XML 22 R11.htm IDEA: XBRL DOCUMENT v3.24.3
Fair Value Measurements
9 Months Ended
Sep. 30, 2024
Fair Value Measurements  
Fair Value Measurements

Note 4. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):

At September 30, 2024

Quoted prices

Significant

in active

other

Significant

markets for

observable

unobservable

September 30, 

identical assets

inputs

inputs

    

2024

    

(Level 1)

    

(Level 2)

    

(Level 3)

Assets

Cash equivalents:

Money market funds (i)

$

44,519

$

44,519

$

-

$

-

Available for sale securities:

U.S. treasury securities (ii)(v)

132,200

-

132,200

-

Commercial paper (ii)

-

-

-

-

Bank certificates of deposit (ii)

6,430

-

6,430

-

Corporate notes (ii)

19,032

-

19,032

-

Asset-backed securities (ii)

10,920

-

10,920

-

Municipal bonds (ii)

3,029

-

3,029

-

Investments held for deferred compensation plans (iii)

14,816

-

14,816

-

Total Assets

$

230,946

$

44,519

$

186,427

$

-

Liabilities

Deferred compensation plans (iv)

$

14,559

$

-

$

14,559

$

-

Contingent consideration (iv)

$

1,500

$

-

$

-

$

1,500

Total Liabilities

$

16,059

$

-

$

14,559

$

1,500

(i)Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets.
(ii)Included in short-term investments on the condensed consolidated balance sheets.
(iii)Included in deposits and other assets on the condensed consolidated balance sheets.
(iv)Included in other liabilities on the condensed consolidated balance sheets.
(v)One U.S. treasury security totaling $9,281 (in thousands) is included in cash and cash equivalents on the consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the consolidated balance sheets.

At December 31, 2023

Quoted prices

Significant

in active

other

Significant

markets for

observable

unobservable

December 31, 

identical assets

inputs

inputs

    

2023

    

(Level 1)

    

(Level 2)

    

(Level 3)

Assets

Cash equivalents:

Money market funds (i)

$

52,156

$

52,156

$

-

$

-

Available for sale securities:

U.S. government agency bonds (ii)

$

25,650

$

-

$

25,650

$

-

U.S. treasury securities (ii)

125,018

-

125,018

-

Commercial paper (ii)

5,682

-

5,682

-

Bank certificates of deposit (ii)

7,109

-

7,109

-

Corporate notes (ii)

21,140

-

21,140

-

Asset-backed securities (ii)

12,321

-

12,321

-

Municipal bonds (ii)

5,044

-

5,044

-

Investments held for deferred compensation plans (iii)

11,589

-

11,589

-

Total Assets

$

265,709

$

52,156

$

213,553

$

-

Liabilities

Deferred compensation plans (iv)

$

11,294

$

-

$

11,294

$

-

Total Liabilities

$

11,294

$

-

$

11,294

$

-

(i)Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets.
(ii)Included in short-term investments on the condensed consolidated balance sheets.
(iii)Included in deposits and other assets on the condensed consolidated balance sheets.
(iv)Included in other liabilities on the condensed consolidated balance sheets.

Money market funds are highly-liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

U.S. government agency bonds, U.S. treasury securities, bank certificates of deposit, commercial paper, municipal bonds, corporate notes and asset-backed securities are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. Pursuant to the Company’s deferred compensation plan (the Deferred Compensation Plan), the Company has also established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The investments of the rabbi trust and Deferred Compensation Plan liability consist of company-owned life insurance policies (COLIs) and the pricing on these investments can be independently evaluated. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

The Company recorded a contingent consideration liability upon the asset acquisition described in Recent Developments within Note 1, Organization and Basis of Presentation above. The contingent consideration is measured at fair value and is based on significant inputs not observable in the market which includes the probability and timing of achieving certain future milestones, and to a lesser extent, an applicable discount rate and Glaukos’ credit rating. This represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes a market participant would make. The Company assesses these estimates on an ongoing basis as it obtains additional data impacting the assumptions. During the three and nine months ended September 30, 2024, the contingent consideration liability increased from $1.4 million to $1.5 million, with the change in the fair value of contingent consideration related to updated assumptions and estimates recognized within the condensed consolidated statements of operations.

There were no transfers between levels within the fair value hierarchy during the periods presented.

The Company did not have any assets or liabilities measured at fair value on a recurring basis within Level 3 fair value measurements as of December 31, 2023.

Convertible Senior Notes

As of September 30, 2024 and December 31, 2023, the fair value of the Convertible Notes was $135.3 million and $444.0 million, respectively. The fair value was determined on the basis of the market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. See Note 1, Organization and Basis of Presentation and Note 9, Convertible Senior Notes for additional information.