Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

11. Fair Value Measurements

We account for certain assets and liabilities at fair value. Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability.

Fair Value Hierarchy

The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1:  Quoted prices in active markets for identical assets or 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-based valuation techniques in which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3:  Unobservable inputs that are supported by little or no market activity and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021.

	March 31, 2022						December 31, 2021
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
(In thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Investment in equity securities (1)	$	27,366	$	—	$	27,366	$	49,746	$	—	$	49,746
Derivatives designated as effective hedging instruments
Interest rate swap agreements	$	—	$	1,738	$	1,738	$	—	$	—	$	—
Non-designated derivatives
Interest rate swap agreements	$	—	$	1,397	$	1,397	$	—	$	—	$	—
Total assets	$	27,366	$	3,135	$	30,501	$	49,746	$	—	$	49,746
Liabilities:
Derivatives designated as effective hedging instruments
Interest rate swap agreements	$	—	$	1,580	$	1,580	$	—	$	8,705	$	8,705
Non-designated derivatives
Interest rate swap agreements	$	—	$	1,252	$	1,252	$	—	$	6,938	$	6,938
Total liabilities	$	—	$	2,832	$	2,832	$	—	$	15,643	$	15,643

(1) Reflects ownership of 11,079,331 shares of Sharecare Common Stock, as described in Note 10. 

The fair value of the Sharecare Equity Security is determined based on the closing price of Sharecare’s common stock on the last trading day of the reporting period.  

The fair values of interest rate swap agreements are primarily determined based on the present value of future cash flows using internal models and third-party pricing services with observable inputs, including interest rates, yield curves and applicable credit spreads.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure certain assets at fair value on a nonrecurring basis in the fourth quarter of each year, or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable, including the following:

• reporting units measured at fair value as part of a goodwill impairment test; and

• indefinite-lived intangible assets measured at fair value for impairment assessment.

Each of these assets above is classified as Level 3 within the fair value hierarchy.

The fair value of a reporting unit is the price that would be received upon a sale of the unit as a whole in an orderly transaction between market participants at the measurement date.  We have a single reporting unit.     

Fair Value of Other Financial Instruments

The estimated fair value of each class of financial instruments at March 31, 2022 was as follows:

Cash and cash equivalents – The carrying amount of $92.1 million approximates fair value due to the short maturity of those instruments (less than three months).

Debt – The estimated fair value of outstanding borrowings under the Credit Agreement, which includes a term loan facility and a revolving credit facility (see Note 8), is determined based on the fair value hierarchy as discussed above.

The Term Loan B is actively traded and therefore is classified as a Level 1 valuation. The estimated fair value is based on an average of quotes as of March 31, 2022 from dealers who stand ready and willing to transact at those prices. We use a mid-market pricing convention (i.e., the mid-point of average bid and ask prices). The Revolving Credit Facility is not actively traded and therefore is classified as a Level 2 valuation based on the market for similar instruments. The estimated fair value and carrying amount of outstanding borrowings under the Term Loan B (excluding original issue discount and deferred loan costs) were $389.1 million and $393.0 million, respectively. There were no outstanding borrowings under the Revolving Credit Facility at March 31, 2022.