Azenta Inc

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1. Nature of Operations

Azenta, Inc. (“Azenta”, or the “Company”) is a leading global provider of sample exploration and management solutions for the life sciences industry. The Company supports its customers from research and clinical development to commercialization with its sample management, automated storage, vaccine cold storage and transport, as well as genomic services expertise to help bring impactful therapies to market faster.

Organizational Structure

Effective* October 1, 2023,the Company realigned its organizational structure tothree principal business segments: Sample Management Solutions (“SMS”), Multiomics, and B Medical Systems. The segment realignment hadno* impact on the Company’s consolidated financial position, results of operations, or cash flows. All segment information included in this Form10-Q is reflective of this new structure and prior period information has been recast to conform to the Company’s current period presentation. Refer to Note15, Segment and Geographic Informationbelow for* *further details on the nature of operations of these segments.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and all entities where it has a controlling financial interest and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying year-end balance sheet was derived from audited financial statements but doesnot include all disclosures required by GAAP. The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented.

Certain information and disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form10-K for the fiscal year ended* September**30,* 2023 filed with the U.S. Securities and Exchange Commission (“SEC”) on* November 21, 2023 (the“2023* Annual Report on Form10-K”).

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect amounts reported in the financial statements and notes thereto. Although these estimates are based on the Company’s knowledge of current events and actions it* mayundertake in the future, actual results may*differ from these estimates. Estimates are associated with recording accounts receivable, inventories, goodwill, intangible assets other than goodwill, long-lived assets, derivative financial instruments, deferred income taxes, warranty obligations, revenue over time, stock-based compensation expense, and other accounts. The Company assesses the estimates on an ongoing basis and records changes in estimates in the period they occur and become known.

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Foreign Currency Translation

Certain transactions of the Company and its subsidiaries are denominated in currencies other than their functional currency. Foreign currency exchange gains (losses) generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other income” in the Condensed Consolidated Statements of Operations. Net foreign currency transaction and remeasurement losses were $0.8 million and gains were $0.1 million for thethree months ended* June 30, 2024and2023*, respectively. Net foreign currency transaction and remeasurement losses were $1.7 million and $2.7 million during thenine months ended* June 30, 2024and2023*, respectively.

Recently Issued Accounting Pronouncements

In* October 2023,the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU aligns the requirements in FASB’s Accounting Standards Codification (“ASC”) with SEC regulations. The effective date for each amendment is the date on which the SEC removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or if the SEC doesnot* remove the requirement by* June 30, 2027,the amendment willnot* become effective for any entity. Early adoption is prohibited. The Company doesnot expect the adoption of this standard to have a material impact on its consolidated financial statements or disclosures.

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures*. The ASU requires the disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. This update is effective for annual periods beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024,and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the standard to determine the impact of adoption on its disclosures; the Company doesnot* expect that the standard will have an impact on the Company's consolidated financial statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*):* Improvements to Income Tax Disclosures. The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after* December 15, 2024,though early adoption is permitted. The Company is currently evaluating the standard to determine the impact of adoption on its disclosures; the Company doesnot* expect that the standard will have an impact on the Company's consolidated financial statements.

In* March 2024,the FASB issued ASU2024*-02, Codification Improvements-Amendments to Remove References to the Concepts Statements. The ASU contains amendments to the ASC that remove references to various FASB Concepts Statements. This update is effective for annual periods beginning after* December 15, 2024,though early adoption is permitted. The Company doesnot* expect the adoption of this standard to have a material impact on its disclosures; the Company doesnot expect that the standard will have an impact on the Company's consolidated financial statements.

In* March 2024,the SEC issued final rules under SEC ReleaseNo.* 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. Effective fiscal year2026, the Company is required to disclose climate-related risks that are reasonably likely to have a material impact on the Company’s business strategy, results of operations, or financial condition. Additionally, the Company will be required to disclose the effects of severe weather events and other natural conditions within the notes to the financial statements, subject to certain materiality thresholds. Effective fiscal year2027, required disclosures will also include disclosure of material direct greenhouse gas emissions from operations owned or controlled (Scope1) and material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope2). In* April 2024,*the SEC issued an order voluntarily staying the effectiveness of the new rules pending the completion of judicial review of certain legal challenges to their validity. The Company is currently evaluating the impact of these rules assuming adoption as well as monitoring the status of the related litigation and the SEC’s stay.

In2021, the Organization of Economic Cooperation and Development (“OECD”) introduced its Pillar II Framework Model Rules (“Pillar2”), which are designed to impose a15% global minimum tax on the earnings of in-scope multinational corporations on a country-by-country basis. Certain aspects of Pillar2 took effect on* January 1, 2024while other aspects go into effect on January 1, 2025.The Company is evaluating the potential impact of Pillar2* on its business, as the countries in which it operates are enacting legislation implementing Pillar2.

