What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 72 added, 76 removed, 450 unchanged (25% of the section changed)

3 unchanged sentences

(in thousands, except share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

36 unchanged sentences

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

9 unchanged sentences

(in thousands, except share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Assets (unaudited)

2 unchanged sentences

Short-term investments 115,570 156,804

Accounts and other receivables, net of allowance for doubtful accounts of $ 701 at June 30, 2023 and $ 540 at December 31, 2022

Accounts and other receivables, net of allowance for doubtful accounts of $ 690 at September 30, 2023 and $ 540 at December 31, 2022

277,913 232,439

23 unchanged sentences

$ 0.00001 par value per share, 100,000,000 shares authorized;

42,498,924 and 41,470,738 issued and outstanding at June 30, 2023;

42,655,394 and 41,627,208 issued and outstanding at September 30, 2023;

42,041,344 and 41,013,158 shares issued and outstanding at December 31, 2022

6 unchanged sentences

Treasury stock, at cost:

1,028,186 shares at June 30, 2023 and December 31, 2022

1,028,186 shares at September 30, 2023 and December 31, 2022

( 16,534 ) ( 16,534 )

7 unchanged sentences

Shares Amount

Balance at April 1, 2023 41,327,702 $ — $ 511,940 $ ( 196,342 ) $ ( 4,255 ) $ ( 16,534 ) $ 294,809

Balance at July 1, 2023 41,470,738 $ — $ 519,450 $ ( 210,056 ) $ ( 4,102 ) $ ( 16,534 ) $ 288,758

Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings 156,470 — 356 — — — 356

2 unchanged sentences

Net income (loss) — — — ( 4,036 ) — — ( 4,036 )

Balance at June 30, 2023 41,470,738 $ — $ 519,450 $ ( 210,056 ) $ ( 4,102 ) $ ( 16,534 ) $ 288,758

Balance at September 30, 2023 41,627,208 $ — $ 527,199 $ ( 214,092 ) $ ( 7,108 ) $ ( 16,534 ) $ 289,465

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

Shares Amount

Balance at April 1, 2022 40,711,491 $ — $ 472,878 $ ( 135,745 ) $ 2,179 $ ( 10,779 ) $ 328,533

Balance at July 1, 2022 40,745,298 $ — $ 481,818 $ ( 149,363 ) $ ( 1,171 ) $ ( 16,530 ) $ 314,754

Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings 128,126 — ( 437 ) — — — ( 437 )

3 unchanged sentences

Net income (loss) — — — ( 12,914 ) — — ( 12,914 )

Balance at June 30, 2022 40,745,298 $ — $ 481,818 $ ( 149,363 ) $ ( 1,171 ) $ ( 16,530 ) $ 314,754

Balance at September 30, 2022 40,873,362 $ — $ 490,566 $ ( 162,277 ) $ ( 6,017 ) $ ( 16,534 ) $ 305,738

Trupanion, Inc.

8 unchanged sentences

Net income (loss) — — — ( 42,530 ) — — ( 42,530 )

Balance at June 30, 2023 41,470,738 $ — $ 519,450 $ ( 210,056 ) $ ( 4,102 ) $ ( 16,534 ) $ 288,758

Balance at September 30, 2023 41,627,208 $ — $ 527,199 $ ( 214,092 ) $ ( 7,108 ) $ ( 16,534 ) $ 289,465

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

6 unchanged sentences

Net income (loss) — — — ( 35,387 ) — — ( 35,387 )

Balance at June 30, 2022 40,745,298 $ — $ 481,818 $ ( 149,363 ) $ ( 1,171 ) $ ( 16,530 ) $ 314,754

Balance at September 30, 2022 40,873,362 $ — $ 490,566 $ ( 162,277 ) $ ( 6,017 ) $ ( 16,534 ) $ 305,738

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

14 unchanged sentences

Maturities and sales of investment securities 147,365 104,492

Cash paid in business acquisition, net of cash acquired — ( 2,755 )

Purchases of property, equipment, and internal-use software ( 14,310 ) ( 11,610 )

7 unchanged sentences

Shares withheld to satisfy tax withholding ( 1,296 ) ( 3,780 )

Other ( 150 ) —

Net cash provided by (used in) financing activities 58,557 46,061

20 unchanged sentences

The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2022 10-K.

Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.

Use of Estimates

5 unchanged sentences

Trade receivables are primarily related to the Company’s other business segment where the Company generates revenue from underwriting policies through unaffiliated general agents.

