What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-03 compared with 2025-11-06 · 119 added, 141 removed, 223 unchanged (54% of the section changed)

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Investors are cautioned that statements in this Quarterly Report on Form 10-Q that are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position;

the effect and duration of macroeconomic conditions in relevant markets;

results of acquisitions;

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We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and the APAC region, and by independent distributors throughout the world.

As of September 30, 2025, we managed our operations in four reportable segments, or divisions:

As of December 31, 2025, we managed our operations in four reportable segments, or divisions:

Sterilization and Disinfection Control, Biopharmaceutical Development ("BPD"), Calibration Solutions, and Clinical Genomics.

Each of our divisions is described further in "Results of Operations" below.

Unallocated corporate expenses and other business activities are reported within Corporate and Other.

Corporate Strategy

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At the center of our organization are talented people who are capable of taking on new challenges using a team-based approach.

Indeed, it is our exceptionally talented workforce that works together to find ways to continuously and sustainably improve our products, our services, and ourselves, resulting in long-term value creation for our stakeholders.

Indeed, it is our exceptionally talented workforce that collaborates to find ways to continuously and sustainably improve our products, our services, and ourselves, resulting in long-term value creation for our stakeholders.

General Trends

We are a global company with multinational operations.

During the six months ended September 30, 2025, approximately 53% of our revenues were earned outside of the United States.

Our geographic and industry diversity presents both opportunities and challenges, including those associated with operating in varied economic environments, complying with evolving regulatory requirements such as tariffs, navigating global labor trends and costs, adapting to technology changes in served markets, pursuing expansion opportunities in high-growth markets, and monitoring foreign currency impacts against the U.S.

As a global company, our geographic and industry diversity presents both opportunities and challenges, including those associated with pursuing expansion opportunities in high-growth markets, operating in varied economic environments, complying with evolving regulatory requirements such as tariffs, navigating global labor trends and costs, adapting to technology changes in served markets, and monitoring foreign currency impacts against the U.S.

dollar ("USD").

For the six months ended September 30, 2025, we realized revenue growth of 3.7% versus the comparable prior year period, driven by growth in our Calibration Solutions, Biopharmaceutical Development, and Sterilization and Disinfection Control divisions.

Our Clinical Genomics division experienced revenue declines due to trade tensions and unfavorable macroeconomic conditions in China, which continued to weaken demand for our Clinical Genomics products and services in that region.

We anticipate that challenges in China will persist through the end of fiscal year 2026 and will most likely continue into fiscal year 2027.

Despite challenges in China, Clinical Genomics has continued to execute its commercial strategy successfully in the Americas and Europe;

this geographic mix has resulted in improved gross profit percentages in the second quarter of fiscal 2026 versus the same quarter in the prior year.

Consolidated gross profit as a percentage of revenues decreased 1.0 percentage point, to 61.7%, in the first half of fiscal year 2026 versus the comparable prior year period.

During the nine months ended December 31, 2025, approximately 53% of our revenues were earned outside of the United States.

For the nine months ended December 31, 2025, revenues grew 3.7% versus the comparable prior year period, driven by growth in our Biopharmaceutical Development, Sterilization and Disinfection Control, and Calibration Solutions divisions.

Our Clinical Genomics division continued to experience revenue declines due to trade tensions and unfavorable macroeconomic conditions in China, which have weakened demand for our Clinical Genomics products and services in that region.

We expect that challenges in China will persist through the end of fiscal year 2026 and will most likely continue into fiscal year 2027.

Despite challenges in China, Clinical Genomics has continued to execute its product development and commercial strategy successfully in the Americas and Europe, and our cost savings initiatives and geographic mix have resulted in improved gross profit percentages during the three and nine months ended December 31, 2025 versus the comparable prior year periods.

Consolidated gross profit as a percentage of revenues in the nine months ended December 31, 2025 was largely consistent with the comparable prior year period.

The weakening of the U.S.

dollar versus the comparable prior year period and the impact of tariffs negatively impacted our consolidated gross profit as a percentage of revenues, with a particularly pronounced effect on our Biopharmaceutical Development division.

Excluding the impacts of exchange rate changes and tariffs, gross profit as a percentage of revenue would have been approximately 62.6% for the six months ended September 30, 2025, largely consistent with the prior year period.

