Azenta(AZTA) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Azenta, Inc.'s unaudited condensed consolidated financial statements, including detailed notes, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements This section presents Azenta, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's nature of operations, significant accounting policies, discontinued operations, marketable securities, derivative instruments, goodwill and intangible assets, restructuring, supplementary balance sheet information, stockholders' equity, revenue recognition, stock-based compensation, fair value measurements, income taxes, net income (loss) per share, and segment/geographic information Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Total Assets | $2,019,135 | $2,100,041 | | Total Liabilities | $345,501 | $331,074 | | Total Stockholders' Equity | $1,673,634 | $1,768,967 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | | Gross Profit | $67,760 | $65,478 | $202,317 | $187,885 | | Operating Loss | $(714) | $(7,106) | $(28,218) | $(47,564) | | Income (Loss) from Continuing Operations | $680 | $(158) | $(26,926) | $(23,552) | | Loss from Discontinued Operations, net of tax | $(53,486) | $(6,424) | $(79,676) | $(135,634) | | Net Loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Basic Net Loss Per Share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Diluted Net Loss Per Share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net Loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Total Other Comprehensive Income (Loss), net of tax | $22,514 | $(3,167) | $(6,171) | $17,531 | | Comprehensive Loss | $(30,292) | $(9,749) | $(112,773) | $(141,655) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $70,011 | $32,151 | | Net cash (used in) provided by investing activities | $(91,287) | $26,732 | | Net cash used in financing activities | $(10,408) | $(411,661) | | Effects of exchange rate changes on cash, cash equivalents and restricted cash | $4,510 | $15,596 | | Net decrease in cash, cash equivalents and restricted cash | $(27,174) | $(337,182) | | Cash, cash equivalents and restricted cash, end of period | $293,816 | $346,863 | Condensed Consolidated Statements of Changes in Stockholders' Equity Changes in Stockholders' Equity (in thousands) | Metric | Balance September 30, 2024 | Net Loss | Stock-based Compensation | Net Investment Hedge Currency Translation Adjustment | Foreign Currency Translation Adjustments | Balance June 30, 2025 | | :------------------------------------ | :------------------------- | :--------- | :----------------------- | :-------------------------------------------- | :--------------------------------------- | :-------------------- | | Total Equity | $1,768,967 | $(106,602) | $15,887 | $(39,744) | $33,462 | $1,673,634 | Notes to Condensed Consolidated Financial Statements Note 1. Nature of Operations - Azenta, Inc. is a global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry, offering sample management, automated storage, and genomic services[33] - The Company announced a plan to sell its B Medical Systems business in Q1 fiscal year 2025 to simplify its portfolio and focus on core businesses, classifying this business as 'held for sale' and 'discontinued operations'[34][35] - Discontinued operations also include a loss contingency related to the sale of the semiconductor automation business in February 2022, with an accrued liability of $2.1 million as of June 30, 2025[36][58] Note 2. Summary of Significant Accounting Policies - The Company revised its Condensed Consolidated Statements of Cash Flows for prior periods (FY2023 and interim FY2024) to correct immaterial classification errors, primarily related to the effects of exchange rate changes on foreign denominated cash and cash equivalents[40][41] - Net foreign currency transaction and remeasurement losses were $0.2 million and $0.5 million for the three months ended June 30, 2025 and 2024, respectively, and $1.3 million and $1.5 million for the nine months ended June 30, 2025 and 2024, respectively[44] - The Company does not expect the adoption of new accounting standards (ASU 2023-07 Segment Reporting, ASU 2023-09 Income Taxes, Pillar 2 global minimum tax) to have a material impact on its financial statements in the near term, with ASU 2024-03 (Expense Disaggregation) still under evaluation[45][46][47][48] Note 3. Discontinued Operations - The Company recorded an additional $68.8 million loss on assets held for sale for the B Medical Systems business during the three months ended June 30, 2025, bringing the total loss to $93.0 million for the nine months ended June 30, 2025[53][55] Financial Results of B Medical Systems Business (Discontinued Operations, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $16,302 | $28,517 | $51,099 | $63,888 | | Gross Profit | $4,909 | $3,578 | $13,445 | $6,068 | | Operating Loss | $(72,774) | $(7,647) | $(105,855) | $(140,821) | | Loss from Discontinued Operations, net of tax | $(53,187) | $(6,424) | $(78,997) | $(135,634) | Carrying Value of B Medical Systems Assets and Liabilities Held for Sale (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Current Assets Held for Sale | $77,025 | $88,894 | | Noncurrent Assets Held for Sale | $85,479 | $173,794 | | Current Liabilities Held for Sale | $31,715 | $30,050 | | Noncurrent Liabilities Held for Sale | $17,091 | $42,196 | - The Company accrued an additional $0.4 million liability for the 2020 Claim related to the semiconductor cryogenics business sale, resulting in a total accrual of $2.1 million as of June 30, 2025[58] Note 4. Marketable Securities Sales and Maturities of Marketable Securities (in thousands) | Period | Sales and Maturities | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $57,900 | | Three Months Ended June 30, 2024 | $241,000 | | Nine Months Ended June 30, 2025 | $242,500 | | Nine Months Ended June 30, 2024 | $431,500 | Marketable Securities Amortized Cost and Fair Value (in thousands) | Category | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | September 30, 2024 Amortized Cost | September 30, 2024 Fair Value | | :------------------------------------ | :--------------------------- | :----------------------- | :-------------------------------- | :------------------------------ | | U.S. Treasury securities and obligations of U.S. government agencies | $255,091 | $254,993 | $118,159 | $118,091 | | Bank certificates of deposit | $1,234 | $1,234 | $5,212 | $5,200 | | Corporate securities | $3,782 | $3,782 | $77,580 | $77,325 | | Municipal securities | $10,932 | $10,976 | - | - | | Total | $271,039 | $270,985 | $200,951 | $200,616 | - Unrealized losses on fixed-income securities are primarily due to changes in interest rates, but the Company does not believe they represent impairments[65] Note 5. Derivative Instruments Realized Losses on Undesignated Derivatives (in thousands) | Period | Realized Losses | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $(4,242) | | Three Months Ended June 30, 2024 | $(415) | | Nine Months Ended June 30, 2025 | $(4,246) | | Nine Months Ended June 30, 2024 | $(2,202) | Notional Amounts of Derivative Instruments (in thousands) | Instrument | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Cross-currency swap (Net Investment Hedge) | $260,025 | $75,978 | | Foreign exchange contracts (Undesignated) | $46,975 | $60,101 | - The Company entered into a new cross-currency swap agreement on February 3, 2025, notionally exchanging $260.0 million for €250.0 million to hedge net investments against a Euro-denominated subsidiary, maturing on February 2, 2026[69] - Interest income from cross-currency swaps was $1.2 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively, and $2.2 million and $3.4 million for the nine months ended June 30, 2025 and 2024, respectively[72] Note 6. Goodwill and Intangible Assets - The Company performed an interim quantitative goodwill impairment test as of June 30, 2025, and concluded there was no impairment to goodwill for its Sample Management Solutions (SMS) and Multiomics reporting units[73][74] Changes in Carrying Amount of Goodwill by Segment (in thousands) | Segment | Balance - October 1, 2024 | Currency Translation Adjustments | Balance - June 30, 2025 | | :------------------------------------ | :-------------------------- | :------------------------------- | :-------------------- | | Sample Management Solutions | $494,649 | $12,205 | $506,854 | | Multiomics | $196,760 | — | $196,760 | | Total | $691,409 | $12,205 | $703,614 | Identifiable Intangible Assets (Net Book Value, in thousands) | Category | June 30, 2025 Net Book Value | September 30, 2024 Net Book Value | | :------------------------------------ | :----------------------------- | :-------------------------------- | | Completed technology | $50,270 | $54,758 | | Trademarks and trade names | $463 | $531 | | Customer relationships | $57,403 | $69,753 | | Total | $108,136 | $125,042 | - Amortization expenses for intangible assets were $6.2 million and $7.2 million for the three months ended June 30, 2025 and 2024, respectively, and $18.4 million and $21.6 million for the nine months ended June 30, 2025 and 2024, respectively[77] Note 7. Restructuring - The Company continued its 2024 Restructuring Plan, focusing on facilities consolidation, portfolio optimization, and organization structure simplification, with completion expected by the end of fiscal year 2025[79] Restructuring Charges (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Severance and related costs | $971 | $852 | $4,740 | $3,625 | | ROU asset abandonment | — | — | — | $901 | | Other | $(217) | $849 | $25 | $1,389 | | Total Restructuring Charges | $754 | $1,701 | $4,765 | $5,915 | - The majority of 2025 restructuring expenses are severance and related costs, with $0.3 million