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FAIR VALUE MEASUREMENTS | 12 Months Ended
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Jun. 30, 2022
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | (6) 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):
| Fair Value of Financial Assets and Liabilities | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3)
June 30, 2022 |  |  |  |
Cash equivalents | $ | 75 |  | $ | 75 |  | $ | — |  | $ | — |
Deferred compensation plan assets | 52,718 |  | 52,718 |  | — |  | — |
Total assets | 52,793 |  | 52,793 |  | — |  | — |
Earn-out liabilities | 22,789 |  | — |  | — |  | 22,789 |
Total liabilities | $ | 22,789 |  | $ | — |  | $ | — |  | $ | 22,789 |
June 30, 2021 |  |  |  |
Cash equivalents | $ | 75 |  | $ | 75 |  | $ | — |  | $ | — |
Deferred compensation plan assets | 65,051 |  | 65,051 |  | — |  | — |
Total assets | 65,126 |  | 65,126 |  | — |  | — |
Earn-out liabilities | 24,249 |  | — |  | — |  | 24,249 |
FFF put right | 64,110 |  | — |  | — |  | 64,110 |
Total liabilities | $ | 88,359 |  | $ | — |  | $ | — |  | $ | 88,359 |
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 ($5.3 million and $5.5 million at June 30, 2022 and 2021, respectively) was included in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets. Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) FFF Put and Call Rights On July 29, 2021, the FFF shareholders’ agreement was amended resulting in the termination of the FFF Put Right and the derecognition of the FFF Put Right liability. In the event of a Key Man Event (generally defined in the shareholders’ agreement as the resignation, termination for cause, death or disability of the majority shareholder), the Company has a call right that requires the majority shareholder to sell its remaining interest in FFF to the Company, and is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of June 30, 2022 and 2021, the Call Right had zero value. In the event that either of these rights are exercised, the purchase price for the additional interest in FFF will be at a per share price equal to the earnings before interest, taxes, depreciation and amortization (“FFF 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, divided by the number of shares of FFF common stock then outstanding (“Equity Value per Share”). At June 30, 2021, the fair values of the Put and Call Rights were determined using a Monte Carlo simulation in a risk-neutral framework 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 the FFF EBITDA and enterprise value over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. FFF’s enterprise value over the option period was valued utilizing expected annual FFF EBITDA and revenue growth rates, among other assumptions. The resulting FFF enterprise value was an assumption utilized in the valuation of the Put and Call Rights. The Company utilized the following assumptions to estimate the fair value of FFF Put and Call Rights at June 30, 2021:
| June 30, 2021
Annual FFF EBITDA growth rate | 2.5-10.8%
Annual revenue growth rate | 2.5-6.3%
Correlation | 80.0 | %
Weighted average cost of capital | 14.0 | %
Asset volatility | 30.0 | %
Credit spread | 0.8 | %
The significant assumptions using the Monte Carlo simulation approach for valuation of the Put and Call Rights are: (i)Annual FFF EBITDA growth rate: The forecasted FFF EBITDA growth range over six years; (ii)Annual revenue growth rate: The forecasted revenue growth range over six years; (iii)Correlation: The estimated correlation between future Business Enterprise Value and FFF EBITDA; (iv)Weighted average cost of capital: The expected rate paid to security holders to finance debt and equity; (v)Asset volatility: Based on the asset volatility of guideline public companies in the healthcare industry; and (vi)Credit spread: Based on term-matched BBB yield curve. At June 30, 2021, 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, including the gain recorded as a result of the termination of the FFF Put Right, were recorded within other (expense) income, net in the accompanying Consolidated Statements of Income and Comprehensive Income. Earn-out liabilities An earn-out liability was established in connection with the acquisition of substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020. The earn-out liability was classified as Level 3 of the fair value hierarchy. The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and are remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of 1.6% and 0.9% at June 30, 2022 and 2021, respectively. As of June 30, 2022 and 2021, the undiscounted range of outcomes is between $0 and $30.0 million. A significant decrease in the probability could result in a significant decrease in the value of the earn-out liability. The fair value of the Acurity and Nexera earn-out liability at June 30, 2022 and 2021 was $22.8 million and $24.2 million, respectively. Acurity and Nexera Earn-out
| As of June 30,
Input assumptions | 2022 |  | 2021
Probability of transferred member renewal percentage < 50% | 5.0 | % |  | 5.0 | %
Probability of transferred member renewal percentage between 50% and 65% | 10.0 | % |  | 10.0 | %
Probability of transferred member renewal percentage between 65% and 80% | 25.0 | % |  | 25.0 | %
Probability of transferred member renewal percentage > 80% | 60.0 | % |  | 60.0 | %
Credit spread | 1.6 | % |  | 0.9 | %
A reconciliation of the FFF Put Right and earn-out liabilities is as follows (in thousands):
| Beginning Balance | Settlements | (Gain)/Loss (c) | Ending Balance
Year Ended June 30, 2022 |  |  |  |
Earn-out liabilities | $ | 24,249 |  | $ | — |  | $ | (1,460) |  | $ | 22,789 |
FFF put right (a) | 64,110 |  | (64,110) |  | — |  | — |
Total Level 3 liabilities | $ | 88,359 |  | $ | (64,110) |  | $ | (1,460) |  | $ | 22,789 |
Year Ended June 30, 2021 |  |  |  |
Earn-out liabilities (b) | 33,151 |  | (13,733) |  | 4,831 |  | 24,249 |
FFF put right | 36,758 |  | — |  | 27,352 |  | 64,110 |
Total Level 3 liabilities | $ | 69,909 |  | $ | (13,733) |  | $ | 32,183 |  | $ | 88,359 |
_________________________________ (a)Settlements for the year ended June 30, 2022 includes non-cash gain recognized as a result of the termination of the FFF Put Right and the derecognition of the FFF Put Right liability. (b)Settlements for the year ended June 30, 2021, includes earnout liabilities from previous acquisitions which were earned and paid during the period. (c)A gain on level 3 liability balances will decrease the liability ending balance and a loss on level 3 liability balance will increase the liability ending balance. Non-Recurring Fair Value Measurements During the year ended June 30, 2021, the Company recorded notes payable to former limited partners as a result of the August 2020 Restructuring. Although these notes are non-interest bearing, they include a Level 2 input associated with the implied interest rate of 1.8% and are calculated as of August 11, 2020. (see Note 10 - Debt and Notes Payable). During the year ended June 30, 2022, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. 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 $0.1 million at both June 30, 2022 and 2021, based on assumed market interest rates of 1.6% for both periods. Other Financial Instruments The fair values of cash, accounts receivable, accounts payable, accrued liabilities, and the Credit Facility (as defined in Note 10 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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