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FAIR VALUE MEASUREMENTS
12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
The three levels of the fair value hierarchy established are as follows:
Level 1    Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access 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 ongoing basis.
Level 2    Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3    Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
The following table presents the Company’s fair value measurements as of December 31, 2021 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
(In thousands)Fair value at December 31, 2021Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Cash, cash equivalents, and restricted cash
Cash and money market$247,335 $247,335 $— $— 
Commercial paper64,593 — 64,593 — 
U.S. government agency securities3,543 — 3,543 — 
Restricted cash297 297 — — 
Marketable securities
Corporate bonds$313,154 $— $313,154 $— 
U.S. government agency securities249,920 — 249,920 — 
Asset backed securities94,460 — 94,460 — 
Certificates of deposit47,139 — 47,139 — 
Commercial paper6,996 — 6,996 — 
Equity securities3,336 3,336 — — 
Non-marketable securities$3,090 $— $— $3,090 
Liabilities
Contingent consideration$(359,021)$— $— $(359,021)
Total$674,842 $250,968 $779,805 $(355,931)
The following table presents the Company’s fair value measurements as of December 31, 2020 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
(In thousands)Fair Value at December 31, 2020Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Cash and cash equivalents
Cash and money market$901,294 $901,294 $— $— 
U.S. government agency securities589,994 — 589,994 — 
Restricted cash306 306 — — 
Marketable securities
Corporate bonds$132,913 $— $132,913 $— 
Asset backed securities7,094 — 7,094 — 
U.S. government agency securities207,171 — 207,171 — 
Equity securities1,521 1,521 — — 
Liabilities
Contingent consideration$(2,477)$— $— $(2,477)
Total$1,837,816 $903,121 $937,172 $(2,477)
The equity securities held as of December 31, 2021 were subject to a short-term lock-up restriction after they were obtained in the second quarter of 2021, and the fair value was previously discounted from the observable market prices of the similar unrestricted equity securities, which the Company classified as a Level 2 investment. The lock-up restriction ended during the fourth quarter of 2021, and the equity securities are classified as a Level 1 investment as of December 31, 2021. There was no change in valuation techniques or transfers between fair value measurement levels during the year ended December 31, 2020. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities are valued using a third-party pricing agency where the valuation is based on observable inputs including pricing for similar assets and other observable market factors.
Contingent Consideration
The fair value of contingent consideration as of December 31, 2021 and 2020 was $359.0 million and $2.5 million, respectively, which was recorded in other long-term liabilities in the condensed consolidated balance sheets.
The following table provides a reconciliation of the beginning and ending balances of contingent consideration:
(In thousands)Contingent consideration
Balance, January 1, 2020 (1)
$(2,879)
Changes in fair value325 
Payments77 
Balance, December 31, 2020
(2,477)
Purchase price contingent consideration (2)(350,348)
Changes in fair value(6,359)
Payments163 
Balance, December 31, 2021
$(359,021)
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(1) The change in fair value of the contingent consideration liability during the year ended December 31, 2019 was not material to the consolidated financial statements.
(2) The increase in the contingent consideration liability is due to the contingent consideration associated with the acquisitions of Ashion Analytics, LLC (“Ashion”) and Thrive. Refer to Note 19 for further information.
This fair value measurement of contingent consideration is categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the market.
The fair value of the contingent consideration liability recorded related to regulatory and product development milestones associated with the Thrive and Ashion acquisitions was $357.8 million as of December 31, 2021. The Company evaluates the fair value of the regulatory and product development contingent consideration liabilities using the probability-weighted scenario based discounted cash flow model, which is consistent with the initial measurement of the expected contingent consideration liabilities. Probabilities of success are applied to each potential scenario and the resulting values are discounted using a rate that considers a present-value factor. The passage of time in addition to changes in projected milestone achievement timing, present-value factor, the degree of achievement if applicable, and probabilities of success may result in adjustments to the fair value measurement. The fair value measurements of contingent consideration for which a liability is recorded include significant unobservable inputs. As of December 31, 2021, the fair value of the contingent consideration liability recorded related to regulatory and product development milestones was determined using a weighted average probability of success of 90.5% and a weighted average present-value factor of 2.3%. The projected fiscal year of payment range is from 2024 to 2027. Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.
The fair value of the contingent consideration earnout liability related to certain revenue milestones associated with the Biomatrica acquisition was $1.2 million as of December 31, 2021. The revenue milestone associated with the Ashion acquisition is not expected to be achieved and therefore no liability has been recorded for this milestone.
Non-Marketable Equity Investments
As of December 31, 2021 and 2020, the aggregate carrying amounts of the Company’s non-marketable equity securities without readily determinable fair values were $25.3 million and $28.3 million, respectively, which are classified as a component of other long-term assets in the Company’s consolidated balance sheets. There have been no downward or upward adjustments made on these investments since initial recognition.
The Company has committed capital to venture capital investment funds (the “Funds”) of $17.5 million, of which $16.0 million remained callable through 2033 as of December 31, 2021. The aggregate carrying amount of the Funds, which are classified as a component of other long-term assets in the Company's consolidated balance sheets, were $1.5 million and $0.8 million as of December 31, 2021 and 2020, respectively.
Derivative Financial Instruments
As of December 31, 2021 and 2020, the Company had open foreign currency forward contracts with notional amounts of $46.7 million and $22.4 million, respectively. The Company's foreign exchange derivative instruments are classified as Level 2 within the fair value hierarchy as they are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. The fair value of the foreign currency forward contracts was zero at December 31, 2021 and 2020, and there were no gains or losses recorded for the years ended December 31, 2021 and 2020.