What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-05 · 191 added, 143 removed, 494 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

September 30,

Current assets:

1 unchanged sentence

$ 24,337 $ 28,214

Accounts receivable, less allowance for doubtful accounts of $ 1,057 and $ 1,321 , respectively

Accounts receivable, less allowance for credit losses of $ 1,026 and $ 1,321 , respectively

40,234 39,055

21 unchanged sentences

14,412 15,478

Term loan, current portion

Other accrued expenses

22,866 12,858

Term loan, current portion

Convertible senior notes, current portion, net of debt issuance costs

Total current liabilities

4 unchanged sentences

Other noncurrent liabilities

14,653 15,613

Revolving line of credit

1 unchanged sentence

Term loan, noncurrent portion, net of discounts and debt issuance costs

Convertible senior notes, net of debt issuance costs

96,896 171,198

Convertible senior notes, noncurrent portion, net of debt issuance costs

Total liabilities

17 unchanged sentences

(in thousands, except per share data)

Three Months Ended June 30,

$ 58,170 $ 50,645

Three Months Ended September 30,

Six Months Ended September 30,

Cost of revenues

20,921 19,462

37,249 31,183

Operating expense:

General and administrative

16,818 18,060

Research and development

Total operating expense

31,669 31,847

Operating income (loss)

5,580 ( 664 )

Nonoperating expense:

1 unchanged sentence

(Gain) on extinguishment of convertible senior notes

Other expense (income), net

2,030 ( 775 )

Total nonoperating expense, net

Other (income) expense, net

Total nonoperating (income) expense, net

Earnings (loss) before income taxes

3,905 ( 937 )

Income tax expense (benefit)

Net income (loss)

$ 3,388 $ ( 549 )

Earnings (loss) per share:

$ 0.63 $ ( 0.10 )

$ 0.62 $ ( 0.10 )

Weighted-average common shares outstanding:

3 unchanged sentences

(in thousands)

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

Net income (loss)

26 unchanged sentences

5,409,155 $ 345,999 $ ( 180,969 ) $ ( 14,303 ) $ 150,727

Number of Shares

(Accumulated Deficit) Retained Earnings

March 31, 2023

5,369,466 $ 332,076 $ 74,199 $ ( 12,795 ) $ 393,480

Exercise of stock options and vesting of restricted stock units

9 unchanged sentences

- - 3,428 - 3,428

June 30, 2023

September 30, 2024

5,419,855 $ 349,529 $ ( 178,407 ) $ ( 9,671 ) $ 161,451

Number of Shares

(Accumulated Deficit) Retained Earnings

March 31, 2023

Exercise of stock options and vesting of restricted stock units

Tax withholding on vesting of restricted stock units

Dividends paid, $0.16 per share

Stock-based compensation expense

Foreign currency translation

June 30, 2023

Exercise of stock options and vesting of restricted stock units

Tax withholding on vesting of restricted stock units

Dividends paid, $0.16 per share

Stock-based compensation expense

Foreign currency translation

September 30, 2023

*Accumulated Other Comprehensive Income (Loss).

3 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended September 30,

Cash flows from operating activities:

Net income (loss)

$ 3,388 $ ( 549 )

Adjustments to reconcile net income to net cash from operating activities:

Adjustments to reconcile net income (loss) to net cash from operating activities:

Depreciation of property, plant and equipment

5 unchanged sentences

Accounts receivable, net

( 671 ) ( 1,244 )

Prepaid expenses and other assets

969 ( 2,448 )

Accounts payable

( 388 ) ( 539 )

Accrued liabilities and taxes payable

( 2,811 ) ( 3,217 )

Unearned revenues

( 919 ) ( 135 )

Net cash provided by operating activities

1 unchanged sentence

Purchases of property, plant and equipment

( 891 ) ( 270 )

Net cash (used in) investing activities

( 891 ) ( 270 )

Cash flows from financing activities:

