceeds from sales of short-term investments
|
2,560
|
|
|
—
|
|
||
Proceeds from maturities of short-term investments
|
41,495
|
|
|
34,150
|
|
||
Purchases of intangible assets
|
(60
|
)
|
|
(70
|
)
|
||
Net cash provided by (used in) investing activities
|
34,676
|
|
|
(73,102
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of common stock options
|
—
|
|
|
1,396
|
|
||
Proceeds from issuance of common stock under Employee Stock Purchase Plan
|
—
|
|
|
869
|
|
||
Payments of debt modification costs
|
(100
|
)
|
|
—
|
|
||
Payments of debt principal
|
(60,000
|
)
|
|
—
|
|
||
Payment of finance lease obligations
|
(48
|
)
|
|
(75
|
)
|
||
Taxes paid related to net share settlement of stock-based compensation arrangements
|
—
|
|
|
(218
|
)
|
||
Net cash (used in) provided by financing activities
|
(60,148
|
)
|
|
1,972
|
|
||
Net decrease in cash and cash equivalents, unrestricted and restricted
|
(115,660
|
)
|
|
(88,004
|
)
|
||
Cash and cash equivalents at beginning of period, unrestricted and restricted
|
898,759
|
|
|
779,677
|
|
||
Cash and cash equivalents at end of period, unrestricted and restricted
|
$
|
783,099
|
|
|
$
|
691,673
|
|
|
|
|
|
||||
Supplemental cash flow disclosure:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
2,483
|
|
|
$
|
1,961
|
|
Income taxes
|
$
|
268
|
|
|
$
|
113
|
|
Noncash financing and investing activities:
|
|
|
|
||||
Property and equipment, accrued but not paid
|
$
|
1,262
|
|
|
$
|
4,063
|
|
Property and equipment under finance lease
|
$
|
—
|
|
|
$
|
142
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
4,057
|
|
|
$
|
11,019
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Basic weighted-average shares
|
39,853
|
|
|
39,823
|
|
||
|
|
|
|
||||
Effect of potentially dilutive shares:
|
|
|
|
||||
Weighted-average dilutive stock options, restricted stock and performance restricted stock units, and employee stock purchase plan shares
|
584
|
|
|
657
|
|
||
Diluted weighted-average shares
|
40,437
|
|
|
40,480
|
|
||
|
|
|
|
||||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.10
|
|
|
$
|
0.28
|
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.27
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Benefit administration services and COBRA
|
|
$
|
95,960
|
|
|
$
|
104,440
|
|
Interchange
|
|
15,439
|
|
|
15,745
|
|
||
Other revenue
|
|
6,826
|
|
|
6,455
|
|
||
Total
|
|
$
|
118,225
|
|
|
$
|
126,640
|
|
Revenue recognized in the period for:
|
Three Months Ended March 31, 2019
|
||
Amounts included in contract liabilities at the beginning of the period:
|
|
||
Performance obligations satisfied
|
$
|
143
|
|
Changes in the period:
|
|
||
Performance obligations satisfied from new activities in the period - contract revenue
|
118,082
|
|
|
Total revenue
|
$
|
118,225
|
|
|
March 31, 2019
|
||
2019 (remainder of year)
|
$
|
429
|
|
2020
|
571
|
|
|
2021
|
571
|
|
|
2022 and thereafter
|
1,143
|
|
|
Total
|
$
|
2,714
|
|
March 31, 2019
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
40,171
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,171
|
|
|
$
|
40,171
|
|
|
$
|
—
|
|
Commercial paper
|
|
52,242
|
|
|
—
|
|
|
(9
|
)
|
|
52,233
|
|
|
—
|
|
|
52,233
|
|
||||||
Municipal bonds
|
|
7,742
|
|
|
—
|
|
|
—
|
|
|
7,742
|
|
|
—
|
|
|
7,742
|
|
||||||
Total cash equivalents
|
|
100,155
|
|
|
—
|
|
|
(9
|
)
|
|
100,146
|
|
|
40,171
|
|
|
59,975