While we have been successful at passing certain tariff surcharges on to our customers, in many cases, these incremental tariff surcharges are equal to or slightly less than the tariff costs we incur.

We expect to realize improved tariff cost recovery in future periods.

To address our outlook for Clinical Genomics in China, mitigate margin pressures attributable to tariffs in our business units, and support strategic long-term growth, we adjusted our cost structure during the second quarter of our fiscal year 2026.

Specifically, we have implemented headcount reductions and other cost savings initiatives that we expect to reduce our annualized costs by approximately $3.2 million, of which approximately $2.1 million will be realized by the Clinical Genomics division.

The remainder will benefit other business units and corporate functions.

We expect to reinvest approximately $0.9 million of the savings back into our Sterilization and Disinfection Control division, historically our most profitable division, to accelerate its growth.

As a result of these efforts, we anticipate net annualized cost reductions of approximately $2.3 million, which will be realized starting in the third quarter of fiscal year 2026.

We incurred approximately $0.85 million of severance expense in fiscal year 2026 in connection with these cost reductions.

Operating expenses increased 4.5% for the six months ended September 30, 2025 versus the comparable prior year period.

The increase was largely driven by higher personnel expense, including the impact of foreign-denominated personnel expenses translating into higher reported U.S.

dollar amounts, higher non-cash stock-based compensation, and approximately $0.8 million of operating severance expense, primarily related to the Clinical Genomics division.

dollar versus the comparable prior year period and the impact of tariffs reduced consolidated year-to-date gross profit as a percentage of revenues by approximately 0.8 percentage points, with a particularly pronounced effect on our Biopharmaceutical Development and Sterilization and Disinfection Control divisions.

The decreases were partially offset by GKE-related inventory step-up amortization expense that reduced margins in the prior year period, and in the current year period, cost‑savings initiatives implemented in the prior quarter and favorable geographic revenues mix within the Clinical Genomics division resulted in higher reported margins.

Operating expenses increased 2.8% for the nine months ended December 31, 2025 compared to the prior year period, but decreased slightly as a percentage of revenues.

The increase in operating expenses was largely driven by (i) higher allowances on accounts receivable, particularly in China, and (ii) higher personnel expense, including increased stock-based compensation from performance-based awards, and severance expense related primarily to Clinical Genomics.

The increase was partially offset by lower professional services and consulting fees as the comparable prior year period included GKE integration costs.

In addition, the weaker U.S.

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Gross Profit as a % of Revenues

Three Months Ended September 30,

Three Months Ended December 31,

amounts in thousands, except percent data

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Gross Profit as a % of Revenues

Six Months Ended September 30,

Nine Months Ended December 31,

amounts in thousands, except percent data

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See "Non-GAAP Measures" below for further information and for a reconciliation of organic revenues growth to total revenues growth.

Organic revenues growth in our Sterilization and Disinfection Control division for the three and six months ended September 30, 2024 differed from total GAAP revenues growth due to the acquisition of GKE;

for all other amounts presented, GAAP revenues growth is equivalent to organic revenues growth.

Organic revenues growth in our Sterilization and Disinfection Control division for the three and nine months ended December 31, 2024 differed from total U.S.

GAAP revenues growth due to the acquisition of GKE;

for all other amounts presented, U.S.

GAAP revenues growth is equivalent to organic revenues growth.

Our unaudited condensed consolidated results of operations are as follows:

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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Operating income

Net income (loss)

Reportable Segments

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Sterilization and Disinfection Control products are disposable and are used on a routine basis.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

Gross profit as a % of revenues

Revenues for the Sterilization and Disinfection Control division declined 0.4% for the three months ended September 30, 2025 versus the comparable prior year period.

The decrease was primarily driven by lower-than-expected order fulfillments for certain product lines.

Bookings were approximately 5% greater than revenues for the three months ended September 30, 2025.

For the six months ended September 30, 2025, the division’s revenues increased 5.2% versus the comparable prior year period.

Year-to-date growth was largely attributable to strong commercial execution and higher sales volumes during the first quarter of fiscal 2026.

Gross profit as a percentage of revenues decreased by 1.0 percentage point and increased by 1.5 percentage points for the three and six months ended September 30, 2025, respectively, versus the comparable prior year periods.

