The fair value measurements of the Company's financial assets and liabilities measured on a recurring basis were as follows:


	June 30, 2025											December 31, 2024
(U.S. Dollars, in thousands)	Level 1		Level 2			Level 3			Total			Total
									(Unaudited)
Assets
Neo Medical convertible loan agreement	$	—	$	—		$	—		$	—		$	—
Neo Medical preferred equity securities		—		—			—			—			—
Total	$	—	$	—		$	—		$	—		$	—
Liabilities
Lattus contingent consideration	$	—	$	—		$	(14,027	)	$	(14,027	)	$	(15,400	)
Deferred compensation plan		—		(1,695	)		—			(1,695	)		(1,703	)
Total	$	—	$	(1,695	)	$	(14,027	)	$	(15,722	)	$	(17,103	)

On October 1, 2020, the Company purchased shares of Neo Medical's preferred stock for consideration of $5.0 million and entered into a Convertible Loan Agreement (the "Convertible Loan") pursuant to which Orthofix loaned Neo Medical CHF 4.6 million, or $5.0 million at the date of issuance. In April 2024, the Company converted the Convertible Loan into shares of Neo Medical preferred equity securities. On November 14, 2024, the Company sold and transferred all shares of Neo Medical's preferred equity securities for CHF 6.6 million, or $7.4 million.

The table below presents a reconciliation of the beginning and ending balances of the Company's investment in Neo Medical preferred equity securities:


(Unaudited, U.S. Dollars, in thousands)	2025		2024
Fair value of Neo Medical preferred equity securities at January 1	$	—	$	4,951
Conversion of loan into preferred equity securities		—		8,224
Unrealized loss recognized in other expense, net		—		(2,233	)
Fair value of Neo Medical preferred equity securities at June 30	$	—	$	10,942
Cumulative unrealized loss on Neo Medical preferred equity securities	$	—	$	(2,953	)

The following table provides a reconciliation of the beginning and ending balances of the Convertible Loan, which was measured at fair value using significant unobservable inputs:


(Unaudited, U.S. Dollars, in thousands)	2025		2024
Fair value of Neo Medical Convertible Loan at January 1	$	—	$	6,760
Gain recognized in other comprehensive income		—		1,671
Interest recognized in interest income, net		—		162
Foreign currency remeasurement recognized in other expense, net		—		(602	)
Expected credit loss recognized in other income, net		—		260
Conversion into preferred equity securities		—		(8,224	)
Realized foreign currency loss recognized in other expense, net		—		(27	)
Fair value of Neo Medical Convertible Loan at June 30	$	—	$	—

Contractual value of Neo Medical Convertible Loan at June 30	$	—	$	—
Allowance for credit loss recognized in other income (expense), net		—		—
Amortized cost basis of Neo Medical Convertible Loan at June 30	$	—	$	—

In connection with the merger with SeaSpine Holdings Corporation ("SeaSpine") in 2023 (the "SeaSpine Merger"), the Company assumed a contingent consideration obligation under a purchase agreement between SeaSpine and Lattus Spine LLC ("Lattus") executed in December 2022. Under the terms of this agreement, the Company may be required to make installment payments to Lattus (the "Lattus Contingent Consideration") at certain dates based on future net sales of certain products (the "Lateral Products").

The estimated fair value of the Lattus Contingent Consideration is determined using a Monte Carlo simulation and a discounted cash flow model requiring significant inputs which are not observable in the market. The significant inputs include assumptions related to the timing and probability of launch dates for the Lateral Products, estimated future sales of the Lateral Products, revenue risk-adjusted discount rate, revenue volatility, and discount rates matched to the timing of payments. The following table provides a reconciliation of the beginning and ending balances for the Lattus Contingent Consideration measured at estimated fair value using significant unobservable inputs (Level 3):

The estimated fair value of the Lattus Contingent Consideration as of June 30, 2025, was $14.0 million; however, the actual amount ultimately paid could be higher or lower this. As of June 30, 2025, the Company classified the remaining Lattus Contingent Consideration liability of $10.5 million and $3.5 million within other current liabilities and other long-term liabilities, respectively.