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Note 3 - Discontinued Operations | 9 Months Ended
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Jun. 30, 2025
Notes to Financial Statements |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | 3. Discontinued Operations Plan to Sell B Medical Systems Business During the first quarter of fiscal year 2025, following approval by the Board of Directors of the Company, the Company publicly announced its plan to sell the B Medical Systems business. The B Medical Systems business operates as a separate business unit within the Company and focuses on the manufacturing and distribution of temperature-controlled storage and transportation solutions in international markets to governments, health institutions, and non-government organizations. This action is intended to simplify the Company's portfolio and allow management to focus on driving revenue growth and profitability in its core businesses. The decision followed work by the Board of Directors to evaluate strategic, operational and financial opportunities to maximize stockholder value. The Company anticipates entering into a definitive agreement to sell its B Medical Systems business by November 2025. The Company determined that the B Medical Systems business met the “held for sale” criteria and “discontinued operations” criteria in accordance with FASB ASC 205 as of November 12, 2024. Results related to the B Medical Systems business are included within discontinued operations. The Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Operations, and the notes to the Condensed Consolidated Financial Statements, were retroactively reclassified for all periods presented to reflect the discontinuation of the B Medical Systems business in accordance with FASB ASC 205. The Company measured the B Medical Systems business at the lower of carrying value or fair value less cost to sell at each reporting period. During the three months ended March 31, 2025, the Company recorded $24 million of loss on assets held for sale based on the estimated fair value of the B Medical Systems business at that time. During the three months ended June 30, 2025, the Company recorded an additional $68.8 million of loss on assets held for sale due to subsequent changes in the fair value less costs to sell the business resulting from observable inputs received during the continued progression of the sale process. The loss on assets held for sale recorded during the three months ended June 30, 2025 includes an immaterial correction of an error related to the second quarter of 2025, whereby the Company had understated the loss recorded in the second quarter by $5.6 million, net of tax. The loss on assets held for sale is included in “Loss from discontinued operations, net of tax” on the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2025 and is included as a valuation allowance or contra-asset account within “Noncurrent assets held for sale” on the Condensed Consolidated Balance Sheets as of June 30, 2025. The estimated fair value as of March 31, 2025 was derived based on the income approach and the market approach which were weighted equally at 50% each. The discounted cash flow method, or “DCF Method”, was used in the income approach which reflected the Company’s assumptions regarding revenue growth rates, forecasted 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 the B Medical Systems business. The guideline company method was used in the market approach and publicly traded companies in similar lines of business were identified and used in an analysis to estimate the fair value. The fair value as of March 31, 2025 was based on indications of the expected value of the business which is classified in level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information. The fair value as of June 30, 2025 was based on observable inputs received during the continued progression of the sale process which is classified in level 2 of the fair value hierarchy. The following table presents the financial results of the B Medical Systems business, included within discontinued operations (in thousands):
|  | Three Months Ended June 30, |  |  | Nine Months Ended June 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Products |  | $ | 14,333 |  |  | $ | 24,735 |  |  | $ | 44,507 |  |  | $ | 54,666 |
Services |  |  | 1,969 |  |  |  | 3,782 |  |  |  | 6,592 |  |  |  | 9,222 |
Total revenue |  |  | 16,302 |  |  |  | 28,517 |  |  |  | 51,099 |  |  |  | 63,888 |
Cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Products |  |  | 9,793 |  |  |  | 21,249 |  |  |  | 31,333 |  |  |  | 48,947 |
Services |  |  | 1,600 |  |  |  | 3,690 |  |  |  | 6,321 |  |  |  | 8,873 |
Total cost of revenue |  |  | 11,393 |  |  |  | 24,939 |  |  |  | 37,654 |  |  |  | 57,820 |
Gross profit |  |  | 4,909 |  |  |  | 3,578 |  |  |  | 13,445 |  |  |  | 6,068 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 1,533 |  |  |  | 1,002 |  |  |  | 4,369 |  |  |  | 3,155 |
Selling, general and administrative |  |  | 6,939 |  |  |  | 9,861 |  |  |  | 20,855 |  |  |  | 27,804 |
Impairment of goodwill and intangible assets |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 111,317 |
Loss on assets held for sale |  |  | 68,838 |  |  |  | - |  |  |  | 93,025 |  |  |  | - |
Restructuring charges |  |  | 373 |  |  |  | 362 |  |  |  | 1,051 |  |  |  | 4,613 |
Total operating expenses |  |  | 77,683 |  |  |  | 11,225 |  |  |  | 119,300 |  |  |  | 146,889 |
Operating loss |  |  | (72,774 | ) |  |  | (7,647 | ) |  |  | (105,855 | ) |  |  | (140,821 | )
Interest income (expense), net |  |  | (10 | ) |  |  | 79 |  |  |  | (20 | ) |  |  | 291 |
Other income (expense), net |  |  | (92 | ) |  |  | 94 |  |  |  | (166 | ) |  |  | 776 |
Loss before income taxes |  |  | (72,876 | ) |  |  | (7,474 | ) |  |  | (106,041 | ) |  |  | (139,754 | )
Income tax benefit |  |  | (19,689 | ) |  |  | (1,050 | ) |  |  | (27,044 | ) |  |  | (4,120 | )
Loss from discontinued operations, net of tax |  | $ | (53,187 | ) |  | $ | (6,424 | ) |  | $ | (78,997 | ) |  | $ | (135,634 | )
