Part I Financial Statements This section presents the unaudited condensed consolidated financial statements for the nine months ended September 30, 2022, highlighting a significant decrease in total assets and a net loss primarily due to unrealized losses on equity investments Condensed Consolidated Financial Statements The company's financial position as of September 30, 2022, shows total assets decreased to $12.1 billion, a net loss of $4.46 billion, and significantly reduced operating cash flow, primarily due to equity investment losses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $12,058,462 | $17,775,795 | | Total current assets | $3,140,155 | $1,989,088 | | Other investments | $7,459,169 | $14,387,006 | | Total Liabilities | $3,604,857 | $4,108,661 | | Total Stockholders' Equity | $8,453,605 | $13,667,134 | Condensed Consolidated Statements of Income (Loss) Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net sales | $2,071,961 | $2,189,776 | | Gross profit | $1,173,333 | $1,239,660 | | Income from operations | $356,436 | $382,448 | | (Gains) losses from change in fair market value of equity securities | $6,172,306 | $(7,078,753) | | Net income (loss) | $(4,461,029) | $5,819,561 | | Diluted earnings (loss) per share | $(149.60) | $192.76 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $104,027 | $498,597 | | Net cash used in investing activities | $(1,138,278) | $(229,954) | | Net cash provided by (used in) financing activities | $1,060,195 | $(60,064) | Notes to Condensed Consolidated Financial Statements These notes detail significant events including the acquisition of Curiosity Diagnostics, a $6.0 billion unrealized loss on the Sartorius AG investment, issuance of $1.2 billion in senior notes, and ongoing European restructuring efforts - On August 3, 2022, the company acquired Curiosity Diagnostics for a total consideration of $137.1 million, including $36.1 million in potential contingent payments, to facilitate entry into the molecular disease testing market525354 - The company's investment in Sartorius AG experienced a significant decline in value, resulting in a $6.00 billion loss in fair market value for the nine months ended September 30, 20226970 - In March 2022, the company issued $1.2 billion in senior notes, consisting of $400.0 million due in 2027 (3.3% interest) and $800.0 million due in 2032 (3.7% interest)9091 Segment Net Sales (in millions) | Segment | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Life Science | $987.5 | $1,074.2 | | Clinical Diagnostics | $1,081.4 | $1,111.0 | - The company's European restructuring plan, initiated in February 2021, is expected to be substantially complete by mid-2023, with total incurred expenses of $69.0 million and a remaining liability of $36.4 million through September 30, 2022111112 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports a 5.4% decrease in net sales for the first nine months of 2022, driven by lower COVID-related sales and currency impacts, with a net loss primarily from equity security revaluation and reduced operating cash flow Net Sales Performance (Q3 2022 vs Q3 2021) | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $680.8 million | $747.0 million | -8.9% | | COVID-related Sales | $17.2 million | $57.1 million | -69.9% | | Currency Neutral Sales | - | - | -4.1% | Net Sales Performance (Nine Months 2022 vs Nine Months 2021) | Metric | 9M 2022 | 9M 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2.07 billion | $2.19 billion | -5.4% | | COVID-related Sales | $95.7 million | $220.1 million | -56.5% | | Currency Neutral Sales | - | - | -1.5% | - Supply chain constraints and lockdowns in China negatively impacted sales, particularly instrument placements, causing a significant backlog of sales orders expected to continue through the remainder of 2022 and into 2023133 - The change in fair market value of equity securities and a related loan receivable resulted in a $6.17 billion loss for the first nine months of 2022, compared to a $7.08 billion gain in the same period of 2021, primarily due to holding losses on the Sartorius AG position164 - Net cash from operations decreased to $104.0 million for the first nine months of 2022 from $498.6 million in the prior year, due to lower cash receipts from customers and higher payments to suppliers and for taxes and interest170 Quantitative and Qualitative Disclosures about Market Risk No material changes have occurred in the company's market risk disclosures since the Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes from the disclosures about market risk provided in the Annual Report on Form 10-K for the year ended December 31, 2021181 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level183 - No changes in internal control over financial reporting were identified during the quarter ended September 30, 2022, that have materially affected or are likely to materially affect internal controls184 Part II – Other Information Legal Proceedings The company is involved in various ordinary course legal proceedings, which management does not expect to materially adversely affect its financial condition or results - The company is a party to various legal proceedings arising in the ordinary course of business, which are not expected to have a material adverse effect on its financial condition or results of operations109185 Risk Factors Key risks include ongoing pandemic impacts on supply chains and demand, material changes in the Sartorius AG investment value, international operational complexities, regulatory compliance, and cybersecurity threats - The COVID-19 pandemic continues to pose risks, including decreased demand for some products, supply chain challenges causing significant order backlogs expected to last into 2023, and increased raw material and freight costs188190191 - Changes in the market value of the company's large equity position in Sartorius AG materially impact financial results and could lead to the company being deemed an "investment company" under the Investment Company Act of 1940211213 - The company faces significant risks from its international operations, which account for 59% of net sales, including foreign currency exchange fluctuations, complex foreign laws (e.g., FCPA, UK Bribery Act), and trade barriers197198210 - The business is subject to substantial government regulation, including from the FDA and foreign counterparts like the EU IVDR, which could lead to product approval delays, recalls, or fines and increase compliance costs229230233 - Cybersecurity threats, including data breaches and phishing schemes, and potential disruptions from the ongoing multi-year implementation of a new global ERP system, pose significant operational risks205218 Unregistered Sales of Equity Securities and Use of Proceeds As of September 30, 2022, $298.1 million remained under the Share Repurchase Program, with no shares repurchased during the third quarter - The company's Share Repurchase Program had $298.1 million available for future repurchases as of September 30, 2022268 - No shares were purchased under the publicly announced repurchase program during the three months ended September 30, 2022269 Other Information, Exhibits, and Signatures This section confirms no defaults or other material information under Item 5, lists exhibits including CEO and CFO certifications, and concludes with executive signatures dated October 28, 2022 - The company reported no defaults upon senior securities, no mine safety disclosures, and no other information required under Item 5269270 - The report was signed and certified by Norman Schwartz (CEO) and Ilan Daskal (CFO) on October 28, 2022275
Bio-Rad(BIO_B) - 2022 Q3 - Quarterly Report