UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________

FORM 10-Q

~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~_______________

~~For~~☒QUARTERLY ~~the~~REPORT ~~quarterly~~PURSUANT ~~period~~TO ~~ended~~SECTION ~~June~~13 ~~30,~~OR ~~2018~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐For ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~September 1330, ~~OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2018

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 000-51954

_______________

DCP Holding Company

(Exact name of Registrant as specified in its Charter)

Ohio	20-1291244
(State or Other Jurisdiction of	(IRS Employer Identification No.)
Incorporation or Organization)

100 Crowne Point Place	45241
Sharonville, Ohio	(Zip Code)
(Address of Principal Executive Office)

Registrant’s telephone number, including area code: (513) 554-1100

_______________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or aan ~~smaller~~emerging ~~reporting~~growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in ~~rule~~Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting Company ☐ Emerging growth company ☐ ~~(Do not check if smaller reporting company)~~

(Do not check if smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~June~~November 309, 2018, there were ~~500~~492, 8,~~653~~565 and 3,~~771~~521 of the Registrant’s Class A, Class B and Class C Redeemable Common Shares outstanding, respectively.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

		PAGE
Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
	Signatures	23

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DCP HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30,		December 31,
	2018		2017
ASSETS
INVESTMENTS:
Fixed maturities, available for sale at fair value, amortized cost of $8,841,163 and $8,790,000 at September 30, 2018 and December 31, 2017, respectively	$	8,616,903	$	8,810,056
Short-term investments, available for sale at fair value, cost of $849,371 and $781,000 at September 30, 2018 and December 31, 2017, respectively		850,454		781,951
Total investments		9,467,357		9,592,007
CASH AND CASH EQUIVALENTS		13,131,696		13,177,193
ACCRUED INVESTMENT INCOME		85,323		80,904
ACCOUNTS RECEIVABLE, including billed premiums of $1,694,314 and $1,118,996, net of allowance of $86,380 and $45,809 at September 30, 2018 and December 31, 2017, respectively		41,790,989		36,400,634
DEFERRED ACQUISITION COSTS		2,996,314		2,636,858
PROPERTY AND EQUIPMENT, net of depreciation and amortization of $4,039,777 and $3,684,537 at September 30, 2018 and December 31, 2017, respectively		3,938,650		3,661,598
OTHER ASSETS		5,205,961		4,780,001
TOTAL ASSETS	$	76,616,290	$	70,329,195

LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY
CLAIMS PAYABLE	$	3,587,715	$	3,576,185
UNEARNED PREMIUM REVENUE		41,490,442		36,818,123
OTHER PAYABLES AND ACCRUALS		8,180,305		7,175,048
MORTGAGE LOAN PAYABLE		1,053,800		1,095,200
CAPITAL LEASE OBLIGATIONS		871,252		1,200,925
DEFERRED COMPENSATION		5,022,810		4,821,982
TOTAL LIABILITIES		60,206,324		54,687,463
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED AND COMMON SHARES:
Class A, Redeemable Common Shares, no par value—authorized, 7,500 shares; issued and outstanding, 494 and 500 shares at September 30, 2018 and December 31, 2017		643,273		605,143
Class B Redeemable Common Shares, no par value—authorized, 120,000 shares; issued and outstanding, 8,587 and 8,653 shares at September 30, 2018 and December 31, 2017		11,181,747		10,472,602
Class C Redeemable Common Shares, no par value—authorized, 80,000 shares; issued and outstanding, 3,521 and 3,771 shares at September 30, 2018 and December 31, 2017		4,584,946		4,563,987

Total redeemable preferred and common shares		16,409,966		15,641,732

SHAREHOLDERS’ EQUITY—Preferred Shares; no par value—authorized, 92,700 shares; none outstanding

TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY	$	76,616,290	$	70,329,195

	June 30,		December 31,
	2018		2017
ASSETS
INVESTMENTS:
Fixed maturities, available for sale at fair value, amortized cost of $8,837,000 and $8,790,000 at June 30, 2018 and December 31, 2017, respectively	$	8,608,684	$	8,810,056
Short-term investments, available for sale at fair value, cost of $843,000 and $781,000 at June 30, 2018 and December 31, 2017, respectively		843,664		781,951
Total investments		9,452,348		9,592,007
CASH AND CASH EQUIVALENTS		13,652,167		13,177,193
ACCRUED INVESTMENT INCOME		83,226		80,904
ACCOUNTS RECEIVABLE, including billed premiums of $1,449,805 and $1,118,996, net of allowance of $37,962 and $45,809 at June 30, 2018 and December 31, 2017, respectively		46,804,456		36,400,634
DEFERRED ACQUISITION COSTS		3,383,514		2,636,858
PROPERTY AND EQUIPMENT, net of depreciation and amortization of $3,917,503 and $3,684,537 at June 30, 2018 and December 31, 2017, respectively		3,781,477		3,661,598
OTHER ASSETS		5,319,254		4,780,001
TOTAL ASSETS	$	82,476,442	$	70,329,195
LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY
CLAIMS PAYABLE	$	4,142,250	$	3,576,185
UNEARNED PREMIUM REVENUE		47,398,955		36,818,123
OTHER PAYABLES AND ACCRUALS		7,423,097		7,175,048
MORTGAGE LOAN PAYABLE		1,067,600		1,095,200
CAPITAL LEASE OBLIGATIONS		962,908		1,200,925
DEFERRED COMPENSATION		4,964,377		4,821,982
TOTAL LIABILITIES		65,959,187		54,687,463
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED AND COMMON SHARES:
Class A, Redeemable Common Shares, no par value—authorized, 7,500 shares; issued and outstanding, 500 shares at June 30, 2018 and December 31, 2017		639,015		605,143
Class B Redeemable Common Shares, no par value—authorized, 120,000 shares; issued and outstanding, 8,653 shares at June 30, 2018 and December 31, 2017		11,058,790		10,472,602
Class C Redeemable Common Shares, no par value—authorized, 80,000 shares; issued and outstanding, 3,771 shares at June 30, 2018 and December 31, 2017		4,819,450		4,563,987
Total redeemable preferred and common shares		16,517,255		15,641,732
SHAREHOLDERS’ EQUITY—Preferred Shares; no par value—authorized, 92,700 shares; none outstanding
TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY	$	82,476,442	$	70,329,195

See notes to unaudited condensed consolidated financial statements.

DCP HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

REVENUES
Premium revenue	$	28,710,449		$	27,339,477		$	84,826,682		$	81,226,549
Investment income		86,254			70,162			236,893			193,776
Realized gains on investments, net		29,861			54,755			26,532			187,177
Total revenues		28,826,564			27,464,394			85,090,107			81,607,502

EXPENSES
Healthcare services expense		21,368,643			20,402,073			63,921,739			62,209,264
Insurance expense:
Salaries and benefits expense		2,248,710			2,142,120			6,979,429			6,730,439
Commission expenses and other acquisition costs		1,677,843			1,385,740			4,465,523			4,086,964
Other insurance expense		2,324,966			1,951,554			7,129,990			5,972,507
Total insurance expense		6,251,519			5,479,414			18,574,942			16,789,910
Total expenses		27,620,162			25,881,487			82,496,681			78,999,174


INCOME BEFORE INCOME TAX		1,206,402			1,582,907			2,593,426			2,608,328

INCOME TAX EXPENSE		336,586			563,657			723,532			929,005

NET INCOME		869,816			1,019,250			1,869,894			1,679,323

OTHER COMPREHENSIVE (LOSS) INCOME
Change in the fair value of interest rate swap, net of income tax of $986, $450, $5,916 and $914, respectively		3,707			871			22,250			1,773
Change in the fair value of investments, net of income (benefit) tax ($557), $7,890, ($53,272) and $43,017, respectively		(2,071	)		15,318			(200,384	)		83,503
Reclassification adjustment for realized gains (loss) included in net income, net of income tax (benefit) of $1,606, ($4,254), $2,275 and ($16,740), respectively		6,042			(8,258	)		8,559			(32,494	)
Total other comprehensive (loss) income		7,678			7,931			(169,575	)		52,782

TOTAL COMPREHENSIVE INCOME	$	877,494		$	1,027,181		$	1,700,319		$	1,732,105

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
REVENUES
Premium revenue	$	27,890,853		$	26,789,418		$	56,116,234		$	53,887,072
Investment income		72,581			58,289			150,638			123,614
Realized (losses) gains on investments, net		(16,378	)		62,835			(3,329	)		132,422
Total revenues		27,947,056			26,910,542			56,263,543			54,143,108
EXPENSES
Healthcare services expense		21,054,292			20,382,516			42,553,095			41,807,191
Insurance expense:
Salaries and benefits expense		2,357,581			2,276,259			4,730,719			4,588,319
Commission expenses and other acquisition costs		1,567,447			1,418,244			2,787,681			2,701,224
Other insurance expense		2,378,964			2,047,348			4,805,024			4,020,953
Total insurance expense		6,303,992			5,741,851			12,323,424			11,310,496
Total expenses		27,358,284			26,124,367			54,876,519			53,117,687
INCOME BEFORE INCOME TAX		588,772			786,175			1,387,024			1,025,421
INCOME TAX EXPENSE		164,251			279,949			386,946			365,348
NET INCOME		424,521			506,226			1,000,078			660,073
OTHER COMPREHENSIVE (LOSS) INCOME
Change in the fair value of interest rate swap, net of income (benefit) tax of $1,324, ($1,428), $4,929 and $465, respectively		4,983			(2,776	)		18,543			902
Change in the fair value of investments, net of income (benefit) tax ($12,206), $21,285, ($52,716) and $35,126, respectively		(45,915	)		41,317			(198,312	)		68,186
Reclassification adjustment for realized (loss) gains included in net income, net of income tax (benefit) of $964, ($2,552), $669 and ($12,485), respectively		3,628			(4,955	)		2,517			(24,237	)
Total other comprehensive (loss) income		(37,304	)		33,586			(177,252	)		44,851
TOTAL COMPREHENSIVE INCOME	$	387,217		$	539,812		$	822,826		$	704,924

See notes to unaudited condensed consolidated financial statements.

