10-Q 1 srdx-20231231.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-23837

 

Surmodics, Inc.

(Exact name of registrant as specified in its charter)

 

Minnesota

41-1356149

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9924 West 74th Street, Eden Prairie, Minnesota 55344

(Address of principal executive offices) (Zip Code)

 

(952) 500-7000

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.05 par value

 

SRDX

 

Nasdaq Global Select Market

Indicate by 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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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

The number of shares of the registrant’s Common Stock, $0.05 par value per share, as of January 29, 2024 was 14,236,000.

 

 


 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

SIGNATURES

 

32

 

2


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

December 31,

 

 

September 30,

 

 

2023

 

 

2023

 

(In thousands, except per share data)

(Unaudited)

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

$

23,355

 

 

$

41,419

 

Available-for-sale securities

 

11,819

 

 

 

3,933

 

Accounts receivable, net of allowances of $86 and $80 as of
December 31, 2023 and September 30, 2023, respectively

 

12,919

 

 

 

10,850

 

Contract assets

 

9,178

 

 

 

7,796

 

Inventories, net

 

14,438

 

 

 

14,839

 

Income tax receivable

 

361

 

 

 

491

 

Prepaids and other

 

7,738

 

 

 

7,363

 

Total Current Assets

 

79,808

 

 

 

86,691

 

Property and equipment, net

 

25,563

 

 

 

26,026

 

Intangible assets, net

 

26,213

 

 

 

26,206

 

Goodwill

 

44,283

 

 

 

42,946

 

Other assets

 

4,373

 

 

 

3,864

 

Total Assets

$

180,240

 

 

$

185,733

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

$

2,581

 

 

$

2,993

 

Accrued liabilities:

 

 

 

 

 

Compensation

 

4,079

 

 

 

10,139

 

Accrued other

 

5,809

 

 

 

6,444

 

Deferred revenue

 

4,008

 

 

 

4,378

 

Total Current Liabilities

 

16,477

 

 

 

23,954

 

Long-term debt, net

 

29,443

 

 

 

29,405

 

Deferred revenue, less current portion

 

1,648

 

 

 

2,400

 

Deferred income taxes

 

1,992

 

 

 

2,004

 

Other long-term liabilities

 

8,530

 

 

 

8,060

 

Total Liabilities

 

58,090

 

 

 

65,823

 

Commitments and Contingencies (Note 11)

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Series A Preferred stock — $.05 par value, 450 shares authorized; no shares issued and outstanding

 

 

 

 

 

Common stock — $.05 par value, 45,000 shares authorized; 14,235 and 14,155 shares
issued and outstanding as of December 31, 2023 and September 30, 2023, respectively

 

712

 

 

 

708

 

Additional paid-in capital

 

37,621

 

 

 

36,706

 

Accumulated other comprehensive loss

 

(2,652

)

 

 

(4,759

)

Retained earnings

 

86,469

 

 

 

87,255

 

Total Stockholders’ Equity

 

122,150

 

 

 

119,910

 

Total Liabilities and Stockholders’ Equity

$

180,240

 

 

$

185,733

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


TABLE OF CONTENTS

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

Three Months Ended December 31,

 

 

2023

 

 

2022

 

(In thousands, except per share data)

(Unaudited)

 

Revenue:

 

 

 

 

 

Product sales

$

18,827

 

 

$

14,234

 

Royalties and license fees

 

9,179

 

 

 

8,765

 

Research, development and other

 

2,546

 

 

 

1,934

 

Total revenue

 

30,552

 

 

 

24,933

 

Operating costs and expenses:

 

 

 

 

 

Product costs

 

8,803

 

 

 

5,267

 

Research and development

 

8,664

 

 

 

12,743

 

Selling, general and administrative

 

12,537

 

 

 

13,236

 

Acquired intangible asset amortization

 

870

 

 

 

913

 

Contingent consideration expense

 

 

 

 

3

 

Total operating costs and expenses

 

