Marketable Securities and Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Marketable Securities and Fair Value Measurements


NOTE 4. Marketable Securities and Fair Value Measurements

Marketable Securities

The following table summarizes the Company’s marketable securities (in thousands):


	June 30, 2023								December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities:
Corporate debt securities	$	234,436	$	15	$	(3,642)	$	230,809	$	255,613	$	60	$	(3,240)	$	252,433
U.S. Treasury notes	151,042		—		(2,798)		148,244		151,873		—		(2,306)		149,567
Other	10,000		—		(7)		9,993		9,975		—		(74)		9,901
	$	395,478	$	15	$	(6,447)	$	389,046	$	417,461	$	60	$	(5,620)	$	411,901

At June 30, 2023 and December 31, 2022, marketable securities of $384.6 million and $407.4 million, respectively, were in an unrealized loss position for less than twelve months. The Company’s unrealized losses from marketable securities as of June 30, 2023 and December 31, 2022 were caused primarily by interest rate increases. The Company does not intend to sell marketable securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. Therefore, the Company believes these losses to be temporary. There was no allowance for credit losses on available-for-sale marketable securities at June 30, 2023 and December 31, 2022.

The following table summarizes the Company’s marketable securities maturity as of June 30, 2023 (in thousands):


Year	Amortized Cost		Fair Value
2023	$	63,765	$	63,474
2024	137,470		135,271
2025	170,573		166,946
2026	23,670		23,355
	$	395,478	$	389,046

Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, restricted cash and cash equivalents, marketable securities, receivables, other liabilities, accounts payable, certain accrued expenses, and borrowings which consist of a term loan and a revolving credit facility. The carrying values of the financial instruments classified as current in the consolidated balance sheets approximate their fair values due to their short-term maturities. The Company's cash and cash equivalents are classified within Level 1 of the fair value hierarchy. The Company may be required, from time to time, to measure its loans to physician partner groups, primarily in connection with taxes payable on shares distributed to them upon completion of the initial public offering ("IPO"), at fair value on a nonrecurring basis. Such measurements are classified within Level 2 of the fair value hierarchy. The carrying values of the term loan and revolving credit facility are a reasonable estimate of fair value because the interest rates on such borrowings approximate market rates as of the reporting date. Such borrowings are classified within Level 2 of the fair value hierarchy. During the three and six months ended June 30, 2023 and 2022, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

•Level 1—quoted prices for identical instruments in active markets;

•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 significant inputs and significant value drivers are observable in active markets; and

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

The table below summarizes the Company’s financial instruments measured at fair value on a recurring basis (in thousands):


	June 30, 2023						December 31, 2022
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Marketable securities:
Corporate debt securities	$	—	$	230,809	$	—	$	—	$	252,433	$	—
U.S. Treasury notes	148,244		—		—		149,567		—		—
Other	9,993		—		—		9,901		—		—
	$	158,237	$	230,809	$	—	$	159,468	$	252,433	$	—