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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, 2020or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __ to __.

lmnx-20200930_g1.jpg
LUMINEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware000-3010974-2747608
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

12212 Technology Blvd.,Austin,Texas78727
(Address of principal executive offices)(Zip Code)

(512)219-8020
Registrant’s Telephone Number, Including Area Code
None
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, $0.001 par valueLMNXThe Nasdaq Global Select Market

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.
YesNo
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated 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).
YesNo

There were 46,525,493 shares of the Company’s Common Stock, par value $0.001 per share, outstanding on November 5, 2020.



LUMINEX CORPORATION

FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2020

TABLE OF CONTENTS
PAGE
 



Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30,December 31,
 20202019
ASSETS(unaudited)
Current assets:  
Cash and cash equivalents$308,454 $59,173 
Accounts receivable, net60,454 55,815 
Inventories, net109,795 77,084 
Prepaids and other12,743 10,398 
Total current assets491,446 202,470 
Property and equipment, net62,667 65,515 
Intangible assets, net81,714 90,336 
Deferred income taxes21,175 27,702 
Goodwill118,145 118,145 
Right of use assets18,799 20,439 
Other16,999 19,122 
Total assets$810,945 $543,729 
LIABILITIES AND STOCKHOLDERS EQUITY
  
Current liabilities:  
Accounts payable$17,201 $17,983 
Accrued liabilities48,849 31,872 
Deferred revenue - current portion10,192 8,214 
Total current liabilities76,242 58,069 
Deferred revenue1,515 1,633 
Lease liabilities14,485 17,182 
Long-term debt200,512  
Other long-term liabilities2,094 1,985 
Total liabilities294,848 78,869 
Stockholders’ equity:  
Common stock, $0.001 par value, 200,000,000 shares authorized; issued and outstanding: 45,617,807 shares at September 30, 2020; 44,325,369 shares at December 31, 201946 44 
Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding  
Additional paid-in capital428,628 380,304 
Accumulated other comprehensive loss(837)(1,380)
Retained earnings88,260 85,892 
Total stockholders’ equity516,097 464,860 
Total liabilities and stockholders’ equity$810,945 $543,729 
See the accompanying notes which are an integral part of these
Consolidated Financial Statements.

1

Table of Contents

LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (unaudited)(unaudited)
Revenue$106,060 $78,673 $306,003 $244,137 
Cost of revenue42,679 36,833 122,595 111,263 
Gross profit63,381 41,840 183,408 132,874 
Operating expenses: 
Research and development14,074 13,262 39,855 43,295 
Selling, general and administrative34,862 31,448 102,987 96,085 
Amortization of acquired intangible assets2,919 2,852 8,623 8,556 
Total operating expenses51,855 47,562 151,465 147,936 
Income (loss) from operations11,526 (5,722)31,943 (15,062)
Interest and other expense, net(4,506)2 (6,889)(96)
Loss from equity method investment(457) (1,350) 
Income (loss) before income taxes6,563 (5,720)23,704 (15,158)
Income tax (expense) benefit(4,796)470 (8,773)7,937 
Net income (loss)$1,767 $(5,250)$14,931 $(7,221)
Net income (loss) attributable to common stockholders
Basic$1,734 $(5,224)$14,637 $(7,187)
Diluted$1,733 $(5,224)$14,638 $(7,189)
Net income (loss) per share attributable to common stockholders
Basic$0.04 $(0.12)$0.33 $(0.16)
Diluted$0.04 $(0.12)$0.32 $(0.16)
Weighted-average shares used in computing net income (loss) per share
Basic45,459 44,216 44,920 44,109 
Diluted46,343 44,216 45,777 44,109 
Dividends declared per share$0.09 $0.09 $0.27 $0.21 
Other comprehensive income (loss):
Foreign currency translation adjustments526 (454)543 (496)
Other comprehensive income (loss)526 (454)543 (496)
Comprehensive income (loss)$2,293 $(5,704)$15,474 $(7,717)
See the accompanying notes which are an integral part of these
Consolidated Financial Statements.