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Other

For further information regarding the Company’s significant accounting policies, please refer to Note2, Summary of Significant Accounting Policies in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K. There wereno material changes to the Company’s critical accounting policies during thenine months ended* June 30, 2024*.

3. Business Combinations

The Company recorded the assets acquired and liabilities assumed related to the following acquisitions at their fair values as of the acquisition date, from a market participant’s perspective. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The measurement period to finalize the fair values is withinone year after the respective acquisition date.

Acquisitions Completed in Fiscal Year2023**

Ziath, Ltd.

On* February 2, 2023,the Company acquired Ziath, Ltd. and its subsidiaries (“Ziath”). Based in Cambridge, United Kingdom, Ziath is a leading provider of2D* barcode readers for life science applications. Founded in2005, Ziath’s innovative2D barcode readers are a key component of the laboratory automation workflow serving pharmaceutical, biotechnology and academic customers worldwide. Ziath is expected to enhance the Company’s offerings, which support the entire lifecycle of sample management from specimen collection to sample registration, storage and processing. The acquisition was completed at a purchase price of $16.0 million, net of cash acquired. The acquired business is included in the SMS segment.

The allocation of the consideration included $12.0 million of goodwill, $4.1 million of technology, $1.1 million of deferred tax liability, $0.6 million of customer relationships, $0.3 million of trademarks, and several other assets and liabilities. The weighted average life of completed technology is 10 years, customer relationships is 13 years, and trademarks is 13 years. The goodwill represents the Company’s ability to provide differentiated technology enabling high throughput scanning of varied formats of consumables. The goodwill isnot expected to be deductible for income tax purposes.

The Company didnot present pro forma financial information for its consolidated results of operations for the acquisition because such results are immaterial.

B Medical Systems S.á r.l.

On* October 3, 2022,*the Company acquired B Medical Systems S.á r.l. and its subsidiaries ("B Medical") for a purchase price of $432.2 million. B Medical is a market leader in temperature-controlled storage and transportation solutions that enables the delivery of life-saving treatments to more than 150 countries worldwide.

The consideration paid for B Medical was allocated to the assets acquired and liabilities assumed based on their fair values at the acquisitions date. The Company finalized purchase accounting for B Medical in thefourth quarter of fiscal year2023 and there have beenno adjustments to the purchase price allocation disclosed in Note3, Business Combinationsin the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K.

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In performing the purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, and historical financial performance and estimates of future performance of B Medical’s business. As part of the purchase price allocations, the Company determined the identifiable intangible assets were completed technology value, trademarks, customer relationships and backlog. The fair value of the intangible assets was estimated using the income approach, specifically the multi-period excess earnings method, and the cash flow projections were discounted using a rate of 13%. The cash flows were based on estimates used to price the transaction, and the discount rate applied was benchmarked to the implied rate of return from the transaction and the weighted average cost of capital. The weighted average life of completed technology is 10 years, customer relationships is 16 years, trademarks isfive years and backlog isone year. The intangible assets acquired are amortized over their respective weighted average life using methods that approximate the pattern in which the economic benefits are expected to be realized. The calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill. The goodwill recorded in connection with the transaction was largely based on the potential expansion of the Company's cold chain capabilities by adding differentiated solutions for reliable and traceable transport of temperature-controlled specimens. The goodwill isnot deductible for income tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and otherwise at least annually. See Note6, Goodwill and Intangible Assetsbelow for information about the impairment of this goodwill during thenine months ended* June 30, 2024*.

4. Marketable Securities

The Company had sales and maturities of marketable securities of$241.0 million and $223.3 million in thethree months ended* June 30, 2024and2023*, respectively. The Company had sales and maturities of marketable securities of$431.5 million and $951.5 million in thenine months ended* June 30, 2024and2023*, respectively. There were insignificant realized gains or losses in each of thethree months ended* June 30, 2024and2023* on the sale and maturity of marketable securities. There were insignificant and $0.8 million realized losses in thenine months ended* June 30, 2024and2023,* respectively, on the sale and maturity of marketable securities.

The following is a summary of the amortized cost and the fair value, including accrued interest receivable as well as unrealized gains (losses) on the short-term and long-term marketable securities as of* June 30, 2024* and* September 30, 2023* (in thousands):

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The fair values of the marketable securities by contractual maturities as of* June 30, 2024* were as follows (in thousands):

Expected maturities could differ from contractual maturities because the security issuers* may*have the right to prepay obligations without prepayment penalties.

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. The Company doesnot believe any unrealized losses represent impairments based on its evaluation of the available evidence.

