Fair Value Measurements

9 Months Ended

Sep. 30, 2023

The Company establishes the fair value of its assets and liabilities using the price that would be received to sell an asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to measure fair value. The three levels of the fair value hierarchy are as follows:

•Level 1 — Quoted prices in active markets for identical assets and liabilities.

•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The recorded amounts of certain financial instruments, including cash, accounts receivable, prepaid expenses and other, accounts payable and accrued liabilities, approximate fair value due to their relatively short-term maturities. The fair value of the Company’s long-term debt can be determined based on the estimated or actual bid prices of the Convertible Notes in an over-the-counter market, which are classified as a Level 2 financial instrument.

The Company’s investments by level within the fair value hierarchy were as follows (in thousands):


	Fair value measurement using:
Type of securities as of September 30, 2023	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	90,666	$	—	$	—	$	90,666
Short-term investments:
Corporate debt securities	—		3,299		—		3,299


Total	$	90,666	$	3,299	$	—	$	93,965

	Fair value measurement using:
Type of securities as of December 31, 2022	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market fund	$	104,294	$	—	$	—	$	104,294
Short-term investments:
Corporate debt securities	—		62,503		—		62,503
U.S. Government-related debt securities	—		21,779		—		21,779

Total	$	104,294	$	84,282	$	—	$	188,576

In March 2020, the Company issued $230.0 million of Convertible Notes as described in more detail in Note 9. Long-term Debt, Net. As of September 30, 2023, the fair value of the Convertible Notes was $182.0 million, as determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy.

- 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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