What changed in this filing

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Item 1. Business

2022-05-31 compared with 2021-06-01 · 174 added, 158 removed, 110 unchanged (75% of the section changed)

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the “Company,”

or “Mesa Labs.” Mesa Labs was organized in 1982 as a Colorado corporation.

We are a multinational manufacturer, developer, and seller of quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements.

We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and Asia, and by independent distributors in these areas as well as throughout the rest of the world.

We prefer markets in which we can establish a strong presence and achieve high gross margins.

As of March 31, 2021, we managed our operations in four reportable segments, or divisions.

Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries.

The division also provides testing and laboratory services, mainly to the dental industry.

Our Instruments division designs, manufactures, and markets quality control hardware and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, and environmental air sampling industries.

During the year ended March 31, 2020, we added a new reportable segment:

Biopharmaceutical Development as a result of our acquisition of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition"), which is discussed further in Note 4. "Significant Transactions." Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions.

Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biotherapeutic drugs.

Our Continuous Monitoring division designs, develops, and markets systems which are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments. 

Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended March 31, 2020) and unallocated corporate expenses are reported within Corporate and Other.

or "Mesa." Mesa was organized in 1982 as a Colorado corporation.

We are a multinational manufacturer, developer, and seller of life sciences tools and critical quality control products and services, many of which are sold into niche markets driven by regulatory requirements.

We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe, and Asia Pacific, and by independent distributors in these areas as well as throughout the rest of the world.

We prefer markets in which we can establish a strong presence and achieve high gross margins. 

We are headquartered in Lakewood, Colorado and our common stock is listed for trading on the Nasdaq Global Market (“Nasdaq”) under the symbol MLAB.

Our fiscal year ends on March 31. References in this Annual Report on Form 10-K (“annual report”) to a particular “fiscal year,” “year”

or “year-end” mean our fiscal year, references to the first quarter of fiscal year 2022 refer to the period from April 1, 2021 through June 30, 2021, references to the second quarter of fiscal year 2022 refer to the period from July 1, 2021 through September 30, 2021, references to the third quarter of fiscal year 2022 refer to the period from October 1, 2021 through December 31, 2021, and references to the fourth fiscal quarter of fiscal year 2022 refer to the period from January 1, 2022 through March 31, 2022. 

We strive to create shareholder value and further our purpose of Protecting the Vulnerable® by growing our business both organically and through further strategic acquisitions, by improving our operating efficiency, and by continuing to hire, develop and retain top talent.

As a business, we commit to our purpose of Protecting the Vulnerable® every day by taking a customer-focused approach to developing, building, and delivering our products.

We serve a broad set of industries that require dependable quality control and calibration solutions to ensure the safety and efficacy of the products they use, and by delivering the highest quality products possible, we are committed to protecting environment, products, and people. 

Our revenues come from product sales, which include hardware and software, and consumables;

as well as services, which include installation, discrete maintenance services, software subscriptions and ongoing maintenance contracts. We grow our revenues organically by expanding our customer base, increasing sales volumes, and implementing price increases;

and inorganically, through acquisitions. 

We continue to focus on improving our operating efficiency 

The Mesa Way , which is our customer-centric, lean based system for continuously improving and operating a set of high-margin, niche businesses.

We serve a broad set of industries, in particular the pharmaceutical, healthcare services, and medical device verticals that require dependable life sciences tools and quality control and calibration solutions to ensure the safety and efficacy of the products they use.

Our revenues come from product sales, which include consumables and hardware, as well as services, which include discrete and ongoing calibration, testing, and maintenance services and contracts. We grow our revenues organically by expanding our customer base, increasing sales volumes, and implementing price increases, and inorganically through acquisitions.

Our acquisition strategy is focused on businesses that complement our existing portfolio as well as those that expand our presence further into life sciences tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare and medical device industries.

We continue to focus on improving our operating efficiency through 

The Mesa Way , which is our customer-centric, lean based system for continuously improving and operating a set of high-margin, niche businesses. 

The Mesa Way  is based on four pillars:

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We use “True North,”

our customer’s perspective, to measure what matters most to customers and to set high standards for performance.

We manage to leading indicators, whenever possible, which drives us to proactively avoid problems before they are apparent to our customers.

our customers’

perspective, to measure what matters most and to set high standards for performance.

We manage to leading indicators whenever possible, which drives us to proactively avoid problems before they are apparent to our customers.

E mpower Teams:

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We leverage a common and proven set of lean-based tools to identify the root cause of opportunities, prioritize our biggest opportunities, and enable change to be embraced and implemented quickly.

A lways Learn: 

We ensure that improvements are sustained, enabling us to raise performance expectations and repeat the cycle of improvement.

A lways Learn: We ensure that improvements are sustained, enabling us to raise performance expectations and repeat the cycle of improvement.

Equally, this cycle strengthens the Mesa team by providing endless learning opportunities for our employees and helps us to become an employer of choice in our communities.

Finally, we hire, develop, and retain top talent capable of taking on new challenges using a team approach to continuously improve our products, our services, and ourselves, resulting in long-term value creation for our shareholders.  

We report our financial performance in four reportable segments:

(1) Sterilization and Disinfection Control, (2) Instruments, (3) Biopharmaceutical Development, and (4) Continuous Monitoring. Unallocated corporate expenses are reported within Corporate and Other.

Financial information of each of our segments is included in Note 16.

"Segment Data" to the consolidated financial statements within Item 8. 

Financial Statements and Supplementary Data  of this Annual Report on Form 10-K ("annual report"). 

As described in Note 14 .

 "Segment Data" of the Notes to Consolidated Financial Statements contained within Item 8. 

Financial Statements and Supplementary Data  of this annual report, following the acquisition (the "Agena Acquisition") of Agena Bioscience, Inc.

