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What changed in MARAVAI LIFESCIENCES HOLDINGS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MARAVAI LIFESCIENCES HOLDINGS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+461 added−541 removedSource: 10-K (2025-03-18) vs 10-K (2024-02-29)

Top changes in MARAVAI LIFESCIENCES HOLDINGS, INC.'s 2024 10-K

461 paragraphs added · 541 removed · 332 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

81 edited+17 added−84 removed71 unchanged
Biggest changeJurisdiction Patent Number Title Expiration United States 10494399 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 10519189 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 10913768C1 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11414453 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11878991 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11578095 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3352584 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3954225 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3906789 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 4104687 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 4140491 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Australia 2016328645 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Australia 2021206780 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Canada 2999274 Compositions and methods for synthesizing 5′-Capped RNAs 2036 China ZL 202310734863.0 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Hong Kong 40080484 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Japan 6814997 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Japan 7082174 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Korea, Republic of 10-2500198 Compositions and methods for synthesizing 5′-Capped RNAs 2036 The following patents relate to our MockV related products and technology.
Biggest changeJurisdiction Patent Number Title Expiration United States 10494399 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 10519189 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 10913768C1 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11414453 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11878991 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 11578095 Compositions and methods for synthesizing 5′-Capped RNAs 2036 United States 12103944 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3352584 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3954225 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 3906789 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 4104687 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Europe 4140491 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Australia 2016328645 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Australia 2021206780 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Australia 2023201915 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Canada 2999274 Compositions and methods for synthesizing 5′-Capped RNAs 2036 China ZL 202310734863.0 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Hong Kong HK40080484 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Hong Kong HK40068021 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Hong Kong HK40054592 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Hong Kong HK40075972 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Japan 6814997 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Japan 7082174 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Japan 7594563 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Korea, Republic of 10-2500198 Compositions and methods for synthesizing 5′-Capped RNAs 2036 Korea, Republic of 10-2670937 Compositions and methods for synthesizing 5′-Capped RNAs 2036 15 Table of Contents The following patents relate to our MockV related products and technology.
Some customers may choose to use generic assays early in development and migrate to process-specific assays later. The trend in recent years has been for customers to increasingly use generic assays throughout their development and commercialization pathway, relying on our expertise, the established performance of our assays supported by our comprehensive state-of-the-art assay qualification services.
Some customers may choose to use generic assays early in development and migrate to process-specific assays later. The trend in recent years has been for customers to increasingly use generic assays throughout their development and commercialization pathway, relying on our expertise and the established performance of our assays supported by our comprehensive state-of-the-art assay qualification services.
Nucleoside triphosphates (“NTPs”) are the precursors to DNA and RNA. They are composed of a nitrogen base bound to either ribose or deoxyribose with three phosphate groups added to the sugar. We manufacture NTPs that are used in polymerase chain reactions (“PCR”), in sequencing reactions and in the manufacture of mRNA.
Nucleoside triphosphates (“NTPs”) are the precursors to DNA and RNA. They are composed of a nitrogen base bound to either ribose or deoxyribose with three phosphate groups added to the sugar. We manufacture NTPs that are used in polymerase chain reactions, in sequencing reactions and in the manufacture of mRNA.
DNA, a double stranded molecule, is unwound and copied as mRNA by the enzyme RNA polymerase. mRNA is then transferred out of the nucleus to the cytosol, a component of the cytoplasm of a cell, where it serves as a blueprint for making cellular proteins by a multi-component organelle complex called the ribosome. mRNA has traditionally been a difficult molecule for vaccine and therapeutic purposes. mRNA is inherently unstable compared to DNA and is susceptible to degradation by ubiquitous enzymes called RNases. mRNAs are also physically and chemically fragile and can degrade at elevated temperatures and under shear forces that occur during downstream manufacturing processes.
DNA, a double stranded molecule, is unwound and copied as mRNA by the enzyme RNA polymerase. mRNA is then 5 Table of Contents transferred out of the nucleus to the cytosol, a component of the cytoplasm of a cell, where it serves as a blueprint for making cellular proteins by a multi-component organelle complex called the ribosome. mRNA has traditionally been a difficult molecule for vaccine and therapeutic purposes. mRNA is inherently unstable compared to DNA and is susceptible to degradation by ubiquitous enzymes called RNases. mRNAs are also physically and chemically fragile and can degrade at elevated temperatures and under shear forces that occur during downstream manufacturing processes.
We are a reputable and trusted vendor with a large portfolio, quality brand, knowledgeable technical support, and responsive customer service. In addition to oligonucleotide synthesis service providers, our customer base includes life science, biopharma, and diagnostic companies as well as academic institutions and government organizations, all of which internally manufacture their own oligonucleotide products. Nucleoside triphosphates.
We are a reputable and trusted vendor with a large portfolio, quality brand, knowledgeable technical support, and responsive customer service. In addition to oligonucleotide synthesis service providers, our customer base includes life science, biopharma and diagnostic companies, academic institutions and government organizations, all of which internally manufacture their own oligonucleotide products. Nucleoside Triphosphates.
Most of our TriLink BioTechnologies oligonucleotide products are custom manufactured DNA or RNA sequences, often highly modified and produced as research grade or under GMP conditions for use in development, clinical and commercial applications. Oligonucleotide Synthesis Inputs. Our product offerings through Glen Research include reagents and support supplies for DNA and RNA oligonucleotide synthesis, labeling, modification and purification.
Most of our TriLink BioTechnologies oligonucleotide products are custom manufactured DNA or RNA sequences, often highly modified and produced as RUO or under GMP conditions for use in development, clinical and commercial applications. Oligonucleotide Synthesis Inputs. Our product offerings through Glen Research include reagents and support supplies for DNA and RNA oligonucleotide synthesis, labeling, modification and purification.
Both the Flanders 1 and Flanders 2 facilities include the introduction of integrated manufacturing systems, quality of water improvements from Reverse Osmosis De-ionized grade water to WFI (“Water For Injection”), which is pharmaceutical grade water, and other facility infrastructure investments to support potential customer needs related to quality.
Both the Flanders 1 and Flanders 2 facilities include integrated manufacturing systems, quality water improvements from Reverse Osmosis De-ionized grade water to WFI (“Water For Injection”), which is pharmaceutical grade water, and other facility infrastructure investments to support potential customer needs related to quality.
Issued patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, utility patents issued for applications are granted a term of 21 years from the earliest effective filing date of a non-provisional patent application.
Issued patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, utility patents issued for applications are granted a term of 20 years from the earliest effective filing date of a non-provisional patent application.
The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 21 Table of Contents
The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 17 Table of Contents
We are entitled to terminate the Broad Patent License Agreement for convenience at any time on at least three (3) months written notice, in which case we must continue to pay license maintenance fees and royalties as noted above for the sale of products that are not covered by the specific claims of the licensed patent rights but are otherwise derived from such 15 Table of Contents licensed patent rights or from products covered by such licensed patent rights.
We are entitled to terminate the Broad Patent License Agreement for convenience at any time on at least three (3) months written notice, in which case we must continue to pay license maintenance fees and royalties as noted above for the sale of products that are not covered by the specific claims of the licensed patent rights but are otherwise derived from such licensed patent rights or from products covered by such licensed patent rights.
As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 18 Table of Contents The following granted patents relate to our CleanCap products and technology.
As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 14 Table of Contents The following granted patents relate to our CleanCap products and technology.
If customers choose to develop process-specific assays, we offer custom antibody production and assay development as well as characterization services to meet their needs. Our comprehensive catalog of Cygnus Technologies HCP ELISA kits cover 24 expression platforms and provides the specificity and sensitivity to detect impurities with reproducibility, which supports regulatory compliance.
If customers choose to develop process-specific assays, we offer custom antibody production and assay development as well as characterization services to meet their needs. Our comprehensive catalog of Cygnus Technologies HCP ELISA kits covers 25 expression platforms and provides the specificity and sensitivity to detect impurities with reproducibility, which supports regulatory compliance.
Issued patents may be extended beyond the natural 21 year term for regulatory or administrative delay in accordance with provisions of applicable local law.
Issued patents may be extended beyond the natural 20-year term for regulatory or administrative delay in accordance with provisions of applicable local law.
To prevent disclosure of trade secrets to others, it is our policy to enter into nondisclosure, invention assignment and confidentiality agreements with parties who have access to trade secrets, such as our employees, collaborators, outside scientific collaborators, consultants, advisors 19 Table of Contents and other third parties.
To prevent disclosure of trade secrets to others, it is our policy to enter into nondisclosure, invention assignment and confidentiality agreements with parties who have access to trade secrets, such as our employees, collaborators, outside scientific collaborators, consultants, advisors and other third parties.
Our brands, products and the end markets they serve are depicted in the following image: Nucleic Acid Production (78% of Revenue for the Year Ended December 31, 2023) We are a global provider of highly modified, complex nucleic acids and related products. We have recognized expertise in complex chemistries and products provided under exacting quality standards.
Our brands, products and the end markets they serve are depicted in the following image: Nucleic Acid Production (76% of Revenue for the Year Ended December 31, 2024) We are a global provider of highly modified, complex nucleic acids and related products. We have recognized expertise in complex chemistries and products provided under exacting quality standards.
Quick turnaround times and the ability to produce at scale are essential requirements in this segment. In the oligonucleotide synthesis inputs market, we compete against large distributor-manufacturers like Thermo Fisher and Millipore Sigma while also serving them as customers.
Quick turnaround times and the ability to produce at scale are essential requirements in this segment. 10 Table of Contents In the oligonucleotide synthesis inputs market, we compete against large distributor-manufacturers like Thermo Fisher and Millipore Sigma while also serving them as customers.
Products in this category include kits for measuring Protein A leachate, which results from the affinity purification method used for monoclonal antibody therapeutic agents; ELISA kits for measuring additives in growth media, such as bovine serum albumin; kits for measuring host cell DNA; ELISA kits to detect and quantify residual endonuclease impurities in recombinant viral vector and vaccine preparations: and ELISA kits to quantify residual AAV2, AAV8, AAV9 ligands resulting from affinity purification method used for adeno associated virus (AAV)-based gene therapies.
Our products in this category include kits for measuring Protein A leachate, which results from the affinity purification method used for monoclonal antibody therapeutic agents; ELISA kits for measuring additives in growth media, such as bovine serum albumin; kits for measuring host cell DNA; ELISA kits to detect and quantify residual endonuclease impurities in recombinant viral vector and vaccine preparations; and ELISA kits to quantify residual AAV2, AAV8 and AAV9 ligands resulting from affinity purification method used for adeno associated virus (AAV)-based gene therapies. 8 Table of Contents Viral Clearance Prediction kits .
