☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, no par value | VIVO | NASDAQ Global Select Market |
Large accelerated filer | Accelerated filer | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||
Emerging growth company | ☐ | ||||||||
Class | Outstanding January 31, | |
Common Stock, no par value |
Page(s) | ||||||||||
PART I. | ||||||||||
Item 1. | ||||||||||
1 | ||||||||||
2 | ||||||||||
3 | ||||||||||
6 | ||||||||||
Item 3. | ||||||||||
Item 4. | 28 | |||||||||
PART II. | ||||||||||
Item | ||||||||||
Item 1A. | 28 | |||||||||
28 | ||||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2019 | 2018 | |||||||
NET REVENUES | $ | 47,421 | $ | |||||
COST OF SALES | 19,981 | 19,908 | ||||||
GROSS PROFIT | 27,440 | 31,572 | ||||||
OPERATING EXPENSES | ||||||||
Research and development | 4,824 | 3,967 | ||||||
Selling and marketing | 6,684 | 7,563 | ||||||
General and administrative | 8,756 | 8,902 | ||||||
Change in fair value of contingent consideration obligation | 1,187 | — | ||||||
Restructuring costs | 275 | — | ||||||
Selected legal costs | 320 | 589 | ||||||
Total operating expenses | 22,046 | 21,021 | ||||||
OPERATING INCOME | 5,394 | 10,551 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 111 | 149 | ||||||
Interest expense | (767 | ) | (363 | ) | ||||
Other, net | (712 | ) | 139 | |||||
Total other expense | (1,368 | ) | (75 | ) | ||||
EARNINGS BEFORE INCOME TAXES | 4,026 | 10,476 | ||||||
INCOME TAX PROVISION | 1,199 | 2,370 | ||||||
NET EARNINGS | $ | 2,827 | $ | 8,106 | ||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.07 | $ | 0.19 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.07 | $ | 0.19 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 42,789 | 42,446 | ||||||
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS | 149 | 459 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 42,938 | 42,905 | ||||||
ANTI-DILUTIVE SECURITIES: | ||||||||
Common share options and restricted share units | 1,407 | 684 | ||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | — | $ | 0.125 |
Three Months Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
NET REVENUES | $ | 92,917 | $ | 47,421 | ||||
COST OF SALES | 31,369 | 19,770 | ||||||
GROSS PROFIT | 61,548 | 27,651 | ||||||
OPERATING EXPENSES | ||||||||
Research and development | 5,651 | 4,763 | ||||||
Selling and marketing | 7,021 | 6,728 | ||||||
General and administrative | 11,938 | 8,984 | ||||||
Change in fair value of acquisition consideration | 1,047 | 1,187 | ||||||
Restructuring costs | — | 275 | ||||||
Selected legal costs | 1,227 | 320 | ||||||
Total operating expenses | 26,884 | 22,257 | ||||||
OPERATING INCOME | 34,664 | 5,394 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 9 | 111 | ||||||
Interest expense | (534 | ) | (767 | ) | ||||
RADx grant income | 800 | — | ||||||
Other, net | (691 | ) | (712 | ) | ||||
Total other expense, net | (416 | ) | (1,368 | ) | ||||
EARNINGS BEFORE INCOME TAXES | 34,248 | 4,026 | ||||||
INCOME TAX PROVISION | 7,469 | 1,199 | ||||||
NET EARNINGS | $ | 26,779 | $ | 2,827 | ||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.62 | $ | 0.07 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.61 | $ | 0.07 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING—BASIC | 43,098 | 42,789 | ||||||
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS | 681 | 149 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING—DILUTED | 43,779 | 42,938 | ||||||
ANTI-DILUTIVE SECURITIES: | ||||||||
Common share options and restricted share units | 258 | 1,407 | ||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2019 | 2018 | |||||||
NET EARNINGS | $ | 2,827 | $ | 8,106 | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | 2,768 | (716 | ) | |||||
Unrealized loss on cash flow hedge | — | (577 | ) | |||||
Reclassification of gain on cash flow hedge | (77 | ) | — | |||||
Income taxes related to items of other comprehensive income | 19 | 145 | ||||||
Other comprehensive income (loss), net of tax | 2,710 | (1,148 | ) | |||||
COMPREHENSIVE INCOME | $ | 5,537 | $ | 6,958 | ||||
Three Months Ended December 31, | ||||||||
2020 | 2019 | |||||||
NET EARNINGS | $ | 26,779 | $ | 2,827 | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | 3,301 | 2,768 | ||||||
Unrealized gain on cash flow hedge | 21 | — | ||||||
Reclassification of amortization of gain on cash flow hedge | (77 | ) | (77 | ) | ||||
Income taxes related to items of other comprehensive income | 14 | 19 | ||||||
Other comprehensive income, net of tax | 3,259 | 2,710 | ||||||
COMPREHENSIVE INCOME | $ | 30,038 | $ | 5,537 | ||||
Three Months Ended December 31, | 2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings | $ | 2,827 | $ | 8,106 | ||||