("Agena") on October 20, 2021 ,  we changed our reporting segments to align with strategic changes in the way we manage our business units. We report our financial performance in four segments, or divisions:

(1) Sterilization and Disinfection Control, (2) Biopharmaceutical Development, (3) Calibration Solutions, which represents a combination of the historical Instruments and Continuous Monitoring reporting segments, and (4) Clinical Genomics, a new reporting segment comprised entirely of Agena's operations. Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

Sterilization and Disinfection Control

Our Sterilization and Disinfection Control division manufactures and sells  biological, chemical and cleaning indicators used to assess the effectiveness of sterilization processes, including steam, gas, hydrogen peroxide, ethylene oxide and radiation, in the hospital, dental, medical device and pharmaceutical industries, and also provides related testing services. 

Biological indicators are used to validate equipment and monitor the effectiveness of a process in any industrial or healthcare setting which uses sterilization. 

Our Sterilization and Disinfection Control division manufactures and sells biological, chemical, and cleaning indicators used to assess the effectiveness of sterilization processes, including steam, gas, hydrogen peroxide, ethylene oxide, radiation, and other processes in the pharmaceutical, medical device, hospital, and dental industries.

The Sterilization and Disinfection Control division also provides related testing services, mainly to the dental industry. 

Biological indicators consist of resistant spores of certain microorganisms that are applied on a convenient substrate, such as a small piece of filter paper.

The spores are well characterized in terms of purity, numbers and resistance to sterilization.

Our biological indicators are developed and manufactured according to International Standards Organization (“ISO”) 11138 (Sterilization of health care products) under a quality system that complies with ISO 13485 (Medical devices) and 21 Code of Federal Regulations 820 (Quality System Regulation).

Our biological indicator products are manufactured by growing microbiological spores from raw materials, forming the finished products and testing the finished biological indicators using established quality control tests. 

Our dental sterilizer testing products are assembled into kits containing biological indicator spore strips and our microbiological laboratory tests these kits when they are returned to us to determine the effectiveness of our customer’s sterilization process.

The spores are well characterized in terms of purity, population of spores, and resistance to sterilization.

Our biological indicator products are manufactured by growing microbiological spores from raw materials, using the spores to form finished products, and testing the finished biological indicators using established quality control tests.

Our dental sterilizer testing products are assembled into kits containing biological indicator spore strips.

Our microbiological laboratory tests these kits when they are returned to us to determine the effectiveness of our customers' sterilization processes.

Our biological indicators are distinguished in the marketplace by their high level of quality, consistency, and flexibility.

A variety of different formats allows our biological indicators to be used in many different types of processes and products.

For example, the simple spore strips are used most often in the small table-top steam sterilizers in dental offices, while a more complex self-contained biological indicator, either with or without a PCD, may be used by a medical device manufacturer to assure the sterility in a complex ethylene oxide sterilization process.

In either case, the number of spores contained on the carrier and the resistance of the spores to the sterilization process must be well characterized in order to accurately assess the effectiveness of sterilization.

During manufacturing, extensive quality control steps are used to ensure that the microorganism spores are well-characterized and their resistance is known following placement on the target carrier.

We offer a variety of different product formats, which allows our biological indicators to be used in many different types of processes, equipment, and environments.

For example, our simple spore strips are used most often in small table-top steam sterilizers in dental offices, while our more complex self-contained biological indicators, either with or without process challenge devices ("PCDs"), may be used by medical device manufacturers to assure sterility in complex ethylene oxide sterilization processes.

In either case, the population of spores contained on the carrier and the resistance of the spores to the sterilization process must be well characterized in order to accurately assess the effectiveness of sterilization.

During manufacture, extensive quality control steps are used to ensure that the microorganism spores are well-characterized and their resistance is known following placement on the target carrier.

Chemical indicators use a chemical change (generally determined by color) to assess the exposure to sterilization conditions.

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Cleaning is the critical first step performed prior to disinfection and sterilization.

Debris left on an instrument may interfere with microbial inactivation and can compromise the disinfection or sterilization process.

Cleaning indicators compliment sterilization and disinfection processes within central sterile supply departments in hospitals. Our cleaning indicator products are manufactured by inoculating a test soil onto a stainless-steel coupon. 

The test soil is designed to mimic the challenge of removing blood and tissue from surgical instruments and evaluates the effectiveness of our customer’s cleaning process. Biological indicators are used to validate equipment and monitor the effectiveness of a process in any industrial or healthcare setting which uses sterilization.

Debris left on an instrument may interfere with microbial inactivation and can compromise disinfection or sterilization processes.

Cleaning indicators complement sterilization and disinfection processes within central sterile supply departments, such as in hospitals. Our cleaning indicator products are manufactured by inoculating a test soil onto a stainless-steel coupon.

The test soil is designed to mimic the challenge of removing blood and tissue from surgical instruments and evaluates the effectiveness of our customers' cleaning processes. 

Our Bozeman, Montana and Munich, Germany locations manufacture our Sterilization and Disinfection Control division products, which include the EZTest®, ProSpore®, PCD®, Apex®

and Simicon biological and cleaning indicators, while our Bozeman, Montana, facility also provides sterility assurance testing services to dental offices in the United States and Canada. 

and Simicon biological and cleaning indicators.

Our Bozeman, Montana facility also provides sterility assurance testing services to dental offices in the United States and Canada.

Sterilization and disinfection control products are disposable and are used on a routine basis, thus product sales are less sensitive to general economic conditions.

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Customers include hospitals, dental offices, contract sterilization providers and various industrial users involved in pharmaceutical and medical device manufacturing. 

Our sterilization and disinfection control products operate in a highly regulated industry and compete on the basis of quality, cost effectiveness, and suitability for the intended use.

We compete with various other sterilization and cleaning indicator providers for healthcare, medical device, and biopharmaceutical clients.

Additional products using new technologies that may be competitive with our products may also be introduced.