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-Term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government securities
|
|
19,501
|
|
|
—
|
|
|
(45
|
)
|
|
19,456
|
|
|
19,456
|
|
|
—
|
|
||||||
U.S. government agency securities
|
|
10,826
|
|
|
—
|
|
|
(27
|
)
|
|
10,799
|
|
|
—
|
|
|
10,799
|
|
||||||
Municipal bonds
|
|
2,345
|
|
|
1
|
|
|
—
|
|
|
2,346
|
|
|
—
|
|
|
2,346
|
|
||||||
Foreign government securities
|
|
2,514
|
|
|
—
|
|
|
(1
|
)
|
|
2,513
|
|
|
—
|
|
|
2,513
|
|
||||||
Corporate debt securities
|
|
114,238
|
|
|
116
|
|
|
(233
|
)
|
|
114,121
|
|
|
—
|
|
|
114,121
|
|
||||||
Commercial paper
|
|
4,975
|
|
|
—
|
|
|
(1
|
)
|
|
4,974
|
|
|
—
|
|
|
4,974
|
|
||||||
Certificates of deposit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Asset-backed securities
|
|
29,481
|
|
|
1
|
|
|
(88
|
)
|
|
29,394
|
|
|
—
|
|
|
29,394
|
|
||||||
Total short-term investments
|
|
183,880
|
|
|
118
|
|
|
(395
|
)
|
|
183,603
|
|
|
19,456
|
|
|
164,147
|
|
||||||
Total cash equivalents and short-term investments
|
|
$
|
284,035
|
|
|
$
|
118
|
|
|
$
|
(404
|
)
|
|
$
|
283,749
|
|
|
$
|
59,627
|
|
|
$
|
224,122
|
|
December 31, 2018
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
41,027
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,027
|
|
|
$
|
41,027
|
|
|
$
|
—
|
|
Commercial paper
|
|
10,436
|
|
|
1
|
|
|
—
|
|
|
10,437
|
|
|
—
|
|
|
10,437
|
|
||||||
Municipal bonds
|
|
7,781
|
|
|
—
|
|
|
—
|
|
|
7,781
|
|
|
—
|
|
|
7,781
|
|
||||||
Total cash equivalents
|
|
59,244
|
|
|
1
|
|
|
—
|
|
|
59,245
|
|
|
41,027
|
|
|
18,218
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-Term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government securities
|
|
22,534
|
|
|
—
|
|
|
(94
|
)
|
|
22,440
|
|
|
22,440
|
|
|
—
|
|
||||||
U.S. government agency securities
|
|
14,346
|
|
|
—
|
|
|
(56
|
)
|
|
14,290
|
|
|
—
|
|
|
14,290
|
|
||||||
Municipal bonds
|
|
3,548
|
|
|
—
|
|
|
(4
|
)
|
|
3,544
|
|
|
—
|
|
|
3,544
|
|
||||||
Foreign government securities
|
|
2,504
|
|
|
—
|
|
|
(6
|
)
|
|
2,498
|
|
|
—
|
|
|
2,498
|
|
||||||
Corporate debt securities
|
|
134,003
|
|
|
37
|
|
|
(685
|
)
|
|
133,355
|
|
|
—
|
|
|
133,355
|
|
||||||
Commercial paper
|
|
12,954
|
|
|
—
|
|
|
(4
|
)
|
|
12,950
|
|
|
—
|
|
|
12,950
|
|
||||||
Certificates of deposit
|
|
1,258
|
|
|
—
|
|
|
—
|
|
|
1,258
|
|
|
—
|
|
|
1,258
|
|
||||||
Asset-backed securities
|
|
32,054
|
|
|
—
|
|
|
(184
|
)
|
|
31,870
|
|
|
—
|
|
|
31,870
|
|
||||||
Total short-term investments
|
|
223,201
|
|
|
37
|
|
|
(1,033
|
)
|
|
222,205
|
|
|
22,440
|
|
|
199,765
|
|
||||||
Total cash equivalents and short-term investments
|
|
$
|
282,445
|
|
|
$
|
38
|
|
|
$
|
(1,033
|
)
|
|
$
|
281,450
|
|
|
$
|
63,467
|
|
|
$
|
217,983
|
|
|
|
Less than 12 months
|
|
12 months or greater
|
|
Total
|
||||||||||||||||||
March 31, 2019
|
|
Fair Value
|
|
Gross Unrealized Loss
|
|
Fair Value
|
|
Gross Unrealized Loss
|
|
Fair Value
|
|
Gross Unrealized Loss
|
||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial paper
|
|
$
|
52,233
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,233
|
|
|
$
|
(9
|
)
|
Total cash equivalents in unrealized loss position
|
|
52,233
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
52,233
|
|
|
(9
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-Term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government securities
|
|
—
|
|
|
—
|
|
|
19,455
|
|
|
(45
|
)
|
|
19,455
|
|
|
(45
|
)
|
||||||
U.S. government agency securities