Non-cash items included in net earnings: | ||||||||
Depreciation of property, plant and equipment | 1,218 | 1,253 | ||||||
Amortization of intangible assets | 1,722 | 829 | ||||||
Stock-based compensation | 788 | 1,670 | ||||||
Deferred income taxes | 419 | 96 | ||||||
Change in accrued contingent consideration | 1,187 | — | ||||||
Change in the following: | ||||||||
Accounts receivable | 550 | 317 | ||||||
Inventories | (3,526 | ) | (37 | ) | ||||
Prepaid expenses and other current assets | 1,434 | 539 | ||||||
Accounts payable and accrued expenses | (664 | ) | (4,081 | ) | ||||
Income taxes payable | (464 | ) | 991 | |||||
Other, net | (203 | ) | (197 | ) | ||||
Net cash provided by operating activities | 5,288 | 9,486 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (340 | ) | (1,109 | ) | ||||
Net cash used for investing activities | (340 | ) | (1,109 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends paid | — | (5,301 | ) | |||||
Payments on term loan | — | (1,125 | ) | |||||
Proceeds from exercise of stock options | — | 66 | ||||||
Net cash used for financing activities | — | (6,360 | ) | |||||
Effect of Exchange Rate Changes on Cash and Equivalents and Restricted Cash | 1,212 | (257 | ) | |||||
Net Increase in Cash and Equivalents and Restricted Cash | 6,160 | 1,760 | ||||||
Cash and Equivalents and Restricted Cash at Beginning of Period | 62,397 | 60,763 | ||||||
Cash and Equivalents and Restricted Cash at End of Period | $ | 68,557 | $ | 62,523 | ||||
Cash and Equivalents | $ | 68,557 | $ | 61,523 | ||||
Restricted Cash | — | 1,000 | ||||||
Cash and Equivalents and Restricted Cash at End of Period | $ | 68,557 | $ | 62,523 | ||||
Three Months Ended December 31, | 2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings | $ | 26,779 | $ | 2,827 | ||||
Non-cash items included in net earnings: | ||||||||
Depreciation of property, plant and equipment | 1,508 | 1,218 | ||||||
Amortization of intangible assets | 2,221 | 1,722 | ||||||
Stock-based compensation | 1,241 | 788 | ||||||
Deferred income taxes | (852 | ) | 419 | |||||
Change in acquisition consideration | 1,047 | 1,187 | ||||||
Change in the following: | ||||||||
Accounts receivable | (1,776 | ) | 550 | |||||
Inventories | (5,941 | ) | (3,526 | ) | ||||
Prepaid expenses and other current assets | 2,682 | 1,434 | ||||||
Accounts payable and accrued expenses | (5,826 | ) | (664 | ) | ||||
Income taxes payable | 4,032 | (464 | ) | |||||
Other, net | 6 | (203 | ) | |||||
Net cash provided by operating activities | 25,121 | 5,288 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (2,086 | ) | (340 | ) | ||||
Payment of acquisition consideration holdback | (5,000 | ) | — | |||||
Net cash used for investing activities | (7,086 | ) | (340 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Payment on revolving credit facility | (10,000 | ) | — | |||||
Net cash used for financing activities | (10,000 | ) | — | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 1,644 | 1,212 | ||||||
Net Increase in Cash and Cash Equivalents | 9,679 | 6,160 | ||||||
Cash and Cash Equivalents at Beginning of Period | 53,514 | 62,397 | ||||||
Cash and Cash Equivalents at End of Period | $ | 63,193 | $ | 68,557 | ||||
December 31, 2019 (Unaudited) | September 30, 2019 | |||||||
CURRENT ASSETS | ||||||||
Cash and equivalents | $ | 68,557 | $ | 62,397 | ||||
Accounts receivable, less allowances of $527 and $537 , respectively | 35,318 | 35,608 | ||||||
Inventories | 42,827 | 39,617 | ||||||
Prepaid expenses and other current assets | 5,730 | 7,139 | ||||||
Total current assets | 152,432 | 144,761 | ||||||
PROPERTY, PLANT AND EQUIPMENT, at Cost | ||||||||
Land | 985 | 982 | ||||||
Buildings and improvements | 31,928 | 31,904 | ||||||
Machinery, equipment and furniture | 65,320 | 64,155 | ||||||
Construction in progress | 943 | 522 | ||||||
Subtotal | 99,176 | 97,563 | ||||||
Less: accumulated depreciation and amortization | 68,681 | 66,996 | ||||||
Net property, plant and equipment | 30,495 | 30,567 | ||||||
OTHER ASSETS | ||||||||
Goodwill | 89,958 | 89,241 | ||||||
Other intangible assets, net | 58,586 | 60,243 | ||||||
Right-of-use assets | 6,041 | — | ||||||
Deferred income taxes | 132 | 156 | ||||||
Other assets | 484 | 510 | ||||||
Total other assets | 155,201 | 150,150 | ||||||
TOTAL ASSETS | $ | $ | 325,478 | |||||
December 31, 2020 (Unaudited) | September 30, 2020 |
December 31, 2019 (Unaudited) | September 30, 2019 | |||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 7,932 | $ | 7,238 | ||||
Accrued employee compensation costs | 6,401 | 7,938 | ||||||
