Note 18 - Segment and Geographic Information

12 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

18.    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 Services and Core Products (Automated Stores, Cryogenic Systems, Automated Sample Tube, Consumables and Instruments and Controlled Rate Thawing Devices).

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

● 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 and rebranding 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 fiscal years ended September 30, 2024, 2023 and 2022 (in thousands):

	Year Ended September 30,
	2024			2023			2022
Revenue:
Sample Management Solutions	$	318,646		$	303,654		$	304,561
Multiomics		254,552			248,296			250,937
B Medical Systems		83,125			113,122			-
Total revenue	$	656,323		$	665,072		$	555,498
Adjusted operating income (loss):
Sample Management Solutions	$	10,841		$	(2,349	)	$	23,970
Multiomics		(7,995	)		(13,779	)		5,032
B Medical Systems		(5,669	)		919			—
Segment adjusted operating income (loss)		(2,823	)		(15,209	)		29,002
Amortization of completed technology		24,770			18,494			7,324
Purchase accounting impact on inventory		—			9,664			—
Amortization of intangible assets other than completed technology		26,500			29,884			24,965
Transformation(1) and rebranding costs		13,856			(49	)		2,741
Restructuring charges		11,808			4,577			712
Impairment of goodwill and intangible assets		115,975			—			—
Contingent consideration - fair value adjustments		—			(18,549	)		600
Merger and acquisition costs and costs related to share repurchase(2)		4,874			13,842			17,329
Other unallocated corporate expenses		72			54			66
Total operating loss		(200,678	)		(73,126	)		(24,735	)
Interest income, net		33,177			43,735			15,697
Other income (expense), net		178			(1,042	)		(898	)
Loss before income taxes	$	(167,323	)	$	(30,433	)	$	(9,936	)

(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 cost reduction 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 and systems re-design.

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

The Company has corrected the segment adjusted operating income (loss) for the years ended September 30, 2023 and 2022 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 operating income (loss) performance measure. As a result, the presentation of amounts previously disclosed for segment operating income (loss) were updated to reflect segment adjusted operating income (loss) after having been adjusted to remove these corporate expenses.  These adjustments reduced total segment adjusted operating loss for fiscal year 2023 by $29.8 million and increased total segment adjusted operating income for fiscal year 2022 by $7.2 million. The total net loss before income taxes remained unchanged.

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

Assets:	September 30, 2024		September 30, 2023
Sample Management Solutions	$	859,353	$	675,708
Multiomics		462,825		534,437
B Medical Systems		231,601		511,640
Total assets	$	1,553,779	$	1,721,785

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

	September 30,		September 30,
	2024		2023
Segment assets	$	1,553,779	$	1,721,785
Cash and cash equivalents, restricted cash, and marketable securities		521,606		1,134,256
Deferred tax assets		837		571
Other assets		23,819		29,108
Total assets	$	2,100,041	$	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 fiscal years ended September 30, 2024, 2023 and 2022 are as follows (in thousands):

	Year Ended September 30,
	2024		2023		2022
Geographic Location:
United States	$	366,209	$	355,094	$	358,208
Africa		61,962		65,092		1,331
China		58,260		51,787		53,867
United Kingdom		27,451		26,764		30,258
Rest of Europe		102,771		109,856		79,005
Asia Pacific/ Other		39,670		56,479		32,829
Total revenue	$	656,323	$	665,072	$	555,498

Net property, plant and equipment by geographic area as of September 30, 2024 and 2023 is as follows (in thousands):

	September 30,
	2024		2023
United States	$	75,242	$	78,533
China		52,826		53,146
Europe		71,690		70,654
Asia Pacific/ Other		2,896		3,411
Total property, plant, and equipment, net	$	202,654	$	205,744

Significant Customers

The Company had one customer that accounted for 10% and 13% of the Company's consolidated revenue for fiscal years 2024 and 2023, respectively; this customer is related to the B Medical Systems segment and is a distributor shipping to end users in approximately 40 countries. There were no customers that accounted for 10% or more of the Company's consolidated revenue for fiscal year 2022. As of September 30, 2024, 2023 and 2022 there were no customers that accounted for 10% or more of the Company’s accounts receivable balance.