MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM10-Q


		Page(s)

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Operations Three Months Ended December 31, ~~2017~~2022 and ~~2016~~2021		1

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three Months Ended December 31, ~~2017~~2022 and ~~2016~~2021		2

	Condensed Consolidated Statements of Cash Flows Three Months Ended December 31, ~~2017~~2022 and ~~2016~~2021		3

	Condensed Consolidated Balance Sheets December 31, ~~2017~~2022 and September 30, ~~2017~~2022		4-5

	Condensed Consolidated ~~Statement~~Statements of Changes in Shareholders’ Equity Three Months Ended December 31, ~~2017~~2022 and 2021		6

	Notes to Condensed Consolidated Financial Statements		~~7-12~~7-18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~12-20~~19-26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2126

Item 4.	Controls and Procedures		2126

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		2227

Item 1A.	Risk Factors		2227

Item 6.	Exhibits		2227

~~Signature~~Signatures			2228

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 “continues”, “estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “signals”, “should”, “can” 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 Bioscience, Inc. (“Meridian” or “the Company”) expects or anticipates will occur in the future, including, but not limited to, statements relating to per share diluted net earnings, sales, product demand, net revenues, operating margin, other guidance and ~~revenue,~~the impact of COVID-19 on its business and prospects, 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 operating results, financial condition and 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, its ability to effectively sell such products and its ability to successfully expand and effectively manage increased sales and marketing operations. While Meridian has introduced a number of internally developed products and acquired 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, and unexpected or costly manufacturing costs associated with ~~the ramp up~~its introduction of new products or acquired products could cause actual results to differ from expectations. 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~~the Company’s 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, and in

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(dollar and share amounts in thousands, except per share data)

   Three Months Ended
   December 31,
   2017 2016
NET REVENUES
   $ 52,283 $ 46,809
COST OF SALES
   20,497 17,770


GROSS PROFIT
   31,786 29,039


OPERATING EXPENSES

Research and development
   4,496 3,597
Selling and marketing
   8,842 7,618
General and administrative
   8,904 7,739
CEO transition and litigation costs
   1,483 —


Total operating expenses
   23,725 18,954


OPERATING INCOME
   8,061 10,085
OTHER INCOME (EXPENSE)

Interest income
   72 22
Interest expense
   (395 ) (423 )
Other, net
   (80 ) (25 )


Total other expense
   (403 ) (426 )


EARNINGS BEFORE INCOME TAXES
   7,658 9,659
INCOME TAX PROVISION
   1,356 3,380


NET EARNINGS
   $ 6,302 $ 6,279


BASIC EARNINGS PER COMMON SHARE
   $ 0.15 $ 0.15
DILUTED EARNINGS PER COMMON SHARE
   $ 0.15 $ 0.15
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC
   42,263 42,159
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS
   399 376


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED
   42,662 42,535


ANTI-DILUTIVE SECURITIES:

Common share options and restricted share units
   1,034 715


DIVIDENDS DECLARED PER COMMON SHARE
   $ 0.125 $ 0.20


	Three Months Ended December 31,
	2022			2021
NET REVENUES	$	56,902		$	88,341
COST OF SALES		25,397			39,182

GROSS PROFIT		31,505			49,159

OPERATING EXPENSES
Research and development		6,177			6,194
Selling and marketing		8,294			7,741
General and administrative		11,073			14,660
Acquisition and transaction related costs		1,188			—
Litigation and select legal costs		32,888			281

Total operating expenses		59,620			28,876

OPERATING INCOME (LOSS)		(28,115	)		20,283
OTHER INCOME (EXPENSE)
Interest income		3			1
Interest expense		(148	)		(372	)
Other, net		(837	)		(161	)

Total other expense, net		(982	)		(532	)

EARNINGS (LOSS) BEFORE INCOME TAXES		(29,097	)		19,751

INCOME TAX PROVISION		724			4,411

NET EARNINGS (LOSS)	$	(29,821	)	$	15,340

BASIC EARNINGS (LOSS) PER COMMON SHARE	$	(0.68	)	$	0.35
DILUTED EARNINGS (LOSS) PER COMMON SHARE	$	(0.68	)	$	0.35
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		43,896			43,439
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS		—			589

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		43,896			44,028

ANTI-DILUTIVE SECURITIES:
Common share options and restricted share units		813			425

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)

(dollar amounts in thousands)

Three Months Ended December 31,
   2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES

Net earnings
   $ 6,302 $ 6,279
Non-cash items included in net earnings:

Depreciation of property, plant and equipment
   1,146 1,078
Amortization of intangible assets
   938 968
Amortization of deferred instrument costs
   201 257
Stock-based compensation
   1,759 1,884
Deferred income taxes
   (1,624 ) 2,091
Change in:

Accounts receivable
   (2,989 ) 2,191
Inventories
   (2,353 ) (169 )
Prepaid expenses and other current assets
   87 (406 )
Accounts payable and accrued expenses
   1,315 (913 )
Income taxes payable
   497 44
Other, net
   (108 ) (311 )


Net cash provided by operating activities
   5,171 12,993


CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment
   (1,234 ) (1,392 )


Net cash used for investing activities
   (1,234 ) (1,392 )


CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid
   (5,288 ) (8,440 )
Payments on term loan
   (1,125 ) (750 )
Proceeds and tax benefits from exercises of stock options
   —   301


Net cash used for financing activities
   (6,413 ) (8,889 )


Effect of Exchange Rate Changes on Cash and Equivalents
   115 (662 )


Net (Decrease) Increase in Cash and Equivalents
   (2,361 ) 2,050
Cash and Equivalents at Beginning of Period
   57,072 47,226


Cash and Equivalents at End of Period
   $ 54,711 $ 49,276


	Three Months Ended December 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$	(29,821	)	$	15,340
Non-cash items included in net earnings (loss):
Depreciation of property, plant and equipment		1,643			1,700
Amortization of intangible assets		2,541			2,483
Stock compensation expense		1,393			1,903
Deferred income taxes		216			927
Estimated litigation costs		32,000			—
Change in the following, net of acquisition:
Accounts receivable		6,083			9,424
Inventories		(3,496	)		2,093
Prepaid expenses and other current assets		894			200
Accounts payable and accrued expenses		(10,833	)		1,018
Income taxes payable		(2,023	)		1,113
Other, net		(946	)		(646	)

Net cash (used in) provided by operating activities		(2,349	)		35,555

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(2,654	)		(1,708	)
Acquisition, net of holdback		(2,000	)		—

Net cash used in investing activities		(4,654	)		(1,708	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment on revolving credit facility		—			(10,000	)
Payment of deferred financing costs		—			(404	)
Proceeds from exercise of stock options		799			80
Employee taxes paid upon net share settlement of restricted share units		(3,323	)		(763	)

Net cash used in financing activities		(2,524	)		(11,087	)

Effect of Exchange Rate Changes on Cash and Cash Equivalents		2,172			198

Net Increase (Decrease) in Cash and Cash Equivalents		(7,355	)		22,958
Cash and Cash Equivalents at Beginning of Period		81,453			49,771

Cash and Cash Equivalents at End of Period	$	74,098		$	72,729

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

(dollar amounts in thousands)

ASSETS

   December 31,
2017
(Unaudited)    September 30,
2017
CURRENT ASSETS

Cash and equivalents
   $ 54,711    $ 57,072
Accounts receivable, less allowances of $306 and $307
   32,136    29,106
Inventories
   43,644    41,493
Prepaid expenses and other current assets
   6,126    6,204




Total current assets
   136,617    133,875




PROPERTY, PLANT AND EQUIPMENT, at Cost

Land
   1,164    1,162
Buildings and improvements
   32,244    32,207
Machinery, equipment and furniture
   49,367    48,836
Construction in progress
   2,374    1,895




Subtotal
   85,149    84,100
Less: accumulated depreciation and amortization
   54,749    53,590




Net property, plant and equipment
   30,400    30,510




OTHER ASSETS

Goodwill
   54,997    54,926
Other intangible assets, net
   25,777    26,704
Restricted cash
   1,000    1,000
Deferred instrument costs, net
   1,415    1,368
Fair value of interest rate swap
   1,156    815
Deferred income taxes
   146    158
Other assets
   443    421




Total other assets
   84,934    85,392




TOTAL ASSETS
   $ 251,951    $ 249,777


	December 31, 2022 (Unaudited)		September 30, 2022
CURRENT ASSETS
Cash and cash equivalents	$	74,098	$	81,453
Accounts receivable, less allowances of $1,327 and $1,325, respectively		41,573		47,235
Inventories, net		72,663		67,814
Prepaid expenses and other current assets		13,200		14,095

Total current assets		201,534		210,597

PROPERTY, PLANT AND EQUIPMENT
Land		979		968
Buildings and improvements		33,068		32,983
Machinery, equipment and furniture		86,732		79,517
Construction in progress		5,693		10,589

Subtotal		126,472		124,057
Less: accumulated depreciation and amortization		81,051		79,199

Net property, plant and equipment		45,421		44,858

OTHER ASSETS
Goodwill		120,567		116,302
Other intangible assets, net		71,572		74,131
Right-of-use assets, net		6,041		5,850
Deferred income taxes		9,650		9,278
Other assets		1,978		2,081

Total other assets		209,808		207,642

TOTAL ASSETS	$	456,763	$	463,097

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~~dollar amounts in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

   December 31,
2017
(Unaudited) September 30,
2017
CURRENT LIABILITIES

Accounts payable
   $ 8,507 $ 7,719
Accrued employee compensation costs
   4,801 4,536
Current portion of acquisition consideration
   2,095 2,095
Other accrued expenses
   2,795 2,789
Current portion of long-term debt
   4,500 4,500
Income taxes payable
   776 1,248


Total current liabilities
   23,474 22,887


NON-CURRENT LIABILITIES

Acquisition consideration
   235 235
Post-employment benefits
   2,551 2,468
Long-term debt
   49,030 50,147
Long-term income taxes payable
   854 —
Deferred income taxes
   2,929 4,455


Totalnon-current liabilities
   55,599 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, 42,307,542 and 42,207,317 shares issued, respectively
   —   —
Additionalpaid-in capital
   127,367 125,608
Retained earnings
   47,937 46,923
Accumulated other comprehensive loss
   (2,426 ) (2,946 )


Total shareholders’ equity
   172,878 169,585


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 251,951 $ 249,777


	December 31, 2022 (Unaudited)			September 30, 2022
CURRENT LIABILITIES
Accounts payable	$	14,413		$	17,759
Accrued employee compensation costs		9,894			17,682
Accrued estimated litigation costs		42,000			10,000
Accrued product recall costs		997			1,157
Current operating lease obligations		1,954			1,830
Current government grant obligations		799			667
Other accrued expenses		6,288			5,048
Income taxes payable		2,232			3,808

Total current liabilities		78,577			57,951

NON-CURRENT LIABILITIES
Post-employment benefits		1,728			1,673
Long-term operating lease obligations		4,187			4,127
Long-term debt		25,000			25,000
Government grant obligations		4,521			4,620
Long-term income taxes payable		395			395
Deferred income taxes		1,104			578
Other non-current liabilities		712			692

Total non-current liabilities		37,647			37,085

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, 43,999,659 and 43,755,188 shares issued and outstanding, respectively		—			—
Additional paid-in capital		154,533			155,664
Treasury stock, at cost, 9,655 shares		(259	)		(259	)
Retained earnings		193,339			223,160
Accumulated other comprehensive loss		(7,074	)		(10,504	)

Total shareholders’ equity		340,539			368,061

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	456,763		$	463,097

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)

1.	~~Basis~~ Nature of ~~Presentation~~Business

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

Meridian Bioscience, Inc. (“Meridian” or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of December 31, 2017, the results of its operations for the three month periods ended December 31, 2017 and 2016, and its cash flows for the three month periods ended December 31, 2017 and 2016. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s fiscal 2017 Annual Report on Form 10-K. Financial information as of September 30, 2017 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.

