v3.26.1
Fair Value Measurement of Assets and Liabilities
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurement of Assets and Liabilities

11. Fair Value Measurement of Assets and Liabilities

The following financial assets and liabilities are recorded at fair value on a recurring basis (in millions):

 

 

As of June 30, 2026

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using:

 

Description

 

Recorded
Balance

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

56.2

 

 

$

-

 

 

$

56.2

 

 

$

-

 

Cross-currency interest rate swaps

 

 

54.9

 

 

 

-

 

 

 

54.9

 

 

 

-

 

Derivatives not designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

5.9

 

 

 

-

 

 

 

5.9

 

 

 

-

 

Total Assets

 

$

117.0

 

 

$

-

 

 

$

117.0

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

0.7

 

 

$

-

 

 

$

0.7

 

 

$

-

 

Cross-currency interest rate swaps

 

 

2.9

 

 

 

-

 

 

 

2.9

 

 

 

-

 

Interest rate swaps

 

 

119.8

 

 

 

-

 

 

 

119.8

 

 

 

-

 

Derivatives not designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

1.7

 

 

 

-

 

 

 

1.7

 

 

 

-

 

Contingent payments related to acquisitions

 

 

244.6

 

 

 

-

 

 

 

-

 

 

 

244.6

 

Total Liabilities

 

$

369.7

 

 

$

-

 

 

$

125.1

 

 

$

244.6

 

 

 

 

As of December 31, 2025

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using:

 

Description

 

Recorded
Balance

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

41.4

 

 

$

-

 

 

$

41.4

 

 

$

-

 

Cross-currency interest rate swaps

 

 

49.7

 

 

 

-

 

 

 

49.7

 

 

 

-

 

Derivatives not designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

4.0

 

 

 

-

 

 

 

4.0

 

 

 

-

 

Total Assets

 

$

95.1

 

 

$

-

 

 

$

95.1

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

4.8

 

 

$

-

 

 

$

4.8

 

 

$

-

 

Cross-currency interest rate swaps

 

 

9.4

 

 

 

-

 

 

 

9.4

 

 

 

-

 

Interest rate swaps

 

 

112.4

 

 

 

-

 

 

 

112.4

 

 

 

-

 

Derivatives not designated as hedges, current and long-term

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

1.4

 

 

 

-

 

 

 

1.4

 

 

 

-

 

Contingent payments related to acquisitions

 

 

299.2

 

 

 

-

 

 

 

-

 

 

 

299.2

 

Total Liabilities

 

$

427.2

 

 

$

-

 

 

$

128.0

 

 

$

299.2

 

We value our foreign currency forward contracts using a market approach based on foreign currency exchange rates obtained from active markets, and we perform ongoing assessments of counterparty credit risk.

We value our interest rate swaps using a market approach based on publicly available market yield curves and the terms of our swaps, and we perform ongoing assessments of counterparty credit risk. The valuation of our cross-currency interest rate swaps also includes consideration of foreign currency exchange rates.

Contingent payments related to acquisitions consist of sales-based payments and development and regulatory milestones, and are valued using discounted cash flow techniques. The fair value of sales-based payments is based upon significant unobservable inputs such as probability-weighted future revenue estimates and simulating the numerous potential outcomes, and changes as revenue estimates increase or decrease. The fair value of the development and regulatory milestones is based on the probability of success in obtaining the specified development achievement or regulatory approval. The fair value of sales-based payments and development and regulatory milestones utilize significant unobservable inputs, which could reasonably change in future periods resulting in significantly higher or lower fair value measurements. If our estimates of future revenue or probability of achievement increase, the fair value measurements for these contingent payments will increase. Vice versa, if our estimates of future revenue or probability of achievement decrease, the fair value measurements for these contingent payments will decline. For each of our acquisitions that include contingent consideration, there is a maximum payout. Accordingly, the range of our potential contingent consideration payments are $0 to $720 million.

The following table provides a reconciliation of the beginning and ending balances for the six-month periods ended June 30, 2026 and 2025, of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) (in millions):

 

Level 3 - Liabilities

 

June 30, 2026

 

 

June 30, 2025

 

Contingent payments related to acquisitions

 

 

 

 

 

 

Beginning balance

 

$

299.2

 

 

$

180.7

 

New contingent consideration related to Paragon 28 acquisition

 

 

-

 

 

 

36.8

 

Change in estimates

 

 

19.2

 

 

 

(7.7

)

Settlements

 

 

(74.1

)

 

 

(45.2

)

Foreign currency impact

 

 

0.3

 

 

 

2.1

 

Ending balance

 

$

244.6

 

 

$

166.7

 

Changes in estimates for contingent payments related to acquisitions are recognized in the "Acquisition, integration, divestiture and related" line item on our condensed consolidated statements of earnings.