During the six months ended June 30, 2023, the Company incurred a non-recurring $ 3.8 million settlement of accounts receivable due to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

During the nine months ended September 30, 2023, the Company incurred a non-recurring $ 3.8 million settlement of accounts receivable due to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

Net Loss per Share

3 unchanged sentences

The following potentially dilutive equity securities were not included in the diluted earnings per share of common stock calculation because they would have had an antidilutive effect:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Goodwill arises from business acquisitions in which the purchase price exceeds the fair value of tangible and intangible assets acquired less assumed liabilities.

The following is a summary of goodwill by reportable segment for the six months ended June 30, 2023 (in thousands):

The following is a summary of goodwill by reportable segment for the nine months ended September 30, 2023 (in thousands):

Subscription Business Other Business Total

2 unchanged sentences

Effects of foreign currency 22 — 22

Balance as of June 30, 2023 $ 43,877 $ — $ 43,877

Balance as of September 30, 2023 $ 42,005 $ — $ 42,005

Available-for sale securities are classified as short-term versus long-term investments based on whether they represent the investment of funds available for current operations.

1 unchanged sentence

Held-to-maturity securities are classified as short-term versus long-term investments based on the effective maturity dates.

The amortized cost, gross unrealized holding gains and losses, and estimates of fair value of long-term and short-term investments by major security type and class of security were as follows as of June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 2023

The amortized cost, gross unrealized holding gains and losses, and estimates of fair value of long-term and short-term investments by major security type and class of security were as follows as of September 30, 2023 and December 31, 2022 (in thousands):

As of September 30, 2023

Long-term investments:

10 unchanged sentences

Other asset-backed securities 12,400 — ( 135 ) 12,265

Municipal bond 1,000 — — 1,000

Corporate bonds 36,752 — ( 459 ) 36,293

26 unchanged sentences

Maturities of investments classified as available-for-sale and held-to-maturity were as follows (in thousands):

As of June 30, 2023

As of September 30, 2023

Available-for-sale:

11 unchanged sentences

The Company does not expect any credit losses from its held-to-maturity investments, considering the composition of the investment portfolio and the credit loss history of these investments.

For available-for-sale investments, the Company determined that there were unrealized losses of $ 1.2 million and $ 0.6 million as of June 30, 2023 and December 31, 2022, respectively.

Available-for-sale investments with unrealized losses have been in the loss position for less than twelve months and losses relate to interest rate changes.

For available-for-sale investments, the Company determined that there were unrealized losses of $ 1.5 million and $ 0.6 million as of September 30, 2023 and December 31, 2022, res pectively.

As of September 30, 2023, $ 20.1 million in available-for-sale investments have been in a loss position for more than twelve months, with total unrealized losses of $ 0.5 million .

As of September 30, 2023, $ 72.4 million available-for-sale investments have been in a loss position for less than twelve months, with total unrealized losses of $ 1.0 million .

These losses relate to interest rate changes.

The Company does not expect any credit losses from its available-for-sale investments, considering the composition of the investment portfolio and the credit rating of these investments.

For those securities, the Company determined it is not likely to, and does not intend to, sell prior to a potential recovery.

Proceeds from the sales of fixed maturities classified as available-for-sale were $ 58.8 million and nil during the six months ended June 30, 2023 and 2022, respectively.

Proceeds from the sales of fixed maturities classified as available-for-sale were $ 83.9 million and $ 5.9 million during the nine months ended September 30, 2023 and 2022, respectively.

Other Investments

6 unchanged sentences

The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on its consolidated balance sheet.

The outstanding loan balance under the line of credit, including accrued interest, was $ 5.2 million and $ 6.3 million as of June 30, 2023 and December 31, 2022, respectively.

The outstanding loan balance under the line of credit, including accrued interest, was $ 4.6 million and $ 6.3 million as of September 30, 2023 and December 31, 2022, respectively.

The Company has also entered into a series of agreements to provide ancillary services to, and receive reimbursement from, the variable interest entity at cost.

The Company provided $ 0.3 million and $ 0.4 million of these services for the six months ended June 30, 2023 and 2022, respectively.

The Company provided $ 0.3 million and $ 0.6 million of these services for the nine months ended September 30, 2023 and 2022, respectively.

