v3.25.2
Fair Value Measurement
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurement Fair Value Measurement
GAAP defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) assuming an orderly transaction in the most advantageous market at the measurement date. GAAP also establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

•Level 1 - inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date;
•Level 2 - inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and the fair value can be determined through the use of models or other valuation methodologies; and
•Level 3 - inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of
the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the particular asset or liability being measured. These items are recorded in accrued liabilities on our consolidated balance sheets.

Recurring Fair Value Measurements

In accordance with GAAP, certain assets and liabilities are required to be recorded at fair value on a recurring basis. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):

June 30, 2025
Level 1Level 2Level 3Total
Liabilities
Contingent consideration (1)
$— $— $2,750 $2,750 
Total fair value of liabilities measured on a recurring basis$— $— $2,750 $2,750 

December 31, 2024
Level 1Level 2Level 3Total
Liabilities
Contingent consideration (1)
$— $— $5,000 $5,000 
Total fair value of liabilities measured on a recurring basis$— $— $5,000 $5,000 
————————
(1)Contingent consideration as of June 30, 2025 represents the earn-out consideration related to the Machinify transaction described in Note 4 and the contingent consideration as of December 31, 2024 includes $1.9 million of earn-out consideration related to Machinify and $3.1 million of annual incentive payments to Evolent Care Partners providers based on membership attribution.

The Company recognizes any transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between fair value levels for the three and six months ended June 30, 2025.

In the absence of observable market prices, the fair value is based on the best information available and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks.

The acquisition of Machinify includes earn-outs up to $2.75 million that we may be required to pay, in either cash or in shares of our Class A common stock, at our option, based on the achievement of certain measures. A portion of such earnout will be paid in the third quarter of 2025. During the three months ended June 30, 2025, we amended the earnout agreement with Machinify including volume and performance results through May 31, 2025 and productivity results through September 30, 2025. Any amounts earned during this period would be payable in the fourth quarter of 2025.

The changes in our liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands):
For the Six Months Ended June 30,
20252024
Balance as of beginning of period$5,000 $83,600 
Settlements(5,176)(92,508)
Change in fair value of contingent consideration2,926 8,908 
Balance as of end of period$2,750 $— 

The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented:


June 30, 2025
Fair ValuationSignificantAssumption or
ValueTechniqueUnobservable InputsInput Ranges
Machinify contingent consideration$2,750 Contractual obligationN/AN/A
December 31, 2024
Fair ValuationSignificantAssumption or
ValueTechniqueUnobservable InputsInput Ranges
Machinify contingent consideration$1,900 Real options approachRisk-neutral expected earnout consideration$1,900 
Discount rate6.57 %
ECP contingent consideration$3,100 Contractual obligationN/AN/A

Nonrecurring Fair Value Measurements

In addition to the assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. This includes assets and liabilities recorded in business combinations or asset acquisitions, goodwill, intangible assets, property, plant and equipment and equity method investments. While not carried at fair value on a recurring basis, these items are continually monitored for indicators of impairment that would indicate current carrying value is greater than fair value. In those situations, the assets are considered impaired and written down to current fair value.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents (those not held in a money market fund), restricted cash and receivables approximate their fair values because of the relatively short-term maturities of these items and financial instruments.

See Note 9 for information regarding the fair value of the 2025 Notes and 2029 Notes.