30,874

 

 

 

32,162

 

Operating loss

 

(322

)

 

 

(7,229

)

Other expense:

 

 

 

 

 

Interest expense, net

 

(896

)

 

 

(826

)

Foreign exchange loss

 

(45

)

 

 

(125

)

Investment income, net

 

539

 

 

 

172

 

Other expense, net

 

(402

)

 

 

(779

)

Loss before income taxes

 

(724

)

 

 

(8,008

)

Income tax (expense) benefit

 

(62

)

 

 

165

 

Net loss

$

(786

)

 

$

(7,843

)

 

 

 

 

 

 

Basic net loss per share

$

(0.06

)

 

$

(0.56

)

Diluted net loss per share

$

(0.06

)

 

$

(0.56

)

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

Basic

 

14,102

 

 

 

13,983

 

Diluted

 

14,102

 

 

 

13,983

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


TABLE OF CONTENTS

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

 

 

Three Months Ended December 31,

 

 

2023

 

 

2022

 

(In thousands)

(Unaudited)

 

Net loss

$

(786

)

 

$

(7,843

)

Other comprehensive income:

 

 

 

 

 

Derivative instruments:

 

 

 

 

 

Unrealized net loss

 

(620

)

 

 

(444

)

Net (gain) loss reclassified to earnings

 

(62

)

 

 

31

 

Net changes related to available-for-sale securities, net of tax

 

(8

)

 

 

 

Foreign currency translation adjustments

 

2,797

 

 

 

5,670

 

Other comprehensive income

 

2,107

 

 

 

5,257

 

Comprehensive income (loss)

$

1,321

 

 

$

(2,586

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

 

Three Months Ended December 31, 2023 and 2022

 

 

(Unaudited)

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

(In thousands)

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at September 30, 2023

 

14,155

 

 

$

708

 

 

$

36,706

 

 

$

(4,759

)

 

$

87,255

 

 

$

119,910

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(786

)

 

 

(786

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

2,107

 

 

 

 

 

 

2,107

 

Issuance of common stock

 

102

 

 

 

5

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

Common stock options exercised, net

 

7

 

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

39

 

Purchase of common stock to pay
employee taxes

 

(29

)

 

 

(1

)

 

 

(1,087

)

 

 

 

 

 

 

 

 

(1,088

)

Stock-based compensation

 

 

 

 

 

 

 

1,968

 

 

 

 

 

 

 

 

 

1,968

 

Balance at December 31, 2023

 

14,235

 

 

$

712

 

 

$

37,621

 

 

$

(2,652

)

 

$

86,469

 

 

$

122,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2022

 

14,029

 

 

$

701

 

 

$

28,774

 

 

$

(9,874

)

 

$

88,791

 

 

$

108,392

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,843

)

 

 

(7,843

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

5,257

 

 

 

 

 

 

5,257

 

Issuance of common stock

 

103

 

 

 

5

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

Common stock options exercised, net

 

17

 

 

 

1

 

 

 

346

 

 

 

 

 

 

 

 

 

347

 

Purchase of common stock to pay
employee taxes

 

(23

)

 

 

(1

)

 

 

(856

)

 

 

 

 

 

 

 

 

(857

)

Stock-based compensation

 

 

 

 

 

 

 

1,965

 

 

 

 

 

 

 

 

 

1,965

 

Balance at December 31, 2022

 

14,126

 

 

$

706

 

 

$

30,224

 

 

$

(4,617

)

 

$

80,948

 

 

$

107,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 

Three Months Ended December 31,

 

 

2023

 

 

2022

 

(In thousands)

(Unaudited)

 

Operating Activities:

 

 

 

 

 

Net loss

$

(786

)

 

$

(7,843

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

2,333

 

 

 

2,122

 

Stock-based compensation

 

1,968

 

 

 

1,965

 

Noncash lease expense

 

183

 

 

 

159

 

Amortization of debt issuance costs

 

76

 

 

 

