# Azenta, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Azenta, Inc.](/companies/azta.md) (CIK 933974)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 16:24 ET
- Period: 2024-03-31
- Accession: 0001558370-24-007628
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/933974/000155837024007628/azta-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/933974/000155837024007628/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $159.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-10-01 to 2024-03-31 | $313.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $95.7m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-10-01 to 2024-03-31 | $188.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $63.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-10-01 to 2024-03-31 | $124.9m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $8.7m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-10-01 to 2024-03-31 | $17.2m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $78.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-10-01 to 2024-03-31 | $156.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$147.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-10-01 to 2024-03-31 | −$173.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$260.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-10-01 to 2024-03-31 | −$450.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$136.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-10-01 to 2024-03-31 | −$152.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$2.47 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-10-01 to 2024-03-31 | −$2.72 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$2.47 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-10-01 to 2024-03-31 | −$2.72 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 55,440,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-10-01 to 2024-03-31 | 56,078,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-10-01 to 2024-03-31 | $34.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-10-01 to 2024-03-31 | $18.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2023-10-01 to 2024-03-31 | $186.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $353.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $1.19bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $2.56bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $203.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $340.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $2.22bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 54,354 characters.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, 2023 (the “2023 Annual Report on Form 10-K”). In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below and in the forward-looking statements. Factors that could cause or contribute to these differences include, without limitation, those discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) as well as those described in the 2023 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Information Related to Forward-Looking Statements” and Part II, Item 1A “Risk Factors”. All dollar amounts in the below MD&A are presented in U.S. dollars, unless otherwise noted or the context otherwise provides.

Our MD&A is organized as follows:

- *Overview*. This section provides a general description of our business and operating segments as well as a brief discussion and overall analysis of our business and financial performance, including key developments affecting us during the three and six months ended March 31, 2024 and 2023.
- *Critical Accounting Policies and Estimates.* This section discusses accounting policies and estimates that require us to exercise subjective or complex judgments in their application. We believe these accounting policies and estimates are important to understanding the assumptions and judgments incorporated in our reported financial results.
- *Results of Operations.* This section provides an analysis of our financial results for the three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023.
- *Liquidity and Capital Resources.* This section provides an analysis of our liquidity and changes in cash flows as well as a discussion of contractual commitments.

### OVERVIEW

We are a leading global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry. We entered the life sciences market in 2011, leveraging our in-house precision automation and cryogenics capabilities that we were then applying in the semiconductor manufacturing market. This led us to develop solutions for automated ultra-cold storage. Since then, we have expanded our life sciences offerings through internal investments and through a series of acquisitions. We now support our customers from research and clinical development to commercialization with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the importance of sample integrity and offer a broad portfolio of products and services supporting customers at every stage of the life cycle of samples including procurement and sourcing, automated storage systems, genomic services and a multitude of sample consumables, informatics and data software, along with sample repository solutions. Our expertise, global footprint and leadership positions enable us to be a trusted global partner to pharmaceutical, biotechnology and life sciences research institutions. In total, we employ approximately 3,400 full-time employees, part-time employees and contingent workers worldwide as of March 31, 2024 and have sales in approximately 150 countries. We are headquartered in Burlington, Massachusetts and have operations in North America, Asia, and Europe.

Our portfolio includes product and service offerings developed by us internally, as well as acquired through acquisitions, designed to provide comprehensive capabilities to our customers, addressing their needs in sample exploration and management, automated storage, multiomics, and cold chain solutions. We continue to develop new product and service offerings and enhance existing and acquired offerings through the expertise of our research and development resources. We believe our acquisition, investment and integration approach has allowed us to accelerate internal development and significantly accelerate time to market for our life sciences solutions.

### Segments

Within our Sample Management Solutions segment, we operate as a single business unit offering end-to-end sample management products and services, including: Sample Repository Solutions and Core Products (Automated Stores, Cryogenic Systems, Automated Sample Tube, and Consumables and Instruments). This portfolio provides customers with a high level of sample quality, security, availability, intelligence and integrity throughout the lifecycle of samples, providing customers with complete end-to-end “cold-chain of custody” capabilities. We also offer expert-level consultation services to our clients throughout their experimental design and implementation processes.

Within our Multiomics segment, our genomics services business advances research and development activities by providing gene sequencing, synthesis, editing and related services. We offer a comprehensive, global portfolio that we believe has both broad appeal in the life sciences industry and enables customers to select the best solution for their research and development challenges. This portfolio also offers unique solutions for key markets such as cell and gene therapy, antibody development and biomarker discovery by addressing genomic complexity and throughput challenges.

Within our B Medical Systems segment, we provide temperature-controlled storage and transportation solutions that complement our cold chain capabilities, adding differentiated solutions for reliable and traceable transport of temperature-sensitive specimens worldwide. We offer end-to-end cold chain of custody capabilities for vaccines, blood components, and laboratory specimens through our portfolio of cold chain transport solutions, plasma freezers, contact shock freezers, ultra-low freezers, and real-time sample monitoring and location tracking solutions.

### Business and Financial Performance

### Basis of Presentation

Our condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

### Financial Performance

Our performance for the three and six months ended March 31, 2024 and 2023 are as follows:

