What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-03-01 · 196 added, 198 removed, 605 unchanged (39% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements Comprehensive Income (Loss)

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit )

Consolidated Statements Comprehensive Income

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Progyny, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in convertible preferred stock and stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "consolidated financial statements").

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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Auditing the Company’s estimates of accrued receivables and the related accrued claims payable was complex and required significant judgment as the estimates were sensitive to changes in the significant assumptions, including management’s assumptions regarding the lag between authorization date and service date, service changes and cancellations.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Company’s process to estimate accrued receivables and the associated claims payable.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Company’s process to estimate accrued receivables and the associated claims payable.

For example, we tested controls over management’s review of the methodology, significant assumptions and the underlying data used to determine these estimates.

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Accounts receivable, net of $ 28,328 and $ 17,379 of allowances at December 31, 2022 and 2021, respectively

240,067 134,557

Prepaid expenses and other current assets 4,489 4,564

2 unchanged sentences

Operating lease right-of-use assets 6,903 7,805

Goodwill 11,880 11,880

Intangible assets, net 99 599

1 unchanged sentence

Other noncurrent assets 3,988 2,941

Total assets $ 542,986 $ 358,065

LIABILITIES AND STOCKHOLDERS’ EQUITY

4 unchanged sentences

Operating lease noncurrent liabilities 6,482 7,419

Other noncurrent liabilities

Total liabilities 166,018 106,243

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615,980 shares outstanding at December 31, 2022 and 2021, respectively

Accumulated deficit

( 1,009 ) ( 1,009 )

Accumulated earnings (deficit) 27,934 ( 2,424 )

Accumulated other comprehensive income (loss) 501 ( 93 )

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(in thousands, except share and per share amounts)

2022 2021 2020

Revenue $ 786,913 $ 500,621 $ 344,858

Cost of services 619,588 388,486 274,799

Gross profit 167,325 112,135 70,059

Operating expenses:

3 unchanged sentences

Income from operations 23,341 32,340 8,348

Other income (expense):

Other income, net:

Other income (expense), net 286 ( 366 ) 210

Interest income (expense), net

Convertible preferred stock warrant valuation adjustment

Total other income (expense), net

Income (loss) before income taxes

Benefit (provision) for income taxes

Net income (loss)

Net income (loss) per share:

Weighted-average shares used in computing net income (loss) per share:

Interest income, net 814 461 121

Total other income, net 1,100 95 331

Income before income taxes 24,441 32,435 8,679

Benefit for income taxes 5,917 33,334 37,780

Net income $ 30,358 $ 65,769 $ 46,459

Net income per share:

Basic $ 0.33 $ 0.74 $ 0.54

Diluted $ 0.30 $ 0.66 $ 0.47

Weighted-average shares used in computing net income per share:

Basic 92,195,068 89,105,562 85,722,670

Diluted 99,957,173 100,358,047 99,055,526

The accompanying notes are an integral part of these consolidated financial statements.

PROGYNY, INC.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(in thousands)

Net income (loss)

2022 2021 2020

Net income $ 30,358 $ 65,769 $ 46,459

Other comprehensive income (loss):

1 unchanged sentence

Total other comprehensive income (loss) 594 ( 94 ) 1

Total comprehensive income (loss)

Total comprehensive income $ 30,952 $ 65,675 $ 46,460

The accompanying notes are an integral part of these consolidated financial statements.

PROGYNY, INC.

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit )

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share and per share amounts)

Preferred Stock

Comprehensive

Common Stock Treasury Stock Additional Paid in Capital Accumulated Earnings (Deficit) Other Comprehensive Income (Loss) Total

Shares Amount

Balance at December 31, 2019

Repurchase of common stock

Stock option exercise

Stock-based compensation

Conversion of convertible preferred stock to common stock upon initial public offering

84,188,202 $ 8 $ ( 1,009 ) $ 228,755 $ ( 113,483 ) $ — $ 114,271

Conversion of convertible preferred stock warrants to common stock warrants upon initial public offering

Warrant exercise

Issuance of common stock in connection with initial public offering, net of issuance costs of $ 5.9 million and $ 3.7 million in offering costs

Balance at December 31, 2019

Issuance of employee equity awards, net of shares withheld 2,688,273 1 — ( 5,451 ) — — ( 5,450 )

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Other comprehensive income — — — — — 1 1

Net income — — — — 46,459 — 46,459

Balance at December 31, 2020

87,054,329 $ 9 $ ( 1,009 ) $ 236,139 $ ( 68,193 ) $ 1 $ 166,947

Issuance of employee equity awards, net of shares withheld 3,209,461 — — ( 14,589 ) — — ( 14,589 )

2 unchanged sentences

Other comprehensive loss — — — — — ( 94 ) ( 94 )

Net income — — — — 65,769 — 65,769

Balance at December 31, 2021

The accompany notes are an integral part of these consolidated financial statements.

91,088,781 $ 9 $ ( 1,009 ) $ 255,339 $ ( 2,424 ) $ ( 93 ) $ 251,822

Issuance of employee equity awards, net of shares withheld 2,212,375 — — ( 7,327 ) — — ( 7,327 )

Stock-based compensation — — — 101,521 — — 101,521

Other comprehensive income — — — — — 594 594

Net income — — — — 30,358 — 30,358

Balance at December 31, 2022

93,301,156 $ 9 $ ( 1,009 ) $ 349,533 $ 27,934 $ 501 $ 376,968

The accompanying notes are an integral part of these consolidated financial statements.

PROGYNY, INC.