78

 

Provision for credit losses

 

6

 

 

 

59

 

Deferred taxes

 

(97

)

 

 

(107

)

Other

 

(123

)

 

 

78

 

Change in operating assets and liabilities:

 

 

 

 

 

Accounts receivable and contract assets

 

(3,430

)

 

 

546

 

Inventories

 

401

 

 

 

(905

)

Prepaids and other

 

(788

)

 

 

(1,857

)

Accounts payable

 

(428

)

 

 

(1,254

)

Accrued liabilities

 

(7,084

)

 

 

(4,700

)

Income taxes

 

99

 

 

 

2,218

 

Deferred revenue

 

(1,122

)

 

 

(1,361

)

Net cash used in operating activities

 

(8,792

)

 

 

(10,802

)

Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(720

)

 

 

(977

)

Purchases of available-for-sale securities

 

(9,750

)

 

 

 

Maturities of available-for-sale securities

 

2,000

 

 

 

 

Net cash used in investing activities

 

(8,470

)

 

 

(977

)

Financing Activities:

 

 

 

 

 

Payments of short-term borrowings

 

 

 

 

(10,000

)

Proceeds from issuance of long-term debt

 

 

 

 

29,664

 

Payments of debt issuance costs

 

 

 

 

(353

)

Issuance of common stock

 

39

 

 

 

347

 

Payments for taxes related to net share settlement of equity awards

 

(1,088

)

 

 

(858

)

Net cash (used in) provided by financing activities

 

(1,049

)

 

 

18,800

 

Effect of exchange rate changes on cash

 

247

 

 

 

411

 

Net change in cash and cash equivalents

 

(18,064

)

 

 

7,432

 

Cash and Cash Equivalents:

 

 

 

 

 

Beginning of period

 

41,419

 

 

 

18,998

 

End of period

$

23,355

 

 

$

26,430

 

Supplemental Information:

 

 

 

 

 

Cash paid for income taxes

$

 

 

$

5

 

Cash paid for interest

 

779

 

 

 

660

 

Noncash investing and financing activities:

 

 

 

 

 

Acquisition of property and equipment

 

43

 

 

 

150

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

845

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Surmodics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Period Ended December 31, 2023

(Unaudited)

 

1. Organization

Description of Business

Surmodics, Inc. and subsidiaries (referred to as “Surmodics,” the “Company,” “we,” “us,” “our” and other like terms) is a leading provider of performance coating technologies for intravascular medical devices and chemical and biological components for in vitro diagnostic (“IVD”) immunoassay tests and microarrays. Surmodics develops and commercializes highly differentiated vascular intervention medical devices that are designed to address unmet clinical needs and engineered to the most demanding requirements. This key growth strategy leverages the combination of the Company’s expertise in proprietary surface modification and drug-delivery coating technologies, along with its device design, development and manufacturing capabilities. The Company’s mission is to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include all accounts and wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. The Company operates on a fiscal year ending on September 30. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited consolidated financial statements of the Company. These unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements for the fiscal year ended September 30, 2023, and notes thereto included in our Annual Report on Form 10-K as filed with the SEC.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from those estimates. The results of operations for the three months ended December 31, 2023 are not necessarily indicative of the results that may be expected for the entire 2024 fiscal year.

New Accounting Pronouncements

Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This guidance requires disclosure of incremental segment information on an annual and interim basis. This amendment is effective for our fiscal year ending September 30, 2025 and interim periods within our fiscal year ending September 30, 2026. We are currently assessing the impact of this guidance on our disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction. This amendment is effective for our fiscal year ending September 30, 2026 and interim periods within our fiscal year ending September 30, 2027. We are currently assessing the impact of this guidance on our disclosures.

No other new accounting pronouncement issued or effective during the fiscal year has had, or is expected to have, a material impact on the Company’s condensed consolidated financial statements.

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2. Revenue

The following table is a disaggregation of revenue within each reportable segment.

