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Fair value measurements
12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair value measurements Fair value measurements
There were no assets measured at fair value on a recurring basis and there were no liabilities valued at fair value using Level 1 inputs at December 31, 2023 and 2022. The following table provides information for assets and liabilities measured at fair value on a recurring basis using Level 2 and Level 3 inputs:
December 31, 2023December 31, 2022
TotalLevel 2Level 3TotalLevel 2Level 3
Liabilities:
Deferred Amount - Current(a)
$— $— $— $117,615 $— $117,615 
Deferred Amount - Long Term(a)
— — — 79,269 — 79,269 
CartiHeal Contingent Consideration(a)
— — — 67,251 — 67,251 
Bioness Contingent Consideration18,150 — 18,150 17,431 — 17,431 
Total liabilities:$18,150 $— $18,150 $281,566 $— $281,566 
(a)The Deferred Amount and contingent consideration attributable to CartiHeal have been reclassified to discontinued operations within the December 31, 2022 balance sheet. CartiHeal was fully deconsolidated during the first quarter of 2023. Refer to Note 4. Acquisitions and divestitures and Note 15. Discontinued operations for further details regarding the deconsolidation of CartiHeal.
Deferred Amount
The Deferred Amount that resulted from the CartiHeal Acquisition was calculated based on the total amount payable on each due date for the payment tranches including applicable interest. As previously discussed, the Company reached a Settlement Agreement with the Former Securityholders which relieved the Company of the obligations under the Deferred Amount. Refer to Note 4. Acquisitions and divestitures for further information.
Contingent consideration
The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones. For other milestones, the Company used a variation of the income approach where revenue was simulated in a risk-neutral framework using Geometric Brownian Motion, a stock price behavior model.
Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets. After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using unobservable Level 3 inputs. As previously discussed, the Company reached a Settlement Agreement with CartiHeal’s selling securityholders. As a result of the Settlement Agreement, the Company was relieved of the CartiHeal Contingent Consideration obligations. Refer to Note 4. Acquisitions and divestitures for further information.
Unobservable inputs
A summary of unobservable Level 3 inputs utilized for the above liabilities are as follows:
Valuation TechniqueUnobservable inputsRange
Bioness Contingent ConsiderationDiscounted cash flowPayment discount rate
6.4% - 6.8%
Payment period
2024 - 2025
Significant changes in these assumptions could result in a significantly higher or lower fair value. The contingent consideration reported in the above table resulted from the Bioness Acquisition on March 30, 2021 and the CartiHeal Acquisition on July 12, 2022. Contingent consideration is adjusted quarterly based upon the passage of time or the anticipated success or failure of achieving certain milestones. Changes in contingent consideration related to the Bioness Acquisition totaled $719, $1,102 and $829 for the years ended December 31, 2023, 2022 and 2021, respectively, and were recorded as the change in fair value of contingent consideration within the consolidated statements of operations and comprehensive (loss) income. Changes in contingent consideration related to the CartiHeal Acquisition totaled $1,710 and $5,350 for years ended December 31, 2023 and 2022, respectively and were recorded in discontinued operations, net of tax within the consolidated statements of operations and comprehensive (loss) income. comprehensive loss. Pursuant to the Settlement Agreement, the Company was relieved of CartiHeal related obligations. The Company deconsolidated the remaining $68,961 contingent consideration liability as a result. Refer to Note 4. Acquisitions and divestitures for further details regarding the deconsolidation of CartiHeal.
Management incentive plan and liability-classified awards
BV LLC had operated two equity-based compensation plans, the management incentive plan (the “MIP”) and the BV LLC Phantom Profits Interest Plan (together with the MIP, the “Phantom Plans”), which were terminated on February 11, 2021 in connection with the Company’s IPO. Awards granted under the MIP Plan and the 2015 Phantom Units were liability-classified and the 2012 Phantom Units were equity-classified. Prior to the IPO and during the year ended December 31, 2021, the Company settled with the sole MIP awardee for $10,802. No awards under the Phantom Plans were granted post-IPO and the Phantom Plan awards were settled 12 months following the termination. Vested awardees whose BV LLC employment terminated prior to the IPO had their awards settled in March 2022 for $10,413. Due to the changes in fair value for these awards granted prior to the Company’s IPO, compensation award activity from the Phantom Plans resulted in a net gain of $24,356 for the year ended December 31, 2021.