Fair Value Measures and Disclosures (Tables)

6 Months Ended

Jun. 30, 2023

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, 2023	$	25,572

Change in fair value of earn-out (included in income from operations as a separate line item)(1)	(700)
Currency translation	33
Accrued balance, March 31, 2023	24,905
Change in fair value of earn-out (included in income from operations as a separate line item)(2)	4,016
Other	11
Currency translation	1
Accrued balance, June 30, 2023	$	28,933


	Earn-out Liability
Accrued balance, January 1, 2022	$	2,589
Acquisition date fair value estimate of earn-out(3)	55,158

Currency translation	(46)
Accrued balance, March 31, 2022	57,701
Change in fair value of earn-out (included in income from operations as a separate line item)(1)	(27,194)
Currency translation	(98)
Accrued balance, June 30, 2022	$	30,409

_______________________________

(1) Primarily relates to Smiths Medical.

(2) $2.3 million relates to Smiths Medical and $1.7 million relates to the earn-out in connection with our acquisition of a small foreign infusions systems supplier.

(3) $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).

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:

Smiths Medical Earn-out Liability


Simulation Input	As of June 30, 2023		As of December 31, 2022
Volatility	34.00	%	38.00	%
Risk-Free Rate	4.62	%	4.17	%

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 June 30, 2023
	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 corporate bonds	$	1,313	$	—	$	1,313	$	—


Short-term government bonds	499		—		499		—

Foreign exchange contracts:
Prepaid expenses and other current assets	11,533		—		11,533		—
Other assets	897		—		897		—


Interest rate contracts:
Prepaid expenses and other current assets	31,702		—		31,702		—
Other assets	17,229		—		17,229		—
Total Assets	$	63,173	$	—	$	63,173	$	—

Liabilities:
Contingent earn-out liability - ST	$	1,989	$	—	$	—	$	1,989
Contingent earn-out liability - LT	26,944		—		—		26,944
Foreign exchange contracts:
Accrued liabilities	3,806		—		3,806		—
Other long-term liabilities	105		—		105		—


Total Liabilities	$	32,844	$	—	$	3,911	$	28,933


	Fair value measurements as of December 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 corporate bonds	$	2,314	$	—	$	2,314	$	—
Short-term U.S. treasury securities	1,412		1,412		—		—
Short-term government bonds	498		—		498		—
Long-term corporate bonds	516		—		516		—

Foreign exchange forwards:
Prepaid expenses and other current assets	4,860		—		4,860		—
Other assets	94		—		94		—
Interest rate contracts:
Prepaid expenses and other current assets	28,431		—		28,431		—
Other assets	26,753		—		26,753		—

Total Assets	$	64,878	$	1,412	$	63,466	$	—

Liabilities:
Contingent earn-out liability - LT	$	25,572	$	—	$	—	$	25,572



Foreign exchange contracts:
Accrued liabilities	1,847		—		1,847		—
Other long-term liabilities	167		—		167		—
Total Liabilities	$	27,586	$	—	$	2,014	$	25,572