MEDIDATA SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
Cash flows from operating activities
|
(Amounts in thousands)
|
|
Net income
|
$
|
11,145
|
|
|
$
|
10,325
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
Amortization of intangible assets and depreciation
|
10,529
|
|
|
7,813
|
|
|
Stock-based compensation
|
19,664
|
|
|
13,155
|
|
|
Amortization of operating lease assets (1)
|
3,025
|
|
|
—
|
|
|
Amortization of capitalized contract costs
|
6,583
|
|
|
4,919
|
|
(2)
|
Amortization of discounts or premiums on marketable securities
|
38
|
|
|
147
|
|
|
Realized loss on available-for-sale marketable securities
|
27
|
|
|
—
|
|
|
Deferred income taxes
|
(659
|
)
|
|
818
|
|
|
Amortization of debt issuance costs
|
109
|
|
|
427
|
|
|
Amortization of debt discount
|
—
|
|
|
3,481
|
|
|
Provision for doubtful accounts
|
431
|
|
|
373
|
|
|
Loss on fixed asset disposal
|
101
|
|
|
96
|
|
|
Changes in fair value of contingent consideration
|
161
|
|
|
(72
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable
|
(7,540
|
)
|
|
(23,141
|
)
|
|
Capitalized contract costs
|
(12,054
|
)
|
|
(10,619
|
)
|
(2)
|
Prepaid expenses and other current assets
|
(2,820
|
)
|
|
(658
|
)
|
|
Other assets
|
159
|
|
|
125
|
|
|
Accounts payable
|
1,361
|
|
|
2,600
|
|
|
Accrued payroll and other compensation
|
(24,174
|
)
|
|
(13,711
|
)
|
|
Accrued expenses and other
|
7,668
|
|
|
(778
|
)
|
|
Deferred revenue
|
(4,291
|
)
|
|
9,440
|
|
|
Operating lease liabilities (1)
|
(3,858
|
)
|
|
—
|
|
|
Other long-term liabilities
|
479
|
|
|
236
|
|
|
Net cash provided by operating activities
|
6,084
|
|
|
4,976
|
|
|
Cash flows from investing activities
|
|
|
|
|
Purchases of furniture, fixtures and equipment
|
(18,188
|
)
|
|
(11,147
|
)
|
|
Purchase of domain name
|
(600
|
)
|
|
—
|
|
|
Purchases of available-for-sale securities
|
—
|
|
|
(57,974
|
)
|
|
Proceeds from sale of available-for-sale securities
|
38,512
|
|
|
64,202
|
|
|
Net cash provided by (used in) investing activities
|
19,724
|
|
|
(4,919
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from exercise of stock options
|
2,341
|
|
|
2,366
|
|
|
Proceeds from employee stock purchase plan
|
3,408
|
|
|
3,121
|
|
|
Acquisition of treasury stock
|
(26,616
|
)
|
|
(16,614
|
)
|
|
Term loan principal payments
|
(1,250
|
)
|
|
—
|
|
|
Payment of acquisition-related earn-outs
|
(297
|
)
|
|
(87
|
)
|
|
Payment of credit facility financing costs
|
—
|
|
|
(175
|
)
|
|
Net cash used in financing activities
|
(22,414
|
)
|
|
(11,389
|
)
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
225
|
|
|
597
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
3,619
|
|
|
(10,735
|
)
|
|
Cash, cash equivalents and restricted cash – Beginning of period
|
112,645
|
|
|
242,843
|
|
|
Cash, cash equivalents and restricted cash – End of period
|
$
|
116,264
|
|
|
$
|
232,108
|
|
|
|
|
(1) Figures for the three months ended March 31, 2019 reflect the Company's January 1, 2019 adoption of ASU No. 2016-02,
Leases
. For additional details, see
Note 1
, "Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements."
|
|
(2) Change in prior period to conform to current period presentation
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
MEDIDATA SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Supplemental disclosures of cash flow information:
|
|
|
|
Cash paid (received) during the period for:
|
|
|
|
Interest
|
$
|
990
|
|
|
$
|
2,200
|
|
Income taxes
|
$
|
(1,053
|
)
|
|
$
|
1,099
|
|
|
|
|
|
Noncash investing activities:
|
|
|
|
Furniture, fixtures, and equipment acquired but not yet paid for at period-end
|
$
|
6,801
|
|
|
$
|
3,901
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Medidata Solutions, Inc., together with its consolidated subsidiaries (collectively, the "Company"), is the leading global provider of cloud-based solutions for clinical research in life sciences, offering platform technology that transforms clinical development and increases the value of its customers' research investments. The Company was organized as a New York corporation in June 1999 and reincorporated as a Delaware corporation in May 2000.
Except to the extent updated or described below, the Company’s significant accounting policies as of
March 31, 2019
are the same as those at
December 31, 2018
, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018
, filed with the Securities and Exchange Commission (“SEC”) on
March 1, 2019
.
