10-Q

United States

Securities and Exchange Commission

Washington, D.C. 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 September 30, 2020

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 No: 0-11740

MESA LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-0872291
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification number)
12100 West Sixth Avenue
Lakewood, Colorado	80228
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 987-8000

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

Title of each class	Trading Symbol	Name on each exchange on which registered
Common Stock, no par value	MLAB	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 (Section 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, a smaller reporting company or an emerging growth company. See 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 Rule 12b-2 of the Exchange Act).

Yes ☐     No ☒

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date:

There were 5,118,653 shares of the Issuer’s common stock, no par value, outstanding as of October 30, 2020.

Table of Contents

Part I. Financial Information		1
	Item 1. Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Notes to Condensed Consolidated Financial Statements	6
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.  Quantitative and Qualitative Disclosures about Market Risk	30
	Item 4.  Controls and Procedures	31
Part II. Other Information		32
	Item 1.  Legal Proceedings	32
	Item 1A.  Risk factors	32
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	32
	Item 6.  Exhibits	33
	Signatures	34
	Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350
	Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

Part I. Financial Information

Item 1. Financial Statements

Mesa Laboratories, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share amounts)

	September 30,		March 31,
	2020		2020
ASSETS
Current assets:
Cash and cash equivalents	$	241,924	$	81,380
Accounts receivable, less allowances of $168 and $159, respectively		18,563		21,132
Inventories, net		11,837		14,230
Prepaid income taxes		3,344		1,914
Prepaid expenses and other		4,457		4,136
Total current assets		280,125		122,792
Property, plant and equipment, net of accumulated depreciation of $14,087 and $12,741, respectively		22,309		22,066
Deferred tax asset		11,453		11,461
Other assets		1,977		2,480
Intangibles, net		116,703		119,871
Goodwill		156,365		141,536
Total assets	$	588,932	$	420,206
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,852	$	3,408
Accrued payroll and benefits		5,611		8,940
Unearned revenues		6,790		6,814
Contingent consideration		527		504
Other accrued expenses		4,753		6,342
Total current liabilities		19,533		26,008
Deferred tax liability		33,090		32,549
Convertible senior notes, net of discounts and debt issuance costs		142,945		140,278
Other long-term liabilities		952		1,358
Total liabilities		196,520		200,193
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,117,441 and 4,387,140 shares, respectively		309,935		158,023
Retained earnings		74,724		72,359
Accumulated other comprehensive income (loss)		7,753		(10,369	)
Total stockholders’ equity		392,412		220,013
Total liabilities and stockholders’ equity	$	588,932	$	420,206

See accompanying notes to Condensed Consolidated Financial Statements.

Page 1

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019
Revenues	$	31,860		$	25,536		$	61,801		$	51,824
Cost of revenues		10,575			9,950			20,176			20,034
Gross profit		21,285			15,586			41,625			31,790
Operating expenses:
Selling		3,786			2,274			7,861			4,482
General and administrative		10,615			7,703			20,714			15,223
Research and development		2,414			915			5,010			1,934
Total operating expenses		16,815			10,892			33,585			21,639
Operating income		4,470			4,694			8,040			10,151
Nonoperating expense:
Interest expense and amortization of debt discount		1,934			1,397			3,853			1,593
Other expense (income), net		152			(477	)		1,049			(641	)
Total nonoperating expense		2,086			920			4,902			952
Earnings before income taxes		2,384			3,774			3,138			9,199
Income tax (benefit) expense		(295	)		602			(758	)		1,365
Net income	$	2,679		$	3,172		$	3,896		$	7,834
Earnings per share:
Basic	$	0.52		$	0.76		$	0.81		$	1.94
Diluted		0.51			0.73			0.79			1.86
Weighted-average common shares outstanding:
Basic		5,110			4,155			4,821			4,029
Diluted		5,241			4,321			4,958			4,205

See accompanying notes to Condensed Consolidated Financial Statements.

Page 2

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands) 

	Three Months Ended September 30,					Six Months Ended September 30,
	2020		2019			2020		2019
Net income	$	2,679	$	3,172		$	3,896	$	7,834
Other comprehensive income:
Foreign currency translation adjustments		5,262		(986	)		18,122		(865	)
Comprehensive income	$	7,941	$	2,186		$	22,018	$	6,969

See accompanying notes to Condensed Consolidated Financial Statements.

Page 3

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Six Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net income	$	3,896		$	7,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,333			4,444
Stock-based compensation		3,276			2,050
Non-cash interest and debt amortization		2,667			706
Amortization of step-up in inventory basis		(436	)		-
Change in inventory reserve		258			70
Other		499			129
Cash provided by changes in operating assets and liabilities
Accounts receivable, net		3,077			246
Inventories, net		(464	)		295
Prepaid expenses and other assets		(1,941	)		(2,508	)
Accounts payable		(1,604	)		(746	)
Accrued liabilities and taxes payable		(4,811	)		(5,385	)
Unearned revenues		(140	)		14
Net cash provided by operating activities		12,610			7,149
Cash flows from investing activities:
Acquisitions	$	-		$	(2,555	)
Purchases of property, plant and equipment		(707	)		(543	)
Net cash (used in) investing activities		(707	)		(3,098	)
Cash flows from financing activities:
Proceeds from the issuance of convertible senior notes, net		-			167,070
Proceeds from the issuance of common stock, net		145,935			84,995
Payments of debt		-			(23,000	)
Dividends		(1,522	)		(1,321	)
Payments of Contingent Consideration		(10	)		(11	)
Proceeds from the exercise of stock options		2,701			3,507
Net cash provided by financing activities		147,104			231,240
Effect of exchange rate changes on cash and cash equivalents		1,537			(33	)
Net increase in cash and cash equivalents		160,544			235,258
Cash and cash equivalents at beginning of period		81,380			10,185
Cash and cash equivalents at end of period	$	241,924		$	245,443

See accompanying notes to Condensed Consolidated Financial Statements.

Page 4

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except per share data)

	Common Stock
	Number of Shares		Amount		Retained Earnings			AOCI*			Total
March 31, 2020		4,387,140	$	158,023	$	72,359		$	(10,369	)	$	220,013
Proceeds from the issuance of common stock, net of issuance costs of $9,315		690,000		145,935		-			-			145,935
Exercise of stock options and vesting of restricted stock units		25,799		1,654		-			-			1,654
Dividends paid, $0.16 per share		-		-		(704	)		-			(704	)
Stock-based compensation expense		-		1,268		-			-			1,268
Foreign currency translation		-		-		-			12,860			12,860
Adoption of accounting standards, net		-		-		(9	)		-			(9	)
Net income		-		-		1,217			-			1,217
June 30, 2020		5,102,939	$	306,880	$	72,863		$	2,491		$	382,234
Exercise of stock options and vesting of restricted stock units		14,502		1,047		-			-			1,047
Dividends paid, $0.16 per share		-		-		(818	)		-			(818	)
Stock-based compensation expense		-		2,008		-			-			2,008
Foreign currency translation		-		-		-			5,262			5,262
Net income		-		-		2,679			-			2,679
September 30, 2020		5,117,441	$	309,935	$	74,724		$	7,753		$	392,412

	Common Stock
	Number of Shares		Amount		Retained Earnings			AOCI*			Total
March 31, 2019		3,890,138	$	39,823	$	73,303		$	(1,815	)	$	111,311
Exercise of stock options and vesting of restricted stock units		31,441		2,709		-			-			2,709
Dividends paid, $0.16 per share		-		-		(624	)		-			(624	)
Stock-based compensation expense		-		868		-			-			868
Foreign currency translation		-		-		-			121			121
Net income		-		-		4,662			-			4,662
June 30, 2019		3,921,579		43,400		77,341			(1,694	)		119,047
Exercise of stock options and vesting of restricted stock units		12,220		798		-			-			798
Proceeds from issuance of common stock, net of issuance costs of $5,568		431,250		84,995								84,995
Proceeds from conversion feature of convertible senior notes, due 2025, net of allocated costs and taxes of $8,338		-		22,735								22,735
Dividends paid, $0.16 per share		-		-		(697	)		-			(697	)
Stock-based compensation expense		-		1,182		-			-			1,182
Foreign currency translation		-		-		-			(986	)		(986	)
Net Income		-		-		3,172			-			3,172
September 30, 2019		4,365,049	$	153,110	$	79,816		$	(2,680	)	$	230,246

*Accumulated Other Comprehensive Income (Loss).

See accompanying notes to Condensed Consolidated Financial Statements.

Page 5

Mesa Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(dollar and share amounts in thousands, unless otherwise specified)

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

In this quarterly report on Form 10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company” or “Mesa Labs.”

We are a multinational manufacturer, developer, and seller of quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements. We have manufacturing operations in North America and Europe and our products are marketed by our sales personnel in North America, Europe, China, Japan, and by distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross margins.

As of September 30, 2020, we managed our operations in four reportable segments, or divisions. Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry. Our Instruments division designs, manufactures, and markets quality control hardware and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, and environmental air sampling industries. During the year ended March 31, 2020, we added a new reportable segment: Biopharmaceutical Development as a result of our acquisition of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition"), which is discussed further in Note 12. "Significant Transactions". Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biotherapeutic drugs. Our Continuous Monitoring division designs, develops, and markets systems which are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments.  Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended March 31, 2020) and unallocated corporate expenses are reported within Corporate and Other.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. The results of operations for the interim periods are not necessarily indicative of results that may be achieved for the entire year.  The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2020.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgement about the outcome of future events. The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus ("COVID-19"), and it is not possible to accurately predict the future impact of COVID-19. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected by the impacts of COVID-19 during the near term: 

● Estimates regarding the future financial performance of the business used in the impairment tests for goodwill and long-lived assets acquired in a business combination; however, we identified no triggering events since our impairment analysis was completed during the three months ended March 31, 2020; 

● Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions;

● Estimates regarding recoverability for customer receivables;

● Estimates of the net realizable value for inventory.

Immaterial Error Correction

During the three months ended September 30, 2020, we identified an immaterial error in the design of our Enterprise Resource Planning tool that resulted in a system failure to eliminate intercompany cost of revenues for certain types of transactions. The error resulted in an overstatement of cost of goods sold and an understatement in gross profit for the Continuous Monitoring, Instruments, and Sterilization and Disinfection Control divisions. The issue began during the three months ended June 30, 2019; we have determined that no financial statement prior to April 1, 2019 was misstated as a result of the previously uneliminated balances in cost of revenues. 

In accordance with Staff Accounting Bulletin ("SAB") No. 99 Materiality, and SAB No. 108 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, we evaluated the error quantitatively and qualitatively and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the three months ended September 30, 2020. In considering the materiality, we concluded that the impact of the error correction is not material in absolute dollar amount especially since our most recent fiscal year results included various new non cash charges that reduced net income below historical levels, [nor is it qualitatively material]. Accordingly, we have revised previously reported financial information for the immaterial error.

We performed manual intercompany elimination calculations and determined that cost of revenues and accumulated other comprehensive income were overstated by $429 for the year ended March 31, 2020, which would increase operating income and net income by approximately $429 and diluted earnings per share by $0.10; there was no income tax impact on the full year adjustment since the inventory balance was not misstated.  To correct the immaterial error, we have restated retained earnings as of March 31, 2020. The error resulted in overstated cost of goods sold and a corresponding understatement of net income of: $65 during the three months ended June 30, 2019; $110 during the three months ended September 30, 2019, $126 during the three months ended December 31, 2019, and $128 during the three months ended March 31, 2020. Additionally, during the three months ended June 30, 2020, cost of revenues were overstated by $372, which after the impact of taxes would increase net income by approximately $192 and diluted earnings per share by $0.04. We have restated retained earnings as of June 30, 2020 in the amount of $192. The immaterial error has no impact on total cash flows from operating activities or total comprehensive income for any of the periods that were revised. 

Page 6

 

Recently Issued Accounting Pronouncements

In August, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, such as our convertible senior notes, due 2025. ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. It is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The update permits the use of either the modified retrospective or fully retrospective method of transition. We are currently evaluating the timing, method of adoption, and financial impact of the adoption of ASU 2020-06 on our financial statements but anticipate that subsequent to adoption, the equity conversion feature will be categorized as a liability and there will be a reduction in non-cash interest expense related to the 1.375% convertible senior notes due August 15, 2025.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as modified by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The ASU was effective for public business entities for fiscal years beginning after December 15, 2019, with early adoption permitted. On April 1, 2020, we adopted the ASU using the modified retrospective transition method. We recorded a net decrease to beginning retained earnings of $9 as of April 1, 2020 due to the cumulative effect of adopting Topic 326's requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on our trade receivables. As a result of the adoption of the ASU, our allowance for doubtful accounts as of September 30, 2020 reflects our best estimate of the expected future losses for our accounts receivable based on the current economic conditions. We have accounted for the macroeconomic impact of the COVID-19 pandemic in our estimates, but due to the unprecedented nature of the impact of the pandemic, our estimates may change and future actual losses may differ from our current estimates. We will continue to monitor economic conditions and will revise our estimate of the expected future losses for accounts receivable as necessary.  

We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable was developed using historical collection experience, current and expected future economic and market conditions and a review of the current status of customers’ trade accounts receivables. Customers are pooled based on sharing specific risk factors. Due to the short-term nature of trade receivables, the estimated accounts receivable that may not be collected is based on aging of the accounts receivable balances.

Customers are assessed for credit worthiness upfront through a credit review. We evaluate contract terms and conditions, and may require prepayment to mitigate risk of loss. Specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. We monitor changes to the receivables balance on timely basis, and balances are written off as they are determined to be uncollectable after all collection efforts have been exhausted. Estimates of potential credit losses are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.

Note 2. Revenue Recognition

We design, manufacture, market, sell, and maintain quality control instruments and software, consumables, and services driven primarily by the regulatory requirements of niche markets. Our consumables, such as biological indicator test strips are typically used on a standalone basis; however, some that are used in protein synthesis and calibration solutions are also critical to the ongoing use of our instruments. Hardware and software sales, such as medical meters, protein synthesizers, wireless sensor systems, and data loggers are generally driven by our acquisition of new customers, growth of existing customers, or customers' replacement of existing equipment. Hardware sales may be offered with perpetual or annual software licenses, which in some cases are required for the hardware to function. Our Biopharmaceutical Development Division designs, manufactures, markets, and sells instruments, such as protein synthesizers that are used to process immunoassay samples and related software designed to enhance productivity; consumable chemical solutions designed for use in testing; and on-demand and long-term service contracts to support customers' use of the equipment. The division generates revenue from the same general categories as those we have identified for the rest of our business and recognizes revenue consistently with our policies. We evaluate our revenues internally by product line, timing of revenue generation, and the nature of goods and services provided. Typically, discrete revenue is recognized at the shipping point or upon completion of the service, while contracted revenue is recognized over a period of time reflective of the performance obligation period in the applicable contract. Consumables are typically used on a one-time basis requiring frequent replacement in our customer's operating cycle. Substantially all of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

Page 7

The following tables present disaggregated revenues for the three and six months ended September 30, 2020 and three and six months ended September 30, 2019, respectively:

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	9,518	$	715	$	3,238	$	15	$	-	$	13,486
Hardware and Software		108		4,815		4,191		2,207		-		11,321
Services		706		2,028		1,005		614		-		4,353
Contracted Revenues
Services		1,220		-		697		783		-		2,700
Total Revenues	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	10,122	$	563	$	-	$	10	$	877	$	11,572
Hardware and Software		148		5,923		-		1,821		-		7,892
Services		641		2,474		-		570		19		3,704
Contracted Revenues
Services		1,183		-		-		1,185		-		2,368
Total Revenues	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	21,002	$	1,523	$	5,177	$	45	$	-	$	27,747
Hardware and Software		237		9,835		6,747		4,162		-		20,981
Services		956		3,880		1,787		1,145		-		7,768
Contracted Revenues
Services		2,424		-		1,369		1,512		-		5,305
Total Revenues	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801

	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	20,539	$	1,583	$	-	$	21	$	2,186	$	24,329
Hardware and Software		334		12,401		-		3,812		-		16,547
Services		941		4,520		-		1,110		27		6,598
Contracted Revenues
Services		2,390		-		-		1,960		-		4,350
Total Revenues	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824

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Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
United States	$	11,222	$	15,006	$	27,594	$	30,197
Foreign		20,638		10,530		34,207		21,627
Total revenues	$	31,860	$	25,536	$	61,801	$	51,824

No foreign country exceeds 10% of total revenues.

Contract Balances

Our contracts have varying payment terms and conditions. Some customers prepay for services, resulting in unearned revenues or customer deposits, called contract liabilities, which are included within other accrued expenses and unearned revenues in the accompanying Condensed Consolidated Balance Sheets. Contract assets would exist when sales are recorded (i.e. the control of the goods or services has been transferred to the customer), but customer payment is contingent on a future event besides the passage of time (such as satisfaction of additional performance obligations). We do not have any contract assets. Unbilled receivables, which are not classified as contract assets, represent arrangements in which sales have been recorded prior to billing and right to payment is unconditional.

A summary of contract liabilities is as follows:

Contract liabilities balance as of March 31, 2020	$	7,217
Prior year liabilities recognized in revenues during the six months ended September 30, 2020		(3,353	)
Contract liabilities added during the six months ended September 30, 2020, net of revenues recognized		3,272
Contract liabilities balance as of September 30, 2020	$	7,136

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Note 3. Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable and debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value. We measure our cash equivalents at fair value, and classify them within Level 1 of the fair value hierarchy and we value them using quoted market prices in an active market.  As of September 30, 2020 and  March 31, 2020, cash and cash equivalents on our Condensed Consolidated Balance Sheets included $222,806 and $66,735, respectively, in a money market account. The increase in the balance in our money market account is primarily a result of our public offering of common stock described in further detail in Note 8. "Stockholders' Equity". 

During our year ended March 31, 2020, we issued $172,500 aggregate principal amount of 1.375% convertible senior notes due August 15, 2025. We estimate the fair value of the Notes based on the last actively traded price or market observable input before the end of the reporting period. The estimated fair value and carrying value of the Notes were as follows:

	September 30, 2020				March 31, 2020
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Notes	$	142,945	$	191,475	$	140,278	$	173,363

The Notes are discussed in more detail in Note 7. "Indebtedness." 

Assets recognized or disclosed at fair value on the unaudited condensed consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets, including those that were a part of the GPT Acquisition. These assets are measured at fair value if determined to be impaired. Preliminary fair values assigned to the assets and liabilities acquired in the GPT Acquisition were measured using Level 3 inputs, as discussed further in Note 12. "Significant Transactions." There were no transfers between the levels of the fair value hierarchy during the six months ended September 30, 2020 or six months ended September 30, 2019.

Cash and cash equivalents and accounts receivables are the financial instruments that subject us to the highest concentration of credit risk. It is our policy to invest cash equivalents in highly liquid financial instruments with high credit ratings, and low exposure to a single issuer (except U.S. treasuries). Concentration of credit risk with respect to accounts receivable is limited to customers to which we make significant sales. We reserve an allowance for potential write-offs of accounts receivable, but we have not written off any significant accounts to date. To control credit risk, we perform regular credit evaluations of our customers’ financial condition.

