Note 1. Basis of Presentation and Summary of Significant Accounting Policies:

The interim consolidated financial statements of Bio-Techne Corporation and subsidiaries, (the Company) presented here have been prepared by the Company and are unaudited. They have been prepared in accordance with accounting principles generally accepted in the United States of America and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30, 2021, included in the Company's Annual Report on Form 10-K for fiscal ~~year~~ 2021. A summary of significant accounting policies followed by the Company is detailed in the Company's Annual Report on Form 10-K for fiscal ~~year~~ 2021. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements.

During the ~~first~~six ~~quarter of fiscal~~months ended ~~2022,~~December 31, 2021, the Company operated under 2two operating segments, Protein Sciences and Diagnostics and Genomics. The operating segments the Company operated under were consistent with the Company's operating segments disclosed in the Company's Annual Report on Form 10-K for fiscal 2021.

Goodwill: In the second quarter of fiscal 2022, Changzhou Eminence Biotechnology Co., Ltd. (Eminence) notified the Company of its need for additional capital to execute its growth plan. The Company first attempted to find outside equity financing support for the Eminence investment but was unable to do so. The Company then reviewed the additional financing needs required to successfully ramp Eminence’s business, which ultimately did not meet the Company’s return on capital requirements. Therefore, the Company did not provide additional funding to Eminence. As a result of not obtaining additional financing, Eminence notified the Company of its plans to cease operations and liquidate its business.

Given the upcoming liquidation process to dispose of the Eminence assets, the Company identified a triggering event in the second quarter of fiscal 2022 and performed impairment testing. The impairment testing resulted in a full impairment of the Eminence goodwill and intangible assets, which resulted in charges of $8.3 million and $8.6 million, respectively. The Company also recognized inventory and fixed asset impairment charges of $0.9 million and $0.9 million, respectively.

The Company recorded the impairment charges within the General and Administrative line in the Consolidated Income Statement. The impact on net income attributable to Bio-Techne was approximately $8 million, after taking into effect non-controlling interest holders. The remaining net tangible assets of Eminence included in our Consolidated Balance Sheet were approximately $4 million and primarily consisted of fixed assets and related deposits of $3.7 million, inventory of $0.9 million, receivables of $0.6 million, and other current assets of $0.2 million. The Company also had $1.6 million related to current liabilities. The Company holds a financial interest of approximately 57.4% in those tangible assets in the liquidation process.

Investments: In December 2021, the Company paid $25 million to enter into a two-part forward contract which requires the Company to make an initial ownership investment followed by purchase of full equity interest in Wilson Wolf Corporation (Wilson Wolf) if certain annual revenue or EBITDA thresholds are met. Wilson Wolf is a leading manufacturer of cell culture devices, including the G-Rex product line.

The first part of the forward contract is triggered upon Wilson Wolf achieving approximately $92 million in annual revenue or $55 million in annual earnings before interest, taxes, depreciation, and amortization (EBITDA) at any point prior to December 31, 2027. Once triggered, the Company is required to make an additional investment of $231 million in exchange for a 19.9% ownership stake. If Wilson Wolf doesn’t achieve the revenue and EBITDA targets by December 31, 2027, the agreement will expire.

Once the first part of the forward contract is triggered, the second part of the forward contract will automatically trigger, and requires the Company to acquire the remaining equity interest in Wilson Wolf on December 31, 2027 based on a revenue multiple. The second part of the contract would be accelerated in advance of December 31, 2027, if Wilson Wolf meets its second milestone of approximately $226 million in annual revenue or $136 million in annual EBITDA. If the second milestone is achieved, the forward contract requires the Company to pay approximately $1 billion plus potential consideration for revenue in excess of the revenue milestone. The approximate multiple for total expected payments of the second forward contract is 4.4 times the annual revenue of Wilson Wolf. The Company has elected to apply the measurement alternative as detailed under ASC 321-10-35-2 for the Wilson Wolf investment. The Company recorded the $25 million payment as a cost basis investment within Other long-term assets on the Consolidated Balance Sheet.

Restructuring actions: Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and impairments and disposals of assets associated with such actions. Employee-related severance charges are based upon distributed employment policies and substantive severance plans. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Asset impairment and disposal charges include right of use assets, leasehold improvements, and other asset write-downs associated with combining operations and disposal of assets.

In September 2021, the Company informed employees of our decision to close our Exosome Diagnostics Germany facility, discontinuing lab and research occurring at the site, as part of a realignment of activities within our Exosome Diagnostics business. The closure of the site is expected to be completed in the third quarter of fiscal 2022. As a result of the restructuring activities, an estimated pre-tax charge of $1.2 million was recorded within our Diagnostics and Genomics ~~segment. The related~~segment during the first quarter of fiscal ~~2022~~2022. Additional charges of approximately $0.5 million were recorded in the quarter ended December 31, 2021. These additional charges related to the refinement of our estimated close down costs as well as miscellaneous shut-down costs incurred during the quarter. Total restructuring charges for the closure of the Exosome Diagnostics Germany facility for the six months ended December 31, 2021 were recorded inwithin operating income on the income statement as follows (in thousands):

Restructuring actions, including cash and non-cash impacts, are as follows (in thousands):

⁽¹⁾The ~~charges~~expense recorded ~~above are accrued~~for the three months ended September 31,2021 of $1.2 million included $0.2 million related to the non-cash impairment of fixed assets.

During the second quarter of fiscal 2022, the Company also incurred a restructuring charge of $0.2 million related to employee severance for the relocation of a US plant. This charge is recorded within Other current liabilities as of ~~September 30,~~December 31, 2021. There were 0 cash payments ~~or adjustments~~related to ~~the initial accrual~~this restructuring during the period ended ~~September 30,~~December 31, 2021.

There were no accounting pronouncements adopted in the first ~~fiscal~~and second quarter of fiscal 2022. Refer to the Form 10-K for accounting pronouncements adopted prior to June 30, 2021.

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Note 2. Revenue Recognition:

Consumables revenues consist of single-use products and are recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. Service revenues consist of extended warranty contracts, post contract support, and custom development projects that are recognized over time as either the customers receive and consume the benefits of such services simultaneously or the underlying asset being developed has no alternative use for the Company at contract inception and the Company has an enforceable right to payment for the portion of the performance completed. Service revenues also include laboratory services recognized at point in time. Prior to fiscal ~~year~~ 2021, the Company has not recognized revenue upon completion of the performance obligation for laboratory services, but rather upon cash receipt, which was subsequent to the performance obligation being satisfied. The Company accounted for these services based on cash receipts as we did not have significant historical experience collecting payments from Medicare or other insurance providers and considered the variable consideration for such services to be constrained as it would not be probable that a significant amount of revenue would not need to be reversed in future periods for the services provided. Given Medicare coverage for our laboratory services became effective on December 1, 2019, the Company considered it to have sufficient data to estimate variable consideration as of July 1, 2020 for laboratory services that are reimbursed by ~~Medicare.~~Medicare. The amount of cash received in fiscal ~~year~~ 2021 for laboratory services reimbursed by Medicare that were performed prior to July 1, 2020 was approximately $0.5 million. TheThe Company continues to record revenue based on cash receipts for laboratory services not reimbursed by Medicare, as the variable consideration remains constrained. We recognize royalty revenues in the period the sales occur using third party evidence. The Company elected the "right to invoice" practical expedient based on the Company's right to invoice a customer at an amount that approximates the value to the customer and the performance completed to date.

The Company elected the exemption to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less and the exemption to exclude future performance obligations that are accounted under the sales-based or usage-based royalty guidance. The Company’s unfulfilled performance obligations were not material as of ~~September 30,~~December 31, 2021.

Contracts with customers that contain instruments may include multiple performance obligations. For these contracts, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis. Allocation of the transaction price is determined at the contracts’ inception.

Payment terms for shipments to end-users are generally net 30 days. Payment terms for distributor shipments may range from 30 to 90 days. Service arrangements commonly call for payments in advance of performing the work (e.g. extended warranty and service contracts), upon completion of the service (e.g. custom development manufacturing) or a mix of both.

Contract assets include revenues recognized in advance of billings. Contract assets are included within other current assets in the accompanying balance sheet as ~~the~~the amount of time expected to lapse until the company's right to consideration becomes unconditional is less than one year. We elected the practical expedient allowing us to expense contract costs that would otherwise be capitalized and amortized over a period of less than one year. Contract assets as of ~~September 30,~~December 31, 2021 2021are not material.

Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenue on warranty contracts. Contract liabilities as of ~~September 30,~~December 31, 2021 and June 30, 2021 were ~~approximately~~ appro~~$20.1~~ximately $20.8 m ~~million~~illion and $20.0 million, respectively. Contract liabilities as of June 30, 2021 subsequently recognized as revenue during the quarter and six month period ~~end~~edended ~~September 30,~~December 31, 2021 were ~~$9.7 million.~~approximately $3.6 million and $13.3 million, respectively. Contract ~~liabilities~~liabilities in excess of one year are included in ~~other~~Other long-term liabilities inon the consolidated balance sheet.

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Any claims for credit or return of goods must be made within 10 days of receipt. Revenues are reduced to reflect estimated credits and returns. Although the amounts recorded for these revenue deductions are dependent on estimates and assumptions, historically our adjustments to actual results have not been material.

Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products. We elected the practical expedient that allows us to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost, and we accrue costs of shipping and handling when the related revenue is recognized.

The following tables present our disaggregated revenue for the periods presented.

Revenue by type is as follows:

	Quarter Ended				Quarter Ended				Six Months Ended
	September 30,				December 31,				December 31,
	2021		2020		2021		2020		2021		2020
Consumables	$	205,691	$	166,627	$	212,706	$	177,464	$	418,397	$	344,091
Instruments		29,869		19,572		33,353		26,529		63,222		46,101
Services		16,257		15,464		17,354		15,175		33,611		30,639
Total product and services revenue, net	$	251,817	$	201,663	$	263,413	$	219,168	$	515,230	$	420,831
Royalty revenues		5,902		2,536		5,863		5,085		11,765		7,621
Total revenues, net	$	257,719	$	204,199	$	269,276	$	224,253	$	526,995	$	428,452

Revenue by geography is as follows:

	Quarter Ended				Quarter Ended				Six Months Ended
	September 30,				December 31,				December 31,
	2021		2020		2021		2020		2021		2020
United States	$	140,702	$	113,561	$	142,367	$	114,439	$	283,069	$	228,001
EMEA, excluding United Kingdom		51,543		43,134		57,159		49,936		108,702		93,070
United Kingdom		12,478		8,534		11,842		9,852		24,320		18,386
APAC, excluding Greater China		17,501		15,734		19,603		18,008		37,104		33,742
Greater China		28,433		18,052		31,009		25,165		59,442		43,218
Rest of World		7,062		5,184		7,296		6,853		14,358		12,035
Net sales	$	257,719	$	204,199
Net Sales					$	269,276	$	224,253	$	526,995	$	428,452

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Note 3. Selected Balance Sheet Data:

Inventories:

Inventories consist of (in thousands):

	September 30,		June 30,		December 31,		June 30,
	2021		2021		2021		2021
Raw materials	$	58,001	$	55,096	$	61,624	$	55,096
Finished goods⁽¹⁾		64,740		67,108		65,620		67,108
Inventories, net	$	122,741	$	122,204	$	127,244	$	122,204

⁽¹⁾Finished goods inventory of ~~$5,375~~$5,386 and $5,456 included within other long-term assets in the respective ~~September 30,~~December 31, 2021 and June 30, 2021, consolidated balance sheet. The inventory is included in long-term assets as it is forecasted to be sold after the 12 months subsequent to the consolidated balance sheet date.

Property and Equipment:

Property and equipment consist of (in thousands):

	September 30,			June 30,			December 31,			June 30,
	2021			2021			2021			2021
Land	$	8,586		$	8,612		$	8,587		$	8,612
Buildings and improvements		191,284			190,661			225,501			190,661
Machinery and equipment		202,792			198,483			161,431			149,410
Construction in progress								17,386			49,073
Property and equipment, cost		402,662			397,756			412,905			397,756
Accumulated depreciation and amortization		(195,528	)		(189,849	)		(201,091	)		(189,849	)
Property and equipment, net	$	207,134		$	207,907		$	211,814		$	207,907

Intangible Assets:

Intangible assets consist of (in thousands):

September 30,

June 30,

2021

2021

Developed technology
$ 551,289 $ 552,160
Trade names
147,245 147,640
Customer relationships
230,695 232,493
Patents
2,989 2,926
Other intangibles 6,309 6,316
Definite-lived intangible assets
938,527 941,535
Accumulated amortization
(364,927
)
(348,267
)
Definite-lived intangibles assets, net 573,600 593,268
In process research and development 22,700 22,700
Total intangible assets, net $ 596,300 $ 615,968

	December 31,			June 30,
	2021			2021
Developed technology	$	544,388		$	552,160
Trade names		147,327			147,640
Customer relationships		228,419			232,493
Patents		3,116			2,926
Other intangibles		6,309			6,316
Definite-lived intangible assets		929,559			941,535
Accumulated amortization		(382,912	)		(348,267	)
Definite-lived intangibles assets, net		546,647			593,268
In process research and development		22,700			22,700
Total intangible assets, net	$	569,347		$	615,968

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Changes to the carrying amount of net intangible assets for the quarter ended ~~September~~December 31, 2021 ~~30,~~~~2021~~consist of (in thousands):

Beginning balance	$	615,968		$	615,968
Acquisitions		0			0
Other additions		43			171
Amortization expense		(18,606	)		(37,258	)
Currency translation		(1,105	)		(971	)
Eminence impairment ⁽¹⁾					(8,563	)
Ending balance	$	596,300		$	569,347

The estimated future amortization expense for intangible assets as of ~~September~~December 31, 2021 ~~30,~~~~2021~~is as follows (in thousands):

2022 remainder	$	55,714	$	36,927
2023		72,454		71,669
2024		69,618		68,818
2025		66,372		65,579
2026		62,606		61,819
Thereafter		246,836		241,835
Total	$	573,600	$	546,647

⁽¹⁾As disclosed in Note 1, the Company recorded an impairment charge of $8.6 million related to Eminence in Q2 of FY'22.

