v3.26.1
FAIR VALUE MEASUREMENTS
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following table summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy:
March 31, 2026December 31, 2025
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Available-for-sale debt securities:
U.S. treasury securities$298 $— $— $298 $1,224 $— $— $1,224 
U.S. government agencies securities— — — — — 15 — 15 
Corporate debt securities— 555 — 555 — 1,398 — 1,398 
Residential mortgage and asset-backed securities— 144 — 144 — 407 — 407 
Equity securities:
Money market funds5,966 — — 5,966 6,150 — — 6,150 
Publicly traded equity securities2,147 — — 2,147 1,961 — — 1,961 
Deferred compensation plan405 — — 405 406 — — 406 
Foreign currency derivative contracts— 73 — 73 — 56 — 56 
Total$8,817 $772 $— $9,589 $9,741 $1,875 $— $11,616 
Liabilities:
Contingent consideration liability$— $— $275 $275 $— $— $278 $278 
Deferred compensation plan405 — — 405 406 — — 406 
Foreign currency derivative contracts— 30 — 30 — 72 — 72 
Total$405 $30 $275 $710 $406 $72 $278 $757 
Level 2 Inputs
Available-for-Sale Debt Securities
For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of the measurement date and by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate the fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.
Foreign Currency Derivative Contracts
Our foreign currency derivative contracts have maturities of 18 months or less and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. We estimate the fair values of these contracts by utilizing an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency exchange rates, Secured Overnight Financing Rate (“SOFR”) and swap rates. These inputs, where applicable, are observable at commonly quoted intervals.
Level 3 Inputs
Contingent Consideration Liability
In connection with our first quarter 2021 acquisition of MYR GmbH, we are subject to a potential contingent consideration payment of up to €300 million, subject to customary adjustments, which is revalued each reporting period using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of bulevirtide until the related contingency is resolved.
The following table summarizes the change in fair value of our contingent consideration liability:
Three Months Ended
March 31,
(in millions)20262025
Beginning balance$278 $206 
Changes in valuation assumptions(1)
3 2 
Effect of foreign exchange remeasurement(2)
(6)7 
Ending balance(3)
$275 $216 
________________________________
(1)    Included in Research and development expenses on our Condensed Consolidated Statements of Operations.
(2)    Included in Other (income) expense, net on our Condensed Consolidated Statements of Operations.
(3)    Included in Other current liabilities on our Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025.
Fair Value Level Transfers
There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.
Other Fair Value Disclosures
Senior Unsecured Notes
The following table summarizes the total estimated fair value and carrying value of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values:
(in millions)March 31, 2026December 31, 2025
Fair value$19,178 $22,342 
Carrying value$21,080 $23,827 
Liability Related to Future Royalties
We recorded a liability related to future royalties as part of our 2020 acquisition of Immunomedics, Inc., which is subsequently amortized using the effective interest method over the remaining estimated life. The fair value of the liability related to future royalties, determined using Level 3 inputs, was approximately $0.8 billion as of March 31, 2026 and December 31, 2025, and the carrying value was $1.1 billion as of March 31, 2026 and December 31, 2025.