DCP HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Nine Months Ended September 30,

	2018			2017

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,869,894		$	1,679,323
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		366,058			350,196
Realized gains on investments, net		(26,532	)		(187,177	)
Deferred compensation		200,828			569,133
Effects of changes in operating assets and liabilities:
Accrued investment income		(4,419	)		1,060
Accounts receivable		(5,337,658	)		502,020
Deferred acquisition costs		(359,456	)		10,428
Other assets		(312,923	)		(217,008	)
Claims payable		11,530			(325,766	)
Unearned premium revenue		4,672,319			(107,939	)
Other payables and accruals		629,214			(581,149	)

Net cash provided by operating activities		1,708,855			1,693,121

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments		(2,521,078	)		(3,585,005	)
Sales of investments		1,778,827			2,968,344
Maturities of investments		600,000			490,000
Proceeds from the sale of property and equipment					920,752
Acquisition of property and equipment		(655,992	)		(1,083,697	)

Net cash used in investing activities		(798,243	)		(289,606	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loan repayments		(41,400	)		(39,600	)
Payments on capital lease		(329,673	)		(170,083	)
Repurchase of redeemable common shares		(14,706	)		(182,107	)
Dividends paid		(570,330	)		(547,443	)

Net cash used in financing activities		(956,109	)		(939,233	)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(45,497	)		464,282

CASH AND CASH EQUIVALENTS—Beginning of period		13,177,193			11,221,951

CASH AND CASH EQUIVALENTS—End of period	$	13,131,696		$	11,686,233

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	63,000		$	46,900
Cash paid for income taxes		1,112,000			863,000

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Redeemed common shares (in other payables and accruals)	$	411,614		$	10,882
Capital lease obligation					920,752

	For the Six Months Ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,000,078		$	660,073
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		245,258			241,570
Realized loss (gain) on investments, net		3,329			(132,422	)
Deferred compensation		142,395			453,139
Effects of changes in operating assets and liabilities:
Accrued investment income		(2,322	)		2,690
Accounts receivable		(10,351,125	)		(7,309,423	)
Deferred acquisition costs		(746,656	)		(508,601	)
Other assets		(468,368	)		(298,358	)
Claims payable		566,065			66,129
Unearned premium revenue		10,580,832			8,101,177
Other payables and accruals		271,749			(1,065,508	)
Net cash provided by operating activities		1,241,235			210,466
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments		(1,732,714	)		(2,723,131	)
Sales of investments		1,208,615			2,346,789
Maturities of investments		400,000			350,000
Acquisition of property and equipment		(376,545	)		(745,541	)
Net cash used in investing activities		(500,644	)		(771,883	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loan repayments		(27,600	)		(26,400	)
Payments on capital lease		(238,017	)		(115,949	)
Repurchase of redeemable common shares					(123,917	)
Dividends paid					(547,443	)
Net cash used in financing activities		(265,617	)		(813,709	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		474,974			(1,375,126	)
CASH AND CASH EQUIVALENTS—Beginning of period		13,177,193			11,221,951
CASH AND CASH EQUIVALENTS—End of period	$	13,652,167		$	9,846,825
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	41,000		$	31,000
Cash paid for income taxes		1,058,000			830,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Redeemed common shares (in other payables and accruals)	$	11,871		$	38,426

See notes to unaudited condensed consolidated financial statements.

DCp HOLDING COMPANY And subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.	BASIS OF PRESENTATION

DCP Holding Company (the “Company”) is the parent holding company of three wholly-owned operating subsidiaries which include Dental Care Plus, Inc., an Ohio corporation; Insurance Associates Plus, Inc., an Ohio corporation; and Adenta, Inc., a Kentucky corporation. Providers who participate in one or more of the Dental Care Plus networks own a majority of the Company’s Redeemable Common Shares. The Company’s Redeemable Common Shares are also owned by retired providers, Company board members, non-provider individuals and employees. The Company primarily offers ~~to employer groups of all sizes and individuals~~ health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity plans for dental care services and vision benefit plans to employer groups of all sizes and individuals. The condensed consolidated interim financial statements included in this report have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation are reflected in the interim financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited 2017 financial statements and notes thereto as included in the DCP Holding Company annual report on Form 10-K for the year ended December 31, 2017 filed with the Commission on March 30, 2018. These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain financial information that is required in the annual financial statements may not be required for interim financial reporting purposes and has been condensed or omitted. Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

The accounting policies of the Company conform to GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accompanying consolidated financial statements include estimates. Actual results could differ from those estimates.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the notes to the Company’s consolidated financial statements for the year ended December 31, 2017. While management believes that the procedures followed in preparation of interim financial information are reasonable, the accompanying condensed consolidated financial statements include estimates for items such as changes in claims payable, income tax accounts, deferred acquisition costs, deferred share-based compensation and accrued expenses and various other liability accounts. Any adjustments related to such estimates during the reporting period were of a normal recurring nature.

Premium Revenue—

Fully-Insured—Membership contracts are written on an annual or multi-year basis and are subject to cancellation by the employer group upon thirty days written notice. The Company’s unearned premium revenue was approximately $4741,~~399~~490,000 and $36,818,000 at ~~June~~September 30, 2018 and December 31, 2017, respectively, and primarily relates to the estimated premium revenue associated with the remaining contract periods. Related unbilled amounts recorded in accounts receivable were approximately $4540,~~355~~097,000 and $35,281,000 at ~~June~~September 30, 2018 and December 31, 2017, respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts not received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Premiums received in advance were approximately $21,~~044~~394,000 and $1,537,000 at ~~June~~September 30, 2018 and December 31, 2017, respectively. Management has determined that as of ~~June~~September 30, 2018 and December 31, 2017, respectively, no premium deficiency reserve is required. The Company’s premium deficiency reserve analysis includes an allocation of investment income.

Self-Insured—The Company provides administrative and claims processing services, benefit plan design, and access to the Company-managed provider networks for an administrative fee to self-insured groups. The Company has no underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records self-insured premiums on a gross basis because it controls the services as evidenced by: (i) the Company is primarily responsible for fulfilling the service and (ii) the Company establishes the pricing for the services provided. The self-insured services constitute a series of distinct services accounted for as a single performance obligation.

Administration fee revenue (“ASO fees”) is recognized monthly when earned and is normally based on annual or multi-year contracts with the self-insured groups. ASO fees are charged to self-insured employer groups monthly on a per subscriber per month basis and included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any unearned ASO fee revenue received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Self-insured ASO ~~fee~~fees receivable and revenue received in advance were immaterial at ~~June~~September 30, 2018.

Self-insured premium revenue is recognized upon the adjudication of claims for self-insured members in accordance with agreements with self-insured employers and is included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any self-insured premium amounts not received by the end of a reporting period are recorded as accounts receivable by the Company. The Company’s ~~account~~accounts receivable for self-insured premiums was approximately $~~423~~302,000 at ~~June~~September 30, 2018. Collection of the self-insured premium revenue occurs within the first month after the reporting period. In addition, the Company also holds deposits from self-insured groups which were approximately $127,000 at ~~June~~September 30, 2018. Self-insured deposits are recorded as other payables and accruals in the accompanying condensed consolidated balance sheet.

Healthcare Services Expense—Healthcare services expense is recognized on a monthly basis. In the case of the fully-insured dental HMO and indemnity and dental PPO segments, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in the claims payable liability determined using actuarial estimates. For the self-insured dental segment, the healthcare services expense is based solely on the adjudicated claims for the self-insured membership.

Investments—The Company invests in certificates of deposit, corporate bonds and money market funds. The Company classifies all investments as available-for-sale. The Company engages a fixed income portfolio manager to manage the Company’s investment grade and non-investment grade corporate bonds, under the Company’s direction, in order to maximize investment returns. Such investments are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive income. The Company recognizes gains and losses when these securities have other than temporary impairment, mature or are sold using the specific identification method.

Deferred Acquisition Costs—Deferred acquisition costs are those incremental direct costs related to the successful acquisition of new and renewal business. These incremental direct costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. Such incremental direct costs include commissions, costs of contract issuance and underwriting, state premium taxes and other costs the Company incurs to successfully acquire new business or renew existing business. The Company defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately $~~635~~977,000 and $~~647~~724,000 and amortized approximately $1,~~350~~365,000 and $1,~~239~~243,000 of these capitalized costs for the three months ended ~~June~~September 30, 2018 and 2017, respectively. The Company capitalized deferred acquisition costs of approximately $34,~~443~~420,000 and $23,~~976~~700,000 and amortized approximately $24,~~696~~061,000 and $23,~~467~~710,000 of these capitalized costs for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively. The amortization of these costs is recorded in commission expense and other acquisition costs included in the condensed consolidated statements of comprehensive income.

Claims Payable—The Company estimates liabilities for both incurred but not reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries. These estimates meet actuarial standards of practice and are also recorded in accordance with generally accepted accounting principles. Management’s estimates of dental services provided are based on the Company’s historical experience and current trends, with assistance from the Company’s consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims data, dental utilization statistics and other pertinent information. However, final claim payments may differ from the established reserves. Any resulting adjustments are reflected in current operations in the condensed consolidated statements of comprehensive income.

New Accounting Guidance— In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). The new guidance requires that an entity recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Insurance contracts are not included in the scope of this new guidance and therefore our fully-insured dental HMO/IND and fully-insured dental PPO segments are not impacted. Our self-insured administrative fee revenue and self-insured premium revenue ~~represents~~represent approximately 2829% of our total premium revenue. We adopted the standard on January 1, 2018 using the modified retrospective approach. Upon adopting the guidance, the cumulative effect was presented as an adjustment to beginning retained earnings of approximately $53,000. There was no material change to the timing or pattern of revenue recognition due to the adoption of ASC 606. The net increase in premium revenue and healthcare ~~service~~services expense were approximately $276,000 for the ~~six~~nine months ended ~~June~~September 30, 2018. The net increase in accounts receivable was approximately $~~776~~610,000 and the net increase in other liabilities was approximately $~~703~~551,000 at ~~June~~September 30, 2018.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU 2016-01 is for interim and annual reporting periods beginning after December 15, 2017. The Company adopted the requirements of ASU 2016-01 on January 1, 2018. The adoption of these standards did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In February 2016, the ~~Financial Accounting Standards Board (“~~FASB”) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 introduces new guidance that requires a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases ~~would~~are to be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. The new guidance will also require new qualitative and quantitative disclosures. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted by the Company. The Company’s implementation efforts are primarily focused on the review of its existing lease contracts as well as identification of other contracts that may fall under the scope of the new guidance. We do not expect the adoption to have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU 2017-08 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 clarifies the fair value measurement disclosure requirements of ASC 820 by adding, eliminating and modifying disclosures. The effective date of ASU 2018-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.

