Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Fair Value Measurements

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Note 5 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
5.
FAIR VALUE MEASUREMENTS
 
The Company's financial assets and liabilities reflected at fair value in the consolidated financial statements include: cash and cash equivalents; short-term investments; accounts receivable; other current assets; accounts payable; and contingent consideration. Fair value is 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. In determining fair value, the Company uses various methods, including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows:
 
 
Level 1:
Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
 
 
Level 2:
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
 
 
Level 3:
Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
 
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The valuation methodologies used for the Company's financial instruments measured on a recurring basis at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below.
 
   
As of March 31, 2016
    
Fair Value Measurements
  
   
Carrying
    
Fair
    
As of March 31, 2016
  
   
Amount
    
Value
    
Level 1
    
Level 2
      
Level 3
  
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents:
                                          
Cash
   $ 3,564     $ 3,564     $ 3,564     $ -  
 
   $ -  
Money market funds
     776       776       776       -         -  
    $ 4,340     $ 4,340     $ 4,340     $ -       $ -  
Marketable securities:
                                          
U.S. Treasury securities
   $ 553     $ 553     $ 553     $ -       $ -  
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration:
                                          
Asuragen
   $ 4,628     $ 4,628     $ -     $ -       $ 4,628  
RedPath
     13,921       13,921       -       -         13,921  
    $ 18,549     $ 18,549     $ -     $ -       $ 18,549  
 
 
The fair value of cash and cash equivalents and marketable securities is valued using market prices in active markets (level 1). As of March 31, 2016, the Company did not have any marketable securities in less active markets (level 2) or without observable market values that would require a high level of judgment to determine fair value (level 3).
 
In connection with the acquisition of assets from Asuragen and the acquisition of RedPath, the Company has recorded $4.6 million and $13.9 million of contingent cash consideration related to deferred payments and revenue based payments, respectively. The Company determined the fair value of the contingent consideration based on a probability-weighted income approach derived from revenue estimates. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.  There was no change in the fair value of the contingent consideration during the period ended March 31, 2016.
 
The Company considers carrying amounts of accounts receivable, accounts payable and accrued expenses to approximate fair value due to the short-term nature of these financial instruments.  There is no fair value ascribed to the letters of credit as management does not expect any material losses to result from these instruments because performance is not expected to be required.
 
Certain of the Company's non-financial assets, such as other intangible assets, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.