Derivative Financial Instruments |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Financial Instruments | Derivative Financial Instruments We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, collars, swaptions, embedded derivatives and warrants. We also enter into master netting agreements, which reduce credit risk by permitting net settlement of transactions. We posted collateral of $372 and received collateral of $34 related to our derivative financial instruments at September 30, 2026 and December 31, 2025, respectively. We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to the Secured Overnight Financing Rate (“SOFR”). These derivatives are recorded at fair value and are included in the captions “Other current assets,” “Other noncurrent assets,” “Other current liabilities” or “Other noncurrent liabilities” in our consolidated balance sheets, as applicable. The unrecognized loss, net of tax, for all expired and terminated interest rate cash flow hedges included in “Accumulated other comprehensive loss” in our consolidated balance sheets was $184 and $192 as of September 30, 2026 and December 31, 2025, respectively. During the three and nine months ended September 30, 2026, we recognized net gains of $86 and $66, respectively, on non-hedging derivatives included in “Net losses on financial instruments” in our consolidated income statements. During the three and nine months ended September 30, 2025, we recognized net gains of $0 and net losses of $2, respectively, on non-hedging derivatives included in “Net losses on financial instruments” in our consolidated income statements. In connection with our equity investment in Mosaic Health (see Note 4, “Investments”), we entered into a limited partnership and related agreements with the majority owners that provide for certain rights and obligations of each party, including certain put, call, and purchase price true-up options. These options, if exercised, will result in our purchase of the units held by the majority owners as early as 2028 but no later than 2030 at a price based on certain multiples of revenue and earnings of Mosaic Health businesses, subject to various adjustments and qualifications. At inception, we calculated the fair value of the net put option, which is a Level III measurement (see Note 6, “Fair Value”), using a Monte Carlo simulation, which relies on assumptions including cash flow projections, risk-free rates, volatility and details specific to the options. Significant changes in assumptions could result in significantly lower or higher fair value measurements. The carrying value of the net put option of $1,330, which is a non-cash item originally measured at fair value, is included under the caption “Other noncurrent liabilities” in our consolidated balance sheets as of September 30, 2026. We have elected to not mark the net put option to market, as it is an option on large blocks of equity securities, and the carrying value of the net put option will remain on the consolidated balance sheets until it is exercised, expires, or the terms are substantially amended. In connection with our equity investment in Liberty Dental (see Note 4, “Investments”), we entered into an agreement with the majority owners that provides for certain rights and obligations of each party, including certain put and call options. The terms of the agreement were amended in September 2026 whereby the put and call options were replaced with a variable-priced forward contract with specified purchase dates in 2027 for the majority owners' shares, subject to customary regulatory approvals. Our purchase of the units held by the majority owners will be at a price based on certain multiples of Liberty Dental earnings, subject to various adjustments and qualifications, which is expected to total up to $600 based on current projections. We have calculated the fair value of the forward contract as of September 2026, which is a Level III measurement (see Note 6, “Fair Value”), based on assumptions including cash flow projections, risk-free rates, volatility and details specific to the agreement. Significant changes in assumptions could result in significantly lower or higher fair value measurements. The fair value of the variable-priced forward contract of $227, which is a non-cash item, was recorded under the caption “Other noncurrent liabilities” in our consolidated balance sheets as of September 30, 2026. Replacing the $396 net put option liability with the variable-priced forward contract resulted in a realized gain on financial instruments of $169 during the three months ended September 30, 2026. For additional information relating to the fair value of our derivative assets and liabilities, see Note 6, “Fair Value,” included in this Quarterly Report on Form 10-Q.
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