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(in thousands)

2022 2021 2020

OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Deferred tax (benefit) expense

Net income $ 30,358 $ 65,769 $ 46,459

Adjustments to reconcile net income to net cash provided by operating activities:

Deferred tax benefit ( 6,615 ) ( 33,303 ) ( 37,971 )

Non-cash interest expense — 38 75

2 unchanged sentences

Bad debt expense 13,794 9,783 5,562

Loss on disposal of property and equipment

Change in fair value of warrant liabilities

Changes in operating assets and liabilities:

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Other noncurrent assets and liabilities ( 1,080 ) ( 3,280 ) 605

Net cash provided by (used in) operating activities

Net cash provided by operating activities 80,395 26,037 36,203

INVESTING ACTIVITIES

2 unchanged sentences

Sale of marketable securities 122,709 122,372 64,970

Net cash provided by (used in) continuing operations

Net cash provided by discontinued operations

Net cash provided by (used in) investing activities ( 43,866 ) 8,766 ( 40,031 )

FINANCING ACTIVITIES

Proceeds from issuance of common stock upon initial public offering

Payment of initial public offering costs — — ( 892 )

Proceeds from revolving line of credit

Repayments made against revolving line of credit

Repurchase of common stock

Proceeds from exercise of stock options 3,073 2,924 2,329

1 unchanged sentence

Proceeds from contributions to employee stock purchase plan 1,152 1,347 1,244

Proceeds from exercise of stock warrants

Net cash provided by (used in) financing activities

Net cash used in financing activities ( 7,864 ) ( 13,695 ) ( 6,249 )

Net increase (decrease) in cash and cash equivalents 28,665 21,108 ( 10,077 )

2 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest

Cash paid for income taxes, net of refunds received $ 133 $ 97 $ —

1 unchanged sentence

Additions of property and equipment, net included in accounts payable and accrued expenses $ 636 $ 204 $ 24

Deferred initial public offering costs in accounts payable and accrued expenses

Non-cash preferred stock warrant conversion to common stock warrant upon IPO

The accompanying notes are an integral part of these consolidated financial statements.

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The pharmacy benefits solution is only available as an add-on service to its fertility benefits solution.

Reverse Stock Split

On October 14, 2019, the shareholders of Progyny approved a one-for-4.5454 reverse stock split of its common and convertible preferred stock.

The par value of the common stock and convertible preferred stock was not adjusted as a result of the reverse stock split.

Accordingly, the consolidated financial statements and notes retroactively reflect Progyny’s capital structure after giving effect to the reverse stock split.

Initial Public Offering

On October 29, 2019, the Company completed its initial public offering (“IPO”) in which it issued and sold 6,700,000 shares of its common stock at a public offering price of $ 13.00 per share.

As part of the IPO, certain selling stockholders offered and sold an additional 4,800,000 shares (including 1,500,000 shares sold pursuant to the exercise of the underwriters’ over-allotment option), at an equivalent public offering price of $ 13.00 per share.

The Company received net proceeds of $ 77.6 million from the IPO, after deducting underwriters’ discounts and commissions of $ 5.9 million and offering costs of $ 3.6 million.

Offering costs were initially capitalized and consisted of fees and expenses incurred in connection with the sale of common stock in the IPO, including legal, accounting, printing and other IPO-related costs.

Upon completion of the IPO, these offering costs were reclassified to stockholders’ equity and offset against the proceeds from the offering on the balance sheet.

Immediately prior to the completion of the IPO, all shares of convertible preferred stock then outstanding were converted into 65,428,088 shares of common stock on a one -to- one basis, $ 106.2 million of convertible preferred stock was reclassified to additional paid-in-capital and $ 7,000 of convertible preferred stock was reclassified to common stock on the Company’s balance sheet.

Basis of Presentation

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The consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in United Sates (“U.S.

Additionally, there are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, including variants, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact its customers and members, its provider network, specialty pharmacy partners, employees, suppliers, vendors, and other business partners.

Additionally, there are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, including variants, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact its customers and members, provider network, specialty pharmacy partners, employees, suppliers, vendors, and other business partners.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, future results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants, the actions taken to contain it or treat its impact, vaccine roll-out efforts and impact, including vaccine hesitancy, break-through cases and the economic impact on local, regional and national markets.

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The Company operates and manages in one operating segment, providing fertility and pharmacy benefits solutions.

The Company defines its CODM as its Chief Executive Officer and its President.

The Company defines its CODM as its Chief Executive Officer.

All long-lived assets are located in the United States and all revenue is attributed to the United States.

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GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities.

Such estimates include, but are not limited to, the determination of accrued receivables related to revenue recognition, accrued claims payable, allowance for doubtful accounts, stock-based compensation, convertible preferred stock warrant liabilities, lease liabilities, and accounting for income taxes.

Such estimates include, but are not limited to, the determination of accrued receivables related to revenue recognition, accrued claims payable, allowance for doubtful accounts, stock-based compensation, lease liabilities, and accounting for income taxes.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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In addition to access to Progyny’s Smart Cycle treatment bundles and access to Progyny’s network of provider clinics, the fertility benefits solution includes other comprehensive services, which Progyny refers to as care management services, such as active management of the provider clinic network, real-time member eligibility and treatment authorization, member-facing digital tools throughout the Smart Cycle and detailed quarterly reporting all supported by client facing account management and end-to-end comprehensive member support provided by Progyny’s in house staff of PCAs.

The promises within Progyny’s fertility benefits contract with a client represent a single performance obligation because Progyny provides a significant service of integrating the Progyny designed Smart Cycles and access to the fertility treatment services provided by provider clinics with the other comprehensive services into the combined fertility benefits solution that the client contracted to receive.

treatment services provided by provider clinics with the other comprehensive services into the combined fertility benefits solution that the client contracted to receive.

Progyny’s fertility benefits solution is a stand-ready obligation that is satisfied over the contract term.

