FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated under the LawsRegistered Pursuantregistered pursuant to Section 12(b) of the Act: ofon which registered
If this report is an annual or transition report, indicate☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S–K (Section 229.405 of this Chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10–K or any amendment to this Form 10–K. ☒
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
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Emerging growth company | ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule12b-2). YES ☐ NO ☒
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consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Recessionary pressures on the economy and the markets in which our customers operate, as well as adverse trends in buying patterns from customers, can change expected results. Costs and difficulties in complying with laws and regulations, including those administered by the United States Food and Drug Administration, can result in unanticipated expenses and delays and interruptions to the sale of new and existing products, as can the uncertainty of regulatory approvals and the regulatory process. The international scope of Meridian’s operations, including changes in the relative strengthpandemic, or weakness of the U.S. dollar and general economic conditions in foreign countries, can impact results and make them difficult to predict. One of Meridian’s growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses will be successfully integrated into Meridian’s operations. There may be risks that acquisitions may disrupt operations and may pose potential difficulties in employee retention, and there may be additional risks with respect to Meridian’s ability to recognize the benefits of acquisitions, including potential synergies and cost savings or the failure of acquisitions to achieve their plans and objectives. Meridian cannot predict the outcome of goodwill impairment testing and the impact of possible goodwill impairments on Meridian’s earnings and financial results. Meridian cannot predict the possible impact of U.S. health care legislation enacted in 2010 – the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act – and any modification or repeal of any of the provisions thereof initiated by Congress or the presidential administration, and any similar initiatives in other countries on its results of operations. Efforts to reduce the U.S. federal deficit, breaches of Meridian’s information technology systems, trade wars, increased tariffs, and natural disasters and other events could have a materially adverse effect on Meridian’s results of operations and revenues. In the past, the Company has identified a material weakness in our internal control over financial reporting, which has been remediated, but the Company can make no assurances that a material weakness will not be identified in the future, which if identified and not properly corrected, could materially adversely affect our operations and result in material misstatements in our financial statements. In addition to the factors described in this paragraph, as well as those factors identified from time to time in our filings with the Securities and Exchange Commission, Part I, Item 1A Risk Factors of this Annual Report on Form10-K contains a list and description of uncertainties, risks and other matters that may affect the Company. Readers should carefully review these forward-looking statements and risk factors and not place undue reliance on our forward-looking statements.
This Annual Report on Form10-K includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See “Forward-Looking Statements” above. Factors that could cause or contribute to such risks and uncertainties include those discussed in Item 1A. “Risk Factors.” In addition to the risk factors discussed herein, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these risks and uncertainties develops into actual events, our business, financial condition or results of operations could be adversely affected.
Unless the context requires otherwise, references in this Annual Report on
Such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted by law, our rights to our trademarks.
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Our website isSecurities and Exchange Commission (“SEC”).SEC. The SEC maintains an internet site containing these filings and other information regarding Meridian atAnnual Report on Form
Type of Segment Information |
| |
Physical locations and activities | Item 2. “Properties” | |
Revenue by geographic region | Item 7. “Management’s Discussion and Analysis of Financial Condition & Results of Operations” (hereafter “MD&A”) | |
Financial information |
Overview of
Our
50% of our consolidated net revenues.
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Our clinical diagnostic products span a broad menu of testing platforms and technologies, and also include transport media that store and preserve specimen samples from patient collection to laboratory testing. Our testing platforms include:
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Enzyme-linked Immunoassay (PREMIER brand) – batch immunoassay platform that can process up to 96 tests per run; is highly accurate and economical; and is adaptable to automation.
Anodic Stripping Voltammetry (LeadCare brand)– electrical chemical sensor platform for quantitative determination of lead levels in blood.
Our clinical diagnostic products are comprised of products used principally in the detection of infectious diseases caused by various bacteria, viruses, parasites and pathogens, along with the LeadCare brand of tests for quantitative determination of blood lead levels. These products are grouped into the following product families:
Gastrointestinal Assays
Includes tests for the following, among others:C. difficile, EnterohemorrhagicE. coli,Campylobacter jejuni (Campy),H. pylori,Cryptosporidium, giardia lamblia, andcalprotectin.
Respiratory Illness Assays
Includes tests for the following, among others: Group AStreptococcus (strep throat), Influenza,M. pneumoniae (Mycoplasma),Bordetella pertussis (whooping cough), and respiratory syncytial virus (RSV).
Blood Chemistry Assays
Tests for elevated lead levels in blood.
Other Assays
Includes tests for the following, among others: Group BStreptococcus, Chlamydia trachomatis,Neisseria gonorrhea, Herpes Simplex Virus Type 1 & Type 2, and Malaria.
Our product portfolio includes over 140just under 200 diagnostic tests and transport media, and is marketed to acute care hospitals, reference laboratories, outpatient clinics and physician office laboratories in over 70 countries around the world.
Our testing platforms include: Real-time PCR Amplification (Revogene brand); Isothermal DNA Amplification (Alethia brand); Lateral Flow Immunoassay using fluorescent chemistry (Curian brand); Rapid Immunoassay (Immuno
the BreathTek business, strengthened our position in
The
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Americas
In the Americas, our sales and distribution network consists ofnetworks. We have a direct sales force complemented by independent distributors. The use of independent distributors allows our products to reach any size health care facility and also provides our customersin four countries, covering the option to purchase our products directly from Meridian or through an authorized distributor. Two independent distributors accounted for 10% or more of consolidated revenues in fiscal 2018, 2017 and 2016: Cardinal Healthcare CorporationUnited States (“Cardinal”U.S.”) and Thermo Fisher Scientific (“Fisher”). Our Diagnostics segment revenues from Cardinal were approximately $21,000, $22,000 and $20,000 during fiscal 2018, 2017 and 2016, respectively. Our Diagnostics segment revenues from Fisher were approximately $22,000, $18,000 and $20,000 during fiscal 2018, 2017 and 2016, respectively.
certain major markets in the EMEA
In region (i.e., in Europe, the Middle East and Africa (“EMEA”),Africa). We also use independent distributors either in a complementary manner with our sales and distribution network consists of direct sales personnelforce (e.g., the U.S.) or solely to supply our products to
ROW
With the exception of Australia and China, where we utilize direct sales personnel, we utilize independent distributors throughout the restfiscal 2021, with each contributing 10% or greater of the world (“ROW”).
Diagnostics segment’s net revenues.
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In September 2021, the U.S. Patent and Trademark Office granted to Meridian Bioscience Canada Inc. (a wholly owned subsidiary) and Laval University a patent for our current Revogene test device and its microfluidic use in our Revogene instrument.
Our urea breath test for
Our Diagnostics segment facilities are certified to ISO 13485:2016.
Seasonal Factors and Sporadic Outbreaks
Our principal business is the sale of13485.
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Overview of
Most ofto a lesser degree, by researchers and
Products such as antibodies, antigens and reagents
Molecularmolecular biology products such as PCR/qPCR reagents, nucleotides and competent cells are marketed to academic/research and industrial customers. These products are used in measuringdetecting DNA and RNA in human, animal, plant and environmental applications. These
Market Trends
As certain global markets become increasingly accessible to us, most notably the Asia-Pacific region geographic expansion continues(e.g., China) are increasing their efforts in the development and manufacturing of infectious disease tests. We intend to be a significant strategy foruse the breadth of our Life Science segment, along with furtherproduct portfolio, particularly molecular reagents, to continue to increase the penetration into industrial markets withof our molecular component products.
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The academic/research market is highly fragmented. Individual purchases are typically of small quantities. The breadth of product offerings, quality, price and service, includingon-line capabilities and technical resources, are important factors to building customer loyalty and repeat purchases.
us.
The focus of this
33 within MD&A.
Acquisitions
Acquisitions have played an important role in the growth of our businesses. Our acquisition objectives include, among other things: (i) enhancing product offerings; (ii) improving product distribution capabilities; (iii) providing access to new markets; and/or (iv) providing access to key biologicals or new technologies that lead to new products. Although we cannot provide assurance that we will consummate additional acquisitions in the future, nor can we provide assurance that any acquisitions will accomplish these objectives, we expect that the potential for acquisitions will continue to provide opportunities for revenue and earnings growth in the future.
During March 2016, we acquired all of the outstanding common stock of Magellan. Details of the Magellan acquisition are set forth in Note 3 of the accompanying Consolidated Financial Statements.
1069.
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Fluctuations in foreign currency exchange rates sincein fiscal 20172021 compared to fiscal 2020 had an approximate $2,200$9,200 favorable impact on fiscal 2018consolidated 2021 net revenues; $1,400$1,300 within the Diagnostics segment and $800$7,900 within the Life Science segment. This compares to$1,200$1,250 unfavorable impact on consolidated net revenues in fiscal 2017; $4002020; $150 within the Diagnostics segment and $800$1,100 within the Life Science segment. Due to natural hedge relationships with expenses, both costIn fiscal 2019, the unfavorable effect on net revenues totaled $2,200; $1,150 within the Diagnostics segment and $1,050 within the Life Science segment.
Meridian Employees | 2021 | |||
Salaried workforce | 543 | |||
Managers and above | 159 | |||
Part-time employees | 27 | |||
Average age | 43 | |||
Average length of service in years | 7 | |||
Employee turnover rate (voluntary) | 19 | % | ||
Fiscal 2021 net revenues per employee (in thousands) | $ | 415 |
Equal Employment Opportunity Table (by number of employees) U.S. Employee Diversity as of September 30, 2021 | ||||||||||||||||||||||||||||||
Job category | Gender | White | Black/African American | Hispanic/Latino | Asian | American Indian/Alaskan Native | Two or more races | Total | ||||||||||||||||||||||
Executive/senior level officials and managers | Male | 12 | — | — | — | — | — | 12 | ||||||||||||||||||||||
Female | 3 | — | 1 | — | — | — | 4 | |||||||||||||||||||||||
First/mid-level officials and managers | Male | 41 | 4 | 2 | 3 | — | — | 50 | ||||||||||||||||||||||
Female | 36 | 4 | — | 4 | — | 1 | 45 | |||||||||||||||||||||||
Professionals | Male | 60 | 4 | 4 | 5 | — | 1 | 74 | ||||||||||||||||||||||
Female | 71 | 9 | 5 | 9 | — | 2 | 96 | |||||||||||||||||||||||
All other | Male | 59 | 11 | 8 | 5 | — | 1 | 84 | ||||||||||||||||||||||
Female | 83 | 18 | 7 | 8 | — | 2 | 118 | |||||||||||||||||||||||
Total | Male | 172 | 19 | 14 | 13 | — | 2 | 220 | ||||||||||||||||||||||
Female | 193 | 31 | 13 | 21 | — | 5 | 263 |
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Revenues for our Diagnostics segment may be impacted by our reliance upon two key distributors in North America, seasonal factors and sporadic outbreaks, and changing diagnostic market conditions.
Key Distributors
Our Diagnostics segment’s revenues from sales through two U.S. distributors were approximately 29% and 28% of the Diagnostics segment’s total revenues for fiscal 2018 and fiscal 2017, respectively, or approximately 20% of each fiscal year’s consolidated revenues. These parties distribute our products and other laboratory products toend-user customers. The loss of either of these distributors could negatively impact our revenues and results of operations unless suitable alternatives were timely foundoperations.
operating results.
Seasonal Factors and Sporadic Outbreaks
Our principal business is the salesmall number of a broad range of diagnostic test kits for common gastrointestinal and respiratory infectious diseases, and elevated blood lead levels. Certain infectious diseases may be seasonal in nature, while others may be associated with sporadic outbreaks, such as foodborne illnesses or pandemics such as an influenza outbreak. While we believe that the breadththird-party manufacturers to produce certain of our diagnostic products and product lines reduces the risk that infections subjectcomponents. The operations of our facilities or these third-party manufacturing facilities could be adversely affected by power failures, or natural or other disasters such as earthquakes, floods, tornadoes or terrorist threats. Although we carry insurance to seasonality and sporadic outbreaks will cause significant variability in diagnostic revenues, weprotect against certain business interruptions at our facilities, there can makebe no assurance that revenuessuch coverage will not be negatively impacted period over period byadequate or that such factors.
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Changing Diagnostic Market Conditions
Changes
Having been subject to thenow-repealed 2.3% medical device tax originally established as part of the U.S. health care reform legislation through December 31, 2015, the Company is unable to predict any future legislative changes or developments related to this excise tax or any other excise tax.
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As part of the Budget Control Act passed in August 2011 to extend the federal debt limit and reduce government spending, $1.2 trillion in automatic spending cuts (known as sequestration) were implemented in 2013. The sequestration requires a 2% cut in Medicare payments for all services, including our diagnostic tests, which, due to subsequent legislative amendments to the statute, will remain in effect through 2024 unless Congressional action is otherwise taken. Government research funding has also been reduced as a result of the sequestration. On January 2, 2013, the American Taxpayer Relief Act of 2012 also was signed into law, which, among other things, further reduces Medicare payments to providers such as hospitals, imaging centers and cancer treatment centers, and increases the statute of limitations period for the government to recover overpayments to providers from three to five years.
Such
Revenues forconsolidated financial condition, and results of operations.
Our Life Science segment’s revenues from two diagnostic manufacturing customers were 18% and 17%create additional risk to our results of operations: (i) continuing uncertainties in the eurozone; (ii) the effects of climate change regulation; (iii) the global effects of the Life Science segment’s total revenues for fiscal 2018ongoing
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Intense competition could adversely affectbusiness in several ways, including limiting our profitability.
The marketscustomers’ ability to obtain sufficient credit or pay for our products within the terms of sale. Competition could further intensify among the manufacturers and services are characterized by substantial competitiondistributors with whom we compete for volume and rapid change. Hundreds of companies around the world supply diagnostic testsmarket share, resulting in lower net revenue due to steeper discounts and immunoassay and molecular reagents. These companies range from multinational health care entities, for which diagnostics is one line of business,product
We expect to face increased competition resulting from expiration of our H. pylori patents.
The patents for ourH. pylori products, owned by us, expiredbecome capacity constrained or insolvent, it could result in May 2016a reduction or interruption in the U.S. and in May 2017 in countries outside the U.S. We expect competition with respect to ourH. pylori products, high margin products which represent approximately 16% of our total revenues, tosupplies or a significant increase in the near future,price of supplies.
operations.
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Risks Affecting our Manufacturing Operations
We are subject to comprehensive regulation, and our ability to earn profits
Medical device diagnostics is a highly regulated industry. We cannot provide assurance that we will be able to obtain necessary governmental clearancesmore likely or approvals, or timely clearances or approvals, to market future productspronounced in the United States and other countries. Costs and difficulties in complying with laws and regulations administered by the U.S. Food and Drug Administration, the U.S. Department of Agriculture, the U.S. Department of Commerce, the U.S. Drug Enforcement Agency, the Centers for Disease Control, or other regulators can result in unanticipated expenses and delays, and interruptions to the sale of new and existing products.
Regulatory approval can be a lengthy, expensive and uncertain process, making the timing and costs of approvals difficult to predict. Failure to comply with these regulations can result in delays in obtaining authorization to sell products, seizure or recall of products, suspension or revocation of authority to manufacture or sell products, and other civil or criminal sanctions.
If we oremerging markets, where our third-party vendors fail to comply with FDA regulations relating to the manufacturing of our products or any component part, weoperations may be subject to fines, injunctions and penalties, and our abilitygreater uncertainty due to commercially distribute and sell our products may be negatively impacted.
Our diagnostics manufacturing facilities, and the manufacturing facilities of any of our third-party diagnostic component manufacturers or critical suppliers, are required to complyincreased volatility associated with the FDA’s Quality System Regulation (“QSR”) which sets forth minimum standards fordeveloping nature of their economic, legal, and governmental systems.
FDA enforcement actions, which include seizure, injunction and criminal prosecution, could result in total or partial suspension of a facility’s production and/or distribution, product recalls, fines, suspension of the FDA’s review of product applications, and/or the FDA’s issuance of adverse publicity. Thus, an adverse inspection could force a shutdown of our manufacturing operations or a recall of our products. Adverse inspections could also delay FDA approval of our products and could have an adverse effect on our production, sales and profitability.
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We and any of our third-party vendors may also encounter other problems during manufacturing including failure to follow specific protocols and procedures, equipment malfunction, and environmental factors, any of which could delay or impede our ability to meet demand. The manufacture of our product also subjects us to risks that could harm our business, including problems relating to our facilities and errors in manufacturing components that could negativelyadversely affect the efficacy or safety of our products or cause delays in shipment of our products. Any interruption or delay in the manufacture of the product, or any of its components could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products, which could, therefore, have a material adverse effect on our business, financial condition, andor results of operations.
On June 29, 2017, the FDA, in connection with its Safety Notification related to Magellan’s lead testing systems for venous blood samples, issued its Form 483, Inspectional Observations, to Magellan. This was followed by the FDA issuing a Warning Letter related to the matter on October 23, 2017. While we remain committed to strengthening Magellan’s quality system
Additionally, as set forth in Item 3. “Legal Proceedings”, on April 17, 2018, Magellan received a subpoena from the United States Department of Justice (“DOJ”) regarding its LeadCare product line. The subpoena outlines documents to be produced, and we are cooperating with the DOJ in this matter. We maintain rigorous policies and procedures to promote compliance with applicable regulatory agencies and requirements, and are working with the DOJ to promptly respond to the subpoena. However, we cannot predict when the investigation will be resolved, the outcome of the investigation, or its potential impact on Meridian.
See a more detailed discussion of these matters within MD&A on page 32.
Significant interruptions in production at our principal manufacturing facilities and/or third-party manufacturing facilities would adversely affect our business and operating results.
Products and services manufactured at facilities we own or lease comprised a majority of our revenues. Our global supply of these products and services is dependent on the uninterrupted and efficient operation of these facilities. In addition, we currently rely on a small number of third-party manufacturers to produce certain of our diagnostic products and product components. The operations of our facilities or these third-party manufacturing facilitiesother trade measures could be adversely affected by power failures, or natural or other disasters such as earthquakes, floods, tornadoes or terrorist threats. Although we carry insurance to protect against certain business interruptions at our facilities, there can be no assurance that such coverage will be adequate or that such coverage will continue to remain available on acceptable terms, if at all. Any significant interruption in the Company’s or a third-party supplier’s manufacturing capabilities could materially and adversely affect our operating results.
