Fair Value Measurements
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources outside the reporting entity. Unobservable inputs are inputs that reflect the Company’s own assumptions based on market data and assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The sensitivity to changes in inputs and their impact on fair value measurements can be significant.
The three levels of inputs that may be used to measure fair value are:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date
Level 2 Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs to the valuation techniques that are significant to the fair value measurements of the assets or liabilities
The following table presents the Company’s short-term investments that are measured and accounted for at fair value on a recurring basis as of June 30, 2025.
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| in thousands | Amortized Cost | | Fair Value | | | | Short-term Investments |
| | | | | | | |
| Level 1 | | | | | | | |
| | | | | | | |
| Mutual funds | 41,367 | | | 41,775 | | | | | 41,775 | |
| Total | $ | 41,367 | | | $ | 41,775 | | | | | $ | 41,775 | |
Recurring Measurements
The Company’s investment in InnovAge Sacramento includes a put right for the noncontrolling interest holders to require the Company to repurchase the interest of the noncontrolling interest holders at fair value, after the initial term of the management services agreement in 2028. As a result, at each fiscal period end the Company reports this put right at the greater of (i) carrying value of the redeemable noncontrolling interest or (ii) fair value of the redeemable noncontrolling interest. Because this asset does not have observable inputs, Level 3 inputs are used to measure fair value. The fair value of the redeemable noncontrolling interest is determined utilizing a discounted cash flow model. As of June 30, 2025 and 2024, the Company’s redeemable noncontrolling interest was recorded at fair value of $25.0 million and $22.2 million, respectively.
There were no transfers in and out of Level 3 during the fiscal years ended June 30, 2025 and 2024. The Company’s policy is to recognize transfers as of the actual date of the event or change in circumstances.