2.	~~Significant Accounting Policies~~

~~A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2017 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). The Company has prepared an inventory of its existing revenue streams and a preliminary analysis of the revenue recognition criteria applying ASU~~2014-09.~~ This analysis is preliminary and our overall assessment is not yet complete. However, based on the analysis completed to date, aside from certain expanded disclosure requirements, the Company does not currently anticipate that its planned adoption of ASU~~2014-09~~ ~~on a modified retrospective basis will have a material impact on its reported revenues.~~

~~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 expects to begin its assessment of the impact that adoption of this guidance will have on its financial statements later 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. 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 the previous guidance would have been recorded within additional~~paid-in~~ capital. While the future effect of the guidance is dependent upon 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.

~~Page 7~~

~~Reclassifications –~~

Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.

3.	~~Cash and Equivalents~~

~~Cash and equivalents include the following components:~~

   December 31, 2017    September 30, 2017
   Cash and
Equivalents    Other
Assets    Cash and
Equivalents    Other
Assets
Institutional money market funds
   $ 20,155    $ —      $ 20,104    $ —
Cash on hand -

Restricted
   —      1,000    —      1,000
Unrestricted
   34,556    —      36,968    —








Total
   $ 54,711    $ 1,000    $ 57,072    $ 1,000

4.	~~Inventories~~

~~Inventories are comprised of the following:~~

   December 31,
2017    September 30,
2017

Raw materials
   $ 7,989    $ 6,575
Work-in-process
   12,110    11,559
Finished goods - instruments
   1,271    1,460
Finished goods - kits and reagents
   22,274    21,899




Total
   $ 43,644    $ 41,493

5.	~~Intangible Assets~~

~~A summary of our acquired intangible assets subject to amortization, as of December 31, 2017 and September 30, 2017, is as follows:~~

   December 31, 2017    September 30, 2017
   Gross
Carrying
Value    Accumulated
Amortization    Gross
Carrying
Value    Accumulated
Amortization
Manufacturing technologies, core products and cell lines
   $ 22,341    $ 13,117    $ 22,332    $ 12,807
Trade names, licenses and patents
   8,699    4,632    8,689    4,398
Customer lists, customer relationships and supply agreements
   24,586    12,190    24,562    11,854
Non-compete agreements
   720    630    720    540








   $ 56,346    $ 30,569    $ 56,303    $ 29,599

~~Page 8~~

The actual aggregate amortization expense for these intangible assets was $938 and $968 for the three months ended December 31, 2017 and 2016, respectively. The estimated aggregate amortization expense for these intangible assets for each of the fiscal years through fiscal 2023 is as follows: remainder of fiscal 2018 – $2,628, fiscal 2019 – $3,343, fiscal 2020 – $3,178, fiscal 2021 – $2,561, fiscal 2022 – $2,182, and fiscal 2023 – $2,170.

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 25^th ~~and June 5~~^th.Magellan’s lead testing systems are capable of processing both capillary and venous blood samples. Magellan’s LeadCare Plus and LeadCare Ultra systems, which account for approximately 10% of Magellan’s annual revenues, are used predominantly with venous blood samples. Magellan’s LeadCare and LeadCare II systems are predominantly used with capillary blood samples.

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. To date, we have satisfied our post-Warning Letter reporting requirements with the FDA. During the first quarter of fiscal 2018, we incurred approximately $500 in Quality System remediation costs, primarily related to regulatory consultants.

As a result of these matters, we expect to experience delays in reinstating venous blood sample testing on our LeadCare products, as well as in obtaining 510(k) clearance for new Magellan products. We also expect delays in obtaining export certifications for Magellan products during the remediation period. In light of these factors and their impacts, 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”“the Company”). 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 a~~pre-tax~~ ~~andafter-tax~~ ~~basis, was recorded during the fiscal 2017 third quarter. Given all of the factors considered, we do not anticipate, at this time, any further goodwill impairment charge from the Magellan acquisition.~~

6.	~~Income Taxes~~

On December 22, 2017, the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (the “tax reform act”). In applying the tax reform act, we followed the guidance in SEC Staff Accounting Bulletin 118 (“SAB 118”), regarding the application of ASC Topic 740 in situations where a company does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the tax reform act for the reporting period in which the tax reform act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the tax reform act’s enactment date and ending when a company has obtained, prepared and analyzed the information needed in order to complete the accounting requirements, but in no circumstances should the measurement period extend beyond one year from the enactment date.

~~We completed the accounting for the effects of the tax reform act during the quarter ended December 31, 2017, except for the effects related to theone-time~~ deemed repatriation transition tax on unrepatriated foreign earnings (the “repatriation transition tax”). As a result, our financial statements for the quarter ended December 31, 2017 reflect these effects of the tax reform act as provisional based on a reasonable estimate of the income tax effects. We have included a provisional non-current income tax payable in the amount of $854 related to the repatriation transition tax. The provisional amount is based on tax attribute information currently available from foreign investments. We continue to gather and analyze information, including historical adjustments to earnings and profits of foreign subsidiaries, in order to complete the accounting for the effects of the estimated repatriation transition tax.

Accounting for the remaining income tax effects of the tax reform act which impact our tax provision has been substantially completed and are included in the accompanying Condensed Consolidated Financial Statements as of December 31, 2017. We recorded a~~one-time~~ ~~tax benefit of $1,695 resulting from the tax reform act, including an adjustment from there-measurement~~ ~~of deferred tax assets and liabilities. Thisre-measurement~~ ~~includes an estimate of the temporary differences expected to be realized during fiscal 2018 at a transitional blended rate of 24.5%. The remaining temporary differences werere-measured~~ ~~at 21%.~~

~~Page 9~~

7.	~~Bank Credit Arrangements~~

In connection with the acquisition of Magellan Biosciences, Inc., and its wholly-owned subsidiary Magellan Diagnostics, Inc. (collectively, “Magellan”), 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: remainder of fiscal 2018 - $3,375, 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 December 31, 2017 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 was established with critical terms identical to those of the term loan, including (i) notional reduction amounts and dates; (ii) LIBOR settlement rates; (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 December 31, 2017 and September 30, 2017, the fair value of the interest rate swap was $1,156 and $815, respectively, and is reflected as a~~non-current~~ asset in the accompanying Condensed Consolidated Balance Sheets. 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 maintains 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 December 31, 2017 or September 30, 2017.

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 December 31, 2017, the Company is in compliance with all covenants. The Company is also required to maintain a compensating cash balance with the bank in the amount of $1,000, and is in compliance with this requirement.

8.	~~Reportable Segment and Major Customers Information~~

~~Meridian~~ was formed in 1976 and functions as a fully-integrated life science company with principal businesses inin: (i) the development, manufacture, sale and distribution of diagnostic ~~test~~testing systems and kits, primarily for certain gastrointestinal ~~viral,~~and respiratory ~~and parasitic~~ infectious diseases, and elevated blood lead levels; and (ii) the manufacture and distribution of bulk antigens, antibodies, ~~PCR/qPCR~~immunoassay blocking reagents, various Polymerase Chain Reaction (“PCR”) master mixes, isothermal mixes, enzymes, nucleotides, ~~competent cells,~~ and bioresearch reagents used by ~~researchers and~~ other diagnostic ~~manufacturers.~~

manufacturers and researchers.

Our reportable segments are Diagnostics and Life Science. The Diagnostics segment consists ofof: (i) manufacturing operations for infectious disease products in Cincinnati, Ohio; ~~Magellan’s~~Quebec City, Canada; and Modi’in, Israel; (ii) manufacturing operations for blood chemistry products ~~detecting elevated lead levels in blood~~ in Billerica, ~~Massachusetts (near Boston);~~Massachusetts; and (iii) 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.~~

levels in blood.

The Life Science segment consists ofof: (i) manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; North Brunswick, New Jersey; London, England; and Luckenwalde, Germany;

and ~~Sydney, Australia; and~~(ii) the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, ~~competent cells,~~ and bioresearch reagents domestically and abroad, including a sales and business development ~~and~~facility, with outsourced distribution ~~facilities~~capabilities, 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~~ in vitro medical device manufacturing, microRNA detection, ~~next-gen~~next-generation sequencing, plant genotyping, and mutation detection, among others).

~~Page 10~~

~~Amounts due from two Diagnostics distributor customers accounted~~

2.	Basis of Presentation

The Condensed Consolidated Financial Statements are unaudited and are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for ~~25%~~interim financial information, and ~~11%~~the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the Condensed Consolidated Financial Statements include all normal adjustments and disclosures necessary to present fairly the Company’s consolidated ~~accounts receivable at~~financial position as of December 31, ~~2017~~2022, and the results of its operations, cash flows, and shareholders’ equity for the three months ended December 31, 2022 and 2021. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s fiscal 2022 Annual Report on Form

10-K,

filed with the SEC on November 22, 2022.

It should be noted that the terms revenue and/or revenues are utilized throughout these notes to the Condensed Consolidated Financial Statements to indicate net revenue and/or net revenues.

The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the period. Actual results could differ from the estimates made by management.

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3.	Significant Accounting Policies

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2022 Annual Report on Form

10-K,

filed with the SEC on November 22, 2022, and should be referred to for a description of the Company’s significant accounting policies.

(a)	Recent Accounting Pronouncements –

Pronouncements Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

, to provide temporary optional guidance relating to reference rate reform, particularly as it relates to easing the potential burden resulting from the expected discontinuation of the London Interbank Offered Rate (“LIBOR”). The guidance provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met, which may be applied through December 31, 2024. Application of this guidance did not have a material impact on the Condensed Consolidated Financial Statements.

No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the Condensed Consolidated Financial Statements.

(b)	Reclassifications –

Within the notes to the Condensed Consolidated Financial Statements, certain reclassifications have been made to the prior year allocation of expenses between segments in order to conform to the current year presentation. Such reclassifications had no impact on any consolidated figures or segment net revenues.

4.	Revenue Recognition

Revenue Disaggregation

The following tables present our net revenues disaggregated by major geographic region, major product platform and disease state (Diagnostics segment only):

Net Revenues by Reportable Segment & Geographic Region


	Three Months Ended December 31,
	2022		2021		Inc (Dec)
Diagnostics-
Americas	$	33,182	$	26,613		25	%
EMEA		5,694		6,093		(7	)%
ROW		490		498		(2	)%

Total Diagnostics		39,366		33,204		19	%

Life Science-
Americas		5,859		8,137		(28	)%
EMEA		6,944		28,648		(76	)%
ROW		4,733		18,352		(74	)%

Total Life Science		17,536		55,137		(68	)%

Consolidated	$	56,902	$	88,341		(36	)%

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Net Revenues by Product Platform/Type


	Three Months Ended December 31,
	2022		2021		Inc (Dec)
Diagnostics-
Molecular assays	$	4,490	$	4,752		(6	)%
Non-molecular assays		34,876		28,452		23	%

Total Diagnostics		39,366		33,204		19	%

Life Science-
Molecular reagents		7,574		31,488		(76	)%
Immunological reagents		9,962		23,649		(58	)%

Total Life Science		17,536		55,137		(68	)%

Consolidated	$	56,902	$	88,341		(36	)%

Net Revenues by Disease State (Diagnostics segment only)


	Three Months Ended December 31,
	2022		2021		Inc (Dec)
Diagnostics-
Gastrointestinal assays	$	21,273	$	21,619		(2	)%
Respiratory illness assays		6,714		6,380		5	%
Blood chemistry assays		4,620		78		5823	%
Other		6,759		5,127		32	%

Total Diagnostics	$	39,366	$	33,204		19	%

Royalty Income

Royalty income received from a third party related to sales of

H. pylori

products, totaled $1,650 and $1,040 in the three months ended December 31, 2022 and 2021, respectively. Such revenue is included as part of

Non-molecular

assays and Other within the Net Revenues by Product Platform/Type and Net Revenues by Disease State tables, respectively, above.