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These service level refunds, which are determined based on results of a full plan year, if met, are based on a percentage of the PEPM fee paid by clients.

The Company estimates the variable consideration related to the total PEPM administration fee, less estimated refunds related to service level agreements, and recognizes the amounts allocated to

the fertility benefits solution ratably over the contract term.

The Company estimates the variable consideration related to the total PEPM administration fee, less estimated refunds related to service level agreements, and recognizes the amounts allocated to the fertility benefits solution ratably over the contract term.

Progyny’s estimate of service level agreement refunds, have not historically resulted in significant adjustments to the transaction price.

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Progyny integrates the prescription fulfillment and clinical services provided by the pharmacies and PCAs into the overall pharmacy benefits solution that the client contracted to receive.

In addition, Progyny defines the scope of the potential services to be performed by the specialty pharmacies and monitors the performance of the specialty

In addition, Progyny defines the scope of the potential services to be performed by the specialty pharmacies and monitors the performance of the specialty pharmacies.

Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with pharmacies, which establish pricing for each drug.

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The Company adopted ASU 2016-13 as of January 1, 2020, using the modified retrospective transition method, which resulted in a cumulative-effect adjustment to accumulated deficit of $ 1.2 million.

As a result, periods prior to the adoption date continue to be reported under the historical accounting guidance.

The following table provides a summary of the activity in this allowance (in thousands):

Years Ended December 31, 2022, 2021 and 2020

December 31, 2021

ASU 2016-13 Adoption Adjustment

December 31, 2022 Balance at

ASU 2016-13 Adoption Adjustment Charged

Write-offs Balance

Allowance for doubtful accounts $ 17,379 $ — $ 13,794 $ ( 2,845 ) $ 28,328

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In addition, the Company periodically evaluates the financial condition of its clients to manage credit risk related to accounts receivable.

As of December 31, 2021, two entities accounted for 24% and 11 % each, or a combined 35 % of total receivables.

Two entities accounted for 14 % each, or a combined 28 % total receivables as of December 31, 2020.

As of December 31, 2022, one vendor accounted for 30 % of total receivables.

One vendor accounted for 24 % and one client accounted for 11 %, or a combined 35 % total receivables, as of December 31, 2021.

Property and Equipment

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Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or asset groups may not be recoverable.

In such instances, the recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset group to future undiscounted net

cash flows expected to be generated by the assets.

In such instances, the recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the assets.

If such assets are considered to be impaired, an impairment loss would be recognized if the carrying amount of the asset exceeds the fair value of the asset or asset group.

2 unchanged sentences

On January 1, 2020, the Company adopted ASU 2016-02, Leases (Topic 842) using the modified retrospective transition method, which applies the provisions of the standard at the effective date without adjusting comparative periods presented.

As a result, periods prior to the adoption date continue to be reported under the historical lease accounting guidance.

In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company not to reassess (i) whether any expired or existing contracts contained leases, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for existing leases.

The Company elected the package of practical expedients permitted under the transition guidance within the

new standard, which allowed the Company not to reassess (i) whether any expired or existing contracts contained leases, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for existing leases.

The Company also elected not to reassess lease terms for existing leases using hindsight and to account for each separate lease and non-lease component as a single lease component.

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For non-employee awards, a measurement date is normally reached when performance is completed, and the fair value is remeasured as the awards vest.

The fair value of the Company’s restricted stock units has been determined utilizing the closing market price of the Company’s common stock on the date of the grant.

The fair value of the Company’s restricted stock units has been determined utilizing the closing market price of the Company’s common stock on the date of the grant, including those with performance-based vesting criteria.

The fair value of the Company’s stock options and stock purchased under the employee stock purchase plan has been determined using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends.

Due to the lack of historical and implied volatility data of the Company’s common stock, the expected stock price volatility has been estimated based on the historical volatilities of the daily closing prices of a specified group of companies in Progyny’s industry for a period equal to the expected term of the option.

Progyny selected companies with comparable characteristics to the Company, including enterprise value, risk profiles and position within the industry, that have historical share price information sufficient to meet the expected term of the stock

The expected term of the options granted represents the period of time that options granted are expected to be outstanding and is calculated using the simplified method, which is the mid-point between the vesting date and the end of the contractual term for each option.

For non-employee service-based and performance-based awards, the expected term is estimated based on the remaining contractual term of such awards.

For non-employee service-based awards, the expected term is estimated based on the remaining contractual term of such awards.

The risk-free interest rate is based on the yield of zero-coupon, U.S.

2 unchanged sentences

therefore, the expected dividend yield is zero .

The Company’s stock-based awards are subject to either service-based or performance-based vesting conditions.

The Company’s stock-based awards are subject to service-based or performance-based vesting conditions.

The Company recognizes compensation expense for service-based awards over the vesting period of the award on a straight-line basis.

Compensation expense related to awards with performance-based vesting conditions is recognized when achievement of the performance condition is considered probable over the requisite service period.

Common Stock Valuation

Prior to the Company’s IPO on October 29, 2019, the Company had historically granted stock options at exercise prices equal to the fair value as determined by the Board of Directors on the date of grant.

Prior to the IPO and in the absence of a public trading market, the Board of Directors, with input from management, exercised significant judgement and considered numerous objective and subjective factors to determine the fair value of the Company’s common stock as of the date of each stock option grant, including:

● the Company’s financial performance

● the rights, preferences and privileges of the convertible preferred stock relative to those of the common stock;

● general economic and financial conditions, and the trends specific to the markets in which the Company operates

In addition, the Board of Directors considered the independent valuations completed by a third-party valuation consultant.

The valuations of the Company’s common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

In performing these valuations, the Board of Directors considered a variety of relevant factors and valuation methodologies in accordance with the guidelines.

