UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive offices and zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 2, 2022, there were approximately
Benefitfocus, Inc.
Form 10-Q
For the Quarterly Period Ended March 31, 2022
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Benefitfocus, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
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As of March 31, 2022 |
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As of December 31, 2021 |
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Assets |
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Current assets: |
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Cash, cash equivalents and restricted cash |
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$ |
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$ |
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Marketable securities |
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Accounts receivable, net |
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Contract, prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Financing lease right-of-use assets |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Goodwill |
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Deferred contract costs and other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities, redeemable preferred stock and stockholders' deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Accrued compensation and benefits |
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Deferred revenue, current portion |
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Lease liabilities and financing obligations, current portion |
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Contingent consideration |
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Total current liabilities |
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Deferred revenue, net of current portion |
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Convertible senior notes |
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Lease liabilities and financing obligations, net current portion |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
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Redeemable preferred stock: |
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Series A preferred stock, par value $ authorized, at March 31, 2022 and December 31, 2021, respectively, liquidation preference $ |
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Stockholders' deficit: |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' deficit |
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Total liabilities, redeemable preferred stock and stockholders' deficit |
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$ |
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$ |
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The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.
3
Benefitfocus, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenue |
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$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Sales and marketing |
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Research and development |
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General and administrative |
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Restructuring costs |
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Total operating expenses |
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(Loss) income from operations |
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Other income (expense): |
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Interest income |
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Interest expense |
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Other income (expense) |
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Total other expense, net |
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Loss before income taxes |
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Income tax expense |
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Net loss |
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Preferred dividends |
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Net loss available to common stockholders |
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$ |
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$ |
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Comprehensive loss |
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Net loss per common share: |
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Basic and diluted |
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$ |
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Weighted-average common shares outstanding: |
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Basic and diluted |
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The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.
4
Benefitfocus, Inc.
Unaudited Consolidated Statements of Changes in Stockholders’ Deficit
(in thousands, except share and per share data)
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Common Stock, |
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Additional |
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Total |
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$0.001 Par Value |
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Paid-in |
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Accumulated |
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Stockholders' |
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Shares |
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Par Value |
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Capital |
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Deficit |
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Deficit |
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Balance, December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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Cumulative effect adjustment from adoption of new accounting standard |
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Issuance of common stock upon vesting of restricted stock units |
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Stock-based compensation expense |
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Preferred dividends |
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Net loss |
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Balance, March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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Common Stock, |
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Additional |
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Total |
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$0.001 Par Value |
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Paid-in |
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Accumulated |
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Stockholders' |
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Shares |
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Par Value |
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Capital |
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Deficit |
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Deficit |
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Balance, December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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Exercise of stock options |
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Issuance of common stock upon vesting of restricted stock units |
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Stock-based compensation expense |
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Preferred dividends |
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Net loss |
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Balance, March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.
5
Benefitfocus, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
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Depreciation and amortization |
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Stock-based compensation expense |
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Accretion of interest on convertible senior notes |
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Interest accrual on finance lease liabilities |
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Rent expense less than payments |
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Non-cash accretion income from investments |
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Impairment or loss on disposal of right-of-use assets and property and equipment |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Accrued interest on investments |
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Contract, prepaid and other current assets |
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Deferred costs and other non-current assets |
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Accounts payable and accrued expenses |
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Accrued compensation and benefits |
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Deferred revenue |
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Other non-current liabilities |
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Net cash (used in) provided by operating activities |
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Cash flows from investing activities |
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Purchases of investments held-to-maturity |
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Maturities of investments held-to-maturity |
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Maturities of investments available-for-sale |
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Sales of investments available-for-sale |
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Business combination, net of cash acquired |
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Purchases of property and equipment |
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Net cash provided by (used in) investing activities |
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Cash flows from financing activities |
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Payments of preferred dividends |
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Change in amounts payable on behalf of customer members |
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Proceeds from exercises of stock options and ESPP |
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Payments on financing obligations |
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Payments of principal on finance lease liabilities |
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Net cash used in financing activities |
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Net increase in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities |
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Property and equipment purchases in accounts payable and accrued expenses |
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$ |
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$ |
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The accompanying notes are an integral part of the Unaudited Consolidated Financial Statements.
6
BENEFITFOCUS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Organization and Description of Business
Benefitfocus, Inc. (the “Company”) provides a leading cloud-based benefits management platform for consumers, employers, health plans (also known as insurance carriers) and brokers that is designed to simplify how organizations and individuals transact benefits. The financial statements of the Company include the financial position and operations of its wholly owned subsidiaries, Benefitfocus.com, Inc., BenefitStore, Inc. and Tango Health, Inc.