Excluding the impact of prior year inventory step-up amortization related to the GKE acquisition, gross profit as a percentage of revenues would have decreased by 3.1 and 1.2 percentage points for the three and six months ended September 30, 2025, respectively.

These declines were primarily driven by increased professional services expenses, as we invested in outside expertise to improve our production processes for this division and the impact of a weakening USD.

We expect to significantly decrease these outside professional services expenses during the second half of fiscal year 2026.

Revenues for the Sterilization and Disinfection Control division increased 6.0% and 5.5%, respectively, for the three and nine months ended December 31, 2025 versus the comparable prior year periods.

The increases were primarily attributable to the weakening of the USD, higher sales volumes and price increases during fiscal 2026.

Excluding the impact of foreign currency translation, revenues would have increased approximately 2.4% and 2.3% for the three and nine months ended December 31, 2025, respectively.

The Sterilization and Disinfection Control division’s backlog modestly decreased sequentially in the third quarter of fiscal year 2026 as order fulfillments returned to normal levels.

Gross profit as a percentage of revenues decreased slightly for the three months ended December 31, 2025 versus the comparable prior year period.

The decrease is primarily attributable to the impact of the weaker USD, partially offset by higher revenues on a partially fixed cost base.

Gross profit as a percentage of revenues increased by 0.8 percentage points for the nine months ended December 31, 2025 versus the comparable prior year period, primarily due to the impact of inventory step-up amortization related to the GKE acquisition in the prior year, partially offset by the weakening USD.

Excluding the impact of prior year inventory step-up amortization and foreign currency translation, gross profit as a percentage of revenues for the three and nine months ended December 31, 2025 would have been largely consistent with the comparable prior year periods.

Biopharmaceutical Development

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Immunoassays and peptide synthesis solutions accelerate the discovery, development and manufacture of biotherapeutic therapies, among other applications.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

Gross profit as a % of revenues

Revenues for the Biopharmaceutical Development division increased 17.3% and 6.4%, respectively, for the three and six months ended September 30, 2025 versus the comparable prior year periods.

Increases in revenue were primarily driven by higher sales of Peptides instruments.

The Biopharmaceutical Development division's consumables revenues grew approximately 14% and 6%, respectively, for the three and six months ended September 30, 2025 versus the comparable prior year periods.

Gross profit as a percentage of revenue for the Biopharmaceutical Development division decreased 2.0 percentage points for the three months ended September 30, 2025 versus the comparable prior year period.

The decrease for the three months ended September 30, 2025 was primarily due to the impact of tariffs and foreign currency translation along with unfavorable product mix as higher-margin Immunoassays revenues comprised a lower portion of the division’s total revenues.

The 6.6 percentage point decrease for the six months ended September 30, 2025 versus the comparable prior year period was primarily due to unfavorable product mix, the impact of tariffs and foreign currency translation, and lower revenues on a partially fixed cost base.

Excluding the impact of tariffs and foreign currency translation, gross profit as a percentage of revenues would have been approximately 61.3% and 59.1%, respectively, for the three and six months ended September 30, 2025.

Revenues for the Biopharmaceutical Development division increased 17.5% and 10.2%, respectively, for the three and nine months ended December 31, 2025 versus the comparable prior year periods.

Increases in revenues for the three months ended December 31, 2025 were primarily driven by increased peptides and immunoassays hardware sales volumes, along with the weakening of the USD.

Increases in revenues for the nine months ended December 31, 2025 were primarily driven by higher sales volumes of peptides instruments and immunoassays consumables and services, as well as the weakening of the USD.

Gross profit as a percentage of revenues for the Biopharmaceutical Development division increased 0.5 percentage points for the three months ended December 31, 2025 versus the comparable prior year period.

The increase was primarily due to higher revenues on a partially fixed cost base, partially offset by the impacts of foreign currency translation and tariffs.

Gross profit as a percentage of revenues for the Biopharmaceutical Development division decreased 4.1 percentage points for the nine months ended December 31, 2025, primarily due to the impacts of foreign currency translation and tariffs.

Unfavorable product mix also contributed to the decline, as higher-margin immunoassays revenues represented a smaller share of total revenues, while hardware represented a larger share.