Our Instruments division designs, manufactures and markets quality control instruments and disposable products used in the healthcare, pharmaceutical, medical device, food and beverage, industrial hygiene, and environmental air sampling industries. 

Generally, our instrument products are used for testing, quality control, safety, validation and regulatory compliance. 

As of March 31, 2021, our Lakewood, Colorado, Hanover, Germany, and Butler, New Jersey, facilities manufacture our Instruments division products which include the DataTrace®, DialyGuard®, DryCal®, Torqo®, SureTorque®, IBP Medical, and BGI brands.

During the three months ending June 30, 2021, we are closing our Butler, New Jersey location and moving manufacturing operations to Lakewood, Colorado. 

Instrument products have a relatively long life and their purchase by our customers is discretionary, so sales are more sensitive to general economic conditions.

Our sterilization and disinfection control products are used in highly regulated industries and compete on the basis of quality, cost effectiveness, and suitability for intended use.

We compete with various other sterilization and cleaning indicator providers, and additional products using new technologies that may be competitive with our products may be introduced.

Biopharmaceutical Development

Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions.

Protein analysis and peptide synthesis solutions accelerate the discovery, development, and manufacture of biological therapies, among other applications. Customers include biopharmaceutical research, development, and manufacturing teams at biopharmaceutical companies and their contract research organization partners, as well as academic research and development laboratories. The Biopharmaceutical Development division sells two types of products:

(1) protein analysis solutions, which are used to test for the existence or concentration of specific proteins in a fluid sample, and (2) peptide synthesis solutions, which automate the synthesis of peptides from amino acids;

both are primarily used in biopharmaceutical research, discovery and development, and bioprocessing. Our Biopharmaceutical Development division develops and manufactures Gyrolab® xPand and Gyrolab xPlore® hardware and software, as well as Gyrolab Bioaffy®

consumable microfluidic disks (“CDs”), and Gyrolab kits and Rexxip® buffers for protein analysis in Uppsala, Sweden, while PurePep®

Chorus, Symphony® X, and Sonata® XT hardware and associated software for peptide synthesis are developed and manufactured in our Tucson, Arizona location. Products manufactured in Sweden are typically invoiced in U.S.

Dollars or euros, whereas the costs to produce the products is incurred in Swedish Krona.

As a result, the Biopharmaceutical Development segment is susceptible to changes in foreign currency.

For a discussion of risks related to our non-U.S.

operations and foreign currency exchange, refer to Item 1A.

Risk Factors, “Foreign currency exchange rates may adversely affect our financial statements”

and “Our international operations subject us to a wide range of risks .

About one-third of our Biopharmaceutical Development revenues are from consumables used on a routine basis.

Sales of these products are less sensitive to general economic conditions. Approximately 45% of revenues are from more discretionary hardware purchases that are more sensitive to general economic conditions. The remainder of sales are related to service and support agreements.

We generate sales directly as well as through independent foreign distributors.

Marketing activities include industry conferences, user meetings, educational webinars, and all forms of digital marketing, in addition to market sensing and capturing user requirements for new product roadmaps. In-person marketing largely resumed during the year ended March 31, 2022 as many COVID-19 restrictions gradually lifted. 

The Biopharmaceutical Development division’s market success is primarily dependent upon creating innovative, high quality products that customers choose based on available features, cost-effectiveness, and performance. We believe we are one of the leading world-wide suppliers of protein analysis and peptide synthesis equipment to the biologics discovery and development market.

We further believe that enhancements of our product offerings and new product development driven by our research and development team, the recognized quality of our products and support, and the ability to continue to bring novel, cutting edge products and solutions to the market will allow us to remain competitive in the growing markets we serve. 

Protein Analysis

We develop, manufacture, and market protein analysis equipment, CDs, kits, and buffers that enable the detection and quantification of a target protein in a biological or bioprocess sample.

Gyrolab technology is widely used across human and non-human applications, mainly for therapy development and bioprocess design.

Customers, primarily pharmaceutical and biotech companies and their contract research organization partners developing protein-based therapies, use our CDs to deposit their samples for mixing with application specific reagents.

The CDs and reagents are loaded into one of our instruments for processing and analysis.

Our proprietary software interprets results and provides useful data analysis for decision-making.

Our protein analysis products accelerate the development and processing of assays to obtain accurate results for pre-clinical and clinical studies as well as for upstream and downstream bioprocessing of biological therapies, thus meeting critical data and time requirements.

Our analytical protein technologies provide superior data consistency and accuracy, and reduce labor and the attendant variability of more manual analysis methods.

Peptide Synthesizers

Our peptide synthesis solutions enable customers to automate the chemical synthesis of peptides used in the creation of peptide therapies, biomaterials, cosmetics, and general research.

Our peptide synthesis products facilitate the ability to produce more complex and longer peptides with higher purity, and are designed to comply with related Food and Drug Administration ("FDA") and European Medicines Agency requirements.

Customers of our peptide synthesizers include commercial and academic biopharmaceutical laboratories, as well as contract manufacturers of peptides. 

Calibration Solutions 

Our Calibration Solutions division develops, manufactures, and sells quality control and calibration products used to measure or calibrate temperature, pressure, pH, humidity, and other such parameters for health and safety purposes, primarily in hospital, medical device manufacturing, pharmaceutical manufacturing, and various laboratory and healthcare environments. Generally, our Calibration Solutions products are used for testing, quality control, safety, validation and regulatory compliance.

As of March 31, 2022, our Lakewood, Colorado and Hanover, Germany facilities manufacture our Calibration Solutions products, which include continuous monitoring systems, dialysate meters and consumables, data loggers, gas flow calibration and air sampling equipment, and torque testing systems represented by the ViewPoint®, Point Six, CheckPoint®, AmegaView, FreshLoc®, DialyGuard®, DataTrace®, DryCal®, Torqo®, SureTorque®, IBP Medical, and BGI brands.