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We dependsole-source suppliers for certain criticalproducts, components or raw materials components and finished products. A supply interruption could adversely affect our business.Raw Materials and ComponentsOur diagnostic products are madesourced from a wide variety of raw materials that are biological or chemical in nature, and that generally are available from multiple sources of supply. We sole-source certain raw materials and components, which makes it time consuming and costly to switch raw materials and components inFDA-cleared products. If certain suppliers fail to supply required raw materials or components, we will need to secure other sourcesthose countries, which may require us to conduct additional development and testing and obtain regulatory approval. These activities require significant time and resources, and there is no assurance thatinclude countries from which we import components or raw materials. We are currently not aware of any new sources will be secured or regulatory approvals, if necessary, will be obtained.We utilize third-party manufacturers for our instrumentation. One third party manufactures our proprietary Alethia Incubator/Reader (instrument), a component of our Alethia molecular system, and a separate third party currently assembles our proprietary LeadCare instruments. Upon commercialization in fiscal 2019, an additional third party will manufacture our Curian instrument. These instruments are manufactured exclusively for Meridian according to our specifications. While other manufacturers for these types of instruments are available, we source each instrument solely from one manufacturer to limit the costs involved in clearing the system for marketing in the United States. If these third-party manufacturers fail to supply us with instruments, we will need to secure another manufacturer, and it may take as long as 12 months to transfer instrument manufacturing. An interruption in the manufacturing of these instruments could have a material adverse effectimport duties imposed on our operating results.Additionally, one third party manufactures a certain reagent for use with our Alethia assays. While alternative suppliers exist, we elect to utilize this third party exclusively in order to maintain consistency in our materials, which is critical in complying with FDA regulatory requirements. An interruption in the manufacturing of these reagents could have a material adverse effect on our operating results.Finished ProductsWe outsource the manufacturing for certain finished diagnostic products to third parties. A disruption in the supply of these finished productsproducts. Any such new import duties or restrictions could have a material adverse effect on our business, untilresults of operations or financial condition. Moreover, these new tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. Certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods.
Fouroperate and, thus may adversely impact our businesses. In addition, there may be changes to existing trade agreements, like the North American Free Trade Agreement (“NAFTA”) and its anticipated successor agreement, the U.S.-Mexico-Canada Agreement (“USMCA”), which is still subject to approval by the U.S., Mexico and Canada, greater restrictions on free trade generally, and significant increases in tariffs on goods imported into the U.S., particularly tariffs on products manufactured exclusively for us by two separatein Mexico, among other possible changes. It remains unclear what the U.S. administration or foreign governments will or will not do with respect to tariffs, NAFTA, USMCA or other international trade agreements and independent companies accounted for 11%, 11%policies. Any changes to NAFTA (or subsequent trade agreements) could impact our operations in countries where we manufacture or sell products, or source components or materials, which could adversely affect our business and 12%results of consolidated revenues in fiscal 2018, 2017 and 2016, respectively. Meridian owns all rights and title to the FDA 510(k) clearances for these products.
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Activities undertaken by Meridian to reduce the risk of these sole-supplier arrangements include maintaining adequate inventory levels, supplier qualification procedures, supplier audits, site visits, and frequent communication. Additionally, we have identified potential alternate suppliers.
Risks Related to Intellectual Property and Product Liability
We may be unable to protect or obtain proprietary rights that we utilize or intend to utilize.
In developing and manufacturing our products, we employ a variety of proprietary and patented technologies. In addition, we have licensed, and expect to continue to license, various complementary technologies and methods from academic institutions and public and private companies. We cannot provide assurance that the technologies that we own or license provide protection from competitive threats or from challenges to our intellectual property. In addition, we cannot provide assurances that we will be successful in obtaining and retaining licenses or proprietary or patented technologies in the future.
See Item 3. “Legal Proceedings” for a discussion of the status of certain litigation related to our intellectual property.
Product infringement claims by other companies could result in costly disputes and could limit our ability to sell our products.
Litigation over intellectual property rights is prevalent in the diagnostic industry. As the market for diagnostics continues to grow and the number of participants in the market increases, we may increasingly be subject to patent infringement claims. It is possible that a third party may claim infringement against us. If found to infringe, we may attempt to obtain a license to such intellectual property; however, we may be unable to do so on favorable terms, or at all. Additionally, if our products are found to infringe on third-party intellectual property, we may be required to pay damages for past infringement and lose the ability to sell certain products, causing our revenues to decrease. Any substantial loss resulting from such a claim could have a material adverse effect on our profitability, and the damage to our reputation in the industry could have a material adverse effect on our business.
results of operations.
Other Risks Affecting Our Business
Our future success depends on our continued ability to attract, hire and retain highly qualified personnel, including our executive officers and scientific, technical, sales and marketing employees, and their ability to manage growth successfully.other forms of stockholder activism have been directed against numerous public companies. If such key employees were to leave and we were unable to obtain adequate replacements, our operating results could be adversely affected.
Our bank credit agreements impose restrictionsa proxy contest or an unsolicited takeover proposal is made with respect to our operations.
Our bank credit agreements contain a number of financial covenants that require us, to meet certain financial ratios and tests. If we fail to comply with the obligations in the credit agreements, we would be in default under the credit agreements. If an event of default is not cured or waived, it could result in acceleration of any indebtedness under our credit agreements, which could have a material adverse effect on our business. At September 30, 2018, we have $50,250 outstanding on a five-year term loan entered into in connection with the Magellan acquisition and no borrowings are outstanding under our $30,000 bank revolving credit facility.
We face risks related to global economic conditions.
We currently generate significant operating cash flows, which combined with access to the credit markets, provides us with discretionary funding capacity for research and development and other strategic activities. However, as an enterprise with global operations and markets, our operations and financial performance are in part dependent upon global economic conditions, and we could be negatively impacted by a global, regional or national economic crisis, including sovereign riskincur significant costs in the event of deterioration in the credit worthiness of or a default by local governments. We are particularly susceptible to the economic conditions in countries where government-sponsored health care systems are the primary payers for health care, including those countries within the European Union that are reducing their public expenditures in an effort to achieve cost savings. The uncertainty in global economic conditions poses a risk to the overall economy that could impact demand fordefending our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors, including financial institutions. As such, if global economic conditions deteriorate significantly, our business could be negatively impacted, including such areas as reduced demand for our products from a slow-down in the general economy, supplier or customer disruptions resulting from tighter credit markets, and/or temporary interruptions in our ability to conductday-to-day transactions through our financial intermediaries involving the payment to or collection of funds from our customers, vendors and suppliers. Whileto-date such factors have not had a significant negative impact on our results or operations, we continue to monitor and plan for the potential impact of these global economic factors.
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While the impact of the United Kingdom’s planned separation from the European Union (commonly referred to as “Brexit”), a final agreement oncompany, which is expected in the very near future, remains uncertain, the resulting immediate changes in foreign currency exchange rates have had a limited overall impact due to natural hedging. However, any predicted deterioration in the United Kingdom and European economic outlook maywould have an adverse effect on revenue growth, butour financial results. Shareholder activists may also seek to involve themselves in the extent of such effect cannot yet be quantified. In the longer term, it is possible that we will be directly impacted in a number of key areas including, without limitation, the hiringgovernance, strategic direction and retention of qualified staff, regulatory affairs, manufacturing, logistics, and increased tariffs. We are closely monitoring the Brexit developments in order to determine, quantify and proactively address changes as they become clear. Despite the Brexit developments, we do not expect macroeconomic conditions to have a significant impact on our liquidity needs, financial condition or results of operations although no assurances can be made in this regard. We intend to continue to fund our working capital requirements and dividends from current cash flows from operating activities and cash on hand. If needed, we also have an additional source of liquidity through our $30,000 bank revolving credit facility. Our liquidity needs may change if overall economic conditions worsen and/or liquidity and credit within the financial markets tightens for an extended period of time, and such conditions impact the collectability of our customer accounts receivable or impact credit terms withcompany. Such proposals may disrupt our vendors, or disruptbusiness and divert the supply of raw materials and services.
Breachesattention of our information technology systems could have a material adverse effect on our operations.
We rely on information technology systems to process, transmitmanagement and store electronic information in ourday-to-day operations. The secure processing, maintenanceemployees, and transmission of this information is criticalany perceived uncertainties as to our operations. Like many multinational corporations, our information technology systems may be subjected to computer viruses or other malicious codes, unauthorized access attempts, and cyber- or phishing-attacks. We also store certain information with third parties that could be subject to these types of attacks. Anyfuture direction resulting from such breach could compromise our networks, and the information stored therein could be accessed, publicly disclosed, lost or stolen. Such attacksa situation could result in our intellectual property and other confidential information being lost or stolen, disruption of our operations, and other negative consequences, such as increased costs for security measures or remediation costs, and diversion of management attention. Any such access, disclosure or otherthe loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption ofpotential business opportunities, be exploited by our operations, damagecompetitors, cause concern to our reputation, and/current or cause a loss of confidence in our productspotential customers, and services,make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business revenuesbusiness. In addition, actions of activist stockholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and competitive position. While we will continueprospects of our business.
Natural disasters, war and other events could adversely affect our future revenues and operating income.
Natural disasters (including pandemics), war, terrorism, labor disruptions and international conflicts, and actions taken by the United States and other governments or by our customers or suppliers in response to such events, could cause significant economic disruption and political and social instability in the United States and in areas outsideeffects of the United States in which we operate. These events could result in decreased demand for our products, adversely affect our manufacturing and distribution capabilities, or increase the costs for, or cause interruptions in, the supplycertain provisions of materials from our suppliers.
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Risks Related to Our Common Stock
Material weaknesses in our internal control over financial reporting could be identified, which if not properly corrected, could materially adversely affect our operations and result in material misstatements in our financial statements.
During fiscal 2017, the Company identified a material weakness in internal control over financial reporting, which has been remediated. However, the Company can make no assurances that a material weakness will not be identified in the future or that, if identified, it will be properly corrected. In the event we are unable to remediate a material weakness identified in the future, weOhio corporation law may be unable to provide holders of our securities with required financial information in a timely and reliable manner, and we may incorrectly report financial information. Either of these events could have a material adverse effect on our operations, investor, supplier and customer confidence in our reported financial information and/or the trading price of our common stock.
Additional stock issuance authorizations.
discourage takeover bids.
The market price
The market pricelitigation with third parties, regulatory action, loss of our common stock may be subject to significant fluctuationsbusiness due to numerous factors, including but not limited to the risks described in this “Risk Factors” section. In addition, the stock market in general, The NASDAQ Global Marketdisruption of operations and/or reputational damage, potential liability and the market for diagnostics companies in particular may experience a lossincreased remediation and protection costs, any of investor confidence. A loss of investor confidence may result in extreme price and volume fluctuations in our common stock that are unrelated or disproportionate to the operating performance of our business, our financial condition or results of operations. These broad market and industry factors may materially harm the market price of our common stock and expose us to securities class-action litigation. Class-action litigation, even if unsuccessful, could be costly to defend and divert management’s attention and resources, which could further materially harmhave a material adverse effect on our consolidated financial condition and results of operations.
- 25 -
There can In an effort to mitigate the financial impact such an attack might have on the Company, we maintain cyber liability insurance coverage. However, such coverage may be no assurance thatinsufficient to cover the full impact of a cyber-attack. Additionally, as cybersecurity risks become more sophisticated, we will continuemay need to pay dividends.
The declaration, amountincrease our investments in security measures which could have a material adverse effect on our consolidated financial condition and timingresults of the Company’s dividendsoperations.
business. At September 30, 2021, we had $60,000 outstanding on a $160,000 bank revolving credit facility.
- 26 -
On November 15, 2017, Barbara Forman filed a class action complaint in the United States District Court for the Southern District of Ohio naming Meridian, its Chief Executive Officer and Chief Financial Officer (in their capacities as such) as defendants. An amended complaint was filed on April 16, 2018 and the Company believes the essential elements of the amended complaint are the same. The complaint and the amended complaint are hereafter referred to as the “Complaint”. The Complaint seeks compensatory damages and attorneys’ fees. Meridian has filed a motion to dismiss the Complaint, to which the plaintiff responded on August 14, 2018. The motion has been fully briefed and remains pending before the court. We are unable to determine or predict the ultimate outcome or estimate the range of possible losses, if any. Accordingly, no provision for litigation losses has been included within the accompanying Consolidated Statement of Operations for fiscal 2018 or 2017.
On December 6, 2017, Michael Edelson filed a derivative complaint in the United States District Court for the Southern District of Ohio naming Meridian, its Chief Executive Officer, Chief Financial Officer and certain members of Meridian’s Board of Directors and Audit Committee (in their capacities as such) as defendants. The complaint alleges that Meridian made false and misleading representations concerning certain of Magellan’s lead test systems at or around the time of Meridian’s acquisition of Magellan and subsequent thereto, and the complaint alleges that certain members of the Board of Directors and Audit Committee breached their fiduciary duties in their oversight of the Company’s public disclosures and corporate governance matters. The complaint seeks compensatory damages, equitable relief relating to corporate governance matters and attorneys’ fees. The case has been stayed by agreement of the parties pending resolution of the motion to dismiss the class action described above. We are unable to determine or predict the ultimate outcome or estimate the range of possible losses, if any. Accordingly, no provision for litigation losses has been included within the accompanying Consolidated Statement of Operations for fiscal 2018 or 2017.
- 27 -
Approximately $600 of expense for attorneys’ fees related to the above two class action matters is included within the accompanying Consolidated Statement of Operations for fiscal 2018. The Company maintains an insurance policy covering these matters, which has a $500 deductible.
On October 9, 2018, the Company2021, 2020 and DiaSorin Inc. entered into a strategic collaboration to sell DiaSorin’sHelicobacter pylori stool antigen test to detectH. pylori for use2019, respectively. See “Lead Testing Matters” beginning on its automated LIAISON platform under the Meridian brand name worldwide. The new collaboration results in the terminationpage 29 within MD&A.
- 28 -
Refer to “Forward-Looking Statements” following the Index in front of this Form10-K and Item 1A “Risk Factors” on pages 14 through 26 of this Annual Report.
“Quarterly Financial Data (Unaudited)” relating to our dividends in Note 11
During fiscal 2018 and 2017, theits quarterly cash dividend, which had previously been established at an indicated annual cash dividend rate was established atof $0.50 per share (down from $0.80 per sharefor fiscal 2019. The dividend was suspended as part of the Company’s regular evaluation of its capital allocation, with the action taken in fiscal 2016). Theorder to deploy cash into new product development activities and to preserve capital resources and liquidity for general corporate purposes. Any declaration and amount of dividends will be determined by the board of directors in its discretion based upon its evaluation of earnings, cash flow requirements, and future business developments and opportunities, including acquisitions. At its meeting on November 7, 2018,and any other factors the board of directors announced a continuation of the $0.50 indicated annual dividend rate per share for fiscal 2019.determines are relevant to its evaluation. At this time, we do not expect to resume paying cash dividends. We paid dividends of $0.50, $0.575 and $0.80$0.25 per common share in fiscal 2018, 2017 and 2016, respectively. Except as may otherwise be prohibited by applicable law, there are no restrictions on cash dividend payments.
2019.
in each of the peer groups (including reinvestment of dividends) on September 30, 2016, and its relative performance is tracked through September 30, 2021.
1. | The six companies included in the Company’s first customized peer group (“2020 Peer Group”) are: Bio-Rad Laboratories, Inc., bioMerieux S.A., Myriad Genetics, Inc., OraSure Technologies, Inc., Quidel Corporation, and Trinity Biotech Plc. |
2. | The ten companies included in the Company’s second customized peer group (“2021 Peer Group”) are: Bio-Rad Laboratories, Inc.,Bio-Techne Corporation, bioMerieux S.A., DiaSorin S.p.a., Hologic, Inc., Myriad Genetics, Inc., OraSure Technologies, Inc., Qiagen N.V., Quidel Corporation, and Trinity Biotech Plc. |
SELECTED FINANCIAL DATA
Income Statement Information (Amounts in thousands, except per share data) | ||||||||||||||||||||
For the Year Ended September 30, | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Net revenues | $ | 213,571 | $ | 200,771 | $ | 196,082 | $ | 194,830 | $ | 188,832 | ||||||||||
Gross profit | 130,461 | 124,292 | 127,212 | 121,882 | 117,243 | |||||||||||||||
Operating income | 31,584 | 37,382 | 51,378 | 56,060 | 52,392 | |||||||||||||||
Net earnings | 23,849 | 21,557 | 32,229 | 35,540 | 34,743 | |||||||||||||||
Basic earnings per share | $ | 0.56 | $ | 0.51 | $ | 0.77 | $ | 0.85 | $ | 0.84 | ||||||||||
Diluted earnings per share | $ | 0.56 | $ | 0.51 | $ | 0.76 | $ | 0.85 | $ | 0.83 | ||||||||||
Cash dividends declared per share | $ | 0.500 | $ | 0.575 | $ | 0.800 | $ | 0.800 | $ | 0.790 | ||||||||||
Book value per share | $ | 4.14 | $ | 4.02 | $ | 3.95 | $ | 3.96 | $ | 3.87 |
Balance Sheet Information | ||||||||||||||||||||
As of September 30, | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Current assets | $ | 139,053 | $ | 133,875 | $ | 126,791 | $ | 119,422 | $ | 108,832 | ||||||||||
Current liabilities | 24,173 | 22,887 | 22,571 | 15,251 | 13,735 | |||||||||||||||
Total assets | 251,377 | 249,777 | 252,028 | 183,282 | 176,929 | |||||||||||||||
Long-term debt obligations | 50,180 | 54,647 | 58,360 | — | — | |||||||||||||||
Shareholders’ equity | 175,418 | 169,585 | 166,472 | 165,873 | 161,029 |
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Results
Fourth Quarter
Net earnings for the fourth quarter of fiscal 2018 decreased 5%Management’s Discussion and Analysis is to $5,434, or $0.13 per diluted share, from net earnings for the fourth quarter of fiscal 2017 of $5,726, or $0.13 per diluted share. The fiscal 2018 fourth quarter results include $4,576 of costs associated with the transition to our new CEO, other restructuring costs and litigation costs (collectively, “restructuring and litigation costs”), along with certainone-time tax effectsprovide an understanding of the U.S. tax reform act enactedfinancial condition, changes in December 2017 (combined impact on net earningsconsolidated financial condition and results of $3,145, or $0.07 per diluted share). The fiscal 2017 fourth quarter results included $762operations of restructuring and litigation costs (impact on net earnings of $495, or $0.01 per diluted share). Consolidated revenues forMeridian Bioscience, Inc. (“Meridian”, the fourth quarter of fiscal 2018 totaled $53,100, an increase of 7% compared to the fourth quarter of fiscal 2017, also increasing 7% on a constant-currency basis.
Revenues for the Diagnostics segment for the fourth quarter of fiscal 2018 increased 2% compared to the fourth quarter of fiscal 2017 (also 2% on a constant-currency basis)“Company”, comprised of a 6% decrease in molecular assay products and a 5% increase in immunoassay and blood chemistry assay products. With a 9% increase in its molecular reagents products and a 27% increase in its immunological reagents products, revenues for our Life Science segment increased 19% in the fourth quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017. On a constant-currency basis, revenues for our Life Science Segment increased 20%.
The fourth quarter revenues reflect improvement in our respiratory illness and blood chemistry assay product lines, being partially offset by decreased revenues for our gastrointestinal assays. Both Life Science product categories performed well, reflecting continued growth in the Asia-Pacific region and high volume sales to IVD manufacturer customers.
Fiscal Year
Net earnings for fiscal 2018 increased 11% to $23,849, or $0.56 per diluted share, from net earnings for fiscal 2017 of $21,557, or $0.51 per diluted share. Fiscal 2018 results include $13,051 of restructuring and litigation costs, along with certainone-time tax effects of the U.S. tax reform act enacted in December 2017 (combined impact on net earnings of $7,856, or $0.18 per diluted share). Fiscal 2017 results include $762 of restructuring and litigation costs, and a $6,628 impairment charge against Diagnostics segment goodwill (combined impact on net earnings of $7,123, or $0.17 per diluted share). Consolidated revenues increased 6% to $213,571 for fiscal 2018 compared to fiscal 2017, increasing 5% on a constant-currency basis.
- 31 -
In fiscal 2018, revenues for the Diagnostics segment increased 5% compared to fiscal 2017 (4% on a constant-currency basis)“We”). This increase is comprised of relatively flat revenues for our molecular assay products and a 6% increase in immunoassay and blood chemistry assay products. With a 12% increase in its molecular reagents business and a 9% increase in its immunological reagents business, revenues of our Life Science segment increased 10% during fiscal 2018 compared to fiscal 2017, increasing 9% on a constant-currency basis.
Update on Lead Testing
We offer multiple lead testing systems that are capable of processing both capillary and venous blood samples. Our LeadCare Plus and LeadCare Ultra systems, which accounted for approximately 10% of lead testing annual revenues in fiscal 2016, are used predominantly with venous blood samples. Typically, the Ultra and Plus systems are used in a reference lab setting. Our LeadCare II system is predominantly used with capillary blood samples and is typically used in a physician office setting. LeadCare II system revenue represented approximately 90% of our lead testing product revenues in fiscal 2016. The LeadCare II system is the onlypoint-of-care system for testing lead exposure, receiving CLIA-waived status. Other methods for testing blood lead levels include Graphite Furnace Atomic Absorption Spectroscopy and Mass Spectrometry, which are typically performed in hospital and reference laboratory settings.
On May 17, 2017, the FDA issued a field safety notice advising customers to discontinue use of our lead testing systems with venous blood samples. This field safety notice was followed by product recall notices on May 25th and June 5th. Subsequent to the issuances of these field safety and product recall notices, the FDA completed an inspection of our Quality System for our lead testing manufacturing facility in Billerica, Massachusetts, and issued its Form 483, Inspectional Observations, on June 29, 2017, which was expectedly followed by a Warning Letter issued on October 23, 2017. During our 2017 third fiscal quarter, it was determined that a potential impairment of goodwill recorded in connection with the acquisition of Magellan had occurred (i.e., a “triggering event”). An impairment charge of $6,628, on both apre-tax andafter-tax basis, was recorded during the fiscal 2017 third quarter as set forth in Note 1(h)“Summary of Significant Accounting Policies – Intangible Assets” of the accompanying Consolidated Financial Statements.
The Warning Letter requires periodic reporting on our remediation progress. To date, we have satisfied our post-Warning Letter reporting requirements with the FDA. During fiscal 2018 and 2017, we incurred approximately $1,600 in aggregate remediation costs, primarily related to regulatory consultants and studies required to reinstate our venous blood sample claim, and we expect to incur additional costs during fiscal 2019. In the course of remediation, we may encounter additional matters that warrant notifications to the FDA and/or customers regarding the use of its products. At this time, we do not believe that any such notifications would impact the ability to use the LeadCare systems with capillary blood samples.
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As set forth in Item 3. “Legal Proceedings”, on April 17, 2018, Magellan received a subpoena from the United States Department of Justice (“DOJ”) regarding its LeadCare product line. The subpoena outlines documents todiscussion should be produced, and we are cooperating with the DOJ in this matter. We maintain rigorous policies and procedures to promote compliance with applicable regulatory agencies and requirements, and are working with the DOJ to promptly respond to the subpoena. However, we cannot predict when the investigation will be resolved, the outcome of the investigation, or its potential impact on Meridian.
USE OFNON-GAAP MEASURES
We have supplemented our reported GAAP financial information with information on net earnings, basic earnings per share and diluted earnings per share excluding the effects of: (i) restructuring and litigation costs (fiscal 2018, 2017 and 2016); (ii) the impairment charge against Diagnostics segment goodwill (fiscal 2017); (iii) acquisition-related costs (fiscal 2016); and (iv) certainone-time tax effects of the tax reform act – each of which is anon-GAAP measure. We have provided in the tables below reconciliations to the net earnings, basic earnings per share and diluted earnings per share amounts reported under U.S. Generally Accepted Accounting Principles. We believe that this information is useful to those who read our financial statements and evaluate our operating results because:
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Revenue reported on a constant-currency basis is also anon-GAAP measure and is calculated by applying current period average foreign currency exchange rates to each of the comparable periods. Management analyzes revenue on a constant-currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have anon-operating impact on revenue, management believes that evaluating revenue changes on a constant-currency basis provides an additional and meaningful assessment of revenue to both management and investors.
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Thesenon-GAAP measures may be different fromnon-GAAP measures used by other companies. In addition, thesenon-GAAP measures are not based on any comprehensive set of accounting rules or principles.Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should only be used to evaluate our results in conjunction with corresponding GAAP measures.
2018 | 2017 | 2016 | ||||||||||
Net Earnings - | ||||||||||||
U.S. GAAP basis | $ | 23,849 | $ | 21,557 | $ | 32,229 | ||||||
Restructuring costs(1) | 6,430 | 87 | 431 | |||||||||
Litigation costs(1) | 3,205 | 408 | — | |||||||||
Goodwill impairment charge(2) | — | 6,628 | — | |||||||||
Acquisition-related costs(1) | — | — | 1,233 | |||||||||
One-time benefit from tax law change | (2,655 | ) | — | — | ||||||||
Repatriation transition tax | 876 | — | — | |||||||||
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Adjusted earnings | $ | 31,705 | $ | 28,680 | $ | 33,893 | ||||||
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Net Earnings per Basic Common Share - | ||||||||||||
U.S. GAAP basis | $ | 0.56 | $ | 0.51 | $ | 0.77 | ||||||
Restructuring costs(1) | 0.15 | — | 0.01 | |||||||||
Litigation costs(1) | 0.08 | 0.01 | — | |||||||||
Goodwill impairment charge(2) | — | 0.16 | — | |||||||||
Acquisition-related costs(1) | — | — | 0.03 | |||||||||
One-time benefit from tax law change | (0.06 | ) | — | — | ||||||||
Repatriation transition tax | 0.02 | — | — | |||||||||
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Adjusted Basic EPS | $ | 0.75 | $ | 0.68 | $ | 0.81 | ||||||
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Net Earnings per Diluted Common Share - | ||||||||||||
U.S. GAAP basis | $ | 0.56 | $ | 0.51 | $ | 0.76 | ||||||
Restructuring costs(1) | 0.15 | — | 0.01 | |||||||||
Litigation costs(1) | 0.07 | 0.01 | — | |||||||||
Goodwill impairment charge(2) | — | 0.16 | — | |||||||||
Acquisition-related costs(1) | — | — | 0.03 | |||||||||
One-time benefit from tax law change | (0.06 | ) | — | — | ||||||||
Repatriation transition tax | 0.02 | — | — | |||||||||
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Adjusted Diluted EPS(3) | $ | 0.74 | $ | 0.67 | $ | 0.80 | ||||||
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- 34 -
REVENUE OVERVIEW
Belowthe Consolidated Financial Statements and notes. It should be noted that the terms revenue and/or revenues are analysesutilized throughout the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) to indicate net revenue and/or net revenues. In addition, throughout the MD&A, we refer to certain product tradenames and trademarks, which are protected under applicable intellectual property laws and are our property. Solely for convenience, these tradenames and trademarks are referred to without the
Revenues for each of our segmentsLife Science segment during fiscal 2021, and the geographic regions therein are shown below.
2018 vs. 2017 | 2017 vs. 2016 | |||||||||||||||||||
2018 | 2017 | 2016 | Inc (Dec) | Inc (Dec) | ||||||||||||||||
Diagnostics- | ||||||||||||||||||||
Americas | $ | 126,647 | $ | 119,685 | $ | 123,187 | 6 | % | (3 | )% | ||||||||||
EMEA | 21,231 | 20,273 | 19,024 | 5 | % | 7 | % | |||||||||||||
ROW | 2,576 | 3,563 | 2,903 | (28 | )% | 23 | % | |||||||||||||
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Total Diagnostics | 150,454 | 143,521 | 145,114 | 5 | % | (1 | )% | |||||||||||||
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Life Science- | ||||||||||||||||||||
Americas | 20,792 | 19,978 | 19,484 | 4 | % | 3 | % | |||||||||||||
EMEA | 24,530 | 21,968 | 20,075 | 12 | % | 9 | % | |||||||||||||
ROW | 17,795 | 15,304 | 11,409 | 16 | % | 34 | % | |||||||||||||
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Total Life Science | 63,117 | 57,250 | 50,968 | 10 | % | 12 | % | |||||||||||||
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Consolidated | $ | 213,571 | $ | 200,771 | $ | 196,082 | 6 | % | 2 | % | ||||||||||
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% of total revenues- | ||||||||||||||||||||
Diagnostics | 70 | % | 71 | % | 74 | % | ||||||||||||||
Life Science | 30 | % | 29 | % | 26 | % | ||||||||||||||
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Total | 100 | % | 100 | % | 100 | % | ||||||||||||||
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Ex-Americas | 31 | % | 30 | % | 27 | % | ||||||||||||||
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See Note 2,Overview- By Product Platform/TypeThe revenues generated by each of our reportable segments result primarily from the sale Recognition”following segment-specific categories of products:
Diagnostics
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Life Science
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2018 vs. 2017 | 2017 vs. 2016 | |||||||||||||||||||
2018 | 2017 | 2016 | Inc (Dec) | Inc (Dec) | ||||||||||||||||
Diagnostics- | ||||||||||||||||||||
Molecular assays | $ | 34,011 | $ | 33,901 | $ | 38,302 | — | % | (11 | )% | ||||||||||
Immunoassays & blood chemistry assays | 116,443 | 109,620 | 106,812 | 6 | % | 3 | % | |||||||||||||
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Total Diagnostics | $ | 150,454 | $ | 143,521 | $ | 145,114 | 5 | % | (1 | )% | ||||||||||
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Life Science- | ||||||||||||||||||||
Molecular reagents | $ | 24,613 | $ | 21,998 | $ | 20,506 | 12 | % | 7 | % | ||||||||||
Immunological reagents | 38,504 | 35,252 | 30,462 | 9 | % | 16 | % | |||||||||||||
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Total Life Science | $ | 63,117 | $ | 57,250 | $ | 50,968 | 10 | % | 12 | % | ||||||||||
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% of Diagnostics revenues- | ||||||||||||||||||||
Molecular assays | 23 | % | 24 | % | 26 | % | ||||||||||||||
Immunoassays & blood chemistry assays | 77 | % | 76 | % | 74 | % | ||||||||||||||
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Total Diagnostics | 100 | % | 100 | % | 100 | % | ||||||||||||||
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% of Life Science revenues- | ||||||||||||||||||||
Molecular reagents | 39 | % | 38 | % | 40 | % | ||||||||||||||
Immunological reagents | 61 | % | 62 | % | 60 | % | ||||||||||||||
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Total Life Science | 100 | % | 100 | % | 100 | % | ||||||||||||||
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Gastrointestinal Assays
During fiscal 2018, revenues from our gastrointestinal products, which include tests forC. difficile,H. pylori and certain foodborne pathogens, among others, totaled $78,803. This represents a 1% increase from fiscal 2017 and follows a 12% decrease
Contributing to the competitive pressures being faced in this product category, the patents for ourH. pylori products, owned by us, expired in May 2016customers in the U.S. and in May 2017 in countries outside the U.S. We expect competition with respect to ourH. pylori;
Respiratory Illness Assays
Including tests for influenza, RSV, Group A Strep, Pertussis, and Mycoplasma pneumonia, Influenza, and Pertussis, among others, our respiratory illnessreflecting the decreased focus on testing for these illnesses throughout the
Blood Chemistry Assays
Revenues from our sale of products to test for elevated levels of lead in blood increased 5% during fiscal 2018 to a total of $19,109. This follows fiscal 2017 revenues from such products increasing 2% over the twelve months ended September 30, 2016, of which the six months ended March 31, 2016 were prior to Meridian’s ownership of Magellan. These increases were achieved despite the effect on venous blood testing revenue of the previously-notedFDA-related activities.
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Life Science Products
During fiscal 2018, revenues from our Life Science segment increased 10%, with revenues from molecular reagent sales increasing 12%2021, compared to fiscal 2017 and revenues from immunological reagent sales increasing 9%2020).
products for
2018 | 2017 | 2016 | 2018 vs. 2017 Inc (Dec) | 2017 vs. 2016 Inc (Dec) | ||||||||||||||||
Gross Profit | $ | 130,461 | $ | 124,292 | $ | 127,212 | 5 | % | (2 | )% | ||||||||||
Gross Profit Margin | 61 | % | 62 | % | 65 | % | -1 point | -3 points |
The overall
2021 | 2020 | 2021 vs. 2020 Inc (Dec) | ||||||||||
Gross Profit | $ | 201,148 | $ | 156,248 | 29 | % | ||||||
Gross Profit Margin | 63 | % | 62 | % | 1 point |
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Our overall operations consistimpacts of the salepreviously discussed LeadCare product recall (see “Lead Testing Matters” above).
—
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
Fiscal 2016: | ||||||||||||||||||||
Diagnostics | $ | 11,412 | $ | 21,339 | $ | 21,483 | $ | — | $ | 54,234 | ||||||||||
Life Science | 2,779 | 8,717 | 7,946 | — | 19,442 | |||||||||||||||
Unallocated expenses | — | — | — | 2,158 | 2,158 | |||||||||||||||
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Total 2016 Expenses | $ | 14,191 | $ | 30,056 | $ | 29,429 | $ | 2,158 | $ | 75,834 | ||||||||||
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Fiscal 2017: | ||||||||||||||||||||
Diagnostics | $ | 13,433 | $ | 22,942 | $ | 23,603 | $ | — | $ | 59,978 | ||||||||||
Life Science | 2,603 | 9,446 | 7,493 | — | 19,542 | |||||||||||||||
Unallocated expenses | — | — | — | 7,390 | 7,390 | |||||||||||||||
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Total 2017 Expenses | $ | 16,036 | $ | 32,388 | $ | 31,096 | $ | 7,390 | $ | 86,910 | ||||||||||
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Fiscal 2018: | ||||||||||||||||||||
Diagnostics | $ | 13,772 | $ | 24,990 | $ | 26,257 | $ | — | $ | 65,019 | ||||||||||
Life Science | 3,098 | 9,478 | 8,231 | — | 20,807 | |||||||||||||||
Unallocated expenses | — | — | — | 13,051 | 13,051 | |||||||||||||||
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Total 2018 Expenses | $ | 16,870 | $ | 34,468 | $ | 34,488 | $ | 13,051 | $ | 98,877 | ||||||||||
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Research & Development | Selling & Marketing | General & Administrative | Other (1)(2) | Total Operating Expenses | ||||||||||||||||
Fiscal 2020: | ||||||||||||||||||||
Diagnostics | $ | 21,454 | $ | 21,172 | $ | 23,233 | $ | (1,916 | ) | $ | 63,943 | |||||||||
Life Science | 2,275 | 5,314 | 11,755 | 200 | 19,544 | |||||||||||||||
Corporate | — | — | 9,357 | 2,080 | 11,437 | |||||||||||||||
Total 2020 Expenses | $ | 23,729 | $ | 26,486 | $ | 44,345 | $ | 364 | $ | 94,924 | ||||||||||
Fiscal 2021: | ||||||||||||||||||||
Diagnostics | $ | 21,406 | $ | 21,430 | $ | 24,915 | $ | 5,079 | $ | 72,830 | ||||||||||
Life Science | 2,505 | 5,350 | 13,265 | — | 21,120 | |||||||||||||||
Corporate | — | — | 11,361 | 2,803 | 14,164 | |||||||||||||||
Total 2021 Expenses | $ | 23,911 | $ | 26,780 | $ | 49,541 | $ | 7,882 | $ | 108,114 | ||||||||||
(1) | Diagnostics segment fiscal 2020 reflects negative expense amount due to $6,293 adjustment to fair value of the acquisition consideration related to GenePOC. |
(2) | LeadCare product recall expenses are included within the Diagnostics segment’s fiscal 2021 Other expenses. |
Comparisons to Prior Year
Periods
Research & Development | Selling & Marketing | General & Administrative | Other | Total Operating Expenses | ||||||||||||||||
2016 Expenses | $ | 14,191 | $ | 30,056 | $ | 29,429 | $ | 2,158 | $ | 75,834 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of Revenues | 7 | % | 15 | % | 15 | % | 1 | % | 39 | % | ||||||||||
Fiscal 2017 Increases (Decreases): | ||||||||||||||||||||
Diagnostics | 2,021 | 1,603 | 2,120 | — | 5,744 | |||||||||||||||
Life Science | (176 | ) | 729 | (453 | ) | — | 100 | |||||||||||||
Restructuring costs | — | — | — | (543 | ) | (543 | ) | |||||||||||||
Litigation costs | — | — | — | 628 | 628 | |||||||||||||||
Goodwill impairment charge | — | — | — | 6,628 | 6,628 | |||||||||||||||
Acquisition-related costs | — | — | — | (1,481 | ) | (1,481 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2017 Expenses | $ | 16,036 | $ | 32,388 | $ | 31,096 | $ | 7,390 | $ | 86,910 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of Revenues | 8 | % | 16 | % | 15 | % | 4 | % | 43 | % | ||||||||||
% Increase | 13 | % | 8 | % | 6 | % | 242 | % | 15 | % | ||||||||||
Fiscal 2018 Increases (Decreases): | ||||||||||||||||||||
Diagnostics | 339 | 2,048 | 2,654 | — | 5,041 | |||||||||||||||
Life Science | 495 | 32 | 738 | — | 1,265 | |||||||||||||||
Restructuring costs | — | — | — | 8,572 | 8,572 | |||||||||||||||
Litigation costs | — | — | — | 3,717 | 3,717 | |||||||||||||||
Goodwill impairment charge | — | — | — | (6,628 | ) | (6,628 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2018 Expenses | $ | 16,870 | $ | 34,468 | $ | 34,488 | $ | 13,051 | $ | 98,877 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of Revenues | 8 | % | 16 | % | 16 | % | 6 | % | 46 | % | ||||||||||
% Increase | 5 | % | 6 | % | 11 | % | 77 | % | 14 | % |
Total operating expenses increased during both fiscal 2018 and fiscal 2017, resulting primarily from the combined effects of the following:
Diagnostics
Fiscal 2018 increase
Increased Selling & Marketing costs, reflecting increased commission and bonus payments made in connection with the increased revenue levels, along with costs associated with the new branding strategy; and
Increased General & Administrative costs due in large part to the cash incentive compensation resulting from the revenue and net earnings results achieved, along with increased Quality System remediation costs related to Magellan.