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5. Derivative Instruments

The Company has transactions and balances denominated in currencies other than the functional currency of the transacting entity. Most of these transactions carry foreign exchange risk in Germany, the United Kingdom and China. The Company enters into foreign exchange contracts to reduce its exposure to currency fluctuations. Net gains and losses related to foreign exchange contracts are recorded as a component of “Other income” in the Condensed Consolidated Statements of Operations and are as follows for thethree andnine months ended* June 30, 2024and2023* (in thousands):

The notional amounts of the Company’s derivative instruments as of* June 30, 2024* and* September 30, 2023* were as follows (in thousands):

The fair values of the foreign exchange contracts are recorded in the Condensed Consolidated Balance Sheets as “Prepaid expenses and other current assets” and “Accrued expenses and other current liabilities”. Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level2 of the fair value hierarchy described further in Note2, Summary of Significant Accounting Policies in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K and in Note12,** Fair Value Measurementsbelow due to a lack of an active market for these contracts.

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Hedging Activities

On* February 1, 2022,the Company entered into a cross-currency swap agreement to hedge the variability of exchange rate impacts between the U. S. dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged $1.0 billion for€915.0 million at a weighted average interest rate of 1.20%. The designated notional amount was $960.0 million, and the actual interest rate was 1.28%. The 1.28% rate was in the range of the market value for February 1, 2022and was the true interest rate on the notional amount. The Company designated the cross-currency swap as a hedge of net investments againstone* of its Euro denominated subsidiaries requiring an exchange of the notional amounts at maturity. At the maturity of the cross currency-swap on* February 1, 2023,*the Company delivered a notional amount of€852.0 million and received a notional amount of $960.0 million at a Euro to U.S. dollar exchange rate of 1.13, which included a gain of $29.3 million.

On* February 1, 2023,the Company entered into a cross-currency swap agreement to hedge the variability of exchange rate impacts between the U.S. dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged $436.0 million for€400.0 million at a weighted average interest rate of 1.66%. The Company designated the cross-currency swap as a hedge of net investments againstone* of its Euro denominated subsidiaries, which requires an exchange of the notional amounts at maturity on* February 1, 2024.At the maturity of the cross currency-swap on February 1, 2024,*the Company delivered a notional amount of€400 million and received a notional amount of $436.0 million at a Euro to U.S. dollar exchange rate of 1.09, which included a gain of $1.4 million.

On* February 1, 2024,the Company entered into another cross-currency swap agreement to hedge the variability of exchange rate impacts between the U.S. dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged $76.0 million for€70.0 million at a weighted average interest rate of 1.44%. The Company designated the cross-currency swap as a hedge of net investments againstone* of its Euro denominated subsidiaries, which requires an exchange of the notional amounts at maturity on* February 3, 2025.*

The cross-currency swaps were recorded as a derivative asset as of* June 30, 2024* and* September 30, 2023* in the Condensed Consolidated Balance Sheets.

The cross-currency swap is marked to market at each reporting period, representing the fair value of the cross-currency swap, any changes in fair value are recognized as a component of “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. The cross-currency swap is classified within Level2 of the fair value hierarchy, described in Note2, Summary of Significant Accounting Policies in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K and in Note12,** Fair Value Measurements below.

Interest earned on the cross-currency swap is recorded within “Interest income, net” in the Condensed Consolidated Statements of Operations. For thethree months ended* June 30, 2024and2023*, the Company recorded interest income of$0.3 millionand $1.8 million, respectively, on these instruments. For thenine months ended* June 30, 2024and2023*, the Company recorded interest income of$3.4 million and $7.1 million, respectively, on these instruments.

6. Goodwill and Intangible Assets

The Company conducts an impairment assessment annually on* April 1,or more frequently if impairment indicators are present. Changes to the Company’s operating segments effective October 1, 2023resulted in a change to the Company’s reporting units, which are aligned to the Company’s operating and reportable segments (as further described in Note15,* Segment and Geographic Informationbelow).

As a result of this segment realignment, the Company allocated goodwill to the reporting units existing under the new organizational structure on a relative fair value basis as of* October 1, 2023.The Company estimated the fair values of the affected businesses based upon the present value of their anticipated future cash flows. The Company’s determination of fair value involved judgment and the use of significant estimates and assumptions, as described in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8* of the2023 Annual Report on Form10-K and in the “Critical Accounting Policies and Estimates” included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item7 of the2023 Annual Report on Form10-K.

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In conjunction with the goodwill allocation described above, the Company tested its reporting units for potential impairment immediately before and after the segment realignment and concluded that the estimated fair value of each reporting unit exceeded its respective carrying value. As of* October 1, 2023,the fair value of the B Medical Systems reporting unit exceeded its carrying value by approximately5* percent.

