XML 26 R17.htm IDEA: XBRL DOCUMENT
v3.23.3

Fair Value Measures and Disclosures (Notes) | 9 Months Ended
--- | ---
Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Disclosures | Fair Value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value: •Level 1: quoted prices in active markets for identical assets or liabilities; •Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or •Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Contingent Earn-out Liabilities On January 6, 2022, we acquired Smiths Medical with a combination of cash consideration and share consideration issued at closing. Total consideration for the acquisition includes a potential earn-out payment of $100.0 million in cash contingent on our common stock achieving certain Price Targets from the closing date to either the third or fourth anniversary of closing (see Note 3: Acquisitions for additional information) and provided Smiths beneficially owns at least 50.0% of the shares of common stock issued at closing at the time the Price Target is achieved. The initial estimated fair value of the earn-out was determined to be $53.5 million. The initial fair value of the earn-out was determined using a Monte Carlo simulation model. The model utilized several assumptions including volatility and the risk-free interest rate. The assumed volatility is based on the average of the historical volatility of our common stock price and the implied volatility of certain at-the-money traded options. The risk-free interest rate is equal to the yield on U.S. Treasury securities at constant maturity for the period commensurate with the term of the earn-out. At each reporting date subsequent to the acquisition, we remeasure the earn-out liability and recognize any changes in its fair value in our consolidated statements of operations. If the probability of achieving the Price Targets during their respective measurement periods is significantly greater than initially anticipated, the realization of an additional liability and related expense will have a significant impact on our consolidated financial statements in the period recognized. As of September 30, 2023, the estimated fair value of the contingent earn-out is $7.1 million. In November 2021, we acquired a small foreign infusion systems supplier. Total consideration for the acquisition included a potential earn-out payment of up to $2.5 million, consisting of (i) a cash payment of $1.0 million contingent on the achievement of certain revenue targets for the annual period ending December 31, 2022 and, separately, (ii) a cash payment of $1.5 million contingent on certain product-related regulatory certifications obtained by May 26, 2024. As of December 31, 2022, the measurement period related to (i) above ended, and based on the actual revenue achieved during the measurement period we determined that the fair value of the contingent earn-out was zero as the minimum threshold for earning the earn-out was not met. As of September 30, 2023, the estimated fair value for the contingent earn-out related to certain product-related regulatory certifications was estimated to be $1.5 million. In August 2021, we entered into an agreement with one of our international distributors whereby that distributor would not compete with us in a specific territory for a three-year period that will end in September 2024. The terms of the agreement include a contingent earn-out payment. The contingent earn-out payment shall not exceed $6.0 million, which will be earned based on certain revenue targets over a twelve-month measurement period determined by the highest four consecutive quarters commencing over a two-year period starting on the closing date of the agreement and provided that the distributor is in compliance with its obligations under the agreement. As of September 30, 2023, the estimated fair value of the contingent earn-out is $4.3 million. The estimated fair value of the contingent earn-out is calculated using a probability-weighted cash flow model based on historical revenue streams and the likelihood that the revenue targets will be met. Our contingent earn-out liabilities are separately stated on our condensed consolidated balance sheets. The following tables provide a reconciliation of the Level 3 earn-out liabilities measured at estimated fair value (in thousands):
|  | Earn-out Liability
Accrued balance, January 1, 2023 |  | $ | 25,572 |
Change in fair value of earn-out (included in income from operations as a separate line item)(1) |  | (700) |
Currency translation |  | 33 |
Accrued balance, March 31, 2023 |  | 24,905 |
Change in fair value of earn-out (included in income from operations as a separate line item)(2) |  | 4,016 |
Other |  | 11 |
Currency translation |  | 1 |
Accrued balance, June 30, 2023 |  | 28,933 |
Change in fair value of earn-out (included in income from operations as a separate line item)(1) |  | (15,572) |
Other |  | 58 |
Currency translation |  | (58) |
Accrued balance, September 30, 2023 |  | $ | 13,361 |
|  | Earn-out Liability
Accrued balance, January 1, 2022 |  | $ | 2,589 |
Acquisition date fair value estimate of earn-out(3) |  | 55,158 |
Currency translation |  | (46) |
Accrued balance, March 31, 2022 |  | 57,701 |
Change in fair value of earn-out (included in income from operations as a separate line item)(1) |  | (27,194) |