for SMS and $0.4 million for Multiomics in the three months ended June 30, 2025[80] Note 8. Supplementary Balance Sheet Information Inventories (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Raw materials and purchased parts | $35,796 | $34,134 | | Work-in-process | $6,056 | $8,402 | | Finished goods | $38,654 | $36,387 | | Total Inventories | $80,506 | $78,923 | | Inventory reserves | $8,500 | $6,100 | Product and Warranty Retrofit Activity (in thousands) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Balance at beginning of period | $5,213 | $3,974 | | Accruals for warranties during the period | $587 | $1,939 | | Costs incurred during the period | $(427) | $(1,184) | | Balance at end of period | $5,373 | $4,729 | Note 9. Stockholders' Equity - The Company completed its $1.5 billion 2022 Repurchase Authorization by September 30, 2024, repurchasing 30.0 million shares, and made an $11.4 million excise tax payment related to these repurchases during the nine months ended June 30, 2025[86][87] Components of Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance at September 30, 2024 | Other comprehensive income (loss) before reclassifications (9M 2025) | Amounts reclassified (9M 2025) | Balance at June 30, 2025 | | :------------------------------------ | :---------------------------- | :----------------------------------------------------------------- | :----------------------------- | :----------------------- | | Currency Translation Adjustments | $(34,170) | $33,462 | — | $(708) | | Unrealized Gains (Losses) on Available-for-Sale Securities | $(263) | $262 | — | $(1) | | Gains (Losses) on Derivative Net of tax | $21,468 | $(39,744) | — | $(18,276) | | Pension Liability Adjustments Net of tax | $(499) | $(205) | $54 | $(650) | | Total | $(13,464) | $(6,225) | $54 | $(19,635) | Note 10. Revenue from Contracts with Customers Revenue by Significant Business Line (in thousands) | Business Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Multiomics | $66,235 | $63,619 | $196,054 | $188,556 | | Core Products | $45,750 | $49,440 | $143,418 | $143,170 | | Sample Repository Services | $31,957 | $31,233 | $95,398 | $90,646 | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | - Accounts receivable, net, decreased from $156.3 million at September 30, 2024, to $124.5 million at June 30, 2025[91] - Contract assets increased from $28.9 million at September 30, 2024, to $40.1 million at June 30, 2025, while contract liabilities increased from $30.5 million to $40.0 million over the same period[92][93] - Remaining performance obligations totaled $76.2 million as of June 30, 2025, with $55.2 million expected to be recognized within one year and $21.0 million after one year[94] Note 11. Stock-Based Compensation Total Stock-Based Compensation Expense for Continuing Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Restricted stock units | $1,973 | $3,381 | $14,408 | $11,122 | | Employee stock purchase plan | $242 | $310 | $711 | $980 | | Total | $2,215 | $3,691 | $15,119 | $12,102 | - As of June 30, 2025, the future unrecognized stock-based compensation expense related to restricted stock units for continuing operations is $25.5 million, expected to be recognized over an estimated weighted average amortization period of 1.7 years[98] - In October 2023, the Company amended performance goals for previously issued performance-based restricted stock units, leading to a total potential maximum compensation cost of $3.3 million recognized through November 2025[102] - In November 2024, the Company issued restricted stock unit awards with vesting based on market conditions (relative total shareholder return), with fair values estimated using the Monte Carlo simulation model[105] Note 12. Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (in thousands) | Description | Total Fair Value (June 30, 2025) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | | :------------------------------------ | :------------------------------- | :---------------------- | :---------------------- | :---------------------- | | Assets: | | | | | | Cash equivalents | $141,537 | $141,035 | $502 | — | | Available-for-sale securities | $270,985 | $9,447 | $261,538 | — | | Investment in equity securities | $2,100 | — | — | $2,100 | | Foreign exchange contracts | $142 | — | $142 | — | | Liabilities: | | | | | | Net investment hedge | $34,656 | — | $34,656 | — | - Cash equivalents primarily consist of money market funds and U.S. government backed securities (Level 1) and debt securities/bank certificates of deposit (Level 2)[109] - Available-for-sale securities include highly rated corporate debt and U.S. government backed securities (Level 1) and debt securities/bank certificates of deposit valued using matrix pricing (Level 2)[110] - The Company's investment in preferred stock of a private company (converted from convertible notes) is valued at $2.1 million and classified