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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Our financial assets and (liabilities) carried at fair value and measured on a recurring basis as of September 30, 2020 and December 31, 2019 consisted of the following (in thousands):


			Fair Value Measurements Using
	Total Fair		Quoted prices in		Significant other		Significant
	Value at		active markets		observable inputs		unobservable inputs
	September 30, 2020		(Level 1)		(Level 2)		(Level 3)
Interest rate contract liabilities, current and long-term ⁽¹⁾	$	(4,915)	$	—	$	(4,915)	$	—
Foreign currency contract assets, current and long-term ⁽²⁾	$	2,325	$	—	$	2,325	$	—
Foreign currency contract liabilities, current and long-term ⁽³⁾	$	(4,219)	$	—	$	(4,219)	$	—
Contingent consideration liabilities	$	(64,665)	$	—	$	—	$	(64,665)


			Fair Value Measurements Using
	Total Fair		Quoted prices in		Significant other		Significant
	Value at		active markets		observable inputs		unobservable inputs
	December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Interest rate contract asset, long-term ⁽¹⁾	$	1,192	$	—	$	1,192	$	—
Interest rate contract liability, long-term ⁽¹⁾	$	(290)	$	—	$	(290)	$	—
Foreign currency contract assets, current and long-term ⁽²⁾	$	2,447	$	—	$	2,447	$	—
Foreign currency contract liabilities, current and long-term ⁽³⁾	$	(4,255)	$	—	$	(4,255)	$	—
Contingent consideration liabilities	$	(76,709)	$	—	$	—	$	(76,709)

(1)	The fair value of the interest rate contracts is determined using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets, other long-term assets, accrued expenses, or other long-term obligations in the consolidated balance sheets.

(2)

The fair value of the foreign currency contract assets (including those designated as hedging instruments and those not designated as hedging instruments) is determined using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets or other long-term assets in the consolidated balance sheets.

(3)

The fair value of the foreign currency contract liabilities (including those designated as hedging instruments and those not designated as hedging instruments) is determined using Level 2 fair value inputs and is recorded as accrued expenses or other long-term obligations in the consolidated balance sheets.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

Changes in the fair value of our contingent consideration liabilities during the three and nine-month periods ended September 30, 2020 and 2019 consisted of the following (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Beginning balance	$	69,100	$	93,204	$	76,709	$	82,236
Contingent consideration liability recorded as the result of acquisitions		—		1,203		—		9,583
Contingent consideration expense (benefit)		(4,356)		273		884		3,473
Contingent payments made		(130)		(15,072)		(12,991)		(15,684)
Effect of foreign exchange		51		—		63		—
Ending balance	$	64,665	$	79,608	$	64,665	$	79,608

Fair Value Inputs, Liabilities, Quantitative Information

The recurring Level 3 measurement of our contingent consideration liabilities included the following significant unobservable inputs at September 30, 2020 and December 31, 2019 (amounts in thousands):


	Fair value at
	September 30,		Valuation
Contingent consideration liability	2020		technique	Unobservable inputs	Range	Weighted Average⁽¹⁾
Revenue-based royalty payments contingent liability	$	4,804	Discounted cash flow	Discount rate	13% - 20%	13.6%
				Projected year of payments	2020-2034	2025

Revenue milestones contingent liability	$	55,561	Monte Carlo simulation	Discount rate	11% - 14%	12.4%
				Projected year of payments	2020-2023	2022

Regulatory approval contingent liability	$	4,300	Scenario-based method	Discount rate	2.7%
				Probability of milestone payment	90%
				Projected year of payment	2021-2022	2022
⁽¹⁾ Unobservable inputs were weighted by the relative fair value of the instruments. No weighted average is reported for contingent consideration liabilities without a range of unobservable inputs.


	Fair value at
	December 31,		Valuation
Contingent consideration liability	2019		technique	Unobservable inputs	Range
Revenue-based royalty payments contingent liability	$	7,710	Discounted cash flow	Discount rate	13% - 24%
				Projected year of payments	2020-2034

Revenue milestones contingent liability	$	66,114	Monte Carlo simulation	Discount rate	9% - 13.5%
				Projected year of payments	2020-2023

Regulatory approval contingent liability	$	2,885	Scenario-based method	Discount rate	2.4%
				Probability of milestone payment	65%
				Projected year of payment	2022

Schedule of Rollforward of Allowance for Credit Losses

The table below presents a rollforward of the allowance for current expected credit losses on our notes receivable for the three and nine-month periods ended September 30, 2020 (in thousands):


	Three Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2020
Beginning balance	$	757	$	—
Cumulative effect adjustment upon adoption of ASU 2016-13, Credit Losses		—		575
Provision for credit loss expense		46		228
Ending balance	$	803	$	803