Fair Value Measurements

9 Months Ended

Sep. 30, 2022

(12) Fair Value Measurements

Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:

•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.

•Level 3 - One or more inputs are unobservable and significant.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Cash equivalents and short-term investments are valued utilizing the market approach to measure fair value for financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Assets measured at fair value on a recurring basis are summarized below:


	Fair Value Measurement As of September 30, 2022
	Fair Value Measurement							Balance Sheet Classification
	Fair Value Level	Cost Basis		Unrealized Gains (Losses)		Fair Value		Cash and Cash Equivalents		Short-term Investments and Marketable Securities
Money market funds	Level 1	$	157,186	$	—	$	157,186	$	157,186	$	—
Certificates of deposit	Level 2	990		—		990		—		990
Commercial paper	Level 2	5,987		—		5,987		—		5,987
Short-term bond mutual funds	Level 2	100,242		(400)		99,842		—		99,842
Corporate bonds(1)	Level 2	162,530		(1,252)		161,278		—		161,278

Total		$	426,935	$	(1,652)	$	425,283	$	157,186	$	268,097

(1) Includes $745 and $743 of cost basis and fair market value, respectively, with a weighted average maturity of 1.5 years.

We did not have any transfers of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy during the nine months ended September 30, 2022.

Additionally, as discussed in Note 2, the Enhatch warrants are measured at fair value on a recurring basis and are considered Level 3 in the fair value hierarchy. The value at September 30, 2022 was $200. The balance is recorded in other non-current assets. The fair value of the warrants was determined via a valuation as of September 30, 2022 using a Monte Carlo simulation which applied a number of assumptions including, but not limited to, financial projections, equity and revenue volatility estimates, risk free rates, comparable company financial metrics, correlations, risk factors and rates of returns.


	Fair Value Measurements as of December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Description
Money market funds a	$	485,521	$	—	$	—	$	485,521

a.Money market funds at December 31, 2021 are recorded in cash and cash equivalents.

In addition to the assets and liabilities included in the above table, certain of our assets and liabilities are measured at fair value on a non-recurring basis. This includes goodwill and other intangible assets which are measured at fair value at acquisition and subsequently adjusted only if an impairment charge is recognized. For further discussion on the valuation techniques and inputs used in the fair value measurement of goodwill and other intangible assets, see Notes 1, 2 and 7. Additionally, the Enhatch convertible preferred stock investment and the related embedded call option are measured at fair value on a non-recurring basis for which a fair value adjustment will be made if there are any impairments or observable and orderly transactions undertaken by Enhatch which provides evidence/support of a reduction in carrying value.

- 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.

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