1 unchanged sentence

Repayment of debt

( 9,438 ) ( 8,000 )

Repurchase of convertible debt

Dividends paid

( 863 ) ( 859 )

Other financing, net

( 1,023 ) ( 660 )

Net cash (used in) financing activities

( 9,109 ) ( 9,519 )

Effect of exchange rate changes on cash and cash equivalents

( 175 ) ( 684 )

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

28,214 32,910

Cash and cash equivalents at end of period

$ 28,472 $ 32,376

Supplemental non-cash activity:

Right of use assets obtained in exchange for lease liabilities

See accompanying notes to Condensed C onsolidated Fin ancial Statements.

7 unchanged sentences

We offer products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world.

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 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 and throughout the rest of the world.

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

As of June 30, 2024 , we managed our operations in four reportable segments, or divisions:

● Sterilization and Disinfection Control - manufactures and sells biological, chemical and cleaning indicators which are used to assess the effectiveness of sterilization, decontamination, disinfection, and cleaning processes, including steam, hydrogen peroxide, ethylene oxide, radiation, and other processes in the medical device, pharmaceutical, and healthcare industries.

As of September 30, 2024 , we managed our operations in four reportable segments, or divisions:

● Sterilization and Disinfection Control - manufactures and sells biological, chemical and cleaning indicators used to assess the effectiveness of sterilization, decontamination, disinfection, and cleaning processes in the medical device, pharmaceutical, and healthcare industries.

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

25 unchanged sentences

Improvements to Reportable Segment Disclosures." ASU No.

2023 - 07 requires all annual disclosures currently required by Topic 280 to be included in interim periods and requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and applicable additional measures of segment profit or loss used by the CODM when allocating resources and assessing business performance.

2023 - 07 requires all annual disclosures currently required by Topic 280 to be included in interim financial statements and requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and applicable additional measures of segment profit or loss used by the CODM when allocating resources and assessing business performance.

The ASU is effective for fiscal years beginning after December 15, 2023 ( our fiscal year 2025 for annual periods), and interim periods within fiscal years beginning after December 15, 2024 ( our fiscal year 2026 for interim periods) on a retrospective basis.

We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures.

We do not expect the adoption of ASU 2023 - 07 to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU No.

8 unchanged sentences

We acquired 100 % of the outstanding shares of GKE GmbH and SAL GmbH effective October 16, 2023, and upon approval by applicable Chinese regulators, effective December 31, 2023, we acquired 100 % of the outstanding shares of Beijing GKE Science & Technology Co.

(“GKE China.” Together with GKE GmbH and SAL GmbH, “GKE” or the "GKE acquisition").

(“GKE China” and together with GKE GmbH and SAL GmbH, “GKE” or the "GKE acquisition").

GKE develops, manufactures and sells a highly competitive portfolio of chemical sterilization indicators, biologics, and process challenge devices to protect patient safety across global healthcare markets.

3 unchanged sentences

We finalized our purchase price accounting of GKE during fiscal year 2024.

Total cash consideration for the GKE acquisition was $ 87,187 , net of cash and financial liabilities and inclusive of working capital adjustments.

Of the total acquisition price, approximately $ 9,200 (at June 30, 2024 exchange rates) is being held back for a period of 18 months from the acquisition closing as security against potential indemnification losses.

Total cash consideration for the GKE acquisition was $ 87,187 , net of cash and financial liabilities acquired and inclusive of working capital adjustments.

Of the total acquisition price, approximately $ 9,700 (at September 30, 2024 exchange rates) is being held back until April 2025 in accordance with the purchase agreement as security against potential indemnification losses ("GKE holdback").

We funded the acquisition through a combination of cash on-hand and a total of $ 71,000 borrowed under our line of credit.

During the three months ended June 30, 2024 , GKE's operations contributed $ 6,254 to our consolidated revenues and $ 3,820 to our gross profit, including $ 778 of inventory step-up amortization recorded to cost of revenues.