Following the IPO, the Board of Directors determines the fair market value for all common stock grants based on the closing market price of the common stock, on the date of grant, as reported by Nasdaq.

Compensation expense related to awards with performance-based vesting conditions is recognized over the requisite service period when achievement of the performance condition is considered probable.

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), including updates in ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which the Company adopted as of January 1, 2021.

Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax basis of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes.

Deferred income taxes are recorded for the expected tax consequences of

temporary differences between the tax basis of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes.

The Company periodically reviews the recoverability of deferred tax assets recorded on the consolidated balance sheet and provides valuation allowances as deemed necessary to reduce such deferred tax assets to the amount that will, more likely than not, be realized.

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The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

The Company’s policy is to recognize interest and penalty expenses associated with uncertain tax positions as a component of income tax expense in the consolidated statements of operations and comprehensive (loss) income.

As of December 31, 2022, 2021 and 2020, the Company had no significant accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations.

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The carrying amounts of certain of the Company’s financial instruments, including cash equivalents, marketable securities, accounts receivable and accounts payable approximate fair value due to their short maturities.

Net Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period.

For the year ended December 31, 2019, the Company’s convertible preferred stock was entitled to receive noncumulative dividends, prior and in preference to any declaration or payment of any dividend on common stock and thereafter participate pro rata on an as-converted basis with the common stockholders in any distributions to common stockholders and were therefore considered to be participating securities.

As a result, the Company calculated the net loss per share using the two-class method.

Accordingly, the net loss attributable to common stockholders is derived from the net loss for the period.

Diluted net income (loss) per share is computed by dividing the diluted net income (loss) by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming dilutive effect of outstanding common stock options, restricted stock units, shares issuable under the employee stock purchase program and common stock warrants.

In periods when the Company has incurred a net loss, diluted net loss per

share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Net Income per Share

Basic net income per share is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income per share is computed by dividing the diluted net income by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares assuming dilutive effect of outstanding common stock options, restricted stock units, shares issuable under the employee stock purchase program and

common stock warrants.

In periods when the Company has incurred a net loss, diluted net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

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Simplifying the Accounting for Income Taxes .

The standard is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The Company adopted this standard as of January 1, 2021.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements Issued but Not Yet Adopted

In May 2021, the FASB issued ASU No.

2021-04 (“ASU 2021-04”) “ Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation- Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40) ” which provides guidance on modifications or exchanges of a freestanding equity-classified written call options that are not within the scope of another Topic, such as warrants.

The new standard will be effective for the Company for the fiscal year beginning January 1, 2022 and should be applied prospectively to modifications or exchanges occurring on or after this date.

The Company currently does not expect the adoption of the new standard to have a material effect on its consolidated financial statements, however, this impact will depend on the terms of written call options, such as warrants, or financings issued or modified in the future.

The Company adopted this standard as of January 1, 2022 on a prospective basis to modifications or exchanges occurring on or after this date.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Disaggregated revenue

The following table disaggregates revenue by service (in thousands):

2022 2021 2020

Fertility benefit services revenue $ 510,145 $ 355,616 $ 253,556

3 unchanged sentences

For the year ended December 31, 2022, two clients accounted for 16 % and 10 %, or a combined 26 %, of total revenue.

Two clients accounted for 19 % and 15 %, or a combined 34 %, of total revenue for the year ended December 31, 2021.

For the year ended December 31, 2020, two clients accounted for 18 %, and 17 %, or a combined 35 % of total revenue.

No other clients accounted for more than 10% for the years ended December 31, 2022, 2021, and 2020.

For the year ended December 31, 2019, three clients accounted for 16 %, 15 %, and 10 %, or a combined 41 %, of total revenue.

Fair Value of Financial Instruments

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The Company classified these assets as Level 1 because the values of these assets are determined using unadjusted quoted prices in active markets for identical assets.

During the year ended December 31, 2021, the Company had gross realized losses related to marketable securities and money market accounts of $ 0.4 million included within earnings.

The gross realized gains for the period as well as the gross realized gains and losses for the year ended December 31, 2020 were not significant.

During the year ended December 31, 2021, the Company reclassified $ 0.4 million of net unrealized holding losses out of other comprehensive loss and into earnings.

During the year ended December 31, 2022, the Company had gross realized gains and losses related to marketable securities and money market accounts of $ 0.4 million and $ 0.1 million, respectively, included within earnings.

The gross realized losses included within earnings for the year ended December 31, 2021 was $ 0.4 million.

The gross realized gains for the year ended December 31, 2021 as well as the gross realized gains and losses for the year ended December 31, 2020 were not significant.

The Company reclassified $ 0.3 million of net unrealized holding gains and $ 0.4 million of net unrealized holding losses out of other comprehensive income (loss) and into earnings for the years ended December 31, 2022 and 2021, respectively.

The amount reclassified out of other comprehensive income for the year ended December 31, 2020 was not significant.

The total gains and losses for marketable securities and money market accounts in other comprehensive income (loss) as of December 31, 2021 and 2020 were not significant.

The total gains for marketable securities and money market accounts with net gains in other comprehensive income as of December 31, 2022 was $ 0.5 million.

The total losses for the period as well as the total gains and losses for marketable securities and money market accounts in other comprehensive income (loss) as of December 31, 2021 and 2020 were not significant.

During the years ended December 31, 2022 and December 31, 2021, the Company did not maintain any assets or liabilities classified as Level 2 or Level 3 in the fair value hierarchy.

1 unchanged sentence

Property and equipment consist of the following (in thousands):

(in years) December 31,

Machinery and equipment 3 - 5

Computers and hardware 3 1,252 1,023

Leasehold improvements

Leasehold improvements lease term 3,394 3,110

Furniture and fixtures 7 1,296 453

3 unchanged sentences

Total property and equipment, net $ 8,371 $ 5,027

Depreciation expense was approximately $ 0.7 million for the years ended December 31, 2021, 2020 and 2019.

