v3.26.1
Fair value measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair value measurements

6. Fair value measurements

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

 

 

June 30,
2026

 

 

December 31,
2025

 

(U.S. Dollars, in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lattus Contingent Consideration

 

$

—

 

 

$

—

 

 

$

9,548

 

 

$

9,548

 

 

$

7,930

 

Deferred compensation plan

 

 

—

 

 

 

1,543

 

 

 

—

 

 

 

1,543

 

 

 

1,720

 

Total

 

$

—

 

 

$

1,543

 

 

$

9,548

 

 

$

11,091

 

 

$

9,650

 

Lattus Contingent Consideration

In connection with the merger with SeaSpine Holdings Corporation ("SeaSpine") in 2023 (the "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 estimated future sales of Lateral Products, revenue risk-adjusted discount rates, 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):

(Unaudited, U.S. Dollars, in thousands)

 

2026

 

 

2025

 

Lattus Contingent Consideration estimated fair value at January 1

 

$

7,930

 

 

$

15,400

 

Change in fair value recognized in acquisition-related amortization, impairment, and remeasurement

 

 

1,618

 

 

 

(1,373

)

Lattus Contingent Consideration estimated fair value at June 30

 

$

9,548

 

 

$

14,027

 

The estimated fair value of the Lattus Contingent Consideration as of June 30, 2026, was $9.5 million; however, the actual amount ultimately paid could be higher or lower. As of June 30, 2026, the Company classified the remaining Lattus Contingent Consideration of $9.5 million within other current liabilities.

The following table provides quantitative information related to certain key assumptions utilized within the valuation as of June 30, 2026:

(Unaudited, U.S. Dollars, in thousands)

 

Fair Value as of
 June 30, 2026

 

 

Unobservable inputs

 

Estimate

 

Lattus Contingent Consideration

 

$

9,548

 

 

Counterparty discount rates

 

 

11.5

%

 

 

 

 

 

Revenue risk-adjusted discount rates

 

 

6.0

%

On July 1, 2026, the Company made an installment payment related to the Lattus Contingent Consideration of $5.1 million.