Investments and Note Receivable

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

(6) Investments and Note Receivable

The Company holds various investments in equity and debt instruments that are included in other assets on our condensed consolidated balance sheets. The following table summarizes our investment balances as of March 31, 2024 and December 31, 2023:


(in thousands)	March 31, 2024		December 31, 2023
Equity investments under the equity method of accounting	$	5,000	$	5,247
Equity investments without readily determinable fair values	20,847		20,847
Other	200		200
Total equity investments	$	26,047	$	26,294

Long-term note receivable(1)	$	540	$	535
Total notes receivable	$	540	$	535

(1) Includes interest amounts that have been accrued on, recorded to and reported as part of the notes receivable balances.

Equity Investments under the Equity Method of Accounting

National Additive Manufacturing Innovation ("NAMI") Joint Venture

In February 2023, we became a shareholder in a joint venture formed with the Saudi Arabian Industrial Investments Company ("Dussur") for purposes of expanding the use of additive manufacturing within the Kingdom of Saudi Arabia and surrounding geographies, including the Middle East and North Africa. During April 2023, we deposited our initial investment commitment of approximately $6,500 into a bank account of the joint venture for use in its operations. Additional future investments in the joint venture are contingent upon the achievement of certain milestones or separate agreement by the parties to the joint venture to invest additional capital. As of both March 31, 2024 and December 31, 2023, the Company owned 49% of the joint venture's common stock. The impact of this investment on the Company’s future financial condition and cash flows is expected to be limited to the cash outflow(s) related to any future contingent investments, if required.

The Company accounts for the joint venture under the equity method of accounting, which requires the Company to recognize its proportionate share of the joint venture's reported net income or loss. For the three months ended March 31, 2024, the Company has reported a loss on equity method investment in its consolidated statement of operations. No income or loss on equity method investment is reported in the consolidated statement of operations for the three months ended March 31, 2023, as the Company recognizes its proportionate share of the joint venture's reported net income or loss on a one quarter lag.

The Company's reported revenue and cost of sales for three months ended March 31, 2024 included related party revenue and associated related party cost of sales of $263 and $86, respectively, attributable to sales to NAMI. The Company's reported revenue and cost of sales for the three months ended March 31, 2023 included related party revenue and associated related party cost of sales of $301 and $193, respectively, attributable to sales to NAMI. As of March 31, 2024 and December 31, 2023, the outstanding related party receivable balances attributable to our sales to NAMI were $205 and $1,092, respectively.

Equity Investments without Readily Determinable Fair Values

Enhatch

Included within the amounts reported for equity investments without readily determinable fair values as of March 31, 2024 and December 31, 2023 is the Company's investment in Enhatch Inc. ("Enhatch"), the developer of the Intelligent Surgery Ecosystem, for which the Company has previously recognized an impairment charge. In March 2022, the Company made a $10,000 investment in Enhatch and received convertible preferred shares, warrants to purchase additional shares of Enhatch, and the right to purchase in the future (the “call option”) the remaining shares of Enhatch that 3D Systems does not own if certain revenue targets are achieved. The Company's investment in Enhatch's convertible preferred shares and the call option, which have been accounted for together as a single unit of account and represent an equity investment without a readily determinable fair value, was recorded at $9,670 as of the original investment date, with the remaining value assigned to the Enhatch warrants.

As of March 31, 2024 and December 31, 2023, the reported carrying value of the Company's convertible preferred stock investment in Enhatch (i.e., inclusive of the call option) is $6,900, which is recorded in other assets on our consolidated balance sheets. This adjusted carrying value reflects the impact of a $2,770 impairment charge that was recorded during the year ended December 31, 2022.

During the three months ended March 31, 2024 and 2023, the Company made purchases from Enhatch of $153 and $14, respectively. As of March 31, 2024 and December 31, 2023, the outstanding related party payable balances attributable to our purchases from Enhatch were $35 and $26, respectively.

Variable Interest Entities (VIEs)

We concluded that two of our investments are VIEs. These investments are not consolidated because we concluded that the Company is not the primary beneficiary. As of March 31, 2024, our maximum exposure to losses associated with the VIEs is limited to the $13,000 carrying value of our investments in the VIEs, which is included in other assets on our condensed consolidated balance sheet. We have no other investments in unconsolidated entities that have been determined to be VIEs.