During the year ended December 31, 2021, the Company capitalized $ 0.1 million in stock-based compensation expense related to the development of internal-use software.

Depreciation expense was approximately $ 1.1 million for the year ended December 31, 2022.

For the years ended December 31, 2021 and 2020, depreciation expense was approximately $ 0.7 million.

During the years ended December 31, 2022 and December 31, 2021, the Company capitalized $ 0.8 million and $ 0.1 million, respectively, in stock-based compensation expense related to the development of internal-use software.

Intangible Assets, Net

Intangible assets consist of the following (in thousands):

(in years) December 31,

Trademarks 8 $ 4,000 $ 4,000

Physician Network 6 3,500 3,500

Website 5 2,000 2,000

Intangible assets, gross 9,500 9,500

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Year ending December 31:

In September 2019, the Company’s sublease agreement for its corporate headquarters in New York, NY commenced and will expire in May 2029.

In September 2019, the Company’s sublease agreement for its corporate headquarters in New York, NY commenced and is scheduled to expire in May 2029.

Pursuant to the sublease, the Company will pay the base rent of approximately $ 1.3 million per annum through the end of the fifth lease year and approximately $ 1.4 million per annum thereafter through the expiration date.

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Lease expense for the Company’s operating leases was $ 1.3 million for the years ended December 31, 2022, 2021, and 2020.

Cash outflows from operating activities attributable to the operating leases for the years ended December 31, 2021 and 2020 was $ 1.3 million and $ 0.8 million, respectively.

Cash outflows from operating activities attributable to the operating leases for the years ended December 31, 2022 and 2021 was $ 1.3 million.

For the year ended December 31, 2020, cash outflows from operating activities attributable to the operating leases was $ 0.8 million.

Information related to the Company’s leases is as follows (in thousands):

Balance Sheet Location

December 31, 2021

Balance Sheet Location December 31, 2022

Operating Leases

Right-of-use asset

Operating lease right-of-use assets

Short-term lease liabilities

Accrued expenses and other current liabilities

Long-term lease liabilities

Operating lease noncurrent liabilities

Right-of-use asset Operating lease right-of-use assets $ 6,903

Short-term lease liabilities Accrued expenses and other current liabilities $ 1,231

Long-term lease liabilities Operating lease noncurrent liabilities $ 6,482

Other information

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Future minimum facility lease payments as of December 31, 2022, are as follows (in thousands):

Balance at December 31, 2021

Year Ending December 31:

Operating Lease Payments as of December 31, 2022

Thereafter 1,993

Total undiscounted lease payments $ 8,826

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Operating lease noncurrent liabilities $ 6,482

Rent expense under the operating leases was approximately $ 1.2 million for the year ended December 31, 2019.

The terms of the facility lease provide for rental payments on a monthly basis and on a graduated scale.

February 2022 Lease Agreement

In February 2022, the Company entered into a lease agreement for additional space in its corporate offices in New York, New York, consisting of a 24,099 square foot office and a 21,262 square foot office, and also for continued occupancy of the 25,212 square foot office after the expiration of the current sublease.

For the 24,099 square foot office, the Company will pay the base rent of approximately $ 1.4 million per year starting in the fourth quarter of 2023 for five years and approximately $ 1.5 million per year thereafter through the first quarter of 2035, the expiration date.

For the 21,262 square foot office, the Company will pay the base rent of approximately $ 1.3 million starting in the first quarter of 2025 for five years and approximately $ 1.4 million per year thereafter through the first quarter of 2035, the expiration date.

For the current 25,212 square foot office, the Company will pay the base rent of approximately $ 1.6 million per year beginning in June 2029 through the first quarter of 2035, the expiration date.

The 24,099 square foot office became available to the Company for use in February 2023.

The Company is obligated to pay the base rent of approximately $ 1.4 million per year starting in March 2024 for five years and approximately $ 1.5 million per year thereafter through the first quarter of 2035, the expected expiration date.

For the 21,262 square foot office, the lease commencement date, which is when the premises will become available to the Company for use, is expected to be in the first quarter of 2024.

The Company is obligated to pay the base rent of approximately $ 1.3 million starting in the first quarter of 2025 for five years and approximately $ 1.4 million per year thereafter through the first quarter of 2035, the current expiration date.

For the current 25,212 square foot office, the Company will pay the base rent of approximately $ 1.6 million per year beginning in June 2029 through the first quarter of 2035, the current expiration date.

Accrued Expenses and Other Current Liabilities

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Professional fees 861 843

Other 6,480 2,172

Total accrued expenses and other current liabilities $ 50,249 $ 37,425

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When the Company held unrestricted cash balances greater than $ 5.0 million, interest accrued at a floating rate per annum equal to the greater of prime rate or 4.75 %.

If the unrestricted cash balance was less than $ 5.0 million, interest accrued at a floating rate per annum equal to the greater of prime rate plus 0.5 % or 4.75 %, with inter est payable monthly.

If the unrestricted cash balance was less than $ 5.0 million, interest accrued at a floating rate per annum equal to the greater of prime rate plus 0.50 % or 4.75 %, with interest payable monthly.

Interest was paid based upon the borrowed funds.

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and enter into agreements with negative pledge clauses or clauses restricting subsidiary distributions.

The financial covenant requires the Company to achieve a specified minimum quarterly revenue as defined by the SVB Line of Credit.

The Company was in compliance with all requirements and its covenant of the revolving credit facility as of December 31, 2020.

The Company had $ 0 drawn on the SVB Line of Credit as of December 31, 2020 and 2019.

