UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2022, or

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

For the transition period from to

Commission file number 0-17272

BIO-TECHNE CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota	41-1427402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

614 McKinley Place N.E. Minneapolis, MN 55413	(612) 379-8854
(Address of principal executive offices) (Zip Code)	(Registrant's telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	TECH	The NASDAQ Stock Market LLC

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, 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 Exchange Act Rule 12b- 2). ☐ Yes ☒ No

At February 1, 2023, 157,275,200 shares of the Company's Common Stock (par value $0.01) were outstanding.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

Bio-Techne Corporation and Subsidiaries

(in thousands, except per share data)

(unaudited)


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021

Net sales	$	271,581	$	269,276	$	541,236	$	526,995
Cost of sales		88,221		85,585		178,280		172,307
Gross margin		183,360		183,691		362,956		354,688

Operating expenses:
Selling, general and administrative		93,010		100,693		192,386		186,868
Research and development		22,459		20,650		46,362		42,250
Total operating expenses		115,469		121,343		238,748		229,118
Operating income		67,891		62,348		124,208		125,570

Other income (expense)		(1,462)		23,831		45,938		27,992
Earnings before income taxes		66,429		86,179		170,146		153,562
Income taxes (benefit)		16,424		14,120		30,407		12,522
Net earnings, including noncontrolling interest		50,005		72,059		139,739		141,040
Net earnings (loss) attributable to noncontrolling interest		—		(8,114)		179		(8,748)
Net earnings attributable to Bio-Techne	$	50,005	$	80,173	$	139,560	$	149,788
Other comprehensive income (loss):
Foreign currency translation adjustments		17,370		1,924		(4,087)		(6,722)
Foreign currency translation reclassified to earnings with Eminence deconsolidation		—		—		119		—
Unrealized gains (losses) on derivative instruments - cash flow hedges, net of tax amounts disclosed in Note 8		(685)		2,884		4,010		4,566
Other comprehensive income (loss)		16,685		4,808		42		(2,156)
Other comprehensive income (loss) attributable to noncontrolling interest		—		66		(33)		27
Other comprehensive income (loss) attributable to Bio-Techne		16,685		4,742		75		(2,183)
Comprehensive income attributable to Bio-Techne	$	66,690	$	84,915	$	139,635	$	147,605

Earnings per share attributable to Bio-Techne⁽¹⁾:
Basic	$	0.32	$	0.51	$	0.89	$	0.95
Diluted	$	0.31	$	0.49	$	0.86	$	0.91

Weighted average common shares outstanding⁽¹⁾:
Basic		157,011		157,240		156,887		156,808
Diluted		161,750		164,828		161,766		164,636

⁽¹⁾Prior period results have been adjusted to reflect the four-for-one stock split effected in the form of a stock dividend on November 29, 2022. See Note 1 for details.

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS

Bio-Techne Corporation and Subsidiaries

(in thousands, except share and per share data)


	December 31,
	2022		June 30,
	(unaudited)		2022
ASSETS
Current assets:
Cash and cash equivalents	$	164,682	$	172,567
Short-term available-for-sale investments		32,074		74,462
Accounts receivable, less allowance for doubtful accounts of $3,250 and $2,568, respectively		184,763		194,548
Inventories		160,233		141,123
Other current assets		23,431		22,856
Total current assets		565,183		605,556

Property and equipment, net		223,851		223,242
Right of use asset		83,937		65,556
Goodwill		869,589		822,101
Intangible assets, net		567,647		531,522
Other assets		53,194		46,828
Total assets	$	2,363,401	$	2,294,805
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	24,100	$	33,865
Salaries, wages and related accruals		28,633		61,953
Accrued expenses		16,279		17,886
Contract liabilities		21,812		23,406
Income taxes payable		25,277		13,237
Operating lease liabilities - current		10,975		11,928
Current portion of long-term debt obligations		—		12,500
Other current liabilities		1,319		1,243
Total current liabilities		128,395		176,018

