SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form10-Q

For the Quarterly Period Ended DecemberMarch 31, 20162017

OR

For the transition period from                    to                    

Commission file number0-14902

MERIDIAN BIOSCIENCE, INC.

Incorporated under the laws of Ohio

31-0888197

(I.R.S. Employer Identification No.)

3471 River Hills Drive

Cincinnati, Ohio 45244

(513)271-3700

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM10-Q

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form10-Q contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, which may be identified by words such as “estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “should” and similar expressions or the negative versions thereof and which also may be identified by their context. All statements that address operating performance or events or developments that Meridian expects or anticipates will occur in the future, including, but not limited to, statements relating to per share diluted earnings and revenue, are forward-looking statements. Such statements, whether expressed or implied, are based upon current expectations of the Company and speak only as of the date made. Specifically, Meridian’s forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events and operating performance. Meridian assumes no obligation to publicly update or revise any forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially, including, without limitation, the following: Meridian’s continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian’s competition, and its ability to effectively sell such products. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis or in protecting its intellectual property. Meridian relies on proprietary, patented and licensed technologies. As such, the Company’s ability to protect its intellectual property rights, as well as the potential for intellectual property litigation, would impact its results. Ongoing 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 well as the uncertainty of regulatory approvals and the regulatory process. The international scope of Meridian’s operations, including changes in the relative strength 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 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, 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 and natural disasters and other events could have a materially adverse effect on Meridian’s results of operations and revenues. In addition to the factors described in this paragraph, Part I, Item 1A Risk Factors of our 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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

ASSETS

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Shareholders’ Equity  (Unaudited)

(dollars and shares in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Dollars in Thousands, Except Per Share Amounts

(Unaudited)

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of DecemberMarch 31, 2016,2017, the results of its operations for the three and six month periods ended DecemberMarch 31, 20162017 and 2015,2016, and its cash flows for the threesix month periods ended DecemberMarch 31, 20162017 and 2015.2016. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s fiscal 2016 Annual Report on Form10-K. Financial information as of September 30, 2016 has been derived from the Company’s audited consolidated financial statements. The results of operations for interim periods are not necessarily indicative of the results to be expected for the year.

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2016 Annual Report on Form10-K.

Recent Accounting Pronouncements –

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, will be effective for the Company beginning October 1, 2018 (fiscal 2019). While the Company has begun the process of identifying, categorizing and analyzing its various revenue streams, the Company has not yet completed its assessment of the impact that adoption of this guidance will have on its financial statements.

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 required by the Company until the beginning of fiscal 2020, although early adoption is permitted. The Company has not yet completedexpects to begin its assessment of the impact that adoption of this guidance will have on its financial statements.statements in fiscal 2018.

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. Adoption and implementation of the guidance is not required by the Company until the beginning of fiscal 2018, although early adoption is permitted. The Company has not yet completed its assessment ofassessed the impact that adoption of this guidance will have, and believes that the impact will primarily relate to the treatment of the differences between stock compensation expense recorded in the Company’s financial statements and the stock compensation ultimately deducted on its financial statements.tax returns. The tax effect of such differences is currently recorded in additionalpaid-in capital and reflected within the financing activities section of the statement of cash flows but upon adoption of this guidance will be required to be recorded directly to income tax expense and reflected within the operating activities section of the statement of cash flows. While the impact of this guidance, which the Company plans to adopt on a prospective

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basis at the beginning of fiscal 2018, 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), based on currently outstanding awards and the current market price of the Company’s common stock, the effect on the Company’s annual tax provision is not expected to be material.

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 significant impact on the Company’s statement of cash flows.

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In October 2016, the FASB issued ASU2016-16,Intra-Entity Transfers of Assets Other Than Inventory, which intends to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Adoption and implementation of the guidance is not required by the Company until the beginning of fiscal 2019, although early adoption is permitted. While the Company has not yet completedbegun its assessment of the impact that adoption of this guidance will have on its financial statements, in light of the levels of such transfer activity within the Company, adoption of this guidance is not expected to have a significant impact on the Company’s consolidated results of operations, cash flows or financial position.

In January 2017, the FASB issued ASU2017-04,Simplifying the Test for Goodwill Impairment, which serves to simplify the process of testing for goodwill impairment by eliminating the “Step 2” comparison of a reporting unit’simplied fair value to its carrying amount. The guidance requires an entity to compare a reporting unit’s fair value to its carrying amount, and if the carrying amount exceeds the fair value, an impairment equal to the excess carrying amount is recorded; no Step 2 implied fair value comparison is required. Adoption and implementation of the guidance is not required by the Company until the beginning of fiscal 2021, although early adoption is permitted.