During fiscal year 2022, we closed our Butler, New Jersey location, which previously manufactured our gas flow calibration and air sampling equipment products.

These manufacturing operations have since moved to Lakewood, Colorado. 

The majority of our Calibration Solutions products have relatively long lives and their purchase by customers is discretionary, so sales are more sensitive to general economic conditions.

Service demand is driven by our customers’

quality control and regulatory environments, which require periodic repair and recalibration or certification of our instrument products. Our instrument products are manufactured primarily by assembling the products from purchased components and calibrating the final products prior to release. Our Instruments division's commercial efforts focus on offering quality products to our customers that will aid them in containing cost, improving the quality of their products and services, and helping them meet their regulatory requirements.

quality control and regulatory environments, which require periodic repair and recalibration or certification of our instruments products. Most of our Calibration Solutions products are manufactured by assembling the products from purchased components and calibrating the final products prior to release, though certain continuous monitoring products are assembled and calibrated on site at customer locations. Our Calibration Solutions division's commercial efforts focus on offering quality products to our customers that will aid them in containing cost, improving the quality of their products and services, and meeting regulatory requirements.

We generate sales through our direct sales personnel and independent distributors.

Customers include dialysis clinics, pharmaceutical, medical device and food and beverage manufacturers, contract sterilizing services, governmental agencies and environmental testing labs. 

Dialysate Meters and Calibration Solutions

Our medical meters are used to test various parameters of the dialysis fluid (dialysate), the proper calibration and operation of the dialysis machine in dialysis clinics.

Continuous Monitoring  

Our continuous monitoring products are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained.

Continuous monitoring systems are used in controlled environments such as refrigerators, freezers, warehouses, laboratory incubators, clean rooms, and a number of other settings.

The continuous monitoring systems consist of wired or wireless sensors that are placed in controlled environments, hardware modules to receive the data, and various software programs to collect, store and process the data. Our systems are designed to operate continuously, providing data around the clock, 365 days per year.

We provide recalibration of sensors through our dedicated service organization and SnapCal TM  self-managed probe exchange program.

Because of the advantages of our continuous monitoring systems, we have a solid market share in North America, but are not currently focused on international expansion.

A critical function of our systems is the ability to provide local alarms and notifications via e-mail, text, or telephone, if established environmental conditions are exceeded.

Among the important competitive differentiators of our continuous monitoring systems are (1) their high degree of reliability and up-time;

(2) a large variety of sensor types to meet the needs of most applications;

(3) a skilled, distributed installation and service team;

and (4) a full-featured and 21 CFR Part 11 (Electronic records;

Electronic signatures) validated software program, providing extensive reporting and alarm capability.

Key markets for our continuous monitoring systems are hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments, all located in North America. 

Dialysate Meters and Calibration Consumables

Our medical meters are used to test various parameters of dialysis fluid (dialysate) and the proper calibration and operation of dialysis machines used in dialysis clinics.

Each meter measures some combination of temperature, pressure, pH, conductivity and flow to ensure that the dialysate has the proper composition to promote the transfer of waste products from the blood to the dialysate.

The meters provide a digital readout that the technician uses to verify that the dialysis machine is working within prescribed limits and delivering properly prepared dialysate.

The meters provide a digital readout that the technician uses to verify that a dialysis machine is working within prescribed limits and delivering properly prepared dialysate.

We manufacture two styles of medical meters: those designed for use by dialysis machine manufacturers and biomedical technicians, and those used primarily by dialysis clinicians.

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These meters are used as the final quality control check on the dialysate just prior to starting a treatment.

In addition to the dialysate meters, we market a line of standard solutions for use in dialysis clinics for calibration of our meters.

In addition to the dialysate meters, we market a line of standard consumable solutions for use in dialysis clinics for calibration of our meters.

These standard solutions are regularly consumed by the dialysis clinics;

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In addition to competition in the dialysis meter business, our products face regulatory and technological challenges.

For a discussion of risks related to our regulatory and technological challenges, refer to Item 1A.

Risk Factors "Changes in dialysis methods may decrease demand for our dialysis products and negatively impact our financial statements."

Our data loggers are self-contained, wireless, high precision instruments used in critical manufacturing and quality control processes in the pharmaceutical, medical device, food, and tool industries.

They are used to measure temperature, humidity and pressure inside a process or a product during manufacturing.

In addition, data loggers can be used to validate the proper operation of laboratory or manufacturing equipment, either during its installation or for annual re-certifications.

In addition, data loggers can be used to validate the proper operation of laboratory or manufacturing equipment, either during installation or for annual re-certifications.

The products consist of individual data loggers, a personal computer (“PC”) interface, software, and various accessories.

A customer typically purchases a large number of data loggers along with a single PC interface and the software package.

Customers typically purchase a large number of data loggers along with a single PC interface and the software package.

In practice, using the PC interface, the user programs the loggers to collect environmental data at a pre-determined interval, places the data loggers in the product or process, and then collects stored process data from the data logger either through the PC interface or wirelessly via a radio link.

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Unique aspects of our data loggers are their ability to operate at elevated temperatures and in explosive environments –

important differentiating factors in the marketplace and, consequently, they are used by companies to control their most critical processes, such as sterilization.

Industries using the data loggers include pharmaceutical and medical device manufacturers and food processors.

Market-wide demand for data loggers has decreased slightly as a result of macroeconomic conditions during the year ended March 31, 2021, but we do not expect that decreases will be sustained.

important differentiating factors in the marketplace.

Consequently, they are used by companies to control their most critical processes, such as sterilization.

We face competition in data logger sales from several other companies, some of which have well-established commercial organizations, particularly in Europe.

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This product has a competitive advantage in the market because our particle separation cyclones hold the only “federal reference method”

distinction for the measurement of PM 2.5 in ambient air and are sold to most manufacturers of ambient particulate measurement instrumentation.

distinction for the measurement of PM 2.5  in ambient air and are sold to most manufacturers of ambient particulate measurement instrumentation.