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During thesecond quarter of fiscal year2024, as part of the Company’s routine long-term planning process, the Company assessed several events and circumstances that could affect the significant inputs used to determine the fair value of its reporting units, including updates to forecasted cash flows, the impact of the Company’s planned transformation initiatives and the overall change in the economic climate since its last impairment assessment in* October 2023.The Company concluded it was more likely thannot* the fair value of the Company’s B Medical Systems segment was less than its carrying amount resulting from the reduction in the Company’s anticipated revenue growth rates for the current and subsequent years as compared to prior projections. As a result, the Company completed a quantitative goodwill impairment test for its reporting units in accordance with ASC350, Intangibles–* Goodwill* as of* March 31, 2024.*

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For the quantitative goodwill impairment analyses performed, the Company compared the estimated fair values of each of its reporting units to their respective carrying amounts. The estimated fair values of each of the reporting units were derived using the income approach, specifically the Discounted Cash Flow (“DCF”) method. The DCF models used in the analysis reflected the Company’s assumptions regarding revenue growth rates, projected gross profit margins, risk-adjusted discount rates, terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting units. As part of the goodwill impairment test, the Company also considered its market capitalization and guideline public companies in assessing the reasonableness of the combined fair values estimated for its reporting units. Goodwill impairment is measured as the excess of a reporting unit's carrying amount over its estimated fair value,not to exceed the carrying amount of goodwill for that reporting unit.

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The results of the Company’s quantitative goodwill impairment analyses as of* March**31,* 2024 indicated an impairment of goodwill within its B Medical Systems reporting unit resulting in a non-cash impairment charge of $111.3 million recorded within "Impairment of goodwill and intangible assets" in its Condensed Consolidated Statements of Operations during thethree months ended* March 31, 2024.The Company concluded that there wasno impairment to goodwill for the SMS and Multiomics reporting units as of March 31, 2024or the annual impairment testing date of April 1, 2024.*

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In the event the financial performance of any of the reporting units doesnot meet management’s expectations in the future, the Company experiences a prolonged macroeconomic downturn, or there are other negative revisions to key assumptions used in the DCF method used to value the reporting units, the Company* may*be required to perform additional impairment analyses with respect to such reporting units and could be required to recognize additional impairment charges.

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The following table sets forth the changes in the carrying amount of goodwill by reportable segment since* October 1, 2023 (in thousands). The Company has presented the October 1, 2023*balances to be consistent with the current segment structure.

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As of* March 31, 2024,prior to performing the quantitative goodwill impairment analyses, the Company performed a recoverability test of B Medical Systems long-lived assets in accordance with ASC360*-10-15, Impairment or Disposal of Long-Lived Assets. The Company concludedno impairment of the B Medical Systems long-lived asset group existed as of* March 31, 2024.*The Company’s assessment was based on its estimates and assumptions, similar to those described above related to goodwill, a number of which are based on external factors and the exercise of management judgment.

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The components of the Company’s identifiable intangible assets as of* June 30, 2024* and* September 30, 2023* are as follows (in thousands):

Amortization expense for intangible assets was $12.9 million and $12.2 million, respectively, for thethree months ended* June 30, 2024and2023*. Amortization expense for intangible assets was $38.5 million and $36.1 million, respectively, for thenine months ended* June 30, 2024and2023*.

During thesecond quarter of fiscal year2024, the Company discontinued its sample sourcing product offering (a product line within the SMS segment). As a result, the Company recorded a $4.7 million impairment of intangible assets related to the sample sourcing business within "Impairment of goodwill and intangible assets" in its Condensed Consolidated Statements of Operations during thethree months ended* March 31, 2024.*

Estimated future amortization expense for the intangible assets for the remainder of fiscal year2024 and the subsequentfive fiscal years is as follows (in thousands):

7. Restructuring

2024 Restructuring Plan

In thesecond quarter of fiscal year2024, the Company launched initiatives designed to optimize resources for future growth and improve efficiency across its organization. The focus of the initiatives is to improve the Company’s profitability, which includes facilities consolidation, portfolio optimization, and organization structure simplification. The Company expects to complete the activities included in these initiatives by the end of fiscal year2026. As of the date of issuance of the financial statements for the quarterly period ended* June 30, 2024*, the Company hasnot identified restructuring actions related to these initiatives that will result in additional material charges. The Company expects to identify additional actions as it further refines its plan, and the related initiatives in future periods will be recorded when specified criteria are met, including butnot limited to, communication of benefit arrangements or when the costs have been incurred.

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The majority of the restructuring expenses associated with the initiatives described above for thethree andnine months ended* June 30, 2024* are severance and related costs, operating lease related right-of-use (“ROU”) asset abandonment, and fixed assets and other asset write-offs. Of the total restructuring expenses in thenine months ended* June 30, 2024*, $4.9 million is related to B Medical Systems segment; $2.6 million is related to SMS segment; $3.0 million is the Company’s headquarters operating lease related ROU asset abandonment and corporate related severance costs.

2023 Cost Savings Plans

In thesecond andthird quarters of fiscal year2023, the Company announced cost savings plans designed to position the Company to meet the needs of its customers and accelerate growth of the business.

The restructuring expenses associated with the2023 cost savings plans for thethree andnine months ended* June 30, 2023* are severance and related costs.

