XML 34 R17.htm IDEA: XBRL DOCUMENT

Note 8 - Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Text Block]

8. Goodwill and Intangible Assets

The Company conducts an impairment assessment annually on April 1, or more frequently if impairment indicators are present. Changes to the Company’s operating segments effective October 1, 2023 resulted in a change to the Company’s reporting units, which are aligned to the Company’s operating and reportable segments (as further described in Note 18, Segment and Geographic Information below). As a result of this segment realignment, the Company allocated goodwill to the reporting units existing under the new organizational structure on a relative fair value basis as of October 1, 2023. The Company estimated the fair values of the affected businesses based upon the present value of their anticipated future cash flows. The Company's determination of fair value involved judgment and the use of significant estimates and assumptions.

The Company tested its reporting units for potential impairment immediately before and after the segment realignment and concluded that the estimated fair value of each reporting unit exceeded its respective carrying value. As of October 1, 2023, the fair value of the B Medical Systems reporting unit exceeded its carrying value by approximately 5 percent.

During the second quarter of fiscal year 2024, as part of the Company’s routine long-term planning process, the Company assessed several events and circumstances that could affect the significant inputs used to determine the fair value of its reporting units, including updates to forecasted cash flows, the impact of the Company’s planned transformation initiatives and the overall change in the economic climate since its last impairment assessment in October 2023. The Company concluded it was more likely than not the fair value of the Company’s B Medical Systems segment was less than its carrying amount resulting from the reduction in the Company’s anticipated revenue growth rates for the current and subsequent years as compared to prior projections. As a result, the Company completed a quantitative goodwill impairment test for its reporting units in accordance with ASC 350, Intangibles – Goodwill as of March 31, 2024.

For the quantitative goodwill impairment analyses performed, the Company compared the estimated fair values of each of its reporting units to their respective carrying amounts. The estimated fair values of each of the reporting units were derived using the income approach, specifically the DCF method. The discounted cash flow models used in the DCF Method analysis reflected the Company’s assumptions regarding revenue growth rates, forecast gross profit margins, operating expenses, capital expenditures, discount rates, terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting units. As part of the goodwill impairment test, the Company also considered its market capitalization and guideline public companies in assessing the reasonableness of the combined fair values estimated for its reporting units. Goodwill impairment is measured as the excess of a reporting unit's carrying amount over its estimated fair value, not to exceed the carrying amount of goodwill for that reporting unit.

The results of the Company’s quantitative goodwill impairment analyses as of March 31, 2024 indicated an impairment of goodwill within its B Medical Systems reporting unit resulting in a non-cash impairment charge of $111.3 million recorded within "Impairment of goodwill and intangible assets" in its Condensed Consolidated Statements of Operations during the three months ended March 31, 2024. The Company concluded that there was no impairment to goodwill for the Sample Management Solutions and Multiomics reporting units as of March 31, 2024 or the annual impairment testing date of April 1, 2024.

In the event the financial performance of any of the reporting units does not meet management’s expectations in the future, the Company experiences a prolonged macroeconomic downturn, or there are other negative revisions to key assumptions used in the DCF method used to value the reporting units, the Company may be required to perform additional impairment analyses with respect to such reporting units and could be required to recognize additional impairment charges.

The following table sets forth the changes in the carrying amount of goodwill by reportable segment that is consistent with the Company's operating segments effective October 1, 2023 (in thousands):

		*Life Sciences Products*			*Life Sciences Services*			*Sample Management Solutions*		*Multiomics*		*B Medical Systems*			*Total*
Balance - September 30, 2022	$	154,612		$	359,011		$	—	$	—	$	—		$	513,623
Acquisitions		242,789						—		—		—			242,789
Currency translation adjustments		27,903			24			—		—		—			27,927
Balance - September 30, 2023	$	425,304		$	359,035		$	—	$	—	$	—		$	784,339
Segment recast ⁽¹⁾		(425,304	)		(359,035	)		478,601		196,760		108,978			—
Impairment		—			—			—		—		(111,317	)		(111,317	)
Currency translation adjustments		—			—			16,048		—		2,339			18,387
Balance - September 30, 2024	$	—		$	—		$	494,649	$	196,760	$	—		$	691,409

Accumulated goodwill impairments, September 30, 2024	$	-		$	-		$	-	$	-	$	(111,317	)	$	(111,317	)

₍₁₎

Changes to the Company’s operating segments effective October 1, 2023 resulted in a change to the Company’s reporting units. As a result of this segment realignment, the Company allocated goodwill to the reporting units existing under the new organizational structure on a relative fair value basis as of October 1, 2023.

The components of the Company’s identifiable intangible assets as of September 30, 2024 and 2023 are as follows (in thousands):

	*September 30, 2024*						*September 30, 2023*
			*Accumulated*		*Net Book*				*Accumulated*		*Net Book*
	*Cost*		*Amortization*		*Value*		*Cost*		*Amortization*		*Value*
Patents	$	1,227	$	1,227	$	—	$	1,226	$	1,175	$	51
Completed technology		224,487		82,736		141,751		215,430		56,021		159,409
Trademarks and trade names		6,988		3,133		3,855		6,630		1,445		5,185
Non-competition agreements		—		—		—		681		568		113
Customer relationships		289,821		187,397		102,424		290,800		161,257		129,543
Other intangibles		683		683		—		869		869		—
Total	$	523,206	$	275,176	$	248,030	$	515,636	$	221,335	$	294,301

For further details regarding the goodwill and intangible assets obtained from the B Medical and Ziath acquisitions, please refer to Note 4, Business Combinations.

During the second quarter of fiscal year 2024, the Company discontinued its sample sourcing product offering (a product line within the Sample Management Solutions segment). As a result, the Company recorded a $4.7 million impairment of intangible assets related to the sample sourcing business within “Impairment of goodwill and intangible assets” in its Condensed Consolidated Statements of Operations during the three months ended March 31, 2024.

Amortization expense for intangible assets was $51.3 million, $48.4 million, and $32.3 million, respectively, for the fiscal years ended September 30, 2024, 2023 and 2022.

Estimated future amortization expense for the intangible assets as of September 30, 2024 is as follows (in thousands):

2025	$	50,051
2026		45,502
2027		37,285
2028		30,793
2029		25,007
Thereafter		59,392
Total	$	248,030