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Fair Value of Financial Instruments | 6 Months Ended
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Jun. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | 16. Fair Value of Financial Instruments The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At June 30, 2024 and December 31, 2023, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities. Investments measured at fair value are based on one or more of the following three valuation techniques: • Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; • Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and • Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models). In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities; Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Financial assets and liabilities measured at fair value on a quarterly basis are as follows: Fair value as of June 30, 2024 (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Contingent consideration |  |  |  |  |  |  |  |  |  |  |  |
Earnout liability |  | $ | - |  |  | $ | - |  |  | $ | 4,142 |  |  | $ | 4,142 |
Total liabilities at fair value |  | $ | - |  |  | $ | - |  |  | $ | 4,142 |  |  | $ | 4,142 |
Fair value as of December 31, 2023 (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Contingent consideration |  |  |  |  |  |  |  |  |  |  |  |
Earnout liability |  | $ | - |  |  | $ | - |  |  | $ | 2,300 |  |  | $ | 2,300 |
Total liabilities at fair value |  | $ | - |  |  | $ | - |  |  | $ | 2,300 |  |  | $ | 2,300 |
Refer to Notes to Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2023 for a more complete discussion of the various items within the consolidated financial statements measured at fair value and the methods used to determine fair value. The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in our consolidated balance sheets, on the basis of Level 1 inputs for the Company's convertible notes and Level 2 inputs for the delayed draw term loan, were as follows (in thousands):
|  | June 30, 2024 |  |  | December 31, 2023 |
|  | Carrying Value |  |  | Fair Value |  |  | Carrying Value |  |  | Fair Value |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Convertible senior notes due 2025 |  | $ | 115,443 |  |  | $ | 207,797 |  |  | $ | 400,000 |  |  | $ | 568,000 |
Convertible senior notes due 2029 |  |  | 800,000 |  |  |  | 859,520 |  |  |  | - |  |  |  | - |
Delayed draw term loan |  |  | 350,000 |  |  |  | 350,000 |  |  |  | 350,000 |  |  |  | 350,000 |
Total |  | $ | 1,265,443 |  |  | $ | 1,417,317 |  |  | $ | 750,000 |  |  | $ | 918,000 |

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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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