Note 4. Inventories, Net

Inventories consist of the following:

	September 30, 2020			March 31, 2020
Raw materials	$	7,263		$	6,757
Work-in-process		357			329
Finished goods		7,099			9,768
Less: reserve		(2,882	)		(2,624	)
Inventories, net	$	11,837		$	14,230

As of  September 30, 2020 and March 31, 2020, finished goods inventory included $0 and $2,901, respectively, which was the remaining balance of the adjustment to step-up inventory acquired as part of the GPT Acquisition to fair value; see Note 12. "Significant Transactions." 

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Note 5. Goodwill and Intangible Assets, Net

Finite-lived intangible assets consist of the following:

	September 30, 2020							March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intellectual property	$	20,852	$	(7,671	)	$	13,181	$	15,731	$	(6,454	)	$	9,277
Trade names		8,477		(2,992	)		5,485		5,839		(2,855	)		2,984
Customer relationships		143,378		(45,464	)		97,914		146,106		(38,777	)		107,329
Non-compete agreements		1,299		(1,176	)		123		1,447		(1,166	)		281
Total	$	174,006	$	(57,303	)	$	116,703	$	169,123	$	(49,252	)	$	119,871

Amortization expense for finite-lived intangible assets acquired in a business combination was $3,512 and $6,866 for the three and six months ended September 30, 2020 and $1,658 and $3,330 for the three and six months ended  September 30, 2019, respectively. The increase in the amortization expense was attributable to intangible assets acquired as part of the GPT acquisition, including a cumulative effect true up that we recorded during the three months ended June 30, 2020 as we made adjustments to purchase accounting, see Note 12. "Significant Transactions." 

The following is estimated amortization expense for the years ending March 31:

2021	$	14,635
2022		14,599
2023		14,581
2024		14,056
2025		12,471

The change in the carrying amount of goodwill was as follows:

	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
March 31, 2020	$	29,594	$	19,123	$	74,716	$	18,103	$	-	$	141,536
Effect of foreign currency translation		500		60		8,604		-		-		9,164
Goodwill adjustment related to GPT acquisition		-		-		5,665		-		-		5,665
September 30, 2020	$	30,094	$	19,183	$	88,985	$	18,103	$	-	$	156,365

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Note 6. Supplemental Balance Sheets Information

Accrued payroll and benefits consist of the following:

	September 30, 2020		March 31, 2020
Bonus payable	$	1,771	$	4,069
Wages payable		2,146		2,485
Payroll related taxes		1,504		2,228
Other benefits payable		190		158
Total accrued payroll and benefits	$	5,611	$	8,940

Other accrued expenses consist of the following:

	September 30, 2020		March 31, 2020
Accrued business taxes	$	1,965	$	3,796
Current operating lease liabilities		945		1,095
Interest payable		296		296
Professional services fees		494		857
Other		1,053		298
Total other accrued expenses	$	4,753	$	6,342

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Note 7.  Indebtedness

On August 12, 2019, we issued an aggregate principal amount of $172,500 of convertible senior notes (the "Notes"). The Notes mature on August 15, 2025, unless earlier repurchased or converted and bear interest at a rate of 1.375% payable semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2020. The Notes are initially convertible at a conversion rate of 3.5273 shares of the common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $283.50 per share of common stock. Noteholders may convert their Notes at their option only in the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price per share of  our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets; and (iv) at any time from, and including, April 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.  Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. Our current intent is to settle conversions entirely in shares of common stock. We will reevaluate this policy from time to time as conversion notices are received from holders of the Notes. The circumstances required to allow the holders to convert their Notes were not met during the three months ended September 30, 2020.  As of September 30, 2020, the if-converted value of the Notes did not exceed the principal balance.

We accounted for the transaction by bifurcating the Notes into liability and equity components. The carrying amount of the liability component was $141,427 upon issuance and was calculated by using the income approach and measuring the fair value of a similar debt instrument that does not have an associated convertible feature.  The implied interest rate (a Level 3 unobservable input) assuming no conversion option was estimated using the Tsiveriotis-Frenandes model; all other assumptions used in measuring the fair value represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs before allocated issuance costs and deferred taxes.  The carrying amount of the equity component representing the conversion option was $31,073 and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the "Debt Discount") is being amortized to interest expense using the effective interest method over the six-year contractual term of the Notes.

Debt issuance costs related to the Notes comprised of discounts and commissions payable to the initial purchasers of $5,175 and third party offering costs of $255. We allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $4,452 and are being amortized to interest expense using the effective interest method over the contractual term.  Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

The net carrying amount of the Notes were as follows:

	September 30, 2020			March 31, 2020
Principal outstanding	$	172,500		$	172,500
Unamortized debt discount		(25,879	)		(28,205	)
Unamortized debt issuance costs		(3,676	)		(4,017	)
Net carrying value	$	142,945		$	140,278

The net carrying amount of the equity component of the Notes were as follows:

	September 30, 2020			March 31, 2020
Amount allocated to conversion option	$	31,073		$	31,073
Less: allocated issuance costs and deferred taxes		(8,338	)		(8,338	)
Equity component, net	$	22,735		$	22,735

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We recognized interest expense on the Notes as follows:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Coupon interest expense at 1.375%	$	593	$	316	$	1,186	$	316
Amortization of debt discounts and issuance costs		1,341		707		2,667		707
Total	$	1,934	$	1,023	$	3,853	$	1,023

The effective interest rate of the liability component of the note is approximately 5.5%.

Note 8. Stockholders' Equity

Public Offerings of Common Stock

On June 12, 2020, we completed the sale and issuance of 600,000 shares of our common stock and on June 19, 2020, our underwriters exercised in full their option to purchase an additional 90,000 shares of our common stock. The offering price to the public was $225.00 per share. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses was $145,935. 

Stock-Based Compensation

Amounts recognized related to stock-based compensation are as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019
Stock-based compensation expense	$	2,008		$	1,182		$	3,276		$	2,050
Amount of income tax (benefit) recognized in earnings		(522	)		(368	)		(1,447	)		(908	)
Stock-based compensation expense, net of tax	$	1,486		$	814		$	1,829		$	1,142

Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Income.

Page 14

The following is a summary of stock option award activity for the six months ended September 30, 2020 (shares in thousands):

	Stock Options
	Shares Subject to Options			Weighted- Average Exercise Price per Share
Outstanding at March 31, 2020		286		$	107.72
Awards granted		36			226.72
Awards forfeited or expired		(10	)		112.27
Awards exercised		(36	)		83.69
Outstanding as of September 30, 2020		276		$	126.30

The stock options granted during the six months ended September 30, 2020 vest in equal installments on each of the first three anniversaries of the grant date. 

The following is a summary of restricted stock unit ("RSU") award activity for the six months ended September 30, 2020 (shares in thousands): 

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	Number of Shares			Weighted- Average Grant Date Fair Value per Share		Number of Shares			Weighted- Average Grant Date Fair Value per Share
Nonvested at March 31, 2020		28		$	180.15		22		$	204.68
Awards granted		19			225.32		-			-
Awards forfeited or expired		(3	)		205.10		(1	)		199.50
Awards distributed		(5	)		177.17		-			-
Nonvested as of September 30, 2020		39		$	201.49		21		$	204.80

The majority of the time-based RSUs granted during the six months ended September 30, 2020 vest and settle in shares of our common stock, on a one-for-one basis, in equal installments on each of the first three anniversaries of the grant date. Time-based RSUs issued to non-employee directors and a portion of the awards granted to executives of the company vest after a one-year period from the grant date. We recognize the expense relating to these units, net of estimated forfeitures, on a straight-line basis over the vesting period.

Performance-based RSUs vest upon completion of the service period described in the award agreement and based on achievements of the financial targets described in the award agreements. We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the financial targets, on a straight-line basis over the service period.

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Note 9. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share (“diluted EPS”) is computed similarly to basic earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. Potentially dilutive securities include common shares related to stock options and RSUs (collectively “stock awards”). Stock awards are excluded from the calculation of diluted EPS in the event that they are subject to performance conditions that have not yet been achieved or are antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect. 

The impact of the assumed conversion of the Notes calculated under the if-converted method was anti-dilutive, and as such, shares underlying the Notes were excluded from the diluted EPS calculation for the three and  six months ended September 30, 2020. 

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share (shares in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Net income available for shareholders	$	2,679	$	3,172	$	3,896	$	7,834
Weighted average outstanding shares of common stock		5,110		4,155		4,821		4,029
Dilutive effect of stock options		119		156		125		166
Dilutive effect of non-vested shares		12		10		12		10
Fully diluted shares		5,241		4,321		4,958		4,205
Basic	$	0.52	$	0.76	$	0.81	$	1.94
Diluted	$	0.51	$	0.73	$	0.79	$	1.86

The following stock awards were excluded from the calculation of diluted EPS:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Assumed conversion of convertible debt		608		331		608		166
Stock awards that were anti-dilutive		63		29		49		19
Stock awards subject to performance conditions		21		18		19		15
Total stock awards excluded from diluted EPS		692		378		676		200

Note 10. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, impairments of non-deductible goodwill, excess benefits from stock-based compensation, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

Our effective income tax rate was (12.4)% and (24.2)% for the three and six months ended September 30, 2020 and was 16.0% and 14.8% for the three and six months ended  September 30, 2019, respectively.  The effective tax rate for the three and six months ended September 30, 2020 differed from the statutory federal rate of 21% primarily due to the release of an uncertain tax position during the three months ended September 30, 2020 as discussed further below, the benefit of share-based payment awards for employees and research and development tax credits, partially offset by expenses for state income taxes, the limitations imposed by Section 162(m), and the foreign rate differential.

As part of our adoption of the Tax Cuts and Jobs Act, we recorded an uncertain tax position in the amount of $630. During the three months ended September 30, 2020, the Internal Revenue Service issued final regulations clarifying the law and providing greater flexibility to companies regarding substantiation requirements. As a result of the clarifications, we have determined that the uncertain tax position is no longer required and we have released it, which resulted in a $630 tax benefit during the three months ended September 30, 2020.

Since we are subject to audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. However, we do not expect the change, if any, to have a material effect on our financial condition or results of operations within the next 12 months.

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Note 11. Commitments and Contingencies

We review the adequacy of our legal reserves on a quarterly basis and establish reserves for loss contingencies that are both probable and reasonably estimable. As of September 30, 2020, there were no material legal reserves recorded on the accompanying unaudited Condensed Consolidated Balance Sheets. 

Under the terms of the revised IBP agreement, we are required to pay contingent consideration if the company is able to achieve certain operational and regulatory milestones. The potential undiscounted consideration payable ranges from €0 to €450, depending on whether units being developed are certified for sale by U.S. and foreign regulatory bodies. We currently believe that it is more likely than not that all aspects of the contingency will be achieved and we expect to pay $530, depending on foreign exchange rates, during the year ending March 31, 2021.

Note 12. Significant Transactions

GPT Acquisition

On October 31, 2019, we completed the acquisition of 100% of the outstanding shares of GPT, which comprises our new reportable segment - Biopharmaceutical Development. The acquisition of GPT expanded our presence into a new market--immunoassays and peptide synthesis solutions--that accelerate the discovery, development, and manufacturing of biotherapeutic drugs. GPT systems include laboratory instruments, consumables, kits, and software that maximize laboratory productivity by miniaturizing and automating immunoassays at nanoliter scale. GPT's protein detection is used most frequently by pharmaceutical and biotech companies that are developing protein-based drugs. This division also provides instruments, consumables, and software for the chemical synthesis of peptides from amino acids which are used in the discovery of new peptide-based drug therapies.  After adjustments, we paid cash consideration of $181,547 to the sellers in the transaction.  The acquisition was considered a stock purchase for tax purposes. 

Preliminary Allocation of Purchase Price

We accounted for the GPT Acquisition as the purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of GPT were recorded as of the acquisition date, at their respective estimated fair values, and consolidated with those of Mesa Labs. During the three months ended September 30, 2020, we finalized the valuation of net assets acquired. We obtained the information used to prepare the preliminary valuation during due diligence and from other sources. In the months after closing, we obtained additional information about these assets and liabilities as we learned more about GPT. We refined the estimates of fair value to more accurately allocate the purchase price. Only items identified as of the acquisition date were considered for subsequent adjustment.

The preparation of the valuation required the use of Level 3 inputs, which are subject to significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. 

During the six months ended  September 30, 2020, we finalized the valuation of the inventory step-up, intangible assets acquired, and property, plant, and equipment; however we have not finalized the valuation of certain tax related items, including deferred taxes. The final purchase price allocation will be completed within one year of the closing of the transaction, and may be refined further in the coming months as we learn more about GPT and therefore we can more accurately allocate the purchase price.  The measurement period adjustments to the acquisition fair values of the assets were due to the refinement of our valuation models, assumptions and inputs. The updated assumptions and inputs incorporated additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date. 

The significant purchase price allocation changes during the six months ended September 30, 2020 included a net decrease of $6,002 in the value of intangible assets, a decrease of $3,752 in the value of the inventory step-up, and an increase of $878 in the value of property, plant and equipment, net.  Long-term deferred tax liabilities also decreased by a net amount of $2,010, primarily due to the tax effect of these changes to the purchase price allocation. During the six months ended September 30, 2020, the cumulative net decrease to amortization expense recorded as a result of the decrease to intangible assets was $344, of which $178 of expense was recorded to cost of revenues and a benefit of $522 was recorded in general and administrative costs. Additionally, a $207 cumulative increase to depreciation expense was recorded to general and administrative costs during the three months ended September 30, 2020 as a result of the increase in the fair value of property, plant and equipment. 

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The cumulative impacts of all adjustments to date have been reflected in the Unaudited Condensed Consolidated Financial Statements as of and for the six months ended September 30, 2020. The components and allocation of the purchase price consist of the following amounts:

	Note	Fair Value
Cash and cash equivalents		$	4,654
Accounts receivable, net	(a)		6,663
Inventories, net	(b)		12,522
Prepaid income taxes			477
Prepaid expenses and other			13,649
Property, plant and equipment, net			1,523
Other assets			1,469
Deferred taxes			10,340
Intangible assets:
Customer relationships	(c)		77,500
Trade name	(c)		4,600
Non-compete agreements	(c)		-
Acquired technology	(c)		11,800
Goodwill	(d)		84,028
Total Assets acquired		$	229,225
Accounts payable			599
Accrued salaries and payroll taxes			10,735
Other short-term liabilities			157
Unearned revenues			2,089
Other accrued expenses			5,068
Deferred taxes			23,411
Other long-term liabilities			965
Total liabilities assumed		$	43,024
Total closing amount, net of cash acquired		$	181,547

 ^(a) Accounts receivable is composed of trade accounts receivable, net which is expected to be collected. 

^(b)  Finished goods inventory of GPT includes $8,066 of inventory-step up, which is required to report inventory at fair value at the time of acquisition. The inventory step-up was amortized to cost of revenues over approximately eight months following the acquisition date, which resulted in a temporary reduction in gross profit for the business. During the period from November 1, 2019 until March 31, 2020, we recorded $8,502 of amortization of inventory step-up costs in cost of revenues on the Condensed Consolidated Statement of Income. The final inventory valuation was completed during the six months ended September 30, 2020 and was lower than our preliminary valuation, resulting in a cumulative effect decrease of $436 in amortization of inventory step up costs. We do not expect further adjustments to the inventory step-up valuation, nor do we expect changes in the amortization to be recorded.

^(c)  Customer relationships and acquired technology are being amortized on a straight-line basis over a 10 year period. Amortization expense for customer relationships is recorded to general and administrative expenses; amortization expense for acquired technology is recorded to cost of revenues. During the six months ended September 30, 2020, $1,409 of amortization expense related to the GPT intangible assets was recorded to general and administrative costs and $473 of amortization expense was recorded to cost of goods sold and allocated to the Biopharmaceutical Development division, including the cumulative-effect benefit to amortization expense discussed above. Trademarks associated with this acquisition are considered indefinite-lived intangibles. The estimated fair value of identifiable intangible assets was determined primarily using the income approach, which requires a forecast of all the expected future cash flows associated with the identified intangible assets. 

^(d)  Acquired goodwill of $84,028, all of which is allocated to the Biopharmaceutical Development reportable segment, represents the value expected to arise from organic revenues growth projections that are expected to exceed that of our legacy divisions, and the opportunity to expand into a new market with well-established market share. The goodwill acquired is not deductible for income tax purposes.

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Unaudited Pro Forma Information

GPT's operations contributed $15,080 to revenues and ($2,083) of net loss to our consolidated results during the six months ended September 30, 2020 including cumulative-effect adjustments. We included the operating results of GPT in our Condensed Consolidated Statements of Income beginning on November 1, 2019, subsequent to the acquisition date. The following pro forma financial information presents the combined results of operations of Mesa Labs and GPT as if the acquisition had occurred on April 1, 2019 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected only include those adjustments that are directly attributable to the GPT Acquisition, factually supportable and have a recurring impact; they do not reflect any adjustments for anticipated expense savings resulting from the acquisition and are not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on April 1, 2019 or of future results. Prior to the GPT Acquisition, GPT did not generate monthly or quarterly financial statements that were prepared in accordance with GAAP. 

	Six Months Ended September 30,
	2019
Pro forma total revenues (1)	$	67,907
Pro forma net income (2)		6,435

(1) Net revenues were adjusted to include net revenues of GPT. 

(2) Pro forma adjustments to net earnings attributable to Mesa Labs include the following:

● Excludes interest expense attributable to GPT's external debt that was paid off as part of the acquisition.

● Additional amortization expense of $4,057 for the six months ended September 30, 2019 based on the increased fair value of amortizable intangible assets acquired.

● For the six months ended September 30, 2019, $351 additional stock based compensation expense representing expense for performance share units awarded to certain key GPT employees.

● Income tax effect of the adjustments made at a blended federal and state statutory rate (approximately 25%).

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Note 13. Segment Information

As of September 30, 2020, we had four reportable segments, Sterilization and Disinfection Control, Instruments, Biopharmaceutical Development, and Continuous Monitoring. Results for the Cold Chain Packaging division, which we exited during the year ended March 31, 2020, are now presented within Corporate and Other. The following tables set forth our segment information: 

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860
Gross profit	$	8,770	$	4,852	$	6,212	$	1,368	$	83	$	21,285
Reconciling items (2)												(18,901	)
Earnings before income taxes											$	2,384

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536
Gross profit	$	8,723	$	5,557	$	-	$	1,221	$	85	$	15,586
Reconciling items (2)												(11,812	)
Earnings before income taxes											$	3,774

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801
Gross profit	$	18,790	$	9,541	$	10,678	$	2,552	$	64	$	41,625
Reconciling items (2)												(38,487	)
Earnings before income taxes											$	3,138

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	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824
Gross profit	$	17,233	$	11,639	$	-	$	2,506	$	412	$	31,790
Reconciling items (2)												(22,591	)
Earnings before income taxes											$	9,199

⁽¹⁾ Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

⁽²⁾ Reconciling items include selling, general and administrative, research and development, interest expense and amortization of debt discount, and other (income) expenses.

The following table sets forth assets by reportable segment: 

	September 30, 2020		March 31, 2020
Sterilization and Disinfection Control	$	68,571	$	73,103
Instruments		29,735		31,025
Biopharmaceutical Development		194,570		182,758
Continuous Monitoring		28,625		29,732
Corporate and administrative		267,431		103,588
Total	$	588,932	$	420,206

Note 14. Subsequent Event

In October 2020, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on December 15, 2020, to shareholders of record at the close of business on November 30, 2020.

