(6)   Fair Value Measurements

The following table sets forth the fair value of the Company’s financial assets and liabilities within the fair value hierarchy:

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In connection with the acquisition of 2nd.MD, the Company recorded contingent consideration liabilities for the estimated fair value of Accolade common stock issuable to 2nd.MD shareholders upon the achievement of certain defined milestones. The contingent consideration liabilities are measured at fair value and are based on significant inputs not observable in the market, which represent a Level 3 measurement. The valuation of contingent consideration uses assumptions we believe would be made by a market participant.

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The Company records the change in fair value of its contingent consideration liabilities in the consolidated statements of operations. The following presents changes in the Company’s Level 3 contingent consideration liabilities for the three months ended May 31, 2021:

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The estimated fair value of the convertible senior notes (Note 7) was $349,111 as of May 31, 2021, based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop an estimate of the fair value. Accordingly, the estimate is not necessarily indicative of the amount at which this instrument could be purchased, sold, or settled.

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