Changes in Fair Value

[Table of Contents](#i30d98ad3bee64d018232130137db9899_7)Equity InvestmentsThe following table is a summary of the activity related to equity investments (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Reported as: |
|  | December 31, 2020Carrying Value |  | Changes in Fair Value (1) |  | Sales/Purchases/Others (2) |  | December 31, 2021Carrying Value |  | Prepaids and other current assets |  | Intangible and other assets, net |
| Equity investments with readily determinable value (Level 1) | $ | 60.1  |  |  | (17.7) |  |  | (15.5) |  |  | $ | 26.9  |  |  | $ | 26.9  |  |  | $ | —  |  |
| Equity investments without readily determinable value (Level 2) | $ | 30.2  |  |  | 43.8  |  |  | (58.4) |  |  | $ | 15.6  |  |  | $ | —  |  |  | $ | 15.6  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (1) Recorded in Interest and other income, net. |
| (2) Other includes conversion of certain equity investments without readily determinable value to equity investments with readily determinable value. |

The Company recognized a $43.8 million increase in fair value, which was reflected in Interest and other income, net, due to changes in observable prices for certain equity investments that are held at cost, because they lack readily determinable market values (Level 2). A total of $34.2 million of this increase in fair value was related to an equity investment in preferred shares of Broncus Holding Corporation (“Broncus”). There were no decreases in fair value reflected in net income due to impairments.In September 2021, Broncus completed an IPO of common shares on the Stock Exchange of Hong Kong. Upon completion of its IPO, the Company’s preferred shares were converted to common shares, which have a readily determinable value (Level 1). The Company is restricted from selling these shares for a period of six months. Subsequent to the IPO, the Company recognized a $29.1 million decrease in fair value from this investment. Accordingly, for the year ended December 31, 2021, the Company has recognized a net gain of $5.1 million related to its Broncus investment, comprised of the $34.2 million gain reflected in changes in fair value for Level 2 equity investments, offset by the $29.1 million loss reflected in changes in fair value for Level 1 equity investments, both of which were reflected in Interest and other income, net.The Company held an equity investment in common shares of Bolder Surgical Holdings, Inc. (“Bolder”), which was reflected in its financial statements on a cost basis. During the fourth quarter of 2021, Hologic, Inc., a publicly traded company, completed its acquisition of Bolder. Under the terms of the acquisition agreement, the Company received cash on the date of closing and recognized a gain on its investment of $9.5 million.In January 2021, the Company sold all of its shares of Teladoc Health, Inc. (“Teladoc”), a publicly traded company, for $71.5 million and recognized a gain of $11.4 million, which was reflected in Interest and other income, net. This gain was offset by a $7.5 million loss recognized upon the settlement of a corresponding derivative collar contract.Foreign Currency DerivativesThe objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency-denominated sales, expenses, and intercompany balances and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). The derivative assets and liabilities are measured using Level 2 fair value inputs.Cash Flow Hedges. The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the USD, primarily the Euro (“EUR”), the British Pound (“GBP”), the Japanese Yen (“JPY”), and the Korean Won (“KRW”). The Company also enters into currency forward contracts as cash flow hedges to hedge certain forecasted expense transactions denominated in EUR and Swiss Franc (“CHF”).For these derivatives, the Company reports the unrealized after-tax gain or loss from the hedge as a component of accumulated other comprehensive income/(loss) in stockholders’ equity and reclassifies the amount into earnings in the same period in which the hedged transaction affects earnings. The amounts reclassified to revenue and expenses related to the hedged transactions and the ineffective portions of cash flow hedges were not material for the periods presented.Other Derivatives Not Designated as Hedging Instruments. Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the USD, primarily the EUR, GBP, JPY, KRW, CHF, Indian Rupee (“INR”), Mexican Peso (“MXN”), Chinese Yuan (“CNY”), and New Taiwan Dollar (“TWD”).99