We also manufacture gas flow calibration instruments to support the use of our air sampling equipment, and for broader industrial applications.

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Our flow calibrators are used by professionals in many industries, including (1) industrial hygienists and environmental technicians, (2) calibration and research laboratories, (3) manufacturers who design, develop and manufacture gas flow metering devices, and (4) industrial engineering and manufacturing companies that utilize gas flow metering devices.

The market for gas flow calibration has been expanding as the markets that heavily use and measure process gas are growing.

There is competition in gas flow calibration, however, our products are distinguished against the competition by their unique dry piston technology and industry-leading accuracy and certifications.

We see expanded opportunities in gas flow calibration as markets that heavily use and measure process gas are growing.

There is competition in gas flow calibration; however, our products are distinguished against the competition by their unique dry piston technology and industry-leading accuracy and certifications.

Due to the relocation of gas flow calibration and air sampling equipment production from Butler, NJ to Lakewood, CO, sales of these products were lower during the year ended March 31, 2022;

however, we expect a return to normal sales levels in future years.

Torque Testing Systems

Our automated torque testing systems are durable and reliable motorized cap torque analyzers used throughout the packaging industry.

Our automated torque testing systems are durable and reliable motorized cap torque analyzers that measure the amount of force required to open a container.

The primary advantages of our torque instruments are their high accuracy and long-term consistency of measurement.

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With a motorized torque testing system, the force applied to a cap is precisely the same in each testing cycle, regardless of the strength of the machine's operator.

Our torque systems provide information that helps the packaging operation track events and potential problems during the manufacturing process so that corrections can be performed in a timely fashion.

Industries utilizing these instruments include beverage, pharmaceutical, and food processing companies.

Given the niche nature of this product, there is relatively low competition for this product line;

however, the growth of this line is limited by the growth of new manufacturing facilities and packaging regulation in pharmaceutical manufacturing.

Biopharmaceutical Development

During the year ended March 31, 2020, we added a new reportable segment:

Biopharmaceutical Development as a result of our acquisition of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition"), which is discussed further in Note 4 “Significant Transactions.”

Our Biopharmaceutical Development division develops, manufactures, and commercializes automated solutions for protein analysis (immunoassays) and peptide synthesis.

Protein analysis and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biological therapies, among other applications.

The Biopharmaceutical Development division sells two types of products:

(1) Protein analysis solutions, which are used to test for the existence or concentration of specific proteins in a fluid sample, and (2) Peptide synthesis solutions, which automate the synthesis of peptides from amino acids;

both are primarily used in biopharmaceutical research, discovery and development and bioprocessing. Our Biopharmaceutical Development division develops and manufactures Gyrolab® xPand and Gyrolab xPlore TM  hardware and software, as well as Gyrolab Bioaffy TM  consumable microfluidic disks (“CDs”), Gyrolab kits and Rexxip® buffers for protein analysis in Uppsala, Sweden, while PurePep™

Chorus, Symphony® X, and Sonata® XT hardware and associated software for peptide synthesis are developed and manufactured in our Tucson, Arizona location.  Information about the effects of foreign currency fluctuations on this segment is set forth in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For a discussion of risks related to our non-U.S.

operations and foreign currency exchange, refer to “Item 1A.

Risk Factors.”

About half of the protein analysis products are consumables and are used on a routine basis, thus sales of these products are less sensitive to general economic conditions, although partial and full lab closures that resulted from COVID-19 regulations and policies did affect our ability to engage with new accounts and negatively impact sales of our consumables during the year ended March 31, 2021 as laboratories were not running as many tests using our consumables during their limited operating hours.

Approximately 40% of the protein analysis revenues is hardware while 75% of the peptide synthesis solutions revenues is hardware, both of which are discretionary purchases, thus sales are more sensitive to general economic conditions. The remainder of the sales are related to service and support agreements.

We generate sales through our direct sales organization as well as independent foreign distributors.

Marketing activities include industry conferences, user meetings, educational webinars and all forms of digital marketing, in addition to market sensing and capturing user requirements for the new product roadmap. While most all in-person marketing was limited during the year by COVID-19 restrictions, we pursued digital marketing techniques in this division with some success.

Customers include academic research and development laboratories and biopharmaceutical development and manufacturing teams at biopharmaceutical companies and their and their contract research organization partners.

We further believe that the enhancements of our product offerings and new product development driven by our research and development team, the recognized quality of our products and support, and the ability to continue to bring novel, cutting edge products and solutions to the market will allow us to remain competitive in the growing markets that we serve. 

Protein Analysis

We develop, manufacture, and market protein analysis equipment, CDs, kits and buffers that enable the detection and quantification of a target protein in a biological or bioprocess sample.

The Gyrolab technology is widely used across human and non-human applications, mainly for therapy discovery, development and bioprocessing.

Customers, which are primarily pharmaceutical and biotech companies and their contract research organization partners, who are developing protein-based therapies, use our CDs to deposit their samples for mixing with application specific reagents.

The CDs and reagents are loaded into one of our instruments for processing and analysis.

Our proprietary software interprets results and provides useful data analysis for decision-making.

The hardware, CDs and software accelerate the development and processing of assays to obtain accurate results for pre-clinical and clinical studies as well as in upstream and downstream bioprocessing of biological therapies, thus meeting critical data and time requirements during these studies.

Our analytical protein technologies provide superior data consistency and accuracy as well as reducing labor and the attendant variability of more manual methods.

Peptide Synthesizers

Our peptide synthesis solutions enable customers to automate chemically synthesized peptides that are used in the creation of peptide therapies, biomaterials, cosmetics and general research.

Our hardware and software facilitate the ability to produce more complex and longer peptides with higher purity and are designed to comply with related Food and Drug Administration ("FDA") and European Medicines Agency requirements.

