Fair Value Measurements

12 Months Ended

Mar. 31, 2017

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at March 31, 2017 and March 31, 2016:



	Balance at		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	March 31, 2017				Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
ASSETS
Cash and cash equivalents⁽¹⁾	$	37,673	$	37,673	$	—	$	—
Restricted cash and cash equivalents	4,916		4,916		—		—
	$	42,589	$	42,589	$	—	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	18,817	$	—	$	18,817	$	—
	$	18,817	$	—	$	18,817	$	—



	Balance at		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	March 31, 2016				Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
ASSETS
Cash and cash equivalents ⁽¹⁾	$	27,176	$	27,176	$	—	$	—
Restricted cash and cash equivalents	5,320		5,320		—		—
Marketable securities ⁽²⁾	9,297		9,297		—		—
	$	41,793	$	41,793	$	—	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	23,843	$	—	$	—	$	23,843
	$	23,843	$	—	$	—	$	23,843

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⁽¹⁾ Cash equivalents consist primarily of money market funds.

⁽²⁾ Marketable securities consist of available-for-sale money market instruments and fixed-income securities, including certificates of deposit, corporate bonds and notes, and municipal securities.

The contingent consideration liability as of March 31, 2017 relates to the acquisition of HealthFusion (see Note 5). Prior to March 31, 2017, the categorization of the framework used to measure fair value of the contingent consideration liability was considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. We had assessed the fair value of the contingent consideration liability on a recurring basis and any adjustments to fair value subsequent to the measurement period were reflected in the consolidated statements of net income and comprehensive income. Key assumptions included discount rates and probability-adjusted achievement estimates of certain revenue targets that were not observable in the market. As of the end of the HealthFusion contingent consideration liability measurement period on December 31, 2016, the actual revenue target achievement rate was utilized to compute the ending contingent consideration liability. Accordingly, the contingent consideration liability was transferred into the Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs.

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the years ended March 31, 2017:



	Total Liabilities
Balance at March 31, 2015	$	16,155
Contingent consideration related to acquisition of HealthFusion (Note 5)	16,700
Settlement of share-based contingent consideration related to Mirth	(9,273		)
Fair value adjustments, net	261
Balance at March 31, 2016	$	23,843
Settlement of share-based contingent consideration related to Mirth	(9,273		)
Fair value adjustments, net	4,247
Transfer of HealthFusion contingent consideration to Level 2	(18,817		)
Balance at March 31, 2017	$	—

During the year ended March 31, 2017, we issued shares of common stock to settle $9,273 in contingent consideration liabilities related to the acquisition of Mirth and recorded $4,247 of net fair value adjustments to contingent consideration liabilities, of which $3,817 was related to HealthFusion and $430 was related to Mirth. The fair value adjustments to contingent consideration liabilities are included as a component of selling, general and administrative expense in the consolidated statements of net income and comprehensive income.

We believe that the fair value of other financial assets and liabilities, including accounts receivable, accounts payable, and line of credit, approximate their respective carrying values due to their nominal credit risk.

Non-Recurring Fair Value Measurements

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. During the year ended March 31, 2017, we recorded certain adjustments to HealthFusion goodwill (see Note 5).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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