Note 15 - Fair Value Measurements

12 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Fair Value Disclosures [Text Block]

15.    Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize assets and liabilities measured and recorded at fair value on a recurring basis in the accompanying Consolidated Balance Sheets as of September 30, 2024 and 2023 (in thousands):

	As of September 30, 2024
Description	Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	157,990	$	157,990	$	—	$	—
Available-for-sale securities		198,616		37,584		161,032		—
Convertible debt securities		2,000		—		—		2,000
Foreign exchange contracts		9		—		9		—
Total assets	$	358,615	$	195,574	$	161,041	$	2,000
Liabilities:
Net investment hedge		1,915		—		1,915		—
Foreign exchange contracts		213		—		213		—
Total liabilities	$	2,128	$	—	$	2,128	$	—

	As of September 30, 2023
Description	Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	525,952	$	525,952	$	—	$	—
Available-for-sale securities		450,211		85,949		364,262		—
Foreign exchange contracts		44		—		44		—
Net investment hedge		13,036		—		13,036		—
Total assets	$	989,243	$	611,901	$	377,342	$	—
Liabilities:
Foreign exchange contracts		421		—		421		—
Total liabilities	$	421	$	—	$	421	$	—

Cash Equivalents

Cash equivalents consist of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values.

Available-For-Sale Securities

Available-for-sale securities primarily consist of highly rated corporate debt securities and U.S. government backed securities which are classified as Level 1. Investments classified as Level 2 consist of debt securities that are valued using matrix pricing and benchmarking because they are not actively traded, and bank certificates of deposit. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

Convertible Debt Securities

In the third quarter of fiscal year 2024, the Company purchased $2.0 million principal amount of convertible notes issued by a private company. The convertible notes are loans to convert to an equity stake in the private company upon a predetermined conversion event. The Company has elected the fair value option in accordance with ASC 825, Financial Instruments (“ASC 825”) to record the convertible notes. The fair value option under ASC 825 allows an entity to account for the entire financial instrument at fair value with subsequent changes in fair value recognized in earnings through the consolidated statements of operations at each reporting date. The Company elected the fair value option methodology to account for the convertible notes because the Company believes it accurately reflects the value of the securities and embedded features in the financial instrument. As of September 30, 2024, the fair value of the convertible notes was $2.0 million and is included in “Short-term marketable securities” on the Consolidated Balance Sheets. The fair value determination is based on unobservable inputs (Level 3 on the fair value hierarchy) which were based on the best information available in the circumstance, including transaction pricing, recent acquisition, and market participant assumptions. The unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements of the assets as of the reporting date.

Foreign Exchange Contracts & Net Investment Hedge

Our foreign exchange contract assets and liabilities, and our net investment hedge assets and liabilities are measured and reported at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions, so they are classified as Level 2. 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators  may subject goodwill and long-lived assets to fair value measurement on a nonrecurring basis. As described in Note 8, Goodwill and Intangible Assets, as of  September 30, 2024, the Company estimated the fair value of its reporting units using the DCF Method. Because the inputs to the valuation method are largely unobservable and reflect the Company’s own assumptions, goodwill and long-lived assets are classified as Level 3.

Contingent Consideration Liability

The contingent consideration liability related to the acquisition of B Medical was measured and reported at fair value using the real options method based on the unobservable inputs that were significant to the fair value and classified with Level 3 of the fair value hierarchy. The contingency was based on the acquired business’ performance through September 30, 2023. Please refer to Note 4, Business Combinations for further details. This liability was revalued from $18.5 million as of December 31, 2022 to zero as of June 30, 2023, with the offset to the changes in fair value recorded in the Consolidated Statements of Operations during the fiscal year ended September 30, 2023.