Reagent Rental Arrangements

Revenue allocated to the lease elements of Reagent Rental arrangements totaled $1,135 and $995 in the three months ended December 31, 2022 and 2021, respectively. Such revenue is included as part of net revenues in our Condensed Consolidated Statements of Operations.

5.	Fair Value Measurements

To limit exposure to volatility in the LIBOR interest rate, the Company has entered into interest rate swap agreements, which effectively convert the variable interest rate on the outstanding revolving credit facility discussed in Note 12 to a fixed rate. The fair values of the interest rate swap agreements were determined by reference to a third-party valuation, which is considered a Level 2 input within the fair value hierarchy of valuation techniques.

As indicated in Note 6, we acquired Estel Biosciences, Inc. of San Diego, California (“Estel”) on October 26, 2022 and EUPROTEIN Inc. of North Brunswick, New Jersey (“EUPROTEIN”) on April 30, 2022. The fair values of inventories acquired, if applicable, were valued using Level 2 inputs, which included data points that were observable, such as established values of comparable assets and historical sales information (market approach). Identifiable intangible assets, if applicable and specifically the acquired customer relationships, were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows and attrition rates (income approach). Significant increases (decreases) in any of those unobservable inputs, as of the date of the acquisition, in isolation would result in a significantly lower (higher) fair value measurement.

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The following table provides information by level for financial assets and liabilities that are measured at fair value on a recurring basis, the carrying values for which are included within other assets of the December 31, 2022 and September 30, ~~2017, respectively. Revenues from these two distributor customers accounted for 38% and 23%~~2022 Condensed Consolidated Balance Sheets, respectively:


			Fair Value Measurements Using Inputs Considered as
	Carrying Value		Level 1		Level 2		Level 3

Interest rate swap agreements -
As of December 31, 2022	$	1,353	$	—	$	1,353	$	—
As of September 30, 2022	$	1,421	$	—	$	1,421	$	—

6.	Business Combinations

On October 26, 2022, we acquired substantially all of the ~~Diagnostics~~assets of Estel for $3,500 in cash, of which $2,000 was paid at closing, with the remainder held back pending the achievement of certain milestones, which is payable within 18 months of the acquisition date. The amount held back is recorded in other accrued expenses ($1,125) and other

non-current

liabilities ($375) on the December 31, 2022 Condensed Consolidated Balance Sheet. Estel offers development and production of high-quality bioresearch reagents developed in the areas of tropical disease and autoimmune through a proprietary insect cell expression system. Based on the

timing

this transaction

, the full $3,500 of consideration represents goodwill, which is attributable to combining Estel and Meridian’s products and capabilities to give the Company’s customers access to new immunological reagents. The goodwill is included within the Life Science segment ~~third-party revenues~~and is not expected to be deductible for income tax purposes. The preliminary purchase price allocation may change in the future as the fair valuing of assets is completed.

There were no material changes in the preliminary purchase price allocation during the three months ended December 31, ~~2017~~2022.

On April 30, 2022, we acquired substantially all of the assets of EUPROTEIN for $4,250 in cash, of which $3,750 was paid at closing, with the remainder held back for final closing adjustments, which is recorded in other

accrued expenses

on the Condensed Consolidated Balance Sheets and ~~2016, respectively,~~is payable within 18 months of the acquisition date. EUPROTEIN offers custom development and ~~represented 27%~~production of high-quality bioresearch reagents, with a particular focus on human and ~~17%~~other mammalian proteins and recombinant monoclonal antibodies. The acquired assets of ~~consolidated revenues for~~EUPROTEIN are included within the ~~fiscal 2018 and 2017 first quarters, respectively.~~

~~Within our~~ Life Science segment ~~two diagnostic manufacturing~~and are expected to help the Company accelerate its pipeline of new immunological reagents, while expanding recombinant capabilities. The acquired assets, which are comprised of goodwill, property, plant and equipment, prepaid expenses, and inventories, were valued on April 30, 2022, on a preliminary basis at $3,947, $279, $14 and $10, respectively. The goodwill for EUPROTEIN is attributable to combining EUPROTEIN and Meridian’s products and capabilities to give the Company’s customers ~~accounted~~access to new immunological reagents. The goodwill is not expected to be deductible for ~~15% and 19%~~income tax purposes. The preliminary purchase price allocation may change in the future as the fair valuing of assets is completed.

There were no material changes in the ~~segment’s third-party revenues~~preliminary purchase price allocation during the three months ended December 31, ~~2017~~2022.

Based on the nature of both the Estel and ~~2016,~~EUPROTEIN businesses, Estel and EUPROTEIN are not expected to contribute materially to net revenues and net earnings

(loss).

7.	Lead Testing Matters

On September 1, 2021, the Company’s wholly owned subsidiary Magellan announced the expansion of the Class I voluntary recall of its LeadCare test kits for the detection of lead in blood, which it had initiated in May 2021 after identifying an issue in certain manufactured lots of its LeadCare test kits. As a result of the identified issue, impacted test kit lots could potentially underestimate blood lead levels when processing patient blood samples. Although it was initially believed that the root cause of the issue related to the plastic containers used for the treatment reagent, additional studies have indicated that the root cause related to the third-party-sourced cardboard trays that held the treatment reagent containers. Upon correction of the identified supplier issue, shipment of product resumed during the second quarter of fiscal 2022. The Company continues to work closely with the U.S. Food and Drug Administration (“FDA”) in its execution

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of the recall activities, which has included Magellan notifying customers and distributors affected by the recall and providing instructions for the return of impacted test kits. Remaining accrued LeadCare product recall costs totaling approximately

$177 and $430 are reflected within the Condensed Consolidated Balance Sheets at December 31, 2022 and September 30, 2022, respectively.

Anticipated recall-related costs primarily include temporary labor costs, product replacement and/or refund costs, mailing/shipping costs, attorneys’ fees and other miscellaneous costs. Information utilized in the accrual estimation process includes observable inputs such as customer

on-hand

inventory data, product sales data, average sales price, and product inventory turns, among other things.

On April 17, 2018, the Company’s wholly owned subsidiary Magellan received a subpoena from the U.S. Department of Justice (“DOJ”) regarding its LeadCare product line. The subpoena outlined documents to be produced, and the Company is cooperating with the DOJ in this matter. The Company maintains rigorous policies and procedures to promote compliance with applicable regulatory agencies and requirements and is working with the DOJ to promptly respond to the subpoena, including responding to additional information requests that have followed receipt of the subpoena in April 2018. The Company has executed tolling agreements to extend the statute of limitations. In March and April 2021, DOJ issued two subpoenas, both to former employees of Magellan, calling for witnesses to testify before a federal grand jury related to this matter. In September and October 2021, DOJ issued additional subpoenas to individuals seeking testimony and documents in connection with its ongoing investigation. It is the Company’s understanding that multiple witnesses have testified before the federal grand jury and the DOJ’s investigation is ongoing. Discussions continue with the DOJ to explore resolution of the matter. The Company believes a loss is probable in the DOJ LeadCare legal matter and, in accordance with applicable accounting guidance, has accrued $42,000 and $10,000 as of December 31, 2022 and September 30, 2022, respectively, as an estimate of the cost to resolve the DOJ LeadCare legal matter. The increase in the estimated cost to resolve the DOJ LeadCare legal matter is based upon additional information received by the Company during discussions held with the DOJ subsequent

September 30, 2022. The $32,000 expense resulting from the increase in the accrual is reflected in litigation and select legal costs within the

Condensed

Consolidated Statement of Operations for the three months ended December

, 2022. The Company cannot predict when the investigation will be resolved or the outcome of the investigation, and the ultimate resolution of the DOJ LeadCare legal matter may exceed the amount accrued at

December 31

, 2022 and could be material to the Company. Approximately $814 and $281 of expense for attorneys’ fees related to this matter is included within the Condensed Consolidated Statements of Operations for the three months ended December 31, 2022 and 2021, respectively.

8.	Cash and Cash Equivalents

Cash and cash equivalents are comprised of the following:


	December 31, 2022		September 30, 2022
Institutional money market funds	$	1,027	$	1,027
Cash on hand, unrestricted		73,071		80,426

Total	$	74,098	$	81,453

Cash equivalents and institutional money market funds are classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The Company does not adjust the quoted market price for such financial instruments.

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9.	Inventories, Net

Inventories, net are comprised of the following:


	December 31, 2022		September 30, 2022
	December 31, 2022		September 30, 2022
Raw materials	$	18,063	$	15,726
Work-in-process		25,329		21,570
Finished goods - instruments		2,126		1,796
Finished goods - kits and reagents		27,145		28,722

Total	$	72,663	$	67,814

10.	Goodwill and Other Intangible Assets, Net

Goodwill is not amortized but is subject to an annual impairment test. Goodwill has been assigned to reporting units within the reportable segments. The Company assesses the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment. Impairment testing is performed at a reporting unit level. During the three months ended December 31, 2022, goodwill increased $4,265, comprised of: (i) a $20 increase in Diagnostics segment goodwill; and (ii) a $4,245 increase in Life Science segment goodwill. This overall net increase in goodwill reflects $3,500 of goodwill acquired in the Estel acquisition (see Note 6), along with the effects of foreign currency translation. During the three months ended December 31, 2022, the Company did not observe any triggering events or substantive changes in circumstances requiring the need for an interim impairment assessment

A summary of other intangible assets, net, subject to amortization is as follows:


	December 31, 2022				September 30, 2022
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Manufacturing technologies, core products and cell lines	$	56,380	$	21,366	$	56,289	$	20,321
Trade names, licenses and patents		18,363		10,906		18,257		10,491
Customer lists, customer relationships and supply agreements		52,829		23,779		52,703		22,363
Non-compete agreements		110		59		110		53

Total	$	127,682	$	56,110	$	127,359	$	53,228

The aggregate amortization expense for these other intangible assets was $2,541 and $2,483 for the three months ended December 31, 2022 and 2021, respectively. The estimated aggregate amortization expense for these other intangible assets for each of the fiscal years through fiscal 2028 is as follows: remainder of fiscal 2023 – $7,425, fiscal 2024

—

$9,900, fiscal 2025

—

$9,890, fiscal 2026

—

$8,900, fiscal 2027

—

$6,645, and fiscal 2028 – $6,645.

11.	Leasing Arrangements

The Company is party to several operating leases, the majority of which are related to office, warehouse and manufacturing space. The related operating lease assets and obligations are reflected within

right-of-use

assets, net, current operating lease obligations and long-term operating lease obligations on the Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

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The lease costs for these operating leases reflected in our Condensed Consolidated Statements of Operations, as well as the

right-of-use

assets, net obtained during these periods in exchange for operating lease liabilities, are as follows:


Three Months Ended December 31,	2022		2021
Lease costs within cost of sales	$	226	$	225
Lease costs within operating expenses		349		388
Right-of-use assets, net, obtained in exchange for operating lease liabilities		423		218

In addition, the Company periodically enters into other short-term operating leases, generally with an initial term of twelve months or less. These leases are not recorded on the Condensed Consolidated Balance Sheets and the related lease expense is immaterial for three months ended December 31, 2022 and 2021.