Accrued interest expense | 958 | 498 | ||||||
Current portion of acquisition consideration | 13,653 | — | ||||||
Current operating lease obligations | 1,333 | — | ||||||
Other accrued expenses | 2,977 | 3,260 | ||||||
Income taxes payable | 1,599 | 1,980 | ||||||
Total current liabilities | 34,853 | 20,914 | ||||||
NON-CURRENT LIABILITIES | ||||||||
Acquisition consideration | 19,736 | 32,202 | ||||||
Post-employment benefits | 2,484 | 2,500 | ||||||
Long-term operating lease obligations | 4,480 | — | ||||||
Long-term debt | 75,824 | 75,824 | ||||||
Long-term income taxes payable | 549 | 549 | ||||||
Deferred income taxes | 2,910 | 2,522 | ||||||
Total non-current liabilities | 105,983 | 113,597 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Preferred stock, no par value; 1,000,000 shares authorized; 0ne issued | — | — | ||||||
Common shares, no par value; 71,000,000 shares authorized, 42,827,758 and 42,712,296 shares issued, respectively | — | — | ||||||
Additional paid-in capital | 133,622 | 132,834 | ||||||
Retained earnings | 65,935 | 63,108 | ||||||
Accumulated other comprehensive loss | (2,265 | ) | (4,975 | ) | ||||
Total shareholders’ equity | 197,292 | 190,967 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 338,128 | $ | 325,478 |
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 63,193 | $ | 53,514 | ||||
Accounts receivable, less allowances of $579 and $513, respectively | 40,936 | 38,512 | ||||||
Inventories, net | 67,243 | 61,264 | ||||||
Prepaid expenses and other current assets | 6,244 | 8,900 | ||||||
Total current assets | 177,616 | 162,190 | ||||||
PROPERTY, PLANT AND EQUIPMENT, at Cost | ||||||||
Land | 997 | 991 | ||||||
Buildings and improvements | 32,320 | 32,188 | ||||||
Machinery, equipment and furniture | 71,647 | 69,854 | ||||||
Construction in progress | 6,118 | 1,200 | ||||||
Subtotal | 111,082 | 104,233 | ||||||
Less: accumulated depreciation and amortization | 75,094 | 73,113 | ||||||
Property, plant and equipment, net | 35,988 | 31,120 | ||||||
OTHER ASSETS | ||||||||
Goodwill | 114,868 | 114,186 | ||||||
Other intangible assets, net | 80,976 | 83,197 | ||||||
Right-of-use assets, net | 6,213 | 6,336 | ||||||
Deferred income taxes | 7,714 | 7,647 | ||||||
Other assets | 555 | 585 | ||||||
Total other assets | 210,326 | 211,951 | ||||||
TOTAL ASSETS | $ | 423,930 | $ | 405,261 | ||||
December 31, 2020 (Unaudited) | September 30, 2020 | |||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 15,348 | $ | 11,969 | ||||
Accrued employee compensation costs | 10,581 | 16,661 | ||||||
Current portion of acquisition consideration | 11,303 | 12,619 | ||||||
Current operating lease obligations | 1,835 | 1,789 | ||||||
Current government grant obligations | 727 | 600 | ||||||
Other accrued expenses | 6,052 | 5,362 | ||||||
Income taxes payable | 7,985 | 3,524 | ||||||
Total current liabilities | 53,831 | 52,524 | ||||||
NON-CURRENT LIABILITIES | ||||||||
Acquisition consideration | 10,653 | 13,290 | ||||||
Post-employment benefits | 2,494 | 2,493 | ||||||
Fair value of interest rate swaps | 693 | 713 | ||||||
Long-term operating lease obligations | 4,513 | 4,678 | ||||||
Long-term debt | 58,824 | 68,824 | ||||||
Government grant obligations | 10,495 | 10,524 | ||||||
Long-term income taxes payable | 384 | 549 | ||||||
Deferred income taxes | 3,007 | 3,804 | ||||||
Other non-current liabilities | 169 | 233 | ||||||
Total non-current liabilities | 91,232 | 105,108 | ||||||
COMMITMENTS AND CONTINGENCIES | 0 | 0 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Preferred stock, 0 par value; 1,000,000 shares authorized; NaN issued | 0— | 0— | ||||||
Common shares, 0 par value; 71,000,000 shares authorized, 43,124,190and 43,068,842shares issued, respectively | 0— | 0— | ||||||
Additional paid-in capital | 141,395 | 140,195 | ||||||
Retained earnings | 136,073 | 109,294 | ||||||
Accumulated other comprehensive income (loss) | 1,399 | (1,860 | ) | |||||
Total shareholders’ equity | 278,867 | 247,629 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 423,930 | $ | 405,261 | ||||
Common Shares Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||
Balance at September 30, 2019 | 42,712 | $ | 132,834 | $ | 63,108 | $ | (4,975 | ) | $ | 190,967 | ||||||||||
Conversion of restricted share units and | 116 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 788 | — | — | 788 | |||||||||||||||
Net earnings | — | — | 2,827 | — | 2,827 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 2,768 | 2,768 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (58 | ) | (58 | ) | |||||||||||||
Balance at December 31, 2019 | 42,828 | $ | 133,622 | $ | 65,935 | $ | (2,265 | ) | $ | 197,292 | ||||||||||