2

Table of Contents

LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
 (unaudited)(unaudited)
Cash flows from operating activities: 
Net income (loss)$1,767 $(5,250)$14,931 $(7,221)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization7,690 7,177 22,771 21,170 
Amortization of debt issuance costs2,565  3,910  
Stock-based compensation4,072 3,565 10,781 9,644 
Deferred income tax (benefit) expense2,310 (2,316)4,635 (10,970)
(Gain) loss on sale or disposal of assets(40)59 346 231 
Loss on equity method investment457  1,350  
Other833 (510)836 (532)
Changes in operating assets and liabilities:
Accounts receivable, net228 13,459 (4,636)7,563 
Inventories, net(17,366)(6,617)(32,660)(12,602)
Other assets(1,530)567 (339)3,971 
Accounts payable1,170 372 (322)4,540 
Accrued liabilities13,223 600 15,500 (6,956)
Deferred revenue(435)(1,661)1,901 (610)
Net cash provided by operating activities14,944 9,445 39,004 8,228 
Cash flows from investing activities: 
Purchase of property and equipment(3,515)(4,993)(11,614)(13,115)
Proceeds from business acquisition consideration, net of cash acquired   1,915 
Acquired technology rights  22  
Net cash used in investing activities(3,515)(4,993)(11,592)(11,200)
Cash flows from financing activities: 
Proceeds from issuance of convertible notes, net of issuance costs  252,247  
Purchase of convertible notes bond hedge  (54,626) 
Proceeds from issuance of warrants  19,968  
Proceeds from issuance of common stock9,924 695 19,366 2,481 
Shares surrendered for tax withholding(32)(4)(2,365)(2,089)
Dividends paid(4,137)(2,703)(12,297)(8,098)
Net cash provided by (used in) financing activities5,755 (2,012)222,293 (7,706)
Effect of foreign currency exchange rate on cash(395)286 (424)288 
Change in cash and cash equivalents16,789 2,726 249,281 (10,390)
Cash and cash equivalents, beginning of period291,665 63,325 59,173 76,441 
Cash and cash equivalents, end of period$308,454 $66,051 $308,454 $66,051 
See the accompanying notes which are an integral part of these
Consolidated Financial Statements.

3

Table of Contents

LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(in thousands, except share data)
(unaudited)
 Common Stock    
 Number of SharesAmountAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeRetained Earnings
Total Stockholders Equity
Balance at December 31, 201944,325,369 $44 $380,304 $(1,380)$85,892 $464,860 
Exercise of options, net of shares withheld52,604  782   782 
Issuances of restricted stock, net of shares withheld for taxes224,435 1 (2,310)  (2,309)
Stock compensation—  2,683   2,683 
Net income—    654 654 
Foreign currency translation adjustments—   (63) (63)
Dividends— — 42 — (4,143)(4,101)
Balance at March 31, 202044,602,408 $45 $381,501 $(1,443)$82,403 $462,506 
Exercise of stock options, net of shares withheld363,878  7,507   7,507 
Issuances of restricted stock, net of shares withheld for taxes11,665  (22)  (22)
Stock compensation—  4,026   4,026 
Issuance of common shares under ESPP64,100  1,119   1,119 
Net income—    12,510 12,510 
Foreign currency translation adjustments—   80  80 
Dividends— — 45 — (4,185)(4,140)
Equity component of convertible notes, net of issuance costs— — 41,950 — — 41,950 
Purchases of convertible note hedge— — (41,243)— — (41,243)
Issuance of warrants— — 19,968 — — 19,968 
Balance at June 30, 202045,042,051 $45 $414,851 $(1,363)$90,728 $504,261 
Exercise of stock options, net of shares withheld572,919 $1 $9,688 $ $ $9,689 
Issuances of restricted stock, net of shares withheld for taxes2,837 $ $(32)$ $ $(32)
Stock compensation— $ $4,073 $ $ $4,073 
Net income— $ $ $ $1,767 $1,767 
Foreign currency translation adjustments— $ $ $526 $ $526 
Dividends— $— $48 $— $(4,235)$(4,187)
Balance at September 30, 202045,617,807 $46 $428,628 $(837)$88,260 $516,097 
See the accompanying notes which are an integral part of these
Consolidated Financial Statements.


4

Table of Contents
LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (cont.)
(in thousands, except share data)
(unaudited)
 Common Stock    
 Number of SharesAmountAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal Stockholders’ Equity
Balance at December 31, 201843,899,210 $44 $365,349 $(1,127)$103,390 $467,656 
Exercise of options, net of shares withheld16,707  298   298 
Issuances of restricted stock, net of shares withheld for taxes204,216  (2,072)  (2,072)
Stock compensation—  2,449   2,449 
Net income—    2,960 2,960 
Foreign currency translation adjustments—   (133) (133)
Dividends— — 25 — (2,726)(2,701)
Balance at March 31, 201944,120,133 $44 $366,049 $(1,260)$103,624 $468,457 
Exercise of stock options, net of shares withheld28,327  499   499 
Issuances of restricted stock, net of shares withheld for taxes11,033  (13)  (13)
Stock compensation—  3,630   3,630 
Issuance of common shares under ESPP53,865  966   966 
Net income—    (4,931)(4,931)
Foreign currency translation adjustments—   91  91 
Dividends— — 27 — (2,732)(2,705)
Balance at June 30, 201944,213,358 $44 $371,158 $(1,169)$95,961 $465,994 
Exercise of options, net of shares withheld7,283  124   124 
Issuances of restricted stock, net of shares withheld for taxes1,507  (4)  (4)
Stock compensation—  3,565   3,565 
Net income—    (5,250)(5,250)
Foreign currency translation adjustments—   (454) (454)
Dividends— — 29 — (4,097)(4,068)
Other— — — — — — 
Balance at September 30, 201944,222,148 44 374,872 (1,623)86,614 459,907 
See the accompanying notes which are an integral part of these
Consolidated Financial Statements.