Customers of our peptide synthesizers include academic and commercial biopharmaceutical laboratories, as well as contract manufacturers of peptides. 

Continuous Monitoring 

Our Continuous Monitoring division designs, develops and markets systems which are used to monitor various environmental parameters such as temperature, humidity and differential pressure to ensure that critical storage and processing conditions are maintained.

Continuous monitoring systems are used in controlled environments such as refrigerators, freezers, warehouses, laboratory incubators, clean rooms and a number of other settings.

The Continuous Monitoring division’s market success is primarily dependent upon our ability to provide post-installation service and support. For most systems, annual re-calibration of each sensor is required, and we provide this service through our dedicated service organization and SnapCal TM self-managed probe exchange program. Because of the advantages of our continuous monitoring solutions, we have a solid market share and growth in North America but are currently not focused on international expansion.

The manufacture and support of our Continuous Monitoring division systems primarily involve assembling the systems from purchased components and calibrating the sensors, either at the factory or at the point of installation at the customer’s facility. 

Continuous Monitoring products and systems have a relatively long life, and their purchase by our customers is discretionary and typically driven by expansion, so sales are more sensitive to general economic conditions.

Additionally, the installation of many of our products require physical presence at a customers' site; thus, policies or regulations restricting our physical access to customers' facilities (including during Covid-19 restrictions during the year) has a negative impact on our ability to sell these products. Continuous Monitoring products may be sold in conjunction with a perpetual or subscription-based software license, which may be required for the related hardware to function.

Service demand is driven by our customers’

quality control and regulatory environments, which require periodic repair and recalibration or certification of our monitoring systems. 

A critical function of our systems is the ability to provide local alarms and notifications via e-mail, text or telephone, in the case where established environmental conditions are exceeded.

Among the other important competitive differentiators of our continuous monitoring systems are (1) their high degree of reliability and up-time;

(2) a large variety of sensor types to meet the needs of most applications;

(3) a skilled, distributed installation and service team;

and (4) a full-featured and 21 CFR Part 11 (Electronic records;

Electronic signatures) validated software program, providing extensive reporting and alarm capability.

Key markets for our continuous monitoring systems are hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies and laboratory environments, all located in North America. Our Lakewood, Colorado, facility manufactures our Continuous Monitoring division products which include ViewPoint®, Point Six®, CheckPoint®, AmegaView, and FreshLoc®

brands. 

Our torque systems provide information that helps the packaging operation track events and potential problems during the manufacturing process so corrections can be performed in a timely fashion.

Industries utilizing these instruments include pharmaceutical and beverage and food processing companies.

Given the niche nature of this product, there is a relatively low level of competition this product line;

however, the growth of this line is limited by the growth of new manufacturing facilities and packaging regulations in pharmaceutical manufacturing.

Clinical Genomics

During the year ended March 31, 2022, we added a new reportable segment, Clinical Genomics, as a result of the Agena Acquisition discussed further in Note 4 to the financial statements included in this report, “Significant Transactions.”

Our Clinical Genomics division develops, manufactures, and sells highly sensitive, low-cost, high-throughput genetic analysis tools used by labs to perform clinical genomic testing in several therapeutic areas.

Clinical Genomics’

MassARRAY®

system couples mass spectrometry with end-point polymerase chain reaction ("PCR") methods, enabling highly multiplexed reactions under universal cycling conditions to provide accurate, sensitive, rapid genetic analysis.

Using the MassARRAY®

system and our proprietary consumables, including chips, panels, and chemical reagent solutions, customers can analyze DNA samples for a variety of high volume clinical testing applications such as inherited genetic disease testing, newborn screenings, pharmacogenetics, various oncology tests, infectious disease testing, and other highly-differentiated applications. The MassARRAY® system is differentiated in the market by its ability to target up to 50 specific DNA variants in a single PCR reaction and run up to 384 samples on one SpectroCHIP®

array, up to eight times in a full workday, with the flexibility to process additional samples overnight.

The system allows for the testing of hundreds of mutations, including SNPs, insertions, deletions, translocations, copy number variation, and methylation makers, all in a single, efficient workflow.

Using time-of-flight mass spectrometry, genetic variants are distinguished by analysis of their individual mass, eliminating the need for fluorescence or labeling.

The system's integrated software provides a user-friendly interface to generate reports that identify the targets and review spectra. 

In addition to the MassARRAY®

system and related consumable products, Clinical Genomics also sells services, including equipment maintenance contracts and custom laboratory services through which our scientists help customers develop specified assay designs.

About 70% of our Clinical Genomics revenues to date are from consumables used on a routine basis.

Sales of these products are less sensitive to general economic conditions.

Approximately 20% of our Clinical Genomics revenues to date are from more discretionary hardware products that are more sensitive to general economic conditions. The remainder of Clinical Genomics revenues are related to service and support agreements.

Clinical Genomics sells its products and services primarily to clinical labs, including large specialty, reference, and pathology labs, as well as to a variety of academic, hospital, and government facilities.

The majority of revenues are derived from customers in the United States and China.

Our Clinical Genomics products are manufactured in San Diego, California, primarily by assembling purchased subcomponents designed to our specification into finished goods, and by processing and mixing reagents.

Our Clinical Genomics products generate revenues primarily through direct sales, and also through independent distributors in certain regions.

Clinical Genomics products are manufactured under a quality system that complies with ISO 13485 for the design, development, manufacture, distribution, installation, and servicing of diagnostic products, reagents, and instruments for genetic analysis and life sciences.