The Company often has options to renew lease terms, with the exercise of lease renewal options generally at the Company’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The discount rate implicit within our leases is generally not determinable and, therefore, the Company uses its incremental borrowing rate as the basis for its discount rate. The weighted average remaining lease term for our operating leases and the weighted average discount rate used to measure our operating leases were as follows:


	December 31, 2022			September 30, 2022
	December 31, 2022			September 30, 2022
Weighted average remaining lease term		3.6 years			3.9 years
Average discount rate		3.5	%		3.5	%

Maturities of lease liabilities by fiscal year for the Company’s operating leases were as follows as of December 31, 2022:


2023 (represents remainder of fiscal year)	$	1,571
2024		1,796
2025		1,519
2026		796
2027		545
Thereafter		136

Total lease payments		6,363
Less amount of lease payments representing interest		(222	)

Total present value of lease payments	$	6,141

Supplemental cash flow information related to the Company’s operating leases is as follows:


Three Months Ended December 31,	2022		2021

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	580	$	627

12.	Bank Credit Arrangements

The Company maintains a revolving credit facility with a commercial bank in an aggregate principal amount not to exceed $200,000, which expires in October 2026. Outstanding principal amounts bear interest at a fluctuating rate tied to, at the Company’s option, either the federal funds rate or LIBOR, resulting in an effective interest rate of 3.46% and 2.22% on the revolving credit facility during the three months ended December 31, 2022 and 2021, respectively.

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In light of the interest being determined on a variable rate basis, the fair value of the borrowings under the credit facility at both December 31, 2022 and September 30, 2022 approximates the $25,000 carrying value reflected in the Condensed Consolidated Balance Sheets, which is consistent with a level 2 fair value measurement.

The revolving credit facility is collateralized by the business assets of the Company’s U.S. subsidiaries and requires 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 revolving credit facility agreement. As of December 31, 2022, the Company was in compliance with all covenants.

See Note 18 for a discussion of activities related to the Company’s bank credit arrangements occurring subsequent to the December 31, 2022 Condensed Consolidated Balance Sheet date.

13.	Contingent Obligations and Non-Current Liabilities

In connection with the acquisition of Exalenz Bioscience Ltd. (“Exalenz”) in fiscal 2020, the Company assumed several Israeli government grant obligations. The repayment of the grants, along with interest incurred at varying stated fixed rates based on LIBOR at the time each grant was received, is not dictated by an established repayment schedule. Rather, the grants and related interest are required to be repaid using 3% of the net revenues generated from the sales of BreathID products, with the timing of repayment contingent upon the level and timing of such revenues. In addition, the grants have no collateral or financial covenant provisions generally associated with traditional borrowing instruments. These obligation amounts total $5,320 and $5,287 as of December 31, 2022 and September 30, 2022, respectively, bearing interest at rates ranging from 0.58% to 2.02%.

The grant obligations are reflected in the Condensed Consolidated Balance Sheets as follows:


	December 31, 2022		September 30, 2022
Current liabilities	$	799	$	667
Non-current liabilities	$	4,521	$	4,620

Additionally, the Company has provided certain post-employment benefits to its former Chief Executive Officer, and these obligations total $1,254 and $1,284 at December 31, 2022 and September 30, 2022, respectively. In addition, the Company is required by the governments of certain foreign countries in which we operate to maintain a level of accruals for potential future severance indemnity. These accruals total $652 and $566 at December 31, 2022 and September 30, 2022, respectively.

14.	National Institutes of Health Contracts

In December 2020, the Company entered into a

sub-award

grant contract with the University of Massachusetts Medical School as part of the National Institutes of Health Rapid Acceleration of Diagnostics (“RADx”) initiative to support the Company’s research and development of its diagnostic test for the

SARS-CoV-2

antigen. The Company has received $1,000 under the grant contract for reimbursement of eligible research and development expenditures.

On January 25, 2022, the Company entered into a contract to amend the Company’s second grant contract under the RADx initiative, which was originally effective February 1, 2021. The purpose of the grant is to support the Company’s manufacturing production

scale-up

and expansion to meet the demand for

COVID-19

testing, as well as the Company’s Revogene respiratory panel. The amended contract is a

24-month

service contract through January 2023, with

a subsequent extension to January 2025 and

payment of up to $6,250 being made based on the Company achieving key milestones related to increasing its capacity to produce

COVID-19

tests and the Revogene respiratory panel. As of December 31, 2022, $2,750 has been received related to this contract and is reflected as a reduction in the cost of building and improvements on the Condensed Consolidated Balance Sheets, in accordance with applicable accounting guidance.

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15.	Reportable Segment and Major Customers Information

The Company’s reportable segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company records the direct costs of business operations to the reportable segments, including allocations for certain corporate-wide costs such as treasury management, human resources and technology, among others. Corporate provides certain executive management and administrative services to each reportable segment. These services primarily include executive oversight by

non-segment-specific

executives, including the Board of Directors, along with certain other corporate-wide support functions such as insurance, legal and business development. The Company generally does not allocate these types of corporate expenses to the reportable segments.

Reportable segment and corporate information for the interim periods is as follows:

   Diagnostics    Life
Science    Eliminations(1)    Total
Three Months Ended December 31, 2017

Net revenues -

Third-party
   $ 37,490    $ 14,793    $ —      $ 52,283
Inter-segment
   121    192    (313 )    —
Operating income
   5,291    2,784    (14 )    8,061
Goodwill (December 31, 2017)
   35,213    19,784    —      54,997
Other intangible assets, net (December 31, 2017)
   24,202    1,575    —      25,777
Total assets (December 31, 2017)
   179,943    72,480    (472 )    251,951
Three Months Ended December 31, 2016

Net revenues -

Third-party
   $ 33,808    $ 13,001    $ —      $ 46,809
Inter-segment
   79    125    (204 )    —
Operating income
   6,643    3,267    175    10,085
Goodwill (September 30, 2017)
   35,213    19,713    —      54,926
Other intangible assets, net (September 30, 2017)
   24,973    1,731    —      26,704
Total assets (September 30, 2017)
   180,226    69,938    (387 )    249,777


	Diagnostics			Life Science		Corporate (1)			Eliminations (2)			Total
Three Months Ended December 31, 2022
Net revenues -
Third-party	$	39,366		$	17,536	$	—		$	—		$	56,902
Inter-segment		86			8		—			(94	)		—
Operating income (loss)		3,160			5,383		(36,693	)		35			(28,115	)
Goodwill (December 31, 2022)		94,432			26,135		—			—			120,567
Other intangible assets, net (December 31, 2022)		71,570			2		—			—			71,572
Total assets (December 31, 2022)		353,997			102,775		—			(9	)		456,763

Three Months Ended December 31, 2021
Net revenues -
Third-party	$	33,204		$	55,137	$	—		$	—		$	88,341
Inter-segment		34			55		—			(89	)		—
Operating income (loss)		(1,763	)		26,602		(4,571	)		15			20,283
Goodwill (September 30, 2022)		94,412			21,890		—			—			116,302
Other intangible assets, net (September 30, 2022)		74,129			2		—			—			74,131
Total assets (September 30, 2022)		357,630			105,511		—			(44	)		463,097

(1)	Includes acquisition and transaction related costs and litigation and select legal costs of $34,048 and $281 in the three months ended December 31, 2022 and 2021, respectively.

(2)	Eliminations consist of inter-segment transactions.

A reconciliation of reportable segment operating income (loss) to consolidated earnings

(loss)

before income taxes is as follows:


Three Months Ended December 31,	2022			2021
Operating income (loss):
Diagnostics segment	$	3,160		$	(1,763)
Life Science segment		5,383			26,602
Eliminations		35			15

Total operating income		8,578			24,854
Corporate expenses		(36,693	)		(4,571	)
Interest income		3			1
Interest expense		(148	)		(372	)
Other, net		(837	)		(161	)

Consolidated earnings (loss) before income taxes	$	(29,097	)	$	19,751

Page 15

Table of Contents

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

Net revenues generated by the Company’s three major Diagnostics segment product families – gastrointestinal, respiratory illnesses and blood chemistry – accounted for 57% and 32% of consolidated net revenues during the three months ended December 31, 2022 and 2021, respectively.

Three individual Diagnostics and two Life Science segment customers, including their affiliates, comprising 10% or more of reportable segment net revenues were as follows:


Three Months Ended December 31,	2022			2021

Diagnostics
Customer A		7	%		10	%
Customer B		10	%		11	%
Customer C		12	%		11	%
Life Science
Customer D		—	%		23	%
Customer E		4	%		14	%
Customer F		12	%		5	%

In addition,

one of

the Life Science segment customers, including their affiliates, identified above accounted for greater than 10% of consolidated net revenues as follows:


Three Months Ended December 31,	2022			2021

Life Science
Customer D		—	%		14	%

No individual Diagnostics segment customer accounted for greater than 10% of

consolidated

net revenues during the three months ended December 31, 2022 or 2021.

During the three months ended December 31, 2022 and 2021, the Life Science segment’s ten largest customers, including their affiliates, accounted for approximately 42% and 67%, respectively, of Life Science segment net revenues, and 13% and 42%, respectively, of consolidated net revenues.

No Diagnostics or Life Science segment customer accounted for greater than 10% of consolidated accounts receivable as of December 31,

2022

, while one Diagnostics segment customer (Customer B above) and one Life Science segment customer (

Customer F

above) accounted for approximately 12% and 11%, respectively, of consolidated accounts receivable as of September 30, 2022.

16.

~~Legal Matters~~

Income Taxes

The effective rate for income taxes was (2%) and 22% for the three months ended December 31, 2022 and 2021, respectively. The negative effective rate for the three months ended December 31, 2022 relates primarily to the anticipated

non-deductibility

litigation and select legal costs associated with

the previously discussed DOJ LeadCare legal matter (see Note 7).

Page 16

Table of Contents

17.	The Merger

On ~~May 17, 2017,~~July 7, 2022, the Company entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”) with SD Biosensor, Inc., a corporation with limited liability organized under the laws of the Republic of Korea (“SDB”), Columbus Holding Company, a Delaware corporation (“Parent”), and Madeira Acquisition Corp., an Ohio corporation and a direct wholly owned subsidiary of Parent (“Merger Sub,” and together with SDB and Parent, the “Parent Parties”). Pursuant to the Merger Agreement, Merger Sub merged with and into Meridian ~~filed~~(the “Merger”), with Meridian surviving the Merger as a ~~complaint~~direct wholly owned subsidiary of Parent.

On December 9, 2022, Meridian and the Parent Parties entered into a Letter Agreement (the “Letter Agreement”), modifying the Merger Agreement, such that all of the conditions to the Parent Parties’ obligation to complete the Merger have been satisfied (and are deemed to remain satisfied through the completion of the Merger), provided that Meridian is required to comply with certain covenants in the ~~United States District Court for~~Merger Agreement through the ~~Southern District~~completion of ~~Ohio, Western Division (Cincinnati) naming DiaSorin Inc. (“DiaSorin”) as a defendant. Meridian’s complaint alleges DiaSorin has breached~~ the ~~2010Co-Development~~Merger. Under the Letter Agreement, Meridian and ~~License Agreement (the “Agreement”) between it and Meridian relating~~the Parent Parties also agreed to, among other things, consummate the~~co-development~~ Merger on January 31, 2023.

On January 31, 2023, the Merger was consummated in accordance with the terms of certain tests and diagnostic products, pursuant to which Meridian disclosed certain trade secrets and proprietary information. The lawsuit underlying Meridian’s complaint alleges that DiaSorin breached the Merger Agreement and ~~used,~~the Letter Agreement, and Parent, which at the time of Closing was wholly-owned and controlled by SDB, became the sole shareholder of Meridian. Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of Meridian’s common stock (subject to certain exceptions set forth in the Merger Agreement) was canceled and converted into the right to receive

34.00

n cash, without interest (the “Merger Consideration”). See Note 18 below regarding consummation of the Merger.