 

Three Months Ended December 31,

 

(In thousands)

2023

 

 

2022

 

Medical Device

 

 

Product sales

$

11,950

 

 

$

8,380

 

Royalties & license fees – performance coatings

 

8,208

 

 

 

7,469

 

License fees – SurVeil DCB

 

971

 

 

 

1,296

 

Research, development and other

 

2,416

 

 

 

1,873

 

Medical Device Revenue

 

23,545

 

 

 

19,018

 

In Vitro Diagnostics

 

 

 

 

 

Product sales

 

6,877

 

 

 

5,854

 

Research, development and other

 

130

 

 

 

61

 

In Vitro Diagnostics Revenue

 

7,007

 

 

 

5,915

 

Total Revenue

$

30,552

 

 

$

24,933

 

Contract assets totaled $9.2 million and $7.8 million as of December 31, 2023 and September 30, 2023, respectively, on the condensed consolidated balance sheets. Fluctuations in the balance of contract assets result primarily from (i) fluctuations in the sales volume of performance coating royalties and license fees earned, but not collected, at each balance sheet date due to payment timing and contractual changes in the normal course of business; and (ii) starting in fiscal 2024, sales-based profit-sharing earned, but not collected, related to a collaborative arrangement (Note 3).

3. Collaborative Arrangement

On February 26, 2018, the Company entered into an agreement with Abbott Vascular, Inc. (“Abbott”) with respect to one of the device products in our Medical Device reportable segment, the SurVeil™ drug-coated balloon (“DCB”) for treatment of the superficial femoral artery (the “Abbott Agreement”). In June 2023, the SurVeil DCB received U.S. Food and Drug Administration (“FDA”) premarket approval (“PMA”) and may now be marketed and sold in the U.S. by Abbott.

SurVeil DCB License Fees

Under the Abbott Agreement, Surmodics is responsible for conducting all necessary clinical trials, including completion of the ongoing, five-year TRANSCEND pivotal clinical trial of the SurVeil DCB. The Company has received payments totaling $87.8 million for achievement of clinical and regulatory milestones under the Abbott Agreement, which consisted of the following: (i) $25 million upfront fee in fiscal 2018, (ii) $10 million milestone payment in fiscal 2019, (iii) $10.8 million milestone payment in fiscal 2020, (iv) $15 million milestone payment in fiscal 2021, and (v) $27 million milestone payment in the third quarter of fiscal 2023 upon receipt of PMA for the SurVeil DCB from the FDA. There are no remaining contingent or other milestone payments under the Abbott Agreement.

License fee revenue on milestone payments received under the Abbott Agreement is recognized using the cost-to-cost method based on total costs incurred to date relative to total expected costs for the TRANSCEND pivotal clinical trial, which is expected to be competed in fiscal 2025. See Note 2 Revenue for SurVeil DCB license fee revenue recognized in our Medical Device reportable segment.

As of December 31, 2023 and September 30, 2023, deferred revenue on the condensed consolidated balance sheets totaled $5.7 million and $6.8 million, respectively, which was primarily related to milestone payments received under the Abbott Agreement. The $5.7 million in deferred revenue as of December 31, 2023, which represents the Company’s performance obligations that are unsatisfied for executed contracts with an original duration of one year or more, is expected to be recognized as revenue over the next two years through fiscal 2025 as services, principally TRANSCEND clinical trial, are completed.

The amount of revenue recognized that was included in the respective beginning of fiscal year balances of deferred revenue on the condensed consolidated balance sheets totaled $1.0 million and $1.3 million for the three months ended December 31, 2023 and 2022, respectively.