Fair Value Disclosures - Investments

The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis, and placement within the fair value hierarchy (in thousands):

As of June 30, 2023

As of September 30, 2023

Fair Value Level 1 Level 2 Level 3

5 unchanged sentences

Foreign deposits 10,437 10,437 — —

Municipal bond 1,000 — 1,000 —

Treasury securities 43,332 — 43,332 —

13 unchanged sentences

Total $ 113,730 $ 9,316 $ 100,299 $ 4,115

The Company measures the fair value of money market funds and foreign deposits based on quoted prices in active markets for identical assets.

The Company measures the fair value of money market funds and foreign deposits, classified as Level 1, based on quoted prices in active markets for identical assets.

The Company's fixed maturity investments classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices.

5 unchanged sentences

An increase or decrease in any of these unobservable inputs would result in a change in the fair value measurement.

The estimated fair value was $ 4.1 million as of June 30, 2023, unchanged from December 31, 2022, and is recorded in other long-term assets on the Company's consolidated balance sheet.

The estimated fair value was $ 4.1 million as of September 30, 2023, unchanged from December 31, 2022, and is recorded in other long-term assets on the Company's consolidated balance sheet.

This investment has maintained an unrealized loss position of $ 2.9 million for less than twelve months.

Fair Value Disclosures - Other Assets and Liabilities

The Company's other long-term assets balance also included notes receivable of $ 8.2 million and $ 9.3 million as of June 30, 2023 and December 31, 2022, respectively, recorded at their estimated collectible amount.

The Company's other long-term assets balance also included notes receivable of $ 7.5 million and $ 9.3 million as of September 30, 2023 and December 31, 2022, respectively, recorded at their estimated collectible amount.

The Company estimates that the carrying value of the notes receivable approximates the fair value.

2 unchanged sentences

This is a Level 3 measurement.

Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at June 30, 2023.

Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at September 30, 2023.

The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

There were no transfers between levels for the six months ended June 30, 2023 and the year ended December 31, 2022.

There were no transfers between levels for the nine months ended September 30, 2023 and the year ended December 31, 2022.

Commitments and Contingencies

13 unchanged sentences

Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Subscription 2023 2022

10 unchanged sentences

Reserve at end of period $ 31,681 $ 20,311

The Company's reserve for the subscription business segment increased $ 4.7 million from $ 21.5 million at December 31, 2022 to $ 26.2 million at June 30, 2023.

This change was primarily comprised of $ 263.3 million in expense recorded during the period less $ 256.9 million in payments of veterinary invoices.

This $ 263.3 million in veterinary invoice expense incurred included an increase of $ 2.0 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends.

For the six months ended June 30, 2022, the Company's adjustment to prior year reserves was a reduction of $ 2.3 million as a result of analysis of payment trends.

The Company had an unfavorable development on veterinary invoice reserves for the subscription business segment of $ 2.4 million for the nine months ended September 30, 2023, and a favorable development on veterinary invoice reserves of $ 3.0 million for the nine months ended September 30, 2022, both of which were the result of ongoing analysis of recent payment trends.

Summarized below are the changes in total liability for the Company's other business segment (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Other Business 2023 2022

10 unchanged sentences

Reserve at end of period $ 29,657 $ 19,231

The Company’s reserve for the other business segment increased $ 7.8 million from $ 22.2 million at December 31, 2022 to $ 30.0 million at June 30, 2023.

This change was comprised of $ 137.6 million in expense recorded during the period less $ 129.8 million in payments of veterinary invoices.

This $ 137.6 million in veterinary invoice expense incurred included an increase of $ 0.8 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends.

For the six months ended June 30, 2022, the Company's adjustment to prior year reserves was an increase of $ 0.5 million as a result of analysis of payment trends.

The Company had an unfavorable development on veterinary invoice reserves for the other business segment of $ 0.7 million for the nine months ended September 30, 2023, and an unfavorable development on veterinary invoice reserves of $ 0.6 million for the nine months ended September 30, 2022, both of which were the result of ongoing analysis of recent payment trends.

Reserve for veterinary invoices, by year of occurrence

In the following tables, the reserve for veterinary invoices for each segment is presented as the amount (in thousands) by the year to which the veterinary invoice relates, referred to as the year of occurrence.

