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Fair Value of Financial Instruments | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | 9. Fair Value of Financial Instruments The Company measures the following financial assets and liabilities at fair value on a recurring basis. The following tables set forth the Company’s financial instruments measured at fair value on a recurring basis and present them within the fair value hierarchy using the lowest level of input that is significant to the fair value measurement (in millions):
September 30, 2023 |  | Total |  |  | Quoted Prices in Active Markets Available (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Time deposits and money market funds |  | $ | 78.8 |  |  | $ | — |  |  | $ | 78.8 |  |  | $ | — |
Interest rate and cross-currency swap agreements |  |  | 38.2 |  |  |  | — |  |  |  | 38.2 |  |  |  | — |
Forward currency contracts |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | — |
Embedded derivatives in purchase and delivery contracts |  |  | 0.3 |  |  |  | — |  |  |  | 0.3 |  |  |  | — |
Debt securities available for sale |  |  | 1.2 |  |  |  | — |  |  |  | — |  |  |  | 1.2 |
Total assets recorded at fair value |  | $ | 118.6 |  |  | $ | — |  |  | $ | 117.4 |  |  | $ | 1.2 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 5.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 5.9 |
Hybrid instruments liability |  |  | 64.5 |  |  |  | — |  |  |  | — |  |  |  | 64.5 |
Liability awards |  |  | 1.3 |  |  |  | — |  |  |  | — |  |  |  | 1.3 |
Interest rate and cross-currency swap agreements |  |  | 15.8 |  |  |  | — |  |  |  | 15.8 |  |  |  | — |
Forward currency contracts |  |  | 1.7 |  |  |  | — |  |  |  | 1.7 |  |  |  | — |
Fixed price commodity contracts |  |  | 0.2 |  |  |  | — |  |  |  | 0.2 |  |  |  | — |
Embedded derivatives in purchase and delivery contracts |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | — |
Total liabilities recorded at fair value |  | $ | 89.5 |  |  | $ | — |  |  | $ | 17.8 |  |  | $ | 71.7 |
December 31, 2022 |  | Total |  |  | Quoted Prices in Active Markets Available (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Time deposits and money market funds |  | $ | 198.7 |  |  | $ | 34.0 |  |  | $ | 164.7 |  |  | $ | — |
Interest rate and cross-currency swap agreements |  |  | 37.8 |  |  |  | — |  |  |  | 37.8 |  |  |  | — |
Forward currency contracts |  |  | 0.6 |  |  |  | — |  |  |  | 0.6 |  |  |  | — |
Embedded derivatives in purchase and delivery contracts |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | — |
Fixed price commodity contracts |  |  | 0.6 |  |  |  | — |  |  |  | 0.6 |  |  |  | — |
Debt securities available for sale |  |  | 10.5 |  |  |  | — |  |  |  | — |  |  |  | 10.5 |
Total assets recorded at fair value |  | $ | 248.3 |  |  | $ | 34.0 |  |  | $ | 203.8 |  |  | $ | 10.5 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 9.6 |  |  | $ | — |  |  | $ | — |  |  | $ | 9.6 |
Hybrid instruments liability |  |  | 34.2 |  |  |  | — |  |  |  | — |  |  |  | 34.2 |
Liability awards |  |  | 1.1 |  |  |  | — |  |  |  | — |  |  |  | 1.1 |
Interest rate and cross-currency swap agreements |  |  | 12.2 |  |  |  | — |  |  |  | 12.2 |  |  |  | — |
Forward currency contracts |  |  | 0.3 |  |  |  | — |  |  |  | 0.3 |  |  |  | — |
Total liabilities recorded at fair value |  | $ | 57.4 |  |  | $ | — |  |  | $ | 12.5 |  |  | $ | 44.9 |
Derivative financial instruments are classified within Level 2 because there is not an active market for each derivative contract. However, the inputs used to calculate the value of the instruments are obtained from active markets. The Company measures certain assets and liabilities at fair value with changes in fair value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to remeasure any of its existing financial assets or liabilities and did not elect the fair value option for any financial assets or liabilities which originated during the nine months ended September 30, 2023, or the year ended December 31, 2022. The fair value of the Company's long-term fixed interest rate debt was $776.0 million and $767.8 million as of September 30, 2023, and December 31, 2022, respectively. The fair value was based on market and observable sources with similar maturity dates and classified as Level 2 within the fair value hierarchy. The carrying value of the Company's variable rate debt approximates its fair value at September 30, 2023 and December 31, 2022. On a quarterly basis, the Company reviews its short-term investments to determine if there have been any events that could indicate an impairment. There were none noted for the nine months ended September 30, 2023, or 2022. Debt securities consist of investments in redeemable preferred stock. Debt securities are classified as either current or long-term investments based on their contractual maturities unless the Company intends to sell an investment within the next twelve months, in which case it is classified as current on the consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value. Contingent consideration recorded within other current and other long-term liabilities represents the estimated fair value of future payments to the former shareholders as part of certain acquisitions. The contingent consideration is primarily based on the applicable acquired company achieving annual revenue and gross margin targets in certain years as specified in the relevant purchase and sale agreement. The Company initially values the contingent consideration on the acquisition date by using a Monte Carlo simulation or an income approach method. The Monte Carlo method models future revenue and costs of goods sold projections and discounts the average results to present value. The income approach method involves calculating the earnout payment based on the forecasted cash flows, adjusting the future earnout payment for the risk of reaching the projected financials, and then discounting the future payments to present value by the counterparty risk. The counterparty risk considers the risk of the buyer having the cash to make the earnout payments and is commensurate with a cost of debt over an appropriate term. Changes in fair value subsequent to acquisition are recognized in “Acquisition-related expenses, net” included in Other Charges, net, in the Consolidated Statements of Income and Comprehensive Income. The following table sets forth the changes in contingent consideration liabilities (in millions):
Balance at December 31, 2022 |  | $ | 9.6 |
Current period additions |  |  | 2.8 |
Current period adjustments |  |  | 1.5 |
Current period settlements |  |  | (8.1 | )
Foreign currency effect |  |  | 0.1 |
Balance at September 30, 2023 |  | $ | 5.9 |
As part of the 2018 Mestrelab Research, S.L. (“Mestrelab”), 2022 PreOmics, 2023 Biognosys and Zontal acquisitions and certain other majority owned acquisitions, the Company entered into agreements with the noncontrolling interest holders that provide the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining ownerships for cash at contractually defined redemption values. These rights (embedded derivatives) can be adjusted upon certain events related to post combination employment services. As the options are tied to continued employment, the Company classified the hybrid instruments (noncontrolling interests with embedded derivatives) as long-term liabilities on the consolidated balance sheet. Subsequent to the acquisitions, the carrying value of the hybrid instruments are remeasured to fair value with changes recorded to stock-based compensation expense in proportion to the respective requisite service period vested. The Company classified the hybrid instruments as Level 3 in the fair value hierarchy. The following table sets forth the changes in hybrid instruments liability (in millions):
Balance at December 31, 2022 |  | $ | 34.2 |
Acquisitions |  |  | 26.8 |
Current period adjustments |  |  | 4.1 |
Foreign currency effect |  |  | (0.6 | )
Balance at September 30, 2023 |  | $ | 64.5 |

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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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