Excluding the impacts of foreign currency translation and tariffs, gross profit as a percentage of revenues would have increased by approximately 3.2 percentage points and decreased by approximately 1.7 percentage points, respectively, for the three and nine months ended December 31, 2025, versus the comparable prior year periods.

Calibration Solutions

The Calibration Solutions division develops, manufactures, sells and services quality control products using principles of advanced metrology to enable customers to measure and calibrate critical parameters in applications such as renal care, environmental and process monitoring, gas flow and torque testing.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

Gross profit as a % of revenues

Revenues for the Calibration Solutions division increased 10.7% and 7.7% for the three and six months ended September 30, 2025, respectively, versus the comparable prior-year periods.

Growth was primarily driven by ongoing commercial efforts to renew contracts with larger customers that incentivize utilization of our service offerings, and to a lesser extent, by price increases.

Gross profit as a percentage of revenues increased by 1.9 percentage points for the three months ended September 30, 2025 versus the comparable prior-year period, primarily due to higher revenues on a partially fixed cost base, partially offset by increased manufacturing input costs, including the impact of tariffs.

For the six months ended September 30, 2025, gross profit as a percentage of revenues decreased 1.2 percentage points versus the comparable prior-year period, primarily due to increased personnel-related costs that we expect will support future growth, and to a lesser extent, due to increased manufacturing input costs, including the impact of tariffs.

Revenues for the Calibration Solutions division decreased 2.5% for the three months ended December 31, 2025 versus the comparable prior year period.

The decrease was primarily due to particularly strong commercial activity in our renal care product lines in the prior year period.

Revenues for the Calibration Solutions division increased 3.9% for the nine months ended December 31, 2025 versus the comparable prior year period, primarily driven by ongoing commercial efforts to establish and renew contracts that incentivize utilization of our service offerings, and to a lesser extent, by price increases.

Gross profit as a percentage of revenues decreased by 1.0 and 1.1 percentage points, respectively, for the three and nine months ended December 31, 2025 versus the comparable prior year period, primarily due to unfavorable product mix and increased personnel-related costs that we expect will support future growth.

Clinical Genomics

The Clinical Genomics division develops, manufactures and sells highly sensitive high-throughput genetic analysis tools and related consumables and services that enable clinical research labs and contract research organizations to perform genomic testing for a broad range of research applications in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics, oncology related applications and toxicology research.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

Gross profit as a % of revenues

Revenues for the Clinical Genomics division declined 3.1% and 6.4% for the three and six months ended September 30, 2025, respectively, versus the comparable prior year periods.

The decrease was driven primarily by lower sales to customers in China, reflecting ongoing macroeconomic and regulatory uncertainty and escalating trade tensions.

Excluding sales to China, revenues increased 16.2% and 12.1%, respectively, for the three and six months ended September 30, 2025 versus the comparable prior year periods.

While we anticipate continued revenues growth outside of China for the remainder of the fiscal year, we expect continued decreases in revenues from China over the same period, versus the comparable prior year periods.

Clinical Genomics’ gross profit as a percentage of revenue increased 3.3 percentage points for the three months ended September 30, 2025 versus the comparable prior year period, despite lower revenues.

The increase was primarily driven by favorable product mix, as consumables, which carry higher margins, represented a higher portion of total revenues, and by favorable geographic mix, as domestic sales tend to generate higher margins than sales in the APAC region.

Gross profit percentage decreased 0.4 percentage points for the six months ended September 30, 2025 versus the comparable prior year period.

The decline was primarily driven by lower revenues on a partially fixed cost base, and to a lesser extent, foreign currency impacts, partially offset by increased domestic and consumables sales.

Revenues for the Clinical Genomics division declined 7.1% and 6.7% for the three and nine months ended December 31, 2025, respectively, versus the comparable prior year periods.

The decreases were driven primarily by lower sales to customers in China, reflecting ongoing macroeconomic and regulatory uncertainty and heightened trade tensions.

Excluding sales to China, revenues increased 2.4% and 8.4% for the three and nine months ended December 31, 2025 versus the comparable prior year periods.

Clinical Genomics’ gross profit as a percentage of revenues increased 5.6 percentage points and 1.7 percentage points, respectively, for the three and nine months ended December 31, 2025 versus the comparable prior year periods, despite lower revenues.

The increases in gross profit as a percentage of revenues were primarily attributable to manufacturing and supply chain efficiency improvements, lower personnel-related costs attributable to our cost mitigation efforts in the prior quarter, and favorable geographic product mix, as sales outside of China typically generate higher margins.

Gross profit as a percentage of revenues for the nine months ended December 31, 2025 was also positively impacted by product mix, as higher-margin consumables represented a greater portion of the division's total revenues.

Operating Expense

Operating expense increased 2.1% and 4.5%, respectively, for the three and six months ended September 30, 2025 versus the comparable prior year periods.

Operating expense was flat for the three months ended December 31, 2025 and increased 2.8% for the nine months ended December 31, 2025, versus the comparable prior year periods.

Operating expense as a percentage of revenues decreased 2.2 percentage points and 0.5 percentage points for the three and nine months ended December 31, 2025, respectively, versus the comparable prior year periods.

Among other factors, reported selling, general and administrative, and research and development expenses increased due to the weakening of the U.S.

dollar against the euro and Swedish krona for the three and six months ended September 30, 2025 versus the comparable prior year period.

dollar against the euro and Swedish krona for the three and nine months ended December 31, 2025 versus the comparable prior year periods.

Selling Expense

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accordingly, it may vary with sales levels.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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As a percentage of revenues

Selling expense decreased 0.5% for the three months ended September 30, 2025 versus the comparable prior year period, primarily due to lower personnel and training costs, including lower commissions expense, partially offset by severance charges.

Selling expense increased 3.8% for the six months ended September 30, 2025, versus the comparable prior year period, primarily due to severance costs and investments in professional services to support lead-generation and marketing.

Selling expense decreased 4.4% for the three months ended December 31, 2025 versus the comparable prior year period, primarily due to lower expenditures on certain outside services as we began to transition more of our commercial selling efforts in-house.

Selling expense increased 1.0% for the nine months ended December 31, 2025 versus the comparable prior year period primarily due to severance costs, investments in certain professional services to support lead-generation and marketing, and higher commissions expense.

General and Administrative Expense

Labor costs, amortization of intangible assets, and non-cash stock-based compensation drive the substantial majority of our general and administrative expense.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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As a percentage of revenues

General and administrative expense increased 1.7% for the three months ended September 30, 2025 versus the comparable prior year period.

The increase was primarily driven by higher expense related to estimated uncollectible accounts receivable, particularly in China, and by increased personnel and benefits costs, including severance.

These increases were partially offset by lower professional services costs.

General and administrative expense increased 4.2% for the six months ended September 30, 2025 versus the comparable prior year period.

The increase was primarily attributable to higher personnel costs, including increased non-cash stock-based compensation resulting from an adjustment to performance-based awards to reflect achievement against targets through September 30, 2025.

Higher expense related to estimated uncollectible accounts receivable in China also contributed to the increase.

The increase was partially offset by lower consulting and professional services expenses, as our prior year results included consulting costs related to integrating GKE into our enterprise resource planning system.

General and administrative expense increased 1.8% and 3.4%, respectively, for the three and nine months ended December 31, 2025 versus the comparable prior year periods.

The increases were primarily attributable to higher expense related to estimated uncollectible accounts receivable related to customers in China.

Higher personnel costs, including higher non-cash stock-based compensation resulting from an adjustment to performance-based awards to reflect achievement against targets through December 31, 2025, also contributed to the increase.

The increases were partially offset by lower consulting and professional services expenses, as the prior year periods included consulting costs associated with integrating GKE into our enterprise resource planning system.

Research and Development Expense

Research and development expense is predominantly comprised of labor costs and costs of third-party consultants.

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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As a percentage of revenues

Research and development expenses increased 8.9% and 7.1% for the three and six months ended September 30, 2025, respectively, versus the comparable prior year periods.

The increases were primarily attributable to severance costs, particularly within our Clinical Genomics division, and purchases of supplies and consulting services to support project-specific research and development activities.

Research and development expenses were flat for the three months ended December 31, 2025 versus the comparable prior year period, as decreased salaries expense was offset by the impact of foreign currency translation and higher benefits-related costs.

Research and development expense increased approximately 4.4% for the nine months ended December 31, 2025.

The increase was primarily attributable to purchases of supplies and consulting services to support project-specific research and development activities, as well as severance costs, particularly within our Clinical Genomics division.