Deferred income taxes		111,381		98,994
Long-term debt obligations		200,000		243,410
Long-term contingent consideration payable		7,000		5,000
Operating lease liabilities		78,183		58,133
Other long-term liabilities		11,336		12,239

Bio-Techne’s Shareholders’ equity:
Undesignated capital stock, no par; authorized 5,000,000 shares; none issued or outstanding		—		—
Common stock, par value $.01 per share; authorized 400,000,000; issued and outstanding 157,093,879 and 156,644,212, respectively⁽¹⁾		1,571		1,566
Additional paid-in capital⁽¹⁾		700,684		652,467
Retained earnings⁽¹⁾		1,199,976		1,122,937
Accumulated other comprehensive loss		(75,125)		(75,200)
Total Bio-Techne’s shareholders’ equity		1,827,106		1,701,770
Noncontrolling interest		—		(759)
Total shareholders’ equity		1,827,106		1,701,011
Total liabilities and shareholders’ equity	$	2,363,401	$	2,294,805

⁽¹⁾Prior period results have been adjusted to reflect the four-for-one stock split effected in the form of a stock dividend on November 29,2022. See Note 1 for details.

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Bio-Techne Corporation and Subsidiaries

(in thousands)

(unaudited)


	Six Months Ended
	December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, including noncontrolling interest	$	139,739	$	141,040
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		53,344		49,836
Costs recognized on sale of acquired inventory		400		1,596
Deferred income taxes		(6,365)		7,233
Stock-based compensation expense		31,205		25,706
Fair value adjustment to contingent consideration payable		(8,600)		(16,400)
Contingent consideration payments - operating		—		(3,300)
(Gain) Loss on investment, net		(37,176)		—
Fair value adjustment on available for sale investments		(839)		(33,672)
Asset impairment restructuring		—		546
Eminence impairment		—		18,715
Gain on sale of Eminence		(11,682)		—
Leases, net		640		(501)
Other operating activity		112		383
Change in operating assets and operating liabilities, net of acquisition:
Trade accounts and other receivables, net		11,425		(9,347)
Inventories		(18,362)		(8,700)
Prepaid expenses		(2,005)		(7,025)
Trade accounts payable, accrued expenses, contract liabilities, and other		(11,541)		(175)
Salaries, wages and related accruals		(33,265)		(10,408)
Income taxes payable		13,435		(6,100)
Net cash provided by (used in) operating activities		120,465		149,427

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale investments		26,509		12,450
Purchases of available-for-sale investments		(20,500)		(13,500)
Proceeds from sale of CCXI investment		73,219		—
Additions to property and equipment		(15,665)		(16,238)
Acquisitions, net of cash acquired		(101,184)		—
Proceeds from sale of Eminence		17,824		—
Investment of forward purchase contract		—		(25,000)
Net cash provided by (used in) investing activities		(19,797)		(42,288)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends		(25,106)		(25,069)
Proceeds from stock option exercises		16,977		56,500
Re-purchases of common stock		(19,562)		(41,294)
Borrowings under line-of-credit agreement		449,661		50,000
Repayments of long-term debt		(505,661)		(109,250)
Contingent consideration payments - financing		—		(700)
Taxes paid on RSUs and net share settlements		(17,853)		(23,247)
Other financing activity		(2,457)		—
Net cash provided by (used in) financing activities		(104,001)		(93,060)

Effect of exchange rate changes on cash and cash equivalents		(4,552)		(1,325)
Net change in cash and cash equivalents		(7,885)		12,754
Cash and cash equivalents at beginning of period		172,567		199,091
Cash and cash equivalents at end of period	$	164,682	$	211,845

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	26,411	$	15,368
Cash paid for interest	$	5,619	$	6,144

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Bio-Techne Corporation and Subsidiaries

(unaudited)

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 December 31, 2022, 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 was 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 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 annual earnings before interest, taxes, depreciation, and amortization (EBITDA) at any point prior to December 31, 2027. Once triggered, the Company is required to make a payment of $231 million in exchange for a 19.9% ownership stake. If Wilson Wolf doesn’t achieve the revenue and EBITDA targets by December 31, 2027, the agreement will expire.

