. Fair value measurement

As a basis for determining the fair value of certain of the Company

’s financial instruments, the Company utilizes a

three

-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level

1—Observable

inputs such as quoted prices in active markets for identical assets or liabilities.

Level

2—Observable

inputs, other than Level

prices, 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 market data for substantially the full term of the assets or liabilities.

Level

3—Unobservable

inputs that are supported by little or

market activity and that are significant to the fair value of the assets or liabilities.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The carrying amount of certain of the Company

’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable, and accrued liabilities approximate fair value due to their short maturities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company

’s assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability.

The following table

s present information about the balances of liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value. In general, fair values determined by Level

inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level

inputs utilize data points that are observable such as quoted prices, interest rates, and yield curves. Fair values determined by Level

inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company did

not

have any financial assets measured at fair value on a recurring basis.

			Fair v alue m easurements at June 30 , 201 7 us ing
(in thousands)	June 30 , 2017		Quoted p rices in a ctive m arkets f or i dentical a ssets (Level 1)		Significant o ther o bservable i nputs (Level 2)		Significant u nobservable i nputs (Level 3)
Liabilities:
Contingent purchase price consideration	$	880	$	—	$	—	$	880
Total	$	880	$	—	$	—	$	880

			Fair v alue m easurements at December 31, 201 6 us ing
(in thousands)	December 31, 201 6		Quoted p rices in a ctive m arkets f or i dentical a ssets (Level 1)		Significant o ther o bservable i nputs (Level 2)		Significant u nobservable i nputs (Level 3)
Liabilities:
Contingent purchase price consideration	$	3,475	$	—	$	—	$	3,475
Total	$	3,475	$	—	$	—	$	3,475

The following

table provides a summary of changes in the fair value of the Company's Level

financial liabilities for the

six

-month period ended

June 30, 2017:

(in thousands)
Balance – December 31, 2016	$	3,475
Change in fair value of c ontingent purchase price consideration		(2,595	)
Balance – June 30, 2017	$	880

October 12, 2016,

the Company acquired

Immunetics, a Massachusetts based diagnostics company focused on developing specialized tests for infectious diseases, including tick-borne diseases, such as Lyme disease. The terms of the purchase agreement included contingent purchase price consideration consisting of up to an additional

$6.0

million in cash payable on the achievement of certain revenue thresholds and pipeline related milestones over the following

three

years

. The fair value of these milestone payments was estimated to be

$3.4

million on the date of acquisition based on significant assumptions, including the probabilities of milestone occurrence, the expected timing of milestone payments, and a discount rate of

4.4%,

which are considered as Level

inputs. During

March 2017,

as a result of events subsequent to the acquisition, the Company determined that the timing for Food and Drug Administration approval of the Babesia product acquired from Immunetics would be more likely to occur after the cut-off date for a milestone to be earned. As a result, the Company reduced the related contingent purchase price consideration liability by

$2.4

million.

As FDA approval did

not

occur in the

second

quarter of

2017,

the remaining accrual related to this milestone of

$238,000

was written-off.

The Company has a term loan outstanding under

the MidCap agreement. The amount outstanding on its

2016

term loan is reported at its carrying value in the accompanying balance sheet. The estimated fair value of the term loan as of

June 30, 2017,

based upon current market rates for similar borrowings, as measured using Level

inputs, approximates the carrying amount as presented on the condensed consolidated balance sheet.