The foregoing description of the Merger, the Merger Agreement, and the Letter Agreement does not purport to be complete and is ~~currently using,~~subject to, and qualified in its entirety by, the full text of (i) the Merger Agreement, a copy of which was filed by Meridian as Exhibit 2.1 to Meridian’s ~~proprietary information~~Current Report on Form

8-K

filed on July 7, 2022 and ~~therefore seeks injunctive relief~~is incorporated herein by reference, and (ii) the Letter Agreement, a copy of which was filed by Meridian as Exhibit 2.1 to ~~protect~~ Meridian’s ~~intellectual property~~Current Report on Form

8-K

filed on December 12, 2022 and ~~information with respect to its diagnostics products. Approximately $730~~is incorporated herein by reference.

The Company incurred transaction related costs of ~~expense~~approximately $1,160 during the three months ended December 31, 2022 related to ~~this matter~~the Merger, which is ~~included within~~recorded in acquisition and transaction related costs in the ~~accompanying~~ Condensed Consolidated Statement of ~~Operations for~~Operations.

18.	Subsequent Events

On January 31, 2023, the ~~fiscal quarter ended December 31, 2017.~~

~~Page 11~~

~~On November 15, 2017, Barbara Forman filed a class action complaint~~Merger was consummated in accordance with 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. 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. The lawsuit underlying plaintiff’s class action complaint seeks compensatory damages, injunctive relief and attorneys’ fees to all membersterms of the ~~proposed class. Because~~Merger Agreement and the ~~litigation~~Letter Agreement, as described in Note 17. Upon completion of the Merger, effective January 31, 2023:

Meridian named Jack Kenny and ~~related discovery are in preliminary stages, we do not have sufficient information to determine or predict~~Andrew Kitzmiller as the ultimate outcome or estimate the range of possible losses, if any. Accordingly, no provision for litigation losses has been included within the accompanying Condensed Consolidated Statement of Operations for the fiscal quarter ended December 31, 2017.

On December 6, 2017, Michael Edelson filed a class action complaint in the United States District Court for the Southern District of Ohio naming Meridian, its Chief Executive Officer, Chief Financial Officer and certain memberssole directors of Meridian’s Board of Directors (the “Board”), and ~~Audit Committee (in~~all other previously named directors tendered their ~~capacities as such) as defendants. The complaint alleges~~resignations and resigned from the Board effective January 31, 2023;

Meridian amended and restated its Articles of Incorporation and Code of Regulations in accordance with the Merger Agreement which, among other things, changed the fiscal year of the Company to an annual calendar year;

Meridian: (i) notified the Nasdaq Stock Market LLC (“Nasdaq”) of the consummation of the Merger, and (ii) requested that ~~Meridian made false and misleading representations concerning certain of Magellan’s lead test systems at or around the time~~Nasdaq (A) suspend trading of Meridian’s ~~acquisition~~common stock effective before the opening of ~~Magellan~~trading on January 31, 2023, and ~~subsequent thereto,~~(B) file with the SEC a Form 25 Notification of Removal from Listing and/or Registration to delist and deregister the ~~complaint alleges that certain members~~Shares under Section 12(b) of the ~~Board~~Securities Exchange Act of ~~Directors~~1934, as amended (the “Exchange Act”);

Meridian terminated its Amended and ~~Audit Committee breached their fiduciary duties~~Restated Credit Agreement, dated as of October 25, 2021, by and among Meridian, as borrower, the guarantors party thereto, the lenders party thereto, PNC Bank,

Page 17

Table of Contents

National Association, as administrative agent, PNC Capital Markets LLC, as joint lead arranger and sole bookrunner, and Fifth Third Bank, National Association, as joint lead arranger and syndication agent; and

Meridian, entered into: (i) a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with Standard Chartered Bank (“SCB”), as administrative agent, SCB, Industrial Bank of Korea, The Export-Import Bank of Korea, JPMorgan Chase Bank, N.A., Kookmin Bank, New York Branch and Citibank N.A., Hong Kong Branch, as joint lead arrangers, and SCB, as coordinating bank; and (ii) a Revolving Credit Facility Credit Agreement (the “RCF Credit Agreement”, and together with the Term Loan Credit Agreement, the “Credit Agreements”) with PNC Bank, National Association (“PNC”), as administrative agent, and PNC Capital Markets LLC, as sole lead arranger, sole bookrunner and syndication agent. The Term Loan Credit Agreement made available to Meridian an aggregate principal amount of $500,000, in the form of a term loan credit facility (the “Term Loan”). The RCF Agreement makes available to Meridian revolving loan commitments in an aggregate principal amount of $50,000 (the “RCF Loan”, and together with the Term Loan, the “Credit Facilities”). As of January 31, 2023, the principal amount of the RCF Loan outstanding was $25,000. The Credit Facilities mature on January 31, 2028.

The foregoing descriptions of events occurring on or about the consummation of the Merger, including the foregoing description of the Credit Facilities, do not purport to be complete and are subject to and qualified in their ~~oversight~~entirety by reference to the respective agreements, articles of incorporation and other documents, each of which are attached as an exhibit to our Current Report on Form

8-K

filed with the Company’s public disclosures and corporate governance matters. The lawsuit underlying plaintiff’s class action complaint seeks compensatory damages, injunctive relief, equitable relief and attorneys’ fees to all members of the proposed class. Because the litigation and related discovery are in preliminary stages, we do not have sufficient information 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 Condensed Consolidated Statement of Operations for the fiscal quarter ended December 31, 2017.SEC on February 1, 2023.

Page 18

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~~

The purpose of Management’s Discussion and Analysis is ~~a discussion and analysis~~to provide an understanding 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.~~operations of Meridian Bioscience, Inc. (“Meridian”, the “Company”, “We”). This discussion should be read in conjunction with the ~~financial statements and notes thereto beginning on page 1.~~

~~QUARTERLY HIGHLIGHTS~~

~~The first quarter of fiscal 2018 proved to be a successful quarter; a quarter highlighted by the following, the effects of which are discussed throughout this MD&A:~~

~~double-digit percentage revenue growth in both our Diagnostics and Life Science reportable segments compared to the fiscal 2017 first quarter;~~

~~significant executive leadership announcements of Mr. Jack Kenny as Meridian’s new CEO, and Mr. Jack Kraeutler continuing to serve the Company as Executive Chairman of the Board; and~~

~~U.S. Congress’ passage of the Tax Cuts and Jobs Act (the “tax reform act”).~~

~~Page 12~~

~~RESULTS OF OPERATIONS~~

~~Three Months Ended December 31, 2017~~

Net earnings for the first quarter of fiscal 2018 totaled $6,302, or $0.15 per diluted share, relatively flat compared to the net earnings for the first quarter of fiscal 2017 of $6,279, or $0.15 per diluted share. The fiscal 2018 first quarter results include $1,483 of costs associated with the transition to our new CEO and litigation costs (collectively, “CEO transition and litigation costs”) (see Note 9 of the accompanying Condensed Consolidated Financial ~~Statements), along with~~Statements and notes. It should be noted that the terms revenue and/or revenues are utilized 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~~one-time~~ ~~tax effects~~ 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 ^® or ^™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent of the ~~recently-enacted U.S. tax reform act. These items impacted earnings by $239, or less than $0.01 per diluted share on a net basis (see “USE OFNON-GAAP~~ ~~MEASURES” below). Consolidated revenues increased 12%~~law, our rights to ~~$52,283 for the first quarter of fiscal 2018 compared to the same period of the prior year (10% on a constant-currency basis).~~these tradenames and trademarks.

Revenues for the Diagnostics segment for the first quarter of fiscal 2018 increased 11% compared to the first quarter of fiscal 2017 (10% on a constant-currency basis), comprised of a 12% increase in molecular assay products and a 10% increase in immunoassay and lead testing products. With a 12% increase in its molecular components business and a 15% increase in its immunoassay components business, revenues of our Life Science segment increased by 14% during the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017, increasing 12% on a constant-currency basis.

Our outlook for Magellan’s LeadCare II testing volume continues to be healthy. In the time period since the FDA released its Safety Notification (which pertained to venous blood lead testing performed on the systems produced by Magellan), nearly 700 new LeadCare II systems utilizing capillary blood samples have been placed in physician offices and clinics. Quality System remediation costs in the first quarter of fiscal 2018 associated with the Magellan FDA matter totaled approximately $500~~pre-tax,~~ ~~resulting in a total impact of less than $0.01 on diluted earnings per share for the quarter. Remediation costs in the remainder of fiscal 2018 are expected to be approximately $250pre-tax,~~ or less than $0.01 impact on diluted earnings per share. Remediation costs relate primarily to professional fees for regulatory consultants and periodic Quality System audits. In the course of remediation, Magellan 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. In addition, at this time, we do not anticipate any further significant impact on our results of operations or financial condition.

~~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 CEO transition costs, litigation costs and certain~~one-time~~ ~~tax effects of the tax reform act, each of which is anon-GAAP~~ ~~measure. We have provided in the tables below reconciliations of net earnings, basic earnings per share and diluted earnings per share, with and without the effects of thesenon-routine~~ ~~items, for the fiscal quarters ended December 31, 2017 and December 31, 2016.~~

~~We believe that this information is useful to those who read our financial statements and evaluate our operating results because:~~

~~These measures help to appropriately evaluate and compare the results of operations from period to period by removing the impacts of thesenon-routine~~ ~~items; and~~

These measures are used by our management for various purposes, including evaluating performance against incentive bonus achievement targets, comparing performance from period to period in presentations to our board of directors, and as a basis for strategic planning and forecasting.

~~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.

~~Page 13~~

   Three Months Ended
December 31,
   2017    2016
Net Earnings -

U.S. GAAP basis
   $ 6,302    $ 6,279
CEO transition and litigation costs (1)
   1,080    —
One-time benefit from tax law change
   (1,695 )    —
Repatriation transition tax
   854    —




Adjusted earnings
   $ 6,541    $ 6,279




Net Earnings per Basic Common Share -

U.S. GAAP basis
   $ 0.15    $ 0.15
CEO transition and litigation costs (1)
   0.03    —
One-time benefit from tax law change
   (0.04 )    —
Repatriation transition tax
   0.02    —




Adjusted Basic EPS (2)
   $ 0.15    $ 0.15




Net Earnings per Diluted Common Share -

U.S. GAAP basis
   $ 0.15    $ 0.15
CEO transition and litigation costs (1)
   0.03    —
One-time benefit from tax law change
   (0.04 )    —
Repatriation transition tax
   0.02    —




Adjusted Diluted EPS (2)
   $ 0.15    $ 0.15

~~(1)~~

~~These CEO transition and litigation costs are net of income tax effects of $403, which were calculated using the effective tax rates of the jurisdictions in which the costs were incurred.~~

~~(2)~~

~~Neither Net Earnings per Basic Common Share nor Net Earnings per Diluted Common Share sum to their respective Adjusted EPS amounts due to rounding.~~

~~Page 14~~

~~REVENUE OVERVIEW~~

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

By Reportable ~~Segment & Geographic Region~~

~~By Product Platform/Type~~

~~Revenue Overview – By Reportable Segment & Geographic Region~~Segments

Our reportable segments are Diagnostics and Life ~~Science, with~~Science. The Diagnostics segment consists of manufacturing operations for infectious disease products in Cincinnati, Ohio; Quebec City, Canada; and Modi’in, Israel; and manufacturing operations for blood chemistry products in Billerica, Massachusetts. These diagnostic test products are 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~~The Life Science segment consists of ~~our segments~~manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; North Brunswick, New Jersey; London, England; and Luckenwalde, Germany, and the sale and distribution of bulk antigens, antibodies, immunoassay blocking reagents, various Polymerase Chain Reaction (“PCR”) and isothermal amplification master mixes, and bioresearch reagents domestically and abroad, including a sales and business development facility, with outsourced distribution capabilities, in Beijing, China to further pursue growing revenue opportunities in Asia.