Once the first part of the forward contract is 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. The second

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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 approximate multiple for total expected payments of the second forward contract is 4.4 times the annual revenue of Wilson Wolf. The Company has elected to apply the measurement alternative as detailed under ASC 321-10-35-2 for the Wilson Wolf investment. The Company recorded the $25 million payment as a cost basis investment 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 third 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 six months ended December 31, 2022. There were no additional charges for the second fiscal quarter ended December 31, 2022. The related first quarter of fiscal 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

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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 is expected to be complete in the third fiscal quarter of 2023. As a result, 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 quarter ended December 31, 2022.

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

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 December 31, 2022. Refer to the Form 10-K for accounting pronouncements adopted prior to June 30, 2022.

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Note 2. Revenue Recognition:

Consumables revenues consist of specialized proteins, immunoassays, antibodies, reagents, blood chemistry and blood gas quality controls, and hematology instrument controls that are typically single-use products recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. Service revenues consist of extended warranty contracts, post contract support, and custom development projects that are recognized over time as either the customers receive and consume the benefits of such services simultaneously or the underlying asset being developed has no alternative use for the Company at contract inception and the Company has an enforceable right to payment for the portion of the performance completed. Service revenues also include laboratory services recognized at point in time.

Prior to fiscal year 2021, the Company had not recognized revenue upon completion of the performance obligation for laboratory services, but rather upon cash receipt, which was subsequent to the performance obligation being satisfied. The Company accounted for these services based on cash receipts as we did not have significant historical experience collecting payments from Medicare or other insurance providers and considered the variable consideration for such services to be constrained as it would not be probable that a significant amount of revenue would not need to be reversed in future periods for the services provided. Given Medicare coverage for our laboratory services became effective on December 1, 2019, the Company considered it to have sufficient data to estimate variable consideration as of July 1, 2020 for laboratory services that are reimbursed by Medicare. The amount of cash received in fiscal 2021 for laboratory services reimbursed by Medicare that were performed prior to July 1, 2020 was approximately $0.5 million.

Prior to fiscal year 2023, the Company recorded revenue based on cash receipts for laboratory services not reimbursed by Medicare, as the variable consideration was constrained since we did not have significant historical experience collecting payments not reimbursed by Medicare or other insurance providers and it would not be probable that a significant amount of revenue would not need to be reversed in future periods for the services provided. During the first half of fiscal 2022, we began to see an increase in claim volume due to strategic initiatives, including broader messaging around the importance of cancer screenings during the COVID-19 pandemic, and the acute phase of the COVID-19 pandemic subsiding. Given these factors, the Company considered it to have sufficient data to estimate variable consideration as of July 1, 2022 for laboratory services that are not reimbursed by Medicare. The amount of cash received in fiscal 2023 for non-Medicare laboratory services that were performed prior to July 1, 2022 was approximately $0.8 million.

We recognize royalty revenues in the period the sales occur using third party evidence. The Company elected the "right to invoice" practical expedient based on the Company's right to invoice a customer at an amount that approximates the value to the customer and the performance completed to date.

The Company elected the exemption to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less and the exemption to exclude future performance obligations that are accounted under the sales-based or usage-based royalty guidance. The Company’s unfulfilled performance obligations for contracts with an original length greater than one year were not material as of December 31, 2022.

Contracts with customers that contain instruments may include multiple performance obligations. For these contracts, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis. Allocation of the transaction price is determined at the contracts’ inception.

Payment terms for shipments to end-users are generally net 30 days. Payment terms for distributor shipments may range from 30 to 90 days. Service arrangements commonly call for payments in advance of performing the work (e.g. extended warranty and service contracts), upon completion of the service (e.g. custom development manufacturing) or a mix of both.