Basis of Presentation —
The accompanying interim condensed consolidated balance sheets as of
March 31, 2019
and
December 31, 2018
, the condensed consolidated statements of operations for the
three months ended March 31, 2019
and
2018
, the condensed consolidated statements of comprehensive income for the
three months ended March 31, 2019
and
2018
, and the condensed consolidated statements of cash flows for the
three months ended March 31, 2019
and
2018
are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC for interim financial reporting. Accordingly, certain information and footnote disclosures have been condensed or omitted pursuant to SEC rules that would ordinarily be required by U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the fiscal year ended
December 31, 2018
included in the Company’s Annual Report on Form 10-K filed with the SEC on
March 1, 2019
.
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments consisting of normal recurring accruals considered necessary to present fairly the Company’s financial position as of
March 31, 2019
, results of its operations for the
three months ended March 31, 2019
and
2018
, comprehensive income for the
three months ended March 31, 2019
and
2018
, and cash flows for the
three months ended March 31, 2019
and
2018
. The results of operations for the
three months ended March 31, 2019
are not necessarily indicative of the results that may be expected for the year ending
December 31, 2019
.
Accounts Receivable
—
Accounts receivable are recorded at original invoice amount less an allowance that management believes will be adequate to absorb estimated losses on uncollectible accounts. This allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. Accounts receivable are written off when deemed uncollectible. Unbilled receivables consist of revenue recognized in excess of billings, substantially all of which is expected to be billed and collected within one year. As of
March 31, 2019
and
December 31, 2018
, unbilled accounts receivable of
$48.6 million
and
$38.6 million
, respectively, were included in accounts receivable on the Company's condensed consolidated balance sheets.
Leases
—
At the inception of an arrangement, the Company evaluates the existence and type of lease; the Company has determined that all of its leases are operating leases, which are recognized as operating lease assets and operating lease liabilities on its condensed consolidated balance sheet as of
March 31, 2019
(subsequent to the adoption of Accounting Standards Codification ("ASC") 842,
Leases
on January 1, 2019). Operating lease assets represent the right to use an underlying asset over the lease term, and operating lease liabilities represent the obligation to make lease payments. Some of the Company's leases contain options to extend or terminate; the Company is reasonably certain that it will not exercise these options and does not consider them in the determination of the lease term.
Leases with an initial term of twelve months or less are not recorded on the balance sheet; the Company recognizes the related expense on a straight-line basis over the lease term. For leases beginning in 2019 and later, the Company accounts for lease components together with nonlease components. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments as of the commencement date. As the majority of its leases do not provide an implicit interest rate, the Company uses the estimated incremental borrowing rate that would be required to secure a loan from a third-party lender over the relevant term. For further information, see
Note 8
, “Leases.".
Income Taxes
—
The Company’s interim period provision for income taxes is computed by using an estimate of the annual effective tax rate, adjusted for discrete items taken into account in the relevant period, if any. Each quarter, the annual effective income tax rate is recomputed and if there are material changes in the estimate, a cumulative adjustment is made.
Recently Adopted Accounting Pronouncements
—
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02,
Leases
, which replaces previous lease guidance in its entirety with ASC 842 and requires lessees to recognize lease assets and lease liabilities for those arrangements classified as operating leases under previous guidance, with the exception of leases with a term of twelve months or less. The Company adopted ASU No. 2016-02 on January 1, 2019 using the additional transition method, which allows prior periods to be presented under previous lease accounting guidance. Refer to
Note 8
, "Leases," for related disclosures.
In February 2018, the FASB issued ASU No. 2018-02,
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,
which permits companies to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the U.S. Tax Cuts and Jobs Act enacted in December 2017 to retained earnings. ASU No. 2018-02 is effective
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU No. 2018-02 on January 1, 2019, and the adoption did not have a material impact on its condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
—
There have been no changes in the expected dates of adoption or estimated effects on the Company's consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K.
2.
REVENUES
Disaggregation of Revenue
The following tables provide information about the Company's revenues, disaggregated by geographical market and revenue type, for the
three months ended March 31, 2019
and
2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
|
Subscription
|
|
Professional Services
|
|
Total
|
|
Subscription
|
|
Professional Services
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
108,836
|
|
|
$
|
17,517
|
|
|
$
|
126,353
|
|
|
$
|
96,165
|
|
|
$
|
15,984
|
|
|
$
|
112,149
|
|
Rest of Americas
|
1,803
|
|
|
239
|
|
|
2,042
|
|
|
1,115
|
|
|
376
|
|
|
1,491
|
|
Total Americas
|
110,639
|
|
|
17,756
|
|
|
128,395
|
|
|
97,280
|
|
|
16,360
|
|
|
113,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Japan
|
10,897
|
|
|
2,473
|
|
|
13,370
|
|
|
8,112
|
|
|
1,794
|
|
|
9,906
|
|
Rest of Asia Pacific
|
6,004
|
|
|
1,736
|
|
|
7,740
|
|
|
3,701
|
|
|
977
|
|
|
4,678
|
|
Total Asia Pacific
|
16,901
|
|
|
4,209
|
|
|
21,110
|
|
|
11,813
|
|
|
2,771
|
|
|
14,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa
|
19,335
|
|
|
4,664
|
|
|
23,999
|
|
|
17,726
|
|
|
3,248
|
|
|
20,974
|
|
Total
|
$
|
146,875
|
|
|
$
|
26,629
|
|
|
$
|
173,504
|
|
|
$
|
126,819
|
|
|
$
|
22,379
|
|
|
$
|
149,198
|
|
The above tables present revenues according to the region in which they were generated, separately displaying those individual countries that, in any of the periods presented, constituted 5% or more or of total revenues.
