Investments

9 Months Ended

Sep. 30, 2019

Investments

Investments

3.    Investments

Available-for-Sale Debt Securities

Available-for-sale debt securities are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income in stockholders’ equity, until realized. Available-for-sale debt securities consisted of the following (in millions):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of September 30, 2019	Cost		Gains		Losses		Value
U.S. government and agency securities	$	1,287.9	$	3.2	$	(0.5)	$	1,290.6
Corporate debt securities		223.6		1.8		(0.1)		225.3
Total	$	1,511.5	$	5.0	$	(0.6)	$	1,515.9
Reported under the following captions on our consolidated balance sheet:
Current marketable investments								785.5
Non-current marketable investments								730.4
Total							$	1,515.9

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of December 31, 2018	Cost		Gains		Losses		Value
U.S. government and agency securities	$	1,077.4	$	0.7	$	(3.9)	$	1,074.2
Corporate debt securities		72.3		—		(0.3)		72.0
Total	$	1,149.7	$	0.7	$	(4.2)	$	1,146.2
Reported under the following captions on our consolidated balance sheet:
Current marketable investments								705.8
Non-current marketable investments								440.4
Total							$	1,146.2

The following table summarizes the contractual maturities of available-for-sale marketable investments (in millions):

	As of September 30, 2019
	Amortized		Fair
	Cost		Value
Due within one year	$	784.7	$	785.5
Due in one to three years		726.8		730.4
Total	$	1,511.5	$	1,515.9

	As of December 31, 2018
	Amortized		Fair
	Cost		Value
Due within one year	$	708.2	$	705.8
Due in one to three years		441.5		440.4
Total	$	1,149.7	$	1,146.2

Investments in Privately-Held Companies

As of September 30, 2019, we maintained non-controlling equity investments in privately-held companies of $101.7 million in the aggregate. We measure these investments using the measurement alternative because the fair values of these investments are not readily determinable. Under this alternative, the investments are measured at cost, less any impairment, adjusted for any observable price changes. There were no impairments or observable price changes in our investments in privately-held companies during the three and nine months ended September 30, 2019. We include our investments in privately-held companies within other non-current assets on our consolidated balance sheets. These investments are subject to a periodic impairment review and if impaired, the investment is measured and recorded at fair value in accordance with ASC 820, Fair Value Measurements.

During the quarter ended September 30, 2018, one of the privately-held companies in which we invested underwent a significant change in management and a change in business outlook and strategy, all of which triggered our review of the recoverability of our investment in the company. We determined the fair value of our investment as of September 30, 2018 considering an income approach based on the company's discounted projected cash flows. We corroborated the implied revenue multiples from the income approach with the observed revenue multiples of comparable public companies. We concluded that the fair value of our investment as of September 30, 2018 was lower than its carrying value, resulting in an impairment charge of $12.4 million.

Deconsolidation of a Variable Interest Entity

In April 2017, we made a $7.5 million minority equity investment in a privately-held company. In addition to our investment, we entered into an exclusive license, development and commercialization agreement (the License Agreement) with this company. The License Agreement entitled us to control rights sufficient to require us to regard the company as a variable interest entity (VIE) and to consolidate the company’s balance sheet and results of operations as the primary beneficiary of this company.

In June 2019, we elected to terminate the License Agreement. The termination of the License Agreement caused us to impair an associated in-process research and development (IPR&D) asset during the second quarter of 2019 and recognize an impairment charge of $8.8 million, which is included within research and development expense on our consolidated statements of operations. Upon effectiveness of the termination of the License Agreement in the third quarter of 2019 , we no longer have the power to direct the entity’s activities. Consequently, we deconsolidated the entity in the third quarter of 2019. Our deconsolidation of the entity’s balance sheet, which included $3.5 million of goodwill and $8.4 million of temporary equity, resulted in a net deconsolidation loss of $2.0 million. The deconsolidation loss is included within other (expense) income, net on our consolidated statements of operations . We have no further funding obligations to the entity, and our maximum exposure to loss is equal to the carrying value of our retained interest. We now account for our equity investment in this privately-held company using the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of the entity, but we no longer have a controlling financial interest.

Investments in Equity Securities with Readily Determinable Fair Values

We held investments in equity securities with readily determinable fair values of $64.8 million and $3.5 million as of September 30, 2019 and December 31, 2018, respectively, which are included in current marketable investments on our consolidated balance sheets. During the second quarter of 2019, TransMedics Group, Inc., one of the privately-held companies in which we had invested, completed its initial public offering and its common stock began trading on the Nasdaq Stock Market. As a result, the equity securities we own in this company are now recorded at fair value rather than reflected as an investment in a privately-held company. Changes in the fair value of publicly traded equity securities are recorded on our consolidated statements of operations within other (expense) income, net. Refer to Note 4—Fair Value Investments.