Page 19

REVENUE OVERVIEW

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

- By Reportable Segment & Geographic Region

- By Product Platform/Type

Revenue Overview- By Reportable Segment & Geographic Region

Revenues for the Diagnostics segment, in the normal course of business, may be affected from ~~quarter~~year to ~~quarter~~year by buying patterns of major distributors and reference laboratories, seasonality and ~~the~~ severity of seasonal diseases and outbreaks (including the ongoing COVID-19 pandemic), and foreign currency exchange rates. Revenues for the Life Science segment, in the normal course of business, may be affected from ~~quarter~~year to ~~quarter~~year by buying patterns of major IVD manufacturing customers, severity of disease outbreaks (specifically the ongoing COVID-19 pandemic), and foreign currency exchange rates. ~~We believe that~~

See the ~~overall breadth~~“Revenue Disaggregation” section of ~~our product lines serves to reduce the variability in consolidated revenues due to these factors.~~

   Three Months Ended December 31,
   2017 2016 Inc (Dec)
Diagnostics -

Americas
   $ 31,462 $ 27,569 14 %
EMEA
   5,341 5,662 (6 )%
ROW
   687 577 19 %


Total Diagnostics
   37,490 33,808 11 %


Life Science -

Americas
   5,351 5,399 (1 )%
EMEA
   5,106 4,898 4 %
ROW
   4,336 2,704 60 %


Total Life Science
   14,793 13,001 14 %


Consolidated
   $ 52,283 $ 46,809 12 %


% of total revenues -

Diagnostics
   72 % 72 %
Life Science
   28 % 28 %


Total
   100 % 100 %


Ex-Americas
   30 % 30 %

Note 4, “Revenue ~~Overview – By Product Platform/Type~~

~~The revenues generated by each of our reportable segments result primarily from the sale~~Recognition” of the ~~following segment-specific categories of products:~~

~~Diagnostics~~

~~Molecular assays that operate on our~~~~illumi~~~~gene~~ ~~platform~~

~~Immunoassays and lead tests on multiple technology platforms~~

~~Life Science~~

~~Molecular components~~

~~Immunoassay components~~

~~Page 15~~

~~Revenues~~Condensed Consolidated Financial Statements for ~~each product platform/type, as well as its relative percentage of segment revenues, are shown below.~~detailed revenue disaggregation information.

   Three Months Ended December 31,
   2017 2016 Inc (Dec)
Diagnostics -

Molecular assays
   $ 8,668 $ 7,711 12 %
Immunoassays & lead tests
   28,822 26,097 10 %


Total Diagnostics
   $ 37,490 $ 33,808 11 %


Life Science -

Molecular components
   $ 5,705 $ 5,116 12 %
Immunoassay components
   9,088 7,885 15 %


Total Life Science
   $ 14,793 $ 13,001 14 %


% of Diagnostics revenues -

Molecular assays
   23 % 23 %
Immunoassays & lead tests
   77 % 77 %


Total Diagnostics
   100 % 100 %


% of Life Science revenues -

Molecular components
   39 % 39 %
Immunoassay components
   61 % 61 %


Total Life Science
   100 % 100 %

Following is a discussion of the net revenues generated by ~~each of~~ these product platforms/~~types:~~types and/or disease states:

Diagnostics ~~Products~~

~~Molecular Assay Products~~

~~Revenues for our~~~~illumi~~~~gene~~ molecular platform of products increased 12% to $8,668 for the first quarter of fiscal 2018 (also 12% on a constant-currency basis). This increase primarily reflects strong revenue growth in our respiratory-related products and a continuation of the revenue stabilization trend for our~~C. difficile~~ ~~tests over the last four quarters.~~

We have over 1,650 customer account placements. Of these account placements, over 1,375 accounts have completed evaluations and validations and are regularly purchasing product, with the balance of our account placements being in some stage of product evaluation and/or validation. Of our account placements, we have approximately 600 accounts that are regularly purchasing, evaluating and/or validating two or more assays. Increasing the number of customers utilizing two or more assays is a key objective, as we believe broader menu utilization lessens the risk of displacement by competitors.

We continue to invest in new product development for our molecular testing platform, and this platform now has nine commercialized tests spanning hospital acquired infections, women’s health, respiratory, sexually transmitted diseases, and tropical diseases. As of December 31, 2017, our~~illumi~~~~gene~~ Malaria test has been placed in nearly 175 accounts in the EMEA region for use as a screening test for travelers returning to Europe from endemic areas in Africa. Our efforts to develop market channels in the endemic areas of Africa continue, as we work to convince policy-makers of the advantages of a more accurate molecular test to assist in efforts to eradicate malaria.

We believe that the diagnostic testing market, particularly in the U.S., is continuing to selectively move away from culture and immunoassay testing to molecular testing for diseases where there is a favorable cost/benefit position for the total cost of health care. While this market is competitive, with molecular companies such as Cepheid and Becton Dickinson, and others such as Quidel, Luminex and Abbott (Alere division), we believe we are well-

~~Page 16~~

~~positioned. Our simple,easy-to-use,~~~~illumi~~~~gene~~ ~~platform, with its expanding menu, requires no expensive equipment purchase and little to no maintenance cost. We believe these features, along with its small footprint and the performance of the~~~~illumi~~~~gene~~ ~~assays, make~~~~illumi~~~~gene~~ an attractive molecular platform for any size hospital or physician office laboratory that runs moderately-complex tests. We continue to invest in the development of additional assays for this platform and expect a test for congenital cytomegalovirus (CMV), a leading cause of deafness in infants, to be our next~~FDA-cleared~~ ~~test on the~~~~illumi~~~~gene~~~~platform.~~

~~Immunoassay and Lead Testing Products~~

~~Revenues from our Diagnostics segment’s immunoassay and lead testing products increased 10% in the first quarter of fiscal 2018. These results reflect increased revenues in our~~~~H. pylori~~~~and other immunoassay product lines, partially offset by decreased revenue from Magellan’s lead testing products.~~

~~During the first quarter of fiscal 2018, revenues from our~~~~H. pylori~~ products increased 24% (22% on a constant-currency basis) to $8,860, reflecting the ongoing conversion of serology testing to our antigen tests and buying patterns of certain customers. We continue to believe there are ongoing benefits to be realized from our partnerships with managed care companies in promoting (i) the health and economic benefits of a test and treat strategy; (ii) changes in policies that discourage the use of traditional serology methods and promote the utilization of active infection testing methods; and (iii) physician behavior movement away from serology-based testing and toward direct antigen testing. A significant amount of the~~H. pylori~~ product revenues are sales to reference labs, whose buying patterns may not be consistent from period to period. During fiscal 2017, we also introduced capabilities to identify resistance to Clarithromycin, the antibiotic commonly used to treat~~H. pylori.This is currently available in an Analyte Specific Reagent (ASR) format. We believe that partnering the ability to diagnose~~~~H. pylori~~ ~~and identify resistance provides a competitive advantage.~~

~~The patents for our~~~~H. pylori~~ ~~products, owned by us, expired in May 2016 in the U.S. and in May 2017 in countries outside the U.S. We expect competition with respect to our~~~~H. pylori~~ ~~products to increase in the near future, as we currently market the onlyFDA-cleared~~ ~~tests to detect~~~~H. pylori~~ antigen in stool samples in the U.S. market. Such competition may have an adverse impact on our selling prices for these products, or our ability to retain business at prices acceptable to us, and consequently, adversely affect our future results of operations and liquidity, including revenues and gross profit. In order to mitigate competition, our product development pipeline includes multiple new product initiatives for the detection of~~H. pylori~~.We are unable to provide assurances that we will be successful with any mitigation strategy or that any mitigation strategy will prevent an adverse effect on our future results of operations and liquidity, including revenues and gross profit.

~~During the first quarter of fiscal 2018, revenues from our other immunoassay products (including~~~~C. difficile~~, foodborne and respiratory) increased 16% (14% in constant-currency) to $15,544. Although benefiting from the effects of strong seasonal respiratory sales, the extension of the growth experienced during the second half of fiscal 2017 continues to support our belief that this portion of our business has stabilized and is positioned for continued future growth.

Revenues from Magellan’s sale of products to test for elevated levels of lead in blood totaled $4,159 during the fiscal 2018 first quarter. This level of revenues reflects a 20% decrease from the three-month period ended December 31, 2016, primarily resulting from (i) the effect of the prior year quarter including an international bulk kit purchase that was not repeated during the current year quarter; and (2) decreased revenue from lead testing systems utilizing venous blood samples, in connection with the FDA matter noted above.

~~Page 17~~

~~Life Science~~Segment Products

During the first quarter of fiscal ~~2018,~~2023, Diagnostics segment net revenues ~~from our Life Science segment~~ increased ~~14%~~$6,162, or 19%, with revenues from molecular component sales increasing 12% from the comparable fiscal 2017 quarter and revenues from immunoassay component sales increasing 15%. Our molecular component business’ growth was impacted by the movement in currency exchange rates sincecompared to the first quarter of fiscal ~~2017, with~~2022. This growth primarily resulted from the $4,542 increase in net revenues ~~increasing 7% on a constant-currency basis over~~from sales of blood chemistry products, as sales of the LeadCare product have continued to rebound since shipment of the product resumed in the second quarter of fiscal 2022. LeadCare shipments resumed upon correction of the identified supplier issue that caused the LeadCare product recall, which commenced in May 2021 (see Note 7, “Lead Testing Matters” of the Condensed Consolidated Financial Statements).

Life Science Segment Products

During the first quarter of fiscal ~~2017. Our~~2023, net revenues for our Life Science segment ~~continued~~decreased 68% compared to ~~benefit from (i) increased revenues in~~ the ~~steadily-expanding tropical disease product family, with sales of such products increasing 20% over the fiscal 2017~~ first quarter ~~to approximately $1,300~~of fiscal 2022. While the level of net revenues during the first quarter of fiscal 2023 reflects the significant decline in demand for COVID-19 related reagents, such level of quarterly net revenues significantly outpaced the pre-pandemic level of net revenues generated in the first quarter of fiscal ~~2018;~~2020; increasing 39% in total, 41% for molecular reagents and (ii) increased revenue from sales into China, with such sales totaling approximately $1,500 during first quarter of fiscal 2018 (approximately $200 in the molecular components business and $1,300 in the immunoassay components business) – representing an approximate 115% increase over the first quarter of fiscal 2017.37% for immunological reagents.

Significant Customers

Revenue concentrations related to certain customers within our Diagnostics and Life Science segments are set forth in Note 815, “Reportable Segment and Major Customers Information” of the ~~accompanying~~ Condensed Consolidated Financial Statements.