Subscription As of June 30, 2023

Subscription As of September 30, 2023

Year of Occurrence

2021 and prior $ 39

Other Business As of June 30, 2023

Other Business As of September 30, 2023

Year of Occurrence

3 unchanged sentences

(b) commitments for delayed draw term loans in an aggregate principal amount not in excess of $ 75.0 million (Delayed Draw Term Loans, and together with the Initial Term Loan, the Term Loans), which may be drawn from time to time until September 25, 2023 .

On December 29, 2022 and February 17, 2023, the Company borrowed Delayed Draw Term loans of $ 15.0 million and $ 35.0 million, respectively;

On December 29, 2022, February 17, 2023, and September 21, 2023, the Company borrowed Delayed Draw Term loans of $ 15.0 million, $ 35.0 million, and $ 25.0 million, respectively;

(c) commitments for revolving loans in an aggregate principal amount at any time outstanding not in excess of $ 15.0 million (Revolving Loans), which may be drawn at any time prior to March 25, 2027 .

The Credit Facility bears interest at a floating base rate plus an applicable margin.

The stated interest rate as of June 30, 2023 was approximately 10.39 % for the original $ 60.0 million term loan, the $ 15.0 million term loan, and the $ 35.0 million term loan.

The stated interest rate as of September 30, 2023 was approximately 10.54 % for the original $ 60.0 million term loan and for the aggregate $ 75.0 million term loans.

The Company incurred total debt issuance cost of approximately $ 5.9 million, which is reported in the consolidated balance sheet as a direct reduction from the carrying amount of the Credit Facility, and is amortized as interest expense over the term of five years.

2 unchanged sentences

The Credit Agreement contains financial and other covenants .

As of June 30, 2023, the Company was in compliance with all financial and other covenants .

As of September 30, 2023, the Company was in compliance with all financial and other covenants .

To the extent not previously paid, the Initial Term Loan is due and payable on March 25, 2027 , the Delayed Draw Term Loans are due and payable on the earlier of the five-year anniversary of their initial funding or March 25, 2028 , and Revolving Loans are due and payable on March 25, 2027 .

The Company must repay 0.25 % of any then-outstanding Term Loans, together with accrued and unpaid interest, on a quarterly basis.

Future principal payments on outstanding borrowings as of June 30, 2023 are as follows (in thousands):

Year Ending December 31, June 30, 2023

Future principal payments on outstanding borrowings as of September 30, 2023 are as follows (in thousands):

Year Ending December 31, September 30, 2023

Thereafter 57,188

3 unchanged sentences

Stock-based compensation expense recognized in each category of the consolidated statements of operations was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Total stock-based compensation $ 7,393 $ 9,185 $ 27,520 $ 25,970

As of June 30, 2023, the Company had 695,574 unvested restricted stock units.

As of September 30, 2023, the Company had 735,163 unvested restricted stock units.

Stock-based compensation expenses of $ 51.1 million related to unvested restricted stock units are expected to be recognized over a weighted average period of approximately 2.3 years.

1 unchanged sentence

In conjunction with these departures, the Company accelerated the vesting of certain RSUs as of the termination date and extended the purchase date of certain vested options from 90 to 365 days.

These award modifications resulted in the recognition of $ 4.8 million share-based compensation expense during the six months ended June 30, 2023.

These award modifications resulted in the recognition of $ 4.8 million share-based compensation expense during the nine months ended September 30, 2023.

Stock Options

5 unchanged sentences

Forfeited ( 3,015 ) 20.58 —

Outstanding as of June 30, 2023 574,151 13.67 3,465

Exercisable as of June 30, 2023 574,151 $ 13.67 $ 3,465

As of June 30, 2023, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 2.4 years.

Outstanding as of September 30, 2023 522,830 13.70 7,579

Exercisable as of September 30, 2023 522,830 $ 13.70 $ 7,579

As of September 30, 2023, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 2.3 years.

Restricted Stock Awards and Restricted Stock Units

6 unchanged sentences

Forfeited ( 73,702 ) 83.51

Unvested shares as of June 30, 2023 695,574 $ 82.24

Unvested shares as of September 30, 2023 735,163 $ 72.78

Stockholders' Equity

Common Stock and Preferred Stock

As of June 30, 2023, the Company had 100,000,000 shares of common stock authorized and 41,470,738 shares of common stock outstanding.

As of September 30, 2023, the Company had 100,000,000 shares of common stock authorized and 41,627,208 shares of common stock outstanding.

Holders of common stock are entitled to one vote on each matter properly submitted to the stockholders of the Company except those related to matters concerning possible outstanding preferred stock.

