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Fair Value Measurements | 3 Months Ended
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Jun. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 2. FAIR VALUE MEASUREMENTS We determine the fair value of an asset or liability based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritizes the inputs into three broad levels as follows: •Level 1: Quoted prices in active markets for identical instruments •Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments) •Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments) Financial assets and liabilities carried at fair value and measured on a recurring basis as of June 30, 2024 are classified in the hierarchy as follows (in millions):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets carried at fair value: |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |
Time deposits | — |  |  | 40.3 |  |  | — |  |  | 40.3 |
Money market funds | 76.3 |  |  | — |  |  | — |  |  | 76.3 |
Total cash equivalents (a) | 76.3 |  |  | 40.3 |  |  | — |  |  | 116.6 |
Restricted investments (b) | 7.2 |  |  | — |  |  | — |  |  | 7.2 |
Equity securities (c) | 4,825.6 |  |  | — |  |  | — |  |  | 4,825.6 |
Loan under the fair value option (d) | — |  |  | — |  |  | 305.6 |  |  | 305.6 |
Available-for-sale investments: |  |  |  |  |  |  |
Corporate debt securities | — |  |  | 545.0 |  |  | — |  |  | 545.0 |
U.S. government sponsored agencies | — |  |  | 246.1 |  |  | — |  |  | 246.1 |
Foreign government obligations | — |  |  | 2.6 |  |  | — |  |  | 2.6 |
Municipal obligations | — |  |  | 8.3 |  |  | — |  |  | 8.3 |
Asset-backed securities | — |  |  | 333.6 |  |  | — |  |  | 333.6 |
Total available-for-sale investments (e) | — |  |  | 1,135.6 |  |  | — |  |  | 1,135.6 |
Forward foreign exchange contracts (f) | — |  |  | 1.5 |  |  | — |  |  | 1.5 |
Total financial assets carried at fair value | $ | 4,909.1 |  |  | $ | 1,177.4 |  |  | $ | 305.6 |  |  | $ | 6,392.1 |
Financial liabilities carried at fair value: |  |  |  |  |  |  |
Forward foreign exchange contracts (g) | $ | — |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | 1.2 |
Contingent consideration (h) | — |  |  | — |  |  | 17.9 |  |  | 17.9 |
Total financial liabilities carried at fair value | $ | — |  |  | $ | 1.2 |  |  | $ | 17.9 |  |  | $ | 19.1 |
Financial assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2023 are classified in the hierarchy as follows (in millions):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets carried at fair value: |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |
Commercial paper | $ | — |  |  | $ | 12.5 |  |  | $ | — |  |  | $ | 12.5 |
Time deposits | — |  |  | 36.6 |  |  | — |  |  | 36.6 |
U.S. government sponsored agencies | — |  |  | 7.0 |  |  | — |  |  | 7.0 |
Money market funds | 28.0 |  |  | — |  |  | — |  |  | 28.0 |
Total cash equivalents (a) | 28.0 |  |  | 56.1 |  |  | — |  |  | 84.1 |
Restricted investments (b) | 7.1 |  |  | — |  |  | — |  |  | 7.1 |
Equity securities (c) | 7,399.3 |  |  | — |  |  | — |  |  | 7,399.3 |
Loan under the fair value option (d) | — |  |  | — |  |  | 325.7 |  |  | 325.7 |
Available-for-sale investments: |  |  |  |  |  |  |
Corporate debt securities | — |  |  | 531.6 |  |  | — |  |  | 531.6 |
U.S. government sponsored agencies | — |  |  | 255.9 |  |  | — |  |  | 255.9 |
Foreign government obligations | — |  |  | 12.7 |  |  | — |  |  | 12.7 |
Municipal obligations | — |  |  | 12.1 |  |  | — |  |  | 12.1 |
Asset-backed securities | — |  |  | 323.7 |  |  | — |  |  | 323.7 |
Total available-for-sale investments (e) | — |  |  | 1,136.0 |  |  | — |  |  | 1,136.0 |
Forward foreign exchange contracts (f) | — |  |  | 4.1 |  |  | — |  |  | 4.1 |
Total financial assets carried at fair value | $ | 7,434.4 |  |  | $ | 1,196.2 |  |  | $ | 325.7 |  |  | $ | 8,956.3 |
Financial liabilities carried at fair value: |  |  |  |  |  |  |
Forward foreign exchange contracts (g) | $ | — |  |  | $ | 11.7 |  |  | $ | — |  |  | $ | 11.7 |
Contingent consideration (h) | — |  |  | — |  |  | 17.5 |  |  | 17.5 |
Total financial liabilities carried at fair value | $ | — |  |  | $ | 11.7 |  |  | $ | 17.5 |  |  | $ | 29.2 |
(a)Cash equivalents are included in Cash and cash equivalents in the condensed consolidated balance sheets. (b) Restricted investments are included in the following accounts in the condensed consolidated balance sheets (in millions):
