The accounting guidance on fair value measurements defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The guidance is applicable for all financial assets and financial liabilities and for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. In valuing Level 3 assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

The Company’s Level 2 assets as of September 30, 2020 and 2019 consisted of cash equivalents (money market funds and commercial paper instruments) and available-for-sale debt securities (commercial paper instruments and corporate bonds). Cash equivalents are carried at historical cost which is a reasonable estimate of fair value because of the relatively short time between origination of the instrument and its expected realization. Available-for-sale securities are valued based on quoted vendor prices in active markets underlying the securities. Fair market values for cash equivalents and available-for-sale debt securities are based on quoted vendor prices and broker pricing where all significant inputs are observable. To ensure the accuracy of quoted vendor prices and broker pricing, the Company performs regular reviews of investment returns to industry benchmarks and sample tests of individual securities to validate quoted vendor prices with other available market data.

The Company’s Level 3 liabilities consisted of contingent consideration liabilities arising from business and asset acquisitions as of September 30, 2019. The fair value of contingent consideration liabilities was determined based on discounted cash flow analyses that included revenue estimates, probability of strategic milestone achievement and a discount rate, which are considered significant unobservable inputs as of the acquisition dates and as of September 30, 2019.

The Company did not significantly change its valuation techniques from prior periods. There were no transfers of assets or liabilities to or from amounts measured using Level 3 fair value measurements during fiscal 2020 or 2019.

Assets and liabilities measured at fair value on a recurring basis by level of the fair value hierarchy were as follows:

	September 30, 2020
(In thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Cash equivalents	$	—	$	18,634	$	—	$	18,634
Available-for-sale securities		—		30,313		—	$	30,313
Total assets	$	—	$	48,947	$	—	$	48,947

	September 30, 2019
(In thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Cash equivalents	$	—	$	24,375	$	—	$	24,375
Available-for-sale securities		—		24,931		—	$	24,931
Total assets	$	—	$	49,306	$	—	$	49,306

Liabilities
Contingent consideration	$	—	$	—	$	3,200	$	3,200
Total liabilities	$	—	$	—	$	3,200	$	3,200

Changes in the contingent consideration liabilities measured at fair value using Level 3 inputs were as follows:

(In thousands)
Contingent consideration liability at September 30, 2018	$	14,466
Additions		—
Fair value adjustments		(415	)
Settlements		(10,979	)
Interest accretion		254
Foreign currency translation		(126	)
Contingent consideration liability at September 30, 2019		3,200
Additions		—
Fair value adjustments		—
Settlements		(3,200	)
Interest accretion		—
Foreign currency translation		—
Contingent consideration liability at September 30, 2020	$	—

As of September 30, 2019, contingent consideration liabilities consisted of $3.2 million related to the fiscal 2016 acquisition of NorMedix which was paid in fiscal 2020. As of September 30, 2018, contingent consideration liabilities totaled $14.5 million, of which $3.4 million was noncurrent, and related to the fiscal 2016 acquisitions of Creagh Medical and NorMedix.

The contingency period for the NorMedix acquisition ended September 30, 2019. Based on the milestones achieved during the contingency period, the Company paid the NorMedix shareholders $3.2 million in fiscal 2020.

The contingency period for the Creagh Medical contingent consideration obligation ended September 30, 2018. Based on the milestones achieved during the contingency period, the Company paid Creagh Medical shareholders $11.0 million in fiscal 2019. The Creagh Medical obligation was discounted using the Company’s annualized cost of debt for the three-month period between September 30, 2019 and the expected settlement date, or 2.3%. Probability of completion for the redefined milestones was reflected in the estimated fair value of the NorMedix contingent consideration obligation as of September 30, 2018. For the revenue-based milestones, the Company discounted forecasted revenue by 20.5%, which represents the Company’s weighted average cost of capital for the transaction, adjusted for the short-term nature of the cash flows. The resulting present value of revenue was used as an input into an option pricing approach, which also considered the Company’s risk of non-payment of the revenue-based milestones. Outstanding strategic milestones were projected to have a 5% to 95% probability of achievement as of September 30, 2018, and related payments were discounted using the Company’s estimated cost of debt for the remaining contingency period, or 6.0%.

The €9.6 million (approximately $11.0 million as of September 30, 2018) contingent consideration related to the Creagh Medical acquisition was denominated in Euros and was not hedged. The Company recorded foreign currency gains of $0.1 million in both fiscal 2019 and 2018 related to this contingent consideration obligation as it was marked to year-end exchange rates.

We measure certain assets at fair value on a nonrecurring basis, primarily goodwill, intangible assets, and long-lived assets, as well as cost method equity investments recorded within other assets on the consolidated balance sheets. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase and subject to changes in value only for foreign currency translation and impairment. See Note 2 for additional information on impairment assessments and related Level 3 inputs for goodwill, indefinite-lived intangible assets, long-lived assets, and cost method equity investments.

Certain financial instruments are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated fair value as of September 30, 2020 and 2019.