- 40 -
Fiscal 2017 increase
Incremental Magellan operating expenses due to six additional months of Meridian ownership in fiscal 2017;2021 increased $13,190 to $108,114. Major components of this increase were as follows:
Increased Research & Development costs in connection with instrumentation development programs.
Life Science
Fiscal 2018 increase
Increased Research & Development costs related to new molecular reagent products; and
Increased General & Administrative costs due in large part to the cash incentive compensation resulting from the revenue and net earnings results achieved.
Fiscal 2017 increase
Increased investment in Sales & Marketing activities, including costs associated with the WFOE established in Beijing, China during fiscal 2017.
Other
Fiscal 2018 and fiscal 2017 activity
Restructuring costs (reflecteda full year of administrative expenses within “Other” in the above tables) totaled $8,706 and $134 in fiscal 2018 and fiscal 2017, respectively. These costs reflect: (i) compensation and benefits for our previous Executive Chairman and CEO throughout fiscal 2018, the period during which we also have the compensation and benefits of a new CEO; and (ii) the costs of terminations and related expenses incurred in connection with realigning our business structure.
Litigation costs (reflected within “Other” in the above tables) totaled $4,345 and $628 in fiscal 2018 and fiscal 2017, respectively, and relate to the matters discussed in Item 3. “Legal Proceedings”.
A goodwill impairment charge totaling $6,628 was recorded in fiscal 2017, with no such additional charges occurring in fiscal 2018.
Costs were incurred in fiscal 2016 in connection with: (i) acquisition activities, most notablyDiagnostics segment related to the Exalenz acquisition completed in April 2020;
- 41 -
Income and Expense
the revolving credit facility reflect the following approximate levels of average debt outstanding, as detailed in Note 10,
Application of an approximate 24.5% blended federal rate due to the loweringincreasing allocations of taxable income in certain foreign jurisdictions with tax rates lower than the applicable federal rate from 35% to 21%;
Recognizing aone-time $2,655 tax benefit includingU.S., particularly there-measurement of deferred tax balances at U.K. Additionally, the lower rate; and
Recording aone-time $876 tax expense related to the estimated repatriation transition tax on foreign earnings.
The increased fiscal 2017 rate results primarily from thenon-deductibility of the Magellan goodwill impairment charge. Excluding the effects of the Magellan goodwill impairment charge, the2021 effective tax rate was 35% for fiscal 2017.
favorably impacted by a larger-than-prior-year effect of current year restricted share unit lapses and stock option exercises occurring on dates when the share price of Company stock was significantly higher than the share price on the date such equity awards were granted.
2020.
- 42 -
Considering the various worldwidegeo-political andgeo-economic conditions (including Brexit, as more fully discussed within the “Risk Factors” section of Part 1A), we do not expect macroeconomic conditions to have a significant impact on our liquidity needs, financial condition or results of operations, although no assurances can be made in this regard.
Fluctuations in overall stock market valuations may raise questions as to the potential impairment of goodwill and other long-lived assets. Our annual goodwill impairment review takes place as of June 30th each year, and is performed at the reporting unit level. While these annual reviewsto-date have not resulted in the recording of any impairments, a $6,628 impairment charge was recorded in fiscal 2017 on the goodwill resulting from the Magellan acquisition due to certain FDA activities related to our lead testing system utilizing venous blood samples (see full description previously within this MD&A).
As of September 30, 2018,2021, our cash and cash equivalents balance is $59,763was $49,771 or $2,691 higher$3,743 lower than at the end of fiscal 2017.2020. This modest decrease primarily results from generating $66,865 of cash flow from operations, an increase results in large part fromof 39% over fiscal 2020, and the use of cash flows from operating activities being more than sufficient to cover capital expenditures, shareholder dividendsfund certain rather significant uses of cash during the year, most notably the following:
(i) | payment of consideration holdback and contingent consideration settlement related to the fiscal 2019 GenePOC acquisition ($25,000); |
(ii) | acquisition of the BreathTek business, net of $1,000 holdback ($18,585); |
(iii) | funding of capital expenditures, which were primarily comprised of manufacturing expansion related to Revogene, net of $1,500 RADx grant monies received ($16,812); and |
(iv) | net paydown on revolving credit facility and Israeli government grant obligations ($8,824 and $5,297, respectively). |
The indicated annual cash dividend rate for fiscal 2018 was establishedapproximately $17,000 at $0.50 per share. Consistent with this annual indicated dividend rate, a cash dividendSeptember 30, 2021.
- 43 -
Capital Resources
In connectionConsolidated Financial Statements, the Company maintains a $160,000 credit facility, which is secured by substantially all our U.S. assets and includes certain restrictive financial covenants. This credit facility was amended in October 2021 to increase its capacity to $200,000 and extend its term to October 25, 2026. The Company also maintains a shelf registration statement on file with the acquisition of Magellan, the Company entered into a $60,000 five-year term loan and related interest rate swap agreement with a commercial bank, the details of which are set forth in Note 5 of the accompanying Consolidated Financial Statements. In addition, we have a $30,000 revolving credit facility (discussed above) with a commercial bank that expires March 31, 2021. As of November 22, 2018, there were no borrowings outstanding on this facility and we had 100% borrowing capacity available to us. We have had no borrowings outstanding under this revolving credit facility during fiscal 2018, 2017 or 2016.
SEC.
Known In addition, a portion of the Diagnostics segment expansion may be funded by $4,000 remaining under the previously noted RADx grant entered into on February 1, 2021 (see Note 14,
Known
Total | Less than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | ||||||||||||||||
Operating leases(1) | $ | 7,914 | $ | 1,866 | $ | 4,139 | $ | 1,480 | $ | 429 | ||||||||||
Purchase obligations(2) | 11,398 | 11,271 | 117 | 10 | — | |||||||||||||||
Loan principal payments(3) | 50,250 | 5,250 | 45,000 | — | — | |||||||||||||||
Scheduled interest payments(3) | 3,094 | 1,358 | 1,736 | — | — | |||||||||||||||
Uncertain income tax positions liability and interest(4) | 423 | 423 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 73,079 | $ | 20,168 | $ | 50,992 | $ | 1,490 | $ | 429 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Total | Less than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | ||||||||||||||||
Operating leases (1) | $ | 6,239 | $ | 2,194 | $ | 2,736 | $ | 1,244 | $ | 65 | ||||||||||
Purchase obligations (2) | 51,295 | 49,537 | 1,554 | 204 | — | |||||||||||||||
Acquisition price holdback (3) | 1,000 | — | 1,000 | — | — | |||||||||||||||
Uncertain income tax positions liability and interest (4) | 870 | 870 | — | — | — | |||||||||||||||
Total | $ | 59,404 | $ | 52,601 | $ | 5,290 | $ | 1,448 | $ | 65 | ||||||||||
(1) | Meridian and its subsidiaries are |
(2) | Purchase obligations relate primarily to outstanding purchase orders for machinery and equipment, inventory, including instruments, service items, and research and development activities. These contractual commitments are not in excess of expected production requirements over the next twelve months. |
(3) |
Pursuant to the |
(4) | Due to inherent uncertainties in the timing of settlement of tax positions, we are unable to estimate the timing of the effective settlement of these obligations. |
2022.
Accounting Policy | Location
| Examples of Key Estimate Assumptions | ||
Note 1(h) | ||||
Revenue Recognition | Note 1(i) | Distributor price adjustments and fee accruals | ||
Income Taxes | Note | Uncertain |
In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers, which supersedes and replaces nearly all currently-existing U.S. GAAP revenue recognition guidance including related disclosure requirements. This guidance, including any clarification guidance thereon, is effective for the Company beginning October 1, 2018 (fiscal 2019). The Company anticipates that adoptionASU 2014-09 on a modified retrospective basis will result in the recording of an immaterial adjustment to retained earnings of approximately $150 and expanding certain disclosures, as required.In February 2016, the FASB issued ASU2016-02,Leases, which amends the accounting guidance related to leases. These changes, which are designed to increase transparency and comparability among organizations for both lessees and lessors, include, among other things, requiring recognition of lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Adoption and implementation of the guidance is not requiredpronouncements recently adopted by the Company, until the beginning of fiscal 2020, although early adoption is permitted. The Company expects to begin its assessment of the impact that adoption of this guidance will have on its financial statements in fiscal 2019.In March 2016, the FASBas well as accounting pronouncements issued ASU2016-09,Improvements to Employee Share-Based Payment Accounting, which amends the accounting for share-based payment transactions. These changes, which are designed for simplification, involve several aspects of the accounting for share-based transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Companybut not yet adopted this guidance in the first quarter of fiscal 2018, and as a result recorded $160 to the income tax provision, which under previous guidance would have been recorded in additionalpaid-in capital. While the future effect of this guidance is dependent on numerous factors (e.g., the market price of the Company’s common stock on the equity award grant date, the exercise/lapse dates of equity awards, and the market price of the Company’s common stock on such exercise/lapse dates), the effect is not expected to be material. During fiscal 2018, our tax provision included a $180 charge for application of ASU2016-09.- 46 -
In August 2016, the FASB issued ASU2016-15,Classification of Certain Cash Receipts and Cash Payments. The update addresses certain specific cash flows and their treatment, with the objective being to reduce the existing diversity in how the items are presented and classified within the statement of cash flows. Adoption and implementation of the guidance is not required by the Company, untilare set forth in Note 1(s),
35.
Table of ContentsManagement’s Report on Internal Control over Financial Reporting
2021.
/s/ Jack Kenny | /s/ | |||
Jack Kenny | ||||
Chief Executive Officer | Executive Vice President and | |||
November | Chief Financial Officer | |||
November |
of Meridian Bioscience, Inc.
Financial Statements
accounting principles.
opinion thereon.
Opinion
Evaluation of Goodwill Impairment for the Diagnostics Reporting Unit | ||
Description of the Matter | At September 30, 2021, the Company has recorded goodwill of $94.9 million within the Diagnostics reporting unit (within the Diagnostics reportable segment). As discussed in Note 1 to the consolidated financial statements, goodwill is tested for impairment annually at the beginning of the fourth quarter, or more frequently if indicators of potential impairment exist. Auditing management’s annual goodwill impairment test related to Diagnostics reporting unit was especially challenging due to the complexity of forecasting the long-term cash flows of the Diagnostics reporting unit and the estimation uncertainty of certain assumptions included within such forecasts. The estimation uncertainty was primarily due to the sensitivity of the Diagnostic reporting unit’s fair value to changes in the significant assumptions used in the income approach, such as forecasted net revenues, earnings before interest, taxes, depreciation and amortization (EBITDA) margins, long-term growth rates, and discount rates. These significant assumptions require a high degree of estimation and judgment based on an evaluation of historical performance, current industry and macroeconomic conditions. |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual goodwill impairment process, including controls over management’s review of the significant assumptions described above and controls over management’s review of its financial forecasts and carrying value of the Diagnostics reporting unit. To test the estimated fair value of the Diagnostics reporting unit, we performed audit procedures that included, among others, involving an internal valuation specialist to assist in our evaluation of the methodologies and certain significant assumptions used by the Company. We assessed the reasonableness of the Company’s assumptions around forecasted net revenues, EBITDA margins, long-term growth rates, and discount rates by comparing those assumptions to recent historical performance, current economic and industry trends, and financial forecasts. We also assessed the reasonableness of estimates included in the Company’s Diagnostics reporting unit financial forecast by evaluating how such assumptions compared to economic, industry, and peer expectations. We evaluated management’s historical accuracy of forecasting Diagnostics reporting unit net revenues and EBITDA margins by comparing past forecasts to subsequent actual activity. We performed various sensitivity analyses around these significant assumptions to understand the impact on the fair value calculation. |
of Meridian Bioscience, Inc.
We have audited the internal control over financial reporting of Meridian Bioscience, Inc. (an Ohio corporation) and subsidiaries (the “Company”) as of September 30, 2018,2021, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)(2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018,2021, based on criteria established in the 2013Internal Control—Integrated Framework issued by COSO.
COSO criteria.
thereon.
Opinion
Internal Control Over Financial Reporting
- 51 -
For the Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
Net Revenues | $ | 213,571 | $ | 200,771 | $ | 196,082 | ||||||
Cost of Sales | 83,110 | 76,479 | 68,870 | |||||||||
|
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|
|
|
| |||||||
Gross Profit | 130,461 | 124,292 | 127,212 | |||||||||
|
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|
|
| |||||||
Operating Expenses: | ||||||||||||
Research and development | 16,870 | 16,036 | 14,191 | |||||||||
Selling and marketing | 34,468 | 32,388 | 30,056 | |||||||||
General and administrative | 34,488 | 31,096 | 29,429 | |||||||||
Restructuring costs | 8,706 | 134 | 677 | |||||||||
Litigations costs | 4,345 | 628 | — | |||||||||
Goodwill impairment charge | — | 6,628 | — | |||||||||
Acquisition-related costs | — | — | 1,481 | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 98,877 | 86,910 | 75,834 | |||||||||
|
|
|
|
|
| |||||||
Operating Income | 31,584 | 37,382 | 51,378 | |||||||||
Other Income (Expense): | ||||||||||||
Interest income | 418 | 171 | 67 | |||||||||
Interest expense | (1,520 | ) | (1,642 | ) | (897 | ) | ||||||
Other, net | (102 | ) | 518 | 96 | ||||||||
|
|
|
|
|
| |||||||
Total other expense | (1,204 | ) | (953 | ) | (734 | ) | ||||||
|
|
|
|
|
| |||||||
Earnings Before Income Taxes | 30,380 | 36,429 | 50,644 | |||||||||
Income Tax Provision | 6,531 | 14,872 | 18,415 | |||||||||
|
|
|
|
|
| |||||||
Net Earnings | $ | 23,849 | $ | 21,557 | $ | 32,229 | ||||||
|
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|
|
|
| |||||||
Earnings Per Share Data: | ||||||||||||
Basic earnings per common share | $ | 0.56 | $ | 0.51 | $ | 0.77 | ||||||
Diluted earnings per common share | $ | 0.56 | $ | 0.51 | $ | 0.76 | ||||||
Common shares used for basic earnings per common share | 42,325 | 42,188 | 42,010 | |||||||||
Effect of dilutive stock options and restricted share units | 429 | 383 | 383 | |||||||||
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|
|
| |||||||
Common shares used for diluted earnings per common share | 42,754 | 42,571 | 42,393 | |||||||||
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|
|
| |||||||
Dividends declared per common share | $ | 0.500 | $ | 0.575 | $ | 0.800 | ||||||
Anti-dilutive Securities: | ||||||||||||
Common share options and restricted share units | 1,007 | 873 | 462 |
For the Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Net Revenues | $ | 317,896 | $ | 253,667 | $ | 201,014 | ||||||
Cost of Sales | 116,748 | 97,419 | 82,286 | |||||||||
Gross Profit | 201,148 | 156,248 | 118,728 | |||||||||
Operating Expenses: | ||||||||||||
Research and development | 23,911 | 23,729 | 17,760 | |||||||||
Selling and marketing | 26,780 | 26,486 | 27,995 | |||||||||
General and administrative | 49,541 | 44,345 | 34,044 | |||||||||
Product recall costs | 5,596 | 0 | 0 | |||||||||
Selected legal costs | 2,803 | 2,080 | 1,583 | |||||||||
Acquisition-related costs | 392 | 3,890 | 1,808 | |||||||||
Change in fair value of acquisition consideration and settlement | (909 | ) | (6,293 | ) | 0 | |||||||
Restructuring costs | 0 | 687 | 2,839 | |||||||||
Total Operating Expenses | 108,114 | 94,924 | 86,029 | |||||||||
Operating Income | 93,034 | 61,324 | 32,699 | |||||||||
Other Income (Expense): | ||||||||||||
Interest income | 0 | 142 | 681 | |||||||||
Interest expense | (1,878 | ) | (2,632 | ) | (1,945 | ) | ||||||
RADx grant income | 1,000 | 0 | 0 | |||||||||
Other, net | (1,705 | ) | 459 | 122 | ||||||||
Total Other Expense, Net | (2,583 | ) | (2,031 | ) | (1,142 | ) | ||||||
Earnings Before Income Taxes | 90,451 | 59,293 | 31,557 | |||||||||
Income Tax Provision | 19,044 | 13,107 | 7,175 | |||||||||
Net Earnings | $ | 71,407 | $ | 46,186 | $ | 24,382 | ||||||
�� | ||||||||||||
Earnings Per Share Data: | ||||||||||||
Basic earnings per common share | $ | 1.65 | $ | 1.08 | $ | 0.57 | ||||||
Diluted earnings per common share | $ | 1.62 | $ | 1.07 | $ | 0.57 | ||||||
Common shares used for basic earnings per common share | 43,259 | 42,855 | 42,571 | |||||||||
Effect of dilutive stock options and restricted share units | 753 | 319 | 328 | |||||||||
Common shares used for diluted earnings per common share | 44,012 | 43,174 | 42,899 | |||||||||
Dividends declared per common share | $ | 0 | $ | 0 | $ | 0.25 | ||||||
Anti-Dilutive Securities: | ||||||||||||
Common share options and restricted share units | 203 | 893 | 1,129 |
Consolidated Financial Statements.