Page 21

 

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

(Dollars in thousands, except per share amounts)

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form 10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Q which are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position, potential impairment of future earnings, anticipated effects of, and future actions to be taken in response to, the COVID-19 pandemic, management’s strategy, plans and objectives for future operations or acquisitions, product development and sales, product candidate research, development and regulatory approval, selling, general and administrative expenditures, intellectual property, development and manufacturing plans, availability of materials and product and adequacy of capital resources and financing plans constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. The Company undertakes no obligation to publicly update or revise the statements in light of future developments. In addition, other written and oral statements that constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as “expect,” “seek,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “project,” or variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including risks associated with: the duration and impact of the COVID-19 pandemic and the myriad of its effects on our business including related decreases in customer demand and spending; our ability to successfully grow our business, including as a result of acquisitions; the market acceptance of our products; reduced demand for our products that adversely impacts our future revenues, cash flows, results of operations and financial condition; inability to consummate acquisitions at our historical rate and at appropriate prices, and to effectively integrate acquired businesses; conditions in the global economy and the particular markets we serve; significant developments or uncertainties stemming from the U.S. government, including changes in U.S. trade policies and medical device regulations; the timely development and commercialization, and customer acceptance, of enhanced and new products and services based on technological innovation; laws regulating fraud and abuse in the health care industry and the privacy and security of health and personal information; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities;  and foreign currency exchange rates and fluctuations in those rates.  Further information on potential risk factors that could affect our financial results are included in the filings made by us from time to time with the Securities and Exchange Commission including under the section entitled “Risk Factors” in our Annual Report on Form 10-K, for the year ended March 31, 2020 and our subsequent Quarterly Reports on Form 10-Qs. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Business Overview

We are a multinational manufacturer, developer, and seller of quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements. We have manufacturing operations in North America and Europe and our products are marketed by our sales personnel in North America, Europe, China, Japan, and by distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross margins. As of September 30, 2020, we managed our operations in four reportable segments, or divisions: Sterilization and Disinfection Control, Instruments, Biopharmaceutical Development, and Continuous Monitoring, each of which are described further in Results of Operations below.  Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended March 31, 2020) and unallocated corporate expenses are reported within Corporate and Other.

As discussed in Note 8. "Stockholders' Equity" within Item 1. "Financial Statements," we completed an equity offering of our common stock, which provided $145,935, net of discounts and issuance costs. We intend to use the money raised for general corporate purposes, which may include furthering our acquisition strategy.

Corporate Strategy

We strive to create shareholder value and further our purpose of Protecting the Vulnerable^® by growing our business both organically and through further acquisitions, by improving our operating efficiency, and by continuing to hire, develop and retain top talent.  As a business, we commit to our purpose of Protecting the Vulnerable^® every day by taking a customer-focused approach to developing, building, and delivering our products. We serve a broad set of industries that require dependable quality control and calibration solutions to ensure the safety and efficacy of the products they use, and by delivering the highest quality products possible, we are committed to protecting the environment, products, and people. 

Our revenues come from product sales, which includes hardware and software, and consumables; as well as services, which include installation, discrete maintenance services, and ongoing maintenance contracts. Revenues increase as a result of organic or inorganic revenues growth. Inorganic revenues growth is driven by acquisitions. 

We continue to focus on improving our operating efficiency The Mesa Way, which is our customer-centric, lean based system for continuously improving and operating a set of high-margin, niche businesses. The Mesa Way is based on four pillars:

– Measure what matters: We use “True North,” our customer’s perspective, to measure what matters most to customers and to set high standards for performance. We manage to leading indicators, whenever possible, which drives us to proactively avoid problems before they are apparent to our customers.

– Empower Teams: We move decision making as close to the customer as possible and provide the structure and real-time communication forum to align the whole organization towards surpassing customer expectations.

– Steadily Improve: We leverage a common and proven set of lean-based tools to identify the root cause of opportunities, prioritize our biggest opportunities, and enable change to be embraced and implemented quickly.

– Always Learn:  We ensure that improvements are sustained, enabling us to raise performance expectations and repeat the cycle of improvement. Equally, this cycle strengthens the Mesa team by providing endless learning opportunities for our employees and helps us to become an employer of choice in our communities.

Finally, we hire, develop, and retain top talent, capable of taking on new challenges using a team approach to continuously improve our products, our services, and ourselves, resulting in long-term value creation for our shareholders.  

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COVID-19 and Business Update

During March 2020, the impact from the spreading of COVID-19 was declared a global pandemic by the World Health Organization and a national public health emergency in the United States. The consequences of the outbreak and impact to the economy have continued to evolve throughout the six months ended September 30, 2020 and we are unable to ascertain the full extent of the impact on our business as of the date of this filing. Throughout our fiscal year, the pandemic has continued to present a substantial public health and economic challenge around the world and is affecting our employees, business operations, and operating segments in various ways.

As COVID-19 has continued to spread and significantly affect markets around the world, we continued to enforce company policies that are focused on ensuring the safety of our employees, while continuing to deliver our goods to customers across the world. Due to the critical nature of our products and services, we are generally exempt from governmental orders in the U.S. and other countries requiring businesses to suspend operations. Nevertheless, the pandemic brought a material disruption to our operations. To protect employees and comply with regulations and recommendations to limit gatherings and increase social distancing, we require office-based employees to work remotely in most cases, and we implemented enhanced safety protocols at our manufacturing facilities, including performing health checks at the start of shifts, utilizing contact tracing technology to support case investigation when needed, and maximizing the amount of space between workspaces. We have taken aggressive steps to limit the exposure and enhance the safety of our facilities for employees working so that we can continue to supply products and services to our customers, although there is no guarantee that our measures will be successful. Additionally, we continue to evaluate and monitor the condition of our supply chain and work with our suppliers to develop contingency plans for potential supply interruptions. 

Our business has encountered challenges resulting from COVID-19, as the global downturn resulted in a slow-down in demand for many of the products and services that we offer. The impact on our businesses is outlined below:

● Sterilization and Disinfection Control: This division benefited in the three months ended June 30, 2020 from fulfilling temporary advanced buying orders placed by certain customers during the three months ended March 31, 2020; however, overall orders slowed significantly during the latter part of the three months ended June 30, 2020 and continued throughout the three months ended September 30, 2020 as advanced ordering began to reverse. Additionally, sales to distributors that service high growth economies that were severely impacted by COVID-19 have declined. Nevertheless, we believe that the consumable, critical, and disposable nature of Sterilization and Disinfection Control products makes them less sensitive to general economic conditions, and the demand for Sterilization and Disinfection Control products has remained relatively strong. Prior to the COVID-19 pandemic, the worldwide market for sterilization and disinfection control products had been growing as more countries increase their focus on verifying the effectiveness of sterilization and disinfection processes.

● Biopharmaceutical Development, and Continuous Monitoring: Demand for hardware, consumables, and services sold by our Biopharmaceutical Development and hardware and software sold by our Continuous Monitoring divisions declined during the three months ended June 30, 2020, which we believe was mainly a result of COVID-19. As several of the restrictions limiting vendors from going on-site at customer facilities were lifted during the three months ended September 30, 2020, demand for both Biopharmaceutical Development and Continuous Monitoring products and services increased significantly compared to the three months ended June 30, 2020.  Although orders increased during the three months ended September 30, 2020, the global pandemic continues to inhibit our ability to use proven strategies to market and sell these products.  Further, increases in COVID-19 cases throughout the world could lead to customers closing their facilities again and decreased demand for our products. In the future, when travel and gathering restrictions are lifted more broadly and we are able to go on-site at more customer facilities, we expect to continue to grow revenues organically in the Biopharmaceutical Development and Continuous Monitoring divisions.

● Instruments: Demand for hardware and certain services sold by our Instruments division declined during the six months ended September 30, 2020, which we believe was mainly a result of COVID-19. We expect that demand for hardware sold by our Instruments division will return to more normal levels slowly, given the discretionary nature of the products.

Sales of our hardware products have historically been more sensitive to general economic conditions than sales of our consumables. The COVID-19 induced economic downturn appears to be having a similar impact, as businesses are postponing certain capital spending in response to economic uncertainty, declines in income and asset values, tighter credit, unemployment, and negative financial news. Even as the broad healthcare industry has begun to return to more normal operations resulting in increased sales levels in some of our divisions, outbreaks and increasing numbers of COVID-19 cases in many areas, especially the U.S. and Europe, may result in the reinstatement of strict regulations, which we expect would result in lower sales levels. We believe that COVID-19 related uncertainties, restrictions, and suppressed demand will continue to negatively impact our business during the remainder of the year ending March 31, 2021, and potentially continuing into our year ending March 31, 2022. Even after the COVID-19 pandemic has subsided as a public health matter, we may experience material adverse impacts to our business as a result of its adverse impact on the global economy, in-person collaboration and sales efforts, and our customers’ purchasing behavior and confidence.

Gross profit is affected by our product mix, manufacturing efficiencies, and price competition. Historically, as we have integrated our acquisitions and taken advantage of manufacturing efficiencies, our gross profit percentages for some products have improved. There are, however, differences in gross profit percentages between product lines, and ultimately the mix of sales will continue to impact our overall gross profit.

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Results of Operations

Our results of operations and period-over-period changes are discussed in the following section. The tables and discussion below should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements and the notes thereto appearing in Item 1. Financial Statements (in thousands, except percent data).

Revenues from our reportable segments increased 29% and 25%, organic revenues growth declined 8% and 6%, and gross profit as a percentage of revenues increased four percentage points for both the three and six months ended September 30, 2020, as compared to the three and six months ended September 30, 2019, respectively. Results by reportable segment are as follows:

	Revenues				Organic Revenues Growth						Gross Profit as a % of Revenues
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
Sterilization and Disinfection Control	$	11,552	$	12,094		(4	%)		4	%		76	%		72	%
Instruments		7,558		8,960		(16	%)		(3	%)		64	%		62	%
Biopharmaceutical Development		9,131		-		N/A			N/A			68	%		N/A
Continuous Monitoring		3,619		3,586		1	%		16	%		38	%		34	%
Mesa Labs' reportable segments	$	31,860	$	24,640		(8	%)		3	%		67	%		63	%
Corporate and Other		-		896
Total Company	$	31,860	$	25,536

	Revenues				Organic Revenues Growth						Gross Profit as a % of Revenues
	Six Months Ended September 30, 2020		Six Months Ended September 30, 2019		Six Months Ended September 30, 2020			Six Months Ended September 30, 2019			Six Months Ended September 30, 2020			Six Months Ended September 30, 2019
Sterilization and Disinfection Control	$	24,619	$	24,204		2	%		6	%		76	%		71	%
Instruments		15,238		18,504		(18	%)		1	%		63	%		63	%
Biopharmaceutical Development		15,080		-		N/A			N/A			71	%		N/A
Continuous Monitoring		6,864		6,903		(1	%)		1	%		37	%		36	%
Mesa Labs' reportable segments	$	61,801	$	49,611		(6	%)		3	%		67	%		63	%
Corporate and Other		-		2,213
Total Company	$	61,801	$	51,824

Our unaudited condensed consolidated results of operations are as follows:

	Three Months Ended September 30,				Percentage Change			Six Months Ended September 30,				Percentage Change
	2020		2019					2020		2019
Revenues	$	31,860	$	25,536		25	%	$	61,801	$	51,824		19	%
Gross profit		21,285		15,586		37	%		41,625		31,790		31	%
Operating Expenses		16,815		10,892		54	%		33,585		21,639		55	%
Operating Income		4,470		4,694		(5	%)		8,040		10,151		(21	%)
Net income	$	2,679	$	3,172		(16	%)	$	3,896	$	7,834		(50	%)

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Reportable Segments

Sterilization and Disinfection Control

Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators. Biological, cleaning, and chemical indicators are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry. Sterilization and disinfection control products are disposable and are used on a routine basis.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
Revenues	$	11,552		$	12,094			(4	%)	$	24,619		$	24,204			2	%
Gross profit		8,770			8,723			1	%		18,790			17,233			9	%
Gross profit as a % of revenues		76	%		72	%		4	%		76	%		71	%		5	%

Sterilization and Disinfection Control revenues decreased 4% for the three months ended September 30, 2020 as a result of reduced sales to distributors that service high growth economies that were severely impacted by COVID-19, the loss of certain OEM hospital oriented customers that began to diversify their supply chains, as well as decreased demand due primarily to timing as certain customers had ordered larger than normal quantities earlier in the calendar year to mitigate supply chain risk. As these orders were filled during the quarter ended June 30, 2020, our backlog decreased, and ordering remains slower as customers continue to use the inventory they purchased from us in the previous two quarters. We expect the impacts from the loss of customers and to a lesser extent, the temporary advanced ordering that occurred during the three months ended June 30, 2020 will negatively impact organic revenues growth in this division for the remainder of the fiscal year.

Sterilization and Disinfection Control revenues increased 2% for the six months ended September 30, 2020 as result of organic revenues growth, which was achieved primarily through volume increases resulting from advanced ordering with existing customers during the quarter ended June 30, 2020, and to a lesser extent, modest price increases. Increases were partially offset by reduced sales to distributors that service high growth economies that were severely impacted by COVID-19, the loss of a portion of our business with certain OEM hospital-oriented customers, and lower demand during the three months ended September 30, 2020 as advanced ordering reversed. 

Sterilization and Disinfection Control gross profit margin percentage increased four percentage points and five percentage points for the three and six months ended September 30, 2020, respectively, primarily as a result of labor efficiencies and favorable customer mix. 

Instruments

Our Instruments division designs, manufactures, and markets quality control instruments and consumable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, and environmental air sampling industries. Instrument products have a longer life, and their purchase by our customers is discretionary, so sales are more sensitive to general economic conditions. Service demand is driven by our customers’ quality control and regulatory environments, which require periodic repair and recalibration or certification of our instrument products.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
Revenues	$	7,558		$	8,960			(16	%)	$	15,238		$	18,504			(18	%)
Gross profit		4,852			5,557			(13	%)		9,541			11,639			(18	%)
Gross profit as a % of revenues		64	%		62	%		2	%		63	%		63	%		-	%

Instruments revenues decreased 16% and 18% for the three and six months ended September 30, 2020, respectively, as customers across all served markets continued to limit spending that is more discretionary in nature in response to economic uncertainty. 

Instruments gross profit margin percentage increased two percentage points during the three months ended September 30, 2020, primarily due to favorable product mix. Gross margin percentage was flat for the six months ended September 30, 2020.  

Biopharmaceutical Development

Our Biopharmaceutical Development division was created as a result of the GPT acquisition on October 31, 2019. The division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biotherapeutic drugs. 

	Three Months Ended September 30,						Percentage Change		Six Months Ended September 30,						Percentage Change
	2020			2019					2020			2019
Revenues	$	9,131		$	-			N/A	$	15,080		$	-			N/A
Gross profit		6,212			-			N/A		10,678			-			N/A
Gross profit as a % of revenues		68	%		-	%		N/A		71	%		-	%		N/A

Biopharmaceutical Development's revenues during the three and six months ended September 30, 2020 were negatively impacted by the economic uncertainty and social restrictions related to the COVID-19 pandemic.  Particularly during the three months ended June 30, 2020, and to a lesser extent during the three months ended September 30, 2020, global efforts to stop the spread of COVID-19 and the resulting shut down and slowing of many facets of our society and commerce resulted in reduced demand as we became unable to market our products at industry conferences or visit customers at their facilities. Restrictions limiting vendors from going on-site at customers facilities were partially lifted during the three months ended September 30, 2020. Additionally, we pursued digital marketing avenues to continue to create leads and demonstrate our products to potential customers. Primarily as a result of these factors, demand for Biopharmaceutical Development products and services increased significantly as compared to the three months ended June 30, 2020. 

Biopharmaceutical Development's gross profit for the six months ended September 30, 2020 includes a $436 reduction in amortization expense as a result of an adjustment booked to the value of an inventory step-up recorded in purchase accounting related to the GPT Acquisition. Gross profit for the six months ended September 30, 2020 also includes $178 of incremental amortization expense related to the adjustment of the value of technology intangibles that are amortized to cost of revenues. Excluding the amortization catch ups, gross profit for the six months ended September 30, 2020 would have been $10,242 and gross profit margin percentage would have been 69% for the six months ended September 30, 2020. 

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Continuous Monitoring

Our Continuous Monitoring division designs, develops, and markets systems which are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments. Continuous monitoring products and systems have a longer life, and their purchase by our customers is discretionary, so sales are sensitive to general economic conditions. Continuous monitoring products may be sold in conjunction with a perpetual or subscription-based software license, which may be required for the related hardware to function. Service demand is driven by our customers’ quality control and regulatory environments, which require periodic repair and recalibration or certification of our continuous monitoring systems.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
Revenues	$	3,619		$	3,586			1	%	$	6,864		$	6,903			(1	%)
Gross profit		1,368			1,221			12	%		2,552			2,506			2	%
Gross profit as a % of revenues		38	%		34	%		4	%		37	%		36	%		1	%

Continuous Monitoring's revenues increased 1% for the three months ended September 30, 2020 primarily because of eased restrictions at many of our customer sites, which allowed our technicians to go on-site to perform work that was previously backlogged as a result of COVID-19 related restrictions. Continuous Monitoring's revenue decreased 1% for the six months ended September 30, 2020 as a result of  the shut down and slowing of many facets of the U.S. society and economy in response to the COVID-19 outbreak. Specifically, during April and May, 2020, our ability to go on-site to many of our customers' facilities to install and service systems was severely restricted. These restrictions began to ease late in our first fiscal quarter and our sales volumes began to increase as a result. 

Continuous Monitoring gross profit margin percentage increased four percentage points and one percentage point for the three and six months ended September 30, 2020, respectively, primarily due to the reorganization of the business unit during the three months ended June 30, 2020, which has resulted in steady improvements to its operating efficiency. This reorganization was one step in our road map to improve the division’s operations and resulting gross profit percentage. 

Corporate and Other

Corporate and Other primarily consists of results from our Cold Chain Packaging division which was dissolved during the year ended March 31, 2020 and is no longer considered a reportable segment, as well as unallocated corporate expenses.  

	Three Months Ended September 30,					Percentage Change			Six Months Ended September 30,					Percentage Change
	2020		2019						2020		2019
Revenues	$	-	$	896			(100	%)	$	-	$	2,213			(100	%)
Gross profit		83		85			(2	%)		64		412			(84	%)
Gross profit as a % of revenues		N/A		9	%		N/A			N/A		19	%		N/A

Page 26

Operating Expenses

Operating expenses for the three and six months ended September 30, 2020 increased 54% and 55%, respectively, as compared to the prior year.

Selling

Selling expense is driven primarily by labor costs, including salaries and commissions; accordingly, it may vary with sales levels.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
Selling expense	$	3,786		$	2,274			66	%	$	7,861		$	4,482			75	%
As a percentage of revenues		12	%		9	%		3	%		13	%		9	%		4	%

Selling expense for the three and six months ended September 30, 2020 increased 66% and 75%, respectively, primarily as a result of selling costs incurred by the Biopharmaceutical Development division, partially offset by lower professional services costs, lower commission costs, and lower travel-related costs as we implemented strict travel restrictions for our employees beginning in March, 2020. As a percentage of revenues, selling expense was 12% for the three months ended September 30, 2020 and was 13% for the six months ended September 30, 2020 as compared to 9% for both the three and six months ended September 30, 2019. We plan to continue making modest, strategic investments in sales and marketing resources in order to further increase organic revenues growth. In addition, costs associated with the Biopharmaceutical Development division's sales force are expected to continue to result in higher selling expense as a percentage of revenues than we incurred historically; however, increases are expected to begin to normalize once the Biopharmaceutical Development division returns to normal sales levels.  In the near-term, we expect total selling expense to approximate 10%-15% of revenues.