3.	INVESTMENTS

The Company owned certificates of deposit insured by the Federal Deposit Insurance Corporation (“FDIC”) with an amortized cost of $1,100,000 and $1,150,000 as of ~~June~~September 30, 2018 and December 31, 2017, respectively. The certificates of deposit included in short term and fixed maturities investments are classified as available-for-sale and are carried at fair value. The Company also invests in money market funds included in short term investments that are classified as available-for-sale, with a cost of approximately $~~243~~249,000 and $181,000 as of ~~June~~September 30, 2018 and December 31, 2017, respectively. The Company invested in corporate bonds with an amortized cost of approximately $8,~~337~~341,000 and $8,240,000 as of ~~June~~September 30, 2018 and December 31, 2017, respectively. These corporate bonds included in fixed maturity investments are classified as available-for-sale and are carried at fair value.

The Company owned corporate bonds at June 30, 2018, which consisted primarily of investment grade securities. At June 30, 2018, total bond fair value was approximately $8,109,000, which consisted of approximately $7,457,000 with a credit rating of BBB- or better. The remaining securities, totaling approximately $652,000 had a credit rating of BB+ or lower. The weighted average yield-to-cost of the Company’s corporate bonds was approximately 3.31% at June 30, 2018. The weighted average maturity of the Company’s corporate bonds was 5.05 years at June 30, 2018.

The Company owned corporate bonds at September 30, 2018, which consisted primarily of investment grade securities. At ~~June~~September 30, 2018, ~~and~~total ~~December~~bond 31fair value was approximately $8,117,000, ~~2017~~which consisted of approximately $7,436,000 ~~maturity~~with ~~dates~~a ~~for~~credit ~~fixed~~rating ~~maturities~~of ~~and~~BBB- ~~short~~or ~~term~~better. ~~investments~~The ~~(excluding~~remaining securities, totaling approximately $681,000 had a credit rating of BB+ or lower. The weighted average yield-to-cost of the ~~money~~Company’s ~~market~~corporate ~~funds)~~bonds ~~were:~~was approximately 3.36% at September 30, 2018. The weighted average maturity of the Company’s corporate bonds was 4.93 years at September 30, 2018.

	Available-for-Sale
	Amortized		Fair		% of Total
June 30, 2018	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,796		6.5	%
Years 1-5		5,928,973		5,810,455		63.1	%
Years 5-10		2,758,920		2,654,829		28.8	%
Due after ten years		149,045		143,399		1.6	%
Total	$	9,436,938	$	9,209,479		100.0	%

At September 30, 2018 and December 31, 2017, maturity dates for fixed maturities and short term investments (excluding the money market funds) were:

	Available-for-Sale
	Amortized		Fair		% of Total
September 30, 2018	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	601,083		6.5	%
Years 1-5		6,087,572		5,978,937		64.9	%
Years 5-10		2,606,438		2,498,790		27.1	%
Due after ten years		147,153		139,176		1.5	%
Total	$	9,441,163	$	9,217,986		100.0	%

	Available-for-Sale
	Amortized		Fair		% of Total
December 31, 2017	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,767		6.4	%
Years 1-5		5,326,884		5,320,683		56.5	%
Years 5-10		3,313,024		3,340,138		35.5	%
Due after ten years		150,374		149,236		1.6	%
Total	$	9,390,282	$	9,410,824		100.0	%

Investments classified at ~~June~~September 30, 2018 and December 31, 2017 as fixed maturities and short term investments were as follows:

Available-for-Sale

Cost or

Gross

Amortized

Unrealized

Fair

June 30, 2018

Cost

Gain

Loss

Value

September 30, 2018

Cost

Gain

Loss

Value

Money market fund

~~242~~249,~~868~~371

Certificates of deposit, short term

600,000

~~796~~1,083

~~600~~601,~~796~~083

Certificates of deposit, fixed maturities

~~500~~499,~~000~~932

Corporate bonds, fixed maturities

8,~~336~~341,~~939~~231

1113,~~562~~243

(~~239~~237,~~817~~503

)

8,~~108~~116,~~684~~971

Total investments

9,~~679~~690,~~807~~534

1214,~~358~~326

(~~239~~237,~~817~~503

)

9,~~452~~467,~~348~~357

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gain		Loss			Value
Money market fund	$	181,183						$	181,183
Certificates of deposit, short term		600,000	$	782	$	(15	)		600,767
Certificates of deposit, fixed maturities		550,000		983					550,983
Corporate bonds, fixed maturities		8,240,282		73,769		(54,977	)		8,259,074

Total investments	$	9,571,465	$	75,534	$	(54,992	)	$	9,592,007

Unrealized losses on investments at June 30, 2018 and December 31, 2017 were generally due to higher current market yields relative to the yields of the investments at their amortized cost. Unrealized losses due to credit risk associated with the underlying collateral of the investments, if any, are not material. All investments with unrealized losses are reviewed quarterly to determine if any impairment is other than temporary, requiring a charge to earnings. The Company considers the severity of the loss on a security, duration of loss, duration of the investment, credit rating of the security, as well as payment performance and the Company’s intent or requirement to sell the investment before recovery when determining whether any impairment is other than temporary. The Company had no investments in a material unrealized loss position for greater than one year at June 30, 2018 or December 31, 2017.

Unrealized losses on investments at September 30, 2018 and December 31, 2017 were generally due to higher current market yields relative to the yields of the investments at their amortized cost. Unrealized losses due to credit risk associated with the underlying collateral of the investments, if any, are not material. All investments with unrealized losses are reviewed quarterly to determine if any impairment is other than temporary, requiring a charge to earnings. The Company considers the severity of the loss on a security, duration of loss, duration of the investment, credit rating of the security, as well as payment performance and the Company’s intent or requirement to sell the investment before recovery when determining whether any impairment is other than temporary. The Company had no investments in a material unrealized loss position for greater than one year at September 30, 2018 or December 31, 2017.

4.	DEFERRED COMPENSATION PLAN

In accordance with the 2006 Dental Care Plus Management Equity Incentive Plan and the Dental Care Plus, Inc. and DCP Holding Company Deferred Compensation Plan (the “Plans”), Company directors and certain key employees elected to defer portions of their director fees and employee compensation, as applicable. In 2018, key employees were granted cash retention awards. The retention awards may be subject to deferral elections upon vesting.

In 2017, the non-employee members of the Board were granted a total of 216 share-based awards and key employees were granted 99 share-based awards. Share-based awards may be subject to deferral elections upon vesting, in which case these accounts in the Deferred Compensation Plan will increase or decrease in value based upon the value of the Company’s Redeemable Common Shares.

The Company recorded deferred compensation expense of approximately $~~193~~45,000 and $~~313~~127,000 related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the three months ended ~~June~~September 30, 2018 and 2017, respectively. The Company recorded deferred compensation expense of approximately $1315,~~400~~000 and $13,000 related to deferred director fees and deferred employee compensation for the three months ended ~~June~~September 30, 2018 and 2017, respectively.

The Company recorded deferred compensation expense of approximately $~~137~~182,000 and $~~421~~550,000 related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively. The Company recorded deferred compensation expense of approximately $2945,~~700 and $32,~~000 related to deferred director fees and deferred employee compensation for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively.

In August 2018 and February 2017, the Board declared a per share cash dividend for all Redeemable Common Shares in the amounts of $45.00 and $42.50 per share, respectively. With the 2018 dividend, the holders of restricted share units and phantom shares received a dividend that resulted in an increase in the deferred compensation liability of approximately $129,000. With the 2017 dividend, the holders of restricted share units and phantom shares received an equivalent share based dividend that resulted in an increase in the deferred compensation liability of approximately $115,000 ~~in February 2017~~.

At ~~June~~September 30, 2018 and December 31, 2017, the deferred compensation liability was approximately $45,~~964~~023,000 and $4,822,000, respectively.

5.	LIABILITY FOR CLAIMS PAYABLE

Activity in the liability for claims payable for members is summarized as follows:

	Six months ended			Six months ended
	Nine months ended			Nine months ended
	June 30, 2018			June 30, 2017
	September 30, 2018			September 30, 2017
Balance—January 1	$	3,576,185		$	3,743,551
Net incurred claims related to:
Current year		2943,~~133~~122,~~575~~438			2942,~~248~~789,~~270~~639
Prior years		(~~102~~112,~~430~~454	)		~~(102~~80,~~369~~300	)
Net incurred claims		2943,~~031~~009,~~145~~984			2942,~~145~~869,~~901~~939
Net paid claims related to:
Current year		2539,~~093~~541,~~164~~781			2539,~~547~~583,~~725~~233
Prior years		3,~~371~~456,~~916~~673			3,~~532~~612,~~047~~472
Net paid claims		2842,~~465~~998,~~080~~454			2943,~~079~~195,~~772~~705
Balance—June 30	$	4,142,250		$	3,809,680
Balance—September 30	$	3,587,715		$	3,417,785

6.	FEDERAL INCOME TAXES

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2018 was 27.9% with tax expense of approximately $~~164~~337,000 and $~~387~~724,000, respectively. The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2017 was 35.6% with tax expense of approximately $~~280~~564,000 and $~~365~~929,000, respectively. The decrease in federal income tax is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 34% to 21%. This reduction is offset by the non-deductible federal premium tax in 2018. Tax years subsequent to ~~2013~~2014 remain open to examination by the Internal Revenue Service (“IRS”), and ~~2012~~2013 remains open to state and local tax authorities. The Company has recorded no uncertain tax positions in the tax years that are subject to examination.

On December 22, 2017, the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended ~~June~~September 30, 2018, the U.S. Treasury Department (the “Treasury”) and the ~~Internal Revenue Service (the ”~~IRS”) have not issued further clarification or guidance on matters impacting the Company. We ~~expect~~will to complete our ~~determination~~accounting offor the effects of the Tax Act onunder ~~our~~the ~~deferred~~SAB ~~tax~~118 ~~assets~~guidance ~~and liabilities~~ in ~~connection with~~ the ~~preparation~~fourth quarter of ~~our annual income tax return~~2018.

7.	ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income includes changes in unrealized gains and losses on available for sale and other invested assets as follows:

	Three months ended									Three months ended
	June 30, 2018									June 30, 2017
	September 30, 2018									September 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized loss, net, on investments available for sale, beginning of period	$	(~~193~~246,~~341~~870	)	$	(4051,~~470~~711	)	$	(~~152~~195,~~871~~159	)	$	(153,~~881~~214	)	$	~~(636~~18,097	)	$	(135,~~245~~117	)
Other comprehensive (loss) income before reclassification		(582,~~121~~628	)		(~~12,206~~557	)		(452,~~915~~071	)		6223,~~602~~208			217,~~285~~890			4115,~~317~~318
Reclassification adjustment for realized investment loss (gains), net, included in realized gains on investments, net		47,~~592~~648			~~964~~1,606			36,~~628~~042			(712,~~507~~512	)		(24,~~552~~254	)		(48,~~955~~258	)
Effect on other comprehensive (loss) income		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Effect on other comprehensive income		5,020			1,049			3,971			10,696			3,636			7,060
Accumulated unrealized (loss) gains, net, on investments available for sale, end of period	$	(~~246~~241,~~870~~850	)	$	(5150,~~712~~662	)	$	(~~195~~191,~~158~~188	)	$	5363,~~214~~910		$	1821,~~097~~733		$	3542,~~117~~177
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	2430,~~170~~478		$	57,~~986~~311		$	1823,~~184~~167		$	(15,~~126~~330	)	$	(~~384~~1,812	)	$	(~~742~~3,518	)
Other comprehensive income (loss) before reclassification		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Other comprehensive income before reclassification		4,693			986			3,707			1,320			449			871
Effect on other comprehensive gains (loss)		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive gains		4,693			986			3,707			1,320			449			871
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	3035,~~477~~171		$	78,~~310~~297		$	2326,~~167~~874		$	(54,~~330~~010	)	$	(1,~~812~~363	)	$	(32,~~518~~647	)
Accumulated other comprehensive loss, beginning of period	$	(~~169~~216,~~171~~392	)	$	(3444,~~484~~400	)	$	(~~134~~171,~~687~~992	)	$	(347,~~007~~884	)	$	(116,~~020~~285	)	$	(131,~~987~~599	)
Change in unrealized (loss) gains, net, on investments available for sale		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Change in unrealized gains, net, on investments available for sale		5,020			1,049			3,971			10,696			3,636			7,060
Change in unrealized gains (loss), net, on interest rate swap		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Change in unrealized gains, net, on interest rate swap		4,693			986			3,707			1,320			449			871
Effect on other comprehensive (loss) income		(47,222	)		(9,918	)		(37,304	)		50,891			17,305			33,586
Effect on other comprehensive income		9,713			2,035			7,678			12,016			4,085			7,931
Accumulated other comprehensive (loss) income, end of period	$	(~~216~~206,~~393~~679	)	$	(4442,~~402~~365	)	$	(~~171~~164,~~991~~314	)	$	4759,~~884~~900		$	1620,~~285~~370		$	3139,~~599~~530

	Nine months ended									Nine months ended
	September 30, 2018									September 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized gains (loss), net, on investments available for sale, beginning of period	$	972		$	335		$	637		$	(13,376	)	$	(4,544	)	$	(8,832	)
Other comprehensive (loss) income before reclassification		(253,656	)		(53,272	)		(200,384	)		126,520			43,017			83,503
Reclassification adjustment for realized investment gains (loss), net, included in realized gains on investments, net		10,834			2,275			8,559			(49,234	)		(16,740	)		(32,494	)
Effect on other comprehensive (loss) income		(242,822	)		(50,997	)		(191,825	)		77,286			26,277			51,009
Accumulated unrealized (loss) gains net, on investments available for sale, end of period	$	(241,850	)	$	(50,662	)	$	(191,188	)	$	63,910		$	21,733		$	42,177

Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	7,005		$	2,381		$	4,624		$	(6,697	)	$	(2,277	)	$	(4,420	)

Other comprehensive income before reclassification		28,166			5,916			22,250			2,687			914			1,773
Effect on other comprehensive income		28,166			5,916			22,250			2,687			914			1,773
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	35,171		$	8,297		$	26,874		$	(4,010	)	$	(1,363	)	$	(2,647	)

Accumulated other comprehensive gain (loss), beginning of period	$	7,977		$	2,716		$	5,261		$	(20,073	)	$	(6,821	)	$	(13,252	)
Change in unrealized (loss) gains, net, on investments available for sale		(242,822	)		(50,997	)		(191,825	)		77,286			26,277			51,009

Change in unrealized gains, net, on interest rate swap		28,166			5,916			22,250			2,687			914			1,773
Effect on other comprehensive (loss) income		(214,656	)		(45,081	)		(169,575	)		79,973			27,191			52,782
Accumulated other comprehensive (loss) income, end of period	$	(206,679	)	$	(42,365	)	$	(164,314	)	$	59,900		$	20,370		$	39,530

	Six months ended									Six months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized gains (loss), net, on investments available for sale, beginning of period	$	972		$	335		$	637		$	(13,376	)	$	(4,544	)	$	(8,832	)
Other comprehensive (loss) income before reclassification		(251,028	)		(52,716	)		(198,312	)		103,312			35,126			68,186
Reclassification adjustment for realized investment gains (loss), net, included in realized gains on investments, net		3,186			669			2,517			(36,722	)		(12,485	)		(24,237	)
Effect on other comprehensive (loss) income		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Accumulated unrealized (loss) gains net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	7,005		$	2,381		$	4,624		$	(6,697	)	$	(2,277	)	$	(4,420	)
Other comprehensive income before reclassification		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive income		23,472			4,929			18,543			1,367			465			902
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive gain (loss), beginning of period	$	7,977		$	2,716		$	5,261		$	(20,073	)	$	(6,821	)	$	(13,252	)
Change in unrealized (loss) gains, net, on investments available for sale		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Change in unrealized gains, net, on interest rate swap		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive (loss) income		(224,370	)		(47,118	)		(177,252	)		67,957			23,106			44,851
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

8.	SEGMENT INFORMATION

The Company manages its business with four segments: fully-insured dental HMO and indemnity, fully-insured dental PPO, self-insured dental and corporate, all other. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other consists of revenue associated with the Company’s dental indemnity and vision products underwritten by third-party insurance carriers and certain other corporate activities. These segments are consistent with information used by the Chief Executive Officer (the chief operating decision maker) in managing the business.

The results of the fully-insured dental HMO and indemnity, fully-insured dental PPO and self-insured dental segments are measured by gross profit. The Company does not allocate insurance expense, investment and other income, assets or liabilities to these segments because the Company does not use these measures to analyze the segments. These items are assigned to the remainder of the Company’s business, which it identifies as corporate, all other. The Company’s gross profit was approximately $67,~~836~~342,000 and $6,~~407~~937,000 for the three months ended ~~June~~September 30, 2018 and 2017, respectively. The Company’s gross profit was approximately $1320,~~562~~905,000 and $1219,~~080~~017,000 for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively.

10Listed below is financial information required for each reportable segment for the three and nine months ended September 30, 2018 and 2017 (amounts in thousands):

Listed below is financial information required for each reportable segment for the three and six months ended June 30, 2018 and 2017 (amounts in thousands):

	Three Months Ended						Three Months Ended
	September 30, 2018						September 30, 2017

	Revenues-		Healthcare				Revenues-		Healthcare
	External		Services				External		Services
	Customers		Expense		Total		Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	12,667	$	9,340	$	3,327	$	12,922	$	9,352	$	3,570
Fully-insured dental PPO		7,266		4,639		2,627		6,483		4,372		2,111
Self-insured dental		8,555		7,390		1,165		7,733		6,678		1,055
Corporate, all other		223				223		201				201
Total	$	28,711	$	21,369		7,342	$	27,339	$	20,402		6,937

Investment income						86						70
Realized (losses) gains on investments, net						30						55

Insurance expense						6,251						5,479

Income before income tax					$	1,207					$	1,583

Total assets-corporate					$	76,616

Three Months Ended

Nine Months Ended

June 30, 2018

June 30, 2017

September 30, 2018

September 30, 2017

Revenues-

Healthcare

Revenues-

Healthcare

External

Services

External

Services

Customers

Expense

Total

Customers

Expense

Total

Reportable segments:

Fully-insured dental HMO/Indemnity

1237,~~723~~999

928,~~655~~810

39,~~068~~189

1238,~~896~~700

929,~~745~~375

39,~~151~~325

Fully-insured dental PPO

721,~~137~~812

414,~~667~~200

27,~~470~~612

619,~~572~~513

413,~~511~~495

26,~~061~~018

Self-insured dental

724,~~821~~261

620,~~732~~912

13,~~089~~349

722,~~129~~414

619,~~126~~339

13,~~003~~075

Corporate, all other

~~209~~755

~~192~~599

Total

2784,~~890~~827

2163,~~054~~922

620,~~836~~905

2681,~~789~~226

2062,~~382~~209

619,~~407~~017

Investment income

73237

58194

Realized (losses) gains on investments, net

~~(16~~26

)

63187

Insurance expense

618,~~304~~575

516,~~742~~790

Income before income tax

~~589~~2,593

~~786~~2,608

Total assets-corporate

8276,~~476~~616

	Six Months Ended							Six Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	25,332	$	19,471	$	5,861		$	25,778	$	20,023	$	5,755
Fully-insured dental PPO		14,546		9,561		4,985			13,030		9,123		3,907
Self-insured dental		15,706		13,522		2,184			14,681		12,661		2,020
Corporate, all other		532				532			398				398
Total	$	56,116	$	42,554		13,562		$	53,887	$	41,807		12,080
Investment income						151							124
Realized (losses) gains on investments, net						(3	)						132
Insurance expense						12,323							11,311
Income before income tax					$	1,387						$	1,025
Total assets-corporate					$	82,476

Inter-segment revenues were not significant for the three and nine months ended September 30, 2018 and 2017.

~~Inter-segment revenues were not significant for the three and six months ended June 30, 2018 and 2017.~~11

9.	FAIR VALUE MEASUREMENTS

The Company classifies the assets and liabilities that require measurement of fair value based on the priority of the observable and market-based sources of data into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows:

● Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. ● Level 2 – Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. ● Level 3 – Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

11● Level 2 – Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

~~The~~● ~~following~~Level ~~table~~3 ~~presents~~– ~~each~~Valuations ofbased ~~the~~on ~~fair~~unobservable ~~value~~inputs ~~levels,~~such ~~the~~as ~~Company’s~~when ~~assets~~observable ~~and~~inputs ~~liabilities~~are not available or inputs that are ~~measured~~supported atby ~~fair~~little ~~value~~or onno amarket ~~recurring~~activity ~~basis~~and asthat ofare ~~June~~significant ~~30,~~to ~~2018~~the ~~and~~fair ~~December~~value ~~31,~~of ~~2017~~the ~~(amounts~~assets inor ~~thousands):~~liabilities.

