Company: NINE
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001532286-25-000016
Chunk: 74

Company: Nine Energy Service, Inc.
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 8
Chunk 74
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 project the amount of incurred but not reported claims liability. The estimated liability for self-insured medical claims was $1.8 million and $1.5 million at June 30, 2025 and December 31, 2024, respectively, and is included under the caption “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets.Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, the self-insurance liability could be affected if future claims experience differs significantly from historical trends and actuarial assumptions.Contingent LiabilitiesOn October 1, 2018, pursuant to the terms and conditions of a Securities Purchase Agreement (the “Frac Tech Purchase Agreement”), the Company acquired Frac Technology AS (“Frac Tech”), a Norwegian private limited company focused on the development of downhole technology, including a casing flotation tool and a number of patented downhole completion tools. The Frac Tech Purchase Agreement, as amended, includes, among other things, the potential for additional future payments, based on certain Frac Tech revenue metrics through December 31, 2025 (the “Frac Tech Earnout”). 

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The Company’s contingent liability (Level 3) associated with the Frac Tech Earnout (in thousands) at June 30, 2025 and 2024 was as follows:Balance at December 31, 2024$719 Revaluation adjustments73 Payments(402)Balance at June 30, 2025$390 Balance at December 31, 2023$1,219 Revaluation adjustments(192)Payments(343)Balance at June 30, 2024$684 All contingent liabilities that relate to contingent consideration are reported at fair value, based on a Monte Carlo simulation model. Significant inputs used in the fair value measurement include forecasted sales of the plugs, terms of the agreement, a risk-adjusted discount factor (ranging from 4.3% to 4.4%), and a credit-adjusted rate (ranging from 17.4% to 17.6%). Contingent liabilities include $0.4 million and $0.6 million reported in “Accrued expenses” at June 30, 2025 and December 31, 2024, respectively, and $0.0 million and $0.1 million reported in “Other long-term liabilities” at June 30, 2025 and December 31,