The financial covenant required the Company to achieve a specified minimum quarterly revenue as defined by the SVB Line of Credit.

The Company recorded interest expense on the SVB Line of Credit of $ 38,000 and $ 75,000 during the years ended December 31, 2021, and 2020, respectively.

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The common stock confers upon its holders the right to receive dividends out of any assets legally available, when and as declared by the Board of Directors.

In August 2019, the Company repurchased 26,659 shares of common stock at an average price per share of $ 6.91 pursuant to its contractual right of first refusal for offers made by third parties to acquire outstanding shares from existing stockholders.

The repurchased shares were recorded as treasury shares.

The Company had 615,980 shares of treasury stock as of December 31, 2022, 2021 and 2020.

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In connection with the IPO on October 25, 2019, all outstanding convertible preferred warrants were converted to common stock warrants.

As of December 31, 2021 and 2020, the Company had 565,351 and 1,419,415 common stock warrants outstanding, respectively.

For the year ended December 31, 2021, 854,065 common stock warrants were exercised for 824,991 shares at a weighted average exercise price of $ 1.73 .

As of December 31, 2022 and 2021, the Company had 565,351 common stock warrants outstanding.

No common stock warrants were exercised during the year ended December 31, 2022.

For the year ended December 31, 2021, 854,065 common stock warrants were exercised for 824,991 shares of common stock at a weighted-average exercise price of $ 1.73 .

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Stock Incentive Plan

In October 2019, the Company’s Board of Directors and stockholders adopted and approved the 2019 Equity Incentive Plan, as amended (the “2019 Plan”), as the successor to continuation of the Company’s 2017 Equity Incentive Plan, as amended (the “2017 Plan”).

In October 2019, the Company’s Board of Directors and stockholders adopted and approved the 2019 Equity Incentive Plan, as amended (the “2019 Plan”), as the successor to the Company’s 2017 Equity Incentive Plan, as amended (the “2017 Plan”).

No further grants were made under the 2017 Plan from the date that the 2019 Plan became effective.

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As of December 31, 2022 and 2021, 1,241,365 and 4,160,618 shares of common stock, respectively, remained available for future grants under the 2019 Plan.

Under the 2019 Plan, subject to any adjustments necessary to implement any capitalization adjustments, an annual increase to the number of shares issuable is automatically added on January 1 of each year for a period of ten years commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to 4 % of the total number of shares of common stock outstanding on December 31 of the preceding year.

Stock Options

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A summary of the Company’s stock option activity for the year ended December 31, 2022 is as follows:

Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value

(In thousands)

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14,924,013 $ 25.11 7.9 $ 439,557

Granted 6,710,394 41.36

Exercised ( 2,014,629 ) 3.76

Forfeited ( 773,193 ) 50.28

Cancelled ( 38,559 ) 35.71

Outstanding at December 31, 2022

18,808,026 $ 32.13 7.9 $ 188,241

Exercisable at December 31, 2021

6,694,592 $ 4.21 6.6 $ 308,893

Exercisable at December 31, 2022

8,015,001 $ 15.21 6.3 $ 169,601

The total intrinsic value of options exercised was $ 76.7 million, $ 175.0 million, and $ 79.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The weighted-average grant date fair value of options granted was $ 21.84 , $ 30.60 , and $ 26.56 in the years ended December 31, 2022, 2021, and 2020, respectively.

The total grant date fair value of options vested was $ 16.0 million, $ 9.3 million, and $ 2.8 million in the years ended December 31, 2021, 2020, and 2019, respectively.

The total grant date fair value of options vested was $ 62.6 million, $ 16.0 million, and $ 9.3 million as of December 31, 2022, 2021, and 2020, respectively.

The total unrecognized compensation cost related to unvested options was approximately $ 228.4 million at December 31, 2022.

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Year Ended December 31,

2022 2021 2020

Expected term (in years) 4.61 - 6.11

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0.3 % - 1.7 %

1.5 % - 2.5 %

Expected volatility 49.3 % - 53.3 %

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49.2 % - 54.7 %

48.6 % - 49.0 %

Expected dividend rate — — —

Restricted Stock Units

During the year ended December 31, 2020, the Company began granting restricted stock units under the 2019 Equity Incentive Plan.

Restricted stock units vest based on the terms outlined in the applicable award agreement, which is generally over a period of 4 years.

During the year ended December 31, 2020, the Company began granting restricted stock units under the 2019 Plan.

Restricted stock units are subject to service-based or performance-based vesting criteria.

The restricted stock units vest based on the terms outlined in the applicable award agreement, which, for service-based awards, is generally over a period of 4 years.

The Company's performance-vesting awards are based on the achievement of specified revenue targets and continued employment through the date of achievement of such targets.

If the targets have not been achieved prior to the fifth anniversary of the grant, the awards will be forfeited.

As of December 31, 2022, all of the performance-vesting awards remained unvested.

A summary of the Company’s restricted stock unit activity is as follows:

Shares Weighted-Average

Outstanding at December 31, 2021

1,765,518 $ 53.25

Granted 1,412,850 $ 44.09

Vested ( 572,911 ) $ 49.78

Forfeited ( 189,295 ) $ 52.82

Outstanding at December 31, 2022

The total intrinsic value of restricted stock units vested was $ 11.1 million and $ 1.4 million for the years ended December 31, 2021 and 2020, respectively.

2,416,162 $ 48.74

The total intrinsic value of restricted stock units vested was $ 22.0 million, $ 11.1 million, and $ 1.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The weighted-average grant date fair value of restricted stock units granted was $ 44.09 , $ 58.13 , and $ 25.46 for the years ended December 31, 2022, 2021, and 2020, respectively.

