Fair Value Measurements of Assets and Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements of Assets and Liabilities | 8. Fair Value Measurements of Assets and Liabilities
The fair value of foreign currency exchange forward contracts (see Note 10) is determined using Level 2 inputs. The carrying value of our debt (see Note 9) approximates fair value as it bears interest at floating rates. The carrying amounts of other financial instruments (i.e., cash and cash equivalents, restricted cash, bank time deposits, accounts receivable, net, and accounts payable) approximated their fair values at June 30, 2025 and December 31, 2024 due to their short-term nature.
As discussed in Notes 1 and 3, on April 1, 2024, we completed the sale of our spine segment. A portion of the consideration was in the form of a $60.0 million promissory note that accrues interest at a rate of 10% per annum, compounded semi-annually, and interest is payable in kind. The note matures on October 1, 2029, contains change of control provisions and allows for optional prepayment at any time. The fair value of the note, including consideration of paid-in-kind interest, is determined using a discounted cash flow analysis (a Level 3 input), where contractual cash flows are discounted to present value at a risk-adjusted rate of return. The fair value of the note is determined each period by applying the same approach, considering changes to the risk-adjusted rate of return given observed changes to the interest rate environment, market pricing of credit risk and issuer-specific credit risk.
The fair values of acquisition-related contingent payments are estimated using Level 3 inputs. Contingent payments related to acquisitions consist of sales-based payments and are valued using discounted cash flow techniques. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases as revenue estimates increase.
The following table provides a reconciliation of the beginning and ending balance of assets and liabilities measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):
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