Goodwill: In the second quarter of fiscal 2022, Changzhou Eminence Biotechnology Co., Ltd. (Eminence) notified the Company of its need for additional capital to execute its growth plan. The Company first attempted to find outside equity financing support for the Eminence investment but was unable to do so. The Company then reviewed the additional financing needs required to successfully ramp Eminence’s business, which ultimately did not meet the Company’s return on capital requirements. Therefore, the Company did not provide additional funding to Eminence. As a result of not obtaining additional financing, Eminence notified the Company of its plans to cease operations and liquidate its business.

Given the upcoming liquidation process to dispose of the Eminence assets, the Company identified a triggering event in the second quarter of fiscal 2022 and performed impairment testing. The impairment testing resulted in a full impairment of the Eminence goodwill and intangible assets, which resulted in charges of $8.3 million and $8.6 million, respectively. The Company also recognized inventory and fixed asset impairment charges of $0.9 million and $0.9 million, respectively.

The Company recorded the impairment charges within the General and Administrative line in the Consolidated Income Statement. The impact on net income attributable to Bio-Techne was approximately $8 million, after taking into effect non-controlling interest holders. The remaining net tangible assets of Eminence included in our Consolidated Balance Sheet were approximately $4 million and primarily consisted of fixed assets and related deposits of $3.7 million, inventory of $0.9 million, receivables of $0.6 million, and other current assets of $0.2 million. The Company also had $1.6 million related to current liabilities. The Company holds a financial interest of approximately 57.4% in those tangible assets in the liquidation process.   

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.

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 closure of the site is expected to be completed in the third quarter of fiscal 2022. As a result of the restructuring activities, an estimated pre-tax charge of $1.2 million was recorded within our Diagnostics and Genomics segment during the first quarter of fiscal 2022. Additional charges of approximately $0.5 million were recorded in the quarter ended December 31, 2021. These additional charges related to the refinement of our estimated close down costs as well as miscellaneous shut-down costs incurred during the quarter. Total restructuring charges for the closure of the Exosome Diagnostics Germany facility for the six months ended December 31, 2021 were recorded within operating income on the income statement as follows (in thousands):

Restructuring actions, including cash and non-cash impacts, are as follows (in thousands):

⁽¹⁾ The expense recorded for the three months ended September 31, 2021 of $1.2 million included $0.2 million related to the non-cash impairment of fixed assets.

During the second quarter of fiscal 2022, the Company also incurred a restructuring charge of $0.2 million related to employee severance for the relocation of a US plant. This charge is recorded within Other current liabilities as of December 31, 2021. There were no cash payments related to this restructuring during the period ended December 31, 2021.