Balance at September 30, 2018 | 42,400 | $ | 129,193 | $ | 49,602 | $ | (3,377 | ) | $ | 175,418 | ||||||||||
Cash dividends paid - $0.125 per share | — | — | (5,301 | ) | — | (5,301 | ) | |||||||||||||
Conversion of restricted share units and | 89 | 13 | — | — | 13 | |||||||||||||||
Stock compensation expense | — | 1,670 | — | — | 1,670 | |||||||||||||||
Net earnings | — | — | 8,106 | — | 8,106 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (716 | ) | (716 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | (432 | ) | (432 | ) | |||||||||||||
Adoption of ASU 2014-09 | — | — | (116 | ) | — | (116 | ) | |||||||||||||
Balance at December 31, 2018 | 42,489 | $ | 130,876 | $ | 52,291 | $ | (4,525 | ) | $ | 178,642 |
Common Shares Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||
Balance at September 30, 2020 | | 43,069 | $ | 140,195 | $ | 109,294 | $ | (1,860) | $ | 247,629 | ||||||||||
Conversion of restricted share units and exercise of stock options | 55 | (41 | ) | — | — | (41 | ) | |||||||||||||
Stock compensation expense | — | 1,241 | — | — | 1,241 | |||||||||||||||
Net earnings | — | — | 26,779 | — | 26,779 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 3,301 | 3,301 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (42) | (42 | ) | ||||||||||||||
Balance at December 31, 2020 | 43,124 | $ | 141,395 | $ | 136,073 | $ | 1,399 | $ | 278,867 | |||||||||||
Balance at September 30, 2019 | 42,712 | $ | 132,834 | $ | 63,108 | $ | (4,975) | $ | 190,967 | |||||||||||
Conversion of restricted share units and exercise of stock options | 116 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 788 | — | — | 788 | |||||||||||||||
Net earnings | — | — | 2,827 | — | 2,827 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 2,768 | 2,768 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (58) | (58 | ) | ||||||||||||||
Balance at December 31, 2019 | 42,828 | $ | 133,622 | $ | 65,935 | $ | (2,265) | $ | 197,292 | |||||||||||
1. | Nature of Business |
2. | Basis of Presentation |
3. | Significant Accounting Policies |
Three Months Ended December 31, | ||||||||||||
2019 | 2018 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Americas | $ | $ | (9 | )% | ||||||||
EMEA | 6,500 | 5,802 | 12 | % | ||||||||
ROW | 556 | 440 | 26 | % | ||||||||
Total Diagnostics | 34,791 | 36,665 | (5 | )% | ||||||||
Life Science- | ||||||||||||
Americas | 4,019 | 4,521 | (11 | )% | ||||||||
EMEA | 4,966 | 7,363 | (33 | )% | ||||||||
ROW | 3,645 | 2,931 | 24 | % | ||||||||
Total Life Science | 12,630 | 14,815 | (15 | ) % | ||||||||
Consolidated | $ | 47,421 | $ | 51,480 | (8 | )% | ||||||
Three Months Ended December 31, | ||||||||||||
2019 | 2018 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Molecular assays | $ | 6,887 | $ | 7,231 | (5 | )% | ||||||
Immunoassays & blood chemistry assays | 27,904 | 29,434 | (5 | )% | ||||||||
Total Diagnostics | $ | 34,791 | $ | 36,665 | (5 | )% | ||||||
Life Science- | ||||||||||||
Molecular reagents | $ | 5,357 | $ | 6,615 | (19 | )% | ||||||
Immunological reagents | 7,273 | 8,200 | (11 | )% | ||||||||
Total Life Science | $ | 12,630 | $ | 14,815 | (15 | ) % | ||||||
(b) | Reclassifications – |
Three Months Ended December 31, | ||||||||||||
2019 | 2018 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Gastrointestinal assays | $ | $ | (14 | )% | ||||||||
Respiratory illness assays | 7,749 | 7,981 | (3 | )% | ||||||||
Blood chemistry assays | 5,150 | 4,430 | 16 | % | ||||||||
Other | 5,846 | 5,639 | 4 | % | ||||||||
Total Diagnostics | $ | 34,791 | $ | 36,665 | (5 | )% | ||||||
4. | Revenue Recognition |
Three Months Ended December 31, | ||||||||||||
2020 | 2019 | Inc (Dec) | ||||||||||
Diagnostics- | ||||||||||||
Americas | $ | 23,551 | $ | 27,735 | (15 | )% | ||||||
EMEA | 6,020 | 6,500 | (7 | )% | ||||||||
ROW | 750 | 556 | 35 | % | ||||||||
Total Diagnostics | 30,321 | 34,791 | (13 | )% | ||||||||
Life Science- | ||||||||||||
Americas | 18,755 | 4,012 | 367 | % | ||||||||
EMEA | 32,311 | 4,960 | 551 | % | ||||||||
ROW | 11,530 | 3,658 | 215 | % | ||||||||
Total Life Science | 62,596 | 12,630 | 396 | % | ||||||||
Consolidated | $ | 92,917 | $ | 47,421 | 96 | % | ||||||
Three Months Ended | ||||||||||||
2020 | 2019 | Inc | ||||||||||
Diagnostics- | ||||||||||||
Molecular assays | $ | 4,590 | $ | 6,903 | (34 | )% | ||||||
Non-molecular assays | 25,731 | 27,888 | (8 | )% | ||||||||
Total Diagnostics | $ | 30,321 | $ | 34,791 | (13 | )% | ||||||
Life Science- | ||||||||||||
Molecular reagents | $ | 46,029 | $ | 5,367 | 758 | % | ||||||
Immunological reagents | 16,567 | 7,263 | 128 | % | ||||||||
Total Life Science | $ | 62,596 | $ | 12,630 | 396 | % | ||||||
