Azenta Inc
For the period ended Mar 31, 2024. Filed May 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
AZTA$39.16+4.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0001558370-24-000902
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001558370-24-007628
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 89 current paragraphs.
34 unchanged; 30 reworded; 24 added; 11 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Revenue increased 7% for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by a 51% increase in revenue in the B Medical Systems segment and a 4% increase in revenue in the Sample Management Solutions segment. Gross margin was 40% for the three months ended March 31, 2024 compared to 36% for the corresponding period in the prior fiscal year, driven by margin expansion in all three business segments and higher revenue in the B Medical Systems and Sample Management Solutions segments. Operating expenses increased $144.1 million during the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, primarily due to an $111.3 million non-cash goodwill impairment charge within the B Medical Systems segment, a $4.7 million of intangible asset impairment charge associated with the discontinuation of our sample sourcing product offering within our Sample Management Solutions business, and increased restructuring charges resulting from initiatives launched in the second quarter of fiscal year 2024. Additionally, we recognized a benefit of $17.1 million of fair value contingent consideration adjustments related to the B Medical Systems segment in the three months ended March 31, 2023 which did not reoccur in fiscal year 2024. We generated a net loss of $136.9 million for the three months ended March 31, 2024 compared to a net loss of $4.9 million for the three months ended March 31, 2023, primarily driven by the impairment of goodwill and intangible assets.
Current report
Six months ended March 31, 2024 compared to six months ended March 31, 2023
Current report
Revenue decreased by 4% for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by a 38% decrease in revenue in the B Medical Systems segment due to the timing of orders,
Current report
partially offset by 5% and 1% increases in revenue in the Sample Management Solutions and Multiomics segments, respectively. Gross margin was 40% for the six months ended March 31, 2024 compared to 39% for the corresponding period in the prior fiscal year, driven by margin expansion in the Sample Management Solutions and Multiomics segments, partially offset by margin pressure from decreased revenue in the B Medical Systems segment. Operating expenses increased $130.8 million during the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, primarily due to the non-cash impairment of goodwill and intangible assets and increased restructuring charges recognized in the six months ended March 31, 2024, partially offset by decreased selling, general and administrative expenses. Additionally, we recognized a benefit of $17.1 million of fair value contingent consideration adjustments related to the B Medical Systems segment in the six months ended March 31, 2023 which did not reoccur in fiscal year 2024. We generated a net loss of $152.6 million for the six months ended March 31, 2024 compared to a net loss of $16.2 million for the six months ended March 31, 2023, primarily driven by the impairment of goodwill and intangible assets.
Current report
Revenue for the three months ended March 31, 2024 increased 7% compared tothe corresponding prior fiscal year period, driven by a 51% increase in our B Medical Systems segment and a 4% increase in our Sample Management Solutions segment, while revenue in our Multiomics segment remained flat.
Current report
Our Sample Management Solutions segment revenue for the three months ended March 31, 2024 increased 4% compared tothe corresponding prior fiscal year period driven by revenue growth in the large-automated Store Systems and Sample Repository Solutions businesses.
Current report
Our Multiomics segment revenue for the three months ended March 31, 2024 remained flat compared tothe corresponding prior fiscal year period with consistent revenue in the Next Generation Sequencing business and revenue growth in the Gene Synthesis business, offset by a decline in Sanger sequencing services.
Current report
Revenue generated outside the United States was $134.5 million, or 43% of total revenue, for the six months ended March 31, 2024 compared to $152.5 million, or 47% of total revenue, for the corresponding period in the prior fiscal year.
Current report
Operating Loss
Current report
Our operating loss performance for the three and six months ended March 31, 2024 and 2023 is as follows (in thousands, except percentages):
Current report
Operating loss for the Sample Management Solutions segment was $3.0 million for the three months ended March 31, 2024 compared to an operating loss of $7.2 million in the corresponding period in the prior fiscal year. The Sample Management Solutions segment operating margin was (4.1)%, an increase of 610 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $1.6 million for the three months ended March 31, 2024 compared to adjusted operating loss of $6.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (2.1)%, an increase of 650 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $1.1 million for the three months ended March 31, 2024 and 2023 and transformation costs of $0.4 million for the three months ended March 31, 2024.
