(5) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table represents the Company's financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):



			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2018
Cash equivalents	$	62,684	$	62,684	$	—	$	—
FFF call right	610		—		—		610
Deferred compensation plan assets	48,215		48,215		—		—
Total assets	$	111,509	$	110,899	$	—	$	610
FFF put right	$	42,041	$	—	$	—	$	42,041
Total liabilities	$	42,041	$	—	$	—	$	42,041

June 30, 2017
Cash equivalents	$	22,218	$	22,218	$	—	$	—
FFF call right	4,655		—		—		4,655
Deferred compensation plan assets	47,202		47,202		—		—
Total assets	$	74,075	$	69,420	$	—	$	4,655
Earn-out liabilities	$	21,310	$	—	$	—	$	21,310
FFF put right	24,050		—		—		24,050
Total liabilities	$	45,360	$	—	$	—	$	45,360

Cash equivalents were included in cash and cash equivalents in the accompanying Consolidated Balance Sheets (see Note 4 - Investments).

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets was included in prepaid expenses and other current assets ($3.6 million and $5.7 million at June 30, 2018 and 2017, respectively) in the accompanying Consolidated Balance Sheets.

Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

Earn-out liabilities

Earn-out liabilities were incurred in connection with acquisitions of HCI on July 31, 2015, Inflow on October 1, 2015 and Innovatix and Essensa on December 2, 2016 (see Note 3 - Business Acquisitions). The earn-out liabilities were classified as Level 3 of the fair value hierarchy and their values were determined based on estimated future earnings and the probability of achieving them. The decrease in the earn-out liabilities is attributable to the $21.1 million earn-out payment to GNYHA Holdings that occurred during the current year (see Note 3 - Business Acquisitions). Changes in the fair values of the earn-out liabilities were recorded within selling, general and administrative expenses in the accompanying Consolidated Statements of Income.

FFF put and call rights

Pursuant to a shareholders' agreement entered into in connection with the Company's equity investment in FFF on July 26, 2016 (see Note 4 - Investments), which shareholders' agreement was amended and restated November 22, 2017, the majority shareholder of FFF holds a put right that provides such shareholder the right to require the Company to purchase (i) up to 50% of its interest in FFF, which is exercisable beginning on July 26, 2020, the fourth anniversary of the investment closing date and (ii) all or a portion of its remaining interest in FFF on or after December 31, 2020. Any such required purchases are to be made at a per share price equal to FFF's earnings before interest, taxes, depreciation and amortization ("EBITDA") over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents ("Equity Value per Share"). In addition, the amended and restated shareholders' agreement provides the Company with a call right requiring the majority shareholder to sell its remaining interest in FFF to the Company, which is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (generally defined in the amended and restated shareholders' agreement as the resignation, termination for cause, death or disability of the majority shareholder) or 30 calendar days after December 31, 2020. In the event that the FFF put or call rights are exercised, the purchase price for the additional interest in FFF will be at a per share price equal to the Equity Value per Share.

The fair values of the FFF put and call rights were determined based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF put and call rights' expiration dates, the forecast of FFF's EBITDA over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. Significant changes to the Equity Value per Share resulting from changes in the unobservable inputs could have a significant impact on the fair values of the FFF put and call rights.

The Company recorded the FFF put and call rights within long-term other liabilities and long-term other assets, respectively, within the accompanying Consolidated Balance Sheets. Net changes in the fair values of the FFF put and call rights were recorded within other income (expense) in the accompanying Consolidated Statements of Income.

A reconciliation of the Company's earn-out liabilities and FFF put and call rights is as follows (in thousands):



	Beginning Balance		Purchases (Settlements)			Gain (Loss)			Ending Balance
Year ended June 30, 2018
FFF call right	$	4,655	$	—		$	(4,045	)	$	610
Total Level 3 assets	$	4,655	$	—		$	(4,045	)	$	610
Earn-out liabilities	$	21,310	$	(21,125	)	$	185		$	—
FFF put right	24,050		—			(17,991		)	42,041
Total Level 3 liabilities	$	45,360	$	(21,125	)	$	(17,806	)	$	42,041

Year ended June 30, 2017
FFF call right	$	—	$	10,361		$	(5,706	)	$	4,655
Total Level 3 assets	$	—	$	10,361		$	(5,706	)	$	4,655
Earn-out liabilities	$	4,128	$	16,662		$	(520	)	$	21,310
FFF put right	—		25,821			1,771			24,050
Total Level 3 liabilities	$	4,128	$	42,483		$	1,251		$	45,360

Non-Recurring Fair Value Measurements

During the year ended June 30, 2018, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The fair values of the acquired intangible assets resulting from the acquisitions of Acro Pharmaceuticals and Innovatix and Essensa were determined using the income approach (see Note 3 - Business Acquisitions).

The Company recognized a one-time gain of $205.1 million during the year ended June 30, 2017 related to the remeasurement of the Company's 50% equity method investment in Innovatix to fair value upon acquisition of the remaining interest in Innovatix (see Note 3 - Business Acquisitions). The fair value of the investment was calculated using a discounted cash flow model.

Financial Instruments For Which Fair Value Only is Disclosed

The fair values of non-interest bearing notes payable, classified as Level 2, were less than their carrying value by approximately $0.6 million and $0.6 million at June 30, 2018 and 2017, respectively, based on assumed market interest rates of 3.6% and 2.6%, respectively.

Other Financial Instruments

The fair values of cash, accounts receivable, accounts payable, accrued liabilities and the Company's Credit Facility approximated carrying value due to the short-term nature of these financial instruments.