Contract assets include revenues recognized in advance of billings. Contract assets are included within other current assets in the accompanying balance sheet as the amount of time expected to lapse until the company's right to consideration becomes unconditional is less than one year. We elected the practical expedient allowing us to expense contract costs that would otherwise be capitalized and amortized over a period of less than one year. Contract assets as of December 31, 2022 are not material.

Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenue on warranty contracts. Contract liabilities as of December 31, 2022 and June 30, 2022 were approximately $23.5 million and $25.5 million, respectively. Contract liabilities as of June 30, 2022 subsequently recognized as revenue during the quarter and six month period ended December 31, 2022 were approximately $5.3 million and $15.9 million, respectively. Contract liabilities in excess of one year are included in Other long-term liabilities on the consolidated balance sheet.

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Any claims for credit or return of goods must be made within 10 days of receipt. Revenues are reduced to reflect estimated credits and returns. Although the amounts recorded for these revenue deductions are dependent on estimates and assumptions, historically our adjustments to actual results have not been material.

Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products. We elected the practical expedient that allows us to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost, and we accrue costs of shipping and handling when the related revenue is recognized.

The following tables present our disaggregated revenue for the periods presented.

Revenue by type is as follows (in thousands):


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
Consumables	$	217,330	$	212,706	$	433,760	$	418,397
Instruments		32,301		33,353		58,759		63,222
Services		15,852		17,354		37,297		33,611
Total product and services revenue, net	$	265,483	$	263,413	$	529,816	$	515,230
Royalty revenues		6,098		5,863		11,420		11,765
Total revenues, net	$	271,581	$	269,276	$	541,236	$	526,995

Revenue by geography is as follows (in thousands):


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021

United States	$	149,005	$	142,367	$	304,436	$	283,069
EMEA, excluding United Kingdom		54,523		57,159		100,544		108,702
United Kingdom		10,872		11,842		22,574		24,320
APAC, excluding Greater China		17,968		19,603		35,433		37,104
Greater China		30,326		31,009		61,847		59,442
Rest of World		8,887		7,296		16,402		14,358
Net Sales	$	271,581	$	269,276	$	541,236	$	526,995

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Note 3. Selected Balance Sheet Data:

Inventories:

Inventories consist of (in thousands):


	December 31,		June 30,
	2022		2022

Raw materials	$	84,757	$	79,291
Finished goods⁽¹⁾		80,548		66,943
Inventories, net	$	165,305	$	146,234

⁽¹⁾Finished goods inventory of $5,072 and $5,111 included within other long-term assets in the respective December 31, 2022 and June 30, 2022, consolidated balance sheet. The inventory is included in long-term assets as it is forecasted to be sold after the 12 months subsequent to the consolidated balance sheet date.

Property and Equipment:

Property and equipment consist of (in thousands):


	December 31,		June 30,
	2022		2022
Land	$	9,079	$	8,572
Buildings and improvements		242,340		229,551
Machinery and equipment		182,306		174,813
Construction in progress		13,469		21,729
Property and equipment, cost		447,194		434,665
Accumulated depreciation and amortization		(223,343)		(211,423)
Property and equipment, net	$	223,851	$	223,242

Intangible Assets:

Intangible assets consist of (in thousands):


	December 31,		June 30,
	2022		2022

Developed technology	$	615,301	$	542,038
Trade names		146,618		146,457
Customer relationships		224,212		225,882
Patents		3,514		3,313
Other intangibles		6,894		6,306
Definite-lived intangible assets		996,539		923,996
Accumulated amortization		(451,592)		(415,174)
Definite-lived intangibles assets, net		544,947		508,822
In process research and development		22,700		22,700
Total intangible assets, net	$	567,647	$	531,522

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Changes to the carrying amount of net intangible assets for the period ended December 31, 2022 consist of (in thousands):



Beginning balance	$	531,522
Acquisitions		75,600
Other additions		713
Amortization expense		(38,861)
Currency translation		(1,327)
Ending balance	$	567,647