The total fair value of restricted stock units vested was $ 0.2 million for the year ended December 31, 2021.

For the year ended December 31, 2020, the total fair value of restricted stock units vested was not significant.

The total grant date fair value of restricted stock units vested was $ 28.5 million and $ 5.3 million for the years ended December 31, 2022 and December 31, 2021.

The total fair value of restricted stock units vested was not significant for the year ended December 31, 2020.

The total unrecognized compensation cost related to unvested restricted stock units was approximately $ 100.3 million at December 31, 2022.

The weighted-average remaining recognition period is approximately 2.8 years.

January 2022 Executive Equity Grants

On November 4, 2021, the Company announced that David Schlanger will transition to the role of Executive Chairman, effective as of January 1, 2022, and will continue to serve as a director.

In connection with this transition, the Company entered into an amended and restated employment agreement with Mr.

Schlanger, effective as of January 1, 2022.

Pursuant to this agreement, Mr.

Schlanger received an equity award for fiscal year 2022 comprised of 333,000 non-qualified stock options and 84,000 restricted stock units, in each case vesting as to 25 % on the first anniversary of the vesting commencement date with the remaining 75 % of such award vesting in equal quarterly installments thereafter over the next three years , as well as a performance stock unit award with respect to a maximum number of 83,000 shares that are eligible to be earned based on the achievement of specified revenue targets.

Peter Anevski, who served as President and Chief Operating Officer, succeeded Mr.

Schlanger as Chief Executive Officer, effective as of January 1, 2022.

In connection with this transition, the Company entered into an amended and restated employment agreement with Mr.

Anevski, effective as of January 1, 2022.

Pursuant to this agreement, Mr.

Anevski received an equity award for fiscal year 2022 comprised of 1,000,000 non-qualified stock options and 250,000 restricted stock units, in each case vesting as to 25 % on the first anniversary of the vesting commencement date with the remaining 75 % of such award vesting in equal quarterly installments thereafter over the next three years , as well as a performance stock unit award with respect to a maximum number of 250,000 shares that are eligible to be earned based on the achievement of specified revenue targets.

Employee Stock Purchase Plan

I n October 2019, the Board of Directors and stockholders also adopted and approved the 2019 Employee Stock Purchase Plan (the “ESPP”).

Following the IPO, the ESPP authorized the issuance of 1,700,000 shares of common stock to purchase rights granted to the Company’s employees or to employees of the Company’s designated affiliates.

December 31, 2021, 1,560,693 shares of common stock remained available to be issued under the ESPP.

In October 2019, the Board of Directors and stockholders also adopted and approved the 2019 Employee Stock Purchase Plan (the “ESPP”).

Following the IPO, the ESPP authorized the issuance of 1,700,000 shares of common stock to purchase rights granted to the Company’s employees.

Subject to the ESPP, the maximum number of shares of common stock that may be issued under the Plan will not exceed 1,700,000 shares, plus the number of shares that are automatically added on January 1st of each year, in an amount equal to the lesser of 1 % of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year, and 2,500,000 shares of common stock, or such smaller amount as determined by the Company's Board of Directors.

As of December 31, 2022 and December 31, 2021, 3,306,387 and 1,560,693 shares of common stock remained available to be issued under the ESPP, respectively.

The following table summarizes the purchases that were made for each purchase period of the ESPP through December 31, 2022 (in thousands, except for share amounts):

Purchase Period

Proceeds used for purchase

Shares purchased

Purchase Period Proceeds used for purchase Shares purchased

October 25, 2019 to July 31, 2020 $ 1,146 103,677

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February 1, 2021 to July 31, 2021 595 14,505

August 1, 2021 to January 31, 2022 683 19,838

February 1, 2022 to July 31, 2022 412 15,888

The next purchase period commenced on August 1, 2022 and ended on January 31, 2023.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for employees, which was included in the statements of operations and comprehensive loss as follows (in thousands):

The following table summarizes stock-based compensation expense, which was included in the statements of operations as follows (in thousands):

2022 2021 2020

Cost of services $ 25,918 $ 8,969 $ 3,056

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Total stock-based compensation expense $ 100,748 $ 33,706 $ 12,821

Net Income (Loss) Per Share

A reconciliation of net income (loss) and the number of shares in the calculation of basic and diluted net income (loss) per share is as follows (in thousands, except share and per share amounts):

Basic net income (loss) per common share:

Net income (loss)

Weighted-average shares used in computing basic net income (loss) per share

Basic net income (loss) per share

Diluted net income (loss) per common share:

Net income (loss)

Weighted-average shares used in computing basic net income (loss) per share

Net Income Per Share

A reconciliation of net income and the number of shares in the calculation of basic and diluted net income per share is as follows (in thousands, except share and per share amounts):

2022 2021 2020

Basic net income per common share:

Net income $ 30,358 $ 65,769 $ 46,459

Weighted-average shares used in computing basic net income per share 92,195,068 89,105,562 85,722,670

Basic net income per share $ 0.33 $ 0.74 $ 0.54

Diluted net income per common share:

Net income $ 30,358 $ 65,769 $ 46,459

Weighted-average shares used in computing basic net income per share 92,195,068 89,105,562 85,722,670

Effect of dilutive securities 7,762,105 11,252,485 13,332,856

Weighted-average shares used in computing diluted net income (loss) per share

Diluted net income (loss) per share

The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been antidilutive:

Weighted-average shares used in computing diluted net income per share 99,957,173 100,358,047 99,055,526

Diluted net income per share $ 0.30 $ 0.66 $ 0.47

The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income per share for the periods presented because including them would have been antidilutive:

2022 2021 2020

Options to purchase common stock 8,019,010 1,562,029 699,233

Shares issuable under ESPP — — 70,184

Warrants to purchase common stock

Restricted stock units 1,733,420 186,547 —

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The Company sponsors a 401(k) defined contribution plan covering all employees and began employer contributions in 2018.