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SurVeil DCB Product Sales

Under the Abbott Agreement, we supply commercial units of the SurVeil DCB to Abbott, and Abbott has exclusive worldwide distribution rights. During the three months ended December 31, 2023, we commenced shipment of commercial units of the SurVeil DCB to Abbott. We recognize revenue from the sale of commercial units of the SurVeil DCB to Abbott at the time of shipment in product sales on the condensed consolidated statements of operations. The amount of SurVeil DCB product sales revenue recognized includes (i) the contractual transfer price per unit and (ii) an estimate of Surmodics’ share of net profits resulting from product sales by Abbott to third parties pursuant to the Abbott Agreement (“estimated SurVeil DCB profit-sharing”). On a quarterly basis, Abbott (i) reports to us its third-party sales of the SurVeil DCB the quarter after those sales occur, which may occur within two years following shipment based on the product’s current shelf life; and (ii) reports to us and pays the actual amount of profit-sharing. Estimated SurVeil DCB profit-sharing represents variable consideration and is recorded in contract assets on the condensed consolidated balance sheets. We estimate variable consideration as the most-likely amount to which we expect to be entitled, and we include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty associated with the variable consideration is resolved. Significant judgment is required in estimating the amount of variable consideration to recognize when assessing factors outside of Surmodics’ influence, such as limited availability of third-party information, expected duration of time until resolution, and limited relevant past experience.

4. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis by level of the fair value hierarchy were as follows:

 

 

December 31, 2023

 

(In thousands)

Quoted Prices in Active Markets for Identical Instruments
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable Inputs
(Level 3)

 

 

Total Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

$

 

 

$

19,940

 

 

$

 

 

$

19,940

 

Available-for-sale securities (1)

 

 

 

 

11,819

 

 

 

 

 

 

11,819

 

Total assets

$

 

 

$

31,759

 

 

$

 

 

$

31,759

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap (2)

 

 

 

 

499

 

 

 

 

 

 

499

 

Total liabilities

$

 

 

$

499

 

 

$

 

 

$

499

 

 

 

September 30, 2023

 

(In thousands)

Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant
Unobservable Inputs
(Level 3)

 

 

Total Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

$

 

 

$

36,255

 

 

$

 

 

$

36,255

 

Available-for-sale securities (1)

 

 

 

 

3,933

 

 

 

 

 

 

3,933

 

Interest rate swap (2)

 

 

 

 

183

 

 

 

 

 

 

183

 

Total assets

$

 

 

$

40,371

 

 

$

 

 

$

36,255

 

(1)
Fair value of cash equivalents (money market funds) and available-for-sale securities (commercial paper and corporate bond securities) was based on quoted vendor prices and broker pricing where all significant inputs are observable.
(2)
Fair value of interest rate swap is based on forward-looking, one-month term secured overnight financing rate (“Term SOFR”) spot rates and interest rate curves (Note 7).

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5. Supplemental Balance Sheet Information

Investments — Available-for-sale Securities

The amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities were as follows:

 

 

 

December 31, 2023

 

(In thousands)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Commercial paper and corporate bonds

 

$

11,829

 

 

$

 

 

$

(10

)

 

$

11,819

 

Available-for-sale securities

 

$

11,829

 

 

$

 

 

$

(10

)

 

$

11,819

 

 

 

 

September 30, 2023

 

(In thousands)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Commercial paper and corporate bonds

 

$

3,936

 

 

$

 

 

$

(3

)

 

$

3,933

 

Available-for-sale securities

 

$

3,936

 

 

$

 

 

$

(3

)

 

$

3,933

 

Inventories

Inventories consisted of the following components:

 

 

December 31,

 

 

September 30,

 

(In thousands)

2023

 

 

2023

 

Raw materials

$

9,091

 

 

$

8,063

 

Work-in process

 

2,067

 

 

 

2,607

 

Finished products

 

3,280

 

 

 

4,169

 

Total

$

14,438

 

 

$

14,839

 

Prepaids and Other Assets, Current

Prepaids and other current assets consisted of the following:

 

December 31,

 

 

September 30,

 

(In thousands)

2023

 

 

2023

 

Prepaid expenses

$

3,635

 

 

$

2,600

 

Irish research and development credits receivable

 

662

 

 

 

1,322

 