All of the Company's performance obligations are transferred to customers over time; as a result, no disaggregation of revenues by timing of revenue recognition is provided.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Contract Balances
The following table provides information about changes in the Company's deferred revenue balances during the
three months ended March 31, 2019
and
2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
Deferred Revenue
|
|
2019
|
|
2018
|
Balance as of January 1
|
$
|
78,306
|
|
|
$
|
82,631
|
|
Revenue recognized that was included in deferred revenue at the beginning of the period
|
(51,444
|
)
|
|
(63,720
|
)
|
Revenue recognized that was not included in deferred revenue at the beginning of the period
|
(116,052
|
)
|
|
(85,275
|
)
|
Increases due to invoicing
|
155,583
|
|
|
155,416
|
|
Revenue recognized in excess of billings
|
10,048
|
|
|
2,688
|
|
Other
|
(2,426
|
)
|
|
331
|
|
Balance as of March 31
|
$
|
74,015
|
|
|
$
|
92,071
|
|
Aside from the accounts receivable presented on its condensed consolidated balance sheets, the Company did not have any material contract assets for any of the periods presented.
Transaction Price Allocated to the Remaining Performance Obligations
As of March 31, 2019
, the Company has unsatisfied performance obligations associated with subscription services that extend through
2030
. The total multi-year transaction price allocated to unsatisfied subscription performance obligations is approximately
$1,042 million
as of
March 31, 2019
. Of this amount, approximately
$407 million
,
$377 million
, and
$258 million
are expected to be recognized in
2019
,
2020
, and thereafter, respectively.
As of March 31, 2019
, the total transaction price allocated to unsatisfied professional services performance obligations is immaterial.
Costs to Obtain and Fulfill a Contract with a Customer
Sales commissions earned are considered incremental and recoverable costs of obtaining a contract with a customer and therefore are capitalized as contract costs.
Capitalized contract costs were
$65.5 million
and
$60.0 million
as of
March 31, 2019
and
December 31, 2018
, respectively. The current portion of capitalized contract costs is represented by capitalized contract costs on the Company's consolidated balance sheets; the long-term portion is included in other assets.
Amortization of capitalized contract costs was
$6.6 million
and
$4.9 million
for the
three months ended March 31, 2019
and
2018
, respectively. There have been
no
impairment losses related to capitalized contract costs.
3.
STOCKHOLDERS' EQUITY
Common Stock —
Common stockholders are entitled to one vote for each share of common stock held. Common stockholders may receive dividends if and when the board of directors determines, at its sole discretion.
Treasury Stock —
From time to time, the Company grants nonvested restricted stock awards ("RSAs"), restricted stock units ("RSUs"), and performance-based restricted stock units ("PBRSUs") to its employees pursuant to the terms of its Amended and Restated 2017 Long-Term Incentive Plan ("2017 Plan") and formerly pursuant to the terms of its Second Amended and Restated 2009 Long-Term Incentive Plan ("2009 Plan”). Under the provisions of the 2017 Plan and 2009 Plan, unless otherwise elected, participants fulfill their related income tax obligation by having shares withheld at the time of vesting. On the date of vesting, the Company divides the participant's income tax withholding obligation in dollars by the closing price of its common stock and withholds the resulting number of vested shares. The shares withheld are then transferred to the Company's treasury stock at cost.
During the
three months ended March 31, 2019
and
2018
, the Company withheld
393,249
shares at an average price of
$72.99
and
248,831
shares at an average price of
$66.77
, respectively, in connection with the vesting of equity awards.
Nonvested restricted stock awards forfeited by plan participants are transferred to the Company's treasury stock at par. During the
three months ended March 31, 2019
and
2018
,
40,281
and
42,176
forfeited shares, respectively, were transferred to treasury stock at their par value of $0.01.