Additionally, amortization expense of $ 532 was recorded to general and administrative expense and $ 110 was recorded to cost of revenues related to intangibles acquired as part of the GKE acquisition during the three months ended June 30, 2024 .

During the three and six months ended September 30, 2024 , GKE's operations contributed the following amounts to our consolidated results of operations:

Three Months Ended

Six Months Ended

September 30, 2024

$ 5,863 $ 12,117

Amortization of inventory step-up recorded in cost of revenues

Amortization of acquired intangibles recorded in cost of revenues

Amortization of acquired intangibles recorded in general and administrative expense

We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables.

3 unchanged sentences

Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, such as reagents used for molecular and genetic analysis or solutions used for protein synthesis, are critical to the ongoing use of our instruments.

Consumables such as biological indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Consumables such as biological and chemical indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Revenues from hardware and consumables are recognized upon transfer to the customer, typically at the point of shipment.

We also offer maintenance, calibration, and testing service contracts.

These contracts result in revenues recognized over time, for example, when we are obligated to perform labor and replace parts on an as-needed basis over a contractually specified period, or at a point in time, upon completion of a specific, discrete service.

We also offer maintenance, calibration, and testing services.

Such service contracts result in revenues recognized over time, for example, when we are obligated to perform labor and replace parts on an as-needed basis over a contractually specified period, or at a point in time, upon completion of a specific, discrete service.

In many cases, our contracts contain both revenues recognized over time and revenues recognized at a point in time.

We evaluate our revenues internally based on business division and the nature of goods and services provided.

The following tables present disaggregated revenues for the three months ended June 30, 2024 and 2023 , respectively:

Three Months Ended June 30, 2024

The following tables present disaggregated revenues for the three and six months ended September 30, 2024 and 2023 , respectively:

Three Months Ended September 30, 2024

Sterilization and Disinfection Control (1)

8 unchanged sentences

$ 22,205 $ 11,499 $ 11,867 $ 12,262 $ 57,833

( 1 ) Revenues of $ 6,254 from GKE are included in the Sterilization and Disinfection Control division during the three months ended June 30, 2024 .

Three Months Ended June 30, 2023

( 1 ) Revenues of $ 5,863 from GKE are included in the Sterilization and Disinfection Control division during the three months ended September 30, 2024 .

Three Months Ended September 30, 2023

Sterilization and Disinfection Control

8 unchanged sentences

$ 17,080 $ 15,549 $ 9,207 $ 11,329 $ 53,165

Six Months Ended September 30, 2024

Sterilization and Disinfection Control (1)

Clinical Genomics

Biopharmaceutical Development

Calibration Solutions

$ 39,869 $ 16,290 $ 7,748 $ 1,024 $ 64,931

Hardware and software

313 4,634 10,005 14,734 29,686

4,980 1,979 6,122 8,305 21,386

Total revenues

$ 45,162 $ 22,903 $ 23,875 $ 24,063 $ 116,003

( 1 ) Revenues of $ 12,117 from GKE are included in the Sterilization and Disinfection Control division during the six months ended September 30, 2024 .

Six Months Ended September 30, 2023

Sterilization and Disinfection Control

Clinical Genomics

Biopharmaceutical Development

Calibration Solutions

$ 28,456 $ 18,732 $ 8,673 $ 1,295 $ 57,156

Hardware and software

201 7,901 5,166 13,962 27,230

4,350 2,285 5,257 7,532 19,424

Total revenues

$ 33,007 $ 28,918 $ 19,096 $ 22,789 $ 103,810

Revenues from external customers are attributed to individual countries based upon the locations to which the products are shipped or exported, or locations where services are performed, as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

United States

1 unchanged sentence

7,390 7,529 13,949 13,642

22,365 18,563 47,115 36,558

Total revenues

$ 57,833 $ 53,165 $ 116,003 $ 103,810

Other than China, no foreign country exceeded 10% of total revenues for the three months ended June 30, 2024 and 2023 .

Other than China, no foreign country exceeded 10% of total revenues for the three and six months ended September 30, 2024 and 2023 .

Contract Balances

6 unchanged sentences

Contract liabilities as of March 31, 2024

Prior year liabilities recognized in revenues during the three months ended June 30, 2024

Contract liabilities added during the three months ended June 30, 2024, net of revenues recognized

Contract liabilities as of June 30, 2024

Prior year liabilities recognized in revenues during the six months ended September 30, 2024

Contract liabilities added during the six months ended September 30, 2024, net of revenues recognized

Contract liabilities as of September 30, 2024

Fair Value Measurements

5 unchanged sentences

Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales.

No customers accounted for more than 10% of total trade receivables as of June 30, 2024 .

No customers accounted for more than 10% of total trade receivables as of September 30, 2024 .

On April 5, 2024, we entered into separate, privately negotiated purchase agreements with a limited number of holders of our 1.375 % convertible senior notes due August 15, 2025 ( the "Notes"), through which we repurchased $ 75,000 in aggregate principal amount of the Notes.

"Indebtedness" for further information.

As of June 30, 2024 , we had remaining outstanding $ 97,500 aggregate principal amount of the Notes.

As of September 30, 2024 , we had remaining outstanding $ 97,500 aggregate principal amount of the Notes.

We estimate the fair value of the Notes using Level 2 inputs based on the last actively traded price or observable market input preceding the end of the reporting period.

1 unchanged sentence

The estimated fair value and carrying value of the Notes were as follows:

June 30, 2024

September 30, 2024

March 31, 2024

5 unchanged sentences

The carrying amount of the term loan and revolving line of credit (together, the "Credit Facility") on the Condensed Consolidated Balance Sheets approximates fair value due to the variable interest rate pricing on the debt with the balance bearing an interest rate approximating current market rates.

For the GKE acquisition, we held back approximately $ 9,200 (at June 30, 2024 exchange rates) for a period of 18 months from the acquisition closing as security against potential indemnification losses.

We estimate the fair value of consideration held back to be $ 8,900 , using Level 3 inputs, and we adjust the estimated fair value at each reporting period through earnings.

We expect to pay approximately $ 9,700 (at September 30, 2024 exchange rates) for the GKE holdback in April 2025.

We estimate the discounted fair value of consideration held back to be approximately $ 9,400 as of September 30, 2024 based on Level 3 inputs from the acquisition, including discount rate estimates.

We adjust the estimated fair value at each reporting period through earnings.

During fiscal year 2023, we acquired substantially all of the assets and certain liabilities of Belyntic GmbH’s peptide purification business (“the Belyntic acquisition”).

1 unchanged sentence

"Commitments and Contingencies"), of which $ 750 has not yet been paid.

We estimate the fair value of the remaining contingent consideration is $ 650 , using Level 3 inputs and a probability-weighted outcome analysis based on our expectations of patent approval, leveraging our historical experience and expert input, and we adjust the estimated fair value at each reporting period through earnings.

Amounts recognized or disclosed at fair value in the unaudited condensed consolidated financial statements on a nonrecurring basis include the initial recognition and disclosure of most assets and liabilities purchased in business acquisitions and any related measurement period adjustments.

Additionally, assets such as property and equipment, operating lease assets, goodwill and other intangible assets are adjusted to fair value if determined to be impaired.

We recorded no impairments during the three months ended June 30, 2024 or June 30, 2023 .

Fair values of such assets and liabilities require measurement using Level 3 inputs.

There were no transfers between the levels of the fair value hierarchy during the three months ended June 30, 2024 or June 30, 2023 .

We recorded no impairments during the three and six months ended September 30, 2024 or 2023 .

There were no transfers between the levels of the fair value hierarchy during the three months ended three and six months ended September 30, 2024 .