Non-Operating Expense (Income), Net

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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(Gain) on extinguishment of convertible notes

Other (income), net

Non-operating expense (income), net

Interest expense decreased for the three and six months ended September 30, 2025 compared to the prior year periods, primarily due to lower weighted average levels of outstanding interest-bearing debt and a reduction in interest rates applicable to our floating rate debt.

These decreases were partially offset by the settlement of $97.5 million principal on our Notes using $97.0 million in borrowings under the Revolver, which carries a higher interest rate than the Notes.

We expect interest expense to increase for the remainder of fiscal year 2026 compared to fiscal year 2025, driven by the higher interest rate on debt outstanding under our Credit Facility compared with the Notes.

Other (income), net primarily consists of gains and losses on foreign currency transactions.

In particular, during the six months ended September 30, 2025, we recognized unrealized foreign currency gains of approximately $6.1 million related to an intercompany U.S.

Other expense (income), net

Total non-operating expense, net

Interest expense increased for the three months ended December 31, 2025 compared to the prior year period primarily due to the higher interest rate on our Credit Facility relative to the rate on the Notes, which we repaid using $97.0 million of borrowings under the Credit Facility’s Revolver in the prior quarter, partially offset by a decrease in total debt outstanding.

We expect interest expense to remain higher for the remainder of fiscal year 2026 compared to fiscal year 2025 as a result of the higher Credit Facility rate compared to the rate previously incurred on the Notes.

For the nine months ended December 31, 2025, interest expense decreased compared to the prior year period due to lower weighted‑average levels of outstanding interest‑bearing debt and a reduction in interest rates applicable to our floating‑rate debt, partially offset by the higher rate on the Credit Facility compared to the Notes.

Other expense (income), net primarily consists of gains and losses on foreign currency transactions.

In particular, during the nine months ended December 31, 2025, we recognized unrealized foreign currency gains of approximately $5.8 million related to an intercompany U.S.

dollar-denominated loan issued in fiscal year 2024 to one of our wholly owned, euro-denominated subsidiaries.

The $2.9 million gain on extinguishment of the Notes reported in the first six months of fiscal year 2025 was a result of the partial repurchase of the Notes during that period.

No gain or loss was recognized upon final settlement of the Notes during the three months ended September 30, 2025, as the Notes had reached maturity and were settled in cash at the contractual principal amount.

Three Months Ended September 30,

Six Months Ended September 30,

The $2.9 million gain on extinguishment of the Notes reported in the first nine months of fiscal year 2025 was a result of the partial repurchase of the Notes during that period.

No gain or loss was recognized upon final settlement of the Notes during the nine months ended December 31, 2025, as the Notes had reached maturity and were settled in cash at the contractual principal amount.

Three Months Ended December 31,

Nine Months Ended December 31,

amounts in thousands, except percent data

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Effective tax rate

Our effective income tax rate was (23.9%) and 19.9%, respectively, for the three and six months ended September 30, 2025 compared to 10.1% and 11.7% for the prior year periods.

The effective tax rate for both the three and six months ended September 30, 2025 differed from the statutory federal rate of 21% primarily due to the impact of the valuation allowance on U.S.

Our effective income tax rate was 21.0% and 20.3%, respectively, for the three and nine months ended December 21, 2025 compared to 24.4% and 6.5% for the comparable prior year periods.

The effective tax rate for the three months ended December 31, 2025 approximated the federal statutory rate of 21%, but was impacted by the valuation allowance on U.S.

deferred taxes, offset by the foreign differential rate.

The effective tax rate for the nine months ended December 31, 2025 differed from the statutory federal rate of 21% due to the impact of the valuation allowance on U.S.

deferred taxes, partially offset by the foreign rate differential.

The change in the effective tax rate for both the three and six months ended September 30, 2025 versus the comparable prior year periods is primarily due to prior year valuation allowance adjustments related to our operations in Germany and an increase in German statutory taxes in the current fiscal year.

The change in the effective tax rate for both the three and nine months ended December 31, 2025 versus the comparable prior year periods was primarily due to prior year valuation allowance adjustments related to our operations in Germany and an increase in German statutory taxes in the current fiscal year.

Our future effective income tax rate depends on various factors, such as changes in tax laws including OBBBA, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income.

