General (Tables)

6 Months Ended

Jun. 30, 2020

General

Schedule of disaggregation of revenue by major service line, type of customer and timing of revenue recognition

	Three Months Ended June 30, 2019
	Healthcare		Pharmacy Management		Elimination		Total
Major Service Lines
Behavioral & Specialty Health
Risk-based, non-EAP	$	400,591	$	—	$	(65)	$	400,526
EAP risk-based		87,296		—		—		87,296
ASO		58,226		10,327		(82)		68,471
PBM, including dispensing		—		480,167		(4,335)		475,832
Medicare Part D		—		69,843		—		69,843
PBA		—		33,476		—		33,476
Formulary management		—		18,426		—		18,426
Other		—		419		—		419
Total net revenue	$	546,113	$	612,658	$	(4,482)	$	1,154,289
Type of Customer
Government	$	236,014	$	173,804	$	—	$	409,818
Non-government		310,099		438,854		(4,482)		744,471
Total net revenue	$	546,113	$	612,658	$	(4,482)	$	1,154,289
Timing of Revenue Recognition
Transferred at a point in time	$	—	$	550,010	$	(4,335)	$	545,675
Transferred over time		546,113		62,648		(147)		608,614
Total net revenue	$	546,113	$	612,658	$	(4,482)	$	1,154,289

	Three Months Ended June 30, 2020
	Healthcare		Pharmacy Management		Elimination		Total
Major Service Lines
Behavioral & Specialty Health
Risk-based, non-EAP	$	344,199	$	—	$	(92)	$	344,107
EAP risk-based		77,419		—		—		77,419
ASO		59,403		12,271		(85)		71,589
PBM, including dispensing		—		499,484		(4,831)		494,653
Medicare Part D		—		56,711		—		56,711
PBA		—		30,811		—		30,811
Formulary management		—		25,061		—		25,061
Other		—		(276)		—		(276)
Total net revenue	$	481,021	$	624,062	$	(5,008)	$	1,100,075
Type of Customer
Government	$	222,393	$	208,989	$	—	$	431,382
Non-government		258,628		415,073		(5,008)		668,693
Total net revenue	$	481,021	$	624,062	$	(5,008)	$	1,100,075
Timing of Revenue Recognition
Transferred at a point in time	$	—	$	556,195	$	(4,831)	$	551,364
Transferred over time		481,021		67,867		(177)		548,711
Total net revenue	$	481,021	$	624,062	$	(5,008)	$	1,100,075

	Six Months Ended June 30, 2019
	Healthcare		Pharmacy Management		Elimination		Total
Major Service Lines
Behavioral & Specialty Health
Risk-based, non-EAP	$	762,399	$	—	$	(143)	$	762,256
EAP risk-based		176,913		—		—		176,913
ASO		113,623		18,470		(173)		131,920
PBM, including dispensing		—		973,391		(8,442)		964,949
Medicare Part D		—		133,184		—		133,184
PBA		—		67,453		—		67,453
Formulary management		—		35,609		—		35,609
Other		—		1,011		—		1,011
Total net revenue	$	1,052,935	$	1,229,118	$	(8,758)	$	2,273,295
Type of Customer
Government	$	467,076	$	401,852	$	—	$	868,928
Non-government		585,859		827,266		(8,758)		1,404,367
Total net revenue	$	1,052,935	$	1,229,118	$	(8,758)	$	2,273,295
Timing of Revenue Recognition
Transferred at a point in time	$	—	$	1,106,575	$	(8,442)	$	1,098,133
Transferred over time		1,052,935		122,543		(316)		1,175,162
Total net revenue	$	1,052,935	$	1,229,118	$	(8,758)	$	2,273,295

	Six Months Ended June 30, 2020
	Healthcare		Pharmacy Management		Elimination		Total
Major Service Lines
Behavioral & Specialty Health
Risk-based, non-EAP	$	694,044	$	—	$	(182)	$	693,862
EAP risk-based		157,357		—		—		157,357
ASO		118,526		23,805		(168)		142,163
PBM, including dispensing		—		1,017,596		(9,398)		1,008,198
Medicare Part D		—		112,377		—		112,377
PBA		—		60,940		—		60,940
Formulary management		—		47,222		—		47,222
Other		—		335		—		335
Total net revenue	$	969,927	$	1,262,275	$	(9,748)	$	2,222,454
Type of Customer
Government	$	449,495	$	412,946	$	—	$	862,441
Non-government		520,432		849,329		(9,748)		1,360,013
Total net revenue	$	969,927	$	1,262,275	$	(9,748)	$	2,222,454
Timing of Revenue Recognition
Transferred at a point in time	$	—	$	1,129,973	$	(9,398)	$	1,120,575
Transferred over time		969,927		132,302		(350)		1,101,879
Total net revenue	$	969,927	$	1,262,275	$	(9,748)	$	2,222,454

Schedule of accounts receivable, contract assets and contract liabilities

Accounts receivable, contract assets and contract liabilities consisted of the following (in thousands, except percentages):

	December 31,		June 30,
	2019		2020		$ Change		% Change
Accounts receivable	$	717,455	$	837,710	$	120,255		16.8%
Contract assets		2,162		7,151		4,989		230.8%
Contract liabilities - current		6,728		25,769		19,041		283.0%
Contract liabilities - long-term		11,099		11,022		(77)		(0.7%)

Schedule of customers generating in excess of ten percent of net revenues for respective segment

The following customers generated in excess of ten percent of net revenues for the respective segment for the six months ended June 30, 2019 and 2020 (in thousands):