Goodwill:

Changes to the carrying amount of goodwill for the quarter ended ~~September~~December 31, 2021 ~~30,~~~~2021~~consist of (in thousands):

	Protein Sciences			Diagnostics and Genomics			Total			Protein Sciences			Diagnostics and Genomics			Total
Beginning balance	$	392,717			450,350		$	843,067		$	392,717		$	450,350		$	843,067
Acquisitions											0			0			0
Eminence impairment											(8,275	)		0			(8,275	)
Currency translation		(2,979	)		(68	)		(3,047	)		(2,610	)		(126	)		(2,736	)
Ending balance	$	389,738		$	450,282		$	840,020		$	381,832		$	450,224		$	832,056

We evaluate the carrying value of goodwill in the fourth quarter of each fiscal year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. The Company performed a quantitative goodwill impairment assessment for all of its reporting units during the fourth quarter of fiscal 2021. No indicators of impairment were identified as part of our assessment.

During the quarter ended September 30, 2021, the Company combined the management of the Exosome Diagnostics and Asuragen reporting units, both of which are included in the Diagnostics and Genomics operating segment. In conjunction with the combination of the reporting units, a qualitative goodwill impairment assessment was performed. The qualitative assessment identified no indicators of impairment.

As disclosed in Note 1, the Company identified a triggering event and a goodwill impairment charge of $8.3 million in the quarter ended December 31, 2021. No additional triggering events or items beyond the ~~reporting unit combination that would require a goodwill impairment assessment~~upcoming Eminence liquidation were identified during the quarter ended ~~September 30,~~December 31, 2021. ~~There has been~~ noThe impairment of the Eminence goodwill is the only impairment of goodwill recorded since the adoption of Financial Accounting Standards Board ~~(“FASB”~~("FASB") ASC 350 guidance for goodwill and other intangibles on July 1, 2002.

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Note 4. Acquisitions:

We periodically complete business combinations that align with our business strategy. Acquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date and that the results of operations of each acquired business be included in our consolidated statements of comprehensive income from their respective dates of acquisitions. Acquisition costs are recorded in selling, general and administrative expenses as incurred.

2021 Acquisitions

Asuragen, Inc.

On April 6, 2021, the Company acquired all of the ownership interests of Asuragen, Inc. (Asuragen) for approximately $216 million, net of cash acquired, plus contingent consideration of up to $105.0 million, subject to certain revenue thresholds. The Asuragen acquisition adds a leading portfolio of best in-class molecular diagnostic and research products, including genetic screening, oncology testing kits, molecular controls, a GMP compliant manufacturing facility, and a CLIA-certified laboratory. The transaction was accounted for in accordance with ASC 805, Business Combinations. The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’ product portfolio and the expected revenue growth from increased market penetration. The goodwill is not deductible for income tax purposes. The business became part of the Diagnostics and Genomics operating segment in the fourth quarter of fiscal ~~year~~ 2021.

~~The allocation~~Purchase accounting remained open as of ~~purchase consideration related to Asuragen Inc is considered preliminary with provisional amounts primarily related to goodwill and~~December 31, 2021 for our income tax assessment of acquired net operating ~~losses.~~losses with the completion of the stub period tax returns and the corresponding goodwill impact. The Company expects to finalize the allocation of purchase price ~~within~~in the ~~one~~third~~-year measurement-period following the acquisition.~~ quarter of fiscal 2022. Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations ~~as of~~for the quarter ended ~~September 30,~~December 31, 2021 were approximately ~~$7.6~~$8.8 million and ~~$3.2~~$0.4 million, respectively. Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations for the six months ended December 31, 2021 were approximately $16.4 million and $3.6 million, respectively. The preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date and at ~~September~~December 31, 2021 ~~30,~~~~2021~~are as follows (in thousands):

	Preliminary allocation at acquisition date and at September 30, 2021		Preliminary allocation at acquisition date and at December 31, 2021
Current assets, net of cash	$	10,422	$	10,422
Equipment and other long-term assets		3,762		3,762
Intangible assets:
Developed technology		107,000		107,000
In-process research and development		22,700		22,700
Customer relationships		11,700		11,700
Tradenames		2,000
Trade names				2,000
Non-competition agreement		1,000		1,000
Goodwill		94,970		94,970
Total assets acquired		253,554		253,554

Liabilities		4,003		4,003
Deferred income taxes, net		15,664		15,664
Net assets acquired	$	233,887	$	233,887

Cash paid, net of cash acquired		215,587		215,587
Contingent consideration payable		18,300		18,300
Net assets acquired	$	233,887	$	233,887

Tangible assets and liabilities acquired were recorded at fair value on the date of close based on management's preliminary assessment. The purchase price allocated to developed technology, in-process research and development, and customer relationships was based on management's preliminary forecasted cash inflows and outflows and using a multiperiod excess earnings method to calculate the fair value of assets purchased. The amount recorded for developed technology is being amortized with the expense reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for developed technology is estimated to be 14 years. Amortization expense related to customer relationships is reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for customer relationships is estimated to be 16 years. The amount recorded for ~~tradenames~~trade names and the non-competition agreement is being amortized with the expense reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for ~~tradenames~~trade names and the non-competition agreement is estimated to be 5 years and 3 years, respectively. The net deferred income tax liability represents the net amount of the estimated future impact of adjustments for costs to be recognized as intangible asset amortization, which is not deductible for income tax purposes, offset by the deferred tax asset for the preliminary calculation of acquired ~~NOLs.~~

net operating losses.

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Note 5. Fair Value Measurements:

The Company’s financial instruments include cash and cash equivalents, available for sale investments, derivative instruments, accounts receivable, accounts payable, contingent consideration obligations, and long-term debt.

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. This standard also establishes a hierarchy for inputs used in measuring fair value. This standard maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available in the circumstances.

The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable for the asset or liability and their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 may also include certain investment securities for which there is limited market activity or a decrease in the observability of market pricing for the investments, such that the determination of fair value requires significant judgment or estimation.

The following tables provide information by level for financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Total carrying value as of		Fair Value Measurements Using Inputs Considered as						Total carrying value as of		Fair Value Measurements Using Inputs Considered as
	September 30, 2021		Level 1		Level 2		Level 3		December 31, 2021		Level 1		Level 2		Level 3
Assets
Equity securities ⁽¹⁾	$	25,240	$	23,729	$	1,511	$	0	$	53,635	$	50,525	$	3,110	$	0
Certificates of deposit⁽²⁾		13,500		13,500		0		0		13,500		13,500		0		0
Derivative instruments - cash flow hedges		533		0		533		0
Derivative instruments – cash flow hedges										2,254		0		2,254		0
Total assets	$	39,273	$	37,229	$	2,044	$	0	$	69,389	$	64,025	$	5,364	$	0

Liabilities
Contingent consideration	$	22,600	$	0	$	0	$	22,600	$	9,000	$	0	$	0	$	9,000
Derivative instruments - cash flow hedges		6,435		0		6,435		0		4,382		0		4,382		0
Total liabilities	$	29,035	$	0	$	6,435	$	22,600	$	13,382	$	0	$	4,382	$	9,000

	Total carrying value as of		Fair Value Measurements Using Inputs Considered as						Total carrying value as of		Fair Value Measurements Using Inputs Considered as
	June 30, 2021		Level 1		Level 2		Level 3		June 30, 2021		Level 1		Level 2		Level 3
Assets
Equity securities ⁽¹⁾	$	19,963	$	18,581	$	1,382	$	0	$	19,963	$	18,581	$	1,382	$	0
Certificates of deposit ⁽²⁾		12,500		12,500		0		0		12,500		12,500		0		0
Derivative instruments - cash flow hedges		275		0		275		0
Derivative instruments – cash flow hedges										275		0		275		0
Total assets	$	32,738	$	31,081	$	1,657	$	0	$	32,738	$	31,081	$	1,657	$	0

Liabilities
Contingent consideration	$	29,400	$	0	$	0	$	29,400	$	29,400	$	0	$	0	$	29,400
Derivative instruments - cash flow hedges		8,376		0		8,376		0		8,376		0		8,376		0
Total liabilities	$	37,776	$	0	$	8,376	$	29,400	$	37,776	$	0	$	8,376	$	29,400

	⁽¹⁾	Included in available-for-sale investments on the balance sheet. The cost basis in the Company's investment in ChemoCentryx Inc (CCXI) was $6.6 million at both ~~September 30,~~December 31, 2021 and June 30, ~~2021~~2021. ~~was $6.6 million and $6.6 million, respectively.~~ The Company has a warrant to purchase additional CCXI equity shares which was valued at ~~$1.5~~$3.1 million and $1.4 million as of ~~September 30,~~December 31, 2021 and June 30, 2021, respectively.
	⁽²⁾	Included in available-for-sale investments on the balance sheet. The certificates of deposit have contractual maturity dates within one year.

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Fair value measurements of available for sale securities
Our available for sale securities are measured at fair value using quoted market prices in active markets for identical assets and are therefore classified as Level 1 assets. The Company's warrant to purchase additional shares at a specified future price was valued using a Black-Scholes model with observable inputs in active markets and therefore was classified as a Level 2 asset.

Fair value measurements of derivative instruments
In October 2018, the Company entered into forward starting swaps designated as cash flow hedges on outstanding debt. The forward starting swaps reduce the variability of cash flow payments for the Company by converting the variable interest rate on the Company’s long-term debt described in Note 6 to that of a fixed interest rate. Accordingly, as part of the forward starting swaps, the Company exchanges, at specified intervals, the difference between floating and fixed interest amounts based on an initial $380 million of notional principal amount. The notional amount decreased by $100 million in October 2020, ~~and further decreased by~~ $80 million in October 2021 and will further decrease by $200 million in October 2022. In June 2020, the Company de-designated $80 million of the notional amount set to expire in October 2020. The net loss associated with the June 2020 de-designated portion of the derivative instrument was not reclassified into earnings based on the amount of probable variable interest payments to occur within a two ~~month~~-month time period of the forecasted hedged transaction. In December 2020, the Company de-designated an additional $80 million of notional amount set to expire in October 2021. ~~During fiscal year~~The net loss associated with the ~~2021,~~December 2020 de-designated portion of the ~~Company~~derivative instrument was recorded as a loss in other non-operating income related to variable interest debt payments in certain months on a portion of the de-designated derivative that iswas not expected to occur. The ~~remaining variable interest payments for the portion of the de-designated derivative are considered probable of occurring and therefore remain in accumulated other comprehensive income as of~~ ~~September 30, 2021~~. ~~The~~ fair value of the ~~portion of the de-designated~~designated derivative ~~was $0.2~~instrument is $4.4 million and ~~$0.8 million as of~~ ~~September 30, 2021~~ ~~and~~ ~~June 30, 2021,~~ ~~respectively, which~~ is recorded within short-term liabilities on the Consolidated Balance ~~Sheet.~~ Sheet as of December 31, 2021. The fair value of the designated derivative instrument ~~is $6.2~~ ~~million and~~was $7.6 million as of ~~September~~June 30, 2021 and ~~June 30, 2021,~~ ~~respectively, and is~~was recorded within other long-term liabilities on the Consolidated Balance Sheet.

In May 2021, the Company entered into a new forward starting swap designated as a cash flow hedge on forecasted debt. The forward starting swap reduces the variability of cash flow payments for the Company by converting the variable interest rate on the Company’s forecasted variable interest long-term debt to that of a fixed interest rate. Accordingly, as part of the forward starting swap, the Company exchanges, at specified intervals, the difference between floating and fixed interest amounts based on $200 million of notional principal amount. The effective date of the swap is November 2022 with the full swap maturing in November 2025. The fair value of the derivative instrument was ~~$0.5~~$2.3 million and $0.3 million as of ~~September 30,~~December 31, 2021 and June 30, 2021, respectively, which is recorded within other long-term assets on the Consolidated Balance Sheet.