Accumulated Other Comprehensive Loss —
For the
three months ended March 31, 2019
and
2018
, reclassifications of items from accumulated other comprehensive loss to net income were insignificant.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The following reconciliation presents significant changes in the components of stockholders' equity for the
three months ended March 31, 2019
and
2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(amounts in thousands)
|
|
Common stock
|
|
Additional paid-in capital
|
|
Treasury stock
|
|
Foreign currency translation adjustments
|
|
Unrealized gains (losses) on marketable securities
|
|
Retained earnings
|
|
Total
|
Balance - January 1, 2019
|
|
$
|
661
|
|
|
$
|
574,667
|
|
|
$
|
(152,849
|
)
|
|
$
|
(4,255
|
)
|
|
$
|
(614
|
)
|
|
$
|
213,838
|
|
|
$
|
631,448
|
|
Comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
372
|
|
|
394
|
|
|
11,145
|
|
|
11,911
|
|
Stock-based compensation
|
|
—
|
|
|
19,730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,730
|
|
Issuance of shares under stock-based compensation plans
|
|
13
|
|
|
2,328
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,341
|
|
Acquisition of treasury stock in connection with award vesting
|
|
—
|
|
|
—
|
|
|
(28,704
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,704
|
)
|
Balance - March 31, 2019
|
|
$
|
674
|
|
|
$
|
596,725
|
|
|
$
|
(181,553
|
)
|
|
$
|
(3,883
|
)
|
|
$
|
(220
|
)
|
|
$
|
224,983
|
|
|
$
|
636,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(amounts in thousands)
|
|
Common stock
|
|
Additional paid-in capital
|
|
Treasury stock
|
|
Foreign currency translation adjustments
|
|
Unrealized gains (losses) on marketable securities
|
|
Retained earnings
|
|
Total
|
Balance - January 1, 2018
|
|
628
|
|
|
486,147
|
|
|
(132,705
|
)
|
|
(2,459
|
)
|
|
(918
|
)
|
|
161,917
|
|
|
512,610
|
|
Comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,270
|
|
|
(968
|
)
|
|
10,325
|
|
|
10,627
|
|
Stock-based compensation
|
|
—
|
|
|
13,214
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,214
|
|
Issuance of shares under stock-based compensation plans
|
|
9
|
|
|
2,357
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,366
|
|
Acquisition of treasury stock in connection with award vesting
|
|
—
|
|
|
—
|
|
|
(16,614
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,614
|
)
|
Balance - March 31, 2018
|
|
$
|
637
|
|
|
$
|
501,718
|
|
|
$
|
(149,319
|
)
|
|
$
|
(1,189
|
)
|
|
$
|
(1,886
|
)
|
|
$
|
172,242
|
|
|
$
|
522,203
|
|
4.
INVESTMENTS
Marketable Securities
Marketable securities, which the Company classifies as available-for-sale securities, primarily consist of high quality commercial paper, corporate bonds, and U.S. government debt obligations. Marketable securities with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term; otherwise, they are classified as long-term on the condensed consolidated balance sheets.
The following tables provide the Company’s marketable securities by security type as of
March 31, 2019
and
December 31, 2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
Commercial paper and corporate bonds
|
$
|
86,668
|
|
|
$
|
—
|
|
|
$
|
(251
|
)
|
|
$
|
86,417
|
|
U.S. government agency debt securities
|
10,690
|
|
|
—
|
|
|
(47
|
)
|
|
10,643
|
|
Total
|
$
|
97,358
|
|
|
$
|
—
|
|
|
$
|
(298
|
)
|
|
$
|
97,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
Commercial paper and corporate bonds
|
$
|
125,245
|
|
|
$
|
—
|
|
|
$
|
(747
|
)
|
|
$
|
124,498
|
|
U.S. government agency debt securities
|
10,690
|
|
|
—
|
|
|
(83
|
)
|
|
10,607
|
|
Total
|
$
|
135,935
|
|
|
$
|
—
|
|
|
$
|
(830
|
)
|
|
$
|
135,105
|
|
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Contractual maturities of the Company’s marketable securities as of
March 31, 2019
and
December 31, 2018
are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
|
Cost
|
|
Estimated
Fair
Value
|
|
Cost
|
|
Estimated
Fair
Value
|
Due in one year or less
|
$
|
97,358
|
|
|
$
|
97,060
|
|
|
$
|
135,935
|
|
|
$
|
135,105
|
|
Due in one to five years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
97,358
|
|
|
$
|
97,060
|
|
|
$
|
135,935
|
|
|
$
|
135,105
|
|
At
March 31, 2019
, the Company had
$0.3 million
of gross unrealized losses primarily due to a decrease in the fair value of certain corporate bonds.
The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Investments that are impaired are those that are considered to have losses that are other-than-temporary. Factors considered in determining whether a loss is temporary include:
•
the length of time and extent to which fair value has been lower than the cost basis;
•
the financial condition, credit quality and near-term prospects of the investee; and
•
whether it is more likely than not that the Company will be required to sell the security prior to recovery.
As the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, the Company has determined that the gross unrealized losses on such investments at
March 31, 2019
are temporary in nature. Accordingly, the Company did not consider its investments in marketable securities to be other-than-temporarily impaired as of
March 31, 2019
.
The following table provides the fair market value and gross unrealized losses of the Company's marketable securities with unrealized losses, aggregated by security type, as of
March 31, 2019
and
December 31, 2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Loss Position for More than 12 Months
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
Commercial paper and corporate bonds
|
$
|
86,416
|
|
|
$
|
(251
|
)
|
|
$
|
124,498
|
|
|
$
|
(747
|
)
|
U.S. government agency debt securities
|
10,643
|
|
|
(47
|
)
|
|
10,607
|
|
|
(83
|
)
|
Total
|
$
|
97,059
|
|
|
$
|
(298
|
)
|
|
$
|
135,105
|
|
|
$
|
(830
|
)
|
During the
three months ended March 31, 2019
and
2018
, the Company recorded an insignificant amount of net realized gains and losses from the sale of marketable securities.
Other Investments
The Company holds shares of Series D Preferred Stock of Syapse Inc. purchased in a private placement. This investment does not have a readily determinable fair value and is carried at original cost in other assets on the Company's condensed consolidated balance sheets.