Supplemental Information

Inventories consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

7 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

6 unchanged sentences

Accrued payroll and benefits consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

7 unchanged sentences

Other accrued expenses consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

6 unchanged sentences

$ 22,866 $ 12,858

The increase in other accrued expenses is primarily due to the reclassification of the GKE acquisition consideration held back to current from long term as of June 30, 2024.

The increase in other accrued expenses is primarily due to the reclassification of the held back GKE acquisition-related consideration from noncurrent liabilities.

Other noncurrent liabilities consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

4 unchanged sentences

$ 14,653 $ 15,613

The decrease in other noncurrent liabilities is primarily due to the reclassification of the GKE acquisition consideration held back to current from long term as of June 30, 2024.

Three Months Ended June 30,

The increase in operating lease liabilities is primarily attributable to new a new right-of-use leased facility associated with the manufacturing and administrative office facilities used by our Biopharmaceutical Development division in Uppsala, Sweden.

Three Months Ended September 30,

Six Months Ended September 30,

Depreciation expense in cost of revenues

$ 904 $ 655 $ 1,766 $ 1,329

Depreciation expense in operating expense

614 256 1,156 496

Total depreciation expense

$ 1,518 $ 911 $ 2,922 $ 1,825

$ 304 of the increase in depreciation expense is attributable to GKE.

The increase in depreciation expense for the three and six months ended September 30, 2024 is primarily due to GKE's operations, which included $ 321 and $ 625 of depreciation expense, respectively.

Goodwill and Intangible Assets, Net

Finite-lived intangible assets consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

12 unchanged sentences

Amortization expense for finite-lived intangible assets was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Amortization in cost of revenues

1 unchanged sentence

Amortization in general and administrative

3,878 5,429 7,292 10,921

Total amortization expense

$ 4,550 $ 7,185 $ 8,611 $ 14,405

For the following fiscal years ending March 31, amortization expense is estimated as follows:

For the following fiscal years ending March 31, amortization expense is estimated as follows, based on foreign currency exchange rates as of September 30, 2024:

Amortization Expense

9 unchanged sentences

1,979 116 1,530 32 3,657

June 30, 2024

September 30, 2024

$ 81,409 $ 17,056 $ 48,045 $ 37,243 $ 183,753

9 unchanged sentences

Make certain changes to the financial covenants.

In conjunction with the amendment and restatement of the Credit Facility during the three months ended June 30, 2024, we incurred $ 1,987 of customary lender fees and debt issuance costs paid to third parties, of which $ 1,242 is related to the Revolver and $ 745 is related to the Term Loan.

In conjunction with the amendment and restatement of the Credit Facility during the six months ended September 30, 2024, we incurred $ 1,987 of customary lender fees and debt issuance costs paid to third parties, of which $ 1,242 is related to the Revolver and $ 745 is related to the Term Loan.

The fees are being amortized to interest expense through maturity.

Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate plus an applicable spread ranging from 1.5 % to 3.5 %, depending on our total net leverage ratio.

The interest rate on borrowings under our line of credit as of June 30, 2024 was 8.4 %.

The interest rate on borrowings under our line of credit as of September 30, 2024 was 8.4 %.

The financial covenants in the Credit Facility as amended include a maximum leverage ratio of 4.50 to 1.00 for the first five testing dates on which amounts under the Revolver are outstanding;

2 unchanged sentences

The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0 and a minimum senior net leverage ratio of 3.5 to 1.

Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales.

As of June 30, 2024, we were in compliance with all covenants under the Credit Facility.

We borrowed $ 75,000 under the Term Loan on April 5, 2024, to fund the repurchase of a portion of the Notes (see “Convertible Notes” below).

During the three months ended June 30, 2024, we made a required quarterly principal payment on the Term Loan of $ 937 .

Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales.

As of September 30, 2024 , we were in compliance with all covenants under the Credit Facility.

We borrowed $ 75,000 under the Term Loan on April 5, 2024, to fund the privately negotiated repurchases of a portion of the Notes (see “Convertible Notes” below).