	June 30, 2018						December 31, 2017
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	500	$	500			$	551	$	551
Investment grade corporate bonds				7,457		7,457				7,588		7,588
Non-investment grade corporate bonds				652		652				671		671
Short-term investments
Money market funds	$	243				243	$	181				181
Federally-Insured certificates of deposit				601		601				601		601
Deferred compensation investments (a)
Equity mutual fund investments		1,194				1,194		1,194				1,194
State guarantee fund deposits (b)
Government securities		1,765				1,765		1,763				1,763
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				30		30				7		7
Total	$	3,202	$	9,315	$	12,517	$	3,138	$	9,493	$	12,631

The following table presents each of the fair value levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 (amounts in thousands):

(a) Included as a trading security in other assets

	September 30, 2018						December 31, 2017
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	500		500			$	551	$	551
Investment grade corporate bonds				7,436		7,436				7,588		7,588
Non-investment grade corporate bonds				681		681				671		671
Short-term investments
Money market funds	$	249				249	$	181				181
Federally-Insured certificates of deposit				601		601				601		601
Deferred compensation investments (a)
Equity mutual fund investments		1,247				1,247		1,194				1,194
State guarantee fund deposits (b)
Government securities		1,843				1,843		1,763				1,763
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				35		35				7		7
Total	$	3,339	$	9,328	$	12,667	$	3,138	$	9,493	$	12,631

(a) Included as a trading security in other assets (b) Included in other assets

The Company measures fair value using the following valuation methodologies. The Company uses quoted market prices to determine the fair value of the deferred compensation investments and certain state fund guarantee deposits; such items are classified as Level 1 of the fair value hierarchy. Examples include government securities and mutual fund equity securities. The Company primarily bases fair value for investments in fixed-maturity securities on quoted market prices or on prices from a pricing vendor, an outside resource that supplies independent securities pricing, dividend, corporate action and descriptive information to support fund pricing, securities operations, research and portfolio management. The Company obtains and reviews the pricing service’s valuation methodologies and validates these prices using various inputs including quotes from other independent regulatory sources. When deemed necessary, the Company validates prices by replicating a sample using a discounted cash flow model. Such items are classified as Level 2 of the fair value hierarchy. The Company obtains a price from an independent vendor to determine the fair value of the interest rate swap. The independent vendor uses a discounted cash flow method whereby the significant observable inputs include the replacement interest rates of similar swap instruments in the market and swap curves; such items are classified as Level 2 of the fair value hierarchy.

As of ~~June~~September 30, 2018 and December 31, 2017, there were no assets or liabilities that were required to be measured at fair value on a non-recurring basis. The Company did not have any transfers between fair value hierarchy levels during the three and ~~six~~nine months ended ~~June~~September 30, 2018. As of ~~June~~September 30, 2018 and December 31, 2017, the Company did not have any assets or liabilities classified as Level 3 of the fair value hierarchy.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking statements

Portions of this report, including this discussion and the information contained in the notes to the condensed consolidated financial statements, contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential,” “likely will result,” or the negative of such terms or similar expressions. These forward-looking statements reflect our current expectations and views about future events and speak only as of the date of this report. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements, include, among others: claims costs exceeding our estimates, a downgrade in our financial strength rating, competitive pressures, changes in demand for dental benefits and other economic conditions, the loss of a significant customer or broker, the occurrence or non-occurrence of circumstances beyond our control and those items described in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date this report is filed.

Overview

Headquartered in Cincinnati, Ohio, the Dental Care Plus Group offers dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services to employer groups in Ohio, Kentucky, Indiana and Tennessee and dental HMO and dental PPO plans to individuals in Ohio, Kentucky and Indiana. The Company also offers dental PPO plans to individuals and small groups on the Ohio, Indiana, Pennsylvania, Georgia, Tennessee, Kentucky, Virginia, Illinois, Missouri, Michigan and Wisconsin exchanges (“the FFM exchanges”). As of ~~June~~September 30, 2018, we had approximately ~~408~~409,~~400~~100 members in our dental and vision benefit programs with approximately 23,~~900~~000 providers participating in our Dental Care Plus dental HMO network, approximately 3,~~100~~200 providers participating in our DentaSelect dental PPO network and approximately 2,300 providers participating in our Balanced Value dental PPO network. The Company has a network access agreement with a national dental network management company that has one of the largest PPO networks of providers under contract in the United States. With this network access agreement, our dental PPO members have access to approximately 46,000 additional providers throughout the United States. The Company also has a network access arrangement with a national dental administration company for the dental PPO plans that it offers on the FFM exchanges in 2018. With this network access arrangement, FFM exchange members have access to approximately 16,800 providers across eleven FFM exchange states.

We manage our business with four reportable segments: fully-insured dental HMO and indemnity (“dental HMO/IND”), fully-insured dental PPO, self-insured dental, and corporate, all other. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other primarily consists of revenue associated with our dental PPO and vision products underwritten by third-party insurance carriers and certain other corporate activities.

The results of our fully-insured dental HMO/IND, fully-insured dental PPO and self-insured dental segments are measured by gross profit. We do not measure the gross profit of our corporate, all other segment. We do not allocate investment and other income, interest expense, insurance expenses, assets or liabilities to our segments because these measures are not used to analyze the segments. Our segments do not share overhead costs or assets. We do, however, measure the contributions of each of our fully-insured and self-insured segments to costs retained in our corporate, all other segment.

As disclosed in our 2017 Annual Report on Form 10-K, the Board of Directors established a Special Committee to consider strategic alternatives available to the Company, including consideration of certain third party proposals made to the Company, conducting preliminary discussions with advisors and third parties regarding potential transactions and business relationships, and making recommendations to the Board of Directors regarding the Company’s growth strategy. The Special Committee is not currently in discussions with a third party, but will continue to consider any third party proposals received by the Company and evaluate the Company’s business and growth strategy.

Profitability Strategy

Our strategy has focused on providing solutions to employers and individuals to manage the rising cost of dental care by leveraging our products that give employer groups and members options that meet their needs. We strive to provide excellent customer service to our employer groups, members, brokers and providers. Additionally, we have increased the diversification of our membership base, not only through our newer products, but also by entering new geographic territories.

Highlights

– We had net income of approximately $~~425~~870,000 for the three months ended ~~June~~September 30, 2018 (the “2018 quarter”) compared to net income of approximately $~~506~~1,019,000 for the three months ended ~~June~~September 30, 2017 (the “2017 quarter”).

– We had net income of approximately $1,~~000~~869,000 for the ~~six~~nine months ended ~~June~~September 30, 2018 (the “2018 period”) compared to net income of approximately $~~660~~1,679,000 for the ~~six~~nine months ended ~~June~~September 30, 2017 (the “2017 period”). ~~This~~The increase in net income of approximately $190,000 was primarily the result of an increase in gross profit (total premium revenue less healthcare services expense) of approximately $1,~~482~~888,000. ~~The~~and ~~increase~~a reduction in ~~gross~~federal ~~margin~~income ~~was~~tax expense of approximately $205,000. These favorable impacts were offset by higher insurance expense of approximately $1,~~012~~785,000, which iswas ~~mostly~~primarily the result of an increase in federal premium tax of approximately $~~400~~600,000, ~~salaries~~commission and ~~benefits~~other acquisition costs of $~~142~~379,000 and ~~various~~salaries ~~other~~and ~~expenses~~benefits of $249,000.

– Our dental and vision product membership increased by approximately 1720,~~500~~000 members to approximately ~~408~~409,~~400~~100 members at ~~June~~September 30, 2018. This membership increase from ~~June~~September 30, 2017 is predominantly due to an increase in fully-insured dental PPO, self-insured dental and corporate all other membership totaling approximately 2123,~~000~~700 members, offset by a decrease in fully-insured HMO/IND dental membership of approximately 3,~~500~~700 members.

– Our ratio of healthcare services expense to premium revenue (“loss ratio”) decreased from 7776.6% in the 2017 period to 75.84% in the 2018 period. The decrease in the loss ratio is primarily the result of a decrease in the ~~level~~utilization ~~of incurred claims~~ for our fully-insured dental HMO/IND business segment and ~~a decrease in utilization for~~ our fully-insured dental PPO business segment.

–

In September 2018, we paid a dividend of $45.00 per share to shareholders of record for all Redeemable Common Shares. We paid a dividend in March 2017 of $42.50 per share to shareholders of record for all Redeemable Common Shares.

Comparison of Results of Operations

The following is a discussion of our results of operations for the 2018 quarter and the 2017 quarter, the 2018 period and the 2017 period.

The table below presents membership and financial data for our four reportable segments (dollar amounts in thousands):

As of

June 30, 2018

June 30, 2017

Change

September 30, 2018

September 30, 2017

Change

Membership:

Fully-insured dental HMO/IND

~~157~~158,~~800~~100

161,~~300~~800

(2.23%

Fully-insured dental PPO

~~105~~102,~~100~~700

9491,~~000~~300

1112.85

Self-insured dental

~~102~~104,~~500~~000

96,800

57.94

Corporate, all other

4344,~~000~~300

3839,~~800~~200

1013.80

Total membership

~~408~~409,~~400~~100

~~390~~389,~~900~~100

4.5.1

	Three months ended			Three months ended
	June 30, 2018			June 30, 2017		Change
	September 30, 2018			September 30, 2017		Change
Premium revenue:
Fully-insured dental HMO/IND	$	12,~~723~~667		$	12,~~896~~922		(12.30%	%)
Fully-insured dental PPO		7,~~137~~266			6,~~572~~483		812.61	%
Self-insured dental		78,~~821~~555			7,~~129~~733		910.76	%
Corporate, all other		~~209~~223			~~192~~201		810.9	%
Total premium revenue		2728,~~890~~711			2627,~~789~~339		45.10	%
Investment income		7386			5870		2522.9	%
Realized (losses) gains on investments, net		~~(16~~30	)		6355		(~~125~~45.45%	%)
Total revenue		2728,~~947~~827			2627,~~910~~464		35.90	%
Healthcare services expense:
Fully-insured dental HMO/IND		9,~~655~~340			9,~~745~~352		(0.91%	%)
Fully-insured dental PPO		4,~~667~~639			4,~~511~~372		36.51	%
Self-insured dental		67,~~732~~390			6,~~126~~678		910.97	%
Total healthcare service expense		21,~~054~~369			20,~~382~~402		34.37	%
Insurance expense		6,~~304~~251			5,~~742~~479		914.81	%
Income tax expense		~~164~~337			~~280~~564		(4140.42%	%)
Net income	$	~~425~~870		$	~~506~~1,019		(1614.06%	%)