Gross Profit


	Three Months Ended December 31,									Three Months Ended December 31,
	2017			2016			Change			2022			2021			Change
Gross Profit	$	31,786		$	29,039			9	%	$	31,505		$	49,159			(36	)%
Gross Profit Margin		61	%		62	%		-1 point			55	%		56	%		-1 point

~~The~~Overall gross profit ~~decreases experienced in fiscal 2018 primarily result from the combined effects of mix of products sold and operating segment mix.~~

~~Operating Expenses~~

   Research &
Development Selling &
Marketing General &
Administrative Other Total Operating
Expenses
Fiscal 2017 First Quarter:

Diagnostics
   $ 2,973 $ 5,494 $ 5,805 $ —   $ 14,272
Life Science
   624 2,124 1,934 —   4,682


Total 2017 First Quarter Expenses
   $ 3,597 $ 7,618 $ 7,739 $ —   $ 18,954


Fiscal 2018 First Quarter:

Diagnostics
   $ 3,737 $ 6,445 $ 6,772 $ 1,483 $ 18,437
Life Science
   759 2,397 2,132 —   5,288


Total 2018 First Quarter Expenses
   $ 4,496 $ 8,842 $ 8,904 $ 1,483 $ 23,725


   Research &
Development Selling &
Marketing General &
Administrative Other Total Operating
Expenses
Fiscal 2017 First Quarter Expenses
   $ 3,597 $ 7,618 $ 7,739 $ —   $ 18,954


% of Revenues
   8 % 16 % 17 % —   % 40 %
Fiscal 2018 First Quarter Increases:

Diagnostics
   764 951 967 1,483 4,165
Life Science
   135 273 198 —   606


Fiscal 2018 First Quarter Expenses
   $ 4,496 $ 8,842 $ 8,904 $ 1,483 $ 23,725


% of Revenues
   9 % 17 % 17 % 3 % 45 %
% Increase
   25 % 16 % 15 % NMF 25 %

~~Page 18~~

~~Total operating expenses increased~~margins during the first quarter of fiscal ~~2018 compared to~~2023 are relatively consistent with the fiscal 2022 first quarter margins, with the slight decline largely reflecting the shift in segment revenue mix. During the first quarter of fiscal ~~2017, relating primarily~~2023, approximately 31% of consolidated net revenues were generated from the Life Science segment, the products of which generally generate higher gross profit margins relative to ~~overall increases~~the Diagnostics segment. This compares to the Life Science comprising approximately 62% of consolidated net revenues in ~~spending in our~~the first quarter of fiscal 2022.

Page 23

In addition, Diagnostics segment ~~reflecting~~gross profit margins were favorably impacted by the ~~following:~~previously discussed resumption of blood chemistry product sales in the second quarter of fiscal 2022 (see “Diagnostics Segment Products” above). This resulted in $4,620 of net revenues from sales of such products in the first quarter of fiscal 2023, compared to only $78 in the fiscal 2022 first quarter.

Operating Expenses – Segment Detail and Corporate


	Research & Development		Selling & Marketing		General & Administrative		Other		Total Operating Expenses
Fiscal 2023 First Quarter:
Diagnostics	$	5,230	$	6,280	$	6,010	$	—	$	17,520
Life Science		947		2,014		2,418		28		5,407
Corporate		—		—		2,645		34,048		36,693

Total 2023 First Quarter Expenses	$	6,177	$	8,294	$	11,073	$	34,076	$	59,620

Fiscal 2022 First Quarter:
Diagnostics	$	5,556	$	6,009	$	6,294	$	—	$	17,859
Life Science		638		1,732		4,076		—		6,446
Corporate		—		—		4,290		281		4,571

Total 2022 First Quarter Expenses	$	6,194	$	7,741	$	14,660	$	281	$	28,876

Compared to the prior year first quarter, operating expenses increased $30,744 to $59,620 in the first quarter of fiscal 2023. Major components of this increase were as follows:

A $32,607 increase in litigation and select legal costs, reflected within Corporate and primarily related to the previously discussed LeadCare legal matter (see “Lead Testing Matters” above); and

•

~~Increased R&D~~

A $1,188 increase in acquisition and transaction related costs, ~~in connection with instrumentation development programs~~primarily within Corporate and ~~clinical trials for our~~~~illumi~~~~gene~~ ~~CMV test;~~related to the previously discussed merger (see “Agreement and Plan of Merger” above).

~~Increased sales commission and bonus payments made~~Partially offsetting these increases was a $2,124 decrease in ~~connection with increased sales levels;~~

~~Increased Quality System remediation costs related to Magellan;~~

~~Increased accrual of cash~~ incentive compensation ~~expenses (also for the Life Science segment); and~~

CEO transition and litigation costs. CEO transition costs, which totaled $734, reflect compensation and benefits for our Executive Chairman (formerly Chairman and CEO) during 2018, while we also have the compensation and benefits costs of a new CEO. Litigation costs, which totaled $749, relateexpense across both segments, tied to the ~~matters discussed in Note 9 of the accompanying Condensed Consolidated Financial Statements and Part II. Item 1 of this Quarterly Report on Form10-Q.~~

Company’s financial performance.

Operating Income (Loss)

~~Operating income decreased 20% to $8,061 for~~An operating loss of $28,115 was generated in the first quarter of fiscal ~~2018, as a~~2023, compared to $20,283 of operating income during the first quarter of fiscal 2022. These operating income (loss) levels result offrom the factors discussed above.

Income Taxes

The effective rate for income taxes was ~~18%~~(2%) and 22% for the three months ended December 31, 2022 and 2021, respectively. The negative effective rate for the three months ended December 31, 2022 relates primarily to the anticipated non-deductibility of the previously discussed LeadCare legal matter (see “Lead Testing Matters” above).

Impact of Inflation

To the extent feasible, we have consistently followed the practice of reviewing our prices to consider the impacts of inflation on salaries and fringe benefits for employees, the cost of purchased materials and services, and transportation costs. Inflation and changing prices did not have a material adverse impact on our gross margin, revenues or operating income (loss) in the first quarter of fiscal ~~2018, compared to 35% for the first quarter of 2017. This lower~~2023 or fiscal ~~2018 tax primarily results from the combined net impact of the following effects of the recently-enacted tax reform act (see Note 6 of the accompanying Condensed Consolidated Financial Statements):~~2022.

~~Application of an approximate 24.5% blended rate due to the lowering of the applicable rate from 35% to 21%;~~

Page 24

~~Recognizing aone-time~~ ~~$1,695 tax benefit, including there-measurement~~ ~~of deferred tax balances at the lower rate; and~~

~~Recording a provisionalone-time~~ ~~$854 tax expense related to the estimated repatriation transition tax on foreign earnings.~~

~~Excluding the effects of theseone-time~~ ~~tax effects, we expect the effective tax rate for the fiscal year ending September 30, 2018 to approximate26%-27%.~~

Liquidity and Capital Resources

~~Comparative Cash Flow Analysis~~Liquidity

Our cash flow and financing requirements are determined by analyses of operating and capital spending budgets and debt ~~service, consideration of acquisition plans, and consideration of common share dividends.~~service. We have historically maintained a credit facility to augment working capital requirements and to respond quickly to acquisition opportunities.

~~Page 19~~

We have an investment policy that guides the holdings of our investment portfolio, which presently consists of bank savings accounts and institutional money market mutual funds. Our objectives in managing the investment portfolio are toto: (i) preserve capital; (ii) provide sufficient liquidity to meet working capital requirements and fund strategic objectives such as acquisitions; and (iii) capture a market rate of return commensurate with market conditions and our policy’s investment eligibility criteria. As we look forward, we will continue to manage the holdings of our investment portfolio with preservation of capital being the primary objective.

~~Considering the various worldwidegeo-political~~ ~~andgeo-economic~~ conditions (including Brexit), 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~~hand, and such sources are anticipated to be adequate to fund working capital requirements, capital expenditures and debt service during the next twelve months. However, if needed, we also have an additional source of liquidity through the amount remaining available on our ~~$30,000~~$200,000 bank revolving credit ~~facility.~~facility, which totaled $175,000 as of December 31, 2022 (see Note 18, “Subsequent Events” of the Condensed Consolidated Financial Statements for a discussion of activities related to the Company’s bank credit arrangements occurring subsequent to the December 31, 2022 Condensed Consolidated Balance Sheet date). 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 ~~collectibility~~collectability of our customer accounts receivable, impact credit terms with our vendors, or disrupt the supply of raw materials and services.

~~Net~~As of December 31, 2022, our cash ~~provided by operating activities totaled $5,171 for the first three months of fiscal 2018, a 60%~~and cash equivalents balance was $74,098 or $7,355 lower than at September 30, 2022. This decrease primarily results primarily from the ~~$12,993 provided during~~combined effects of: (i) $2,349 of cash used in operations; and (ii) using cash to acquire property, plant and equipment ($2,654) and the ~~first three months~~assets of ~~fiscal 2017. While reflecting~~Estel Biosciences, Inc. ($2,000) (see Note 6, “Business Combinations” of the ~~timing~~Condensed Consolidated Financial Statements).

Considering these factors, our balance of ~~payments from customers,~~cash and ~~to suppliers~~cash equivalents on hand exceeded our total debt (defined as bank debt, government grant obligations and taxing authorities, this decrease also results in large part from the net effects of (i) increased customer receivables from higher sales levels; (ii) increased inventory levels during the first quarter of fiscal 2018, largelyobligations related to continued expansion in Asia; and (iii) decreased accrued employee compensation costs during the first quarter of fiscal 2017, reflecting the payment of discretionary bonuses and the timing of regularly scheduled payroll payments. Net cash flows from operating activities and cash on hand are anticipated to be adequate to fund working capital requirements, capital expenditures and dividends during the next 12 months.acquisitions) by approximately $41,800 at December 31, 2022.

Following the release of results for the fiscal 2017 first quarter, the Board of Directors reduced the fiscal 2017 indicated annual cash dividend rate to $0.50 per share (down from $0.80 per share) in order to align it with the stated policy guidelines of the payout ratio to range between 75% and 85% of each fiscal year’s net earnings. Consistent with this annual indicated dividend rate, a cash dividend of $0.125 per share was declared for the first quarter of fiscal 2018, representing 83% of the quarter diluted earnings per share.

Capital Resources

As described in Note 712, “Bank Credit Arrangements” of the ~~accompanying~~ Condensed Consolidated Financial Statements, ~~in connection with the acquisition of Magellan,~~ the Company ~~entered into~~maintains 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. In addition, we have a $30,000$200,000 revolving credit facility, ~~with a commercial bank that expires March 31, 2021.~~which is secured by substantially all of our U.S. assets and includes certain restrictive financial covenants. As of ~~January~~December 31, ~~2018, there were no borrowings outstanding~~2022, the Company was in compliance with all covenants. In addition, as of December 31, 2022, Meridian maintains a shelf registration statement on ~~this facility~~file with the SEC. See Note 18, “Subsequent Events” of the Condensed Consolidated Financial Statements for a discussion of activities related to the Company’s bank credit arrangements and ~~we had 100% borrowing capacity available~~public company status occurring subsequent to ~~us. We have had no borrowings outstanding under this revolving credit facility during~~ the ~~first three months of~~December 31, 2022 Condensed Consolidated Balance Sheet date.

During fiscal ~~2018 or during the full year of fiscal 2017.~~

~~Our~~2023 our capital expenditures are estimated to ~~range between~~total approximately ~~$4,000 to $5,000 for fiscal 2018, with~~$10,000, comprised of approximately $6,500 and $3,500 in the ~~actual amount dependent upon actual operating results~~Diagnostics and ~~the phasing of certain projects.~~Life Science segments, respectively. Such expenditures may be funded with cash and cash equivalents on hand, operating cash flows, and/or availability under the ~~$30,000~~$200,000 revolving credit facility discussed above.

License Agreements

The Company has entered into various license agreements that require payment of royalties based on a specified percentage of sales of related products. During the first quarter of fiscal 2023, royalty expense totaled approximately $150, with 70% and 30% of such expense relating to our Diagnostics and Life Science segments, respectively. This compares to a total of approximately $800 of royalty expense in the first quarter of fiscal 2022, with 35% and 65% relating to our Diagnostics and Life Science segments, respectively. The Company expects that payments under these agreements will amount to approximately $700 in fiscal 2023, a decrease from the $2,300 in fiscal 2022, with the anticipated decrease largely resulting from the last of the licensed patents applicable to the Alethia product line having expired during fiscal 2022.

Page 25

Off-Balance Sheet Arrangements

We utilize foreign currency exchange forward contracts to limit exposure to volatility in foreign currency gains and losses related to financial assets denominated in other than the holding subsidiary’s functional currency. These contracts are generally settled within a 30-day time frame and are not formally designated or accounted for as accounting hedges. We also utilize interest rate swap agreements to limit exposure to volatility in the LIBOR interest rate in connection with the revolving credit facility. The interest rate swap agreements are designated and accounted for as accounting hedges (see Note 5, “Fair Value Measurements” of the Condensed Consolidated Financial Statements). Aside from these instruments, we do not utilize ~~any~~ special-purpose financing vehicles or have any material undisclosedoff-balance sheet arrangements.