Three Months Ended December 31, | ||||||||||||
2020 | 2019 | Inc | ||||||||||
Diagnostics- | ||||||||||||
Gastrointestinal assays | $ | 15,452 | $ | 16,251 | (5 | )% | ||||||
Respiratory illness assays | 4,806 | 7,778 | (38 | )% | ||||||||
Blood chemistry assays | 4,394 | 4,951 | (11 | )% | ||||||||
Other | 5,669 | 5,811 | (2 | )% | ||||||||
Total Diagnostics | $ | 30,321 | $ | 34,791 | (13 | )% | ||||||
5. | Fair Value Measurements |
Fair Value Measurements Using Inputs Considered as | ||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Contingent consideration - | ||||||||||||||||
As of December 31, 2019 | $ | 28,389 | $ | — | $ | — | $ | 28,389 | ||||||||
As of September 30, 2019 | $ | 27,202 | $ | — | $ | — | $ | 27,202 |
Fair Value Measurements Using Inputs Considered as | ||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swaps - | ||||||||||||||||
As of December 31, 2020 | $ | (693 | ) | $ | 0 | $ | (693 | ) | $ | 0 | ||||||
As of September 30, 2020 | $ | (713 | ) | $ | 0 | $ | (713 | ) | $ | 0 | ||||||
Contingent consideration (GeneP OC ) | ||||||||||||||||
As of December 31, 2020 | $ | (21,956 | ) | $ | 0 | $ | 0 | $ | (21,956 | ) | ||||||
As of September 30, 2020 | $ | (20,909 | ) | $ | 0 | $ | 0 | $ | (20,909 | ) |
6. | Business |
June 3, 2019 (as initially reported) | Measurement Period Adjustments | June 3, 2019 (as adjusted) | ||||||||||
Fair value of assets acquired - | ||||||||||||
Accounts receivable | $ | 58 | $ | (1 | ) | $ | 57 | |||||
Inventories | 1,617 | (106 | ) | 1,511 | ||||||||
Other current assets | 77 | 7 | 84 | |||||||||
Property, plant and equipment | 1,520 | (96 | ) | 1,424 | ||||||||
Goodwill | 34,482 | 100 | 34,582 | |||||||||
Other intangible assets (estimated useful life): | ||||||||||||
License agreement (10 years) | 5,990 | — | 5,990 | |||||||||
Technology (15 years) | 34,040 | 96 | 34,136 | |||||||||
Government grant (1.33 years) | 800 | — | 800 | |||||||||
78,584 | — | 78,584 | ||||||||||
Fair value of liabilities assumed - | ||||||||||||
Accounts payable and accrued expenses | 1,082 | (24 | ) | 1,058 | ||||||||
Total consideration paid (including contingent consideration originally estimated at $27,202) | $ | 77,502 | $ | 24 | $ | 77,526 | ||||||
PRELIMINARY | ||||||||||||
April 30, 2020 (as initially reported) | Measurement Period Adjustments | April 30, 2020 (as adjusted) | ||||||||||
Fair value of assets acquired - | ||||||||||||
Cash | $ | 5,006 | $ | — | $ | 5,006 | ||||||
Accounts receivable | 637 | — | 637 | |||||||||
Inventories | 4,329 | — | 4,329 | |||||||||
Other current assets | 851 | 1,825 | 2,676 | |||||||||
Property, plant and equipment | 544 | 39 | 583 | |||||||||
Goodwill | 29,288 | (4,785 | ) | 24,503 | ||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Non-compete agreement (5 years) | 120 | (10 | ) | 110 | ||||||||
Trade name (10 years) | 3,540 | 320 | 3,860 | |||||||||
Technology (15 years) | 5,590 | 530 | 6,120 | |||||||||
Customer relationships (10 years) | 19,370 | 1,270 | 20,640 | |||||||||
Right-of-use | 1,358 | (47 | ) | 1,311 | ||||||||
Deferred tax assets, net | 5,566 | 1,151 | 6,717 | |||||||||
76,199 | 293 | 76,492 | ||||||||||
Fair value of liabilities assumed - | ||||||||||||
Accounts payable and accrued expenses (including current portion of lease and government grant obligations) | 7,757 | 251 | 8,008 | |||||||||
Long-term lease obligations | 1,054 | 42 | 1,096 | |||||||||
Long-term government grant obligations | 10,792 | — | 10,792 | |||||||||
Other non-current liabilities | 291 | — | 291 | |||||||||
19,894 | 293 | 20,187 | ||||||||||
Total consideration paid (including $8,068 to pay off long-term debt) | $ | 56,305 | $ | — | $ | 56,305 | ||||||
Three Months Ended December 31, | 2019 | 2018 | ||||||
Net Revenues | $ | 47,421 | $ | 51,552 | ||||
Net Earnings | $ | 2,827 | $ | 4,379 |
Three Months Ended December 31, | 2020 | 2019 | ||||||
Net Revenues | $ | 92,917 | $ | 51,194 | ||||
Net Earnings | $ | 26,779 | $ | 1,182 |
Three Months Ended December 31, | 2019 | 2018 | ||||||
Adjustments to Net Revenues | ||||||||
GenePOC pre-acquisition revenues | $ | — | $ | 72 | ||||
Adjustments to Net Earnings | ||||||||
GenePOC pre-acquisition net loss | $ | — | $ | (3,203 | ) | |||
Pro forma adjustments: | ||||||||
Expenses related to non-continuing personnel,locations or activities | — | 568 | ||||||
Incremental depreciation and amortization | — | (876 | ) | |||||
Incremental interest costs | — | (284 | ) | |||||
Tax effects of pro forma adjustments | — | 68 | ||||||
Total Adjustments to Net Earnings | $ | — | $ | (3,727 | ) | |||
Three Months Ended December 31, | 2020 | 2019 | ||||||
