[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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46-1282634
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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15438 N. Florida Avenue, Suite 201
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Tampa, FL 33613
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(Address of Principal Executive Offices)
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Large accelerated filer
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[ ]
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Emerging growth company
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[X]
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Accelerated filer
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[X]
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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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March 31, 2018
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December 31, 2017
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||||
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(unaudited)
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||||
Assets
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Current assets:
|
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Cash and cash equivalents
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$
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41,926
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$
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40,907
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Restricted cash
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15,385
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14,920
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Accounts receivable, net, prepaid expenses and other current assets
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1,979
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2,227
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Advanced commissions, net
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37,061
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39,549
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Income taxes receivable
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633
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—
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Total current assets
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96,984
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97,603
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Property and equipment, net
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5,578
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5,408
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Goodwill
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41,076
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41,076
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Intangible assets, net
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5,478
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5,942
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Deferred tax assets
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14,698
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14,960
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Other assets
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1,098
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96
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Total assets
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$
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164,912
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$
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165,085
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Liabilities and stockholders’ equity
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Current liabilities:
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Accounts payable and accrued expenses
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$
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32,822
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$
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39,725
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Deferred revenue
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268
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662
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Income taxes payable
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—
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787
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Due to member
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1,137
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1,775
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Other current liabilities
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7
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5
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Total current liabilities
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34,234
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42,954
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Due to member
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15,096
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15,096
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Other liabilities
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32
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34
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Total liabilities
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49,362
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58,084
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Commitments and contingencies
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Stockholders’ equity:
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Class A common stock (par value $0.001 per share, 100,000,000 shares authorized; 12,915,760 and 12,731,758 shares issued as of March 31, 2018 and December 31, 2017, respectively; 12,533,874 and 12,350,981 shares outstanding as of March 31, 2018 and December 31, 2017, respectively)
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13
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13
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Class B common stock (par value $0.001 per share, 20,000,000 shares authorized; 3,841,667 shares issued and outstanding as of March 31, 2018 and December 31, 2017)
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4
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4
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Preferred stock (par value $0.001 per share, 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2018 and December 31, 2017)
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—
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—
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Additional paid-in capital
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74,594
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71,770
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Treasury stock, at cost (381,886 and 380,777 shares as of March 31, 2018 and December 31, 2017, respectively)
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(6,923
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)
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(6,887
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)
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Retained earnings
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23,451
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19,305
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Total Health Insurance Innovations, Inc. stockholders’ equity
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91,139
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84,205
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Noncontrolling interests
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24,411
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22,796
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Total stockholders’ equity
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115,550
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107,001
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Total liabilities and stockholders' equity
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$
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164,912
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$
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165,085
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Three Months Ended March 31,
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2018
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2017
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Revenues (premium equivalents of $104,976 and $90,940 for the three months ended March 31, 2018 and 2017, respectively)
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$
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67,750
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$
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55,868
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Operating expenses:
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Third-party commissions
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41,212
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31,435
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Credit card and ACH fees
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1,377
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1,183
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Selling, general and administrative
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16,213
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15,257
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Depreciation and amortization
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1,165
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938
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Total operating expenses
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59,967
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48,813
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Income from operations
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7,783
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7,055
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Other (income) expense:
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Interest income
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(26
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)
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(1
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)
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Other expense
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28
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3
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Net income before income taxes
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7,781
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7,053
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Provision (benefit) for income taxes
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1,796
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(1,469
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)
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Net income
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5,985
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8,522
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Net income attributable to noncontrolling interests
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1,839
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2,688
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Net income attributable to Health Insurance Innovations, Inc.
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$
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4,146
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$
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5,834
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Per share data:
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Net income per share attributable to Health Insurance Innovations, Inc.
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Basic
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$
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0.36
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$
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0.66
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Diluted
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$
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0.33
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$
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0.58
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Weighted average Class A common shares outstanding
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Basic
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11,589,777
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8,892,239
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Diluted
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12,658,277
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10,051,369
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Health Insurance Innovations, Inc.
