Company: NINE
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001532286-25-000011
Chunk: 27

Company: Nine Energy Service, Inc.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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ual has been made for this matter in the Company’s condensed consolidated financial statements. The Company will continue to monitor the progress of this litigation and will adjust its accrual as necessary if and when additional information becomes available.Self-insuranceThe Company uses a combination of third-party insurance and self-insurance for health insurance claims. The self-insured liability represents an estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. The estimate is based on an analysis of trailing months of incurred medical claims to project the amount of incurred but not reported claims liability. The estimated liability for self-insured medical claims was $1.7 million and $1.5 million at March 31, 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”). The Company’s contingent liability (Level 3) associated with the Frac Tech Earnout (in thousands) at March 31, 2025 and 2024 was as follows:Balance at December 31, 2024$719 Revaluation adjustments25 Payments(223)Balance at March 31, 2025$521 Balance at December 31, 2023$1,219 Revaluation adjustments(74)Payments(159)Balance at March 31, 2024$986 

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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 (of 4.3%), and