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Fair Value Measurement
 3 Months Ended
Mar. 31, 2016
Fair Value Measurement [Abstract]  
Fair Value Measurement
5.Fair Value Measurement

 

Assets and liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2016 (in thousands):

 

     Fair Value Measurements at Reporting Date Using 
     Quoted Prices in  Significant    
     Active Markets  Other  Significant 
     for Identical  Observable  Unobservable 
  March 31,  Assets/Liabilities  Inputs  Inputs 
  2016  (Level 1)  (Level 2)  (Level 3) 
Assets:            
Cash equivalents:            
Money market funds $100  $100  $—  $— 
Total assets at fair value on a recurring basis $100  $100  $—  $— 
Liabilities:                
Other long-term liabilities:                
Deferred payments $12,473  $—  $—  $12,473 
Total liabilities at fair value on a recurring basis $12,473  $—  $—  $12,473 

 

Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2015 (in thousands):

 

     Fair Value Measurements at Reporting Date Using 
     Quoted Prices in  Significant    
     Active Markets   Other  Significant 
     for Identical  Observable  Unobservable 
  December 31,  Assets/Liabilities  Inputs  Inputs 
  2015  (Level 1)  (Level 2)  (Level 3) 
Assets:            
Cash equivalents:            
Money market funds $100  $100  $—  $— 
Total assets at fair value on a recurring basis $100  $100  $—  $— 
Liabilities:                
Other long-term liabilities:                
Deferred payments $3,278  $—  $—  $3,278 
Total liabilities at fair value on a recurring basis $3,278  $—  $—  $3,278 

 

The Company measures the above items on a recurring basis at fair value as follows:

 

●Money market funds - Classified in Level 1 is excess cash the Company holds in both taxable and tax-exempt money market funds and are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of Accumulated other comprehensive income in stockholders' equity. The Company's cash and cash equivalents held at December 31, 2015 and March 31, 2016, approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

 

●

Deferred payments - The Company acquired certain assets and entered into deferred payment arrangements with the sellers, which are classified within Level 3 as there is no liquid market for similarly priced instruments. The deferred payments are valued using a discounted cash flow model that encompasses significant unobservable inputs to estimate the operating results of the acquired assets. The assumptions used to prepare the discounted cash flows include estimates for interest rates, enrollment growth, retention rates, obtaining regulatory approvals for expansion into new markets, and pricing strategies. These assumptions are subject to change as the underlying data sources evolve and the programs mature.

 

The Company’s lease loss liability incorporates an assessment of current sublease market conditions and uses Level 3 inputs, but is not deemed a fair value liability as the future lease payments are required to be discounted using the Company’s incremental borrowing rate at the date of lease abandonment without subsequent adjustment. See Note 4 for further discussion of the Company’s lease loss liability.

 

The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods, and no assets or liabilities were transferred between levels of the fair value hierarchy during the three months ended March 31, 2015 or 2016.

 

Changes in the fair value of the Company’s Level 3 liabilities during the three months ended March 31, 2016 are as follows (in thousands):

 

  Deferred 
  Payments 
Balance at December 31, 2015 $3,278 
Amounts earned  (232)
Contingent consideration in connection with NYCDA acquisition  9,125 
Adjustments to fair value  302 
Balance at March 31, 2016 $12,473