Changes in the fair value of the designated hedged ~~instrument~~instruments are reported as a component of other comprehensive income and reclassified into interest expense over the corresponding term of the cash flow hedge. The Company ~~reclassified $2.1 million~~reclassified $3.8 million to interest expense and related tax benefits of ~~$0.5~~ $0.9 million during the ~~three~~sixmonths ended ~~September 30, 2021~~December 31, 2021. The Company reclassified $5.0 million to interest expense, $0.5 million to non-operating income for the portion of de-designated variable payments considered probable to not occur, and related tax benefits of $1.3 million during the ~~2020,~~six ~~respectively~~. ~~The~~months ended December 31, 2020.The instruments were valued using observable market inputs in active markets and therefore are classified as Level 2 liabilities.

11

~~Table of Contents~~
Fair value measurements of contingent consideration
The Company has ~~$22.6~~$9 million in contingent consideration recorded as of ~~September 30,~~December 31, 2021, which is the fair value of contingent consideration related to the Asuragen and B-MoGen Biotechnologies Inc ("B-MoGen") acquisitions. The Company is required to make contingent consideration payments of up to $105.0 million and $38.0 million, respectively, as part of these acquisition agreements. The contingent agreement ~~with~~for Asuragen is based on achieving certain revenue thresholds. The ~~preliminary~~opening balance sheet fair value of the liabilities for the Asuragen acquisition iswas $18.3 million, as discussed in Note 4. The contingent agreement ~~with~~for B-MoGen is based on meeting certain product development milestones and revenue thresholds. The ~~preliminary~~ fair value amount recorded on the opening balance sheet of the revenue milestone payments was determined using a Monte Carlo simulation-based model discounted to present value. Assumptions used in these calculations are units sold, expected revenue, expected expenses, discount rate, and various probability factors.

The ultimate settlement of contingent consideration liabilities for the Asuragen and B-Mogen acquisitions could deviate from current estimates based on the actual results of the financial measures described above. This liability is considered to be a Level 3 financial liability that is re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in general and administrative expense.

During the first quarter of fiscal 2022, the Company made a $4.0 million payment on the QT Holdings Corporation contingent consideration agreement relating to certain product development milestones. The cash paid was consistent with the related accrual as of June 30, ~~2021.~~ 2021.

The following table presents a reconciliation of the liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

Quarter Ended

Quarter Ended

Six Months Ended

September 30,
2021

December 31,
2021

December 31,
2021

Fair value at the beginning of period
$ 29,400 $ 22,600 $ 29,400
Change in fair value of contingent consideration
(13,600 ) (16,400 )
Payments (4,000 ) 0 (4,000 )
Change in fair value of contingent consideration
(2,800
)
Fair value at the end of period
$ 22,600 $ 9,000 $ 9,000

The use of different assumptions, applying different judgment to matters that inherently are subjective and changes in future market conditions could result in different estimates of fair value of our securities or contingent consideration, currently and in the future. If market conditions deteriorate, we may incur impairment charges for securities in our investment portfolio. We ~~may~~ ~~also incur changes to our contingent consideration liability as discussed below.~~

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash and cash equivalents, certificates of deposit, accounts receivable, and accounts payable – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Long-term debt – The carrying amounts reported in the consolidated balance sheets for the amount drawn on our line-of-credit facility and long-term debt approximates fair value because our interest rate is variable and reflects current market rates.

11

Note 6. Debt and Other Financing Arrangements:

On August 1, 2018, the Company entered into a new revolving line-of-credit and term loan governed by a Credit Agreement (the Credit Agreement). The Credit Agreement provides for a revolving credit facility of $600.0 million, which can be increased by an additional $200.0 million subject to certain conditions, and a term loan of $250.0 million. Borrowings under the Credit Agreement may be used for working capital and expenditures of the Company and its subsidiaries, including financing permitted acquisitions. Borrowings under the Credit Agreement bear interest at a variable rate. The current outstanding debt is based on the Eurodollar Loans term for which the interest rate is calculated as the sum of LIBOR plus an applicable margin. The applicable margin is determined from the total leverage ratio of the Company and updated on a quarterly basis. The annualized fee for any unused portion of the credit facility is currently 1512.5 basis points.

The Credit Agreement matures on August 1, 2023 and contains customary restrictive and financial covenants and customary events of default. As of ~~September 30,~~December 31, 2021, the outstanding balance under the Credit Agreement was ~~$300.2~~$282.3 million.
12

~~Table of Contents~~

Note 7. Leases:

As a lessee, the company leases offices, labs, and manufacturing facilities, as well as vehicles, copiers, and other equipment. The Company adopted ASU No. 2016-02 and related standards (collectively ASC 842, Leases), which replaced previous lease accounting guidance, on July 1, 2019.

The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is Bio-Techne’s incremental borrowing rate or, if available, the rate implicit in the lease. Bio-Techne determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. During the ~~three~~six months ended ~~September 30,~~December 31, 2021, the Company ~~recognized $1.1 million~~recognized $2.1 million in variable lease ~~expense~~expense and ~~$3.7 million~~$7.3 million relating to fixed lease expense in the Condensed Consolidated Statements of Earnings and Comprehensive Income.

The following table summarizes the balance sheet classification of the Company’s operating leases and amounts of right of use assets and lease liabilities and the weighted average remaining lease term and weighted average discount rate for the Company’s operating leases (asset and liability amounts are in thousands):

Balance Sheet Classification

As of September
30, 2021

Balance Sheet
Classification

As of: December
31, 2021

Operating leases:

Operating lease right of use assets
Right of Use Asset
$ 71,396
Right of Use Asset
$ 64,293

Current operating lease liabilities
Operating lease liabilities current
$ 12,001
Operating lease liabilities current
$ 11,809
Noncurrent operating lease liabilities
Operating lease liabilities
65,059
Operating lease liabilities
57,718
Total operating lease liabilities
Total operating lease liabilities
$ 77,060 $ 69,527

Weighted average remaining lease term (in years):
Weighted average remaining lease term (in years):
7.77 7.25

Weighted average discount rate:
Weighted average discount rate:
3.93
%
3.87 %

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right of use assets obtained in exchange for new operating lease liabilities for the ~~three~~six months ended (in thousands):

Three months
ended September
30, 2021

Six months
ended December
31, 2021

Cash amounts paid on operating lease liabilities
$ 3,758 $ 7,504

Right of use assets obtained in exchange for lease liabilities
278 575

The following table summarizes the fair value of the lease liability by payment date for the Company’s operating leases by fiscal year (in thousands):

Operating
Leases

Operating
Leases

Remainder of 2022
$ 10,865
Remainder of fiscal 2022
$ 7,176
2023
13,566 13,191
2024
11,897 11,511
2025
10,805 10,353
2026
10,148 9,628
Thereafter
32,236 27,902
Total
$ 89,517 $ 79,761
Less: Amounts representing interest
12,457 10,234
Total Lease obligations
$ 77,060 $ 69,527

Certain leases include one or more options to renew, with terms that extend the lease term up to five years. Bio-Techne includes the option to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, Bio-Techne is not reasonably certain to exercise such options.

13
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Table of Contents

Note 8. Supplemental Equity and Accumulated Other Comprehensive Income (Loss):

Supplemental Equity

The Company has declared cash dividends per share of $0.32 and $0.64 in both the three and sixmonths ended ~~September 30,~~December 31, 2021 and ~~2020.~~2020, respectively.

Consolidated Changes in Equity (amounts in thousands)

Bio-Techne Shareholders

Accumulated

Accumulated

Additional

Other

Additional

Other

Common Stock

Paid-in

Retained

Comprehensive

Non-Controlling

Common Stock

Paid-in

Retained

Comprehensive

Noncontrolling

Shares

Amount

Capital

Earnings

Income(Loss)
Interest

Total
Shares

Amount

Capital

Earnings

Income(Loss)

Interest

Total

Balances at June 30, 2021
38,955 $ 390 $ 534,411 $ 1,085,461 $ (57,291
)
$ 8,263 $ 1,571,234 38,955 $ 390 $ 534,411 $ 1,085,461 $ (57,291
)
$ 8,263 $ 1,571,234
Net earnings
69,615 (634 ) 68,981 69,615 (634
)
68,981
Other comprehensive income
(6,925 ) (39 ) (6,964 )
Other comprehensive income (loss)
(6,925
)
(39
)
(6,964
)
Share repurchases
Common stock issued for exercise of options
295 3 36,345 (13,481 ) 22,867 295 3 36,345 (13,481
)
22,867
Common stock issued for restricted stock awards
20 0 0 (9,765
)

(9,765
) 20 0 0 (9,765
)
(9,765 )
Cash dividends
(12,493
)

(12,493
) �� (12,493
)
(12,493 )
Stock-based compensation expense
11,396 11,396 11,396 11,396
Common stock issued to employee stock purchase plan
3 0 1,358 1,358 3 0 1,358 1,358
Employee stock purchase plan expense
341 341 341 341
Balances at September 30, 2021
39,273 $ 393 $ 583,851 $ 1,119,337 $ (64,216
)
$ 7,590 $ 1,646,955 39,273 $ 393 $ 583,851 $ 1,119,337 $ (64,216
)
$ 7,590 $ 1,646,955
Net earnings
80,173 0 (8,114 ) 72,059
Other comprehensive income (loss)
4,742 66 4,808
Share repurchases (89 ) (1 ) (41,293 ) (41,294 )
Common stock issued for exercise of options
134 1 18,604 18,605
Common stock issued for restricted stock awards
1
Cash dividends
(12,576 ) (12,576 )
Stock-based compensation expense
13,701 13,701
Common stock issued to employee stock purchase plan 6 6
Employee stock purchase plan expense
267 267
Balances at December 31, 2021
39,319 393 616,429 1,145,641 (59,474 ) (458 ) 1,702,531

Bio-Techne Shareholders

Accumulated

Accumulated

Additional

Other

Additional

Other

Common Stock

Paid-in

Retained

Comprehensive

Common Stock

Paid-in

Retained

Comprehensive

Noncontrolling

Shares

Amount

Capital

Earnings

Income(Loss)

Total

Shares

Amount

Capital

Earnings

Income(Loss)

Interest

Total

Balances at June 30, 2020
38,453 $ 385 $ 420,536 $ 1,057,470 $ (97,199
)
$ 1,381,192 38,453 $ 385 $ 420,536 $ 1,057,470 $ (97,199
)
$ 0 $ 1,381,192
Cumulative effect adjustments due to adoption of new accounting standards and other
(276
)
(276
)
Cumulative effect adjustments due to adoption of new accounting standards
(276
)
(276
)
Net earnings
33,395 33,395 33,395 33,395
Other comprehensive loss
14,057

14,057

Other comprehensive income (loss)
14,057 14,057
Common stock issued for exercise of options
117 1 13,727 13,728 117 1 13,727 13,728
Common stock issued for restricted stock awards
25 0

(4,890
)
(4,890
)
25 0 (0
)
(4,890
)
(4,890
)
Cash dividends
(12,336
)
(12,336
)
(12,336
)
(12,336
)
Stock-based compensation expense
12,667 12,667 12,667 12,667
Common stock issued to employee stock purchase plan
6 0 1,463 1,463 6 0 1,463 1,463
Employee stock purchase plan expense
286 286 286 286
Balances at September 30, 2020
38,601 $ 386 $ 448,679 $ 1,073,362 $ (83,142
)
$ 1,439,285 38,601 $ 386 $ 448,679 $ 1,073,362 $ (83,142
)
$ 0 $ 1,439,285
Non-controlling interest in Eminence
8,985 8,985
Net earnings
46,274 0 (130
)
46,144
Other comprehensive income (loss)
18,904 83 18,987
Common stock issued for exercise of options
161 2 16,748 (2,482
)
14,268
Common stock issued for restricted stock awards
3 0 (0
)
0 0
Cash dividends
(12,392
)
(12,392
)
Stock-based compensation expense
15,471 15,471
Employee stock purchase plan expense
106 106
Balances at December 31, 2020
38,765 $ 388 $ 481,004 $ 1,104,762 $ (64,238
)
$ 8,938 $ 1,530,854

1413
Table of Contents

Accumulated Other Comprehensive Income

The components of other comprehensive income (loss) consist of changes in foreign currency translation adjustments and changes in net unrealized gains (losses) on derivative instruments designated as cash flow hedges. The Company reclassified ~~$1.6~~$2.9 million, net of taxes, from accumulated other comprehensive income (loss) to earnings during the ~~three~~six months ended ~~September 30,~~December 31, 2021. The Company reclassified $4.2 million, net of taxes, from accumulated other comprehensive income (loss) to earnings during the six months ended December 31, 2020.