|
|
1,998
|
|
|
(2
|
)
|
|
8,801
|
|
|
(25
|
)
|
|
10,799
|
|
|
(27
|
)
|
||||||
Foreign government securities
|
|
—
|
|
|
—
|
|
|
2,514
|
|
|
(1
|
)
|
|
2,514
|
|
|
(1
|
)
|
||||||
Corporate debt securities
|
|
10,055
|
|
|
(23
|
)
|
|
71,741
|
|
|
(210
|
)
|
|
81,796
|
|
|
(233
|
)
|
||||||
Commercial paper
|
|
4,974
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
4,974
|
|
|
(1
|
)
|
||||||
Asset-backed securities
|
|
3,884
|
|
|
(8
|
)
|
|
22,155
|
|
|
(80
|
)
|
|
26,039
|
|
|
(88
|
)
|
||||||
Total short-term investments in unrealized loss position
|
|
20,911
|
|
|
(34
|
)
|
|
124,666
|
|
|
(361
|
)
|
|
145,577
|
|
|
(395
|
)
|
||||||
Total cash equivalents and short-term investments in unrealized loss position
|
|
$
|
73,144
|
|
|
$
|
(43
|
)
|
|
$
|
124,666
|
|
|
$
|
(361
|
)
|
|
$
|
197,810
|
|
|
$
|
(404
|
)
|
|
|
Less than 12 months
|
||||||
December 31, 2018
|
|
Fair Value
|
|
Gross Unrealized Loss
|
||||
Short-Term Investments:
|
|
|
|
|
||||
U.S. government securities
|
|
$
|
22,440
|
|
|
$
|
(94
|
)
|
U.S. government agency securities
|
|
14,290
|
|
|
(56
|
)
|
||
Municipal bonds
|
|
3,544
|
|
|
(4
|
)
|
||
Foreign government securities
|
|
2,498
|
|
|
(6
|
)
|
||
Corporate debt securities
|
|
125,192
|
|
|
(685
|
)
|
||
Commercial paper
|
|
12,950
|
|
|
(4
|
)
|
||
Asset-backed securities
|
|
31,870
|
|
|
(184
|
)
|
||
Total short-term investments in unrealized loss position
|
|
$
|
212,784
|
|
|
$
|
(1,033
|
)
|
March 31, 2019
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Due less than one year
|
|
$
|
248,374
|
|
|
$
|
248,066
|
|
||||
Due in one to five years
|
|
35,661
|
|
|
35,683
|
|
||||||
Total
|
|
$
|
284,035
|
|
|
$
|
283,749
|
|
December 31, 2018
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Due less than one year
|
|
$
|
219,058
|
|
|
$
|
218,395
|
|
||||
Due in one to five years
|
|
63,387
|
|
|
63,055
|
|
||||||
Total
|
|
$
|
282,445
|
|
|
$
|
281,450
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Trade receivables
|
$
|
66,974
|
|
|
$
|
52,525
|
|
Unpaid amounts for benefit services
|
51,474
|
|
|
52,380
|
|
||
Receivables, gross
|
118,448
|
|
|
104,905
|
|
||
Less: allowance for doubtful accounts
|
(4,022
|
)
|
|
(3,608
|
)
|
||
Receivables, net
|
$
|
114,426
|
|
|
$
|
101,297
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Computers and equipment
|
$
|
28,455
|
|
|
$
|
27,519
|
|
Software and software development costs
|
148,625
|
|
|
144,260
|
|
||
Furniture and fixtures
|
8,125
|
|
|
8,123
|
|
||
Leasehold improvements
|
28,895
|
|
|
28,883
|
|
||
|
214,100
|
|
|
208,785
|
|
||
Less: accumulated depreciation and amortization
|
(139,722
|
)
|
|
(131,865
|
)
|
||
Property and equipment, net
|
$
|
74,378
|
|
|
$
|
76,920
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Client/broker contracts and relationships
|
$
|
237,490
|
|
|
$
|
(114,920
|
)
|
|
$
|
122,570
|
|
|
$
|
237,430
|
|
|
$
|
(108,834
|
)
|
|
$
|
128,596
|
|
Trade names
|
3,880
|
|
|
(3,611
|
)
|
|
269
|
|
|
3,880
|
|
|
(3,587
|
)
|
|
293
|
|
||||||
Technology
|
14,646
|
|
|
(14,249
|
)
|
|
397
|
|
|
14,646
|
|
|
(14,009
|
)
|
|
637
|
|
||||||
Noncompete agreements
|
2,232
|
|
|
(2,102
|
)
|
|
130
|
|
|
2,232
|
|
|
(2,084
|
)
|
|
148
|
|
||||||
Favorable lease agreements
|
1,134
|
|
|
(738
|
)
|
|
396
|
|
|
1,134
|
|
|
(713
|
)
|
|
421
|
|
||||||
Total
|
$
|
259,382
|
|
|
$
|
(135,620
|
)
|
|
$
|
123,762
|
|
|
$
|
259,322
|
|
|
$