*In thousands*

| ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 | ​ ​ ​ | ​ ​ Six Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $159,134 | ​ | $148,401 | ​ | $313,451 | ​ | $326,767 |
| Cost of revenue | ​ | 95,749 | ​ | 95,165 | ​ | 188,554 | ​ | 199,666 |
| Gross profit | ​ | 63,385 | ​ | 53,236 | ​ | 124,897 | ​ | 127,101 |
| Operating expenses | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Research and development | ​ | 8,707 | ​ | 8,520 | ​ | 17,200 | ​ | 16,056 |
| Selling, general and administrative | ​ | 78,314 | ​ | 73,339 | ​ | 156,890 | ​ | 165,891 |
| Impairment of goodwill and intangible assets | ​ | 115,975 | ​ | — | ​ | 115,975 | ​ | — |
| Contingent consideration - fair value adjustments | ​ | ​ — | ​ | ​ (17,145) | ​ | ​ — | ​ | ​ (17,145) |
| Restructuring charges | ​ | 7,344 | ​ | 1,499 | ​ | 8,464 | ​ | 2,961 |
| Total operating expenses | ​ | 210,340 | ​ | 66,213 | ​ | 298,529 | ​ | 167,763 |
| Operating loss | ​ | (146,955) | ​ | (12,977) | ​ | (173,632) | ​ | (40,662) |
| Other income | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest income, net | ​ | 9,565 | ​ | 10,394 | ​ | 19,646 | ​ | 21,059 |
| Other income (expense), net | ​ | 250 | ​ | (2,668) | ​ | 932 | ​ | (1,523) |
| Loss before income taxes | ​ | (137,140) | ​ | (5,251) | ​ | (153,054) | ​ | (21,126) |
| Income tax benefit | ​ | (260) | ​ | (3,260) | ​ | (450) | ​ | (7,900) |
| Loss from continuing operations | ​ | ​ (136,880) | ​ | ​ (1,991) | ​ | ​ (152,604) | ​ | ​ (13,226) |
| Loss from discontinued operations, net of tax | ​ | — | ​ | (2,936) | ​ | — | ​ | (2,936) |
| Net loss | ​ | $(136,880) | ​ | $(4,927) | ​ | $(152,604) | ​ | $(16,162) |

### Three months ended March 31, 2024 compared to three months ended March 31, 2023

Revenue increased 7% for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by a 51% increase in revenue in the B Medical Systems segment and a 4% increase in revenue in the Sample Management Solutions segment. Gross margin was 40% for the three months ended March 31, 2024 compared to 36% for the corresponding period in the prior fiscal year, driven by margin expansion in all three business segments and higher revenue in the B Medical Systems and Sample Management Solutions segments. Operating expenses increased $144.1 million during the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, primarily due to an $111.3 million non-cash goodwill impairment charge within the B Medical Systems segment, a $4.7 million of intangible asset impairment charge associated with the discontinuation of our sample sourcing product offering within our Sample Management Solutions business, and increased restructuring charges resulting from initiatives launched in the second quarter of fiscal year 2024. Additionally, we recognized a benefit of $17.1 million of fair value contingent consideration adjustments related to the B Medical Systems segment in the three months ended March 31, 2023 which did not reoccur in fiscal year 2024. We generated a net loss of $136.9 million for the three months ended March 31, 2024 compared to a net loss of $4.9 million for the three months ended March 31, 2023, primarily driven by the impairment of goodwill and intangible assets.

### Six months ended March 31, 2024 compared to six months ended March 31, 2023

Revenue decreased by 4% for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by a 38% decrease in revenue in the B Medical Systems segment due to the timing of orders, partially offset by 5% and 1% increases in revenue in the Sample Management Solutions and Multiomics segments, respectively. Gross margin was 40% for the six months ended March 31, 2024 compared to 39% for the corresponding period in the prior fiscal year, driven by margin expansion in the Sample Management Solutions and Multiomics segments, partially offset by margin pressure from decreased revenue in the B Medical Systems segment. Operating expenses increased $130.8 million during the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, primarily due to the non-cash impairment of goodwill and intangible assets and increased restructuring charges recognized in the six months ended March 31, 2024, partially offset by decreased selling, general and administrative expenses. Additionally, we recognized a benefit of $17.1 million of fair value contingent consideration adjustments related to the B Medical Systems segment in the six months ended March 31, 2023 which did not reoccur in fiscal year 2024. We generated a net loss of $152.6 million for the six months ended March 31, 2024 compared to a net loss of $16.2 million for the six months ended March 31, 2023, primarily driven by the impairment of goodwill and intangible assets.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the interim condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and consider various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the life sciences industry, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.

The critical accounting estimates that we believe affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q are described in the Critical Accounting Policies Estimates included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the 2023 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies or estimates from those set forth in our Annual Report on Form 10-K.

### RESULTS OF OPERATIONS

Please refer to the commentary provided below for further discussion and analysis of the factors contributing to our results from operations for the three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023.

### Non-GAAP Financial Measures

Non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusts the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments to inventory, charges related to merger and acquisitions and share repurchases, goodwill and intangible asset impairment charges, and non-recurring costs related to the Company’s business transformation initiatives to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers. Management also excludes special charges and gains, such as gains and losses from the sale of assets, certain tax benefits and charges, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly filed reports in their entirety and not rely on any single measure. A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included under “Operating Loss” and “Gross Margin” below.

### Revenue

Our revenue performance for the three and six months ended March 31, 2024 and 2023 is as follows:

*In thousands, except percentages*

| ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, ​ ​ 2024 | ​ ​ ​ | ​ ​ ​ ​ 2023 | ​ ​ ​ | ​ ​ % Change 2024 v. 2023 | ​ ​ ​ ​ | ​ ​ Six Months Ended March 31, ​ ​ 2024 | ​ ​ ​ | ​ ​ ​ ​ 2023 | ​ ​ ​ | ​ ​ % Change 2024 v. 2023 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Sample Management Solutions | ​ | $74,137 | ​ | $71,043 | ​ | 4.4% | ​ | $153,142 | ​ | $146,498 | ​ | 4.5% |
| Multiomics | ​ | ​ 62,218 | ​ | ​ 62,236 | ​ | (0.0)% | ​ | ​ 124,938 | ​ | ​ 123,325 | ​ | 1.3% |
| B Medical Systems | ​ | ​ 22,779 | ​ | ​ 15,122 | ​ | 50.6% | ​ | ​ 35,371 | ​ | ​ 56,944 | ​ | (37.9)% |
| Total revenue | ​ | $159,134 | ​ | $148,401 | ​ | 7.2% | ​ | $313,451 | ​ | $326,767 | ​ | (4.1)% |

### Three months ended March 31, 2024 compared to three months ended March 31, 2023

Revenue for the three months ended March 31, 2024 increased 7% compared to the corresponding prior fiscal year period, driven by a 51% increase in our B Medical Systems segment and a 4% increase in our Sample Management Solutions segment, while revenue in our Multiomics segment remained flat.

Our B Medical Systems segment revenue for the three months ended March 31, 2024 increased 51% compared to the corresponding prior fiscal year period, primarily due to the timing of orders for cold chain equipment.

Our Sample Management Solutions segment revenue for the three months ended March 31, 2024 increased 4% compared to the corresponding prior fiscal year period driven by revenue growth in the large-automated Store Systems and Sample Repository Solutions businesses.