The accumulated balances related to each component of other comprehensive income (loss), attributable to Bio-Techne, net of tax, are summarized as follows:

Unrealized
Gains
(Losses) on
Derivative
Instruments

Foreign
Currency
Translation
Adjustments

Total

Unrealized
Gains
(Losses) on
Derivative
Instruments

Foreign
Currency
Translation
Adjustments

Total

Balance as of June 30, 2021
$ (6,193
)
$ (51,098
)
$ (57,291
)
$ (6,193
)
$ (51,098
)
$ (57,291
)
Other comprehensive income (loss) before reclassifications, net of taxes, attributable to Bio-Techne
84 (8,607 ) (8,523 ) 1,682 (6,750 ) (5,068 )
Reclassification from loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne⁽¹⁾ 1,598 0 1,598 2,884 $ 0 $ 2,884
Balance as of September 30, 2021⁽²⁾
$ (4,511
)
$ (59,705
)
$ (64,216
)
Balance as of December 31, 2021⁽²⁾
$ (1,626 ) (57,848 ) (59,474 )

Unrealized
Gains
(Losses) on
Derivative
Instruments

Foreign
Currency
Translation
Adjustments

Total

Unrealized
Gains
(Losses) on
Derivative
Instruments

Foreign
Currency
Translation
Adjustments

Total

Balance as of June 30, 2020
$ (13,253
)
$ (83,946
)
$ (97,199
)
Balance as of June 30, 2020 attributable to Bio-Techne
$ (13,253
)
$ (83,946
)
$ (97,199
)
Other comprehensive income (loss), net of tax before reclassifications, attributable to Bio-Techne
11

11,914

11,925

(47 ) 28,759 28,712
Reclassification from loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne ⁽³⁾ 2,132 0 2,132 4,249 0 4,249
Balance as of September 30, 2020⁽²⁾ $ (11,110
)
$ (72,032
)
$ (83,142
)
Balance as of December 31, 2020⁽²⁾
$ (9,051
)
$ (55,187
)
$ (64,238
)

(1) Gains (losses) on the interest swap are reclassified into interest expense as payments on the derivative agreement are made. The Company reclassified ($2,091) to interest expense and a related tax benefit of $493 during the quarter ended ~~September 30,~~
(1)
Gains (losses) on the interest swap are reclassified into interest expense as payments on the derivative agreement are made. The Company reclassified $3,777 to interest expense and a related tax benefit of $892 during the six months ended December 31, 2021.
(2~~) The Company had net deferred tax benefits of $1,391 and $3,413 included in the accumulated other comprehensive income loss as of~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively.~~
(3) Gains (losses) on the interest swap are reclassified into interest expense as payments on the derivative agreement are made. The Company reclassified ($2,769) to interest expense and a related tax benefit of $637 during the quarter ended ~~September 30, 2020.~~
(2)
The Company had net deferred tax benefits of $502 and $2,886 included in the accumulated other comprehensive income loss as of December 31, 2021 and 2020, respectively.
(3)
Gains (losses) on the interest swap are reclassified into interest expense as payments on the derivative agreement are made. The Company reclassified $5,026 to interest expense and $512 to non-operating income relating to variable interest payments that were probable not to occur in the six months ended December 31, 2020. The Company also recorded a related tax benefit of $1,289 during the six months ended December 31, 2020.

15
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Table of Contents

Note 9. Earnings Per Share:

The following table reflects the calculation of basic and diluted earnings per share (in thousands, except per share amounts):

Quarter Ended

Six Months Ended

Quarter Ended
September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Earnings per share – basic:

Net earnings, including noncontrolling interest $ 68,981 $ 33,395 $ 72,059 $ 46,144 $ 141,040 $ 79,538
Less net earnings (loss) attributable to noncontrolling interest (634
)
0

(8,114 ) (130
)
(8,748 ) (130
)
Net earnings attributable to Bio-Techne $ 69,615 $ 33,395 $ 80,173 $ 46,274 $ 149,788 $ 79,668
Income allocated to participating securities (36 ) (21) (34 ) (37
)
(70 ) (50
)
Income available to common shareholders $ 69,579 $ 33,374 $ 80,139 $ 46,237 $ 149,718 $ 79,618

Weighted-average shares outstanding - basic
39,094 38,536
Earnings per share - basic
$ 1.78 $ 0.87
Weighted-average shares outstanding – basic
39,310 38,691 39,202 38,614
Earnings per share – basic
$ 2.04 $ 1.20 $ 3.82 $ 2.06

Earnings per share – diluted:

Net earnings, including noncontrolling interest $ 68,981 $ 33,395 $ 72,059 $ 46,144 $ 141,040 $ 79,538
Less net earnings (loss) attributable to noncontrolling interest (634 ) 0 (8,114 ) (130
)
(8,748 ) (130
)
Net earnings attributable to Bio-Techne
$ 69,615 $ 33,395 $ 80,173 $ 46,274 $ 149,788 $ 79,668
Income allocated to participating securities (36
)
(21
)
(34 ) (37
)
(70 ) (50
)
Income available to common shareholders $ 69,579 $ 33,374 $ 80,139 $ 46,237 $ 149,718 $ 79,618

Weighted average shares outstanding - basic
39,094 38,536
Weighted-average shares outstanding – basic
39,310 38,691 39,202 38,614
Dilutive effect of stock options and restricted stock units
2,064 1,489 1,897 1,566 1,957 1,521
Weighted average common shares outstanding - diluted
41,158 40,025
Earnings per share - diluted
$ 1.69 $ 0.83
Weighted-average common shares outstanding – diluted
41,207 40,257 41,159 40,135
Earnings per share – diluted
$ 1.94 $ 1.15 $ 3.64 $ 1.98

The dilutive effect of stock options and restricted stock units in the above table excludes all options for which the aggregate exercise proceeds exceeded the average market price for the period. The number of potentially dilutive option shares excluded from the calculation was ~~0.4~~0.7 million and 1.6 million for the quarter ended December 31, 2021 and 2020, respectively and 0.5 million and 1.5 million for the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 and 2020 respectively.

Note 10. Share-based Compensation:

During the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 and 2020, the Company granted 0.3 million and 0.7 million stock options at weighted average grant prices of ~~$481.84~~$483.48 and ~~$267.79~~$267.59 and weighted average fair values of ~~$118.47~~$119.27 and ~~$56.71,~~$56.88, respectively. During the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 and 2020, the Company granted ~~13,929~~21,218 and 22,367 restricted stock units at a weighted average fair value of ~~$481.82~~$485.94 and $267.87, respectively. During the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 and 2020, the Company granted ~~5,344~~6,896 and ~~8,675~~11,803 shares of restricted common stock shares at a weighted average fair value of ~~$481.82~~$489.34 and ~~$267.98.~~$264.73.

Stock options for ~~336,565~~470,942 and ~~116,816~~293,262 shares of common stock with total intrinsic values of ~~$122.8~~$170.7 million and ~~$16.9~~$50.6 million were exercised during the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 and 2020, respectively.

Stock-based compensation expense, inclusive of payroll taxes, of ~~$13.2~~$14.1 million and ~~$12.9~~$15.6 million was included in selling, general and administrative expenses for the quarter ended ~~September 30,~~December 31, 2021 and 2020, respectively. Stock-based compensation expenses, inclusive of payroll taxes, of $27.3 million and $28.5 million was included in selling, general, and administrative expenses for the six months ended December 31, 2021 and 2020, respectively. Additionally, ~~stock-based compensation costs, inclusive of payroll taxes, of~~the company recognized $0.4 million and ~~$0.5~~$0.8 million ~~was included~~of stock-based compensation costs in cost of goods sold ~~for~~in the quarter and six months ended ~~September 30,~~December 31, 2021 respectively, compared to $0.6 million and ~~2020,~~ ~~respectively.~~$1 million in cost of goods sold in the comparative prior year periods. As of ~~September 30,~~December 31, 2021, there was ~~$61.2~~$54.1 million of unrecognized compensation cost related to non-vested stock options, non-vested restricted stock units and non-vested restricted stock. The weighted average period over which the compensation cost is expected to be recognized is 2.2 years.

In fiscal ~~year~~ 2015, the Company established the Bio-Techne Corporation 2014 Employee Stock Purchase Plan (ESPP), which was approved by the Company's shareholders on October 30, 2014, and which is designed to comply with IRS provisions governing employee stock purchase plans. 200,000 shares were allocated to the ESPP. The Company recorded expense of $0.3 million and ~~$0.3~~$0.1 million for the ESPP for the quarter ended ~~September 30,~~December 31, 2021 and 2020, respectively. The Company recorded expense of $0.6 million and $0.4 million for the ESPP for the six months ended December 31, 2021 and 2020, respectively.

Note 11. Other Income / (Expense):

The components of other income (expense) in the accompanying Statement of Earnings and Comprehensive Income are as follows:

Quarter Ended

September 30,

2021

2020

Interest expense
$ (3,409
)
$ (4,416
)
Interest income
193 114
Other non-operating income (expense), net⁽¹⁾
7,377

(5,451
)
Total other income (expense)
$ 4,161

$ (9,753
)

Quarter Ended

Six Months

December 31,

December 31,

2021

2020

2021

2020

Interest expense
$ (2,902 ) $ (3,585
)
$ (6,311 ) $ (8,002
)
Interest income
245 78 438 192
Other non-operating income (expense), net⁽¹⁾
26,488 8,880 33,865 3,429
Total other income (expense)
$ 23,831 $ 5,373 $ 27,992 $ (4,381
)
⁽¹⁾ ~~Primarily~~ ~~due to a $5.3 million~~ ~~gain in the fair value of our CCXI investment for the quarter ended~~ ~~September 30, 2021~~ ~~as compared to a $4.4 million loss in the comparative period.~~
⁽¹⁾
Primarily due to a $28.4 million and $33.7 million gain in the fair value of our CCXI investment for the quarter and six months ended December 31, 2021, respectively, as compared to a $10.7 million and $6.4 million gain in the comparative periods.

16
15
Table of Contents

Note 12. Income Taxes:

The Company’s effective income tax rate for the ~~first~~second quarter of fiscal 2022 and 2021 ~~was (~~wa~~2.4)% an~~s 16.4% a~~d 15.1%~~nd 18.1% of consolidated earnings before income taxes, and 8.2% and 16.9% for the firstsix months of fiscal 2022 and 2021, respectively. The change in the company’s tax rate for the quarter and ~~first~~six ~~quarter of fiscal~~months ended ~~2022~~December 31, 2021 compared to the quarter and ~~first~~six ~~quarter of fiscal~~months ended ~~2021~~December 31,2020 was driven by discrete tax items.

The Company recognized total net benefits related to discrete tax item~~items~~s of ~~$17.7 mill~~$7.6 million and $25.3 millio~~ion~~n during the quarter and ~~three~~six months ended ~~September 30,~~December 31, 2021, respectively, compared to ~~$4.2~~$3.7 million and $7.8 million during the quarter and ~~three~~six months ended ~~September 30, 2020.~~December 31, 2020, respectively. Share-based compensation excess tax benefit ~~contribute~~cont~~d $18.3 million~~ributed $6.1 million and ~~$3.3~~$24.4 million in the quarter and six months ended December 31, 2021, respectively, compared to $4.8 million and $8.0 million in the quarter and ~~three~~six months, ended ~~September 30, 2021~~December 31, 2020, ~~and~~ ~~2020,~~respectively. The Company recognized total other immaterial net discrete tax ~~expense~~benefit of ~~$0.6~~$1.5 million and $0.9 million in the quarter and six months ended December 31, 2021, respectively, compared to ~~$0.9 millio~~n$1.1 million and $0.2 million of other immaterial net discrete tax ~~benefits~~expense in the quarter and ~~three~~six months ended ~~September 30, 2020.~~December 31, 2020, respectively.

Note 13. Segment Information:

The Company's management evaluates segment operating performance based on operating income before certain charges to cost of sales and selling, general and administrative expenses, principally associated with the impact of partially owned consolidated subsidiaries as well as acquisition accounting related to inventory, amortization of acquisition-related intangible assets and other acquisition-related expenses. The Protein Sciences and Diagnostics and Genomics segments both include consumables, instruments, services and royalty revenue.

The following is financial information relating to the Company's reportable segments (in thousands):

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Net sales:

Protein Sciences
$ 197,186 $ 154,446 $ 204,971 $ 172,179 $ 402,156 $ 326,625
Diagnostics and Genomics
60,985 50,125 64,527 52,469 125,512 102,595
Intersegment
(452
)
(372
)
(222 ) (395
)
(673 ) (768
)
Consolidated net sales
$ 257,719 $ 204,199 $ 269,276 $ 224,253 $ 526,995 $ 428,452
Operating income:

Protein Sciences
$ 90,100 $ 70,352 $ 93,281 $ 80,453 $ 183,381 $ 150,803
Diagnostics and Genomics
7,463 8,674 10,880 8,107 18,344 16,781
Segment operating income
97,563 79,026 $ 104,161 $ 88,560 $ 201,725 $ 167,584
Costs recognized on sale of acquired inventory (1,512) 0 (84 ) (23
)
(1,595 ) (23
)
Amortization of acquisition related intangible assets
(18,389
)
(15,501
)
(18,380 ) (15,027
)
(36,769 ) (30,528
)
Impact of partially owned consolidated subsidiaries(1) (1,562 ) 0 (1,004 ) (207 ) (2,567 ) (207 )
Acquisition related expenses
2,377

(136
)
13,262 (4,421
)
15,618 (4,558
)
Stock-based compensation, inclusive of employer taxes
(13,860
)
(13,333
)
Eminence impairment (18,715 ) 0 (18,715 ) 0
Stock based compensation, inclusive of employer taxes
(14,815 ) (16,225
)
(28,675 ) (29,557
)
Restructuring costs (1,185 ) 0 (743 ) (142 ) (1,928 ) (142
)
Corporate general, selling, and administrative expenses
(210
)
(964
)
(1,334 ) (1,520
)
(1,524 ) (2,482
)
Consolidated operating income
$ 63,222 $ 49,092 $ 62,348 $ 50,995 $ 125,570 $ 100,087
⁽¹⁾ Adjusted operating income for the second quarter and full year of fiscal 2021 have been updated for comparability to fiscal 2022 for the inclusion of the impact of partially owned consolidated subsidiaries on the Company’s adjusted operating income.