Six months ended

Nine months ended

June 30, 2018

June 30, 2017

Change

September 30, 2018

September 30, 2017

Change

Premium revenue:

Fully-insured dental HMO/IND

2537,~~332~~999

2538,~~778~~700

(1.78%

Fully-insured dental PPO

1421,~~546~~812

1319,~~030~~513

11.68

Self-insured dental

1524,~~706~~261

1422,~~681~~414

78.02

Corporate, all other

~~532~~755

~~398~~599

3326.70

Total premium revenue

5684,~~116~~827

5381,~~887~~226

4.14

Investment income

~~151~~237

~~124~~194

2122.82

Realized (losses) gains on investments, net

(326

)

~~132~~187

(~~102~~86.31%

Total revenue

5685,~~264~~090

5481,~~143~~607

34.93

Healthcare services expense:

Fully-insured dental HMO/IND

1928,~~471~~810

2029,~~023~~375

(21.89%

Fully-insured dental PPO

914,~~561~~200

913,~~123~~495

45.82

Self-insured dental

1320,~~522~~912

1219,~~661~~339

6.8.1

Total healthcare service expense

4263,~~554~~922

4162,~~807~~209

12.8

Insurance expense

1218,~~323~~575

1116,~~311~~790

810.96

Income tax expense

~~387~~724

~~365~~929

6(22.01%

Net income

1,~~000~~869

~~660~~1,679

5111.53

Membership

Our fully-insured dental HMO/IND membership decreased by approximately 3,~~500~~700 members from the 2017 period to the 2018 period. This membership decrease isof ~~the~~approximately 16,900 was a result of employer groups that did not renew with the Company or reduced employee counts of retained employer groups ~~of approximately 16,100 members~~. Some of our fully-insured dental HMO/IND membership losses were the result of corporate consolidations and employer groups moving to medical or other ancillary carriers to take advantage of ~~medical/dental~~multi-line packaged savings. These decreases were offset by an increase of 1011,~~500~~200 members from new sales ~~with~~to employer groups and an increase of 2,~~100~~000 members from new sales of individual HMO products.

Our fully-insured dental PPO membership increased by approximately 11,~~100~~400 members from the 2017 period to the 2018 period. This membership increase is due to new sales ~~with~~to employer groups of approximately 10,600 members ~~during~~and ~~2018,~~800 members from new sales in individual PPO products. These increases were offset by the loss of approximately 108,~~200~~000 members with employer groups that did not renew with the Company or reduced employee counts of retained employer groups. The remaining increase of approximately 108,~~700~~000 members is due to new sales of individual and on exchange dental PPO products in 2018.

Our self-insured dental membership increased by approximately 57,~~700~~200 members from the 2017 period to the 2018 period. This increase is the result of new sales of approximately 2,200 members with employer groups and an increase of 35,~~500~~000 members as a result of existing employer groups that increased membership from the 2017 period to the 2018 period.

Our corporate, all other membership increased 4by approximately 5,~~200~~100 members as a result of increased membership in our vision plan.

Revenue

Fully-insured dental HMO/IND premium revenue for the 2018 quarter decreased by approximately $~~173~~255,000 compared to the 2017 quarter. A decrease in fully-insured dental HMO/IND group and individual membership resulted in a decrease in fully-insured dental HMO/IND premium revenue of approximately $~~305~~265,000 that was offset by an increase in fully-insured dental HMO/IND group and individual revenue of approximately $~~132~~10,000 due to higher overall premium rates on a PMPM basis.

Fully-insured dental HMO/IND premium revenue for the 2018 period decreased by approximately $~~446~~701,000 compared to the 2017 period. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND premium revenue of approximately $~~582~~847,000 that was offset by an increase in fully-insured dental HMO/IND revenue of approximately $~~136~~146,000 due to higher overall premium rates on a PMPM basis.

Fully-insured dental PPO premium revenue for the 2018 quarter increased by approximately $~~565~~783,000 compared to the 2017 quarter. Fully-insured dental PPO revenue increased by approximately $~~748~~774,000 due to an increase in fully-insured PPO group and individual membership in the 2018 quarter,. ~~offset~~In byaddition athere ~~decrease~~was an increase in fully-insured dental PPO revenue of approximately $~~183~~9,000 due to ~~lower~~an increase in overall premium rates on a PMPM basis during the 2018 quarter.

Fully-insured dental PPO premium revenue for the 2018 period increased by approximately $12,~~516~~299,000 compared to the 2017 period. Fully-insured dental PPO revenue increased by approximately $12,~~848~~720,000 due to an increase in fully-insured PPO group and individual membership in the 2018 period, offset by a decrease in fully-insured dental PPO revenue of approximately $~~332~~421,000 due to lower overall premium rates on a PMPM basis.

Total self-insured dental revenue for the 2018 quarter increased approximately $~~692~~822,000 compared to the 2017 quarter. Total self-insured dental revenue for the 2018 period increased approximately $1,~~025~~847,000 compared to the 2017 period.

The self-insured dental segment revenue has two components:

Self-Insured Claim Revenue – Self-insured claim revenue increased approximately $~~669~~783,000 to approximately $78,~~438~~165,000 in the 2018 quarter from approximately $67,~~769~~382,000 in the 2017 quarter. The self-insured claim revenue increased by approximately $~~380~~553,000 due to an increase in membership of the self-insured product as well as an increase of approximately $~~289~~230,000 as a result of an increase in self-insured claim revenue on a PMPM basis in the 2018 quarter.

Self-Insured Claim Revenue – Self-insured claim revenue increased approximately $~~971~~1,754,000 to approximately $1423,~~939~~104,000 in the 2018 period from approximately $1321,~~968~~350,000 in the 2017 period. The self-insured claim revenue increased by approximately $~~749~~1,296,000 due to an increase in membership of the self-insured product as well as an increase of approximately $~~222~~458,000 as a result of an increase in self-insured claim revenue on a PMPM basis in the 2018 period.

Self-Insured ASO Fees -– Self-insured ASO fees increased approximately $2339,000 to approximately $~~383~~390,000 in the 2018 quarter from approximately $~~360~~351,000 in the 2017 quarter due to an increase in the self-insured membership for the 2018 quarter compared to the 2017 quarter.

Self-Insured ASO Fees -– Self-insured ASO fees increased approximately $5493,000 to approximately $~~767~~1,157,000 in the 2018 period from approximately $~~713~~1,064,000 in the 2017 period due to an increase in the self-insured membership for the 2018 period compared to the 2017 period.

Corporate, all other premium revenue is primarily derived from the dental indemnity product and the vision product that are underwritten by third-party insurance carriers. In aggregate, corporate, all other premium revenue increased by approximately $~~134~~156,000 in the 2018 period compared to the 2017 period primarily due to an increase in vision membership induring the 2018 period ~~compared to the 2017 period~~.

Healthcare Services Expense

Fully-insured dental HMO/IND healthcare services expense decreased approximately $9012,000 in the 2018 quarter compared to the 2017 quarter. Fully-insured dental HMO/IND healthcare services expense on a PMPM basis increased by 12.50% from $2019.1231 PMPM in the 2017 quarter to $2019.4269 PMPM in the 2018 quarter. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND healthcare services expense of $~~230~~192,000. InThis ~~addition,~~was offset by higher healthcare services utilization ~~resulted~~resulting in an increase of approximately $~~140~~180,000 in the 2018 quarter compared to the 2017 quarter.

Fully-insured dental HMO/IND healthcare services expense decreased approximately $~~552~~565,000 in the 2018 period compared to the 2017 period. Fully-insured dental HMO/IND healthcare services expense on a PMPM basis decreased by 0.52% from $20.6923 PMPM in the 2017 period to $20.5828 PMPM in the 2018 period. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND healthcare services expense of $~~452~~643,000. InThis ~~addition,~~was ~~lower~~offset by higher healthcare services utilization ~~resulted~~resulting in aan ~~decrease~~increase of approximately $~~100~~78,000 in the 2018 period compared to the 2017 period.

Fully-insured dental PPO healthcare services expense increased by approximately $~~156~~267,000 in the 2018 quarter compared to the 2017 quarter. An increase in fully-insured dental PPO membership resulted in an increase in fully-insured dental PPO healthcare services expense of $~~514~~522,000. This increase was offset by lower healthcare services expense on a PMPM basis that resulted in a decrease of approximately $~~358~~255,000 in the 2018 quarter compared to the 2017 quarter. Fully-insured dental PPO healthcare services expense on a PMPM basis decreased by 75.12% from $15.9076 PMPM in the 2017 quarter to $14.7794 PMPM in the 2018 quarter.

Fully-insured dental PPO healthcare services expense increased by approximately $~~438~~705,000 in the 2018 period compared to the 2017 period. An increase in fully-insured dental PPO membership resulted in an increase in fully-insured dental PPO healthcare services expense of $1,~~294~~881,000. This increase was offset ofby lower healthcare services expense on a PMPM basis that resulted in a decrease of approximately $~~856~~1,176,000 in the 2018 period compared to the 2017 period. Fully-insured dental PPO healthcare services expense on a PMPM basis decreased by 87.27% from $16.2113 PMPM in the 2017 period to $14.8890 PMPM in the 2018 period.

Self-insured healthcare services expense increased by approximately $~~606~~712,000 in the 2018 quarter compared to the 2017 quarter. An increase in self-insured healthcare services expense of $~~344~~501,000 was due to an increase in membership ~~volume~~ in the 2018 quarter compared to the 2017 quarter. asIn ~~well~~addition, as an increase ofin ~~higher~~ healthcare services expense on a PMPM basis ~~that~~ resulted in an increase in self-insured healthcare services expense of approximately $~~262~~211,000 in the 2018 quarter compared to the 2017 quarter. Self-insured healthcare services expense on a PMPM basis increased by 43.0% from $2123.0301 PMPM in the 2017 quarter to $2123.8869 PMPM in the 2018 quarter.