The following table sets forth restructuring charges recognized for thethree andnine months ended* June 30, 2024and2023* (in thousands):

The following table sets forth the activity in the severance and related costs accruals for thenine months ended* June 30, 2024and2023* (in thousands):

8. Supplementary Balance Sheet Information

Inventories

The following is a summary of inventories at* June 30, 2024* and* September 30, 2023* (in thousands):

Inventory reserves were $9.0 million and $5.0 million, respectively, at* June 30, 2024* and* September 30, 2023*.

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Warranty and Retrofit Costs

The following is a summary of product and warranty retrofit activity for thenine months ended* June 30, 2024and2023* (in thousands):

9. Stockholders’** Equity**

Share Repurchases

During thethree months ended* June 30, 2024*, the Company repurchased 4.2 million shares of common stock for $225.9 million (excluding fees, commissions, and excise tax) pursuant to the2022 share repurchase authorization. During thenine months ended* June 30, 2024*, the Company repurchased 7.7 million shares of common stock for $412.6 million (excluding fees, commissions, and excise tax) pursuant to the2022 share repurchase authorization. As of* June 30, 2024*, the Company accrued $3.9 million for excise tax related to share repurchases, which is considered an additional cost of the share repurchases and a reduction to stockholders’ equity in the Condensed Consolidated Balance Sheets.

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Accumulated Other Comprehensive Income (Loss)

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The following is a summary of the components of accumulated other comprehensive income (loss), net of tax for thenine months ended* June 30, 2024and2023* (in thousands):

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Unrealized gains (losses) on available-for-sale marketable securities are reclassified from “Accumulated other comprehensive income (loss)” into results of operations at the time of the securities’ sale, as described in Note2, Summary of Significant Accounting Policies in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K. Amounts reclassified from “Accumulated other comprehensive income (loss)” related to pension liability adjustments represent amortization of actuarial gains and losses.

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10. Revenue from Contracts with Customers

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers in a manner that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following is revenue by significant business line for thethree andnine months ended* June 30, 2024and2023* (in thousands):

(1) Core Products are Automated Stores, Cryogenic Systems, Automated Sample Tube, and Consumables and Instruments.

Contract Balances

*Accounts Receivable, Net.*Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is unconditional and only the passage of time is required before payment is due. The Company maintains an allowance for expected credit losses representing its best estimate of probable credit losses related to its existing accounts receivable. The Company determines the allowance for expected credit losses based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience, and other information through the payment periods.

Contract Assets.Contract assets represent rights to consideration in exchange for products or services that have been transferred by the Company and payment is conditional on something other than the passage of time. These amounts typically relate to contracts where the right to invoice the customer isnot present until completion of the contract or the achievement of specified milestones and the value of the products or services transferred exceed this constraint. Contract assets are classified as current as they are expected to convert to cash withinone year. Contract asset balances which are included within “Prepaid expenses and other current assets” in the Company’s Condensed Consolidated Balance Sheet, were $26.9 million and $24.2 million at* June 30, 2024* and* September 30, 2023*, respectively.

Contract Liabilities.Contract liabilities represent the Company’s obligation to transfer products or services to a customer for which consideration has been received, or for which an amount of consideration is due from the customer. Contract assets and liabilities are reported on a net basis at the contract level, depending on the contract’s position at the end of each reporting period. Contract liabilities are included within “Deferred revenue” in the Condensed Consolidated Balance Sheet. Contract liabilities were $33.3 million and $34.6 million at June 30, 2024 and* September 30, 2023*, respectively. The Company recognized revenues of $29.4 million and $26.8 million in thenine months ended* June 30, 2024and2023*, respectively, that were included in the contract liability balance at the beginning of each period*.*

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Remaining Performance Obligations.Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations within contracts with an original expected contract term that is greater thanone year and for which fulfillment of the contract has started as of the end of the reporting period. The aggregate amount of transaction consideration allocated to remaining performance obligations as of* June 30, 2024* was $96.0 million. The following table summarizes when the Company expects to recognize the remaining performance obligations as revenue; the Company will recognize revenue associated with these performance obligations as transfer of control occurs (in thousands):

11. Stock-Based Compensation

In accordance with the2020 Equity Incentive Plan, the Company* mayissue to eligible employees options to purchase shares of the Company’s common stock, restricted stock units and other equity incentives, which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues common stock to participating employees pursuant to an employee stock purchase plan, and may*issue common stock awards and deferred restricted stock units to members of its board of directors in accordance with its board of director compensation program.

2020 Equity Incentive Plan

The following table reflects the total stock-based compensation expense recorded during thethree andnine months ended* June 30, 2024and2023* (in thousands):

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for thenine months ended* June 30, 2024*:

The fair value of restricted stock units vested during thethree andnine months ended* June 30, 2024* was $0.4 million and $10.2 million, respectively. The fair value of restricted stock units vested during thethree andnine months ended* June 30, 2023* was $0.1 million and $9.7 million, respectively.