General and Administrative

Labor costs, including non-cash stock-based compensation and amortization of intangible assets drive the substantial majority of general and administrative expense.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
General and administrative expense	$	10,615		$	7,703			38	%	$	20,714		$	15,223			36	%
As a percentage of revenues		33	%		30	%		3	%		34	%		29	%		5	%

General and administrative expenses increased 38% and 36% for the three and six months ended September 30, 2020, respectively.  The increase was primarily attributable to increased amortization expense associated with intangible assets acquired from the GPT acquisition; costs associated with the Biopharmaceutical Development division including professional services fees related to the implementation of our enterprise resource planning tool for the division, and higher non-cash stock-based compensation expense, which was almost fully offset by lower bonus and salaries expense as certain executives of the Company converted portions of cash incentives to non-cash stock-based compensation for the year ending March 31, 2021. 

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Research and Development

Research and development expense is predominantly comprised of labor costs and costs of third-party consultants.

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019						2020			2019
Research and development expense	$	2,414		$	915			164	%	$	5,010		$	1,934			159	%
As a percentage of revenues		8	%		4	%		4	%		8	%		4	%		4	%

Research and development expenses increased 164% and 159% for the three and six months ended September 30, 2020, respectively, primarily as a result of expenses attributable to the Biopharmaceutical Development division. Including the Biopharmaceutical Development division, we expect research and development expenses will be approximately 7%-10% of revenues in the near term in part depending on the pace of the economic recovery.

Nonoperating Expense (Income)  

	Three Months Ended September 30,				Percentage Change			Six Months Ended September 30,				Percentage Change
	2020		2019		2020 vs. 2019			2020		2019
Nonoperating expense	$	2,086		920		127	%	$	4,902	$	952		415	%

Nonoperating expense for the three and six months ended September 30, 2020 is composed primarily of interest expense and amortization of the debt discount associated with our 1.375% convertible senior notes issued in August 2019 (the "Notes"), interest income earned on cash and cash equivalents, and gains and losses on foreign currency transactions.

Interest expense and amortization of debt discount increased for both the three and six months ended September 30, 2020, compared to the three and six months ended September 30, 2019 due to interest expense related to the Notes which were outstanding for all of the three and six months ended September 30, 2020, but only part of the three and six months ended September 30, 2019. Interest expense was offset primarily by interest income earned on our money market account. Higher interest was earned on the money market during the three and six months ended September 30, 2019 compared to the three and six months ended September 30, 2020 as interest rates were higher in the prior year. 

As discussed in Note 1. within Item 1. Financial Statements, subsequent to the adoption of Accounting Standards Update 2020-06, there will be a reduction in non-cash interest expense related to the 1.375% convertible senior notes due August 15, 2025.

Income Taxes

	Three Months Ended September 30,						Percentage Change			Six Months Ended September 30,						Percentage Change
	2020			2019			2020 vs. 2019			2020			2019
Income tax (benefit) expense	$	(295	)	$	602			(149	%)	$	(758	)	$	1,365			(156	%)
Effective tax rate		(12	%)		16	%		(28	%)		(24	%)		15	%		(39	%)

Our effective tax rate benefited notably from the release of an uncertain tax position of $630, the exercise of stock options and to a lesser extent, lower pre-tax income. Our income tax rate varies based upon many factors, but in general, we anticipate that on a go-forward basis our effective tax rate as adjusted for the GPT Acquisition will be approximately 25%, plus or minus the impact of excess tax benefits and deficiencies associated with share-based payment awards to employees; see Note 10. “Income Taxes” within Item 1. Financial Statements for additional discussion. The excess tax benefits and deficiencies associated with share-based payment awards to our employees have caused and, in the future, may cause large fluctuations in our realized effective tax rate based on timing, volume, and nature of stock options exercised under our share-based payment program.

Net Income 

Net income for the six months ended September 30, 2020 varied with the changes in revenues, gross profit, and operating expenses (which includes $3,276, $6,866, and $2,667 of non-cash: stock-based compensation, amortization of intangible assets acquired in a business combination, and interest expense and discount amortization on the Notes, respectively, partially offset by a $436 benefit associated with a cumulative effect true up of inventory step up amortization). 

Seasonality

Our Biopharmaceutical Development division is subject to modest seasonal fluctuations that align with the budget cycles of our customers. Sales of capital equipment and consumables for that segment are typically the lowest in the first calendar quarter of the year, and highest during the fourth calendar quarter of the year (which is the third quarter of our fiscal year). The other reportable segments are typically not subject to seasonality.

Page 28

Liquidity and Capital Resources

Our sources of liquidity include cash generated from operations, cash and cash equivalents on hand, working capital and potential additional equity and debt offerings. Our more significant uses of resources have historically included acquisitions, long-term capital expenditures, payment of debt and interest obligations, and quarterly dividends to shareholders. Although the COVID-19 pandemic has resulted in lower revenues overall, we continue to believe that we have the liquidity required to continue operations during this volatile period. During the six months ended September 30, 2020, we continued taking steps to reduce cash outlays and expenses, including limiting travel, reducing hiring new employees, and converting a portion of our executives' remuneration from cash to non-cash stock-based compensation incentives. 

Even given current macroeconomic conditions, we believe that cash and cash equivalents on hand and cash generated from operations will be sufficient to meet our short-term and long-term needs. Additionally, we believe that we have access to equity and credit markets if necessary. However, additional equity or debt financing, or other transactions, may not be available on acceptable terms, if at all.  

Working capital is the amount by which current assets exceed current liabilities. We had working capital of $260,592 and $96,784 at September 30, 2020, and March 31, 2020, respectively. As of September 30, 2020, and March 31, 2020, we had $241,924 and $81,380, respectively, of cash and cash equivalents, which were held primarily in money market funds. We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. 

On June 9, 2020, we completed the sale and issuance of 600,000 shares of our common stock and on June 16, 2020, our underwriters exercised in full their option to purchase an additional 90,000 shares of our common stock. The offering price to the public was $225.00 per share. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses that we initially paid was $145,935. 

Under the terms of the amended IBP agreement, we are required to pay contingent consideration if the company is able to achieve certain operational and regulatory milestones. The potential undiscounted consideration payable ranges from €0 to €450, depending on whether units being developed are certified for sale by U.S. and foreign regulatory bodies. We currently believe that it is more likely than not that all aspects of the contingency will be achieved and we expect to pay $530 during the year ending March 31, 2021.

As of September 30, 2020, $172,500 in aggregate principal amount Notes was outstanding. The Notes bear interest at a rate of 1.375% payable semi-annually in arrears on February 15 and August 15 of each year, beginning with our first payment made on February 15, 2020. These Notes can be converted prior to maturity if certain conditions are met. We currently expect to settle future conversions of the Notes entirely in shares of our common stock and will reevaluate this policy from time to time in the event that conversion conditions are met and conversion notices are received from holders of the Notes.   We were in compliance with all debt agreements at September 30, 2020 and for all prior years presented and have met all debt payment obligations. Refer to Note 7. "Indebtedness" within Item 1. Financial Statements for more details on these transactions. We may from time to time repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our balance sheet. These actions may include retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise. The amount of debt that may be retired, if any, could be material and would be decided at the sole discretion of our Board of Directors and will depend on market conditions, our cash position and other considerations.

We routinely evaluate opportunities for strategic acquisitions. We currently have significant cash and cash equivalents on hand, but future material acquisitions may require that we obtain additional capital, assume additional third-party debt or incur other long-term obligations. We believe that we have the ability to issue more equity or debt in the future in order to finance our acquisition and investment activities.

Dividends

We have paid regular quarterly dividends since 2003. We declared and paid dividends of $0.16 per share during the six months ended September 30, 2020 as well as each quarter for the year ended March 31, 2020.

In October 2020, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on December 15, 2020, to shareholders of record at the close of business on November 30, 2020.

Page 29

Cash Flows

Our cash flows from operating, investing, and financing activities were as follows (in thousands):

	Six Months Ended September 30,
	2020			2019
Net cash provided by operating activities	$	12,610		$	7,149
Net cash (used in) investing activities		(707	)		(3,098	)
Net cash provided by financing activities		147,104			231,240

Cash flows from operating activities for the six months ended September 30, 2020 provided $12,610, which primarily resulted from cash provided by GPT's operations and favorable changes in our working capital accounts. Cash used in investing was lower during the six months ended September 30, 2020 compared to the six months ended September 30, 2019, which included a cash outlay for the IBP acquisition. Cash provided by financing activities included our equity raise, which provided $145,935 during the six months ended September 30, 2020 and our convertible debt offering and equity raise which provided $252,065 during the six months ended September 30, 2019. 

Contractual Obligations and Other Commercial Commitments

We are party to many contractual obligations that involve commitments to make payments to third parties in the ordinary course of business. For a description of our contractual obligations and other commercial commitments as of March 31, 2020, see our Form 10-K for the fiscal year ended March 31, 2020, filed with the Securities and Exchange Commission on June 1, 2020. During the six months ended September 30, 2020, there were no material changes with respect to the nature of our contractual obligations and other commercial commitments outside the ordinary course of business. At September 30, 2020, we had contractual obligations for open purchase orders of approximately $4,902 for routine purchases of supplies and inventory, which are payable in less than one year.  

Off-Balance Sheet Arrangements

As of September 30, 2020, we had no off-balance sheet arrangements or obligations.

Critical Accounting Policies and Estimates

Critical accounting estimates are those that we believe are both significant and require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. These estimates are based on historical experience and various other factors that we believe to be appropriate under the circumstance. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended March 31, 2020, in the Critical Accounting Policies and Estimates section of “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have no derivative instruments and minimal exposure to commodity market risks. Our reporting currency is U.S. dollars, and the functional currency of each of our foreign subsidiaries is its respective local currency. Our operations include activities outside of the U.S. and we have currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar. We face currency exposures in our global operations as a result of various factors including intercompany currency denominated loans, selling our products in various currencies, purchasing raw materials and equipment in various currencies and tax exposures not denominated in the functional currency. These exposures have increased as a result of the GPT Acquisition, which conducts a substantial portion of its business in Swedish Krona. Fluctuations in exchange rates may adversely affect our results of operations, financial position, and cash flows. 

We hold investments in money market funds. As a result, we are exposed to potential loss from market risks that may occur as a result of changes in interest rates, credit quality of the issuer, or other factors. 

Page 30

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As of September 30, 2020, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report, given the remediation of the material weakness described in more detail below.

Remediation of Material Weakness

As disclosed in Part II Item 9A. "Controls and Procedures" in our annual report on Form 10-K for the year ended March 31, 2020, during the three months ended March 31, 2020, we identified a material weakness in internal controls related to ineffective information technology general controls ("ITGCs") in the areas of user access and program change management over certain information technology ("IT") systems that support our financial reporting processes. 

Beginning during the three months ended March 31, 2020, and continuing through June 30, 2020, we implemented our previously-disclosed remediation plan that included: (i) training programs addressing ITGCs and policies around internal controls over financial reporting, which included educating control owners concerning the requirements of each control that they are responsible for; (ii) creation of roles that are responsible for IT compliance and oversight; (iii) development of documentation underlying ITGCs to promote knowledge transfer upon personnel and function changes; (iv) an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes; and (v) enhanced quarterly reporting on the remediation measures to the Audit Committee of the Board of Directors.

During the three months ended June 30, 2020, we completed our testing of the operating effectiveness of the affected ITGC controls and found them to be effective. As a result, we have concluded that the material weakness was remediated as of June 30, 2020 and our disclosure controls and procedures were effective as of September 30, 2020.  

Changes in Internal Control over Financial Reporting

The GPT Acquisition was completed on October 31, 2019. The financial results of GPT are included in our unaudited consolidated financial statements as of September 30, 2020 and for the period then ended. The GPT business represented approximately $15,080 of revenues and ($2,083) of net loss for the six months ended September 30, 2020. As this acquisition occurred in the third quarter of fiscal year 2020, the scope of our assessment of our internal control over financial reporting does not include GPT. This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.

Page 31

Part II. Other Information

Item 1. Legal Proceedings

See Note 11. “Commitments and Contingencies” within Item 1. “Financial Statements.” for information regarding any legal proceedings in which we may be involved.

Item 1A. Risk factors

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market.  The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in our Annual Report on Form 10-K for the year ended March 31, 2020, under the heading “Risk Factors” in Part I – Item 1A.  Information regarding risk factors also appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward Looking Statements” in Part I - Item 2 of this Form 10-Q.  The Risk Factors section in our Annual Report on Form 10-K for the year ended March 31, 2020, as updated by this Form 10-Q including the discussions in “Management’s Discussion and Analysis of Financial Condition and Results of Operations –Business Overview—COVID-19 and Business Update”, remains current in all material respects. These risk factors do not identify all risks that we face—our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

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

On November 7, 2005, our Board of Directors adopted a share repurchase plan which allows for the repurchase of up to 300,000 of our common shares, of which 162,486 have been purchased to date; however, no shares have been purchased under the plan in the last three fiscal years. This plan will continue until the maximum is reached or the plan is terminated by further action of the Board of Directors. We have made no repurchases of our common stock in the current or any of the last three fiscal years.

Page 32

Item 6. Exhibits

Exhibit No.	Description of Exhibit
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+	Inline XBRL Taxonomy Extension Schema Document.
101.CAL+	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+	Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB+	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104+	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

+ Filed herewith

* Furnished herewith

Page 33

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MESA LABORATORIES, INC.

(Registrant)

DATED: November 5, 2020	BY:	/s/ Gary M. Owens. Gary M. Owens Chief Executive Officer
DATED:  November 5, 2020	BY:	/s/ John V. Sakys John V. Sakys Chief Financial Officer

Page 34

EX-31.1

Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)

I, Gary M. Owens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mesa Laboratories, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 5, 2020  /s/ Gary M. Owens Gary M. Owens Chief Executive Officer

EX-31.2

Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)

I, John V. Sakys, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mesa Laboratories, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2020 /s/ John V. Sakys John V. Sakys Chief Financial Officer

EX-32.1

Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

In connection with the Quarterly Report of Mesa Laboratories, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary M. Owens, Chief Executive Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2020 /s/ Gary M. Owens Gary M. Owens Chief Executive Officer

EX-32.2

Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

In connection with the Quarterly Report of Mesa Laboratories, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John V. Sakys, Chief Financial Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2020  /s/ John V. Sakys John V. Sakys Chief Financial Officer

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Document And Entity Information - shares	6 Months Ended
	Sep. 30, 2020	Oct. 30, 2020
Document Information [Line Items]
Entity Central Index Key	0000724004
Entity Registrant Name	MESA LABORATORIES INC /CO
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	0-11740
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-0872291
Entity Address, Address Line One	12100 West Sixth Avenue
Entity Address, City or Town	Lakewood
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80228
City Area Code	303
Local Phone Number	987-8000
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	MLAB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,118,653

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Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
ASSETS
Cash and cash equivalents	$ 241,924	$ 81,380
Accounts receivable, less allowances of $168 and $159, respectively	18,563	21,132
Inventories, net	11,837	14,230
Prepaid income taxes	3,344	1,914
Prepaid expenses and other	4,457	4,136
Total current assets	280,125	122,792
Property, plant and equipment, net of accumulated depreciation of $14,087 and $12,741, respectively	22,309	22,066
Deferred tax asset	11,453	11,461
Other assets	1,977	2,480
Intangibles, net	116,703	119,871
Goodwill	156,365	141,536
Total assets	588,932	420,206
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	1,852	3,408
Accrued payroll and benefits	5,611	8,940
Unearned revenues	6,790	6,814
Contingent consideration	527	504
Other accrued expenses	4,753	6,342
Total current liabilities	19,533	26,008
Deferred tax liability	33,090	32,549
Convertible senior notes, net of discounts and debt issuance costs	142,945	140,278
Other long-term liabilities	952	1,358
Total liabilities	196,520	200,193
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,117,441 and 4,387,140 shares, respectively	309,935	158,023
Retained earnings	74,724	72,359
Accumulated other comprehensive income (loss)	7,753	(10,369)
Total stockholders’ equity	392,412	220,013
Total liabilities and stockholders’ equity	$ 588,932	$ 420,206

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Allowance for doubtful accounts receivable	$ 168	$ 159
Property, plant and equipment, accumulated depreciation	$ 14,087	$ 12,741
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	5,117,441	4,387,140
Common stock, shares outstanding (in shares)	5,117,441	4,387,140

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues	[1]	$ 31,860	$ 25,536	$ 61,801	$ 51,824
Cost of revenues		10,575	9,950	20,176	20,034
Gross profit		21,285	15,586	41,625	31,790
Operating expenses:
Selling		3,786	2,274	7,861	4,482
General and administrative		10,615	7,703	20,714	15,223
Research and development		2,414	915	5,010	1,934
Total operating expenses		16,815	10,892	33,585	21,639
Operating income		4,470	4,694	8,040	10,151
Nonoperating expense:
Interest expense and amortization of debt discount		1,934	1,397	3,853	1,593
Other expense (income), net		152	(477)	1,049	(641)
Total nonoperating expense		2,086	920	4,902	952
Earnings before income taxes		2,384	3,774	3,138	9,199
Income tax (benefit) expense		(295)	602	(758)	1,365
Net income		$ 2,679	$ 3,172	$ 3,896	$ 7,834
Earnings per share:
Basic (in dollars per share)		$ 0.52	$ 0.76	$ 0.81	$ 1.94
Diluted (in dollars per share)		$ 0.51	$ 0.73	$ 0.79	$ 1.86
Weighted-average common shares outstanding:
Basic (in shares)		5,110	4,155	4,821	4,029
Diluted (in shares)		5,241	4,321	4,958	4,205

[1] Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net income	$ 2,679	$ 3,172	$ 3,896	$ 7,834
Other comprehensive income:
Foreign currency translation adjustments	5,262	(986)	18,122	(865)
Comprehensive income	$ 7,941	$ 2,186	$ 22,018	$ 6,969

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020
Cash flows from operating activities:
Net income	$ 2,679	$ 1,217	$ 3,172	$ 4,662	$ 3,896	$ 7,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					8,333	4,444
Stock-based compensation					3,276	2,050
Non-cash interest and debt amortization					2,667	706
Amortization of step-up in inventory basis					(436)	0
Change in inventory reserve					258	70
Other					499	129
Cash provided by changes in operating assets and liabilities
Accounts receivable, net					3,077	246
Inventories, net					(464)	295
Prepaid expenses and other assets					(1,941)	(2,508)
Accounts payable					(1,604)	(746)
Accrued liabilities and taxes payable					(4,811)	(5,385)
Unearned revenues					(140)	14
Net cash provided by operating activities					12,610	7,149
Cash flows from investing activities:
Acquisitions					0	(2,555)
Purchases of property, plant and equipment					(707)	(543)
Net cash (used in) investing activities					(707)	(3,098)
Cash flows from financing activities:
Proceeds from the issuance of convertible senior notes, net					0	167,070
Proceeds from the issuance of common stock, net					145,935	84,995
Payments of debt					0	(23,000)
Dividends					(1,522)	(1,321)
Payments of Contingent Consideration					(10)	(11)
Proceeds from the exercise of stock options					2,701	3,507
Net cash provided by financing activities					147,104	231,240
Effect of exchange rate changes on cash and cash equivalents					1,537	(33)
Net increase in cash and cash equivalents					160,544	235,258
Cash and cash equivalents at beginning of period		$ 81,380		$ 10,185	81,380	10,185	$ 10,185
Cash and cash equivalents at end of period	$ 241,924		$ 245,443		$ 241,924	$ 245,443	$ 81,380

