Europe increased mid-single digits, and China declined over 20% in the quarter. As Kim mentioned, the soft biotech funding environment combined with overall conservatism from our biopharmic customers, were both a drag on our North American business, and to a lesser extent also represented a headwind to our European performance relative to more recent quarters. APAC, outside of China, increased low single digits overall, with government funding constraints in South Korea, partially offset by growth in Japan and India. For China, the soft government funding environment continue to impact the region. Following many months of decelerating run rates in China, we experienced a stabilization in our run rate business in December. Encouragingly, the stabilization has continued as we began calendar 2024.
It is challenging to call the bottom in this dynamic geography, that we are optimistic that headwinds going forward will be less severe. It’ll likely be a while before we return to the kind of growth rates that we historically achieved in China. But we remain confident that China will still be the fastest growing major region in the world for life science tools over the long term. By end market and Q2, excluding China, biopharmic declined low single digits, while academia grew upper single digits. U.S. revenue on the P&L total company adjusted gross margin was 69.7% in the quarter compared to 71.7% in the prior year. The decrease was primarily driven by lower volume leverage, unfavorable product mix, and the impact of the Luma-4 acquisition.
Adjusted SG&A and Q2 was 31.2% of revenue compared to 27.9% in the prior year, while R&D expense in Q2 was 8.4% of revenue compared to 8.3% in the prior year. The increase in SG&A was driven primarily by the Luma-4 acquisition, partially offset by diligent cost management across the business. The price increases implemented during fiscal year ’23 continue to offset the dollar impact of inflation to operating income, with pricing also largely offsetting the inflationary impact on our operating margin in Q2. Adjusted operating margin for Q2 was 30.1%, a decrease of 540 basis points from the prior year period. Excluding the Luma-4 acquisition, which closed at the beginning of Q1, adjusted operating margin was 300 basis points lower than the prior year, due to the impact of unfavorable volume leverage and product mix.
Looking at our numbers below operating income, net interest expense in Q2 was $3.4 million, increasing $1.2 million compared to the prior year period due to higher debt levels. Our bank debt and the balance sheet as we ended Q2 stood at $447 million, an increase of $7 million compared to last quarter. Other adjusted non-operating income was $3.1 million a quarter, an increase of $3.1 million compared to prior year, primarily reflecting our 20% share of Wilson-Wilson Adjustment Income and the foreign exchange impacts related to our cash pooling arrangement. Moving further down the P&L, our adjusted effective tax rate in Q1 was 22%. Flat sequentially, but up 100 basis points compared to the prior year due to geographic mix. Turning to cash flow and return of capital, $83.1 million of cash was generated from operations in the quarter, and our net investment in capital expenditures was $14.9 million.
Also during Q2, we returned capital to shareholders by a way of $12.5 million in dividend and completed an $80 million buyback of 1.4 million shares. We finished the quarter with 160.1 million average diluted shares outstanding. Our balance sheet finished Q2 in a strong position with $135.6 million in cash, and our total leverage stood below one time due to that. Going forward, M&A remained the top priority for capital allocation. Now I’ll discuss the performance of our reporting segment starting with the protein science assignment. Q2 reported sales were $107.7 million, which reported revenue decreasing 3% compared to the prior year period. Organic revenue decreased 4%, but foreign exchange having a 1% favorable impact. As a reminder, is our protein science assignment that has the most exposure to the China geographic region as well as to the biotech and market.
Operating margin for the protein science assignment was 40.3%, a decrease of 350 basis points compared to the prior year quarter, as unfavorable volume and product mix were partially offset by cost management initiatives. Turning to the diagnostic syndrome segment, Q2 reported sales were $75.4 million, with reported growth increasing 11% compared to the same quarter last year. Organic revenue growth for the assignment was 5%, with acquisitions having a 5% impact and foreign exchange having a favorable impact of 1%. As Kim previously mentioned, organic growth was driven by our spatial biology and molecular diagnostic growth pillars, partially muted by the de-stocking and older timing of our core diagnostic region-only customers. Moving on to the diagnostics and genomic segment operating margin, at 6%, the segment operating margin decrease compared to the prior year’s 12.2% due primarily to the impact of room for acquisition.
However, Q2 operating margin improved 530 basis points sequentially from Q1, due to improving volume leverage and favorable mix. As we turn the page on Q2 and look ahead to the back half of our fiscal year, there are still reasons to remain cautious, but there are also some reasons or green shoots, as Kim called them, for optimism in the near term. On the macro front, biotech funding has not dramatically started flooding back, nor has the Chinese economy and funding of life science research returned to its pre-COVID strength. But inflation and interest rates are period of stabilize. And according to some analysts reports, biotech funding has already been reduced to a level not seen since 2016. Having recently bended China and Q2, Kim, Chuck and I all witnessed the local economy on the move with crowded streets and restaurants and busy regional airports.
And for several years of COVID shutdown, the local economy is starting to bustle once again and likely generating tax revenue for their government. As for biotech, our growth pillars are continuing to shine even these typical macro conditions. We are closely monitoring sequential run rates in our reagents business to help determine where we are at in this bottoming process. It’s early in the new quarter, but thus far we are encouraged that the worst may be behind us. This does not mean we expect a quick acceleration of growth. But we do expect that the trend of decelerating growth that has been pervasive throughout this macroeconomic cycle may have subsided. Down cycles like we experienced over the past 18 months or so are never fun. But the resiliency of our growth pillars throughout this cycle has given us even greater confidence that our company will grow at a double digit growth rate when markets normalize in the long-term.
As our markets start to normalize and prepare for the inevitable return to growth, we will continue to diligently manage our cost structure and invest in the business for the future. As Kim mentioned in his opening comments, we continue to identify opportunities for efficiencies and by executing on these opportunities. We’ll protect and even grow our adjusting operating margins sequentially for the remainder of the fiscal year. That concludes my prepared comments. And with that, I’ll turn the call back over to the operator to open the line for questions.
Operator: Thank you. [Operator instructions]. Our first questions come from the line of Puneet Soda with Learink Partners. Please proceed with your questions.
Puneet Soda: Yeah, hi, guys. Thanks for taking the question. And Chuck, it was really great working with you and good luck ahead. Kim, welcome on board again. It’s good to have you in the role leading the company. And Matt, really glad to have you back at Biotech.net as well. So maybe let me ask my question. It’s really around the headwinds that have existed for the last few quarters. You have known them. We have seen that across the industry, China, Biopharma. I think the question really here is what changed in the quarter within your assumptions? You were expecting a flat result in this quarter. You ended up down 2%. So maybe just walk us through, is there something in the portfolio? Is it specific to customer orders? Or is there something in the forecasting process that’s not working well that yielded this result versus what you were expecting? And then I have a follow-up.
Charles Kummeth: Thank you, Puneet. Good morning. And thanks for your kind words towards our team. A great question. I, of course, have an opinion on which of these headwinds are going to be most significant going forward. But in that area of view, we certainly have a good understanding of which ones are most significant. So I’ll let Jim talk about that.
James Hippel: Yeah, I got Puneet. Good morning. I was the one that called that forecast, so I speak. So I need to speak to it. As we ended the last quarter, we were pretty transparent on the call that in the last couple of weeks, as we closed Q1 in the first few weeks, as we opened Q2, that we’ve seen a step down in deceleration in our biotech especially, but even a bit in pharma. And so the reality is, and we’ve talked about this in various conferences throughout, that that trend had continued. And the time of the call, a few weeks doesn’t necessarily make a trend. So we took a view on our growth rates decelerating from where they were in Q1. But obviously that trend ended up being longer and deeper than we anticipated. So that’s kind of how and why we ended up where we did.
