Investments (Notes)

12 Months Ended

Dec. 31, 2019

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science, technology, and agtech industries. Investments in publicly traded companies are classified as investments with readily determinable fair values, and are carried at fair value, with changes in fair value classified in net income. Our investments in privately held entities consist of (i) investments that report NAV, such as our privately held investments in limited partnerships, which are carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income, and (ii) investments in privately held entities that do not report NAV, which are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.

Effective January 1, 2018:


•	Investments in publicly traded companies are presented at fair value in our consolidated balance sheet, with changes in fair value recognized in net income.


•	Investments in privately held entities without readily determinable fair values previously accounted for under the cost method are accounted for as follows:

•

Investments in privately held entities that report NAV are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date.

•

Investments in privately held entities that do not report NAV are carried at cost, adjusted for observable price changes and impairments, with changes recognized in net income. These investments continue to be evaluated on the basis of a qualitative assessment for indicators of impairment by utilizing the same monitoring criteria described in the “Investments” section in Note 2 – “Summary of Significant Accounting Policies” to our consolidated financial statements, and by monitoring the presence of the following impairment indicators: (i) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee; (ii) a significant adverse change in the regulatory, economic, or technological environment of the investee, (iii) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, (iv) significant concerns about the investee’s ability to continue as a going concern. If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an impairment loss, without consideration as to whether the impairment is other-than-temporary, in an amount equal to the investment’s carrying value in excess of its estimated fair value.

•

Investments in privately held entities continue to require accounting under the equity method unless our interest in the entity is deemed to be so minor that we have virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we initially recognize our investment at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method as of December 31, 2019.

We classify unrealized and realized gains and losses on our equity investments within investment income in our consolidated statements of operations.

Unrealized gains and losses represent (i) changes in fair value for investments in publicly traded companies, (ii) changes in NAV, as a practical expedient to estimate fair value, for investments in privately held entities that report NAV, and (iii) observable price changes of our investments in privately held entities that do not report NAV. An observable price is a price observed in an orderly transaction for an identical or similar investment of the same issuer. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

Realized gains and losses represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. Impairments are realized losses, which result in an adjusted cost, and represent charges to reduce the carrying values of investments in privately held entities that do not report NAV to their estimated fair value.

The following tables summarize our investments as of December 31, 2019, and 2018 (in thousands):



	December 31, 2019
	Cost		Adjustments		Carrying Amount
Investments:
Publicly traded companies	$	148,109	$	170,528	$	318,637
Entities that report NAV	271,276		162,626		433,902
Entities that do not report NAV:
Entities with observable price changes	42,045		68,489		110,534
Entities without observable price changes	277,521		—		277,521
Total investments	$	738,951	$	401,643	$	1,140,594



	December 31, 2018
	Cost		Adjustments		Carrying Amount
Investments:
Publicly traded companies	$	121,121	$	62,884	$	184,005
Entities that report NAV	204,646		113,159		317,805
Entities that do not report NAV:
Entities with observable price changes	39,421		64,112		103,533
Entities without observable price changes	286,921		—		286,921
Total investments	$	652,109	$	240,155	$	892,264

Cumulative adjustments recognized on investments in privately held entities that do not report NAV held as of December 31, 2019, aggregated $68.5 million, which consisted of upward adjustments representing unrealized gains of $69.5 million and downward adjustments representing unrealized losses of $1.0 million.

During the year ended December 31, 2019, adjustments recognized on investments in privately held entities that do not report NAV aggregated $4.4 million, which consisted of upward adjustments of $5.2 million primarily representing unrealized gains, and downward adjustments of $832 thousand representing unrealized losses. Additionally, we recognized an impairment charge of $17.1 million related to investments in privately held entities that do not report NAV. Refer to the “Investments” section of Note 2 – “Summary of Significant Accounting Policies” to our consolidated financial statements for further details.

Our investment income for the years ended December 31, 2019 and 2018, consisted of the following (in thousands):



	Year Ended December 31, 2019
	Unrealized Gains (Losses)			Realized Gains (Losses)			Total
Investments held at December 31, 2019:
Publicly traded companies	$	130,802		$	—		$	130,802
Entities that report NAV	49,440			—			49,440
Entities that do not report NAV, held at period end	4,378			(17,124		)	(12,746		)
Total investments held at December 31, 2019	184,620			(17,124		)	167,496
Investment dispositions during the year ended December 31, 2019:
Recognized in the current period	—			27,151			27,151
Previously recognized gains	(23,131		)	23,131			—
Total investment dispositions during the year ended December 31, 2019	(23,131		)	50,282			27,151
Investment income	$	161,489		$	33,158		$	194,647



	Year Ended December 31, 2018
	Unrealized Gains			Realized (Losses) Gains			Total
Investments held at December 31, 2018:
Publicly traded companies	$	27,944		$	—		$	27,944
Entities that report NAV	22,389			—			22,389
Entities that do not report NAV, held at period end	64,112			(5,483		)	58,629
Total investments held at December 31, 2018	114,445			(5,483		)	108,962
Investment dispositions during the year ended December 31, 2018:
Recognized in the current period	—			27,801			27,801
Previously recognized gains	(14,811		)	14,811			—
Total investment dispositions during the year ended December 31, 2018	(14,811		)	42,612			27,801
Investment income	$	99,634		$	37,129		$	136,763

Investments in privately held entities that report NAV

Investments in privately held entities that report NAV consist primarily of investments in limited partnerships. We are committed to funding approximately $229.5 million for all investments primarily related to our investments in limited partnerships. Our funding commitments expire at various dates over the next 12 years, with a weighted-average expiration of 8.6 years as of December 31, 2019.

These investments are not redeemable by us, but we normally receive distributions from these investments throughout their term. Our investments in privately held entities that report NAV generally have expected initial terms in excess of 10 years. The weighted-average remaining term during which these investments are expected to be liquidated was 5.5 years as of December 31, 2019.