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]		Total
Balance (in shares) at Mar. 31, 2019			3,890,138
Balance at Mar. 31, 2019			$ 39,823	$ 73,303	$ (1,815)	[1]	$ 111,311
Exercise of stock options and vesting of restricted stock units (in shares)			31,441
Exercise of stock options and vesting of restricted stock units			$ 2,709				2,709
Dividends paid, $0.16 per share				(624)			(624)
Stock-based compensation expense			$ 868				868
Foreign currency translation					121	[1]	121
Net income				4,662			4,662
Balance (in shares) at Jun. 30, 2019			3,921,579
Balance at Jun. 30, 2019			$ 43,400	77,341	(1,694)	[1]	119,047
Balance (in shares) at Mar. 31, 2019			3,890,138
Balance at Mar. 31, 2019			$ 39,823	73,303	(1,815)	[1]	111,311
Foreign currency translation							(865)
Net income							7,834
Balance (in shares) at Sep. 30, 2019			4,365,049
Balance at Sep. 30, 2019			$ 153,110	79,816	(2,680)	[1]	230,246
Balance (in shares) at Jun. 30, 2019			3,921,579
Balance at Jun. 30, 2019			$ 43,400	77,341	(1,694)	[1]	119,047
Proceeds from the issuance of common stock, net of issuance costs (in shares)			431,250
Proceeds from the issuance of common stock, net of issuance costs of $9,315			$ 84,995				84,995
Exercise of stock options and vesting of restricted stock units (in shares)			12,220
Exercise of stock options and vesting of restricted stock units			$ 798				798
Dividends paid, $0.16 per share				(697)			(697)
Stock-based compensation expense			1,182				1,182
Foreign currency translation					(986)	[1]	(986)
Net income			$ 0	3,172	0		3,172
Balance (in shares) at Sep. 30, 2019			4,365,049
Balance at Sep. 30, 2019			$ 153,110	79,816	(2,680)	[1]	230,246
Proceeds from conversion feature of convertible senior notes, due 2025, net of allocated costs and taxes of $8,338			$ 22,735				$ 22,735
Balance (in shares) at Mar. 31, 2020			4,387,140				4,387,140
Balance at Mar. 31, 2020			$ 158,023	72,359	(10,369)	[1]	$ 220,013
Proceeds from the issuance of common stock, net of issuance costs (in shares)			690,000
Proceeds from the issuance of common stock, net of issuance costs of $9,315			$ 145,935				145,935
Exercise of stock options and vesting of restricted stock units (in shares)			25,799
Exercise of stock options and vesting of restricted stock units			$ 1,654				1,654
Dividends paid, $0.16 per share				(704)			(704)
Stock-based compensation expense			$ 1,268				1,268
Foreign currency translation					12,860	[1]	12,860
Net income				1,217			1,217
Balance (in shares) at Jun. 30, 2020			5,102,939
Balance at Jun. 30, 2020	$ (9)	$ (9)	$ 306,880	72,863	2,491	[1]	$ 382,234
Balance (in shares) at Mar. 31, 2020			4,387,140				4,387,140
Balance at Mar. 31, 2020			$ 158,023	72,359	(10,369)	[1]	$ 220,013
Exercise of stock options and vesting of restricted stock units (in shares)							36,000
Foreign currency translation							$ 18,122
Net income							$ 3,896
Balance (in shares) at Sep. 30, 2020			5,117,441				5,117,441
Balance at Sep. 30, 2020			$ 309,935	74,724	7,753	[1]	$ 392,412
Balance (in shares) at Jun. 30, 2020			5,102,939
Balance at Jun. 30, 2020	$ (9)	$ (9)	$ 306,880	72,863	2,491	[1]	382,234
Exercise of stock options and vesting of restricted stock units (in shares)			14,502
Exercise of stock options and vesting of restricted stock units			$ 1,047				1,047
Dividends paid, $0.16 per share				(818)			(818)
Stock-based compensation expense			$ 2,008				2,008
Foreign currency translation					5,262	[1]	5,262
Net income				2,679			$ 2,679
Balance (in shares) at Sep. 30, 2020			5,117,441				5,117,441
Balance at Sep. 30, 2020			$ 309,935	$ 74,724	$ 7,753	[1]	$ 392,412

[1] Accumulated Other Comprehensive Income (Loss).

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2019
Retained Earnings [Member]
Dividends paid, per share (in dollars per share)		$ 0.16	$ 0.16	$ 0.16
Common Stock Including Additional Paid in Capital [Member]
Proceeds from issuance of common stock, issuance costs			$ 5,568
Proceeds from issuance of common stock, issuance costs		$ 9,315
Dividends paid, per share (in dollars per share)	$ 0.16
Allocated costs and taxes			$ 8,338

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Note 1 - Description of Business and Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

In this quarterly report on Form 10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company” or “Mesa Labs.”

We are a multinational manufacturer, developer, and seller of quality control products and services, many of which are sold into niche markets that are driven by regulatory requirements. We have manufacturing operations in North America and Europe and our products are marketed by our sales personnel in North America, Europe, China, Japan, and by distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross margins.

As of September 30, 2020, we managed our operations in four reportable segments, or divisions. Our Sterilization and Disinfection Control division manufactures and sells biological, cleaning, and chemical indicators which are used to assess the effectiveness of sterilization and disinfection processes in the hospital, dental, medical device, and pharmaceutical industries. The division also provides testing and laboratory services, mainly to the dental industry. Our Instruments division designs, manufactures, and markets quality control hardware and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, and environmental air sampling industries. During the year ended March 31, 2020, we added a new reportable segment: Biopharmaceutical Development as a result of our acquisition of Gyros Protein Technologies Holding AB ("GPT" or the "GPT acquisition"), which is discussed further in Note 12. "Significant Transactions". Our Biopharmaceutical Development division develops, manufactures, and sells automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacturing of biotherapeutic drugs. Our Continuous Monitoring division designs, develops, and markets systems which are used to monitor various environmental parameters such as temperature, humidity, and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies, and laboratory environments.  Non-reportable operating segments (including our Cold Chain Packaging division which ceased operations during the year ended March 31, 2020) and unallocated corporate expenses are reported within Corporate and Other.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. The results of operations for the interim periods are not necessarily indicative of results that may be achieved for the entire year.  The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2020.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgement about the outcome of future events. The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus ("COVID-19"), and it is not possible to accurately predict the future impact of COVID-19. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected by the impacts of COVID-19 during the near term: 

● Estimates regarding the future financial performance of the business used in the impairment tests for goodwill and long-lived assets acquired in a business combination; however, we identified no triggering events since our impairment analysis was completed during the three months ended March 31, 2020; 

● Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions;

● Estimates regarding recoverability for customer receivables;

● Estimates of the net realizable value for inventory.

Immaterial Error Correction

During the three months ended September 30, 2020, we identified an immaterial error in the design of our Enterprise Resource Planning tool that resulted in a system failure to eliminate intercompany cost of revenues for certain types of transactions. The error resulted in an overstatement of cost of goods sold and an understatement in gross profit for the Continuous Monitoring, Instruments, and Sterilization and Disinfection Control divisions. The issue began during the three months ended June 30, 2019; we have determined that no financial statement prior to April 1, 2019 was misstated as a result of the previously uneliminated balances in cost of revenues. 

In accordance with Staff Accounting Bulletin ("SAB") No. 99 Materiality, and SAB No. 108 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, we evaluated the error quantitatively and qualitatively and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the three months ended September 30, 2020. In considering the materiality, we concluded that the impact of the error correction is not material in absolute dollar amount especially since our most recent fiscal year results included various new non cash charges that reduced net income below historical levels, [nor is it qualitatively material]. Accordingly, we have revised previously reported financial information for the immaterial error.

We performed manual intercompany elimination calculations and determined that cost of revenues and accumulated other comprehensive income were overstated by $429 for the year ended March 31, 2020, which would increase operating income and net income by approximately $429 and diluted earnings per share by $0.10; there was no income tax impact on the full year adjustment since the inventory balance was not misstated.  To correct the immaterial error, we have restated retained earnings as of March 31, 2020. The error resulted in overstated cost of goods sold and a corresponding understatement of net income of: $65 during the three months ended June 30, 2019; $110 during the three months ended September 30, 2019, $126 during the three months ended December 31, 2019, and $128 during the three months ended March 31, 2020. Additionally, during the three months ended June 30, 2020, cost of revenues were overstated by $372, which after the impact of taxes would increase net income by approximately $192 and diluted earnings per share by $0.04. We have restated retained earnings as of June 30, 2020 in the amount of $192. The immaterial error has no impact on total cash flows from operating activities or total comprehensive income for any of the periods that were revised. 

Recently Issued Accounting Pronouncements

In August, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, such as our convertible senior notes, due 2025. ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. It is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The update permits the use of either the modified retrospective or fully retrospective method of transition. We are currently evaluating the timing, method of adoption, and financial impact of the adoption of ASU 2020-06 on our financial statements but anticipate that subsequent to adoption, the equity conversion feature will be categorized as a liability and there will be a reduction in non-cash interest expense related to the 1.375% convertible senior notes due August 15, 2025.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as modified by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The ASU was effective for public business entities for fiscal years beginning after December 15, 2019, with early adoption permitted. On April 1, 2020, we adopted the ASU using the modified retrospective transition method. We recorded a net decrease to beginning retained earnings of $9 as of April 1, 2020 due to the cumulative effect of adopting Topic 326's requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on our trade receivables. As a result of the adoption of the ASU, our allowance for doubtful accounts as of September 30, 2020 reflects our best estimate of the expected future losses for our accounts receivable based on the current economic conditions. We have accounted for the macroeconomic impact of the COVID-19 pandemic in our estimates, but due to the unprecedented nature of the impact of the pandemic, our estimates may change and future actual losses may differ from our current estimates. We will continue to monitor economic conditions and will revise our estimate of the expected future losses for accounts receivable as necessary.  

We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable was developed using historical collection experience, current and expected future economic and market conditions and a review of the current status of customers’ trade accounts receivables. Customers are pooled based on sharing specific risk factors. Due to the short-term nature of trade receivables, the estimated accounts receivable that may not be collected is based on aging of the accounts receivable balances.

Customers are assessed for credit worthiness upfront through a credit review. We evaluate contract terms and conditions, and may require prepayment to mitigate risk of loss. Specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. We monitor changes to the receivables balance on timely basis, and balances are written off as they are determined to be uncollectable after all collection efforts have been exhausted. Estimates of potential credit losses are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.

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Note 2 - Revenue Recognition

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note 2. Revenue Recognition

We design, manufacture, market, sell, and maintain quality control instruments and software, consumables, and services driven primarily by the regulatory requirements of niche markets. Our consumables, such as biological indicator test strips are typically used on a standalone basis; however, some that are used in protein synthesis and calibration solutions are also critical to the ongoing use of our instruments. Hardware and software sales, such as medical meters, protein synthesizers, wireless sensor systems, and data loggers are generally driven by our acquisition of new customers, growth of existing customers, or customers' replacement of existing equipment. Hardware sales may be offered with perpetual or annual software licenses, which in some cases are required for the hardware to function. Our Biopharmaceutical Development Division designs, manufactures, markets, and sells instruments, such as protein synthesizers that are used to process immunoassay samples and related software designed to enhance productivity; consumable chemical solutions designed for use in testing; and on-demand and long-term service contracts to support customers' use of the equipment. The division generates revenue from the same general categories as those we have identified for the rest of our business and recognizes revenue consistently with our policies. We evaluate our revenues internally by product line, timing of revenue generation, and the nature of goods and services provided. Typically, discrete revenue is recognized at the shipping point or upon completion of the service, while contracted revenue is recognized over a period of time reflective of the performance obligation period in the applicable contract. Consumables are typically used on a one-time basis requiring frequent replacement in our customer's operating cycle. Substantially all of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration.

The following tables present disaggregated revenues for the three and six months ended September 30, 2020 and three and six months ended September 30, 2019, respectively:

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	9,518	$	715	$	3,238	$	15	$	-	$	13,486
Hardware and Software		108		4,815		4,191		2,207		-		11,321
Services		706		2,028		1,005		614		-		4,353
Contracted Revenues
Services		1,220		-		697		783		-		2,700
Total Revenues	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	10,122	$	563	$	-	$	10	$	877	$	11,572
Hardware and Software		148		5,923		-		1,821		-		7,892
Services		641		2,474		-		570		19		3,704
Contracted Revenues
Services		1,183		-		-		1,185		-		2,368
Total Revenues	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	21,002	$	1,523	$	5,177	$	45	$	-	$	27,747
Hardware and Software		237		9,835		6,747		4,162		-		20,981
Services		956		3,880		1,787		1,145		-		7,768
Contracted Revenues
Services		2,424		-		1,369		1,512		-		5,305
Total Revenues	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801

	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	20,539	$	1,583	$	-	$	21	$	2,186	$	24,329
Hardware and Software		334		12,401		-		3,812		-		16,547
Services		941		4,520		-		1,110		27		6,598
Contracted Revenues
Services		2,390		-		-		1,960		-		4,350
Total Revenues	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824

Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
United States	$	11,222	$	15,006	$	27,594	$	30,197
Foreign		20,638		10,530		34,207		21,627
Total revenues	$	31,860	$	25,536	$	61,801	$	51,824

No foreign country exceeds 10% of total revenues.

Contract Balances

Our contracts have varying payment terms and conditions. Some customers prepay for services, resulting in unearned revenues or customer deposits, called contract liabilities, which are included within other accrued expenses and unearned revenues in the accompanying Condensed Consolidated Balance Sheets. Contract assets would exist when sales are recorded (i.e. the control of the goods or services has been transferred to the customer), but customer payment is contingent on a future event besides the passage of time (such as satisfaction of additional performance obligations). We do not have any contract assets. Unbilled receivables, which are not classified as contract assets, represent arrangements in which sales have been recorded prior to billing and right to payment is unconditional.

A summary of contract liabilities is as follows:

Contract liabilities balance as of March 31, 2020	$	7,217
Prior year liabilities recognized in revenues during the six months ended September 30, 2020		(3,353	)
Contract liabilities added during the six months ended September 30, 2020, net of revenues recognized		3,272
Contract liabilities balance as of September 30, 2020	$	7,136

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Note 3 - Fair Value Measurements

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 3. Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable and debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value. We measure our cash equivalents at fair value, and classify them within Level 1 of the fair value hierarchy and we value them using quoted market prices in an active market.  As of September 30, 2020 and  March 31, 2020, cash and cash equivalents on our Condensed Consolidated Balance Sheets included $222,806 and $66,735, respectively, in a money market account. The increase in the balance in our money market account is primarily a result of our public offering of common stock described in further detail in Note 8. "Stockholders' Equity". 

During our year ended March 31, 2020, we issued $172,500 aggregate principal amount of 1.375% convertible senior notes due August 15, 2025. We estimate the fair value of the Notes based on the last actively traded price or market observable input before the end of the reporting period. The estimated fair value and carrying value of the Notes were as follows:

	September 30, 2020				March 31, 2020
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Notes	$	142,945	$	191,475	$	140,278	$	173,363

The Notes are discussed in more detail in Note 7. "Indebtedness." 

Assets recognized or disclosed at fair value on the unaudited condensed consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets, including those that were a part of the GPT Acquisition. These assets are measured at fair value if determined to be impaired. Preliminary fair values assigned to the assets and liabilities acquired in the GPT Acquisition were measured using Level 3 inputs, as discussed further in Note 12. "Significant Transactions." There were no transfers between the levels of the fair value hierarchy during the six months ended September 30, 2020 or six months ended September 30, 2019.

Cash and cash equivalents and accounts receivables are the financial instruments that subject us to the highest concentration of credit risk. It is our policy to invest cash equivalents in highly liquid financial instruments with high credit ratings, and low exposure to a single issuer (except U.S. treasuries). Concentration of credit risk with respect to accounts receivable is limited to customers to which we make significant sales. We reserve an allowance for potential write-offs of accounts receivable, but we have not written off any significant accounts to date. To control credit risk, we perform regular credit evaluations of our customers’ financial condition.

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Note 4 - Inventories, Net

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note 4. Inventories, Net

Inventories consist of the following:

	September 30, 2020			March 31, 2020
Raw materials	$	7,263		$	6,757
Work-in-process		357			329
Finished goods		7,099			9,768
Less: reserve		(2,882	)		(2,624	)
Inventories, net	$	11,837		$	14,230

As of  September 30, 2020 and March 31, 2020, finished goods inventory included $0 and $2,901, respectively, which was the remaining balance of the adjustment to step-up inventory acquired as part of the GPT Acquisition to fair value; see Note 12. "Significant Transactions." 

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Note 5 - Goodwill and Intangible Assets, Net

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5. Goodwill and Intangible Assets, Net

Finite-lived intangible assets consist of the following:

	September 30, 2020							March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intellectual property	$	20,852	$	(7,671	)	$	13,181	$	15,731	$	(6,454	)	$	9,277
Trade names		8,477		(2,992	)		5,485		5,839		(2,855	)		2,984
Customer relationships		143,378		(45,464	)		97,914		146,106		(38,777	)		107,329
Non-compete agreements		1,299		(1,176	)		123		1,447		(1,166	)		281
Total	$	174,006	$	(57,303	)	$	116,703	$	169,123	$	(49,252	)	$	119,871

Amortization expense for finite-lived intangible assets acquired in a business combination was $3,512 and $6,866 for the three and six months ended September 30, 2020 and $1,658 and $3,330 for the three and six months ended  September 30, 2019, respectively. The increase in the amortization expense was attributable to intangible assets acquired as part of the GPT acquisition, including a cumulative effect true up that we recorded during the three months ended June 30, 2020 as we made adjustments to purchase accounting, see Note 12. "Significant Transactions." 

The following is estimated amortization expense for the years ending March 31:

2021	$	14,635
2022		14,599
2023		14,581
2024		14,056
2025		12,471

The change in the carrying amount of goodwill was as follows:

	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
March 31, 2020	$	29,594	$	19,123	$	74,716	$	18,103	$	-	$	141,536
Effect of foreign currency translation		500		60		8,604		-		-		9,164
Goodwill adjustment related to GPT acquisition		-		-		5,665		-		-		5,665
September 30, 2020	$	30,094	$	19,183	$	88,985	$	18,103	$	-	$	156,365

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Note 6 - Supplemental Balance Sheets Information

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Supplemental Balance Sheet Disclosures [Text Block]

Note 6. Supplemental Balance Sheets Information

Accrued payroll and benefits consist of the following:

	September 30, 2020		March 31, 2020
Bonus payable	$	1,771	$	4,069
Wages payable		2,146		2,485
Payroll related taxes		1,504		2,228
Other benefits payable		190		158
Total accrued payroll and benefits	$	5,611	$	8,940

Other accrued expenses consist of the following:

	September 30, 2020		March 31, 2020
Accrued business taxes	$	1,965	$	3,796
Current operating lease liabilities		945		1,095
Interest payable		296		296
Professional services fees		494		857
Other		1,053		298
Total other accrued expenses	$	4,753	$	6,342

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Note 7 - Indebtedness

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 7.  Indebtedness

On August 12, 2019, we issued an aggregate principal amount of $172,500 of convertible senior notes (the "Notes"). The Notes mature on August 15, 2025, unless earlier repurchased or converted and bear interest at a rate of 1.375% payable semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2020. The Notes are initially convertible at a conversion rate of 3.5273 shares of the common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $283.50 per share of common stock. Noteholders may convert their Notes at their option only in the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price per share of  our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets; and (iv) at any time from, and including, April 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.  Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. Our current intent is to settle conversions entirely in shares of common stock. We will reevaluate this policy from time to time as conversion notices are received from holders of the Notes. The circumstances required to allow the holders to convert their Notes were not met during the three months ended September 30, 2020.  As of September 30, 2020, the if-converted value of the Notes did not exceed the principal balance.

