Fair Value of Financial Instruments

12 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

5. Fair Value of Financial Instruments

The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts, financing receivables and accounts payable.  Due to the short-term maturities of cash and cash equivalents, trade accounts receivable, financing receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates.  The valuation technique used to measure the fair value of the contingent consideration was derived from models utilizing market observable inputs.  

The Company measures its short-term investments and contingent consideration at fair value on a recurring basis.

The following tables present the fair value of the Company’s short-term investments and contingent consideration by valuation hierarchy and input (in thousands):

	AS OF SEPTEMBER 30, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)		Significant Unobservable (Level 3)			Totals
Short-term investments:
Corporate bonds	$	—	$	9,496	$	—		$	9,496
Total assets	$	—	$	9,496	$	—		$	9,496
Contingent consideration liabilities		—		—		(5,210	)		(5,210	)
Total liabilities	$	—	$	—	$	(5,210	)	$	(5,210	)

	AS OF SEPTEMBER 30, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)		Significant Unobservable (Level 3)			Totals
Contingent consideration	$	—	$	—	$	(10,962	)	$	(10,962	)

The following table summarizes changes in the fair value of the Company’s Level 3 financial instruments for the fiscal years ended September 30, 2020 and 2021:

Balance at October 1, 2019	$	9,940
Fair value adjustments		1,100
Payment of contingent consideration		(78	)
Balance at September 30, 2020		10,962
Fair value adjustments		(3,524	)
Payment of contingent consideration		(1,421	)
		6,017
Less:  Consideration payable		(807	)
Balance at September 30, 2021	$	5,210

Adjustments to the fair value of the contingent consideration are based on Monte Carlo simulations or the probability-weighted expected return method utilizing inputs which include market comparable information and management assessments regarding potential future scenarios.  The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved.