Meridian Bioscience (VIVO) 10-Q 9 Feb 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Jan. 31, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Trading Symbol	VIVO
Entity Registrant Name	MERIDIAN BIOSCIENCE INC
Entity Central Index Key	794,172
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		42,051,142

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
NET REVENUES	$ 47,160	$ 48,013
COST OF SALES	15,577	18,776
GROSS PROFIT	31,583	29,237
OPERATING EXPENSES
Research and development	3,381	3,103
Selling and marketing	6,443	6,080
General and administrative	8,173	7,385
Total operating expenses	17,997	16,568
OPERATING INCOME	13,586	12,669
OTHER INCOME (EXPENSE)
Interest income	17	6
Other, net	96	(582)
Total other income (expense)	113	(576)
EARNINGS BEFORE INCOME TAXES	13,699	12,093
INCOME TAX PROVISION	4,806	4,192
NET EARNINGS	$ 8,893	$ 7,901
BASIC EARNINGS PER COMMON SHARE	$ 0.21	$ 0.19
DILUTED EARNINGS PER COMMON SHARE	$ 0.21	$ 0.19
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC	41,947	41,607
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARES AND UNITS	380	334
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-DILUTED	42,327	41,941
ANTI-DILUTIVE SECURITIES:
Common share options and restricted shares and units	450	566
DIVIDENDS DECLARED PER COMMON SHARE	$ 0.20	$ 0.20

Condensed Consolidated Stateme3

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net earnings	$ 8,893	$ 7,901
Foreign currency translation adjustment	(787)	(1,365)
COMPREHENSIVE INCOME	$ 8,106	$ 6,536

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$ 8,893	$ 7,901
Non-cash items included in net earnings:
Depreciation of property, plant and equipment	896	927
Amortization of intangible assets	388	469
Amortization of deferred illumigene® instrument costs	281	395
Stock-based compensation	1,611	1,428
Deferred income taxes	433	100
Change in current assets	(1,186)	4,878
Change in current liabilities	834	246
Other, net	(58)	(259)
Net cash provided by operating activities	12,092	16,085
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(776)	(1,331)
Purchase of equity method investment	(600)
Purchases of intangible assets	(16)
Net cash used for investing activities	(1,392)	(1,331)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid	(8,407)	(8,330)
Proceeds and tax benefits from exercises of stock options	1,470	499
Net cash used for financing activities	(6,937)	(7,831)
Effect of Exchange Rate Changes on Cash and Equivalents	(314)	(454)
Net Increase in Cash and Equivalents	3,449	6,469
Cash and Equivalents at Beginning of Period	49,973	43,047
Cash and Equivalents at End of Period	$ 53,422	$ 49,516

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
CURRENT ASSETS
Cash and equivalents	$ 53,422	$ 49,973
Accounts receivable, less allowances of $222 and $248	27,617	26,254
Inventories	38,778	35,817
Prepaid expenses and other current assets	3,414	7,378
Total current assets	123,231	119,422
PROPERTY, PLANT AND EQUIPMENT, at Cost
Land	981	986
Buildings and improvements	30,119	30,056
Machinery, equipment and furniture	42,363	41,541
Construction in progress	938	1,139
Subtotal	74,401	73,722
Less: accumulated depreciation and amortization	46,952	46,230
Net property, plant and equipment	27,449	27,492
OTHER ASSETS
Goodwill	22,064	22,349
Other intangible assets, net	5,465	5,931
Restricted cash	1,000	1,000
Deferred illumigene instrument costs, net	1,671	1,750
Deferred income taxes	4,566	4,954
Other assets	989	384
Total other assets	35,755	36,368
TOTAL ASSETS	186,435	183,282
CURRENT LIABILITIES
Accounts payable	7,208	6,646
Accrued employee compensation costs	4,990	5,132
Other accrued expenses	2,601	2,587
Income taxes payable	933	886
Total current liabilities	15,732	15,251
NON-CURRENT LIABILITIES	$ 2,129	$ 2,158
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 1,000,000 shares authorized; none issued
Common shares, no par value; 71,000,000 shares authorized; 42,044,388 and 41,838,399 shares issued, respectively	$ 0	$ 0
Additional paid-in capital	120,153	117,151
Retained earnings	51,538	51,052
Accumulated other comprehensive income (loss)	(3,117)	(2,330)
Total shareholders' equity	168,574	165,873
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 186,435	$ 183,282

Condensed Consolidated Balance6

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 222	$ 248
Preferred stock, par value
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value
Common stock, shares authorized	71,000,000	71,000,000
Common stock, shares issued	42,044,388	41,838,399

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - 3 months ended Dec. 31, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Shares Issued [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Sep. 30, 2015	$ 165,873		$ 117,151	$ 51,052	$ (2,330)
Beginning balance, Shares at Sep. 30, 2015		41,838
Cash dividends paid	(8,407)			(8,407)
Exercise of stock options	1,391		1,391
Exercise of stock options, Shares		91
Conversion of restricted stock units		115
Stock compensation expense	1,611		1,611
Net earnings	8,893			8,893
Foreign currency translation adjustment	(787)				(787)
Ending balance at Dec. 31, 2015	$ 168,574		$ 120,153	$ 51,538	$ (3,117)
Ending balance, Shares at Dec. 31, 2015		42,044

Basis of Presentation

Basis of Presentation	3 Months Ended
	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	1. Basis of Presentation The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2015, the results of its operations for the three month periods ended December 31, 2015 and 2014, and its cash flows for the three month periods ended December 31, 2015 and 2014. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s fiscal 2015 Annual Report on Form 10-K. Financial information as of September 30, 2015 has been derived from the Company’s audited consolidated financial statements. The results of operations for interim periods are not necessarily indicative of the results to be expected for the year.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Significant Accounting Policies	2. Significant Accounting Policies A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2015 Annual Report on Form 10-K. (a) Recent Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes Issued but not yet effective accounting pronouncements are not expected to have a material impact on the Condensed Consolidated Financial Statements. (b) Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to the current fiscal period presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.

Cash and Equivalents

Cash and Equivalents	3 Months Ended
	Dec. 31, 2015
Cash and Cash Equivalents [Abstract]
Cash and Equivalents	3. Cash and Equivalents Cash and equivalents include the following components: December 31, 2015 September 30, 2015 Cash and Other Cash and Other Overnight repurchase agreements $ 25,147 $ — $ 25,436 $ — Cash on hand— Restricted — 1,000 — 1,000 Unrestricted 28,275 — 24,537 — Total $ 53,422 $ 1,000 $ 49,973 $ 1,000

Inventories

Inventories	3 Months Ended
	Dec. 31, 2015
Inventory Disclosure [Abstract]
Inventories	4. Inventories Inventories are comprised of the following: December 31, September 30, Raw materials $ 7,351 $ 7,095 Work-in-process 12,297 10,096 Finished goods— illumi gene 2,260 1,890 Finished goods—kits and reagents 16,870 16,736 Total $ 38,778 $ 35,817

Reportable Segment and Major Cu

Reportable Segment and Major Customers Information	3 Months Ended
	Dec. 31, 2015
Segment Reporting [Abstract]
Reportable Segment and Major Customers Information	5. Reportable Segment and Major Customers Information Meridian was formed in 1976 and functions as a fully-integrated research, development, manufacturing, marketing and sales organization with primary emphasis in the fields of in vitro diagnostics and life science. Our principal businesses are (i) the development, manufacture and distribution of diagnostic test kits primarily for gastrointestinal, viral, respiratory and parasitic infectious diseases; and (ii) the manufacture and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents used by researchers and other diagnostic manufacturers, and the contract development and manufacture of proteins and other biologicals for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines. Our reportable segments are Diagnostics and Life Science, both of which are headquartered in Cincinnati, Ohio, which also serves as the Diagnostics segment’s base of manufacturing operations and research and development. The Diagnostics segment has sales and distribution facilities in the United States, Europe and Australia. The Life Science segment consists of manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents domestically and abroad, including sales and business development offices in Singapore and Beijing, China to further pursue growing revenue opportunities in Asia. Amounts due from two Diagnostics distributor customers accounted for 26% and 21% of consolidated accounts receivable at December 31, 2015 and September 30, 2015, respectively. Revenues from these two distributor customers accounted for 39% and 41% of the Diagnostics segment third-party revenues during the three months ended December 31, 2015 and 2014, respectively; and represented 29% and 31% of consolidated revenues for the fiscal 2016 and 2015 first quarters, respectively. Within our Life Science segment, two diagnostic manufacturing customers accounted for 18% of the segment’s third-party revenues during each of the three months ended December 31, 2015 and 2014. Segment information for the interim periods is as follows: Diagnostics Life Science Eliminations(1) Total Three Months Ended December 31, 2015 Net revenues— Third-party $ 35,301 $ 11,859 $ — $ 47,160 Inter-segment 71 367 (438 ) — Operating income 10,330 3,236 20 13,586 Goodwill (December 31, 2015) 1,250 20,814 — 22,064 Other intangible assets, net (December 31, 2015) 2,236 3,229 — 5,465 Total assets (December 31, 2015) 120,780 65,927 (272 ) 186,435 Three Months Ended December 31, 2014 Net revenues— Third-party $ 36,586 $ 11,427 $ — $ 48,013 Inter-segment 104 297 (401 ) — Operating income 10,284 2,489 (104 ) 12,669 Goodwill (September 30, 2015) 1,250 21,099 — 22,349 Other intangible assets, net (September 30, 2015) 2,364 3,567 — 5,931 Total assets (September 30, 2015) 119,939 63,670 (327 ) 183,282 (1) Eliminations consist of inter-segment transactions. Transactions between segments are accounted for at established intercompany prices for internal and management purposes, with all intercompany amounts eliminated in consolidation.

Intangible Assets

Intangible Assets	3 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	6. Intangible Assets A summary of our acquired intangible assets subject to amortization, as of December 31, 2015 and September 30, 2015 is as follows: December 31, 2015 September 30, 2015 Gross Accumulated Gross Accumulated Manufacturing technologies, core products and cell lines $ 11,547 $ 10,963 $ 11,582 $ 10,906 Trademarks, licenses and patents 6,349 3,450 6,410 3,296 Customer lists and supply agreements 12,012 10,030 12,105 9,964 $ 29,908 $ 24,443 $ 30,097 $ 24,166 The actual aggregate amortization expense for these intangible assets was $388 and $469 for the three months ended December 31, 2015 and 2014, respectively. The estimated aggregate amortization expense for these intangible assets for each of the fiscal years through fiscal 2021 is as follows: remainder of fiscal 2016 – $1,009, fiscal 2017 – $1,106, fiscal 2018 – $1,085, fiscal 2019 – $1,045, fiscal 2020 – $873 and fiscal 2021 – $313.

Significant Accounting Polici14

Significant Accounting Policies (Policies)	3 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Recent Accounting Pronouncements	(a) Recent Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes Issued but not yet effective accounting pronouncements are not expected to have a material impact on the Condensed Consolidated Financial Statements.
Reclassifications	(b) Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to the current fiscal period presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.

Cash and Equivalents (Tables)

Cash and Equivalents (Tables)	3 Months Ended
	Dec. 31, 2015
Cash and Cash Equivalents [Abstract]
Components of Cash and Cash Equivalents	Cash and equivalents include the following components: December 31, 2015 September 30, 2015 Cash and Other Cash and Other Overnight repurchase agreements $ 25,147 $ — $ 25,436 $ — Cash on hand— Restricted — 1,000 — 1,000 Unrestricted 28,275 — 24,537 — Total $ 53,422 $ 1,000 $ 49,973 $ 1,000

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Dec. 31, 2015
Inventory Disclosure [Abstract]
Components of Inventories	Inventories are comprised of the following: December 31, September 30, Raw materials $ 7,351 $ 7,095 Work-in-process 12,297 10,096 Finished goods— illumi gene 2,260 1,890 Finished goods—kits and reagents 16,870 16,736 Total $ 38,778 $ 35,817

Reportable Segment and Major 17

Reportable Segment and Major Customers Information (Tables)	3 Months Ended
	Dec. 31, 2015
Segment Reporting [Abstract]
Segment Information	Segment information for the interim periods is as follows: Diagnostics Life Science Eliminations(1) Total Three Months Ended December 31, 2015 Net revenues— Third-party $ 35,301 $ 11,859 $ — $ 47,160 Inter-segment 71 367 (438 ) — Operating income 10,330 3,236 20 13,586 Goodwill (December 31, 2015) 1,250 20,814 — 22,064 Other intangible assets, net (December 31, 2015) 2,236 3,229 — 5,465 Total assets (December 31, 2015) 120,780 65,927 (272 ) 186,435 Three Months Ended December 31, 2014 Net revenues— Third-party $ 36,586 $ 11,427 $ — $ 48,013 Inter-segment 104 297 (401 ) — Operating income 10,284 2,489 (104 ) 12,669 Goodwill (September 30, 2015) 1,250 21,099 — 22,349 Other intangible assets, net (September 30, 2015) 2,364 3,567 — 5,931 Total assets (September 30, 2015) 119,939 63,670 (327 ) 183,282 (1) Eliminations consist of inter-segment transactions.

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Summary of Acquired Intangible Assets Subject to Amortization	A summary of our acquired intangible assets subject to amortization, as of December 31, 2015 and September 30, 2015 is as follows: December 31, 2015 September 30, 2015 Gross Accumulated Gross Accumulated Manufacturing technologies, core products and cell lines $ 11,547 $ 10,963 $ 11,582 $ 10,906 Trademarks, licenses and patents 6,349 3,450 6,410 3,296 Customer lists and supply agreements 12,012 10,030 12,105 9,964 $ 29,908 $ 24,443 $ 30,097 $ 24,166

Significant Accounting Polici19

Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Schedule Of Accounting Policies [Line Items]
Deferred income taxes	$ 4,566	$ 4,954
ASU 2015-17 [Member]
Schedule Of Accounting Policies [Line Items]
Deferred income taxes		$ 3,431

Cash and Equivalents - Componen

Cash and Equivalents - Components of Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Cash and Cash Equivalents [Line Items]
Cash on hand - Restricted	$ 1,000	$ 1,000
Total	53,422	49,973	$ 49,516	$ 43,047
Cash and Equivalents [Member]
Cash and Cash Equivalents [Line Items]
Overnight repurchase agreements	25,147	25,436
Cash on hand - Unrestricted	28,275	24,537
Total	53,422	49,973
Other Assets [Member]
Cash and Cash Equivalents [Line Items]
Cash on hand - Restricted	1,000	1,000
Total	$ 1,000	$ 1,000

Inventories - Components of Inv

Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Inventory [Line Items]
Raw materials	$ 7,351	$ 7,095
Work-in-process	12,297	10,096
Total	38,778	35,817
Illumigene Instruments [Member]
Inventory [Line Items]
Finished goods	2,260	1,890
Kits and Reagents [Member]
Inventory [Line Items]
Finished goods	$ 16,870	$ 16,736

Reportable Segment and Major 22

Reportable Segment and Major Customers Information - Additional Information (Detail) - Customer Concentration Risk [Member] - Customer	3 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Two Diagnostic Distributor Customers [Member] | Consolidated Accounts Receivable [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of major customers	2		2
Concentration risk percentage	26.00%		21.00%
Two Diagnostic Distributor Customers [Member] | Segment, Third-Party Sales Revenue [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of major customers	2	2
Two Diagnostic Distributor Customers [Member] | Segment, Third-Party Sales Revenue [Member] | Diagnostics [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Concentration risk percentage	39.00%	41.00%
Two Diagnostic Distributor Customers [Member] | Revenues [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Concentration risk percentage	29.00%	31.00%
Two Diagnostic Manufacturing Customers [Member] | Segment, Third-Party Sales Revenue [Member] | Life Science [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of major customers	2	2
Concentration risk percentage	18.00%	18.00%

Reportable Segment and Major 23

Reportable Segment and Major Customers Information - Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Segment Reporting Information [Line Items]
NET REVENUES	$ 47,160	$ 48,013
Operating income	13,586	12,669
Goodwill	22,064		$ 22,349
Other intangible assets, net	5,465		5,931
Total assets	186,435		183,282
Inter-segment [Member] | Diagnostics [Member]
Segment Reporting Information [Line Items]
NET REVENUES	71	104
Inter-segment [Member] | Life Science [Member]
Segment Reporting Information [Line Items]
NET REVENUES	367	297
Eliminations [Member]
Segment Reporting Information [Line Items]
NET REVENUES	(438)	(401)
Operating income	20	(104)
Total assets	(272)		(327)
Operating Segments [Member] | Diagnostics [Member]
Segment Reporting Information [Line Items]
NET REVENUES	35,301	36,586
Operating income	10,330	10,284
Goodwill	1,250		1,250
Other intangible assets, net	2,236		2,364
Total assets	120,780		119,939
Operating Segments [Member] | Life Science [Member]
Segment Reporting Information [Line Items]
NET REVENUES	11,859	11,427
Operating income	3,236	$ 2,489
Goodwill	20,814		21,099
Other intangible assets, net	3,229		3,567
Total assets	$ 65,927		$ 63,670

Intangible Assets - Summary of

Intangible Assets - Summary of Acquired Intangible Assets Subject to Amortization (Detail) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 29,908	$ 30,097
Accumulated Amortization	24,443	24,166
Manufacturing Technologies, Core Products and Cell Lines [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	11,547	11,582
Accumulated Amortization	10,963	10,906
Trademarks, Licenses and Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	6,349	6,410
Accumulated Amortization	3,450	3,296
Customer Lists and Supply Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	12,012	12,105
Accumulated Amortization	$ 10,030	$ 9,964

Intangible Assets - Additional

Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 388	$ 469
Estimated amortization expense for intangible assets remainder of fiscal year 2016	1,009
2,017	1,106
2,018	1,085
2,019	1,045
2,020	873
2,021	$ 313