Cygnus Technologies product categories include HCP ELISA kits, other bioprocess impurity and contaminant ELISA kits, viral clearance prediction kits, ancillary reagents and custom services. 9 Table of Contents HCP ELISA kits. HCP ELISA kits are bioassays used to detect residual proteins from the expression system used in bioproduction.
Cygnus Technologies product categories include HCP ELISA kits, other bioprocess impurity and contaminant ELISA kits, viral clearance prediction kits, ancillary reagents and custom services. HCP ELISA Kits. HCP ELISA kits are bioassays used to detect residual proteins from the expression system used in bioproduction.
Our investor relations website also provides notifications of news or announcements regarding our financial performance and other items that may be material or of interest to our investors, 20 Table of Contents including SEC filings, investor events, press and earnings releases, and blogs.
Our investor relations website also provides notifications of news or announcements regarding our financial performance and other items that may be material or of interest to our investors, including SEC filings, investor events, press and earnings releases.
They have decades of combined experience and expertise on the forefront of life sciences innovation. In addition, as of December 31, 2023, approximately 24% of our workforce have earned advanced degrees and all receive rigorous on the job training.
They have decades of combined experience and expertise on the forefront of life sciences innovation. In addition, as of December 31, 2024, approximately 28% of our workforce have earned advanced degrees and all receive rigorous on the job training.
Innovation, Proprietary Technologies and Expertise Underpin Our Portfolio Our expertise in complex chemistries leads customers to seek our collaboration in designing complex products that meet high performance expectations. Based on the responses to the Industry Analysis, we believe the solutions we provide, in many cases, cannot be provided effectively by our competitors.
Innovation, Proprietary Technologies and Expertise Underpin Our Portfolio Our expertise in complex chemistries leads customers to seek our collaboration in designing complex products that meet high performance expectations. We believe the solutions we provide, in many cases, cannot be provided effectively by our competitors.
In 2023, we initiated a bi-monthly “Leading Together” people leader series with all levels of our people leaders to ensure they had the critical knowledge, perspective, and tools to develop their people and align their teams towards company goals and objectives.
In 2024, we continued our bi-monthly “Leading Together” people leader series with all levels of our people leaders to ensure they had the critical knowledge, perspective, and tools to develop their people and align their teams towards company goals and objectives.
Within each business, we have established Quality Management Systems (“QMS”) responsible for risk based internal audit programs to manage regulatory requirements and client quality expectations.
Within each business, we have established Quality Management Systems (“QMS”) responsible for risk based internal audit programs to manage regulatory requirements and client 12 Table of Contents quality expectations.
Jurisdiction Patent Number Title Expiration United States 9632087 Methods for evaluating viral clearance from a biopharmaceutical solution employing mock viral particles 2034 United States 10309963 Methods for evaluating viral clearance from a process solution employing mock viral particles 2034 Europe 3044339 Methods and kits for quantifying the removal of mock virus particles from a purified solution 2034 Australia 2014320015 Methods and kits for quantifying the removal of Mock Virus Particles from a purified solution 2034 Australia 2021200484 Methods and kits for quantifying the removal of Mock Virus Particles from a purified solution 2034 China 105899684 Methods and kits for quantifying pseudoviral particles removed from purified solution 2034 Japan 6549126 Methods and kits for removal of mock virus particles from a purified solution 2034 United States 11754565 Methods and kits for removal of mock virus particles from a purified solution 2034 Trademarks.
Jurisdiction Patent Number Title Expiration United States 9632087 Methods for evaluating viral clearance from a biopharmaceutical solution employing mock viral particles 2034 United States 10309963 Methods for evaluating viral clearance from a process solution employing mock viral particles 2034 Europe 3044339 Methods and kits for quantifying the removal of mock virus particles from a purified solution 2034 Europe 3250696 Stock Solution of Retrovirus Like Particles with Method and Kit 2036 Australia 2014320015 Methods and kits for quantifying the removal of Mock Virus Particles from a purified solution 2034 Australia 2021200484 Methods and kits for quantifying the removal of Mock Virus Particles from a purified solution 2034 China 105899684 Methods and kits for quantifying pseudoviral particles removed from purified solution 2034 Japan 6549126 Methods and kits for removal of mock virus particles from a purified solution 2034 United States 11754565 Methods and kits for removal of mock virus particles from a purified solution 2034 Trademarks.
Our compensation and comprehensive benefits packages are designed to attract and retain the talent we need to be competitive in the markets we serve. Believing in the value of ownership, we extend equity awards to all full-time employees through our 2020 Omnibus Incentive Plan, alongside opportunities to participate in our 2020 Employee Stock Purchase Plan.
Our compensation and benefits packages are designed to attract and retain the talent we need to be competitive in the markets we serve. We extend equity awards to all full-time employees through our 2020 Omnibus Incentive Plan, alongside opportunities to participate in our 2020 Employee Stock Purchase Plan, both to align employee and shareholder interests.
For over 25 years, the Cygnus Technologies brand has been associated with products and services that enable the detection of impurities present in bioproduction. Our biologics safety testing products are used during development and scale-up, during the regulatory approval process and 8 Table of Contents throughout commercialization.
Biologics Safety Testing (24% of Revenue for the Year Ended December 31, 2024) For over 25 years, the Cygnus Technologies brand has been associated with products and services that enable the detection of impurities present in bioproduction. Our biologics safety testing products are used during development and scale-up, during the regulatory approval process and throughout commercialization.
Our enzymes are produced under the controls of an ISO 13485:2016 compliant QMS. Our supply chain is supported by a diverse network of specialized suppliers and transportation partners and undergoes regular evaluations to assess supplier quality and identify risks, including those associated with supply concentration. These proactive evaluations enable us to implement strategic measures to effectively manage and mitigate risks.
Our supply chain is supported by a diverse network of specialized suppliers and transportation partners and undergoes regular evaluations to assess supplier quality and identify risks, including those associated with supply concentration. These proactive evaluations enable us to implement strategic measures to effectively manage and mitigate risks.
Cap analogs are a component of mRNA that aids in protein production as well as in making mRNA more stable inside cells. For mRNA to serve as a template to make a protein, it requires a special cap at the 5’ end of the molecule. The cap structure also affects the stability of the mRNA.
CleanCap analogs principally serve the mRNA vaccine and therapeutics markets. Cap analogs are a component of mRNA that aids in protein production as well as in making mRNA more stable inside cells. For mRNA to serve as a template to make a protein, it requires a special cap at the 5’ end of the molecule.
The facility was designed and built by us in conjunction with the building owner to contain fully functional chemical and biological manufacturing operations from material receiving to product distribution and has its own loading dock, manufacturing gas delivery system, solvent delivery and waste system, ISO Class 8 and ISO Class 7 designated customer manufacturing suites and integrated building management systems for required site control.
The facility was designed and built by us in conjunction with the building owner to contain fully functional chemical and biological manufacturing operations from material receiving to product distribution and has its own loading dock, manufacturing gas delivery system, solvent delivery and waste system, ISO Class 8 and ISO Class 7 designated customer manufacturing suites and integrated building management systems for required site control. 11 Table of Contents In addition to the Wateridge facility, we have two other facilities in San Diego, Flanders 1 and Flanders 2.
In certain cases, like our CleanCap technology, our know-how features differentiated performance characteristics and is backed by intellectual property. In other cases, such as our HCP products, our antibodies are proprietary and therefore can only be supplied by us.
In certain cases, like our CleanCap technology, our know-how features differentiated performance characteristics and is backed by intellectual property. In other cases, such as our HCP products, our antibodies are proprietary and therefore can only be supplied by us. We believe the proprietary nature of our expertise and products solidifies our long-term customer relationships.
Viral Clearance Prediction kits . In 2020, Cygnus Technologies introduced the MockV® Minute Virus of Mice (“MVM”) kit, a novel, proprietary viral clearance prediction tool that includes a non-infectious “mock virus particle” mimicking the physicochemical properties of live virus that may be present endogenously in the drug substance or introduced during bioproduction.
Following its 2020 acquisition of the MockV® technology, Cygnus Technologies has introduced the Minute Virus of Mice kit and the MockV RVLP Kit, which are novel, proprietary viral clearance prediction tools that includes a non-infectious “mock virus particle” mimicking the physicochemical properties of live virus that may be present endogenously in the drug substance or introduced during bioproduction.
Lack of a cap can result in activation of the innate immune system, which can affect the production of the desired protein or elicit undesired biological effects. We offer a suite of CleanCap analogs that are specifically made for therapeutics and vaccines. CleanCap analogs are sold as a stand-alone reagents or bundled with other mRNA products.
The cap structure also affects the stability of the mRNA. Lack of a cap can result in activation of the innate immune system, which can affect the production of the desired protein or elicit undesired biological effects. We offer a suite of CleanCap analogs that are specifically made for therapeutics and vaccines.
In addition, the specific activities of some of our businesses require us to hold specialized licenses for the manufacture, distribution and/or marketing of particular products. 16 Table of Contents All of our sites are subject to licensing and regulation, as appropriate under federal, state and local laws relating to: • the surface and air transportation of chemicals, biological reagents and hazardous materials; • the handling, use, storage and disposal of chemicals (including toxic substances), biological reagents and hazardous waste; • the procurement, handling, use, storage and disposal of biological products for research purposes; • the safety and health of employees and visitors to our facilities; and • protection of the environment and general public.
All of our sites are subject to licensing and regulation, as appropriate under federal, state and local laws relating to: • the surface and air transportation of chemicals, biological reagents and hazardous materials; • the handling, use, storage and disposal of chemicals (including toxic substances), biological reagents and hazardous waste; • the procurement, handling, use, storage and disposal of biological products for research purposes; • the safety and health of employees and visitors to our facilities; and • protection of the environment and general public.
The mRNA molecules may serve as APIs for diverse applications, such as enzyme replacement therapies, gene editing therapies and vaccines. We offer both research grade material and material made under GMP conditions for early phase clinical trials. RNA Capping. Within the mRNA category, we also offer our patented CleanCap technology. CleanCap analogs principally serve the mRNA vaccine and therapeutics markets.
The mRNA molecules may serve as APIs for diverse applications, such as enzyme replacement therapies, gene editing therapies and vaccines. We offer both research grade material and material made under GMP conditions to support all phases of development. RNA Capping. Within the mRNA category, we also offer our patented CleanCap technology.
Our customers are required to follow regulatory pathways that are not always known, which may cause additional unforeseen requirements placed on us as their contract manufacturer and delays in advancing to the next stage of product development.
Customers’ biopharmaceutical products early in their development have a high failure rate and often do not advance through the clinical stages to commercialization. Our customers are required to follow regulatory pathways that are not always known, which may cause additional unforeseen requirements placed on us as their contract manufacturer and delays in advancing to the next stage of product development.
