OmniAb, Inc.OABI
OmniAb, Inc. Fair Value Disclosure
3. Fair Value Measurement
The Company measures its financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company uses the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial assets and liabilities:
•Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
•Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly.
•Level 3 - Significant unobservable inputs based on the Company’s assumptions.
Financial Instruments Measured on a Recurring Basis
The following tables provide a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and 2024:
Fair Value Measurements as of December 31, 2025 | ||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Cash equivalents | ||||||||||||||||||||||||||
| Money market funds | $ | 20,080 | $ | — | $ | — | $ | 20,080 | ||||||||||||||||||
| Total cash equivalents | $ | 20,080 | $ | — | $ | — | $ | 20,080 | ||||||||||||||||||
| Short-term investments | ||||||||||||||||||||||||||
Government securities | $ | 28,501 | $ | — | $ | — | $ | 28,501 | ||||||||||||||||||
| Total short-term investments | $ | 28,501 | $ | — | $ | — | $ | 28,501 | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Current contingent liabilities | $ | — | $ | — | $ | 1,044 | $ | 1,044 | ||||||||||||||||||
| Long-term contingent liabilities | — | — | 315 | 315 | ||||||||||||||||||||||
Total contingent liabilities | $ | — | $ | — | $ | 1,359 | $ | 1,359 | ||||||||||||||||||
Fair Value Measurements as of December 31, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Cash equivalents | ||||||||||||||||||||||||||
| Money market funds | $ | 17,616 | $ | — | $ | — | $ | 17,616 | ||||||||||||||||||
| Total cash equivalents | $ | 17,616 | $ | — | $ | — | $ | 17,616 | ||||||||||||||||||
| Short-term investments | ||||||||||||||||||||||||||
| Government and agency securities | $ | 30,430 | $ | 1,316 | $ | — | $ | 31,746 | ||||||||||||||||||
| Asset-backed securities | — | 90 | — | 90 | ||||||||||||||||||||||
| Total short-term investments | $ | 30,430 | $ | 1,406 | $ | — | $ | 31,836 | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Current contingent liabilities | $ | — | $ | — | $ | 531 | $ | 531 | ||||||||||||||||||
| Long-term contingent liabilities | — | — | 953 | 953 | ||||||||||||||||||||||
Total contingent liabilities | $ | — | $ | — | $ | 1,484 | $ | 1,484 | ||||||||||||||||||
The carrying amounts reported in the Company’s consolidated balance sheets for accounts receivable, other assets, accounts payable and accrued expenses and other current liabilities approximate fair value due to their relatively short periods to maturity.
Available-for-Sale Securities
The Company obtains the fair value of its Level 2 available-for-sale securities from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources. The Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2025 or December 31, 2024. There were no Level 2 available-for-sale securities as of December 31, 2025. The Company has not transferred any investment securities between classification levels.
Contingent Liabilities
Contingent liabilities are measured at fair valued each reporting period by using a probability weighted income approach.
A reconciliation of the Level 3 financial instruments as of December 31, 2025 and 2024 is as follows:
| (in thousands) | Icagen(1) | Taurus(2) | Total | |||||||||||||||||
Balance as of January 1, 2024 | $ | 4,106 | $ | 400 | $ | 4,506 | ||||||||||||||
Payments of contingent liabilities | (75) | (400) | (475) | |||||||||||||||||
| Fair value adjustments to contingent liabilities | (2,547) | — | (2,547) | |||||||||||||||||
Balance as of December 31, 2024 | $ | 1,484 | $ | — | $ | — | $ | 1,484 | ||||||||||||
Payments of contingent liabilities | (450) | — | (450) | |||||||||||||||||
| Fair value adjustments to contingent liabilities | 325 | — | 325 | |||||||||||||||||
Balance as of December 31, 2025 | $ | 1,359 | $ | — | $ | 1,359 | ||||||||||||||
_____________
(1)Changes in the fair values of contingent liabilities in connection with the acquisition of Icagen are recognized in Other operating income, net in the consolidated statements of operations and in the operating section of the statements of cash flows. Payments to contingent liability holders are disclosed in the financing section of the statements of cash flows.
(2)Changes in the fair values of contingent liabilities in connection with the acquisitions of Taurus are recognized in Intangible assets, net in the consolidated balance sheets. Payments to contingent liability holders are disclosed in the investing section of the statement of cash flows.
Contingent liabilities are classified as Level 3 liabilities as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. These subjective estimates include but are not limited to assumptions involving the achievement probability of certain developmental and commercialization milestones, discount rates, and projected years of payments. If different assumptions were used for the various inputs to the valuation approaches, the estimated fair value could be materially higher or lower than the fair value determined.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 18, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 30, 2023 | |
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.