As of* June 30, 2024*, the future unrecognized stock-based compensation expense related to restricted stock units expected to vest is $22.7 million and is expected to be recognized over an estimated weighted average amortization period of 1.8 years.

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Restricted stock units granted with performance goals* mayalso have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units granted during thenine* months ended* June 30, 2024and2023*:

Time-Based Restricted Stock Unit Grants

Restricted stock units granted with a required service period typically have three-year vesting schedules in whichone-third of awards vest at each annual anniversary of grant date, subject to the award holders meeting service requirements.

Performance-Based Restricted Stock Unit Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee and approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target, and maximum performance goals.

Performance-based restricted stock unit awards granted allow participants to earn 100% of restricted stock units if the Company’s performance meets or exceeds its target goal for each applicable financial metric, and up to a maximum of 200% if the Company’s performance for such metrics meets or exceeds the maximum or stretch goal. Performance below the minimum threshold for each financial metric results in award forfeiture. Performance goals are measured over athree-year period for each year’s restricted stock unit awards and at the end of the period to determine the number of restricted stock units earned, if any, by recipients who continue to meet the service requirement. Upon thethird anniversary of each year’s restricted stock unit awards’ grant date, the Company’s Board of Directors approves the number of restricted stock units earned for participants who continue to meet the service requirements on the vesting date.

In* October 2023,the Company’s Board of Directors approved an amendment to the performance goals associated with the previously issued performance-based restricted stock units for all impacted employees, excluding members of the executive team. The performance goals, as amended, are more reflective of the current macroeconomic environment and consideration toward employee retention in the competitive life sciences industry. Before the amendment, the original performance goals werenot* expected to be satisfied. Subsequent to the amendment, vesting became probable based on the forecasted achievement of the amended performance goals. The amendment of these restricted stock units is treated as a modification with the total potential maximum compensation cost of $5.5 million recognized over the service period through* November 2025.The Company recorded expense of $0.3 million and $1.0 million for thethree* andnine months ended* June 30, 2024*, respectively, related to the modified awards.

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12. Fair Value Measurements

See Note2, Summary of Significant Accounting Policies in the notes to the audited consolidated financial statements included in the section titled “Financial Statements and Supplementary Data” in Part II, Item8 of the2023 Annual Report on Form10-K for information on the fair value hierarchy and the level of inputs used by the Company in determining fair value.

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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize assets and liabilities measured and recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets as of* June 30, 2024* and* September 30, 2023* (in thousands):

Cash Equivalents

The Company considers all highly liquid interest-earning investments with a maturity ofthree months or less at the date of purchase to be cash equivalents. Cash equivalents primarily consist of money market funds and U.S. government backed securities with a maturity ofthree months or less. They are classified within Level1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The fair values of these investments approximate their carrying values. Investments classified as Level2 consist of debt securities that are valued using matrix pricing benchmarking because they arenot actively traded and bank certificates of deposit with a maturity ofthree months or less. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

Available-For-Sale Securities

Available-for-sale securities primarily consist of highly rated corporate debt securities, and U.S. government backed securities, which are classified as Level1. Investments classified as Level2 consist of debt securities that are valued using matrix pricing and benchmarking because they arenot actively traded, and bank certificates of deposit.

Convertible Debt Securities

In thethird quarter of fiscal year2024, the Company purchased $2.0 million principal amount of convertible notes issued by a private company. The convertible notes are loans to convert to an equity stake in the private company upon a predetermined conversion event. The Company has elected the fair value option in accordance with ASC825, Financial Instruments("ASC825") to record the convertible notes. The fair value option under ASC825 allows an entity to account for the entire financial instrument at fair value with subsequent changes in fair value recognized in earnings through the condensed consolidated statements of operations at each reporting date. The Company elected the fair value option methodology to account for the convertible notes because the Company believes it accurately reflects the value of the securities and embedded features in the financial statements. As of* June 30, 2024,the fair value of the convertible notes was $2.0 million and is included in short-term marketable securities on the condensed consolidated balance sheets. The fair value determination is based on unobservable inputs (Level3* on the fair value hierarchy) which were based on the best information available in the circumstance, including transaction pricing, recent acquisition, and market participant assumptions. The unobservable inputs used in the determination of the fair value of assets classified as Level3 have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements of the assets as of the reporting date.

Foreign Exchange Contracts & Net Investment Hedge

The Company’s foreign exchange contract assets and liabilities, and its net investment hedge assets are measured and reported at fair value using the market method valuation technique. The inputs to this technique utilize current foreign currency exchange forward market rates published bythird-party leading financial news and data providers. These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they arenot based on actual transactions, so they are classified as Level2.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators* maysubject goodwill and long-lived assets to fair value measurement on a nonrecurring basis. As described in Note6,* Goodwill and Intangible Assets, as of* June 30, 2024* the Company estimated the fair value of its reporting units using a DCF model. Because the inputs to the valuation model are largely unobservable and reflect the Company’s own assumptions, goodwill and long-lived assets are classified as Level3.