This investment had a carrying value of
$3.0 million
as of
March 31, 2019
and
December 31, 2018
. The Company periodically evaluates this investment to determine if impairment charges are required;
no
impairment charges were recognized during the
three months ended March 31, 2019
or
2018
.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5.
FAIR VALUE
The following table summarizes, as of
March 31, 2019
and
December 31, 2018
, the Company's financial assets and liabilities that are measured at fair value on a recurring basis, according to the fair value hierarchy described in the significant accounting policies included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Cash
|
$
|
108,292
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,292
|
|
|
$
|
103,859
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103,859
|
|
Money market funds
|
760
|
|
|
—
|
|
|
—
|
|
|
760
|
|
|
1,581
|
|
|
—
|
|
|
—
|
|
|
1,581
|
|
Total cash and cash equivalents
|
109,052
|
|
|
—
|
|
|
—
|
|
|
109,052
|
|
|
105,440
|
|
|
—
|
|
|
—
|
|
|
105,440
|
|
Commercial paper and corporate bonds
|
—
|
|
|
86,416
|
|
|
—
|
|
|
86,416
|
|
|
—
|
|
|
124,498
|
|
|
—
|
|
|
124,498
|
|
U.S. government agency debt securities
|
—
|
|
|
10,644
|
|
|
—
|
|
|
10,644
|
|
|
—
|
|
|
10,607
|
|
|
—
|
|
|
10,607
|
|
Total marketable securities
|
—
|
|
|
97,060
|
|
|
—
|
|
|
97,060
|
|
|
—
|
|
|
135,105
|
|
|
—
|
|
|
135,105
|
|
Total financial assets measured at fair value on a recurring basis
|
$
|
109,052
|
|
|
$
|
97,060
|
|
|
$
|
—
|
|
|
$
|
206,112
|
|
|
$
|
105,440
|
|
|
$
|
135,105
|
|
|
$
|
—
|
|
|
$
|
240,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration – short-term
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
974
|
|
|
$
|
974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,110
|
|
|
$
|
1,110
|
|
Total financial liabilities measured at fair value on a recurring basis
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
974
|
|
|
$
|
974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,110
|
|
|
$
|
1,110
|
|
Investments in commercial paper, corporate bonds, and U.S. government agency debt securities have been classified as Level 2 as they are valued using quoted prices in less active markets or other directly or indirectly observable inputs. Fair values of corporate bonds and U.S. government agency debt securities were derived from a consensus or weighted-average price based on input of market prices from multiple sources at each reporting period. With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments if available.
During the
three months ended March 31, 2019
and
2018
, there were
no
transfers of financial assets between Level 1 and Level 2.
Contingent consideration liabilities associated with earn-out payments related to the Company's February 2017 acquisition of CHITA Inc. ("CHITA") are classified as Level 3 in the fair value hierarchy because they rely significantly on inputs that are unobservable in the market. The fair value of portions of contingent consideration related to the achievement of a technical milestone have been estimated using situation-based modeling, which considers the probability-weighted present value of the expected payout amount. The fair value of portions of contingent consideration related to achievement of revenue targets have been estimated using a Monte Carlo simulation to simulate future performance of the acquired business under a risk-neutral framework; significant inputs to the simulation include a risk-adjusted discount rate of 10.2% and revenue volatility of 8.0%.
Contingent consideration is recorded in accrued expenses and other on the Company's condensed consolidated balance sheets.
The following table provides a summary of changes in fair value of the Company's Level 3 contingent consideration liabilities during the
three months ended March 31, 2019
(in thousands):
|
|
|
|
|
Balance as of January 1, 2019
|
$
|
1,110
|
|
Amounts earned by sellers
|
(297
|
)
|
Fair value adjustment (included in general and administrative expenses)
|
161
|
|
Balance as of March 31, 2019
|
$
|
974
|
|
The carrying amounts of all other current financial assets and current financial liabilities reflected in the condensed consolidated balance sheets approximate fair value due to their short-term nature.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6.
GOODWILL AND INTANGIBLE ASSETS
The change in the carrying amount of goodwill during the
three months ended March 31, 2019
was as follows (in thousands):
|
|
|
|
|
Balance as of January 1, 2019
|
$
|
216,017
|
|
Purchase price adjustment - SHYFT Analytics, Inc.
|
(149
|
)
|
Foreign currency translation adjustments
|
90
|
|
Balance as of March 31, 2019
|
$
|
215,958
|
|
Total intangible assets are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
Developed technology
|
$
|
31,384
|
|
|
$
|
(15,243
|
)
|
|
$
|
16,141
|
|
|
$
|
31,358
|
|
|
$
|
(13,852
|
)
|
|
$
|
17,506
|
|
Customer relationships
|
9,175
|
|
|
(3,711
|
)
|
|
5,464
|
|
|
9,167
|
|
|
(3,404
|
)
|
|
5,763
|
|
Trade name
|
5,400
|
|
|
(280
|
)
|
|
5,120
|
|
|
5,400
|
|
|
(190
|
)
|
|
5,210
|
|
Non-competition agreements
|
1,460
|
|
|
(509
|
)
|
|
951
|
|
|
1,460
|
|
|
(393
|
)
|
|
1,067
|
|
Domain name (1)
|
600
|
|
|
—
|
|
|
600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
48,019
|
|
|
$
|
(19,743
|
)
|
|
$
|
28,276
|
|
|
$
|
47,385
|
|
|
$
|
(17,839
|
)
|
|
$
|
29,546
|
|
(1) During the three months ended March 31, 2019, the Company purchased the domain name
medidata.com,
which is considered to have an indefinite life.
|
Future amortization of intangible assets is expected to be as follows (in thousands):
|
|
|
|
|
Remainder of 2019
|
$
|
5,603
|
|
2020
|
6,730
|
|
2021
|
6,249
|
|
2022
|
3,465
|
|
2023
|
1,849
|
|
Thereafter
|
3,780
|
|
Total
|
$
|
27,676
|
|
7.