For the Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
Net Earnings | $ | 23,849 | $ | 21,557 | $ | 32,229 | ||||||
Other comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustment | (1,075 | ) | 1,616 | (2,732 | ) | |||||||
Unrealized gain (loss) on cash flow hedge | 907 | 1,544 | (729 | ) | ||||||||
Income taxes related to items of other comprehensive income | (263 | ) | (590 | ) | 275 | |||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | (431 | ) | 2,570 | (3,186 | ) | |||||||
|
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|
|
|
| |||||||
Comprehensive Income | $ | 23,418 | $ | 24,127 | $ | 29,043 | ||||||
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|
|
|
For the Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Net Earnings | $ | 71,407 | $ | 46,186 | $ | 24,382 | ||||||
Other Comprehensive Income (Loss): | ||||||||||||
Foreign currency translation adjustment | 1,780 | 3,884 | (802 | ) | ||||||||
Unrealized gain (loss) on cash flow hedge | 510 | (713 | ) | (1,159 | ) | |||||||
Reclassification of amortization of gain on cash flow hedge | (154 | ) | (308 | ) | (102 | ) | ||||||
Income taxes related to items of other comprehensive income (loss) | (78 | ) | 252 | 465 | ||||||||
Other Comprehensive Income (Loss), Net of Tax | 2,058 | 3,115 | (1,598 | ) | ||||||||
Comprehensive Income | $ | 73,465 | $ | 49,301 | $ | 22,784 | ||||||
Consolidated Financial Statements.
For the Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
Cash Flows From Operating Activities | ||||||||||||
Net earnings | $ | 23,849 | $ | 21,557 | $ | 32,229 | ||||||
Non-cash items included in net earnings: | ||||||||||||
Depreciation of property, plant and equipment | 4,491 | 4,342 | 3,937 | |||||||||
Amortization of intangible assets | 3,433 | 3,776 | 2,690 | |||||||||
Amortization of deferred instrument costs | 764 | 972 | 1,091 | |||||||||
Stock-based compensation | 3,402 | 3,381 | 2,911 | |||||||||
Goodwill impairment charge | — | 6,628 | — | |||||||||
Deferred income taxes | (300 | ) | 1,474 | (233 | ) | |||||||
Losses on long-lived assets | — | — | 659 | |||||||||
Change in: | ||||||||||||
Accounts receivable | (4,447 | ) | (1,211 | ) | 119 | |||||||
Inventories | (1,142 | ) | 3,467 | (8,225 | ) | |||||||
Prepaid expenses and other current assets | 323 | 1,225 | (9 | ) | ||||||||
Accounts payable and accrued expenses | 4,124 | (3,151 | ) | 1,773 | ||||||||
Income taxes payable | (524 | ) | (384 | ) | 464 | |||||||
Other, net | 810 | (721 | ) | (183 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 34,783 | 41,355 | 37,223 | |||||||||
|
|
|
|
|
| |||||||
Cash Flows From Investing Activities | ||||||||||||
Purchase of property, plant and equipment | (4,201 | ) | (4,467 | ) | (4,004 | ) | ||||||
Purchase of equity method investment | — | — | (600 | ) | ||||||||
Acquisition of Magellan, net of cash acquired | — | — | (62,091 | ) | ||||||||
|
|
|
|
|
| |||||||
Net cash used for investing activities | (4,201 | ) | (4,467 | ) | (66,695 | ) | ||||||
|
|
|
|
|
| |||||||
Cash Flows From Financing Activities | ||||||||||||
Dividends paid | (21,170 | ) | (24,266 | ) | (33,649 | ) | ||||||
Proceeds from term loan, net of issuance costs | — | — | 59,860 | |||||||||
Payments on term loan | (4,500 | ) | (3,750 | ) | (1,500 | ) | ||||||
Proceeds and tax benefits from exercises of stock options | 187 | 303 | 2,494 | |||||||||
Payment of acquisition consideration | (2,110 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net cash provided by (used for) financing activities | (27,593 | ) | (27,713 | ) | 27,205 | |||||||
|
|
|
|
|
| |||||||
Effect of Exchange Rate Changes on Cash and Equivalents | (298 | ) | 671 | (480 | ) | |||||||
Net Increase (Decrease) in Cash and Equivalents | 2,691 | 9,846 | (2,747 | ) | ||||||||
Cash and Equivalents at Beginning of Period | 57,072 | 47,226 | 49,973 | |||||||||
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|
|
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|
| |||||||
Cash and Equivalents at End of Period | $ | 59,763 | $ | 57,072 | $ | 47,226 | ||||||
|
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|
|
|
| |||||||
Supplemental Cash Flow Information | ||||||||||||
Cash paid for interest | $ | 1,487 | $ | 1,605 | $ | 879 | ||||||
Cash paid for income taxes | $ | 6,555 | $ | 12,613 | $ | 17,915 |
For the Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Cash Flows From Operating Activities | ||||||||||||
Net earnings | $ | 71,407 | $ | 46,186 | $ | 24,382 | ||||||
Non-cash items included in net earnings: | ||||||||||||
Depreciation of property, plant and equipment | 6,510 | 5,823 | 5,433 | |||||||||
Amortization of intangible assets | 8,776 | 7,744 | 4,531 | |||||||||
Stock compensation expense | 4,156 | 3,802 | 3,251 | |||||||||
Deferred income taxes | (3,835 | ) | 760 | (817 | ) | |||||||
Losses on dispositions of long-lived assets | 9 | 64 | 632 | |||||||||
Change in fair value of acquisition consideration and settlement | (909 | ) | (6,293 | ) | 0 | |||||||
Change in the following, net of acquisitions: | ||||||||||||
Accounts receivable | (12,766 | ) | (971 | ) | (2,215 | ) | ||||||
Inventories | (7,800 | ) | (18,977 | ) | 3,841 | |||||||
Prepaid expenses and other current assets | (3,711 | ) | (153 | ) | (2,143 | ) | ||||||
Accounts payable and accrued expenses | 6,346 | 7,248 | (2,315 | ) | ||||||||
Income taxes payable | (329 | ) | 1,435 | 1,793 | ||||||||
Other, net | (989 | ) | 1,308 | (198 | ) | |||||||
Net cash provided by operating activities | 66,865 | 47,976 | 36,175 | |||||||||
Cash Flows From Investing Activities | ||||||||||||
Purchase of property, plant and equipment | (18,312 | ) | (3,299 | ) | (3,797 | ) | ||||||
RADx grant proceeds offsetting cost of equipment | 1,500 | 0 | 0 | |||||||||
Payment of acquisition consideration holdback | (5,000 | ) | 0 | 0 | ||||||||
Disposals of property, plant and equipment | 0 | 0 | 669 | |||||||||
Acquisitions, net of cash acquired and holdback | (18,585 | ) | (51,299 | ) | (45,324 | ) | ||||||
Net cash used in investing activities | (40,397 | ) | (54,598 | ) | (48,452 | ) | ||||||
Cash Flows From Financing Activities | ||||||||||||
Proceeds from revolving credit facility | 10,000 | 50,000 | 75,824 | |||||||||
Payment of acquisition consideration | (20,000 | ) | 0 | 0 | ||||||||
Payment on revolving credit facility | (18,824 | ) | (57,000 | ) | 0 | |||||||
Payment on government grant obligations | (5,297 | ) | 0 | 0 | ||||||||
Payment of debt issuance costs | 0 | (116 | ) | (489 | ) | |||||||
Payments on term loan | 0 | 0 | (50,250 | ) | ||||||||
Proceeds from exercise of stock options | 3,052 | 3,559 | 443 | |||||||||
Dividends paid | 0 | 0 | (10,612 | ) | ||||||||
Net cash (used in) provided by financing activities | (31,069 | ) | (3,557 | ) | 14,916 | |||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 858 | 1,296 | (1,005 | ) | ||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | (3,743 | ) | (8,883 | ) | 1,634 | |||||||
Cash and Cash Equivalents at Beginning of Period | 53,514 | 62,397 | 60,763 | |||||||||
Cash and Cash Equivalents at End of Period | $ | 49,771 | $ | 53,514 | $ | 62,397 | ||||||
Consolidated Financial Statements.
As of September 30, | 2018 | 2017 | ||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and equivalents | $ | 59,763 | $ | 57,072 | ||||
Accounts receivable, less allowances of $310 and $307, respectively | 32,336 | 29,106 | ||||||
Inventories | 41,993 | 41,493 | ||||||
Prepaid expenses and other current assets | 4,961 | 6,204 | ||||||
|
|
|
| |||||
Total current assets | 139,053 | 133,875 | ||||||
|
|
|
| |||||
Property, Plant and Equipment, at Cost: | ||||||||
Land | 1,160 | 1,162 | ||||||
Buildings and improvements | 32,444 | 32,207 | ||||||
Machinery, equipment and furniture | 50,606 | 48,836 | ||||||
Construction in progress | 1,631 | 1,895 | ||||||
|
|
|
| |||||
Subtotal | 85,841 | 84,100 | ||||||
Less: accumulated depreciation and amortization | 55,846 | 53,590 | ||||||
|
|
|
| |||||
Net property, plant and equipment | 29,995 | 30,510 | ||||||
|
|
|
| |||||
Other Assets: | ||||||||
Goodwill | 54,637 | 54,926 | ||||||
Other intangible assets, net | 23,113 | 26,704 | ||||||
Restricted cash | 1,000 | 1,000 | ||||||
Deferred instrument costs, net | 1,239 | 1,368 | ||||||
Fair value of interest rate swap | 1,722 | 815 | ||||||
Deferred income taxes | 130 | 158 | ||||||
Other assets | 488 | 421 | ||||||
|
|
|
| |||||
Total other assets | 82,329 | 85,392 | ||||||
|
|
|
| |||||
Total assets | $ | 251,377 | $ | 249,777 | ||||
|
|
|
|
As of September 30, | 2021 | 2020 | ||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 49,771 | $ | 53,514 | ||||
Accounts receivable, less allowances of $1,078 and $513, respectively | 53,568 | 38,512 | ||||||
Inventories, net | 76,842 | 61,264 | ||||||
Prepaid expenses and other current assets | 12,626 | 8,900 | ||||||
Total Current Assets | 192,807 | 162,190 | ||||||
Property, Plant and Equipment: | ||||||||
Land | 989 | 991 | ||||||
Buildings and improvements | 32,765 | 32,188 | ||||||
Machinery, equipment and furniture | 78,410 | 69,854 | ||||||
Construction in progress | 9,991 | 1,200 | ||||||
Subtotal | 122,155 | 104,233 | ||||||
Less: accumulated depreciation and amortization | 78,941 | 73,113 | ||||||
Net Property, Plant and Equipment | 43,214 | 31,120 | ||||||
Other Assets: | ||||||||
Goodwill | 114,668 | 114,186 | ||||||
Other intangible assets, net | 84,151 | 83,197 | ||||||
Right-of-use assets, net | 5,786 | 6,336 | ||||||
Deferred income taxes | 8,731 | 7,647 | ||||||
Other assets | 365 | 585 | ||||||
Total Other Assets | 213,701 | 211,951 | ||||||
Total Assets | $ | 449,722 | $ | 405,261 | ||||
Consolidated Financial Statements.
As of September 30, | 2018 | 2017 | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 6,260 | $ | 7,719 | ||||
Accrued employee compensation costs | 7,263 | 4,536 | ||||||
Current portion of acquisition consideration | — | 2,095 | ||||||
Other accrued expenses | 5,065 | 2,789 | ||||||
Current portion of long-term debt | 5,250 | 4,500 | ||||||
Income taxes payable | 335 | 1,248 | ||||||
|
|
|
| |||||
Total current liabilities | 24,173 | 22,887 | ||||||
|
|
|
| |||||
Non-Current Liabilities | ||||||||
Acquisition consideration | — | 235 | ||||||
Post-employment benefits | 2,646 | 2,468 | ||||||
Long-term debt | 44,930 | 50,147 | ||||||
Long-term income taxes payable | 441 | — | ||||||
Deferred income taxes | 3,769 | 4,455 | ||||||
|
|
|
| |||||
Totalnon-current liabilities | 51,786 | 57,305 | ||||||
|
|
|
| |||||
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, 42,399,962 and 42,207,317 issued, respectively | — | — | ||||||
Additionalpaid-in capital | 129,193 | 125,608 | ||||||
Retained earnings | 49,602 | 46,923 | ||||||
Accumulated other comprehensive loss | (3,377 | ) | (2,946 | ) | ||||
|
|
|
| |||||
Total shareholders’ equity | 175,418 | 169,585 | ||||||
|
|
|
| |||||
Total liabilities and shareholders’ equity | $ | 251,377 | $ | 249,777 | ||||
|
|
|
|
As of September 30, | 2021 | 2020 | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 11,701 | $ | 11,969 | ||||
Accrued employee compensation costs | 16,853 | 16,661 | ||||||
Accrued product recall costs | 5,100 | 0 | ||||||
Current portion of acquisition consideration | 0 | 12,619 | ||||||
Current operating lease obligations | 1,990 | 1,789 | ||||||
Current government grant obligations | 638 | 600 | ||||||
Other accrued expenses | 7,027 | 5,362 | ||||||
Income taxes payable | 3,848 | 3,524 | ||||||
Total Current Liabilities | 47,157 | 52,524 | ||||||
Non-Current Liabilities: | ||||||||
Acquisition consideration | 1,000 | 13,290 | ||||||
Post-employment benefits | 2,253 | 2,493 | ||||||
Fair value of interest rate swaps | 203 | 713 | ||||||
Long-term operating lease obligations | 3,932 | 4,678 | ||||||
Long-term debt | 60,000 | 68,824 | ||||||
Government grant obligations | 5,176 | 10,524 | ||||||
Long-term income taxes payable | 469 | 549 | ||||||
Deferred income taxes | 1,055 | 3,804 | ||||||
Other non-current liabilities | 175 | 233 | ||||||
Total Non-Current Liabilities | 74,263 | 105,108 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Shareholders’ Equity: | ||||||||
Preferred stock, 0 par value; 1,000,000 shares authorized; 0ne issued | 0— | 0— | ||||||
Common shares, 0 par value; 71,000,000 shares authorized, 43,361,898 and 43,068,842 issued, respectively | 0— | 0— | ||||||
Additional paid-in capital | 147,403 | 140,195 | ||||||
Retained earnings | 180,701 | 109,294 | ||||||
Accumulated other comprehensive income (loss) | 198 | (1,860 | ) | |||||
Total Shareholders’ Equity | 328,302 | 247,629 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 449,722 | $ | 405,261 | ||||
Consolidated Financial Statements.
Common Shares Issued | Additional Paid-in Capital | Retained Earnings | Accum Other Comp Income (Loss) | Total | ||||||||||||||||
Balance at September 30, 2015 | 41,838 | $ | 117,151 | $ | 51,052 | $ | (2,330 | ) | $ | 165,873 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash dividends paid - $0.800 per share | — | — | (33,649 | ) | — | (33,649 | ) | |||||||||||||
Exercise of stock options | 152 | 2,294 | — | — | 2,294 | |||||||||||||||
Conversion of restricted share units | 117 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 2,911 | — | — | 2,911 | |||||||||||||||
Net earnings | — | — | 32,229 | — | 32,229 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (2,732 | ) | (2,732 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | (454 | ) | (454 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance at September 30, 2016 | 42,107 | 122,356 | 49,632 | (5,516 | ) | 166,472 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash dividends paid - $0.575 per share | — | — | (24,266 | ) | — | (24,266 | ) | |||||||||||||
Exercise of stock options | 18 | (129 | ) | — | — | (129 | ) | |||||||||||||
Conversion of restricted share units | 82 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 3,381 | — | — | 3,381 | |||||||||||||||
Net earnings | — | — | 21,557 | — | 21,557 | |||||||||||||||
Foreign currency translation adjustment | 1,616 | 1,616 | ||||||||||||||||||
Hedging activity, net of tax | — | — | — | 954 | 954 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance at September 30, 2017 | 42,207 | 125,608 | 46,923 | (2,946 | ) | 169,585 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash dividends paid - $0.500 per share | — | — | (21,170 | ) | — | (21,170 | ) | |||||||||||||
Exercise of stock options | 13 | 183 | — | — | 183 | |||||||||||||||
Conversion of restricted share units | 180 | — | — | — | — | |||||||||||||||
Stock compensation expense | — | 3,402 | — | — | 3,402 | |||||||||||||||
Net earnings | — | — | 23,849 | — | 23,849 | |||||||||||||||
Foreign currency translation adjustment | (1,075 | ) | (1,075 | ) | ||||||||||||||||
Hedging activity, net of tax | — | — | — | 644 | 644 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance at September 30, 2018 | 42,400 | $ | 129,193 | $ | 49,602 | $ | (3,377 | ) | $ | 175,418 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Common Shares Issued | Additional Paid-in Capital | Retained Earnings | Accum Other Comp (Loss) Income | Total | ||||||||||||||||
Balance at September 30, 2018 | 42,400 | $ | 129,193 | $ | 49,602 | $ | (3,377 | ) | $ | 175,418 | ||||||||||
Cash dividends paid - $0.250 per share | — | — | (10,612 | ) | — | (10,612 | ) | |||||||||||||
Conversion of restricted share units and exercise of stock options | 312 | 390 | — | — | 390 | |||||||||||||||
Stock compensation expense | — | 3,251 | — | — | 3,251 | |||||||||||||||
Net earnings | — | — | 24,382 | — | 24,382 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | (802 | ) | (802 | ) | |||||||||||||
Hedging activity, net of tax | — | — | — | (944 | ) | (944 | ) | |||||||||||||
Adoption of ASU 2014-09 | — | — | (116 | ) | — | (116 | ) | |||||||||||||
Adoption of ASU 2018-02 | — | — | (148 | ) | 148 | — | ||||||||||||||
Balance at September 30, 2019 | 42,712 | $ | 132,834 | $ | 63,108 | $ | (4,975 | ) | $ | 190,967 | ||||||||||
Conversion of restricted share units and exercise of stock options | 357 | 3,559 | — | — | 3,559 | |||||||||||||||
Stock compensation expense | — | 3,802 | — | — | 3,802 | |||||||||||||||
Net earnings | — | — | 46,186 | — | 46,186 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 3,884 | 3,884 | |||||||||||||||
Hedging activity, net of tax | — | — | — | (769 | ) | (769 | ) | |||||||||||||
Balance at September 30, 2020 | 43,069 | $ | 140,195 | $ | 109,294 | $ | (1,860 | ) | $ | 247,629 | ||||||||||
Conversion of restricted share units and exercise of stock options | 293 | 3,052 | — | — | 3,052 | |||||||||||||||
Stock compensation expense | — | 4,156 | — | — | 4,156 | |||||||||||||||
Net earnings | — | — | 71,407 | — | 71,407 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 1,780 | 1,780 | |||||||||||||||
Hedging activity, net of tax | — | — | — | 278 | 278 | |||||||||||||||
Balance at September 30, 2021 | 43,362 | $ | 147,403 | $ | 180,701 | $ | 198 | $ | 328,302 | |||||||||||
Consolidated Financial Statements.
