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REPLIGEN CORP

REPLIGEN CORPRGENEarnings & Financial Report

Nasdaq · Health Care · Biological Products, (No Diagnostic Substances)

Repligen Corporation is a global life sciences company devoted to the development and commercialization of innovative bioprocessing technologies and systems that enable efficiencies in the process of manufacturing biological drugs.2025 The company is based in Waltham, Massachusetts,2014 and was incorporated in Delaware in 1981. A public company, Repligen is listed on the NASDAQ exchange under the symbol RGEN. As of 2025, Repligen employs over 1,900 employees globally and serves primarily biop...

What changed in REPLIGEN CORP's 10-K — 2022 vs 2023

Top changes in REPLIGEN CORP's 2023 10-K

430 paragraphs added · 409 removed · 270 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

89 edited+34 added−39 removed75 unchanged
We believe the OPUS 5-80R product line is the most flexible product line 5 available in the market, serving the purification needs of customers manufacturing mAbs and other biologics such as vaccines and C&GT.
We believe the OPUS 5-80R product line is the most flexible product line available in the market, serving the purification needs of customers manufacturing mAbs and other biologics such as vaccines and C&GT.
The growth of our filtration business has allowed us to substantially increase our direct sales presence in Europe and Asia and diversify our end markets to include all biologic classes, including mAbs, vaccines, recombinant proteins and C&GT. Chromatography Our chromatography franchise includes a number of products used in downstream purification, development, manufacturing and quality control of biological drugs.
The growth of our filtration business has allowed us to substantially increase our direct sales presence in Europe and Asia and diversify our end markets to include all biologic classes, including mAbs, vaccines, recombinant proteins and C&GT. 5 CHROMATOGRAPHY Our chromatography franchise includes a number of products used in downstream purification, development, manufacturing and quality control of biological drugs.
Through a standard implementation network, all teams were empowered to implement just-do-it process improvements, solve priority problems through stand-up meetings and 13 improve key processes through kaizen events. We believe RPS improved our teams' ability to continuously resolve customer challenges, enhance product quality and improve operational efficiencies.
Through a standard implementation network, all teams were empowered to implement just-do-it process improvements, solve priority problems through stand-up meetings and improve key processes through kaizen events. We believe RPS improved our teams' ability to continuously resolve customer challenges, enhance product quality and improve operational efficiencies.
Use of SIUS TFF cassettes eliminates non-value-added steps (cleaning, testing between uses, storage and flushing) that are required with reusable TFF products, providing cost and time savings. For process economics requiring reusable 3 cassettes, TangenX PRO cassettes are available with the same high performance membranes used in SIUS cassettes.
Use of SIUS TFF cassettes eliminates non-value-added steps (cleaning, testing between uses, storage and flushing) that are required with reusable TFF products, providing cost and time savings. For process economics requiring reusable cassettes, TangenX PRO cassettes are available with the same high performance membranes used in SIUS cassettes.
Our EAP offers employees and their eligible dependents counseling and well-being resources 24 hours a day, seven days a week by phone, online or via the mobile site. Our environmental health and safety policy advances our vision of zero workplace incidents and our efforts to reduce our environmental impacts.
Our EAP offers employees and their eligible dependents counseling and well-being resources 24 hours a day, seven days a week by phone, online or via the mobile site. 12 Our environmental health and safety policy advances our vision of zero workplace incidents and our efforts to reduce our environmental impacts.
SoloVPE ® Device Our SoloVPE slope spectroscopy system is the industry standard for offline and at-line absorbance measurements for protein concentration determination in process development, manufacturing and quality control settings. FlowVPE ® Device Our FlowVPE slope spectroscopy system enhances the power of slope spectroscopy and provides in-line protein concentration measurement for filtration, chromatography and fill-finish applications.
SoloVPE ® Device Our SoloVPE slope spectroscopy system is the industry standard for offline and at-line absorbance measurements for protein concentration determination in process development, manufacturing and quality control settings. 6 FlowVPE ® Device Our FlowVPE slope spectroscopy system enhances the power of slope spectroscopy and provides in-line protein concentration measurement for filtration, chromatography and fill-finish applications.
Process Analytics Technologies Our process analytics products complement and support our filtration, chromatography and proteins franchises as they allow end-users to make at-line or in-line absorbance measurements allowing for the determination of protein concentration in filtration, chromatography formulation and fill-finish applications.
PROCESS ANALYTICS Our process analytics products complement and support our filtration, chromatography and proteins franchises as they allow end-users to make at-line or in-line absorbance measurements allowing for the determination of protein concentration in filtration, chromatography formulation and fill-finish applications.
The resins AVIPure ® -AAV9; AVIPure ® -AAV8; and AVIPure ® -AAV2, were developed by Avitide and are specific to the major adeno-associated virus ("AAV") C&GT vectors used today. AAV vectors are the leading platform for gene delivery for the treatment of a variety of human diseases.
The resins AVIPure ® -AAV9; AVIPure ® -AAV8; and AVIPure ® -AAV2, were developed by Avitide and are specific to the major adeno-associated virus (“AAV”) C&GT vectors used today. AAV vectors are the leading platform for gene delivery for the treatment of a variety of human diseases.
We intend to expand our global commercial presence by continuing to selectively build out our global sales, marketing, field applications and services infrastructure. • Operational efficiency . We seek to expand operating margins through capacity utilization and process optimization strategies designed to increase our manufacturing yields.
We intend to expand our global commercial presence by continuing to selectively build out our global sales, marketing, field applications and services infrastructure. 10 • Operational efficiency . We seek to expand operating margins through capacity utilization and process optimization strategies designed to increase our manufacturing yields.
KrosFlo ® TFDF ® Systems We believe our KrosFlo Tangential Flow Depth Filtration ("TFDF") systems, have the potential to disrupt and displace traditional upstream harvest clarification operations. The KrosFlo TFDF system includes control hardware, novel high throughput tubular depth filters and ProConnex TFDF flow paths.
Tangential Flow Depth Filtration Systems: KrosFlo ® TFDF ® We believe our KrosFlo Tangential Flow Depth Filtration (“TFDF”) systems, have the potential to disrupt and displace traditional upstream harvest clarification operations. The KrosFlo TFDF system includes control hardware, novel high throughput tubular depth filters and ProConnex TFDF flow paths.
The N&CG Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board in order to ensure that our ESG program and strategy align with the Company's mission.
The N&CG Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board in order to ensure that our ESG program and 13 strategy align with the Company's mission.
Creating a culture where all employees feel supported and valued is paramount to our corporate mission. Our well-being goals are for employees to physically thrive, flourish mentally and emotionally, be socially connected and achieve financial security. We are proud to provide all of our full time employees in the United States with access to an employee assistance program ("EAP").
Creating a culture where all employees feel supported and valued is paramount to our corporate mission. Our well-being goals are for employees to physically thrive, flourish mentally and emotionally, be socially connected and achieve financial security. We are proud to provide all of our full time employees in the United States with access to an employee assistance program (“EAP”).
We plan to invest in systems to support our global operations, optimizing resources across our global footprint to maximize productivity. Research and Development Our research activities are focused on developing new high-value bioprocessing products across all of our franchises. We strive to continue to introduce truly differentiated products that address specific pain points in the biologics manufacturing process.
We plan to invest in systems to support our global operations, optimizing resources across our global footprint to maximize productivity. Research and Development Our R&D activities are focused on developing new high-value bioprocessing products across all of our franchises. We strive to continue to introduce truly differentiated products that address specific pain points in the biologics manufacturing process.
We manufacture multiple forms of Protein A ligands under long-term supply agreements with major life sciences companies including Cytiva (a standalone operating company owned by Danaher Corporation), MilliporeSigma and Purolite, an Ecolab Inc. company ("Purolite"), who in turn sell their Protein A chromatography resins to end users (mAb manufacturers).
We manufacture multiple forms of Protein A ligands under 7 long-term supply agreements with major life sciences companies including Cytiva (a standalone operating company owned by Danaher Corporation), MilliporeSigma and Purolite, an Ecolab Inc. company (“Purolite”), who in turn sell their Protein A chromatography resins to end users (mAb manufacturers).
As further described below, we own or have exclusive rights to at least 263 active patent grants and 353 pending patent applications in the United States and other foreign jurisdictions including Australia, Canada, China, France, Germany, India, Japan, South Korea, Sweden and the United Kingdom.
As further described below, we own or have exclusive rights to at least 263 active patent grants and 369 pending patent applications in the United States and other foreign jurisdictions including Australia, Canada, China, France, Germany, India, Japan, South Korea, Sweden and the United Kingdom.
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. Manufacturing A majority of our 18 manufacturing sites are located in the United States (California, Massachusetts, New Jersey, New Hampshire, New York and Texas).
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. Manufacturing A majority of our 19 manufacturing sites are located in the United States (California, Massachusetts, New Jersey, New Hampshire, New York and Texas).
Our corporate headquarters are located in Waltham, Massachusetts, with additional administrative and manufacturing operations worldwide. The majority of our 18 manufacturing sites and assembly centers are located in the United States (California, Massachusetts, New Hampshire, New Jersey, New York and Texas). Outside the United States, we have sites in Estonia, France, Germany, Ireland, the Netherlands and Sweden.
Our corporate headquarters are located in Waltham, Massachusetts, with additional administrative and manufacturing operations worldwide. The majority of our 19 manufacturing sites and assembly centers are located in the United States (California, Massachusetts, New Hampshire, New Jersey, New York and Texas). Outside the United States, we have sites in Estonia, France, Germany, Ireland, the Netherlands and Sweden.
This extension and product line expansion aligns with our Proteins strategy and supports the acceleration in market adoption of the Praesto ® affinity resin portfolio. It provides Purolite with exclusive access to mAb fragment ligands developed at Avitide, Inc. ("Avitide"), in addition to the NGL 7 portfolio developed at Navigo.
This extension and product line expansion aligns with our Proteins strategy and supports the acceleration in market adoption of the Praesto ® affinity resin portfolio. It provides Purolite with exclusive access to mAb fragment ligands developed at Avitide, Inc. (“Avitide”), in addition to the NGL portfolio developed at Navigo.
Statements by the FDA are supported by industry reports that estimate annual revenue growth of over 25% for the C&GT market over the next several years. This scientifically advanced therapeutic approach has unique manufacturing challenges that many of our products can help address.
Statements by the FDA are supported by industry reports that estimate annual revenue growth of over 20% for the C&GT market over the next several years. This scientifically advanced therapeutic approach has unique manufacturing challenges that many of our products can help address.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”), recombinant proteins, vaccines, and cell and gene therapies (“C&GT”) – that are improving human health worldwide.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”) and mAb derivatives, recombinant proteins, vaccines, and cell and gene therapies (“C&GT”) – that are improving human health worldwide.
The Repligen facility in Marlborough, is focused on XCell ATF and FS TFF products, while in Rancho Dominguez the focus is on Spectrum HF, TFDF and ProConnex products. Our process 16 analytics products are manufactured in Bridgewater, New Jersey. Our operating room products are manufactured in Irving, Texas.
Our facility in Marlborough, is focused on XCell ATF and FS TFF products, while in Rancho Dominguez the focus is on Spectrum HF, TFDF and ProConnex products. Our process analytics products are manufactured in Bridgewater, New Jersey. Our operating room products are manufactured in Irving, Texas.
We have two manufacturing sites supporting overall global demand for our Protein A ligands: one in Lund, Sweden and the other in Waltham, Massachusetts. Protein A chromatography resins are considered the industry "gold standard" for purification of antibody-based therapeutics due to the ability of the Protein A ligand to very selectively bind to or “capture” antibodies from crude protein mixtures.
We have two manufacturing sites supporting overall global demand for our Protein A ligands: one in Lund, Sweden and the other in Waltham, Massachusetts. Protein A chromatography resins are considered the industry “gold standard” for purification of antibody-based therapeutics due to the ability of the Protein A ligand to very selectively bind to or “capture” antibodies from crude protein mixtures.
We perform in a highly competitive industry and recognize that our continued success and growth hinges upon our ability to attract, develop and retain an all-inclusive team of talented and diverse individuals. 3. Product. Our diversified portfolio of bioprocessing technology solutions unlocks opportunity by enabling our customers to speed the development and manufacture of biological drugs.
We operate in a highly competitive industry and recognize that our continued success and growth hinges upon our ability to attract, develop and retain an all-inclusive team of talented and diverse colleagues. 3. Product. Our diversified portfolio of bioprocessing technology solutions unlocks opportunity by enabling our customers to speed the development and manufacture of biological drugs.
Monoclonal Antibody Market Antibody-based biologics alone accounted for approximately $169 billion of global biopharma revenue in 2021. Industry sources project the mAbs market to grow in the range of approximately 10% to 12% annually through 2026, driven by new approvals and expanded clinical uses for marketed antibodies, as well as the emergence of biosimilar versions of originator mAbs.
Monoclonal Antibody Market Antibody-based biologics alone accounted for approximately $175 billion of global biopharma revenue in 2022. Industry sources project the mAbs market to grow in the range of approximately 10% to 12% annually through 2026, driven by new approvals and expanded clinical uses for marketed antibodies, as well as the emergence of biosimilar versions of originator mAbs.
With the same software, hardware, controls and cGMP compliance built into every system, and with preassembled flow kits for error-free installation, the KrosFlo RS platform offers operational simplicity that can easily scalable from lab- through production-scale use. KrosFlo FS systems integrate over 10 components with specifications to process volumes between 140 milliliters and 500 liters.
With the same software, hardware, controls and cGMP compliance built into every system, and with pre-assembled flow kits for error-free installation, the KrosFlo RS platform offers operational 4 simplicity that can easily be scalable from lab- through production-scale use. KrosFlo FS systems integrate over 10 components with specifications to process volumes between 140 milliliters and 500 liters.
We regularly evaluate and invest in these areas as needed to ensure timely deliveries and to stay ahead of increased customer demand for our products. 2 A majority of our revenue is derived from consumable and/or single-campaign (“single-use”) product sales, as compared to associated equipment.
We regularly evaluate and invest in these areas as needed to ensure timely deliveries and to stay ahead of customer demand for our products. 2 The majority of our revenue is derived from consumable and/or single-campaign (“single-use”) product sales, as compared to associated hardware and equipment.
We intend to leverage our balance sheet to acquire technologies and products that improve our overall financial performance by improving our competitiveness in filtration, chromatography, fluid management or process analytics or by moving us into adjacent markets with common commercial call points. • Geographical expansion .
We intend to leverage our consolidated balance sheets to acquire technologies and products that improve our overall financial performance by improving our competitiveness in filtration (including fluid management), chromatography or process analytics, or by moving us into adjacent markets with common commercial call points. • Geographical expansion .
Our primary warehouse and distribution centers are located in Massachusetts and California. Our Products Our bioprocessing business is comprised of four main franchises: filtration; chromatography; process analytics; and proteins.
Our primary warehouse and distribution centers are located in Massachusetts and California. Our Products Our bioprocessing business is comprised of four main franchises: filtration (including fluid management); chromatography; process analytics; and proteins.
Repligen will continue to receive access to Purolite's leading-edge base bead technology, as we proceed with the development and commercialization of novel affinity resins focused on new modalities and C&GT. mAb Fragment Affinity Ligands and Resins from Avitide Our acquisition of Avitide also led to our development and 2022 launch of AVIPure ® CH1, a cross-linked agarose-based resin specifically engineered for the capture of the CH1 region of antigen-binding fragments (Fabs) from human immunoglobins (IgGs) and monoclonal antibodies 9mAbs).
Repligen will continue to receive access to Purolite's leading-edge base bead technology, as we proceed with the development and commercialization of novel affinity resins focused on new modalities and C&GT. mAb Fragment Affinity Ligands and Resins from Avitide Our acquisition of Avitide also led to our development and 2022 launch of AVIPure ® CH1, a cross-linked agarose-based resin specifically engineered for the capture of the CH1 region of antigen-binding fragments (“Fabs”) from human immunoglobins (“IgGs”) and mAbs.
Our Commercial Team To support our sales goals for our direct-to-consumer products, we have invested in our commercial organization. Since 2018, we have significantly expanded our global commercial organization from 103, to a commercial team of 322 employees as of December 31, 2022.
Our Commercial Team To support our sales goals for our direct-to-consumer products, we have invested in our commercial organization. Since 2018, we have significantly expanded our global commercial organization from 103, to a commercial team of 342 employees as of December 31, 2023.
Repligen Performance System In 2022, we formalized the Repligen Performance System ("RPS"), to provide the tools and a framework for engaging employees across the organization to "find a better way every day" to continuously improve operational performance, with a focus on product quality, customer lead times, material supply, production costs and sustainability.
Repligen Performance System In 2022, we formalized the Repligen Performance System ("RPS"), to provide the tools and a framework for engaging employees across the organization to continuously improve operational performance, with a focus on product quality, customer lead times, material supply, production costs and sustainability.
We were incorporated in 1981 and became a publicly traded company in 1986. Our common stock is listed on the Nasdaq Global Market under the symbol “RGEN”. We have over 2,000 employees and operate globally with offices and manufacturing sites located at multiple locations in the United States, Europe and Asia.
We were incorporated in 1981 and became a publicly traded company in 1986. Our common stock is listed on the Nasdaq Global Market under the symbol “RGEN”. We have approximately 1,800 employees and operate globally with offices and manufacturing sites located at multiple locations in the United States, Europe and Asia.
These acquisitions streamline and increase our control over many components in our single-use supply chain, which ultimately should drive reduced lead-times for our customers in the coming years.
These acquisitions streamline and increase our control over many components in our single-use supply chain, which ultimately should drive reduced lead-times for our customers in the coming years. We acquired FlexBiosys, Inc.
Our ESG pillars are as follows: 14 1. Principles. Our core principles guide how we operate, respecting that our stakeholders depend on us to conduct business honestly, fairly and responsibly. 2. People. We recognize that our success as a company depends on the skills and contributions of a diverse group of employees who are engaged as individuals and teams.
Our core principles guide how we operate, respecting that our stakeholders depend on us to conduct business honestly, fairly and responsibly. 2. People. We recognize that our success as a company depends on the skills and contributions of a diverse group of employees who are engaged as individuals and high-performing teams.
Our Market Opportunity Bioprocessing Addressable Market The global addressable market for bioprocessing products is estimated to be approximately $25 billion of which we estimate Repligen’s addressable market to be approximately $8.5 billion at year end 2022. This market includes products used to manufacture therapeutic antibodies, recombinant proteins and vaccines, as well as C&GTs.
Our Market Opportunity Bioprocessing Addressable Market The global addressable market for bioprocessing products is estimated to be approximately $20 billion of which we estimate Repligen’s addressable market to be approximately $12 billion at year end 2023. This market includes bioprocessing products used to manufacture therapeutic antibodies, recombinant proteins and vaccines, as well as C&GTs.
We make available free of charge through our website our Form 10-Ks, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the SEC.
We make available free of charge through our website our Form 10-Ks, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including exhibits and amendments to these reports, as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission (“SEC”).
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): For the Years Ended December 31, 2022 2021 2020 Revenue by customers' geographic locations: North America 43 % 41 % 48 % Europe 37 % 40 % 38 % APAC/Other 20 % 19 % 14 % Total revenue 100 % 100 % 100 % 12 There was no revenue from customers that represented 10% or more of the Company's total revenue for the year ended December 31, 2022.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): For the Years Ended December 31, 2023 2022 2021 Revenue by customers' geographic locations: North America 44 % 43 % 41 % Europe 37 % 37 % 40 % APAC/Other 19 % 20 % 19 % Total revenue 100 % 100 % 100 % There was no revenue from customers that represented 10% or more of the Company's total revenue for the years ended December 31, 2023 and 2022.
In addition, the Audit Committee of the Board regularly reviews ESG-related topics such as enterprise risk management, anticorruption, ethics and compliance, supply chain management, human rights protections, and cybersecurity and data privacy. The CRT, under strategic direction of our Chief Executive Officer, is responsible for the development and implementation of our expanding ESG program.
In addition, the Audit Committee of the Board regularly reviews ESG-related topics such as enterprise risk management, anti-corruption, ethics and compliance, supply chain management, human rights protections, and cybersecurity and data privacy. The Head of Sustainability, under strategic direction of our CEO and Chief Operating Officer, is responsible for the development and implementation of our expanding ESG program.
As of December 31, 2022, over 140 mAbs were approved by the U.S. Food and Drug Administration (“FDA”) to treat a diverse range of diseases. Biological R&D remains robust, with more than 1,500 active mAb clinical trials ongoing to address a wide range of medical conditions.
As of December 31, 2023, over 150 mAbs were approved by the U.S. Food and Drug Administration (“FDA”) to treat a diverse range of diseases. 9 Biological R&D remains robust, with more than 2,000 active mAb clinical trials ongoing to address a wide range of medical conditions.
Our products empower biopharmaceutical manufacturers to generate more product in less space and with less waste, ultimately making a positive impact on overall human health and well-being. 4. Planet. Social and environmental impacts of business are a growing concern for our stakeholders and a priority for us.
Our products empower biopharmaceutical manufacturers to generate more product in less space and with less waste, ultimately making a positive impact on overall human health and well-being, which is also Sustainability Development Goal (“SDG”) #3 and our #1 SDG priority. 4. Planet. Social and environmental impacts of business are a growing concern for our stakeholders and a priority for us.
Our TFF systems are designed for scalability from small to large (up to 5,000 liters) volumes, flexibility between HF and FS filter formats, and the ability to use the same system in different unit operations while deploying ready-to-use application-specific flow paths.
Tangential Flow Filtration Systems: KrosFlo ® TFF Our KrosFlo systems for TFF combine significant configurability with premium quality manufacturing. Our TFF systems are designed for scalability from small to large (up to 5,000 liters) volumes, flexibility between HF and FS filter formats, and the ability to use the same system in different unit operations while deploying ready-to-use application-specific flow paths.
Available Information We maintain a website with the address www.repligen.com . We are not including the information contained on our website as a part of, or incorporating it by reference into, this Form 10-K.
We are not including the information contained on our website as a part of, or incorporating it by reference into, this Form 10-K.
The customization, scalability and plug-and-play convenience of these products, and in many cases the closed nature of our technologies, make them ideal for use in biologics manufacturing processes where contamination risk is a critical concern of our customers. Filtration Filtration is our largest franchise with the broadest product offering covering upstream and downstream technologies.
The customization, scalability and plug-and-play convenience of these products, and in many cases the closed nature of our technologies, make them ideal for use in biologics manufacturing processes where contamination risk is a critical concern of our customers.
Growth Factors Most biopharmaceuticals are produced through an upstream mammalian cell culture process. In order to stimulate increased cell growth and maximize overall yield from a bioreactor, manufacturers often add growth factors, such as insulin, to their cell culture media.
In order to stimulate increased cell growth and maximize overall yield from a bioreactor, manufacturers often add growth factors, such as insulin, to their cell culture media.
The availability of XCell ATF technology in a single-use format reduces implementation time by eliminating the time intensive workflow associated with autoclaving and enables our customers to accelerate evaluations of the product with a lower initial overall cost of ownership. Tangential Flow Filtration Systems and Consumables Our systems for tangential flow filtration ("TFF") combine significant configurability with premium quality manufacturing.
The availability of XCell ATF technology in a single-use format reduces implementation time by eliminating the time intensive workflow associated with autoclaving and enables our customers to accelerate evaluations of the product with a lower initial overall cost of ownership.
Our Second Amended and Restated Code of Business Conduct and Ethics applies to all Repligen employees, including those who are integrated into the Company through acquisitions. Diversity, Equity and Inclusion Repligen supports the values of diversity, equity and inclusion (“DE&I”), reflecting our resolute commitment to a diverse, equitable and inclusive workplace.
Our Second Amended and Restated Code of Business Conduct and Ethics applies to all Repligen employees, including those who are integrated into the Company through acquisitions. Inclusive Workforce Repligen maintains a resolute commitment to fostering a diverse and inclusive workplace.
Cell and Gene Therapy Market C&GT has emerged in the past few years to become a rapidly growing area of biological drug development, with over 1,100 active clinical trials underway at year-end 2021 according to industry sources.
Cell and Gene Therapy Market C&GT has emerged in the past few years to become a rapidly growing area of biological drug development, with an estimated global market of greater than $7 billion in 2022, and over 3,000 active clinical trials underway at year-end 2023 according to industry sources.
We renewed this collective bargaining agreement in November 2020, and it expires at the end of March 2023. In France, 86 employees are under the relevant national and local collective bargaining agreements for metallurgy, comprising approximately 4% of our total workforce. Code of Business Conduct and Ethics Repligen is committed to conducting business in accordance with the highest ethical standards.
In France, 64 employees are under the relevant national and local collective bargaining agreements for metallurgy, comprising approximately 4% of our total workforce. Code of Business Conduct and Ethics Repligen is committed to conducting business in accordance with the highest ethical standards.
Our Sustainability Pillars Our sustainability initiatives are organized around four pillars that reflect our ESG priorities: Principles, People, Product and Planet. Our "4Ps" embody the belief shared by our Board and the executive leadership team that corporate responsibility is essential to sustaining business and economic growth in a manner that can also deliver positive environmental and social impact.
Our “4Ps” embody the belief shared by our Board and the executive leadership team that corporate responsibility is essential to sustaining business and economic growth in a manner that can also deliver positive environmental and social impact. Our ESG pillars are as follows: 1. Principles.
With representation across all key business functions, the mandate of the CRT is to consider our existing ESG efforts, understand stakeholder perspectives, identify business-relevant areas of opportunity to make a positive impact on global ESG efforts, and work collaboratively to support programs designed to accelerate our ESG initiatives.
In collaboration with all key business functions, the mandate of this globally focused role is to consider our existing ESG initiatives, understand stakeholder perspectives, identify business-relevant areas of opportunity to make a positive impact on global ESG efforts, and work collaboratively to drive initiatives designed to accelerate our ESG progress and stretch our ESG ambition.
Within the C&GT market, mRNA-based therapeutic programs have become an area of focus and investment by several large biopharmaceutical 10 companies, following the regulatory approval of mRNA-based vaccines for the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-2 coronavirus ("COVID-19").
We believe we are well positioned to participate in C&GT production, particularly in the manufacture of plasmids and viral vectors. Within the C&GT market, mRNA-based therapeutic programs have become an area of focus and investment by several large biopharmaceutical companies, following the regulatory approval of mRNA-based vaccines for the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-2 coronavirus (“COVID-19”).
Our Second Amended and Restated Code of Business Conduct and Ethics is also available free of charge through our website. Our filings with the SEC may be accessed through the SEC’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system at www.sec.gov . 17
We also provide corporate governance, such as our Second Amended and Restated Code of Business Conduct and Ethics and other information, including our 2022 Sustainability Report, free of charge, through our website. Our filings with the SEC may be accessed through the SEC’s Electronic Data Gathering, Analysis and Retrieval system at www.sec.gov . 17
This "walk-away automation" system monitors concentration during ultrafiltration/diafiltration runs without having to depend on mass inputs and off-line fixed pathlength UV-Vis spectrophotometers. Risk is mitigated with fully enclosed ProConnex custom flow paths a part of the automated TFF process.
KrosFlo RPM systems monitor concentration during UF/DF runs without having to depend on mass inputs and off-line fixed pathlength UV-Vis spectrophotometers. Risk is further mitigated with fully enclosed ProConnex custom flow paths as a part of the automated TFF process.
The impact of RPS was seen during 2022 in productivity savings, customer lead-time reductions, manufacturing capacity expansions, product quality improvements and significant reductions in manufacturing scrap at several key sites.
The impact of RPS was seen during 2022 and into 2023 in productivity savings, customer lead-time reductions, manufacturing capacity expansions, product quality improvements and significant reductions in manufacturing scrap at several key sites. There are a number of programs setup using RPS over the next twelve months.
Our proteins franchise also includes cell culture growth factor products, which are a key component of cell culture media used in upstream bioprocessing to increase cell density and improve product yield. Protein A Affinity Ligands We are a leading provider of Protein A affinity ligands to other life sciences companies (integrators), whose final products are Protein A resins.
PROTEINS Our proteins franchise is represented by our Protein A affinity ligands and viral vector affinity ligands and resins. Our proteins franchise also includes cell culture growth factor products, which are a key component of cell culture media used in upstream bioprocessing to increase cell density and improve product yield.
Many of the companies selling or developing competitive products have greater financial and human resources, R&D, manufacturing and marketing experience than we do.
Additional products using new technologies that may be competitive with our products may also be introduced. Many of the companies selling or developing competitive products have greater financial and human resources, and greater R&D, manufacturing and marketing experience than we do.
Protein A ligands are an essential “binding” component of Protein A affinity chromatography resins used in the purification of virtually all mAb-based drugs on the market or in development.
Protein A Affinity Ligands We are a leading provider of Protein A affinity ligands to other life sciences companies (integrators), whose final products are Protein A resins. Protein A ligands are an essential “binding” component of Protein A affinity chromatography resins used in the purification of virtually all mAb-based drugs on the market or in development.
TangenX ® Flat Sheet Cassettes Our TangenX portfolio of FS TFF cassettes are used primarily in downstream, ultrafiltration processes, e.g., biologic drug concentration, buffer exchange and formulation processes. The TangenX product portfolio includes our single-use SIUS ® line and our reusable PRO line of cassettes, providing customers with a high-performance, cost saving alternative to other companies' TFF cassette offerings.
Tangential Flow Filtration Consumables Our TangenX ® product portfolio includes flat sheet (“FS”) tangential flow filtration (“TFF”) cassettes that are used primarily in downstream, ultrafiltration processes, e.g., biologic drug concentration, buffer exchange and formulation processes, our single-use SIUS ® line, including our reusable PRO line of cassettes, providing customers with a high-performance, cost saving alternative to other companies' TFF cassette offerings and our TangenX SC Device, the industry's first holder-free, self-contained (“SC”) TFF device, which was launched in November 2023.
Significant Customers and Geographic Reporting Customers for our bioprocessing products include major life sciences companies, contract manufacturing organizations, biopharmaceutical companies, diagnostics companies and laboratory researchers.
Our dual manufacturing capability provides strong business continuity and reduces overall supply risk for our ligand customers. Significant Customers and Geographic Reporting Customers for our bioprocessing products include major life sciences companies, contract manufacturing organizations, biopharmaceutical companies, diagnostics companies and laboratory researchers.
Filtration For our filtration franchise, our patent grants include coverage for, ATF filtration, TFDF and TFF HF and FS systems, membranes, filters, flow paths and single-use technologies. We continually seek to improve upon these technologies and have multiple new patent filings including patents covering next generation TFDF filters, next generation ATF filtration technologies, and proprietary reduced cost system components.
We continually seek to improve upon these technologies and have multiple new patent filings including patents covering next generation TFDF filters, next generation ATF filtration technologies, and proprietary reduced cost system components.
Additional channels for employee engagement include CEO-led town halls and Company-wide all-hands meetings. We are committed to colleague recognition, which includes acknowledging, appreciating and celebrating each other's contributions and achievements.
We regularly conduct engagement surveys to gain insight on employee perspectives. Additional channels for employee engagement include Company-wide all-hands meetings led by our Chief Executive Officer (“CEO”) and site town halls ran by site leaders. We are committed to colleague recognition, which includes acknowledging, appreciating and celebrating each other's contributions and achievements.
This includes 257 people in field positions (sales, field applications and field service), 40 people in customer service and 25 11 in marketing. Geographically, 177 members of our commercial team are located in North America, 69 in Europe and 76 in Asia-Pacific ("APAC") regions.
This includes 277 people in field positions (sales, field applications and field service), 38 people in customer service and 27 in marketing. Geographically, 173 members of our commercial team are located in North America, 89 in Europe and 80 in Asia-Pacific (“APAC”) regions.
We prioritize our “housemarks”, (e.g., Repligen, the stylized “R” logo, Spectrum, TangenX, C Technologies, ARTeSYN, Polymem, Avitide, etc.), and ensure continued protection globally. We also have trademark registrations for various product lines, including OPUS, XCell, XCell ATF, TFDF, KrosFlo, SIUS, ProConnex, Spectra/Por, NGL-Impact, SoloVPE, FlowVPE, FlowVPX, XO and AVIPure, that provide valuable company recognition and goodwill with our customers.
We also have trademark registrations for various product lines, including OPUS, XCell, XCell ATF, TFDF, KrosFlo, SIUS, ProConnex, Spectra/Por, NGL-Impact, SoloVPE, FlowVPE, FlowVPX, RPM, XO and AVIPure, that provide valuable company recognition and goodwill with our customers.
C Technologies’ scientists are continually developing new analytical tools using our state-of-the-art slope spectroscopy technology, which we continue to file patent applications for. 15 Proteins We currently hold a patent grant for “Nucleic Acids Encoding Recombinant Protein A,” which claims sequences that encode a truncated recombinant Protein A but are otherwise identical to the natural Protein A, which is used for bioprocessing applications.
Proteins We currently hold a patent grant for “Nucleic Acids Encoding Recombinant Protein A,” which claims sequences that encode a truncated recombinant Protein A but are otherwise identical to the natural Protein A, which is used for bioprocessing applications.
Sustainability - Environmental, Social and Governance Matters Our Commitment to Sustainability We believe our commitment to Environmental, Social and Governance ("ESG") matters at all our global facilities is an important part of creating long-term business value for all stakeholders. We are strongly committed to corporate responsibility and transparency, and we continue to factor sustainability into our business decisions and operations.
Sustainability - Environmental, Social and Governance Matters Our Commitment to Sustainability We believe our commitment to Environmental, Social and Governance (“ESG”) topics across all our global facilities matters and is an important part of creating long-term business value for all stakeholders.
The KrosFlo family of HF TFF systems integrate multiple components with specifications to process volume between 2 milliliters and 5,000 liters – from lab-scale through commercial manufacturing. KrosFlo systems enable robust downstream ultrafiltration and microfiltration.
The KrosFlo family of HF TFF systems integrate multiple components with specifications to process volume between 2 milliliters and 5,000 liters – from lab-scale through commercial manufacturing. In early 2023 we introduced our RS 30 series of KrosFlo TFF systems, featuring increased automation capabilities.
Our CEO-led town halls and Company-wide all-hands meetings serve as a platform for CEO awards and platinum awards, which reward and recognize both teams and individual colleagues who have made significant and notable contributions to Repligen's success. Health, Safety and Well-Being We actively promote the safety, health and well-being of our employees and end users of our products.
Our CEO-led all-hands meetings serve as a platform for CEO awards and platinum awards, which reward and recognize both teams and individual colleagues who have made significant and notable contributions to Repligen's success. We also offer a range of programs to develop our managers and enhance our leadership across the Company.
TFDF technology also provides benefits such as low hold-up volume, high recovery, small footprint, simple set up and disposal, scalability and reduced process time. Strengthening our Filtration Franchise through Acquisitions With our acquisition of Engineered Molding Technology LLC (“EMT”) on July 13, 2020, we added EMT’s silicone-based, single-use components and manifolds to our filtration franchise.
TFDF technology also provides benefits such as low hold-up volume, high recovery, small footprint, simple set up and disposal, scalability and reduced process time. Strengthening our Filtration Franchise through Acquisitions With our acquisition of Polymem S.A.
Our primary chromatography assembly and manufacturing sites are located in Waltham, Massachusetts, Ravensburg, Germany and Breda, the Netherlands. Our primary filtration manufacturing sites are located in Marlborough, Massachusetts, Rancho Dominguez, California and Toulouse, France.
Our primary chromatography assembly and manufacturing sites are located in Waltham, Massachusetts, Ravensburg, Germany and Breda, the Netherlands. Our primary filtration manufacturing sites, including manufacturing of fluid management systems, products and consumables, are located in Marlborough, Massachusetts; Rancho Dominguez, California; Clifton Park, New York; Auburn, Massachusetts; Waterford, Ireland; Tallinn, Estonia and Toulouse, France.
We practice continuous improvement initiatives based on routine internal audits as well as external feedback and audits performed by our partners and customers. In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, security stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products.
In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, security stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products. 16 Available Information We maintain a website with the address www.repligen.com .
Most recently, we entered into a 15-year exclusive License Agreement with Daylight (the "Daylight Agreement"), giving us exclusive license and commercialization rights to use certain technology and intellectual property subject to conditions set forth in the Daylight Agreement. See Note 12, "Commitments and Contingencies" to our consolidated financial statements included in this report for more information on this license agreement.
For example, we entered into a 15-year exclusive License Agreement with Daylight (the “Daylight Agreement”), giving us exclusive license and commercialization rights to use certain technology and 15 intellectual property subject to conditions set forth in the Daylight Agreement.
We are integrating these high performance AVIPure ® resins with our OPUS PPC and ARTeSYN chromatography systems to provide our customers with a seamless chromatography solutions. Caustic stability has been a challenge that the AVIPure resins are designed to overcome without sacrificing high dynamic binding capacity. We believe customers will benefit from superior process economics, including multi-cycle resin capabilities.
Caustic stability has been a challenge that the AVIPure resins are designed to 8 overcome without sacrificing high dynamic binding capacity. We believe customers will benefit from superior process economics, including multi-cycle resin capabilities. Growth Factors Most biopharmaceuticals are produced through an upstream mammalian cell culture process.
ARTeSYN’s primary manufacturing sites for fluid management products and systems are located in Waterford, Ireland and Tallinn, Estonia, with additional sites in California. We utilize our facilities in Waltham, Massachusetts and Lund, Sweden to carry out fermentation and recovery operations, and purification, immobilization, packaging and quality control testing of our protein-based bioprocessing products.
As a result of these activities, we closed manufacturing sites in Newton, New Jersey and Oceanside, California. We utilize our facilities in Waltham, Massachusetts and Lund, Sweden to carry out fermentation and recovery operations, and purification, immobilization, packaging and quality control testing of our protein-based bioprocessing products.
We completed our first materiality assessment gleaning insights from internal and external stakeholders, and we established a financial grade ESG software platform to inform current and future ESG-related reporting and decisions. In 2022, we established a dedicated internal ESG team to build out our sustainability initiatives and enhance related processes and reporting capabilities.
The CRT was headed by a member of our operations leadership team and represented multiple disciplines within the organization. We completed our first materiality assessment gleaning insights from internal and external stakeholders, and we established a financial grade ESG software platform to inform current and future ESG-related reporting and decisions.
In the case of employees and consultants, the agreements generally provide that all inventions conceived by the individual in the course of rendering services to Repligen shall be our exclusive property and must be assigned to Repligen.
In the case of employees and consultants, the agreements generally provide that all inventions conceived by the individual in the course of employment or rendering services to Repligen shall be our exclusive property and must be assigned to Repligen. 14 Filtration For our filtration franchise, our patent grants include coverage for, ATF filtration, TFDF and TFF HF and FS systems, membranes, filters, mixers flow paths and single-use technologies.
We have established talent acquisition processes, as well as training and employee engagement resources, including the formation of a DE&I council, to drive the promotion of diversity and inclusion at all levels of our organization. Employee Engagement We regularly conduct engagement surveys to gain insight on employee perspectives.
We have established talent acquisition processes, as well as training and employee engagement resources, including the formation of inclusive workforce initiatives, to drive the principles of diversity and inclusion at all levels of our organization starting with our Board of Directors (“Board”) and our Leadership team.
The Cytiva Protein A supply agreement relating to our Waltham, Massachusetts facility was amended in September 2021 and pursuant to its amended terms, runs through 2025. Cytiva moved a portion of its ligand manufacturing in house in 2020 and under the terms of our existing long-term supply agreements, Cytiva has the ability to move additional manufacturing in house in 2023.
The Cytiva Protein A supply agreement relating to our Waltham, Massachusetts facility was amended in September 2021 and pursuant to its amended terms, runs through 2025. Our Protein A amended supply agreement with Purolite was amended in October 2022 and, pursuant to its amended terms, runs through 2032.
In establishing a formal approach to ESG, we joined the United Nations Global Compact in 2020 in support of its Ten Principles related to human rights, labor, the environment, and anti-corruption. The actions we have taken as we have built our ESG strategy demonstrate our long-term commitment to being a responsible global corporate citizen.
We are deeply committed to corporate responsibility and transparency, and we continue to factor sustainability into our business decisions and integrate its core principles into our daily operations. In establishing a formal approach to ESG, we joined the United Nations Global Compact in 2020 in support of its Ten Principles related to human rights, labor, the environment, and anti-corruption.
Human Capital Employees Repligen performs in a highly competitive industry and recognizes that our continued success hinges upon our ability to attract, develop and retain a diverse team of talented individuals. We place high value on the satisfaction and well-being of our employees and operate with fair labor standards and industry-competitive compensation and benefits globally.
Revenue from Pfizer Inc. accounted for 10% of total revenue for the year ended December 31, 2021. 11 Human Capital Employees Repligen performs in a highly competitive industry and recognizes that our continued success hinges upon our ability to attract, develop and retain a diverse team of talented individuals.
Our Reporting Frameworks We have become an active participant in the sustainability reporting ecosystem through membership with the Sustainability Accounting Standards Board ("SASB"), part of the Value Reporting Foundation, and the Global Reporting Initiative ("GRI").
Our Reporting Frameworks We have become an active participant in the sustainability reporting ecosystem through our alignment with the Greenhouse Gas Protocol and membership with the United Nations Global Compact (“UNGC”), the Global Reporting Initiative (“GRI”) and the International Financial Reporting Standards Sustainability Alliance, which now includes the International Sustainability Standards Board standards.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • problems maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; 20 • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • problems maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; 19 • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with the Board, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. Additionally, certain of our contracts with third parties allow for termination upon specified change of control transactions.
Although we 26 believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with the Board, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. Additionally, certain of our contracts with third parties allow for termination upon specified change of control transactions.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2019 Notes or make cash payments upon conversions thereof. In addition, our significant indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof. In addition, our significant indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences.
We also face significant competition in the hiring and retention of such personnel from other companies, research and academic institutions, government and other organizations who 18 have superior funding and resources. The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect our product development efforts and our business.
We also face significant competition in the hiring and retention of such personnel from other companies, research and academic institutions, government and other organizations who have superior funding and resources. The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect our product development efforts and our business.
Broad market and industry factors, including potentially worsening economic conditions, may adversely affect the market price of our common stock, regardless of our actual operating performance. If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
Broad market and industry factors, including potentially worsening economic conditions, may adversely affect the market price of our common stock, regardless of our actual operating performance. 25 If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
It is our policy to implement 28 safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of Repligen may engage in conduct for which we might be held responsible.
It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of Repligen may engage in conduct for which we might be held responsible.
With or without merit, litigation can be complex, can extend for a protracted period of time, can be very expensive and the expense can be 32 unpredictable. Litigation initiated by us could also result in counterclaims against us, which could increase the costs associated with the litigation and result in our payment of damages or other judgments against us.
With or without merit, litigation can be complex, can extend for a protracted period of time, can be very expensive and the expense can be unpredictable. Litigation initiated by us could also result in counterclaims against us, which could increase the costs associated with the litigation and result in our payment of damages or other judgments against us.
Under accounting principles generally accepted in the United States (“GAAP”), we must assess, at least annually and potentially more frequently, whether the value of intangible assets and goodwill has been impaired. Intangible assets and goodwill will be assessed for impairment in the event of an impairment indicator.
Under accounting principles generally accepted in the United States, we must assess, at least annually and potentially more frequently, whether the value of intangible assets and goodwill has been impaired. Intangible assets and goodwill will be assessed for impairment in the event of an impairment indicator.
For example, it could: • make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; and • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies. 22 Any of these factors could materially and adversely affect our business, financial condition and results of operations.
For example, it could: • make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; and • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies. 21 Any of these factors could materially and adversely affect our business, financial condition and results of operations.
If our competitors prepare and file patent applications that claim technology also claimed by us, we may be required to 30 participate in interference proceedings declared by Patent Offices to determine priority of invention, which would result in substantial costs to us.
If our competitors prepare and file patent applications that claim technology also claimed by us, we may be required to participate in interference proceedings declared by Patent Offices to determine priority of invention, which would result in substantial costs to us.
In addition, we must maintain sufficient production capacity in order to meet anticipated customer demand, which carries fixed costs that we may not be able to offset if orders slow, which would adversely affect our operating margins.
In addition, we must maintain sufficient production capacity in order to meet anticipated customer demand, which carries fixed costs that we may not be able to offset if orders were to slow, which would adversely affect our operating margins.
Litigation is subject to inherent risks and uncertainties that may cause actual results to differ materially from our expectations. If we receive an adverse judgment in any litigation, we could be required to pay substantial damages.
Litigation is subject to inherent risks and uncertainties that may cause actual results to differ materially from our 33 expectations. If we receive an adverse judgment in any litigation, we could be required to pay substantial damages.
Provisions in our certificate of incorporation and by-laws may delay or prevent an acquisition of us or a change in our management. These provisions include the ability of our Board of Directors (the "Board") to issue preferred stock without stockholder approval.
Provisions in our certificate of incorporation and by-laws may delay or prevent an acquisition of us or a change in our management. These provisions include the ability of our Board to issue preferred stock without stockholder approval.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including the 2019 Notes.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including the Notes.
Risks related to these increased foreign operations include: • fluctuations in foreign currency exchange rates, which may affect the costs incurred in international operations and could harm our results of operations and financial condition; • changes in general economic and political conditions in countries where we operate, particularly as a result of ongoing economic instability within foreign jurisdictions; • the occurrence of a trade war, or other governmental action related to tariffs or trade agreements; • differing protection of intellectual property in foreign jurisdictions; • difficulty in staffing and managing widespread operations; • being subject to complex and restrictive employment and labor laws and regulations, as well as union and works council restrictions; • changes in tax laws or rulings in the United States or other foreign jurisdictions that may have an adverse impact on our effective tax rate; • being subject to burdensome foreign laws and regulations, including regulations that may place an increased tax burden on our operations; • being subject to longer payment cycles from customers and experiencing greater difficulties in timely accounts receivable collections; and • required compliance with a variety of foreign laws and regulations, such as data privacy requirements, real estate and property laws, anti-competition regulations, import and trade restrictions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act of 1977 (the "FCPA") and the U.S.
Risks related to these increased foreign operations include: • fluctuations in foreign currency exchange rates, which may affect the costs incurred in international operations and foreign acquisitions and could harm our results of operations and financial condition; • changes in general economic and political conditions in countries where we operate, particularly as a result of ongoing economic instability within foreign jurisdictions; • the occurrence of a trade war, or other governmental action related to tariffs or trade agreements; • differing protection of intellectual property, technology and data in foreign jurisdictions; 22 • difficulty in staffing and managing widespread operations; • being subject to complex and restrictive employment and labor laws and regulations, as well as union and works council restrictions; • changes in tax laws or rulings in the United States or other foreign jurisdictions that may have an adverse impact on our effective tax rate; • being subject to burdensome foreign laws and regulations, including regulations that may place an increased tax burden on our operations; • being subject to longer payment cycles from customers and experiencing greater difficulties in timely accounts receivable collections; and • required compliance with a variety of foreign laws and regulations, such as data privacy requirements, real estate and property laws, anti-competition regulations, import and trade restrictions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act of 1977 (the “FCPA”) and the U.S.
If we, or our independent registered public accounting firm, determine that our internal controls over financial reporting are not effective, discover areas that need improvement in the future or discover a material weakness, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could be negatively affected.
If we, or our independent registered public accounting firm, determine that our internal control over financial reporting are not effective, discover areas that need improvement in the future or discover a material weakness, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could be negatively affected.
Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
We expect a portion of our future revenue growth to come from introducing new bioprocessing products, including line extensions and new features for our OPUS ® disposable chromatography columns, our XCell ATF system, our SIUS ® tangential flow filtration (“TFF”) cassettes, our Spectrum ® hollow fiber modules TFF line of cassettes and our growth factors.
We expect a portion of our future revenue growth to come from introducing new bioprocessing products, including line extensions and new features for our OPUS ® disposable chromatography columns, our XCell ATF system, our SIUS ® tangential flow filtration (“TFF”) cassettes, our Spectrum ® hollow fiber modules TFF line of cassettes, our process analytics products and our growth factors.
Investor advocacy groups, certain institutional investors, investment funds, other market participants and other stakeholders have focused increasingly on the Environmental, Social and Governance ("ESG") practices of companies, including those associated with climate change. These parties have placed increased importance on the importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, other market participants and other stakeholders have focused increasingly on the Environmental, Social and Governance (“ESG”) practices of companies, including those associated with climate change. These parties have placed increased importance on the importance on the implications of the social cost of their investments.
The ACA and other federal and state proposals and health care reforms could limit the prices that can be charged for the products we develop and may limit our commercial opportunity. In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law.
The ACA and other federal and state proposals and health care reforms could limit the prices that can be charged for the products we develop and may limit our commercial opportunity. In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law.
These current and future data privacy laws and regulations may require us to modify our data collection or processing practices and policies, incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
These current and future data privacy laws and regulations may require us to modify our data collection or processing practices and policies, incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement, reputational damage, and/or litigation.
Risks Related to Our Business Risks Related to Competition, Sales and Marketing We compete with life sciences, pharmaceutical and biotechnology companies who are capable of developing new approaches that could make our products and technology obsolete. The bioprocessing market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
Risks Related to Our Business We compete with life sciences, pharmaceutical and biotechnology companies who are capable of developing new approaches that could make our products and technology obsolete. The bioprocessing market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
Patent litigation and other proceedings may also absorb significant management time, attention and resources. 31 Risks Related to Our Products The market may not be receptive to our new bioprocessing products upon their introduction.
Patent litigation and other proceedings may also absorb significant management time, attention and resources. 32 Risks Related to Our Products The market may not be receptive to our new bioprocessing products upon their introduction.
Our business, financial condition and results from operations could be adversely affected by disruptions in the global economy caused by geopolitical events, such as the ongoing conflict between Russia and Ukraine. Global conflicts could increase costs and limit availability of fuel, energy, and other resources we depend upon for our business operations.
Our business, financial condition and results from operations could be adversely affected by disruptions in the global economy caused by geopolitical events, such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine. Global conflicts could increase costs and limit availability of fuel, energy, and other resources we depend upon for our business operations.
C&GT remains a relatively new and developing treatment method, with only a few gene therapies approved to date by regulatory authorities. Public perception may be influenced by claims that C&GT is unsafe or ineffective, and C&GT may not gain the acceptance of the public or the medical community.
C&GT remains a relatively new and developing treatment method, with only a limited number of gene therapies approved to date by regulatory authorities. Public perception may be influenced by claims that C&GT is unsafe or ineffective, and C&GT may not gain the acceptance of the public or the medical community.
Unforeseen adverse events, negative clinical outcomes, or increased regulatory scrutiny of cell and gene therapy ("C&GT") and its financial cost may damage public perception of the safety, utility, or efficacy of gene therapies and may harm our customers’ ability to conduct their business. Such events may negatively impact our revenues and have an adverse effect on our performance.
Unforeseen adverse events, negative clinical outcomes, or increased regulatory scrutiny of cell and gene therapy (“C&GT”) and its financial cost may damage public perception of the safety, utility, or efficacy of gene therapies and may harm our customers’ ability to conduct their business. Such events may negatively impact our revenues and have an adverse effect on our performance.
Further sanctions, bans or other economic actions in response to the ongoing conflict between Russia and Ukraine or in response to any other global conflict could result in, among other things, cyber-attacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.
Further sanctions, bans or other economic actions in response to the ongoing conflict between Russia and Ukraine or in response to any other global conflict such as the ongoing conflict between Israel and Palestine, could result in, among other things, cyber-attacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.
Our failure to repurchase 2019 Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the 2019 Notes as required by the indenture would constitute a default under the indenture.
Our failure to repurchase Notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the Notes as required by the applicable indenture would constitute a default under such indenture.
Many of our competitors are large, well-capitalized companies that may have greater financial, manufacturing, marketing, research and development ("R&D") resources than we have, as well as stronger name recognition, longer operating histories and benefits derived from greater economies of scale.
Many of our competitors are large, well-capitalized companies that may have greater financial, manufacturing, marketing, research and development (“R&D”) resources than we have, as well as stronger name recognition, longer operating histories and benefits derived from greater economies of scale.
The stock market in general, and the market for life sciences, biotechnology and pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of specific companies, including recently in connection with the ongoing COVID-19 pandemic, the conflict in Ukraine and rising inflation and interest rates in the United States, which have resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects.
The stock market in general, and the market for life sciences, biotechnology and pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of specific companies, the conflict in Ukraine and Israel, and rising inflation and interest rates in the United States, which have resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects.
We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2019 Notes surrendered therefor or notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.
Accordingly, a material weakness increases the risk that the financial information we report contains material errors. 25 If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
Any such changes in policies or rulings may also result in the taxes we previously paid being subject to change. 26 Due to the large scale of our international business activities, any substantial changes in international corporate tax policies, enforcement activities or legislative initiatives may materially adversely affect our business, the amount of taxes we are required to pay and our financial condition and results of operations generally.
Due to the large scale of our international business activities, any substantial changes in international corporate tax policies, enforcement activities or legislative initiatives may materially adversely affect our business, the amount of taxes we are required to pay and our financial condition and results of operations generally.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met, including objectives that may involve our reliance on third-party advisors and professionals.
We have been a party to, and in the future may become a party to, patent litigation or other proceedings regarding intellectual property rights.
There has been substantial litigation and other proceedings regarding the complex patent and other intellectual property rights in the life sciences industry. We have been a party to, and in the future may become a party to, patent litigation or other proceedings regarding intellectual property rights.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the 2019 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control.
As of December 31, 2023, $69.7 million in aggregate principal amount of the 2019 Notes remain outstanding. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control.
In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and security of personal information.
In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and security of personal information. These laws continue to change and evolve and are increasing in breadth and impact.
Additionally, effective January 1, 2023, the California Privacy Rights Act (“CPRA”) imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA by expanding consumers’ rights with respect to certain sensitive personal information.
For example, the California Privacy Rights Act imposes additional obligations on companies covered by the legislation and will significantly modify the California Consumer Privacy Act by expanding consumers’ rights with respect to certain sensitive personal information.
In addition, the effects of the ongoing conflict could heighten many of our known risks described in this section. 24 Risks Related to Ownership of Our Common Stock Risks Related to Investment in Our Securities Our operating results may fluctuate significantly, our customers’ future purchases are difficult to predict and any failure to meet financial expectations may result in a decline in our stock price.
Risks Related to Ownership of Our Common Stock Risks Related to Investment in Our Securities Our operating results may fluctuate significantly, our customers’ future purchases are difficult to predict and any failure to meet financial expectations may result in a decline in our stock price.
In some cases, litigation or other proceedings may be necessary to assert claims of infringement, to enforce patents issued to us or our licensors, to protect trade secrets, know-how or other intellectual property rights we own or to determine the scope and validity of the proprietary rights of third parties.
Patents that may be granted to us in certain foreign countries may be subject to opposition proceedings brought by third parties or result in suits by us, which may be costly and result in adverse consequences for us. 31 In some cases, litigation or other proceedings may be necessary to assert claims of infringement, to enforce patents issued to us or our licensors, to protect trade secrets, know-how or other intellectual property rights we own or to determine the scope and validity of the proprietary rights of third parties.
As a part of our growth strategy, we may make selected acquisitions of complementary products and/or businesses, such as our most recent acquisitions of Polymem, Avitide, BioFlex and NTM.
As a part of our growth strategy, we may make selected acquisitions of complementary products and/or businesses, such as our most recent acquisitions of Metenova Holding AB and FlexBiosys, Inc.
Our success depends largely upon the continued service of our management and scientific staff and our ability to attract, retain and motivate highly skilled technical, scientific, management and marketing personnel.
If we are unable to continue to hire and retain skilled personnel, then we will have trouble developing and marketing our products. Our success depends largely upon the continued service of our management and scientific staff and our ability to attract, retain and motivate highly skilled technical, scientific, management and marketing personnel.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, the Nasdaq Global Select Market or other regulatory authorities. We have previously implemented several significant ERP modules and expect to implement additional ERP modules in the future. The implementation of the ERP system represents a change in our internal control over financial reporting.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the Securities and Exchange Commission, the Nasdaq Global Select Market or other regulatory authorities. We have previously implemented several significant enterprise resource planning (“ERP”) modules and expect to implement additional ERP modules in the future.
Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold us liable for successor liability FCPA violations committed by any companies in which we invest or that we acquire.
Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
Risks Related to Our Financial Position and Need for Additional Capital Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to make payments on our debt.
Risks Related to Our Financial Position and Need for Additional Capital Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to make payments on our debt and we may not have the ability to raise the funds necessary to settle for cash conversions of our Notes or to repurchase the Notes for cash upon a fundamental change, which could adversely affect our business and results of operations.
Any violations, even if inadvertent or accidental, of current or future environmental and safety laws or regulations and the cost of compliance with any resulting order or fine could adversely affect our operations. 27 Climate change, climate change-related regulation and sustainability concerns could adversely affect our businesses and the operations of our subsidiaries, and any actions we take or fail to take in response to such matters could damage our reputation.
Climate change, climate change-related regulation and sustainability concerns could adversely affect our businesses and the operations of our subsidiaries, and any actions we take or fail to take in response to such matters could damage our reputation.
In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. Future strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, if at all.
Future strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, if at all.
While one of our U.S. patents covering recombinant Protein A had its term adjusted to expire in 2028, our other U.S. patents covering recombinant Protein A have expired, and as a result, we may face increased competition, which could harm our results of operations, financial condition, cash flow and future prospects.
While we continue to obtain patent grants directed towards Protein A, other patent grants directed towards Protein A have expired, and as a result, we may face increased competition, which could harm our results of operations, financial condition, cash flow and future prospects.
In addition, investors may decide to refrain from investing in us as a result of their assessment of our approach to and consideration of the ESG factors. Health care reform measures could adversely affect our business.
In addition, investors may decide to refrain from investing in us as a result of their assessment of our approach to and consideration of the ESG factors. In addition, we face physical risks associated with climate change.
Any of these catastrophic events may have a strong negative impact on our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products to our customers.
Any of these catastrophic events may have a strong negative impact on our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products to our customers. 23 In addition, a catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected.
In addition, if our customers order our products, but fail to pay on time or at all, our liquidity and operating results could be materially and adversely affected. Certain of our products are used by customers in the production of gene therapies, which represent a relatively new and still-developing mode of treatment.
In addition, if our customers order our products, but fail to pay on time or at all, our liquidity and operating results could be materially and adversely affected.
These laws continue to change and evolve and are increasing in breadth and impact. 29 For example, the European Union's ("EU") General Data Protection Regulations ("GDPR") and the California Consumer Privacy Act (“CCPA”) impose significant requirements on how we collect, process and transfer personal data, as well as significant regulatory penalties and legal liability for non-compliance.
For example, the European Union's and United Kingdom’s General Data Protection Regulations impose significant requirements on how we collect, process and transfer personal data, as well as significant regulatory penalties and legal liability for non-compliance.
We may be unable to efficiently manage our growth as a larger and more geographically diverse organization. Our strategic acquisitions, the continued expansion of our commercial sales operations, and our organic growth have increased the scope and complexity of our business.
Our strategic acquisitions, the continued expansion of our commercial sales operations, and our organic growth have increased the scope and complexity of our business.
Risks Related to Government Regulation Risks Related to Regulations and Compliance We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
Additionally, for taxable years beginning after December 31, 2020, the deductibility of such deferral net operating losses is limited to 80% of our taxable income in any future taxable year. 27 Risks Related to Government Regulation Risks Related to Regulations and Compliance We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
If we fail to remedy any deficiencies or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.
If we fail to remediate the material weakness or any future deficiencies or fail to otherwise maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.
The effect of IRA on our business and the healthcare industry in general is not yet known.
The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA's Medicare drug price negotiation program. The effect of IRA on our business and the healthcare industry in general is not yet known.
The use of materials furnished by these replacement suppliers would require us to alter our operations related to the XCell ATF systems. Transitioning to a new supplier for our products would be time-consuming and 21 expensive, may result in interruptions in our operations, could affect the performance specifications of our product lines or could require that we revalidate the materials.
Transitioning to a new supplier for our products would be time-consuming and expensive, may result in interruptions in our operations, could affect the performance specifications of our product lines or could require that we revalidate the materials. 20 There can be no assurance that we will be able to secure alternative materials and bring such materials online and revalidate them without experiencing interruptions in our workflow.
In addition, a deterioration in diplomatic relations between the United States and any country where we conduct business could adversely affect our future operations and lead to a decline in profitability. In 2018 and 2019, the United States imposed tariffs on goods imported from China and certain other countries.
In addition, a deterioration in diplomatic relations between the United States and any country where we conduct business could adversely affect our future operations and lead to a decline in profitability. We may be unable to efficiently manage our growth as a larger and more geographically diverse organization.
For the fiscal year ended December 31, 2022, 38.2% of our revenues were denominated in foreign currencies.
For the fiscal year ended December 31, 2023, 38.5% of our revenues were denominated in foreign currencies with the primary foreign currency exposures being the Swedish krona, Euro and Chinese yuan.
Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
In addition, the government may seek to hold us liable for successor liability FCPA violations committed by any companies in which we invest or that we acquire. 29 Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
In addition, future acquisitions may require the issuance or sale of additional equity or debt securities, which may result in additional dilution to our stockholders. Our exposure to political, economic and other risks that arise from operating a multinational business has and may continue to increase.
In addition, future acquisitions may require the issuance or sale of additional equity or debt securities, which may result in additional dilution to our stockholders. Our corporate restructuring and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
In 2019, we incurred significant indebtedness in the amount of $287.5 million in aggregate principal with additional accrued interest under our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”).
In December 2023, we incurred significant indebtedness with the issuance of $600.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2023 Notes”) where $309.9 million principal amount of the 2023 Notes were issued in exchange for $217.7 million principal amount of our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”, and together with the 2023 Notes, the “Notes”) and $290.1 million principal amount of the 2023 Notes were issued for $290.1 million in cash.
In addition, certain of our third-party suppliers have experienced labor shortages and supply chain delays due to the spread of COVID-19. Such shortages and delays may lead to interruptions in our manufacturing activities and our product supply and could have a material adverse effect on our business and our results of operation and financial condition.
In addition, any further deterioration in the macroeconomic economy or financial services industry, could lead to losses or defaults by our suppliers, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
Removed
As we evolve from a company dependent on others to commercialize our products to a company selling directly to end users, we may encounter difficulties in expanding our product portfolio and our commercial marketing capabilities.
Added
Furthermore, if any of our current or future products compete with those of any of our largest customers, these 18 customers may place fewer orders with us or cease placing orders with us, which would negatively affect our revenues and operating results.
Removed
Prior to 2016, we generated most of our revenues through sales of bioprocessing products to a limited number of life sciences companies, such as Cytiva, MilliporeSigma and other individual integrators or distributors.
Added
Certain of our products are used by customers in the production of gene therapies, which represent a relatively new and still-developing mode of treatment.
Removed
However, due in part to our recent strategic acquisitions, an increasing amount of our revenue is attributable to our commercialization of bioprocessing products that we sell directly to end-users, including biopharmaceutical companies and contract manufacturing organizations. This has required and will continue to require us to invest additional resources in our sales and marketing capabilities.
Added
The use of materials furnished by these replacement suppliers would require us to alter our operations related to the XCell ATF systems.
Removed
We may not be able to attract and retain additional sales and marketing professionals, and the cost of building the sales and marketing function may not generate our anticipated revenue growth. In addition, our sales and marketing efforts may be unsuccessful.
Added
In addition, holders of the Notes have the right, subject to certain conditions, to require us to repurchase all or any portion of their Notes upon the occurrence of a “fundamental change” (as defined in the indentures governing the Notes) at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, but excluding the fundamental change repurchase date.
Removed
Our failure to manage these risks may have a negative impact on our financial condition, or results of operations and may cause our stock price to decline. If we are unable to continue to hire and retain skilled personnel, then we will have trouble developing and marketing our products.
Added
Upon any conversion of Notes, we will also be required to make cash payments for each $1,000 principal amount of 2023 Notes converted of at least the lesser of $1,000 and the sum of the “daily conversion values” (as defined in the indenture governing the 2023 Notes).
Removed
Risks Related to the COVID-19 Pandemic In response to the ongoing COVID-19 pandemic, including all emerging variants of the SARS-CoV-2 coronavirus ("COVID-19"), certain of our products are used by customers in the development or manufacture of COVID-19 vaccines and therapeutics, some of which have not yet received regulatory approval or authorization.
Added
In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
Removed
A deceleration in demand from customers focused on manufacturing COVID-19 vaccinations, unforeseen adverse events, regulatory interventions, the emergence of new variants of the virus rendering current vaccines and therapeutics ineffective and the development of next generation vaccines and therapeutics that do not incorporate our products may negatively impact our revenues and have an adverse effect on our performance.
Added
A default under either indenture governing the Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
Removed
Certain of our products are used by our customers in the development or manufacture of COVID-19 vaccines and therapies. As COVID-19 has evolved and demand for COVID-19 vaccinations has decelerated, we have seen a corresponding decrease in our revenues attributable to such products.
Added
In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and liquidity.
Removed
Furthermore, the level of future demand for COVID-19 vaccinations is uncertain and dependent on many factors including the emergence of new variants of the virus, the continued development of variant-specific vaccines and boosters and public demand and acceptance of variant-specific vaccines and boosters.

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Item 2. Properties

Properties — owned and leased real estate

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PR OPERTIES Our material office and manufacturing leases are detailed below: Location Square Feet Principal Use Lease Expiration Waltham, Massachusetts 182,243 (1) Corporate headquarters, manufacturing, research and development, marketing and administrative offices October 31, 2030 Marlborough, Massachusetts 130,700 Manufacturing operations November 30, 2033 (2) Rancho Dominguez, California 68,908 Manufacturing, research and development, marketing and administrative operations July 15, 2035 (3) Lund, Sweden 65,240 Manufacturing and administrative operations June 30, 2028 Hopkinton, Massachusetts 64,000 Manufacturing, assembly site July 13, 2034 Toulouse, France 62,980 Manufacturing and administrative operations May 31, 2030 Bridgewater, New Jersey 57,485 (4) Manufacturing and administrative operations February 1, 2034 Compton, California (9) 54,060 Warehouse May 31, 2029 Waterford, Ireland 50,311 (5) Manufacturing, administrative operations and assembly site January 31, 2037 Clifton Park, New York 34,386 (6) Manufacturing operations November 30, 2029 Lebanon, New Hampshire 31,053 Research and development and administrative operations July 31, 2026 (1) In September 2021, we signed the Sixth Amendment of Lease for our facility in Waltham, Massachusetts, which extended our lease term to October 31, 2030, and expanded the facility by 74,108 square feet.
PR OPERTIES Our material office, manufacturing and warehouse leases are detailed below: Location Square Feet Principal Use Lease Expiration Waltham, Massachusetts 182,243 Corporate headquarters, manufacturing, research and development, marketing and administrative offices October 31, 2030 Marlborough, Massachusetts 130,700 Manufacturing operations November 30, 2033 Rancho Dominguez, California 68,908 Manufacturing, research and development, marketing and administrative operations July 15, 2035 Toulouse, France 67,285 (1) Manufacturing and administrative operations March 31, 2032 Lund, Sweden 65,240 Manufacturing and administrative operations December 31, 2026 Hopkinton, Massachusetts 64,000 Manufacturing, assembly site July 13, 2034 Bridgewater, New Jersey 57,739 Manufacturing and administrative operations February 1, 2034 Compton, California 54,060 Warehouse May 31, 2029 Waterford, Ireland 50,311 Manufacturing, administrative operations and assembly site January 31, 2037 Clifton Park, New York 34,386 Manufacturing operations November 30, 2029 Lebanon, New Hampshire 31,313 Research and development and administrative operations July 31, 2026 (1) On April 1, 2023, we expanded our space in Toulouse, France by approximately 4,000 square feet for additional office and warehouse space.
During the year ended December 31, 2022, we incurred total rental costs for all facilities of $29.2 million. 33
During the year ended December 31, 2023, we incurred total rental costs for all facilities of $25.1 million.
Removed
This expansion is needed to accommodate our need for additional office and manufacturing space. (2) In 2022, we assessed our lease for the Marlborough facility and decided to exercise one of the two 5-year options to extend the lease to November 30, 2033. (3) In 2018, we expanded our facility in Rancho Dominguez, California by approximately 15,000 square feet.
Added
The Company entered into a lease agreement to lease approximately 76,000 square feet of office, manufacturing and storage space in Jüri, Estonia. The Company gained access to the space and the right to control the use of the space was conveyed effective January 1, 2024.
Removed
The lease for the expanded portion of the facility expires on November 30, 2025. In 2022, after assessing this lease under Accounting Standards Codification No. 842, "Leases" , we became reasonably certain that we would exercise our option to extend the lease for ten years. This lease now expires in 2035.
Added
In addition to the above, the Company also entered into a lease agreement to lease approximately 139,000 square foot of primarily warehouse space in Shrewsbury, Massachusetts. The Company gained access to the space and the right to control the use of the space was conveyed effective February 1, 2024.
Removed
(4) In 2022, we expanded the facility in Bridgewater, New Jersey by approximately 24,000 square feet for additional office and lab space. (5) On February 1, 2022, we expanded our space in Waterford, Ireland by approximately 8,000 square feet for additional office space.
Removed
(6) On August 1, 2022, we expanded our facility in Clifton Park, New York by approximately 4,000 square feet for additional office space. On December 29, 2022, the Company entered into a Purchase and Sale Agreement to purchase an 11,000 square foot building in Fredon (Newton), New Jersey from the former owners of BioFlex for approximately $1.0 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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MINE SAF ETY DISCLOSURES Not applicable. 34 PART II
MINE SAF ETY DISCLOSURES Not applicable. 35 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Any future determination as to the payment of dividends will be at the sole discretion of our Board of Directors (the "Board") and will depend on our financial condition, results of operations, capital requirements and other factors the Board deems relevant.
Any future determination as to the payment of dividends will be at the sole discretion of our Board of Directors (“Board”) and will depend on our financial condition, results of operations, capital requirements and other factors the Board deems relevant.
We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 35 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Repligen Corporation, the Nasdaq Composite Index, the Nasdaq Pharmaceutical Index and the Nasdaq Biotechnology Index Issuer Purchases of Equity Securities In June 2008, the Board of Directors authorized a program to repurchase up to 1.25 million shares of our common stock to be repurchased at the discretion of management from time to time in the open market or through privately negotiated transactions.
We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 36 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Repligen Corporation, the Nasdaq Composite Index, the Nasdaq Pharmaceutical Index and the Nasdaq Biotechnology Index Issuer Purchases of Equity Securities In June 2008, the Board authorized a program to repurchase up to 1.25 million shares of our common stock to be repurchased at the discretion of management from time to time in the open market or through privately negotiated transactions (the “2008 Share Repurchase Program”).
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2017 to December 31, 2022. The comparisons shown in the graph below are based upon historical data.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023. The comparisons shown in the graph below are based upon historical data.
The repurchase program has no set expiration date and may be suspended or discontinued at any time. We did not repurchase any shares of common stock during the year ended December 31, 2022. In prior years, we repurchased a total of 592,827 shares, leaving 657,173 shares remaining under this authorization. ITEM 6. RESERVED 36
The 2008 Repurchase Program has no set expiration date and may be suspended or discontinued at any time. We did not repurchase any shares of common stock under the 2008 Repurchase Program during the year ended December 31, 2023. In prior years, we repurchased a total of 592,827 shares, leaving 657,173 shares remaining under this authorization.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “RGEN.” Stockholders and Dividends As of February 17, 2023, there were 260 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “RGEN.” Stockholders and Dividends As of February 16, 2024, there were 259 stockholders of record of our common stock.
Equity Compensation Plan Information The following table sets forth information as of December 31, 2022, regarding shares of common stock that may be issued under the Company’s equity compensation plans, consisting of the Second Amended and Restated 2001 Repligen Corporation Stock Plan, the Amended and Restated 2012 Stock Option and Incentive Plan and the 2018 Stock Option and Incentive Plan.
Equity Compensation Plan Information The following table sets forth information as of December 31, 2023, regarding shares of common stock that may be issued under the Company’s equity compensation plans, consisting of the Amended and Restated 2012 Stock Option and Incentive Plan and the 2018 Stock Option and Incentive Plan.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,140,999 (1) $ 71.74 (2) 1,904,702 (1) Includes 609,965 shares of common stock issuable upon the exercise of outstanding options and 531,034 shares of common stock issuable upon the vesting of stock units, which include restricted stock units and performance stock units.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,123,450 (1) $ 85.97 (2) 1,671,408 (1) Includes 649,130 shares of common stock issuable upon the exercise of outstanding options and 474,320 shares of common stock issuable upon the vesting of stock units, which include restricted stock units and performance stock units.
Added
In December 2023, the Board authorized and approved a stock repurchase, separate from the 2008 Share Repurchase Program, of up to $25.0 million of our common stock concurrent with the issuance of $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (“2023 Notes”).
Added
See Note 14, “ Convertible Senior Notes,” included in this report for more information on the issuance.
Added
We used $14.4 million of the proceeds from the issuance of the 2023 Notes to repurchase 92,090 shares at a price of $156.22, including transaction costs, to offset the impact of dilution from the issuance of 2023 Notes and equity compensation programs as well as to reduce our outstanding share count (“2023 Share Repurchase Program”).
Added
We have elected to retire the shares repurchased to date under the 2023 Share Repurchase Program. Retired shares become part of the pool of authorized but unissued shares.
Added
The purchase price of the retired shares in excess of par value, including transaction costs, is recorded as a decrease to additional paid-in capital in our consolidated balance sheets as of December 31, 2023. 37 ITEM 6. RESERVED 38

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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There has been no impairment of our intangible assets for the periods presented. Goodwill We test goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
There has been no impairment of our intangible assets for the periods presented. 41 Goodwill We test goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Capital Requirements Our future capital requirements will depend on many factors, including the following: • the expansion of our bioprocessing business; 51 • the ability to sustain sales and profits of our bioprocessing products and successfully integrate them into our business; • our ability to acquire additional bioprocessing products; • the scope of and progress made in our R&D activities; • the scope of investment in our intellectual property portfolio; • contingent consideration earnout payments resulting from our acquisitions; • the extent of any share repurchase activity; • the success of any proposed financing efforts; • general economic and capital markets; • change in accounting standards; • the impact of inflation on our operations, including our expenditures on raw material and freight charges; • fluctuations in foreign currency exchange rates; and • costs associated with our ability to comply with emerging environmental, social and governance standards.
Capital Requirements Our future capital requirements will depend on many factors, including the following: • the expansion of our bioprocessing business; 53 • the ability to sustain sales and profits of our bioprocessing products and successfully integrate them into our business; • our ability to acquire additional bioprocessing products; • the scope of and progress made in our R&D activities; • the scope of investment in our intellectual property portfolio; • contingent consideration earnout payments resulting from our acquisitions; • the extent of any share repurchase activity; • the success of any proposed financing efforts; • general economic and capital markets; • change in accounting standards; • the impact of inflation on our operations, including our expenditures on raw material and freight charges; • fluctuations in foreign currency exchange rates; and • costs associated with our ability to comply with emerging environmental, social and governance standards.
We adopted an accounting policy to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense. In addition, we are subject to the continual examination of our income tax returns by the U.S. Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities.
We adopted an accounting policy to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense. In addition, we are subject to the continual examination of our income tax returns by the U.S. Internal Revenue Service and other domestic and foreign tax authorities.
An increase in accounts receivable consumed $3.6 million of cash and was primarily driven by the 19.5% year-to-date increase in revenue in 2022, as compared to 2021. Additionally, we had an increase in inventory manufactured of $57.2 million to support expected increases in future revenue.
An increase in accounts receivable consumed $3.6 million of cash and was primarily driven by the 19.5% year-to-date increase in revenue in 2022, as compared to 2021. Additionally, we had an increase in inventory of $57.2 million to support expected increases in future revenue.
Based on an analysis of historical data, we have calculated an 8% annual forfeiture rate for non-executive level employees, a 3% annual forfeiture rate for executive level employees, and a 0% forfeiture rate for non-employee members of the Board of Directors, which we believe are reasonable assumptions to estimate forfeitures.
Based on an analysis of historical data, we have calculated an 8% annual forfeiture rate for non-executive level employees, a 3% annual forfeiture rate for executive level employees, and a 0% forfeiture rate for non-employee members of the Board of Directors (“Board”), which we believe are reasonable assumptions to estimate forfeitures.
To the extent that our estimates change in the future regarding the likelihood of achieving these targets, we may need to record material adjustments to our accrued contingent consideration. Such changes in the fair value of contingent consideration are recorded as contingent consideration expense in our consolidated statements of comprehensive income.
To the extent that our estimates change in the future regarding the likelihood of achieving these targets, we may need to record material adjustments to our accrued contingent consideration. Such changes in the fair value of contingent consideration are recorded as contingent consideration in our consolidated statements of comprehensive income.
In the event that we do not identify certain costs that have begun to be incurred 40 or we under or over-estimate the level of services performed or the costs of such services, the reported expenses for that period may be too low or too high.
In the event that we do not identify certain costs that have begun to be incurred or we under or over-estimate the level of services performed or the costs of such services, the reported expenses for that period may be too low or too high.
Although we believe that our estimates, assumptions, and judgements are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
At December 31, 2022, we have not provided for taxes on outside basis differences of our foreign subsidiaries as it is not practicable and we have the ability and intent to indefinitely reinvest the undistributed earnings of our foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict our plan to indefinitely reinvest.
At December 31, 2023, we have not provided for taxes on outside basis differences of our foreign subsidiaries as it is not practicable and we have the ability and intent to indefinitely reinvest the undistributed earnings of our foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict our plan to indefinitely reinvest.
If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its definite-lived intangible assets are recoverable at December 31, 2022. Indefinite-lived intangible assets are tested for impairment at least annually.
If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its definite-lived intangible assets are recoverable at December 31, 2023. Indefinite-lived intangible assets are tested for impairment at least annually.
The difference represented a debt discount that, prior to the adoption of ASU 2020-06, was amortized to interest expense in our consolidated statement of comprehensive income over the term of the convertible notes using the effective interest rate method. We assessed the equity classification of the cash conversion feature quarterly.
The difference represented a debt discount that, prior to the adoption of ASU 2020-06, was amortized to interest expense in our consolidated statements of comprehensive income over the term of the convertible notes using the effective interest rate method. We assessed the equity classification of the cash conversion feature quarterly.
Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next 24 months. We expect operating expenses in 2023 to increase as we continue to expand our bioprocessing business.
Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next 24 months. We expect operating expenses in 2024 to increase as we continue to expand our bioprocessing business.
These policies require management’s most difficult, subjective or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
These policies require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
("ASU") 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)", the 2019 Notes were carried at their principal amount less unamortized debt discount and unamortized debt issuance costs.
(“ASU”) 2020-06, “ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)”, the 2019 Notes were carried at their principal amount less unamortized debt discount and unamortized debt issuance costs.
We are subject to a territorial tax system under the Tax Cuts and Jobs Act enacted in December 2017, in which we are required to provide for tax on Global Intangible Low-Taxed Income ("GILTI") earned by certain foreign subsidiaries.
We are subject to a territorial tax system under the Tax Cuts and Jobs Act enacted in December 2017, in which we are required to provide for tax on 44 Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.
As the overall market for biologics continues to grow and expand, our primary customers – global biopharmaceutical companies and contract development and manufacturing organizations and other life sciences companies (integrators) – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our products help set new standards for the way biologics are manufactured.
As the overall market for biologics continues to grow and expand, our customers – primarily large biopharmaceutical companies and contract development and manufacturing organizations and other life sciences companies (integrators) – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our products help set new standards for the way biologics are manufactured.
"Business" including “Overview”, “Our Products”, “2021 Acquisitions”, “2020 Acquisitions” and “Our Market Opportunity” sections therein. Macroeconomic Trends As a result of our global presence, a significant portion of our revenue and expenses is denominated in currencies other than the U.S. dollar. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure.
"Business" including “Overview”, “Our Products”, “2023 Acquisitions”, “2021 Acquisitions” and “Our Market Opportunity” sections therein. Macroeconomic Trends As a result of our global presence, a significant portion of our revenue and expenses is denominated in currencies other than the U.S. dollar. We are therefore subject to non-U.S. exchange exposure.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. The Company operates as one reporting unit. We performed a qualitative assessment for our reporting unit as of December 31, 2022 and 2021.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. We operate as one reporting unit. We performed a qualitative assessment for our reporting unit as of December 31, 2023, 2022 and 2021.
Income taxes Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
Income taxes Deferred taxes are determined based on the difference between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately.
Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”), recombinant proteins, vaccines and cell and gene therapies ("C&GT") – that are improving human health worldwide.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”), recombinant proteins, vaccines and cell and gene therapies (“C&GT”) – that are improving human health worldwide.
If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
The business tax credits carryforwards will expire at various dates through December 2042.
The business tax credits carryforwards will expire at various dates through December 2043.
Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders. 52 Foreign Earnings As of December 31, 2022, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $148.2 million.
Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders. 54 Foreign Earnings As of December 31, 2023, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $212.4 million.
To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract.
To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the 39 transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract.
During the fourth quarter of 2022, the closing price of the Company’s common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter.
During the fourth quarter of 2023, the closing price of our common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter.
Based on the assessment, we concluded that it was more likely than not that the estimated fair value of our reporting unit for 2022 and 2021 was higher than its carrying value for such years, and that the performance of the quantitative impairment test was not required.
Based on the assessment, we concluded that it was more likely than not that the estimated fair value of our reporting unit for 2023, 2022 and 2021 was higher than its carrying value for such years, and that the performance of the quantitative impairment test was not required. Therefore, no impairment was required for any of the periods presented.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”).
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer (“transaction price”).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information pertaining to fiscal years 2021 and 2020 was included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2021, on pages 37 through 52 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 17, 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information pertaining to fiscal years 2022 and 2021 was included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2022, on pages 37 through 53 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the Securities and Exchange Commission on February 22, 2023.
For the years ended December 31, 2022, 2021 and 2020, we recorded stock-based compensation expense of $27.3 million, $27.5 million and $17.0 million, respectively, for share-based awards granted under all of the Company’s stock plans. As of December 31, 2022, there was $63.9 million of total unrecognized compensation cost related to unvested share-based awards.
For the years ended December 31, 2023, 2022 and 2021, we recorded stock-based compensation expense of $25.6 million, $27.3 million and $27.5 million, respectively, for share-based awards granted under all of the Company’s stock plans. As of December 31, 2023, there was $63.8 million of total unrecognized compensation cost related to unvested share-based awards.
Re-measurement of the contingent consideration obligation is done each quarter and the carrying value of the obligation is adjusted to the current fair value through our consolidated statement of comprehensive income.
Remeasurement of the contingent consideration obligation is done each quarter and the carrying value of the obligation is adjusted to the current fair value through our consolidated statements of comprehensive income.
This cost is expected to be recognized over a weighted average remaining requisite service period of 3.01 years. We expect 2,071,467 unvested options and stock units to vest over the next five years.
This cost is expected to be recognized over a weighted average remaining requisite service period of 2.84 years. We expect 2,185,873 unvested options and stock units to vest over the next five years.
We recognize 41 compensation expense on awards that vest based on performance conditions following our assessment of the probability that the performance condition will be achieved over the service period. Forfeitures represent only the unvested portion of a surrendered option.
We recognize compensation expense on awards that vest based on performance conditions following our assessment of the probability that the performance condition will be achieved over the service period. Forfeitures represent only the unvested portion of surrendered options, restricted stock units and performance stock units.
Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2022.
Applying the practical expedient in paragraph 606-10-32-18, we do not assess whether a significant financing component exists if the period between when we perform our obligations under the contract and when the customer pays is one year or less. None of our contracts contained a significant financing component as of December 31, 2023.
This was partially offset by proceeds received from stock option exercises during the period of $3.7 million. In 2021, cash provided by financing activities of $1.0 million included proceeds from stock option exercises, offset by cash disbursed in relation to shares withheld to cover employee income taxes due upon the vesting and release of restricted stock units.
Our financing activities consumed $13.3 million of cash in 2022, which included cash disbursed in relation to shares withheld to cover employee income tax due upon the vesting and release of restricted stock units of $17.0 million. This was partially offset by proceeds received from stock option exercises during the period of $3.7 million.
The state net operating loss carryforwards will expire at various dates through 2041, while the foreign net operating loss carryforwards do not expire. The other $35.6 million of federal net operating loss carryforwards have unlimited carryforward periods. We had business tax credits carryforwards of $3.8 million available to reduce future federal and state income taxes, if any.
The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. We had federal and state business tax credits carryforwards of $5.0 million available to reduce future federal and state income taxes.
These direct sales have increased to approximately 88% of our total product revenue during 2022 from approximately 83% of our total product revenue in 2021. Sales of our bioprocessing products can be impacted by the timing of large-scale production orders and the regulatory approvals for such antibodies, which may result in significant quarterly fluctuations.
These direct sales have represented 85.8% of our total product revenue during 2023 compared to 87.8% of our total product revenue in 2022. Sales of our bioprocessing products can be impacted by the timing of large-scale production orders and the regulatory approvals for such antibodies, which may result in significant quarterly fluctuations.
Due to the size of the Company and the fact that these various programs share personnel and fixed costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided historical costs incurred by project. R&D expenses in 2022 increased $9.7 million, or 28.2%, compared to 2021.
Due to the fact that these various programs share personnel and fixed costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided historical costs incurred by project. R&D expenses decreased $1.2 million, or 2.8%, during 2023, compared to 2022.
Debt accounting Our short-term debt balance is related to our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”), which were issued in July 2019. Prior to the adoption of Accounting Standards Update No.
Our short-term debt balance is related to our 2019 Notes, which were issued in July 2019. Prior to the adoption of Accounting Standards Update No.
Effect of exchange rate changes on cash, cash equivalents and restricted cash The effect of exchange rate changes on cash during 2022 is a result of the weakening of the Swedish krona against the U.S. dollar by 15%, the weakening of the Euro against the U.S. dollar by 6% and the weakening of the British pound against the U.S. dollar by 12%.
Effect of exchange rate changes on cash, cash equivalents and restricted cash The effect of exchange rate changes on cash during 2023 is a result of the strengthening of the Swedish krona against the U.S. dollar by 3%, the strengthening of the Euro against the U.S. dollar by 3% and the strengthening of the British pound against the U.S. dollar by 5%.
Any excess of purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement.
While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement.
As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the first quarter of 2023, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes.
As a result, the remaining $69.7 million aggregate principal amount of 2019 Notes are convertible at the option of the holders of the 2019 Notes during the first quarter of 2024, the quarter immediately following the quarter when conditions are met, as stated in the terms of the 2019 Notes.
The effective tax rate was 15.1% for 2022 and is based upon the income for the year ending December 31, 2022, and the composition of income in different jurisdictions.
The effective tax rate was 35.2% for 2023 and is based upon the income for the year ended December 31, 2023 and the composition of income in different jurisdictions.
We expect future examinations to focus on our intercompany transfer pricing practices as well as other matters. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from such examinations.
We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from such examinations.
Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue. At December 31, 2022, we had cash and cash equivalents of $523.5 million compared to cash and cash equivalents of $603.8 million at December 31, 2021.
Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue. At December 31, 2023, we had cash and cash equivalents of $751.3 million compared to cash and cash equivalents of $523.5 million at December 31, 2022. There were no restrictions on cash as of December 31, 2023.
See Note 13, “Convertible Senior Notes,” included in this report for more information on this transaction. 49 During the fourth quarter of 2022, the closing price of the Company’s common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter.
See Note 14, “Convertible Senior Notes,” to our consolidated financial statements included in this report for more information on our adoption of ASU 2020-06. 43 During the fourth quarter of 2023, the closing price of the Company’s common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter.
Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses include the costs associated with selling our commercial products and costs required to support our marketing efforts, including legal, accounting, patent, shareholder services, amortization of intangible assets and other administrative functions. During 2022, SG&A costs increased by $32.0 million, or 17.4%, as compared to 2021.
Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses include the costs associated with selling our commercial products and costs required to support our marketing efforts, including legal, accounting, patent, shareholder services, amortization of intangible assets and other administrative functions.
The following is a reconciliation of income from operations in accordance with GAAP to non-GAAP adjusted income from operations for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 (Amounts in thousands) GAAP income from operations $ 224,670 $ 167,249 Non-GAAP adjustments to income from operations: Inventory step-up charges — 2,130 Acquisition and integration costs 9,253 18,001 Contingent consideration expense (28,729 ) 5,865 Intangible amortization 27,016 21,941 Non-GAAP adjusted income from operations $ 232,210 $ 215,186 Non-GAAP adjusted net income and adjusted earnings per share Non-GAAP adjusted net income and adjusted earnings per share is measured by taking net income as reported in accordance with GAAP and excluding acquisition and integration costs, intangible asset amortization, inventory step-up charges, loss on conversion of debt, non-cash interest expense, amortization of debt issuance costs, contingent consideration fair value adjustments and the tax effects on these items.
The following is a reconciliation of income from operations in accordance with GAAP to non-GAAP adjusted income from operations for the years ended December 31, 2023 and 2022: For the Years Ended December 31, 2023 2022 (Amounts in thousands) GAAP income from operations $ 54,576 $ 224,670 Non-GAAP adjustments to income from operations: Inventory step-up charges 1,238 — Acquisition and integration costs 5,861 9,253 Restructuring costs (1) 32,200 — Contingent consideration (30,569 ) (28,729 ) Intangible amortization 30,981 27,016 Non-GAAP adjusted income from operations $ 94,287 $ 232,210 Non-GAAP adjusted net income and adjusted earnings per share Non-GAAP adjusted net income and adjusted earnings per share is measured by taking net income as reported in accordance with GAAP and excluding inventory step-up charges, acquisition and integration costs, restructuring costs, contingent consideration fair value adjustments, intangible amortization, loss on extinguishment of debt, non-cash interest expense, amortization of debt issuance costs, foreign currency impact of certain intercompany loans and the tax effects on these items.
For 2021, our operating activities provided cash of $119.0 million reflecting net income of $128.3 million and non-cash charges totaling $92.9 million primarily related to depreciation, amortization, inventory step-up amortization, contingent consideration expense, deferred income taxes, amortization of debt discount and issuance costs and stock-based compensation charges.
For 2022, our operating activities provided cash of $172.1 million reflecting net income of $186.0 million and non-cash charges totaling $49.9 million primarily related to depreciation, amortization, contingent consideration adjustments, amortization of debt issuance costs, deferred income taxes and stock-based compensation charges.
We recorded an adjustment to the fair value of the contingent consideration obligation for the twelve months ended December 31, 2022 of ($28.7) million related to the change in estimated contingent consideration obligations from the acquisition of Avitide, Inc. ("Avitide") in September 2021.
We recorded a net decrease to the fair value of the contingent consideration obligations for the twelve months ended December 31, 2023 of ($30.6) million primarily related to the change in estimated contingent consideration obligations from the acquisition of Avitide, Inc. (“Avitide”) in September 2021.
Our investment income increased by $6.8 million in 2022, compared to 2021, due to an increase in interest rates on average invested cash balances since December 31, 2021, as well as interest earned on U.S. treasury bills purchased in 2022. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.
Our investment income increased by $17.2 million in 2023, as compared to 2022 due to an increase in interest rates on higher average invested cash balances since December 31, 2022, as well as interest earned on U.S. treasury bills purchased at the end of 2022.
In 2022, we had other purchase obligations primarily consisting of purchase commitments with certain vendors and open purchase orders for the procurement of raw materials for manufacturing. As of December 31, 2022, the Company had other purchase obligations of $72.1 million, payable within 12 months.
As of December 31, 2023, the Company had fixed lease payment obligations of $132.2 million, with $5.6 million payable within 12 months. See Note 6, “Leases,” for additional information. In 2023, we had other purchase obligations primarily consisting of purchase commitments with certain vendors and open purchase orders for the procurement of raw materials for manufacturing.
The expected term of options granted represents the period of time for which the options are expected to be outstanding and is derived from our historical stock option exercise experience and option expiration data.
Stock-based compensation We use the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date. The expected term of options granted represents the period of time for which the options are expected to be outstanding and is derived from our historical stock option exercise experience and option expiration data.
Income tax provision (benefit) Income tax provision (benefit) for the years ended December 31, 2022, 2021 and 2020 was as follows: For the Years Ended December 31, 2022 vs 2021 2021 vs 2020 2022 2021 2020 $ Change % Change $ Change % Change (Amounts in thousands, except for percentage data) Income tax provision (benefit) $ 33,181 $ 25,252 $ (709 ) $ 7,929 31.4 % $ 25,961 (3,661.6 )% Effective tax rate 15.1 % 16.4 % (1.2 )% For 2022, we recorded an income tax provision of $33.2 million.
Income tax provision Income tax provision for the years ended December 31, 2023 and 2022 was as follows: For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change % Change (Amounts in thousands, except for percentage data) Income tax provision $ 22,555 $ 33,181 $ (10,626 ) (32.0 )% Effective tax rate 35.2 % 15.1 % For 2023, we recorded an income tax provision of $22.6 million.
We believe such estimates to be reasonable; however, the final determination of any of these examinations could significantly impact the amounts provided for income taxes in our consolidated financial statements.
We believe such estimates to be reasonable; however, the final determination of any of these examinations could significantly impact the amounts provided for income taxes in our consolidated financial statements. Recent accounting standards update See Note 2, “Summary of Significant Accounting Policies – Recent Accounting Standards Updates,” to our consolidated financial statements included in this report for more information.
The difference in effective tax rates between 2022 and 2021 was primarily due to increased benefits from business tax credits and nontaxable contingent consideration partially offset by lower windfall benefits recognized on stock option exercises and vesting of stock units.
The difference in effective tax rates between 2023 and 2022 was primarily due to a loss on extinguishment of debt and a debt discount basis difference, partially offset by increased benefits from business tax credits and nontaxable contingent consideration.
Accordingly, our results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts. See Note 7, “Credit Losses,” to our consolidated financial statements included in this report for more information. Inventories We value inventory at cost or, if lower, net realizable value, using the first-in, first-out method.
See Note 8, “Credit Losses,” to our consolidated financial statements included in this report for more information. Inventories We value inventory at cost or, if lower, net realizable value, using the first-in, first-out method.
Of these expenditures, $3.5 million represented capitalized costs related to our internal-use software for 2022. In addition, in September 2022, the Company paid a one-time, non-refundable, non-creditable upfront payment to Daylight as required under the Daylight Agreement for the commercialization and sale of Culpeo ® QCL-IR Liquid Analyzer.
In addition, in September 2022, the Company paid a one-time, non-refundable, non-creditable upfront payment to Daylight as required under the Daylight Agreement for the commercialization and sale of Culpeo ® QCL-IR Liquid Analyzer. In December 2022, the Company invested $100.0 million in short-term U.S. treasury securities.
In 2022 and 2021, a change in market inputs and shifts in revenue and volume projections due to the expected timing of achievement over the three-year performance period resulted in adjustments to the fair value of the contingent consideration obligation for the years ended December 31, 2022 and 2021 of ($28.7) million and $5.9 million, respectively.
In 2023, 2022 and 2021, actual and expected results and a change in market inputs used to calculate the discount rate, resulted in adjustments to the fair value of the contingent consideration obligation for the years ended December 31, 2023, 2022 and 2021 of ($30.6) million, ($28.7) million and $5.9 million, respectively.
Non-GAAP Financial Measures In addition to our key financial metrics presented above, we provide non-GAAP adjusted income from operations, adjusted net income and adjusted EBITDA as supplemental measures to GAAP measures regarding our operating performance. These financial measures exclude the items detailed below and, therefore, have not been calculated in accordance with GAAP.
Non-GAAP Financial Measures In addition to our key financial metrics presented above, we provide non-GAAP adjusted income from operations, adjusted net income and adjusted EBITDA as supplemental measures to accounting principles generally accepted in the United States (“GAAP”) measures regarding our operating performance.
We believe the estimated purchased customer relationships, developed technologies, trademark/tradename, patents, non-competition agreements and in-process research and development ("R&D") amounts so determined represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets. 39 Intangible assets and goodwill Intangible assets Intangible assets with a definite life are amortized over their useful lives using the straight-line method and the amortization expense is recorded within cost of product revenue, research and development and selling, general and administrative expense in the consolidated statements of comprehensive income.
We believe the estimated purchased customer relationships, developed technologies, trademark/tradename, patents, non-competition agreements and in-process research and development ("R&D") amounts so determined represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets.
Our depreciation expense increased in 2022, as compared to 2021, due to manufacturing equipment being placed into service throughout 2021 and 2022.
Also, our occupancy costs and depreciation expense increased during 2023, as compared to 2022, due to expanded facilities and manufacturing equipment being placed into service towards the end of 2022 and throughout 2023.
Revenues Total revenues for years ended December 31, 2022, 2021 and 2020 were comprised of the following: For the Years Ended December 31, 2022 vs 2021 2021 vs 2020 2022 2021 2020 $ Change % Change $ Change % Change (Amounts in thousands, except for percentage data) Revenue: Product $ 801,183 $ 670,319 $ 366,136 $ 130,864 19.5 % $ 304,183 83.1 % Royalty and other 353 215 124 138 64.2 % 91 73.4 % Total revenue $ 801,536 $ 670,534 $ 366,260 $ 131,002 19.5 % $ 304,274 83.1 % Product revenues Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers.
Revenues Total revenues for years ended December 31, 2023 and 2022 were comprised of the following: For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change % Change (Amounts in thousands, except for percentage data) Revenue: Product $ 638,381 $ 801,183 $ (162,802 ) (20.3 %) Royalty and other income 383 353 30 8.5 % Total revenue $ 638,764 $ 801,536 $ (162,772 ) (20.3 %) Product revenues Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers.
We excluded the impact of certain acquisition-related items and items related to the issuance of conversion of our 2019 Notes because we believe that the resulting charges do not accurately reflect the performance of our ongoing operations for the period in which such charges are incurred. 47 Non-GAAP adjusted income from operations Non-GAAP adjusted income from operations is measured by taking income from operations as reported in accordance with GAAP and excluding inventory step-up charges, acquisition and integration costs, contingent consideration fair value adjustments and intangible amortization booked through our consolidated statements of comprehensive income.
Non-GAAP adjusted income from operations Non-GAAP adjusted income from operations is measured by taking income from operations as reported in accordance with GAAP and excluding inventory step-up charges, acquisition and integration costs, restructuring costs, contingent consideration fair value adjustments and intangible amortization booked through our consolidated statements of comprehensive income.
Of these expenditures, $4.2 million represented capitalized costs related to our internal-use software. Our investing activities consumed $201.4 million of cash during 2020. We used $175.0 million in cash (net of cash received) for the EMT, NMS and ARTeSYN Acquisitions. Capital expenditures consumed $26.3 million as we continue to increase our manufacturing capacity worldwide.
Our investing activities consumed $233.2 million of cash during 2022, mainly due to $88.3 million of capital expenditures in 2022 as we continued to increase our manufacturing capacity worldwide. Of these expenditures, $3.5 million represented capitalized costs related to our internal-use software for 2022.
Cash flows For the Years Ended December 31, 2022 vs 2021 2021 vs 2020 2022 2021 2020 $ Change $ Change (Amounts in thousands) Cash provided by (used in): Operating activities $ 172,083 $ 119,016 $ 62,625 $ 53,067 $ 56,391 Investing activities (233,236 ) (221,169 ) (201,385 ) (12,067 ) (19,784 ) Financing activities (13,337 ) 961 305,916 (14,298 ) (304,955 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (5,866 ) (12,286 ) 12,729 6,420 (25,015 ) Net (decrease) increase in cash, cash equivalents and restricted cash $ (80,356 ) $ (113,478 ) $ 179,885 $ 33,122 $ (293,363 ) Operating activities For 2022, our operating activities provided cash of $172.1 million reflecting net income of $186.0 million and non-cash charges totaling $49.9 million primarily related to depreciation, amortization, contingent consideration adjustments, amortization of debt discount and issuance costs, deferred income taxes and stock-based compensation charges.
Cash flows For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change (Amounts in thousands) Cash provided by (used in): Operating activities $ 113,918 $ 172,083 $ (58,165 ) Investing activities (123,275 ) (233,236 ) 109,961 Financing activities 248,961 (13,337 ) 262,298 Effect of exchange rate changes on cash, cash equivalents and restricted cash (11,739 ) (5,866 ) (5,873 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 227,865 $ (80,356 ) $ 308,221 Operating activities For 2023, our operating activities provided cash of $113.9 million reflecting net income of $41.6 million and non-cash charges totaling $81.0 million primarily related to amortization of inventory step-up charges, depreciation, intangible amortization, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges and loss on extinguishment of debt.
This purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets and deferred revenue obligations. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management.
The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management. Any excess of purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.
In connection with the acquisitions, the Company has an obligation to pay up to $62.5 million (undiscounted) in contingent consideration earnout payments in cash over a three-year performance period beginning January 1, 2022 and ending December 31, 2024. See Note 3, “Fair Value Measurements,” and Note 4, “Acquisitions,” for additional information.
In 2023, we acquired two companies for an aggregate of $186.6 million in cash, net of cash acquired. In connection with the acquisitions, the Company has an obligation to pay up to $52.0 million (undiscounted) in contingent consideration earnout payments in cash over a two-year earnout period beginning January 1, 2023 and ending December 31, 2024).
Net Operating Loss Carryforwards At December 31, 2022, we had federal net operating loss carryforwards of $42.9 million, state net operating loss carryforwards of $0.8 million, and foreign net operating loss carryforwards of $4.9 million. Federal net operating loss carryforwards of $7.3 million will expire at various dates through 2037.
Net Operating Loss Carryforwards At December 31, 2023, we had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $1.5 million, and foreign net operating loss carryforwards of $4.9 million.
This process consists of a thorough review of historical collection experience, current aging status of the customer 38 accounts, financial condition of our customers, and whether the receivables involve retainages. We also consider the economic environment of our customers, both from a marketplace and geographic perspective, in evaluating the need for an allowance.
Allowance for credit losses We evaluate our global accounts receivable through a continuous process of assessing our portfolio on an individual customer and overall basis. This process consists of a thorough review of historical collection experience, current aging status of the customer accounts, financial condition of our customers, and whether the receivables involve retainages.
Transaction costs attributable to the liability component are amortized to amortization of debt issuance costs on the consolidated statements of comprehensive income. Amortization of debt issuance costs increased during 2022, as compared to 2021. This is a result of the decrease in the balance of debt issuance costs that are being amortized.
Amortization of debt issuance costs Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the consolidated statements of comprehensive income. Amortization of debt issuance costs increased during 2023, as compared to 2022.
Recent accounting standards update See Note 2, “Summary of Significant Accounting Policies – Recent Accounting Standards Updates,” to our consolidated financial statements included in this report for more information. 42 Results of Operations The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.
Results of Operations The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.
As these costs decrease, the carrying value of the debt increases and interest calculated based on the carrying value increases as well. 46 Other expenses, net The change in other expenses, net in 2022, compared to 2021, is primarily attributable to realized foreign currency losses related to transactions with customers and vendors.
Other income (expenses), net The changes in other expenses, net in 2023, as compared to 2022, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries.
A detailed explanation and a reconciliation of each non-GAAP financial measures to its most comparable GAAP financial measures are described below. We include this financial information because we believe these measures are helpful to investors in providing a comparison of our financial results between periods that more accurately reflects how management reviews its financial results.
We include this financial information because we believe these measures provide a more accurate comparison of our financial results between periods that more accurately reflects how management reviews its financial results and measures the performance of our ongoing operations for the periods in which such changes incurred.
Revenue from the sale of our products which make up our filtration, chromatography, process analytics and proteins franchises comes from the sale of a number of products as described in Part I, Item 1. "Business - Our Products" of this report.
(“Polymem”) from July 1, 2021, as well as BioFlex Solutions LLC (“BioFlex”) and Newton T&M Corp (“NTM”) from December 16, 2021 through December 31, 2021. 2021 revenue for proteins products includes revenue related to Avitide from September 20, 2021 through December 31, 2021. 45 Revenue from the sale of our products which make up our filtration, chromatography, process analytics and proteins franchises comes from the sale of a number of products as described in Part I, Item 1.
Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue.
“ Business - Our Products” of this report. Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue. For 2023, product revenue decreased by $162.8 million, or 20.3%, as compared to 2022.
The following are reconciliations of net income and fully diluted earnings per share in accordance with GAAP to non-GAAP adjusted net income and adjusted fully diluted earnings per share for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 Fully Diluted Fully Diluted Earnings per Earnings per Amount Share* Amount Share* (Amounts in thousands, except per share data) GAAP net income $ 185,959 $ 3.24 $ 128,291 $ 2.24 Non-GAAP adjustments to net income: Inventory step-up charges — — 2,130 0.04 Acquisition and integration costs 9,514 0.17 18,001 0.31 Contingent consideration expense (28,729 ) (0.50 ) 5,865 0.10 Intangible amortization 27,016 0.47 21,941 0.38 Loss on conversion of debt — — 13 0.00 Amortization of debt issuance costs (1) 1,815 0.03 1,436 0.02 Non-cash interest expense (1) — — 10,094 0.18 Tax effect on non-GAAP charges (7,002 ) (0.12 ) (12,515 ) (0.22 ) Non-GAAP adjusted net income $ 188,573 $ 3.28 $ 175,256 $ 3.06 (1) See Note 2, "Summary of Significant Accounting Policies - Earnings Per Share," in this report, for more information on the effects of adopting ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)," which we adopted effective January 1, 2022, to these financial statement line items. * Note that earnings per share amounts may not add due to rounding. 48 Adjusted EBITDA Adjusted EBITDA is measured by taking net income as reported in accordance with GAAP, excluding investment income, interest expense, taxes, depreciation and intangible amortization, acquisition and integration costs, inventory step-up charges, loss on conversion of debt and contingent consideration fair value adjustments booked through our consolidated statements of comprehensive income.
The following is a reconciliation of net income in accordance with GAAP to adjusted EBITDA for years ended December 31, 2023 and 2022: For the Years Ended December 31, 2023 2022 (Amounts in thousands) GAAP net income $ 41,577 $ 185,959 Non-GAAP EBITDA adjustments to net income: Investment income (24,135 ) (6,978 ) Interest expense 1,951 1,162 Amortization of debt issuance costs 8,075 1,815 Income tax provision 22,555 33,181 Depreciation 36,994 23,859 Intangible amortization 31,091 27,126 EBITDA 118,108 266,124 Other non-GAAP adjustments: Inventory step-up charges 1,238 — Acquisition and integration costs 5,861 9,514 Restructuring costs (1)(3) 28,384 — Contingent consideration (30,569 ) (28,729 ) Loss on extinguishment of debt 12,676 — Foreign currency impact of certain intercompany loans (4) (7,743 ) — Adjusted EBITDA $ 127,955 $ 246,909 (1) See Note 5, “ Restructuring Plan,” in this report, for more information on the restructuring activities in 2023. 50 (2) See Note 2, “ Summary of Significant Accounting Policies - Earnings Per Share,” in this report, for more information on the effects of adopting ASU 2020-06, “ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40),” which we adopted effective January 1, 2022, to these financial statement line items.
We have experienced, and expect to continue to experience, cost inflation, primarily in raw materials, and other supply chain costs, as a result of global macroeconomic trends, including the conflict between Russia and Ukraine, government-mandated actions in response to the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-2 coronavirus ("COVID-19"), and labor shortages.
We have experienced, and expect to continue to experience, cost inflation, primarily in raw materials, and other supply chain costs, as a result of global macroeconomic trends, including global geopolitical conflicts and labor shortages. Actions taken to mitigate supply chain disruptions and inflation, including price increases and productivity improvements, have generally been successful in offsetting the impact of these trends.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Our foreign currency exposures include the Swedish krona, Euro, British pound, Chinese yuan, Japanese yen, Singapore dollar, South Korean won and Indian rupee; of these, the primary foreign currency exposures are the Swedish kronor, Euro and Chinese yuan. Exchange gains or losses resulting from the translation between the transactional currency and the functional currency are included in net income.
Our foreign currency exposures include the Swedish krona, Euro, British pound, Chinese yuan, Japanese yen, Singapore dollar, South Korean won and Indian rupee; of these, the primary foreign currency exposures are the Swedish krona, Euro and Chinese yuan. Exchange gains or losses resulting from the translation between the transactional currency and the functional currency are included in net income.
As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of December 31, 2022. We manage our investment portfolio in accordance with our investment policy or approval by the Board of Directors.
As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of December 31, 2023. We manage our investment portfolio in accordance with our investment policy or approval by the Board of Directors.
Fluctuations in exchange rates may adversely affect our results of operations, financial position and cash flows. We currently do not seek to hedge this exposure to fluctuations in exchange rates. Although a majority of our contracts are denominated in U.S. dollars, 38.2% and 37.5% of total revenues were denominated in foreign currencies during 2022 and 2021, respectively. 53
Fluctuations in exchange rates may adversely affect our results of operations, financial position and cash flows. We currently do not seek to hedge this exposure to fluctuations in exchange rates. Although a majority of our contracts are denominated in U.S. dollars, 38.5% and 38.2% of total revenues were denominated in foreign currencies during 2023 and 2022, respectively.
As a result, we have been exposed to potential loss from market risks that may occur as a result of changes in interest rates, changes in credit quality of the issuer or otherwise.
As a result, we have been exposed to potential loss from market risks that may occur as a result of changes in interest rates, changes in credit quality of the issuer or otherwise. We do not have any such investments as of December 31, 2023.
The primary objectives of our investment policy are to preserve principal, maintain a high degree of liquidity to meet operating and other needs, and obtain competitive returns subject to prevailing market conditions without significantly increasing risk.
The primary objectives of our investment policy are to preserve principal, maintain a high degree of liquidity to meet operating and other needs, and obtain competitive returns subject to prevailing market conditions without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents in high-quality securities, including money market funds.
We do not expect any material loss from our marketable security investments and therefore believe that our potential interest rate exposure is limited. Foreign Exchange Risk The reporting currency of the Company is U.S. dollars, and the functional currency of each of our foreign subsidiaries is its respective local currency.
Foreign Exchange Risk The reporting currency of the Company is U.S. dollars, and the functional currency of each of our foreign subsidiaries is its respective local currency.
Our investment portfolio consists of cash and cash equivalents (cash and money market funds) that total $523.5 million and marketable securities (U.S. treasury bills) of $100.3 million within short-term marketable securities on the consolidated balance sheet as of December 31, 2022.
Our investment portfolio consists of cash and cash equivalents (cash and money market funds) that total $751.3 million on the consolidated balance sheets as of December 31, 2023. Our cash equivalent investments (money market funds) have short-term maturity periods that dampen the impact of market or interest rate risk.
Removed
Our cash equivalent investments (money market funds) have short-term maturity periods that dampen the impact of market or interest rate risk. Our marketable securities consist of U.S. treasury bills with a short term maturity period of 180 days.
Removed
To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in high-quality securities, including money market funds and U.S. treasury bills. The marketable securities are classified as held-to-maturity and consequently are recorded at amortized cost on our consolidated balance sheet in accordance with accounting principles generally accepted in the United States.

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