DEBT
Credit Facility
The Company's credit facility agreement (the "Credit Facility"), entered into in December 2017, consists of revolving commitments with a maximum borrowing amount of
$400.0 million
(the "Revolver"), currently undrawn, and term loans (the "Term Loans") in an aggregate principal amount of
$100.0 million
.
The repayment terms of the Term Loans provide for monthly interest payments and quarterly principal payments, with a maturity date of December 2022.
The Credit Facility consisted of the following components as of
March 31, 2019
and
December 31, 2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
Term Loans
|
$
|
93,750
|
|
|
$
|
95,000
|
|
Less: unamortized debt issuance costs
|
(1,616
|
)
|
|
(1,725
|
)
|
Net carrying amount (1)
|
$
|
92,134
|
|
|
$
|
93,275
|
|
(1) Of the total carrying amount of the Term Loans, short-term maturities of $5.5 million and $4.9 million were included in accrued expenses and other on the Company's condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.
|
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The following table sets forth total interest expense recognized related to the Credit Facility for the
three months ended March 31, 2019
and
2018
(in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Contractual interest expense on Term Loans
|
$
|
854
|
|
|
$
|
748
|
|
Amortization of debt issuance costs
|
109
|
|
|
108
|
|
Unused commitment fee on Revolver
|
147
|
|
|
200
|
|
Total
|
$
|
1,110
|
|
|
$
|
1,056
|
|
|
|
|
|
Contractual interest rate on Term Loans
|
3.624
|
%
|
|
3.229
|
%
|
Commitment fee rate on undrawn Revolver
|
0.150
|
%
|
|
0.200
|
%
|
As of
March 31, 2019
the remaining term of the Credit Facility is approximately
45 months
.
The Company was in compliance with all financial covenants related to the Credit Facility
as of
March 31, 2019
.
1.00% Convertible Senior Notes
The Company's
1.00%
convertible senior notes (the "Notes") were issued in August 2013 and
settled on August 1, 2018
. Interest expense related to the Notes for the
three months ended March 31, 2018
was
$4.5 million
, consisting of contractual interest expense of
$0.7 million
, amortization of debt issuance costs of
$0.3 million
, and amortization of debt discount of
$3.5 million
.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
8.
LEASES
The Company leases office and data center space under operating lease agreements with remaining lease terms extending through 2031.
During the
three months ended March 31, 2019
and
2018
, the Company recognized operating lease costs of
$4.8 million
and
$3.9 million
, respectively; for the
three months ended March 31, 2019
, operating lease costs include
$0.2 million
of short-term lease costs.
Supplemental cash flow information related to leases for the three months ended March 31, 2019 was as follows (in thousands):
|
|
|
|
|
|
Three months ended March 31,
|
|
2019
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
Cash paid for operating leases
|
$
|
(3,858
|
)
|
|
|
Noncash activities:
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
|
$
|
—
|
|
(1) No new operating leases were entered into during the three months ended March 31, 2019; all new operating lease liabilities recorded during the period are the result of the Company's January 1, 2019 adoption of ASC 842.
|
As of
March 31, 2019
, the weighted-average remaining lease term for operating lease liabilities was approximately
7.4 years
and the weighted-average discount rate was approximately
3.59%
.
Maturities of operating lease liabilities are as follows (in thousands):
|
|
|
|
|
Remainder of 2019
|
$
|
13,316
|
|
2020
|
19,391
|
|
2021
|
19,118
|
|
2022
|
18,792
|
|
2023
|
18,072
|
|
Thereafter
|
38,667
|
|
Total lease payments
|
127,356
|
|
Less imputed interest
|
(16,485
|
)
|
Total present value of operating lease liabilities
|
$
|
110,871
|
|
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
9.
