Fair value measurements
There were no assets measured at fair value on a recurring basis and there were no liabilities valued at fair value using Level 1 or Level 2 inputs at December 31, 2024 and 2023. The following table provides information for assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Total | | Level 3 | | Total | | Level 3 |
| Liabilities: | | | | | | | |
| Current portion of contingent consideration | $ | 19,573 | | | $ | 19,573 | | | $ | — | | | $ | — | |
| Contingent consideration | — | | | — | | | 18,150 | | | 18,150 | |
| Total liabilities: | $ | 19,573 | | | $ | 19,573 | | | $ | 18,150 | | | $ | 18,150 | |
Contingent consideration
The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones. For other milestones, the Company used a variation of the income approach where revenue was simulated in a risk-neutral framework using Geometric Brownian Motion, a stock price behavior model.
Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets. After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using unobservable Level 3 inputs.
Unobservable inputs
A summary of unobservable Level 3 inputs utilized for the above liabilities are as follows:
| | | | | | | | | | | | | | | | | |
| Valuation Technique | | Unobservable inputs | | Range |
| Contingent consideration | Discounted cash flow | | Payment discount rate | | 6.4% - 6.8% |
| | | Payment period | | 2025 |
Significant changes in these assumptions could result in a significantly higher or lower fair value. The contingent consideration reported in the above table resulted from the acquisition of Bioness, Inc. (“Bioness”) on March 30, 2021 and is comprised of future earn-out payments contingent upon the achievement of certain research and development projects as well as sales milestones related to Bioness products. Contingent consideration resulting from the acquisition of Bioness includes maximum earn-out payments of $50,000 as follows: (i) $20,000 for meeting net sales targets for certain implantable products over a three year period ending on June 30, 2025 at the latest; (ii) up to $10,000 for meeting net sales milestones for certain implantable products over a three year period ending on June 30, 2025 at the latest; and (iii) $20,000 for maintaining Centers for Medicare & Medicaid Services coverage and reimbursement for certain products at specified levels as of December 31, 2024. The Company met criteria (iii) as of December 31, 2024 and will make the related payment in the first half of fiscal year 2025.
Contingent consideration is adjusted quarterly based upon the passage of time or the anticipated success or failure of achieving certain milestones. Changes in contingent consideration related to the Bioness Acquisition totaled $1,423, $719 and $1,102 for the years ended December 31, 2024, 2023 and 2022, respectively, and were recorded as the change in fair value of contingent consideration within the consolidated statements of operations and
comprehensive loss.