Ceribell, Inc. Fair Value Disclosure
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described below:
Level 1 – This level consists of quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 – This level consists of directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.
Level 3 – This level consists of unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.
In determining the fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessments of fair value.
Fair Value of Assets and Liabilities
The following tables represent the Company’s financial assets and liabilities according to the fair value hierarchy, measured at fair value (in thousands):
December 31, 2025 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets |
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Cash equivalents: |
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Money market funds |
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$ |
34,918 |
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|
$ |
— |
|
|
$ |
— |
|
|
$ |
34,918 |
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Marketable securities |
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|
|
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|
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U.S. Treasury Bills |
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7,900 |
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|
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53,329 |
|
|
|
— |
|
|
|
61,229 |
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U.S. Notes and Bonds |
|
|
— |
|
|
|
57,556 |
|
|
|
— |
|
|
|
57,556 |
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Total assets, at fair value |
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$ |
42,818 |
|
|
$ |
110,885 |
|
|
$ |
— |
|
|
$ |
153,703 |
|
December 31, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets |
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Cash equivalents: |
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|
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|
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|
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Money market funds |
|
$ |
178,925 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
178,925 |
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Total Assets, at fair value |
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$ |
178,925 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
178,925 |
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The fair value and amortized cost of Level 2 cash equivalents and available-for-sale marketable securities as of December 31, 2025 are presented in the following table (in thousands):
December 31, 2025 |
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Amortized Cost Basis |
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Unrealized Gains |
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Unrealized Losses |
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Estimated Fair Value |
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U.S. Treasury bills |
|
$ |
61,178 |
|
|
$ |
51 |
|
|
$ |
— |
|
|
$ |
61,229 |
|
U.S. Notes and Bonds |
|
|
57,448 |
|
|
|
108 |
|
|
|
— |
|
|
|
57,556 |
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Total marketable securities |
|
$ |
118,626 |
|
|
$ |
159 |
|
|
$ |
— |
|
|
$ |
118,785 |
|
The fair value of available-for-sale marketable securities by contractual maturities as of December 31, 2025 are presented in the following table (in thousands):
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December 31, |
|
|
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2025 |
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Due in less than one year |
|
$ |
113,928 |
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Due in one to two years |
|
|
4,857 |
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Total marketable securities |
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$ |
118,785 |
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Cash and cash equivalents are comprised of Level 1 financial instruments of money market fund investments. Level 2 financial instruments are comprised of U.S. Treasury bills and U.S. Notes and Bonds. The Company's valuation technique used to measure the fair value of money market funds is derived from quoted prices in active markets for identical assets or liabilities, which is categorized as Level 1.
The carrying amount of the Company’s notes payable is carried at amortized cost and approximates its fair value.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.