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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The three levels of the fair value hierarchy established are as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available. The following table presents the Company’s fair value measurements as of September 30, 2023 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
(In thousands) |  | Fair Value at September 30, 2023 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash, cash equivalents, and restricted cash |  |  |  |  |  |  |  |
Cash and money market |  | $ | 543,316 |  |  | $ | 543,316 |  |  | $ | — |  |  | $ | — |
Commercial paper |  | 49,806 |  |  | — |  |  | 49,806 |  |  | — |
U.S. government agency securities |  | 1,490 |  |  | — |  |  | 1,490 |  |  | — |
Restricted cash |  | 297 |  |  | 297 |  |  | — |  |  | — |
Marketable securities |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 55,110 |  |  | $ | — |  |  | $ | 55,110 |  |  | $ | — |
U.S. government agency securities |  | 42,932 |  |  | — |  |  | 42,932 |  |  | — |
Asset backed securities |  | 30,105 |  |  | — |  |  | 30,105 |  |  | — |
Commercial paper |  | 8,902 |  |  | — |  |  | 8,902 |  |  | — |
Equity securities |  | 2,745 |  |  | 2,745 |  |  | — |  |  | — |
Non-marketable securities |  | $ | 9,057 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,057 |
Liabilities |  |  |  |  |  |  |  |
Contingent consideration |  | $ | (293,777) |  |  | $ | — |  |  | $ | — |  |  | $ | (293,777) |
Total |  | $ | 449,983 |  |  | $ | 546,358 |  |  | $ | 188,345 |  |  | $ | (284,720) |
The following table presents the Company’s fair value measurements as of December 31, 2022 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
(In thousands) |  | Fair Value at December 31, 2022 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents |  |  |  |  |  |  |  |
Cash and money market |  | $ | 178,168 |  |  | $ | 178,168 |  |  | $ | — |  |  | $ | — |
Commercial paper |  | 63,021 |  |  | — |  |  | 63,021 |  |  | — |
U.S. government agency securities |  | 1,304 |  |  | — |  |  | 1,304 |  |  | — |
Restricted cash |  | 297 |  |  | 297 |  |  | — |  |  | — |
Marketable securities |  |  |  |  |  |  |  |
U.S. government agency securities |  | $ | 225,223 |  |  | $ | — |  |  | $ | 225,223 |  |  | $ | — |
Corporate bonds |  | 114,671 |  |  | — |  |  | 114,671 |  |  | — |
Asset backed securities |  | 44,521 |  |  | — |  |  | 44,521 |  |  | — |
Equity securities |  | 5,149 |  |  | 5,149 |  |  | — |  |  | — |
Non-marketable securities |  | $ | 10,065 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,065 |
Liabilities |  |  |  |  |  |  |  |
Contingent consideration |  | $ | (306,927) |  |  | $ | — |  |  | $ | — |  |  | $ | (306,927) |
Total |  | $ | 335,492 |  |  | $ | 183,614 |  |  | $ | 448,740 |  |  | $ | (296,862) |
There have been no changes in valuation techniques or transfers between fair value measurement levels during the three and nine months ended September 30, 2023. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities are valued using a third-party pricing agency where the valuation is based on observable inputs including pricing for similar assets and other observable market factors. The Company has elected the fair value option under the income approach to measure its non-marketable securities categorized as Level 3 measurements. Gains and losses recorded on non-marketable securities are included in investment income (loss), net in the condensed consolidated statement of operations. The following table provides a reconciliation of the beginning and ending balances of non-marketable securities valued using the fair value option:
(In thousands) |  | Non-Marketable Securities
Beginning balance, January 1, 2023 |  | $ | 10,065 |
Purchases of non-marketable securities |  | 6,957 |
Changes in fair value |  | (7,965) |
Ending balance, September 30, 2023 |  | $ | 9,057 |
Contingent Consideration Liabilities The fair value of the contingent consideration liabilities was $293.8 million and $306.9 million as of September 30, 2023 and December 31, 2022, respectively, which was included in other long-term liabilities in the condensed consolidated balance sheets. The following table provides a reconciliation of the beginning and ending balances of contingent consideration:
(In thousands) |  | Contingent Consideration
Beginning balance, January 1, 2023 |  | $ | 306,927 |
Changes in fair value (1) |  | (13,051) |
Payments |  | (99) |
Ending balance, September 30, 2023 |  | $ | 293,777 |