We serve many of our biopharmaceutical customers, especially in our nucleic acid production segment, via direct sales worldwide. Our distributors also sell our products in over 40 countries and provide customer service and local sales and marketing. Competition We compete with a range of companies across our segments.
Our distributors also serve our customers in over 40 countries and provide customer service and local sales and marketing. Competition We compete with a range of companies across our segments.
We offer the following nucleic acid products: mRNA, RNA Capping (CleanCap), oligonucleotides, oligonucleotide inputs, nucleoside triphosphates, custom nucleic acid chemistry, plasmid DNA and specialty enzymes. mRNA. mRNA is an intermediary molecule that translates the genetic information stored in DNA into proteins. The genetic information stored in DNA is transferred to mRNA in a cellular process called transcription.
We offer the following nucleic acid products: mRNA, RNA Capping (CleanCap), oligonucleotides, oligonucleotide synthesis inputs, nucleoside triphosphates, custom nucleic acid chemistry, and specialty enzymes. We also offer Discovery/RUO and GMP mRNA synthesis through our manufacturing services. mRNA . mRNA is an intermediary molecule that translates the genetic information stored in DNA into proteins.
The second method is to add a synthetic cap analog into the transcription reaction such that the mRNA is transcribed and capped in a single step. Anti-reverse cap analog (“ARCA”) is an example of a cap analog that is added to the transcription reaction. This avoids the workflow challenges of the enzymatic process, but typically results in lower yields.
Anti-reverse cap analog (“ARCA”) is an example of a cap analog that is added to the transcription reaction. This avoids the workflow challenges of the enzymatic process, but typically results in lower yields. Like ARCA, CleanCap analogs are synthetic, chemically-made mRNA 5’ cap analogs added to the transcription process in a single step.
As a leading life sciences company, we are committed to the health, safety and well-being of our employees. All employees that could be exposed to potential hazards are required to complete annual health and safety training, including laboratory chemical safety, hazard communication and hazardous waste management trainings.
All employees that could be exposed to potential hazards are required to complete annual health and safety training, including laboratory chemical safety, hazard communication and hazardous waste management trainings.
Our products address the key phases of biopharmaceutical development spanning research to commercialization and include complex nucleic acids for vaccine, therapeutic and diagnostic applications, custom enzymes for research and diagnostic use and antibody-based products to detect impurities during the production of biopharmaceutical products.
Our comprehensive product portfolio addresses the critical stages of biopharmaceutical development, offering: • complex nucleic acids for vaccine, therapeutic and diagnostic applications; • custom enzymes for research and diagnostic use; and • antibody-based solutions to detect impurities during the production of biopharmaceutical products.
Our workforce represents a diversity of backgrounds, with 44% identifying as female, 56% as male, and 52% as ethnically or racially diverse as of December 31, 2023. We take pride in the fact that, as of December 31, 2023, 24% of our team held advanced degrees, underscoring our emphasis on science and innovation.
Our workforce represents a diversity of backgrounds, with 44.3% identifying as female, 55.5% as male, 0.2% as non-binary, and approximately 48.6% as ethnically or 16 Table of Contents racially diverse. We take pride in the fact that, as of December 31, 2024, 27.7% of our team held advanced degrees, underscoring our emphasis on science and innovation.
However, given CleanCap’s high yield and process efficiency, many customers who previously insourced these processes have begun to partner with us. Based on the Industry Analysis, we believe our products and services are more effective than those of our competitors.
However, given CleanCap’s high yield and process efficiency, many customers who previously insourced these processes have begun to partner with us. We believe our products and services are more effective than those of our competitors. Deep scientific expertise, intellectual property protection and specialty equipment serve as barriers to entry in this space.
Our core offerings include mRNA, long and short oligonucleotides, our proprietary CleanCap mRNA capping technology, mRNA building blocks, oligonucleotide building blocks and specialty enzymes. Our offerings address key customer needs for critical components, from research to GMP-grade raw materials and API manufacturing. We market our nucleic acid products under the TriLink BioTechnologies®, Glen Research and Alphazyme brands.
Our core offerings include mRNA, long and short oligonucleotides, our proprietary CleanCap® mRNA capping technology, mRNA building blocks, oligonucleotide building blocks and specialty enzymes. Our offerings address key customer needs for critical components, from research to good manufacturing processes (“GMP”) grade raw materials and active pharmaceutical ingredient (“API”) manufacturing.
Item 1. Business Overview Maravai LifeSciences Holdings, Inc. (also referred to in this document as “Maravai”, “we”, “us” or “the Company”) is a leading life sciences company providing critical products to enable the development of novel vaccines, drug therapies, and diagnostics, and to support research on human diseases.
Item 1. Business Description of Business Maravai LifeSciences Holdings, Inc. (also referred to in this document as “Maravai,” “we,” “us,” “our” or “the Company”) is a leading life sciences company dedicated to providing critical products that drive the development of groundbreaking vaccines, drug therapies, cell and gene therapies, and diagnostics.
To date, there have been no material effects upon our earnings or competitive position resulting from our compliance with applicable laws or regulations enacted or adopted relating to the protection of the environment. Our capital and operating expenditures for pollution control in 2023 and 2022 were not material and are not expected to be material in 2024.
To date, there have been no material effects upon our earnings or competitive position resulting from our compliance with applicable laws or regulations enacted or adopted relating to the protection of the 13 Table of Contents environment.
Based on the Industry Analysis, we believe we have a reputation for our expertise in the RNA space with talented scientists who are constantly pushing the frontier of RNA science. This scientific expertise and the required high-cost equipment serve as barriers to entry. In addition to our expertise, we believe our GMP cleanroom manufacturing process differentiates us from competitors.
For our mRNA offerings, we compete with Aldevron, Patheon, eTheRNA, Lonza, Catalent, and Samsung Biologics, among others. We believe we have a reputation for our expertise in the RNA space with talented scientists who are constantly pushing the frontier of RNA science. This scientific expertise and the required high-cost equipment serve as barriers to entry.
Like ARCA, CleanCap analogs are synthetic, chemically-made mRNA 5’ cap analogs added to the transcription process in a single step. Unlike ARCA, however, CleanCap results in significantly higher levels of capping efficiency, resulting in very low levels of uncapped mRNA, which in turn minimizes the risk of activation of the innate immune system.
Unlike ARCA, however, CleanCap results in significantly higher levels of capping efficiency, resulting in very low levels of uncapped mRNA, which in turn minimizes the risk of activation of the innate immune system. In addition, CleanCap’s higher mRNA yields compared to ARCA result in lower cost of goods.
This enzymatic method has several drawbacks, including the high cost of the capping enzymes as well as the need to perform additional processing steps to the mRNA to remove enzymes and byproducts of the capping reaction. While capping efficiency is usually high, the extra processing steps typically result in degradation and mRNA of poorer quality.
The cap can be added post mRNA synthesis by an enzymatic process. This enzymatic method has several drawbacks, including the high cost of the capping enzymes as well as the need to perform additional processing steps to the invitro-transcription (“IVT”) synthesis process to remove enzymes and byproducts of the capping reaction.
In addition, we have pioneered advanced orthogonal methods including antibody affinity extraction (AAE™) and mass spectrometry for HCP antibodies coverage analysis and HCP identification, which we provide as custom services. Our Competitive Strengths We believe we are a leader in providing nucleic acid products and services and biologics safety testing products and services to biopharmaceutical customers worldwide.
We provide process-specific antibody and ELISA development, qualification and maintenance services. In addition, we have pioneered advanced orthogonal methods including antibody affinity extraction (AAE™), mass spectrometry for HCP antibodies coverage analysis and HCP identification, which we provide as custom services.
We are well positioned to leverage our service capabilities and deep understanding of mRNA biology to serve our customers’ needs to express these large, complex, peptide-based molecules. 12 Table of Contents Nucleic Acid Production Market The nucleic acid production market includes the production and synthesis of reagents for research and manufacturing of DNA and RNA-based biologics, including cell and gene therapies, mRNA therapeutics and synthetic biology approaches.
The nucleic acid production market includes the production and synthesis of reagents for research and manufacturing of DNA and RNA-based biologics, including cell and gene therapies, mRNA therapeutics and synthetic biology approaches. mRNA lies at the core of our capabilities and expertise.
All of the 19 existing FDA-and EMA-approved CAR-T Cell and Gene Therapies use Cygnus Host Cell Protein ELISA kits for HCP testing for commercial product lot release. Four of these 19 therapies were approved in 2023. ELISA is the benchmark method for monitoring levels of process-related impurities during the purification process and in product release testing.
All of the 24 existing FDA-and EMA-approved CAR-T Cell and Gene Therapies use Cygnus Host Cell Protein enzyme-linked immunosorbent assay (“ELISA”) kits for HCP testing for commercial product lot release.
Commercial We have relationships with the following categories of customers: developers of therapeutics and vaccines, other biopharmaceutical and life science research companies, academic institutions and molecular diagnostic companies. Our biopharmaceutical customers include startups, established biotechnology companies and large pharmaceutical companies developing enzyme replacement therapies, gene editing therapies, ex vivo therapies and vaccines.
We believe the quality of our personnel is critical to ensuring the collaborative, long-standing relationships we maintain with many of our customers. Commercial We have relationships with the following categories of customers: developers of therapeutics, cell and gene therapies and vaccines, other biopharmaceutical and life science research companies, academic institutions and molecular diagnostic companies.
Large manufacturers like Integrated DNA Technologies, Thermo Fisher Scientific and EMD Millipore Corporation (“Millipore Sigma”) serve less complex customer needs while we, LGC Biosearch Technologies and GenScript Biotech Corporation serve more complex customer needs. In the custom oligonucleotide market, we have a reputation for accepting complex orders and delivering high purity products that reduce researcher re-work and save money.
In the custom oligonucleotide market, we have a reputation for accepting complex orders and delivering high purity products that reduce researcher re-work and save money.
This brand recognition has been earned over decades. Our manufacturing processes, quality standards, technical support and high-touch customer service ensure that we maintain the reputation of our brands. State-of-the-Art Manufacturing Facilities Our biopharmaceutical customers manufacture their products to meet stringent quality standards under strict regulatory guidelines and expect their critical suppliers to meet their exacting requirements.
State-of-the-Art Manufacturing Facilities Our biopharmaceutical customers manufacture their products to meet stringent quality standards under strict regulatory guidelines and expect their critical suppliers to meet their exacting requirements. Our customers further expect that we have the production capacity to meet their needs in a timely manner.
CleanCap mRNA products represented 69% of our Nucleic Acid Production revenue for the year ended December 31, 2023 (including the revenue from CleanCap products). Oligonucleotides. The oligonucleotide product category supports broad customer applications, including therapeutics, in vitro diagnostics, NGS and CRISPR-based gene editing.