as Level 3 due to unobservable inputs[112] Note 13. Income Taxes Income Tax Expense (in thousands) | Period | Income Tax Expense | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $2,758 | | Nine Months Ended June 30, 2025 | $14,007 | | Three Months Ended June 30, 2024 | $600 | | Nine Months Ended June 30, 2024 | $3,220 | - The nine-month tax expense for 2025 was primarily driven by a $6.5 million tax expense related to a change in indefinite reinvestment assertion and the repatriation of cash from a China subsidiary[116][121] - The Company maintains a valuation allowance against U.S. deferred tax assets due to U.S. pre-tax losses and expects a $22 million valuation allowance for fiscal year 2025[119] Note 14. Net Income (Loss) per Share Net Income (Loss) per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income (loss) from continuing operations | $680 | $(158) | $(26,926) | $(23,552) | | Loss from discontinued operations, net of tax | $(53,486) | $(6,424) | $(79,676) | $(135,634) | | Net loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Basic net loss per share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Diluted net loss per share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Weighted average common shares outstanding (Basic) | 45,780 | 52,963 | 45,712 | 54,914 | | Weighted average common shares outstanding (Diluted) | 45,823 | 52,963 | 45,712 | 54,914 | Note 15. Segment and Geographic Information - The Company's continuing operations consist of two operating and reportable segments: Sample Management Solutions (SMS) and Multiomics[128][131] Segment Revenue and Adjusted Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 Revenue | Three Months Ended June 30, 2024 Revenue | Nine Months Ended June 30, 2025 Revenue | Nine Months Ended June 30, 2024 Revenue | Three Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Three Months Ended June 30, 2024 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2024 Adjusted Operating Income (Loss) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | :--------------------------------------------------------------- | :--------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Sample Management Solutions | $77,707 | $80,673 | $238,816 | $233,816 | $11,248 | $3,582 | $18,177 | $1,509 | | Multiomics | $66,235 | $63,619 | $196,054 | $188,556 | $(3,331) | $(592) | $(11,127) | $(6,736) | | Total Revenue / Segment Adjusted Operating Loss | $143,942 | $144,292 | $434,870 | $422,372 | $7,917 | $2,990 | $7,050 | $(5,227) | Revenue by Geographic Location (in thousands) | Geographic Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $87,833 | $95,037 | $271,244 | $272,898 | | China | $14,321 | $14,510 | $41,947 | $43,054 | | United Kingdom | $9,370 | $8,086 | $25,252 | $19,387 | | Rest of Europe | $25,430 | $21,370 | $75,009 | $66,493 | | Asia Pacific/Other | $6,988 | $5,289 | $21,418 | $20,540 | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | Note 16. Commitments and Contingencies - The Company is subject to various legal proceedings but believes no new material provision for liability or disclosure is required as of June 30, 2025, for continuing operations[133] - In July 2024, the Company paid approximately $2.5 million in tariffs and interest related to imports from its GENEWIZ business into the United States for the period from December 2021 to July 2024[134] - As of June 30, 2025, the Company had non-cancellable commitments totaling $48.7 million, including $37.3 million for inventory purchase orders and $11.4 million for other operating expenses[135] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Azenta, Inc.'s financial condition and results of operations for the three and nine months ended June 30, 2025, compared to the corresponding periods in 2024, covering business overview, strategic decisions, detailed financial performance by segment, critical accounting policies, and an analysis of liquidity and capital resources Overview - Azenta is a leading global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry, with approximately 3,000 employees and sales in 92 countries[139] - The Company is pursuing the sale of its B Medical Systems business to simplify its portfolio and focus on core Sample Management Solutions (SMS) and Multiomics segments[138] - The Sample Management Solutions segment offers end-to-end sample management products and services, including Sample Repository Services and Core Products (Automated Stores, Cryogenic Systems, etc.)