INVESTMENTS

3 Months Ended

Mar. 31, 2024

Investments, All Other Investments [Abstract]

Certain financial assets and liabilities are accounted for at fair value, which is defined as the 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 following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an on-going basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):


	March 31, 2024
	Cost		Unrealized Gains (Losses)		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	92,291	$	—	$	—	$	92,291	$	92,291	$	—

Level 1:
Money market accounts	5,180		—		—		5,180		5,180		—
Government & agency securities	15,454		(14)		64		15,504		—		15,504
Equity securities	10,000		2,587		—		12,587		—		12,587
	30,634		2,573		64		33,271		5,180		28,091

Level 2:
Corporate bonds	30,412		182		272		30,866		—		30,866

Total	$	153,337	$	2,755	$	336	$	156,428	$	97,471	$	58,957


	December 31, 2023
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	88,778	$	—	$	—	$	88,778	$	88,778	$	—

Level 1:
Money market accounts	5,662		—		—		5,662		5,662		—
Government & agency securities	15,282		126		40		15,448		—		15,448
Equity securities	10,000		150		—		10,150		—		10,150
	30,944		276		40		31,260		5,662		25,598

Level 2:
Corporate bonds	29,440		293		270		30,003		—		30,003

Total	$	149,162	$	569	$	310	$	150,041	$	94,440	$	55,601

The Company had $9 thousand of realized gains for the three months ended March 31, 2024 and no realized gains or losses for the three months ended March 31, 2023.

During the fourth quarter of 2023, the Company entered into an agreement to purchase common stock of LifeMD, Inc (Nasdaq: LFMD), a leading provider of virtual primary care, and made a $10 million payment to LifeMD for the purchase of the shares. The securities are subject to a registration rights agreement which stipulates that the registration of the securities is to be made as soon as practicable, but not later than 90 days, following written demand by the Company. Written demand has been made, and the securities registration remained in process as of March 31, 2024. In addition, the shares are subject to a 180-day lock-up period from the closing date of the agreement, December 11, 2023. The fair value of the investment is recorded within the

investment securities of the consolidated balance sheet. The gains related to the Company’s LifeMD investment for the three months ended March 31, 2024 and 2023 are summarized in the table below (in thousands):


	March 31, 2024		March 31, 2023

Net gains recognized during the period on equity securities	$	2,437	$	—
Less: Net gains recognized on equity securities sold	—		—
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date	$	2,437	$	—

The Company concurrently entered into an agreement in which LifeMD would provide services to stand-up the collaboration between LifeMD and the Company. The agreement stipulated an initial milestone payment of $5 million due upon execution of the agreement for these services. The services under the initial milestone were completed prior to December 31, 2023, and this amount was included in the Company’s selling, general, and administrative expenses on the consolidated statement of income for the quarter ended December 31, 2023. The Company made a second milestone payment under the agreement of $2.5 million on March 18, 2024. Of the total $2.5 million second milestone payment, $1.3 million was recognized within selling, general, and administrative expenses for services performed by LifeMD for the quarter ended March 31, 2024, with the remaining $1.2 million expected to be recognized in the second quarter. The final milestone payment of $2.5 million is expected to be made in the second quarter of 2024, with the expense being recognized in the consolidated statement of income as the services are rendered.