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Financial Instruments | 12 Months Ended
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Dec. 31, 2021
Financial Instruments [Abstract] |
Financial Instruments | NOTE 5. FINANCIAL INSTRUMENTS Fair Value of Financial InstrumentsFair value is the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy established under GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1: quoted prices in active markets for identical assets or liabilities;Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; andLevel 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.We consider an active market as one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, we view an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our non-performance risk, or that of our counterparty, is considered in determining the fair values of liabilities and assets, respectively. We classify our cash deposits and money market funds within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. We classify our investments as Level 2 instruments based on market pricing and other observable inputs. We did not classify any of our investments within Level 3 of the fair value hierarchy.Assets and liabilities measured at fair value are classified in their entirety based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability. The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other liabilities, current, approximate fair value due to their short maturities. Assets and Liabilities Measured at Fair Value on a Recurring BasisThe following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of December 31, 2021 and December 31, 2020 respectively: December 31, 2021 December 31, 2020 (in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Cash and money market funds $ 327,315 $ — $ — $ 327,315 $ 43,040 $ — $ — $ 43,040 Commercial paper — 133,185 — 133,185 — 32,537 — 32,537 U.S. government & agency securities — 225 — 225 — 170 — 170 U.S. Treasury security — — — — — 5,864 — 5,864 Total cash and cash equivalents 327,315 133,410 — 460,725 43,040 38,571 — 81,611 Investments: Commercial paper — 187,632 — 187,632 — 112,644 — 112,644 Corporate debt securities — 8,968 — 8,968 — 17,456 — 17,456 U.S. government & agency securities — 387,075 — 387,075 — 107,103 — 107,103 Total investments — 583,675 — 583,675 — 237,203 — 237,203 Short-term restricted cash: Cash 500 — — 500 836 — — 836 Long-term restricted cash: Cash 4,592 — — 4,592 3,500 — — 3,500 Total assets measured at fair value $ 332,407 $ 717,085 $ — $ 1,049,492 $ 47,376 $ 275,774 $ — $ 323,150 Liabilities Continuation advances $ — $ — $ — $ — $ — $ — $ — $ — Contingent consideration — — 169,717 169,717 — — — — Total liabilities measured at fair value $ — $ — $ 169,717 $ 169,717 $ — $ — $ — $ — We classify contingent consideration, which was incurred in connection with the acquisition of Omniome, within Level 3 as factors used to develop the estimate of fair value include unobservable inputs that are not supported by market activity and are significant to the fair value. On a quarterly basis, we estimate the fair value of the contingent consideration liability by discounting the probability-weighted outcomes to present value using an estimate of our borrowing rate and the risk-free rate. The potential outcomes of milestone achievement dates are within the period from December 31, 2022 to June 30, 2025. A decrease in the probability of an earlier scenario within this range would result in a decrease in the fair value of the liability. The discount rates used are the sum of the U.S. risk-free rate and the estimated subordinated credit spread for B- and B credit rating, which ranges from 4.8% to 5.5%. Changes in our estimated subordinated credit spread can result in changes in the fair value of the contingent consideration liability, where a lower credit spread may result in an increased liability valuation.Changes in the estimated fair value of the contingent consideration liability for the year ended December 31, 2021 were as follows: (in thousands)Level 3Beginning balance as of January 1, 2021 -Acquisition of Omniome 168,574Change in estimated fair value 1,143Ending balance as of December 31, 2021 169,717 Changes to the fair value are recorded as the Change in fair value of contingent consideration in the Consolidated Statement of Operations and Comprehensive (Loss) Income.As of December 31, 2020, we classified the Continuation Advances, which were incurred in connection with the Illumina Merger Agreement and were subject to repayment under certain circumstances, as a financial liability and were reported at fair value. The estimated fair value of the liability related to the Continuation Advances was determined using Level 3 inputs, or significant unobservable inputs. Management assessed the fair value of this financial instrument to be zero at December 31, 2020.We were first approached by SB Northstar LP during the quarter ended March 31, 2021 regarding a potential convertible debt transaction. As discussed further below in Note 7. Convertible Senior Notes, in February 2021, we entered into an investment agreement with SB Northstar LP for the issuance and sale of $900 million of 1.50% Convertible Senior Notes due February 15, 2028. As a result, $52.0 million of Continuation Advances were repaid without interest to Illumina in February 2021 and recorded as a non-operating expense in the Consolidated Statements of Operations and Comprehensive (Loss) Income for the year ended December 31, 2021. There was no further liability exposure for Continuation Advances as of December 31, 2021. For the year ended December 31, 2021, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and our valuation techniques did not change compared to the prior year. As discussed above, we recorded a contingent consideration liability in connection with our acquisition of Omniome during the year ended December 31, 2021. Cash, Cash Equivalents and InvestmentsThe following table summarizes our cash, cash equivalents and investments as of December 31, 2021 and 2020: As of December 31, 2021 Gross Gross Amortized unrealized unrealized Fair(in thousands) Cost gains losses Value Cash and cash equivalents: Cash and money market funds$ 327,316 $ — $ — $ 327,316Commercial paper 133,190 — (5) 133,185U.S. government & agency securities 225 — — 224Total cash and cash equivalents 460,731 — (5) 460,725Investments: Commercial paper 187,705 — (73) 187,632Corporate debt securities 8,964 9 (5) 8,968U.S. government & agency securities 388,088 1 (1,014) 387,075Total investments 584,757 10 (1,092) 583,675Total cash, cash equivalents and investments $ 1,045,488 $ 10 $ (1,097) $ 1,044,400Short-term restricted cash: Cash $ 500 $ — $ — $ 500Long-term restricted cash: Cash $ 4,592 $ — $ — $ 4,592 As of December 31, 2020 Gross Gross Amortized unrealized unrealized Fair(in thousands) Cost gains losses Value Cash and cash equivalents: Cash and money market funds$ 43,040 $ — $ — $ 43,040Commercial paper 32,538 — (1) 32,537U.S. government & agency securities 170 — — 170U.S. Treasury security 5,864 — — 5,864Total cash and cash equivalents 81,612 — (1) 81,611Investments: Commercial paper 112,648 4 (8) 112,644Corporate debt securities 17,360 96 — 17,456U.S. government & agency securities 107,109 6 (12) 107,103Total investments 237,117 106 (20) 237,203Total cash, cash equivalents and investments $ 318,729 $ 106 $ (21) $ 318,814Short-term restricted cash: Cash $ 836 $ — $ — $ 836Long-term restricted cash: Cash $ 3,500 $ — $ — $ 3,500 The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of December 31, 2021: (in thousands)Fair ValueDue in one year or less $ 595,063Due after one year through 5 years 122,022Total investments $ 717,085 Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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