We accounted for the transaction by bifurcating the Notes into liability and equity components. The carrying amount of the liability component was $141,427 upon issuance and was calculated by using the income approach and measuring the fair value of a similar debt instrument that does not have an associated convertible feature.  The implied interest rate (a Level 3 unobservable input) assuming no conversion option was estimated using the Tsiveriotis-Frenandes model; all other assumptions used in measuring the fair value represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs before allocated issuance costs and deferred taxes.  The carrying amount of the equity component representing the conversion option was $31,073 and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the "Debt Discount") is being amortized to interest expense using the effective interest method over the six-year contractual term of the Notes.

Debt issuance costs related to the Notes comprised of discounts and commissions payable to the initial purchasers of $5,175 and third party offering costs of $255. We allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $4,452 and are being amortized to interest expense using the effective interest method over the contractual term.  Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

The net carrying amount of the Notes were as follows:

	September 30, 2020			March 31, 2020
Principal outstanding	$	172,500		$	172,500
Unamortized debt discount		(25,879	)		(28,205	)
Unamortized debt issuance costs		(3,676	)		(4,017	)
Net carrying value	$	142,945		$	140,278

The net carrying amount of the equity component of the Notes were as follows:

	September 30, 2020			March 31, 2020
Amount allocated to conversion option	$	31,073		$	31,073
Less: allocated issuance costs and deferred taxes		(8,338	)		(8,338	)
Equity component, net	$	22,735		$	22,735

We recognized interest expense on the Notes as follows:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Coupon interest expense at 1.375%	$	593	$	316	$	1,186	$	316
Amortization of debt discounts and issuance costs		1,341		707		2,667		707
Total	$	1,934	$	1,023	$	3,853	$	1,023

The effective interest rate of the liability component of the note is approximately 5.5%.

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Note 8 - Stockholders' Equity

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note 8. Stockholders' Equity

Public Offerings of Common Stock

On June 12, 2020, we completed the sale and issuance of 600,000 shares of our common stock and on June 19, 2020, our underwriters exercised in full their option to purchase an additional 90,000 shares of our common stock. The offering price to the public was $225.00 per share. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses was $145,935. 

Stock-Based Compensation

Amounts recognized related to stock-based compensation are as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019
Stock-based compensation expense	$	2,008		$	1,182		$	3,276		$	2,050
Amount of income tax (benefit) recognized in earnings		(522	)		(368	)		(1,447	)		(908	)
Stock-based compensation expense, net of tax	$	1,486		$	814		$	1,829		$	1,142

Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Income.

The following is a summary of stock option award activity for the six months ended September 30, 2020 (shares in thousands):

	Stock Options
	Shares Subject to Options			Weighted- Average Exercise Price per Share
Outstanding at March 31, 2020		286		$	107.72
Awards granted		36			226.72
Awards forfeited or expired		(10	)		112.27
Awards exercised		(36	)		83.69
Outstanding as of September 30, 2020		276		$	126.30

The stock options granted during the six months ended September 30, 2020 vest in equal installments on each of the first three anniversaries of the grant date. 

The following is a summary of restricted stock unit ("RSU") award activity for the six months ended September 30, 2020 (shares in thousands): 

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	Number of Shares			Weighted- Average Grant Date Fair Value per Share		Number of Shares			Weighted- Average Grant Date Fair Value per Share
Nonvested at March 31, 2020		28		$	180.15		22		$	204.68
Awards granted		19			225.32		-			-
Awards forfeited or expired		(3	)		205.10		(1	)		199.50
Awards distributed		(5	)		177.17		-			-
Nonvested as of September 30, 2020		39		$	201.49		21		$	204.80

The majority of the time-based RSUs granted during the six months ended September 30, 2020 vest and settle in shares of our common stock, on a one-for-one basis, in equal installments on each of the first three anniversaries of the grant date. Time-based RSUs issued to non-employee directors and a portion of the awards granted to executives of the company vest after a one-year period from the grant date. We recognize the expense relating to these units, net of estimated forfeitures, on a straight-line basis over the vesting period.

Performance-based RSUs vest upon completion of the service period described in the award agreement and based on achievements of the financial targets described in the award agreements. We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the financial targets, on a straight-line basis over the service period.

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Note 9 - Earnings Per Share

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 9. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share (“diluted EPS”) is computed similarly to basic earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. Potentially dilutive securities include common shares related to stock options and RSUs (collectively “stock awards”). Stock awards are excluded from the calculation of diluted EPS in the event that they are subject to performance conditions that have not yet been achieved or are antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect. 

The impact of the assumed conversion of the Notes calculated under the if-converted method was anti-dilutive, and as such, shares underlying the Notes were excluded from the diluted EPS calculation for the three and  six months ended September 30, 2020. 

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share (shares in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Net income available for shareholders	$	2,679	$	3,172	$	3,896	$	7,834
Weighted average outstanding shares of common stock		5,110		4,155		4,821		4,029
Dilutive effect of stock options		119		156		125		166
Dilutive effect of non-vested shares		12		10		12		10
Fully diluted shares		5,241		4,321		4,958		4,205
Basic	$	0.52	$	0.76	$	0.81	$	1.94
Diluted	$	0.51	$	0.73	$	0.79	$	1.86

The following stock awards were excluded from the calculation of diluted EPS:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Assumed conversion of convertible debt		608		331		608		166
Stock awards that were anti-dilutive		63		29		49		19
Stock awards subject to performance conditions		21		18		19		15
Total stock awards excluded from diluted EPS		692		378		676		200

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Note 10 - Income Taxes

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, impairments of non-deductible goodwill, excess benefits from stock-based compensation, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

Our effective income tax rate was (12.4)% and (24.2)% for the three and six months ended September 30, 2020 and was 16.0% and 14.8% for the three and six months ended  September 30, 2019, respectively.  The effective tax rate for the three and six months ended September 30, 2020 differed from the statutory federal rate of 21% primarily due to the release of an uncertain tax position during the three months ended September 30, 2020 as discussed further below, the benefit of share-based payment awards for employees and research and development tax credits, partially offset by expenses for state income taxes, the limitations imposed by Section 162(m), and the foreign rate differential.

As part of our adoption of the Tax Cuts and Jobs Act, we recorded an uncertain tax position in the amount of $630. During the three months ended September 30, 2020, the Internal Revenue Service issued final regulations clarifying the law and providing greater flexibility to companies regarding substantiation requirements. As a result of the clarifications, we have determined that the uncertain tax position is no longer required and we have released it, which resulted in a $630 tax benefit during the three months ended September 30, 2020.

Since we are subject to audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. However, we do not expect the change, if any, to have a material effect on our financial condition or results of operations within the next 12 months.

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Note 11 - Commitments and Contingencies

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 11. Commitments and Contingencies

We review the adequacy of our legal reserves on a quarterly basis and establish reserves for loss contingencies that are both probable and reasonably estimable. As of September 30, 2020, there were no material legal reserves recorded on the accompanying unaudited Condensed Consolidated Balance Sheets. 

Under the terms of the revised IBP agreement, we are required to pay contingent consideration if the company is able to achieve certain operational and regulatory milestones. The potential undiscounted consideration payable ranges from €0 to €450, depending on whether units being developed are certified for sale by U.S. and foreign regulatory bodies. We currently believe that it is more likely than not that all aspects of the contingency will be achieved and we expect to pay $530, depending on foreign exchange rates, during the year ending March 31, 2021.

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Note 12 - Significant Transactions

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Significant Transactions [Text Block]

Note 12. Significant Transactions

GPT Acquisition

On October 31, 2019, we completed the acquisition of 100% of the outstanding shares of GPT, which comprises our new reportable segment - Biopharmaceutical Development. The acquisition of GPT expanded our presence into a new market--immunoassays and peptide synthesis solutions--that accelerate the discovery, development, and manufacturing of biotherapeutic drugs. GPT systems include laboratory instruments, consumables, kits, and software that maximize laboratory productivity by miniaturizing and automating immunoassays at nanoliter scale. GPT's protein detection is used most frequently by pharmaceutical and biotech companies that are developing protein-based drugs. This division also provides instruments, consumables, and software for the chemical synthesis of peptides from amino acids which are used in the discovery of new peptide-based drug therapies.  After adjustments, we paid cash consideration of $181,547 to the sellers in the transaction.  The acquisition was considered a stock purchase for tax purposes. 

Preliminary Allocation of Purchase Price

We accounted for the GPT Acquisition as the purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of GPT were recorded as of the acquisition date, at their respective estimated fair values, and consolidated with those of Mesa Labs. During the three months ended September 30, 2020, we finalized the valuation of net assets acquired. We obtained the information used to prepare the preliminary valuation during due diligence and from other sources. In the months after closing, we obtained additional information about these assets and liabilities as we learned more about GPT. We refined the estimates of fair value to more accurately allocate the purchase price. Only items identified as of the acquisition date were considered for subsequent adjustment.

The preparation of the valuation required the use of Level 3 inputs, which are subject to significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that we believe to be reasonable; however, actual results may differ from these estimates. 

During the six months ended  September 30, 2020, we finalized the valuation of the inventory step-up, intangible assets acquired, and property, plant, and equipment; however we have not finalized the valuation of certain tax related items, including deferred taxes. The final purchase price allocation will be completed within one year of the closing of the transaction, and may be refined further in the coming months as we learn more about GPT and therefore we can more accurately allocate the purchase price.  The measurement period adjustments to the acquisition fair values of the assets were due to the refinement of our valuation models, assumptions and inputs. The updated assumptions and inputs incorporated additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date. 

The significant purchase price allocation changes during the six months ended September 30, 2020 included a net decrease of $6,002 in the value of intangible assets, a decrease of $3,752 in the value of the inventory step-up, and an increase of $878 in the value of property, plant and equipment, net.  Long-term deferred tax liabilities also decreased by a net amount of $2,010, primarily due to the tax effect of these changes to the purchase price allocation. During the six months ended September 30, 2020, the cumulative net decrease to amortization expense recorded as a result of the decrease to intangible assets was $344, of which $178 of expense was recorded to cost of revenues and a benefit of $522 was recorded in general and administrative costs. Additionally, a $207 cumulative increase to depreciation expense was recorded to general and administrative costs during the three months ended September 30, 2020 as a result of the increase in the fair value of property, plant and equipment. 

The cumulative impacts of all adjustments to date have been reflected in the Unaudited Condensed Consolidated Financial Statements as of and for the six months ended September 30, 2020. The components and allocation of the purchase price consist of the following amounts:

	Note	Fair Value
Cash and cash equivalents		$	4,654
Accounts receivable, net	(a)		6,663
Inventories, net	(b)		12,522
Prepaid income taxes			477
Prepaid expenses and other			13,649
Property, plant and equipment, net			1,523
Other assets			1,469
Deferred taxes			10,340
Intangible assets:
Customer relationships	(c)		77,500
Trade name	(c)		4,600
Non-compete agreements	(c)		-
Acquired technology	(c)		11,800
Goodwill	(d)		84,028
Total Assets acquired		$	229,225
Accounts payable			599
Accrued salaries and payroll taxes			10,735
Other short-term liabilities			157
Unearned revenues			2,089
Other accrued expenses			5,068
Deferred taxes			23,411
Other long-term liabilities			965
Total liabilities assumed		$	43,024
Total closing amount, net of cash acquired		$	181,547

 ^(a) Accounts receivable is composed of trade accounts receivable, net which is expected to be collected. 

^(b)  Finished goods inventory of GPT includes $8,066 of inventory-step up, which is required to report inventory at fair value at the time of acquisition. The inventory step-up was amortized to cost of revenues over approximately eight months following the acquisition date, which resulted in a temporary reduction in gross profit for the business. During the period from November 1, 2019 until March 31, 2020, we recorded $8,502 of amortization of inventory step-up costs in cost of revenues on the Condensed Consolidated Statement of Income. The final inventory valuation was completed during the six months ended September 30, 2020 and was lower than our preliminary valuation, resulting in a cumulative effect decrease of $436 in amortization of inventory step up costs. We do not expect further adjustments to the inventory step-up valuation, nor do we expect changes in the amortization to be recorded.

^(c)  Customer relationships and acquired technology are being amortized on a straight-line basis over a 10 year period. Amortization expense for customer relationships is recorded to general and administrative expenses; amortization expense for acquired technology is recorded to cost of revenues. During the six months ended September 30, 2020, $1,409 of amortization expense related to the GPT intangible assets was recorded to general and administrative costs and $473 of amortization expense was recorded to cost of goods sold and allocated to the Biopharmaceutical Development division, including the cumulative-effect benefit to amortization expense discussed above. Trademarks associated with this acquisition are considered indefinite-lived intangibles. The estimated fair value of identifiable intangible assets was determined primarily using the income approach, which requires a forecast of all the expected future cash flows associated with the identified intangible assets. 

^(d)  Acquired goodwill of $84,028, all of which is allocated to the Biopharmaceutical Development reportable segment, represents the value expected to arise from organic revenues growth projections that are expected to exceed that of our legacy divisions, and the opportunity to expand into a new market with well-established market share. The goodwill acquired is not deductible for income tax purposes.

Unaudited Pro Forma Information

GPT's operations contributed $15,080 to revenues and ($2,083) of net loss to our consolidated results during the six months ended September 30, 2020 including cumulative-effect adjustments. We included the operating results of GPT in our Condensed Consolidated Statements of Income beginning on November 1, 2019, subsequent to the acquisition date. The following pro forma financial information presents the combined results of operations of Mesa Labs and GPT as if the acquisition had occurred on April 1, 2019 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected only include those adjustments that are directly attributable to the GPT Acquisition, factually supportable and have a recurring impact; they do not reflect any adjustments for anticipated expense savings resulting from the acquisition and are not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on April 1, 2019 or of future results. Prior to the GPT Acquisition, GPT did not generate monthly or quarterly financial statements that were prepared in accordance with GAAP. 

	Six Months Ended September 30,
	2019
Pro forma total revenues (1)	$	67,907
Pro forma net income (2)		6,435

(1) Net revenues were adjusted to include net revenues of GPT. 

(2) Pro forma adjustments to net earnings attributable to Mesa Labs include the following:

● Excludes interest expense attributable to GPT's external debt that was paid off as part of the acquisition.

● Additional amortization expense of $4,057 for the six months ended September 30, 2019 based on the increased fair value of amortizable intangible assets acquired.

● For the six months ended September 30, 2019, $351 additional stock based compensation expense representing expense for performance share units awarded to certain key GPT employees.

● Income tax effect of the adjustments made at a blended federal and state statutory rate (approximately 25%).

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Note 13 - Segment Information

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 13. Segment Information

As of September 30, 2020, we had four reportable segments, Sterilization and Disinfection Control, Instruments, Biopharmaceutical Development, and Continuous Monitoring. Results for the Cold Chain Packaging division, which we exited during the year ended March 31, 2020, are now presented within Corporate and Other. The following tables set forth our segment information: 

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860
Gross profit	$	8,770	$	4,852	$	6,212	$	1,368	$	83	$	21,285
Reconciling items (2)												(18,901	)
Earnings before income taxes											$	2,384

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536
Gross profit	$	8,723	$	5,557	$	-	$	1,221	$	85	$	15,586
Reconciling items (2)												(11,812	)
Earnings before income taxes											$	3,774

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801
Gross profit	$	18,790	$	9,541	$	10,678	$	2,552	$	64	$	41,625
Reconciling items (2)												(38,487	)
Earnings before income taxes											$	3,138

	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824
Gross profit	$	17,233	$	11,639	$	-	$	2,506	$	412	$	31,790
Reconciling items (2)												(22,591	)
Earnings before income taxes											$	9,199

⁽¹⁾ Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

⁽²⁾ Reconciling items include selling, general and administrative, research and development, interest expense and amortization of debt discount, and other (income) expenses.

The following table sets forth assets by reportable segment: 

	September 30, 2020		March 31, 2020
Sterilization and Disinfection Control	$	68,571	$	73,103
Instruments		29,735		31,025
Biopharmaceutical Development		194,570		182,758
Continuous Monitoring		28,625		29,732
Corporate and administrative		267,431		103,588
Total	$	588,932	$	420,206

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Note 14 - Subsequent Event

6 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

Note 14. Subsequent Event

In October 2020, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on December 15, 2020, to shareholders of record at the close of business on November 30, 2020.

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Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. The results of operations for the interim periods are not necessarily indicative of results that may be achieved for the entire year.  The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2020.

Risk and Uncertainties, Policy [Policy Text Block]

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgement about the outcome of future events. The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus ("COVID-19"), and it is not possible to accurately predict the future impact of COVID-19. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected by the impacts of COVID-19 during the near term: 

● Estimates regarding the future financial performance of the business used in the impairment tests for goodwill and long-lived assets acquired in a business combination; however, we identified no triggering events since our impairment analysis was completed during the three months ended March 31, 2020; 

● Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions;

● Estimates regarding recoverability for customer receivables;

● Estimates of the net realizable value for inventory.

Immaterial Error Correction, Policy [Policy Text Block]

Immaterial Error Correction

During the three months ended September 30, 2020, we identified an immaterial error in the design of our Enterprise Resource Planning tool that resulted in a system failure to eliminate intercompany cost of revenues for certain types of transactions. The error resulted in an overstatement of cost of goods sold and an understatement in gross profit for the Continuous Monitoring, Instruments, and Sterilization and Disinfection Control divisions. The issue began during the three months ended June 30, 2019; we have determined that no financial statement prior to April 1, 2019 was misstated as a result of the previously uneliminated balances in cost of revenues. 

In accordance with Staff Accounting Bulletin ("SAB") No. 99 Materiality, and SAB No. 108 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, we evaluated the error quantitatively and qualitatively and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the three months ended September 30, 2020. In considering the materiality, we concluded that the impact of the error correction is not material in absolute dollar amount especially since our most recent fiscal year results included various new non cash charges that reduced net income below historical levels, [nor is it qualitatively material]. Accordingly, we have revised previously reported financial information for the immaterial error.