Our Multiomics segment revenue for the three months ended March 31, 2024 remained flat compared to the corresponding prior fiscal year period with consistent revenue in the Next Generation Sequencing business and revenue growth in the Gene Synthesis business, offset by a decline in Sanger sequencing services.

Revenue generated outside the United States was $70.7 million, or 44% of total revenue, for the three months ended March 31, 2024 compared to $61.8 million, or 42% of total revenue, for the corresponding period in the prior fiscal year.

### Six months ended March 31, 2024 compared to six months ended March 31, 2023

Revenue for the six months ended March 31, 2024 decreased 4% compared to the corresponding period in the prior fiscal year, driven by a 38% decrease in our B Medical Systems segment, partially offset by a 5% increase in our Sample Management Solutions segment and a 1% increase in our Multiomics segment.

Our B Medical Systems segment revenue for the six months ended March 31, 2024 decreased 38% compared to the corresponding prior fiscal year period, primarily due to the timing of orders for cold chain equipment.

Our Sample Management Solutions segment revenue for the six months ended March 31, 2024 increased 5% compared to the corresponding prior fiscal year period driven by revenue growth in the large-automated Store Systems and Sample Repository Solutions businesses.

Our Multiomics segment revenue for the six months ended March 31, 2024 increased 1% compared to the corresponding prior fiscal year period primarily driven by revenue growth in Gene Synthesis and Next-Generation Sequencing services, partially offset by a decline in Sanger sequencing services.

Revenue generated outside the United States was $134.5 million, or 43% of total revenue, for the six months ended March 31, 2024 compared to $152.5 million, or 47% of total revenue, for the corresponding period in the prior fiscal year.

### Operating Loss

Our operating loss performance for the three and six months ended March 31, 2024 and 2023 is as follows (in thousands, except percentages):

| ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ Sample Management Solutions ​ ​ Multiomics ​ ​ B Medical Systems ​ ​ 2024 ​ 2023 ​ ​ 2024 ​ 2023 ​ ​ 2024 ​ 2023 ​ |
| --- | --- |
| **Revenue:** | **​** $74,137 ​ $71,043 ​ ​ $62,218 ​ $62,236 ​ ​ $22,779 ​ $15,122 ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **Operating loss:** | **​** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Operating loss | ​ $(3,005) ​ $(7,221) ​ ​ $(4,006) ​ $(5,037) ​ ​ $(5,810) ​ $(9,021) ​ |
| Amortization of completed technology | ​ ​ 1,027 ​ ​ 933 ​ ​ ​ 1,040 ​ ​ 1,226 ​ ​ ​ 4,306 ​ ​ 2,742 ​ |
| Purchase accounting impact on inventory | ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 2,912 ​ |
| Amortization of other intangibles | ​ ​ 52 ​ ​ 212 ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ |
| Transformation costs(1) | ​ ​ 359 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ 351 ​ ​ — ​ |
| Total adjusted operating loss | ​ $(1,567) ​ $(6,076) ​ ​ $(2,966) ​ $(3,810) ​ ​ $(1,153) ​ $(3,367) ​ |
| Operating margin | ​ ​ (4.1)% ​ (10.2)% ​ ​ (6.4)% ​ (8.1)% ​ ​ (25.5)% ​ (59.7)% |
| Adjusted operating margin | ​ ​ (2.1)% ​ (8.6)% ​ ​ (4.8)% ​ (6.1)% ​ ​ (5.1)% ​ (22.3)% |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | **Three Months Ended March 31,** **​** |
| ​ | ​ **Segment** ​ ​ **Corporate** ​ ​ **Azenta Total** ​ |
| ​ | **​** **2024** **​** **2023** **​** **​** **2024** **​** **2023** **​** **​** **2024** **​** **2023** ​ |
| **Revenue:** | ​ $159,134 ​ $148,401 ​ ​ $— ​ $— ​ ​ $159,134 ​ $148,401 ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **Operating loss:** | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Operating loss | ​ $(12,821) ​ $(21,279) ​ ​ $(134,134) ​ $8,302 ​ ​ $(146,955) ​ $(12,977) ​ |
| Amortization of completed technology | ​ ​ 6,373 ​ ​ 4,901 ​ ​ ​ — ​ ​ — ​ ​ ​ 6,373 ​ ​ 4,901 ​ |
| Purchase accounting impact on inventory | ​ ​ — ​ ​ 2,912 ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 2,912 ​ |
| Amortization of other intangibles | ​ ​ 52 ​ ​ 212 ​ ​ ​ 6,602 ​ ​ 7,297 ​ ​ ​ 6,654 ​ ​ 7,509 ​ |
| Transformation costs(1) | ​ ​ 710 ​ ​ — ​ ​ ​ 3,736 ​ ​ 10 ​ ​ ​ 4,446 ​ ​ 10 ​ |
| Restructuring charges | ​ ​ — ​ ​ — ​ ​ ​ 7,344 ​ ​ 1,499 ​ ​ ​ 7,344 ​ ​ 1,499 ​ |
| Impairment of goodwill and intangible assets | ​ ​ — ​ ​ — ​ ​ ​ 115,975 ​ ​ — ​ ​ ​ 115,975 ​ ​ — ​ |
| Contingent consideration - fair value adjustments | ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ (17,145) ​ ​ ​ — ​ ​ (17,145) ​ |
| Merger and acquisition costs and costs related to share repurchase(2) | ​ ​ — ​ ​ — ​ ​ ​ 426 ​ ​ 19 ​ ​ ​ 426 ​ ​ 19 ​ |
| Total adjusted operating loss | ​ $(5,686) ​ $(13,254) ​ ​ $(51) ​ $(18) ​ ​ $(5,737) ​ $(13,272) ​ |
| Operating margin | ​ ​ (8.1)% ​ (14.3)% ​ ​ ​ ​ ​ ​ ​ ​ ​ (92.3)% ​ (8.7)% |
| Adjusted operating margin | ​ ​ (3.6)% ​ (8.9)% ​ ​ ​ ​ ​ ​ ​ ​ ​ (3.6)% ​ (8.9)% |

| ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended March 31, ​ Sample Management Solutions ​ ​ Multiomics ​ ​ B Medical Systems ​ ​ 2024 ​ 2023 ​ ​ 2024 ​ 2023 ​ ​ 2024 ​ 2023 ​ |
| --- | --- |
| **Revenue:** | **​** $153,142 ​ $146,498 ​ ​ $124,938 ​ $123,325 ​ ​ $35,371 ​ $56,944 ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **Operating loss:** | **​** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Operating loss | ​ $(4,728) ​ $(10,697) ​ ​ $(8,495) ​ $(9,518) ​ ​ $(13,991) ​ $(9,475) ​ |
| Amortization of completed technology | ​ ​ 1,843 ​ ​ 1,362 ​ ​ ​ 2,079 ​ ​ 2,441 ​ ​ ​ 8,078 ​ ​ 5,265 ​ |
| Purchase accounting impact on inventory | ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 5,781 ​ |
| Amortization of other intangibles | ​ ​ 103 ​ ​ 260 ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 1,365 ​ |
| Transformation costs(1) | ​ ​ 359 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ 351 ​ ​ — ​ |
| Other adjustment | ​ ​ — ​ ​ — ​ ​ ​ (1) ​ ​ — ​ ​ ​ — ​ ​ — ​ |
| Total adjusted operating loss | ​ $(2,423) ​ $(9,074) ​ ​ $(6,417) ​ $(7,075) ​ ​ $(5,562) ​ $2,936 ​ |
| Operating margin | ​ ​ (3.1)% ​ (7.3)% ​ ​ (6.8)% ​ (7.7)% ​ ​ (39.6)% ​ (16.6)% |
| Adjusted operating margin | ​ ​ (1.6)% ​ (6.2)% ​ ​ (5.1)% ​ (5.7)% ​ ​ (15.7)% ​ 5.2% |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | **Six Months Ended March 31,** **​** |
| ​ | ​ **Segment** ​ ​ **Corporate** ​ ​ **Azenta Total** ​ |
| ​ | **​** **2024** **​** **2023** **​** **​** **2024** **​** **2023** **​** **​** **2024** **​** **2023** **​** |
| **Revenue:** | ​ $313,451 ​ $326,767 ​ ​ $— ​ $— ​ ​ $313,451 ​ $326,767 ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **Operating loss:** | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Operating loss | ​ $(27,214) ​ $(29,690) ​ ​ $(146,418) ​ $(10,973) ​ ​ $(173,632) ​ $(40,662) ​ |
| Amortization of completed technology | ​ ​ 12,000 ​ ​ 9,070 ​ ​ ​ — ​ ​ — ​ ​ ​ 12,000 ​ ​ 9,070 ​ |
| Purchase accounting impact on inventory | ​ ​ — ​ ​ 5,781 ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 5,781 ​ |
| Amortization of other intangibles | ​ ​ 103 ​ ​ 1,624 ​ ​ ​ 13,413 ​ ​ 13,257 ​ ​ ​ 13,516 ​ ​ 14,882 ​ |
| Transformation costs(1) | ​ ​ 710 ​ ​ — ​ ​ ​ 3,777 ​ ​ (55) ​ ​ ​ 4,487 ​ ​ (55) ​ |
| Restructuring charges | ​ ​ — ​ ​ — ​ ​ ​ 8,464 ​ ​ 2,960 ​ ​ ​ 8,464 ​ ​ 2,961 ​ |
| Impairment of goodwill and intangible assets | ​ ​ — ​ ​ — ​ ​ ​ 115,975 ​ ​ — ​ ​ ​ 115,975 ​ ​ — ​ |
| Contingent consideration - fair value adjustments | ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ (17,145) ​ ​ ​ — ​ ​ (17,145) ​ |
| Merger and acquisition costs and costs related to share repurchase(2) | ​ ​ — ​ ​ — ​ ​ ​ 4,747 ​ ​ 11,857 ​ ​ ​ 4,747 ​ ​ 11,857 ​ |
| Other adjustment | ​ ​ (1) ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ (1) ​ ​ — ​ |
| Total adjusted operating loss | ​ $(14,402) ​ $(13,213) ​ ​ $(42) ​ $(99) ​ ​ $(14,444) ​ $(13,312) ​ |
| Operating margin | ​ ​ (8.7)% ​ (9.1)% ​ ​ ​ ​ ​ ​ ​ ​ ​ (55.4)% ​ (12.4)% |
| Adjusted operating margin | ​ ​ (4.6)% ​ (4.0)% ​ ​ ​ ​ ​ ​ ​ ​ ​ (4.6)% ​ (4.1)% |

(1) Transformation costs represent non-recurring expenses for strategic projects with anticipated long-term benefits to the Company focused on cost reduction and productivity improvement that do not meet the definition of restructuring charges. These costs are directed at simplifying, standardizing, streamlining, and optimizing the Company’s operations, processes and systems to permanently alter the Company’s operations for the long term. For a project to be considered transformational, successful completion of the project must be expected to bring long-term material benefits to the organization and involve significant changes to process and/or underlying technology. Transformation costs in the period result from actions taken as part of the Company’s 2024 transformation plan, and primarily relate to one time asset write downs associated with changes in technology, one time inventory write downs relating to restructuring actions taken in the period, and third-party consulting costs associated with process & systems re-design.

(2) Includes expenses related to governance-related matters.

### Three months ended March 31, 2024 compared to three months ended March 31, 2023

Operating loss for the Sample Management Solutions segment was $3.0 million for the three months ended March 31, 2024 compared to an operating loss of $7.2 million in the corresponding period in the prior fiscal year. The Sample Management Solutions segment operating margin was (4.1)%, an increase of 610 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $1.6 million for the three months ended March 31, 2024 compared to adjusted operating loss of $6.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (2.1)%, an increase of 650 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $1.1 million for the three months ended March 31, 2024 and 2023 and transformation costs of $0.4 million for the three months ended March 31, 2024.