Adjustments to Net Revenues | ||||||||
Exalenz pre-acquisition revenues | $ | 0 | $ | 3,773 | ||||
Adjustments to Net Earnings | ||||||||
Exalenz pre-acquisition net losses | $ | 0 | $ | (752 | ) | |||
Pro forma adjustments: | ||||||||
Remove net impact of non-continuing personnel, locations or activities | 0 | 101 | ||||||
Incremental depreciation and amortization | 0 | (913 | ) | |||||
Incremental interest costs, net | 0 | (391 | ) | |||||
Tax effects of pro forma adjustments and recognizing benefit on resulting Exalenz losses | 0 | 310 | ||||||
Total Adjustments to Net Earnings | $ | 0 | $ | (1,645 | ) | |||
7 . | C ash |
December 31, 2020 | September 30, 2020 | |||||||
Institutional money market funds | $ | 1,017 | $ | 1,017 | ||||
Cash on hand, unrestricted | 62,176 | 52,497 | ||||||
Total | $ | 63,193 | $ | 53,514 | ||||
8 . | Inventories , Ne t |
Employee Separation and Related Costs | Lease and Other Contract Termination Fees | Other | Total | |||||||||||||
Balance at September 30, 2019 | $ | 1,010 | $ | 12 | 114 | $ | 1,136 | |||||||||
Restructuring charges | 236 | 80 | — | 316 | ||||||||||||
Reversal of prior period accruals | (41 | ) | — | — | (41 | ) | ||||||||||
Payments | (1,020 | ) | (65 | ) | (114 | ) | (1,199 | ) | ||||||||
Balance at December 31, 2019 | $ | 185 | $ | 27 | $ | — | $ | 212 | ||||||||
December 31, 2020 | September 30, 2020 | |||||||
Raw materials | $ | 13,868 | $ | 11,966 | ||||
Work-in-process | 20,874 | 19,477 | ||||||
Finished goods - instruments | 1,532 | 1,594 | ||||||
Finished goods - kits and reagents | 30,969 | 28,227 | ||||||
Total | $ | 67,243 | $ | 61,264 | ||||
December 31, 2019 | September 30, 2019 | |||||||
Institutional money market funds | $ | 21,010 | $ | 20,913 | ||||
Cash on hand, unrestricted | 47,547 | 41,484 | ||||||
Total | $ | 68,557 | $ | 62,397 | ||||
December 31, 2019 | September 30, 2019 | |||||||
Raw materials | $ | 8,549 | $ | 7,455 | ||||
Work-in-process | 12,209 | 11,504 | ||||||
Finished goods - instruments | 688 | 935 | ||||||
Finished goods - kits and reagents | 21,381 | 19,723 | ||||||
Total | $ | 42,827 | $ | 39,617 | ||||
Leasing Arrangements |
December 31, 2019 | ||||
Remainder of 2020 | $ | 1,132 | ||
2021 | 1,456 | |||
2022 | 1,310 | |||
2023 | 967 | |||
2024 | 712 | |||
Thereafter | 616 | |||
Total lease payments | 6,193 | |||
Less amount of lease payment representing interest | (380 | ) | ||
Total present value of lease payments | $ | 5,813 | ||
December 31, 2020 | ||||
2021 (represents remainder of fiscal year) | $ | 1,590 | ||
2022 | 1,873 | |||
2023 | 1,346 | |||
2024 | 1,002 | |||
2025 | 707 | |||
Thereafter | 292 | |||
Total lease payments | 6,810 | |||
Less amount of lease payments representing interest | (462 | ) | ||
Total present value of lease payments | $ | 6,348 | ||
September 30, 2019 | ||||
2020 | $ | 1,528 | ||
2021 | 1,451 | |||
2022 | 1,293 | |||
2023 | 967 | |||
2024 | 712 | |||
Thereafter | 616 | |||
Total | $ | 6,567 | ||
Three Months Ended December 31, | 2020 | 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 494 | $ | 387 | ||||
10. | Goodwill and Other Intangible Assets, Net |
December 31, 2020 | September 30, 2020 | |||||||||||||||
Gross Carrying Value | Accumulated Amortization | Gross Carrying Value | Accumulated Amortization | |||||||||||||
Manufacturing technologies, core products and cell lines | $ | 62,436 | $ | 19,791 | $ | 62,363 | $ | 18,750 | ||||||||
Trade names, licenses and patents | 18,510 | 8,351 | 18,425 | 7,801 | ||||||||||||
Customer lists, customer relationships and supply agreements | 45,263 | 17,186 | 45,071 | 16,210 | ||||||||||||
Government grants | 847 | 847 | 810 | 810 | ||||||||||||
Non-compete agreements | 110 | 15 | 110 | 11 | ||||||||||||
Total | $ | 127,166 | $ | 46,190 | $ | 126,779 | $ | 43,582 | ||||||||
December 31, 2019 | September 30, 2019 | |||||||||||||||
Gross Carrying Value | Accumulated Amortization | Gross Carrying Value | Accumulated Amortization | |||||||||||||
Manufacturing technologies, core products and cell lines | $ | 56,273 | $ | 16,057 | $ | 56,193 | $ | 15,096 | ||||||||
Trade names, licenses and patents | 14,596 | 6,566 | 14,494 | 6,094 | ||||||||||||
Customer lists, customer relationships and supply agreements | 24,500 | 14,626 | 24,274 | 14,110 | ||||||||||||
Government grants | 828 | 362 | 814 | 232 | ||||||||||||
Total | $ | 96,197 | $ | 37,611 | $ | 95,775 | $ | 35,532 | ||||||||
11 . | Bank Credit Arrangements |
12. | Contingent Obligations and Non-Current Liabilities |
13. | National Institutes of Health Contract |
1 4 . | Reportable Segment and Major Customers Information |
Three Months Ended December 31, 2020 | ||||||||
