Fair Value of Financial Measurements

9 Months Ended

Sep. 30, 2023

The fair value of an asset or liability represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between unrelated market participants.

The Company reports the fair value of assets and liabilities using a three level measurement hierarchy that prioritizes the inputs used to measure fair value. Fair value hierarchy consists of the following three levels:

•Level 1—Valuations based on unadjusted quoted prices in active markets that are accessible at measurement date for identical assets.

•Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and model-based valuations in which all significant inputs are observable in the market, either directly or indirectly (e.g., interest rates; yield curves).

•Level 3—Valuations using significant inputs that are unobservable in the market and inputs that reflect the Company’s own assumptions. These are based on the best information available, including the Company’s own data.

The fair value of the restricted marketable securities is recorded in Other assets on the unaudited condensed consolidated balance sheets. There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

Financial Assets and Liabilities Recorded at Fair Value

The Company’s financial assets that are required to be measured at fair value on a recurring basis are as follows (dollars in thousands):


			Fair Value Measurements as of September 30, 2023 (unaudited)
	Total Fair Value as of September 30, 2023 (unaudited)		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents
Cash	$	38,302	$	38,302	$	—	$	—
Money market securities and funds	56,683		56,683		—		—
Marketable securities
Corporate and municipal debt securities	105,204		—		105,204		—

Long-term marketable securities
Corporate and municipal debt securities	25,125		—		25,125		—

Other assets
Marketable securities - restricted (SERP)	512		14		498		—
Total assets at fair value	$	225,826	$	94,999	$	130,827	$	—
Liabilities:
Contingent consideration	$	53,654	$	—	$	—	$	53,654
Total liabilities at fair value	$	53,654	$	—	$	—	$	53,654


			Fair Value Measurements as of December 31, 2022
	Total Fair Value as of December 31, 2022		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents
Cash	$	52,181	$	52,181	$	—	$	—
Money market securities and funds	40,939		40,939		—		—
Marketable securities
Corporate and municipal debt securities	368,214		—		368,214		—

Long-term marketable securities
Corporate and municipal debt securities	93,896		—		93,896		—

Other assets
Marketable securities - restricted (SERP)	496		11		485		—
Total assets at fair value	$	555,726	$	93,131	$	462,595	$	—
Liabilities:
Contingent consideration	$	54,967	$	—	$	—	$	54,967
Total liabilities at fair value	$	54,967	$	—	$	—	$	54,967

Other Financial Instruments

The carrying amounts of other financial instruments, including accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities.

Financial Liabilities Recorded at Carrying Value

On April 1, 2023, the Company paid the total principal amount due of $402.5 million under the 2023 Notes and the outstanding interest due of $1.3 million.

As of December 31, 2022, the carrying value and fair value of the 2023 Notes which were not carried at fair value was as follows (dollars in thousands):


	December 31, 2022
	Carrying Value		Fair Value (Level 2)

Convertible notes, net	$	401,968	$	395,959

The fair value has been estimated based on actual trading information, and quoted prices, both provided by bond traders.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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