Note 14. Subsequent Events:
None.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with both the unaudited condensed consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended June 30, 2021. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” and “Forward-Looking Information and Cautionary Statements” located at the end of Item 2 of this report.

OVERVIEW

Bio-Techne and its subsidiaries, collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

Consistent with the prior year, we have operated with two segments – our Protein Sciences segment and our Diagnostics and Genomics segment – during the ~~first~~second quarter of fiscal ~~year~~ 2022. Our Protein Sciences segment is a leading developer and manufacturer of high-quality purified proteins and reagent solutions, most notably cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies. This segment also includes protein analysis solutions that offer researchers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. Our Genomics and Diagnostics segment develops and manufactures diagnostic products, including FDA-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for OEM and clinical customers, as well as a portfolio of clinical molecular diagnostic oncology assays, including the ExoDx®Prostate (IntelliScore) test (EPI) for prostate cancer diagnosis. This segment also manufactures and sells advanced tissue-based in-situ hybridization assays (ISH) for research and clinical use.

RECENT ACQUISITIONS

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions. The Company did not make any acquisitions in the ~~three~~six months ended ~~September 30,~~December 31, 2021. Refer to the prior year Annual Report on form 10-K for additional disclosure regarding the Company's recent acquisitions.

RESULTS OF OPERATIONS

Operational Update

Consolidated net sales increased ~~26%~~20% and 23% for the quarter and six months ended ~~September 30,~~December 31, 2021, respectively, compared to the same prior year ~~period.~~periods. Organic growth ~~was 21%~~ for the quarter ended ~~September 30,~~December 31, 2021 was 17% compared to the ~~same~~ prior year, ~~period,~~ with acquisitions contributing 3% to revenue growth and foreign currency exchange having ~~a favorable impact of 1% on~~an immaterial impact. Organic growth for the six months ended December 31, 2021 was 19% compared to the prior year same period with acquisitions contributing 4% to revenue growth and ~~acquisitions contributing a favorable impact of 4% to revenue growth.~~foreign currency exchange having an immaterial impact.

Consolidated net earnings attributable to Bio-Techne increased to ~~$69.6~~$80.2 million and $149.8 million for the quarter and six months ended ~~September 30,~~December 31, 2021, respectively, as compared to ~~the $33.4~~$46.3 million and $79.7 million in the same prior year ~~period.~~periods. The increase in net earnings attributable to Bio-Techne for the quarter and six months ended ~~September 30,~~December 31, 2021 is primarily due to an increase in net sales and changes in the fair value of our ChemoCentryx investment.

Business Strategy Update

The Company’s key business strategies for long-term growth and profitability continue to be geographic expansion, core product innovation, acquisitions and talent retention and development. In fiscal ~~year~~ 2022, the Company is also focused on evaluating how climate change impacts from our business operations might be measured and mitigated, with the plan of integrating consideration of greenhouse gas emissions and other climate variables into those key business strategies.
In response to the COVID-19 pandemic, the Company took additional steps to monitor and strengthen our supply chain to maintain an uninterrupted supply of our critical products and services. The Company has maintained these procedures while incorporating additional considerations regarding potential adverse weather events associated with climate change.
The financial impact of ~~this initiative is~~potential environmental regulations pertaining to carbon emissions or the integration of climate change impacts into our core business strategies are not expected to materially alter the Company’s near-term financial ~~results in~~results. Additionally, the ~~fiscal year, but we expect it~~Company is creating a cross-functional internal council to ~~provide positive~~evaluate potential long-term ~~financial benefit.~~ business impacts while driving long-term sustainability solutions.
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Net Sales

Consolidated net sales for the quarter and six months ended ~~September 30,~~December 31, 2021 were ~~$257.7~~$269.3 million and $527.0 million, respectively, an increase of ~~26%~~20% and 23% from the same prior year ~~period.~~periods. Organic growth ~~was 21%~~ for the quarter ended ~~September 30,~~December 31, 2021 was 17% compared to the ~~same~~ prior year, ~~period,~~ with acquisitions contributing 3% to revenue growth and foreign currency exchange having ~~a favorable impact of 1% on sales~~an immaterial impact. Organic growth ~~and~~ for the six months ended December 31, 2021 was 19% compared to the prior year same period with acquisitions contributing ~~a favorable impact of~~ 4% to revenue ~~growth.~~growth and foreign currency exchange having an immaterial impact. Organic ~~revenue~~ growth ~~was mainly~~for the quarter and six months ended December 31, 2021 is primarily driven by strong biopharma demand, especially for products, services and solutions from the Protein Sciences segment and by overall execution of the Company's long-term growth strategy.
18

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Gross Margins

Consolidated gross margins for the quarter and six months ended ~~September 30,~~December 31, 2021 were 68.2% and ~~September 30, 2020 were 66.4%~~67.3% respectively, compared to 67.3% and 67.4%~~, respectively.~~ for the same prior year periods. Under purchase accounting, inventory is valued at fair value less expected selling and marketing costs, resulting in reduced margins in future periods as the inventory is sold. Excluding the impact of costs recognized upon the sale of acquired inventory, stock compensation expense, amortization of intangibles, and impact of partially owned consolidated subsidiaries, adjusted gross margins ~~were 71.2% and 71.9%~~ for the quarter and six months ended ~~September 30,~~December 31, 2021 were 72.3% and 71.8%, respectively compared to 71.5% and 71.7% for the quarter and six months ended December 31, 2020, respectively. Both consolidated gross ~~margins~~margin and non-GAAP adjusted gross margins were positively impacted by volume leverage and favorable product mix as compared to the prior year, partially offset by additional investments made in the business to support future growth for the quarter ended December 31, 2021. Consolidated gross margin for the six months ended December 31, 2021 was negatively impacted by product mix and additional investments made in the business to support future ~~growth~~growth. Non-GAAP adjusted gross margin for the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 ~~as compared~~was positively impacted by volume leverage, partially offset by additional investments made in the business to ~~the prior year.~~support future growth.

A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold, intangible amortization, stock compensation expense, and impact of partially owned consolidated subsidiaries included in cost of sales, is as follows:

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Consolidated gross margin percentage
66.4
%
67.4
%
68.2
%
67.3
%
67.3
%
67.4
%
Identified adjustments:

Costs recognized upon sale of acquired inventory 0.6 % - % 0.0 % 0.0 % 0.3 % 0.0 %
Amortization of intangibles
4.0
%
4.2
%
3.8
%
3.9
%
3.9
%
4.0
%
Stock compensation expense - COGS
0.1
%
0.3
%
0.2
%
0.3
%
0.1
%
0.3
%
Impact of partially owned consolidated subsidiaries(1) 0.1 % - % 0.1 % 0.0 % 0.2 % 0.0 %
Non-GAAP adjusted gross margin percentage
71.2
%
71.9
%
72.3
%
71.5
%
71.8
%
71.7
%
⁽¹⁾Adjusted gross margin percentages for the second quarter and full year of fiscal 2021 have been updated for comparability to fiscal 2022 for the inclusion of the impact of partially owned consolidated subsidiaries on the Company’s adjusted gross margin percentage.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$13.6~~$17.6 million ~~(19%~~(21%) and $31.2 million (20%) for the quarter and six months ended ~~September 30,~~December 31, 2021, respectively, from the same prior year ~~period~~.periods. The increase in expense was due to strategic growth investments and the Asuragen acquisition in the fourth quarter of fiscal ~~year~~ 2021.

Research and Development Expenses

Research and development expenses were ~~$21.6~~$20.7 million and $42.3 million for the quarter and six months ended ~~September 30,~~December 31, 2021, respectively, compared to ~~$16.0 million from~~$16.8 million and $32.8 million for the ~~same~~ comparative prior year ~~period.~~periods. The increase in expense was due to strategic growth investments and the Asuragen acquisition in the fourth quarter of fiscal ~~year~~ 2021.

Segment Results

Protein Sciences

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Net sales (in thousands)
$ 197,186 $ 154,446 $ 204,971 $ 172,179 $ 402,156 $ 326,625
Operating margin percentage
45.7
%
45.6
%
45.5
%
46.7
%
45.6
%
46.2
%

Protein Science’s net sales for the quarter and six months ended ~~September 30,~~December 31, 2021 were ~~$197.2~~$205.0 million and $402.2 million, respectively, with reported growth of ~~28% compared~~19% and 23% compared to the same respective prior year ~~period.~~periods. Organic growth for the quarter and six months ended ~~September 30,~~December 31, 2021 was ~~26% with foreign currency having a favorable~~19% and 23%, respectively, when compared to the prior year. Currency exchange had an immaterial impact ~~of 2%.~~for both the quarter and six months ended December 31, 2021. Segment growth was driven by strong BioPharma demand resulting in broad-based growth across our proteomic research reagents and analytical tools.

The operating margin was 45.5% and 45.6% for the quarter and six months ended ~~September 30,~~December 31, 2021, ~~was 45.7%~~respectively, compared to ~~45.6~~%46.7% and 46.2% for the quarter and six month periods, respectively, for the same prior year ~~period. Operating income~~periods. The segment’s operating margin compared to the prior year was ~~positively~~negatively impacted ~~by volume leverage largely offset~~ by strategic investments to support future growth.

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Diagnostics and Genomics

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Net sales (in thousands)
$ 60,985 $ 50,125 $ 64,527 $ 52,469 $ 125,512 $ 102,595
Operating margin percentage
12.2
%
17.3
%
16.9
%
15.5
%
14.6
%
16.4
%

Diagnostics and ~~Genomics’~~Genomics' net sales for the quarter and six months ended ~~September 30,~~December 31, 2021 were ~~$61.0~~$64.5 million and $125.5 million, respectively, with reported growth of 23% and 22% compared to the same respective prior year ~~period.~~periods. Organic growth for the quarter and six months ended ~~September 30,~~December 31, 2021 was 7% and 6% ~~with acquisitions contributing 15%~~, respectively, when compared to the prior year. Acquisitions contributed 16% to revenue growth for both the quarter and ~~foreign currency~~six months ended December 31, 2021. Currency exchange ~~having a favorable~~had an immaterial impact ~~of 1%. Total segment revenue increased primarily due to~~for both the quarter and six months ended December 31, 2021. Segment growth was driven by the Asuragen acquisition in the fourth quarter of fiscal ~~year~~ 2021. Organic growth was driven by continued strength in our diagnostic reagent product lines.

The operating margin for the segment was ~~12.2%~~16.9% and 14.6% for the quarter and six months ended ~~September 30,~~December 31, 2021, respectively, compared to ~~17.3% for the same~~15.5% and 16.4% in both comparative prior year ~~period.~~periods. The segment’s operating margin was ~~negatively~~favorably impacted by ~~acquisitions~~volume leverage and product mix, which were partially offset by additional investments made in the business to support future growth for the quarter ended December 31, 2021. Operating margin for the six months ended December 31, 2021 was negatively impacted by acquisitions and strategic investments to support future growth.
Income Taxes

Income taxes ~~for the quarter ended September 30, 2021~~ were at an effective ~~rate~~rate of ~~(2.4)%~~16.4% and 8.2% of ~~consolidated~~consolidated earnings ~~before income taxes compared to 15.1%~~ for the quarter and six month period ended ~~September 30, 2020.~~December 31, 2021, respectively, compared to 18.1% and 16.9% for the same respective prior year periods. The change in the Company’s tax rate for the quarter and six months ended ~~September 30,~~December 31, 2021 was driven by the composition and amount of net income across periods and the impact of discrete ~~tax~~tax items of ~~$17.7~~ $7.6 million and $25.3 million, respecti~~million~~vely, compared to prior year discrete tax items of ~~$4.2~~$3.7 million and $7.8 million as further discussed in Note 12.

The forecasted tax rate as of the ~~first~~second fiscal quarter of 2022 before discrete itemsis ~~23.9% co~~24.6% compared ~~mpared~~ to the prior year forecasted tax rate before discrete items of ~~25.7%~~25.1%. Excluding the impact of discrete items, the Company expects the consolidated income tax rate for the remainder of fiscal 2022 to range from ~~23%~~24% to 28%.