5

Table of Contents
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by Luminex Corporation (the Company or Luminex) in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the 2019 10-K).

NOTE 2 — INVESTMENTS AND OTHER ASSETS

Marketable Securities

The Company determines the appropriate classification of any investments in debt and equity securities at the time of purchase and re-evaluates such determinations at each balance sheet date. As of September 30, 2020, the Company had no short or long-term investments.

Available-for-sale securities consisted of the following as of September 30, 2020 (in thousands):
 Amortized CostGains in Accumulated Other Comprehensive IncomeLosses in Accumulated Other Comprehensive IncomeEstimated Fair Value
Current:    
Money market funds$707 $— $— $707 
Total current securities707 — — 707 
Total available-for-sale securities$707 $— $— $707 

Available-for-sale securities consisted of the following as of December 31, 2019 (in thousands):
 Amortized CostGains in Accumulated Other Comprehensive IncomeLosses in Accumulated Other Comprehensive IncomeEstimated Fair Value
Current:    
Money market funds$707 $— $— $707 
Total current securities707 — — 707 
Total available-for-sale securities$707 $— $— $707 

There were no proceeds from the sales of available-for-sale securities for the three and nine months ended September 30, 2020 or the year ended December 31, 2019. Realized gains and losses on sales of investments are determined using the specific identification method and are included in Other income, net in the Condensed Consolidated Statements of Comprehensive Income. There were no available-for-sale debt securities as of September 30, 2020 or December 31, 2019. All of the Company’s available-for-sale securities with gross unrealized losses as of September 30, 2020 had been in a loss position for less than 12 months.

6

Table of Contents
Non-Marketable Securities and Other-Than-Temporary Impairment

During the year ended December 31, 2018, the Company made a $1.8 million investment in Combinati, a private company. On October 1, 2019 the Company made an additional $7.0 million investment in Combinati, bringing the Company's ownership to approximately 28.4% of the voting interest of Combinati. Effective October 1, 2019, the Company accounted for its investment in Combinati under the equity method, given the Company's significant influence over the investee due to its larger ownership percentage and its participation on Combinati’s board of directors. The Company does not have unilateral decision-making power, and therefore does not consolidate the investee. In the fourth quarter of 2019, the Company remeasured the existing, minority interest investment based on the fair value prior to the additional investment and recorded a gain of approximately $3.2 million in Other income, net in the Consolidated Statements of Comprehensive Income. The minority interest investment in Combinati was reclassified to equity method investments to distinguish it from other minority interest investments that take the fair value alternative.

As of September 30, 2020, the carrying value of the Company’s total investment in Combinati was $10.2 million, which exceeded the Company’s share of Combinati’s net assets by approximately $8.0 million. For the quarter ended September 30, 2020, the Company recorded $0.5 million for its allocable share of Combinati’s net loss in its Consolidated Statement of Comprehensive Income and as an adjustment to the invested balance.

The Company owned a minority interest in another private company based in the U.S. through its initial investment of $1.0 million in the third quarter of 2012. We were informed that this private company was dissolving and ceasing operations in 2019. We recorded impairments of $160,000 and $45,000 in Other income, net in the Consolidated Statements of Comprehensive Income during the second quarter and fourth quarter of 2019, respectively. We received the final cash payment for the remainder of our investment in the first quarter of 2020, recorded in Cash flows from investing activities in the Consolidated Statements of Cash Flows.