| June 30, 2024 |  | December 31, 2023
Restricted investments | $ | 5.6 |  |  | $ | 5.6 |
Other investments | 1.6 |  |  | 1.5 |
Total | $ | 7.2 |  |  | $ | 7.1 |
(c) Equity securities are included in the following accounts in the condensed consolidated balance sheets (in millions):
| June 30, 2024 |  | December 31, 2023
Short-term investments | $ | 73.6 |  |  | $ | 67.2 |
Other investments | 4,752.0 |  |  | 7,332.1 |
Total | $ | 4,825.6 |  |  | $ | 7,399.3 |
(d) The Loan under the fair value option is included in Other investments in the condensed consolidated balance sheets. (e) Available-for-sale investments are included in Short-term investments in the condensed consolidated balance sheets. (f) Forward foreign exchange contracts in an asset position are included in Other current assets in the condensed consolidated balance sheets. (g) Forward foreign exchange contracts in a liability position are included in Other current liabilities in the condensed consolidated balance sheets. (h) Contingent considerations in a liability position are included in Other long-term liabilities in the condensed consolidated balance sheets. The changes in the fair value of contingent consideration included in Research and development expense amounted to $0.2 million and $0.4 million in the condensed consolidated statements of income (loss) for the three and six months ended June 30, 2024, respectively. No conditions triggering payment of the contingent consideration were met as of June 30, 2024. Level 1 Fair Value Measurements As of June 30, 2024, we own 12,987,900 ordinary voting shares and 9,588,908 preferenc e shares of Sartorius AG (Sartorius), of Goettingen, Germany, a process technology supplier to the biotechnology, pharmaceutical, chemical and food and beverage industries. We own approximately 38% of the outstanding ordinary shares (excluding treasury shares) and 27% of the preference shares of Sartorius as of June 30, 2024. The Sartorius family trust (Sartorius family members are beneficiaries of the trust) holds a majority interest of the outstanding ordinary shares of Sartorius. We do not have the ability to exercise significant influence over the operating and financial policies of Sartorius primarily because we do not have any representative or designee on Sartorius' board of directors and have tried and failed to obtain access to operating or financial information necessary to apply the equity method of accounting. The change in fair market value of our investment in Sartorius for the three and six months ended June 30, 2024 were a loss of $2,874.4 million and a loss of $2,472.1 million, respectively, and are recorded in our condensed consolidated statements of income (loss). Level 2 Fair Value Measurements To estimate the fair value of Level 2 debt securities as of June 30, 2024 and December 31, 2023, our primary pricing provider uses Refinitiv as the primary pricing source. Our pricing process allows us to select a hierarchy of pricing sources for securities held. If Refinitiv does not price a Level 2 security that we hold, then the pricing provider will utilize our custodian supplied pricing as the secondary pricing source. Available-for-sale investments consist of the following (in millions):
| June 30, 2024
| Amortized Cost |  | Unrealized Gains |  | Unrealized Losses |  |  | Estimated Fair Value
Short-term investments: |  |  |  |  |  |  |  |
Corporate debt securities | $ | 547.3 |  |  | $ | 0.7 |  |  | $ | (3.0) |  |  |  | $ | 545.0 |
Municipal obligations | 8.3 |  |  | — |  |  | — |  |  |  | 8.3 |
Asset-backed securities | 335.1 |  |  | 0.5 |  |  | (2.0) |  |  |  | 333.6 |
U.S. government sponsored agencies | 248.1 |  |  | 0.1 |  |  | (2.1) |  |  |  | 246.1 |
Foreign government obligations | 2.6 |  |  | — |  |  | — |  |  |  | 2.6 |
| $ | 1,141.4 |  |  | $ | 1.3 |  |  | $ | (7.1) |  |  |  | $ | 1,135.6 |
The following is a summary of the amortized cost and estimated fair value of our debt securities at June 30, 2024 by contractual maturity date (in millions):
| Amortized Cost |  | Estimated Fair Value
Mature in less than one year | $ | 216.1 |  |  | $ | 214.8 |
Mature in one to five years | 730.8 |  |  | 727.4 |
Mature in more than five years | 194.5 |  |  | 193.4 |
Total | $ | 1,141.4 |  |  | $ | 1,135.6 |