Operating loss for the Multiomics segment was $4.0 million for the three months ended March 31, 2024 compared to an operating loss of $5.0 million in the corresponding period in the prior fiscal year. The Multiomics segment operating margin was (6.4)%, an increase of 170 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher gross profit and lower operating expenses due to cost reduction initiatives. Adjusted operating loss was $3.0 million for the three months ended March 31, 2024 compared to adjusted operating loss of $3.8 million in the corresponding period of the prior fiscal year. Adjusted operating margin was (4.8)%, an increase of 130 basis points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

Operating loss for the B Medical Systems segment was $5.8 million for the three months ended March 31, 2024 compared to an operating loss of $9.0 million in the corresponding period in the prior fiscal year. The B Medical Systems segment operating margin was (25.5)%, an increase of 34.2 percentage points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily due to higher volume of cold chain sales in the product mix, partially offset by higher operating expenses due to increased commissions on cold chain sales. Adjusted operating loss was $1.2 million for the three months ended March 31, 2024 compared to adjusted operating loss of $3.4 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (5.1)%, an increase of 17.2 percentage points for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $4.3 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the three months ended March 31, 2024 and purchase accounting impact on inventory of $2.9 million for the three months ended March 31, 2023.

### Six months ended March 31, 2024 compared to six months ended March 31, 2023

Operating loss for the Sample Management Solutions segment was $4.7 million for the six months ended March 31, 2024 compared to an operating loss of $10.7 million in the corresponding period in the prior fiscal year. The Sample Management Solutions segment operating margin was (3.1)%, an increase of 420 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $2.4 million for the six months ended March 31, 2024 compared to adjusted operating loss of $9.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (1.6)%, an increase of 460 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $1.9 million and $1.6 million for the six months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the six months ended March 31, 2024.

Operating loss for the Multiomics segment was $8.5 million for the six months ended March 31, 2024 compared to an operating loss of $9.5 million in the corresponding period in the prior fiscal year. The Multiomics segment operating margin was (6.8)%, an increase of 90 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The decrease in operating loss and increase in operating margin were primarily driven by higher revenue, supported by operating leverage and cost reduction initiatives. Adjusted operating loss was $6.4 million for the six months ended March 31, 2024 compared to adjusted operating loss of $7.1 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (5.1)%, an increase of 60 basis points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization related to completed technology of $2.1 million and $2.4 million for the six months ended March 31, 2024 and 2023, respectively.

Operating loss for the B Medical Systems segment was $14.0 million for the six months ended March 31, 2024 compared to an operating loss of $9.5 million in the corresponding period in the prior fiscal year. The B Medical Systems segment operating margin was (39.6)%, a decrease of 23.0 percentage points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. The increase in operating loss and decrease in operating margin were primarily due to lower volume of cold chain sales in the product mix, partially offset by lower operating expenses due to decreased commissions on cold chain sales. Adjusted operating loss was $5.6 million for the six months ended March 31, 2024 compared to adjusted operating income of $2.9 million in the corresponding period in the prior fiscal year. Adjusted operating margin was (15.7)%, a decrease of 20.9 percentage points for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Adjusted operating loss and margin exclude the impact of amortization of intangible assets of $8.1 million and $6.6 million for the six months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the six months ended March 31, 2024 and purchase accounting impact on inventory of $5.8 million for the six months ended March 31, 2023.

### Gross Margin

Our gross margin performance for the three and six months ended March 31, 2024 and 2023 is as follows (in thousands, except percentages):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Sample Management Solutions ​ Multiomics ​ B Medical Systems ​ Azenta Total 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 |
| --- | --- | --- |
| Revenue | ​ | $74,137 ​ ​ $71,043 ​ ​ $62,218 ​ ​ $62,236 ​ ​ $22,779 ​ ​ $15,122 ​ ​ $159,134 ​ ​ $148,401 ​ |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Gross profit | ​ | $32,943 ​ ​ $27,544 ​ ​ $27,721 ​ ​ $27,003 ​ ​ $2,721 ​ ​ $(1,311) ​ ​ $63,385 ​ ​ $53,236 ​ |
| Adjustments: | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Amortization of completed technology | ​ | 1,027 ​ ​ 933 ​ ​ 1,040 ​ ​ 1,226 ​ ​ 4,306 ​ ​ 2,742 ​ ​ 6,373 ​ ​ 4,901 ​ |
| Purchase accounting impact on inventory | ​ | ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 2,912 ​ ​ ​ — ​ ​ 2,912 ​ |
| Transformation costs(1) | ​ | ​ 359 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 351 ​ ​ ​ — ​ ​ ​ 710 ​ ​ ​ — ​ |
| Adjusted gross profit | ​ | $34,329 ​ ​ $28,477 ​ ​ $28,761 ​ ​ $28,229 ​ ​ $7,378 ​ ​ $4,343 ​ ​ $70,468 ​ ​ $61,049 ​ |
| Gross margin | ​ | ​ 44.4% ​ ​ 38.8% ​ ​ 44.6% ​ ​ 43.4% ​ ​ 11.9% ​ ​ (8.7)% ​ ​ 39.8% ​ ​ 35.9% |
| Adjusted gross margin | ​ | ​ 46.3% ​ ​ 40.1% ​ ​ 46.2% ​ ​ 45.4% ​ ​ 32.4% ​ ​ 28.7% ​ ​ 44.3% ​ ​ 41.1% |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ | **Six Months Ended March 31,** |
| ​ | ​ | **Sample Management Solutions** **​** **Multiomics** **​** **B Medical Systems** **​** **Azenta Total** |
| ​ | ​ | **2024** ​ **2023** ​ **2024** ​ **2023** ​ **2024** ​ **2023** ​ **2024** ​ **2023** |
| Revenue | ​ | $153,142 ​ ​ $146,498 ​ ​ $124,938 ​ ​ $123,325 ​ ​ $35,371 ​ ​ $56,944 ​ ​ $313,451 ​ ​ $326,767 ​ |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Gross profit | ​ | $66,215 ​ ​ $59,579 ​ ​ $56,192 ​ ​ $54,719 ​ ​ $2,490 ​ ​ $12,803 ​ ​ $124,897 ​ ​ $127,101 ​ |
| Adjustments: | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Amortization of completed technology | ​ | 1,843 ​ ​ 1,362 ​ ​ 2,079 ​ ​ 2,441 ​ ​ 8,078 ​ ​ 5,265 ​ ​ 12,000 ​ ​ 9,070 ​ |
| Purchase accounting impact on inventory | ​ | ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ 5,781 ​ ​ ​ — ​ ​ 5,781 ​ |
| Transformation costs(1) | ​ | ​ 359 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 351 ​ ​ ​ — ​ ​ ​ 710 ​ ​ ​ — ​ |
| Adjusted gross profit | ​ | $68,417 ​ ​ $60,942 ​ ​ $58,271 ​ ​ $57,160 ​ ​ $10,919 ​ ​ $23,849 ​ ​ $137,607 ​ ​ $141,951 ​ |
| Gross margin | ​ | ​ 43.2% ​ ​ 40.7% ​ ​ 45.0% ​ ​ 44.4% ​ ​ 7.0% ​ ​ 22.5% ​ ​ 39.8% ​ ​ 38.9% |
| Adjusted gross margin | ​ | ​ 44.7% ​ ​ 41.6% ​ ​ 46.6% ​ ​ 46.3% ​ ​ 30.9% ​ ​ 41.9% ​ ​ 43.9% ​ ​ 43.4% |

