Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates fluctuations. We had cash and cash equivalents of $119.7 million as of December 31, 2024, which include bank deposits and money market funds. We had marketable investment securities of $173.4 million as of December 31, 2024, which are U.S. government securities and trading securities. Due to the nature of these instruments, we believe that we have no material exposure to interest rate risk.
As of December 31, 2024, we had a term debt of $10.0 million consisting of an outstanding term loan which bears interest at a floating rate that fluctuates with the WSJ Prime Rate, subject to an interest rate floor of 6.00%. During 2024, the U.S. Federal Reserve lowered interest rates on three separate occasions: by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024. The WSJ Prime Rate decreased by the same basis points for each respective adjustment thereafter.
A hypothetical 10% change in interest rates during any of the periods presented would not have a material impact on future interest income or expense, fair values of portfolio of investments, fair value of long-term debt and related cash flows.
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Inflation Risk
Our exposure to inflationary pressures is primarily in personnel and related costs. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and if the rate of inflation were to further increase, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, the purchasing power of our cash and cash equivalents may be eroded, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our payors may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts.
Equity Price Risk
As of December 31, 2024, we had equity securities with a total fair value of $3.6 million. A hypothetical 10% decrease in the market price of our trading securities as of December 31, 2024 would decrease the fair value by approximately $0.4 million. These securities are subject to a wide variety and number of market-related risks that could substantially reduce or increase the fair value of our holdings.
Item 8. Financial Statements and Supplementary Data.
The financial statements and supplementary data required by this item are included after the Signature page of this Annual Report on Form 10-K beginning on page F-1 .
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.