Self-insured healthcare services expense increased by approximately $~~861~~1,573,000 in the 2018 period compared to the 2017 period. An increase in self-insured healthcare services expense of $~~679~~1,174,000 was due to an increase in membership ~~volume~~ in the 2018 period compared to the 2017 period. asIn ~~well~~addition, as an increase byin ~~higher~~ healthcare services expense on a PMPM basis ~~that~~ resulted in an increase in self-insured healthcare services expense of approximately $~~182~~399,000 in the 2018 period compared to the 2017 period. Self-insured healthcare services expense on a PMPM basis increased by 1.49% from $2122.6712 PMPM in the 2017 period to $2122.9755 PMPM in the 2018 period.

Corporate, all other healthcare services expense is not recognized by the Company due to the fact that our other dental indemnity and vision PPO products are underwritten by third-party insurance carriers.

Insurance Expense

Consolidated insurance expense for the 2018 quarter increased approximately $~~562~~772,000 compared to the 2017 quarter. Consolidated insurance expense for the 2018 period increased approximately $1,~~012~~785,000 compared to the 2017 period. The higher consolidated insurance expense for the 2018 quarter and period was primarily due to the reinstatement of the federal premium tax as well as higher salaries, ~~and~~benefits ~~benefit~~ and various other expenses in 2018. Insurance expense as a percentage of total premium revenue, or the insurance expense ratio, was approximately 2221.09% and 2120.07% for the 2018 and the 2017 period, respectively.

Income Taxes

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the three and six months ended June 30, 2018 was 27.9% with tax expense of approximately $164,000 and $387,000, respectively. The effective tax rate for the three and six months ended June 30, 2017 was 35.6% with tax expense of approximately $280,000 and $365,000, respectively. The decrease in federal income tax rate is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 34% to 21%. This reduction is offset by the non-deductible federal premium tax in 2018. Tax years subsequent to 2013 remain open to examination by the Internal Revenue Service (“IRS”), and 2013 remains open to state and local tax authorities. The Company has recorded no uncertain tax positions in the tax years that are subject to examination.

OnIncome ~~December~~Taxes 22, 2017, the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended June 30, 2018, the U.S. Treasury Department (the “Treasury”) and the Internal Revenue Service (the ”IRS”) have not issued further clarification or guidance on matters impacting the Company. We expect to complete our determination of the effects of the Tax Act on our deferred tax assets and liabilities in connection with the preparation of our annual income tax return.

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the three and nine months ended September 30, 2018 was 27.9% with tax expense of approximately $337,000 and $724,000, respectively. The effective tax rate for the three and nine months ended September 30, 2017 was 35.6% with tax expense of approximately $564,000 and $929,000, respectively. The decrease in federal income tax rate is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 34% to 21%. This reduction is offset by the non-deductible federal premium tax in 2018. Tax years subsequent to 2014 remain open to examination by the Internal Revenue Service (“IRS”), and 2013 remains open to state and local tax authorities. The Company has recorded no uncertain tax positions in the tax years that are subject to examination.

On December 22, 2017, the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended September 30, 2018, the U.S. Treasury Department (the “Treasury”) and the IRS have not issued further clarification or guidance on matters impacting the Company. We will complete our accounting for the effects of the Tax Act under the SAB 118 guidance in the fourth quarter of 2018.

Liquidity and Capital Resources and Changes in Financial Condition

Our primary sources of cash include receipts of premiums, ASO fees, investment and other income, proceeds from the sale or maturity of our investment securities, as well as from the sale of redeemable common and preferred shares and from borrowings. Our primary uses of cash include disbursements for claims payments, insurance expense, interest expense, taxes, purchases of investment securities, capital expenditures, dividends, redeemable common share redemptions and payments on borrowings. Cash ~~increased~~decreased approximately $~~475~~45,000, or 30.63% during the 2018 period to approximately $13,~~652~~132,000 at ~~June~~September 30, 2018 from approximately $13,177,000 at December 31, 2017. The change in cash for the 2018 and 2017 period is summarized as follows (in thousands):

	Six months ended			Six months ended
	Nine months ended			Nine months ended
	June 30, 2018			June 30, 2017
	September 30, 2018			September 30, 2017
Net cash provided by operating activities	$	1,~~241~~709		$	~~211~~1,693
Net cash used in investing activities		(~~500~~798	)		(~~772~~290	)
Net cash used in financing activities		(~~266~~956	)		(~~814~~939	)
Increase (decrease) in cash and cash equivalents	$	475		$	(1,375	)
(Decrease) increase in cash and cash equivalents	$	(45	)	$	464

Cash Flows from Operating Activities

In the 2018 period, we had net income of approximately $1,~~000~~870,000. An increase in ~~premiums~~billed ~~received~~accounts inreceivable ~~advance~~ resulted in a ~~favorable~~decrease ~~increase~~in of cash of approximately $~~508~~575,000 in the 2018 period. ~~Due to claims activity and the timing of our payments, our claims payable liability increased approximately $566,000.~~ Our non-cash deferred compensation activity was approximately $~~142~~201,000 primarily due to current year vesting activity in the 2018 period. Deferred policy acquisition costs increased by approximately $~~747~~359,000 as a result of the increase in the fully-insured business renewed in January 2018. Other assets increased by approximately $~~468~~313,000 primarily due to the ~~increase in~~ prepaid ~~the~~ federal premium tax recorded in January 2018. In future years, the federal premium tax increase will be based on a graduated year-over-year percentage increase of premium revenue earned as a result of the Affordable Care Act. There was no federal premium tax in 2017. Other payables and accrued expenses increased, ~~and~~resulting ~~resulted~~ in a net increase in cash flow from operations of approximately $~~272~~629,000. The remaining effects of changes in operating assets and liabilities that represent fluctuations are not significant and are consistent with the 2017 period.

Cash Flows from Investing Activities

During the 2018 period, we made purchases totaling approximately $12,~~733~~521,000 of investment grade and non-investment grade corporate bonds and certificates of deposit in order to improve investment income. Also during the 2018 period, we had investment grade and non-investment grade corporate bond sales and certificate of deposit sales and maturities that aggregated approximately $12,~~608~~379,000. The remaining net cash of approximately $~~376~~656,000 used in investing activities during the 2018 period was for purchases of computer software, furniture and fixtures.

Cash Flows from Financing Activities

In the 2018 period, we made scheduled principal payments of approximately $2841,000 related to our office building mortgage and scheduled payments of approximately $~~238~~330,000 related to our capital leases. During the 2018 period, we paid dividends of approximately $570,000 to holders of our Redeemable Common Shares. In addition, we paid approximately $15,000 related to the repurchase of Redeemable Common Shares.

Contractual Obligations, Other Commitments and Off-balance Sheet Arrangements

Refer to the Company’s 2017 Annual Report on Form 10-K filed with the SEC for a description of contractual obligations, other commitments and off-balance sheet arrangements. We have had no significant changes in these items in 2018.

Financial Condition

Our consolidated cash and short term investments were approximately $14.50 million and $13.9 million as of ~~June~~September 30, 2018 and December 31, 2017, respectively. We expect to generate positive cash flow from operations during the balance of 2018. Based on total expenses for the ~~six~~nine months ended ~~June~~September 30, 2018, we estimate that we had approximately 4846 days of cash and short term investments on hand at ~~June~~September 30, 2018. In addition, the Company has access to approximately $8.6 million of fixed maturity investments that are classified as available-for-sale and two working capital lines of credit discussed below.

In 2012, the Company refinanced the mortgage of its office building and in connection therewith, the Company executed a mortgage note with a bank, secured by the land and the office building, in the amount of $1,340,000. Interest is payable based on the 30-day LIBOR rate plus 1.95%. The Company also entered into an interest rate swap agreement that effectively changed the interest rate related to the mortgage note with a commercial bank from a variable rate based on the 30-day LIBOR rate plus 1.95% to a fixed rate of 3.90% for the 10-year period through December 22, 2022.

We have an annually renewable agreement with a commercial bank for a $500,000 working capital line of credit. Interest is payable at a variable rate of LIBOR plus 2.50%. We did not have any interest expense for the line of credit in the 2018 period or the 2017 period. As of ~~June~~September 30, 2018 and December 31, 2017, there was no amount outstanding on this line of credit. The $500,000 working capital line of credit expires in July 2019. We expect to renew this line of credit at its maturity.

We have an additional annually renewable working capital line of credit for $1,000,000. Interest is payable at a variable rate of LIBOR plus 2.50%. We did not have any interest expense for the line of credit in the 2018 period or the 2017 period. At ~~June~~September 30, 2018 and December 31, 2017, there was no amount outstanding on this line of credit. The $1,000,000 working capital line of credit expires in July 2019. We expect to renew this line of credit at its maturity.

Under the mortgage note and each of the renewable lines of credit, the Company is required to have a debt service ratio of at least 1:1 at the end of each quarter and a minimum tangible net worth equal to or greater than $3,500,000 at the end of each fiscal year. The Company was in compliance with these covenants at ~~June~~September 30, 2018 and December 31, 2017.

We believe our premium revenues, cash, investments and working capital lines of credit are sufficient to meet our short term and long term liquidity needs. In the short term, we are obligated to make payments related to our contractual requirements such as our healthcare services expense, building mortgage, and our capital and operating leases and other commitments, including payment of certain deferred compensation obligations. In the long term, we will continue to be obligated to make payments related to our other contractual requirements. We will also be obligated in certain circumstances to repurchase the Redeemable Common Shares and make future payments to employees and directors related to the Company’s deferred compensation obligations. Our Board of Directors establishes limitations on the amount of share redemptions each year. While we are not able to estimate future redemptions of our Redeemable Common Shares, we believe our cash balances, investment securities, operating cash flows, and borrowing capacity, taken together, provide adequate resources to fund ongoing operating and regulatory requirements and capital expenditures in the next twelve months.

Our largest subsidiary, Dental Care Plus Inc., (“DCP”), operates in states that regulate its payment of dividends and debt service on inter-company loans, as well as other inter-company cash transfers and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be paid by DCP, without prior approval by state regulatory authorities, is limited based on statutory income and statutory capital and surplus. Even if prior approval is not required, prior notification must be provided to state insurance departments before paying a dividend. During 2018, the total dividend that the DCP subsidiary may declare without prior regulatory approval is approximately $1,480,000. There were no dividends declared or paid by DCP in 2018 or 2017.

A.M. Best Company assigns a rating to companies based on their ability to meet their ongoing obligations to policyholders, but are financially vulnerable to adverse changes in underwriting and economic conditions. In July 2018, A.M. Best Company affirmed our financial strength rating at B+ (Good) with a positive outlook based on DCP’s operating performance and capitalization. Our A.M. Best rating is a measure of our financial strength relative to other insurance companies and is not a recommendation to buy, sell or hold securities. The rating assigned by A.M. Best Company is based, in part, on the ratio of our fully-insured premium revenue to our statutory capital and surplus.