(1) Transformation costs represent non-recurring expenses for strategic projects with anticipated long-term benefits to the Company focused on cost reduction and productivity improvement that do not meet the definition of restructuring charges. These costs are directed at simplifying, standardizing, streamlining, and optimizing the Company’s operations, processes and systems to permanently alter the Company’s operations for the long term. For a project to be considered transformational, successful completion of the project must be expected to bring long-term material benefits to the organization and involve significant changes to process and/or underlying technology. Transformation costs in the period result from actions taken as part of the Company’s 2024 transformation plan, and primarily relate to one time asset write downs associated with changes in technology, one time inventory write downs relating to restructuring actions taken in the period, and third-party consulting costs associated with process & systems re-design.

### Three months ended March 31, 2024 compared to three months ended March 31, 2023

The Sample Management Solutions segment gross margin was 44.4% for the three months ended March 31, 2024, an increase of 560 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.3% for the three months ended March 31, 2024, an increase of 620 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for both the Core Products and Sample Repository Solutions businesses. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.0 million and $0.9 million for the three months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the three months ended March 31, 2024.

The Multiomics segment gross margin was 44.6% for the three months ended March 31, 2024, an increase of 120 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.2% for the three months ended March 31, 2024, an increase of 80 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for the Gene Synthesis business, partially offset by lower gross margin for Sanger sequencing services. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.0 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

The B Medical Systems segment gross margin was 11.9% for the three months ended March 31, 2024, an increase of 20.6 percentage points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 32.4% for the three months ended March 31, 2024, an increase of 370 percentage points compared to the corresponding period in the prior fiscal year, driven by higher volume of cold chain sales in the product mix. Adjusted gross margin excludes the impact of amortization related to completed technology of $4.3 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the three months ended March 31, 2024 and purchase accounting impact on inventory of $2.9 million for the three months ended March 31, 2023.

### Six months ended March 31, 2024 compared to six months ended March 31, 2023

The Sample Management Solutions segment gross margin was 43.2% for the six months ended March 31, 2024, an increase of 250 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 44.7% for the six months ended March 31, 2024, an increase of 310 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for both the Core Products and Sample Repository Solutions businesses. Adjusted gross margin excludes the impact of amortization related to completed technology of $1.8 million and $1.4 million for the six months ended March 31, 2024 and 2023, respectively, and transformation costs of $0.4 million for the six months ended March 31, 2024.

The Multiomics segment gross margin was 45.0% for the six months ended March 31, 2024, an increase of 60 basis points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 46.6% for the six months ended March 31, 2024, an increase of 30 basis points compared to the corresponding period in the prior fiscal year, driven by higher gross margin for the Gene Synthesis business, partially offset by lower gross margin for Sanger sequencing services. Adjusted gross margin excludes the impact of amortization related to completed technology of $2.1 million and $2.4 million for the six months ended March 31, 2024 and 2023, respectively.

The B Medical Systems segment gross margin was 7.0% for the six months ended March 31, 2024, a decrease of 15.5 percentage points compared to the corresponding period in the prior fiscal year. Adjusted gross margin was 30.9% for the six months ended March 31, 2024, a decrease of 11.0 percentage points compared to the corresponding period in the prior fiscal year, primarily due to order delays and lower volume of cold chain sales in the product mix. Adjusted gross margin excludes the impact of amortization related to completed technology of $8.1 million and $5.3 million for the six months ended March 31, 2024 and 2023, respectively, transformation costs of $0.4 million for the six months ended March 31, 2024 and purchase accounting impact on inventory of $5.8 million for the six months ended March 31, 2023.

### Research and Development Expenses

Our research and development expenses for the three and six months ended March 31, 2024 and 2023 are as follows:

*In thousands*

*In thousands*

*In thousands*

*In thousands*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ ​ | ​ ​ Six Months Ended March 31, 2024 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ % of Revenue |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Sample Management Solutions | ​ | $4,609 | ​ | 6.2% | ​ | $4,776 | ​ | 6.7% | ​ | $8,996 | ​ | 5.9% | ​ | $8,262 | ​ | 5.6% |
| Multiomics | ​ | ​ 3,125 | ​ | 5.0% | ​ | ​ 2,971 | ​ | 4.8% | ​ | ​ 6,051 | ​ | 4.8% | ​ | ​ 6,024 | ​ | 4.9% |
| B Medical Systems | ​ | ​ 973 | ​ | 4.3% | ​ | ​ 773 | ​ | 5.1% | ​ | ​ 2,153 | ​ | 6.1% | ​ | ​ 1,770 | ​ | 3.1% |
| Total research and development expense | ​ | $8,707 | ​ | 5.5% | ​ | $8,520 | ​ | 5.7% | ​ | $17,200 | ​ | 5.5% | ​ | $16,056 | ​ | 4.9% |

Total research and development expenses increased $0.2 million and $1.1 million, respectively, for the three and six months ended March 31, 2024 compared to the corresponding periods in the prior fiscal year, primarily due to increased product development expenses at the Sample Management Solutions segment.

### Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three and six months ended March 31, 2024 and 2023 are as follows:

*In thousands*

*In thousands*

*In thousands*

*In thousands*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ ​ | ​ ​ Six Months Ended March 31, 2024 ​ | ​ ​ | ​ ​ % of Revenue | ​ ​ ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ % of Revenue |
| --- | --- | --- | --- | ---: | --- | --- | --- | ---: | --- | --- | --- | ---: | --- | --- | --- | ---: |
| Sample Management Solutions | ​ | $31,340 | ​ | 42.3% | ​ | $29,987 | ​ | 42.2% | ​ | $61,949 | ​ | 40.5% | ​ | $62,003 | ​ | 42.3% |
| Multiomics | ​ | ​ 28,601 | ​ | 46.0% | ​ | ​ 29,069 | ​ | 46.7% | ​ | ​ 58,635 | ​ | 46.9% | ​ | ​ 58,205 | ​ | 47.2% |
| B Medical Systems | ​ | ​ 7,558 | ​ | 33.2% | ​ | ​ 6,938 | ​ | 45.9% | ​ | ​ 14,327 | ​ | 40.5% | ​ | ​ 20,510 | ​ | 36.0% |
| Corporate | ​ | ​ 10,815 | ​ | 6.8% | ​ | ​ 7,345 | ​ | 4.9% | ​ | ​ 21,979 | ​ | 7.0% | ​ | ​ 25,173 | ​ | 7.7% |
| Total selling, general and administrative expense | ​ | $78,314 | ​ | 49.2% | ​ | $73,339 | ​ | 49.4% | ​ | $156,890 | ​ | 50.1% | ​ | $165,891 | ​ | 50.8% |

Total selling, general and administrative expenses increased $5.0 million for the three months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by an increase in corporate expenses related to compensation, benefits and insurance, partially offset by decreased governance-related costs.

Total selling, general and administrative expenses decreased $9.0 million for the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year, driven by savings from cost reduction initiatives, decreased governance-related costs, and non-recurring expenses for the accelerated share repurchase arrangement in the six months ended March 31, 2023.

### Restructuring Charges

Restructuring charges were $7.3 million and $8.5 million, respectively, for the three and six months ended March 31, 2024, an increase of $5.8 million and $5.5 million, respectively, compared to the three and six months ended March 31, 2023 driven by initiatives launched in the second quarter of fiscal year 2024. See Note 7, *Restructuring* in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

### Non-Operating Income

*Interest income, net –* We recorded interest income of $9.6 million and $19.6 million, respectively, for the three and six months ended March 31, 2024 compared to $10.4 million and $21.1 million, respectively, recorded for the three and six months ended March 31, 2023. The decrease in interest income is due to decreased investments in marketable securities during the six months ended March 31, 2024 compared to the corresponding period in the prior fiscal year. Please refer to Note 4, *Marketable Securities* and Note 5, *Derivative Instruments* in the notes to the unaudited condensed consolidated financial statements included in the section titled “Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

*Other, net –* We recorded other income of $0.3 million and $0.9 million, respectively, for the three and six months ended March 31, 2024 compared to other loss of $2.7 million and $1.5 million, respectively, for the three and six months ended March 31, 2023, which primarily relates to foreign exchange gains and losses resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities.

### Income Tax Benefit

We recorded an income tax benefit of $0.3 million and $0.5 million, respectively, during the three and six months ended March 31, 2024. The tax benefit was primarily driven by the pre-tax loss from operations offset by $1.7 million of charge related to a valuation allowance recorded against deferred tax assets in a foreign subsidiary during the three months ended March 31, 2024. The pre-tax benefit was further offset by $0.5 million of stock compensation shortfall expense for tax deductions that were lower than the associated book compensation expense during the six months ended March 31, 2024 and a $0.7 million expense related to a valuation allowance on beginning of year U.S. state deferred tax assets. Additionally, the benefit was reduced by $5.7 million and $8.3 million due to a partial valuation allowance against the current year U. S. federal and state deferred tax assets during the three and six months ended March 31, 2024, respectively.

We recorded an income tax benefit of $3.3 million and $7.9 million, respectively, during the three and six months ended March 31, 2023. The tax benefit for the three months ended March 31, 2023 was primarily driven by the pre-tax loss from operating during the period. The tax benefit for the six months ended March 31, 2023 was primarily driven by the pre-tax loss from the operations and a $1.4 million deferred tax benefit resulting from the extension of a tax incentive in China. The effective tax rates for the three and six months ended March 31, 2023 were substantially higher than statutory rates. The effective rates were driven higher than the statutory rates by the discrete tax benefit in China and the fair value adjustment of the contingent consideration related to the B Medical acquisition. The contingent consideration generated $17.1 million of pre-tax income that was not subject to income taxes, therefore, the tax benefit was being driven by a tax loss that was significantly higher than the book loss for these periods.

### LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, we had cash and cash equivalents of $353.5 million and stockholders’ equity of $2.2 billion. We believe that our current cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least one year from the date of this Quarterly Report on Form 10-Q and for the foreseeable future thereafter. The current global economic environment makes it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any additional financing that may be required on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressures, or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition and operating results.

### Cash Flows and Liquidity

The discussion of our cash flows and liquidity that follows is stated on a total company consolidated basis and excludes the impact of discontinued operations.

Our cash and cash equivalents, restricted cash and marketable securities as of March 31, 2024 and September 30, 2023 were as follows:

*In thousands*

| ​ ​ | ​ ​ ​ | ​ ​ ​ ​ March 31, 2024 | ​ ​ ​ | ​ ​ ​ ​ September 30, 2023 |
| --- | --- | ---: | --- | ---: |
| Cash and cash equivalents | ​ | $353,491 | ​ | $678,910 |
| Restricted cash | ​ | ​ 10,629 | ​ | ​ 5,135 |
| Short-term marketable securities | ​ | 468,220 | ​ | 338,873 |
| Long-term marketable securities | ​ | 143,018 | ​ | 111,338 |
| ​ | ​ | $975,358 | ​ | $1,134,256 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |

As of March 31, 2024, we had $129.7 million of cash, cash equivalents and restricted cash held outside of the United States. If these funds are needed for U.S. operations, we would need to repatriate these funds. Based on current U.S. tax laws, any repatriation in the future would likely not result in U.S. federal income tax. Our marketable securities are generally readily convertible to cash without a material adverse impact.