Current report
Operating loss for the B Medical Systems segment was $5.8 million for the three months ended March 31, 2024 compared to an operating loss of $9.0 million in the corresponding period in the prior fiscal year. The B Medical Systems segment operating margin was (25.5)%, an increase of 34.2 percentage points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily due to higher volume of cold chain sales in the product mix, partially offset by higher operating expenses due to increased commissions on cold chain sales. Adjusted operating loss was $1.2 million for the three months ended March 31, 2024 compared to adjusted operating loss of $3.4 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (5.1)%, an increase of 17.2 percentage points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $4.3 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the three months ended March 31, 2024 and purchase accounting impact on inventory of $2.9 million for the three months ended March 31, 2023.
Current report
Operating loss for the Sample Management Solutions segment was $4.7 million for the six months ended March 31, 2024 compared to an operating loss of $10.7 million in the corresponding period in the prior fiscal year. The Sample Management Solutions segment operating margin was (3.1)%, an increase of 420 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $2.4 million for the six months ended March 31, 2024 compared to adjusted operating loss of $9.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (1.6)%, an increase of 460 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $1.9 million and $1.6 million for the six months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the six months ended March 31, 2024.
Current report
Operating loss for the Multiomics segment was $8.5 million for the six months ended March 31, 2024 compared to an operating loss of $9.5 million in the corresponding period in the prior fiscal year. The Multiomics segment operating
Current report
margin was (6.8)%, an increase of 90 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $6.4 million for the six months ended March 31, 2024 compared to adjusted operating loss of $7.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (5.1)%, an increase of 60 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $2.1 million and $2.4 million for the six months ended March 31, 2024 and 2023, respectively.
Current report
Operating loss for the B Medical Systems segment was $14.0 million for the six months ended March 31, 2024 compared to an operating loss of $9.5 million in the corresponding period in the prior fiscal year. The B Medical Systems segment operating margin was (39.6)%, a decrease of 23.0 percentage points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The increase in operating loss and decrease in operating margin were primarily due to lower volume of cold chain sales in the product mix, partially offset by lower operating expenses due to decreased commissions on cold chain sales. Adjusted operating loss was $5.6 million for the six months ended March 31, 2024 compared to adjusted operating income of $2.9 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (15.7)%, a decrease of 20.9 percentage points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $8.1 million and $6.6 million for the six months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the six months ended March 31, 2024 and purchase accounting impact on inventory of $5.8 million for the six months ended March 31, 2023.
Current report
The Sample Management Solutions segment gross margin was 44.4% for the three months ended March 31, 2024, an increase of 560 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.3% for the three months ended March 31, 2024, an increase of 620 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for both the Core Products and Sample Repository Solutions businesses. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.0 million and $0.9 million for the three months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the three months ended March 31, 2024.
Current report
The Multiomics segment gross margin was 44.6% for the three months ended March 31, 2024, an increase of 120 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.2% for the three months ended March 31, 2024, an increase of 80 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for the Gene Synthesis business, partially offset by lower gross margin for Sanger sequencing services. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.
Current report
The Sample Management Solutions segment gross margin was 43.2% for the six months ended March 31, 2024, an increase of 250 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 44.7% for the six months ended March 31, 2024, an increase of 310 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for both the Core Products and Sample Repository Solutions businesses. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.8 million and $1.4 million for the six months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the six months ended March 31, 2024.
Current report
The Multiomics segment gross margin was 45.0% for the six months ended March 31, 2024, an increase of 60 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.6% for the six months ended March 31, 2024, an increase of 30 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for the Gene Synthesis business, partially offset by lower gross margin for Sanger sequencing services. Adjusted gross margin excludes the impact of amortization related to completed technology of $2.1 million and $2.4 million for the six months ended March 31, 2024 and 2023, respectively.
Current report
The B Medical Systems segment gross margin was 7.0% for the six months ended March 31, 2024, a decrease of 15.5 percentage points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 30.9% for the six months ended March 31, 2024, a decrease of 11.0 percentage points compared to the corresponding period in the prior fiscal year, primarily due to order delays and lower volume of cold chain sales in the product mix. Adjusted gross margin excludes the impact of amortization related to completed technology of $8.1 million and $5.3 million for the six months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the six months ended March 31, 2024 and purchase accounting impact on inventory of $5.8 million for the six months ended March 31, 2023.
