What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-08-22 compared with 2023-08-23 · 123 added, 117 removed, 261 unchanged (48% of the section changed)

16 unchanged sentences

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions.

As disclosed in Note 4, the Company completed the acquisition of Namocell, Inc for $101.2 million, net of cash acquired, plus contingent consideration of up to $25 million upon the achievement of future milestones.

We also purchased a 19.9% investment in Wilson Wolf and, as disclosed in Note 1, will acquire the remaining shares in Wilson Wolf by the end of calendar year 2027, or earlier depending on the achievement of certain future milestones.

As further disclosed in Note 14, the Company closed on the acquisition of Lunaphore Technologies SA on July 7, 2023.

As disclosed in Note 4, the Company completed the acquisition of Lunaphore for $169.7 million, in a cash-free, debt-free acquisition.

We also purchased a 19.9% investment in Wilson Wolf in fiscal 2023 and, as disclosed in Note 1, will acquire the remaining shares in Wilson Wolf by the end of calendar year 2027, or earlier depending on the achievement of certain future milestones.

OVERALL RESULTS

Operational Update

For fiscal 2024, consolidated net sales increased 2% to $1.2 billion as compared to fiscal 2023.

Organic growth was 1%, with acquisitions having a favorable impact of 1%.

Foreign currency translation and a business held-for sale did not have a material impact.

Organic revenue growth was primarily driven by strong commercial execution in our Diagnostics and Genomics segment .

Consolidated net earnings, including non-controlling interest, decreased 41% compared to fiscal 2023.

The decrease in earnings was driven by a non-recurring gain on the sale of our ChemoCentryx investment, a non-recurring gain on the sale of our investment in Changzhou Eminence Biotechnology Co., Ltd.

(Eminence), and a non-recurring benefit related to the fair value of contingent consideration during fiscal 2023.

The decrease in fiscal 2024 was also impacted by impairment of assets held-for-sale, restructuring charges, and CEO transition related charges.

After adjusting for cost recognized upon

sale of acquired inventory, intangibles amortization, acquisition-related costs, certain litigation charges, gain on sale of investments, stock-based compensation, restructuring and restructuring-related costs, impairment of assets held-for-sale, impact of business held-for-sale, and impact from partially-owned consolidated subsidiaries, adjusted net earnings attributable to Bio-Techne decreased 11% in fiscal 2024 as compared to fiscal 2023.

Adjusted net earnings attributable to Bio-Techne was primarily impacted by the acquisition of Lunaphore and unfavorable volume leverage within Protein Sciences.

For fiscal 2023, consolidated net sales increased 3% as compared to fiscal 2022.

2 unchanged sentences

Consolidated earnings, including non-controlling interest, increased 8% compared to fiscal 2022.

The increase in earnings was driven by a gain on the sale of our ChemoCentryx investment and a gain on the sale of our investment in Changzhou Eminence Biotechnology Co., Ltd.

After adjusting for acquisition related costs, intangibles amortization, stock-based compensation, restructuring costs, gain on investments, and impact from partially-owned consolidated subsidiaries, adjusted net earnings attributable to Bio-Techne decreased 1% in fiscal 2023 as compared to

The increase in earnings was driven by a gain on the sale of our ChemoCentryx investment and a gain on the sale of our investment in Eminence.

Adjusted net earnings attributable to Bio-Techne was primarily impacted by foreign currency exchange and strategic growth investments including the Namocell acquisition.

For fiscal 2022, consolidated net sales increased 19% as compared to fiscal 2021.

Organic growth was 17%, with acquisitions having a favorable impact of 3% and foreign currency translation having an unfavorable impact of 1%.

Organic revenue growth was broad based and driven by overall execution of the Company's long-term growth strategy.

Consolidated earnings, including non-controlling interest, increased 88% in fiscal 2022 compared to fiscal 2021.

The increase in earnings was driven by non-operating mark-to-market gain of $16 million on our ChemoCentryx investment in fiscal year 2022, compared to a loss on the investment of $67.9 million in the prior fiscal year.

Additionally, fiscal year 2022 had adjustments of $20.4 million of benefit related to contingent considerations as compared to a charge of $5.3 million in the prior fiscal year.

After adjusting for acquisition related costs, intangibles amortization, stock-based compensation, restructuring costs, the gain on investment, and impact from partially-owned consolidated subsidiaries, adjusted net earnings increased 18% in fiscal 2022 as compared to fiscal 2021.

Adjusted earnings growth was primarily driven by sales growth.

Business Strategy Update

Environmental

The Company’s key business strategies for long-term growth and profitability continue to be geographic expansion, core product innovation, acquisitions and talent retention and development.

As a Company, we are integrating consideration of greenhouse gas emissions and other environmental variables into our key business strategies.

The Company also strives to innovate and improve all aspects of Bio-Techne’s operations, including reducing the environmental impacts of our manufacturing operations.

As described in our Corporate Sustainability Report, among other initiatives, the Company is currently focused on establishing a baseline for emissions to develop appropriate emission reduction targets, as well as reducing our environmental footprint through changes in packaging and shipping materials.

In response to the COVID-19 pandemic, the Company took additional steps to monitor and strengthen our supply chain to maintain an uninterrupted supply of our critical products and services.

The Company has maintained these procedures while incorporating additional considerations regarding potential adverse weather events associated with climate change.

The financial impact of potential environmental regulations pertaining to carbon emissions or the integration of climate change impacts into our core business strategies are not expected to materially alter the Company’s near-term financial results.

Additionally, the Company has established a cross-functional internal council and working group to monitor and report on its sustainability efforts, including those related to measuring and mitigating greenhouse gas emissions.

In driving our key business strategies, the Company utilizes digital networks and systems for data transmission, transaction processing, and storing of electronic information.

As disclosed in “Item 1A.

Risk Factors”, increased cybersecurity attack activity poses a risk for our business.

In response to this risk, the Company actively completes system patching and required maintenance, performs internal and third-party employee training, monitors network and system activity, and completes data backups for our systems.

However, even with the Company’s procedures performed, our digital networks and systems are still potentially vulnerable to cyberattacks.

The financial impact of our cybersecurity initiatives and activities are ongoing and not expected to have a material impact on our financial results.

However, the impact on our business operations and financial results from a material cyber breach would be unknown and dependent on the nature of the breach.

RESULTS OF OPERATIONS

Consolidated organic net sales exclude the impact of companies acquired during the first 12 months post-acquisition and the effect of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily the euro, British pound sterling, and Chinese yuan) into U.S.

Consolidated net sales growth was as follows:

3 unchanged sentences

Impact of foreign currency fluctuations

Impact of business held for sale

Consolidated net sales growth

3 unchanged sentences

Diagnostics and Genomics

Other revenue (1)

Consolidated net sales

(1) Since December 31, 2023, the Company has a business that has met the held-for-sale criteria.

The year ended June 30, 2024 includes the six-month results of this business held-for-sale for the period starting December 31, 2023 through June 30, 2024 while the business has met the held-for-sale criteria.

In fiscal 2024, Protein Sciences segment net sales decreased 2% compared to fiscal 2023.

A business within the Protein Sciences Segment met the criteria as held-for-sale since December 31, 2023.

The exclusion of third and fourth quarter of

fiscal 2024 sales related to a held-for-sale business reduced sales by 1%.

Organic revenue for the segment declined 2% for the fiscal year, with foreign currency exchange having a favorable 1% impact on revenue.

Segment revenue was impacted by broad based headwinds.

In fiscal 2024, Diagnostics and Genomics segment net sales increased 12% compared to fiscal 2023.

Organic growth for the segment was 6%, with acquisitions having a 5% impact and foreign currency exchange having a favorable impact of 1% on revenue growth.

Segment growth was driven by broad based molecular diagnostics performance and Lunaphore.

In fiscal 2023, Protein Sciences segment net sales increased 2% compared to fiscal 2022.

Organic growth for the segment was 4% for the fiscal year, with currency translation having an unfavorable impact of 2% and acquisitions having an immaterial impact on revenue growth.

Organic growth for the segment was 4% for the fiscal year, with currency translation having an unfavorable impact of 2% on revenue and acquisitions having an immaterial impact on revenue growth.

Segment growth was driven by growth in consumable revenue to BioPharma (especially those developing cell and gene therapies) and Academic customers within the Americas and Europe.

2 unchanged sentences

Segment growth was driven by growth in consumable revenue from our Spatial Biology platform and an increase in service revenue related to our ExoDx Prostate test.

In fiscal 2022, Protein Sciences segment net sales increased 18% compared to fiscal 2021.

Organic growth for the segment was 19% for the fiscal year, with currency translation having an unfavorable 1% impact on revenue.

Overall segment growth was driven by strong BioPharma demand resulting in broad-based growth across our proteomic research reagents and analytical tools

In fiscal 2022, Diagnostics and Genomics segment net sales increased 21% compared to fiscal 2021.

Organic growth for the segment was 10% with acquisitions contributing 11% and currency translation having an immaterial impact on revenue growth.

Segment growth was driven by the full year impact of the Asuragen acquisition and organic growth.

Organic growth was driven by an exclusive agreement entered into for development, finalization and commercialization of our ExoTRU kidney transplant rejection test, and continued strength in our diagnostic reagent product lines.

Gross Margins

1 unchanged sentence

Consolidated gross margins were impacted by revenue.

Excluding the impact of acquired inventory sold, amortization of intangibles, stock compensation expense, and the impact of partially-owned consolidated subsidiaries, adjusted gross margins were 71.7%, 72.5%, and 72.3% in fiscal 2023, 2022, and 2021, respectively.

Fiscal 2023 consolidated gross margin was unfavorably impacted by foreign currency exchange and strategic growth investments including the Namocell acquisition when compared to the prior period.

Consolidated gross margins for fiscal 2022 and fiscal 2021 were impacted as a result of volume leverage and product mix, partially offset by additional investments made in the business to support future growth.

A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold and intangible amortization included in cost of sales, is as follows:

Excluding the impact of acquired inventory sold, amortization of intangibles, stock compensation expense, restructuring and restructuring-related costs, impact of business held-for-sale, and the impact of partially-owned consolidated subsidiaries, adjusted gross margins were 71.0%, 71.7%, and 72.5% in fiscal 2024, 2023, and 2022, respectively.

Fiscal 2024 consolidated gross margin was impacted by the Lunaphore acquisition when compared to the prior period.

Fiscal 2023 consolidated gross margin was unfavorably impacted by foreign currency exchange and strategic growth investments including the Namocell acquisition when compared to fiscal 2022.

Consolidated gross margins for fiscal 2022 were impacted as a result of volume leverage and product mix, partially offset by additional investments made in the business to support future growth.

A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold, intangible amortization included in cost of sales, restructuring and restructuring-related expenses, and impact of business held-for-sale is as follows:

Year Ended June 30,

4 unchanged sentences

Stock compensation expense - COGS

Restructuring and restructuring-related costs

Impact of partially-owned consolidated subsidiaries (1)

Impact of business held-for-sale (2)

Non-GAAP adjusted gross margin percentage

(1) Adjusted gross margin percentages for fiscal 2021 have been updated for comparability to fiscal 2022 and fiscal 2023 for the inclusion of the impact of partially-owned consolidated subsidiaries on the Company’s adjusted gross margin percentage.

(1) Includes the quarterly results of the partially-owned consolidated subsidiary prior to the sale of this partially-owned consolidated subsidiary to a third party in the first fiscal quarter of 2023 and the full fiscal year of 2022.

(2) Since December 31, 2023, the Company has a business that has met the held-for-sale criteria.

Fiscal year 2024 includes the six-month results of this business held-for-sale for the period starting December 31, 2023 through June 30, 2024 while the business has met the held-for-sale criteria.

Fluctuations in adjusted gross margins, as a percentage of net sales, have primarily resulted from changes in foreign currency exchange rates and changes in product mix.

5 unchanged sentences

Diagnostics and Genomics

The change in the Protein Sciences segment’s gross margin percentage for fiscal 2023 as compared to fiscal 2022 and 2021 was primarily attributable to mix of product sales within the segment.

The change in the Diagnostics and Genomics segment’s gross margin is related to fiscal 2022 revenue related to the ExoTru kidney transplant rejection agreement that did not occur in fiscal 2023 nor fiscal 2021.

The increase in the Protein Sciences segment’s gross margin percentage for fiscal 2024 as compared to fiscal 2023 was primarily attributable to the exclusion of a business held-for-sale.

The change in the Protein Sciences segment’s gross margin percentage for fiscal 2023 compared to fiscal 2022 was primarily attributable to mix of product sales within the segment.

The change in the Diagnostics and Genomics segment’s gross margin percentage for fiscal 2024 as compared to fiscal 2023 is due to the Lunaphore acquisition.

The change in the Diagnostics and Genomics segment’s gross margin percentage for fiscal 2023 as compared to fiscal 2022 is due to fiscal 2022 revenue related to the ExoTru kidney transplant rejection agreement that did not reoccur in fiscal 2023.

Fiscal 2023 compared to fiscal 2022 was also impacted by strategic investments to drive future growth that was partially offset by volume leverage.

1 unchanged sentence

Selling, general and administrative expenses increased $88.0 million (23%) in fiscal 2024 when compared to fiscal 2023.

Selling, general, and administrative expenses increased primarily due to strategic investments made in the business to support future growth including the Namocell acquisition.

Selling, general, and administrative expenses increased primarily due to the Lunaphore acquisition, impairment of assets held-for-sale, certain litigation charges, restructuring and restructuring-related charges, and CEO transition charges.

Selling, general and administrative expenses increased $5.6 million (2%) in fiscal 2023 when compared to fiscal 2022.

Selling, general, and administrative expenses increased primarily due to the full year impact of fiscal 2021’s Asuragen acquisition and strategic investments made in the business to support future growth.

Selling, general, and administrative expenses increased primarily due to strategic investments made in the business to support future growth including the Namocell acquisition.

Consolidated selling, general and administrative expenses were composed of the following (in thousands):

6 unchanged sentences

Eminence impairment (1)

Restructuring costs

Restructuring and restructuring-related costs

Stock-based compensation

Impairment of assets held-for-sale

Corporate selling, general and administrative expenses

3 unchanged sentences

Research and development expenses increased $4.2 million (5%) and $5.4 million (6%) in fiscal 2024 and 2023, respectively, as compared to prior year periods.

The increase in research and development expenses in fiscal 2023 as compared to 2022 was primarily attributable to strategic growth investments including the Namocell acquisition.

The increase in research and development expenses in fiscal 2022 as compared to fiscal 2021 was primarily attributable to strategic growth investments and the Asuragen acquisition in the fourth quarter of fiscal 2021.

The increase in research and development expenses in fiscal 2024 and fiscal 2023 compared to the prior periods was primarily attributable to strategic growth investments including the acquisitions of Lunaphore and Namocell in fiscal 2024 and fiscal 2023, respectively.

Consolidated research and development expenses were composed of the following (in thousands):

Year Ended June 30,

1 unchanged sentence

Diagnostics and Genomics

Total segment expenses

Unallocated corporate expenses

Total research and development expenses

1 unchanged sentence

Net interest income/(expense) for fiscal 2024, 2023, and 2022 was ($12.4) million, $(7.8) million, and $(10.5) million, respectively.

During fiscal 2024, average monthly outstanding debt was higher than fiscal 2023 leading to increased interest expense compared to fiscal 2023.

Net interest expense in fiscal 2023 decreased when compared to fiscal 2022 due to a favorable rate on a forward starting interest rate swap as disclosed in Note 5 that went into effect in fiscal year 2023.

Net interest expense in fiscal 2022 decreased when compared to fiscal 2021 due to a reduction in our average long-term debt, which coincided with a reduction in the notional amount on our previous interest rate swap as disclosed in Note 5.

Other Non-Operating Income / (Expense), Net

Other non-operating expense, net, consists of foreign currency transaction gains and losses, rental income, building expenses related to rental property and the Company’s gains and losses on investments as follows (in thousands):

Other non-operating income/(expense), net, consists of foreign currency transaction gains and losses, rental income, building expenses related to rental property and the Company’s gains and losses on investments as follows (in thousands):

Year Ended June 30,

2 unchanged sentences

Real estate taxes, depreciation and utilities

Gain (loss) on investment

Gain (loss) on equity method investment

Gain on investment

Loss on equity method investment

Miscellaneous (expense) income

Other non-operating income (expense), net

During fiscal 2024, the Company recognized a gain of $0.3 million related to the sale of our exchange traded bond funds.

Additionally, the Company recognized losses of $6.8 million related to our equity method investment in Wilson Wolf.

During fiscal 2023, the Company recognized gains of $37.2 million related to the sale of our ChemoCentryx, Inc.

4 unchanged sentences

On August 4, 2022, the Company sold all of its shares in CCXI.

During fiscal 2021, the Company recognized losses of $67.9 million related to changes in fair value associated with changes in the stock price of our CCXI investment.

Income taxes for fiscal 2024, 2023, and 2022 were at effective rates of 9.5%, 15.7%, and 12.7%, respectively, of consolidated earnings before income taxes.

The change in the effective tax rate for fiscal 2023 compared to fiscal 2022 was driven by share-based compensation as the number of stock option exercises decreased compared to the prior year comparative period due to the decline in the stock price.

The change in the effective tax rate for fiscal 2024 compared to fiscal 2023 was driven by share-based compensation as the number of stock option exercises increased compared to the prior year comparative period.

The Company had share-based compensation excess tax benefits of $18.4 million in fiscal 2024.

9 unchanged sentences

Acquisition related expenses and other

Certain litigation charges

Eminence impairment

1 unchanged sentence

Stock based compensation, inclusive of employer taxes

Restructuring costs

Investment (gain) loss and other non-operating

Restructuring and restructuring-related costs

Investment gain and other non-operating

Impairment of assets held-for-sale

Impact of partially-owned subsidiaries (1)

Net earnings before taxes - Adjusted

Impact of business held-for-sale (2)

Earnings before taxes - Adjusted (1,2)

Non-GAAP tax rate

2 unchanged sentences

Earnings per share - diluted - Adjusted (1,2)

(1) Adjusted consolidated net earnings and earnings per share for fiscal 2021 have been updated for comparability to fiscal 2023 and 2022 for the inclusion of the impact of partially-owned consolidated subsidiaries on the Company’s adjusted consolidated net earnings and earnings per share.

(2) Prior period share and per share amounts have been retroactively adjusted to reflect the four-for-one stock split effected in the form of a stock dividend in November 2022.

Refer to Note 1 for details.

(2) Since December 31, 2023, the Company has a business that has met the held-for-sale criteria.

Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period to period basis.

The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments.

The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and

jurisdictional mix of the identified non-GAAP adjustments.

The following table summarizes the reported GAAP tax rate and the effective Non-GAAP adjusted tax rate for the periods ended June 30, 2024, 2023, and 2022.

11 unchanged sentences

Cash, cash equivalents and available-for-sale investments at June 30, 2024 were $152.9 million compared to $204.3 million at June 30, 2023.

Included in the available-for-sale-investments was the fair value of the Company’s investment in exchange traded investment grade bond funds, which was $23.7 million as of June 30, 2023 and $23.9 million as of June 30, 2022.

During the first fiscal quarter, the Company sold its remaining shares of its investment in CCXI.

As of June 30, 2022, the fair value of the Company’s investment in CCXI was $36.0 million.

Also included in the June 30, 2022 balance were $14.5 million of certificates of deposit that were sold and not repurchased during fiscal year 2023.

At June 30, 2023, approximately 39% of the Company’s cash and equivalent account balances of $68.5 million were located in the U.S., with the remainder located in primarily in Canada, China, the U.K.

Included in the available-for-sale investments was certificates of deposit that have contractual maturity dates within one year of $1.1 million as of June 30, 2024.

There were no certificiates of deposit in the prior comparable period.

As of June 30, 2023, there was $23.7 million included in the available-for-sale investments related to the fair value of the Company’s investment in exchange traded investment grade bond funds.

At June 30, 2024, approximately 28% of the Company’s cash and cash equivalent account balances of $42.2 million were located in the U.S., with the remainder located in primarily in Canada, China, the U.K.

and other European countries.

At June 30, 2023, all of the Company’s available-for-sale investment account balances of $23.7 million were located in Canada.

At June 30, 2024, all of the Company’s available-for-sale investment account balances of $1.1 million were located in Europe.

At June 30, 2024, we had $319 million in borrowings under the revolving credit facility, resulting in $681 million of unutilized availability under our revolving credit facility.

5 unchanged sentences

The Company generated cash from operations of $299.0 million, $254.4 million, and $325.3 million in fiscal 2024, 2023, and 2022 respectively.

The increase in cash generated from operating activities in fiscal 2024 as compared to fiscal 2023 was mainly a result of changes in the timing of cash payments on certain operating assets and liabilities.

The decrease in cash generated from operating activities in fiscal 2023 as compared to fiscal 2022 was mainly a result of changes in net earnings and changes in the timing of cash payments on certain operating assets and liabilities.

The decrease in cash generated from operating activities in fiscal 2022 as compared to fiscal 2021 was mainly a result of changes in the timing of cash payments on certain operating assets and liabilities, largely offset by an increase in year over year net earnings.

Cash Flows From Investing Activities

We continue to make investments in our business, including capital expenditures.

During fiscal year 2023, the Company acquired Namocell, Inc for $101.2 million, net of cash acquired.

There were no acquisitions fiscal year 2022.

The Company acquired Eminence and Asuragen during fiscal year 2021 for a total of approximately $225.4 million, net of cash acquired.

We continue to make investments in our business, including capital expenditures to enable revenue growth.

During fiscal year 2024, the Company acquired Lunaphore for $169.7 million in cash-free, debt-free acquisition.

During fiscal year 2023, the Company acquired Namocell for $101.2 million, net of cash acquired.

There were no acquisitions in fiscal year 2022.

During the first fiscal quarter of 2023, the Company sold its remaining shares in Eminence, its partially-owned consolidated subsidiary, for $17.8 million.

There were no sales of businesses in the comparative prior year period.

There were no sales of businesses in fiscal 2024 or 2022.

In the first fiscal quarter of 2023, the Company sold its remaining shares in its investment in CCXI for $73.2 million.

There were no comparable activities in the comparative prior year period.

There were no comparable activities in fiscal 2024 and 2022.

The Company’s net proceeds (outflow) from the purchase, sale and maturity of available-for-sale investments in fiscal 2024, 2023, and 2022 were $22.6 million, $14.7 million, and $(26.9) million, respectively.

During fiscal year 2023, the Company’s proceeds in available-for-sale investments relates to the sale of excess cash in certificates of deposit that matured.

As of June 30, 2023, there were no outstanding certificates of deposit.

The outflow of cash in fiscal year 2022 compared to fiscal year 2023 and fiscal year 2021 was driven by the purchase of the exchange traded investment

grade bond funds in fiscal year 2022, which have a cost basis of $25.0 million, that did not reoccur in the comparative periods.

The proceeds in fiscal 2021 related to the sale of excess cash in certificates of deposit.

During fiscal year 2024, the Company’s proceeds in available-for-sale investments relates to the sale of our exchange traded investment grade bond funds.

The proceeds during fiscal year 2023 relates to the sale of excess cash in certificates of deposit that matured.

The outflow of cash in fiscal year 2022 compared to fiscal year 2024 and fiscal year 2023 was driven by the purchase of the exchange traded investment grade bond funds in fiscal year 2022, which had a cost basis of $25.0 million, that did not reoccur in the comparative periods.

The Company’s investment policy is to place excess cash in certificates of deposit with the objective of obtaining the highest possible return while minimizing risk and keeping the funds accessible.

Capital additions in fiscal year 2024, 2023, and 2022 were $62.9 million, $38.2 million, and $44.9 million.

Fiscal 2023 capital expenditures related to investments in new buildings, machinery, and IT equipment.

Fiscal 2024 capital expenditures related to investments in new buildings, machinery, construction in progress, and IT equipment.

Fiscal 2023 capital expenditures related to investments in new buildings, machinery, and IT equipment.

Capital additions planned for fiscal 2025 are approximately $48 million and are expected to be financed through currently available cash and cash generated from operations.

Increase in expected additions in fiscal 2024 is related to increasing capacity to meet expected sales growth across the Company.

During the year ended June 30, 2022, the Company paid $25 million to enter into a two-part forward contract which requires the Company to purchase the full equity interest in Wilson Wolf if certain annual revenue or EBITDA thresholds are met.

During fiscal year 2023, Wilson Wolf met the EBITDA target and the Company paid an additional $232 million to acquire 19.9% of Wilson Wolf.

Since the first part of the forward contract has been triggered, the second part of the forward contract will automatically trigger, which requires the Company to acquire the remaining 80.1% of Wilson Wolf on December 31, 2027.

The second part of the contract would be accelerated in advance of December 31, 2027 if Wilson Wolf meets certain financial milestones.

As of June 30, 2024, the second milestones have not been met.

The second option payment of approximately $1 billion plus potential contingent consideration is forecasted to occur between fiscal 2026 and fiscal 2028.

There were no comparable activities in the comparative prior year period.

During fiscal 2024, the Company received tax distributions from Wilson Wolf of $7.0 million.

Cash Flows From Financing Activities

5 unchanged sentences

Repayments of $256.0 million, $525.7 million, and $175.5 million were made on its line-of-credit in fiscal 2024, 2023, and 2022, respectively.

There were no payments during fiscal 2023 for contingent consideration.

There were no payments during fiscal 2024 nor fiscal 2023 for contingent consideration.

During fiscal 2022, the Company made $4.0 million in cash payments towards the Quad contingent consideration liability.

Of the $4.0 million in total payments, $0.7 million is classified as financing on the statement of cash flows.

The remaining $3.3 million is recorded as operating on the statement of cash flows as it represents the consideration liability that exceeds the amount of the contingent consideration liability recognized at the acquisition date.

During fiscal 2021, there were no payments related to contingent consideration classified as financing activities.

The Company made $0.3 million in contingent consideration payments, which were classified within operating activities

Of the $4.0 million in total

payments, $0.7 million is classified as financing on the statement of cash flows.

The remaining $3.3 million was recorded as operating on the statement of cash flows as it represents the consideration liability that exceeds the amount of the contingent consideration liability recognized at the acquisition date.

During fiscal 2024, 2023 and 2022, the Company paid $21.9 million, $28.9 million and $23.5 million, respectively, for taxes remitted on behalf of participants in net share settlement transactions and restricted stock units.

This is included as a cash outflow within the other financing activities line of the consolidated statements of cash flows.

The increase in other financing activity during fiscal 2023 compared to fiscal 2022 is primarily related to fees for the amended Credit Agreement that occurred in the first fiscal quarter.

The other financing activity during fiscal 2023 is primarily related to fees for the amended Credit Agreement that occurred in the first fiscal quarter.

There was no comparable activity in fiscal 2024 or fiscal 2022.

CRITICAL ACCOUNTING POLICIES

26 unchanged sentences

For potential payments related to financial performance based milestones, projected revenue and/or EBITDA amounts, volatility and discount rates assumptions are included in the estimated amounts.

For potential payments related to product development milestones, the fair value is based on the probability of achievement of such milestones.

For potential payments related to product development milestones, the fair value is based on the

probability of achievement of such milestones.

The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill.

7 unchanged sentences

For example, different classes of assets will have useful lives that differ.

Consequently, to the extent a longer-lived asset is ascribed greater value than a shorter-lived asset, net income

in a given period may be higher.

Consequently, to the extent a longer-lived asset is ascribed greater value than a shorter-lived asset, net income in a given period may be higher.

Additionally, assigning a lower value to amortizable intangibles would result in a higher amount assigned to goodwill.

19 unchanged sentences

The Company determined, after performing the qualitative analysis, there was no evidence that it is more likely than not that the fair value was less than the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test in fiscal 2024.

second quarter of fiscal 2024, as part of restructuring actions, certain assets and liabilities associated with a disposal group in our Protein Sciences segment were classified as held-for-sale as of December 31, 2023.

Given the upcoming divestiture, the Company identified a triggering event and performed impairment testing during the second half of fiscal 2024.

The impairment test resulted in a total impairment charge of $22.0 million, which includes the allocated goodwill, which we have further described within Note 1.

The Company did not identify any triggering events after our annual goodwill impairment analysis through June 30, 2024, the date of our consolidated balance sheet, that would require an additional goodwill impairment assessment to be performed.

In the first quarter of fiscal 2022, the Company combined the management of the Exosome Diagnostics and Asuragen reporting units, both of which are included in the Diagnostics and Genomics operating segment.

For fiscal 2023, we elected to perform a qualitative analysis for all five reporting units.

The Company determined, after performing the qualitative analysis, there was no evidence that it was more likely than not that the fair value was less than the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test in fiscal 2023.

The Company did not identify any triggering events after our annual goodwill impairment analysis through June 30, 2023, the date of our consolidated balance sheet, that would require an additional goodwill impairment assessment to be performed.

In the first quarter of fiscal 2022, the Company combined the management of the Exosome Diagnostics and Asuragen reporting units, both of which were included in the Diagnostics and Genomics operating segment.

In conjunction with the combination of the reporting units, a qualitative goodwill impairment assessment was performed.

6 unchanged sentences

Given the upcoming liquidation process to dispose of the Eminence assets, the Company identified a triggering event and performed impairment testing during the second quarter of fiscal 2022.

The impairment testing resulted in a full

impairment of the Eminence goodwill and intangible assets, which resulted in charges of $8.3 million and $8.6 million, respectively, for the year ended June 30, 2022.

The impairment testing resulted in a full impairment of the Eminence goodwill and intangible assets, which resulted in charges of $8.3 million and $8.6 million, respectively, for the year ended June 30, 2022.

The Company also recognized inventory and fixed asset impairment charges of $0.9 million and $0.9 million, respectively.

6 unchanged sentences

This delay in liquidation allowed time for securing of additional investor financing which coincided with the sale of the Company's equity shares of Eminence in the first quarter of fiscal 2023.

In conjunction with the combination of the reporting units, a qualitative goodwill impairment assessment was performed.

The qualitative assessment identified no indicators of impairment.

In our fiscal 2022 annual goodwill impairment analysis, we elected to perform a quantitative assessment for all five of our reporting units.

1 unchanged sentence

The Company did not identify any triggering events after our annual goodwill impairment through June 30, 2022, the date of our consolidated balance sheet, that would require an additional goodwill impairment assessment to be performed.

In fiscal 2021, because our 2021 quantitative analyses included all of our reporting units, the summation of our reporting units’ fair values, as indicated by our discounted cash flow calculations, were compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations.

This impairment assessment is sensitive to changes in forecasted cash flows, as well as our selected discount rate.

Changes in the reporting unit’s results, forecast assumptions and estimates could materially affect the estimation of the fair value of the reporting units.

The quantitative assessment completed as of April 1, 2021 indicated that all of the reporting units had a substantial amount of headroom.

