Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements on a Recurring Basis

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Fair Value as of March 31, 2023		Fair Value Measurements Using Inputs Considered as:
			Level 1		Level 2		Level 3
Assets:
Derivative assets - designated as cash flow hedges (interest rate swaps)	$	900	$	—	$	900	$	—
Derivative assets - capped call derivatives	31,014		—		—		31,014
Convertible notes receivable	275		—		—		275
	$	32,189	$	—	$	900	$	31,289
Liabilities:
Derivative liabilities - freestanding instruments (FX)	$	1,236	$	—	$	1,236	$	—
Derivative liabilities - embedded exchange feature	41,285		—		—		41,285
Contingent consideration arrangements	90,119		—		—		90,119
	$	132,640	$	—	$	1,236	$	131,404

	Fair Value as of December 31, 2022		Fair Value Measurements Using Inputs Considered as:
			Level 1		Level 2		Level 3
Assets:
Derivative assets - designated as cash flow hedges (interest rate swap)	$	1,333	$	—	$	1,333	$	—
Derivative assets - capped call derivatives	54,393		—		—		54,393
Convertible notes receivable	285		—		—		285
	$	56,011	$	—	$	1,333	$	54,678
Liabilities:
Derivative liabilities - freestanding instruments (FX)	$	5,886	$	—	$	5,886	$	—
Derivative liabilities - embedded exchange feature	85,675		—		—		85,675
Contingent consideration arrangements	85,292		—		—		85,292
	$	176,853	$	—	$	5,886	$	170,967

Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements

The following table provides a reconciliation of the beginning and ending balances of recurring fair value measurements, using significant unobservable inputs (Level 3) (in thousands):

	Capped Call Derivative Asset		Convertible Notes Receivable		Embedded Exchange Feature Derivative Liability		Contingent Consideration Liability Arrangements
As of December 31, 2022 - long-term	$	54,393	$	285	$	85,675	$	85,292
Changes in fair value	(23,379)		(10)		(44,390)		4,827
Total at March 31, 2023 - long-term	$	31,014	$	275	$	41,285	$	90,119

Schedule of Fair Value of Contingent Consideration Arrangements by Acquisition

The following table provides the fair value of Level 3 contingent consideration arrangements by acquisition (in thousands):

	March 31, 2023		December 31, 2022
ImThera	$	73,056	$	69,389
ALung	17,063		15,903
	$	90,119	$	85,292

Significant Unobservable Inputs Related to Contingent Consideration

The sales-based earnout was valued using projected sales from the Company’s internal strategic plan and is a Level 3 fair value measurement, which includes the following significant unobservable inputs (in thousands):

ALung Acquisition	Fair value at May 2, 2022		Valuation Technique	Unobservable Input	Ranges
Sales-based earnout	$	16,791	Monte Carlo simulation	Risk-adjusted discount rate	7.0%	-	8.4%
				Credit risk discount rate	6.4%	-	8.0%
				Revenue volatility	25.7%
				Projected years of earnout	2023	-	2027

These arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of March 31, 2023:

ImThera Acquisition	Valuation Technique	Unobservable Input	Inputs
Regulatory milestone-based payment	Discounted cash flow	Discount rate	9.7%
		Probability of payment	85%
		Projected payment year	2025
Sales-based earnout	Monte Carlo simulation	Risk-adjusted discount rate	13.8% - 14.1%
		Credit risk discount rate	10.0% - 10.6%
		Revenue volatility	32.5%
		Probability of payment	85%
		Projected years of earnout	2026 - 2029

The ALung business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain sales-based thresholds associated with sales of products. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of March 31, 2023:

ALung Acquisition	Valuation Technique	Unobservable Input	Inputs
Sales-based earnout	Monte Carlo simulation	Risk-adjusted discount rate	9.3% - 10.4%
		Credit risk discount rate	9.1% - 10.2%
		Revenue volatility	30.7%
		Projected years of earnout	2023 - 2027