2. Summary of Significant Accounting Policies
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidation. The Company is not the primary beneficiary of, nor does it have a controlling financial interest in, any variable interest entity. Accordingly, the Company has not consolidated any variable interest entity.
Interim Unaudited Consolidated Financial Information
The accompanying unaudited consolidated financial statements and footnotes have been prepared in accordance with GAAP as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information, and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations and comprehensive loss, financial position, changes in stockholders’ deficit and cash flows. The results of operations and comprehensive loss for the three-month period ended March 31, 2022 are not necessarily indicative of the results for the full year or for any other future period. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as amended.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Such estimates include allowances for credit losses and returns, valuations of deferred income taxes, long-lived assets, capitalizable software development costs and the related amortization, contingent consideration, incremental borrowing rate used in lease accounting, the determination of the useful lives of assets, and the impairment assessment of acquired intangibles and goodwill. Additionally, as described in revenue and deferred revenue below, estimates are utilized in association with revenue recognition, in particular the estimation of variable consideration using the expected value method from insurance broker commissions reported in Platform revenue. Determination of these transactions and account balances are based on, among other things, the Company’s estimates and judgments. These estimates are based on the Company’s knowledge of current events and actions it may undertake in the future as well as on various other assumptions that it believes to be reasonable. Actual results could differ materially from these estimates.
Restructuring Costs
Restructuring costs are comprised of one-time severance charges, continuation of health benefits and outplacement services and are presented separately in operating expenses in the consolidated statements of operations and comprehensive loss. The Company recorded restructuring costs of $
Revenue and Deferred Revenue
The Company derives its revenue primarily from fees for subscription services and professional services sold to employers and health plans as well as platform revenue derived from the value of products sold on its platform. Revenue is recognized when control of these services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Taxes collected from customers relating to services and remitted to governmental authorities are excluded from revenue.
The Company determines revenue recognition through the following steps:
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Identification of each contract with a customer; |
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Identification of the performance obligations in the contract; |
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Determination of the transaction price; |
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Allocation of the transaction price to the performance obligations in the contract; and |
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Recognition of revenue when, or as, performance obligations are satisfied. |
Software Services Revenue
Software services revenue consists of subscription revenue and platform revenue.
Subscription Revenue
Subscription revenue primarily consists of monthly or annual subscription fees paid to the Company by its employer and health plan customers for access to, and usage of, cloud-based benefits software solutions for a specified contract term. Fees are generally charged based on the number of employees or subscribers with access to the solution.
Subscription services revenue is generally recognized on a ratable basis over the contract term beginning on the date the subscription services are made available to the customer. The Company’s subscription service contracts are generally three years.
Subscription revenue also includes fees paid for other services, such as event sponsorships and certain data services.
Platform Revenue
Platform revenue is generated from the value of policies or products enrolled in through the Company’s marketplace. Platform revenue from insurance carriers is generally recognized over the policy period of the enrolled products. In arrangements where the Company sells policies to employees of its customers as the broker, it earns broker commissions. Revenue from insurance broker commissions and supplier transactions is recognized at a point in time when the orders for the policies are received and transferred to the insurance carrier or supplier and is reduced by constraints for variable consideration associated with collectability, policy cancellation and termination risks.
Professional Services Revenue
Professional services revenue primarily consists of fees related to the implementation of software products purchased by customers. Professional services typically include discovery, configuration and deployment, integration, testing, and training. Fees from consulting services and support services are also included in professional services revenue.
The Company determined that implementation services for certain of its health plan customers significantly modify or customize the software solution and, as such, do not represent a distinct performance obligation. Accordingly, revenue from such implementation services with these health plan customers are generally recognized over the contract term of the associated subscription services contract, including any extension periods representing a material right. In certain arrangements, the Company utilizes estimates of hours as a measure of progress to determine revenue.
Revenue from implementation services with employer customers is generally recognized as those services are performed.
Revenue from support is recognized over the service period.
Contracts with Multiple Performance Obligations
Certain of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are accounted for separately if they are distinct. The Company allocates the transaction price to the separate performance obligations based on their relative standalone selling prices. The Company determines the standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts, the subscription services sold, customer size and complexity, and the number and types of users under the contracts.