Issued but not yet effective accounting pronouncements are not expected to have a material impact on the Condensed Consolidated Financial Statements.

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 $60,000 five-year term loan and cash and equivalents on hand. An amount of the acquisition consideration totaling $2,383 remains payable to the sellers, pending the realization of tax benefits for certain net operating loss carryforwards in future tax returns, which is included within non-current liabilities on our Condensed Consolidated Balance Sheet.returns. Headquartered near Boston, Massachusetts, Magellan is a leading manufacturer ofFDA-cleared products for the testing of blood to diagnose lead poisoning in children and adults. Magellan is the leading provider ofpoint-of-care lead testing systems in the U.S.

Since the consideration paid exceedsexceeded the preliminary fair value of the net assets acquired, goodwill in the amount of $40,572$40,591 was recorded in connection with this acquisition, none of which will be deductible for tax purposes. This goodwill results largely from the addition of Magellan’s complementary customer base and distribution channels, industry reputation in the U.S. as a leader in lead testing, and management talent and workforce. Our Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2016 include $1,105 of transaction costs related to the Magellan acquisition, which are reflected as Operating Expenses.

The Magellan results of operations, which are included in our Condensed Consolidated StatementStatements of Operations for the three and six months ended DecemberMarch 31, 20162017 and reported as part of the Diagnostics operating segment, include $726$675 and $1,387, respectively, of general and administrative expenses related to the depreciation of the fair value adjustment to acquired property, plant and equipment, and the amortization of specific identifiable intangible assets recorded on the opening balance sheet, including customer relationships, technology,non-compete agreements, and trade names.

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The results of Magellan included in the Company’s consolidated results for the three and six months ended DecemberMarch 31, 2016 include net revenues and net earnings from Magellan totaling $5,199 and $468, respectively, and reflect2017 are as follows, reflecting the items noted above and excludeexcluding interest expense on the debt secured by Meridian in connection with the transaction.

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The recognized preliminary amounts of identifiable assets acquired and liabilities assumed in the acquisition of Magellan are as follows:

As indicated, the allocation of the purchase price and estimated useful lives of property, plant and equipment, and intangible assets shown remain preliminary, pending final completion of valuations.

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The consolidated pro forma results of the combined entities of Meridian and Magellan, had the acquisition date been October 1, 2015, are as follows for the periods indicated:

These pro forma amounts have been calculated by including the results of Magellan, and adjusting the combined results to give effect to the following, as if the acquisition had been consummated on October 1, 2015, together with the consequential tax effects thereon:

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Cash and equivalents include the following components:

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Inventories are comprised of the following:

A summary of our acquired intangible assets subject to amortization, as of DecemberMarch 31, 20162017 and September 30, 2016, is as follows:

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The actual aggregate amortization expense for these intangible assets was $968$936 and $388$374 for the three months ended DecemberMarch 31, 2017 and 2016, respectively, and 2015,$1,904 and $762 for the six months ended March 31, 2017 and 2016, respectively. The estimated aggregate amortization expense for these intangible assets for each of the fiscal years through fiscal 2022 is as follows: remainder of fiscal 2017 – $2,794,$1,866, fiscal 2018 – $3,524,$3,529, fiscal 2019 – $3,303,$3,308, fiscal 2020 – $3,144,$3,148, fiscal 2021 – $2,560, and fiscal 2022 – $2,164.$2,182.

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 five succeeding fiscal years are as follows: remainder of fiscal 2017 – $3,000,$2,250, fiscal 2018 – $4,500, 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 at DecemberMarch 31, 20162017 approximates the current carrying value reflected in the accompanying Condensed Consolidated Balance Sheet.

In order to limit exposure to volatility in the LIBOR interest rate, the Company and the commercial bank also entered into an interest rate swap that effectively converts the variable interest rate on the term loan to a fixed rate of 2.76%. With an initial notional balance of $60,000, the interest rate swap has beenwas established with critical terms identical to those of the term loan, including (i) notional reduction amounts and dates; (ii) LIBOR settlement rates;

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(iii) rate reset dates; and (iv) term/maturity. Due to this, the interest rate swap has been designated as an effective cash flow hedge, with changes in fair value reflected as a separate component of other comprehensive income in the accompanying Condensed Consolidated Statements of Comprehensive Income. At DecemberMarch 31, 2016,2017, the fair value of the interest rate swap was an asset of $831,$960, and is reflected as anon-current asset in the accompanying Condensed Consolidated Balance Sheet. This fair value was determined by reference to a third party valuation, and is considered a Level 2 input within the fair value hierarchy of valuation techniques.