STOCK-BASED COMPENSATION
For the
three months ended March 31, 2019
and
2018
, the components of stock-based compensation expense were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Stock options
|
$
|
471
|
|
|
$
|
572
|
|
Restricted stock awards and units
|
12,739
|
|
|
7,867
|
|
Performance-based restricted stock units
|
4,735
|
|
|
3,227
|
|
Employee stock purchase plan
|
1,785
|
|
|
1,548
|
|
Total stock-based compensation
(1)
|
$
|
19,730
|
|
|
$
|
13,214
|
|
(1) Total stock-based compensation is presented in this table on a gross basis, consistent with the additional paid-in capital impact recorded in stockholders' equity. On the Company's condensed consolidated statements of operations and condensed consolidated statements of cash flows, stock-based compensation is presented net of foreign exchange impact and capitalization of eligible software development-related costs.
|
The following table summarizes the status of the Company's stock options as of
March 31, 2019
, and changes during the
three
months then ended (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding at January 1, 2019
|
1,088
|
|
|
|
$19.17
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
Exercised
|
(57
|
)
|
|
41.15
|
|
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
Expired
|
(1
|
)
|
|
13.99
|
|
|
|
|
|
Outstanding at March 31, 2019
|
1,030
|
|
|
|
$17.96
|
|
|
2.60
|
|
|
$57,037
|
|
Exercisable at March 31, 2019
|
919
|
|
|
|
$12.82
|
|
|
1.95
|
|
|
$55,553
|
|
Vested and expected to vest at March 31, 2019
|
1,025
|
|
|
|
$17.71
|
|
|
2.58
|
|
|
$56,992
|
|
No stock options were granted during the
three months ended March 31, 2019
and
2018
. The total intrinsic value of stock options exercised during the
three months ended March 31, 2019
and
2018
was
$1.9 million
and
$7.6 million
, respectively.
As of
March 31, 2019
, there was
$2.5 million
in unrecognized compensation cost related to all non-vested stock options granted. This cost is expected to be recognized over a weighted-average remaining period of
2.08 years
.
R
estricted Stock Awards and Units
The following table summarizes the status of the Company’s nonvested time-based RSAs and RSUs as of
March 31, 2019
, and changes during the
three
months then ended (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
|
Nonvested at January 1, 2019
|
1,936
|
|
|
|
$61.45
|
|
Granted
|
909
|
|
|
71.42
|
|
Vested
|
(516
|
)
|
|
52.83
|
|
Forfeited
|
(44
|
)
|
|
60.55
|
|
Nonvested at March 31, 2019
|
2,285
|
|
|
|
$67.38
|
|
The total fair value of RSAs and RSUs vested during the
three months ended March 31, 2019
and
2018
was $
38.2 million
and
$31.6 million
, respectively.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
As of
March 31, 2019
, there was
$136.3 million
in unrecognized compensation cost related to all nonvested RSAs and RSUs granted. This cost is expected to be recognized over a weighted-average remaining period of
2.79 years
.
Performance-Based Restricted Stock Units
During the
three months March 31, 2019
, the Company granted: (1)
155 thousand
PBRSUs ("2019 TSR PBRSUs") with
market conditions based on the Company's total stockholder return ("TSR") relative to that of the Russell 2000 Index over the three-year period ending December 31, 2021, vesting in full in three years with the number of shares ultimately earned ranging from zero to 200% of the target number of shares
; (2)
155 thousand
PBRSUs ("2019 Revenue PBRSUs") with
performance conditions based on the compound annual growth rate of revenue over the three-year period ending December 31, 2021, vesting in full in three years with the number of shares ultimately earned ranging from zero to 250% of the target number of shares
.
During the
three months March 31, 2018
, the Company granted: (1)
116 thousand
PBRSUs ("2018 TSR PBRSUs") with
market conditions based on the Company's TSR relative to that of the Russell 2000 Index over the three-year period ending December 31, 2020, vesting in full in three years with the number of shares ultimately earned ranging from zero to 200% of the target number of shares
; (2)
117 thousand
PBRSUs ("2018 Net Income PBRSUs") with
performance conditions based on the compound annual growth rate of net income over the three-year period ending December 31, 2020, vesting in full in three years with the number of shares ultimately earned ranging from zero to 200% of the target number of shares
. The Company also granted an immaterial number of other PBRSUs with performance conditions based on achievement of certain individual and team objectives.
The fair value of PBRSUs with market conditions granted during the
three months ended March 31, 2019
and
2018
was estimated as of the date of grant using a Monte Carlo valuation model with the following weighted average assumptions:
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Expected volatility - Medidata
|
35
|
%
|
|
37
|
%
|
Expected volatility - comparison index
|
44
|
%
|
|
42
|
%
|
Expected life
|
2.88 years
|
|
|
2.86 years
|
|
Risk-free interest rate
|
2.47
|
%
|
|
2.36
|
%
|
Dividend yield
|
—
|
|
|
—
|
|
The following table summarizes the status of the Company’s PBRSUs based upon expected performance as of
March 31, 2019
, and changes during the
three
months then ended (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
TSR
|
|
Revenue
|
|
Other
|
|
Total Number of Shares
|
|
Weighted-Average Grant Date Fair Value
|
Nonvested at January 1, 2019
|
210
|
|
|
793
|
|
|
—
|
|
|
23
|
|
|
1,026
|
|
|
$
|
70.80
|
|
Granted (based on performance at 100% of targeted levels)
|
—
|
|
|
155
|
|
|
155
|
|
|
—
|
|
|
310
|
|
|
88.56
|
|
Adjustment related to expected performance
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
104.54
|
|
Vested
|
—
|
|
|
(370
|
)
|
|
—
|
|
|
—
|
|
|
(370
|
)
|
|
47.11
|
|
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77.64
|
|
Nonvested at March 31, 2019
|
210
|
|
|
584
|
|
|
155
|
|
|
23
|
|
|
972
|
|
|
$
|
85.69
|
|
The total fair value of PBRSUs vested during the
three months ended March 31, 2019
and
2018
was
$26.6 million
and
$8.1 million
, respectively.