Available-for-sale investments consist of the following (in millions):
| December 31, 2023
| Amortized Cost |  | Unrealized Gains |  | Unrealized Losses |  |  | Estimated Fair Value
Short-term investments: |  |  |  |  |  |  |  |
Corporate debt securities | $ | 534.1 |  |  | $ | 0.8 |  |  | $ | (3.3) |  |  |  | $ | 531.6 |
Municipal obligations | 12.2 |  |  | — |  |  | (0.1) |  |  |  | 12.1 |
Asset-backed securities | 325.7 |  |  | 0.7 |  |  | (2.7) |  |  |  | 323.7 |
U.S. government sponsored agencies | 257.4 |  |  | 0.1 |  |  | (1.6) |  |  |  | 255.9 |
Foreign government obligations | 12.8 |  |  | — |  |  | (0.1) |  |  |  | 12.7 |
Total | $ | 1,142.2 |  |  | $ | 1.6 |  |  | $ | (7.8) |  |  |  | $ | 1,136.0 |
As of June 30, 2024, there were no significant continuous unrealized losses greater than 12 months. Our evaluation of credit losses for available-for-sale investments included t he extent to which the fair value is less than the amortized cost basis, adverse conditions specifically related to the debt security, an industry or geographic area, and any changes in the rating of a security by a rating agency. Credit loss impairments are limited to the amount that the fair value of an instrument is less than its amortized cost basis. At June 30, 2024, we have concluded that all payments related to our available-for-sale investments are expected to be made in full and on time at par value. The diminution of value in the intervening period is due to market conditions such as illiquidity and interest rate movements and not due to significant, inherent credit concerns surrounding the issuer. As a result, we have no allowances for credit losses on our available-for-sale investments portfolio as of June 30, 2024. Included in Other current assets are $9.8 million and $11.9 million of interest receivable as of June 30, 2024 and December 31, 2023, respectively, primarily associated with securities in our available-for-sale investments portfolio. Associated interest on these securities is typically payable semi-annually. Due to the short-term nature of our interest receivable asset, we have made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable. We consider any uncollected interest receivable that is overdue greater than one year to be impaired for purposes of write-off. For the six months ended June 30, 2024, we have not written-off any uncollected interest receivable. As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward foreign exchange contracts to manage foreign exchange risk of future movements in foreign exchange rates that affect foreign currency denominated intercompany receivables and payables. We do not use derivative financial instruments for speculative or trading purposes. We do not seek hedge accounting treatment for these contracts. As a result, these contracts, generally with maturity dates of 90 days or less, are recorded at their fair value at each balance sheet date. The notional amounts provide one measure of foreign exchange exposures as of June 30, 2024 and do not represent the amount of Bio-Rad's exposure to loss. The estimated fair value of these contracts was derived using the spot rates and forward points from Refinitiv on the last business day of the quarter. The resulting gains or losses from foreign exchange contracts offset gains or losses from foreign currency remeasurement of the related receivables and payables, both of which are included in Foreign currency exchange gains, net in the condensed consolidated statements of income (loss). The following is a summary of our forward foreign currency exchange contracts (in millions):
Contracts to sell foreign currency: | June 30, 2024 |  | December 31, 2023
Notional value | $ | 698.1 |  |  | $ | 873.5 |
Unrealized gain/(loss) | $ | 0.5 |  |  | $ | (8.1) |
Contracts to purchase foreign currency: |  |  |
Notional value | $ | 59.1 |  |  | $ | 133.6 |
Unrealized (loss)/gain | $ | (0.1) |  |  | $ | 0.5 |
Included in Other investments in the condensed consolidated balance sheet are investments without readily determinable fair value measured at cost with adjustments for observable price changes or impairments. The carrying value of these investments was $6.5 million as of June 30, 2024 and December 31, 2023. Also included in Other investments in the condensed consolidated balance sheet are our equity method investments, for which our share of the equity method investees earnings is included in Other income, net in our condensed consolidated statements of income (loss). The carrying value of these investments, net of impairments, was $33.9 million and $32.3 million as of June 30, 2024 and December 31, 2023, respectively. The carrying value and fair value of our long-term debt were as follows (in millions):