(1) |
|
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
- 59 -
Our investment portfolio includes the following components:
September 30, 2018 | September 30, 2017 | |||||||||||||||
Cash and Equivalents | Other | Cash and Equivalents | Other | |||||||||||||
Institutional money market funds | $ | 20,421 | $ | — | $ | 20,104 | $ | — | ||||||||
Cash on hand – | ||||||||||||||||
Restricted | — | 1,000 | — | 1,000 | ||||||||||||
Unrestricted | 39,342 | — | 36,968 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 59,763 | $ | 1,000 | $ | 57,072 | $ | 1,000 | ||||||||
|
|
|
|
|
|
|
|
( f) |
|
(g) |
|
- 60 -
(h) |
|
During fiscal 2018,
Similarly, during fiscal 2017, we performed quantitative assessments asat July 1, 2021. The impact of June 30, 2017 for each of our Americasthe ongoing COVID-19 pandemic has had varying impacts on the Diagnostics Bioline and LifeScience-U.S. Science reporting units, that existed at that time, notingand specifically an adverse impact on the separate Magellan discussion below. As partDiagnostics reporting unit. However, even in light of this assessment, fair value, as determined through a valuation performed by a third party, was calculated via both market (comparable company) and income (discounted cash flows) approaches. Based upon these approaches, the COVID-19 pandemic, the estimated fair value of eachthe Diagnostics reporting unit, exceeded as calculated at July 1, 2021,
During the quarter ended June 30, 2017, the events described below occurred, indicating that impairment of the goodwill recorded as part of the Magellan acquisition had occurred.
On May 17, 2017, the FDA issued a field safety notice advising customers to discontinue use of Magellan’s lead testing systems with venous blood samples. This field safety notice was followed by product recall notices on May 25th and June 5th. Subsequent to the issuances of these field safety and product recall notices, the FDA completed an inspection of Magellan’s quality system, and issued its Form 483, Inspectional Observations, on June 29, 2017, which was expectedly followed by a Warning Letter issued on October 23, 2017. The Warning Letter requires periodic reporting on our remediation progress.
- 61 -
In light of these factors and their impacts, during the third quarter of fiscal 2017, it was determined that a potential impairment of goodwill recorded in connection with the acquisition of Magellan had occurred (i.e., a “triggering event”). With the assistance of an independent valuation firm, Magellan’s fair value was calculated via both market (comparable company) and income (discounted cash flows) approaches. Based upon these approaches, it was determined that the carrying value of the Magellan reporting unit did, in fact, exceed its fair value. As a result, an impairment charge of $6,628, on both apre-tax andafter-tax basis, was recorded during the third quarter and is reflected as a separate operating expense line item within the accompanying Consolidated Statement of Operations for the year ended September 30, 2017. This quantitative assessment as of May 31, 2017 was supplemented by a qualitative assessment of Magellan’s goodwill as of June 30, 2017, with such assessment indicating that no additional impairment existed.
No impairments were indicated or recorded from the analyses performed for fiscal 2018 or 2016.
During fiscal 2018, goodwill decreased $289, resulting solely from currency translation adjustments on the goodwill of the Life Science reporting unit. The decrease of $7,056 in fiscal 2017 reflects: (i) a $767 acquisition measurement period adjustment downward related to Magellan (Diagnostics segment; see Note 3); (ii) the $6,628 impairment charge related to Magellan; and (iii) a $339 increase from the currency translation adjustment on the goodwill of the Life Science segment.
A summary of Meridian’s acquired intangible assets subject to amortization, as of September 30, 2018 and 2017 is as follows.
2018 | 2017 | |||||||||||||||
As of September 30, | Gross Carrying Value | Accum. Amort. | Gross Carrying Value | Accum. Amort. | ||||||||||||
Manufacturing technologies, core products and cell lines | $ | 22,297 | $ | 13,974 | $ | 22,332 | $ | 12,807 | ||||||||
Tradenames, licenses and patents | 8,647 | 5,267 | 8,689 | 4,398 | ||||||||||||
Customer lists, customer relationships and supply agreements | 24,461 | 13,051 | 24,562 | 11,854 | ||||||||||||
Non-compete agreements | 720 | 720 | 720 | 540 | ||||||||||||
|
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| �� |
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| ||||||||
$ | 56,125 | $ | 33,012 | $ | 56,303 | $ | 29,599 | |||||||||
|
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|
|
|
|
|
|
The actual aggregate amortization expense for these intangible assets for fiscal 2018, 2017 and 2016 was $3,433, $3,776 and $2,690, respectively. The estimated aggregate amortization expense for these intangible assets for each of the five succeeding fiscal years is as follows: fiscal 2019 - $3,328, fiscal 2020 - $3,165, fiscal 2021 - $2,560, fiscal 2022 - $2,182 and fiscal 2023 - $2,170.
- 62 -
If actual cash flows are less favorable than projections, this could trigger impairment of identifiable intangible assets and other long-lived assets. If impairment were to occur, this would negatively affect overall results of operations. Aside from the Magellan matter noted above, noNo triggering events have been identified by the Company for fiscal 2018, 2017 or 2016.
(i) |
|
Revenue for our Diagnostics segment includes revenue for our Alethiamolecular test system. This system includes an instrument, instrument accessories
- 63 -
We evaluate whether each deliverable in the arrangement is a separate unit of accounting. The significant deliverables are an instrument, instrument accessories (e.g., printer) and test kits. An instrument and instrument accessories are delivered to the customer prior to the start of the customer utilization period in order to accommodate customerset-up and installation. There isde minimis consideration received from the customer at the time of instrument placement. We have determined that the instrument and instrument accessories are not a separate unitperformance obligation.
In markets where the test system is not sold via multiple deliverable arrangements, the cost of the instrument and instrument accessories is charged to cost of sales at the time of shipment and transfer of title to the customer. Revenue for the sales of instruments, instrument accessories and test kits is recognized upon shipment and transfer of title to the customers. In these markets, our Alethiamolecular test system is sold to independent distributors who inventory the instruments, instrument accessories and test kits for resale toend-users.
Our products are generally not subject to a customer right of return except for product recall events under the rules and regulations of the Food and Drug Administration or equivalent agencies outside the United States. In this circumstance, the costs to replace affected products would be accrued at the time a loss was probable and estimable.
Trade accountsperformance obligation. Accounts receivable are recorded in the accompanying Consolidated Balance Sheets at invoiced amounts less provisions for distributor price adjustments under local contracts and doubtful accounts. The allowance for doubtful accounts represents our estimate of probable credit losses and is based on historicalwrite-off experience and known conditions that would likely lead tonon-payment. The allowance for doubtful accounts and related metrics, such as days’ sales outstanding, are reviewed monthly. Accounts with past due balances over 90 days are reviewed individually for collectability. Customer invoices are charged off against the allowance for doubtful accounts when we believe it is probable that the invoices will not be paid.
(j) |
|
transparency and reliability of the inputs used in the valuation of such items at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). |
(k) | Research and Development Costs |
- 64 -
(l) |
|
(m) |
|
(n) |
|
(o) |
|
(p) |
|
(q) |
|
(r) | Other income (expense), net - Other income (expense), net, consists principally of transaction currency gains or losses. When a transaction is denominated in a currency other than the subsidiary’s functional currency, the Company recognizes a transaction gain or loss in other income (expense), net within the Consolidated Statements of Operations when the transaction is settled. |
(s) | Recent Accounting Pronouncements |
- 65 -
In February 2016,
In March 2016, the FASB issued ASU2016-09,Improvements to Employee Share-Based Payment Accounting, which amends the accounting for share-based payment transactions. These changes, which are designed for simplification, involve several aspects of the accounting for share-based transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted this guidance in the first quarter of fiscal 2018, and as a result recorded $160 to the income tax provision, which under previous guidance would have been recorded in additionalpaid-in capital. While the future effect of this guidance is dependent on numerous factors (e.g., the market price of the Company’s common stock on the equity award grant date, the exercise/lapse dates of equity awards, and the market price of the Company’s common stock on such exercise/lapse dates), the effect is not expected to be material. During fiscal 2018, our tax provision included a $180 charge for application of ASU2016-09.
In August 2016, the FASB issued ASU2016-15,Classification of Certain Cash Receipts and Cash Payments. The update addresses certain specific cash flows and their treatment, with the objective being to reduce the existing diversity in how the items are presented and classified within the statement of cash flows. Adoption and implementation of the guidance is not required by the Company until the beginning of fiscal 2019, although early adoption is permitted. Adoption of this guidance is not expected to have a significantmaterial impact on the Company’s statement of cash flows.
|
- 66 -
|
During the second quarter of fiscal 2018, the Company began implementation of a plan to realign its business structure into two business units, Diagnostics and Life Science, supported by a global corporate team. As part of this plan, certain functions and locations within both business units have been streamlined, including: (i) the elimination of certain executive management and commercial sales positions; (ii) the closing of Life Science locations in Taunton, Massachusetts and Singapore, the operations of which were transferred to locations in Memphis, Tennessee and London, England, respectively; and (iii) the transfer of certain functions performed in the Billerica, Massachusetts Diagnostics facility to the corporate headquarters in Cincinnati, Ohio.
A summary of the restructuring costs recorded in fiscal 2018 is as follows:
Fiscal 2018 Restructuring Costs | ||||
Severance, other termination benefits and related costs | $ | 5,012 | ||
Lease and other contract termination fees | 353 | |||
Loss on fixed asset disposals and inventory scrap | 225 | |||
Other | 742 | |||
|
| |||
Total | $ | 6,332 | ||
|
|
The above table does not include $2,374 of CEO transition costs, which primarily represents the compensation and benefits for our previous Executive Chairman and CEO, Mr. John A. Kraeutler, throughout fiscal 2018, the period during which we also have the compensation and benefits our new CEO, Mr. Jack Kenny, who began employment at the beginning of fiscal 2018. These CEO transition costs and the restructuring costs set forth in the table above comprise the $8,706 of restructuring costs set forth in the accompanying Consolidated Statement of Operations.
At September 30, 2018, the accrued liability associated with the restructuring costs noted above consisted of the following:
Balance as of | ||||
September 30, | ||||
2018 | ||||
Severance, other termination benefits and related costs | $ | 987 | ||
Lease and other contract termination fees | 33 | |||
Other | 6 | |||
|
| |||
Total accrued liability balance | $ | 1,026 | ||
|
|
- 67 -
|
On March 24, 2016, we acquired all of the outstanding common stock of Magellan Biosciences, Inc., and its wholly-owned subsidiary Magellan Diagnostics, Inc. (collectively, “Magellan”), for $67,874, utilizing the proceeds from a new $60,000 five-year term loan and cash and equivalents on hand. During fiscal 2018, following the filing of our U.S. tax return and the realization of tax benefits for certain net operating loss carryforwards, the final amount of acquisition consideration totaling approximately $2,100 was paid to the sellers, resulting in no such amounts payable
As a result FASB issued ASU 2020-04,
(2) | Revenue Recognition |
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Diagnostics- | ||||||||||||
Americas | $ | 101,293 | $ | 97,228 | $ | 110,109 | ||||||
EMEA | 24,475 | 21,826 | 23,888 | |||||||||
ROW | 1,992 | 2,078 | 2,685 | |||||||||
Total Diagnostics | 127,760 | 121,132 | 136,682 | |||||||||
Life Science- | ||||||||||||
Americas | 46,063 | 37,391 | 19,441 | |||||||||
EMEA | 93,655 | 58,125 | 28,850 | |||||||||
ROW | 50,418 | 37,019 | 16,041 | |||||||||
Total Life Science | 190,136 | 132,535 | 64,332 | |||||||||
Consolidated | $ | 317,896 | $ | 253,667 | $ | 201,014 | ||||||
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Diagnostics- | ||||||||||||
Molecular assays | $ | 19,037 | $ | 21,907 | $ | 26,283 | ||||||
Non-molecular assays | 108,723 | 99,225 | 110,399 | |||||||||
Total Diagnostics | $ | 127,760 | $ | 121,132 | $ | 136,682 | ||||||
Life Science- | ||||||||||||
Molecular reagents | $ | 130,537 | $ | 78,431 | $ | 23,261 | ||||||
Immunological reagents | 59,599 | 54,104 | 41,071 | |||||||||
Total Life Science | $ | 190,136 | $ | 132,535 | $ | 64,332 | ||||||
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Diagnostics- | ||||||||||||
Gastrointestinal assays | $ | 68,890 | $ | 55,040 | $ | 68,982 | ||||||
Respiratory illness assays | 17,608 | 26,694 | 26,622 | |||||||||
Blood chemistry assays | 15,398 | 17,534 | 18,639 | |||||||||
Other | 25,864 | 21,864 | 22,439 | |||||||||
Total Diagnostics | $ | 127,760 | $ | 121,132 | $ | 136,682 | ||||||
|
Inventories are comprised of the following:
As of September 30, | 2018 | 2017 | ||||||
Raw materials | $ | 6,689 | $ | 6,575 | ||||
Work-in-process | 12,098 | 11,559 | ||||||
Finished goods - instruments | 1,191 | 1,460 | ||||||
Finished goods - kits and reagents | 22,015 | 21,899 | ||||||
|
|
|
| |||||
Total | $ | 41,993 | $ | 41,493 | ||||
|
|
|
|
|
In connection with the acquisition of Magellan (see Note 3), on March 22, 2016 the Company entered into a $60,000 five-year term loan with a commercial bank. The term loan requires quarterly principal and interest payments, with interest at a variable rate tied to LIBOR, and a balloon principal payment due March 31, 2021. The required principal payments on the term loan for each of the remaining fiscal years are as follows: fiscal 2019 - $5,250, fiscal 2020 - $6,000, and fiscal 2021 - $39,000. In light of the term loan’s interest being determined on a variable rate basis, the fair value of the term loan atended September 30, 2018 approximates the current carrying value reflected2021
- 68 -
In order to
(3) | Fair Value Measurements |
Fair Value Measurements Using Inputs Considered as | ||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swap agreements - | ||||||||||||||||
As of September 30, 2021 | $ | (203 | ) | $ | 0 | $ | (203 | ) | $ | 0 | ||||||
As of September 30, 2020 | $ | (713 | ) | $ | 0 | $ | (713 | ) | $ | 0 | ||||||
Contingent consideration - | ||||||||||||||||
As of September 30, 2021 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
As of September 30, 2020 | $ | (20,909 | ) | $ | 0 | $ | 0 | $ | (20,909 | ) |
(4) | Business Combinations |
Year Ended September 30, | 2021 | 2020 | ||||||
Net revenues | $ | 337,118 | $ | 279,573 | ||||
Net earnings | 77,270 | 53,305 |
Year Ended September 30, | 2021 | 2020 | ||||||
Net revenues | $ | 14,905 | $ | 4,206 | ||||
Net loss | (3,381 | ) | (1,911 | ) |
April 30, 2020 | ||||
Fair value of assets acquired - | ||||
Cash | $ | 5,006 | ||
Accounts receivable | 637 | |||
Inventories | 4,026 | |||
Other current assets | 2,676 | |||
Property, plant and equipment | 528 | |||
Goodwill | 24,459 | |||
Other intangible assets (estimated useful life): | ||||
Non-compete agreement (5 years) | 110 | |||
Trade name (10 years) | 3,860 | |||
Technology (15 years) | 6,120 | |||
Customer relationships (10 years) | 20,640 | |||
Right-of-use assets | 1,311 | |||