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Net income varies with changes in revenues, gross profit, operating expense, and currency exchange rate fluctuations.

Net income included $9.1 million, $7.7 million and $2.7 million of non-cash amortization of intangible assets, stock-based compensation expense, and depreciation expense, respectively, for the six months ended September 30, 2025.

Net income included $13.5 million, $11.1 million and $4.0 million of non-cash amortization of intangible assets, stock-based compensation expense, and depreciation expense, respectively, for the nine months ended December 31, 2025.

Liquidity and Capital Resources

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We believe these sources are sufficient to meet our ongoing operating needs, scheduled debt service obligations, dividend payments and anticipated capital expenditures.

As of September 30, 2025 and March 31, 2025, we held $20.4 million and $27.3 million of cash, respectively.

As of December 31, 2025 and March 31, 2025, we held $29.0 million and $27.3 million of cash, respectively.

Historically, our more significant uses of cash have included acquisitions, payments on debt principal and interest obligations, and quarterly dividends paid to shareholders.

Working capital, defined as the amount by which current assets exceed current liabilities, was $49.1 million as of September 30, 2025, compared to negative working capital of $(61.3) million as of March 31, 2025.

Working capital, defined as the amount by which current assets exceed current liabilities, was $51.2 million as of December 31, 2025, compared to negative working capital of $(61.3) million as of March 31, 2025.

The prior period's negative working capital was due to the classification of $97.5 million in principal related to our Notes as a current liability.

During the three months ended September 30, 2025, we settled the Notes using a draw of $97.0 million on our Revolver.

The Revolver allows us to borrow to up to $125.0 million, and $106.0 million was outstanding as of September 30, 2025.

During the nine months ended December 31, 2025, we settled the Notes using a draw of $97.0 million on the Revolver.

The Revolver allows us to borrow up to $125.0 million, and $98.3 million was outstanding as of December 31, 2025.

Subsequent to quarter end, we repaid $4.0 million on the Revolver.

On October 10, 2025 we amended our Credit Facility to reduce the applicable interest rate spread above the SOFR base rate from 1.5%-3.5% to 1.25%-2.5%.

This rate reduction represents annual cost savings of approximately $0.6 million at debt levels outstanding under our Credit Facility as of September 30, 2025.

We expect to incur approximately $11.6 million in cash interest expense over the next twelve months.

On October 10, 2025 we amended our Credit Facility to reduce the applicable interest rate spread above the SOFR base rate from 1.5%-3.5% to 1.25%-2.5%, which we expect will reduce interest expense by approximately $0.4 million per year at current debt balances.

We expect to incur approximately $10.2 million in cash interest expense over the next twelve months based on outstanding debt levels and the rate in effect as of December 31, 2025.

Required principal debt payments due on our Term Loan within the next twelve months total $5.2 million.

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We have paid regular quarterly dividends since 2003.

We paid dividends of $0.16 per share during the three months ended September 30, 2025, as well as each quarter of fiscal years 2026 and 2025.

In October 2025, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on December 15, 2025, to shareholders of record at the close of business on November 28, 2025.

We paid dividends of $0.16 per share during the three months ended December 31, 2025, as well as each quarter of fiscal years 2026 and 2025.

In January 2026, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on March 16, 2026, to shareholders of record at the close of business on February 28, 2026.

Goodwill Impairment Testing

We perform qualitative analyses at least quarterly to identify potential indicators of impairment and to assess whether it is more likely than not that any of our five goodwill reporting units (Sterilization and Disinfection Control, Immunoassays (BPD), Peptides (BPD), Calibration Solutions, and Clinical Genomics) is impaired.

As of September 30, 2025, we concluded that our reporting units are not impaired.

However, future impairment losses could result from adverse economic, market, or industry-specific conditions;

unfavorable actual or anticipated adverse changes in the business climate or in our operational performance;

adverse developments in legal or regulatory environments;

declines in our market capitalization;

failure to achieve forecasted cash flows;

or any combination of these or other similar factors.

Our Clinical Genomics and Peptides reporting units remain particularly sensitive to significant changes in key valuation assumptions, and therefore carry a heightened risk of future impairment losses.

As of December 31, 2025, we concluded that there were no indicators of impairment for any of our reporting units.

