Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2024

Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of the periods presented:


	June 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	$	33,608	$	—	$	—	$	33,608
Interest rate swaps	$	—	$	1,940	$	—	$	1,940
Liabilities
Interest rate swaps	—		1,357		—		1,357
Contingent consideration	—		—		7,029		7,029


	December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	11,593		—		—		11,593
Interest rate swaps	—		1,187		—		1,187
Liabilities
Interest rate swaps	—		5,357		—		5,357
Contingent consideration	$	—	$	—	$	2,989	$	2,989

Schedule of Fair Value of the Level 3 Liabilities with Significant Unobservable Inputs

The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Fair value of contingent consideration, beginning of period	$	9,739	$	5,620	$	2,989	$	1,219
Acquired liabilities	—		—		2,750		4,706
Cash payments	—		—		—		—
Change in fair value of contingent consideration, net(1)	(2,710)		—		1,290		(305)
Fair value of contingent consideration, end of period(2)	$	7,029	$	5,620	$	7,029	$	5,620

_________________________

(1)During the three months ended June 30, 2024, the Company recorded a $2.7 million decrease in fair value of the contingent consideration, in accordance with the purchase agreement with Vault. During the six months ended June 30, 2024, the Company recorded a $4.0 million out-of-period adjustment to increase the fair value of the contingent consideration, in accordance with the purchase agreement with EBI. Refer to Note 2. Summary of Significant Accounting Policies” for further information regarding this out-of-period adjustment.

(2)Recorded in Other current liabilities on the unaudited condensed consolidated balance sheets.

Sterling Check Corp. 10-Q