We performed manual intercompany elimination calculations and determined that cost of revenues and accumulated other comprehensive income were overstated by $429 for the year ended March 31, 2020, which would increase operating income and net income by approximately $429 and diluted earnings per share by $0.10; there was no income tax impact on the full year adjustment since the inventory balance was not misstated.  To correct the immaterial error, we have restated retained earnings as of March 31, 2020. The error resulted in overstated cost of goods sold and a corresponding understatement of net income of: $65 during the three months ended June 30, 2019; $110 during the three months ended September 30, 2019, $126 during the three months ended December 31, 2019, and $128 during the three months ended March 31, 2020. Additionally, during the three months ended June 30, 2020, cost of revenues were overstated by $372, which after the impact of taxes would increase net income by approximately $192 and diluted earnings per share by $0.04. We have restated retained earnings as of June 30, 2020 in the amount of $192. The immaterial error has no impact on total cash flows from operating activities or total comprehensive income for any of the periods that were revised. 

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In August, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, such as our convertible senior notes, due 2025. ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. It is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The update permits the use of either the modified retrospective or fully retrospective method of transition. We are currently evaluating the timing, method of adoption, and financial impact of the adoption of ASU 2020-06 on our financial statements but anticipate that subsequent to adoption, the equity conversion feature will be categorized as a liability and there will be a reduction in non-cash interest expense related to the 1.375% convertible senior notes due August 15, 2025.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as modified by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The ASU was effective for public business entities for fiscal years beginning after December 15, 2019, with early adoption permitted. On April 1, 2020, we adopted the ASU using the modified retrospective transition method. We recorded a net decrease to beginning retained earnings of $9 as of April 1, 2020 due to the cumulative effect of adopting Topic 326's requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on our trade receivables. As a result of the adoption of the ASU, our allowance for doubtful accounts as of September 30, 2020 reflects our best estimate of the expected future losses for our accounts receivable based on the current economic conditions. We have accounted for the macroeconomic impact of the COVID-19 pandemic in our estimates, but due to the unprecedented nature of the impact of the pandemic, our estimates may change and future actual losses may differ from our current estimates. We will continue to monitor economic conditions and will revise our estimate of the expected future losses for accounts receivable as necessary.  

We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable was developed using historical collection experience, current and expected future economic and market conditions and a review of the current status of customers’ trade accounts receivables. Customers are pooled based on sharing specific risk factors. Due to the short-term nature of trade receivables, the estimated accounts receivable that may not be collected is based on aging of the accounts receivable balances.

Customers are assessed for credit worthiness upfront through a credit review. We evaluate contract terms and conditions, and may require prepayment to mitigate risk of loss. Specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. We monitor changes to the receivables balance on timely basis, and balances are written off as they are determined to be uncollectable after all collection efforts have been exhausted. Estimates of potential credit losses are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.

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Note 2 - Revenue Recognition (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	9,518	$	715	$	3,238	$	15	$	-	$	13,486
Hardware and Software		108		4,815		4,191		2,207		-		11,321
Services		706		2,028		1,005		614		-		4,353
Contracted Revenues
Services		1,220		-		697		783		-		2,700
Total Revenues	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	10,122	$	563	$	-	$	10	$	877	$	11,572
Hardware and Software		148		5,923		-		1,821		-		7,892
Services		641		2,474		-		570		19		3,704
Contracted Revenues
Services		1,183		-		-		1,185		-		2,368
Total Revenues	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	21,002	$	1,523	$	5,177	$	45	$	-	$	27,747
Hardware and Software		237		9,835		6,747		4,162		-		20,981
Services		956		3,880		1,787		1,145		-		7,768
Contracted Revenues
Services		2,424		-		1,369		1,512		-		5,305
Total Revenues	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801

	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Discrete Revenues
Consumables	$	20,539	$	1,583	$	-	$	21	$	2,186	$	24,329
Hardware and Software		334		12,401		-		3,812		-		16,547
Services		941		4,520		-		1,110		27		6,598
Contracted Revenues
Services		2,390		-		-		1,960		-		4,350
Total Revenues	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
United States	$	11,222	$	15,006	$	27,594	$	30,197
Foreign		20,638		10,530		34,207		21,627
Total revenues	$	31,860	$	25,536	$	61,801	$	51,824

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

Contract liabilities balance as of March 31, 2020	$	7,217
Prior year liabilities recognized in revenues during the six months ended September 30, 2020		(3,353	)
Contract liabilities added during the six months ended September 30, 2020, net of revenues recognized		3,272
Contract liabilities balance as of September 30, 2020	$	7,136

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Note 3 - Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	September 30, 2020				March 31, 2020
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Notes	$	142,945	$	191,475	$	140,278	$	173,363

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Note 4 - Inventories, Net (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	September 30, 2020			March 31, 2020
Raw materials	$	7,263		$	6,757
Work-in-process		357			329
Finished goods		7,099			9,768
Less: reserve		(2,882	)		(2,624	)
Inventories, net	$	11,837		$	14,230

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Note 5 - Goodwill and Intangible Assets, Net (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	September 30, 2020							March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intellectual property	$	20,852	$	(7,671	)	$	13,181	$	15,731	$	(6,454	)	$	9,277
Trade names		8,477		(2,992	)		5,485		5,839		(2,855	)		2,984
Customer relationships		143,378		(45,464	)		97,914		146,106		(38,777	)		107,329
Non-compete agreements		1,299		(1,176	)		123		1,447		(1,166	)		281
Total	$	174,006	$	(57,303	)	$	116,703	$	169,123	$	(49,252	)	$	119,871

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2021	$	14,635
2022		14,599
2023		14,581
2024		14,056
2025		12,471

Schedule of Goodwill [Table Text Block]

	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
March 31, 2020	$	29,594	$	19,123	$	74,716	$	18,103	$	-	$	141,536
Effect of foreign currency translation		500		60		8,604		-		-		9,164
Goodwill adjustment related to GPT acquisition		-		-		5,665		-		-		5,665
September 30, 2020	$	30,094	$	19,183	$	88,985	$	18,103	$	-	$	156,365

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Note 6 - Supplemental Balance Sheets Information (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Employee Related Liabilities [Table Text Block]

	September 30, 2020		March 31, 2020
Bonus payable	$	1,771	$	4,069
Wages payable		2,146		2,485
Payroll related taxes		1,504		2,228
Other benefits payable		190		158
Total accrued payroll and benefits	$	5,611	$	8,940

Schedule of Accrued Liabilities [Table Text Block]

	September 30, 2020		March 31, 2020
Accrued business taxes	$	1,965	$	3,796
Current operating lease liabilities		945		1,095
Interest payable		296		296
Professional services fees		494		857
Other		1,053		298
Total other accrued expenses	$	4,753	$	6,342

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Note 7 - Indebtedness (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Convertible Debt [Table Text Block]

	September 30, 2020			March 31, 2020
Principal outstanding	$	172,500		$	172,500
Unamortized debt discount		(25,879	)		(28,205	)
Unamortized debt issuance costs		(3,676	)		(4,017	)
Net carrying value	$	142,945		$	140,278

	September 30, 2020			March 31, 2020
Amount allocated to conversion option	$	31,073		$	31,073
Less: allocated issuance costs and deferred taxes		(8,338	)		(8,338	)
Equity component, net	$	22,735		$	22,735

Interest Expense on Convertible Debt [Table Text Block]

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Coupon interest expense at 1.375%	$	593	$	316	$	1,186	$	316
Amortization of debt discounts and issuance costs		1,341		707		2,667		707
Total	$	1,934	$	1,023	$	3,853	$	1,023

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Note 8 - Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019
Stock-based compensation expense	$	2,008		$	1,182		$	3,276		$	2,050
Amount of income tax (benefit) recognized in earnings		(522	)		(368	)		(1,447	)		(908	)
Stock-based compensation expense, net of tax	$	1,486		$	814		$	1,829		$	1,142

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Stock Options
	Shares Subject to Options			Weighted- Average Exercise Price per Share
Outstanding at March 31, 2020		286		$	107.72
Awards granted		36			226.72
Awards forfeited or expired		(10	)		112.27
Awards exercised		(36	)		83.69
Outstanding as of September 30, 2020		276		$	126.30

Share-based Payment Arrangement, Activity [Table Text Block]

	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	Number of Shares			Weighted- Average Grant Date Fair Value per Share		Number of Shares			Weighted- Average Grant Date Fair Value per Share
Nonvested at March 31, 2020		28		$	180.15		22		$	204.68
Awards granted		19			225.32		-			-
Awards forfeited or expired		(3	)		205.10		(1	)		199.50
Awards distributed		(5	)		177.17		-			-
Nonvested as of September 30, 2020		39		$	201.49		21		$	204.80

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Note 9 - Earnings Per Share (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Net income available for shareholders	$	2,679	$	3,172	$	3,896	$	7,834
Weighted average outstanding shares of common stock		5,110		4,155		4,821		4,029
Dilutive effect of stock options		119		156		125		166
Dilutive effect of non-vested shares		12		10		12		10
Fully diluted shares		5,241		4,321		4,958		4,205
Basic	$	0.52	$	0.76	$	0.81	$	1.94
Diluted	$	0.51	$	0.73	$	0.79	$	1.86

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Assumed conversion of convertible debt		608		331		608		166
Stock awards that were anti-dilutive		63		29		49		19
Stock awards subject to performance conditions		21		18		19		15
Total stock awards excluded from diluted EPS		692		378		676		200

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Note 12 - Significant Transactions (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	Note	Fair Value
Cash and cash equivalents		$	4,654
Accounts receivable, net	(a)		6,663
Inventories, net	(b)		12,522
Prepaid income taxes			477
Prepaid expenses and other			13,649
Property, plant and equipment, net			1,523
Other assets			1,469
Deferred taxes			10,340
Intangible assets:
Customer relationships	(c)		77,500
Trade name	(c)		4,600
Non-compete agreements	(c)		-
Acquired technology	(c)		11,800
Goodwill	(d)		84,028
Total Assets acquired		$	229,225
Accounts payable			599
Accrued salaries and payroll taxes			10,735
Other short-term liabilities			157
Unearned revenues			2,089
Other accrued expenses			5,068
Deferred taxes			23,411
Other long-term liabilities			965
Total liabilities assumed		$	43,024
Total closing amount, net of cash acquired		$	181,547

Business Acquisition, Pro Forma Information [Table Text Block]

	Six Months Ended September 30,
	2019
Pro forma total revenues (1)	$	67,907
Pro forma net income (2)		6,435

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Note 13 - Segment Information (Tables)

6 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	11,552	$	7,558	$	9,131	$	3,619	$	-	$	31,860
Gross profit	$	8,770	$	4,852	$	6,212	$	1,368	$	83	$	21,285
Reconciling items (2)												(18,901	)
Earnings before income taxes											$	2,384

	Three Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	12,094	$	8,960	$	-	$	3,586	$	896	$	25,536
Gross profit	$	8,723	$	5,557	$	-	$	1,221	$	85	$	15,586
Reconciling items (2)												(11,812	)
Earnings before income taxes											$	3,774

	Six Months Ended September 30, 2020
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,619	$	15,238	$	15,080	$	6,864	$	-	$	61,801
Gross profit	$	18,790	$	9,541	$	10,678	$	2,552	$	64	$	41,625
Reconciling items (2)												(38,487	)
Earnings before income taxes											$	3,138

	Six Months Ended September 30, 2019
	Sterilization and Disinfection Control		Instruments		Biopharmaceutical Development		Continuous Monitoring		Corporate and Other		Total
Revenues (1)	$	24,204	$	18,504	$	-	$	6,903	$	2,213	$	51,824
Gross profit	$	17,233	$	11,639	$	-	$	2,506	$	412	$	31,790
Reconciling items (2)												(22,591	)
Earnings before income taxes											$	9,199

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	September 30, 2020		March 31, 2020
Sterilization and Disinfection Control	$	68,571	$	73,103
Instruments		29,735		31,025
Biopharmaceutical Development		194,570		182,758
Continuous Monitoring		28,625		29,732
Corporate and administrative		267,431		103,588
Total	$	588,932	$	420,206

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Note 1 - Description of Business and Summary of Significant Accounting Policies (Details Textual)	3 Months Ended					6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Apr. 01, 2020 USD ($)	Aug. 12, 2019
Number of Operating Segments						4
Retained Earnings (Accumulated Deficit), Ending Balance		$ 72,359,000				$ 74,724,000	$ 72,359,000
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Retained Earnings (Accumulated Deficit), Ending Balance								$ (9,000)
The Notes [Member]
Debt Instrument, Interest Rate, Stated Percentage				1.375%		1.375%
The Notes [Member] | Senior Notes [Member]
Debt Instrument, Interest Rate, Stated Percentage		1.375%				1.375%	1.375%		1.375%
Revision of Prior Period, Adjustment [Member]
Retained Earnings (Accumulated Deficit), Ending Balance	$ 192,000
Overstatement of Cost of Revenues [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	372,000						$ 429,000
Overstatement of Accumulated Other Comprehensive Income [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount							429,000
Amount By Which Operating Income Would Increase if Cost of Revenues Had Not Been Overstated [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount							429,000
Amount By Which Net Income Would Increase if Cost of Revenues Had Not Been Overstated [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount							429,000
Amount By Which Diluted Earnings Per Share Would Increase if Cost of Revenues Had Not Been Overstated [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	0.04						$ 0.10
Overstatement of Cost of Goods Sold [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount		$ 128,000	$ 126,000	$ 110,000	$ 65,000
Understatement of Net Income [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount		$ 128,000	$ 126,000	$ 110,000	$ 65,000
Amount By Which After-tax Income Would Increase if Cost of Revenues Had Not Been Overstated [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	$ 192,000

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Note 2 - Revenue Recognition (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Contract with Customer, Asset, after Allowance for Credit Loss, Total	$ 0	$ 0

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Note 2 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Sep. 30, 2020		Sep. 30, 2019		Sep. 30, 2020		Sep. 30, 2019
Revenues	[1]	$ 31,860		$ 25,536		$ 61,801		$ 51,824
Consumables [Member] | Transferred at Point in Time [Member]
Revenues		13,486		11,572		27,747		24,329
Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		11,321		7,892		20,981		16,547
Service [Member] | Transferred at Point in Time [Member]
Revenues		4,353		3,704		7,768		6,598
Service [Member] | Transferred over Time [Member]
Revenues		2,700		2,368		5,305		4,350
Corporate, Non-Segment [Member]
Revenues		0		896	[1]			2,213	[1]
Corporate, Non-Segment [Member] | Consumables [Member] | Transferred at Point in Time [Member]
Revenues		0		877				2,186
Corporate, Non-Segment [Member] | Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		0		0
Corporate, Non-Segment [Member] | Service [Member] | Transferred at Point in Time [Member]
Revenues		0		19				27
Corporate, Non-Segment [Member] | Service [Member] | Transferred over Time [Member]
Revenues		0		0
Sterilization and Disinfection Control [Member] | Operating Segments [Member]
Revenues	[1]	11,552		12,094		24,619		24,204
Sterilization and Disinfection Control [Member] | Operating Segments [Member] | Consumables [Member] | Transferred at Point in Time [Member]
Revenues		9,518		10,122		21,002		20,539
Sterilization and Disinfection Control [Member] | Operating Segments [Member] | Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		108		148		237		334
Sterilization and Disinfection Control [Member] | Operating Segments [Member] | Service [Member] | Transferred at Point in Time [Member]
Revenues		706		641		956		941
Sterilization and Disinfection Control [Member] | Operating Segments [Member] | Service [Member] | Transferred over Time [Member]
Revenues		1,220		1,183		2,424		2,390
Instruments [Member] | Operating Segments [Member]
Revenues	[1]	7,558		8,960		15,238		18,504
Instruments [Member] | Operating Segments [Member] | Consumables [Member] | Transferred at Point in Time [Member]
Revenues		715		563		1,523		1,583
Instruments [Member] | Operating Segments [Member] | Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		4,815		5,923		9,835		12,401
Instruments [Member] | Operating Segments [Member] | Service [Member] | Transferred at Point in Time [Member]
Revenues		2,028		2,474		3,880		4,520
Instruments [Member] | Operating Segments [Member] | Service [Member] | Transferred over Time [Member]
Revenues		0		0
Biopharmaceutical Development [Member] | Operating Segments [Member]
Revenues		9,131	[1]	0		15,080	[1]
Biopharmaceutical Development [Member] | Operating Segments [Member] | Consumables [Member] | Transferred at Point in Time [Member]
Revenues		3,238		0		5,177
Biopharmaceutical Development [Member] | Operating Segments [Member] | Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		4,191		0		6,747
Biopharmaceutical Development [Member] | Operating Segments [Member] | Service [Member] | Transferred at Point in Time [Member]
Revenues		1,005		0		1,787
Biopharmaceutical Development [Member] | Operating Segments [Member] | Service [Member] | Transferred over Time [Member]
Revenues		697		0		1,369
Continuous Monitoring [Member] | Operating Segments [Member]
Revenues		3,619		3,586		6,864		6,903
Continuous Monitoring [Member] | Operating Segments [Member] | Consumables [Member] | Transferred at Point in Time [Member]
Revenues		15		10		45		21
Continuous Monitoring [Member] | Operating Segments [Member] | Hardware and Software [Member] | Transferred at Point in Time [Member]
Revenues		2,207		1,821		4,162		3,812
Continuous Monitoring [Member] | Operating Segments [Member] | Service [Member] | Transferred at Point in Time [Member]
Revenues		614		570		1,145		1,110
Continuous Monitoring [Member] | Operating Segments [Member] | Service [Member] | Transferred over Time [Member]
Revenues		$ 783		$ 1,185		$ 1,512		$ 1,960

[1] Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

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Note 2 - Revenue Recognition - Revenues From External Customers (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenues	[1]	$ 31,860	$ 25,536	$ 61,801	$ 51,824
UNITED STATES
Total revenues		11,222	15,006	27,594	30,197
Non-US [Member]
Total revenues		$ 20,638	$ 10,530	$ 34,207	$ 21,627

[1] Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

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Note 2 - Revenue Recognition - Contract Liabilities (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2020 USD ($)
Contract liabilities balance as of March 31, 2020	$ 7,217
Prior year liabilities recognized in revenues during the six months ended September 30, 2020	(3,353)
Contract liabilities added during the six months ended September 30, 2020, net of revenues recognized	3,272
Contract liabilities balance as of September 30, 2020	$ 7,136

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Note 3 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020	Aug. 12, 2019
Money Market Funds, at Carrying Value	$ 222,806		$ 66,735
Proceeds from Convertible Debt	$ 145,935	$ 84,995
The Notes [Member]
Debt Instrument, Interest Rate, Stated Percentage	1.375%	1.375%
Senior Notes [Member] | The Notes [Member]
Proceeds from Convertible Debt			$ 172,500
Debt Instrument, Interest Rate, Stated Percentage	1.375%		1.375%	1.375%

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Note 3 - Fair Value Measurements - Fair Value and Carrying Value of the Notes (Details) - Senior Notes [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Reported Value Measurement [Member]
Notes	$ 142,945	$ 140,278
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Notes	$ 191,475	$ 173,363

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Note 4 - Inventories, Net (Details Textual) - GPT Acquisition [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020	Oct. 31, 2019
Inventory Step-up Cost			$ 8,066
Inventories [Member]
Inventory Step-up Cost	$ 0	$ 2,901

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Note 4 - Inventories, Net - Summary of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Raw materials	$ 7,263	$ 6,757
Work-in-process	357	329
Finished goods	7,099	9,768
Less: reserve	(2,882)	(2,624)
Inventories, net	$ 11,837	$ 14,230

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Note 5 - Goodwill and Intangible Assets, Net (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Amortization of Intangible Assets, Total	$ 3,512	$ 1,658	$ 6,866	$ 3,330