CARES Act employee retention credit receivable (1)

 

3,441

 

 

 

3,441

 

Prepaids and other

$

7,738

 

 

$

7,363

 

(1)
Receivable consisted of anticipated reimbursement of personnel expenses incurred in fiscal periods prior to fiscal 2022 as a result of our eligibility for the employee retention credit under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

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Intangible Assets

Intangible assets consisted of the following:

 

December 31, 2023

 

(Dollars in thousands)

Weighted Average Original Life (Years)

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Customer lists and relationships

 

9.3

 

 

$

11,742

 

 

$

(10,059

)

 

$

1,683

 

Developed technology

 

11.9

 

 

 

35,116

 

 

 

(12,044

)

 

 

23,072

 

Patents and other

 

14.9

 

 

 

2,338

 

 

 

(1,460

)

 

 

878

 

Total definite-lived intangible assets

 

 

 

 

49,196

 

 

 

(23,563

)

 

 

25,633

 

Unamortized intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

580

 

 

 

 

 

 

580

 

Total intangible assets

 

 

 

$

49,776

 

 

$

(23,563

)

 

$

26,213

 

 

 

September 30, 2023

 

(Dollars in thousands)

Weighted Average Original Life (Years)

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Customer lists and relationships

 

9.3

 

 

$

11,260

 

 

$

(9,435

)

 

$

1,825

 

Developed technology

 

11.9

 

 

 

33,929

 

 

 

(11,048

)

 

 

22,881

 

Patents and other

 

14.9

 

 

 

2,338

 

 

 

(1,418

)

 

 

920

 

Total definite-lived intangible assets

 

 

 

 

47,527

 

 

 

(21,901

)

 

 

25,626

 

Unamortized intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Trademarks and trade names

 

 

 

 

580

 

 

 

 

 

 

580

 

Total intangible assets

 

 

 

$

48,107

 

 

$

(21,901

)

 

$

26,206

 

Intangible asset amortization expense was $0.9 million and $1.0 million for the three months ended December 31, 2023 and 2022, respectively. Based on the intangible assets in service as of December 31, 2023, estimated amortization expense for future fiscal years was as follows:

(In thousands)

 

 

Remainder of 2024

$

2,866

 

2025

 

3,786

 

2026

 

2,877

 

2027

 

2,624

 

2028

 

2,613

 

2029

 

2,613

 

Thereafter

 

8,254

 

Definite-lived intangible assets

$

25,633

 

Future amortization amounts presented above are estimates. Actual future amortization expense may be different as a result of future acquisitions, impairments, changes in amortization periods, foreign currency translation rates, or other factors.

Goodwill

Changes in the carrying amount of goodwill by segment were as follows:

(In thousands)

In Vitro
Diagnostics

 

 

Medical
Device

 

 

Total

 

Goodwill as of September 30, 2023

$

8,010

 

 

$

34,936

 

 

$

42,946

 

Currency translation adjustment

 

 

 

 

1,337

 

 

 

1,337

 

Goodwill as of December 31, 2023

$

8,010

 

 

$

36,273

 

 

$

44,283

 

 

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Other Assets, Noncurrent

Other noncurrent assets consisted of the following:

 

December 31,

 

 

September 30,

 

(In thousands)

2023

 

 

2023

 

Operating lease right-of-use assets

$

3,649

 

 

$

2,987

 

Other

 

724

 

 

 

877

 

Other assets

$

4,373

 

 

$

3,864

 

Accrued Other Liabilities

Accrued other liabilities consisted of the following:

 

December 31,

 

 

September 30,

 

(In thousands)

2023

 

 

2023

 

Accrued professional fees

$

200

 

 

$

178

 

Accrued clinical study expense

 

405

 

 

 

1,056

 

Accrued purchases

 

1,275

 

 

 

1,142

 

Deferred consideration (1)

 

2,627

 

 

 

2,661

 

Operating lease liabilities, current portion

 

997

 

 

 

872

 

Other