The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the B Medical Systems business that are included in the Condensed Consolidated Statements of Cash Flows (in thousands):
|  | Three Months Ended June 30, |  |  | Nine Months Ended June 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Depreciation and amortization |  | $ | - |  |  | $ | 7,907 |  |  | $ | 3,846 |  |  | $ | 22,859 |
Capital expenditures |  |  | 1,472 |  |  |  | 581 |  |  |  | 2,600 |  |  |  | 2,578 |
Impairment of goodwill |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 111,317 |
Loss on assets held for sale |  |  | 68,838 |  |  |  | - |  |  |  | 93,025 |  |  |  | - |
The carrying value of the assets and liabilities of the discontinued operations with respect to the B Medical Systems business reflected as “held for sale” on the Condensed Consolidated Balance Sheets as of June 30, 2025 and September 30, 2024 was as follows (in thousands):
|  | June 30, 2025 |  |  | September 30, 2024 |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 15,000 |  |  | $ | 30,899 |
Accounts receivable, net |  |  | 9,566 |  |  |  | 16,438 |
Inventories |  |  | 45,720 |  |  |  | 36,333 |
Prepaid expenses and other current assets |  |  | 6,740 |  |  |  | 5,224 |
Current assets held for sale |  | $ | 77,025 |  |  | $ | 88,894 |
Property, plant and equipment, net |  | $ | 50,490 |  |  | $ | 47,032 |
Intangibles, net |  |  | 126,130 |  |  |  | 122,988 |
Other assets |  |  | 5,351 |  |  |  | 3,774 |
Valuation allowance |  |  | (96,492 | ) |  |  | - |
Noncurrent assets held for sale |  | $ | 85,479 |  |  | $ | 173,794 |
Liabilities |  |  |  |  |  |  |  |
Accounts payable |  | $ | 8,587 |  |  | $ | 11,089 |
Deferred revenue |  |  | 1,639 |  |  |  | 1,485 |
Accrued warranty and retrofit costs |  |  | 5,131 |  |  |  | 4,916 |
Accrued compensation and benefits |  |  | 3,896 |  |  |  | 2,929 |
Accrued income taxes |  |  | 760 |  |  |  | 4,012 |
Accrued expenses and other current liabilities |  |  | 11,702 |  |  |  | 5,619 |
Current liabilities held for sale |  | $ | 31,715 |  |  | $ | 30,050 |
Long-term deferred tax liabilities |  |  | 11,278 |  |  |  | 36,093 |
Long-term operating lease liabilities |  |  | 2,852 |  |  |  | 2,109 |
Other long-term liabilities |  |  | 2,961 |  |  |  | 3,994 |
Noncurrent liabilities held for sale |  | $ | 17,091 |  |  | $ | 42,196 |
Disposition of Semiconductor Business On February 1, 2022, the Company completed the sale of the semiconductor automation business for $2.9 billion in cash to Thomas H. Lee Partners, L.P. On July 1, 2019, the Company completed the sale of the semiconductor cryogenics business for $659.8 million to Edwards Vacuum LLC (a member of the Atlas Copco Group) (“Edwards”). Both the semiconductor automation business and the semiconductor cryogenics business are considered discontinued operations. In the third quarter of fiscal year 2020, Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory (the “2020 Claim”). In addition, in January 2023, Edwards filed a lawsuit against the Company in the Supreme Court of the State of New York in the County of New York seeking indemnification from the Company under such definitive agreement for $1.0 million and other related damages, including interest and attorney’s fees, arising from a third-party claim that was included as part of their initial claims (the “2023 Claim”). In April 2023, the Company responded to and filed a counterclaim against Edwards for the 2023 Claim alleging breach of the definitive agreements by Edwards and seeking a declaratory judgment. During the third quarter of fiscal year 2023, the Company and Edwards entered into a settlement agreement related to the 2023 Claim to avoid the costs and uncertainties of potential litigation. Under the settlement agreement, the Company paid Edwards $0.8 million from one of the indemnification escrows established at closing of the sale in return for the release of the 2023 Claim and the release to the Company of $1.0 million from a separate indemnification escrow. The Company accrued a liability of $2.5 million for the 2020 Claim and 2023 Claim of which $0.8 million was paid during the third quarter of fiscal year 2023. The Company accrued an additional liability of $0.4 million for the 2020 Claim during the three months ended March 31, 2025 resulting in a total accrual of $2.1 million as of June 30, 2025. The Company had been informed that Edwards sought recovery for the 2020 Claim from the representation and warranty insurance Edwards obtained in connection with the closing of the sale of the semiconductor cryogenics business. During the first quarter of fiscal year 2025, the Company was further informed that Edwards agreed to a payment under such insurance for claimed amounts more than the applicable indemnification deductibles established under the definitive agreement, but less than the total of claimed amounts submitted for recovery. Although management believes that any indemnifiable losses in excess of the applicable deductibles established in the definitive agreement would have been covered by such insurance, and the Company further disputes any liability under applicable law, Edwards is seeking recovery from the Company for claimed amounts purportedly not covered, or inadequately covered, by such insurance (the “Claim for Uncovered Amounts”). The Company cannot determine the probability of any losses or outcome of the Claim for Uncovered Amounts including the amount of any indemnifiable losses, if any, resulting from this claim. The Company, however, does not believe that this claim will have a material adverse effect on its consolidated financial position or results of operations, in each case, for continuing operations. Any potential expense incurred by the Company for these claims would be reflected in discontinued operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can be no assurance that the Company’s assessment of these claims will reflect the ultimate outcome, and an adverse outcome in these matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

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