Net Earnings

Non-GAAP adjusted consolidated net earnings are as follows:

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Net earnings before taxes - GAAP
$ 67,383 $ 39,339 $ 86,179 $ 56,368 $ 153,562 $ 95,706
Identified adjustments attributable to Bio-Techne:

Costs recognized upon sale of acquired inventory 1,512 - 84 23 1,596 23
Amortization of intangibles
18,389 15,501 18,380 15,027 36,769 30,528
Acquisition related expenses
(2,262 ) 230 (13,168 ) 4,514

(15,430 ) 4,746

Stock-based compensation, inclusive of employer taxes
13,860 13,333
Eminence impairment 18,715 - 18,715 -
Stock based compensation, inclusive of employer taxes
14,815 16,225 28,675 29,558
Restructuring costs 1,185 - 743 142 1,928 142
Realized (gain) loss on investments and other
(6,235 ) 4,351
Impact of non-controlling interest (pre-tax)
1,562

Non-GAAP adjusted net earnings attributable to Bio-Techne
$ 95,394 $ 72,754
Investment (gain) loss and other
(28,395 ) (10,197
)
(34,630 ) (5,846
)
Impact of partially owned subsidiaries⁽¹⁾
1,004 207 2,567 207
Non-GAAP adjusted net earnings attributable to Bio-Techne⁽¹⁾
$ 98,357 $ 82,309 $ 193,752 $ 155,064

Non-GAAP tax rate 21.0 % 21.5 % 21.4% 20.6 % 21.2 % 20.6 %
Non-GAAP tax expense
20,033 15,609 21,048 16,956 41,076 31,969

Non-GAAP adjusted net earnings attributable to Bio-Techne 75,361 57,145
Non-GAAP adjusted net earnings attributable to Bio-Techne⁽¹⁾
$ 77,309 $ 65,353 $ 152,676 $ 123,095

Earnings per share - diluted - Adjusted $ 1.83 $ 1.43
Earnings per share – diluted - Adjusted
$ 1.88 $ 1.62 $ 3.71 $ 3.07
⁽¹⁾Adjusted consolidated net earnings and earnings per share for the second quarter and full year of fiscal 2021 have been updated for comparability to fiscal 2022 for the inclusion of the impact of partially owned consolidated subsidiaries on the Company’s adjusted consolidated net earnings.

20
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Table of Contents

Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period to period basis. The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective ~~Non-GAAP~~non-GAAP adjusted tax rate for the quarter and six months ended ~~September 30,~~December 31, 2021 and ~~September 30,~~December 31, 2020.

Quarter Ended

September 30,

2021

2020

GAAP effective tax rate (2.4 )% 15.1 %
Discrete items 26.3 10.6
Annual tax forecast update
-

-

Long-term GAAP tax rate
23.9 % 25.7 %

Rate impact items
Stock based compensation (2.1 ) (3.7 )%
Other
(0.8
) (0.5 )
Total rate impact items (2.9 )% (4.2 )%

Non-GAAP adjusted tax rate
21.0
%
21.5
%

Quarter Ended

Six Months Ended

December 31,

December 31,

2021

2020

2021

2020

GAAP effective tax rate
16.4 %
18.1
%
8.2
%
16.9
%
Discrete items 7.5 6.5 16.4 8.2
Annual forecast update 0.7 0.5 - -
Long-term GAAP tax rate 24.6 % 25.1 % 24.6 % 25.1 %

Rate impact items

Stock based compensation
(1.7 ) (4.2 ) (1.9 ) (4.2 )
Other
(1.5 ) (0.3 ) (1.5 ) (0.3 )
Total rate impact items (3.2 )% (4.5 )% (3.4 )% (4.5 )%

Non-GAAP adjusted tax rate⁽¹⁾
21.4 % 20.6 % 21.2 % 20.6 %
⁽¹⁾In our second quarter results of fiscal 2021, the Company re-casted our first quarter results using the non-GAAP tax rate for the first six months of fiscal 2021, which normalized the tax rate impact on adjusted earnings resulting from return to growth patterns seen prior to the onset of the COVID-19 pandemic.

The difference between the reported GAAP tax rate and non-GAAP tax rate applied to the identified non-GAAP adjustments for the quarter ended ~~September 30,~~December 31, 2021 is primarily a result of discrete tax items, including the tax benefit of stock option exercises.

LIQUIDITY AND CAPITAL RESOURCES

~~As of September 30, 2021, cash~~Cash and cash equivalents and available-for-sale ~~investments~~investments were ~~$235.1~~$279.0 million as of December 31, 2021, compared to $231.6 million as of June 30, 2021. Included in available-for-sale-investments ~~as of September 30, 2021~~ was the fair value of the Company's investment in ~~CCXI~~ChemoCentryx, Inc. (CCXI) which was $53.6 million as of ~~$25.2 million. The fair value~~December 31, 2021 and $20.0 million as of ~~the Company's CCXI investment at~~ June 30, ~~2021 was $20.0 million.~~2021.

The Company has a line-of-credit and term loan governed by ~~the~~a Credit Agreement. dated August 1, 2018. See Note 56 to the Co~~ndensed~~Condensed Consolidated Financial Statements for a description of the Credit Agreement.

The Company has remaining potential contingent consideration payments of up to $105 million and $38 m~~illion~~million relating to the Asuragen and B-MoGen acquisitions ~~respectively.~~as of December 31, 2021. The fair value of the remaining payments is ~~$22.6~~ $9.0 million as of ~~September 30,~~December 31, 2021.

Management of the Company expects to be able to meet its cash and working capital requirements for operations, facility expansion, capital additions, and cash dividends for the foreseeable future, and at least the next 12 months, through currently available cash, cash generated from operations, and remaining credit available on its existing revolving line of credit.

Cash Flows From Operating Activities

The Company generated cash of ~~$48.4~~ $149.4 million from operating activities in the ~~first quarter of fiscal 2022~~six months ended December 31, 2021 compared to ~~$66.0~~$155.3 million in the ~~first quarter of fiscal 2021~~.six months ended December 31, 2020. The decrease from the prior year was primarily due to changes in the timing of cash payments on certain operating assets and liabilities, ~~partial~~lylargely offset by an increase in year over year net earnings.

Cash Flows From Investing Activities

We continue to make investments in our business, including capital expenditures.

Capital expenditures for fixed assets for the ~~first quarter of fiscal 2022~~six months ended December 31, 2021 and ~~2021~~December 31, 2020 were ~~$6.1 million~~$16.2 million and ~~$10.9~~$22.4 million, respectively. Capital expenditures for the remainder of fiscal 2022 are expected to be ~~approxima~~approximately ~~tely $60~~$45 million. Capital expenditures are expected to be financed through currently available funds and cash generated from operating activities. Expected additions in fiscal 2022 is related to increasing capacity to meet expected sales growth across the Company.

During the six months ended December 31, 2021, the Company paid $25 million to enter into a two-part forward contract which requires the Company to purchase the full equity interest in Wilson Wolf Corporation (Wilson Wolf) if certain annual revenue or EBITDA thresholds are met. The Company is currently forecasting the first option payment of $231 million to occur in either fiscal 2023 or fiscal 2024 with the second option payment of approximately $1 billion plus potential contingent consideration occurring between fiscal 2026 and fiscal 2028.
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Table of Contents
Cash Flows From Financing Activities

During the ~~first quarter of fiscal 2022~~six months ended December 31, 2021 and ~~2021,~~December 31, 2020, the Company paid cash dividends of ~~$12.5 million~~$25.1 million and ~~$12.3~~$24.7 million, respectively, to all common ~~shareholders.~~shareholders. On ~~November 2, 2021,~~February 1, 2022, the Company announced the payment of a $0.32 per share cash ~~dividend,~~dividend, or ~~approximately~~approximately $12.6 ~~millio~~n,million, will be pa~~yable November 26, 2021~~payable February 25, 2022 to all common shareholders of record on ~~November 12, 2021.~~February 11, 2022.

Cash of ~~$37.9~~ $56.5 million and ~~$15.4~~$32.3 million was received during the ~~first quarter of fiscal 2022~~six months ended December 31, 2021 and ~~2021,~~2020, respectively, from the exercise of stock options.

During the ~~first quarter of fiscal 2022~~six months ended December 31, 2021, and ~~2021, the Company made repayments of~~ ~~$51.1~~ million and $33.1 million, respectively, on its long-term debt balance. The Company drew $10.0 million under its revolving line-of-credit facility during the first quarter of fiscal 2022. There were no withdrawals on the line-of-credit facility during the first quarter of fiscal 2021.
~~During the first quarter of fiscal 2022,~~December 31, 2020, the Company made payments of ~~$0.7~~$109.3 million and $125.3 million, respectively, towards the balance of its line-of-credit facility and term loan. During the six months ended December 31, 2021, the Company borrowed $50.0 million of ~~contingent consideration payments classified as financing activities. The Company made $3.3 million in contingent consideration payments, which~~its line-of-credit facility. There were ~~classified within operating activities. No contingent consideration payments classified as either financing or operating activities were made in~~no borrowings for the ~~first quarter of fiscal 2021.~~  six months ended December 31, 2020.

During the ~~first quarter of fiscal 2022 and~~six months ended December 31, 2021, the Company maderepurchased $41.3 million of common stock. There were no repurchases for the six months ended December 31, 2020.
During the six months ended December 31, 2021 and December 31, 2020, the Company made $23.2 ~~million~~million and ~~$4.9~~$7.4 million in other financing payments, ~~respectively,~~respectively, related to taxes paid on restricted stock units and stock options exercised through a net share settlement.

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Table of Contents

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are discussed in the Company's Annual Report on Form 10-K for fiscal 2021 and are incorporated herein by reference. The application of certain of these policies requires judgments and estimates that can affect the results of operations and financial position of the Company. Judgments and estimates are used for, but not limited to, valuation of available-for-sale investments, inventory valuation and allowances, valuation of intangible assets and goodwill and valuation of investments in unconsolidated entities. There have been no significant changes in estimates in the ~~first~~ quarter ~~of fiscal 2022~~or six months ended December 31, 2021 that would require disclosure nor have there been any changes to the Company's policies.

NON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

•
Organic Growth

•
Adjusted gross margin

•
Adjusted net earnings

•
Adjusted effective tax rate

We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months, the impact of foreign currency, as well as the impact of partially owned consolidated subsidiaries. Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period. Revenues from partially owned subsidiaries consolidated in our financial statements are also excluded from our organic revenue calculation, as those revenues are not fully attributable to the Company. Revenue from partially owned subsidiaries was ~~$413 thousand~~$0.5 million and $0.9 million for the quarter and six months ended ~~September 30,~~December, 31, 2021.

Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, acquisition related expenses inclusive of the changes in fair value of contingent consideration, and other non-recurring items including non-recurring costs, goodwill and long-lived asset impairments, and gains. Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations. The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring items including gains or losses on legal settlements, goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Additionally, these amounts can vary significantly from period to period based on current activity. The Company also excludes revenue and expense attributable to partially owned consolidated subsidiaries in the calculation of our non-GAAP financial measures as the revenues and expenses are not fully attributable to the Company.

The Company’s non-GAAP adjusted operating margin and adjusted net earnings, in total and on a per share basis, also excludes stock-based compensation expense, which is inclusive of the employer portion of payroll taxes on those stock awards, restructuring, impairments of equity method investments, gain and losses from investments, and certain adjustments to income tax expense. Impairments of equity investments are excluded as they are not part of our day-to-day operating decisions. Additionally, gains and losses from other investments that are either isolated or cannot be expected to occur again with any predictability are excluded. Costs related to restructuring activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs. The Company independently calculates a non-GAAP adjusted tax rate to be applied to the identified non-GAAP adjustments considering the impact of discrete items on these adjustments and the jurisdictional mix of the adjustments. In addition, the tax impact of other discrete and non-recurring charges which impact our reported GAAP tax rate are adjusted from net earnings. We believe these tax items can significantly affect the period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical trends and future results.

The Company periodically reassesses the components of our non-GAAP adjustments for changes in how we evaluate our performance, changes in how we make financial and operational decisions, and considers the use of these measures by our competitors and peers to ensure the adjustments are still relevant and meaningful.

Readers are encouraged to review the reconciliations of the adjusted financial measures used in management's discussion and analysis of the financial condition of the Company to their most directly comparable GAAP financial measures provided within the Company's consolidated financial statements.

22

~~Table of Contents~~
FORWARD LOOKING INFORMATION AND CAUTIONARY STATEMENTS

This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those regarding the Company's expectations as to the effect of changes to accounting policies, the amount of capital expenditures for the remainder of the fiscal year, the source of funding for capital expenditure requirements, the sufficiency of currently available funds for meeting the Company's needs, the impact of fluctuations in foreign currency exchange rates, and expectations regarding gross margin fluctuations, increasing research and development expenses, increasing selling, general and administrative expenses and income tax rates. These statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: integration of newly acquired businesses, the introduction and acceptance of new products, general national and international economic, political, regulatory, and other conditions, increased competition, the reliance on internal manufacturing and related operations, the impact of currency exchange rate fluctuations, the recruitment and retention of qualified personnel, the impact of governmental regulation, maintenance of intellectual property rights, credit risk and fluctuation in the market value of the Company's investment portfolio, and unseen delays and expenses related to facility construction and improvements. For additional information concerning such factors, see the Company's Annual Report on Form 10-K for fiscal 2021 as filed with the Securities and Exchange Commission and Part II. Item 1A below.