These investments do not have readily determinable fair values. Therefore, the Company has elected the measurement alternative for its minority interests and the investments are recorded at cost, less any impairment, including changes resulting from observable price changes. The Company regularly evaluates the carrying value of its investments for impairment and whether any events or circumstances are identified that would significantly harm the fair value of these investments. The primary indicators the Company utilizes to identify these events and circumstances are the investee’s ability to remain in business, such as the investee’s liquidity and rate of cash use, and the investee’s ability to secure additional funding and the value of that additional funding. In the event a decline in fair value is less than the investment’s carrying value, the Company will record an impairment charge in Other income, net in the Consolidated Statements of Comprehensive Income. Other than the aggregate $205,000 impairment in 2019 discussed above, the Company has not recorded any impairment charges related to these non-marketable investments.

As the inputs utilized for the Company’s periodic impairment assessment are not based on observable market data, the determination of fair value of these investments is classified within Level 3 of the fair value hierarchy. See Note 5 - Fair Value Measurement to our Condensed Consolidated Financial Statements for further information on the fair value hierarchy and the three classification levels. To determine the fair value of these investments, the Company uses all available financial information related to the entities, including information based on recent or pending third-party equity investments in these entities. In certain instances, an investment’s fair value is not estimated as there are no identified events or changes in the circumstances. There have been no unrealized gains or losses related to these Level 3 minority interest investments.

Other long-term assets consisted of the following (in thousands):
 September 30, 2020December 31, 2019
Purchased technology rights (net of accumulated amortization of $8,736 and $8,300 on September 30, 2020 and December 31, 2019, respectively)$5,590 $6,027 
Minority interest investments10,151 11,501 
Other1,258 1,594 
 $16,999 $19,122 

For the nine months ended September 30, 2020 and 2019, the Company recognized amortization expenses related to the amortization of purchased technology rights of approximately $437,000 and $500,000, respectively. Future amortization expenses are estimated to be $135,000 in the remaining three months of 2020, $540,000 in 2021, $522,000 in 2022, $505,000 in 2023, $501,000 in 2024 and $3,387,000 thereafter.

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NOTE 3 — INVENTORIES, NET

Inventories are stated at the lower of cost or net realizable value, with cost determined according to the standard cost method, which approximates the first-in, first-out method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company routinely assesses its on-hand inventory for timely identification and measurement of obsolete, slow-moving or otherwise impaired inventory. Net inventories consisted of the following (in thousands):
 September 30, 2020December 31, 2019
Parts and supplies$68,550 $45,459 
Work-in-progress20,416 15,532 
Finished goods20,829 16,093 
 $109,795 $77,084 

NOTE 4 — ACCOUNTS RECEIVABLE AND RESERVES

The Company adopted the new credit loss standard effective January 1, 2020. The primary impact for the Company was the timing of recording expected credit losses on its trade receivables. The Company’s allowance for doubtful accounts is based upon its expected credit losses, which is based upon its historical loss experience. Management prepared an analysis of partner versus non-partner credit loss experience and noted that its loss experience between partners and non-partners was very comparable. These receivables have been pooled together, as similar risk characteristics exist between them. Accounts receivable consisted of the following (in thousands):
September 30, 2020December 31, 2019
Accounts receivable61,808 56,956 
Less: Allowance for doubtful accounts(1,354)(1,141)
60,454 55,815 


Balance as of December 31, 2019$1,141 
Net increases charged to costs and expenses494 
Write-offs of uncollectible accounts(281)
Balance as of September 30, 2020$1,354 

NOTE 5 — FAIR VALUE MEASUREMENT

Accounting Standards Codification (ASC) 820 “Fair Value Measurement” (ASC 820) defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 describes a fair value hierarchy based on the following three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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The Company determines the fair value of its investment portfolio assets by obtaining non-binding market prices from its third-party portfolio managers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. There were no transfers between Level 1, Level 2 or Level 3 measurements for the nine-month period ended September 30, 2020.

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 (in thousands):
 Fair Value Measurements as of September 30, 2020 Using
 Level 1Level 2Level 3Total
Assets:    
Money market funds$707 $ $ $707 
Equity investment$ $ $10,151 $10,151 

 Fair Value Measurements as of December 31, 2019 Using
 Level 1Level 2Level 3Total
Assets:    
Money market funds$707 $ $ $707 
Minority interest investments - short-term$— $— $22 $22 
Equity investment$ $ $11,501 $11,501 

NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is reviewed for impairment at least annually at the beginning of the fourth quarter, or more frequently if impairment indicators arise. A portion of the Company’s goodwill is not expected to be deductible for tax purposes. The changes in the carrying amount of goodwill during the period are as follows (in thousands):
 September 30, 2020December 31, 2019
Balance at beginning of period$118,145 $118,127 
Flow cytometry acquisition $ $18 
Balance at end of period$118,145 $118,145 

