WEX Inc.WEX
WEX Inc. Fair Value Disclosure
| 18. | Fair Value | ||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the Company’s financial instruments that are measured at fair value on a recurring basis:
| December 31, | |||||||||||||||||
| (in millions) | Fair Value Hierarchy | 2025 | 2024 | ||||||||||||||
| Financial Assets: | |||||||||||||||||
Money market mutual funds(1) | 1 | $ | 64.3 | $ | 44.3 | ||||||||||||
U.S. Treasury bills(1) | 2 | $ | 99.9 | $ | — | ||||||||||||
| Investment securities, current: | |||||||||||||||||
| Available-for-sale debt securities: | |||||||||||||||||
| U.S. treasury notes | 2 | 397.5 | 353.5 | ||||||||||||||
| Corporate and sovereign debt securities | 2 | 1,349.6 | 1,354.0 | ||||||||||||||
| Municipal bonds | 2 | 66.6 | 65.6 | ||||||||||||||
| Asset-backed securities | 2 | 868.2 | 763.2 | ||||||||||||||
| Mortgage-backed securities | 2 | 1,651.0 | 1,228.3 | ||||||||||||||
| Total | $ | 4,332.9 | $ | 3,764.7 | |||||||||||||
| December 31, | |||||||||||||||||
| (in millions) | Fair Value Hierarchy | 2025 | 2024 | ||||||||||||||
| Investment securities, non-current: | |||||||||||||||||
Available-for-sale debt securities(5) | 2 | $ | 53.7 | $ | 41.7 | ||||||||||||
| Equity securities: | |||||||||||||||||
| Mutual fund | 1 | 27.6 | 26.0 | ||||||||||||||
Pooled investment fund measured at NAV(2) | 12.9 | 12.9 | |||||||||||||||
| Total | $ | 94.2 | $ | 80.5 | |||||||||||||
Executive deferred compensation plan trust(3) | 1 | $ | 18.4 | $ | 16.4 | ||||||||||||
| Liabilities: | |||||||||||||||||
Contingent consideration(4) | 2 | $ | 68.9 | $ | 128.2 | ||||||||||||
(1)The fair value is recorded in cash and cash equivalents.
(2)The fair value of this security is measured at NAV as a practical expedient and has not been classified within the fair value hierarchy. The amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
(3)The fair value of these assets is recorded as current or long-term based on the timing of the Company’s executive deferred compensation plan payment obligations. At December 31, 2025, $2.2 million and $16.3 million in fair value was recorded within prepaid expenses and other current assets and other assets, respectively. At December 31, 2024, $1.8 million and $14.7 million in fair value was recorded within prepaid expenses and other current assets and other assets, respectively.
(4)The fair value of this liability is recorded as current or long-term based on the timing of expected payments. At December 31, 2025, $51.0 million and $17.9 million in fair value was recorded within accrued expenses and other current liabilities and other liabilities, respectively. At December 31, 2024, $62.2 million and $66.0 million in fair value was recorded within accrued expenses and other current liabilities and other liabilities, respectively.
(5)The fair value of available-for-sale debt securities at December 31, 2025 was comprised of municipal bonds of $45.3 million and mortgage-backed securities of $8.4 million. The fair value of available-for-sale debt securities at December 31, 2024 was comprised of municipal bonds of $31.9 million and mortgage-backed securities of $9.8 million.
Money Market Mutual Funds
A portion of the Company’s cash and cash equivalents are invested in money market mutual funds that primarily consist of short-term government securities, which are classified as Level 1 in the fair value hierarchy because they are valued using quoted market prices for identical instruments in an active market.
U.S. Treasury Bills
At December 31, 2025, a portion of the Company’s cash and cash equivalents were invested in U.S. treasury bills with maturities of 30 days or less, which are classified as Level 2 in the fair value hierarchy because they are valued using quoted market prices for similar or identical instruments in a market that is not active.
Available-for-Sale Debt Securities
The Company determines the fair value of U.S. treasury notes using quoted market prices for similar or identical instruments in a market that is not active. For corporate and sovereign debt securities, municipal bonds, asset-backed and mortgage-backed securities, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally valued using Level 2 inputs.