At June 30, 2023, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock.

At September 30, 2023, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock.

The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company (the Board), whenever funds are legally available.

3 unchanged sentences

In April 2021, the Board approved a share repurchase program, pursuant to which the Company may, between May 2021 and May 2026, repurchase outstanding shares of the Company's common stock.

The Company repurchased no shares during the three and six months ended June 30, 2023 and 94,959 shares during the three and six months ended June 30, 2022.

The Company repurchased no shares during the three and nine months ended September 30, 2023 and 62 and 95,021 shares during the three and nine months ended September 30, 2022, respectively.

Accumulated Comprehensive Income (Loss)

A summary of the components of accumulated other comprehensive income (loss) is as follows (in thousands):

For the three months ended June 30, 2023 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of April 1, 2023 $ ( 1,233 ) $ ( 3,022 ) $ ( 4,255 )

For the three months ended September 30, 2023 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of July 1, 2023 $ 23 $ ( 4,125 ) $ ( 4,102 )

Other comprehensive income (loss) ( 2,763 ) ( 243 ) ( 3,006 )

Balance as of June 30, 2023 $ 23 $ ( 4,125 ) $ ( 4,102 )

For the three months ended June 30, 2022 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of April 1, 2022 $ 726 $ 1,453 $ 2,179

Balance as of September 30, 2023 $ ( 2,740 ) $ ( 4,368 ) $ ( 7,108 )

For the three months September 30, 2022 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of July 1, 2022 $ ( 2,623 ) $ 1,452 $ ( 1,171 )

Other comprehensive income (loss) ( 3,946 ) ( 900 ) ( 4,846 )

Balance as of June 30, 2022 $ ( 2,623 ) $ 1,452 $ ( 1,171 )

For the six months ended June 30, 2023 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of September 30, 2022 $ ( 6,569 ) $ 552 $ ( 6,017 )

For the nine months ended September 30, 2023 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of January 1, 2023 $ ( 2,788 ) $ ( 3,513 ) $ ( 6,301 )

Other comprehensive income (loss) 48 ( 855 ) ( 807 )

Balance as of June 30, 2023 $ 23 $ ( 4,125 ) $ ( 4,102 )

For the six months ended June 30, 2022 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of September 30, 2023 $ ( 2,740 ) $ ( 4,368 ) $ ( 7,108 )

For the nine months ended September 30, 2022 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of January 1, 2022 $ 1,624 $ 1,453 $ 3,077

Other comprehensive income (loss) ( 8,193 ) ( 901 ) ( 9,094 )

Balance as of June 30, 2022 $ ( 2,623 ) $ 1,452 $ ( 1,171 )

Balance as of September 30, 2022 $ ( 6,569 ) $ 552 $ ( 6,017 )

The Company has two reporting segments:

4 unchanged sentences

The Company does not undertake marketing efforts for these policies and has a business-to-business relationship with these third-parties.

The other business segment also includes other products and software solutions that have a different margin profile from the Company’s subscription business segment.

The other business segment also includes other products and insurance software solutions that have a different margin profile from the Company’s subscription business segment.

The chief operating decision maker reviews revenue and operating income (loss) to evaluate segment performance.

4 unchanged sentences

Operating income (loss) of the Company’s segments were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

20 unchanged sentences

The following table presents the Company’s revenue by geographic region of the member (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total revenue $ 285,853 $ 233,760 $ 812,748 $ 659,170

Substantially all of the Company’s long-lived assets were located in the United States as of June 30, 2023 and December 31, 2022.

Substantially all of the Company’s long-lived assets were located in the United States as of September 30, 2023 and December 31, 2022.

Related Parties

1 unchanged sentence

The investee is considered to be a related party, as the Company has the ability to exercise significant influence over the investee.

In February 2020, the Company entered into a service agreement with the investee, under which the Company incurred $ 1.5 million and $ 1.8 million of expenses for consulting services provided by the investee related to pet acquisition during the six months ended June 30, 2023 and 2022, respectively, recorded as new pet acquisition expense on the Company's consolidated statement of operations.

In February 2020, the Company entered into a service agreement with the investee, under which the Company incurred $ 1.9 million and $ 2.5 million of expenses for consulting services provided by the investee related to pet acquisition during the nine months ended September 30, 2023 and 2022, respectively, recorded as new pet acquisition expense on the Company's consolidated statement of operations.

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-Q

Item 1. Financial Statements