Reportable Segment and Major Customers Information

9 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Reportable Segment and Major Customers Information

8. Reportable Segment and Major Customers Information

Meridian was formed in 1976 and functions as a fully-integrated research, development, manufacturing, marketing, and sales organization with primary emphasis in the fields of infectious disease (in vitro) and blood lead diagnostics and life science. Our principal businesses are (i) the development, manufacture and distribution of diagnostic test kits primarily for gastrointestinal, viral, respiratory, parasitic infectious diseases, and elevated blood lead levels; and (ii) the manufacture and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents used by researchers and other diagnostic manufacturers.

Our reportable segments are Diagnostics and Life Science, both of which are headquartered in Cincinnati, Ohio, which also serves as the Diagnostics segment’s base of manufacturing operations and research and development for infectious disease products. The Diagnostics segment includes the Company’s recent acquisition of Magellan, which is located in Billerica, Massachusetts (near Boston). Its facility includes research, development, manufacturing, marketing, sales, and distribution operations. The Diagnostics segment has sales and distribution facilities for infectious disease diagnostics in the United States, Europe and Australia. The Life Science segment consists of manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents domestically and abroad, including sales and business development offices in Singapore and Beijing, China to further pursue growing revenue opportunities in Asia.

Amounts due from two Diagnostics distributor customers accounted for 23% and 21% of consolidated accounts receivable at June 30, 2016 and September 30, 2015, respectively. Revenues from these two distributor customers accounted for 25% and 35% of the Diagnostics segment third-party revenues during the three months ended June 30, 2016 and 2015, respectively, and 30% and 36% during the nine months ended June 30, 2016 and 2015, respectively. These distributors represented 19% and 26% of consolidated revenues for the fiscal 2016 and 2015 third quarters, respectively, and 22% and 27% for the respective year-to-date nine month periods.

Within our Life Science segment, two diagnostic manufacturing customers accounted for 23% and 16% of the segment’s third-party revenues during the three months ended June 30, 2016 and 2015, respectively, and 20% and 16% during the nine months ended June 30, 2016 and 2015, respectively.

Segment information for the interim periods is as follows:

	Diagnostics		Life Science		Eliminations (1)			Total
Three Months Ended June 30, 2016
Net revenues -
Third-party	$	37,523	$	13,142	$	—		$	50,665
Inter-segment		70		201		(271	)		—
Operating income		9,886		3,696		159			13,741
Goodwill (June 30, 2016)		43,992		19,706		—			63,698
Other intangible assets, net (June 30, 2016)		28,848		2,536		—			31,384
Total assets (June 30, 2016)		187,557		67,641		(252	)		254,946
Three Months Ended June 30, 2015
Net revenues -
Third-party	$	36,049	$	12,155	$	—		$	48,204
Inter-segment		46		345		(391	)		—
Operating income		11,383		3,060		(45	)		14,398
Goodwill (September 30, 2015)		1,250		21,099		—			22,349
Other intangible assets, net (September 30, 2015)		2,364		3,567		—			5,931
Total assets (September 30, 2015)		119,939		63,670		(327	)		183,282
Nine Months Ended June 30, 2016
Net revenues -
Third-party	$	110,178	$	38,906	$	—		$	149,084
Inter-segment		225		955		(1,180	)		—
Operating income		31,412		11,086		(15	)		42,483
Nine Months Ended June 30, 2015
Net revenues -
Third-party	$	111,297	$	36,465	$	—		$	147,762
Inter-segment		235		867		(1,102	)		—
Operating income		33,750		9,145		(96	)		42,799

(1) Eliminations consist of inter-segment transactions.

Transactions between segments are accounted for at established intercompany prices for internal and management purposes, with all intercompany amounts eliminated in consolidation.