Pooled Investment Fund
The pooled investment fund maintains individual capital accounts for each investor, which reflect each individual investor’s share of the NAV of the fund. As of December 31, 2025, the Company had no unfunded commitments with respect to the fund. Investments in the fund may be redeemed monthly with 30 days’ notice.
Mutual Fund
The Company determines the fair value of its mutual fund using quoted market prices for identical instruments in an active market; such inputs are classified as Level 1 of the fair-value hierarchy.
Executive Deferred Compensation Plan Trust
The investments held in the executive deferred compensation plan trust, which consist primarily of mutual funds, are classified as Level 1 in the fair value hierarchy because the fair value is determined using quoted market prices for identical instruments in active markets.
Contingent Consideration
As discussed in Note 19, Commitments and Contingencies, the Company is obligated to pay additional consideration to Bell Bank as part of a 2021 asset acquisition, contingent upon increases in the Federal Funds rate from the date of acquisition. The Company determines the fair value of this contingent consideration derivative liability based on discounted cash flows using the difference between the baseline Federal Funds rate in the purchase agreement with Bell Bank and future forecasted Federal Funds rates over the agreement term. The Company records changes in the estimated fair value of the contingent consideration in the consolidated statements of operations.
Due to significant increases in the Federal Funds rate since the acquisition date, the fair value of the Company’s contingent consideration derivative liability at both December 31, 2025 and December 31, 2024 were effectively measured at the present value of the maximum remaining contingent consideration payable under the arrangement. Accordingly, the fair value of the contingent consideration could not materially increase.
Reconciliation of Fair Value Measurements Categorized Within Level 3
| (in millions) | December 31, 2024 | ||||
| Beginning of the year | $ | 186.2 | |||
Payments | (64.5) | ||||
| Change in estimated fair value | 6.5 | ||||
Transfers out of level 3(1) | (128.2) | ||||
| End of the year | $ | — | |||
(1)Prior to December 31, 2024, the forecasted Federal Funds rates represented a Level 3 input within the fair value hierarchy. However, due to the availability of projected Federal Funds curve rates through the expected remaining term of the liability, effective December 31, 2024, the forecasted Federal Funds rate represents a Level 2 input within the fair value hierarchy and the contingent consideration liability was transferred out of Level 3 of the fair value hierarchy.
Assets and Liabilities Measured at Carrying Value, for which Fair Value is Disclosed
The fair value of the Company’s financial instruments, which are measured and reported at carrying value, is as follows for the periods indicated:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (in millions) | Carrying value | Fair value | Carrying value | Fair value | |||||||||||||||||||
Term A-1 Loans(1) | $ | 821.3 | ** | $ | 866.3 | ** | |||||||||||||||||
Term B-2 Loans(1) | 1,374.4 | ** | 1,388.3 | ** | |||||||||||||||||||
Term B-3 Loans(1) | 446.6 | ** | — | — | |||||||||||||||||||
Outstanding borrowings on Revolving Credit Facility(1) | 428.4 | ** | 905.6 | ** | |||||||||||||||||||
Senior Notes(1) | 550.0 | ** | — | — | |||||||||||||||||||
** Fair value approximates carrying value due to the instruments’ applicable interest rates approximating market interest rates as of the end of the respective period.
(1)The Company determines the fair value of borrowings on the Revolving Credit Facility, Term Loans and Senior Notes based on market rates for the issuance of the Company’s debt, which are Level 2 inputs in the fair value hierarchy.
Other Assets and Liabilities
The carrying value of certain of the Company’s financial instruments, other than those presented above, including cash, cash equivalents, restricted cash and restricted cash payable, short-term contractual deposits and HSA deposits, accounts receivable and securitized accounts receivable, accounts payable, accrued expenses and other current liabilities and other liabilities approximate their respective fair values due to their short-term nature or maturities. The carrying value of certain other financial instruments we may have from time to time, including interest-bearing money market deposits, securitized debt, participation debt, borrowed federal funds, FHLB advances and deferred consideration associated with our acquisitions approximate their respective fair values due to stated interest rates being consistent with current market interest rates.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 6, 2017 | |
| 2015 | Feb 26, 2016 | |
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.