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FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2024
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 June 30, 2024 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
(In thousands)Fair Value at June 30, 2024Quoted 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$519,836 $519,836 $— $— 
U.S. government agency securities10,344 — 10,344 — 
Restricted cash (1)
5,837 5,837 — — 
Marketable securities
Corporate bonds$203,288 $— $203,288 $— 
U.S. government agency securities118,626 — 118,626 — 
Asset backed securities87,414 — 87,414 — 
Commercial paper4,943 — 4,943 — 
Equity securities2,331 2,331 — — 
Non-marketable securities$1,057 $— $— $1,057 
Liabilities
Contingent consideration$(277,921)$— $— $(277,921)
Total$675,755 $528,004 $424,615 $(276,864)
The following table presents the Company’s fair value measurements as of December 31, 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 December 31, 2023Quoted 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$530,100 $530,100 $— $— 
Commercial paper72,243 — 72,243 — 
Restricted cash (1)
4,297 4,297 — — 
U.S. government agency securities3,035 — 3,035 — 
Marketable securities
U.S. government agency securities$56,716 $— $56,716 $— 
Corporate bonds55,828 — 55,828 — 
Asset backed securities34,897 — 34,897 — 
Commercial paper20,984 — 20,984 — 
Equity securities3,841 3,841 — — 
Non-marketable securities$7,650 $— $— $7,650 
Liabilities
Contingent consideration$(288,657)$— $— $(288,657)
Total$500,934 $538,238 $243,703 $(281,007)
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(1)Restricted cash primarily represents cash held by a third-party financial institution as part of a cash collateral agreement related to the Company’s credit card program. The restrictions will lapse upon the termination of the agreements or the removal of the cash collateral requirement by the third-parties.
There have been no material changes in valuation techniques or transfers between fair value measurement levels during the three and six months ended June 30, 2024. 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 certain Level 3 non-marketable securities. Gains and losses recorded on non-marketable securities are included in investment income, 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, 2024
$7,650 
Changes in fair value(343)
Settlement of non-marketable securities(6,250)
Ending balance, June 30, 2024
$1,057 
Contingent Consideration Liabilities
The fair value of the contingent consideration liabilities was $277.9 million and $288.7 million as of June 30, 2024 and December 31, 2023, respectively, of which $19.0 million was included in other current liabilities and $258.9 million was included in other long-term liabilities in the condensed consolidated balance sheet as of June 30, 2024. The contingent consideration liabilities were included in other long-term liabilities as of December 31, 2023.
The following table provides a reconciliation of the beginning and ending balances of contingent consideration:
(In thousands)Contingent Consideration
Beginning balance, January 1, 2024
$288,657 
Changes in fair value (1)(7,636)
Payments (2)
(3,100)
Ending balance, June 30, 2024
$277,921 
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(1)The change in fair value of the contingent consideration liability was an increase of $4.2 million and a reduction of $4.7 million for the three and six months ended June 30, 2023, respectively, which is included in general and administrative expenses in the condensed consolidated statement of operations.
(2)Payment was made in the second quarter of 2024 to settle the contingent consideration liability previously recorded related to the Company’s acquisition of OmicEra.
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 $277.9 million and $288.7 million as of June 30, 2024 and December 31, 2023, 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 90% and 89% as of June 30, 2024 and December 31, 2023, respectively, and a weighted average present-value factor of 6.1% and 5.8% as of June 30, 2024 and December 31, 2023, respectively. The projected fiscal year of payment range is from 2025 to 2031. Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
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
Non-marketable equity securities without readily determinable fair values, which are classified as a component of other long-term assets, net, had the following cumulative upward and downward adjustments and aggregate carrying amounts:
(In thousands)
June 30, 2024June 30, 2023
Cumulative upward adjustments (1)
$5,102 $779 
Cumulative downward adjustments and impairments (2)
15,071 12,528 
Aggregate carrying value (3)
52,227 34,197 
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(1)    There were no material upward adjustments recorded on non-marketable equity securities held for the three and six months ended June 30, 2024 and 2023.
(2)    There were no material downward adjustments or impairments recorded on non-marketable equity securities held for the three and six months ended June 30, 2024 and 2023, respectively.
(3)    The aggregate carrying value of non-marketable equity securities was $46.0 million as of December 31, 2023.
There were no material realized gains or losses recorded during the three and six months ended June 30, 2024 and 2023.
The Company has committed capital to venture capital investment funds of $18.0 million, of which $11.8 million remains callable through 2033 as of June 30, 2024. The aggregate carrying amount of these funds, which are classified as a component of other long-term assets, net in the Company’s condensed consolidated balance sheets, were $6.8 million and $5.2 million as of June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023 the Company had open foreign currency forward contracts with notional amounts of $45.2 million and $39.5 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 June 30, 2024 and December 31, 2023 and there were no gains or losses recorded to adjust the fair value of the open foreign currency contract held as of June 30, 2024. The contracts are closed subsequent to each month-end, and the gains and losses recorded from the contracts were not significant for the three and six months ended June 30, 2024 and 2023.