Company: OFIX
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000950170-25-026066
Chunk: 50

Company: Orthofix Medical Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 16
Chunk 50
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 preferred equity securities for the years ended December 31, 2024, and 2023:

        (U.S. Dollars, in thousands)
         
        2024

        2023

        Fair value of Neo Medical preferred equity securities at January 1
         
        $
        4,951

        $
        6,084

        Conversion of loan into preferred equity securities

        8,224

        —

        Foreign currency remeasurement recognized in other income, net

        —

        388

        Unrealized loss recognized in other expense, net

        —

        (1,521
        )

        Sale of preferred equity securities

        (7,396
        )

        —

        Realized loss recognized in other expense, net

        (5,779
        )

        —

        Fair value of Neo Medical preferred equity securities at December 31
         
        $
        —

        $
        4,951

        Cumulative unrealized gain (loss) on Neo Medical preferred equity securities
         
        $
        —

        $
        (720
        )
       
      Prior to conversion, the Convertible Loan was recorded at fair value, with applicable interest recorded in interest income. The fair value of the Convertible Loan was based upon significant unobservable inputs, including the use of option-pricing models, Monte Carlo simulations for certain periods, and a probability-weighted discounted cash flows model, requiring the Company to develop its own assumptions. Therefore, the Company had categorized this asset as a Level 3 financial asset. Some of the more significant unobservable inputs used in the fair value measurement of the Convertible Loan included applicable discount rates, implied volatility, the likelihood and projected timing of repayment or conversion, and projected cash flows in support of the estimated enterprise value of Neo Medical. Holding other inputs constant, changes in these assumptions could have resulted in a significant change in the fair value of the Convertible Loan. If the amortized cost of the Convertible Loan exceeds its estimated fair value, the security is deemed to be impaired, and must be evaluated for the recognition of credit losses. Impairment resulting from credit losses is recognized within the statement of income, while impairment resulting from other factors is recognized within other comprehensive income (loss). The following table provides a reconciliation of the beginning and ending balances of the Convertible Loan, measured at fair value using significant unobservable inputs (Level 3):

        (U.S. Dollars, in thousands)
         
        2024