Current report
Total selling, general and administrative expenses increased $5.0 million for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by an increase in corporate expenses related to compensation, benefits and insurance, partially offset by decreased governance-related costs.
Current report
Restructuring charges were $7.3 million and $8.5 million, respectively, for the three and six months ended March 31, 2024, an increase of $5.8 million and $5.5 million, respectively, compared to the three and six months ended March 31, 2023 driven by initiatives launched in the second quarter of fiscal year 2024. See Note 7,Restructuring in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Current report
assets. Additionally, the benefit was reduced by $5.7 million and $8.3 million due to a partial valuation allowance against the current year U. S. federal and state deferred tax assets during the three and six months ended March 31, 2024, respectively.
Removed paragraphs (11)
Previous report
As previously announced, effective October 1, 2023, we realigned our organizational structure to three principal business segments: Sample Management Solutions (“SMS”), Multiomics, and B Medical Systems. The segment realignment had no impact on our consolidated financial position, results of operations, or cash flows. All segment information presented is reflective of this new structure and prior period information has been recast to conform to our current period presentation.
Previous report
Revenue decreased 13% for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year, driven by a 70% decrease in revenue in the B Medical Systems segment due to the timing of orders, partially offset by an 8% combined increase in revenue in the Multiomics and Sample Management Solutions segments. Gross margin was 40% for the three months ended December 31, 2023 compared to 41% for the corresponding period in the prior fiscal year, primarily due to product mix in our B Medical Systems segment. Operating expenses decreased $13.4 million during the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year, driven by a $14.0 million decrease in selling, general and administrative expenses, primarily due to decreased bad debt expenses and commissions expenses, as well as decreased expenses related to the accelerated share repurchase agreement and governance-related costs. The savings from our cost reduction initiatives that commenced in fiscal year 2023 also contributed to the decrease in operating expenses. We generated a net loss of $15.7 million for the three months ended December 31, 2023 compared to a net loss of $11.2 million for the three months ended December 31, 2022, driven by a reduction in income tax benefit. The decrease in the income tax benefit for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year, is due to tax reserves recorded against the current year deferred tax assets.
Previous report
Operating Income (Loss)
Previous report
Our operating income (loss) performance for the three months ended December 31, 2023 and 2022 is as follows:
Previous report
Operating loss for the Sample Management Solutions segment was $1.7 million for the three months ended December 31, 2023 compared to an operating loss of $3.5 million in the corresponding period in the prior fiscal year. The Sample Management Solutions segment operating margin was (2.2)%, an increase of 240 basis points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. The increase is primarily driven by revenue growth across the segment’s major business lines and lower selling, general, and administrative expenses, partially offset by higher research and development expenses. Adjusted operating loss was $0.9 million for the three months ended December 31, 2023 compared to adjusted operating loss of $3.0 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (1.1)%, an increase of 290 basis points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $0.9 million and $0.5 million for the three months ended December 31, 2023 and 2022, respectively. Please refer to Note 15,Segment and Geographic Information in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10 Q.
Previous report
Operating loss for the B Medical Systems segment was $8.2 million for the three months ended December 31, 2023 compared to an operating loss of $0.5 million in the corresponding period in the prior fiscal year. The B Medical Systems segment operating margin was (65.0)%, a decrease of 63.9 percentage points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. The decrease is primarily driven by declines in revenue and gross margin, partially offset by lower selling, general, and administrative expenses, largely associated with lower commissions related to lower sales in the fiscal year 2024 period. Adjusted operating loss was $4.4 million for the three months ended December 31, 2023 compared to adjusted operating income of $6.3 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (35.0)%, a decrease of 50.1 percentage points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $3.8 million and $2.5 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted operating loss and margin for the three months ended December 31, 2022 also exclude purchase accounting impact on inventory of $2.9 million and amortization of other intangibles of $1.4 million. Please refer to Note 15,Segment and Geographic Information in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10 Q.
Previous report
The Sample Management Solutions segment gross margin was 42.1% for the three months ended December 31, 2023, a decrease of 40 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 43.1% for the three months ended December 31, 2023, an increase of 10 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for the Core Products business, partially offset by lower gross margin for the Sample Repository Solutions business. Adjusted gross margin excludes the impact of amortization related to completed technology of $0.8 million and $0.4 million for the three months ended December 31, 2023 and 2022, respectively.
Previous report
The Multiomics segment gross margin was 45.4% for both the three months ended December 31, 2023 and 2022. Adjusted gross margin was 47.1% for the three months ended December 31, 2023, a decrease of 30 basis points compared to the corresponding period in the prior fiscal year, primarily driven by pricing headwinds partially offset by labor productivity and direct material savings. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended December 31, 2023 and 2022, respectively.
Previous report
Restructuring charges were $1.1 million for the three months ended December 31, 2023, a decrease of $0.3 million compared to the three months ended December 31, 2022. The majority of the restructuring expenses for the three months ended December 31, 2023 and 2022 are severance and related costs resulting from cost reduction initiatives that commenced in fiscal year 2023.
Previous report
On November 13, 2023, we announced our intention to repurchase shares using all the remaining capacity available under the 2022 Repurchase Authorization during fiscal year 2024, subject to market and business conditions, legal requirements, and other factors.
Previous report
See Note 9,Stockholders’ Equity in the notes to the unaudited condensed consolidated financial statements included in the section titled "Financial Statements" in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about the 2022 Repurchase Authorization.
Reworded paragraphs (30)
Previous wording
We are a leading global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry. We entered the life sciences market in 2011, leveraging our in-house precision automation and cryogenics capabilities that we were then applying in the semiconductor manufacturing market. This led us to develop solutions for automated ultra-cold storage. Since then, we have expanded our life sciences offerings through internal investments and through a series of acquisitions. We now support our customers from research and clinical development to commercialization with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the importance of sample integrity and offer a broad portfolio of products and services supporting customers at every stage of the life cycle of samples including procurement and sourcing, automated storage systems, genomic services and a multitude of sample consumables, informatics and data software, along with sample repository solutions. Our expertise, global footprint and leadership positions enable us to be a trusted global partner to pharmaceutical, biotechnology and life sciences research institutions. In total, we employ approximately 3,500 full-time employees, part-time employees and contingent workers worldwide as of December 31, 2023 and have sales in approximately 150 countries. We are headquartered in Burlington, Massachusetts and have operations in North America, Asia, and Europe.
Current wording
We are a leading global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry. We entered the life sciences market in 2011, leveraging our in-house precision automation and cryogenics capabilities that we were then applying in the semiconductor manufacturing market. This led us to develop solutions for automated ultra-cold storage. Since then, we have expanded our life sciences offerings through internal investments and through a series of acquisitions. We now support our customers from research and clinical development to commercialization with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the importance of sample integrity and offer a broad portfolio of products and services supporting customers at every stage of the life cycle of samples including procurement and sourcing, automated storage systems, genomic services and a multitude of sample consumables, informatics and data software, along with sample repository solutions. Our expertise, global footprint and leadership positions enable us to be a trusted global partner to pharmaceutical, biotechnology and life sciences research institutions. In total, we employ approximately 3,400 full-time employees, part-time employees and contingent workers worldwide as of March 31, 2024 and have sales in approximately 150 countries. We are headquartered in Burlington, Massachusetts and have operations in North America, Asia, and Europe.
Previous wording
Our portfolio includes product and service offerings developed by us internally, as well as through acquisitions, designed to provide comprehensive capabilities to our customers’, addressing their needs in sample exploration and management, automated storage, multiomics, and cold chain solutions. We continue to develop new product and service offerings and enhance existing and acquired offerings through the expertise of our research and development resources. We believe our acquisition, investment and integration approach has allowed us to accelerate internal development and significantly accelerate time to market for our life sciences solutions.