Segment Revenue % | Consolidated Revenue % | |||||||
Diagnostics | ||||||||
Customer A | 10 | % | 4 | % | ||||
Customer B | 11 | % | 3 | % | ||||
Customer C | 12 | % | 4 | % | ||||
33 | % | 11 | % | |||||
Life Science | ||||||||
Customer D | 3 | % | 2 | % | ||||
Customer E | 5 | % | �� | 4 | % | |||
Customer F | 14 | % | 9 | % | ||||
22 | % | 15 | % | |||||
Three Months Ended December 31, 2019 | ||||||||
Segment Revenue % | Consolidated Revenue % | |||||||
Diagnostics | ||||||||
Customer A | 15 | % | 11 | % | ||||
Customer B | 6 | % | 4 | % | ||||
Customer C | 12 | % | 9 | % | ||||
33 | % | 24 | % | |||||
Life Science | ||||||||
Customer D | 8 | %�� | 2 | % | ||||
Customer E | 7 | % | 2 | % | ||||
15 | % | 4 | % | |||||
Diagnostics | Life Science | Corporate (1) | Eliminations (2) | Total | ||||||||||||||||
Three Months Ended December 31, 2019 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third- p arty | $ | 34,791 | $ | 12,630 | $ | — | $ | — | $ | 47,421 | ||||||||||
Inter-segment | 97 | 65 | — | (162 | ) | — | ||||||||||||||
Operating income | 4,408 | 3,061 | (2,087 | ) | 12 | 5,394 | ||||||||||||||
Goodwill (December 31, 2019) | 70,415 | 19,543 | — | — | 89,958 | |||||||||||||||
Other intangible assets, net (December 31, 2019) | 58,277 | 309 | — | — | 58,586 | |||||||||||||||
Total assets (December 31, 2019) | 266,514 | 72,081 | — | (467 | ) | 338,128 | ||||||||||||||
Three Months Ended December 31, 2018 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third- p arty | $ | 36,665 | $ | 14,815 | $ | — | $ | — | $ | 51,480 | ||||||||||
Inter-segment | 163 | 176 | — | (339 | ) | — | ||||||||||||||
Operating income | 8,786 | 5,129 | (3,391 | ) | 27 | 10,551 | ||||||||||||||
Goodwill (September 30, 2019) | 70,395 | 18,846 | — | — | 89,241 | |||||||||||||||
Other intangible assets, net (September 30, 2019) | 59,807 | 436 | — | — | 60,243 | |||||||||||||||
Total assets (September 30, 2019) | 255,169 | 70,392 | — | (83 | ) | 325,478 |
Diagnostics | Life Science | Corporate (1) | Eliminations (2) | Total | ||||||||||||||||
Three Months Ended December 31, 2020 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 30,321 | $ | 62,596 | $ | — | $ | — | $ | 92,917 | ||||||||||
Inter-segment | 69 | 18 | — | (87 | ) | — | ||||||||||||||
Operating income (loss) | (1,182 | ) | 39,797 | (3,963 | ) | 12 | 34,664 | |||||||||||||
Goodwill (December 31, 2020) | 94,944 | 19,924 | — | — | 114,868 | |||||||||||||||
Other intangible assets, net (December 31, 2020) | 80,966 | 10 | — | — | 80,976 | |||||||||||||||
Total assets (December 31, 2020) | 308,990 | 114,946 | — | (6 | ) | 423,930 | ||||||||||||||
Three Months Ended December 31, 2019 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 34,791 | $ | 12,630 | $ | — | $ | — | $ | 47,421 | ||||||||||
Inter-segment | 97 | 65 | — | (162 | ) | — | ||||||||||||||
Operating income (loss) | 5,141 | 2,328 | (2,087 | ) | 12 | 5,394 | ||||||||||||||
Goodwill (September 30, 2020) | 94,855 | 19,331 | — | — | 114,186 | |||||||||||||||
Other intangible assets, net (September 30, 2020) | 83,179 | 18 | — | — | 83,197 | |||||||||||||||
Total assets (September 30, 2020) | 306,812 | 98,483 | — | (34 | ) | 405,261 |
(1) | Includes Selected Legal Costs of $1,227 in the three months ended December 31, 2020 and Restructuringin the |
(2) | Eliminations consist of inter-segment transactions. |
Three Months Ended December 31, | 2019 | 2018 | ||||||
Segment operating income | $ | 7,481 | $ | 13,942 | ||||
Corporate expenses | (2,087 | ) | (3,391 | ) | ||||
Interest income | 111 | 149 | ||||||
Interest expense | (767 | ) | (363 | ) | ||||
Other, net | (712 | ) | 139 | |||||
Consolidated earnings before income taxes | $ | 4,026 | $ | 10,476 | ||||
Three Months Ended December 31, | 2020 | 2019 | ||||||
Operating income (loss) : | ||||||||
Diagnostics segment | $ | (1,182 | ) | $ | 5,141 | |||
Life Science segment | 39,797 | 2,328 | ||||||
Eliminations | 12 | 12 | ||||||
Total operating income | 38,627 | 7,481 | ||||||
Corporate expenses | (3,963 | ) | (2,087 | ) | ||||
Interest income | 9 | 111 | ||||||
Interest expense | (534 | ) | (767 | ) | ||||
RADx initiative grant income | 800 | — | ||||||
Other, net | (691 | ) | (712 | ) | ||||
Consolidated earnings before income taxes | $ | 34,248 | $ | 4,026 | ||||
1 |
16. | Litigation Matters |
17. | Subsequent Event |
(i) | significantly higher revenues in the Life Science segment, due to supplying key molecular components and antibodies to diagnostic test manufacturers for use in COVID-19 related PCR and antibody tests (up $49,966); |
(ii) | higher research and development spending in the Diagnostics segment (up $895) under new product development programs; |