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13. Income Taxes

The Company recorded an income tax benefit of $0.5 million and $0.9 million during thethree andnine months ended* June 30, 2024*, respectively. The tax benefit for thethree months ended* June 30, 2024was driven by the Company's loss from operations. The tax benefit for thenine* months ended* June 30, 2024* was primarily driven by the pre-tax loss from operations offset by $1.7 million of charges related to a valuation allowance recorded against deferred tax assets in a foreign subsidiary, $0.5 million of stock compensation shortfall expense for tax deductions that were lower than the associated book compensation expense and $0.7 million of expenses related to a valuation allowance on beginning of year U.S. state deferred tax assets. The Company’s tax rate on the loss from operations was lower than statutory rates because the Company wasnot providing a full tax benefit on U.S. losses due to a partial valuation allowance being recorded against U.S. federal and state deferred tax assets during the current year. As a result of the valuation allowance, the benefit was reduced by $1.3 million and $9.6 million during thethree andnine months ended* June 30,*2024.

The Company recorded an income tax benefit of $1.2 million and $9.1 million, respectively, during thethree andnine months ended* June 30, 2023*. The tax benefit for thethree months ended* June 30, 2023* was primarily driven by the pre-tax loss from operations during the period. The tax benefit for thenine months ended* June 30, 2023* was primarily driven by the pre-tax loss from operations and a $1.4 million deferred tax benefit resulting from the extension of a tax incentive in China. The effective tax rates for thethree andnine months ended* June 30, 2023* are slightly higher than statutory rates. The effective rates are driven higher than statutory rates by the discrete tax benefit in China noted above and the fair value adjustment of the contingent consideration related to the B Medical acquisition. The contingent consideration generated $18.5 million of pre-tax income that isnot subject to income taxes, therefore, the tax benefit is being driven by a tax loss that is significantly higher than the book loss for these periods.

The Company evaluates the realizability of its deferred tax assets by tax-paying component and assesses the need for a valuation allowance on an annual and a quarterly basis. The Company evaluates the profitability of each tax-paying component on a historical cumulative basis and a forward-looking basis in the course of performing this analysis.

The Company has generated U.S. pre-tax losses in recent years but has been in an overall deferred tax liability position where future taxable temporary differences were considered sufficient to offset future deductible temporary differences. The Company expects to generate a U.S. loss during fiscal year2024 which will result in a partial valuation allowance against U.S. federal and state deferred tax assets. In addition to the U.S. federal and state partial valuation allowance being recorded against deferred tax assets through the estimated annual effective tax rate, the Company has also recorded $0.7 million of valuation allowances against U.S. state deferred tax assets which related to beginning of year.

The Company also maintains a valuation allowance against net deferred tax assets on certain foreign tax-paying components.

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During thenine months ended* June 30, 2024,the Company repatriated approximately $455.0 million in cash from its German subsidiary. The Company recorded net tax benefits in the amount of $3.2 million related to the repatriation. The benefit included $5.2 million related to deductible U.S. foreign exchange losses on the repatriation measured at the foreign exchange rate on the date of repatriation. This benefit was offset by $2.0 million of state income taxes, net of federal benefit that was recorded during fiscal year2023.* During thenine months ended* June 30, 2024,*the Company reversed the $2.9 million deferred tax asset due to changes in foreign exchange rates up to the repatriation date. The impact was recorded against other comprehensive income.

The Company hasnot provided deferred income taxes on the outside basis difference of any foreign subsidiary and maintains its general assertion of indefinite reinvestment regarding those subsidiaries and the remaining earnings of its German subsidiary as of* June 30, 2024.*

The Company maintains liabilities for unrecognized tax benefits based on its estimates and assumptions. The Company recognizes interest related to unrecognized tax benefits as a component of the income tax provision or benefit. The Company recognized minimal interest expense related to its unrecognized tax benefits during thethree andnine months ended* June 30,*2024.

The Company is subject to U.S. federal, state, local and foreign income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.

In the normal course of business, the Company is subject to income tax audits in various global jurisdictions in which it operates. The years subject to examination vary for the United States and international jurisdictions, with the earliest tax year being 2018. Based on the outcome of these examinations or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the Condensed Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefits and accrued interest on those benefits willnot be reduced in the nexttwelve months due to the statute of limitations expirations. These unrecognized tax benefits would impact the effective tax rate if recognized.

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14. Net Loss per Share

The calculations of basic and diluted net loss per share and basic and diluted weighted average shares outstanding are as follows for thethree andnine months ended* June 30, 2024and2023* (in thousands, except per share data):

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As a result of incurring a net loss from continuing operations for thethree andnine months ended* June 30, 2024and2023*, outstanding restricted stock units and shares issued by the Company under the employee stock purchase plan were excluded from the computation of diluted loss per share as their effect would be antidilutive to earnings per share for continuing operations based on the treasury stock method.