Deferred tax assets, net | 7,119 | |||
76,492 | ||||
Fair value of liabilities assumed - | ||||
Accounts payable and accrued expenses (including current portion of lease and government grant obligations) | 8,008 | |||
Long-term lease obligations | 1,096 | |||
Long-term government grant obligations | 10,792 | |||
Other non-current liabilities | 291 | |||
20,187 | ||||
Total consideration paid (including $8,068 to pay off long-term debt) | $ | 56,305 | ||
Year Ended September 30, | 2020 | 2019 | ||||||
Net revenues | $ | 261,131 | $ | 214,613 | ||||
Net earnings | 45,843 | 19,089 | ||||||
Year Ended September 30, | 2020 | 2019 | ||||||
Adjustments to Net Revenues | ||||||||
Exalenz pre-acquisition revenues | $ | 7,464 | $ | 13,599 | ||||
Adjustments to Net Earnings | ||||||||
Exalenz pre-acquisition net losses | $ | (6,423 | ) | $ | (4,006 | ) | ||
Pro forma adjustments: | ||||||||
Meridian acquisition-related costs | 3,890 | 0 | ||||||
Exalenz transaction-related costs | 4,550 | 0 | ||||||
Gain on Exalenz purchase price currency contracts | (845 | ) | 0 | |||||
Remove net impact of non-continuing activities | (305 | ) | 1,441 | |||||
Incremental depreciation and amortization | (1,680 | ) | (3,027 | ) | ||||
Incremental interest costs, net | (183 | ) | (728 | ) | ||||
Tax effects of pro forma adjustments and recognizing benefit on resulting Exalenz losses | 653 | 1,027 | ||||||
Total Adjustments to Net Earnings | $ | (343 | ) | $ | (5,293 | ) | ||
(5) | Lead Testing Matters |
(6) | Cash and Cash Equivalents |
As of September 30, | 2021 | 2020 | ||||||
Institutional money market funds | $ | 1,020 | $ | 1,017 | ||||
Cash on hand, unrestricted | 48,751 | 52,497 | ||||||
Total | $ | 49,771 | $ | 53,514 | ||||
(7) | Inventories |
As of September 30, | 2021 | 2020 | ||||||
Raw materials | $ | 14,843 | $ | 11,966 | ||||
Work-in-process | 25,072 | 19,477 | ||||||
Finished goods - instruments | 2,260 | 1,594 | ||||||
Finished goods - kits and reagents | 34,667 | 28,227 | ||||||
Total | $ | 76,842 | $ | 61,264 | ||||
(8) | Goodwill and Other Intangible Assets, Net |
2021 | 2020 | |||||||||||||||
As of September 30, | Gross Carrying Value | Accum. Amort. | Gross Carrying Value | Accum. Amort. | ||||||||||||
Manufacturing technologies, core products and cell lines | $ | 62,416 | $ | 22,633 | $ | 62,363 | $ | 18,750 | ||||||||
Tradenames, licenses and patents | 18,489 | 9,492 | 18,425 | 7,801 | ||||||||||||
Customer lists, customer relationships and supply agreements | 54,941 | 19,649 | 45,071 | 16,210 | ||||||||||||
Non-compete agreements | 110 | 31 | 110 | 11 | ||||||||||||
$ | 135,956 | $ | 51,805 | $ | 125,969 | $ | 42,772 | |||||||||
(9) | Leasing Arrangements |
Year Ended September 30, | 2021 | 2020 | ||||||
Lease costs within cost of sales | $ | 795 | $ | 597 | ||||
Lease costs within operating expenses | 1,542 | 1,286 | ||||||
Right-of-use assets, net obtained in exchange for operating lease liabilities | 1,073 | 1,600 | ||||||
As of September 30, | 2021 | 2020 | ||||||
Weighted average remaining lease term | 3.6 yrs. | 4.2 yrs. | ||||||
Average discount rate | 3.2 | % | 3.7 | % | ||||
2022 | $ | 2,194 | ||
2023 | 1,558 | |||
2024 | 1,178 | |||
2025 | 918 | |||
2026 | 326 | |||
Thereafter | 65 | |||
Total lease payments | 6,239 | |||
Less amount of lease payment representing interest | (317 | ) | ||
Total present value of lease payments | $ | 5,922 | ||
Year Ended September 30, | 2021 | 2020 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 2,228 | $ | 1,693 | ||||
(10) | Bank Credit Arrangements |
2021 and 2020 approximates the current carrying value reflected in the Consolidated Balance Sheets of $60,000 and $68,824,
(11) |
|
(a) | Earnings before income taxes, and the related |
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
Domestic | $ | 27,787 | $ | 31,885 | $ | 44,795 | ||||||
Foreign | 2,593 | 4,544 | 5,849 | |||||||||
|
|
|
|
|
| |||||||
Total earnings before income taxes | $ | 30,380 | $ | 36,429 | $ | 50,644 | ||||||
|
|
|
|
|
| |||||||
Provision (credit) for income taxes - | ||||||||||||
Federal - | ||||||||||||
Current | $ | 6,030 | $ | 11,262 | $ | 16,178 | ||||||
Temporary differences | ||||||||||||
Fixed asset basis differences and depreciation | 410 | (181 | ) | (45 | ) | |||||||
Intangible asset basis differences and amortization | (4,052 | ) | (1,158 | ) | (744 | ) | ||||||
Currentlynon-deductible expenses and reserves | 1,206 | 884 | (694 | ) | ||||||||
Stock-based compensation | 1,379 | (635 | ) | 129 | ||||||||
Net operating loss carryforwards utilized | 61 | 1,831 | — | |||||||||
Tax credit carryforwards utilized | 181 | 67 | 41 | |||||||||
Other, net | (148 | ) | 99 | 181 | ||||||||
|
|
|
|
|
| |||||||
Subtotal | 5,067 | 12,169 | 15,046 | |||||||||
State and local | 1,066 | 1,900 | 2,421 | |||||||||
Foreign | 398 | 803 | 948 | |||||||||
|
|
|
|
|
| |||||||
Total income tax provision | $ | 6,531 | $ | 14,872 | $ | 18,415 | ||||||
|
|
|
|
|
|
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Domestic | $ | 11,354 | $ | 9,068 | $ | 23,954 | ||||||
Foreign | 79,097 | 50,225 | 7,603 | |||||||||
Total earnings before income taxes | $ | 90,451 | $ | 59,293 | $ | 31,557 | ||||||
Provision (benefit) for income taxes - | ||||||||||||
Federal - | ||||||||||||
Current | $ | 4,431 | $ | 1,173 | $ | 5,001 | ||||||
Deferred | (2,595 | ) | 744 | (477 | ) | |||||||
State and local | 1,163 | 1,170 | 834 | |||||||||
Foreign - | ||||||||||||
Current | 16,305 | 10,194 | 1,915 | |||||||||
Deferred | (260 | ) | (174 | ) | (98 | ) | ||||||
Total income tax provision | $ | 19,044 | $ | 13,107 | $ | 7,175 | ||||||
(b) | The following is a reconciliation between the statutory U.S. income tax rate and the effective rate derived by dividing the |
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||||||||||||||
Computed income taxes at statutory rate | $ | 7,443 | 24.5 | % | $ | 12,750 | 35.0 | % | $ | 17,719 | 35.0 | % | ||||||||||||
Increase (decrease) in taxes resulting from - | ||||||||||||||||||||||||
State and local income taxes | 982 | 3.2 | 1,093 | 3.0 | 1,329 | 2.6 | ||||||||||||||||||
U.S. tax law change | (2,655 | ) | (8.7 | ) | — | — | — | — | ||||||||||||||||
One-time repatriation tax | 876 | 2.9 | — | — | — | — | ||||||||||||||||||
Foreign tax rate differences | (104 | ) | (0.3 | ) | (281 | ) | (0.8 | ) | (337 | ) | (0.7 | ) | ||||||||||||
Qualified domestic production incentives | (550 | ) | (1.8 | ) | (1,012 | ) | (2.8 | ) | (1,290 | ) | (2.5 | ) | ||||||||||||
Acquisition-related costs | — | — | — | — | 215 | 0.4 | ||||||||||||||||||
Uncertain tax position activity | (62 | ) | (0.2 | ) | 134 | 0.4 | 122 | 0.2 | ||||||||||||||||
Goodwill impairment charge | — | — | 2,320 | 6.4 | — | — | ||||||||||||||||||
Valuation allowance | (40 | ) | (0.1 | ) | — | — | 327 | 0.7 | ||||||||||||||||
Stock-based compensation | 447 | 1.4 | — | — | — | — | ||||||||||||||||||
Other, net | 194 | 0.6 | (132 | ) | (0.4 | ) | 330 | 0.7 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 6,531 | 21.5 | % | $ | 14,872 | 40.8 | % | $ | 18,415 | 36.4 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
On December 22, 2017, the United States enacted
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||||||||||||||
Computed income taxes at statutory rate | $ | 18,995 | 21.0 | % | $ | 12,452 | 21.0 | % | $ | 6,627 | 21.0 | % | ||||||||||||
Increase (decrease) in taxes resulting from - | ||||||||||||||||||||||||
State and local income taxes | 1,204 | 1.3 | 773 | 1.3 | 577 | 1.8 | ||||||||||||||||||
Foreign-Derived Intangible Income tax | (563 | ) | (0.6 | ) | (136 | ) | (0.2 | ) | (294 | ) | (0.9 | ) | ||||||||||||
Global Intangible Low Taxed Income (“GILTI”) tax | 8,061 | 8.9 | 4,970 | 8.4 | 1,119 | 3.5 | ||||||||||||||||||
Foreign tax credit | (7,802 | ) | (8.6 | ) | (4,767 | ) | (8.0 | ) | (990 | ) | (3.1 | ) | ||||||||||||
Foreign tax rate differences | (869 | ) | (1.0 | ) | (534 | ) | (0.9 | ) | 46 | 0.1 | ||||||||||||||
Transaction costs | — | — | 548 | 0.9 | — | — | ||||||||||||||||||
Uncertain tax position activity | 205 | 0.2 | 62 | 0.1 | 126 | 0.4 | ||||||||||||||||||
Valuation allowance | 729 | 0.8 | 229 | 0.3 | 364 | 1.2 | ||||||||||||||||||
Stock-based compensation | (498 | ) | (0.5 | ) | 41 | 0.1 | (33 | ) | (0.1 | ) | ||||||||||||||
Other, net | (418 | ) | (0.4 | ) | (531 | ) | (0.9 | ) | (367 | ) | (1.2 | ) | ||||||||||||
$ | 19,044 | 21.1 | % | $ | 13,107 | 22.1 | % | $ | 7,175 | 22.7 | % | |||||||||||||
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
U.S. GILTI inclusion | $ | 38,384 | $ | 23,666 | $ | 5,328 | ||||||
Resulting permanent tax expense | 8,061 | 4,970 | 1,119 | |||||||||
Offsetting foreign tax credit | (7,802 | ) | (4,767 | ) | (990 | ) | ||||||
(c) | The components of net deferred |
As of September 30, | 2018 | 2017 | ||||||
Deferred tax assets - | ||||||||
Valuation reserves andnon-deductible expenses | $ | 1,473 | $ | 1,762 | ||||
Stock compensation expense not deductible | 2,033 | 3,367 | ||||||
Net operating loss and tax credit carryforwards | 433 | 743 | ||||||
Basis difference in equity-method investee | 302 | 302 | ||||||
Inventory basis differences | 383 | 1,269 | ||||||
Other | (530 | ) | (289 | ) | ||||
|
|
|
| |||||
Subtotal | 4,094 | 7,154 | ||||||
Less valuation allowance | (302 | ) | (342 | ) | ||||
|
|
|
| |||||
Deferred tax assets | 3,792 | 6,812 | ||||||
|
|
|
| |||||
Deferred tax liabilities - | ||||||||
Fixed asset basis differences and depreciation | (1,913 | ) | (1,325 | ) | ||||
Intangible asset basis differences and amortization | (5,518 | ) | (9,784 | ) | ||||
|
|
|
| |||||
Deferred tax liabilities | (7,431 | ) | (11,109 | ) | ||||
|
|
|
| |||||
Net deferred tax liabilities | $ | (3,639 | ) | $ | (4,297 | ) | ||
|
|
|
|
As of September 30, | 2021 | 2020 | ||||||
Deferred tax assets - | ||||||||
Valuation reserves and non-deductible expenses | $ | 4,939 | $ | 4,848 | ||||
Stock compensation expense not deductible | 2,276 | 1,804 | ||||||
Net operating loss and tax credit carryforwards | 12,711 | 10,757 | ||||||
Basis difference in equity-method investee | 302 | 302 | ||||||
Inventories basis differences | 692 | 382 | ||||||
Other | 0 | 207 | ||||||
Subtotal | 20,920 | 18,300 | ||||||
Less valuation allowance | (1,624 | ) | (895 | ) | ||||
Deferred tax assets | 19,296 | 17,405 | ||||||
Deferred tax liabilities - | ||||||||
Property, plant and equipment basis differences and depreciation | (4,778 | ) | (4,269 | ) | ||||
Intangible asset basis differences and amortization | (6,495 | ) | (9,293 | ) | ||||
Other | (347 | ) | 0 | |||||
Deferred tax liabilities | (11,620 | ) | (13,562 | ) | ||||
Net deferred tax assets | $ | 7,676 | $ | 3,843 | ||||
As described in Note 1, we
2018 | 2017 | |||||||
Unrecognized income tax benefits beginning of year | $ | 517 | $ | 502 | ||||
Additions for tax positions of prior years | — | 144 | ||||||
Tax examination and other settlements | (161 | ) | (129 | ) | ||||
Expiration of statute of limitations | (94 | ) | — | |||||
|
|
|
| |||||
Unrecognized income tax benefits at end of year | $ | 262 | $ | 517 | ||||
|
|
|
|
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Unrecognized income tax benefits at beginning of year | $ | 568 | $ | 509 | $ | 388 | ||||||
Additions for tax positions of prior years | 34 | — | 83 | |||||||||
Reductions for tax positions of prior years | — | — | (38 | ) | ||||||||
Additions for tax positions of current year | 138 | 104 | 138 | |||||||||
Tax examination and other settlements | (40 | ) | (45 | ) | (62 | ) | ||||||
Unrecognized income tax benefits at end of year | $ | 700 | $ | 568 | $ | 509 | ||||||
(12) |
|
(a) |
|
(b) |
|
Each of the 2004
- 72 -
During each of fiscal 2016 and fiscal 20172020, in connection with hisMr. Kenny’s Amended and Restated Employment Agreement, we also granted to our Chairman and Chief Executive Officer at that time, Mr. John A. Kraeutler, 25 restricted share units (with a grant date fair value of $17.03 per share in fiscal 2016 and $19.09 per share in fiscal 2017), with each respective grant to be earned only if specified revenue and earnings per share targets were achieved for each of fiscal 2016 and fiscal 2017. As a result of the performance targets not being achieved in either fiscal 2016 or fiscal 2017, the restricted share units related to both grants have been cancelled.
Additionally, during fiscal 2018 in connection with theeffective October 9, 2017 employment of the Company’s new Chief Executive Officer, Mr. Jack Kenny,1, 2019, we granted to Mr. Kenny: (i) options to purchase 100approximately 198 shares of common stock of the Company (with a grant date fair value of $3.19$3.38 per share) vesting on a pro rata basis over four years;the three years ending October 1, 2022; and (ii) 13approximately 100 restricted share units (with a grant date fair value of $14.50$10.10 per share) vesting 100% on the second anniversary ofOctober 1, 2022, which are included within the grant. Also during fiscal 2018 in connection with his Amended and Restated Employment Agreement, we granted to our Chairman and Chief Executive Officer at that time, Mr. John A. Kraeutler, 25 restricted share units (with a grant date fair value of $15.30 per share) to be earned only if specified revenue and earnings per share targets were achieved for fiscal 2018. As a result of the fiscal 2018 performance targets related to this grant being achieved, these restricted share units have fully vested.
noted above.
2024.
actual.
Year ended September 30, | 2018 | 2017 | 2016 | |||||||||
Risk-free interest rates | 2.10 | % | 1.34 | % | 1.63 | % | ||||||
Dividend yield | 3.3 | % | 4.1 | % | 4.4 | % | ||||||
Life of option | 6.47 yrs. | 6.44 yrs. | 6.39 yrs. | |||||||||
Share price volatility | 30 | % | 27 | % | 31 | % | ||||||
Forfeitures (by employee group) | 0%-16 | % | 0%-19 | % | 0%-16 | % |
Year ended September 30, | 2021 | 2020 | 2019 | |||||||||
Share price volatility | 53%-59% | 34 | % | 29 | % | |||||||
Life of option | 4.00-7.47 yrs. | 6.51 yrs . | 6.51 yrs . | |||||||||
Risk-free interest rates | 0.26% - 0.79% | 1.60 | % | 2.99 | % | |||||||
Dividend yield | 0 % | 0 | % | 3.3 | % |
Options | Wtd Avg Exercise Price | Wtd Avg Remaining Life (Yrs) | Aggregate Intrinsic Value | |||||||||||||
Outstanding beginning of period | 942 | $ | 19.98 | |||||||||||||
Grants | 479 | 14.85 | ||||||||||||||
Exercises | (12 | ) | 14.65 | |||||||||||||
Forfeitures | (184 | ) | 15.38 | |||||||||||||
Cancellations | (130 | ) | 28.36 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding end of period | 1,095 | $ | 17.56 | 7.02 | $ | 249 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Exercisable end of period | 706 | $ | 18.70 | 5.98 | $ | 147 | ||||||||||
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- 74 -
Options | Wtd Avg Exercise Price | Wtd Avg Remaining Life (Yrs) | Aggregate Intrinsic Value | |||||||||||||
Outstanding beginning of period | 1,103 | $ | 14.67 | |||||||||||||
Grants | 167 | 19.28 | ||||||||||||||
Exercises | (219 | ) | 14.48 | |||||||||||||
Forfeitures | (19 | ) | 11.46 | |||||||||||||
Cancellations | (31 | ) | 21.85 | |||||||||||||
Outstanding end of period | 1,001 | $ | 15.31 | 6.55 | $ | 4,299 | ||||||||||
Exercisable end of period | 598 | $ | 15.90 | 5.44 | $ | 2,276 | ||||||||||
Options | Weighted- Average Grant Date Fair Value | |||||||
Nonvested beginning of period | 281 | $ | 3.00 | |||||
Granted | 479 | 3.27 | ||||||
Vested | (188 | ) | 3.09 | |||||
Forfeitures | (83 | ) | 2.99 | |||||
Cancelled | (100 | ) | 3.22 | |||||
|
|
|
| |||||
Nonvested end of period | 389 | $ | 3.24 | |||||
|
|
|
|
The
Options | Weighted- Average Grant Date Fair Value | |||||||
Nonvested beginning of period | 429 | $ | 3.36 | |||||
Granted | 167 | 9.18 | ||||||
Vested | (174 | ) | 3.59 | |||||
Forfeitures | (19 | ) | 2.83 | |||||
Nonvested end of period | 403 | $ | 5.70 | |||||
(13) |
|
Year Ended September 30, | 2021 | 2020 | ||||||
Current liabilities | $ | 638 | $ | 600 | ||||
Non-current liabilities | 5,176 | 10,524 |
(14) |
|
(15) | Reportable Segments and Major Concentration Data |
Our
- 75 -
Revenues from individual customers constituting 10% or more of consolidated net revenues are as follows:
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||||||||||||||
Customer A | $ | 22,490 | (11 | )% | $ | 22,397 | (11 | )% | $ | 20,246 | (10 | )% | ||||||||||||
Customer B | $ | 22,040 | (10 | )% | $ | 17,825 | (9 | )% | $ | 19,585 | (10 | )% |
Accounts receivable from these two Diagnostics customers accounted for 12%
Significant revenueCorporate information by country for the Diagnostics and Life Science segments is as follows. Revenues are attributed to the geographic area based on the location to which the product is delivered.
