SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Sep. 30, 2022

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

5.SEGMENT AND GEOGRAPHIC INFORMATION

As a result of our strategic acquisition of Envigo RMS Holding Corp. (“Envigo”) in November 2021, which added a complementary research model platform, our full spectrum solutions now span two segments: Discovery and Safety Assessment (“DSA”) and Research Models and Services (“RMS”).

Through our DSA segment, we support the discovery, non-clinical and clinical development needs of researchers and clinicians for primarily small molecule drug candidates, but also including biotherapeutics and biomedical devices. Our scientists have the skills in analytical instrumentation development, chemistry, computer software development, histology, pathology, physiology, surgery, analytical chemistry, drug metabolism, pharmacokinetics, and toxicology to make the services and products we provide increasingly valuable to our current and potential clients. Our principal clients are scientists engaged in analytical chemistry, drug safety evaluation, clinical trials, drug metabolism studies, pharmacokinetics and basic research from small start-up biotechnology companies to some of the largest global pharmaceutical companies.

Through our RMS segment, we offer access to a wide range of high-quality small and large research models for basic research and drug discovery and development, as well as specialized models for specific diseases and therapeutic areas. We combine deep animal husbandry expertise and expanded access to scientists across the discovery and preclinical continuum, which reduces nonclinical lead times and provides enhanced project delivery. In conjunction with our contract research organization (“CRO”) business, we have the ability to run selected nonclinical studies directly on-site at closely located research model facilities and access to innovative genetically engineered models and services solutions. We have long-standing relationships with our principal clients, which include biopharmaceutical companies, CROs, and academic and government organizations.

During the twelve months ended September 30, 2022 and following the Envigo acquisition, we took steps to leverage our existing RMS capacity with the acquisition of Robinson’s Services Inc.’s (“RSI”) rabbit breeding business and we acquired Orient BioResource Center, Inc. (“OBRC”), which provided access to additional non-human primate facilities.

Segment Information

In the Annual Report on Form 10-K for the fiscal year ended September 30, 2021 and prior to the Envigo acquisition, the Company’s reportable segments were services and products. Since the Envigo acquisition, the Company has considered its reportable segment to be DSA and RMS. As a result, the segment reporting for fiscal year ended September 30, 2022 has been updated to reflect these segments.

Fiscal year ended September 30, 2022

The operations of the products and services segments reported in the September 30, 2021 financial statements are now included within the DSA reportable segment. The prior period reportable segments have not been restated. The operations of the services segment in the year ended September 30, 2021 are comparable to the operations of the DSA segment in the year ended September 30, 2022 and the operations of the products segment are not material.

Revenue and other financial information by segment for the fiscal year ended September 30, 2022 are as follows:

During the fiscal year ended September 30, 2022, the RMS segment reported intersegment revenue of $7,250 to the DSA segment. The following table presents revenue and other financial information by reportable segment for the fiscal years ended September 30, 2022 and 2021:

	Fiscal Year Ended
	September 30,
	2022
Revenue
DSA:
Service revenue	$	161,113
Product revenue		4,176
RMS:
Service revenue		41,865
Product revenue		340,502
	$	547,656
Operating Income (Loss)
DSA	$	22,330
RMS		(189,346)
Unallocated Corporate		(96,436)
	$	(263,452)
Interest expense		(29,704)
Other (expense) income		(59,293)
(Loss) income before income taxes	$	(352,449)

	Fiscal Year Ended
	September 30,
	2022
Depreciation and amortization:
DSA	$	13,553
RMS		35,771
	$	49,324
Capital expenditures:
DSA	$	16,224
RMS		20,076
	$	36,300

As a result of the application of ASC 805 for the Envigo and OBRC acquisitions, we recognized $10,246 amortization of inventory step-up during the fiscal year ended September 30, 2022, which is reflected in the RMS reportable segment.

During the three and twelve months ended September 30, 2022, we recognized $236,005 goodwill impairment charge, which is reflected in the RMS reportable segment. Refer to Note 6 for further discussion of the goodwill impairment charge.

During the fiscal years ended September 30, 2022 and 2021, we recognized $24,202 and $1,786 of non-cash stock-based compensation expense, which is reflected in unallocated corporate expenses, and $(56,714) and $8,362 of (loss) gain on fair value remeasurement of embedded derivative, respectively, which are reflected in other (expense) income. Other unallocated corporate operating expenses include compensation and other employee-related expenses, external professional fees, insurance, information technology-related fees and acquisition and integration costs.

The following represents total assets by segment:

	Fiscal Year Ended
	September 30,
	2022
DSA	$	280,308
RMS		682,592
	$	962,900

Fiscal year ended September 30, 2021

Revenue and other financial information by segment for the fiscal year ended September 30, 2021 are as follows:

	Fiscal Year Ended
	September 30,
	2021
Revenue:
Service	$	85,832
Product		3,773
	$	89,605
Operating Income (Loss)
Service	$	13,986
Product		202
Unallocated corporate		(19,806)
	$	(5,618)
Interest expense		(1,683)
Other income		13,420
Income (loss) before income taxes	$	6,119

	Fiscal Year Ended			Fiscal Year Ended
	September 30,			September 30,
	2021			2021
Identifiable assets:			Depreciation and amortization:
Services	$	161,805	Services	$	5,320
Products		1,772	Products		34
Unallocated corporate		158,279	Unallocated corporate		914
	$	321,856		$	6,268
Goodwill, net:			Capital expenditures:
Services	$	51,927	Services	$	12,241
Products		—	Products		28
Unallocated corporate		—	Unallocated corporate		203
	$	51,927		$	12,472

Geographic Information

As of September 30, 2021, all long-lived assets were physically located in the United States. Therefore, geographic information was presented based on customer location. Since the Envigo acquisition, the Company has physical

operations in multiple countries. As a result, the Company has presented geographic revenue information based on physical location of the identified geographic area for the fiscal year ended September 30, 2022.

Fiscal year ended September 30, 2022

The following represents revenue originating in entities physically located in the identified geographic area:

	Fiscal Years Ended
	September 30,
	2022
United States	$	471,886
Netherlands		42,361
Other		33,409
	$	547,656

Long-lived assets shown below include property and equipment, net. The following represents long-lived assets where they are physically located:

	Fiscal Years Ended
	September 30,
	2022
United States	$	173,417
Netherlands		5,824
Other		6,958
	$	186,199

Fiscal year ended September 30, 2021

The following represents revenue presented based on customer location:

	Fiscal Year Ended
	September 30,
	2021
United States	$	85,272
Pacific Rim		2,040
Europe		1,795
Other		355
Other North America		143
	$	89,605