2322
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of ~~September 30,~~December 31, 2021, the Company held an investment in the common stock of CCXI. The investment was included in short-term available-for-sale investments at its fair value of ~~$25.2~~$53.6 million. As of ~~September 30,~~December 31, 2021, the potential loss in fair value due to a 10% decrease in the market value of CCXI was ~~$2.5~~$5.4 million.

The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. For the quarter ended ~~September 30,~~December 31, 2021, approximately ~~35.0%~~36% of consolidated net sales were made in foreign currencies, including ~~12%~~13% in euros, 5% in British pound sterling, 8% in Chinese yuan and the remaining 10% in other currencies. The Company is exposed to market risk mainly from foreign exchange rate fluctuations of the euro, British pound sterling, the Chinese yuan, and the Canadian dollar, as compared to the U.S. dollar as the financial position and operating results of the Company's foreign operations are translated into U.S. dollars for consolidation.

Month-end average exchange rates between the British pound sterling, euro, Chinese yuan and Canadian dollar, which have not been weighted for actual sales volume in the applicable months in the periods, to the U.S. dollar were as follows:

Quarter Ended

Quarter Ended

Six Months Ended

September 30,

December 31,

December 31,

2021

2020

2021

2020

2021

2020

Euro
$ 1.18 $ 1.18 $ 1.14 $ 1.19 $ 1.16 $ 1.19
British pound sterling
1.37 1.31 1.35 1.32 1.36 1.32
Chinese yuan
0.15 0.15 0.16 0.15 0.16 0.15
Canadian dollar
0.79 0.75 0.79 0.76 0.79 0.76

The Company's exposure to foreign exchange rate fluctuations also arises from trade receivables, trade payables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency. The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from ~~September 30,~~December 31, 2021 levels against the euro, British pound sterling, Chinese yuan and Canadian dollar are as follows (in thousands):

Decrease in translation of earnings of foreign subsidiaries (annualized)
$ 6,250 $ 5,525
Decrease in translation of net assets of foreign subsidiaries
81,990 61,002
Additional transaction losses
2,947 3,002

2423
Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

The Company maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). The Company's management has evaluated, with the participation of its Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered in this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30,~~December 31, 2021, our disclosure controls and procedures were effective.

(b) Changes in internal controls over financial reporting.

There were no changes in the Company's internal control over financial reporting during the ~~first~~second quarter of fiscal ~~year~~ 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

2524
Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of ~~November 8, 2021,~~February 7, 2022, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company's business, results of operations, financial condition or cash flows.

ITEM 1A. RISK FACTORS

During the ~~three~~quarter and six months ended ~~September 30,~~December 31, 2021, there have been no material changes from the risk factors found in Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended June 30, 2021.

2625
Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~There was no~~The Company's repurchase plan approved by the Board for the period prior to February 2, 2022 granted management the discretion to mitigate the dilutive effect of stock option exercises for fiscal 2018, which then increases in each period subsequent to June 30, 2018 for additional dilutive impacts of stock option exercised in those future periods. As of February 2, 2022, the Company replaced the prior share repurchase ~~activity by~~plan with a new share repurchase plan that authorizes the Company to purchase up to $400 million in stock. The Company repurchased 89,238 shares in fiscal 2022 under the ~~quarter ended September 30, 2021.~~previous plan. No shares have yet been repurchased under the new share repurchase plan.
Period
Total Number of Shares Purchased
Average Price Paid per Share Cash Paid (thousands)
November 1-30, 2021 900 468.90 422
December 1-31, 2021 88,338 462.67 40,872

ITEM 3. DEFAULT ON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

2726
Table of Contents

ITEM 6. EXHIBITS

EXHIBIT INDEX
TO
FORM 10-Q

BIO-TECHNE CORPORATION

Exhibit
Number
Description
3.1
Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q dated February 9, 2015*

3.2
Third Amended and Restated Bylaws of the Company--incorporated by reference to Exhibit 3.1 of the ~~Company~~’sCompany’s Form 8-K dated February 1, 2018*

4.1 Description of Capital Stock -- incorporated by reference to Exhibit 4.1 of the Company's Form 10-K dated August 25, 2021*

10.1**
Management Incentive Plan--incorporated by reference to Exhibit 10.13 of the Company's Form 10-K for the year ended June 30, 2013*

10.2**
~~Second Amended and Restated~~ ~~2010~~Bio-Techne 2020 Equity Incentive Plan - incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated October 26, 2017*November 3, 2020*

10.3**
Form of Time Vesting Restricted Stock Award Agreement - incorporated by reference to Exhibit 10.3 of the Company's Form 10-K dated August 25, 2021*

10.4**
Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.4 of the Company's Form 10-K dated August 25, 2021*

10.5**
Form of Time Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.5 of the Company's Form 10-K dated August 25, 2021*

10.6**
Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.6 of the Company's Form 10-K dated August 25, 2021*

10.7**
Form of the Time Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.7 of the Company's Form 10-K dated August 25, 2021*

10.8**
Form of Performance Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.8 of the Company's Form 10-K dated August 25, 2021*

10.9**
Form of Time Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.9 of the Company's Form 10-K dated August 25, 2021*
27
Table of Contents
Exhibit
Number
Description
10.10**
Form of Performance Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.10 of the Company's Form 10-K dated August 25, 2021*

10.11**
Form of Employee Non-Qualified Stock Option Agreement - incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated August 25, 2021*

10.12**
Form of Director Non-Qualified Stock Option Agreement for Second Amendment and Restated 2010 Equity Incentive Plan - incorporated by reference to Exhibit 10.2 of the Company's Form 8-K dated October 26, 2017*

10.13**
Employment Agreement by and between the Company and Charles Kummeth - incorporated by reference to Exhibit 10.11 of the Company's Form-K dated September 7, 2017*

10.14**
Form of Employment Agreement by and between the Company and Executive Officers of the Company other than the CEO --incorporated by reference to Exhibit 10.12 of the Company's Form 10-K dated September 7, 2017*

10.15**
Form of Amendment No. 1 to Executive Employment Agreement – incorporated by reference to Exhibit 10.15 of the ~~Company~~’sCompany’s Form 10-Q dated May 11, 2020*

10.16
Credit Agreement by and among the Company, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank N.A., as Administrative Agent, dated August 1, 2018--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated August 2, 2018*
28

~~Exhibit~~
~~Number~~
~~Description~~
10.17** Form of Indemnification Agreement entered into with each director and executive officer of the Company - incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q dated February 8, 2018*

~~10.20~~
10.18**
~~Development, Supply and Commercialization~~Employment Agreement by and between the Company and ~~Kantaro Biosciences, LLC~~Mr. William Geist dated ~~May 18, 2020 (portions of which have been redacted as noted, subject to confidential treatment)~~ – incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated May 19, 2020*December 20, 2021

21
Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 25, 2021*

31.1
Certificate of Chief Executive Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

31.2
Certificate of Chief Financial Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

32.1
Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

32.2
Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

101
The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter and six months ended ~~September 30,~~December 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

-------------
*     Incorporated by reference; SEC File No. 000-17272
**   Management contract or compensatory plan or arrangement

2928
Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BIO-TECHNE CORPORATION

(Company)

Date: ~~November 8, 2021~~February 7, 2022
/s/ Charles R. Kummeth

   Charles R. Kummeth

Principal Executive Officer

Date: ~~November 8, 2021~~February 7, 2022
/s/ James T. Hippel

   James T. Hippel

Principal Financial Officer

3029

Minnesota	41-1427402
(State or other jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)	(I.R.S. Employer Identification No.)

614 McKinley Place N.E.
Minneapolis, MN 55413	(612) 379-8854
(Address of principal executive offices) (Zip Code)	(Registrant's telephone number, including area code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	TECH	The NASDAQ Stock Market LLC

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1817

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2423

Item 4.	Controls and Procedures	2524

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	2625

Item 1A.	Risk Factors	2625

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2726

Item 3.	Defaults Upon Senior Securities	2726

Item 4.	Mine Safety Disclosures	2726

Item 5.	Other Information	2726

Item 6.	~~Exhibits~~Exh ibits	2827

	SIGNATURES	3029

	September 30, 2021 (unaudited)			June 30, 2021			December 31, 2021 (unaudited)			June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	196,321		$	199,091		$	211,845		$	199,091
Short-term available-for-sale investments		38,740			32,463			67,135			32,463
Accounts receivable, less allowance for doubtful accounts of $1,273 and $1,229, respectively		147,548			145,385
Accounts receivable, less allowance for doubtful accounts of $1,334 and $1,229, respectively								152,896			145,385
Inventories		117,366			116,748			121,858			116,748
Other current assets		43,773			16,919			36,496			16,919
Total current assets		543,748			510,606			590,230			510,606

Property and equipment, net		207,134			207,907			211,814			207,907
Right of use asset		71,396			73,834			64,293			73,834
Goodwill		840,020			843,067			832,056			843,067
Intangible assets, net		596,300			615,968			569,347			615,968
Other assets		11,589			11,575			37,106			11,575
Total assets	$	2,270,187		$	2,262,957		$	2,304,846		$	2,262,957

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	25,621		$	29,384		$	26,756		$	29,384
Salaries, wages and related accruals		32,213			51,294			43,921			51,294
Accrued expenses		17,419			15,282			18,991			15,282
Contract liabilities		19,121			18,995			19,081			18,995
Income taxes payable		6,505			5,336			14,284			5,336
Operating lease liabilities - current		12,001			11,602			11,809			11,602
Contingent consideration payable		5,000			4,000			2,000			4,000
Current portion of long-term debt obligations		12,500			12,500			12,500			12,500
Other current liabilities		3,612			3,891			5,467			3,891
Total current liabilities		133,992			152,284			154,809			152,284

Deferred income taxes		98,812			93,125			101,423			93,125
Long-term debt obligations		287,723			328,827			269,618			328,827
Long-term contingent consideration payable		17,600			25,400			7,000			25,400
Operating lease liabilities		65,059			67,625			57,718			67,625
Other long-term liabilities		20,046			24,462			11,747			24,462

Bio-Techne's Shareholders' equity:
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding		0			0			0			0
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 39,273,057 and 38,955,484, respectively		393			390
Common stock, par value $.01 per share; authorized 100,000,000; issued and outstanding 39,319,766 and 38,955,484, respectively								393			390
Additional paid-in capital		583,851			534,411			616,429			534,411
Retained earnings		1,119,337			1,085,461			1,145,641			1,085,461
Accumulated other comprehensive loss		(64,216	)		(57,291	)		(59,474	)		(57,291	)
Total Bio-Techne's shareholders' equity		1,639,365			1,562,971
Total Bio-Techne’s shareholders' equity								1,702,989			1,562,971
Noncontrolling interest		7,590			8,263			(458	)		8,263
Total shareholder's equity		1,646,955			1,571,234
Total shareholders’ equity								1,702,531			1,571,234
Total liabilities and shareholders’ equity	$	2,270,187		$	2,262,957		$	2,304,846		$	2,262,957

	Quarter Ended
	September 30,								Quarter Ended December 31,								Six Months Ended December 31,
	2021					2020		2021				2020				2021				2020
Net sales	$	257,719		$	204,199			$	269,276			$	224,253			$	526,995			$	428,452
Cost of sales		86,722				66,468				85,585				73,353				172,307				139,821
Gross margin		170,997				137,731				183,691				150,900				354,688				288,631

Operating expenses:
Selling, general and administrative		86,175				72,598				100,693				83,116				186,868				155,714
Research and development		21,600				16,041				20,650				16,789				42,250				32,830
Total operating expenses		107,775				88,639				121,343				99,905				229,118				188,544

Operating income		63,222				49,092				62,348				50,995				125,570				100,087
Other income (expense)		4,161				(9,753	)			23,831				5,373				27,992				(4,381	)
Earnings before income taxes		67,383				39,339				86,179				56,368				153,562				95,706
Income taxes (benefit)		(1,598	)			5,944				14,120				10,224				12,522				16,168
Net earnings, including noncontrolling interest	$	68,981			$	33,395				72,059				46,144				141,040				79,538
Net earnings (loss) attributable to noncontrolling interest		(634	)			0				(8,114	)			(130	)			(8,748	)			(130	)
Net earnings attributable to Bio-Techne		69,615				33,395			$	80,173			$	46,274			$	149,788			$	79,668
Other comprehensive income (loss):
Foreign currency translation adjustments		(8,646	)			11,914				1,924				16,928				(6,722	)			28,842
Unrealized gains (losses) on derivative instruments - cash flow hedges, net of tax amounts disclosed in Note 8		1,682				2,143				2,884				2,059				4,566				4,202
Other comprehensive income (loss)		(6,964	)			14,057				4,808				18,987				(2,156	)			33,044
Other comprehensive income (loss) attributable to noncontrolling interest		(39	)			0				66				83				27				83
Other comprehensive income (loss) attributable to Bio-Techne		(6,925	)			14,057				4,742				18,904				(2,183	)			32,961

Comprehensive income attributable to Bio-Techne	$	62,690			$	47,452			$	84,915			$	65,178			$	147,605			$	112,629