[142] - The Multiomics segment provides genomic services such as gene sequencing, synthesis, and editing, supporting research and development in life sciences[143] Business and Financial Performance Key Financial Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $143,942 | $144,292 | $434,870 | $422,372 | | Gross profit | $67,760 | $65,478 | $202,317 | $187,885 | | Operating loss | $(714) | $(7,106) | $(28,218) | $(47,564) | | Net loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | - Revenue was flat for the three months ended June 30, 2025, but increased 3% for the nine months, driven by Multiomics growth and strong Sample Repository Solutions performance[146] - Gross margin increased to 47% for both the three and nine months ended June 30, 2025, from 45% and 44% respectively, primarily due to operational efficiencies and favorable sales mix[146] - Net loss from discontinued operations was significantly higher in Q3 2025 ($53.5 million) compared to Q3 2024 ($6.4 million), primarily due to a loss on assets held for sale[146] Critical Accounting Policies and Estimates - The preparation of financial statements requires management to make estimates and judgments, which are evaluated on an ongoing basis[147] - There have been no material changes to the Company's critical accounting policies or estimates from those set forth in its 2024 Annual Report on Form 10-K[148] Results of Operations Non-GAAP Financial Measures - Management uses non-GAAP financial measures, adjusting GAAP results for items like amortization, transformation costs, and restructuring charges, to provide investors with a better perspective on operations comparable to peers[150] Revenue Revenue by Segment (in thousands, except percentages) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change 2025 v. 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | % Change 2025 v. 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------- | :------------------------------ | :------------------------------ | :-------------------- | | Sample Management Solutions | $77,707 | $80,673 | (3.7)% | $238,816 | $233,816 | 2.1% | | Multiomics | $66,235 | $63,619 | 4.1% | $196,054 | $188,556 | 4.0% | | Total Revenue | $143,942 | $144,292 | (0.2)% | $434,870 | $422,372 | 3.0% | - Sample Management Solutions revenue decreased 4% in the three months ended June 30, 2025, due to lower Core Products revenue (Automated Stores and Cryogenic Systems), but increased 2% for the nine months due to Sample Repository Services growth[151] - Multiomics segment revenue increased approximately 4% for both the three and nine months ended June 30, 2025, driven by Next Generation Sequencing services, partially offset by declines in Gene Synthesis and Sanger sequencing[152] - Revenue generated outside the United States increased to 39.0% and 37.6% of total revenue for the three and nine months ended June 30, 2025, respectively, compared to 34.1% and 35.4% in the prior year periods[153] Operating Income (Loss) Segment Operating Income (Loss) and Adjusted Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 Operating Income (Loss) | Three Months Ended June 30, 2024 Operating Income (Loss) | Nine Months Ended June 30, 2025 Operating Income (Loss) | Nine Months Ended June 30, 2024 Operating Income (Loss) | Three Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Three Months Ended June 30, 2024 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2024 Adjusted Operating Income (Loss) | | :------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :--------------------------------------------------------------- | :--------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Sample Management Solutions | $9,834 | $2,647 | $11,963 | $(1,733) | $11,248 | $3,582 | $18,177 | $1,509 | | Multiomics | $(4,191) | $(1,630) | $(13,710) | $(9,853) | $(3,331) | $(592) | $(11,127) | $(6,736) | - Sample Management Solutions operating income increased significantly, driven by gross margin expansion, despite increased transformation costs[158] - Multiomics segment operating loss increased, primarily due to lower revenue from Gene Synthesis and Sanger sequencing services, partially offset by Next Generation Sequencing growth[159] Gross Margin Segment Gross Margin and Adjusted Gross Margin (in percentages) | Segment | Three Months Ended June 30, 2025 Gross Margin | Three Months Ended June 30, 2024 Gross Margin | Nine Months Ended June 30, 2025 Gross Margin | Nine Months Ended June 30, 2024 Gross Margin | Three Months Ended June 30, 2025 Adjusted Gross Margin | Three Months Ended June 30, 2024 Adjusted Gross Margin | Nine Months Ended June 30, 2025 Adjusted Gross Margin | Nine Months Ended June 30, 2024 Adjusted Gross Margin | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :----------------------------------------------------- | :----------------------------------------------------- | | Sample Management Solutions | 52.0% | 45.0% | 48.9% | 43.8% | 53.6% | 46.1% | 50.3% | 45.2% | | Multiomics | 41.3% | 45.9% | 43.6% | 45.3% | 42.6% | 47.5% | 44.9% | 46.9% | | Azenta Total | 47.1% | 45.4% | 46.5% | 44.5% | 48.5% | 46.7% | 47.9% | 46.0% | - Sample Management Solutions gross margin and adjusted gross margin increased due to operational efficiencies and a favorable sales mix[161] - Multiomics segment gross margin and adjusted gross margin