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Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended
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Mar. 31, 2023
Notes to Financial Statements |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1. Basis of Presentation and Summary of Significant Accounting Policies: The interim consolidated financial statements of Bio-Techne Corporation and subsidiaries, (the Company) presented here have been prepared by the Company and are unaudited. They have been prepared in accordance with accounting principles generally accepted in the United States of America and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto for the fiscal year ended June 30, 2022, included in the Company's Annual Report on Form 10-K for fiscal 2022. A summary of significant accounting policies followed by the Company is detailed in the Company's Annual Report on Form 10-K for fiscal 2022. The Company follows these policies in preparation of the interim unaudited condensed consolidated financial statements. During the quarter ended March 31, 2023, the Company operated under two operating segments, Protein Sciences and Diagnostics and Genomics. The operating segments the Company operated under were consistent with the Company's operating segments disclosed in the Company's Annual Report on Form 10-K for fiscal 2022. At the 2022 annual meeting of shareholders of the Company held on October 27, 2022, the shareholders approved an amendment and restatement of the Company’s articles of incorporation to increase the number of authorized shares of the Company’s common stock from 100,000,000 to 400,000,000. On November 1, 2022, the Company’s board of directors approved and declared a four-for-one split of the Company’s common stock in the form of a stock dividend. Each stockholder of record on November 14, 2022 received three additional shares of common stock for each then-held share, which were distributed after close of trading on November 29, 2022. All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the stock split. Partially-owned consolidated subsidiary: On September 1, 2022, the Company completed the sale of its equity shares of Changzhou Eminence Biotechnology Co., Ltd. (Eminence) for approximately $17.8 million to a third party. Eminence was considered a variable-interest entity that was fully consolidated in our financial statements. Prior to the sale, Eminence had revenue of $2.0 million for the first fiscal quarter of 2023 within our Protein Sciences segment. Fiscal 2022 revenues were $4.6 million. As a result of the sale of the business, the Company recorded a gain of $11.7 million within the Other income (expense) line in the Condensed Consolidated Statement of Earnings. Prior to the sale of Eminence, a triggering event was identified in the second quarter of fiscal 2022 and impairment testing was performed as Eminence was forecasted to not have sufficient cash to execute on their growth plan combined with their inability to secure additional financing. Our impairment testing resulted in a full impairment of the Eminence goodwill and intangibles assets for charges of $8.3 million and $8.6 million, respectively, for the year ended June 30, 2022. The Company also recognized inventory and fixed asset impairment charges of $0.9 million and $0.9 million, respectively. These impairment charges were recorded within the General and Administrative line in the Consolidated Statement of Earnings for fiscal 2022. In the fourth quarter of fiscal 2022, Eminence was able to secure cash deposits on future orders to provide funding for their operations. This delay in liquidation allowed time for securing of additional investor financing which coincided with the sale of the Company's investment. Investments: In December 2021, the Company paid $25 million to enter into a two-part forward contract which requires the Company to make an initial ownership investment followed by purchase of full equity interest in Wilson Wolf Corporation (Wilson Wolf) if certain annual revenue or annual earnings before interest, taxes, depreciation, and amortization (EBITDA) thresholds are met. Wilson Wolf is a leading manufacturer of cell culture devices, including the G-Rex product line. The first part of the forward contract is triggered upon Wilson Wolf achieving approximately $92 million in annual revenue or $55 million in EBITDA at any point prior to December 31, 2027. During the quarter ended March 31, 2023, the Company determined that Wilson Wolf had met the EBITDA target. On March 31, 2023, the Company paid an additional $232 million to acquire 19.9% of Wilson Wolf. Since the first part of the forward contract has been triggered, the second part of the forward contract will automatically trigger, and requires the Company to acquire the remaining equity interest in Wilson Wolf on December 31, 2027 based on a revenue multiple of approximately 4.4 times trailing twelve month revenue. The second part of the contract would be accelerated in advance of December 31, 2027, if Wilson Wolf meets its second milestone of approximately $226 million in annual revenue or $136 million in annual EBITDA. If the second milestone is achieved, the forward contract requires the Company to pay approximately $1 billion plus potential consideration for revenue in excess of the revenue milestone. The investment in Wilson Wolf is accounted for as an equity method investment under ASC 323. The Company initially records its equity method investments at the amount of the Company’s investment and adjusts each period for the Company’s share of the investee’s income or loss and dividends paid. There was not material income or loss during the quarter ended March 31, 2023 recorded on the Company’s Consolidated Statement of Earnings and Comprehensive Income related to the investment. The Company’s total investment of $257 million is included within Other long-term assets on the Consolidated Balance Sheet. Restructuring actions: Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and impairments and disposals of assets associated with such actions. Employee-related severance charges are based upon distributed employment policies and substantive severance plans. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Asset impairment and disposal charges include right of use assets, leasehold improvements, and other asset write-downs associated with combining operations and disposal of assets. Fiscal Year 2023 Restructuring Actions: QT Holdings Corporation (Quad) In August 2022, the Company informed employees of our decision to close our QT Holdings Corporation (Quad) facility as part of a realignment of activities within our Reagent Solutions division. The closure of the site is expected to be substantially completed in the fourth quarter of fiscal 2023. As a result of the restructuring activities, an estimated pre-tax charge of $2.2 million was recorded within our Protein Sciences segment for the nine months ended March 31, 2023. There were no additional charges for the third fiscal quarter ended March 31, 2023. The related nine months ended March 31, 2023 restructuring charges were recorded in the income statement as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Employee | ​ | Asset | ​ | ​
​ |  | severance |  | impairment and other |  | Total
Selling, general and administrative | ​ | $ | 1,328 | ​ | $ | 842 | ​ | $ | 2,170
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Employee | ​ | Asset | ​ | ​
​ |  | severance |  | impairment and other |  | Total
Expense incurred in the first quarter of 2023 | ​ | $ | 1,328 | ​ | $ | 842 | ​ | $ | 2,170
Cash payments | ​ | ​ | (420) | ​ | ​ | (431) | ​ | ​ | (851)
Adjustments | ​ | ​ | — | ​ | ​ | (72) | ​ | ​ | (72)
Accrued restructuring actions balances as of September 30, 2022 | ​ | ​ | 908 | ​ | ​ | 339 | ​ | ​ | 1,247
Cash payments | ​ | ​ | (753) | ​ | ​ | (262) | ​ | ​ | (1,015)
Adjustments | ​ | ​ | (38) | ​ | ​ | (73) | ​ | ​ | (111)
Accrued restructuring actions balances as of December 31, 2022 | ​ | ​ | 117 | ​ | ​ | 4 | ​ | ​ | 121
Cash payments | ​ | ​ | (60) | ​ | ​ | (70) | ​ | ​ | (130)
Adjustments | ​ | ​ | (57) | ​ | ​ | 75 | ​ | ​ | 18
Accrued restructuring actions balances as of March 31, 2023 | ​ | $ | — | ​ | $ | 9 | ​ | $ | 9
​ ​ Protein Sciences realignment In December 2022, the Company informed employees it would undertake certain actions to strategically reallocate resources to high growth areas of the business. The realignment impacted a limited number of employees and was completed in the third fiscal quarter of 2023. As a result of the realignment, a pre-tax charge of $0.8 million related to employee severance was recorded in the Selling, general and administrative line of operating income within our Protein Sciences segment during the nine months ended March 31, 2023. ​ Restructuring actions, including cash and non-cash impacts, are as follows (in thousands): ​
​ | ​ | ​ | ​
​ | ​ | Employee
​ | ​ | severance
Expense incurred in the second quarter of 2023 | ​ | $ | 780
Cash payments | ​ | ​ | (176)
Adjustments | ​ | ​ | —
Accrued restructuring actions balances as of December 31, 2022 | ​ | ​ | 604
Cash payments | ​ | ​ | (586)
Adjustments | ​ | ​ | (18)
Accrued restructuring actions balances as of March 31, 2023 | ​ | $ | —
​ ​ Fiscal Year 2022 Restructuring Actions: ​ In September 2021, the Company informed employees of our decision to close our Exosome Diagnostics Germany facility, discontinuing lab and research occurring at the site, as part of a realignment of activities within our Exosome Diagnostics business. The restructuring activities were completed as of June 30, 2022. As a result of the restructuring activities, a pre-tax charge of $1.4 million was recorded within our Diagnostics and Genomics segment during the year ended June 30, 2022. Total restructuring charges for the closure of the Exosome Diagnostics Germany facility for the year ended June 30, 2022 were recorded within Operating Income on the Income statement as follows (in thousands): ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Employee | ​ | Asset | ​ | ​
​ |  | severance |  | impairment and other |  | Total
Selling, general and administrative | ​ | $ | 649 | ​ | $ | 750 | ​ | $ | 1,399
​ ​ Restructuring actions, including cash and non-cash impacts, are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Employee | ​ | Asset | ​ | ​
​ |  | severance |  | impairment and other |  | Total
Expense incurred in the first quarter of 2022 | ​ | $ | 639 | ​ | $ | 546 | ​ | $ | 1,185
Incremental expense incurred during fiscal 2022 | ​ | ​ | — | ​ | ​ | 242 | ​ | ​ | 242
Cash payments | ​ | ​ | (589) | ​ | ​ | (554) | ​ | ​ | (1,143)
Adjustments(1) | ​ | ​ | (50) | ​ | ​ | (234) | ​ | ​ | (284)
Accrued restructuring actions balances as of June 30, 2022 | ​ | $ | — | ​ | $ | — | ​ | $ | —
​ (1)Adjustments include refinements to our estimated close down costs as well as the impacts from foreign currency exchange. Recently Adopted Accounting Pronouncements There were no accounting pronouncements adopted in the quarter ended March 31, 2023. Refer to the Form 10-K for accounting pronouncements adopted prior to June 30, 2022.

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- Definition The entire disclosure for the business description and accounting policies concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI https://asc.fasb.org/topic&trid=2134479 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI https://asc.fasb.org/topic&trid=2122369 + Details
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