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|||||||||||||||||||||||||||||||
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Class A Common Stock
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Class B Common Stock
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Treasury Stock
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Shares
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Amount
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Shares
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Amount
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Additional Paid-in Capital
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Shares
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Amount
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Retained Earnings
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Noncontrolling Interests
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Stockholders’ Equity
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|||||||||||||||||
Balance as of January 1, 2017
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8,036,705
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$
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8
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6,841,667
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$
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7
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$
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47,849
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119,544
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$
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(1,122
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)
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$
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1,420
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$
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31,916
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$
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80,078
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Net income
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—
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—
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—
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—
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—
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—
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—
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17,885
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8,606
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26,491
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|||||||
Issuance of Class A common stock in private offering
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3,000,000
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3
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—
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—
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16,484
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|
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—
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|
|
—
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—
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—
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16,487
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|||||||
Exchange of Series B Membership interest and exchange and cancellation of Class B common stock
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—
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|
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—
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(3,000,000
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)
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(3
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)
|
|
—
|
|
|
—
|
|
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—
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|
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—
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|
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(14,371
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)
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(14,374
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)
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|||||||
Repurchases of Class A common stock
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(222,184
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)
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—
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|
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—
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—
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—
|
|
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222,184
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(4,923
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)
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—
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—
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(4,923
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)
