FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2016

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS (in thousands)

        The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:

	Level 1		Level 2		Level 3			Total
Cash Equivalents:
Money market funds	$	19,298	$	—	$	—		$	19,298
Short-term investments:
Corporate notes and bonds		—		407,553		—			407,553
U.S. agency obligations		—		97,592		—			97,592
U.S. treasury securities		—		70,340		—			70,340
Commercial paper		—		29,858		—			29,858
Certificates of deposit		—		6,255		—			6,255
Other Current Liabilities:
Contingent consideration		—		—		(2,300	)		(2,300	)
Total	$	19,298	$	611,598	$	(2,300	)	$	628,596

        The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015:

	Level 1		Level 2		Level 3			Total
Cash Equivalents:
Money market funds	$	2,521	$	—	$	—		$	2,521
Short-term investments:
Corporate notes and bonds		—		387,876		—			387,876
U.S. agency obligations		—		121,329		—			121,329
U.S. treasury securities		—		60,185		—			60,185
Commercial paper		—		36,821		—			36,821
Certificates of deposit		—		7,919		—			7,919
Other Current Liabilities:
Contingent consideration		—		—		(2,300	)		(2,300	)
Total	$	2,521	$	614,130	$	(2,300	)	$	614,351

        The Company determines the fair value of its security holdings based on pricing from its pricing vendors. The valuation techniques used to measure the fair value of financial instruments having Level 2 inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs). The Company performs procedures to ensure that appropriate fair values are recorded such as comparing prices obtained from other sources.

        On September 1, 2015, the Company recorded contingent consideration at its fair value in conjunction with the acquisition of Avalere Health, Inc. The Company determines fair value of its contingent consideration, using Level 3 inputs under the fair value hierarchy, consisting of information provided by observing certain operating metrics along with management's own assumptions. The Company adjusts the estimated fair value of its contingent consideration quarterly, if there is a change in the aforementioned factors considered in determining the fair value of the contingent consideration. The change in value, if any, is reflected in the Company's statements of operations as gain (loss) from contingent consideration valuation as a component of general and administrative expenses. For the three months ended March 31, 2016 there was no change in the fair value of the contingent consideration.