However, our Clinical Genomics reporting unit remains particularly sensitive to significant changes in key valuation assumptions, and therefore carries a heightened risk of future impairment losses.

The valuation of our reporting units for impairment testing purposes requires significant management judgment and the use of unobservable Level 3 inputs, including discount rates, forecasted results for earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue growth rates, operating expense projections, the identification of comparable public entities, and applied market multiples.

We continue to monitor the impact of macroeconomic challenges, demand for our products and services, and tariffs with respect to China.

Depending on the persistence and magnitude of adverse factors, it is reasonably possible our Clinical Genomics and Peptides reporting units could incur impairment losses in the future.

As of our most recent annual impairment test on January 1, 2025, the estimated fair values of the Clinical Genomics and Peptides reporting units exceeded their carrying values by approximately 40% and 20%, respectively.

As of September 30, 2025, the carrying values of goodwill and finite-lived intangible assets associated with our Clinical Genomics reporting unit were $17.1 million and $8.6 million, respectively.

The carrying values of goodwill and finite-lived intangible assets associated with our Peptides reporting unit were $13.7 million and $0.8 million, respectively.

We continue to monitor the impact of macroeconomic challenges and demand for our Clinical Genomics products and services in China.

Depending on the persistence and magnitude of adverse factors, it is reasonably possible our Clinical Genomics reporting unit could incur impairment losses in the future.

As of our most recent annual impairment test in the fourth quarter of fiscal year 2025, the estimated fair value of the Clinical Genomics reporting unit exceeded its carrying value by approximately 40%.

As of December 31, 2025, the carrying values of goodwill and finite-lived intangible assets associated with our Clinical Genomics reporting unit were $17.1 million and $8.2 million, respectively.

Our cash flows from operating, investing and financing activities were as follows:

Six Months Ended September 30,

Nine Months Ended December 31,

amounts in thousands

2 unchanged sentences

Net cash (used in) financing activities

Cash flows from operating activities provided $10.1 million for the six months ended September 30, 2025, a decrease of $5.9 million versus the comparable prior year period.

Cash flows from operating activities provided $28.9 million for the nine months ended December 31, 2025, a decrease of $5.3 million versus the comparable prior year period.

The decrease in cash flows from operating activities was primarily a result of:

1 unchanged sentence

increased inventory purchases, including for finished goods warehoused in international locations as part of our tariff mitigation strategy.

These uses of cash were partially offset by higher collections on accounts receivable, driven by increased revenues.

Cash used in investing activities decreased for the six months ended September 30, 2025 versus the comparable prior year period as we invested in property, plant and equipment for our new leased facility in Sweden in the prior year.

Cash used in financing activities resulted in a $16.3 million use of cash for the six months ended September 30, 2025.

These uses of cash were partially offset by the timing and magnitude of cash paid for taxes and higher collections on accounts receivable, driven by increased revenues.

Cash used in investing activities decreased for the nine months ended December 31, 2025 versus the comparable prior year period as we invested in property, plant and equipment for our new leased facility in Sweden in the prior year.

Cash used in financing activities resulted in a $26.1 million use of cash for the nine months ended December 31, 2025.

$10.5 million under the Revolver, largely to fund a $9.6 million payment of the GKE acquisition-related holdback;

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We are party to contractual obligations that involve commitments to remit payments to third parties in the ordinary course of business.

On a consolidated basis, as of September 30, 2025, we had contractual obligations for open purchase orders of approximately $11.8 million for routine purchases of supplies and inventory, of which the substantial majority are payable in less than one year.

On a consolidated basis, as of December 31, 2025, we had contractual obligations for open purchase orders of approximately $11.9 million for routine purchases of supplies and inventory, of which the substantial majority are payable in less than one year.

See "Liquidity and Capital Resources" for information related to future required debt and other payments.

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Organic Revenues Growth (non-GAAP)

Three Months Ended September 30,

Three Months Ended December 31,

Sterilization and Disinfection Control

6 unchanged sentences

Organic Revenues Growth (non-GAAP)

Six Months Ended September 30,

Nine Months Ended December 31,

Sterilization and Disinfection Control

5 unchanged sentences

For information regarding our exposure to certain market risks, see Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

There were no material changes to our market risk exposure during the three months ended September 30, 2025.

There were no material changes to our market risk exposure during the three months ended December 31, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis