Fair Value Measures and Disclosures (Tables)

3 Months Ended

Mar. 31, 2022

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

The following tables provide a reconciliation of the Level 3 earn-out liabilities measured at estimated fair value (in thousands):


	Earn-out Liability
Accrued balance, January 1, 2022	$	2,589
Acquisition date fair value estimate of earn-out(1)	55,158

Currency translation	(46)
Accrued balance, March 31, 2022	$	57,701

_______________________________

(1) $53.5 million relates to our acquisition of Smiths Medical and $1.6 million relates to our acquisition of a small foreign infusions systems supplier in the fourth quarter of 2021 (see Note 3: Acquisitions).


	Earn-out Liability
Accrued balance, January 1, 2021	$	26,300

Change in fair value of earn-out (included in income from operations as a separate line item)	—
Accrued balance, March 31, 2021	$	26,300

Fair Value Measurement Inputs and Valuation Techniques

The following tables provide quantitative information about Level 3 inputs for fair value measurement of our earn-out liabilities related to Smiths Medical and Pursuit:

Smiths Medical Earn-out


Simulation Input	At Acquisition January 6, 2022
Volatility	37.00	%
Risk-Free Rate	1.31	%

Pursuit Earn-out


Simulation Input	As of March 31, 2021
Revenue/Gross Profit Volatility	25.00	%
Discount Rate	12.50	%
Risk-Free Rate	0.09	%
Counter Party Risk	3.10	%

Fair Value, by Balance Sheet Grouping

Our assets and liabilities measured at fair value on a recurring basis consisted of the following Level 1, 2 and 3 inputs as defined above (in thousands):


	Fair value measurements as of March 31, 2022
	Total carrying value		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)
Assets:
Available-for-sale debt securities:
Short-term	$	14,864	$	—	$	14,864	$	—
Long-term	2,539		—		2,539		—
Foreign exchange contracts:
Prepaid expenses and other current assets	7,629		—		7,629		—
Other assets	115		—		115		—


Interest rate contracts:

Other assets	28,570		—		28,570		—
Total Assets	$	53,717	$	—	$	53,717	$	—

Liabilities:

Contingent earn-out liability - LT	57,701		—		—		57,701
Foreign exchange contracts:
Accrued liabilities	895		—		895		—
Other long-term liabilities	27		—		27		—


Total Liabilities	$	58,623	$	—	$	922	$	57,701


	Fair value measurements as of December 31, 2021
	Total carrying value		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)
Assets:
Available-for-sale debt securities:
Short-term	$	14,420	$	—	$	14,420	$	—
Long-term	4,620		—		4,620		—
Cross-currency par forward contract:
Prepaid expenses and other current assets	1,061		—		1,061		—


Total Assets	$	20,101	$	—	$	20,101	$	—

Liabilities:
Contingent earn-out liability - LT	$	2,589	$	—	$	—	$	2,589



Forward-starting interest rate swaps:
Other long-term liabilities	1,480		—		1,480		—
Total Liabilities	$	4,069	$	—	$	1,480	$	2,589