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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value.
§Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
§Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
§Level 3 – Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Recurring Fair Value Measurements
The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices.
The fair value of the Company’s investment in Consensus common stock was determined using quoted market prices, which is a Level 1 input. On May 22, 2024, the Company sold its remaining investment in Consensus common stock (see Note 4 - Investments).
The Company has investment in a corporate debt security that does not have a readily determinable fair value because the acquired securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. The investment in corporate debt securities is classified as available-for-sale and is initially measured at its transaction price. The fair value of the corporate debt securities is determined primarily based on estimates and assumptions, including Level 3 inputs. As of September 30, 2024 and December 31, 2023, the fair value was determined based upon various probability-weighted scenarios which included discount rate assumptions between 13% and 15%, depending on the probability scenario. In addition, the determination of fair value included a conversion timeframe of approximately one to two years, depending on the probability scenario, as of September 30, 2024 and as of December 31, 2023.
The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, dividend yield, and breakpoints. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.
As of September 30, 2024 and December 31, 2023, the contingent consideration was determined using a 100% probability of payout at the maximum amount, without any other estimates applied.
The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):
September 30, 2024Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
Money market and other funds$49,568 $— $— $49,568 $49,568 
Long-term investments:
Investment in corporate debt securities— — 16,529 16,529 16,529 
Total assets measured at fair value$49,568 $— $16,529 $66,097 $66,097 
Liabilities:
Contingent consideration$— $— $2,834 $2,834 $2,834 
Total liabilities measured at fair value$— $— $2,834 $2,834 $2,834 
December 31, 2023Level 1Level 2Level 3Fair ValueCarrying Value
Assets:
Cash equivalents:
Money market and other funds$340,928 $— $— $340,928 $340,928 
Short-term investments:
Consensus common stock27,109 — — 27,109 27,109 
Long-term investments:
Investment in corporate debt securities— — 15,699 15,699 15,699 
Total assets measured at fair value$368,037 $— $15,699 $383,736 $383,736 
Liabilities:
Contingent consideration$— $— $2,834 $2,834 $2,834 
Total liabilities measured at fair value$— $— $2,834 $2,834 $2,834 
At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the three and nine months ended September 30, 2024 and 2023, there were no transfers that occurred between levels.
The following table presents a reconciliation of the Company’s Level 3 financial assets and liabilities related to our contingent consideration arrangements and investment in corporate debt securities that are measured at fair value on a recurring basis (in thousands):
Nine months ended September 30,
20242023
Contingent Consideration ArrangementsCorporate Debt SecuritiesContingent Consideration ArrangementsCorporate Debt Securities
Balance as of January 1$2,834 $15,699 $555 $15,586 
Fair value at date of acquisition— — 2,834 — 
Fair value adjustments (1)
— 830 — (117)
Balance as of September 30$2,834 $16,529 $3,389 $15,469 
(1)The fair value adjustments to the corporate debt securities in the table above were recorded in ‘Change in fair value on available-for-sale investments, net’ in the Condensed Consolidated Statements of Comprehensive (Loss) Income during the three and nine months ended September 30, 2024 and 2023.
Nonrecurring Fair Value Measurements
The Company’s non-financial assets, such as goodwill, intangible assets, right-of-use assets, and property, plant and equipment, are adjusted to fair value only when an impairment is recognized. The Company’s financial assets, comprised of equity securities without readily determinable fair value, are adjusted to fair value when observable price changes are identified or due to impairment. Such fair value measurements are based predominately on Level 3 inputs. See Note 7 - Goodwill and Intangible Assets for further information on goodwill impairment charges recorded during the three and nine months ended September 30, 2024 and 2023.
Other Fair Value Disclosures
The fair value of the Company’s 4.625% Senior Notes, 3.625% Convertible Notes, and 1.75% Convertible Notes (as defined in Note 7 — Debt) was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 1 inputs. If such information is not available for the 1.75% Convertible Notes and 3.625% Convertible Notes, the fair value is determined using cash flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes (in thousands):
September 30, 2024December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
4.625% Senior Notes
$457,106 $432,785 $456,796 $405,408 
1.75% Convertible Notes (1)
$148,062 $138,850 $544,516 $519,492 
3.625% Convertible Notes (2)
$258,573 $251,484 $— $— 
(1)On July 16, 2024, the Company exchanged approximately $400.9 million in aggregate principal amount of the Company’s 1.75% Convertible Notes as part of the Exchange Transaction. The Company issued $263.1 million in aggregate principal amount of new 3.625% Convertible Notes, as defined in Note 7 — Debt, and paid an aggregate of approximately $135.0 million in cash. Refer to Note 7 — Debt for additional information.