Segment	Term Date	2019		2020
Healthcare
Customer A	December 31, 2021	$	161,887	$	175,107
Pharmacy Management
Customer B	March 31, 2021	$	174,535	$	195,930

Schedule of leases

The following table shows the components of lease expenses for the three and six months ended June 30, 2020 (in thousands):

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Operating lease cost	$	2,503	$	4,604
Finance lease cost:
Amortization of right-of-use asset		1,046		2,378
Interest on lease liabilities		213		427
Total finance lease cost		1,259		2,805
Short-term lease cost		80		204
Variable lease cost		505		1,011
Total lease cost		4,347		8,624
Sublease income		(66)		(179)
Net lease cost	$	4,281	$	8,445

The following table shows the components of the lease assets and liabilities as of June 30, 2020 (in thousands):

	June 30, 2020
Operating leases:
Other long-term assets	$	20,832
Accrued liabilities	$	23,959
Deferred credits and other long-term liabilities		9,661
Total operating lease liabilities	$	33,620
Finance leases:
Property and equipment, net	$	13,489
Current debt, finance lease and deferred financing obligations	$	4,989
Long-term debt, finance lease and deferred financing obligations		14,024
Total finance lease liabilities	$	19,013

The following table shows the weighted average remaining lease term and discount rate as of June 30, 2020:

	June 30, 2020
Weighted average remaining lease term
Operating leases		3.96
Finance leases		4.08
Weighted average discount rate
Operating leases		4.79%
Finance leases		4.39%

Supplemental cash flow information relating to leases is as follows (in thousands):

	Six months ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,196
Operating cash flows from finance leases		2,815
Financing cash flows from finance leases		427
Right-of-use asset obtained in exchange for new lease obligation
Operating leases		902
Finance leases		3,599

Schedule of maturity dates of leases

	June 30, 2020
2020	$	8,201
2021		13,819
2022		12,518
2023		9,295
2024		7,927
2025 and beyond		2,581
Total lease payments		54,341
Less interest		(1,708)
Present value of lease liabilities	$	52,633

Schedule of fair value of financial assets and liabilities

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s assets and liabilities that are required to be measured at fair value as of December 31, 2019 and June 30, 2020 (in thousands):

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents (1)	$	—	$	111,085	$	—	$	111,085
Investments:
U.S. Government and agency securities		30,775		—		—		30,775
Corporate debt securities		—		69,581		—		69,581
Certificates of deposit		—		1,305		—		1,305
Total assets held at fair value	$	30,775	$	181,971	$	—	$	212,746

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents (2)	$	—	$	132,038	$	—	$	132,038
Investments:
U.S. Government and agency securities		32,174		—		—		32,174
Corporate debt securities		—		42,192		—		42,192
Certificates of deposit		—		1,305		—		1,305
Total assets held at fair value	$	32,174	$	175,535	$	—	$	207,709

(1) Excludes $4.7 million of cash held in bank accounts by the Company.

(2) Excludes $28.4 million of cash held in bank accounts by the Company.

Summary of short-term and long-term investments

	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
U.S. Government and agency securities	$	30,742	$	38	$	(5)	$	30,775
Corporate debt securities		69,552		40		(11)		69,581
Certificates of deposit		1,305		—		—		1,305
Total investments at December 31, 2019	$	101,599	$	78	$	(16)	$	101,661

	June 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
U.S. Government and agency securities	$	32,066	$	108	$	—	$	32,174
Corporate debt securities		42,129		71		(8)		42,192
Certificates of deposit		1,305		—		—		1,305
Total investments at June 30, 2020	$	75,500	$	179	$	(8)	$	75,671

Summary of maturity dates of investments

The maturity dates of the Company’s investments as of June 30, 2020 are summarized below (in thousands):

	Amortized		Estimated
	Cost		Fair Value
2020	$	63,787	$	63,901
2021		11,713		11,770
Total investments at June 30, 2020	$	75,500	$	75,671

Schedule of stock option activity

Summarized information related to the Company’s stock options for the six months ended June 30, 2020 is as follows:

		Weighted
		Average
		Exercise
	Options	Price
Outstanding, beginning of period	2,125,861	$	69.22
Granted	63,771		62.93
Forfeited	(23,638)		83.80
Exercised	(541,148)		58.22
Outstanding, end of period	1,624,846	$	72.42
Vested and expected to vest at end of period	1,617,751	$	72.43
Exercisable, end of period	1,287,233	$	72.52

Schedule of nonvested restricted stock award activity

Summarized information related to the Company’s nonvested restricted stock awards (“RSAs”) for the six months ended June 30, 2020 is as follows:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Outstanding, beginning of period	39,761	$	65.40
Awarded	16,976		70.70
Vested	(18,008)		66.66
Forfeited	—		—
Outstanding, ending of period	38,729		67.14

Schedule of nonvested restricted stock units

Summarized information related to the Company’s nonvested restricted stock units (“RSUs”) for the six months ended June 30, 2020 is as follows:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Outstanding, beginning of period	256,430	$	74.12
Awarded	316,495		61.07
Vested	(100,416)		74.93
Forfeited	(12,096)		72.70
Outstanding, ending of period	460,413		65.01

Schedule of nonvested restricted performance stock units

Summarized information related to the Company’s nonvested restricted performance stock units (“PSUs”) for the six months ended June 30, 2020 is as follows:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Outstanding, beginning of period	248,559	$	104.27
Awarded	133,752		75.65
Vested	(52,861)		76.24
Forfeited	(31,793)		79.22
Outstanding, end of period	297,657		99.06