We attempt to reduce overall risk by maintaining a well-diversified fixed-maturity portfolio of investments. We invest in certificates of deposits, investment grade corporate bonds, non-investment grade corporate bonds, and money market funds, targeting what we believe to be optimal risk-adjusted after-tax yields. Risk, in this context, includes interest rate, call, reinvestment rate, credit and liquidity risk. We typically do not make a concerted effort to alter duration on a portfolio basis in response to anticipated movements in interest rates. By continually investing in certificates of deposits, money market funds and investment and non-investment grade corporate bonds, we believe the portfolio mitigates the impact of adverse economic factors.

We attempt to reduce overall risk by maintaining a well-diversified fixed-maturity portfolio of investments. We invest in certificates of deposit, investment grade corporate bonds, non-investment grade corporate bonds, and money market funds, targeting what we believe to be optimal risk-adjusted after-tax yields. Risk, in this context, includes interest rate, call, reinvestment rate, credit and liquidity risk. We typically do not make a concerted effort to alter duration on a portfolio basis in response to anticipated movements in interest rates. By continually investing in certificates of deposit, money market funds and investment and non-investment grade corporate bonds, we believe the portfolio mitigates the impact of adverse economic factors.

Our regulated subsidiary’s state of domicile has statutory risk-based capital, or RBC, requirements for health and other insurance companies largely based on the NAIC’s RBC Model Act. These RBC requirements are intended to measure capital adequacy, taking into account the risk characteristics of an insurer’s investments and products. The NAIC sets forth the formula for calculating the RBC requirements, which are designed to take into account asset risks, insurance risks, interest rate risks and other relevant risks with respect to an individual insurance company’s business. In general, an insurance company must submit a report of its RBC level to the state insurance department or insurance commissioner, as appropriate, at the end of each calendar year. Our subsidiary’s risk-based capital as of December 31, 2017, which was the most recent date for which reporting was required, was in excess of all mandatory RBC thresholds.

Critical Accounting Policies

Recognition of Premium Revenue

There have been no material changes to our critical accounting policies from what was previously reported in our 2017 Annual Report on Form 10-K except for the adoption of ASC 606 on January 1, 2018 as described in Note 2 to our unaudited quarterly financial statements.

Liability for Claims Payable

We estimate liabilities for both incurred but not reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries and meet actuarial standards of practice. These actuarial standards of practice require that claim liability estimates be adequate under moderately adverse circumstances. The Company’s consulting actuary assists us in making these estimates. Since our liability for claims payable is based on actuarial estimates, the amount of claims eventually paid for services provided prior to the balance sheet date could differ from the estimated liability. Any such differences are recognized in the condensed consolidated statements of comprehensive income for the period in which the differences are identified. Historically, such differences have not been material.

We develop our estimate for the claims payable liability using actuarial methodologies and assumptions, primarily based on historical claim payments and claim receipt patterns, as well as historical dental cost trends. Depending on the period for which incurred claims are estimated, we apply a different method in determining our estimate. For periods prior to the most recent month, we calculate a “completion factor” which indicates the percentage of claims payable estimated for a prior period that have been paid as of the end of the current reporting period. We use the completion factor to determine historical patterns over a rolling 12-month period, made consistent by making adjustments for known changes in claims in process levels and known changes in claim payment processes. For the most recent month, we calculate a “claims trend factor” that estimates incurred claims primarily from a trend analysis based upon PMPM claims trends developed from our historical experience in the preceding months, adjusted for known provider contracting changes, changes in benefit levels, seasonality and consideration of any subsequent actual claims data available. When developing our estimate for claims payable liability as of ~~June~~September 30, 2018 and December 31, 2017, we considered actual paid claim data from ~~July~~October 2018 and January 2018. As a result, we were able to use the completion factors approach for all historical months at ~~June~~September 30, 2018 and December 31, 2017.

We have not changed the key actuarial methodologies used by management to estimate the IBNR and reported claims in process components of our claims payable liability during the periods presented, and management has not adjusted any of the key methodologies used in calculating the most recent estimate of the IBNR and reported claims in process components of our claims payable liability.

The table below illustrates how our operating results are affected when there is a variance between estimated claims expense and actual claims expense. The table shows the sensitivity of the estimated fully-insured incurred claims payable liability to fluctuations in the expected completion factors that were used to estimate the claims payable liability as of ~~June~~September 30, 2018 within variance ranges historically experienced.

Completion Factor (a)	~~Completion Factor (a)~~
			Estimated claims		~~Estimated claims~~
(Decrease)	~~(Decrease)~~		payable liability		~~payable liability~~
Increase	~~Increase~~		as of		~~as of~~
In Factor	~~In Factor~~		September 30, 2018		~~June 30, 2018~~
(0.5)%		~~(0.5)%~~	$	3,878,320	$	~~4,452,919~~
0%		0%(estimate used)	~~(estimate used)~~	3,587,715		~~4,142,250~~
0.5%		~~0.5%~~		3,379,628		~~3,947,594~~

(a) Reflects estimated potential changes in incurred claims payable liability caused by changes in completion factors for months prior to the most recent month.

Based on historical experience, we believe the completion factors we use to estimate outstanding IBNR and reported claims in process are reliable for predicting actual claims paid at future times, with a variance range of approximately one-half of one percent, plus or minus.

Based on our healthcare services expense on a PMPM basis that adjusts the quarterly healthcare services expense for membership volume changes, we have observed that the utilization of our dental plan members is somewhat variable. In general, claims on a PMPM basis are lower in the second and fourth quarter than in the first quarter and the third quarter. The higher third quarter claim level on a PMPM basis is primarily due to the high level of dental services used in July and August by student members prior to returning to school. Use of dental services is lowest in the fourth quarter due to the holiday season and the fact that a portion of our members have already reached their maximum annual benefit level for the year. The following shows these trends in tabular form:

	Healthcare Service Expense
	2018				2017
	$000’s		$PMPM		$000’s		$PMPM
First Quarter	$	21,498	$	19.41	$	21,425	$	20.23
Second Quarter		21,054		19.20		20,383		19.24
Third Quarter		21,369		19.48		20,402		19.39
Fourth Quarter						19,398		18.59

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk that we will incur investment losses or increased interest expense due to adverse changes in market rates and prices. Our market risk exposures are substantially related to our investment portfolio and the impact of interest rate changes on these securities. In addition, interest rate changes can affect future interest expense for debt obligations that have a variable rate of interest associated with them.

Our portfolio includes approximately $8,~~109~~117,000 and $8,259,000 of corporate bonds, approximately $~~243~~249,000 and $181,000 of money market funds and approximately $1,101,000 and $1,152,000 of investments in FDIC-insured bank certificates of ~~deposits~~deposit at ~~June~~September 30, 2018 and December 31, 2017, respectively. We have instructed our investment manager to invest additional funds in shorter duration investment grade corporate bonds with maturities up to five years.

There is increased interest rate risk associated with our investment in longer duration investment grade and non-investment grade corporate bonds. We have evaluated the impact on the invested portfolio’s fair value considering an immediate 100 basis point change in interest rates. A 100 basis point increase in interest rates would result in an approximate $~~259~~250,000 decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate $~~273~~257,000 increase in fair value. The investment and non-investment grade corporate bonds as well as the certificates of ~~deposits~~deposit are all classified as available-for-sale.

At ~~June~~September 30, 2018 and December 31, 2017, we had a mortgage note with a bank with an outstanding principal balance of $1,~~068~~054,000 and $1,095,000, respectively, with a variable rate based on LIBOR plus 1.95%. In December 2012, we entered into a variable to fixed interest rate swap contract that effectively eliminated the interest rate risk exposure on the entire outstanding loan principal. Management estimates that a 100 basis point increase in interest rates would not materially impact our annual pre-tax earnings.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the design and effectiveness of the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~June~~September 30, 2018. Based on the evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15(d)-15(f)) during the three and ~~six~~nine months ended ~~June~~September 30, 2018 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Certain factors may have a material adverse effect on our business, financial condition and results of operations and you should carefully consider them. It is not possible to predict or identify all such factors. For discussion of our potential risks or uncertainties, refer to Part I, Item 1A, Risk Factors, included in our 2017 Annual Report on Form 10-K. There have been no material changes to the risk factors disclosed in our 2017 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~We repurchased and retired 6 Class A, 66 Class B and 250 Class C shares during the three months ended September 30, 2018 as follows:

Period	Total Class A shares purchased (a)		Total Class B shares purchased (a)		Total Class C shares purchased (a)		Average price paid per share		Total Number of Shares Purchased as Part of a Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 – July 31, 2018		0		0		0		N/A		0		N/A
August 1 – August 31, 2018		0		0		250	$	1,304.86		0		N/A
September 1 – September 30, 2018		6		66		0	$	1,225.47		0		N/A

(a)

Repurchased from shareholder in accordance with the Company’s obligations under its Amended and Restated Code of Regulations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits
31.1	CEO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2	CFO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32	CEO and CFO certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial information and Notes to Financial Statements for the three and six months ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

Exhibits

31.1

CEO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2

CFO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

CEO and CFO certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Financial information and Notes to Financial Statements for the three and nine months ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DCP HOLDING COMPANY	~~DCP HOLDING COMPANY~~
August 10, 2018		By: /s/ Anthony A. Cook
November 14, 2018	By: /s/ Anthony A. Cook
	Anthony A. Cook.	~~Anthony A. Cook.~~
	President, Chief Executive Officer and Director	~~President, Chief Executive Officer and Director~~
	Principal Executive Officer	~~Principal Executive Officer~~
August 10, 2018		By: /s/ Robert C. Hodgkins, Jr.
November 14, 2018	By: /s/ Robert C. Hodgkins, Jr.
	Robert C. Hodgkins, Jr.	~~Robert C. Hodgkins, Jr.~~
	Vice President and Chief Financial Officer	~~Vice President and Chief Financial Officer~~
	Principal Financial Officer	~~Principal Financial Officer~~

INDEX TO EXHIBITS

Exhibit No.	Item
31.1	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002
31.2	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Financial information and Notes to Financial Statements for the three and six months ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

Exhibit No.

Item

31.1	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	Financial information and Notes to Financial Statements for the three and nine months ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

______________

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