~~Page 20~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There have been~~As of December 31, 2022, there were no material changes to the information provided under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s ~~exposure to market risk since~~Form 10-K for the year ended September 30, ~~2017.~~2022, filed with the SEC on November 22, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, ~~2017.~~2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were ~~not~~ effective as of ~~December 31, 2017~~the period covered by this report.

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that control objectives are met. Because of inherent limitations in all control systems, no evaluation of controls can provide assurance that all control issues and instances of fraud, if any, within a company will be detected. Additionally, controls can be circumvented by individuals, by collusion of two or more people or by management override. Over time, controls can become inadequate because of changes in conditions or the degree of compliance may deteriorate. Further, the design of any system of controls is based in part upon assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Because of the inherent limitations in any cost-effective control system, misstatements due to ~~the material weakness identified in our internal control over financial reporting described below.~~

~~As previously disclosed in the Company’s Annual Report on Form10-K~~ ~~for the fiscal year ended September 30, 2017, a material weakness was identified in the design~~errors or fraud may occur and operating effectiveness of the Company’s internal control over financial reporting. Specifically, deficiencies were identified related to Information Technology General Controls (“ITGC”) intended to restrict access to certain data and applications, resulting in inappropriate access at both the Information Technology and end user levels within an application impacting financial reporting functions and controls. As a result, we concluded that the Company’s disclosure controls and procedures were not ~~effective in providing reasonable assurance that information required to~~ be disclosed in our reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was accumulated and communicated to our management to allow timely decisions regarding required disclosure.

The Company has implemented and continues to implement changes to its internal control over financial reporting to remediate the control deficiencies that gave rise to the material weakness. Since the end of the fiscal year, we have taken steps to strengthen information technology security and user access controls and begin the remediation of the material weakness described above. We are working to complete our evaluation, fully implement these controls and identify the appropriate level of documentation to be maintained to evidence the effectiveness of these controls. We believe the remediation measures will strengthen our internal control over financial reporting and remediate the material weakness identified. However, as we are still assessing the design and operating effectiveness of these measures, the identified material weakness has not been fully remediated as of December 31, 2017. We will continue to monitor the effectiveness of these remediation measures and will make any changes and take such other actions that we deem appropriate.detected.

Changes in Internal Control over Financial Reporting

~~Except as described above, there~~In the ordinary course of business, we routinely enhance our information systems by either upgrading current systems or implementing new ones. There were no changes in our internal control over financial reporting (as that term is defined in Rules13a-15(f) and15d-15(f) under the Exchange Act) during the quarter ended December 31, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 2126


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	VIVO	NASDAQ Global Select Market


Class		Outstanding January ~~31, 2018~~ 3 0 , 2023
Common Stock, no par value		~~42,307,742~~44,041,635


	Three Months Ended December 31,
	2017			2016
NET EARNINGS	$	6,302		$	6,279
Other comprehensive income (loss):
Foreign currency translation adjustment		291			(1,423	)
Unrealized gain on cash flow hedge		341			1,560
Income taxes related to items of other comprehensive income		(112	)		(589	)

Other comprehensive income (loss), net of tax		520			(452	)

COMPREHENSIVE INCOME	$	6,822		$	5,827


	Three Months Ended December 31,
	2022			2021

NET EARNINGS (LOSS)	$	(29,821	)	$	15,340
Other comprehensive income (loss):
Foreign currency translation adjustment		3,481			(58	)
Unrealized gain (loss) on cash flow hedge		(68	)		550
Income taxes related to items of other comprehensive income (loss)		17			(135	)

Other comprehensive income, net of tax		3,430			357

COMPREHENSIVE INCOME (LOSS)	$	(26,391	)	$	15,697


	Three Months Ended
	December 31,
	2017			2016
NET REVENUES	$	52,283		$	46,809
COST OF SALES		20,497			17,770

GROSS PROFIT		31,786			29,039

OPERATING EXPENSES
Research and development		4,496			3,597
Selling and marketing		8,842			7,618
General and administrative		8,904			7,739
CEO transition and litigation costs		1,483			—

Total operating expenses		23,725			18,954

OPERATING INCOME		8,061			10,085
OTHER INCOME (EXPENSE)
Interest income		72			22
Interest expense		(395	)		(423	)
Other, net		(80	)		(25	)

Total other expense		(403	)		(426	)

EARNINGS BEFORE INCOME TAXES		7,658			9,659
INCOME TAX PROVISION		1,356			3,380

NET EARNINGS	$	6,302		$	6,279

BASIC EARNINGS PER COMMON SHARE	$	0.15		$	0.15
DILUTED EARNINGS PER COMMON SHARE	$	0.15		$	0.15
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		42,263			42,159
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS		399			376

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		42,662			42,535

ANTI-DILUTIVE SECURITIES:
Common share options and restricted share units		1,034			715

DIVIDENDS DECLARED PER COMMON SHARE	$	0.125		$	0.20


	December 31, 2017 (Unaudited)		September 30, 2017
CURRENT ASSETS
Cash and equivalents	$	54,711	$	57,072
Accounts receivable, less allowances of $306 and $307		32,136		29,106
Inventories		43,644		41,493
Prepaid expenses and other current assets		6,126		6,204

Total current assets		136,617		133,875

PROPERTY, PLANT AND EQUIPMENT, at Cost
Land		1,164		1,162
Buildings and improvements		32,244		32,207
Machinery, equipment and furniture		49,367		48,836
Construction in progress		2,374		1,895

Subtotal		85,149		84,100
Less: accumulated depreciation and amortization		54,749		53,590

Net property, plant and equipment		30,400		30,510

OTHER ASSETS
Goodwill		54,997		54,926
Other intangible assets, net		25,777		26,704
Restricted cash		1,000		1,000
Deferred instrument costs, net		1,415		1,368
Fair value of interest rate swap		1,156		815
Deferred income taxes		146		158
Other assets		443		421

Total other assets		84,934		85,392

TOTAL ASSETS	$	251,951	$	249,777


	Common Shares Issued		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at September 30, 2017		42,207	$	125,608	$	46,923		$	(2,946	)	$	169,585
Cash dividends paid		—		—		(5,288	)		—			(5,288	)
Conversion of restricted share units		100		—		—			—			—
Stock compensation expense		—		1,759		—			—			1,759
Net earnings		—		—		6,302			—			6,302
Foreign currency translation adjustment		—		—		—			291			291
Hedging activity, net of tax		—		—		—			229			229

Balance at December 31, 2017		42,307	$	127,367	$	47,937		$	(2,426	)	$	172,878


	Common Shares		Additional Paid-In Capital			Treasury Stock						Retained Earnings			Accumulated Other Comp. Income (Loss)			Total Shareholders’ Equity
	Common Shares		Additional Paid-In Capital			Sh.			Amt.			Retained Earnings			Accumulated Other Comp. Income (Loss)			Total Shareholders’ Equity
Balance at September 30, 2022		43,755	$	155,664			(10	)	$	(259	)	$	223,160		$	(10,504)		$	368,061
Conversion of restricted share units and exercise of stock options		245		(2,524	)		—			—			—			—			(2,524	)
Stock compensation expense		—		1,393			—			—			—			—			1,393
Net loss		—		—			—			—			(29,821	)		—			(29,821	)
Foreign currency translation adjustment		—		—			—			—			—			3,481			3,481
Hedging activity, net of tax		—		—��			—			—			—			(51	)		(51	)

Balance at December 31, 2022		44,000	$	154,533			(10	)	$	(259	)	$	193,339		$	(7,074)		$	340,539

Balance at September 30, 2021		43,362	$	147,403			—		$	—		$	180,701		$	198		$	328,302
Conversion of restricted share units and exercise of stock options		152		(683	)		—			—			—			—			(683	)
Stock compensation expense		—		1,903			—			—			—			—			1,903
Net earnings		—		—			—			—			15,340			—			15,340
Foreign currency translation adjustment		—		—			—			—			—			(58	)		(58	)
Hedging activity, net of tax		—		—			—			—			—			415			415

Balance at December 31, 2021		43,514	$	148,623			—		$	—		$	196,041		$	555		$	345,219


	December 31, 2017				September 30, 2017
	Cash and Equivalents		Other Assets		Cash and Equivalents		Other Assets
Institutional money market funds	$	20,155	$	—	$	20,104	$	—
Cash on hand -
Restricted		—		1,000		—		1,000
Unrestricted		34,556		—		36,968		—

Total	$	54,711	$	1,000	$	57,072	$	1,000


	December 31, 2017		September 30, 2017
	December 31, 2017		September 30, 2017
Raw materials	$	7,989	$	6,575
Work-in-process		12,110		11,559
Finished goods - instruments		1,271		1,460
Finished goods - kits and reagents		22,274		21,899

Total	$	43,644	$	41,493


	Diagnostics		Life Science		Eliminations(1)			Total
Three Months Ended December 31, 2017
Net revenues -
Third-party	$	37,490	$	14,793	$	—		$	52,283
Inter-segment		121		192		(313	)		—
Operating income		5,291		2,784		(14	)		8,061
Goodwill (December 31, 2017)		35,213		19,784		—			54,997
Other intangible assets, net (December 31, 2017)		24,202		1,575		—			25,777
Total assets (December 31, 2017)		179,943		72,480		(472	)		251,951
Three Months Ended December 31, 2016
Net revenues -
Third-party	$	33,808	$	13,001	$	—		$	46,809
Inter-segment		79		125		(204	)		—
Operating income		6,643		3,267		175			10,085
Goodwill (September 30, 2017)		35,213		19,713		—			54,926
Other intangible assets, net (September 30, 2017)		24,973		1,731		—			26,704
Total assets (September 30, 2017)		180,226		69,938		(387	)		249,777



~~10.1~~		~~Employment Agreement dated October 9, 2017 between Meridian and John P. Kenny (Incorporated by reference to Meridian’s Form8-K~~ ~~filed with the Securities and Exchange Commission on October 11, 2017)~~

31.1		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule13a-14(a)/15d-14(a)

31.2		Certification of Principal ~~Financial~~Accounting Officer Pursuant to Securities Exchange Act Rule13a-14(a)/15d-14(a)

32		Certification of Chief Executive Officer and ~~Chief Financial~~Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101~~101.INS		~~The following financial information from Meridian Bioscience Inc.’s Quarterly Report on Form10-Q~~ ~~for the quarter ended December 31, 2017 filed with the SEC on February 7, 2018, formatted~~Inline XBRL Instance Document

101.SCH		Inline XBRL Instance Extension Schema

101.CAL		Inline XBRL Instance Extension Calculation Linkbase

101.DEF		Inline XBRL Instance Extension Definition Linkbase

101.LAB		Inline XBRL Instance Extension Label Linkbase

101.PRE		Inline XBRL Instance Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL includes: (i) Condensed Consolidated Statements of Operations for the three months ended December 31, 2017 and 2016; (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended December 31, 2017 and 2016; (iii) Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2017 and 2016; (iv) Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017; (v) Condensed Consolidated Statement of Shareholders’ Equity for the three months ended December 31, 2017; and (vi) the Notes to Condensed Consolidated Financial StatementsExhibit 101)


		MERIDIAN BIOSCIENCE, INC.

Date:February ~~7, 2018~~9, 2023	By:	/s/ ~~Melissa A. Lueke~~Andrew S. Kitzmiller
		~~Melissa A. Lueke~~Andrew S. Kitzmiller
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: February 9, 2023	By:	/s/ Julie Smith
		Julie Smith
		Senior Vice President and Controller (Principal Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company