|  | June 30, 2024 |  | December 31, 2023
|  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Senior notes |  | $ | 1,190.3 |  |  | $ | 1,093.3 |  |  | $ | 1,189.5 |  |  | $ | 1,102.5 |
Other long-term debt |  | 9.4 |  |  | 9.4 |  |  | 9.6 |  |  | 9.6 |
Total |  | $ | 1,199.7 |  |  | $ | 1,102.7 |  |  | $ | 1,199.1 |  |  | $ | 1,112.1 |
The fair value of our long-term debt was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends, which represent level 2 measurements. Level 3 Fair Value Investments During the fourth quarter of 2021, we extended a collateralized loan to Sartorius-Herbst Beteiligungen II Gmbh ("SHB"), a private limited company incorporated under the laws of Germany, with a principal amount of €400 million due on January 31, 2029, subject to certain events which could trigger payment prior to maturity (“Loan”). SHB used the Loan proceeds to partially finance the acquisition of interests under the Sartorius family trust (“Trust”) from a beneficiary of the Trust. The Loan is collateralized by the pledge of certain of the Trust interests, which upon termination of the Trust in mid-2028 represent the right to receive Sartorius ordinary shares. Interest on the loan is payable annually in arrears at 1.5% per annum, and the entire principal amount is due at maturity. In addition to contractual interest, we are entitled to certain value appreciation rights associated with the acquired Trust interests, which upon termination of the Trust represent the right to receive Sartorius ordinary shares, that is due upon repayment of the Loan. We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to SHB to simplify the accounting. The fair value of the Loan and value appreciation right is estimated under the income approach using a discounted cash flow, and option pricing model, respectively, which results in a fair value measurement categorized in Level 3. The significant assumptions used to estimate fair value of the Loan include an estimate of the discount rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the value appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend. The inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result in a significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right, including accrued interest are recognized in Losses from change in fair market value of equity securities and loan receivable in our condensed consolidated statements of income (loss). The overall change in fair market value reflected in Losses from change in fair market value of equity securities and loan receivable during the three months ended June 30, 2024 was a loss of $22.7 million, which includes a $6.2 million gain from change in fair market value of the Loan and a $28.9 million loss from change in fair market value of the value appreciation right. The overall change in fair market value reflected in Losses from change in fair market value of equity securities and loan receivable during the six months ended June 30, 2024 was a loss of $10.4 million, which includes a $15.0 million gain from change in fair market value of the Loan and a $25.4 million loss from change in fair market value of the value appreciation right. The decrease in the fair market value of the value appreciation right was due to a decrease in the value of the Sartorius ordinary shares. As of June 30, 2024, the €400 million principal amount of the loan is still due on January 31, 2029. The following table provides a reconciliation of the Level 3 Loan measured at estimated fair value (in millions):
December 31, 2023 | $ | 325.7 |
Net decrease in estimated fair market value of the loan included in Losses in fair market value of equity securities and loan receivable | $ | (10.4) |
Foreign currency exchange losses, net | $ | (9.7) |
June 30, 2024 | $ | 305.6 |

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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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