|
(129,227
|
)
|
|
$
|
130,095
|
|
|
As of
March 31, 2019 |
||
Remainder of 2019
|
$
|
18,552
|
|
2020
|
22,758
|
|
|
2021
|
19,953
|
|
|
2022
|
17,518
|
|
|
2023
|
14,728
|
|
|
Thereafter
|
30,253
|
|
|
Total
|
$
|
123,762
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Payable to benefit providers and transit agencies
|
$
|
26,952
|
|
|
$
|
32,771
|
|
Accounts payable and accrued liabilities
|
26,911
|
|
|
30,148
|
|
||
Accrued compensation and related benefits
|
29,064
|
|
|
28,594
|
|
||
Other accrued expenses
|
4,885
|
|
|
5,834
|
|
||
Accounts payable and accrued expenses
|
$
|
87,812
|
|
|
$
|
97,347
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Revolving credit facility used
|
$
|
189,830
|
|
|
$
|
249,830
|
|
Less: Outstanding letters of credit
|
(2,830
|
)
|
|
(2,830
|
)
|
||
Outstanding revolving credit facility
|
187,000
|
|
|
247,000
|
|
||
Unamortized loan origination fees
|
(2,231
|
)
|
|
(2,307
|
)
|
||
Long-term debt
|
$
|
184,769
|
|
|
$
|
244,693
|
|
|
|
Three Months Ended March 31, 2019
|
||
Operating lease cost
|
|
$
|
1,814
|
|
Sublease income
|
|
(468
|
)
|
|
Net lease cost
|
|
$
|
1,346
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2019 (remainder of year)
|
|
$
|
7,154
|
|
2020
|
|
9,700
|
|
|
2021
|
|
9,696
|
|
|
2022
|
|
6,536
|
|
|
2023
|
|
2,308
|
|
|
Thereafter
|
|
5,663
|
|
|
Total minimum lease payments
|
|
41,057
|
|
|
Less: imputed interest
|
|
(4,533
|
)
|
|
Present value of net minimum lease payments
|
|
36,524
|
|
|
Less: current portion
|
|
8,069
|
|
|
Long-term operating lease liabilities
|
|
$
|
28,455
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2019
|
|
$
|
9,479
|
|
2020
|
|
9,685
|
|
|
2021
|
|
9,661
|
|
|
2022
|
|
6,536
|
|
|
2023
|
|
2,308
|
|
|
Thereafter
|
|
5,663
|
|
|
Total future minimum lease payments
|
|
$
|
43,332
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of revenues
|
$
|
525
|
|
|
$
|
1,667
|
|
Technology and development
|
515
|
|
|
575
|
|
||
Sales and marketing
|
631
|
|
|
978
|
|
||
General and administrative
|
1,233
|
|
|
4,073
|
|
||
Total
|
$
|
2,904
|
|
|
$
|
7,293
|
|
|
Shares
|
|
Weighted-average
exercise price
|
|
Remaining
contractual term
(in years)
|
|
Aggregate
intrinsic value
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
2,219
|
|
|
$
|
46.50
|
|
|
5.11
|
|
$
|
4,321
|
|
Granted
|
—
|
|
|
|
|
|
|
|
||||
Exercised
|
—
|
|
|
|
|
|
|
|
||||
Forfeited and cancelled
|
(4
|
)
|
|
$
|
53.47
|
|
|
|
|
|
||
Outstanding as of March 31, 2019
|
2,215
|
|
|
$
|
46.49
|
|
|
4.82
|
|
$
|
8,892
|
|
Vested and expected to vest at March 31, 2019
|
2,189
|
|
|
$
|
46.32
|
|
|
4.79
|
|
$
|
8,895
|
|
Exercisable at March 31, 2019
|
1,914
|
|
|
$
|
44.16
|
|
|
4.43
|
|
$
|
8,895
|
|
|
|
|
Weighted-average grant date fair value
|
||||||||||
|
Service-
based RSUs
|
|
Performance-
based RSUs
|
|
Service-
based RSUs
|
|
Performance-
based RSUs
|
||||||
Unvested at December 31, 2018
|
164
|
|
|
200
|
|
|
$
|
61.79
|
|
|
$
|
59.76
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Vested
|
(11
|
)
|
|
(88
|
)
|
|
$
|
55.86
|
|
|
$
|
43.63
|
|
Forfeited and cancelled
|
(4
|
)
|
|
—
|
|
|
$
|
60.58
|
|
|
$
|
—
|
|
Unvested at March 31, 2019
|
149
|
|
|
112
|
|
|
$
|
62.26
|
|
|
$
|
72.30
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Healthcare
|
$
|
71,974
|
|
|
$
|
75,256
|
|
|
$
|
(3,282
|
)
|
|
(4
|
)%
|
COBRA
|
23,589
|
|
|
28,835
|
|
|
(5,246
|
)
|
|
(18
|
)%
|
|||
Commuter