Contract Costs
The Company capitalizes contract fulfillment costs directly associated with customer contracts that are not related to satisfying performance obligations. The costs are amortized to cost of revenue expense over the estimated period of benefit, which is generally
The following tables present information about deferred contract costs:
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Balance of deferred contract costs |
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As of March 31, 2022 |
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As of December 31, 2021 |
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Costs to obtain contracts |
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$ |
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$ |
|
|
|
Costs to fulfill contracts |
|
$ |
|
|
|
$ |
|
|
8
|
|
|
Three Months Ended March 31, |
|
|
|||||
|
Amortization of deferred contract costs |
|
2022 |
|
|
2021 |
|
|
||
|
Costs to obtain contracts included in sales and marketing expense |
|
$ |
|
|
|
$ |
|
|
|
|
Costs to fulfill contracts included in cost of revenue |
|
$ |
|
|
|
$ |
|
|
|
Cost of Revenue
Cost of revenue primarily consists of employee compensation, professional services, data center co-location costs, networking expenses, depreciation expense for computer equipment directly associated with generating revenue, amortization expense for capitalized software development costs, and infrastructure maintenance costs. In addition, the Company allocates a portion of overhead, such as facilities and security costs, additional depreciation and amortization expense, and employee benefit costs to cost of revenue based on headcount.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of bank checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of
Restricted cash consists of voluntary benefits premiums collected by the Company from its customer members. Restricted cash amounts are segregated in separate bank accounts and are used exclusively for the payment of the related amounts due to third-party insurance providers for benefits enrolled in by customer members. This usage restriction is contractually imposed and reflects the Company’s intention with regards to such deposits. As of March 31, 2022, the Company had $
Marketable Securities
Marketable securities consist of short-term investments in corporate bonds, commercial paper, and U.S. Treasury and agency bonds. During the year ended December 31, 2021, the Company changed the classification of its marketable securities from held-to-maturity to available-for-sale based on its intent to sell the securities. The Company’s available-for-sale marketable securities are recorded at fair value which approximates cost due to the short duration of such securities.
Debt securities classified as either available-for-sale or held-to-maturity are subject to the expected credit loss model prescribed under Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments”. The Company utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for debt securities at the time the financial asset is originated or acquired. The Company measures expected credit losses on its debt portfolio on a collective basis by major security type. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The Company’s credit loss calculations for debt securities are based upon historical default and recovery rates of bonds rated with the same rating as its portfolio. An adjustment factor is applied to these credit loss calculations based upon the Company’s assessment of the expected impact from current economic conditions on its investments. The Company monitors the credit quality of debt securities through the use of their respective credit rating and updates them on a quarterly basis. The allowance for credit losses is discussed in Note 7.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents, marketable securities and accounts receivable. All of the Company’s cash, cash equivalents and restricted cash are held at financial institutions that management believes to be of high credit quality. The bank deposits of the Company might, at times, exceed federally insured limits and are generally uninsured and uncollateralized. The Company has not experienced any losses on cash, cash equivalents and restricted cash to date.
To manage accounts receivable risk, the Company evaluates the creditworthiness of its customers and maintains an allowance for doubtful accounts. Accounts receivable are unsecured and derived from revenue earned from customers located in the United States.
Allowance for Credit Losses
The Company uses a current expected credit loss model. Accounts receivable and allowance for credit losses are discussed in Note 7.
Capitalized Software Development Costs
The Company capitalizes certain costs related to its software developed or obtained for internal use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal and external costs incurred during the application
9
development stage, including upgrades and enhancements representing modifications that will result in significant additional functionality, are capitalized. Software maintenance and training costs are expensed as incurred. Capitalized costs are recorded as part of property and equipment and are amortized on a straight-line basis to cost of revenue over the software’s estimated useful life, which is
The following tables present information about capitalized software development costs:
|
|
|
Three Months Ended March 31, |
|
|
|||||
|
Capitalized software development costs |
|
2022 |
|
|
2021 |
|
|
||
|
Capitalized |
|
$ |
|
|
|
$ |
|
|
|
|
Amortized |
|
$ |
|
|
|
$ |
|
|
|
|
Capitalized software development costs |
|
As of March 31, 2022 |
|
|
As of December 31, 2021 |
|
||
|
Net book value |
|
$ |
|
|
|
$ |
|
|
Leases
The Company periodically enters into finance leases for property and equipment. The leasing arrangements for the Company’s office space at its headquarters campus are classified as finance leases. The Company also leases office space under operating leases.
The Company determines if an arrangement is a lease at inception. Right of use (“ROU”), assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent an obligation to make lease payments arising from the lease. Leases with a term of 12 months or less are not included in the recognized ROU assets and lease liabilities for all classes of assets.
ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on information available at commencement date to determine the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives, or initial direct costs. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense. The Company has lease agreements which require payments for lease and non-lease components (e.g., common area maintenance and equipment maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as maintenance costs based on future obligations, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.
Comprehensive Loss
The Company’s net loss equals comprehensive loss for all periods presented.
Recently Adopted Accounting Standards
Convertible Debt
On January 1, 2022, the Company adopted ASU No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)”. The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. This ASU also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. The Company adopted this update using the modified retrospective transition method at the beginning of the period of adoption. Accordingly, the Company did not adjust prior period financial statements, and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit in 2022 in the amount of $
|
|
• |
Removal of the equity component, net of allocated issuance costs, of the convertible senior notes of $ |
|
|
• |
Elimination of the $ |
|
|
• |
Significant reduction in prospective non-cash interest expense related to the elimination of the unamortized discount. |
The adoption of this standard did not impact the manner in which the Company has or will reflect the convertible senior notes in diluted EPS.
10
3. Business Combination
On November 19, 2021, the Company purchased
As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of acquisition accounting will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The preliminary acquisition accounting will be finalized within one year from the date of acquisition. The Company believes the information gathered to date provides a reasonable basis for estimating the preliminary fair and recorded values of assets acquired and liabilities assumed.
The following table summarizes the preliminary fair value of the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:
|
Consideration Transferred |
|
|
|
|
|
Cash consideration transferred |
|
$ |
|
|
|
Contingently returnable consideration |
|
|
( |
) |
|
Consideration payable |
|
|
|
|
|
Contingent consideration |
|
|
|
|
|
Fair value of total purchase price consideration |
|
|
|
|
|
Cash acquired |
|
|
( |
) |
|
Fair value of total purchase price consideration, net of cash acquired |
|
$ |
|
|
|
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed |
|
|
|
|
|
Accounts receivable, net |
|
$ |
|
|
|
Contract, prepaid and other current assets |
|
|
|
|
|
Intangible assets |
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
( |
) |
|
Deferred revenue, current portion |
|
|
( |
) |
|
Deferred tax liability |
|
|
( |
) |
|
Total identifiable net assets |
|
|
|
|
|
Goodwill |
|
|
|
|
|
Total identifiable net assets and goodwill |
|
$ |
|
|
The goodwill of $
The identifiable intangible assets acquired have a weighted average amortization period of
During Q1 2022 the Company transferred the previously recorded consideration payable of $
Contract assets and deferred revenue balances were recorded at the book amounts acquired as the contract terms and performance obligations were consistent with the Company's application of the provisions of ASC Topic 606, Revenue from Contracts with Customers. All other assets acquired and liabilities assumed were recorded at preliminary fair and recorded values. The fair value of the assets and liabilities assumed is provisional pending finalization of the Company’s review of supporting records for these assets and liabilities.
Revenue recognized by the Company related to the operations of and identifiable expenses associated with the acquired business were immaterial for the three months ended March 31, 2022.
Supplemental pro forma revenue and earnings information are not presented because the Company determined they were immaterial to the consolidated financial statements. The Company estimates that the difference between pro forma information compared to reported results would not be significant.
11
4. Net Loss Per Common Share
Diluted loss per common share is the same as basic loss per common share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss.
The following common share equivalent securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the periods presented:
|
|
|
Three Months Ended March 31, |
|
|||||
|
Anti-Dilutive Common Share Equivalents |
|
2022 |
|
|
2021 |
|
||
|
Restricted stock units |
|
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
|
Convertible senior notes |
|
|
|
|
|
|
|
|
|
Conversion of preferred stock |
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan |
|
|
|
|
|
|
|
|
|
Total anti-dilutive common share equivalents |
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share is calculated as follows:
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Numerator: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
Preferred dividends |
|
|
( |
) |
|
|
( |
) |
|
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic and diluted |
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
5. Fair Value Measurement
The carrying amounts of certain of the Company’s financial instruments, including cash, cash equivalents and restricted cash, net accounts receivable, accounts payable and other accrued liabilities, and accrued compensation and benefits, approximate fair value due to their short-term nature. The carrying value of the Company’s financing obligations approximates fair value, considering the borrowing rates currently available to the Company with similar terms and credit risks.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:
|
|
Level 1. |
Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|
|
Level 2. |
Other inputs that are directly or indirectly observable in the marketplace. |
|
|
Level 3. |
Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. |
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made.
12
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above categories:
|
|
|
March 31, 2022 |
|
|||||||||||||
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Contingently returnable consideration (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
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