Current wording
Our portfolio includes product and service offerings developed by us internally, as well as acquired through acquisitions, designed to provide comprehensive capabilities to our customers, addressing their needs in sample exploration and management, automated storage, multiomics, and cold chain solutions. We continue to develop new product and service offerings and enhance existing and acquired offerings through the expertise of our research and development resources. We believe our acquisition, investment and integration approach has allowed us to accelerate internal development and significantly accelerate time to market for our life sciences solutions.
Previous wording
Our performance for the three months ended December 31, 2023 and 2022 are as follows:
Current wording
Our performance for the three and six months ended March 31, 2024 and 2023 are as follows:
Previous wording
The preparation of the interim condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and consider various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the life sciences industry, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on
Current wording
The preparation of the interim condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and consider various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the life sciences industry, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.
Previous wording
Please refer to the commentary provided below for further discussion and analysis of the factors contributing to our results from operations for the three months ended December 31, 2023 compared to the three months ended December 31, 2022.
Current wording
Please refer to the commentary provided below for further discussion and analysis of the factors contributing to our results from operations for the three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023.
Previous wording
Non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusts the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments, charges related to merger and acquisitions and share repurchases, and rebranding and transformation costs to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers. Management also excludes special charges and gains, such as impairment losses, gains and losses from the sale of assets, certain tax benefits and charges, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly filed reports in their entirety and not rely on any single measure. A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included under “Operating Income (Loss)” and “Gross Margin” below.
Current wording
Non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusts the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments to inventory, charges related to merger and acquisitions and share repurchases, goodwill and intangible asset impairment charges, and non-recurring costs related to the Company’s business transformation initiatives to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers. Management also excludes special charges and gains, such as gains and losses from the sale of assets, certain tax benefits and charges, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly filed reports in their entirety and not rely on any single measure. A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included under “Operating Loss” and “Gross Margin” below.
Previous wording
Our revenue performance for the three months ended December 31, 2023 and 2022 is as follows:
Current wording
Our revenue performance for the three and six months ended March 31, 2024 and 2023 is as follows:
Previous wording
Revenue generated outside the United States was $63.7 million, or 41% of total revenue, for the three months ended December 31, 2023 compared to $90.6 million, or 51% of total revenue, for the corresponding period in the prior fiscal year.
Current wording
Revenue generated outside the United States was $70.7 million, or 44% of total revenue, for the three months ended March 31, 2024 compared to $61.8 million, or 42% of total revenue, for the corresponding period in the prior fiscal year.
Previous wording
Revenue for the three months ended December 31, 2023 decreased 13% compared to the corresponding period in the prior fiscal year, driven by a 70% decrease in revenue in our B Medical Systems segment, partially offset by a 5% increase in revenue in our Sample Management Solutions segment and a 3% increase in revenue in our Multiomics segment.
Current wording
Revenue for the six months ended March 31, 2024 decreased 4% compared to the corresponding period in the prior fiscal year, driven by a 38% decrease in our B Medical Systems segment, partially offset by a 5% increase in our Sample Management Solutions segment and a 1% increase in our Multiomics segment.
Previous wording
Our B Medical Systems segment revenue for the three months ended December 31, 2023 decreased 70% compared to the prior fiscal year, primarily due to the timing of orders for cold chain equipment.
Current wording
Our B Medical Systems segment revenue for the six months ended March 31, 2024 decreased 38% compared to thecorresponding prior fiscal year period, primarily due to the timing of orders for cold chain equipment.
Previous wording
Our Sample Management Solutions segment revenue for the three months ended December 31, 2023 increased 5% compared to the prior fiscal year driven by broad based revenue growth across major business lines, led by large automated stores and sample repository solutions.
Current wording
Our Sample Management Solutions segment revenue for the six months ended March 31, 2024 increased 5% compared to thecorresponding prior fiscal year period driven by revenue growth in the large-automated Store Systems and Sample Repository Solutions businesses.
Previous wording
Our Multiomics segment revenue for the three months ended December 31, 2023 increased 3% compared to the prior fiscal year period primarily driven by revenue growth in Gene Synthesis and Next-Generation Sequencing services, partially offset by a decline in Sanger sequencing services.
Current wording
Our Multiomics segment revenue for the six months ended March 31, 2024 increased 1% compared to thecorresponding prior fiscal year period primarily driven by revenue growth in Gene Synthesis and Next-Generation Sequencing services, partially offset by a decline in Sanger sequencing services.