|
19,340
|
|
|
18,878
|
|
|
462
|
|
|
2
|
%
|
|||
Other
|
3,322
|
|
|
3,671
|
|
|
(349
|
)
|
|
(10
|
)%
|
|||
Total revenues
|
$
|
118,225
|
|
|
$
|
126,640
|
|
|
$
|
(8,415
|
)
|
|
(7
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Cost of revenues (excluding amortization of internal use software)
|
$
|
39,258
|
|
|
$
|
45,242
|
|
|
$
|
(5,984
|
)
|
|
(13
|
)%
|
Percentage of revenue
|
33
|
%
|
|
36
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Technology and development
|
$
|
16,340
|
|
|
$
|
13,033
|
|
|
$
|
3,307
|
|
|
25
|
%
|
Percentage of revenue
|
14
|
%
|
|
10
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Sales and marketing
|
|
$
|
18,331
|
|
|
$
|
18,338
|
|
|
$
|
(7
|
)
|
|
—
|
%
|
Percentage of revenue
|
|
16
|
%
|
|
14
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
General and administrative
|
|
$
|
27,909
|
|
|
$
|
25,249
|
|
|
$
|
2,660
|
|
|
11
|
%
|
Percentage of revenue
|
|
24
|
%
|
|
20
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Amortization
|
|
$
|
10,851
|
|
|
$
|
9,991
|
|
|
$
|
860
|
|
|
9
|
%
|
Percentage of revenue
|
|
9
|
%
|
|
8
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Interest and other income, net
|
|
$
|
2,649
|
|
|
$
|
1,266
|
|
|
$
|
1,383
|
|
|
109
|
%
|
Interest expense
|
|
$
|
(2,709
|
)
|
|
$
|
(2,182
|
)
|
|
$
|
(527
|
)
|
|
24
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
(In thousands except percentage)
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Income before income taxes
|
|
$
|
5,476
|
|
|
$
|
13,871
|
|
|
|
|
|
|||
Income tax benefit (provision)
|
|
$
|
(1,419
|
)
|
|
$
|
(2,852
|
)
|
|
$
|
1,433
|
|
|
(50
|
)%
|
Effective tax rate
|
|
26
|
%
|
|
21
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
(in thousands)
|
2019
|
|
2018
|
|
$ Change
|
||||||
Net cash used in operating activities
|
$
|
(90,188
|
)
|
|
$
|
(16,874
|
)
|
|
$
|
(73,314
|
)
|
Net cash provided by (used in) investing activities
|
34,676
|
|
|
(73,102
|
)
|
|
107,778
|
|
|||
Net cash (used in) provided by financing activities
|
(60,148
|
)
|
|
1,972
|
|
|
(62,120
|
)
|
|||
Net change in cash and cash equivalents, unrestricted and restricted
|
$
|
(115,660
|
)
|
|
$
|
(88,004
|
)
|
|
$
|
(27,656
|
)
|
|
|
Incorporated by Reference
|
||||
Exhibit No.
|
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
31.1
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
X
|
|
32.1
(1)
|
|
|
|
|
X
|
|
10.10H
|
10-Q
|
001-35232
|
10.10H
|
8/1/2017
|
|
|
10.30
|
10-K
|
001-35232
|
10.30
|
5/30/2019
|
|
|
10.35
|
|
|
|
|
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.
|
|
|
WAGEWORKS, INC.
|
|
|
|
Date: June 27, 2019
|
By:
|
/s/ ISMAIL DAWOOD
|
|
|
Ismail Dawood
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting 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: June 27, 2019
|
||
|
|
|
/s/ Edgar O. Montes
|
||
Name:
|
|
Edgar O. Montes
|
Title:
|
|
Chief Executive Officer and President
(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: June 27, 2019
|
||
|
|
|
/s/ Ismail Dawood
|
||
Name:
|
|
Ismail Dawood
|
Title:
|
|
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2019
, 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: June 27, 2019
|
||
|
|
|
/s/ Edgar O. Montes
|
||
Name:
|
|
Edgar O. Montes
|
Title:
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
/s/ Ismail Dawood
|
||
Name:
|
|
Ismail Dawood
|
Title:
|
|
Chief Financial Officer
(Principal Financial Officer)
|