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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 tothree 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:

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The segment realignment hadno 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.

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The following is the summary of the financial information for the Company’s reportable segments for thethree andnine months ended* June 30, 2024and2023* (in thousands):

The Company has corrected the segment adjusted operating income (loss) for thethree andnine months ended* June 30, 2023*, as certain corporate expenses that arenot 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 thethree andnine months ended* June 30, 2023*. The total net loss before income taxes remained unchanged in each period.

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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):

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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):

Revenue from external customers is attributed to geographic areas based on locations in which the product is shipped. Net revenue by geographic area for thethree andnine months ended* June 30, 2024and2023* are as follows (in thousands):

The above table has been adjusted from previously reported to correct for a misclassification of revenue between China and other locations for thethree andnine months ended* June 30, 2023.The adjustment is immaterial and doesnot* impact total revenue. The Company hadone individual customer that accounted for10% or more of its consolidated revenue for thethree months ended* June 30, 2024* and* June 30, 2023*. The Company hadone individual customer that accounted for10% or more of its consolidated revenue for thenine months ended* June 30, 2024and2023*. This individual customer is the same for each period in2024 and2023, a distributor shipping to end users in approximately 30 countries, and is related to the B Medical segment. There wereno customers that accounted for more than10% of the Company’s accounts receivable balance as of* June 30, 2024* and* September 30, 2023*.

16. Commitments and Contingencies

Contingencies

The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or, in certain instances, provide reasonable ranges of potential losses.

The Company* mayalso have certain indemnification obligations pursuant to claims made under the definitive agreement it entered into with Edwards Vacuum LLC (a member of the Atlas Copco Group) (“Edwards”) in connection with the Company’s sale of its semiconductor cryogenics business in thefourth* quarter of fiscal year2018. In thethird quarter of fiscal year2020, Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory (the*“2020* Claim”). In addition, in* January 2023,Edwards filed a lawsuit against the Company in the Supreme Court of the State of New York in the County of New York seeking indemnification from the Company under such definitive agreement for $1.0 million and other related damages, including interest and attorney’s fees, arising from athird*-party claim that was included as part of their initial claims (the*“2023* Claim”).

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In* April 2023,the Company responded to and filed a counterclaim against Edwards for the2023* Claim alleging breach of the definitive agreements by Edwards and seeking a declaratory judgment. During thethird quarter of fiscal year2023, the Company and Edwards entered into a settlement agreement related to the2023 Claim to avoid the costs and uncertainties of potential litigation. Under the settlement agreement, the Company paid Edwards $0.8 million fromone of the indemnification escrows established at closing of the sale in return for the release of the2023 Claim and the release to the Company of any residual funds in this escrow.

The Company accrued a liability of $2.5 million for the2020 Claim and2023 Claim of which $0.8 million was paid during thethird quarter of fiscal year2023. The2020 Claim remains outstanding and $1.7 million remains in the balance of the accrued liability as of* June 30, 2024*.

The Company cannot determine the probability of any losses or outcome of the2020 Claim including the amount of any indemnifiable losses, if any, resulting from these claims. However, the Company doesnot believe that this claim will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of the2020 Claim results in indemnifiable losses in excess of the applicable indemnification deductibles established under the definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection with the closing of the sale of the semiconductor cryogenics business. Management believes that any indemnifiable losses in excess of the applicable deductibles established in the definitive agreement would be covered by such insurance. For indemnifiable claims other than those arising from breaches of representations and warranties and for indemnifiable claims arising from breaches of representations and warranties exceeding the maximum coverage of the representations and warranties insurance policy, Edwards could seek recovery of such indemnifiable losses, if any, directly from the Company. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can beno assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

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Tariff Matter

With the assistance of athird-party consultant, during thefirst quarter of fiscal year2021, the Company initiated a review of the value of transactions it used for intercompany imports into the United States from its GENEWIZ business. As a result of this review and a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed and paid $5.9 million to the U.S. customs authorities during fiscal year2022. The U.S. customers authorities completed the review and closed the matter related to the periods prior to* November 2021.The U.S. customs authorities are currently in process of reviewing the Company’s calculation of tariffs for the periods after November 2021to determine if any further tariffs are owed by the Company. The Company has revised its tariff calculation methodology to align with the new interpretation provided to it by U.S. customs authorities. The estimated amount owed to the U.S. customs authorities under this revised methodology for periods after November 2021*is $2.5 million and has been accrued in the Condensed Consolidated Balance Sheets.

Purchase Commitments

As of* June 30, 2024*, the Company had non-cancellable commitments of $71.4 million, comprised of purchase orders for inventory of $53.3 million and other operating expense commitments of $18.1 million.

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