decreased, primarily driven by lower revenue from Gene Synthesis and Sanger sequencing services[162] Research and Development Expenses Research and Development Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | % of Revenue | Three Months Ended June 30, 2024 | % of Revenue | Nine Months Ended June 30, 2025 | % of Revenue | Nine Months Ended June 30, 2024 | % of Revenue | | :------------------------------------ | :------------------------------- | :----------- | :------------------------------- | :----------- | :------------------------------ | :----------- | :------------------------------ | :----------- | | Total research and development expense | $6,685 | 4.6% | $6,911 | 4.8% | $19,934 | 4.6% | $21,957 | 5.2% | - Total R&D expenses decreased by $0.2 million (3 months) and $2.0 million (9 months) year-over-year, driven by cost reduction initiatives, primarily decreased compensation and benefits[163] Selling, General and Administrative Expenses Selling, General and Administrative Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | % of Revenue | Three Months Ended June 30, 2024 | % of Revenue | Nine Months Ended June 30, 2025 | % of Revenue | Nine Months Ended June 30, 2024 | % of Revenue | | :------------------------------------ | :------------------------------- | :----------- | :------------------------------- | :----------- | :------------------------------ | :----------- | :------------------------------ | :----------- | | Total selling, general and administrative expense | $61,035 | 42.4% | $63,972 | 44.3% | $205,836 | 47.3% | $202,919 | 48.0% | - Total SG&A expenses decreased by $2.9 million for the three months ended June 30, 2025, primarily due to decreased compensation and benefits expense[164] - Total SG&A expenses increased by $2.9 million for the nine months ended June 30, 2025, primarily due to higher stock-based compensation and one-time costs related to leadership changes, partially offset by decreased compensation and benefits[164] Restructuring Charges - Restructuring charges decreased by $0.9 million to $0.8 million for the three months ended June 30, 2025, and by $1.2 million to $4.8 million for the nine months ended June 30, 2025, compared to the prior year periods[165] Non-Operating Income Interest Income, Net (in thousands) | Period | Interest Income, Net | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $5,000 | | Three Months Ended June 30, 2024 | $7,900 | | Nine Months Ended June 30, 2025 | $13,800 | | Nine Months Ended June 30, 2024 | $27,400 | - The decrease in interest income year over year is due to decreased investments in marketable securities[166] - Other income (expense), net, was an expense of $0.8 million for the three months ended June 30, 2025, and income of $1.5 million for the nine months, with the increase primarily from foreign exchange gains and a $2.1 million gain from a cost method investment[167] Income Tax Expense Income Tax Expense (in thousands) | Period | Income Tax Expense | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $2,800 | | Nine Months Ended June 30, 2025 | $14,000 | | Three Months Ended June 30, 2024 | $600 | | Nine Months Ended June 30, 2024 | $3,200 | - The 2025 tax expense was primarily driven by a $6.5 million charge related to a change in indefinite reinvestment assertion and the expectation to repatriate cash from a China subsidiary, along with profits in foreign jurisdictions and a U.S. valuation allowance[168] - The Company does not expect the recently signed 'One Big Beautiful Bill Act' to have a significant near-term effect on its effective tax rate or cash flows[170] Discontinued Operations Revenue and Loss from Discontinued Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue from discontinued operations | $16,300 | $28,500 | $51,100 | $63,900 | | Loss from discontinued operations, net of tax | $53,500 | $6,400 | $79,700 | $135,600 | - The significant loss from discontinued operations in 2025 was primarily driven by the loss on assets held for sale related to the B Medical Systems business, while in 2024 it was due to goodwill impairment[171] Liquidity and Capital Resources Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Cash and cash equivalents | $270,040 | $280,030 | | Restricted cash | $8,776 | $10,061 | | Short-term marketable securities | $48,817 | $151,162 | | Long-term marketable securities | $222,168 | $49,454 | | Total | $549,801 | $490,707 | - The Company believes its current cash and cash equivalents are sufficient to fund operating expenses and capital expenditures for at least one year[172] - Cash inflows from operating activities for the nine months ended June 30, 2025, were $70.0 million, primarily due to increased revenue, collections, and an $11.5 million U.S. federal tax refund[174] - The Company had $121.9 million of cash, cash equivalents, and restricted cash held outside the U.S. as of June 30, 2025, including $23 million in