During the three and six months ended September 30, 2024 , we made required quarterly principal payments on the Term Loan of $ 937 and $ 1,875 , respectively.

We are required to make quarterly principal payments on the Term Loan.

3 unchanged sentences

The net carrying amount of the Term Loan was as follows:

June 30, 2024

September 30, 2024

March 31, 2024

Term Loan (8.4% as of June 30, 2024)

Term Loan ( 8.4 % as of September 30, 2024)

discount and debt issuance costs

2 unchanged sentences

The effective interest rate on the Term Loan at the time of borrowing was 8.13 %.

As of June 30, 2024, the outstanding balance under the Revolver was $ 42,000 and $ 83,000 was available for borrowing.

Subsequent to June 30, 2024, we repaid an additional $ 3,500 on the Revolver.

As of September 30, 2024 , the outstanding balance under the Revolver was $ 35,500 and $ 89,500 was available for borrowing.

Subsequent to September 30, 2024 , we repaid an additional $ 4,500 on the Revolver.

We are obligated to pay quarterly unused commitment fees of between 0.20 % and 0.35 % of the Revolver’s aggregate principal amount, based on our leverage ratio.

The balance of unamortized customary lender fees, including fees related to the April 5, 2024 amendment and restatement, was $ 1,428 and $ 321 as of June 30, 2024 and March 31, 2024, respectively.

The balance of unamortized customary lender fees related to the Revolver, including fees from the original debt issuance and all subsequent amendments and restatements, was $ 1,353 and $ 321 as of September 30, 2024 and March 31, 2024, respectively.

Convert ible Notes

4 unchanged sentences

On April 5, 2024, we entered into separate, privately negotiated transactions with certain holders of the Notes to repurchase $ 75,000 aggregate principal amount of the Notes for an aggregate repurchase price of $ 71,250 in cash, plus accrued and unpaid interest of $ 160 .

We accounted for the partial repurchase of the Notes as a debt extinguishment, which resulted in the recognition of a gain on extinguishment of $ 3,197 in other income on the statements of operations during the three months ended June 30, 2024.

As of June 30, 2024, $ 97,500 in aggregate principal amount of the Notes remained outstanding.

We accounted for the partial repurchase of the Notes as a debt extinguishment, which resulted in the recognition of a gain on extinguishment of $ 3,197 in other income on the Condensed Consolidated Statements of Operations during the six months ended September 30, 2024.

As of September 30, 2024 , $ 97,500 in aggregate principal amount of the Notes remained outstanding, which we intend to pay using a combination of cash on hand and a draw on our Revolver.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock.

The circumstances necessary for conversion were not met during the three months ended June 30, 2024 .

As of June 30, 2024 , the Notes were classified as a noncurrent liability on our Condensed Consolidated Balance Sheets.

The if-converted value of the Notes did not exceed the principal balance as of June 30, 2024 .

The circumstances necessary for conversion were not met during the three or six months ended September 30, 2024 .

The Notes will become convertible at any time from, and including, April 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.

As of September 30, 2024 , the Notes were classified as a current liability on our Condensed Consolidated Balance Sheets.

The if-converted value of the Notes did not exceed the principal balance as of September 30, 2024 .

The net carrying amount of the Notes was as follows:

June 30, 2024

September 30, 2024

March 31, 2024

6 unchanged sentences

We recognized interest expense on the Notes as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Coupon interest expense at 1.375%

$ 335 $ 593 $ 702 $ 1,186

Amortization of debt issuance costs

133 231 278 461

Total interest and amortization of debt issuance costs

$ 468 $ 824 $ 980 $ 1,647

The effective interest rate on the Notes is approximately 1.9 %.

1 unchanged sentence

Stock-Based Compensation

During the three months ended June 30, 2024 , we issued time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Mesa Laboratories, Inc.

During the six months ended September 30, 2024 , we issued time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Mesa Laboratories, Inc.

Amended and Restated 2021 Equity Incentive Plan, which authorizes the issuance of 660 shares of common stock to eligible participants.

Expense recognized related to stock-based compensation is as follows:

Three Months Ended June 30,

Stock-based compensation expense

$ 2,928 $ 2,968

Stock-based compensation expense, net of tax

$ 2,928 $ 2,096

Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Operations.

The following is a summary of stock option award activity for the three months ended June 30, 2024 :

Stock Options

Shares Subject to Options

Weighted- Average Exercise Price per Share

Weighted-Average Remaining Contractual Life (Years)

Aggregate Intrinsic Value

Outstanding as of March 31, 2024

194 $ 181.89 3.2 $ 26

Awards granted

Awards forfeited or expired

( 13 ) 147.07

Awards exercised

Outstanding as of June 30, 2024

181 $ 184.42 3.1 $ -

The following is a summary of RSU and PSU award activity for the three months ended June 30, 2024 :

The following is a summary of RSU and PSU award activity for the six months ended September 30, 2024 :

Time-Based Restricted Stock Units

12 unchanged sentences

( 34 ) 165.50 - -

Outstanding as of June 30, 2024

Outstanding as of September 30, 2024

149 $ 108.40 97 $ 181.85

1 unchanged sentence

Outstanding time-based RSUs vest and settle in shares of our common stock on a one -for- one basis.

The RSUs granted to employees during the three months ended June 30, 2024 vest in equal installments on the first, second, and third anniversary of the grant date.

The majority of RSUs granted to employees during the six months ended September 30, 2024 vest in equal installments on the first, second, and third anniversaries of the grant date.

RSUs granted to non-employee directors during the six months ended September 30, 2024 vest one year from the grant date.

We generally recognize the expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period.

3 unchanged sentences

We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the performance targets on a straight-line basis over the service period.

During the three months ended June 30, 2024, the Compensation Committee of the Board of Directors created a plan to award 41 PSUs at target (“the FY25 PSUs”) to eligible employees.

During the six months ended September 30, 2024, the Compensation Committee of the Board of Directors created a plan to award 41 PSUs at target (“the FY25 PSUs”) to eligible employees.

Of the 41 PSUs granted, 23 PSUs have a grant date fair value of $ 89.82 and are subject to service and company financial performance conditions.

3 unchanged sentences

The quantity of shares that will be earned based upon either company financial performance or market performance will range from 0 % to 200 % of the targeted number of shares; if the defined minimum targets are not met, then no shares will vest.

The following is a summary of stock option award activity for the six months ended September 30, 2024 :

Stock Options

Shares Subject to Options

Weighted- Average Exercise Price per Share

Weighted-Average Remaining Contractual Life (Years)

Aggregate Intrinsic Value

Outstanding as of March 31, 2024

194 $ 181.89 3.2 $ 26

Awards granted

Awards forfeited or expired

( 14 ) 147.90

Awards exercised

Outstanding as of September 30, 2024

180 $ 184.42 2.9 $ 229

Earnings (Loss) Per Share

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings (loss) per share:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Net income (loss) available for shareholders

1 unchanged sentence

Weighted average outstanding shares of common stock

Dilutive effect of stock options

5,413 5,387 5,405 5,379

Dilutive effect of RSUs

Fully diluted shares

5,471 5,387 5,448 5,379

Basic earnings (loss) per share

6 unchanged sentences

The following stock awards were excluded from the calculation of diluted EPS:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Assumed conversion of the Notes

344 608 358 608

Stock awards that were anti-dilutive

218 282 213 255

Total stock awards excluded from diluted EPS

Shares underlying the Notes were excluded from the diluted EPS calculation for the three months ended June 30, 2024 and 2023 as the impact of the assumed conversion of the Notes calculated under the if-converted method was antidilutive.

The decrease in assumed conversion of the Notes is related to the partial repayment of the Notes that occurred in the three months ended June 30, 2024 ( see Note 7.

562 890 571 863

Shares underlying the Notes were excluded from the diluted EPS calculation for the three and six months ended September 30, 2024 and 2023 as the impact of the assumed conversion of the Notes calculated under the if-converted method was antidilutive.

The decrease in assumed conversion of the Notes is related to the partial repayment of the Notes that occurred during the six months ended September 30, 2024 (see Note 7.

"Indebtedness").

We reported an income tax provision as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Income tax expense (benefit)

$ 384 $ ( 95 ) $ 901 $ ( 483 )

Effective tax rate 10.1 % 7.2 % 11.7 % 21.4 %

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income.

2 unchanged sentences

There is a potential for volatility in the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which they relate, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

Our effective income tax rate was 13 % for the three months ended June 30, 2024 compared to 41 % for the three months ended June 30, 2023.

The effective tax rate for the three months ended June 30, 2024 differed from the statutory federal rate of 21 % primarily due to the valuation allowance established related to subsidiaries based in the United States during the fiscal year ended March 31, 2024.

The change in the effective tax rate for both the three and six months ended September 30, 2024 compared to the prior year periods is primary due to the valuation allowance established on the US deferred taxes during fiscal year 2024.

The effective tax rate for both the three and the six months ended September 30, 2024 differed from the statutory federal rate of 21 % primarily due to the valuation allowance established on the US deferred taxes during fiscal year 2024.

Commitments and Contingencies

We are party to various legal proceedings arising in the ordinary course of business.

As of June 30, 2024 , we are not party to any legal proceeding that management believes could have a material adverse effect on our unaudited consolidated financial position, results of operations, or cash flows.

As part of the GKE acquisition , we agreed to pay the GKE sellers approximately $ 9,200 (at June 30, 2024 exchange rates) 18 months following the acquisition date, pending adjustments for potential indemnification losses that may arise.

The liability is recorded at its fair value of $ 8,900 in other accrued expenses on our unaudited Condensed Consolidated Balance Sheets as of June 30, 2024.

As of September 30, 2024 , we are not party to any legal proceeding that management believes could have a material adverse effect on our unaudited consolidated financial position, results of operations, or cash flows.

We expect to pay approximately $ 9,700 (at September 30, 2024 exchange rates) for the GKE holdback in April 2025, pending adjustments for potential indemnification losses that may arise.

The liability is recorded at its discounted fair value of $ 9,400 in other accrued expenses on our unaudited Condensed Consolidated Balance Sheets as of September 30, 2024 .

As part of the Belyntic acquisition, we agreed to pay the sellers a contingency based upon approval of contractually specified patents.

The estimated fair value of the probable remaining contingent consideration was $ 650 as of June 30, 2024 .

The estimated fair value of the probable remaining contingent consideration was $ 650 as of September 30, 2024 .

S egment Information

The following tables set forth our segment information:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Revenues (a):

4 unchanged sentences

Biopharmaceutical Development

11,867 9,207 23,875 19,096

Calibration Solutions

6 unchanged sentences

Clinical Genomics

5,906 7,727 12,396 14,455

Biopharmaceutical Development

7,167 5,509 15,126 11,942

Calibration Solutions

7,210 6,407 14,452 12,838

Reportable segment gross profit

35,455 32,119 72,704 63,302

Corporate and other (c)

- ( 10 ) - ( 10 )

$ 35,455 $ 32,109 $ 72,704 $ 63,292

Reconciling items:

4 unchanged sentences

Nonoperating expense, net

( 304 ) 1,265 1,371 1,538

Earnings (loss) before income taxes

1 unchanged sentence

Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

Includes post-acquisition GKE results during the three months ended June 30, 2024 .

Includes post-acquisition GKE results during the three and six months ended September 30, 2024 .

The following table sets forth inventories by reportable segment.

Our chief operating decision maker is not provided with any other segment asset information.

Our chief operating decision maker is not provided with and does not regularly review any other segment asset information.

September 30,

Sterilization and Disinfection Control

7 unchanged sentences

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 1. Financial Statements