Earnings per share attributable to Bio-Techne:
Basic	$	1.78			$	0.87			$	2.04			$	1.20			$	3.82			$	2.06
Diluted	$	1.69			$	0.83			$	1.94			$	1.15			$	3.64			$	1.98

Weighted average common shares outstanding:
Basic		39,094				38,536				39,310				38,691				39,202				38,614
Diluted		41,158				40,025				41,207				40,257				41,159				40,135

		Employee Severance	Asset Impairment		Total
Selling, general and administrative	$	639	$	546	$	1,185
Total operating income impact⁽¹⁾		639		546		1,185

	Employee Severance			Other			Total
Accrued restructuring action balances as of September 31, 2021⁽¹⁾	$	639		$	364		$	1,003
Incremental expense incurred in the second quarter of fiscal 2022		0			242			242
Cash payments		(370	)		(242	)		(612	)
Adjustments		301			(37	)		264
Accrued restructuring actions balances as of December 31, 2021	$	570		$	327		$	897

	Quarter Ended			Quarter Ended			Six Months Ended
	September 30, 2021			December 31, 2021			December 31, 2021
Fair value at the beginning of period	$	29,400		$	22,600		$	29,400
Change in fair value of contingent consideration					(13,600	)		(16,400	)
Payments		(4,000	)		0			(4,000	)
Change in fair value of contingent consideration		(2,800	)
Fair value at the end of period	$	22,600		$	9,000		$	9,000

	Balance Sheet Classification	As of September 30, 2021			Balance Sheet Classification	As of: December 31, 2021
Operating leases:
Operating lease right of use assets	Right of Use Asset	$	71,396		Right of Use Asset	$	64,293

Current operating lease liabilities	Operating lease liabilities current	$	12,001		Operating lease liabilities current	$	11,809
Noncurrent operating lease liabilities	Operating lease liabilities		65,059		Operating lease liabilities		57,718
Total operating lease liabilities	Total operating lease liabilities	$	77,060			$	69,527

Weighted average remaining lease term (in years):	Weighted average remaining lease term (in years):		7.77				7.25

Weighted average discount rate:	Weighted average discount rate:		3.93	%			3.87	%

	Three months ended September 30, 2021		Six months ended December 31, 2021
Cash amounts paid on operating lease liabilities	$	3,758	$	7,504

Right of use assets obtained in exchange for lease liabilities		278		575

	Operating Leases		Operating Leases
Remainder of 2022	$	10,865
Remainder of fiscal 2022			$	7,176
2023		13,566		13,191
2024		11,897		11,511
2025		10,805		10,353
2026		10,148		9,628
Thereafter		32,236		27,902
Total	$	89,517	$	79,761
Less: Amounts representing interest		12,457		10,234
Total Lease obligations	$	77,060	$	69,527

																			Bio-Techne Shareholders
										Accumulated																				Accumulated
					Additional					Other															Additional					Other
	Common Stock				Paid-in		Retained			Comprehensive			Non-Controlling						Common Stock						Paid-in		Retained			Comprehensive			Noncontrolling
	Shares		Amount		Capital		Earnings			Income(Loss)			Interest			Total			Shares			Amount			Capital		Earnings			Income(Loss)			Interest			Total
Balances at June 30, 2021		38,955	$	390	$	534,411	$	1,085,461		$	(57,291	)	$	8,263		$	1,571,234			38,955		$	390		$	534,411	$	1,085,461		$	(57,291	)	$	8,263		$	1,571,234
Net earnings								69,615						(634	)		68,981											69,615						(634	)		68,981
Other comprehensive income											(6,925	)		(39	)		(6,964	)
Other comprehensive income (loss)																															(6,925	)		(39	)		(6,964	)
Share repurchases
Common stock issued for exercise of options		295		3		36,345		(13,481	)								22,867			295			3			36,345		(13,481	)								22,867
Common stock issued for restricted stock awards		20		0		0		(9,765	)								(9,765	)		20			0			0		(9,765	)								(9,765	)
Cash dividends								(12,493	)								(12,493	)					��					(12,493	)								(12,493	)
Stock-based compensation expense						11,396											11,396									11,396											11,396
Common stock issued to employee stock purchase plan		3		0		1,358											1,358			3			0			1,358											1,358
Employee stock purchase plan expense						341											341									341											341
Balances at September 30, 2021		39,273	$	393	$	583,851	$	1,119,337		$	(64,216	)	$	7,590		$	1,646,955			39,273		$	393		$	583,851	$	1,119,337		$	(64,216	)	$	7,590		$	1,646,955
Net earnings																												80,173			0			(8,114	)		72,059
Other comprehensive income (loss)																															4,742			66			4,808
Share repurchases																				(89	)		(1	)				(41,293	)								(41,294	)
Common stock issued for exercise of options																				134			1			18,604											18,605
Common stock issued for restricted stock awards																				1
Cash dividends																												(12,576	)								(12,576	)
Stock-based compensation expense																										13,701											13,701
Common stock issued to employee stock purchase plan																										6											6
Employee stock purchase plan expense																										267											267
Balances at December 31, 2021																				39,319			393			616,429		1,145,641			(59,474	)		(458	)		1,702,531

	Unrealized Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total			Unrealized Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balance as of June 30, 2021	$	(6,193	)	$	(51,098	)	$	(57,291	)	$	(6,193	)	$	(51,098	)	$	(57,291	)
Other comprehensive income (loss) before reclassifications, net of taxes, attributable to Bio-Techne		84			(8,607	)		(8,523	)		1,682			(6,750	)		(5,068	)
Reclassification from loss on derivatives to interest expense, net of taxes, attributable to Bio-Techne⁽¹⁾		1,598			0			1,598			2,884		$	0		$	2,884
Balance as of September 30, 2021⁽²⁾	$	(4,511	)	$	(59,705	)	$	(64,216	)
Balance as of December 31, 2021⁽²⁾										$	(1,626	)		(57,848	)		(59,474	)

							Quarter Ended						Six Months Ended
	Quarter Ended September 30,						December 31,						December 31,
	2021			2020			2021			2020			2021			2020
Earnings per share – basic:
Net earnings, including noncontrolling interest	$	68,981		$	33,395		$	72,059		$	46,144		$	141,040		$	79,538
Less net earnings (loss) attributable to noncontrolling interest		(634	)		0			(8,114	)		(130	)		(8,748	)		(130	)
Net earnings attributable to Bio-Techne	$	69,615		$	33,395		$	80,173		$	46,274		$	149,788		$	79,668
Income allocated to participating securities		(36	)		(21)			(34	)		(37	)		(70	)		(50	)
Income available to common shareholders	$	69,579		$	33,374		$	80,139		$	46,237		$	149,718		$	79,618

Weighted-average shares outstanding - basic		39,094			38,536
Earnings per share - basic	$	1.78		$	0.87
Weighted-average shares outstanding – basic								39,310			38,691			39,202			38,614
Earnings per share – basic							$	2.04		$	1.20		$	3.82		$	2.06

Earnings per share – diluted:
Net earnings, including noncontrolling interest	$	68,981		$	33,395		$	72,059		$	46,144		$	141,040		$	79,538
Less net earnings (loss) attributable to noncontrolling interest		(634	)		0			(8,114	)		(130	)		(8,748	)		(130	)
Net earnings attributable to Bio-Techne	$	69,615		$	33,395		$	80,173		$	46,274		$	149,788		$	79,668
Income allocated to participating securities		(36	)		(21	)		(34	)		(37	)		(70	)		(50	)
Income available to common shareholders	$	69,579		$	33,374		$	80,139		$	46,237		$	149,718		$	79,618

Weighted average shares outstanding - basic		39,094			38,536
Weighted-average shares outstanding – basic								39,310			38,691			39,202			38,614
Dilutive effect of stock options and restricted stock units		2,064			1,489			1,897			1,566			1,957			1,521
Weighted average common shares outstanding - diluted		41,158			40,025
Earnings per share - diluted	$	1.69		$	0.83
Weighted-average common shares outstanding – diluted								41,207			40,257			41,159			40,135
Earnings per share – diluted							$	1.94		$	1.15		$	3.64		$	1.98

	Quarter Ended						Six Months
	December 31,						December 31,
	2021			2020			2021			2020
Interest expense	$	(2,902	)	$	(3,585	)	$	(6,311	)	$	(8,002	)
Interest income		245			78			438			192
Other non-operating income (expense), net⁽¹⁾		26,488			8,880			33,865			3,429
Total other income (expense)	$	23,831		$	5,373		$	27,992		$	(4,381	)

	•	Organic Growth
	•	Adjusted gross margin
	•	Adjusted net earnings
	•	Adjusted effective tax rate

Decrease in translation of earnings of foreign subsidiaries (annualized)	$	6,250	$	5,525
Decrease in translation of net assets of foreign subsidiaries		81,990		61,002
Additional transaction losses		2,947		3,002

Period	Total Number of Shares Purchased	Average Price Paid per Share	Cash Paid (thousands)
November 1-30, 2021	900	468.90	422
December 1-31, 2021	88,338	462.67	40,872

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation of the Company--incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q dated February 9, 2015*

3.2	Third Amended and Restated Bylaws of the Company--incorporated by reference to Exhibit 3.1 of the ~~Company~~’sCompany’s Form 8-K dated February 1, 2018*

4.1	Description of Capital Stock -- incorporated by reference to Exhibit 4.1 of the Company's Form 10-K dated August 25, 2021*

10.1**	Management Incentive Plan--incorporated by reference to Exhibit 10.13 of the Company's Form 10-K for the year ended June 30, 2013*

10.2**	~~Second Amended and Restated~~ ~~2010~~Bio-Techne 2020 Equity Incentive Plan - incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated October 26, 2017November 3, 2020

10.3**	Form of Time Vesting Restricted Stock Award Agreement - incorporated by reference to Exhibit 10.3 of the Company's Form 10-K dated August 25, 2021*

10.4**	Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.4 of the Company's Form 10-K dated August 25, 2021*

10.5**	Form of Time Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.5 of the Company's Form 10-K dated August 25, 2021*

10.6**	Form of Performance Vesting Restricted Stock Unit Award Agreement - incorporated by reference to Exhibit 10.6 of the Company's Form 10-K dated August 25, 2021*

10.7**	Form of the Time Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.7 of the Company's Form 10-K dated August 25, 2021*

10.8**	Form of Performance Vesting Performance Unit Award Agreement - incorporated by reference to Exhibit 10.8 of the Company's Form 10-K dated August 25, 2021*

10.9**	Form of Time Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.9 of the Company's Form 10-K dated August 25, 2021*

Exhibit Number
	Description
10.10**	Form of Performance Vesting Incentive Stock Option Agreement - incorporated by reference to Exhibit 10.10 of the Company's Form 10-K dated August 25, 2021*

10.11**	Form of Employee Non-Qualified Stock Option Agreement - incorporated by reference to Exhibit 10.11 of the Company's Form 10-K dated August 25, 2021*

10.12**	Form of Director Non-Qualified Stock Option Agreement for Second Amendment and Restated 2010 Equity Incentive Plan - incorporated by reference to Exhibit 10.2 of the Company's Form 8-K dated October 26, 2017*

10.13**	Employment Agreement by and between the Company and Charles Kummeth - incorporated by reference to Exhibit 10.11 of the Company's Form-K dated September 7, 2017*


10.14**	Form of Employment Agreement by and between the Company and Executive Officers of the Company other than the CEO --incorporated by reference to Exhibit 10.12 of the Company's Form 10-K dated September 7, 2017*

10.15**	Form of Amendment No. 1 to Executive Employment Agreement – incorporated by reference to Exhibit 10.15 of the ~~Company~~’sCompany’s Form 10-Q dated May 11, 2020*

10.16	Credit Agreement by and among the Company, the Guarantors party thereto, the Lenders party thereto, and BMO Harris Bank N.A., as Administrative Agent, dated August 1, 2018--incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated August 2, 2018*

~~Exhibit~~ ~~Number~~	~~Description~~
10.17**	Form of Indemnification Agreement entered into with each director and executive officer of the Company - incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q dated February 8, 2018*

~~10.20~~ 10.18**	~~Development, Supply and Commercialization~~Employment Agreement by and between the Company and ~~Kantaro Biosciences, LLC~~Mr. William Geist dated ~~May 18, 2020 (portions of which have been redacted as noted, subject to confidential treatment)~~ – incorporated by reference to Exhibit 10.1 of the Company's Form 8-K dated May 19, 2020*December 20, 2021

21	Subsidiaries of the Company - incorporated by reference to Exhibit 21 of the Company's Form 10-K dated August 25, 2021*

31.1	Certificate of Chief Executive Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

31.2	Certificate of Chief Financial Officer pursuant to section 302 of the Sarbanes Oxley Act of 2002

32.1	Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

32.2	Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes Oxley Act of 2002

101	The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter and six months ended ~~September 30,~~December 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		BIO-TECHNE CORPORATION
		(Company)

Date: ~~November 8, 2021~~February 7, 2022		/s/ Charles R. Kummeth
		Charles R. Kummeth
		Principal Executive Officer

Date: ~~November 8, 2021~~February 7, 2022		/s/ James T. Hippel
		James T. Hippel
		Principal Financial Officer