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Note 5 - Goodwill and Intangible Assets, Net - Other Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Carrying Amount	$ 174,006	$ 169,123
Accumulated Amortization	(57,303)	(49,252)
Net	116,703	119,871
Intellectual Property [Member]
Carrying Amount	20,852	15,731
Accumulated Amortization	(7,671)	(6,454)
Net	13,181	9,277
Trade Names [Member]
Carrying Amount	8,477	5,839
Accumulated Amortization	(2,992)	(2,855)
Net	5,485	2,984
Customer Relationships [Member]
Carrying Amount	143,378	146,106
Accumulated Amortization	(45,464)	(38,777)
Net	97,914	107,329
Noncompete Agreements [Member]
Carrying Amount	1,299	1,447
Accumulated Amortization	(1,176)	(1,166)
Net	$ 123	$ 281

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Note 5 - Goodwill and Intangible Assets, Net - Estimated Amortization Expense (Details) $ in Thousands	Sep. 30, 2020 USD ($)
2021	$ 14,635
2022	14,599
2023	14,581
2024	14,056
2025	$ 12,471

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Note 5 - Goodwill and Intangible Assets, Net - Change in the Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2020 USD ($)
Goodwill	$ 141,536
Effect of foreign currency translation	9,164
Goodwill adjustment related to GPT acquisition	5,665
Goodwill	156,365
Corporate, Non-Segment [Member]
Goodwill	0
Effect of foreign currency translation	0
Goodwill adjustment related to GPT acquisition	0
Goodwill	0
Sterilization and Disinfection Control [Member] | Operating Segments [Member]
Goodwill	29,594
Effect of foreign currency translation	500
Goodwill adjustment related to GPT acquisition	0
Goodwill	30,094
Instruments [Member] | Operating Segments [Member]
Goodwill	19,123
Effect of foreign currency translation	60
Goodwill adjustment related to GPT acquisition	0
Goodwill	19,183
Biopharmaceutical Development [Member] | Operating Segments [Member]
Goodwill	74,716
Effect of foreign currency translation	8,604
Goodwill adjustment related to GPT acquisition	5,665
Goodwill	88,985
Continuous Monitoring [Member] | Operating Segments [Member]
Goodwill	18,103
Effect of foreign currency translation	0
Goodwill adjustment related to GPT acquisition	0
Goodwill	$ 18,103

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Note 6 - Supplemental Balance Sheets Information - Accrued Payroll and Benefits (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Bonus payable	$ 1,771	$ 4,069
Wages payable	2,146	2,485
Payroll related taxes	1,504	2,228
Other benefits payable	190	158
Total accrued payroll and benefits	$ 5,611	$ 8,940

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Note 6 - Supplemental Balance Sheets Information - Other Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Accrued business taxes	$ 1,965	$ 3,796
Current operating lease liabilities	945	1,095
Interest payable	296	296
Professional services fees	494	857
Other	1,053	298
Total other accrued expenses	$ 4,753	$ 6,342

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Note 7 - Indebtedness (Details Textual) $ / shares in Units, $ in Thousands	Aug. 12, 2019 USD ($) $ / shares	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2019
Convertible Debt, Noncurrent		$ 142,945	$ 140,278
The Notes [Member]
Debt Instrument, Interest Rate, Stated Percentage		1.375%		1.375%
The Notes [Member] | Senior Notes [Member]
Debt Instrument, Face Amount	$ 172,500
Debt Instrument, Interest Rate, Stated Percentage	1.375%	1.375%	1.375%
Debt Instrument, Convertible, Conversion Ratio Per 1,000 Principal	3.5273
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares	$ 283.50
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger	130.00%
Debt Instrument, Convertible, Threshold Trading Days	20
Debt Instrument, Convertible, Threshold Consecutive Trading Days	30
Debt Instrument, Convertible, Consecutive Trading Days, Trading Price Per 1,000 Principal of Notes Less Than 98% of the Product	10
Convertible Debt, Noncurrent	$ 141,427
Debt Instrument, Convertible, Carrying Amount of Equity Component	$ 31,073	$ 31,073	$ 31,073
Debt Instrument, Term (Year)	6 years
Debt Instrument, Unamortized Discount and Commissions Including Equity Component	$ 5,175
Third Party Offering Costs	255
Debt Issuance Costs, Gross	$ 4,452
Debt Instrument, Interest Rate, Effective Percentage	5.50%

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Note 7 - Indebtedness - Carrying Amount of the Notes (Details) - The Notes [Member] - Senior Notes [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020	Aug. 12, 2019
Principal outstanding	$ 172,500	$ 172,500
Unamortized debt discount	(25,879)	(28,205)
Unamortized debt issuance costs	(3,676)	(4,017)
Net carrying value	142,945	140,278
Amount allocated to conversion option	31,073	31,073	$ 31,073
Less: allocated issuance costs and deferred taxes	(8,338)	(8,338)
Equity component, net	$ 22,735	$ 22,735

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Note 7 - Indebtedness - Interest Expense on the Notes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Coupon interest expense at 1.375%	$ 593	$ 316	$ 1,186	$ 316
Amortization of debt discounts and issuance costs	1,341	707	2,667	707
Total	$ 1,934	$ 1,023	$ 3,853	$ 1,023

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Note 7 - Indebtedness - Interest Expense on the Notes (Details) (Parentheticals)	Sep. 30, 2020	Sep. 30, 2019
The Notes [Member]
Interest rate	1.375%	1.375%

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Note 8 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Jun. 12, 2020	Sep. 30, 2020	Sep. 30, 2019
Stock Issued During Period, Shares, New Issues (in shares)	600,000
Sale of Stock, Underwriter Options, Shares (in shares)	90,000
Shares Issued, Price Per Share (in dollars per share)	$ 225.00
Proceeds from Issuance of Common Stock	$ 145,935	$ 0	$ 167,070

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Note 8 - Stockholders' Equity - Allocation of Share-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Payment Arrangement, Expense	$ 2,008	$ 1,182	$ 3,276	$ 2,050
Amount of income tax (benefit) recognized in earnings	(522)	(368)	(1,447)	(908)
Stock-based compensation expense, net of tax	$ 1,486	$ 814	$ 1,829	$ 1,142

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Note 8 - Stockholders' Equity - Stock Option and Restricted Stock Unit Award Activity (Details) shares in Thousands	6 Months Ended
	Sep. 30, 2020 $ / shares shares
Options outstanding (in shares) | shares	286
Options outstanding, weighted-average exercise price (in dollars per share) | $ / shares	$ 107.72
Options granted (in shares) | shares	36
Options granted, weighted-average exercise price (in dollars per share) | $ / shares	$ 226.72
Options forfeited or expired (in shares) | shares	(10)
Options forfeited or expired, weighted-average exercise price (in dollars per share) | $ / shares	$ 112.27
Options, awards exercised (in shares) | shares	(36)
Awards exercised, weighted-average exercise price (in dollars per share) | $ / shares	$ 83.69
Options outstanding (in shares) | shares	276
Options outstanding, weighted-average exercise price (in dollars per share) | $ / shares	$ 126.30

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Note 8 - Stockholders' Equity - Restricted Stock Unit Activity (Details) shares in Thousands	6 Months Ended
	Sep. 30, 2020 $ / shares shares
Awards exercised, weighted-average exercise price (in dollars per share)	$ 83.69
Restricted Stock Units (RSUs) [Member]
Nonvested, number of shares (in shares) | shares	28
Nonvested, weighted average grant date fair value per share (in dollars per share)	$ 180.15
Awards granted, number of shares (in shares) | shares	19
Awards granted, weighted average grant date fair value per share (in dollars per share)	$ 225.32
Awards forfeited or expired, number of shares (in shares) | shares	(3)
Awards forfeited or expired, weighted average grant date fair value per share (in dollars per share)	$ 205.10
Awards distributed, number of shares (in shares) | shares	(5)
Awards exercised, weighted-average exercise price (in dollars per share)	$ 177.17
Nonvested , number of shares (in shares) | shares	39
Nonvested, weighted average grant date fair value per share (in dollars per share)	$ 201.49
Performance Stock Units [Member]
Nonvested, number of shares (in shares) | shares	22
Nonvested, weighted average grant date fair value per share (in dollars per share)	$ 204.68
Awards granted, number of shares (in shares) | shares	0
Awards granted, weighted average grant date fair value per share (in dollars per share)	$ 0
Awards forfeited or expired, number of shares (in shares) | shares	(1)
Awards forfeited or expired, weighted average grant date fair value per share (in dollars per share)	$ 199.50
Awards distributed, number of shares (in shares) | shares	0
Awards exercised, weighted-average exercise price (in dollars per share)	$ 0
Nonvested , number of shares (in shares) | shares	21
Nonvested, weighted average grant date fair value per share (in dollars per share)	$ 204.80

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Note 9 - Earnings Per Share - Computation of Net Income Per Share, Basic & Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net income available for shareholders	$ 2,679	$ 1,217	$ 3,172	$ 4,662	$ 3,896	$ 7,834
Weighted average outstanding shares of common stock (in shares)	5,110		4,155		4,821	4,029
Dilutive effect of stock options (in shares)	119		156		125	166
Dilutive effect of non-vested shares (in shares)	12		10		12	10
Fully diluted shares (in shares)	5,241		4,321		4,958	4,205
Basic (in dollars per share)	$ 0.52		$ 0.76		$ 0.81	$ 1.94
Diluted (in dollars per share)	$ 0.51		$ 0.73		$ 0.79	$ 1.86

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Note 9 - Earnings Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock awards excluded from diluted EPS (in shares)	692	378	676	200
Assumed Conversion of Convertible Debt [Member]
Stock awards excluded from diluted EPS (in shares)	608	331	608	166
Stock Awards that were Antidilutive [Member]
Stock awards excluded from diluted EPS (in shares)	63	29	49	19
Stock Awards Subject to Performance Conditions [Member]
Stock awards excluded from diluted EPS (in shares)	21	18	19	15

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Note 10 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020
Effective Income Tax Rate Reconciliation, Percent, Total	(12.40%)	16.00%	(24.20%)	14.80%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			21.00%
Unrecognized Tax Benefits, Ending Balance					$ 630
Tax Cuts and Jobs Act, Income Tax Expense (Benefit), Total	$ (630)

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Note 11 - Commitments and Contingencies (Details Textual) - Sep. 30, 2020 - GPT Acquisition [Member] € in Thousands, $ in Thousands	USD ($)	EUR (€)
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low		€ 0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		€ 450
Business Combination, Contingent Consideration, Liability, Total | $	$ 530

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Note 12 - Significant Transactions (Details Textual) - USD ($) $ in Thousands			3 Months Ended		5 Months Ended	6 Months Ended
	Oct. 31, 2019		Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020	Sep. 30, 2020	Sep. 30, 2019
Payments to Acquire Businesses, Gross						$ (0)	$ 2,555
Amortization of Intangible Assets, Total			$ 3,512	$ 1,658		6,866	3,330
Amortization of Inventory Step-up Cost						(436)	0
Goodwill, Ending Balance			156,365		$ 141,536	156,365
Share-based Payment Arrangement, Expense			$ 2,008	$ 1,182		$ 3,276	$ 2,050
Effective Income Tax Rate Reconciliation, Percent, Total			(12.40%)	16.00%		(24.20%)	14.80%
GPT Acquisition [Member]
Business Acquisition, Percentage of Voting Interests Acquired	100.00%
Payments to Acquire Businesses, Gross	$ 181,547
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles						$ (6,002)
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Inventory						(3,752)
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Property, Plant, and Equipment						878
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Deferred Tax Liabilities						2,010
Amortization of Intangible Assets, Total						(344)	$ 4,057
Inventory Step-up Cost	8,066
Amortization of Inventory Step-up Cost					$ 8,502	(436)
Goodwill, Ending Balance	84,028	[1]	$ 84,028			84,028
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual						15,080
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual						$ (2,083)
Effective Income Tax Rate Reconciliation, Percent, Total							25.00%
GPT Acquisition [Member] | Key GPT Employees [Member] | Performance Stock Units [Member]
Share-based Payment Arrangement, Expense							$ 351
GPT Acquisition [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life (Year)						10 years
GPT Acquisition [Member] | Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Asset, Useful Life (Year)						10 years
GPT Acquisition [Member] | Cost of Sales [Member]
Amortization of Intangible Assets, Total						$ 178
GPT Acquisition [Member] | General and Administrative Expense [Member]
Amortization of Intangible Assets, Total						(522)
Depreciation, Total			$ 207
GPT Acquisition [Member] | General and Administrative Expense [Member] | Biopharmaceutical Development [Member]
Amortization of Intangible Assets, Total	$ 473					$ 1,409

[1] Acquired goodwill of [$84,028], all of which is allocated to the Biopharmaceutical Development reportable segment, represents the value expected to arise from organic revenues growth projections that are expected to exceed that of our legacy divisions, and the opportunity to expand into a new market with well-established market share. The goodwill acquired is not deductible for income tax purposes.

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Note 12 - Significant Transactions - Allocation of Preliminary Price (Details) - USD ($) $ in Thousands		Oct. 31, 2019		Sep. 30, 2020	Mar. 31, 2020
Goodwill, Ending Balance				$ 156,365	$ 141,536
GPT Acquisition [Member]
Cash and cash equivalents		$ 4,654
Accounts receivable, net	[1]	6,663
Inventories, net	[2]	12,522
Prepaid income taxes		477
Prepaid expenses and other		13,649
Property, plant and equipment, net		1,523
Other assets		1,469
Deferred taxes		10,340
Goodwill, Ending Balance		84,028	[3]	$ 84,028
Total Assets acquired		229,225
Accounts payable		599
Accrued salaries and payroll taxes		10,735
Other short-term liabilities		157
Unearned revenues		2,089
Other accrued expenses		5,068
Deferred taxes		23,411
Other long-term liabilities		965
Total liabilities assumed		43,024
Total closing amount, net of cash acquired		181,547
GPT Acquisition [Member] | Customer Relationships [Member]
Intangible assets	[4]	77,500
GPT Acquisition [Member] | Trade Names [Member]
Intangible assets	[4]	4,600
GPT Acquisition [Member] | Noncompete Agreements [Member]
Intangible assets	[4]	0
GPT Acquisition [Member] | Technology-Based Intangible Assets [Member]
Intangible assets	[4]	$ 11,800

[1] Accounts receivable is composed of trade accounts receivable, net which is expected to be collected.

[2] Finished goods inventory of GPT includes $8,066 of inventory-step up, which is required to report inventory at fair value at the time of acquisition. The inventory step-up was amortized to cost of revenues over approximately eight months following the acquisition date, which resulted in a temporary reduction in gross profit for the business. During the period from November 1, 2019 until March 31, 2020, we recorded $8,502 of amortization of inventory step-up costs in cost of revenues on the Condensed Consolidated Statement of Income. The final inventory valuation was completed during the six months ended September 30, 2020 and was lower than our preliminary valuation, resulting in a cumulative effect decrease of $436 in amortization of inventory step up costs. We do not expect further adjustments to the inventory step-up valuation, nor do we expect changes in the amortization to be recorded.

[3] Acquired goodwill of [$84,028], all of which is allocated to the Biopharmaceutical Development reportable segment, represents the value expected to arise from organic revenues growth projections that are expected to exceed that of our legacy divisions, and the opportunity to expand into a new market with well-established market share. The goodwill acquired is not deductible for income tax purposes.

[4] Customer relationships and acquired technology are being amortized on a straight-line basis over a 10 year period. Amortization expense for customer relationships is recorded to general and administrative expenses; amortization expense for acquired technology is recorded to cost of revenues. During the six months ended September 30, 2020, $1,409 of amortization expense related to the GPT intangible assets was recorded to general and administrative costs and $473 of amortization expense was recorded to cost of goods sold and allocated to the Biopharmaceutical Development division, including the cumulative-effect benefit to amortization expense discussed above. Trademarks associated with this acquisition are considered indefinite-lived intangibles. The estimated fair value of identifiable intangible assets was determined primarily using the income approach, which requires a forecast of all the expected future cash flows associated with the identified intangible assets.

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Note 12 - Significant Transactions - Unaudited Pro Forma Information (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2019 USD ($)
Pro forma net income (2)	$ 6,435	[1]
GPT Acquisition [Member]
Pro forma total revenues (1)	$ 67,907	[2]

[1] Pro forma adjustments to net earnings attributable to Mesa Labs include the following: Excludes interest expense attributable to GPT's external debt that was paid off as part of the acquisition. Additional amortization expense of $4,057 for the six months ended September 30, 2019 based on the increased fair value of amortizable intangible assets acquired. For the six months ended September 30, 2019, $351 additional stock based compensation expense representing expense for performance share units awarded to certain key GPT employees. Income tax effect of the adjustments made at a blended federal and state statutory rate (approximately 25%).

[2] Net revenues were adjusted to include net revenues of GPT.

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Note 13 - Segment Information (Details Textual)	6 Months Ended
	Sep. 30, 2020
Number of Reportable Segments	4

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Note 13 - Segment Information - Operating Segment Information (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Sep. 30, 2020		Sep. 30, 2019		Sep. 30, 2020		Sep. 30, 2019
Total revenues	[1]	$ 31,860		$ 25,536		$ 61,801		$ 51,824
Gross profit		21,285		15,586		41,625		31,790
Reconciling items	[2]	(18,901)		(11,812)		(38,487)		(22,591)
Earnings before income taxes		2,384		3,774		3,138		9,199
Corporate, Non-Segment [Member]
Total revenues		0		896	[1]			2,213	[1]
Gross profit		83		85		64		412
Sterilization and Disinfection Control [Member] | Operating Segments [Member]
Total revenues	[1]	11,552		12,094		24,619		24,204
Gross profit		8,770		8,723		18,790		17,233
Instruments [Member] | Operating Segments [Member]
Total revenues	[1]	7,558		8,960		15,238		18,504
Gross profit		4,852		5,557		9,541		11,639
Biopharmaceutical Development [Member] | Operating Segments [Member]
Total revenues		9,131	[1]	0		15,080	[1]
Gross profit		6,212				10,678
Cold Chain Monitoring [Member] | Operating Segments [Member]
Total revenues	[1]	3,619		3,586		6,864		6,903
Gross profit		$ 1,368		$ 1,221		$ 2,552		$ 2,506

[1] Intersegment revenues are not significant and are eliminated to arrive at consolidated totals.

[2] Reconciling items include selling, general and administrative, research and development, interest expense and amortization of debt discount, and other (income) expenses.

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Note 13 - Segment Information - Operating Segment Asset Reconciliation (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Assets	$ 588,932	$ 420,206
Corporate, Non-Segment [Member]
Assets	267,431	103,588
Sterilization and Disinfection Control [Member] | Operating Segments [Member]
Assets	68,571	73,103
Instruments [Member] | Operating Segments [Member]
Assets	29,735	31,025
Biopharmaceutical Development [Member] | Operating Segments [Member]
Assets	194,570	182,758
Continuous Monitoring [Member] | Operating Segments [Member]
Assets	$ 28,625	$ 29,732

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Note 14 - Subsequent Event (Details Textual) - Subsequent Event [Member]	1 Months Ended
	Oct. 31, 2020 $ / shares
Common Stock, Dividends, Per Share, Declared (in dollars per share)	$ 0.16
Dividends Payable, Date to be Paid	Dec. 15, 2020
Dividends Payable, Date of Record	Nov. 30, 2020