As of
March 31, 2019
, there was
$44.6 million
in unrecognized compensation cost related to all nonvested PBRSUs. This cost is expected to be recognized over a weighted-average remaining period of
1.94 years
.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Employee Stock Purchase Plan
The fair value of shares granted under the Company's employee stock purchase plan ("ESPP") was estimated using a Black-Scholes pricing model with the following weighted-average assumptions:
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Expected volatility
|
34
|
%
|
|
37
|
%
|
Expected life
|
1.54 years
|
|
|
1.69 years
|
|
Risk-free interest rate
|
2.39
|
%
|
|
1.10
|
%
|
Dividend yield
|
—
|
|
|
—
|
|
No shares were purchased under the ESPP during the
three months ended March 31, 2019
and
2018
.
As of
March 31, 2019
, there was
$10.1 million
in unrecognized compensation cost related to ESPP shares. This cost is expected to be recognized over a weighted-average remaining period of
1.42
years.
Modifications
Aggregate incremental expense associated with modifications to stock options, RSAs and PBRSUs in connection with separation agreements during the
three months ended March 31, 2019
and
2018
was
$0.1 million
and
$0.2 million
, respectively.
10.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding during the period. The holders of unvested RSAs do not have nonforfeitable rights to dividends or dividend equivalents and therefore, such vested awards do not qualify as participating securities and are excluded from the basic earnings per share calculation. Diluted earnings per share includes the determinants of basic net income per share and, in addition, gives effect to the potential dilution that would occur if securities or other contracts to issue common stock are exercised, vested, or converted into common stock, unless they are anti-dilutive.
In August 2018, the Company settled the principal amount of the Notes in cash and issued shares of common stock to settle the conversion premium. For the
three months ended March 31, 2018
, the dilutive effect of the Notes is reflected in diluted earnings per share using the treasury stock method, which considers the number of shares that would have been required to settle the premium above principal at the average stock price for the period.
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A reconciliation of the numerator and denominator of basic earnings per share and diluted earnings per share for the
three months ended March 31, 2019
and
2018
is shown in the following table (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Numerator
|
|
|
|
Net income
|
$
|
11,145
|
|
|
$
|
10,325
|
|
Denominator
|
|
|
|
Denominator for basic earnings per share:
|
|
|
|
Weighted average common shares outstanding
|
59,693
|
|
|
57,055
|
|
Denominator for diluted earnings per share:
|
|
|
|
Dilutive potential common shares:
|
|
|
|
Stock options
|
775
|
|
|
922
|
|
Restricted stock awards and units
|
676
|
|
|
743
|
|
Performance-based restricted stock units
|
558
|
|
|
494
|
|
Employee stock purchase plan
|
53
|
|
|
250
|
|
Convertible senior notes
|
—
|
|
|
634
|
|
Weighted average common shares outstanding with assumed conversion
|
61,755
|
|
|
60,098
|
|
Basic earnings per share
|
$
|
0.19
|
|
|
$
|
0.18
|
|
Diluted earnings per share
|
$
|
0.18
|
|
|
$
|
0.17
|
|
Anti-dilutive common stock equivalents excluded from the calculation of diluted earnings per share for the
three months ended March 31, 2019
and
2018
are presented in the following table (in thousands, except per share data):
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Stock options
|
81
|
|
|
94
|
|
Restricted stock awards and units
|
28
|
|
|
263
|
|
Performance-based restricted stock units
|
84
|
|
|
54
|
|
Employee stock purchase plan
|
581
|
|
|
188
|
|
Total
|
774
|
|
|
599
|
|
MEDIDATA SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
11.
INCOME TAXES
Unrecognized Tax Benefits
The Company's unrecognized tax benefits were approximately
$6.4 million
as of
March 31, 2019
, and were unchanged from
December 31, 2018
.
12.
COMMITMENTS AND CONTINGENCIES
Legal Matters
—
The Company is subject to legal proceedings and claims that arise in the ordinary course of business and records an estimated liability for these matters when an adverse outcome is considered to be probable and can be reasonably estimated. Although the outcome of the litigation cannot be predicted with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the Company, which could materially and adversely affect its financial condition or results of operations, the Company does not believe that it is currently a party to any material legal proceedings.
Contractual Warranties
—
The Company typically provides contractual warranties to its customers covering its solutions and services. To date, any refunds provided to customers have been immaterial.
Change in Control Agreements
—
The Company has change in control agreements with its chief executive officer and certain other executive officers. These agreements provide for payments to be made to such officers upon involuntary termination of their employment by the Company without cause or by such officers for good reason as defined in the agreements, within a period of 2 years following a change in control. The agreements provide that, upon a qualifying termination event, such officers will be entitled to (a) a severance payment equal to the sum of the officer’s base salary and target bonus amount (except that such payment for the Company's chief executive officer and president would be two times such sum); (b) continuation of health benefits for one year (except that such continuation for the Company's chief executive officer and president would be for two years); and (c) immediate vesting of remaining unvested equity awards, unless otherwise specified in the equity award agreements.