Previous wording
Operating loss for the Multiomics segment was $4.5 million for each of the three months ended December 31, 2023 and 2022. The Multiomics segment operating margin was (7.2)%, an increase of 10 basis points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. Adjusted operating loss was $3.5 million for the three months ended December 31, 2023 compared to adjusted operating loss of $3.3 million in the corresponding period of the prior fiscal year. Adjusted operating margin was (5.5)%, a decrease of 20 basis points for the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended December 31, 2023 and 2022, respectively. Please refer to Note 15,Segment and Geographic Information in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10 Q.
Current wording
Operating loss for the Multiomics segment was $4.0 million for the three months ended March 31, 2024 compared to an operating loss of $5.0 million in the corresponding period in the prior fiscal year. The Multiomics segment operating margin was (6.4)%, an increase of 170 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher gross profit and lower operating expenses due to cost reduction initiatives. Adjusted operating loss was $3.0 million for the three months ended March 31, 2024 compared to adjusted operating loss of $3.8 million in the corresponding period of the prior fiscal year. Adjusted operating margin was (4.8)%, an increase of 130 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.
Previous wording
Our gross margin performance for the three months ended December 31, 2023 and 2022 is as follows:
Current wording
Our gross margin performance for the three and six months ended March 31, 2024 and 2023 is as follows (in thousands, except percentages):
Previous wording
The B Medical Systems segment gross margin was (1.8)% for the three months ended December 31, 2023, a decrease of 35.5 percentage points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 28.1% for the three months ended December 31, 2023, a decrease of 18.5 percentage points compared to the corresponding period in the prior fiscal year, primarily due to product mix. Adjusted gross margin excludes the impact of amortization related to completed technology of $3.8 million and $2.5 million for the three months ended December 31, 2023 and 2022, respectively, and purchase accounting impact on inventory of $2.9 million for the three months ended December 31, 2022.
Current wording
The B Medical Systems segment gross margin was 11.9% for the three months ended March 31, 2024, an increase of 20.6 percentage points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 32.4% for the three months ended March 31, 2024, an increase of 370 percentage points compared to the corresponding period in the prior fiscal year, driven by higher volume of cold chain sales in the product mix. Adjusted gross margin excludes the impact of amortization related to completed technology of $4.3 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the three months ended March 31, 2024 and purchase accounting impact on inventory of $2.9 million for the three months ended March 31, 2023.
Previous wording
Our research and development expenses for the three months ended December 31, 2023 and 2022 are as follows:
Current wording
Our research and development expenses for the three and six months ended March 31, 2024 and 2023 are as follows:
Previous wording
Research and development expenses for the three months ended December 31, 2023 increased $1.0 million compared to the three months ended December 31, 2022, primarily driven by increased product development expenses at the Sample Management Solutions segment.
Current wording
Total research and development expenses increased $0.2 million and $1.1 million, respectively, for the three and six months ended March 31, 2024 compared to the corresponding periods in the prior fiscal year, primarily due to increased product development expenses at the Sample Management Solutions segment.
Previous wording
Our selling, general and administrative expenses for the three months ended December 31, 2023 and 2022 are as follows:
Current wording
Our selling, general and administrative expenses for the three and six months ended March 31, 2024 and 2023 are as follows:
Previous wording
Total selling, general and administrative expenses decreased $14.0 million for the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to decreased bad debt expenses and commissions expenses, as well as decreased expenses related to the accelerated share repurchase and governance-related costs. The savings from our cost reduction initiatives that commenced in fiscal year 2023 also contributed to the decrease for the three months ended December 31, 2023.
Current wording
Total selling, general and administrative expenses decreased $9.0 million for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by savings from cost reduction initiatives, decreased governance-related costs, and non-recurring expenses for the accelerated share repurchase arrangement in the six months ended March 31, 2023.