Currency translation |  | (98) |
Accrued balance, June 30, 2022 |  | 30,409 |
Change in fair value of earn-out (included in income from operations as a separate line item)(1) |  | (4,059) |
Currency translation |  | (108) |
Accrued balance, September 30, 2022 |  | $ | 26,242 |
_______________________________ (1) Primarily relates to the change in fair value of our Smiths Medical earn-out. (2) Primarily relates to the change in fair value of our Smiths Medical earn-out and the earnout with one of our international distributors. (3) $53.5 million of the change in fair value of earn-out relates to our acquisition of Smiths Medical, and $1.6 million of the change in fair value of earn-out relates to our acquisition of a small foreign infusions systems supplier in the fourth quarter of 2021 (see Note 3: Acquisitions). The following tables provide quantitative information about Level 3 inputs for fair value measurement of our earn-out liabilities related to Smiths Medical: Smiths Medical Earn-out Liability
Simulation Input |  |  |  | As of September 30, 2023 |  | As of December 31, 2022
Volatility |  |  |  | 41.00 | % |  | 38.00 | %
Risk-Free Rate |  |  |  | 4.91 | % |  | 4.17 | %
Investments, Foreign Exchange Contracts and Interest Rate Contracts Our investments consist of corporate and government bonds and U.S. treasury securities. The fair value of our corporate and government bonds is estimated using observable market-based inputs such as quoted prices, interest rates and yield curves or Level 2 inputs. The fair value of our U.S. treasury securities are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The fair value of our Level 2 foreign exchange contracts, including forward contracts and cross-currency par forward contracts, is estimated using observable market inputs such as known notional value amounts, spot and forward exchange rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. The fair value of our Level 2 interest rate swaps is estimated using a pricing model that reflects the terms of the contracts, including the period to maturity, and relies on observable market inputs such as known notional value amounts and USD interest rate curves. Our assets and liabilities measured at fair value on a recurring basis consisted of the following Level 1, 2 and 3 inputs as defined above (in thousands):
| Fair value measurements as of September 30, 2023
| Total carrying value |  | Quoted prices in active markets for identical assets (level 1) |  | Significant other observable inputs (level 2) |  | Significant unobservable inputs (level 3)
Assets: |  |  |  |  |  |  |
Available-for-sale debt securities: |  |  |  |  |  |  |
Short-term corporate bonds | $ | 1,306 |  |  | $ | — |  |  | $ | 1,306 |  |  | $ | — |
Short-term government bonds | 500 |  |  | — |  |  | 500 |  |  | — |
Foreign exchange contracts: |  |  |  |  |  |  |
Prepaid expenses and other current assets | 8,630 |  |  | — |  |  | 8,630 |  |  | — |
Other assets | 542 |  |  | — |  |  | 542 |  |  | — |
Interest rate contracts: |  |  |  |  |  |  |
Prepaid expenses and other current assets | 30,446 |  |  | — |  |  | $ | 30,446 |  |  | — |
Other assets | 22,167 |  |  | — |  |  | $ | 22,167 |  |  | — |
Total Assets | $ | 63,591 |  |  | $ | — |  |  | $ | 63,591 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Contingent earn-out liability - ST | $ | 6,300 |  |  | $ | — |  |  |  |  | $ | 6,300 |
Contingent earn-out liability - LT | 7,061 |  |  | — |  |  |  |  | $ | 7,061 |
Foreign exchange contracts: |  |  |  |  |  |  |
Accrued liabilities | 1,890 |  |  | — |  |  | $ | 1,890 |  |  | — |
Other long-term liabilities | 91 |  |  | — |  |  | $ | 91 |  |  | — |
Total Liabilities | $ | 15,342 |  |  | $ | — |  |  | $ | 1,981 |  |  | $ | 13,361 |
| Fair value measurements as of December 31, 2022
| Total carrying value |  | Quoted prices in active markets for identical assets (level 1) |  | Significant other observable inputs (level 2) |  | Significant unobservable inputs (level 3)
Assets: |  |  |  |  |  |  |
Available-for-sale debt securities: |  |  |  |  |  |  |
Short-term corporate bonds | $ | 2,314 |  |  | $ | — |  |  | $ | 2,314 |  |  | $ | — |
Short-term U.S. treasury securities | 1,412 |  |  | 1,412 |  |  | — |  |  | — |
Short-term government bonds | 498 |  |  | — |  |  | $ | 498 |  |  | — |
Long-term corporate bonds | 516 |  |  | — |  |  | $ | 516 |  |  | — |
Foreign exchange forwards: |  |  |  |  |  |  |
Prepaid expenses and other current assets | 4,860 |  |  | — |  |  | $ | 4,860 |  |  | — |
Other assets | 94 |  |  | — |  |  | $ | 94 |  |  | — |
Interest rate contracts: |  |  |  |  |  |  |
Prepaid expenses and other current assets | 28,431 |  |  | — |  |  | $ | 28,431 |  |  | — |
Other assets | 26,753 |  |  | — |  |  | $ | 26,753 |  |  | — |
Total Assets | $ | 64,878 |  |  | $ | 1,412 |  |  | $ | 63,466 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Contingent earn-out liability - LT | $ | 25,572 |  |  | $ | — |  |  | $ | — |  |  | $ | 25,572 |
Foreign exchange contracts: |  |  |  |  |  |  |
Accrued liabilities | 1,847 |  |  | — |  |  | 1,847 |  | — |
Other long-term liabilities | 167 |  |  | — |  |  | 167 |  | — |
Total Liabilities | $ | 27,586 |  |  | $ | — |  |  | $ | 2,014 |  |  | $ | 25,572 |

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration