Annual Statements Open main menu

MERIDIAN BIOSCIENCE INC - Quarter Report: 2021 March (Form 10-Q)

10-Q
Table of Contents
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form
10-Q
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2021
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
              
to
              
Commission file
number    0-14902
 
 
 
MERIDIAN BIOSCIENCE, INC.
 
 
Incorporated under the laws of Ohio
31-0888197
(I.R.S. Employer Identification No.)
3471 River Hills Drive
Cincinnati, Ohio 45244
(513)
271-3700
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, no par value
 
VIVO
 
NASDAQ Global Select Market
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Table of Contents
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated filer      Smaller reporting company  
       
Emerging growth company           
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
 
Outstanding April 30, 2021
Common Stock, no par value
 
43,330,038

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM
10-Q
 
         
Page(s)
 
PART I.
     
Item 1.
     
        1  
        2  
        3  
       
4-5
 
        6  
       
7-20
 
Item 2.
       
21-30
 
Item 3.
        30  
Item 4.
        30  
PART II.
     
Item 1.
        31  
Item 1A.
        31  
Item 6.
        31  
        32  
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q
contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, which may be identified by words such as “continues”, “estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “signals”, “should”, “can” and similar expressions or the negative versions thereof and which also may be identified by their context. All statements that address operating performance or events or developments that Meridian Bioscience, Inc. (“Meridian” or “the Company”) expects or anticipates will occur in the future, including, but not limited to, statements relating to per share diluted net earnings, sales, product demand, net revenues, operating margin, other guidance and the impact of
COVID-19
on its business and prospects, are forward-looking statements. Such statements, whether expressed or implied, are based upon current expectations of the Company and speak only as of the date made. Specifically, Meridian’s forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events and operating performance. Meridian assumes no obligation to publicly update or revise any forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially, including, without limitation, the following:
Meridian’s operating results, financial condition and continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian’s competition, its ability to effectively sell such products and its ability to successfully expand and effectively manage increased sales and marketing operations. While Meridian has introduced a number of internally developed products and acquired products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis or in protecting its intellectual property, and unexpected or costly manufacturing costs associated with its introduction of new products or acquired products could cause actual results to differ from expectations. Meridian relies on proprietary, patented and licensed technologies. As such, the Company’s ability to protect its intellectual property rights, as well as the potential for intellectual property litigation, would impact its results. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Recessionary pressures on the economy and the markets in which the Company’s customers operate, as well as adverse trends in buying patterns from customers, can change expected results. Costs and difficulties in complying with laws and regulations, including those administered by the United States Food and Drug Administration, can result

Table of Contents
in unanticipated expenses and delays and interruptions to the sale of new and existing products, as can the uncertainty of regulatory approvals and the regulatory process (including the currently ongoing study and other FDA actions regarding the Company’s LeadCare products). The international scope of Meridian’s operations, including changes in the relative strength or weakness of the U.S. dollar and general economic conditions in foreign countries, can impact results and make them difficult to predict. One of Meridian’s growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses will be successfully integrated into Meridian’s operations. There may be risks that acquisitions may disrupt operations and may pose potential difficulties in employee retention, and there may be additional risks with respect to Meridian’s ability to recognize the benefits of acquisitions, including potential synergies and cost savings or the failure of acquisitions to achieve their plans and objectives. Meridian cannot predict the outcome of future goodwill impairment testing and the impact of possible goodwill impairments on Meridian’s earnings and financial results. Meridian cannot predict the possible impact of U.S. health care legislation enacted in 2010 – the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act – and any modification or repeal of any of the provisions thereof initiated by Congress or the presidential administration, and any similar initiatives in other countries on its results of operations. Efforts to reduce the U.S. federal deficit, breaches of Meridian’s information technology systems, trade wars, increased tariffs, and natural disasters and other events could have a materially adverse effect on Meridian’s results of operations and net revenues. The Company can make no assurances that a material weakness in its internal control over financial reporting will not be identified in the future, which if identified and not properly corrected, could materially adversely affect its operations and result in material misstatements in its consolidated financial statements. Meridian also is subject to risks and uncertainties related to disruptions to or reductions in business operations or prospects due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases such as
COVID-19.
In addition to the factors described in this paragraph, as well as those factors identified from time to time in the Company’s filings with the Securities and Exchange Commission, Part I, Item 1A Risk Factors of the Company’s most recent Annual Report on Form
10-K
contains a list and description of uncertainties, risks and other matters that may affect the Company. Readers should carefully review these forward-looking statements and risk factors, and not place undue reliance on the Company’s forward-looking statements.

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(dollar and share amounts in thousands, except per share data)
 
    
Three Months Ended
   
Six Months Ended
 
    
March 31,
   
March 31,
 
    
2021
   
2020
   
2021
   
2020
 
NET REVENUES
   $ 85,264     $ 57,296     $ 178,181     $ 104,717  
COST OF SALES
     27,492       22,750       58,861       42,520  
    
 
 
   
 
 
   
 
 
   
 
 
 
GROSS PROFIT
     57,772       34,546       119,320       62,197  
    
 
 
   
 
 
   
 
 
   
 
 
 
OPERATING EXPENSES
                                
Research and development
     6,065       5,315       11,716       10,078  
Selling and marketing
     6,540       6,529       13,561       13,257  
General and administrative
     12,925       10,628       24,863       19,612  
Acquisition-related costs
           1,787             1,787  
Change in fair value of acquisition consideration
     (2,989     (2,491     (1,942     (1,304
Restructuring costs
     —         252         
      527  
Selected legal costs
     1,030       735       2,257       1,055  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     23,571       22,755       50,455       45,012  
    
 
 
   
 
 
   
 
 
   
 
 
 
OPERATING INCOME
     34,201       11,791       68,865       17,185  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
                                
Interest income
     6       23       15       134  
Interest expense
     (472     (532     (1,006     (1,299
RADx grant income
     200       —         1,000       —    
Other, net
     (883     1,365       (1,574     653  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other income (expense)
     (1,149     856       (1,565     (512
    
 
 
   
 
 
   
 
 
   
 
 
 
EARNINGS BEFORE INCOME TAXES
     33,052       12,647       67,300       16,673  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME TAX PROVISION
     6,750       3,288       14,219       4,487  
    
 
 
   
 
 
   
 
 
   
 
 
 
NET EARNINGS
   $ 26,302     $ 9,359     $ 53,081     $ 12,186  
    
 
 
   
 
 
   
 
 
   
 
 
 
BASIC EARNINGS PER COMMON SHARE
   $ 0.61     $ 0.22     $ 1.23     $ 0.28  
DILUTED EARNINGS PER COMMON SHARE
   $ 0.60     $ 0.22     $ 1.21     $ 0.28  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
BASIC
     43,244       42,830       43,171       42,810  
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS
     878       138       789       143  
    
 
 
   
 
 
   
 
 
   
 
 
 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
DILUTED
     44,122       42,968       43,960       42,953  
    
 
 
   
 
 
   
 
 
   
 
 
 
ANTI-DILUTIVE SECURITIES:
                                
Common share options and restricted share units
     166       1,635       169       1,520  
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 1

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(dollar amounts in thousands)
 
    
Three Months
 
Ended
   
Six Months Ended
 
    
March 31,
   
March 31,
 
    
2021
   
2020
   
2021
   
2020
 
NET EARNINGS
   $ 26,302     $ 9,359     $ 53,081     $ 12,186  
Other comprehensive income (loss):
                                
Foreign currency translation adjustment
     79       (2,786     3,380       (18
Unrealized gain (loss) on cash flow hedge
     439       (313     460       (313
Reclassification of amortization of gain on cash flow hedge
     (77     (77     (154     (154
Income taxes related to items of other comprehensive income (loss)
     (80     96       (66     115  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other comprehensive income (loss), net of tax
     361       (3,080     3,620       (370
    
 
 
   
 
 
   
 
 
   
 
 
 
COMPREHENSIVE INCOM
E
   $ 26,663     $ 6,279     $ 56,701     $ 11,816  
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 2

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(dollar amounts in thousands)
     
Six Months Ended March 31,
  
2021
   
2020
 
CASH FLOWS FROM OPERATING ACTIVITIES
                
Net earnings
   $ 53,081     $ 12,186  
Non-cash
items included in net earnings:
                
Depreciation of property, plant and equipment
     3,072       2,439  
Amortization of intangible assets
     4,363       3,449  
Stock compensation expense
     2,291       1,759  
Deferred income taxes
     (777     656  
Change in fair value of acquisition consideration
     (1,942     (1,304
Change in the following:
                
Accounts receivable
     (5,267     (4,950
Inventories
     (12,185     (2,511
Prepaid expenses and other current assets
     1,440       1,278  
Accounts payable and accrued expenses
     77       1,621  
Income taxes payable
     (2,698     400  
Other, net
     36       692  
    
 
 
   
 
 
 
Net cash provided by operating activities
     41,491       15,715  
    
 
 
   
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Purchase of property, plant and equipment
     (11,955     (1,543
Payment of acquisition consideration holdback
     (5,000     —    
    
 
 
   
 
 
 
Net cash used in investing activities
     (16,955     (1,543
    
 
 
   
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Payment on revolving credit facility
     (18,824     (27,000
Payment of debt issuance costs
     —         (116
Proceeds from exercise of stock options
     2,852       —    
    
 
 
   
 
 
 
Net cash used in financing activities
     (15,972     (27,116
    
 
 
   
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
     1,296       97  
    
 
 
   
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
     9,860       (12,847
Cash and Cash Equivalents at Beginning of Period
     53,514       62,397  
    
 
 
   
 
 
 
Cash and Cash Equivalents at End of Period
   $ 63,374     $ 49,550  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 3

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
ASSETS
 
    
March 31,
        
  
2021
    
September 30,
 
  
(Unaudited)
    
    
2020
    
 
CURRENT ASSETS
                 
Cash and cash equivalents
   $ 63,374      $ 53,514  
Accounts receivable, less allowances of $505 and $513, respectively
     44,895        38,512  
Inventories, net
     72,534        61,264  
Prepaid expenses and other current assets
     7,491        8,900  
    
 
 
    
 
 
 
Total current assets
     188,294        162,190  
    
 
 
    
 
 
 
PROPERTY, PLANT AND EQUIPMENT, at Cost
                 
Land
     991        991  
Buildings and improvements
     32,326        32,188  
Machinery, equipment and furniture
     74,173        69,854  
Construction in progress
     10,779        1,200  
    
 
 
    
 
 
 
Subtotal
     118,269        104,233  
Less: accumulated depreciation and amortization
     76,303        73,113  
    
 
 
    
 
 
 
Property, plant and equipment, net
     41,966        31,120  
    
 
 
    
 
 
 
OTHER ASSETS
                 
Goodwill
     115,296        114,186  
Other intangible assets, net
     78,834        83,197  
Right-of-use
assets, net
     6,297        6,336  
Deferred income taxes
     8,017        7,647  
Other assets
     465        585  
    
 
 
    
 
 
 
Total other assets
     208,909        211,951  
    
 
 
    
 
 
 
TOTAL ASSETS
   $ 439,169      $ 405,261  
    
 
 
    
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 4

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
 
(dollar amounts in thousands)
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
     
    
March 31,
    
September 30,
 
    
2021
    
2020
 
    
(Unaudited)
    
        
 
CURRENT LIABILITIES
                 
Accounts payable
   $ 16,714      $ 11,969  
Accrued employee compensation costs
     12,634        16,661  
Current portion of acquisition consideration
     11,296        12,619  
Current operating lease obligations
     1,892        1,789  
Current government grant obligations
     608        600  
Other accrued expenses
     5,664        5,362  
Income taxes payable
     1,502        3,524  
    
 
 
    
 
 
 
Total current liabilities
     50,310        52,524  
    
 
 
    
 
 
 
NON-CURRENT
LIABILITIES
                 
Acquisition consideration
     7,671        13,290  
Post-employment benefits
     2,429        2,493  
Fair value of interest rate swaps
     254        713  
Long-term operating lease obligations
     4,555        4,678  
Long-term debt
     50,000        68,824  
Government grant obligations
     10,537        10,524  
Long-term income taxes payable
     374        549  
Deferred income taxes
     3,389        3,804  
Other
non-current
liabilities
     177        233  
    
 
 
    
 
 
 
Total
non-current
liabilities
     79,386        105,108  
    
 
 
    
 
 
 
COMMITMENTS AND CONTINGENCIES
            
 
 
 
 
 
 
 
 
 
SHAREHOLDERS’ EQUITY
                 
Preferred stock, no par value; 1,000,000 shares authorized; none issued
     —          —    
Common shares, no par value; 71,000,000 shares authorized, 43,329,294 and 43,068,842
shares issued, respectively
     —          —    
Additional
paid-in
capital
     145,338        140,195  
Retained earnings
     162,375        109,294  
Accumulated other comprehensive income (loss)
     1,760        (1,860
    
 
 
    
 
 
 
Total shareholders’ equity
     309,473        247,629  
    
 
 
    
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 439,169      $ 405,261  
    
 
 
    
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 5

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollar and share amounts in thousands)
           
     Common
Shares
Issued
     Additional
Paid-In

Capital
    Retained
Earnings
     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Shareholders’
Equity
 
THREE MONTHS ENDED MARCH 31, 2021
                                          
Balance at December 31, 2020
     43,124      $ 141,395     $ 136,073      $ 1,399     $ 278,867  
Conversion of restricted share units and exercise of stock options
     205        2,893       —          —         2,893  
Stock compensation expense
     —          1,050       —          —         1,050  
Net earnings
     —          —         26,302        —         26,302  
Foreign currency translation adjustment
     —          —         —          79       79  
Hedging activity, net of tax
     —          —         —          282       282  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance at March 31, 2021
     43,329      $ 145,338     $ 162,375      $ 1,760     $ 309,473  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
THREE MONTHS ENDED MARCH 31, 2020
                                          
Balance at December 31, 2019
     42,828      $ 133,622     $ 65,935      $ (2,265   $ 197,292  
Conversion of restricted share units and exercise of stock options
     3        (9     —          —         (9
Stock compensation expense
     —          971       —          —         971  
Net earnings
     —          —         9,359        —         9,359  
Foreign currency translation adjustment
     —          —         —          (2,786     (2,786
Hedging activity, net of tax
     —          —         —          (294     (294
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance at March 31, 2020
     42,831      $ 134,584     $ 75,294      $ (5,345   $ 204,533  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
 
     Common
Shares
Issued
     Additional
Paid-In

Capital
    Retained
Earnings
     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Shareholders’
Equity
 
SIX MONTHS ENDED MARCH 31, 2021
                                          
Balance at September 30, 2020
     43,069      $ 140,195     $ 109,294      $ (1,860   $ 247,629  
Conversion of restricted share units and exercise of stock options
     260        2,852       —          —         2,852  
Stock compensation expense
     —          2,291       —          —         2,291  
Net earnings
     —          —         53,081        —         53,081  
Foreign currency translation adjustment
     —          —         —          3,380       3,380  
Hedging activity, net of tax
     —          —         —          240       240  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance at March 31, 2021
     43,329      $ 145,338     $ 162,375      $ 1,760     $ 309,473  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
SIX MONTHS ENDED MARCH 31, 2020
                                          
Balance at September 30, 2019
     42,712      $ 132,834     $ 63,108      $ (4,975   $ 190,967  
Conversion of restricted share units and exercise of stock options
     119        (9     —          —         (9
Stock compensation expense
     —          1,759       —          —         1,759  
Net earnings
     —          —         12,186        —         12,186  
Foreign currency translation adjustment
     —          —         —          (18     (18
Hedging activity, net of tax
     —          —         —          (352     (352
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance at March 31, 2020
     42,831      $ 134,584     $ 75,294      $ (5,345   $ 204,533  
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
Page 6

Table of Contents
MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Dollars in Thousands, Except Per Share Amounts
(Unaudited)
 
1.
Nature of Business
Meridian Bioscience, Inc. (“Meridian” or “the Company”) was formed in 1976 and functions as a fully-integrated life science company with principal businesses in: (i) the development, manufacture, sale and distribution of diagnostic testing systems and kits, primarily for certain gastrointestinal and respiratory infectious diseases, and elevated blood lead levels; and (ii) the manufacture and distribution of bulk antigens, antibodies, immunoassay blocking reagents, various Polymerase Chain Reaction (“PCR”) master mixes, and bioresearch reagents used by other diagnostic manufacturers and researchers.
Our reportable segments are Diagnostics and Life Science. The Diagnostics segment consists of: (i) manufacturing operations for infectious disease products in Cincinnati, Ohio; Quebec City, Canada; and Modi’in, Israel; (ii) manufacturing operations for blood chemistry products in Billerica, Massachusetts (near Boston); and (iii) the sale and distribution of diagnostics products domestically and abroad. This segment’s products are used by hospitals, reference labs and physician offices to detect infectious diseases and elevated lead levels in blood.
The Life Science segment consists of: (i) manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; and Luckenwalde, Germany; and (ii) the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, and bioresearch reagents domestically and abroad, including a sales and business development facility, with outsourced distribution capabilities, in Beijing, China to pursue revenue opportunities in Asia. This segment’s products are used by manufacturers and researchers in a variety of applications (e.g.,
in-vitro
medical device manufacturing, microRNA detection, next-generation sequencing, plant genotyping, and mutation detection, among others).
 
2.
Basis of Presentation
The Condensed Consolidated Financial Statements are unaudited and are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information, and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the Condensed Consolidated Financial Statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, 2021 and the results of its operations, cash flows and shareholders’ equity for the three- and
six-month
periods ended March 31, 2021 and 2020. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s fiscal 2020 Annual Report on Form
10-K
filed with the SEC on November 23, 2020.
It should be noted that the terms revenue and/or revenues are utilized throughout these notes to the Condensed Consolidated Financial Statements to indicate net revenue and/or net revenues.
The results of operations for interim periods are not necessarily indicative of the results to be expected for the year. In December 2019, the
SARS-CoV-2
virus emerged in Wuhan, China and spread to other parts of the world. In March 2020, the World Health Organization (“WHO”) designated
COVID-19
(the disease caused by
SARS-CoV-2)
a global pandemic. In April 2021, the U.S. Department of Health and Human Services extended the public health emergency declaration for
COVID-19.
During the past year, governments around the world have implemented lockdown and
shelter-in-place
orders, requiring many
non-essential
businesses to shut down operations, many of which remain in effect as of the date of this filing. Our business, however, was deemed “essential” and we have continued to operate, manufacture and distribute products to customers globally.
 
Page 7

Table of Contents
While revenues within our Life Science segment have been positively impacted by the
COVID-19
pandemic, to date, the negative impacts of
COVID-19
on the Company have been limited to decreased demand for most of our Diagnostics segment’s products and the pausing and/or slowing of clinical trials for new product development programs, as diagnostics testing over the last year has focused primarily on
COVID-19
and critical care ailments. For the second half of our fiscal 2021, we expect demand for our Life Science segment’s reagent products used in
COVID-19
tests will be lower than that experienced during the six months ended March 31, 2021, as health care systems transition to more asymptomatic testing versus the predominant symptomatic testing we have seen over the last year. However, this varies by country based on their individual
COVID-19
case statistics. Due to the many uncertainties surrounding the
COVID-19
pandemic, we can provide no assurances with respect to our views of the longevity, severity or impacts to our financial condition of the
COVID-19
pandemic. See Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein for additional discussion of the effects of the
COVID-19
pandemic on the Company and its results of operations.
The preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the Condensed Consolidated Financial Statement
s
 and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
 
3.
Significant Accounting Policies
A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2020 Annual Report on Form
10-K
filed with the SEC on November 23, 2020 and should be referred to for a description of the Company’s significant accounting policies.
(a) Recent Accounting Pronouncements –
Pronouncements Adopted
On October 1, 2020, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)
2016-13,
Measurement of Credit Losses
on Financial Instruments
, which changed the impairment model used to measure credit losses for most financial assets. Use of the new forward-looking expected credit loss model for our accounts receivable valuation, rather than the previously utilized incurred credit loss model, resulted in an immaterial impact on the Condensed Consolidated Financial Statements.
Pronouncements Issued but Not Yet Adopted as of March 31, 2021
In March 2020, the FASB issued ASU
2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
, to provide temporary optional guidance relating to reference rate reform, particularly as it relates to easing the potential burden resulting from the expected discontinuation of the LIBOR rate. The guidance provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met, which may be applied through December 31, 2022. The Company continues to evaluate the impacts of this guidance but does not expect its application to have a material impact on the Condensed Consolidated Financial Statements.
In December 2019, the FASB issued ASU
2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
(“ASU
2019-12”).
ASU
2019-12
clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. ASU
2019-12
will be effective for the Company’s fiscal year beginning on October 1, 2021. The Company is currently evaluating the impact of ASU
2019-12
but does not expect its application to have a material impact on the Condensed Consolidated Financial Statements.
 
(b)
Reclassifications –
Certain reclassifications have been made to the prior year Condensed Consolidated Financial Statements to conform to the current year presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.
 
Page 8

Table of Contents
4.
Revenue Recognition
Overview
Revenue from contracts with customers is recognized in an amount that reflects the consideration we expect to receive in exchange for products when obligations under such contracts are satisfied. Revenue is generally recognized at a
point-in-time
when products are shipped, and control has passed to the customer. Such contracts can include various combinations of products that are generally accounted for as distinct performance obligations. Revenue is reduced in the period of sale for fees paid to distributors, which are inseparable from the distributor’s purchase of our product and for which we receive no goods or services in return. Revenue for the Diagnostics segment is reduced at the date of sale for product price adjustments payable to certain distributors under local contracts.
Revenue Disaggregation
The following tables present our revenues disaggregated by major geographic region, major product platform and disease state (Diagnostics segment only):
Revenue by Reportable Segment & Geographic Region
 
    
Three Months Ended March 31,
   
Six Months Ended March 31,
 
    
2021
    
2020
    
Inc (Dec)
   
2021
    
2020
    
Inc (Dec)
 
Diagnostics-
                                                    
Americas
   $ 25,290      $ 27,670        (9 )%    $ 48,824      $ 55,405        (12 )% 
EMEA
     6,071        6,777        (10 )%      12,101        13,277        (9 )% 
ROW
     588        495        19     1,345        1,051        28
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total Diagnostics
     31,949        34,942        (9 )%      62,270        69,733        (11 )% 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Life Science-
                                                    
Americas
     13,550        4,612        194     32,296        8,623        275
EMEA
     21,773        9,946        119     54,066        14,907        263
ROW
     17,992        7,796        131     29,549        11,454        158
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total Life Science
     53,315        22,354        139     115,911        34,984        231
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Consolidated
   $ 85,264      $ 57,296        49   $ 178,181      $ 104,717        70
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Revenue by Product Platform/Type
 
    
Three Months Ended March 31,
   
Six Months Ended March 31,
 
    
2021
    
2020
    
Inc (Dec)
   
2021
    
2020
    
Inc (Dec)
 
Diagnostics-
                                                    
Molecular assays
   $ 4,395      $ 7,238        (39 )%    $ 8,985      $ 14,077        (36 )% 
Non-molecular
assays
     27,554        27,704        (1 )%      53,285        55,656        (4 )% 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total Diagnostics
   $ 31,949      $ 34,942        (9 )%    $ 62,270      $ 69,733        (11 )% 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Life Science-
                                                    
Molecular reagents
   $ 37,752      $ 11,534        227   $ 83,776      $ 16,902        396
Immunological reagents
     15,563        10,820        44     32,135        18,082        78
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total Life Science
   $ 53,315      $ 22,354        139   $ 115,911      $ 34,984        231
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
 
Page 9

Table of Contents
Revenue by Disease State (Diagnostics segment only)
 
    
Three Months Ended March 31,
   
Six Months Ended March 31,
 
    
2021
    
2020
    
Inc (Dec)
   
2021
    
2020
    
Inc (Dec)
 
Diagnostics-
                                                    
Gastrointestinal assays
   $  15,666      $  14,014        12   $  31,118      $  30,060        4
Respiratory illness assays
     3,686        10,863        (66 )%      8,492        18,612        (54 )% 
Blood chemistry assays
     4,358        4,194        4     8,753        9,142        (4 )% 
Other
     8,239        5,871        40     13,907        11,919        17
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total Diagnostics
   $ 31,949      $ 34,942        (9 )%    $ 62,270      $ 69,733        (11 )% 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Royalty Income
Royalty income received from DiaSorin, which primarily related to sales of
H. pylori
products, totaled approximately $2,845 and $1,280 in the three months ended March 31, 2021 and 2020, respectively, and $3,705 and $2,205 in the six months ended March 31, 2021 and 2020, respectively. Such revenue is included as part of
Non-molecular
assays and Other within the Revenue by Product Platform/Type and Revenue by Disease State tables, respectively, above.
Reagent Rental Arrangements
Revenue allocated to the lease elements of Reagent Rental arrangements totaled approximately $900 and $1,125 in the three months ended March 31, 2021 and 2020, respectively, and $1,780 and 2,250 in the six months ended March 31, 2021 and 2020, respectively.
Such revenue is included as part of net revenues in our Condensed Consolidated Statements of Operations.
 
5.
Fair Value Measurements
Certain asset
s
 and liabilities are recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 820,
Fair Value Measurements and Disclosures
(“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each asset and liability is based on the assessment of the transparency and reliability of the inputs used in the valuation of such items at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2
Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly
Level 3
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable
T
o limit exposure to volatility in the LIBOR interest rate, the Company has entered into interest rate swap agreements, which effectively convert the variable interest rate on $50,000 of the outstanding revolving credit facility discussed in Note 11 to a fixed rate.
The fair values of the interest rate swap agreements were determined by reference to a third-party valuation and is considered a Level 2 input within the fair value hierarchy of valuation techniques.
 
Page 10

Table of Contents
As described in Note 6, we acquired Exalenz Bioscience Ltd. (“Exalenz”) in fiscal 2020. The fair values of the acquired accounts receivable, inventories, property, plant and equipment, and other current assets and the fair values of the assumed accounts payable and accrued expenses were valued using Level 2 inputs, which included data points that were observable, such as appraisals or established values of comparable assets (market approach). Intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs, as of the date of the acquisition, in isolation would result in a significantly lower (higher) fair value measurement. Management engaged a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, and specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.
In connection with the acquisition of the business of GenePOC, Inc. (“GenePOC”) in fiscal 2019 and subsequent amendments to modify certain terms of the agreement related to contingent consideration achievement levels and milestone dates, the Company is required to make contingent consideration payments of up to 
$64,000 (originally $70,000 at the acquisition date), comprised of up to $14,000 for achievement of product development milestones (originally $20,000 at the acquisition date) and up to $50,000 for achievement of certain financial targets. The fair value for the contingent consideration recognized upon the acquisition as part of the purchase price allocation was $27,202. The fair value of the product development milestone payments is estimated by discounting the probability-weighted contingent payments to present value. Assumptions used in the calculations include probability of success, duration of the
earn-out
and discount rate, and such calculations were updated for the effect of the previously noted amendment
s
to the contingent consideration achievement levels and milestone dates. The fair value of the financial performance target payments was determined using a Monte Carlo simulation-based model. Assumptions used in these calculations include expected revenues, probability of certain developments, expected expenses and discount rate. The ultimate settlement of contingent consideration could deviate
significantly from
the current Level 3 measurement estimates, based on the actual results of these financial measures.
The following table provides information by level for financial assets and liabilities that are measured at fair value on a recurring basis:
 
 
           
Fair Value Measurements Using
Inputs Considered as
 
    
Carrying

Value
    
Level 1
    
Level 2
    
Level 3
 
Interest rate swaps -
                          
As of March 31, 2021
   $ (254 )    $ —        $ (254 )    $ —    
As of September 30, 2020
   $ (713 )    $ —        $ (713 )    $ —    
Contingent consideration -
                          
As of March 31, 2021
   $ (18,967 )    $ —        $ —        $ (18,967
As of September 30, 2020
   $ (20,909 )    $ —        $ —        $ (20,909
 
6.
Business Combinations
On April 30, 2020 (“the acquisition date”), we acquired
100
% of the outstanding common shares and voting interest of Exalenz, a Modi’in, Israel based provider of the
BreathID
®
Breath Test Systems (“BreathID”), a breath test platform for the detection of
Helicobacter pylori.
Cash consideration totaled
168.6
 million New Israeli Shekels (“NIS”), which equated to $
48,237
at the date of closing. Including debt assumed and repaid shortly after closing, the total consideration transferred was $
56,305
. To finance the acquisition, the Company utilized cash and cash equivalents on hand and proceeds drawn from our revolving credit facility (see Note 11). In anticipation of the transaction, we executed forward currency contracts to acquire the NIS required for the acquisition. As a result, the net cash outlay for the transaction prior to the repayment of debt was $
47,392
.
As a result of total consideration exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $24,827
was recorded in connection with this acquisition, none of which will be deductible for U.S. tax purposes. The goodwill results largely from our ability to market and sell the BreathID platform through our established customer base and distribution channels.
 
Page 11

Table of Contents
The Company’s consolidated results for the three and six months ended March 31, 2021 include the following from Exalenz:
 
    
Three
Months Ended

March 31,
2021
    
Six
Months Ended

March 31,
2021
 
Net revenues
   $ 2,784      $ 5,882  
Net loss
   $ (947    $ (1,739
    
 
 
    
 
 
 
These results for the three and six months ended March 31, 2021, which are reported as part of the Diagnostics segment, include $720 and
 $1,520
, respectively, of 
amortization expense related to specific identifiable assets recorded in the preliminary purchase price allocation, including a
non-compete
agreement, trade name, technology and customer relationships.
The recognized preliminary amounts of identifiable assets acquired and liabilities assumed in the acquisition of Exalenz are as follows:
 
    
PRELIMINARY
 
    
April 30,
2020

(as initially
reported)
    
Measurement
Period
Adjustments
    
April 30,
2020

(as adjusted)
 
Fair value of assets acquired -
                          
Cash
   $ 5,006      $ —        $ 5,006  
Accounts receivable
     637        —          637  
Inventories
     4,329        (296      4,033  
Other current assets
     851        1,825        2,676  
Property, plant and equipment
     544        (16      528  
Goodwill
     29,288        (4,461      24,827  
Other intangible assets (estimated useful life):
                          
Non-compete
agreement (5 years)
     120        (10      110  
Trade name (10 years)
     3,540        320        3,860  
Technology (15 years)
     5,590        530        6,120  
Customer relationships (10 years)
     19,370        1,270        20,640  
Right-of-use
assets
     1,358        (47      1,311  
Deferred tax assets, net
     5,566        1,178        6,744  
    
 
 
    
 
 
    
 
 
 
       76,199        293        76,492  
    
 
 
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of liabilities assumed -
                          
Accounts payable and accrued expenses (including current portion of lease and government grant obligations)
     7,757        251        8,008  
Long-term lease obligations
     1,054        42        1,096  
Long-term government grant obligations
     10,792        —          10,792  
Other
non-current
liabilities
     291        —          291  
    
 
 
    
 
 
    
 
 
 
       19,894        293        20,187  
    
 
 
    
 
 
    
 
 
 
Total consideration paid (including $8,068 to pay off long-term debt)
   $ 56,305      $ —        $ 56,305  
    
 
 
    
 
 
    
 
 
 
 
Page 12

Table of Contents
As indicated, the allocation of the purchase price is preliminary, pending final completion of valuations. As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to other current assets, goodwill, other intangible assets, and deferred tax assets. There were no measurement period adjustments materially impacting net earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date. Currently, we are primarily assessing the results of the valuation of intangible assets and the tax implications thereon. Upon completion of these analyses, any required adjustments are expected to result in an amount being reclassified among goodwill, other intangible assets and deferred taxes, as applicable.
Pro Forma Information
The following table provides the unaudited condensed consolidated pro forma results for the periods presented as if Exalenz had been acquired as of the beginning of fiscal 2020 (October 1, 2019). Pro forma results do not include the effect of any synergies achieved or anticipated to be achieved from the acquisition, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.
    
Three Months
Ended March 31,
    
Six Months
Ended March 31,
 
    
2021
    
2020
    
2021
    
2020
 
Net revenues
   $ 85,264      $ 60,701      $ 178,181      $ 111,895  
Net earnings
   $ 26,302      $ 8,064      $ 53,081      $ 9,246  
These unaudited pro forma amounts have been calculated by including the results of Exalenz and adjusting the results to give effect to the following, as if the acquisition had been consummated on October 1, 2019, together with the consequential tax effects thereon:
 
    
Three Months
Ended March 31,
    
Six Months Ended
March 31,
 
    
2021
    
2020
    
2021
    
2020
 
Adjustments to net revenues
                                   
Exalenz pre-acquisition net revenues
   $ —        $ 3,405      $ —        $ 7,178  
    
 
 
    
 
 
    
 
 
    
 
 
 
Adjustments to net earnings
                                   
Exalenz pre-acquisition net loss
   $ —        $ (752    $ —        $ (1,504
Pro forma adjustments:
                                   
Remove net impact of
non-continuing
personnel, locations or
activities
     —          490        —          591  
Incremental depreciation and amortization
     —          (911      —          (1,824
Incremental interest costs, net
     —          (381      —          (772
Tax effects of pro forma adjustments and recognizing benefit on
resulting Exalenz losses
     —          259        —          569  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total adjustments to net earnings
   $ —        $ (1,295    $ —        $ (2,940
    
 
 
    
 
 
    
 
 
    
 
 
 
 
Page 13

Table of Contents
7.
Cash and Cash Equivalents
Cash and cash equivalents include the following:
 
    
March 31,
2021
    
September 30,
2020
 
Institutional money market funds
   $ 1,017      $ 1,017  
Cash on hand, unrestricted
     62,357        52,497  
    
 
 
    
 
 
 
Total
   $ 63,374      $ 53,514  
    
 
 
    
 
 
 
 
 
8.
Inventories, Net
Inventories, net are comprised of the following:
 
    
March 31,
2021
    
September 30,
2020
 
Raw materials
   $ 18,706      $ 11,966  
Work-in-process
     22,987        19,477  
Finished goods - instruments
     1,933        1,594  
Finished goods - kits and reagents
     28,908        28,227  
    
 
 
    
 
 
 
Total
   $ 72,534      $ 61,264  
    
 
 
    
 
 
 
 
 
9.
Leasing Arrangements
The Company is party to a number of operating leases, the majority of which are related to office, warehouse and manufacturing space. The related operating lease assets and obligations are reflected within
right-of-use
assets, net, current operating lease obligations and long-term operating lease obligations on the Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.
The lease costs for these operating leases reflected in 
 
our Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2021 and 2020, as well as the right-of-use assets, net obtained during these periods in exchange for operating lease liabilities, are as follows: 
 
 
  
Three Months
Ended March 31,
 
  
Six Months
Ended March 31,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Lease costs within cost of sales
  
$
198
 
  
$
130
 
  
$
356
 
  
$
259
 
Lease costs within operating expenses
  
 
387
 
  
 
292
 
  
 
761
 
  
 
559
 
Right-of-use
assets, net obtained in exchange for operating lease liabilities
  
 
612
 
  
 
222
 
  
 
692
 
  
 
222
 
In addition, the Company periodically enters into other short-term operating leases, generally with an initial term of twelve months or less. These leases are not recorded on the Condensed Consolidated Balance Sheets and the related lease expense is immaterial for the three and six months ended March 31, 2021 and 2020.
The Company often has options to renew lease terms, with the exercise of lease renewal options generally at the Company’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The discount rate implicit within our leases is generally not
 
Page 14

Table of Contents
determin
a
ble and, therefore, the Company uses its incremental borrowing rate as the basis for its discount rate. The weighted average remaining lease term for our operating leases and the weighted average discount rate used to measure our operating leases as of March 31, 2021 and September 30, 2020 were as follows:
 
 
  
March 31,
2021
 
 
September 30,
2020
 
 
Weighted average remaining lease term
  
 
3.8 years
 
 
 
4.2 years
 
Average discount rate
  
 
3.4
 
 
3.7
%
Maturities of lease liabilities by fiscal year for the Company’s operating leases
were
as follows as of March 31, 2021:
       
2021 (represents remainder of fiscal year)
   $ 1,108  
2022
     2,016  
2023
     1,482  
2024
     1,108  
2025
     806  
Thereafter
     331  
    
 
 
 
Total lease payments
     6,851  
Less amount of lease payments representing interest
     (404
    
 
 
 
Total present value of lease payments
   $ 6,447  
    
 
 
 
Supplemental cash flow information related to the Company’s operating leases are as follows:
 
          
Six Months Ended March 31,
  
2021
      
2020
 
Cash paid for amounts included in the measurement of lease liabilities:
                   
Operating cash flows from operating leases
   $ 1,072        $ 778  
    
 
 
      
 
 
 
10.
Goodwill and Other Intangible Assets, Net
During the
six
months ended March 31, 2021, goodwill increased $1110, reflecting: (i) an additional $361 acquisition measurement period adjustment related to Exalenz (Diagnostics segment; see Note 6); (ii) a $67 increase from the currency translation adjustment on goodwill in the Diagnostics segment; and (iii) a $682 increase from the currency translation adjustment on goodwill in the Life Science segment.
 
Page 15

Table of Contents
A summary of other intangible assets, net subject to amortization is as follows:
 
    
March 31, 2021
    
September 30, 2020
 
    
Gross
Carrying
Value
    
Accumulated
Amortization
    
Gross
Carrying
Value
    
Accumulated
Amortization
 
Manufacturing technologies, core products and cell lines
   $ 62,446      $ 20,756      $ 62,363      $ 18,750  
Trade names, licenses and patents
     18,524        8,813        18,425        7,801  
Customer lists, customer relationships and supply agreements
     45,287        17,944        45,071        16,210  
Government grants
     858        858        810        810  
Non-compete
agreements
     110        20        110        11  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 127,225      $ 48,391      $ 126,779      $ 43,582  
    
 
 
    
 
 
    
 
 
    
 
 
 
The aggregate amortization expense for these other intangible assets was $2,142 and $1,727 for the three months ended March 31, 2021 and 2020, respectively
, and
 
$4,363
 
and
 
$3,449
for the six months ended March 31, 2021 and 2020, respectively. The estimated aggregate amortization expense for these other intangible assets for each of the fiscal years through fiscal 2026 is as follows: remainder of fiscal 2021 –
$4,210, fiscal 2022 – $8,000, fiscal 2023 – $7,975, fiscal 2024 – $7,975, fiscal 2025 – $7,950, and fiscal 2026 – $7,300.
 
11.
Bank Cred
i
t Arrangements
In anticipation of the acquisition of the business of GenePOC, on May 24, 2019
,
the Company entered into a credit facility agreement with a commercial bank. The Company amended the credit facility agreement on February 19, 2020
,
in anticipation of the Company’s acquisition of Exalenz (see Note 6). The credit facility expires in May 2024, and as amended makes available to the Company a revolving credit facility in an aggregate principal amount not to exceed $160,000 (originally $125,000), with outstanding principal amounts bearing interest at a fluctuating rate tied to, at the Company’s option, either the federal funds rate or LIBOR, resulting in an effective interest rate of 2.60% and 4.15% on the revolving credit facility during the
three months
ended March 31, 2021 and 2020,
 respectively,
 and 
 2.57% and 4.04% during the six months ended March 31, 2021 and 2020, respectively. Since entering into the revolving credit facility, three draws totaling $125,824 have been made on the credit facility, with principal repayments in January 2020, September 2020, December 2020 and February 2021 of $27,000, $30,000, $10,000 and $8,824, respectively, resulting in an outstanding principal balance of $50,000 and $68,824 at March 31, 2021 and September 30, 2020, respectively. The proceeds from these draws were used to: (i) repay and settle the outstanding principal and interest due on our previously existing $60,000 five-year term loan; and (ii) along with cash
on-hand,
fund the Exalenz and GenePOC acquisitions. In light of the interest being determined on a variable rate basis, the fair value of the borrowings under the revolving credit facility at both March 31, 2021 and September 30,
2020,
approximates the current carrying value reflected in the Condensed Consolidated Balance Sheets.
The revolving credit facility is collateralized by the business assets of the Company’s U.S. subsidiaries and requires compliance with financial covenants that limit the amount of debt obligations and require a minimum level of coverage of fixed charges, as defined in the revolving credit facility agreement. As of March 31, 2021, the Company was in compliance with all covenants.
 
Page 16

Table of Contents
12.
Contingent Obligations and
Non-Current
Liabilities
In connection with the acquisition of Exalenz (see Note 6), the Company assumed several Israeli government grant obligations. The repayment of the grants, along with interest incurred at varying stated fixed rates based on LIBOR at the time each grant was received (ranging from 0.58% to 6.60%), is not dictated by an established repayment schedule. Rather, the grants and related interest are required to be repaid using 3% of the revenues generated from the sales of BreathID products, with the timing of repayment contingent upon the level and timing of such revenues. In addition, the grants have no collateral or financial covenant provisions generally associated with traditional borrowing instruments. These obligation amounts total $11,145 and $11,124 as of March 31, 2021 and September 30, 2020, respectively, and are reflected in the Condensed Consolidated Balance Sheets as follows:
 
 
  
March 31,

2021
 
  
September 30,
2020
 
Current liabilities
  
$
608
 
  
$
600
 
Non-current
liabilities
  
$
10,537
 
  
$
10,524
 
Additionally, the Company has provided certain post-employment benefits to its former Chief Executive Officer, and these obligations total $1,748 and $1,840 at March 31, 2021 and September 30, 2020, respectively. In addition, the Company is required by the governments of certain foreign countries in which we operate to maintain a level of accrual
s
 for potential future severance indemnity. These accruals total $853 and $814 at March 31, 2021 and September 30, 2020, respectively.
 
13.
National Institutes of Health Contracts
In December 2020, the Company entered into a
sub-award
grant contract with the University of Massachusetts Medical School as part of the National Institutes of Health Rapid Acceleration of Diagnostics (“RADx”) initiative to support the Company’s research and development of its diagnostic test for the
SARS-CoV-2
antigen. During the three and six months ended March 31, 2021, the Company
recorded
$200 and $1,000, respectively, under the grant contract for reimbursement of elig
i
ble research and development expenditures. These amounts are included within other income (expense) in the Condensed Consolidated Statements of Operations.
Effective February 1, 2021, the Company entered into a second grant contract under the RADx initiative, the purpose of which is to support the Company’s manufacturing production
scale-up
and expansion to meet the demand for
COVID-19
testing. The contract is a twelve-month term service contract, with payment of up to $5,500 being made based on the Company achieving key milestones related to increasing its capacity to produce
COVID-19
tests. No amounts related to this contract are reflected within the Condensed Consolidated Financial Statements.
 
14.
Reportable Segment and Major Customers Information
During the three and six months ended March 31, 2021, products related to
COVID-19
accounted for approximately 58% and 64%,
 respectively, of Life Science segment revenues, and 37% and 41%, respectively, of consolidated revenues. In addition, during the three and six months ended March 31, 2021 and 2020, no individual Diagnostics or Life Science segment customer accounted for
10% or more of consolidated  revenues.
 
Page 17

Table of Contents
Individual Diagnostics or Life Science segment customers, including their affiliates, comprising 10% or more of reportable segment revenues during any of the three- and
six-month
periods ended March 31, 2
0
21 and 2020 were as follows:
 
 
 
    
Three Months
Ended March 31,
   
Six Months
Ended March 31,
 
 
  
 2021 
   
2020 
   
 2021 
   
2020 
 
Diagnostics
                                
Customer A
  
  10     9     11     11
Customer B
     10     13     10     14
Customer C
     11     5     11     5
    
 
 
   
 
 
   
 
 
   
 
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Life Science
                                
Customer D
     9     13     6     11
Customer E
     9     5     14     4
    
 
 
   
 
 
   
 
 
   
 
 
 
In addition, during both the three and six mo
n
ths ended March 31, 2021, the Life Science segment’s ten largest customers, including their affiliates, accounted for approximately 48% and 30% of Life Science segment revenues and consolidated revenues, respectively.
Two Life Science segment customers accounted for the following significant percentages of consolidated accounts receivable:
 
 
 
 
 
March 31,
2021
 
 
 
September 30,
2020
 
Customer D
    10     8
Customer E
    3     15
    
 
 
   
 
 
 
 
 
Page 18

Table of Contents
Reportable segment information for the inte
r
im periods is as follows:
 
    
Diagnostics
    
Life Science
    
Corporate
(1)
   
Eliminations
(2)
   
Total
 
Three Months Ended March 31, 2021
 
Net revenues -
                                          
Third-party
   $ 31,949      $ 53,315      $ —       $ —       $ 85,264  
Inter-segment
     116        91        —         (207     —    
Operating income
     2,421        36,089        (4,325     16       34,201  
Goodwill (March 31, 2021)
     95,283        20,013        —         —         115,296  
Other intangible assets, net (March 31, 2021)
     78,832        2        —         —         78,834  
Total assets (March 31, 2021)
     313,271        125,947        —         (49     439,169  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Three Months Ended March 31, 2020
                                          
Net revenues -
                                          
Third-party
   $ 34,942      $ 22,354      $ —       $ —       $ 57,296  
Inter-segment
     81        55        —         (136     —    
Operating income
     4,729        9,931        (2,896     27       11,791  
Goodwill (September 30, 2020)
     94,855        19,331        —         —         114,186  
Other intangible assets, net (September 30, 2020)
     83,179        18        —         —         83,197  
Total assets (September 30, 2020)
     306,812        98,483        —         (34     405,261  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Six Months Ended March 31, 2021
 
Net revenues -
                                          
Third-party
   $ 62,270      $ 115,911      $ —       $ —       $ 178,181  
Inter-segment
     185        109        —         (294     —    
Operating income
     1,239        75,886        (8,288     28       68,865  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Six Months Ended March 31, 2020
 
Net revenues -
                                          
Third-party
   $ 69,733      $ 34,984      $ —       $ —       $ 104,717  
Inter-segment
     178        120        —         (298     —    
Operating income
     9,870        12,259        (4,983     39       17,185  
 
(1)
 
Includes selected legal costs of 
$1,030 and $2,257
in the three and six months ended March 31, 2021, respectively, and restructuring costs and selected legal costs of
$685 and $1,055
in the three and six months ended March 31, 2020, respectively.
(2)
 
Eliminations consist of inter-segment transactions.
 
Page 19

Table of Contents
A reconciliation of reportable segment operating income to consolidated earnings before income taxes for the interim periods is as follows:
 
    
Three Months Ended
    
Six Months Ended
 
    
March 31,
    
 March 31,
 
    
2021
    
2020
    
2021
    
2020
 
Operating income:
                                   
Diagnostics segment
   $ 2,421      $ 4,729      $ 1,239      $ 9,870  
Life Science segment
     36,089        9,931        75,886        12,259  
Eliminations
     16        27        28        39  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total operating income
     38,526        14,687        77,153        22,168  
Corporate operating expenses
     (4,325      (2,896      (8,288      (4,983
Interest income
     6        23        15        134  
Interest expense
     (472      (532      (1,006      (1,299
RADx initiative grant income
     200        —          1,000        —    
Other, net
     (883      1,365        (1,574      653  
    
 
 
    
 
 
    
 
 
    
 
 
 
Consolidated earnings before income taxes
   $ 33,052      $ 12,647      $ 67,300      $ 16,673  
    
 
 
    
 
 
    
 
 
    
 
 
 
Transactions betw
e
en reportable segments are accounted for at established intercompany prices for internal and management purposes, with all intercompany amounts eliminated in consolidation
.
 
15.    
Income
Taxes
The effective rate for inco
m
e taxes was 20% and 21%
 
for the three and six months ended March 31, 2021, respectively, and 
26% and 27%
 for the three and six months ended March 31, 2020. The lower fiscal 2021 effective tax rates result primarily from the combined effects of the following: (i) a significantly higher percentage of earnings before income taxes being generated in foreign jurisdictions with tax rates lower than the U.S., particularly the United Kingdom (“U.K.”); (ii) the non-deductibility of a significant portion of the acquisition-related costs related to Exalenz; and (iii) the tax impact of restricted share unit lapses and stock option exercises occurring on dates when the share price of Company stock was significantly higher than the share price on the date such equity awards were granted. 
 
16.    
Litigation
Matters
On April 17, 2018,
Magellan r
e
ceived a subpoena from the U.S. Department of Justice (“DOJ”) regarding its LeadCare® product line. The subpoena outlines documents to be produced, and the Company is cooperating with the DOJ in this matter. The Company maintains rigorous policies and procedures to promote compliance with applicable regulatory agencies and requirements and is working with the DOJ to promptly respond to the subpoena, including responding to additional information requests. The Company has executed tolling agreements to extend the statute of limitations. The Company cannot predict when the investigation will be resolved, the outcome of the investigation, or its potential impact on the Company. Approximately
 
$1,030 and $725
of expense for attorneys’ fees related to this matter is included within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, respectively, and approximately 
$2,257 and $1,005
for the six months ended March 31, 2021 and 2020, respectively.
 
Page 20

Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Refer to “Forward-Looking Statements” following the Table of Contents in front of this Form
10-Q.
In the discussion that follows, all dollar amounts are in thousands (both tables and text), except per share data.
The purpose of Management’s Discussion and Analysis is to provide an understanding of the financial condition, changes in financial condition and results of operations of Meridian Bioscience, Inc. (“Meridian”, the “Company”, “We”). This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes. It should be noted that the terms revenue and/or revenues are utilized throughout the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) to indicate net revenue and/or net revenues. In addition, throughout the MD&A, we refer to certain product tradenames and trademarks, which are protected under applicable intellectual property laws and are our property. Solely for convenience, these tradenames and trademarks are referred to without the
®
or
symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent of the law, our rights to these tradenames and trademarks.
Reportable Segments
Our reportable segments are Diagnostics and Life Science. The Diagnostics segment consists of manufacturing operations for infectious disease products in Cincinnati, Ohio; Quebec City, Canada; and Modi’in, Israel; and manufacturing operations for blood chemistry products in Billerica, Massachusetts (near Boston). These diagnostic test products are sold and distributed in the countries comprising North and Latin America (the “Americas”); Europe, Middle East and Africa (“EMEA”); and other countries outside of the Americas and EMEA (rest of the world, or “ROW”). The Life Science segment consists of manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; and Luckenwalde, Germany, and the sale and distribution of bulk antigens, antibodies, immunoassay blocking reagents, various Polymerase Chain Reaction (“PCR”) master mixes, and bioresearch reagents domestically and abroad, including a sales and business development facility, with outsourced distribution capabilities, in Beijing, China to further pursue growing revenue opportunities in Asia.
Impact of
COVID-19
Pandemic
In December 2019, the
SARS-CoV-2
virus emerged in Wuhan, China and spread to other parts of the world. In March 2020, the World Health Organization (“WHO”) designated
COVID-19
(the disease caused by
SARS-CoV-2)
a global pandemic. In April 2021, the United States (“U.S.”) Department of Health and Human Services extended the public health emergency declaration for
COVID-19.
During the past year, governments around the world have implemented lockdown and
shelter-in-place
orders, requiring many
non-essential
businesses to shut down operations, many of which remain in effect as of the date of this filing. Our business, however, was deemed “essential” and we have continued to operate, manufacture and distribute products to customers globally. We have developed a comprehensive plan that enables us to maintain operational continuity with an emphasis on manufacturing, product distribution and new product development during this crisis. We continually assess
COVID-19
related developments and adjust risk mitigation planning and business continuity activities in real-time as needed.
The
COVID-19
pandemic has had both positive and negative effects on our businesses. Our Life Science segment’s products were well positioned to respond to
in-vitro
device (“IVD”) manufacturers’ needs for reagents for molecular, rapid antigen and serology tests. Consequently, our Life Science segment grew its revenues over 100% in fiscal 2020 and delivered record operating income and margin, demonstrating what this segment could achieve at a much larger scale. This higher-than-historical level of growth continued into the first half of fiscal 2021 for the Life Science segment, with revenue for the three and six months ended March 31, 2021 exceeding the comparable fiscal 2020 periods by approximately 140% and 230%, respectively. Our Diagnostics segment, on the other hand, reported decreased year-over-year revenues in the both the first and second quarters of fiscal 2021, a continuation of the trends experienced in the third and fourth quarters of fiscal 2020, as health systems focus on
SARS-CoV-2
testing over traditional infectious disease and blood-chemistry testing. Following signs of a recovery in our Diagnostics segment late in fiscal 2020, as evidenced by a 38% sequential quarter increase in the fourth quarter of fiscal 2020, and which continued throughout the early part of the first quarter of fiscal 2021, the recent volatility in
COVID-19
infection rates has resulted in sequential quarter growth in Diagnostic segment revenues of only 2% and 5% in the first and second quarters of fiscal 2021, respectively.
 
Page 21

Table of Contents
Employee Safety
We have implemented work-from-home processes on a
site-by-site
basis for employees whose
on-site
presence is designated as
non-essential
to the ongoing functions of our manufacturing sites, distribution centers, and new product development facilities. We continue to utilize this work-from-home process as needed on a
site-by-site
basis. We also implemented enhanced cleaning and sanitizing procedures and provided additional personal hygiene supplies at all our sites. We implemented policies for employees to adhere to the Centers for Disease Control and Prevention (“CDC”) guidelines on social distancing, and similar guidelines by authorities outside the U.S., and any employees experiencing any symptoms of
COVID-19
are required to stay home and encouraged to seek medical attention. Any employee who tests positive for
COVID-19
is required to quarantine and is not allowed to return to our facilities without a physician’s release, including a negative active infection test result. Access to our facilities by outside persons not critical to continuing our operations continues to be limited. To date, we have been able to manufacture and distribute products globally, and all our sites continue to operate with little, if any, impact on shipments to customers to date. As the pandemic continues, along with continuing governmental restrictions which vary by locale and jurisdiction, there is an increased risk of employee absenteeism, which could materially impact our operations at one or more sites. To date, the steps we have taken, including our work-from-home processes, have not materially impacted the Company’s financial reporting systems, internal controls over financial reporting or disclosure controls.
Supply Chains
Supply chains supporting our products remain intact, providing access to sufficient inventory of the key materials needed for manufacturing. To date, delays and allocations for certain raw materials of higher demand have been limited and have not had a material impact on our results of operations. We regularly communicate with suppliers, third-party partners, customers, health care providers and government officials in order to respond rapidly to issues as they arise. The longer the current situation continues, it is more likely that we may experience some sort of interruption to our supply chains, and such an interruption could materially affect our ability to timely manufacture and distribute our products and unfavorably impact our results of operations.
Clinical Trial Delays
As a result of the pandemic, certain of our clinical trials which were underway or scheduled to begin were temporarily placed on hold. While we are continuing to see
“re-starts”
for certain clinical trials, the trials are being conducted at a slower pace than normal, as the prevalence of certain infectious diseases (e.g., bacterial gastrointestinal) has been much lower than normal during the pandemic. Such delays continue to impact our timing for filing applications for product clearances with the FDA, as well as related timing of FDA clearances of such filings. Additionally, the ongoing
COVID-19
pandemic has and could continue to slow down our efforts to expand our product portfolio through acquisitions and distribution opportunities, impacting the speed with which we are able to bring additional products to market.
Product Demand
Our Life Science segment manufactures, markets and sells a number of molecular and immunological reagents to IVD customers, including those who are making both molecular and immunoassay
COVID-19
tests. Since late in the second quarter of fiscal 2020, we have experienced unprecedented demand for certain of our molecular reagents (e.g., ribonucleic acid (“RNA”) master mixes and nucleotides). For the second half of our fiscal 2021, we expect demand for reagent products used in
COVID-19
tests will be lower than we experienced in our second quarter of fiscal 2021, as health care systems transition to more asymptomatic testing versus the predominant symptomatic testing we have seen over the last year. However, this varies by country based on their individual
COVID-19
case statistics, infection rates and vaccine programs. We believe that our reagent products for
COVID-19
have applications in many alternative,
non-hospital-based
channels (e.g., airports, schools, etc.). Our products are used in over 100 approved
COVID-19
related assays around the world.
COVID-19
related reagent revenues totaled approximately $31,000 and $74,000 in the three and six months ended March 31, 2021, respectively, following approximately $71,500 during full year fiscal 2020.
Our Diagnostics segment manufactures, markets and sells a number of molecular, immunoassay, blood chemistry and urea breath tests
for various infectious diseases and blood-lead levels. Sales volumes for a number of these assays have been adversely affected by the
COVID-19
pandemic over the past year, as such assays are often used in
non-critical
care settings. The
COVID-19
pandemic also has continued to affect our instrument placements. The launch of our Curian platform has been slower than expected, as diagnostic testing sites have turned their attention to critical care testing. On the other hand, as a result of announcing the development of a
SARS-CoV-2
assay (the “Revogene
 
Page 22

Table of Contents
COVID-19
assay”) and subsequently submitting an application for the test to the FDA on December 7, 2020 under its emergency use authorization (“EUA”) program, beginning in our fiscal 2020 fourth quarter and continuing through the first quarter of fiscal 2021, we experienced an acceleration in Revogene instrument orders and placements. However, based upon a
mid-February
2021 discussion with the FDA related to certain information contained within the EUA application, on February 23, 2021, we announced our withdrawal of the EUA application and our intention to conduct a
Limit-of-Detection
bridging study and an updated clinical validation study, with the intention of
re-submitting
an EUA application for the Revogene
COVID-19
assay, which we expect to occur in June 2021. We will not resume shipments of the Revogene
COVID-19
assay until FDA EUA clearance. Understandably, these events resulted in a slow-down in orders for the Revogene system that were related to the anticipated COVID-19 assay. We believe this slow-down to be temporary, as potential customers take a “wait and see” approach while we work toward
re-submission
of our EUA application. In response to the high level of demand we have experienced since announcing development of the test, we are in the process of increasing our capacity to produce these tests, as well as other tests on the Revogene system. Specifically, we are: (i) adding a second production line at our Quebec City, Canada manufacturing facility; and (ii) installing two additional production lines in a leased facility near our corporate headquarters in Cincinnati, Ohio. It is expected that these expansion efforts will be completed during fiscal 2021 at a total cost of approximately $18,000, which is expected to be partially offset by the $5,500 RADx grant entered into on February 1, 2021 (see Note 13 of the Condensed Consolidated Financial Statements).
Critical Accounting Estimates
For the three and six months ended March 31, 2021, there were no significant changes to our critical accounting estimates, as outlined in our Annual Report on Form
10-K
as of and for the year ended September 30, 2020.
Impact of Brexit
The United Kingdom (“U.K.”) left the European Union (“EU”) on January 31, 2020. While all EU rules and laws continued to apply to the U.K. through the transition period, which ended December 31, 2020, the U.K. and the EU reached a free trade agreement on December 24, 2020, which was ratified on April 28, 2021 and goes into effect on May 1, 2021. The agreement includes regulatory and customs cooperation mechanisms, as well as provisions supporting open and fair competition. Under the trade agreement, the U.K. is free to set its own trade policy and can negotiate with other countries that do not currently have free trade deals with the EU. Although the full impact of the trade agreement is uncertain, it is possible that the recent changes to the trading relationship between the U.K. and the EU due to the trade agreement could result in increased cost of goods imported into and exported from the U.K., which may decrease the profitability of our operations. Additional currency volatility could drive a weaker British pound, which could increase the cost of goods imported into the U.K. and may decrease the profitability of our operations. A weaker British pound versus the U.S. dollar may also cause local currency results of our operations to be translated into fewer U.S. dollars during a reporting period. Given the lack of comparable precedent, it is unclear what financial, trade, regulatory and legal implications the trade agreement will have on our business; however, Brexit and its related effects could potentially have an adverse impact on our financial position and results of operations.
The U.K.’s withdrawal from the EU could also adversely impact the operations of our vendors and of our other partners. Our management team has evaluated a range of possible outcomes, identified areas of concerns, and implemented strategies to help mitigate these concern. It is possible that these strategies may not be adequate to mitigate any adverse impacts of Brexit, and that these impacts could further adversely affect our business and results of operations.
RESULTS OF OPERATIONS
Three and Six Months Ended March 31, 2021
Net earnings for the second quarter of fiscal 2021 increased 181% to $26,302, or $0.60 per diluted share, from net earnings for the second quarter of fiscal 2020 of $9,359, or $0.22 per diluted share. Net earnings for the
six-month
period ended March 31, 2021 increased 336% to $53,081, or $1.21 per diluted share, from net earnings for the comparable fiscal 2020 period of $12,186, or $0.28 per diluted share. The level of net earnings in the second quarter (“QTD”) and first six months (“YTD”) of fiscal 2021 were affected by several factors, including most notably the combined effects of the following (amounts presented on a
pre-tax
basis) and a lower effective tax rate resulting in large part from a greater percentage of
pre-tax
earnings being generated in lower tax jurisdictions:
 
Page 23

Table of Contents
  (i)
significantly higher revenue in the Life Science segment, due to supplying key reagents to diagnostic test manufacturers for use in
COVID-19
related PCR and immunoassay tests (up $30,961 QTD; up $80,927 YTD);
 
  (ii)
higher research and development spending in the Diagnostics segment (up $745 QTD; up $1,640 YTD) under new product development programs;
 
  (iii)
increased intangible asset amortization, primarily resulting from intangible amortization related to the acquisition of Exalenz in April 2020 (up $491 QTD; up $990 YTD);
 
  (iv)
decreased acquisition-related costs, as compared to those related to the Exalenz transaction in April 2020 (down $1,787 both QTD and YTD);
 
  (v)
increased legal expenses related primarily to the DOJ matter at the Billerica, Massachusetts facility (up $295 QTD; up $1,202 YTD);
 
  (vi)
the fiscal 2021 periods including grant income related to the National Institutes of Health RADx initiative ($200 QTD; $1,000 YTD) (see Note 13 of the Condensed Consolidated Financial Statements); and
 
  (vii)
the change from net currency gains in the fiscal 2020 periods to net currency losses in the fiscal 2021 periods ($2,286 change QTD; $2,250 change YTD), resulting primarily from movement in the British pound exchange rate.
Consolidated revenues for the second quarter of fiscal 2021 totaled $85,264, an increase of 49% compared to the second quarter of fiscal 2020 (45% increase on a constant-currency basis).
Revenues from the Diagnostics segment for the second quarter of fiscal 2021 decreased 9% compared to the second quarter of fiscal 2020 (10% decrease on a constant-currency basis), comprised of a 39% decrease in molecular assay products and a 1% decrease in
non-molecular
assay products. Reflecting the factors noted in the Product Demand section above, our Revogene system installed based totaled 325 at March 31, 2021, as compared to 288 at December 31, 2020.
With a 227% increase in revenues from molecular reagents products and a 44% increase in revenues from immunological reagents products, revenues for our Life Science segment increased 139% during the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020. On a constant-currency basis, revenues for the Life Science segment increased 129%. Life Science segment revenues reflect a significant increase in the sales of key molecular components such as RNA master mixes and deoxyribonucleotide triphosphates (“dNTPs”) to diagnostic test manufacturers for use in
COVID-19
related PCR tests. Also contributing to the increased revenue levels during the second quarter of fiscal 2021 were sales of monoclonal antibody pairs used in
COVID-19
antigen tests and, to a lesser degree, recombinant antigens used in
COVID-19
antibody tests. In addition, our core Life Science segment business (other than
COVID-19
contributions) experienced growth of approximately $5,000, or approximately 32%, compared to the second quarter of 2020. This growth, including an approximate 83% increase in revenues from sales into China, resulted in large part from obtaining business from
COVID-19
customers who are now using our products for other
non-COVID
related purposes, as well as a rebound in volumes in core immunological products.
Consolidated revenues increased 70% to $178,181 for the first six months of fiscal 2021 compared to the same period of the prior year (67% increase on a constant-currency basis). On a reportable segment basis, Diagnostics segment revenues decreased 11% (12% decrease on a constant-currency basis) and Life Science segment revenues increased 231% (222% increase on a constant-currency basis). The drivers of the fiscal
year-to-date
revenue levels are consistent with the drivers that resulted in the quarterly revenue levels, as detailed above and within the Revenue Overview section below.
Lead Testing Matters
On April 17, 2018, Magellan received a subpoena from the U.S. Department of Justice (“DOJ”) regarding its LeadCare product line, which outlined documents to be produced. Since that time, we have received and responded to additional related information requests and executed tolling agreements to extend the statute of limitations. In March and April 2021, DOJ issued two subpoenas calling for witnesses to testify before a federal grand jury related to this matter. The March 2021 subpoena was issued to a former employee of Magellan, and the April 2021 subpoena was issued to a current employee of Magellan. At this time, we do not know the outcome of this matter, however, we continue to cooperate with the DOJ.
 
Page 24

Table of Contents
Magellan submitted 510(k) applications in December 2018, seeking to reinstate venous blood sample-types for its LeadCare II, LeadCare Plus and LeadCare Ultra testing systems. In the second fiscal quarter of 2019 the FDA informed Magellan that each of these 510(k) applications had been put on Additional Information hold. On July 15, 2019, we provided responses to the FDA’s requests for Additional Information. These 510(k) applications have since expired and are no longer under FDA review. Further, while Magellan’s LeadCare testing systems remain cleared for marketing by the FDA and permitted for use with capillary blood samples, the FDA advised that it has commissioned a third-party study of Magellan’s LeadCare testing systems using both venous and capillary blood samples. According to the FDA, the results of the field study will be used in conjunction with other information to determine whether further action by the FDA or the CDC is necessary to protect the public health. Meridian intends to fully cooperate with the FDA as the third-party study is completed.
During October 2019, the FDA performed a
follow-up
inspection of Magellan’s manufacturing facility. The FDA issued five Form FDA 483 observations. On March 18, 2020, we participated in a regulatory meeting with the FDA at the FDA’s request to further discuss the Form FDA 483 observations and our remediation efforts. Over the last year, we have submitted a number of written responses to the FDA regarding the five Form FDA 483 observations issued in the October 2019 inspection, and have worked diligently to execute a remediation plan. During October 2020, the FDA issued Establishment Inspection Reports which closed out the inspections from June 2017 and October 2019 under 21 C.F.R.20.64 (d) (3). The Warning Letter issued in October 2017 remains outstanding, pending a future FDA inspection. While we remain committed to strengthening Magellan’s quality system and ensuring that all aspects of the system are in full compliance, we can provide no assurance that our remediation efforts will be successful to a degree acceptable by the FDA.
In the course of remediation, we may encounter additional matters that warrant notifications to the FDA and/or customers regarding the use of our products. At this time, we do not believe that any such notifications would impact the ability to use the LeadCare systems with capillary blood samples. While we remain confident in the performance of the Magellan LeadCare testing systems using capillary samples, we do not expect that the FDA will reinstate our venous blood claims. We can provide no assurance that the ongoing investigation and study of the DOJ and FDA, respectively, or future exercise of their respective enforcement, regulatory, discretionary or other powers will not result in findings or alleged violations of federal laws that could lead to enforcement actions, proceedings or litigation, and/or the imposition of damages, fines, penalties, restitution, other monetary liabilities, sanctions, injunctions, settlements or changes to our business practices, product offerings or operations that could have a material adverse effect on our business, financial condition or results of operations; or eliminate altogether our ability to operate our lead testing business on terms substantially similar to those on which we currently operate.
REVENUE OVERVIEW
Below are analyses of the Company’s revenues, provided for each of the following:
 
  -
By Reportable Segment & Geographic Region
 
  -
By Product Platform/Type
Revenue Overview- By Reportable Segment & Geographic Region
Revenues for the Diagnostics segment, in the normal course of business, may be affected from quarter to quarter by buying patterns of major distributors, seasonality and severity of seasonal diseases and outbreaks (including the
COVID-19
pandemic), and foreign currency exchange rates. Revenues for the Life Science segment, in the normal course of business, may be affected from quarter to quarter by buying patterns of major IVD manufacturing customers, severity of disease outbreaks and foreign currency exchange rates. The severity of the
COVID-19
pandemic contributed approximately $71,500 of new revenue for our Life Science segment during fiscal 2020, and approximately $31,000 and $74,000 during the second quarter and first six months of fiscal 2021, respectively.
See the “Revenue Disaggregation” section of Note 4,
“Revenue Recognition”
of the Condensed Consolidated Financial Statements for detailed revenue disaggregation information.
 
Page 25

Table of Contents
Following is a discussion of the revenues generated by these product platforms/types and/or disease states:
Diagnostics Segment Products
The acquisitions of the Revogene molecular diagnostics platform and the BreathID breath test system, the development of the Curian immunoassay platform, and the expansion of the related assay-menu for each of these platforms are important steps in addressing competitive pressures in our gastrointestinal and respiratory illness assay families. We continue to convert our existing Alethia install base to the Revogene platform for the
C. difficile
, Group A
Streptococcus
(“Group A Strep”) and Group B
Streptococcus
(“Group B Strep”) assays. Reflecting the factors noted in the Product Demand section above, our Revogene system installed based totaled 325 at March 31, 2021, as compared to 288 at December 31, 2020.
In March 2020, we received clearance from the FDA for the Curian immunoassay diagnostics instrument and its first assay, a test for
H. pylori
antigen in stool. We began clinical trials for the Curian
C. difficile
Common Antigen and Toxins A and B test during the second quarter of fiscal 2021 and submitted a 510(k)
pre-market
notification to the FDA for marketing clearance of Curian Campylobacter on March 31, 2021. We believe the advantages of the Curian analyzer will help protect our existing rapid test accounts, and in the case of the
C. difficile
test, provide meaningful revenue growth opportunities.
Gastrointestinal, Respiratory Illness and Blood Chemistry Assays
As previously noted, the ongoing
COVID-19
pandemic has had a negative impact on revenue levels from sales of our gastrointestinal, respiratory illness and blood chemistry products. Comprised of tests for Group A Strep, Mycoplasma pneumonia, Influenza, and Pertussis, among others, the respiratory illness category in particular continues to experience significantly lower sales activity relative to the prior year, with revenues from sales of such products decreasing 66% and 54% during the second quarter and first six months of fiscal 2021, respectively. However, during the second quarter of fiscal 2021, we began to experience an increase in sales activity for gastrointestinal and blood chemistry products, with revenues from each of these product categories increasing as follows compared to the second quarter of fiscal 2020: (i) gastrointestinal products, which include tests for
C. difficile
,
H. pylori
and certain foodborne pathogens, among others, increased 12% to $15,666; and (ii) blood chemistry products, which test for elevated levels of lead in blood, increased 4% to $4,358. During the first six months of fiscal 2021, gastrointestinal product revenues increased 4% over the prior year period to $31,118, and blood chemistry product revenues decreased 4% to $8,753. The increases in the
H. pylori
component of our gastrointestinal family of products include contributions from the BreathID urea breath platform acquired in the Exalenz acquisition on April 30, 2020.
In order to combat certain of the pricing and volume pressures we face within the gastrointestinal product category, we have executed on a number of measures including: (i) entering into a strategic collaboration with DiaSorin to sell
H. pylori
tests; (ii) executing supply agreements with our two largest reference laboratory customers for
H. pylori
tests to secure volume, albeit at lower selling prices; and (iii) upon FDA clearance in March 2020, launching Curian HpSA, our first assay on the Curian platform, which we expect will help protect our existing customer base using lateral flow tests. We also expect the acquisition of the Exalenz BreathID platform to combat competitive pressures, as we believe that we are now the only company with
FDA-cleared,
non-invasive
assays for both stool antigen and urea breath samples, providing physicians a choice in test format from a single supplier. We are unable to provide assurances that we will be successful with any strategy or that any strategy will prevent an adverse effect on our future results of operations and liquidity, including revenues and gross profit.
Life Science Segment Products
During the second quarter of fiscal 2021, revenues from our Life Science segment increased 139%, with revenues from molecular reagent sales increasing 227% from the comparable fiscal 2020 quarter and revenues from immunological reagent sales increasing 44%. Life Science segment revenues increased 231% for the first six months of fiscal 2021, reflecting a 396% increase from molecular reagent sales and a 78% increase in immunological reagent sales. Our Life Science segment’s revenue performance was nominally impacted by the movement in currency exchange rates since the fiscal 2020 reporting periods, with revenues increasing 129% and 222% on a constant-currency basis over the second quarter and first six months of fiscal 2020, respectively. The increase in revenues was primarily attributable to sales of key molecular components such as RNA master mixes and dNTPs to diagnostic test manufacturers for use in
COVID-19
related PCR tests, as well as sales of
 
Page 26

Table of Contents
monoclonal antibody pairs used in antigen tests and to a lesser degree, recombinant antigens used in
COVID-19
antibody tests. COVID-related reagent revenues totaled approximately $31,000 and $74,000 during the second quarter and first six months of fiscal 2021, respectively.
During the second quarter of fiscal 2021, revenue from our core Life Science segment business (other than
COVID-19
contributions) grew approximately 32% over the second quarter of fiscal 2020 to approximately $22,000. During the first six months of fiscal 2021, such revenue grew approximately 42% over the comparable fiscal 2020 period to approximately $41,600. This growth, including an approximate 83% and 85% increase in revenue from sales into China during the quarter and fiscal
year-to-date
period, respectively, resulted in large part from obtaining business from
COVID-19
customers who are now using our products for
non-COVID
related purposes, as well as a rebound in volumes of core immunological product sales.
Significant Customers
Revenue concentrations related to certain customers within our Diagnostics and Life Science segments are set forth in Note 14 of the Condensed Consolidated Financial Statements.
Gross Profit
 
    
Three Months Ended March 31,
   
Six Months Ended March 31,
 
    
2021
   
2020
   
Change
   
2021
   
2020
   
Change
 
Gross profit
   $ 57,772   $ 34,546        67   $ 119,320     $ 62,197     92
Gross profit margin
     68     60     8 points       67     59     8 points  
The increase in gross profit margin during the second quarter and first six months of fiscal 2021 results primarily from the overall shift in sales mix the Company has experienced, largely as a result of the
COVID-19
pandemic. During the second quarter and first six months of fiscal 2021, approximately 44% and 47%, respectively, of consolidated revenues relate to sales of molecular reagent products by our Life Science segment, which are some of our higher margin products, as compared to sales of such products comprising approximately 20% and 16% of consolidated revenues during the second quarter and first six months of fiscal 2020, respectively.
Operating Expenses – Segment Detail
 
