FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC 820 are described below:

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 in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The Company acquired two businesses, related to the Cholbam and Chenodal products, whose purchase price included potential future payments that are contingent on the achievement of certain milestones and percentages of future net sales derived from the products acquired. The Company recorded contingent consideration liabilities at their fair value on the acquisition date and revalues them at the end of each reporting period. In estimating the fair value of the Company’s contingent consideration, the Company uses a Monte Carlo Simulation. The determination of the contingent consideration liabilities requires significant judgments including the appropriateness of the valuation model and reasonableness of estimates and assumptions included in the forecasts of future net sales and the discount rates applied to such sales. Changes in these estimates and  assumptions could have a significant impact on the fair value of the contingent consideration liabilities. Based on the fair value hierarchy, the Company classified contingent consideration within Level 3 because valuation inputs are based on projected revenues discounted to a present value

Financial instruments with carrying values approximating fair value include cash and cash equivalents, accounts receivable, notes receivable, deposits on lease agreements, and accounts payable, due to their short-term nature.

The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of December 31, 2019 (in thousands):

	As of December, 2019		Fair Value Hierarchy at December 31, 2019
	Total carrying and estimated fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Asset:
Cash and Cash Equivalents	$	62,436	$	62,436	$	—	$	—
Marketable securities, available-for-sale	336,088		—		336,088		—
Total	$	398,524	$	62,436	$	336,088	$	—
Liabilities:
Business combination-related contingent consideration	$	70,900	$	—	$	—	$	70,900
Total	$	70,900	$	—	$	—	$	70,900

The following table presents the Company’s assets and liabilities that are measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of December 31, 2018 (in thousands):

	As of December, 2018		Fair Value Hierarchy at December 31, 2018
	Total carrying and estimated fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Asset:
Cash and Cash Equivalents	$	102,873	$	62,978	$	39,895	$	—
Marketable securities, available-for-sale	368,668		—		368,668		—
Total	$	471,541	$	62,978	$	408,563	$	—
Liabilities:
Business combination-related contingent consideration	93,000		—		—		93,000
Total	$	93,000	$	—	$	—	$	93,000

The following table sets forth a summary of changes in the estimated fair value of the Company's Level 3 business combination-related contingent consideration for the years ended December 31, 2019 and 2018 (in thousands):

	Contingent Consideration (Level 3)
	2019			2018
Balance at January 1,	$	93,000		$	90,000
L-UDCA write-off	(18,000		)	—
Increase from revaluation of contingent consideration	15,051			11,590
Contractual Payments	(6,696		)	(6,373		)
Contractual Payments accrued at December 31	(12,253		)	(2,171		)
Foreign currency impact	(202		)	(46		)
Balance at December 31,	$	70,900		$	93,000