Note 15 - Segment and Geographic Information

9 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15. Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s CODM.

Effective October 1, 2023, the Company realigned its organizational structure to three principal business segments to enhance its commercial strategy for accelerating growth and to enable additional profitability initiatives. These segments align with changes in how the Company’s CODM manages the business, allocates resources, and assesses performance. The Company’s operating and reportable segments consist of the following:

● Sample Management Solutions. The SMS business resources operate as a single business unit offering end-to-end sample management products and services, including: Sample Repository Solutions and Core Products (Automated Stores, Cryogenic Systems, Automated Sample Tube, and Consumables and Instruments).

● Multiomics. The Multiomics business resources operate as a single business unit offering genomic and other sample analysis services, including gene sequencing and gene synthesis.

● B Medical Systems. The B Medical Systems business resources operate as a single business unit focused on the manufacturing and distribution of temperature-controlled storage and transportation solutions in international markets to governments, health institutions, and non-government organizations.

The segment realignment had no impact on the Company’s consolidated financial position, results of operations, or cash flows. All segment information is reflective of this new structure, and prior period information has been recast to conform to our current period presentation.

Management considers adjusted operating income (loss), which excludes charges related to amortization of intangible assets, purchase accounting impact on inventory, transformation costs, restructuring charges, goodwill and intangible asset impairment, fair value adjustments to contingent consideration, merger and acquisition costs and costs related to share repurchase, governance-related matters, and other unallocated corporate expenses, as the primary performance metric when evaluating each segment’s operations.

The following is the summary of the financial information for the Company’s reportable segments for the three and nine months ended June 30, 2024 and 2023 (in thousands):

	Three Months Ended June 30,						Nine Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Sample Management Solutions	$	80,673		$	75,341		$	233,816		$	221,838
Multiomics		63,619			63,846			188,556			187,172
B Medical Systems		28,517			26,761			63,888			83,705
Total revenue	$	172,809		$	165,948		$	486,260		$	492,715
Adjusted operating income (loss):
Sample Management Solutions	$	3,404		$	813		$	981		$	(8,261	)
Multiomics		(730	)		(3,412	)		(7,147	)		(10,487	)
B Medical Systems		1,908			1,520			(3,654	)		4,456
Segment adjusted operating income (loss)		4,582			(1,079	)		(9,820	)		(14,292	)
Amortization of completed technology		6,316			4,656			18,315			13,725
Purchase accounting impact on inventory		—			2,956			—			8,737
Amortization of other intangibles		6,621			7,522			20,136			22,403
Transformation costs (1)		4,255			21			8,742			(34	)
Restructuring charges		2,064			812			10,528			3,773
Impairment of goodwill and intangible assets		—			—			115,975			—
Contingent consideration - fair value adjustments		—			(1,404	)		—			(18,549	)
Merger and acquisition costs and costs related to share repurchase (2)		74			219			4,821			12,075
Other unallocated corporate expenses		6			(25	)		49			76
Total operating loss		(14,754	)		(15,836	)		(188,386	)		(56,498	)
Interest income, net		8,004			11,347			27,650			32,406
Other income (expense), net		(282	)		819			650			(704	)
Loss before income taxes	$	(7,032	)	$	(3,670	)	$	(160,086	)	$	(24,796	)

(1) Transformation costs represent non-recurring expenses for strategic projects with anticipated long-term benefits to the Company focused on cost reduction and productivity improvement that do not meet the definition of restructuring charges. These costs are directed at simplifying, standardizing, streamlining, and optimizing the Company’s operations, processes and systems to permanently alter the Company’s operations for the long term. For a project to be considered transformational, successful completion of the project must be expected to bring long-term material benefits to the organization and involve significant changes to process and/or underlying technology. Transformation costs in the period result from actions taken as part of the Company’s 2024 transformation plan, and primarily relate to one time asset write downs associated with changes in technology, one time inventory write downs relating to restructuring actions taken in the period, and third-party consulting costs associated with process & systems re-design.

(2) Includes expenses related to governance-related matters.

The Company has corrected the segment adjusted operating income (loss) for the three and nine months ended June 30, 2023, as certain corporate expenses that are not part of the Company’s CODM’s review of operating segment performance were improperly included in the previously disclosed segment adjusted operating income (loss). The previously disclosed amount of total segment adjusted operating income (loss) for the reportable segments was understated by $7.6 million and $24.1 million, respectively, for the three and nine months ended June 30, 2023. The total net loss before income taxes remained unchanged in each period.

The following is the summary of the asset information for the Company’s reportable segments as of June 30, 2024 and  September 30, 2023 (in thousands):

Assets:	June 30, 2024		September 30, 2023
Sample Management Solutions	$	849,058	$	675,708
Multiomics		458,578		534,437
B Medical Systems		230,754		511,640
Total assets	$	1,538,390	$	1,721,785

The following is a reconciliation of the segment assets to the corresponding amounts presented in the Condensed Consolidated Balance Sheets as of June 30, 2024 and  September 30, 2023 (in thousands):

	June 30,		September 30,
	2024		2023
Segment assets	$	1,538,390	$	1,721,785
Cash and cash equivalents, restricted cash and marketable securities		754,245		1,134,256
Deferred tax assets		1,231		571
Other assets		29,429		29,108
Total assets	$	2,323,295	$	2,885,720

Revenue from external customers is attributed to geographic areas based on locations in which the product is shipped. Net revenue by geographic area for the three and nine months ended June 30, 2024 and 2023 are as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
Geographic Location:
United States	$	95,196	$	89,199	$	274,184	$	263,488
Africa		21,988		19,052		48,442		44,889
China		14,528		13,522		43,072		38,909
United Kingdom		8,086		8,737		19,427		19,939
Rest of Europe		22,985		23,579		71,667		84,433
Asia Pacific/Other		10,026		11,859		29,468		41,057
Total revenue	$	172,809	$	165,948	$	486,260	$	492,715

The above table has been adjusted from previously reported to correct for a misclassification of revenue between China and other locations for the three and nine months ended June 30, 2023. The adjustment is immaterial and does not impact total revenue. The Company had one individual customer that accounted for 10% or more of its consolidated revenue for the three months ended June 30, 2024 and  June 30, 2023. The Company had one individual customer that accounted for 10% or more of its consolidated revenue for the nine months ended June 30, 2024 and 2023. This individual customer is the same for each period in 2024 and 2023, a distributor shipping to end users in approximately 30 countries, and is related to the B Medical segment. There were no customers that accounted for more than 10% of the Company’s accounts receivable balance as of June 30, 2024 and  September 30, 2023.