In addition, the Company continues to maintainmaintains a $30,000 revolving credit facility with a commercial bank, which expires March 31, 2021. There were no borrowings outstanding on this credit facility at DecemberMarch 31, 20162017 or September 30, 2016.

The term loan and the revolving credit facility are collateralized by the business assets of the Company’s U.S. subsidiaries and require compliance with financial covenants that limit the amount of debt obligations and require a minimum level of coverage of fixed charges, as defined in the borrowing agreement. As of DecemberMarch 31, 2016,2017, the Company is in compliance with all covenants. The Company is also required to maintain a cash compensating balance with the bank in the amount of $1,000, and is in compliance with this requirement.

Meridian was formed in 1976 and functions as a fully-integrated research, development, manufacturing, marketing, and sales organization with primary emphasis in the fields of infectious disease (in vitro) and blood lead diagnostics, and life science.science research and industrial components. Our principal businesses are (i) the development, manufacture and distribution of diagnostic test kits primarily for gastrointestinal, viral, respiratory and parasitic infectious diseases, and elevated blood lead levels; and (ii) the manufacture and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents used by researchersorganizations in the life science andagri-bio industries engaged in research, and by other diagnosticdiagnostics manufacturers.

Our reportable segments are Diagnostics and Life Science. The Diagnostics segment consists of manufacturing operations for infectious disease products in Cincinnati, Ohio; Magellan’s manufacturing operations for products detecting elevated lead levels in blood in Billerica, Massachusetts (near Boston); and the sale and distribution of diagnostics products domestically and abroad. This segment’s products are used by hospitals, reference labs and physician offices to detect infectious diseases and elevated lead levels.

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The Life Science segment consists of manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents domestically and abroad, including sales and business development offices in Singapore and Beijing, China to further pursue growing revenue opportunities in Asia. This segment’s products are used by manufacturers and researchers in a variety of applications (e.g.,in-vitro medical device manufacturing, microRNA detection,next-gen sequencing, and plant genotyping, and mutation detection, among others).

Amounts due from two Diagnostics distributor customers accounted for 12%15% and 16% of consolidated accounts receivable at DecemberMarch 31, 20162017 and September 30, 2016, respectively. Revenues from these two distributor customers accounted for 23%33% and 39%26% of the Diagnostics segment third-party revenues during the three months ended DecemberMarch 31, 20162017 and 2015,2016, respectively, and 28% and 33% during the six months ended March 31, 2017 and 2016, respectively. These distributors represented 17%23% and 29%19% of consolidated revenues for the fiscal 2017 and 2016 firstsecond quarters, respectively.respectively, and 20% and 24% for the respectiveyear-to-date six month periods.

Within our Life Science segment, two diagnostic manufacturing customers accounted for 19%21% and 18% of the segment’s third-party revenues during the three months ended DecemberMarch 31, 2017 and 2016, respectively, and 2015,20% and 18% during the six months ended March 31, 2017 and 2016, respectively.

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Segment information for the interim periods is as follows:

Transactions between segments are accounted for at established intercompany prices for internal and management purposes, with all intercompany amounts eliminated in consolidation.

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

Refer to “Forward-Looking Statements” following the Table of Contents in front of this Form10-Q. In the discussion that follows, all dollar amounts are in thousands (both tables and text), except per share data.

Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of Meridian’s financial condition, changes in financial condition and results of operations. This discussion should be read in conjunction with the financial statements and notes thereto beginning on page 1.

RESULTS OF OPERATIONS

Quarterly Overview

The firstsecond quarter of fiscal 2017 was characterized by strong performance from our Life Science and Magellan business units, with significant weakness in our core diagnostics businessimprovement in the U.S. (partCompany’s overall results compared to those of our Americas region). Our core diagnostics business in the EMEA region (as defined within the Reportable Segment section below) grew by 5% over the first quarter, ofwith both our Diagnostics and Life Science reportable segments reflecting revenue increases over both the fiscal 2017 first quarter and the comparable fiscal 2016 on a constant-currency basis. While we have implementedsecond quarter. These improvements reflect the benefits of measures taken since late in fiscal 2016 to stabilize our Americas core diagnostics business, including making changes to our senior management team and strengthening our relationships with key distribution partners, the recovery in our core diagnostics unit is proceeding more slowly than planned. As a result, first quarter earnings were depressed, as the core diagnostics unit generates the largest contribution to our profits.

In addition to implementing the measures noted above, we are in the process of taking further actionwell as actions taken to align resources, reduce expenses and optimize investments in product development. The resultsRevenues for the second quarter of fiscal 2017 were 16% higher than the first fiscalquarter. Similarly, net earnings for the second quarter have led to the downward revision to ourof fiscal 2017 revenue and earnings guidance, andwere 48% higher than the annual indicated dividend rate has been reduced (as more fully discussed in the Liquidity and Capital Resources section below), better aligning with our stated dividend payout range and enabling the Company to fund global expansion and new product development.first quarter.

Three Months Ended DecemberMarch 31, 20162017

Net earnings for the firstsecond quarter of fiscal 2017 decreased 29%increased 2% to $6,279,$9,312, or $0.15$0.22 per diluted share, from net earnings for the firstsecond quarter of fiscal 2016 of $8,893,$9,091, or $0.21 per diluted share. Reflected within the fiscal 2016 quarterly results are transaction costs related to acquisition activity, including the 2016 Magellan acquisition ($1,000, or $0.02 per diluted share, net of tax). Consolidated revenues decreased 1%increased 6% to $46,809$54,125 for the firstsecond quarter of fiscal 2017 compared to the same period of the prior year (flat(also 6% on a constant-currency basis).

Revenues for the Diagnostics segment for the firstsecond quarter of fiscal 2017 decreased 4%increased 1% compared to the firstsecond quarter of fiscal 2016 (also down 4%(increased 2% on a constant-currency basis), comprised of a 22%2% decrease in molecular products and a 2% increase innon-molecular products, including $5,199$3,645 of Magellan revenues. With an 11%a 25% increase in its immunoassay components business and an 8%a 4% increase in its molecular components business, revenues of our Life Science segment increased by 10%18% during the firstsecond quarter of fiscal 2017 compared to the firstsecond quarter of fiscal 2016 increasing 12%(increasing 20% on a constant-currency basis.basis).

Six Months Ended March 31, 2017

For the six month period ended March 31, 2017, net earnings decreased 13% to $15,591, or $0.37 per diluted share, compared to net earnings for the comparable fiscal 2016 period of $17,984, or $0.42 per diluted share. Reflected within theyear-to-date fiscal 2016 results are transaction costs related to acquisition activity, including the 2016 Magellan acquisition ($1,233, or $0.03 per diluted share, net of tax). Consolidated revenues increased 3% to $100,934 for the first six months of fiscal 2017 compared to the same period of the prior year (also 3% on a constant-currency basis).

Revenues for the Diagnostics segment for the first six months of fiscal 2017 decreased 1% compared to the first six months of fiscal 2016 (also 1% on a constant-currency basis), comprised of a 12% decrease in molecular products and a 2% increase innon-molecular products, including $8,844 of Magellan revenues. With a 19% increase in its immunoassay components business and a 6% increase in its molecular components business, revenues of our Life Science segment increased by 14% during the first six months of fiscal 2017 compared to the first six months of fiscal 2016 (increasing 16% on a constant-currency basis).

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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 effect of costs associated with acquisition activity, each of which is anon-GAAP financial measure, as well as reconciliations to 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:

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.

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REVENUE OVERVIEW

Below are analyses of the Company’s revenue, provided for each of the following:

Revenue Overview – By Reportable Segment & Geographic Region

Our reportable segments are Diagnostics and Life Science, with products sold and distributed in the countries comprising North and Latin America (the “Americas”); Europe, Middle East and Africa (“EMEA”); and other countries outside of the Americas and EMEA (rest of the world, or “ROW”). A full description of our segments is set forth in Note 8 of the accompanying Condensed Consolidated Financial Statements.

Revenues for the Diagnostics segment, in the normal course of business, may be affected from quarter to quarter by buying patterns of major distributors, seasonality and strength of certain diseases, and foreign currency exchange rates. Revenues for the Life Science segment, in the normal course of business, may be affected from quarter to quarter by buying patterns of major customers, and foreign currency exchange rates. We believe that the overall breadth of our product lines serves to reduce the variability in consolidated revenues due to these factors.