The estimated future amortization expense for intangible assets as of December 31, 2022 is as follows (in thousands):


Remainder 2023	$	38,462
2024		74,764
2025		71,341
2026		67,478
2027		57,326
Thereafter		235,576
Total	$	544,947

Goodwill:

Changes to the carrying amount of goodwill for the period ended December 31, 2022 consist of (in thousands):


			Diagnostics and
	Protein Sciences		Genomics		Total
June 30, 2022	$	376,493	$	445,608	$	822,101
Acquisitions		51,051		-		51,051
Currency translation		(3,623)		60		(3,563)
December 31, 2022	$	423,921	$	445,668	$	869,589

We evaluate the carrying value of goodwill in the fourth quarter of each fiscal year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. The Company performed a quantitative goodwill impairment assessment for all of its reporting units during the fourth quarter of fiscal 2022. No indicators of impairment were identified as part of our assessment.

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Note 4. Acquisitions:

We periodically complete business combinations that align with our business strategy. Acquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date and that the results of operations of each acquired business be included in our consolidated statements of comprehensive income from their respective dates of acquisitions. Acquisition costs are recorded in selling, general and administrative expenses as incurred.

Fiscal year 2023 Acquisitions

Namocell, Inc.

On July 1, 2022, the Company acquired all of the ownership interests of Namocell, Inc. for $101.2 million, net of cash acquired, plus contingent consideration of up to $25 million upon the achievement of certain future revenue thresholds. The Namocell acquisition adds easy-to-use single cell sorting and dispensing platforms that are gentle to cells and preserve cell viability and integrity. The transaction was accounted for in accordance with ASC 805, Business Combinations. The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’s product portfolio and the expected revenue growth from increased market penetration. The goodwill is not deductible for income tax purposes. The business became part of the Protein Sciences operating segment in the first quarter of fiscal year 2023.

The allocation of purchase consideration related to Namocell, Inc is considered preliminary with provisional amounts primarily related to goodwill, intangible assets, working capital, certain tax-related, and contingent liability amounts. The Company expects to finalize the allocation of purchase price within the one-year measurement-period following the acquisition. Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations for the quarter ended December 31, 2022 were approximately $2.2 million and $1.6 million, respectively. Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations for the six months ended December 31, 2022 were approximately $4.6 million and $3.1 million, respectively.

The preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date and as of December 31, 2022 are as follows (in thousands):



	Preliminary allocation at acquisition date and at December 31, 2022
Current assets, net of cash	$	3,248
Equipment and other long-term assets		405
Intangible assets:
Developed technologies		73,900
Tradenames		700
Customer relationships		900
Non-competition agreement		100
Goodwill		51,051
Total assets acquired		130,304

Liabilities		546
Deferred income taxes, net		17,974
Net assets acquired	$	111,784

Cash paid, net of cash acquired		101,184
Contingent consideration payable		10,600
Net assets acquired	$	111,784

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The following tables provide information by level for financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	Total
	carrying
	value as of		Fair Value Measurements Using
	December 31,		Inputs Considered as
	2022		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	$	23,574	$	23,574	$	—	$	—
Certificates of deposit⁽²⁾		8,500		8,500		—		—
Derivative instruments - cash flow hedges⁽³⁾		15,791		—		15,791		—
Total assets	$	47,865	$	32,074	$	15,791	$	—

Liabilities
Contingent consideration	$	7,000	$	—	$	—	$	7,000
Total liabilities	$	7,000	$	—	$	—	$	7,000


	Total
	carrying
	value as of		Fair Value Measurements Using
	June 30,		Inputs Considered as
	2022		Level 1		Level 2		Level 3

Assets
Exchange traded securities⁽¹⁾	$	59,962	$	59,962	$	—	$	—
Certificates of deposit⁽²⁾		14,500		14,500		—		—
Derivative instruments - cash flow hedges⁽³⁾		11,026


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	33

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	35

	SIGNATURES	38