Accordingly, the Company determined there was no indication of impairment of goodwill in our annual goodwill impairment analysis.

Further, no triggering events were identified in the year ended June 30, 2021 that would require an additional goodwill impairment assessment beyond our required annual goodwill impairment assessment.

NEW ACCOUNTING PRONOUNCEMENTS

2 unchanged sentences

SUBSEQUENT EVENTS

On July 7, 2023, the Company completed the acquisition of Lunaphore Technologies SA for approximately $165 million, net of cash acquired.

On July 23, 2024, the Company invested $15 million in Spear Bio, an innovative leader in the development and manufacture of ultra-sensitive immunoassays capable of measuring protein biomarkers at attomolar level from sub-microliter sample volume.

NON-GAAP FINANCIAL MEASURES

7 unchanged sentences

We provide these measures as additional information regarding our operating results.

We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to

incentive compensation.

We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation.

We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months, the impact of foreign currency, as well as the impact of partially-owned consolidated subsidiaries.

Our non-GAAP financial measure of organic revenue represents revenue growth excluding revenue from acquisitions within the preceding 12 months, the impact of foreign currency, the impact of businesses held-for-sale, as well as the impact of partially-owned consolidated subsidiaries.

Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period.

Revenue from partially-owned subsidiaries consolidated in our financial statements are also excluded from our organic revenue calculation, as those revenues are not fully attributable to the Company.

Revenue from partially-owned subsidiaries was $2.0 million for the year ended June 30, 2023.

Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, acquisition related expenses inclusive of the changes in fair value of contingent consideration, and other non-recurring items including non-recurring costs, goodwill and long-lived asset impairments, and gains.

Revenues from businesses held-for-sale are excluded from our organic revenue calculation starting on the date they become held-for-sale as those revenues will not be comparative in future periods.

Revenues from partially-owned subsidiaries consolidated in our financial statements are also excluded from our organic revenue calculation, as those revenues are not fully attributable to the Company.

There was no revenue from partially-owned consolidated subsidiaries in fiscal year 2024 due to the sale of Changzhou Eminence Biotechnology Co., Ltd.

(Eminence) in the first quarter of fiscal 2023.

Revenue from partially-owned consolidated subsidiaries was $2.0 million for the year ended June 30, 2023.

Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, which is inclusive of the employer portion of payroll taxes on those stock awards, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, restructuring and restructuring-related costs, and other non-recurring items including non-recurring costs, goodwill and long-lived asset impairments, and gains.

Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations.

The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring items including gains or losses on legal settlements, goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure.

The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring items including gains or losses on goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure.

We also exclude certain litigation charges which are facts and circumstances specific including costs to resolve litigation and legal settlement (gains and losses).

In some cases, these costs may be a result of litigation matters at acquired companies that were not probable, inestimable, or unresolved at the time of acquisition.

Costs related to restructuring and restructuring-related activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs.

Additionally, these amounts can vary significantly from period to period based on current activity.

The Company also excludes revenue and expense attributable to partially-owned consolidated subsidiaries in the calculation of our non-GAAP financial measures as the revenues and expenses are not fully attributable to the Company.

The Company’s non-GAAP adjusted operating margin and adjusted net earnings, in total and on a per share basis, also excludes stock-based compensation expense, which is inclusive of the employer portion of payroll taxes on those stock awards, restructuring, gain and losses from investments, as they are not part of our day-to-day operating decisions (excluding our equity method investment in Wilson Wolf as it is certain to be acquired in the future), and certain adjustments to income tax expense.

The Company also excludes revenue and expense attributable to partially-owned consolidated subsidiaries as well as revenue and expense attributable to businesses held-for-sale in the calculation of our non-GAAP financial measures.

The Company’s non-GAAP adjusted operating margin and adjusted net earnings, in total and on a per share basis, also excludes acquisition related expenses inclusive of the changes in fair value of contingent consideration, gain and losses from investments, as they are not part of our day-to-day operating decisions (excluding our equity method investment in Wilson Wolf as it is certain to be acquired in the future), certain adjustments to income tax expense, and other non-recurring items including certain costs related to the transition to a new CEO.

Additionally, gains and losses from investments that are either isolated or cannot be expected to occur again with any predictability are excluded.

Costs related to restructuring activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs.

The Company independently calculates a non-GAAP adjusted tax rate to be applied to the identified non-GAAP adjustments considering the impact of discrete items on these adjustments and the jurisdictional mix of the adjustments.

4 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-K

Item 7. Management’s Discussion and Analysis