Corporate and Other

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Other Matters Relating to our Business as a Whole

Year Ended March 31, 2020 Acquisitions

On October 31, 2019, we completed the acquisition of 100% of the outstanding shares of Gyros Protein Technologies Holding AB for adjusted cash consideration of $181.5 million. The acquisition of GPT expanded our presence into a new market--immunoassays and peptide synthesis solutions--that accelerate the discovery, development, and manufacturing of biotherapeutic drugs. GPT systems include laboratory instruments, consumables, kits, and software that maximize laboratory productivity by miniaturizing and automating immunoassays at nanoliter scale. 

On April 1, 2019, we completed a business acquisition (the “IBP Acquisition”) whereby we acquired all of the outstanding shares of IBP Medical GmbH, a company whose business manufactures medical meters used to test various parameters of dialysis fluid (dialysate), and the proper calibration and operation of a dialysis machine.

Year Ended March 31, 2022 Acquisitions

During the year ended March 31, 2019, we completed a business combination (the “Point Six Wireless Acquisition”) whereby we acquired substantially all of the assets and certain liabilities of Point Six Wireless, LLC’s continuous monitoring business, which manufactures wireless sensors that are used in healthcare, hospitality, foodservice, retail, data center, and refrigerated transport applications.

On October 20, 2021, we completed the acquisition of 100% of the outstanding shares of Agena Bioscience, Inc.

for adjusted cash consideration of $300.8 million.

Agena is a leading clinical genomics tools company that develops, manufactures, markets, and supports proprietary instruments and related consumables and services that enable genetic analysis for a broad range of diagnostic and research applications. The acquisition of Agena moves our business toward the life sciences tools sector and expands our market opportunities, particularly in Asia. 

Year Ended March 31, 2020 Acquisitions

On October 31, 2019, we completed the acquisition of 100% of the outstanding shares of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition") for adjusted cash consideration of $181.5 million. The acquisition expanded our presence into a new market - immunoassays and peptide synthesis solutions -that accelerate the development, and manufacture of biotherapeutic drugs. GPT systems include laboratory instruments, consumables, kits, and software that maximize laboratory productivity by miniaturizing and automating immunoassays at nanoliter scale. 

On April 1, 2019, we completed the acquisition of 100% of the outstanding shares of IBP Medical GmbH, a company whose business manufactures medical meters used to test various parameters of dialysis fluid (dialysate), and the proper calibration and operation of dialysis machines.

Manufacturing and Materials

Most of the components, raw materials, and other supplies used in our product lines are available from a number of different suppliers. 

We generally maintain multiple sources of supply, but we are dependent on a single source for certain items, particularly in the Biopharmaceutical Development division. 

We continue to have an emphasis on reviewing our supply base and designs for single source or sole source suppliers that might affect our ability to supply critical product to our customers.

We believe that in most cases, alternative sources could be developed, if required, for present single supply sources.

During the ended March 31, 2021, we had no raw material shortages that had a material effect on the business.

Most of the components, raw materials, and other supplies used in our product lines are available from a number of different suppliers.

We generally maintain multiple sources of supply, but we are dependent on single sources for certain items, particularly in the Biopharmaceutical Development and Clinical Genomics divisions.

We continue to emphasize reviewing our supply base and designs for single source or sole source suppliers that might affect our ability to supply critical product to our customers.

We have experienced increased supply constraints for certain components used in our operations, particularly components used by the Calibration Solutions and Biopharmaceutical Development divisions, and to a lesser extent the Sterilization and Disinfection Control and Clinical Genomics divisions.

We continue to work with our suppliers to understand the existing and potential future impacts to our supply chain, and we are making efforts to mitigate such impacts, including pre-ordering components in higher quantities than usual.

See further discussion within Item 1A.

Risk Factors, “We face numerous manufacturing and supply chain risks.

In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies .

Major Customers

No individual customer represented more than 10% of our accounts receivable or revenues in any of the past three years.

We define backlog as firm orders from customers for products and services where the order will be fulfilled within the next 12 months.

Backlog as of March 31, 2021 and March 31, 2020 was approximately $11.3 million and $10.1 million, respectively.

Backlog as of March 31, 2022 and March 31, 2021 was approximately $21.3 million and $11.3 million, respectively.

The increase in backlog is attributable to supply chain constraints causing order fulfillment delays, the addition of Clinical Genomics into our overall backlog, and delays resulting from moving production of our gas flow calibration and air sampling equipment from Butler, NJ to Lakewood, CO.

Research and Development

Research and development ("R&D") activities are primarily directed towards innovating new products and improving the quality and performance of our existing products.

Research and development ("R&D") activities are primarily directed towards innovating new products and improving the quality and performance of our existing products or altering our current products to accommodate use of raw materials that are more readily available for purchase in our supply chain.

Other R&D efforts also seek to develop or improve software that will be sold, leased, or marketed in the future, and improve manufacturing efficiencies. 

Intellectual Property

We own numerous patents, trademarks, and other proprietary rights, each of which are important to the various facets of our business.

We own numerous patents, trademarks, and other proprietary rights, each of which is important to the various facets of our business.

Where appropriate, we seek patent protection for inventions and developments made by our personnel that are incorporated into our products or otherwise fall within our fields of interest. There can be no assurance, however, that any patent will provide adequate protection for the technology, system, product, service or process it covers.

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Regulatory Matters

Mesa Labs’

operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse, export control, product safety and efficacy, employment, privacy, government contracts acquisition regulations, and other areas.

Mesa's operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse, import and export control, product safety and efficacy, employment, privacy, government contracts acquisition regulations, and other areas.

We are required to comply with certain ISO standards and United States Pharmacopeia standards in order to sell some of our products to certain customers.

While our quality system and manufacturing processes are generally the same throughout the Instruments division, specific products are compliant under ISO 13485, ISO 17025, ISO 9001 and certain U.S.

While our quality system and manufacturing processes are generally the same throughout the Calibration Solutions division, specific products are compliant under ISO 13485, ISO 17025, ISO 9001 and certain U.S.

federal regulations.

Our Uppsala, Sweden and Tucson, Arizona facilities, part of the Biopharmaceutical Development division, are ISO 9001:2015 certified.

Clinical Genomics operates a quality management system which complies with the requirements of ISO 13485:2016 and EN ISO 13485:2016.

We obtain third party certification to remain compliant with ISO standards.

Several products in both the Instruments and the Sterilization and Disinfection Control divisions are medical devices subject to the provisions of the Federal Food, Drug and Cosmetic Act, which requires any company proposing to market a medical device to notify the FDA of its intention at least 90 days before doing so.

Several products in the Sterilization and Disinfection Control, Calibration Solutions, and Clinical Genomics divisions are medical devices subject to the provisions of the Federal Food, Drug and Cosmetic Act, which requires any company proposing to market a medical device to notify the FDA of its intention at least 90 days before doing so.

We have received permission from the FDA to market all of our products requiring such permission.

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however, we do not anticipate that complying with state regulations will create any significant problems.

Foreign countries also have laws regulating medical devices sold in those countries, which require additional resources on compliance. 

The time required to obtain approval by the FDA and other foreign governmental agencies can be lengthy and the requirements may differ. 

Foreign countries also have laws regulating medical devices sold in those countries, which require additional resources for compliance. The time required to obtain approval by the FDA and other foreign governmental agencies can be lengthy and the requirements may differ. 

We are subject to data privacy and security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal or sensitive data in the course of our business, including the EU General Data Protection Regulation which imposes strict requirements on how we collect, transmit, process and retain personal data.

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We support employees with compensation, benefits and development programs aimed at ensuring employees are productive and engaged. 

On March 31, 2021, we had 506 employees, of whom 220 are employed for manufacturing and quality assurance, 74 for research and development and engineering, 134 for sales and marketing, and 78 for administration.

As of March 31, 2022, we had 681 employees, of whom 298 are employed for manufacturing and quality assurance, 114 for research and development and engineering, 175 for sales and marketing, and 94 for administration.

Our voluntary employee turnover was 12% during the year ended March 31, 2022.

We believe that our turnover rate indicates that employees remain at Mesa Labs because of the opportunities to grow and develop within the company. 

We believe that our turnover rate indicates that employees remain at Mesa because of the opportunities to grow and develop within the company. 

Diversity and Inclusion

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We continue to evolve our talent acquisition process to focus on diversity for both external hires and succession planning.

Our recruiting standards require that we consider candidates from two or more underrepresented categories for all director-level or higher positions, and we are in the process of instituting a new global cloud-based human capital management platform that will –

among many other talent-focused features –

enable us to more accurately track employee representation and identify how we can better enhance our diversity around the world.

Our executive officers have committed to help drive further D&I progress during our year ending March 31, 2022 and beyond.

Currently, 43% of our board of directors are from under-represented categories.

Our recruiting standards require that we consider candidates from two or more underrepresented categories for all director-level or higher positions, and our global cloud-based human capital management platform enables us to more accurately track employee representation and identify how we can better enhance our diversity around the world.

Our executive officers have committed to help drive further D&I progress during our year ending March 31, 2023 and beyond.

As of March 31, 2022, 50% of our board of directors are from under-represented categories.

Compensation and Benefits

Our compensation and benefits are competitive to market and create incentives to attract and retain employees.

In determining merit increases, we evaluate individual performance—including an individuals’

contribution to company goals and semi-annual performance reviews—to align financial incentives with individual contributions.

 Our compensation package includes market-competitive pay, cash bonuses, stock-based compensation to certain levels of employees, health care and retirement benefits, paid time off and paid family leave, among other benefits.

In determining merit increases, we evaluate individual performance—including measuring an individual's contribution to company goals and performing semi-annual performance reviews—to align financial incentives with individual contributions.

Communication and Engagement

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(ii) internally maintained websites;

(iii) an externally administered, anonymous whistleblower hotline for employment issues and website that is advertised to our employees;

and (iv) quarterly employee engagement surveys.

We also began measuring employee net promoter scores, which is an employee ranking of how likely they are to recommend working at Mesa Labs to a family member or friend, during the year ended March 31, 2021.

Our employee net promoter scores increased during the year ended March 31, 2021, and we will continue tracking and trying to improve the score going forward. 

(iii) an anonymous whistleblower hotline that is advertised to our employees;

and (iv) employee engagement surveys.

We also measure employee net promoter scores, which is an employee ranking of how likely they are to recommend working at Mesa to a family member or friend.

Our employee net promoter scores decreased during the year ended March 31, 2022.

Based on the results of the net promoter score surveys, we are undertaking several initiatives to improve employee engagement, including implementing salary increases and leadership development programs.

We will continue tracking and making efforts to improve the score going forward. 

Available Information

We are subject to the reporting and other information requirements of the Securities Exchange Act of 1934, as amended ("Exchange Act").

Reports and other information filed with the Securities and Exchange Commission ("SEC") pursuant to the Exchange Act may be inspected and copied at the public reference facility maintained by the SEC in Washington, D.C.

The SEC maintains a website at www.sec.gov containing our reports, proxy materials and other items.

We also maintain a website at www.investors.mesalabs.com on which we provide a link to access our SEC reports free of charge, under the link “Financials.”

We are subject to the reporting and other information requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

We make available, free of charge, on or through our website at www.mesalabs.com under the link “Financials”

on the Investor Relations section, our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and other information.

Information on our website is not incorporated into this annual report on Form 10-K and is not a part of this report.

The Securities and Exchange Commission (“SEC”) also maintains a website at www.sec.gov containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our code of ethics and Board of Directors committee charters and policies are also posted on the Investor Relations section of our website.

The information on our website is not part of this or any other report Mesa Laboratories, Inc.

files with, or furnishes to, the SEC.

The information on our website is not part of this or any other report Mesa files with, or furnishes to, the SEC.

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-K

Item 1. Business