Previous wording
*Interest income, net –*We recorded interest income of $10.1 million for the three months ended December 31, 2023 compared to $10.7 million recorded the three months ended December 31, 2022. The decrease in interest income is due to less investment in marketable securities during the three months ended December 31, 2023 compared to the corresponding period in the prior fiscal year. Please refer to Note 4,Marketable Securities and Note 5,Derivative Instruments in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
*Interest income, net –*We recorded interest income of $9.6 million and $19.6 million, respectively, for the three and six months ended March 31, 2024 compared to $10.4 million and $21.1 million, respectively, recorded for the three and six months ended March 31, 2023. The decrease in interest income is due to decreased investments in marketable securities during the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Please refer to Note 4,Marketable Securities and Note 5,Derivative Instruments in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Other, net – We recorded other income of $0.7 million for the three months ended December 31, 2023 compared to other income of $1.1 million for the three months ended December 31, 2022, primarily due to the foreign exchange gains and losses resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities.
Current wording
Other, net – We recorded other income of $0.3 million and $0.9 million, respectively, for the three and six months ended March 31, 2024 compared to other loss of $2.7 million and $1.5 million, respectively, for the three and six months ended March 31, 2023, which primarily relates toforeign exchange gains and losses resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities.
Previous wording
We recorded an income tax benefit of $0.2 million during the three months ended December 31, 2023, which was primarily driven by the pre-tax loss from operations. The pre-tax loss benefit is offset by a $0.5 million stock compensation shortfall expense for tax deductions that are lower than the associated book compensation expense and a $0.7 million expense related to a valuation allowance on beginning of year deferred tax assets. Additionally, the tax benefit for the three months ended December 31, 2023 was reduced by $2.6 million of tax reserves recorded against the current year deferred tax assets.
Current wording
We recorded an income tax benefit of $0.3 million and $0.5 million, respectively, during the three and six months ended March 31, 2024. The tax benefit was primarily driven by the pre-tax loss from operations offset by $1.7 million of charge related to a valuation allowance recorded against deferred tax assets in a foreign subsidiary during the three months ended March 31, 2024. The pre-tax benefit was further offset by $0.5 million of stock compensation shortfall expense for tax deductions that were lower than the associated book compensation expense during the six months ended March 31, 2024 and a $0.7 million expense related to a valuation allowance on beginning of year U.S. state deferred tax
Previous wording
We recorded an income tax benefit of $4.6 million during the three months ended December 31, 2022. The benefit was primarily driven by the pre-tax loss from operations and a $1.3 million deferred tax benefit resulting from the extension of a tax incentive in China.
Current wording
We recorded an income tax benefit of $3.3 million and $7.9 million, respectively, during the three and six months ended March 31, 2023. The tax benefit for the three months ended March 31, 2023 was primarily driven by the pre-tax loss from operating during the period. The tax benefit for the six months ended March 31, 2023 was primarily driven by the pre-tax loss from the operations and a $1.4 million deferred tax benefit resulting from the extension of a tax incentive in China. The effective tax rates for the three and six months ended March 31, 2023 were substantially higher than statutory rates. The effective rates were driven higher than the statutory rates by the discrete tax benefit in China and the fair value adjustment of the contingent consideration related to the B Medical acquisition. The contingent consideration generated $17.1 million of pre-tax income that was not subject to income taxes, therefore, the tax benefit was being driven by a tax loss that was significantly higher than the book loss for these periods.
Previous wording
As of December 31, 2023, we had cash and cash equivalents of $702.9 million and stockholders’ equity of $2.4 billion. We believe that our current cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least one year from the date of this Quarterly Report on Form 10-Q and for the foreseeable future. The current global economic environment makes it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressures, or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition and operating results.
Current wording
As of March 31, 2024, we had cash and cash equivalents of $353.5 million and stockholders’ equity of $2.2 billion. We believe that our current cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least one year from the date of this Quarterly Report on Form 10-Q and for the foreseeable future thereafter. The current global economic environment makes it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any additional financing that may be required on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressures, or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition and operating results.
Previous wording
As of December 31, 2023, we had $593.7 million of cash, cash equivalents and restricted cash held outside of the United States. If these funds are needed for U.S. operations, we would need to repatriate these funds. As a result of changes in U.S. tax legislation, any repatriation in the future would likely not result in U.S. federal income tax. Our marketable securities are generally readily convertible to cash without a material adverse impact.
Current wording
As of March 31, 2024, we had $129.7 million of cash, cash equivalents and restricted cash held outside of the United States. If these funds are needed for U.S. operations, we would need to repatriate these funds. Based on current U.S. tax laws, any repatriation in the future would likely not result in U.S. federal income tax. Our marketable securities are generally readily convertible to cash without a material adverse impact.
Previous wording
Our cash flows for the three months ended December 31, 2023 and 2022 were as follows:
Current wording
Our cash flows for the six months ended March 31, 2024 and 2023 were as follows:
Previous wording
Cash inflows from operating activities for the three months ended December 31, 2023 were $26.4 million, primarily due to improved accounts receivable collections and inventory management, and increased customer prepayments. Investing inflows of $98.4 million include $110.3 million of sales and maturities of marketable securities, offset by $11.9 million for purchases of property plant and equipment. Financing activities for the three months ended December 31, 2023 include $113.0 million of outflows related to our share repurchase program described below.
Current wording
Cash inflows from operating activities for the six months ended March 31, 2024 were $34.8 million, primarily due to improved inventory management and decreased selling, general and administrative expenses as a result of our cost savings plans and transformation initiatives. Investing outflows of $172.2 million include $345.4 million of purchases of marketable securities, offset by $190.5 million for sales and maturities of marketable securities. Financing activities for the six months ended March 31, 2024 include $186.8 million of outflows related to our share repurchase program described below.
Previous wording
On November 4, 2022, our Board of Directors terminated the existing share repurchase authorization and approved a new authorization to repurchase up to $1.5 billion of our common stock (the “2022 Repurchase Authorization”). Repurchases under the 2022 Repurchase Authorization may be made in the open market or through privately negotiated transactions (including under an accelerated share repurchase (“ASR”) agreement), or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, subject to market and business conditions, legal requirements, and other factors. We are not obligated to acquire any specific amount of common stock under the 2022 Repurchase Authorization, and share repurchases may commence or be suspended at any time at management’s discretion.
Current wording
On November 4, 2022, our Board of Directors approved an authorization to repurchase up to $1.5 billion of our common stock (the “2022 Repurchase Authorization”). Repurchases under the 2022 Repurchase Authorization may be made in the open market or through privately negotiated transactions (including under an accelerated share repurchase (“ASR”) agreement), or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, subject to market and business conditions, legal requirements, and other factors. We are not obligated to acquire any specific amount of common stock under the 2022 Repurchase Authorization, and share repurchases may commence or be suspended at any time at management’s discretion.
Previous wording
As of December 31, 2023, we had repurchased 19.7 million shares of common stock for $951.4 million (excluding fees, commissions, and excise tax) under the 2022 Repurchase Authorization and $548.6 million of the 2022 Repurchase Authorization remained. All shares of common stock repurchased by the Company under the 2022 Repurchase Authorization have been retired, accounted for as a reduction to stockholders’ equity in the Condensed Consolidated Balance Sheets and treated as a repurchase of common stock for purposes of calculating earnings per share as of the applicable settlement dates.
Current wording
As of March 31, 2024, we have repurchased 20.9 million shares of common stock for $1.025 billion (excluding fees, commissions, and excise tax) under the 2022 Repurchase Authorization and $475 million of the 2022 Repurchase Authorization remained. All shares of common stock repurchased by the Company under the 2022 Repurchase Authorization have been retired, accounted for as a reduction to stockholders’ equity in the Condensed Consolidated Balance Sheets and treated as a repurchase of common stock for purposes of calculating earnings per share as of the applicable settlement dates.
Previous wording
At December 31, 2023, we had non-cancellable commitments of $78.1 million, comprised primarily of purchase orders for inventory of $58.2 million, and information technology related commitments of $19.9 million.
Current wording
At March 31, 2024, we had non-cancellable commitments of $52.0 million, comprised primarily of purchase orders for inventory of $47.9 million, and information technology related commitments of $4.1 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our B Medical Systems segment revenue for the three months ended March 31, 2024 increased 51% compared tothe corresponding prior fiscal year period, primarily due to the timing of orders for cold chain equipment.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.