China, with a plan to repatriate cash from China and a $6.5 million tax provision for this plan[173] - As of June 30, 2025, the Company had no outstanding debt and non-cancellable commitments of $48.7 million[175][176] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines Azenta, Inc.'s exposure to market risks, specifically focusing on interest rate fluctuations affecting its cash and investments, and foreign currency exchange rate changes impacting its international transactions and balances, quantifying the potential impact of hypothetical changes in these market factors on the company's financial performance - A hypothetical 100 basis point change in interest rates would result in a $2.7 million and $6.1 million change in interest income earned during the nine months ended June 30, 2025 and 2024, respectively[178] - Sales in currencies other than the U.S. dollar were approximately 34% and 29% of total sales during the nine months ended June 30, 2025 and 2024, respectively[179] - Liquid assets denominated in non-functional currencies (primarily Euro and British Pound) were $50.7 million at June 30, 2025, with foreign currency losses of $1.3 million and $1.5 million for the nine months ended June 30, 2025 and 2024, respectively[180] - A hypothetical 10% change in foreign exchange rates as of June 30, 2025, would result in an approximate $0.4 million change in net loss during the nine months ended June 30, 2025[180] Item 4. Controls and Procedures This section details the evaluation of Azenta, Inc.'s disclosure controls and procedures, concluding they were not effective as of June 30, 2025, due to identified material weaknesses, specifically addressing a continuing material weakness related to the review of the cash flow statement and a new material weakness concerning the preparation and review of account reconciliations, with the company outlining its remediation plans for these control deficiencies - The Company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses[181] - A material weakness related to the review of the cash flow statement, previously disclosed in the 2024 Annual Report on Form 10-K, continues to exist as of June 30, 2025[182] - An additional material weakness was identified during Q2 fiscal year 2025, concerning the design and maintenance of effective controls related to the preparation and review of account reconciliations[183] - Remediation plans include implementing a new cash flow reporting tool, new processes and controls for cash flow review, and for account reconciliations, designing enhanced controls, redesigning policy, and engaging outside consultants[185][186] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other information such as Rule 10b5-1 trading arrangements and personnel appointments, and a list of exhibits Item 1. Legal Proceedings This section states that Azenta, Inc. is involved in various legal proceedings in the ordinary course of business, and while the ultimate outcome is unpredictable, the company believes that none of these current claims will have a material adverse effect on its consolidated financial condition or results of operations for continuing operations - The Company is subject to various legal proceedings arising in the ordinary course of business[190] - As of the filing date, the Company believes that none of these claims will have a material adverse effect on its consolidated financial condition or results of operations for continuing operations[190] Item 1A. Risk Factors This section refers readers to the risk factors previously disclosed in Azenta, Inc.'s 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, confirming that there have been no material changes to these risk factors - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[191] Item 5. Other Information This section provides updates on Rule 10b5-1 trading arrangements and a key personnel appointment, stating that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter, and announces the appointment of Lawrence Lin as the Principal Accounting Officer - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[192] - Lawrence Lin, Executive Vice President and Chief Financial Officer, was appointed as the Company's Principal Accounting Officer, effective August 7, 2025[193] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including severance agreements, certifications from the CEO and CFO, and financial statements formatted in iXBRL - Exhibits include severance agreements, certifications pursuant to the Sarbanes-Oxley Act, and financial statements formatted in iXBRL[195] Signatures This section contains the official signatures of the authorized officers of Azenta, Inc., certifying the filing of the Quarterly Report on Form 10-Q - The report was signed by Lawrence Lin, Executive Vice President and Chief Financial Officer, and Violetta A. Hughes, Vice President and Chief Accounting Officer, on August 6, 2025[199]