|
|||||||
Issuance of Class A common stock under equity compensation plans
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1,575,509
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2
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|
|
—
|
|
|
—
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|
|
31
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|||||||
Class A common stock withheld in Treasury from restricted share vesting
|
(39,049
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)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,049
|
|
|
(842
|
)
|
|
—
|
|
|
—
|
|
|
(842
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,404
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,404
|
|
|||||||
Contributions (distributions)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,355
|
)
|
|
(3,353
|
)
|
|||||||
Balance as of December 31, 2017
|
12,350,981
|
|
|
$
|
13
|
|
|
3,841,667
|
|
|
$
|
4
|
|
|
$
|
71,770
|
|
|
380,777
|
|
|
$
|
(6,887
|
)
|
|
$
|
19,305
|
|
|
$
|
22,796
|
|
|
$
|
107,001
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,146
|
|
|
1,839
|
|
|
5,985
|
|
|||||||
Issuance of Class A common stock under equity compensation plans
|
184,002
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||
Class A common stock withheld in Treasury from restricted share vesting
|
(1,109
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,109
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,821
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,821
|
|
|||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224
|
)
|
|
(224
|
)
|
|||||||
Balance as of March 31, 2018 (unaudited)
|
12,533,874
|
|
|
$
|
13
|
|
|
3,841,667
|
|
|
$
|
4
|
|
|
$
|
74,594
|
|
|
381,886
|
|
|
$
|
(6,923
|
)
|
|
$
|
23,451
|
|
|
$
|
24,411
|
|
|
$
|
115,550
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
5,985
|
|
|
$
|
8,522
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Stock-based compensation
|
2,633
|
|
|
821
|
|
||
Depreciation and amortization
|
1,165
|
|
|
938
|
|
||
Deferred income taxes
|
262
|
|
|
309
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Decrease (increase) in accounts receivable, prepaid expenses and other assets
|
261
|
|
|
(844
|
)
|
||
Decrease in advanced commissions
|
1,473
|
|
|
1,287
|
|
||
Increase in income taxes receivable
|
(633
|
)
|
|
(1,645
|
)
|
||
Decrease in income taxes payable
|
(787
|
)
|
|
(2,121
|
)
|
||
Decrease in accounts payable, accrued expenses and other liabilities
|
(6,903
|
)
|
|
(677
|
)
|
||
(Decrease) increase in deferred revenue
|
(394
|
)
|
|
46
|
|
||
Net cash provided by operating activities
|
3,062
|
|
|
6,636
|
|
||
Investing activities:
|
|
|
|
|
|
||
Capitalized internal-use software and website development costs
|
(570
|
)
|
|
(669
|
)
|
||
Purchases of property and equipment
|
(113
|
)
|
|
(14
|
)
|
||
Net cash used in investing activities
|
(683
|
)
|
|
(683
|
)
|
||
Financing activities:
|
|
|
|
|
|
||
Payments for noncompete obligation
|
—
|
|
|
(48
|
)
|
||
Class A common stock withheld in treasury from restricted share vesting
|
(36
|
)
|
|
(185
|
)
|
||
Issuances of Class A common stock under equity compensation plans
|
3
|
|
|
9
|
|
||
Distributions to member
|
(862
|
)
|
|
(1,197
|
)
|
||
Net cash used in financing activities
|
(895
|
)
|
|
(1,421
|
)
|
||
Net increase in cash and cash equivalents, and restricted cash
|
1,484
|
|
|
4,532
|
|
||
Cash and cash equivalents, and restricted cash at beginning of period
|
55,827
|
|
|
25,370
|
|
||
Cash and cash equivalents, and restricted cash at end of period
|
$
|
57,311
|
|
|
$
|
29,902
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
|
|
||
Cash paid during the period for:
|
|
|
|
||||
Income taxes, net
|
$
|
2,969
|
|
|
$
|
1,986
|
|
Interest
|
1
|
|
|
4
|
|
||
Non-cash investing activities:
|
|
|
|
||||
Capitalized stock-based compensation
|
$
|
188
|
|
|
$
|
—
|
|
Non-cash financing activities:
|
|
|
|
||||
Change in due to member related to Exchange Agreement
|
$
|
—
|
|
|
$
|
18,619
|
|
Change in deferred tax asset related to Exchange Agreement
|
—
|
|
|
(20,732
|
)
|
||
Issuance of Class A common stock in a private offering related to Exchange Agreement
|
—
|
|
|
16,484
|
|
||
Exchange of Class B membership interests related to Exchange Agreement
|
—
|
|
|
(14,371
|
)
|
||
Declared but unpaid distribution to member of Health Plan Intermediaries, LLC
|
—
|
|
|
2,695
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Carriers and vendors payable
|
$
|
15,942
|
|
|
$
|
14,726
|
|
Commissions payable
|
8,482
|
|
|
8,811
|
|
||
Accrued wages
|
2,118
|
|
|
7,116
|
|
||
Accrued refunds
|
1,551
|
|
|
1,940
|
|
||
Accounts payable
|
2,216
|
|
|
3,725
|
|
||
Accrued professional fees
|
1,032
|
|
|
820
|
|
||
Accrued credit card/ACH fees
|
474
|
|
|
483
|
|
||
Other accrued expenses
|
1,007
|
|
|
2,104
|
|
||
Total accounts payable and accrued expenses
|
$
|
32,822
|
|
|
$
|
39,725
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Restricted shares
|
$
|
2,269
|
|
|
$
|
380
|
|
SARs
|
552
|
|
|
433
|
|
||
Stock options
|
—
|
|
|
8
|
|
||
Less amounts capitalized for internal-use software
|
(188
|
)
|
|
—
|
|
||
Total
|
$
|
2,633
|
|
|
$
|
821
|
|
|
Unrecognized Expense
|
|
Weighted Average Remaining Years
|
||
Restricted shares
|
$
|
10,713
|
|
|
1.9
|
SARs
|
2,564
|
|
|