______________ (1)The change in fair value of the contingent consideration liability was a reduction of $5.9 million and $57.6 million for the three and nine months ended September 30, 2022, respectively, which is included in general and administrative expenses in the condensed consolidated statement of operations. This fair value measurement of contingent consideration is categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the market. The fair value of the contingent consideration liabilities recorded from the Company’s acquisitions of Thrive Earlier Detection Corporation (“Thrive”), Ashion Analytics, LLC (“Ashion”), and OmicEra related to regulatory and product development milestones was $293.8 million and $306.8 million as of September 30, 2023 and December 31, 2022, respectively. The Company evaluates the fair value of the expected contingent consideration and the corresponding liabilities related to the regulatory and product development milestones using the probability-weighted scenario based discounted cash flow model, which is consistent with the initial measurement of the expected contingent consideration liabilities. Probabilities of success are applied to each potential scenario and the resulting values are discounted using a present-value factor. The passage of time in addition to changes in projected milestone achievement timing, present-value factor, the degree of achievement, if applicable, and probabilities of success may result in adjustments to the fair value measurement. The fair value of the contingent consideration liability recorded related to regulatory and product development milestones was determined using a weighted average probability of success of 91% as of September 30, 2023 and December 31, 2022, and a weighted average present-value factor of 6.7% and 6.2% as of September 30, 2023 and December 31, 2022, respectively. The projected fiscal year of payment range is from 2025 to 2029. Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities. The fair value of the contingent consideration liability related to certain revenue milestones associated with the Biomatrica, Inc. acquisition was not material as of September 30, 2023 and December 31, 2022. The revenue milestone associated with the Ashion acquisition is not expected to be achieved and therefore no liability has been recorded for this milestone. Non-Marketable Equity Investments As of September 30, 2023 and December 31, 2022 the aggregate carrying amounts of the Company’s non-marketable equity securities without readily determinable fair values were $31.7 million and $39.8 million, respectively, which are classified as a component of other long-term assets, net in the Company’s condensed consolidated balance sheets. Since initial recognition of these investments, there have been no material upward or downward adjustments as a result of observable price changes. A realized gain of $5.4 million was recorded in the second quarter of 2023 as a result of an investee being acquired. During the three and nine months ended September 30, 2022, the Company determined that one of its investments was fully impaired and recorded a $10.0 million realized loss. The Company has committed capital to venture capital investment funds (the “Funds”) of $17.5 million, of which $12.4 million remained callable through 2033 as of September 30, 2023. The aggregate carrying amount of the Funds, which are classified as a component of other long-term assets, net in the Company’s condensed consolidated balance sheets, were $5.1 million and $3.9 million as of September 30, 2023 and December 31, 2022, respectively. Derivative Financial Instruments The Company enters into foreign currency forward contracts on the last day of each month to mitigate the impact of adverse movements in foreign exchange rates related to the remeasurement of monetary assets and liabilities and hedge the Company’s foreign currency exchange rate exposure. As of September 30, 2023 and December 31, 2022 the Company had open foreign currency forward contracts with notional amounts of $33.3 million and $22.3 million, respectively. The Company's foreign exchange derivative instruments are classified as Level 2 within the fair value hierarchy as they are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. The fair value of the open foreign currency forward contracts was zero at September 30, 2023 and December 31, 2022 and there were no gains or losses recorded to adjust the fair value of the open foreign currency contract held as of September 30, 2023. The contracts are closed subsequent to each month-end, and the gains and losses recorded from the contracts were not material for the three and nine months ended September 30, 2023 and 2022.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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