CASH EQUIVALENTS AND INVESTMENTS

The Company invests in debt and equity instruments, primarily U.S. government-backed, municipal and corporate obligations, which management believes to be high quality (investment grade) credit instruments.

During the year ended December 31, 2017, the Company sold $51.6 million of its available-for-sale securities, primarily to provide the cash consideration and other acquisition-related payments in connection with the Merger. During the year ended December 31, 2016, the Company sold $4.9 million of its available-for-sale securities. The Company recognized nominal gross gains and losses from the sales of these securities. The Company did not sell any of its available-for-sale securities during the year ended December 31, 2015.

Investments with continuous unrealized losses for one year or greater at December 31, 2017 were nominal; however, since the Company does not intend to sell these securities and does not believe it will be required to sell any securities before they recover in value, it does not believe these declines are other-than-temporary.

On a quarterly basis, the Company reviews its investments to determine if there have been any events that could create a credit impairment. Based on its reviews, the Company does not believe that any impairment existed with its current holdings at December 31, 2017.

The amortized cost, gross unrealized gains and losses and fair value of the Company's cash equivalents and investments at December 31, 2017 and 2016 were comprised of the following (in thousands):



	December 31, 2017
	Amortized cost		Unrealized gains		Unrealized losses			Fair value
Cash equivalents	$	1,254	$	—	$	—		$	1,254

Short-term investments
U.S. government agency notes	$	4,091	$	—	$	(19	)	$	4,072
Corporate debt securities	8,048		—		(31		)	8,017
Certificates of deposit	5,135		—		—			5,135
	$	17,274	$	—	$	(50	)	$	17,224
Investments
U.S. government agency notes	$	3,992	$	—	$	(28	)	$	3,964
Corporate debt securities	3,908		—		(24		)	3,884
Certificates of deposit	1,183		—		—			1,183
	$	9,083	$	—	$	(52	)	$	9,031



	December 31, 2016
	Amortized cost		Unrealized gains		Unrealized losses			Fair value
Cash equivalents	$	6,619	$	—	$	—		$	6,619

Short-term investments
Municipal obligations	$	3,264	$	—	$	(3	)	$	3,261
U.S. government agency notes	16,477		3		(3		)	16,477
Corporate debt securities	41,893		4		(45		)	41,852
Certificates of deposit	246		—		—			246
	$	61,880	$	7	$	(51	)	$	61,836
Investments
U.S. government agency notes	$	19,473	$	3	$	(39	)	$	19,437
Corporate debt securities	10,520		—		(44		)	10,476
Certificates of deposit	2,458		—		—			2,458
	$	32,451	$	3	$	(83	)	$	32,371

The Company's available-for-sale debt securities that are classified as Investments in the consolidated balance sheet mature after one year but within two years or less from the balance sheet date.

Fair Value Hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).

Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The following table shows the fair value of the Company's financial assets at December 31, 2017 and 2016. These financial assets are comprised of the Company's available-for-sale debt securities and reported under the captions Cash and cash equivalents, Short-term investments and Investments in the consolidated balance sheets (in thousands):



			Fair value measurements at December 31, 2017 using:
	Total carrying value at December 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	1,254	$	1,254	$	—	$	—

Short-term investments
U.S. government agency notes	$	4,072	$	—	$	4,072	$	—
Corporate debt securities	8,017		—		8,017		—
Certificates of deposit	5,135		—		5,135		—
	$	17,224	$	—	$	17,224	$	—
Investments
U.S. government agency notes	$	3,964	$	—	$	3,964	$	—
Corporate debt securities	3,884		—		3,884		—
Certificates of deposit	1,183		—		1,183		—
	$	9,031	$	—	$	9,031	$	—



			Fair value measurements at December 31, 2016 using:
	Total carrying value at December 31, 2016		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	6,619	$	6,619	$	—	$	—

Short-term investments
Municipal obligations	$	3,261	$	—	$	3,261	$	—
U.S. government agency notes	16,477		—		16,477		—
Corporate debt securities	41,852		—		41,852		—
Certificates of deposit	246		—		246		—
	$	61,836	$	—	$	61,836	$	—
Investments
U.S. government agency notes	$	19,437	$	—	$	19,437	$	—
Corporate debt securities	10,476		—		10,476		—
Certificates of deposit	2,458		—		2,458		—
	$	32,371	$	—	$	32,371	$	—

The Company's marketable securities and investments have been valued with the assistance of valuations provided by third-party pricing services, as derived from such services' pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. The Company is ultimately responsible for the consolidated financial statements and underlying estimates. Accordingly, the Company assesses the reasonableness of the valuations provided by the third-party pricing services by reviewing actual trade data, broker/dealer quotes and other similar data, which are obtained from quoted market prices or other sources.