Fair Value Measurements

6 Months Ended

Jun. 30, 2025

Disclosure Text Block [Abstract]

Fair Value Measurements

2.Fair Value Measurements

The Company uses various valuation approaches in determining the fair value of its assets and liabilities. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1 -	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2 -	Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities.
Level 3 -	Valuations based on inputs that are unobservable or significant to the overall fair value measurement.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of June 30, 2025 and December 31, 2024 (amounts in thousands):

	As of June 30, 2025
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	616,377	$	—	$	—	$	616,377
Liabilities:
Foreign exchange forward contracts	$	—	$	9,187	$	—	$	9,187
Current contingent consideration	$	—	$	104	$	5,064	$	5,168
Noncurrent contingent consideration	$	—	$	—	$	6,658	$	6,658
	As of December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	687,253	$	—	$	—	$	687,253
Foreign exchange forward contracts	$	—	$	287	$	—	$	287
Liabilities:
Current contingent consideration	$	—	$	17,126	$	—	$	17,126
Noncurrent contingent consideration	$	—	$	—	$	19,662	$	19,662

Cash and cash equivalents

As of June 30, 2025 and December 31, 2024, cash and cash equivalents on the Company's condensed consolidated balance sheets included $616.4 million and $687.3 million, respectively, in money market accounts. These funds are valued on a recurring basis using Level 1 inputs.

Contingent Consideration – Earnouts

As of June 30, 2025, the maximum amount of future contingent consideration (undiscounted) that the Company could be required to pay in connection with each of its completed acquisitions is: $54.5 million over a three-year period for Tantti Laboratory Inc. (“Tantti”), which was acquired December 2024 and $0.1 million for Avitide, Inc. (“Avitide”), which was acquired September 2021. The Avitide earnout period ended on December 31, 2024, therefore the maximum contingent consideration reflects the earnout achievement to be paid in the third quarter of 2025. The fair value level of the contingent consideration related to Avitide was transferred from Level 3 to Level 2 in the fourth quarter of 2024 as the earnout achievement became known. See Note 5, “Acquisitions”, included in Part II, Item 8, “Financial Statements and Supplementary Data,” to the Company’s Form 10-K for additional information on the acquisitions of Avitide and the related contingent consideration.

A reconciliation of the change in the fair value of contingent consideration – earnouts is included in the following table (amounts in thousands):

Balance at December 31, 2024	$	36,788
Decrease in fair value of contingent consideration earnouts		(7,939	)
Earnout payment - equity element		(7,568	)
Earnout payment - cash element		(9,455	)
Balance at June 30, 2025	$	11,826

The recurring Level 3 fair value measurement of our contingent consideration obligations for Tantti include the following significant unobservable inputs (amounts in thousands, except percent data):

Contingent Consideration Earnout	Fair Value as of  June 30, 2025		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
			Monte Carlo Simulation	Probability of
				Success	0% - 100%	41%
Commercialization-based payments	$	4,031		Earnout Discount Rate	5.2%	5.2%
				Volatility	33.8%	33.8%
Revenue and Volume- based payments			Monte Carlo Simulation	Revenue & Volume Discount Rate	15.9%	15.9%
	$	5,041		Earnout Discount Rate	5.0% - 5.4%	5.2%
				Probability of  Success	0% - 100%	100%
Manufacturing line expansions	$	2,650	Probability-weighted present value	Earnout Discount Rate	5.0% - 5.2%	5.0%

(1)Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

The fair value of the contingent consideration liability is valued using the inputs noted in the table above. During the three months ended June 30, 2025, the Company adjusted its revenue targets for Tantti based on revised forecasts. Accordingly, the Company recognized a gain on the change in fair value of contingent consideration. Changes in the projected performance of the acquired business could result in a higher or lower contingent consideration obligation in the future.

Fair Value of Other Financial Instruments

The fair value of outstanding foreign exchange forward contracts are valued using quoted forward foreign exchange prices at the reporting date.

Fair Value Measured on a Nonrecurring Basis

During the three and six months ended June 30, 2025, there were no re-measurements to the fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

Convertible Senior Notes

On December 14, 2023, the Company issued $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2023 Notes”) in a private placement pursuant to separate, privately negotiated exchange and subscription agreements

(the “Exchange and Subscription Agreements”) with a limited number of holders of its outstanding 2019 Notes and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”). Pursuant to the Exchange and Subscription Agreements, the Company exchanged $217.7 million of its 2019 Notes for $309.9 million aggregate principal amount of the 2023 Notes (the “Exchange Transaction”) and issued $290.1 million aggregate principal amount of the 2023 Notes (the “Subscription Transactions”) for $290.1 million in cash. At June 30, 2025 and December 31, 2024, the carrying value of the 2023 Notes was $533.7 million and $525.6 million, respectively, net of unamortized debt discount and debt issuance cost and the fair value of the 2023 Notes was $594.6 million and $546.1 million, respectively. The fair value of the 2023 Notes is a Level 1 valuation and was determined based on the most recent trade activity of the 2023 Notes as of June 30, 2025 and December 31, 2024. The 2023 Notes and 2019 Notes are discussed in more detail in Note 9, “Convertible Senior Notes,” to these condensed consolidated financial statements.