(iii) | increased cash-based incentive compensation (up $600) tied to higher revenues and profit levels; |
(iv) | increased intangible asset amortization, primarily resulting from purchase accounting amortization related to the acquisition of Exalenz in April 2020 (up $499); |
(v) | increased legal expenses related to the DOJ matter at the Billerica, Massachusetts facility (up $947) (see “Lead Testing Matters” below); and |
(vi) | the fiscal 2021 first quarter including $800 in grant income related to the National Institutes of Health RADx initiative (see Note 13 of the accompanying Condensed Consolidated Financial Statements). |
- | By Reportable Segment & Geographic Region |
- | By Product Platform/Type |
Three Months Ended December 31, | ||||||||||||
2019 | 2018 | Change | ||||||||||
Gross Profit | $ | 27,440 | $ | 31,572 | (13) | % | ||||||
Gross Profit Margin | 58 | % | 61 | % | -3 points |
Three Months Ended December 31, | ||||||||||||
2020 | 2019 | Change | ||||||||||
Gross Profit | $ | 61,548 | $ | 27,651 | 123 | % | ||||||
Gross Profit Margin | 66 | % | 58 | % | 8 points |
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2019 First Quarter: | ||||||||||||||||||||
Diagnostics | $ | 3,196 | $ | 6,041 | $ | 4,609 | $ | — | $ | 13,846 | ||||||||||
Life Science | 771 | 1,522 | 1,491 | — | 3,784 | |||||||||||||||
Corporate | — | — | 2,802 | 589 | 3,391 | |||||||||||||||
Total 2019 First Quarter Expenses | $ | 3,967 | $ | 7,563 | $ | 8,902 | $ | 589 | $ | 21,021 | ||||||||||
Fiscal 2020 First Quarter: | ||||||||||||||||||||
Diagnostics | $ | 4,226 | $ | 5,339 | $ | 5,478 | $ | 1,317 | $ | 16,360 | ||||||||||
Life Science | 598 | 1,345 | 1,561 | 95 | 3,599 | |||||||||||||||
Corporate | — | — | 1,717 | 370 | 2,087 | |||||||||||||||
Total 2020 First Quarter Expenses | $ | 4,824 | $ | 6,684 | $ | 8,756 | $ | 1,782 | $ | 22,046 | ||||||||||
Operating Expenses - Comparison to Prior Year Periods | ||||||||||||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2019 First Quarter Expenses | $ | 3,967 | $ | 7,563 | $ | 8,902 | $ | 589 | $ | 21,021 | ||||||||||
% of Revenues | 8 | % | 15 | % | 17 | % | 1 | % | 41 | % | ||||||||||
Fiscal 2020 Increases (Decreases): | ||||||||||||||||||||
Diagnostics | 1,030 | (702 | ) | 869 | 1,317 | 2,514 | ||||||||||||||
Life Science | (173 | ) | (177 | ) | 70 | 95 | (185 | ) | ||||||||||||
Corporate | — | — | (1,085 | ) | (219 | ) | (1,304 | ) | ||||||||||||
2020 First Quarter Expenses | $ | 4,824 | $ | 6,684 | $ | 8,756 | $ | 1,782 | $ | 22,046 | ||||||||||
% of Revenues | 10 | % | 14 | % | 18 | % | 4 | % | 46 | % | ||||||||||
% Increase (Decrease) | 22 | % | (12 | )% | (2 | )% | 203 | % | 5 | % |
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2020 First Quarter: | ||||||||||||||||||||
Diagnostics | $ | 4,175 | $ | 5,396 | $ | 4,929 | $ | 1,317 | $ | 15,817 | ||||||||||
Life Science | 588 | 1,332 | 2,338 | 95 | 4,353 | |||||||||||||||
Corporate | — | — | 1,717 | 370 | 2,087 | |||||||||||||||
Total 2020 First Quarter Expenses | $ | 4,763 | $ | 6,728 | $ | 8,984 | $ | 1,782 | $ | 22,257 | ||||||||||
Fiscal 2021 First Quarter: | ||||||||||||||||||||
Diagnostics | $ | 5,070 | $ | 5,728 | $ | 5,748 | $ | 1,047 | $ | 17,593 | ||||||||||
Life Science | 581 | 1,293 | 3,454 | — | 5,328 | |||||||||||||||
Corporate | — | — | 2,736 | 1,227 | 3,963 | |||||||||||||||
Total 2021 First Quarter Expenses | $ | 5,651 | $ | 7,021 | $ | 11,938 | $ | 2,274 | $ | 26,884 | ||||||||||
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2020 First Quarter Expenses | $ | 4,763 | $ | 6,728 | $ | 8,984 | $ | 1,782 | $ | 22,257 | ||||||||||
% of Revenues | 10 | % | 14 | % | 19 | % | 4 | % | 47 | % | ||||||||||
Fiscal 2021 Increases (Decreases): | ||||||||||||||||||||
Diagnostics | 895 | 332 | 819 | (270 | ) | 1,776 | ||||||||||||||
Life Science | (7 | ) | (39 | ) | 1,116 | (95 | ) | 975 | ||||||||||||
Corporate | — | — | 1,019 | 857 | 1,876 | |||||||||||||||
2021 First Quarter Expenses | $ | 5,651 | $ | 7,021 | $ | 11,938 | $ | 2,274 | $ | 26,884 | ||||||||||
% of Revenues | 6 | % | 8 | % | 13 | % | 2 | % | 29 | % | ||||||||||
% Increase | 19 | % | 4 | % | 33 | % | 28 | % | 21 | % |
10.1*† | ||||
10.2*† | Executive Vice President Cash-Based Incentive Compensation Plan for Fiscal Year 2021 |
* | Certain portions of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish a copy of any omitted portion to the SEC upon request. |
† | Management Compensatory Agreement |
MERIDIAN BIOSCIENCE, INC. | ||||||
Date: February 5, 2021 | By: | /s/ Bryan T. Baldasare | ||||
Bryan T. Baldasare | ||||||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |