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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Fair Value of Financial Instruments

Fair Value of Financial Instruments

7. Fair Value of Financial Instruments

Disclosures of fair value information about financial instruments are required, whether or not recognized in the consolidated balance sheets, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:


Level 1 inputs:	Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 inputs:	Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2, and 3 during the nine months ended September 30, 2023 and 2022.

The following table presents the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument as of September 30, 2023 and December 31, 2022:


									Significant
						Quoted Prices			other			Significant
						in active			observable			unobservable
						markets			inputs			inputs
			Total			(Level 1)			(Level 2)			(Level 3)
September 30, 2023
Cash equivalents:
Money market funds		$	104,250		$	104,250		$	—		$	—
Marketable securities:
Corporate debt securities			17,813			—			17,813			—
U.S. Treasury securities			23,740			—			23,740			—
Government-sponsored securities			4,480			—			4,480			—
Total assets measured at fair value		$	150,283		$	104,250		$	46,033		$	—

December 31, 2022
Cash equivalents:
Money market funds		$	172,590		$	172,590		$	—		$	—
Total assets measured at fair value		$	172,590		$	172,590		$	—		$	—

The Company’s cash equivalents and marketable securities are measured at fair value on a recurring basis using quoted market prices.

Assets and Liabilities Not Carried at Fair Value

As of September 30, 2023, the fair value of the Company's 2.625% convertible senior notes due in 2026 was $25,033 and the fair value of the Company's 2.875% convertible senior notes due in 2029 was $212,602, which were estimated utilizing market quotations, and are considered Level 2.

The Company’s term notes fall into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. As of September 30, 2023, the outstanding principal balance of the term notes of $458,334 reasonably approximated the estimated fair value.

As of September 30, 2023, and December 31, 2022, the carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued rebates, returns and discounts reasonably approximated their estimated fair values.

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.

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