Our cash flows for the six months ended March 31, 2024 and 2023 were as follows:

*In thousands*

| ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | --- | --- | --- |
| Net cash provided by (used in) operating activities | ​ | $34,787 | ​ | $(39,170) |
| Net cash provided by (used in) investing activities | ​ | ​ (172,213) | ​ | ​ 114,530 |
| Net cash used in financing activities | ​ | ​ (187,220) | ​ | ​ (505,136) |
| Effects of exchange rate changes on cash and cash equivalents | ​ | ​ 4,721 | ​ | ​ 60,355 |
| Net decrease in cash, cash equivalents and restricted cash | ​ | $(319,925) | ​ | $(369,421) |

Cash inflows from operating activities for the six months ended March 31, 2024 were $34.8 million, primarily due to improved inventory management and decreased selling, general and administrative expenses as a result of our cost savings plans and transformation initiatives. Investing outflows of $172.2 million include $345.4 million of purchases of marketable securities, offset by $190.5 million for sales and maturities of marketable securities. Financing activities for the six months ended March 31, 2024 include $186.8 million of outflows related to our share repurchase program described below.

As of March 31, 2024, we had no outstanding debt on our balance sheet.

### Capital Resources

### Share Repurchase Program

On November 4, 2022, our Board of Directors approved an authorization to repurchase up to $1.5 billion of our common stock (the “2022 Repurchase Authorization”). Repurchases under the 2022 Repurchase Authorization may be made in the open market or through privately negotiated transactions (including under an accelerated share repurchase (“ASR”) agreement), or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, subject to market and business conditions, legal requirements, and other factors. We are not obligated to acquire any specific amount of common stock under the 2022 Repurchase Authorization, and share repurchases may commence or be suspended at any time at management’s discretion.

As of March 31, 2024, we have repurchased 20.9 million shares of common stock for $1.025 billion (excluding fees, commissions, and excise tax) under the 2022 Repurchase Authorization and $475 million of the 2022 Repurchase Authorization remained. All shares of common stock repurchased by the Company under the 2022 Repurchase Authorization have been retired, accounted for as a reduction to stockholders’ equity in the Condensed Consolidated Balance Sheets and treated as a repurchase of common stock for purposes of calculating earnings per share as of the applicable settlement dates.

### Contractual Obligations and Requirements

At March 31, 2024, we had non-cancellable commitments of $52.0 million, comprised primarily of purchase orders for inventory of $47.9 million, and information technology related commitments of $4.1 million.

### Off-Balance Sheet Arrangements

As of March 31, 2024, we had no obligations, assets or liabilities which would be considered off-balance sheet arrangements.

## Market risk

As filed, 2,704 characters.

We are exposed to a variety of market risks, including changes in interest rates affecting the return on our cash and cash equivalents, restricted cash and short-term and long-term investments and fluctuations in foreign currency exchange rates.

### Interest Rate Exposure

Our cash and cash equivalents and restricted cash consist principally of money market securities which are short-term in nature. At March 31, 2024, our aggregate short-term and long-term investments were $611.2 million, consisting mostly of highly rated corporate debt securities and U.S. government backed securities. At March 31, 2024, the unrealized loss position on marketable securities was $2.5 million which is included in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. A hypothetical 100 basis point change in interest rates would result in a $4.8 million and $6.6 million change in interest income earned during the six months ended March 31, 2024 and 2023, respectively.

### Currency Rate Exposure

We have transactions and balances denominated in currencies other than the functional currency of the transacting entity. Most of these transactions carrying foreign exchange risk are in Germany, the United Kingdom, and China. Sales in currencies other than the U.S. dollar were approximately 26% and 24% of our total sales, respectively, during the six months ended March 31, 2024 and 2023. These sales were made primarily by our foreign subsidiaries, which have cost structures that substantially align with the currency of sale.

In the normal course of our business, we have liquid assets denominated in non-functional currencies which include cash, short-term advances between our legal entities and accounts receivable which are subject to foreign currency exposure. Such balances were $74.1 million and $157.8 million, respectively, at March 31, 2024 and September 30, 2023, and primarily relate to the Euro, British Pound, and the Chinese Yuan. We mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred foreign currency losses of $0.9 million and $0.8 million during the six months ended March 31, 2024 and 2023, respectively, which related to the currency fluctuation on these balances between the time the transaction occurred and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates as of March 31, 2024 would result in an approximate change of $0.1 million in our net loss during the six months ended March 31, 2024.

## Controls and procedures

As filed, 703 characters.

*Evaluation of Disclosure Controls and Procedures*. As of March 31, 2024, pursuant to Rule 13a-15 under the Exchange Act, we performed an evaluation of the effectiveness of our disclosure controls and procedures. Based on this evaluation, management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures are operating and effective as of March 31, 2024.

*Change in Internal Controls*. There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,198 characters.

You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under the section titled “Risk Factors” in Part I, Item 1A of the 2023 Annual Report on Form 10-K. There have been no material changes from the risk factors disclosed in the 2023 Annual Report on Form 10-K, other than the additions to the risk factor set forth below. We may disclose changes to risk factors or additional factors from time to time in our future filings with the SEC.

***Changes in key personnel could impair our ability to execute our business strategy.***

The continuing service of our executive officers and essential engineering, scientific and management personnel, together with our ability to attract and retain such personnel, is an important factor in our continuing ability to execute our strategy. On May 8, 2024, Dr. Stephen Schwartz, our President and Chief Executive Officer informed us of his intention to retire from these positions after more than 14 years of service. Dr. Schwartz will continue to serve as our President and Chief Executive Officer until such time a new successor is appointed, after which we intend to retain Dr. Schwartz as an advisor, ensuring a smooth transition. There is substantial competition to attract such employees and the loss of any such key employees, including Dr. Schwartz during this transition period, could have a material adverse effect on our business and operating results and the announcement of Dr. Schwartz’ retirement may increase stockholder activism focused on our company. The same could be true if we were to experience a high turnover rate among engineering and scientific personnel and we were unable to replace them. Our ability to attract and retain employees may be negatively impacted by employees’ reactions to our policies related working remotely, particularly in the United States. Any failure to attract, recruit, train, retain, motivate and integrate qualified personnel, in particular a new successor Chief Executive Officer, could materially harm our strategic plan, operating results and growth prospects.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-007628. Last ingested by Listed: Oct 30, 2026, 08:03 ET. No prices; not investment advice.