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The Company’s intangible assets are reflected in the table below (in thousands, except weighted average lives):
 Finite-livedIndefinite-lived 
 Technology, trade secrets and know-howCustomer lists and contractsOther identifiable intangible assetsIP R&DTotal
2019     
Balance as of December 31, 2018$98,469 $23,819 $10,655 $24,013 $156,956 
Flow cytometry acquisition (116)(428)1,154 (4,016)(3,406)
Balance as of December 31, 201998,353 23,391 11,809 19,997 153,550 
Less: accumulated amortization:     
Accumulated amortization balance as of December 31, 2018(40,501)(9,036)(2,271)— (51,808)
Amortization expense(7,784)(2,428)(1,194)— (11,406)
Accumulated amortization balance as of December 31, 2019(48,285)(11,464)(3,465)— (63,214)
Net balance as of December 31, 2019$50,068 $11,927 $8,344 $19,997 $90,336 
Weighted average life (in years)111010  
2020     
Balance as of December 31, 201998,353 23,391 11,809 19,997 $153,550 
Completion of IP R&D projects2,687 — — (2,687)$— 
Balance as of June 30, 2020101,040 23,391 11,809 17,310 $153,550 
Less: accumulated amortization:     
Accumulated amortization balance as of December 31, 2019(48,285)(11,464)(3,465)— (63,214)
Amortization expense(5,905)(1,821)(896)— (8,622)
Accumulated amortization balance as of September 30, 2020(54,190)(13,285)(4,361)— (71,836)
Net balance as of September 30, 2020$46,850 $10,106 $7,448 $17,310 $81,714 
Weighted average life (in years)111010  

The Company currently has two in-process research and development (IP R&D) projects. The first relates to the development of the next generation VERIGENE® System, VERIGENE II. The Company is targeting the commercial launch of the VERIGENE II System in 2020. The second is a defensive IP R&D project related to the Company’s next generation xMAP® System, xMAP INTELLIFLEX, which the Company currently believes will launch commercially in the first quarter of 2021. The next generation Guava System (Guava Next Gen System), acquired as part of the Company’s acquisition of EMD Millipore Corporation’s flow cytometry portfolio, was launched commercially in the second quarter of 2020 and transferred from IP R&D to finite-lived technology, trade secrets and know-how and is being amortized.

The estimated aggregate amortization expense for the next five fiscal years and thereafter is as follows (in thousands):
2020 (three months)$2,919 
202111,316 
202210,070 
20239,721 
20249,721 
Thereafter20,657 
 $64,404 


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NOTE 7 — OTHER COMPREHENSIVE (LOSS) INCOME

Other comprehensive (loss) income represents a measure of all changes in equity that result from recognized transactions and other economic events other than those resulting from investments by, and distributions to, shareholders. Other comprehensive (loss) income for the Company includes foreign currency translation adjustments and net unrealized holding gains and losses on available-for-sale investments.

The following table presents the changes in each component of accumulated other comprehensive (loss) income, net of tax (in thousands):
Accumulated Other Comprehensive (Loss) Income Items - Foreign Currency
Balance as of December 31, 2019$(1,380)
Other comprehensive income543 
Net current-period other comprehensive income543 
Balance as of September 30, 2020$(837)

There are no material tax benefits or expenses related to the other comprehensive income for the three and nine months ended September 30, 2020.

NOTE 8 — EARNINGS PER SHARE

A reconciliation of the denominators used in computing per share net income (EPS) is as follows (in thousands, except per share amounts):
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Basic:  
Net income (loss)$1,767 $(5,250)$14,931 $(7,221)
Less: allocation to participating securities(33)26 (294)34 
Net income (loss) attributable to common stockholders$1,734 $(5,224)$14,637 $(7,187)
Weighted average common stock outstanding45,459 44,216 44,920 44,109 
Net income (loss) per share attributable to common stockholders$0.04 $(0.12)$0.33 $(0.16)
Diluted:  
Net income (loss)$1,767 $(5,250)$14,931 $(7,221)
Less: allocation to participating securities(34)26 (293)32 
Net income (loss) attributable to common stockholders$1,733 $(5,224)$14,638 $(7,189)
Weighted average common stock outstanding45,459 44,216 44,920 44,109 
Effect of dilutive securities: stock options and awards884  857  
Weighted-average shares used in computing net income (loss) per share46,343 44,216 45,777 44,109 
Net income (loss) per share attributable to common stockholders$0.04 $(0.12)$0.32 $(0.16)

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and common equivalent shares outstanding during the period. Restricted stock awards (RSAs) and stock options to acquire 38,028 and 2,123,497 shares for the three months ended