    
Three Months Ended March 31,
 
    
Research &
Development
    
Selling &
Marketing
    
General &
Administrative
    
Other
   
Total Operating
Expenses
 
Fiscal 2020:
             
Diagnostics
   $ 4,733    $ 5,401    $ 5,645    $ (505   $ 15,274
Life Science
     582      1,128      2,772      103     4,585
Corporate
     —        —        2,211      685     2,896
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total Expenses (2020 Quarter)
   $ 5,315    $ 6,529    $ 10,628    $ 283   $ 22,755
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Fiscal 2021:
             
Diagnostics
   $ 5,478    $ 5,220    $ 6,553    $ (2,989   $ 14,262
Life Science
     587      1,320      3,077      —       4,984
Corporate
     —        —        3,295      1,030     4,325
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total Expenses (2021 Quarter)
   $ 6,065    $ 6,540    $ 12,925    $ (1,959   $ 23,571
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
Page 27

Table of Contents
    
Six Months Ended March 31,
 
    
Research &
Development
    
Selling &
Marketing
    
General &
Administrative
    
Other
   
Total Operating
Expenses
 
Fiscal 2020:
             
Diagnostics
   $ 8,908    $ 10,797    $ 10,574    $ 812   $ 31,091
Life Science
     1,170      2,460      5,110      198     8,938
Corporate
     —        —        3,928      1,055     4,983
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total Expenses (2020
Year-to-Date)
   $ 10,078    $ 13,257    $ 19,612    $ 2,065   $ 45,012
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Fiscal 2021:
             
Diagnostics
   $ 10,548    $ 10,948    $ 12,301    $ (1,942   $ 31,855
Life Science
     1,168      2,613      6,531      —       10,312
Corporate
     —        —        6,031      2,257     8,288
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total Expenses (2021
Year-to-Date)
   $ 11,716    $ 13,561    $ 24,863    $ 315   $ 50,455
  
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Operating Expenses – Comparisons to Prior Year Periods
 
    
Three Months Ended March 31,
 
    
Research &
Development
   
Selling &
Marketing
   
General &
Administrative
   
Other
   
Total Operating
Expenses
 
2020 Expenses
   $ 5,315   $ 6,529   $ 10,628   $ 283   $ 22,755
% of Revenues
     9     11     19     -     40
Fiscal 2021 Increases/(Decreases):
          
Diagnostics
     745     (181     908     (2,484     (1,012
Life Science
     5     192     305     (103     399
Corporate
     —       —       1,084     345     1,429
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
2021 Expenses
   $ 6,065   $ 6,540   $ 12,925   $ (1,959   $ 23,571
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
% of Revenues
     7     8     15     (2 )%      28
% Increase (Decrease)
     14     -     22     NMF       4
 
    
Six Months Ended March 31,
 
    
Research &
Development
   
Selling &
Marketing
   
General &
Administrative
   
Other
   
Total Operating
Expenses
 
2020 Expenses
   $ 10,078   $ 13,257   $ 19,612   $ 2,065     $ 45,012
% of Revenues
     10     13     19     2     43
Fiscal 2021 Increases/(Decreases):
          
Diagnostics
     1,640     151     1,727     (2,754     764
Life Science
     (2     153     1,421     (198     1,374
Corporate
     —       —       2,103       1,202       3,305
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
2021 Expenses
   $ 11,716   $ 13,561   $ 24,863     315     $ 50,455
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
% of Revenues
     7     8     14         28
% Increase (Decrease)
     16     2     27     (85 )%      12
The changes in operating expenses primarily reflect the combined effects of the following:
 
  1)
Increased Research & Development costs, primarily reflecting the development of the molecular
SARS-CoV-2
assay and molecular gastrointestinal and respiratory panel assays for the Diagnostics segment, and the addition of research and development expenses related to Exalenz, acquired in April 2020;
 
Page 28

Table of Contents
2)
Increased Selling & Marketing costs, primarily reflecting increased bonus and commissions paid early in fiscal 2021 to sustain the Diagnostics segment sales force during the downturn caused by the
COVID-19
pandemic, substantially offset by the effects of reduced travel from restrictions imposed during the pandemic and the effect such restrictions have had on general sales and marketing activities;
 
  3)
Increased General & Administrative costs, primarily reflecting the addition of expenses related to Exalenz, including purchase accounting amortization, along with additional investment in incentive compensation; and
 
  4)
Decreased Acquisition and Restructuring Costs and a decrease in the effect of changes in the fair value of the contingent consideration obligation for the GenePOC business, partially offset by increased Selected Legal Costs (reflected within “Other” in the above tables).
Operating Income
Compared to the prior year periods, operating income increased 190% to $34,201 for the second quarter of fiscal 2021 and increased 301% to $68,865 for the first six months of fiscal 2021, as a result of the factors discussed above.
Income Taxes
The effective rate for income taxes was 20% and 21% for the three and six months ended March 31, 2021, respectively, compared to 26% and 27% for the three and six months ended March 31, 2020, respectively. These lower fiscal 2021 effective tax rates result primarily from the combined effects of the following: (i) a significantly higher percentage of earnings before income taxes being generated in foreign jurisdictions with tax rates lower than the U.S., particularly the U.K.; (ii) the
non-deductibility
of a significant portion of the acquisition-related costs related to Exalenz; and (iii) the tax impact of restricted share unit lapses and stock option exercises occurring on dates when the share price of Company stock was significantly higher than the share price on the date such equity awards were granted.
Liquidity and Capital Resources
Liquidity
Our cash flow and financing requirements are determined by analyses of operating and capital spending budgets and debt service. We have historically maintained a credit facility to augment working capital requirements and to respond quickly to acquisition opportunities.
We have an investment policy that guides the holdings of our investment portfolio, which presently consists of bank savings accounts and institutional money market mutual funds. Our objectives in managing the investment portfolio are to: (i) preserve capital; (ii) provide sufficient liquidity to meet working capital requirements and fund strategic objectives such as acquisitions; and (iii) capture a market rate of return commensurate with market conditions and our policy’s investment eligibility criteria. As we look forward, we will continue to manage the holdings of our investment portfolio with preservation of capital being the primary objective.
We intend to continue to fund our working capital requirements from current cash flows from operating activities and cash on hand. If needed, we also have an additional source of liquidity through the amount remaining available on our $160,000 bank revolving credit facility, which totaled $110,000 as of March 31, 2021. Our liquidity needs may change if overall economic conditions worsen and/or liquidity and credit within the financial markets tightens for an extended period of time, and such conditions impact the collectability of our customer accounts receivable, impact credit terms with our vendors, or disrupt the supply of raw materials and services.
During the first six months of fiscal 2021, we generated cash flow from operations totaling $41,491. This level of cash resulted from the achievement of record fiscal
year-to-date
revenues, along with well-managed accounts receivable balances, including the requirement of advance payments in certain instances, as illustrated by an approximate 33% increase in second quarter fiscal 2021 consolidated revenues over the fourth quarter of fiscal 2020 and only an approximate 17% increase in accounts receivable balances since September 30, 2020.
 
Page 29

Table of Contents
Our levels of inventories increased approximately $11,000 to $72,534 between September 30, 2020 and March 31, 2021. This increase was largely attributable to inventory builds in our Life Science segment to protect against future supply interruptions and to meet
COVID-19
related demand. For our Diagnostics segment, we also have maintained inventory levels in anticipation of a return to
pre-pandemic
diagnostic testing activity. We are continuing to actively manage our inventory levels.
As of March 31, 2021, our cash and cash equivalents balance was $63,374 or $9,860 higher than at the end of fiscal 2020. As a result of the cash generated from operations during the second quarter and first six months of fiscal 2021, our balance of net debt (defined as bank debt, government grant obligations and total contingent obligations related to the acquisition of the GenePOC business, net of cash and cash equivalents
on-hand)
decreased approximately $35,600 to approximately $16,700 at March 31, 2021. Net cash flows from operating activities and cash on hand are anticipated to be adequate to fund working capital requirements, capital expenditures and debt service during the next twelve months.
Capital Resources
As described in Note 11,
“Bank Credit Arrangements”
of the Condensed Consolidated Financial Statements, the Company maintains a $160,000 revolving credit facility, which is secured by substantially all our U.S. assets and includes certain restrictive financial covenants. The Company also maintains a shelf registration statement on file with the SEC.
Our capital expenditures are estimated to range between approximately $18,000 and $24,000. Our Diagnostics segment capital expenditures could be as high as $21,000, depending upon the level and timing of the previously noted Revogene
COVID-19
assay production capacity expansion and
scale-up
efforts, and our Life Science segment capital expenditures could be as high as $3,000, reflecting manufacturing capacity expansion at various locations. Such expenditures may be funded with cash and cash equivalents on hand, operating cash flows and/or availability under the $160,000 revolving credit facility discussed above. In addition, a portion of the Diagnostics segment expansion may be funded by the previously noted $5,500 RADx grant entered into on February 1, 2021 (see Note 13 of the Condensed Consolidated Financial Statements).
We do not utilize any special-purpose financing vehicles or have any undisclosed
off-balance
sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company’s exposure to market risk since September 30, 2020.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules
13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2021. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2021.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rules
13a-15(f)
and
15d-15(f)
under the Exchange Act) during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Page 30

Table of Contents
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 16,
“Litigation Matters”
of the Condensed Consolidated Financial Statements.
ITEM 1A. RISK FACTORS
There have been no material changes from risk factors as previously disclosed in the Company’s fiscal 2020 Annual
Report on Form
10-K
in response to Item 1A to Part I of Form
10-K.
ITEM 6. EXHIBITS
The following exhibits are being filed or furnished as a part of this Quarterly Report on Form
10-Q:
 
10.1    Meridian Bioscience, Inc. 2021 Omnibus Award Plan (incorporated by reference to Exhibit 10 to the Company’s Registration Statement on Form S-8 (File No. 333-252538) filed with the Securities and Exchange Commission on January 29, 2021)
31.1    Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
31.2    Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
32    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS    Inline XBRL Instance Document
101.SCH    Inline XBRL Instance Extension Schema
101.CAL    Inline XBRL Instance Extension Calculation Linkbase
101.DEF    Inline XBRL Instance Extension Definition Linkbase
101.LAB    Inline XBRL Instance Extension Label Linkbase
101.PRE    Inline XBRL Instance Extension Presentation Linkbase
104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
Page 31

Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
     
MERIDIAN BIOSCIENCE, INC.
Date:
May 7, 2021
    By:  
/s/ Bryan T. Baldasare
      Bryan T. Baldasare
     
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
 
Page 32