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
United States | $ | 125,959 | $ | 119,332 | $ | 122,264 | ||||||
Italy | 7,648 | 6,601 | 6,717 | |||||||||
France | 2,363 | 1,856 | 1,619 | |||||||||
United Kingdom | 2,337 | 1,789 | 2,018 | |||||||||
Belgium | 1,719 | 1,517 | 1,471 | |||||||||
Holland | 1,460 | 1,297 | 1,215 | |||||||||
Japan | 1,263 | 2,209 | 1,665 | |||||||||
Other countries | 7,705 | 8,920 | 8,145 | |||||||||
|
|
|
|
|
| |||||||
Total Diagnostics | $ | 150,454 | $ | 143,521 | $ | 145,114 | ||||||
|
|
|
|
|
| |||||||
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
United States | $ | 20,442 | $ | 19,627 | $ | 19,212 | ||||||
China | 8,329 | 5,893 | 4,077 | |||||||||
Germany | 8,198 | 7,400 | 6,999 | |||||||||
United Kingdom | 5,190 | 5,574 | 5,581 | |||||||||
Spain | 4,179 | 3,206 | 2,917 | |||||||||
Australia | 3,617 | 3,999 | 3,163 | |||||||||
South Korea | 2,040 | 2,306 | 1,043 | |||||||||
France | 2,037 | 1,791 | 1,054 | |||||||||
Japan | 1,928 | 1,374 | 1,542 | |||||||||
Other countries | 7,157 | 6,080 | 5,380 | |||||||||
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Total Life Science | $ | 63,117 | $ | 57,250 | $ | 50,968 | ||||||
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In locations outside the U.S., the Company’s identifiable assets were concentrated as follows at the end of most recent fiscal years:
As of September 30, 2018: U.K – $14,816; Germany – $7,706; Italy – $7,334; and Australia – $3,543
As of September 30, 2017: U.K – $15,755; Germany – $6,915; Italy – $7,712; and Australia – $4,376
Segment information for the years ended September 30, 2018, 2017 and 2016 is as follows:
Diagnostics | Life Science | Unallocated Costs and Eliminations (1) | Total | |||||||||||||
Fiscal Year 2018 - | ||||||||||||||||
Net revenues – | ||||||||||||||||
Third-party | $ | 150,454 | $ | 63,117 | $ | — | $ | 213,571 | ||||||||
Inter-segment | 392 | 397 | (789 | ) | — | |||||||||||
Operating income | 29,701 | 14,912 | (13,029 | ) | 31,584 | |||||||||||
Depreciation and amortization | 6,557 | 2,131 | — | 8,688 | ||||||||||||
Capital expenditures | 2,477 | 1,724 | — | 4,201 | ||||||||||||
Goodwill | 35,213 | 19,424 | — | 54,637 | ||||||||||||
Other intangible assets | 22,068 | 1,045 | — | 23,113 | ||||||||||||
Total assets | 180,978 | 70,341 | 58 | 251,377 | ||||||||||||
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Fiscal Year 2017 - | ||||||||||||||||
Net revenues – | ||||||||||||||||
Third-party | $ | 143,521 | $ | 57,250 | $ | — | $ | 200,771 | ||||||||
Inter-segment | 389 | 537 | (926 | ) | — | |||||||||||
Operating income | 23,848 | 14,086 | (552 | ) | 37,382 | |||||||||||
Depreciation and amortization | 7,037 | 2,053 | — | 9,090 | ||||||||||||
Capital expenditures | 2,554 | 1,913 | — | 4,467 | ||||||||||||
Goodwill | 35,213 | 19,713 | — | 54,926 | ||||||||||||
Other intangible assets | 24,973 | 1,731 | — | 26,704 | ||||||||||||
Total assets | 180,226 | 69,938 | (387 | ) | 249,777 | |||||||||||
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Fiscal Year 2016 - | ||||||||||||||||
Net revenues – | ||||||||||||||||
Third-party | $ | 145,114 | $ | 50,968 | $ | — | $ | 196,082 | ||||||||
Inter-segment | 289 | 893 | (1,182 | ) | — | |||||||||||
Operating income | 38,202 | 12,997 | 179 | 51,378 | ||||||||||||
Depreciation and amortization | 5,471 | 2,247 | — | 7,718 | ||||||||||||
Capital expenditures | 2,690 | 1,314 | — | 4,004 | ||||||||||||
Goodwill | 42,608 | 19,374 | — | 61,982 | ||||||||||||
Other intangible assets | 27,534 | 2,321 | — | 29,855 | ||||||||||||
Total assets | 185,446 | 66,624 | (42 | ) | 252,028 |
Diagnostics | Life Science | Corporate (1) | Eliminations (2) | Total | ||||||||||||||||
Fiscal 2021 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 127,760 | $ | 190,136 | $ | — | $ | — | $ | 317,896 | ||||||||||
Inter-segment | 351 | 207 | — | (558 | ) | — | ||||||||||||||
Operating (loss) income | (8,140 | ) | 115,250 | (14,164 | ) | 88 | 93,034 | |||||||||||||
Depreciation and amortization | 13,432 | 1,854 | — | — | 15,286 | |||||||||||||||
Capital expenditures | 15,827 | 2,485 | — | — | 18,312 | |||||||||||||||
Goodwill | 94,904 | 19,764 | — | — | 114,668 | |||||||||||||||
Other intangible assets, net | 84,149 | 2 | — | — | 84,151 | |||||||||||||||
Total assets | 339,208 | 110,536 | — | (22 | ) | 449,722 | ||||||||||||||
Fiscal 2020 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 121,132 | $ | 132,535 | $ | — | $ | — | $ | 253,667 | ||||||||||
Inter-segment | 326 | 261 | — | (587 | ) | — | ||||||||||||||
Operating (loss) income | 3,885 | 68,826 | (11,437 | ) | 50 | 61,324 | ||||||||||||||
Depreciation and amortization | 11,451 | 2,116 | — | — | 13,567 | |||||||||||||||
Capital expenditures | 1,850 | 1,449 | — | — | 3,299 | |||||||||||||||
Goodwill | 94,855 | 19,331 | — | — | 114,186 | |||||||||||||||
Other intangible assets, net | 83,179 | 18 | — | — | 83,197 | |||||||||||||||
Total assets | 306,812 | 98,483 | — | (34 | ) | 405,261 | ||||||||||||||
Fiscal 2019 | ||||||||||||||||||||
Net revenues - | ||||||||||||||||||||
Third-party | $ | 136,682 | $ | 64,332 | $ | — | $ | — | $ | 201,014 | ||||||||||
Inter-segment | 462 | 361 | — | (823 | ) | — | ||||||||||||||
Operating (loss) income | 25,390 | 17,581 | (10,373 | ) | 101 | 32,699 | ||||||||||||||
Depreciation and amortization | 7,676 | 2,288 | — | — | 9,964 | |||||||||||||||
Capital expenditures | 2,049 | 1,748 | — | — | 3,797 | |||||||||||||||
Goodwill | 70,395 | 18,846 | — | — | 89,241 | |||||||||||||||
Other intangible assets, net | 59,807 | 436 | — | — | 60,243 | |||||||||||||||
Total assets | 255,169 | 70,392 | — | (83 | ) | 325,478 | ||||||||||||||
(1) |
Includes Restructuring and Selected Legal Costs of $2,803, $2,080 and $2,596 for the |
(2) | Eliminations consist of inter-segment transactions. |
Year Ended September 30, | 2018 | 2017 | 2016 | |||||||||
Segment operating income | $ | 44,635 | $ | 38,144 | $ | 51,378 | ||||||
Restructuring and litigation costs | (13,051 | ) | (762 | ) | — | |||||||
Interest income | 418 | 171 | 67 | |||||||||
Interest expense | (1,520 | ) | (1,642 | ) | (897 | ) | ||||||
Other, net | (102 | ) | 518 | 96 | ||||||||
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Consolidated earnings before income taxes | $ | 30,380 | $ | 36,429 | $ | 50,644 | ||||||
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Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Operating (loss) income: | ||||||||||||
Diagnostics segment | $ | (8,140 | ) | $ | 3,885 | $ | 25,390 | |||||
Life Science segment | 115,250 | 68,826 | 17,581 | |||||||||
Eliminations | 88 | 50 | 101 | |||||||||
Total reportable segment operating income | 107,198 | 72,761 | 43,072 | |||||||||
Corporate operating expenses | (14,164 | ) | (11,437 | ) | (10,373 | ) | ||||||
Interest income | — | 142 | 681 | |||||||||
Interest expense | (1,878 | ) | (2,632 | ) | (1,945 | ) | ||||||
RADx initiative grant income | 1,000 | 0 | 0 | |||||||||
Other, net | (1,705 | ) | 459 | 122 | ||||||||
Consolidated earnings before income taxes | $ | 90,451 | $ | 59,293 | $ | 31,557 | ||||||
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
Diagnostics | ||||||||||||
Customer A | 10 | % | 12 | % | 13 | % | ||||||
Customer B | 11 | % | 13 | % | 12 | % | ||||||
Customer C | 12 | % | 7 | % | 6 | % | ||||||
Life Science | ||||||||||||
Customer D | 6 | % | 6 | % | 18 | % | ||||||
Customer E | 3 | % | 13 | % | 7 | % | ||||||
Customer F | 13 | % | 11 | % | 2 | % |
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
U.S. and territories | $ | 99,636 | $ | 95,382 | $ | 107,890 | ||||||
Italy | 12,240 | 9,797 | 10,911 | |||||||||
France | 2,283 | 2,238 | 2,446 | |||||||||
United Kingdom | 2,197 | 2,312 | 2,396 | |||||||||
Belgium | 1,554 | 1,440 | 1,468 | |||||||||
Holland | 1,279 | 1,183 | 1,413 | |||||||||
Finland | 1,069 | 275 | 291 | |||||||||
Japan | 551 | 848 | 1,572 | |||||||||
Other countries | 6,951 | 7,657 | 8,295 | |||||||||
Total Diagnostics | $ | 127,760 | $ | 121,132 | $ | 136,682 | ||||||
Year Ended September 30, | 2021 | 2020 | 2019 | |||||||||
U.S. and territories | $ | 44,785 | $ | 36,689 | $ | 18,931 | ||||||
Germany | 18,460 | 14,190 | 12,663 | |||||||||
Finland | 17,936 | 2,518 | 500 | |||||||||
China | 13,559 | 19,047 | 8,464 | |||||||||
United Kingdom | 13,097 | 14,765 | 4,709 | |||||||||
Spain | 12,593 | 7,242 | 4,414 | |||||||||
France | 10,733 | 5,579 | 2,200 | |||||||||
South Korea | 9,242 | 1,908 | 1,134 | |||||||||
Australia | 9,115 | 5,957 | 3,458 | |||||||||
Italy | 7,516 | 4,067 | 1,357 | |||||||||
Turkey | 7,281 | 2,819 | 290 | |||||||||
Japan | 6,532 | 3,707 | 1,624 | |||||||||
India | 5,558 | 2,099 | 143 | |||||||||
Indonesia | 5,183 | 3,027 | 169 | |||||||||
Holland | 3,197 | 3,212 | 710 | |||||||||
Canada | 1,073 | 547 | 322 | |||||||||
Other countries | 4,276 | 5,162 | 3,244 | |||||||||
Total Life Science | $ | 190,136 | $ | 132,535 | $ | 64,332 | ||||||
As of September 30, | 2021 | 2020 | ||||||
Israel | $ | 80,416 | $ | 70,097 | ||||
United Kingdom | 30,027 | 27,373 | ||||||
Germany | 22,293 | 12,877 | ||||||
Canada | 15,236 | 9,865 | ||||||
Italy | 6,921 | 7,858 |
(16) |
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(c) |
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We are a party to various litigation matters from time to time that we believe are in the normal course of business. The ultimate resolution of these routine matters is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. Additionally, the Company has also become a party to certain legal matters that are somewhat outside the normal course of business. See |
- 78 -
(d) |
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(17) |
Subsequent Events |
The sum
For the Quarter Ended in Fiscal 2018 | December 31 | March 31 | June 30 | September 30 | ||||||||||||
Net revenues | $ | 52,283 | $ | 56,451 | $ | 51,737 | $ | 53,100 | ||||||||
Gross profit | 31,786 | 34,569 | 31,956 | 32,150 | ||||||||||||
Net earnings | 6,302 | 5,288 | 6,825 | 5,434 | ||||||||||||
Basic earnings per common share | 0.15 | 0.12 | 0.16 | 0.13 | ||||||||||||
Diluted earnings per common share | 0.15 | 0.12 | 0.16 | 0.13 | ||||||||||||
Cash dividends per common share | 0.125 | 0.125 | 0.125 | 0.125 | ||||||||||||
For the Quarter Ended in Fiscal 2017 | December 31 | March 31 | June 30 | September 30 | ||||||||||||
Net revenues | $ | 46,809 | $ | 54,125 | $ | 50,140 | $ | 49,697 | ||||||||
Gross profit | 29,039 | 33,477 | 31,146 | 30,630 | ||||||||||||
Net earnings | 6,279 | 9,312 | 240 | 5,726 | ||||||||||||
Basic earnings per common share | 0.15 | 0.22 | 0.01 | 0.14 | ||||||||||||
Diluted earnings per common share | 0.15 | 0.22 | 0.01 | 0.13 | ||||||||||||
Cash dividends per common share | 0.200 | 0.125 | 0.125 | 0.125 |
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On October 9, 2018,FDA that emergency use authorization (“EUA”) had been granted for the Company and DiaSorin Inc. entered into a strategic collaboration to sell DiaSorin’sHelicobacter pylori stool antigen test to detectH. pylori for use on its automated LIAISON platform under the Meridian brand name worldwide. The new collaboration results in the terminationCompany’s Revogene SARS-CoV-2 assay.
2021.
Not applicable.
- 80 -
The followingcaption “Committees of the Board of Directors” in the Proxy Statement. That information regarding the Company’s directors and executive officers is provided pursuant to Exchange Act Rule14a-3(b)(8):
DIRECTORS
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- 81 -
ITEM 12.
EQUITY COMPENSATION PLAN INFORMATION
The following table presents summary information as
Plan Category | (a) Number of Securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted- average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders(1) | 1,095 | $ | 17.561 | 2,707 | ||||||||
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Total(2) | 1,095 | $ | 17.561 | 2,707 | ||||||||
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the Proxy Statement set forth under the captions “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” is incorporated herein by reference.
(a) | (1) and (2) FINANCIAL STATEMENTS AND SCHEDULES. |
(b) | (3) EXHIBITS. |
- 82 -
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10.1* |
- 83 -
- 84 -
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101.SCH*** | Inline XBRL Taxonomy Extension Schema | ||
101.CAL*** | Inline XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF*** | Inline XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB*** | Inline XBRL Taxonomy Extension Label Linkbase | ||
101.PRE*** | Inline XBRL Taxonomy Extension Presentation Linkbase | ||
104*** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in |
* | Management Compensatory Contracts |
** | Furnished, not filed |
*** | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. |
† | Schedules to and certain portions of these exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish a copy of any omitted schedule or other portion to the SEC upon request. |
None.
MERIDIAN BIOSCIENCE, INC. | ||||
By: | /s/ Jack Kenny | |||
Date: | November | |||
Jack Kenny | ||||
Chief Executive Officer |
Signature | Capacity | Date | ||
/s/ Jack Kenny | Chief Executive Officer and Director | November | ||
Jack Kenny | ||||
/s/ | Executive Vice President, Chief | November | ||
Financial Officer and Secretary (Principal Financial and Accounting Officer) | ||||
/s/ David C. Phillips | Chairman of the Board | November | ||
David C. Phillips | ||||
/s/ James M. Anderson | Director | November | ||
James M. Anderson | ||||
/s/ | Director | November | ||
Anthony P. Bihl III | ||||
/s/ Dwight E. Ellingwood | Director | November 23, 2021 | ||
Dwight E. Ellingwood | ||||
/s/ John C. McIlwraith | Director | November | ||
John C. McIlwraith | ||||
/s/ John M. Rice, Jr. | Director | November | ||
John M. Rice, Jr. | ||||
/s/ Catherine A. Sazdanoff | Director | November | ||
Catherine A. Sazdanoff | ||||
/s/ Felicia Williams | Director | November | ||
Felicia Williams |
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Deductions | Other (a) | Balance at End of Period | |||||||||||||||
Year Ended September 30, 2018: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 307 | $ | 39 | $ | (32 | ) | $ | (4 | ) | $ | 310 | ||||||||
Inventory realizability reserves | 2,059 | 321 | (405 | ) | (4 | ) | 1,971 | |||||||||||||
Valuation allowances – deferred taxes | 342 | — | (40 | ) | — | 302 | ||||||||||||||
Year Ended September 30, 2017: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 334 | $ | 90 | $ | (134 | ) | $ | 17 | $ | 307 | |||||||||
Inventory realizability reserves | 2,680 | 35 | (661 | ) | 5 | 2,059 | ||||||||||||||
Valuation allowances – deferred taxes | 342 | — | — | — | 342 | |||||||||||||||
Year Ended September 30, 2016: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 248 | $ | 139 | $ | (69 | ) | $ | 16 | $ | 334 | |||||||||
Inventory realizability reserves | 2,456 | 1,285 | (1,072 | ) | 11 | 2,680 | ||||||||||||||
Valuation allowances – deferred taxes | 15 | 327 | — | — | 342 |
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Deductions | Other (a) | Balance at End of Period | |||||||||||||||
Year Ended September 30, 2021: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 513 | $ | 583 | $ | (34 | ) | $ | 16 | $ | 1,078 | |||||||||
Inventory realizability reserves | 3,629 | 2,703 | (1,297 | ) | (38 | ) | 4,997 | |||||||||||||
Valuation allowances – deferred taxes | 895 | 729 | 0 | — | 1,624 | |||||||||||||||
Year Ended September 30, 2020: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 537 | $ | 34 | $ | (75 | ) | $ | 17 | $ | 513 | |||||||||
Inventory realizability reserves | 2,441 | 1,775 | (564 | ) | (23 | ) | 3,629 | |||||||||||||
Valuation allowances – deferred taxes | 666 | 335 | (106 | ) | — | 895 | ||||||||||||||
Year Ended September 30, 2019: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 310 | $ | 347 | $ | (100 | ) | $ | (20 | ) | $ | 537 | ||||||||
Inventory realizability reserves | 1,971 | 930 | (448 | ) | (12 | ) | 2,441 | |||||||||||||
Valuation allowances – deferred taxes | 302 | 364 | — | 0 | 666 |
(a) | Balances reflect the effects of currency |