2.0
|
|
Total
|
$
|
13,277
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Basic net income attributable to Health Insurance Innovations, Inc.
|
$
|
4,146
|
|
|
$
|
5,834
|
|
Weighted average shares—basic
|
11,589,777
|
|
|
8,892,239
|
|
||
Effect of dilutive securities:
|
|
|
|
|
|
||
Restricted shares
|
538,465
|
|
|
251,406
|
|
||
SARs
|
521,782
|
|
|
872,467
|
|
||
Stock options
|
8,253
|
|
|
35,257
|
|
||
Weighted average shares—diluted
|
12,658,277
|
|
|
10,051,369
|
|
||
Basic net income per share attributable to Health Insurance Innovations, Inc.
|
$
|
0.36
|
|
|
$
|
0.66
|
|
Diluted net income per share attributable to Health Insurance Innovations, Inc.
|
$
|
0.33
|
|
|
$
|
0.58
|
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
SARs
|
251
|
|
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Premium equivalents
|
$
|
104,976
|
|
|
$
|
90,940
|
|
Less risk premium
|
35,546
|
|
|
33,541
|
|
||
Less amounts earned by third party obligors
|
1,680
|
|
|
1,531
|
|
||
Revenues
|
$
|
67,750
|
|
|
$
|
55,868
|
|
|
As of March 31,
|
|
|
|||||
|
2018
|
|
2017
|
|
Change
|
|||
IFP
|
192,268
|
|
|
173,675
|
|
|
10.7
|
%
|
Supplemental products
|
190,877
|
|
|
171,317
|
|
|
11.4
|
%
|
Total
|
383,145
|
|
|
344,992
|
|
|
11.1
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
5,985
|
|
|
$
|
8,522
|
|
Interest income
|
(26
|
)
|
|
(1
|
)
|
||
Depreciation and amortization
|
1,165
|
|
|
938
|
|
||
Provision (benefit) for income taxes
|
1,796
|
|
|
(1,469
|
)
|
||
EBITDA
|
8,920
|
|
|
7,990
|
|
||
Non-cash stock-based compensation
|
2,633
|
|
|
821
|
|
||
Transaction costs
|
56
|
|
|
306
|
|
||
Severance, restructuring and other charges
|
287
|
|
|
533
|
|
||
Adjusted EBITDA
|
$
|
11,896
|
|
|
$
|
9,650
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
5,985
|
|
|
$
|
8,522
|
|
Interest income
|
(26
|
)
|
|
(1
|
)
|
||
Amortization
|
464
|
|
|
511
|
|
||
Provision (benefit) for income taxes
|
1,796
|
|
|
(1,469
|
)
|
||
Non-cash stock-based compensation
|
2,633
|
|
|
821
|
|
||
Transaction costs
|
56
|
|
|
306
|
|
||
Severance, restructuring and other charges
|
287
|
|
|
533
|
|
||
Adjusted pre-tax income
|
11,195
|
|
|
9,223
|
|
||
Pro forma income taxes
|
(2,687
|
)
|
|
(3,505
|
)
|
||
Adjusted net income
|
$
|
8,508
|
|
|
$
|
5,718
|
|
Total weighted average diluted share count
|
16,500
|
|
|
16,093
|
|
||
Adjusted net income per share
|
$
|
0.52
|
|
|
$
|
0.36
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Total SG&A
|
$
|
16,213
|
|
|
$
|
15,257
|
|
Less Stock-based compensation
|
2,633
|
|
|
821
|
|
||
Less Transaction costs
|
56
|
|
|
306
|
|
||
Less Severance, restructuring and other charges
|
287
|
|
|
533
|
|
||
Less Marketing and Advertising
|
2,232
|
|
|
3,787
|
|
||
Core SG&A
|
$
|
11,005
|
|
|
$
|
9,810
|
|
% of Revenue
|
16.2
|
%
|
|
17.6
|
%
|
|
Payments Due in Fiscal Year
|
||||||||||||||
Contractual Obligations
|
Total
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||
Operating Leases
|
$
|
839
|
|
|
$
|
436
|
|
|
$
|
403
|
|
|
$
|
—
|
|
Total
|
$
|
839
|
|
|
$
|
436
|
|
|
$
|
403
|
|
|
$
|
—
|
|
Periods
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans (2)
|
||||
January 1, 2018 through January 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,423,318
|
|
February 1, 2018 through February 28, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,423,318
|
|
March 1, 2018 through March 31, 2018
|
|
1,109
|
|
(1)
|
32.55
|
|
|
—
|
|
|
2,423,318
|
|
Total
|
|
1,109
|
|
|
|
|
—
|
|
|
|
(1)
|
Includes only shares that were surrendered by employees to satisfy statutory tax withholding obligations in connection with the vesting of stock-based compensation awards.
|
(2)
|
Maximum number of shares that may yet be repurchased under the repurchase program is estimated by dividing the $50.0 million authorized for repurchase by the reported sale price of our Class A common stock on the NASDAQ Global Market of $18.90 on the date of plan adoption. The plan was announced on October 16, 2017, and expires after 24 months.
|
Exhibit No.
|
|
Description
|
|
Office lease agreement between Magdalene Center of Tampa, LLC and Health Plan Intermediaries Holdings LLC, dated February 13, 2018.
|
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a).
|
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a).
|
|
|
Section 1350 Certifications
|
|
100.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Definition Document
|
|
HEALTH INSURANCE INNOVATIONS, INC.
|
|
|
May 3, 2018
|
/s/ Gavin D. Southwell
|
|
GAVIN D. SOUTHWELL
|
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
|
(PRINCIPAL EXECUTIVE OFFICER)
|
|
|
May 3, 2018
|
/s/ Michael D. Hershberger
|
|
MICHAEL D. HERSHBERGER
|
|
CHIEF FINANCIAL OFFICER, SECRETARY, AND TREASURER
|
|
(PRINCIPAL FINANCIAL OFFICER)
|
/s/ Gavin D. Southwell
|
|
GAVIN D. SOUTHWELL
|
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
|
(Principal Executive officer)
|
|
|
|
/s/ Michael D. Hershberger
|
|
MICHAEL D. HERSHBERGER
|
|
CHIEF FINANCIAL OFFICER, SECRETARY, AND TREASURER
|
|
(Principal Financial Officer)
|
|
|
|
/s/ Gavin D. Southwell
|
|
GAVIN D. SOUTHWELL
|
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
|
(Principal Executive Officer)
|
|
/s/ Michael D. Hershberger
|
|
MICHAEL D. HERSHBERGER
|
|
CHIEF FINANCIAL OFFICER, SECRETARY, AND TREASURER
|
|
(Principal Financial Officer)
|
|
|