The Company incurred expenses of $ 0.9 million, $ 0.5 million, and $ 0.4 million for the years ended December 31, 2021, 2020, and 2019 respectively.

A tax benefit of $ 33.3 million and $ 37.8 million was recorded for the years ended December 31, 2021 and 2020.

A tax provision of $ 12,000 was recorded for the year ended December 31, 2019.

The provision/(benefit) from income taxes is composed of the following (in thousands):

Total Current

Total Deferred

Total provision/(benefit) from income taxes

The Company incurred expenses related to employer contributions of $ 1.0 million, $ 0.9 million, and $ 0.5 million for the years ended December 31, 2022, 2021, and 2020 respectively.

A tax benefit of $ 5.9 million, $ 33.3 million, and $ 37.8 million was recorded for the years ended December 31, 2022, 2021, and 2020, respectively.

The benefit from income taxes is composed of the following (in thousands):

2022 2021 2020

Federal $ — $ — $ —

State ( 695 ) 31 ( 191 )

Total current benefit (provision) from income taxes ( 695 ) 31 ( 191 )

Federal 6,880 25,154 28,852

State ( 268 ) 8,149 9,119

Total deferred benefit from income taxes 6,612 33,303 37,971

Total benefit from income taxes $ 5,917 $ 33,334 $ 37,780

A reconciliation of the U.S.

federal statutory income tax rate to the Company’s effective tax rate is as follows:

2022 2021 2020

Income tax provision at statutory rate 21 % 21 % 21 %

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Stock-based compensation ( 48 ) ( 99 ) ( 100 )

Warrant valuation

Change in valuation allowance — — ( 317 )

Other — — ( 2 )

Effective tax rate ( 24 ) % ( 103 ) % ( 436 ) %

The Company's effective tax rate for the years ended December 31, 2022, 2021, and 2020 was ( 24 )%, ( 103 )%, and ( 436 )%, respectively.

For the year ended December 31, 2021, the effective tax rate differs from the U.S.

federal statutory

rate primarily due to permanent tax adjustments, including windfalls upon the exercise of stock options and vesting of RSUs.

For the year ended December 31, 2022 and 2021, the effective tax rate differs from the U.S.

federal statutory rate primarily due to permanent tax adjustments, including windfalls upon the exercise of stock options and

vesting of RSUs.

For the year ended December 31, 2020, the effective tax rate differs from the U.S.

federal statutory rate primarily due to the release of the valuation allowance in this period, in addition to permanent tax adjustments, including windfalls upon the exercise of options and vesting of RSUs.

For the year ended December 31, 2019, the effective tax rate differs from the U.S.

federal statutory rate due to the increase in valuation allowance.

Deferred Tax Balances

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Property and equipment — 164

Intangibles 547 414

Total deferred tax assets 81,129 74,151

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Deferred tax liabilities:

Property and equipment ( 461 ) —

Goodwill ( 709 ) ( 581 )

Operating lease right-of-use assets ( 1,846 ) ( 2,072 )

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Management continues to maintain this position as of December 31, 2022.

During the year ended December 31, 2021, the net change in the valuation allowance was not significant.

During the years ended December 31, 2022 and December 31, 2021, the net change in the valuation allowance was not significant.

As of December 31, 2022, the Company has net operating loss carryforwards for federal and state income tax purposes of approximately $ 41.8 million and $ 125.1 million, respectively, which expire beginning in the year 2027.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

2022 2021 2020

Balance at the beginning of the year $ 390 $ 390 $ 390

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The unaudited quarterly results of operations have been prepared on the same basis as the audited consolidated financial statements, and we believe they reflect all normal recurring adjustments necessary for the fair statement of the Company’s results of operations for these periods.

information should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report.

This information should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report.

The Company’s historical operating data may not be indicative of the Company’s future performance.

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(in thousands)

Revenue $ 122,133 $ 128,651 $ 122,284 $ 127,553 $ 172,217 $ 195,004 $ 205,371 $ 214,321

Cost of services 93,226 99,030 93,792 102,438 139,268 151,117 159,376 169,827

Gross profit 28,907 29,621 28,492 25,115 32,949 43,887 45,995 44,494

Operating expenses:

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Benefit (provision) for income taxes 3,370 6,807 7,679 15,478 5,113 ( 135 ) 1,672 ( 733 )

Net income (loss)

Net income (loss) per share:

Weighted-average shares used in computing net income (loss) per share:

(1) In the fourth quarter of 2020, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” with an adoption date of January 1, 2020.

As such, quarterly financial information for the interim periods of 2020 has been recast with resulting impacts to the previously disclosed general and administrative expense of $ 0.4 million, $( 0.7 ) million, and $ 0.5 million for the three-month periods ended March 31, 2020, June 30, 2020, and September 30, 2020, respectively.

Net income $ 15,166 $ 18,727 $ 16,796 $ 15,080 $ 4,971 $ 8,768 $ 13,211 $ 3,408

Net income per share:

Basic $ 0.17 $ 0.21 $ 0.19 $ 0.17 $ 0.05 $ 0.10 $ 0.14 $ 0.04

Diluted $ 0.15 $ 0.19 $ 0.17 $ 0.15 $ 0.05 $ 0.09 $ 0.13 $ 0.03

Weighted-average shares used in computing net income per share:

Basic 87,404,287 88,165,158 89,571,226 90,537,077 91,410,368 91,964,978 92,316,022 93,056,297

Diluted 100,106,497 99,808,085 100,370,331 100,321,297 99,935,735 99,672,769 99,819,801 100,059,687

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data