FAIR VALUE MEASUREMENTS

Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:


•	Level 1 — Quoted prices in active markets for identical assets or liabilities;


•	Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016:



	As of June 30, 2017										As of December 31, 2016
(in millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	742		$	674	$	68	$	—		$	242		$	179	$	63	$	—
Restricted cash	$	811		$	811	$	—	$	—		$	—		$	—	$	—	$	—
Liabilities:
Acquisition-related contingent consideration	$	(807	)	$	—	$	—	$	(807	)	$	(892	)	$	—	$	—	$	(892	)

Cash equivalents include highly liquid investments with an original maturity of three months or less at acquisition, primarily including money market funds, reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

Restricted cash includes $811 million of proceeds from the Dendreon Sale. Under the terms of the Third Amended and Restated Credit and Guaranty Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), the Company is required to use the net proceeds of asset sales above a certain threshold to repay its debt obligations. On July 3, 2017, the Company used this restricted cash to repay its Series F Tranche B Term Loan Facility. Restricted cash are cash balances reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

There were no transfers between Level 1, Level 2, or Level 3 during the six months ended June 30, 2017.

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis or Monte Carlo Simulation, using unobservable (Level 3) inputs. These inputs may include: (i) the estimated amount and timing of projected cash flows; (ii) the probability of the achievement of the factor(s) on which the contingency is based; (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows; and (iv) volatility of projected performance (Monte Carlo Simulation). Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2017:



(in millions)
Balance, January 1, 2017				$	892
Acquisition-related contingent consideration:
Accretion for the time value of money	$	35
Fair value adjustments	(94		)
				(59		)
Payments				(26		)
Balance, June 30, 2017				807
Current portion				52
Non-current portion				$	755

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The following fair value hierarchy table presents the assets measured at fair value on a non-recurring basis:



	As of June 30, 2017								As of December 31, 2016
(in millions)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Non-current assets held for sale	$	179	$	—	$	—	$	179	$	38	$	—	$	—	$	38

Non-current assets held for sale of $709 million included in the consolidated balance sheet as of June 30, 2017, includes held for sale assets of $179 million which were remeasured to estimated fair values less costs to sell. The Company recognized an impairment charge of $113 million, in the aggregate, in Asset impairments during the six months ended June 30, 2017 in the consolidated statement of operations. The estimated fair values of these assets less costs to sell were determined using a discounted cash flow analysis which utilized Level 3 unobservable inputs. The remaining balance of non-current assets held for sale as of June 30, 2017 reflect the historical carrying value of those assets which do not exceed fair value less costs to sell.

Long-term Debt

The fair value of long-term debt as of June 30, 2017 and December 31, 2016, was $27,250 million and $26,297 million, respectively, and was estimated using the quoted market prices for the same or similar debt issuances (Level 2).