We estimate that revenue from high-volume sales of CleanCap for 6 Table of Contents commercial phase vaccine programs represented approximately 25.4% and 21.0% of our total revenues for the years ended December 31, 2024 and 2023, respectively. Oligonucleotides. The oligonucleotide product category supports broad customer applications, including therapeutics, in vitro diagnostics, NGS and CRISPR-based gene editing.
For custom oligonucleotides, we compete with a number of manufacturers. Custom oligonucleotide providers include those that provide complex, highly modified oligonucleotides and those that provide less complex offerings. In the custom oligonucleotide space, complexity is based on the length of the sequence and level of modification to the phosphate backbone.
In addition to our expertise, we believe our GMP cleanroom manufacturing process differentiates us from competitors. For custom oligonucleotides, we compete with a number of manufacturers. Custom oligonucleotide providers include those that provide complex, highly modified oligonucleotides and those that provide less complex offerings.
We focus on building partnerships with our customers in the emerging market of cell and gene therapy to ensure we are well-positioned to be an extension of their development teams. Our services feature robust quality management systems and include process development and scale-up, phase-appropriate, high-quality plasmid DNA, regulatory submission support, and in-house analytical services for mRNA analysis and characterization.
Our TriLink BioTechnologies GMP mRNA manufacturing services offer a clear pathway for customers running clinical trials. We focus on building partnerships with our customers in the emerging market of cell and gene therapy to ensure we are well-positioned to be an extension of their development teams.
Our manufacturing capabilities for NTPs now includes both research use and GMP-grade. Custom Nucleic Acid Chemistry . Through our acquisition of MyChem LLC in the first quarter of 2022, TriLink BioTechnologies expanded its synthetic chemistry expertise and added proprietary manufacturing processes allowing for the highest purity NTP, amidite and custom nucleotide services.
Our manufacturing capabilities for NTPs now includes both RUO and GMP-grade. Custom Nucleic Acid Chemistry . TriLink BioTechnologies has synthetic chemistry expertise and proprietary manufacturing processes allowing for the highest purity NTP, amidite and custom nucleotide services. We serve a diverse market of diagnostics and therapeutic developers that require novel molecules that are otherwise unavailable on the market.
In addition, CleanCap’s higher mRNA yields compared to ARCA result in lower cost of goods. When compared to enzymatic capping, CleanCap removes the additional downstream purification steps required. 7 Table of Contents We currently offer several variations of the CleanCap molecule, serving the needs of mRNA and self-amplifying RNA developers.
When compared to enzymatic capping, CleanCap removes the additional downstream purification steps required. We currently offer several variations of the CleanCap molecule, serving the needs of mRNA and self-amplifying RNA developers. CleanCap is available in two quality grades, research use only for discovery and development activities, and a GMP-grade for clinical and commercial applications.
This new facility more than doubles our operational square footage and has capacity to support future growth in the manufacture and processing of antibody and HCP ELISA kits. The operations include laboratory, manufacturing, kitting, cold storage, shipping and waste handling capabilities. The fully customized design includes a Mass Spectrometry Center of Excellence and specialized cell culture facilities.
The operations include R&D, laboratory, manufacturing, kitting, cold storage, shipping and waste handling capabilities. The fully customized design includes a Mass Spectrometry Center of Excellence and specialized cell culture facilities. Extensive process flow analysis has been incorporated into the facility design to optimize and enhance both our manufacturing and kit packaging operations.
Flanders 1 will also support an additional increase to batch run sizes and overall throughput. Flanders 2 was purpose built to support GMP-grade manufacturing and to support customers into Phase II clinical trials and beyond.
Flanders 1 provides us with additional GMP manufacturing capacity and the optionality downstream to manufacture materials beyond current quality requirements for mRNA raw materials, including CleanCap. Flanders 1 supports increased batch run sizes and overall throughput. Flanders 2 was purpose built to support GMP-grade manufacturing and to support customers into Phase II clinical trials through commercial mRNA drug substance.
CleanCap is available in two quality grades, research use only for discovery and development activities, and a GMP-grade for clinical and commercial applications. Our newest CleanCap analog, CleanCap M6, was introduced in May 2023 and is our most robust cap analog to date, enabling mRNA that delivers higher levels of protein production.
Our newest CleanCap analog, CleanCap M6, was introduced in May 2023 and is our most robust cap analog to date, enabling mRNA that delivers higher levels of protein production. CleanCap mRNA products represented 72% of our Nucleic Acid Production revenue for the year ended December 31, 2024 (including the revenue from CleanCap products).
Through our acquisition of Alphazyme in the first quarter of 2023, we acquired a purpose-built enzyme production facility in Jupiter, Florida, that can produce enzymes to kilogram quantities. The facility includes environmental controls such as HEPA filtration, pressure, temperature, and humidity monitoring, with vertical integration of all enzyme development, production, and testing operations.
The facility includes environmental controls such as HEPA filtration, pressure, temperature, and humidity monitoring, with vertical integration of all enzyme development, production, and testing operations. Our enzymes are produced under the controls of an ISO 13485:2016 compliant QMS.
“Risk Factors—Risks Related to our Intellectual Property.” Human Capital Management: Empowering Our Future At Maravai, we understand that our strength lies in the expertise and commitment of our people. As of December 31, 2023, our team had over 650 full-time employees. Following the reduction in force, which was completed on January 5, 2024, we had approximately 570 full-time employees.
“Risk Factors—Risks Related to our Intellectual Property.” Human Capital Management: Empowering Our Future Our people are integral to driving Maravai's innovation, growth, and market leadership. As of December 31, 2024, our team had over 570 full-time employees globally.
Our 2023 company-wide engagement survey reached a participation rate of 97% and all levels of leadership engage in action planning based on the results. In 2023, all of our sites participated in process excellence initiatives and we launched “Find a Better Way Day” to highlight the efforts of our employees to drive quality and safety improvements and reduce cost.
Our 2024 company-wide engagement survey reached a participation rate of 95% and all levels of leadership engage in action planning based on the results. As a leading life sciences company, we are committed to the health, safety and well-being of our employees.
We serve a diverse market of diagnostics and therapeutic developers that require novel molecules that are otherwise unavailable on the market. Typically, these molecules are initially manufactured in small quantities, and then scaled to meet the need of larger diagnostic platform or therapeutic applications once positive candidates have been identified by the customer. Plasmid DNA.
Typically, these molecules are initially manufactured in small quantities, and then scaled to meet the need of larger diagnostic platforms or therapeutic applications once positive candidates have been identified by the customer. Specialty Enzymes. Enzymes are critical to almost every phase of nucleic acid production and provide the key starting materials for the IVT process to make mRNA.
Our products address our customers’ needs for Nucleic Acid Production and Biologics Safety Testing, and our operations are aligned to these two segments. Within Nucleic Acid Production, we have four business units: TriLink Discovery, TriLink GMP, Glen Research and Alphazyme. Our Biologics Safety Testing business is comprised of Cygnus Technologies.
Business Segments and Products We report our business in two reporting segments – Nucleic Acid Production and Biologics Safety Testing. 4 Table of Contents We market our Nucleic Acid Production business under the TriLink BioTechnologies®, Glen Research and Alphazyme brands. Our Biologics Safety Testing business is comprised of Cygnus Technologies®.
As products advance through the clinical phases, requirements become more stringent, and we work with customers to define and agree on requirements and risks associated with their product. 17 Table of Contents Customers’ biopharmaceutical products early in their development have a high failure rate and often do not advance through the clinical stages to commercialization.
APIs are provided to customers under customer contracts that outline quality standards and product specifications. As products advance through the clinical phases, requirements become more stringent, and we work with customers to define and agree on requirements and risks associated with their product.
Our customers further expect that we have the production capacity to meet their needs in a timely manner. Maravai has designed and constructed four world-class manufacturing facilities, and since 2022 has expanded the company’s facility footprint by over 95,000 square feet to support expanded capabilities and future growth.
We have designed and constructed four world-class manufacturing facilities and, since 2022, we have expanded our facility footprint by over 95,000 square feet to support expanded capabilities and future growth. 9 Table of Contents Experienced Leaders and Talented Workforce Our management includes experienced leaders with demonstrated records of success at Maravai and other highly regarded industry participants.
Our commercial function includes direct sales, marketing, customer service, technical support and distributor management. We serve customers through direct sales in each business segment, with a primary focus on our biopharmaceutical and large diagnostics and commercial customers.
We serve customers through direct and indirect sales in each business segment, with a primary focus on our biopharmaceutical and large diagnostics and commercial customers. We serve our academic customers via web, email and phone ordering as well as through key partnerships where our reagent products and services can be accessed through partnerships.
In 2023, we upgraded our electronic Safety Data Sheet (SDS) system to more readily provide chemical safety data electronically to employees and customers. Available Information Our website is located at www.maravai.com, and our investor relations website is located at investors.maravai.com.
Available Information Our website is located at www.maravai.com, and our investor relations website is located at investors.maravai.com.
We believe the proprietary nature of our expertise and products solidifies our long-term customer relationships. 10 Table of Contents Products with Outstanding Quality Performance We believe our products stand out when compared to those of our competitors’ because they present innovative solutions to customer needs, as indicated by the responses to the Industry Analysis, while providing reliable performance and quality.
Products with Outstanding Quality Performance We believe our products stand out when compared to those of our competitors because they present innovative solutions to customer needs, while providing reliable performance and quality. CleanCap, for example, offers advantages over competing capping technologies in yield, process efficiency, stability and safety.
Through the TriLink BioTechnologies Discovery Business unit, we offer a core set of products and services geared toward customers doing early-stage development work. We produce mRNA utilizing standard sequences for generalized research using customer supplied sequences for custom built constructs. We also provide process development services to optimize customers’ transcription and purification processes.
We produce mRNA utilizing standard sequences for generalized research or using customer supplied sequences for custom built constructs. We also provide process development services to optimize customers’ transcription and purification processes. These services can integrate with our cap analogs, NTP products and IVT enzymes and have access to our analytical and QC method development. GMP mRNA synthesis .
We serve our academic customers via web, email and phone ordering as well as through key partnerships where our reagent products are included in their mRNA kits. We support all customers with live technical support and customer service. We address customers outside the United States with a combination of direct sales and distributors.
We support all customers in-field and in-house technical support, alliance and program management and customer service. We address customers outside the United States with a combination of direct sales and distributors. We serve many of our biopharmaceutical customers, especially in our nucleic acid production segment, via direct sales worldwide.
Through our acquisition of Alphazyme in the first quarter of 2023, our Nucleic Acid Production capabilities now include specialized enzymes. Enzymes are critical to almost every phase of nucleic acid production. Alphazyme provides custom, scalable molecular biology enzymes with a full product line of IVT, NGS, life science and diagnostic enzyme solutions. Discovery mRNA synthesis .
Alphazyme provides custom, scalable molecular biology enzymes with a full product line of IVT, NGS, life science and diagnostic enzyme solutions. Alphazyme enzymes are also incorporated into the TriLink Biotechnologies CleanScript mRNA production workflow. Discovery mRNA synthesis . Through TriLink BioTechnologies, we offer a core set of products and services geared toward customers doing early-stage development work.
These include vaccine development programs for infectious diseases, including Lyme disease, malaria, HIV, tuberculosis, shingles, rabies, yellow fever, respiratory syncytial virus (“RSV”) and Zika, as well as other medical conditions.
These trials include vaccine development programs targeting infectious diseases such as avian flu, Lyme disease, malaria, HIV, tuberculosis, shingles, rabies, yellow fever, respiratory syncytial virus (RSV), and Zika. Beyond infectious diseases, mRNA-based programs are addressing various medical conditions, including ornithine transcarbamylase deficiency, glycogen storage disorders, alpha-1 antitrypsin deficiency, acute lymphoblastic leukemia, Hurler syndrome, ovarian cancer, cardiovascular disease, and autoimmune disorders.
The results of the Industry Analysis indicate that our HCP ELISA kits have defined the market for impurity detection and we believe they have become a de facto standard in biologics safety testing. Trusted Brands Our TriLink BioTechnologies, Glen Research, Alphazyme and Cygnus Technologies brands are well known in their respective markets for innovation, consistent quality, and performance.
Our oligonucleotides address complex chemistry challenges, which we believe few competitors can address. We believe that our HCP ELISA kits have defined the market for impurity detection and have become a de facto standard in biologics safety testing.
This process occurs in the nucleus of cells.
The genetic information stored in DNA is transferred to mRNA in a cellular process called transcription. This process occurs in the nucleus of cells.
Based on the Industry Analysis, we believe our cap analogs are critical features of several mRNA vaccines and therapies in development. Traditionally, the 5’ cap has been added in one of two ways. The cap can be added post mRNA synthesis by an enzymatic process.
CleanCap analogs are sold as a stand-alone reagents or bundled with other raw materials such as Nucleoside triphosphates (“NTPs”) and enzymes to support the synthesis of mRNA . Our cap analogs are a critical component of several mRNA vaccines and therapies in development. Traditionally, the 5’ cap has been added in one of two ways.
We took occupancy of the Flanders facilities in 2023 and expect to begin manufacturing from both locations in 2024. In early 2023, our Southport, North Carolina operations were relocated to a new state-of-the-art facility in Leland, North Carolina.
We took occupancy of the Flanders 1 and 2 facilities in 2023 and began manufacturing from both locations in 2024. Our Leland, North Carolina facility is engaged in the development, manufacture and processing of antibodies and HCP and Impurity ELISA kits, MockV Kits, as well as execution of all analytical services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Business and Strategy • The level of our customers’ spending on and demand for outsourced nucleic acid production and biologics safety testing products and services. • Uncertainty regarding the extent and duration of our revenue associated with COVID-19-related products and services and the dependency of such revenue, in important respects, on factors outside our control. • The impact of ongoing macroeconomic challenges and changes in economic conditions, including adverse developments affecting banks and financial institutions, follow-on effects of those events and related systemic pressures, on our and our customers’ current and future business operations. • The effects of our recent reduction in force, including on our ability to attract and/or retain qualified key personnel. • Use of our products by customers in the production of vaccines and therapies, some of which represent relatively new and still-developing modes of treatment, and the impact of unforeseen adverse events, negative clinical outcomes, development of alternative therapies, or increased regulatory scrutiny of these modes of treatment and their financial cost on our customers’ use of our products and services. • Competition with life science, pharmaceutical and biotechnology companies who are substantially larger than us and potentially capable of developing new approaches that could make our products, services and technology obsolete. • The potential failure of our products and services to not perform as expected and the reliability of the technology on which our products and services are based. • The risk that our products do not comply with required quality standards. • Market acceptance of our life science reagents. • Significant fluctuations and unpredictability in our quarterly and annual operating results, which make our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. • Our ability to implement our strategic plan successfully. • Natural disasters, geopolitical instability (including the ongoing military conflicts in Ukraine and the Gaza Strip) and other catastrophic events. • Risks related to our acquisitions, including whether we achieve the anticipated benefits of acquisitions of businesses or technologies. • Product liability lawsuits. • Our dependency on a limited number of customers for a high percentage of our revenue and our ability to maintain our current relationships with such customers. • Our reliance on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials and the risk that we may not be able to find replacements or immediately transition to alternative suppliers. • The risk that our products become subject to more onerous regulation by the FDA or other regulatory agencies in the future. 22 Table of Contents Risks Related to Our Intellectual Property and Technology • Our ability to obtain, maintain and enforce sufficient intellectual property protection for our current or future products. • The risk that a future cyber-attack or security breach cannot be prevented. • Our ability to protect the confidentiality of our proprietary information • The risk that one of our products may be alleged (or found) to infringe on the intellectual property rights of third parties. • Compliance with our obligations under intellectual property license agreements. • Our or our licensors’ failure to maintain the patents or patent applications in-licensed from a third party. • Our ability to adequately protect our intellectual property and proprietary rights throughout the world.
Biggest changeRisks Related to Our Business and Strategy • The level of our customers’ spending on and demand for outsourced nucleic acid production and biologics safety testing products and services. • Our operating results are prone to significant fluctuation, which may make our future operating results difficult to predict and could cause our actual operating results to fall below expectations or any guidance we may provide. • Uncertainty regarding the extent and duration of our revenue associated with high-volume sales of CleanCap® for commercial phase vaccine programs and the dependency of such revenue, in important respects, on factors outside our control. • Shifts in the trade, economic and other policies and priorities of the U.S. federal government on our and our customers’ current and future business operations. • Our ability to attract, retain and motivate a highly skilled workforce. • Use of our products by customers in the production of vaccines and therapies, some of which represent relatively new and still-developing modes of treatment, and the impact of unforeseen adverse events, negative clinical outcomes, development of alternative therapies, or increased regulatory scrutiny of these modes of treatment and their financial cost on our customers’ use of our products and services. • Competition with life science, pharmaceutical and biotechnology companies who are substantially larger than us and potentially capable of developing new approaches that could make our products, services and technology obsolete. • The potential failure of our products and services to not perform as expected and the reliability of the technology on which our products and services are based. • The risk that our products do not comply with required quality standards. • Market acceptance of our life science reagents. • Our ability to efficiently manage our strategic acquisitions and organic growth opportunities. • Natural disasters, geopolitical instability (including the ongoing military conflicts in Ukraine and the Middle East) and other catastrophic events. • Risks related to our acquisitions, including whether we achieve the anticipated benefits of acquisitions of businesses or technologies. • Product liability lawsuits. • Our dependency on a limited number of customers for a high percentage of our revenue and our ability to maintain our current relationships with such customers. • Our reliance on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials and the risk that we may not be able to find replacements or immediately transition to alternative suppliers. • The risk that our products become subject to more onerous regulation by the FDA or other regulatory agencies in the future. 18 Table of Contents Risks Related to Our Intellectual Property and Technology • Our ability to obtain, maintain and enforce sufficient intellectual property protection for our current or future products. • The risk that a future cyber-attack or security breach cannot be prevented. • Our ability to protect the confidentiality of our proprietary information. • The risk that one of our products may be alleged (or found) to infringe on the intellectual property rights of third parties. • Compliance with our obligations under intellectual property license agreements. • Our or our licensors’ failure to maintain the patents or patent applications in-licensed from a third party. • Our ability to adequately protect our intellectual property and proprietary rights throughout the world.
Risks Related to Our Indebtedness • Our existing level of indebtedness and our ability to raise additional capital on favorable terms. • Our ability to generate sufficient cash flow to service all of our indebtedness. • Our potential failure to meet our debt service obligations. • Restrictions on our current and future operations under the terms applicable to the Credit Agreement.
Risks Related to Our Indebtedness • Our existing level of indebtedness and our ability to raise additional capital on favorable terms. • Our ability to generate sufficient cash flow to service all of our indebtedness. • Our potential failure to meet our debt service obligations. • Restrictions on our current and future operations under the terms applicable to our credit agreement.
Our indebtedness, the cash flow needed to satisfy our debt and the covenants contained in the Credit Agreement have important consequences, including: • limiting funds otherwise available for financing our capital expenditures by requiring us to dedicate a portion of our cash flows from operations to the repayment of debt and the interest on this debt; • limiting our ability to incur or prepay existing indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes in the nature of the business, among other things; • making us more vulnerable to rising interest rates, as certain of our borrowings, including borrowings under the Credit Agreement, bear variable rates of interest; and • making us more vulnerable in the event of a downturn in our business.
Our indebtedness, the cash flow needed to satisfy our debt and the covenants contained in our credit agreement have important consequences, including: • limiting funds otherwise available for financing our capital expenditures by requiring us to dedicate a portion of our cash flows from operations to the repayment of debt and the interest on this debt; • limiting our ability to incur or prepay existing indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes in the nature of the business, among other things; • making us more vulnerable to rising interest rates, as certain of our borrowings, including borrowings under our credit agreement, bear variable rates of interest; and • making us more vulnerable in the event of a downturn in our business.
See “Dividend Policy.” Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition. We are subject to income taxes in the U.S. and certain foreign jurisdictions. Our tax liabilities will be subject to the allocation of expenses in differing jurisdictions.
See “Dividend Policy.” Unanticipated changes in our effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition. We are subject to income taxes in the U.S. and certain foreign jurisdictions. Our tax liabilities will be subject to the allocation of expenses in differing jurisdictions.
Any acquisition involves numerous risks, uncertainties and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, results of operations, cash flows and prospects: • difficulties in integrating new operations, systems, technologies, products, services and personnel of acquired businesses effectively and in a timely manner; • difficulties in implementing and maintaining controls, procedures and policies with respect to our financial accounting systems, including disclosure controls and procedures and internal control over financial reporting, at acquired businesses that, prior to the acquisition, had lacked such controls, procedures and policies; • lack of synergies or the inability to realize expected synergies and cost-savings, including enhanced revenue, technology, human resources, cost savings, operating efficiencies and other synergies; • difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • difficulties in managing geographically dispersed operations, including risks associated with entering new or 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, contractual relationships, and strategic partners of acquired companies; • declining employee morale and retention issues affecting employees of businesses that we acquire, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired business; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of historical liabilities, obligations and expenses of the acquired business, including unforeseen and contingent or similar liabilities that are difficult to identify or accurately quantify, or other litigation-related liabilities and regulatory actions; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity or equity-linked securities to finance or as consideration for any acquisitions that dilute the ownership of our shareholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our Class A common stock is low or volatile which could preclude us from completing any such acquisitions; 32 Table of Contents • the assumption of certain collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or products, or grant licenses on terms that are not favorable to us; • disruption of our ongoing operations, diversion of management’s attention and company resources from existing operations of the business, and the dedication of significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal and information technologies; • the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; • the need to later divest acquired assets at a loss if an acquisition does not meet our expectations; • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property; and • difficulties relating to operating with increased leverage and incurring additional interest expense as a result of financing acquisitions with additional indebtedness, which could make us more vulnerable to downturns.
Any acquisition involves numerous risks, uncertainties and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, results of operations, cash flows and prospects: • difficulties in integrating new operations, systems, technologies, products, services and personnel of acquired businesses effectively and in a timely manner; • difficulties in implementing and maintaining controls, procedures and policies with respect to our financial accounting systems, including disclosure controls and procedures and internal control over financial reporting, at acquired businesses that, prior to the acquisition, had lacked such controls, procedures and policies; • lack of synergies or the inability to realize expected synergies and cost-savings, including enhanced revenue, technology, human resources, cost savings, operating efficiencies and other synergies; • difficulties in obtaining and verifying the financial statements and other business information of acquired businesses; • difficulties in managing geographically dispersed operations, including risks associated with entering new or 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, contractual relationships, and strategic partners of acquired companies; • declining employee morale and retention issues affecting employees of businesses that we acquire, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired business; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of historical liabilities, obligations and expenses of the acquired business, including unforeseen and contingent or similar liabilities that are difficult to identify or accurately quantify, or other litigation-related liabilities and regulatory actions; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity or equity-linked securities to finance or as consideration for any acquisitions that dilute the ownership of our shareholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our Class A common stock is low or volatile which could preclude us from completing any such acquisitions; 28 Table of Contents • the assumption of certain collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or products, or grant licenses on terms that are not favorable to us; • disruption of our ongoing operations, diversion of management’s attention and company resources from existing operations of the business, and the dedication of significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal and information technologies; • the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; • the need to later divest acquired assets at a loss if an acquisition does not meet our expectations; • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property; and • difficulties relating to operating with increased leverage and incurring additional interest expense as a result of financing acquisitions with additional indebtedness, which could make us more vulnerable to downturns.
Among other things: • these provisions allow us to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without shareholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of shareholders; • these provisions provide for a classified board of directors with staggered three-year terms; • these provisions provide that, at any time when GTCR controls, in the aggregate, less than 40% of the outstanding shares of our Class A common stock, directors may only be removed for cause, and only by the affirmative vote of 57 Table of Contents holders of at least 66 2⁄3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; • these provisions prohibit shareholder action by written consent from and after the date on which GTCR controls, in the aggregate, less than 35% in voting power of our stock entitled to vote generally in the election of directors; • these provisions provide that for as long as GTCR controls, in the aggregate, at least 50% in voting power of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of a majority in voting power of the outstanding shares of our capital stock and at any time when GTCR controls, in the aggregate, less than 50% in voting power of all outstanding shares of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of the holders of at least 66 2⁄3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and • these provisions establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by shareholders at shareholder meetings; provided, however, at any time when GTCR controls, in the aggregate, at least 10% in voting power of our stock entitled to vote generally in the election of directors, such advance notice procedure will not apply to GTCR.
Among other things: • these provisions allow us to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without shareholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of shareholders; • these provisions provide for a classified board of directors with staggered three-year terms; • these provisions provide that, at any time when GTCR controls, in the aggregate, less than 40% of the outstanding shares of our Class A common stock, directors may only be removed for cause, and only by the affirmative vote of holders of at least 66 2⁄3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; • these provisions prohibit shareholder action by written consent from and after the date on which GTCR controls, in the aggregate, less than 35% in voting power of our stock entitled to vote generally in the election of directors; • these provisions provide that for as long as GTCR controls, in the aggregate, at least 50% in voting power of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of a majority in voting power of the outstanding shares of our capital stock and at any time when GTCR controls, in the aggregate, less than 50% in voting power of all outstanding shares of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of the holders of at least 66 2⁄3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and 54 Table of Contents • these provisions establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by shareholders at shareholder meetings; provided, however, at any time when GTCR controls, in the aggregate, at least 10% in voting power of our stock entitled to vote generally in the election of directors, such advance notice procedure will not apply to GTCR.
For example: • others may be able to develop products that are similar to, or better than, our current or future products in a way that is not covered by the claims of the patents we license or may own currently or in the future; • we, or our licensing partners or current or future collaborators, might not have been the first to make the inventions covered by issued patents or pending patent applications that we license or may own currently or in the future; • we, or our licensing partners or current or future collaborators, might not have been the first to file patent applications for certain of our or their inventions; • our pending owned or in-licensed patent applications may not lead to issued patents; • we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents; 49 Table of Contents • the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business; • any patents that we obtain may not provide us with any competitive advantages or may ultimately be found not to be owned by us, invalid or unenforceable; or • we may not develop additional proprietary technologies that are patentable.
For example: • others may be able to develop products that are similar to, or better than, our current or future products in a way that is not covered by the claims of the patents we license or may own currently or in the future; • we, or our licensing partners or current or future collaborators, might not have been the first to make the inventions covered by issued patents or pending patent applications that we license or may own currently or in the future; • we, or our licensing partners or current or future collaborators, might not have been the first to file patent applications for certain of our or their inventions; • our pending owned or in-licensed patent applications may not lead to issued patents; • we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents; 45 Table of Contents • the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business; • any patents that we obtain may not provide us with any competitive advantages or may ultimately be found not to be owned by us, invalid or unenforceable; or • we may not develop additional proprietary technologies that are patentable.
As a result, we will face challenges inherent in efficiently managing a more complex business with an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. Our inability to manage successfully the geographically more diverse and substantially larger combined organization could materially adversely affect our operating results.
As a result, we will face challenges inherent in efficiently managing a more complex business with an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. Our inability to manage successfully a geographically more diverse and substantially larger organization could materially adversely affect our operating results.
Pursuant to the Tax Receivable Agreement we are required to make cash payments to MLSH 1 and MLSH 2, collectively, equal to 85% of the tax benefits, if any, that we actually realize, or, in some circumstances, are deemed to realize, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes related to the LLC Units held by the corporations that merged into our corporate structure as part of the Organizational Transactions (as discussed in Note 11 to our consolidated financial statements), Topco LLC and subsidiaries of Topco LLC that existed prior to our initial public offering and (iii) certain other tax benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make under the Tax 52 Table of Contents Receivable Agreement.
Pursuant to the Tax Receivable Agreement we are required to make cash payments to MLSH 1 and MLSH 2, collectively, equal to 85% of the tax benefits, if any, that we actually realize, or, in some circumstances, are deemed to realize, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes related to the LLC Units held by the corporations that merged into our corporate structure as part of the Organizational Transactions (as discussed in Note 11 to our consolidated financial statements), Topco LLC and subsidiaries of Topco LLC that existed prior to our initial public offering and (iii) certain other tax benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make under the Tax 48 Table of Contents Receivable Agreement.
In addition, our future 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, who deliver high-quality and timely services to our customers and keep pace with cutting-edge technologies and developments in biologics.
Our future 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, who deliver high-quality and timely services to our customers and keep pace with cutting-edge technologies and developments in biologics.
In addition, to the extent that we have responsibility for taking any action related to the prosecution or maintenance of patents or patent applications in-licensed from a third party, any failure on our part to maintain the in-licensed intellectual property could jeopardize our rights under the relevant license and may have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects. 47 Table of Contents We may be subject to claims by third parties asserting that our employees, consultants, independent contractors or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property and proprietary technology.
In addition, to the extent that we have responsibility for taking any action related to the prosecution or maintenance of patents or patent applications in-licensed from a third party, any failure on our part to maintain the in-licensed intellectual property could jeopardize our rights under the relevant license and may have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects. 43 Table of Contents We may be subject to claims by third parties asserting that our employees, consultants, independent contractors or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property and proprietary technology.
There can be no assurance that Topco LLC and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in debt instruments of Topco LLC and its subsidiaries, will permit such distributions. 51 Table of Contents Topco LLC is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to any entity-level U.S. federal income tax.
There can be no assurance that Topco LLC and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in debt instruments of Topco LLC and its subsidiaries, will permit such distributions. 47 Table of Contents Topco LLC is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to any entity-level U.S. federal income tax.
These fluctuations may be driven by a variety of factors, many of which are outside of our control, including, but not limited to: • unused inventory of our products that our customers have on hand, which are not indication-specific, and our lack of insight as to the amount of unused inventory of our products that such customers have on hand; • changes in the level of our customers’ spending on and demand for our products and services, including as a result of, among other things, their own financial performance, changes in their available resources, timing of their commercial manufacturing initiatives, their decision to acquire in-house manufacturing capacity (rather than outsource), their spending priorities, including research and development budgets, and their budgetary policies and practices; • our ability to increase penetration in our existing markets and expand into new markets; • our customers accelerating, canceling, reducing or delaying orders as a result of developments related to their pre-clinical studies and clinical trials; • the relative reliability and robustness of our products and services; • changes in governmental regulations or the regulatory posture toward our business; • the volume and mix of the products and services we sell; 28 Table of Contents • changes in the production or sales costs related to our products and services; • the ongoing success of our newer products, such as our CleanCap® and mRNA products; • the rate of introduction of other new products or product enhancements by us or others in our industry; • the timing and amount of expenditures that we may incur to acquire, develop or commercialize additional products, services and technologies or for other purposes, such as the expansion of our facilities; • changes in governmental and academic funding of life sciences research and developments or changes that impact budgets, budget cycles or seasonal spending patterns of our customers; • future accounting pronouncements or changes in our accounting policies; • difficulties encountered by our commercial carriers in delivering our products, whether as a result of external factors such as weather or negative macroeconomic conditions or internal issues such as labor disputes; • the timing and magnitude of any adjustments to the Tax Receivable Agreement liability; • changes in the assessment of the realizability of our deferred tax assets; • general market conditions and other factors outside of our control, such as natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events; and • the other factors described in this “Risk Factors” section.
Fluctuations in our operating results may be driven by a variety of factors, many of which are outside of our control, including, but not limited to: • unused inventory of our products that our customers have on hand, which are not indication-specific, and our lack of insight as to the amount of unused inventory of our products that such customers have on hand; • changes in the level of our customers’ spending on and demand for our products and services, including as a result of, among other things, their own financial performance, changes in their available resources, timing of their commercial manufacturing initiatives, their decision to acquire in-house manufacturing capacity (rather than outsource), their spending priorities, including research and development budgets, and their budgetary policies and practices; • our ability to increase penetration in our existing markets and expand into new markets; • our customers accelerating, canceling, reducing or delaying orders as a result of developments related to their pre-clinical studies and clinical trials; • the relative reliability and robustness of our products and services; • changes in governmental regulations or the regulatory posture toward our business; • the volume and mix of the products and services we sell; • changes in the production or sales costs related to our products and services; • the success of our newer products, such as our CleanCap® and mRNA products; • the rate of introduction of other new products or product enhancements by us or others in our industry; • the timing and amount of expenditures that we may incur to acquire, develop or commercialize additional products, services and technologies or for other purposes, such as the expansion of our facilities; • changes in governmental and academic funding of life sciences research and developments or changes that impact budgets, budget cycles or seasonal spending patterns of our customers; • future accounting pronouncements or changes in our accounting policies; • difficulties encountered by our commercial carriers in delivering our products, whether as a result of external factors such as weather or negative macroeconomic conditions or internal issues such as labor disputes; • the timing and magnitude of any adjustments to the Tax Receivable Agreement liability; • changes in the assessment of the realizability of our deferred tax assets; • general market conditions and other factors outside of our control, such as natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events; and • the other factors described in this “Risk Factors” section.
If revised forecasts of our future taxable income or other relevant factors result in us releasing all or a portion of the valuation allowance recorded against the deferred tax assets applicable to the aforementioned tax attributes in a future period, the remaining Tax Receivable Agreement liability may be 53 Table of Contents considered probable at that time and recorded on the consolidated balance sheet and within earnings.
If revised forecasts of our future taxable income or other relevant factors result in us releasing all or a portion of the valuation allowance recorded against the deferred tax assets applicable to the aforementioned tax attributes in a future period, the remaining Tax Receivable Agreement liability may be considered probable at that time and recorded on the 49 Table of Contents consolidated balance sheet and within earnings.
If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, cash flows and prospects may be adversely affected. 48 Table of Contents We rely on confidentiality agreements that, if breached, may be difficult to enforce and could have a material adverse effect on our business and competitive position.
If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, cash flows and prospects may be adversely affected. 44 Table of Contents We rely on confidentiality agreements that, if breached, may be difficult to enforce and could have a material adverse effect on our business and competitive position.
While we currently have no basis to expect any such challenge would be successful, if a court were to find our forum selection provisions to be 58 Table of Contents inapplicable or unenforceable with respect to one or more of these specified types of actions or proceedings, we may incur additional costs associated with having to litigate in other jurisdictions, which could have an adverse effect on our business, financial condition, results of operations, cash flows and prospects and result in a diversion of the time and resources of our employees, management and board of directors.
While we currently have no basis to expect any such challenge would be successful, if a court were to find our forum selection provisions to be inapplicable or unenforceable with respect to one or more of these specified types of actions or proceedings, we may incur additional costs associated with having to litigate in other jurisdictions, which could have an adverse effect on our business, financial condition, results of operations, cash flows and prospects and result in a diversion of the time and resources of our employees, management and board of directors.
Any such failure could, among other things, lead to increased costs, delayed or lost revenue, delayed market acceptance, damaged reputation, diversion of development resources, 27 Table of Contents legal claims, reimbursement to customers for lost drug product, starting materials and active pharmaceutical ingredients, other customer claims, damage to and possibly termination of existing customer relationships, increased insurance costs, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products, any of which could harm our business, financial condition, results of operations, cash flows and prospects.
Any such failure could, among other things, lead to increased costs, delayed or lost revenue, delayed market acceptance, damaged reputation, diversion of development resources, legal claims, reimbursement to customers for lost drug product, starting materials and active pharmaceutical ingredients, other customer claims, damage to and possibly termination of existing customer relationships, increased insurance costs, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products, any of which could harm our business, financial condition, results of operations, cash flows and prospects.
Further, we may not be able to consummate these asset sales (including as a result of restrictions imposed on us under the Credit Agreement) or sell assets at prices and on terms that we believe are fair, and any proceeds that we do receive may not be adequate to meet any debt service obligations then due.
Further, we may not be able to consummate these asset sales (including as a result of restrictions imposed on us under our credit agreement) or sell assets at prices and on terms that we believe are fair, and any proceeds that we do receive may not be adequate to meet any debt service obligations then due.
Many of these competitors also have: • broader name recognition; • longer operating histories and the benefits derived from greater economies of scale; • larger and more established distribution networks; • additional product and service lines and the ability to bundle products and services to offer higher discounts or other incentives to gain a competitive advantage; • more experience in conducting research and development, manufacturing and marketing; • more experience in entering into collaborations or other strategic partnership arrangements; and • more financial, manufacturing and human resources to support product development, sales and marketing and patent and other intellectual property litigation.
Many of these competitors also have: • broader name recognition; • longer operating histories and the benefits derived from greater economies of scale; • larger and more established distribution networks; 23 Table of Contents • additional product and service lines and the ability to bundle products and services to offer higher discounts or other incentives to gain a competitive advantage; • more experience in conducting research and development, manufacturing and marketing; • more experience in entering into collaborations or other strategic partnership arrangements; and • more financial, manufacturing and human resources to support product development, sales and marketing and patent and other intellectual property litigation.
This may be (1) because patent applications in the United States, Europe and many other non-U.S. jurisdictions are typically not published until 18 months after filing, or in some cases not at all, (2) because publications of discoveries in scientific literature lag behind actual discoveries, and (3) because we cannot be certain that we or our licensors were the first to make the inventions claimed in any of our owned or any in-licensed issued patents or pending patent applications, or that we or our licensors were the first to file for protection of the inventions set forth in our patents or patent applications.
This may be (1) because patent 36 Table of Contents applications in the United States, Europe and many other non-U.S. jurisdictions are typically not published until 18 months after filing, or in some cases not at all, (2) because publications of discoveries in scientific literature lag behind actual discoveries, and (3) because we cannot be certain that we or our licensors were the first to make the inventions claimed in any of our owned or any in-licensed issued patents or pending patent applications, or that we or our licensors were the first to file for protection of the inventions set forth in our patents or patent applications.
Any significant disruption of those operations for any reason, such as 29 Table of Contents labor disputes or social unrest, power interruptions, fire, hurricanes, a public health crisis (such as a pandemic), earthquakes or other events beyond our control, could adversely affect our sales and customer relationships and therefore adversely affect our business and results of operations.
Any significant disruption of those operations for any reason, such as labor disputes or social unrest, power interruptions, fire, hurricanes, a public health crisis (such as a pandemic), earthquakes or other events beyond our control, could adversely affect our sales and customer relationships and therefore adversely affect our 25 Table of Contents business and results of operations.
We entered into a Director Nomination Agreement with GTCR that provides GTCR the right to nominate to the Board a number of designees equal to at least: (i) 100% of the total number of directors comprising the Board, so long as GTCR 56 Table of Contents beneficially owns shares of Class A common stock and Class B common stock representing at least 40% of the total amount of shares of Class A common stock and Class B common stock it beneficially owned as of November 19, 2020, (ii) 40% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 30% but less than 40% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iii) 30% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 20% but less than 30% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iv) 20% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 10% but less than 20% of the total amount of shares of Class A common stock and Class B common stock it owns as of November 19, 2020 and (v) one director, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 5% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020.
We entered into a Director Nomination Agreement with GTCR that provides GTCR the right to nominate to the Board a number of designees equal to at least: (i) 100% of the total number of directors comprising the Board, so long as GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 40% of the total amount of shares of Class A common stock and Class B common stock it beneficially owned as of November 19, 2020, (ii) 40% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 30% but less than 40% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iii) 30% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 20% but less than 30% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iv) 20% of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 10% but less than 20% of the total amount of shares of Class A common stock and Class B common stock it owns as of November 19, 2020 and (v) one director, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 5% of the total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020.
Because we rely heavily on third-party package-delivery services, a significant disruption in these services, damages or losses sustained during shipping or significant increases in prices could adversely affect our business, financial condition, results of operations, cash flows and prospects.
Because we rely heavily on third-party package-delivery services, a significant disruption in these services, damages or losses sustained during shipping or significant increases in shipping costs could adversely affect our business, financial condition, results of operations, cash flows and prospects.
Risks Related to Our Class A Common Stock • The fact that investment entities affiliated with GTCR, LLC (“GTCR”) currently control a majority of the voting power of our outstanding common stock, and it may have interests that conflict with ours or yours in the future. • Risks related to our “controlled company” status within the meaning of the corporate governance standards of NASDAQ. • The potential anti-takeover effects of certain provisions in our corporate organizational documents. • Potential sales of a significant portion of our outstanding shares of Class A common stock. 23 Table of Contents • Potential preferred stock issuance and the anti-takeover impacts of any such issuances.
Risks Related to Our Class A Common Stock • The fact that investment entities affiliated with GTCR, LLC (“GTCR”) currently control a majority of the voting power of our outstanding common stock and may have interests that conflict with ours or yours in the future. • Risks related to our “controlled company” status within the meaning of the corporate governance standards of NASDAQ. 19 Table of Contents • The potential anti-takeover effects of certain provisions in our corporate organizational documents. • Potential sales of a significant portion of our outstanding shares of Class A common stock. • Potential preferred stock issuances and the anti-takeover impacts of any such issuances.
Such a loss of patent protection could have a material adverse impact on our business, financial condition, results of operations, cash flows and prospects. 43 Table of Contents Interference proceedings, or other similar enforcement and revocation proceedings, provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications.
Such a loss of patent protection could have a material adverse impact on our business, financial condition, results of operations, cash flows and prospects. Interference proceedings, or other similar enforcement and revocation proceedings, provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications.
In the event that the FDA requires us to obtain marketing authorization of our RUO products in the future, there can be no assurance that the FDA will grant any clearance or approval requested by us in a timely manner, or at all. 36 Table of Contents Our raw material products are manufactured following the voluntary quality standards of ISO 9001:2015.
In the event that the FDA requires us to obtain marketing authorization of our RUO products in the future, there can be no assurance that the FDA will grant any clearance or approval requested by us in a timely manner, or at all. Our raw material products are manufactured following the voluntary quality standards of ISO 9001:2015.
Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence in trial court litigation to overcome the presumption of validity enjoyed by issued patents. Third parties have, and may 44 Table of Contents in the future have, U.S. and non-U.S. issued patents and pending patent applications that may cover our current or future products.
Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence in trial court litigation to overcome the presumption of validity enjoyed by issued patents. Third parties have, and may in the future have, U.S. and non-U.S. issued patents and pending patent applications that may cover our current or future products.
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. Risks Related to Our Reliance on Third Parties We depend on a limited number of customers for a high percentage of our revenue.
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. 30 Table of Contents Risks Related to Our Reliance on Third Parties We depend on a limited number of customers for a high percentage of our revenue.
Like other companies, we have on occasion experienced, and will continue to experience, data security incidents involving access to company data, unauthorized payments and threats to our data and systems, including malicious codes and viruses, phishing, business email compromise attacks, or other cyber-attacks. The number and complexity of these threats continue to increase over time.
Like other companies, we have on occasion experienced, and will continue to 38 Table of Contents experience, data security incidents involving access to company data, unauthorized payments and threats to our data and systems, including malicious codes and viruses, phishing, business email compromise attacks, or other cyber-attacks. The number and complexity of these threats continue to increase over time.
In addition, we may need the cooperation of any such co-owners of such patent rights in order to enforce such patent rights against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
In addition, we may need the cooperation of any such co-owners of such patent rights in order to enforce such patent rights against third parties, and such cooperation may not be provided to us. Any of the 37 Table of Contents foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
We engage in conversations with other companies and institutions regarding 34 Table of Contents potential commercial opportunities on an ongoing basis, which can be time consuming. There is no assurance that any of these conversations will result in a commercial agreement, or if an agreement is reached, that the resulting relationship will be successful.
We engage in conversations with other companies and institutions regarding potential commercial opportunities on an ongoing basis, which can be time consuming. There is no assurance that any of these conversations will result in a commercial agreement, or if an agreement is reached, that the resulting relationship will be successful.
The Director Nomination Agreement provides that GTCR may assign such right to a GTCR affiliate. The Director Nomination Agreement prohibits us from increasing or decreasing the size of our Board without the prior written consent of GTCR. GTCR and its affiliates engage in a broad spectrum of activities, including investments in our industry generally.
The Director Nomination Agreement provides that GTCR may assign such right to a GTCR 53 Table of Contents affiliate. The Director Nomination Agreement prohibits us from increasing or decreasing the size of our Board without the prior written consent of GTCR. GTCR and its affiliates engage in a broad spectrum of activities, including investments in our industry generally.
We engage in business globally, with approximately 51%, 62% and 60% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively, coming from outside the U.S. In addition, one of our strategies is to expand geographically, both through distribution and through direct sales.
We engage in business globally, with approximately 51%, 51% and 62% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively, coming from outside the U.S. In addition, one of our strategies is to expand geographically, both through distribution and through direct sales.
In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data collection and use practices and other data privacy laws and regulations, 42 Table of Contents including claims for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices.
In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data collection and use practices and other data privacy laws and regulations, including claims for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices.
We are subject to the risk of disruption by earthquakes, hurricanes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war (including any escalation of the ongoing military conflicts in Ukraine or the Gaza Strip), terrorist attacks and other hostile acts, public health issues, epidemics or pandemics and other events beyond our control and the control of the third parties on which we depend.
We are subject to the risk of disruption by earthquakes, hurricanes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war (including any escalation of the ongoing military conflicts in Ukraine or the Middle East), terrorist attacks and other hostile acts, public health issues, epidemics or pandemics and other events beyond our control and the control of the third parties on which we depend.
In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages.
In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these 40 Table of Contents patents. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages.
Because each of MLSH 1 and MLSH 2 is controlled by GTCR and is considered an “affiliate” of ours, the shares of Class A common stock held by MLSH 1 and MLSH 2 are subject to certain restrictions on resale imposed by U.S. federal securities laws.
Because each of MLSH 1 and MLSH 2 is controlled by GTCR and is considered an “affiliate” of ours, the shares of Class A common stock held by MLSH 1 and MLSH 2 are subject to certain 55 Table of Contents restrictions on resale imposed by U.S. federal securities laws.
Specifically, the America Invents Act reforms United States patent law in part by changing the U.S. patent system from a “first to invent” system to a “first inventor to file” system.
Specifically, the America Invents Act reformed United States patent law in part by changing the U.S. patent system from a “first to invent” system to a “first inventor to file” system.
Some of the products and services that we are developing are based upon new technologies or approaches. As a result, there can be no assurance that these new products and services, even if successfully developed and 30 Table of Contents introduced, will be accepted by customers.
Some of the products and services that we are developing are based upon new technologies or approaches. As a result, there can be no assurance that these new products and services, even if successfully developed and introduced, will be accepted by customers.
Any exercise by the government of any of the foregoing rights or by any third party of its reserved rights could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects. 41 Table of Contents Furthermore, patents have a limited lifespan.
Any exercise by the government of any of the foregoing rights or by any third party of its reserved rights could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects. Furthermore, patents have a limited lifespan.
The market for pharmaceutical, reagent, therapeutic and diagnostic products and services is intensely competitive, rapidly evolving, significantly affected by new product introductions and other market activities by industry participants and subject to rapid technological change. We also expect increased competition as additional companies enter our market and as more 26 Table of Contents advanced technologies become available.
The market for pharmaceutical, reagent, therapeutic and diagnostic products and services is intensely competitive, rapidly evolving, significantly affected by new product introductions and other market activities by industry participants and subject to rapid technological change. We also expect increased competition as additional companies enter our market and as more advanced technologies become available.
The GDPR came into effect in May 2018,and has resulted in, and will continue to result in, significantly greater compliance burdens and costs for companies like us. Any data security breach could require notifications to the data subject and/or owners under U.S. federal, U.S. state, and/or international data 37 Table of Contents breach notification laws and regulations.
The GDPR came into effect in May 2018,and has resulted in, and will continue to result in, significantly greater compliance burdens and costs for companies like us. Any data security breach could require notifications to the data subject and/or owners under U.S. federal, U.S. state, and/or international data breach notification laws and regulations.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial 52 Table of Contents reporting and the preparation of financial statements in accordance with GAAP.
As of December 31, 2023, investment entities affiliated with GTCR collectively controlled approximately 56% of the voting power of our outstanding common stock and therefore GTCR controls the outcome of all matters submitted to a vote of our shareholders. This control enables GTCR to control the election of the members of the Board and all other corporate decisions.
As of December 31, 2024, investment entities affiliated with GTCR collectively controlled approximately 52% of the voting power of our outstanding common stock and therefore GTCR controls the outcome of all matters submitted to a vote of our shareholders. This control enables GTCR to control the election of the members of the Board and all other corporate decisions.
Additionally, if we are unable to properly protect the privacy and security of personal information, we could be found to have breached our contracts. Many states in which we operate have laws that protect the privacy and security of personal information.
Additionally, if we 33 Table of Contents are unable to properly protect the privacy and security of personal information, we could be found to have breached our contracts. Many states in which we operate have laws that protect the privacy and security of personal information.
If our revenue or operating results fall short of the expectations of analysts or investors or any guidance we may provide, or if the guidance we provide falls short of the expectations of analysts or investors, the price of our Class A common stock could decline substantially.
If our revenue or operating results fall short of the expectations of analysts or investors or any guidance we may provide, or if the guidance we provide falls short of the expectations of analysts or investors, the price of our 21 Table of Contents Class A common stock could decline substantially.
These companies may have a competitive advantage over us due to their size, cash resources and greater capabilities with respect to clinical development and commercialization. Furthermore, companies that perceive us as a competitor may be unwilling to assign or license rights to us.
These companies may have a competitive advantage over us due to their size, cash resources and greater capabilities with respect to clinical development and commercialization. Furthermore, companies that perceive us as a 42 Table of Contents competitor may be unwilling to assign or license rights to us.
We rely on certain distributors in order to market and sell our products and services in in certain international markets, particularly our biologics safety testing products and services in China. Our distributor in China accounted for 4.8 % of our total revenues in the year ended December 31, 2023.
We rely on certain distributors in order to market and sell our products and services in in certain international markets, particularly our biologics safety testing products and services in China. Our distributor in China accounted for 4.6% of our total revenues in the year ended December 31, 2024.
Increase in interest rates directly increase the amount of interest we are required to pay, and negatively impacts our net income and cash flows, including cash available for servicing our indebtedness more generally. 50 Table of Contents We may not be able to generate sufficient cash flow to service all of our indebtedness and may be forced to take other actions to satisfy our debt service obligations, which actions may not be adequate or may impose additional restrictions on us.
An increase in interest rates directly increases the amount of interest we are required to pay on our variable rate borrowings, and negatively impacts our net income and cash flows, including cash available for servicing our indebtedness more generally. 46 Table of Contents We may not be able to generate sufficient cash flow to service all of our indebtedness and may be forced to take other actions to satisfy our debt service obligations, which actions may not be adequate or may impose additional restrictions on us.
This subjects us to a number of risks, including international economic, political, and labor conditions; currency fluctuations; tax laws (including U.S. taxes on income earned by foreign subsidiaries); increased financial accounting and reporting burdens and complexities; unexpected changes in, or impositions of, legislative or regulatory requirements; failure of laws to protect intellectual property rights adequately; inadequate local infrastructure and difficulties in managing and staffing international operations; delays resulting from difficulty in obtaining export licenses for 38 Table of Contents certain technology; tariffs, quotas and other trade barriers and restrictions; transportation delays; operating in locations with a higher incidence of corruption and fraudulent business practices; and other factors beyond our control, including terrorism, war, natural disasters, climate change and diseases.
This subjects us to a number of risks, including international economic, geopolitical, and labor conditions; currency fluctuations; tax laws (including U.S. taxes on income earned by foreign subsidiaries); increased financial accounting and reporting burdens and complexities; unexpected changes in, or impositions of, legislative or regulatory requirements; failure of laws to protect intellectual property rights adequately; inadequate local infrastructure and difficulties in managing and staffing international operations; delays resulting from difficulty in obtaining export licenses for certain technology; new or increased tariffs (or potential retaliatory actions taken in response thereto), quotas and other trade barriers and restrictions; transportation delays; operating in locations with a higher incidence of corruption and fraudulent business practices; and other factors beyond our control, including terrorism, war, natural disasters, climate change and diseases.
We may be required to record a significant charge to earnings if our goodwill and other amortizable intangible assets, or other investments become impaired.
We may be required to record a significant charge to earnings if our goodwill and other amortizable intangible assets, or other investments become impaired in the future.
Any significant change in regulations could have an adverse effect on both our customers’ business and our business, which could result in reduced demand for our products and services or increases in our expenses.
Any significant change in 34 Table of Contents regulations could have an adverse effect on both our customers’ business and our business, which could result in reduced demand for our products and services or increases in our expenses.
If our customers reduce their spending on our products and services as a result of any of these or other factors, our business, financial condition, results of operations, cash flows and prospects would be materially and adversely affected.
If our customers maintain stringent budgetary policies or further reduce their spending on our products and services as a result of any of these or other factors, our business, financial condition, results of operations, cash flows and prospects would be materially and adversely affected.
We expect legal, regulatory and reporting requirements related to ESG matters to continue to expand globally and increase our costs of compliance.
As a result, we expect legal, regulatory and reporting requirements related to ESG matters to continue to expand globally and increase our costs of compliance.
As the supply and manufacture of COVID-19 vaccines by our customers slows, or becomes no longer necessary, including if COVID-19 vaccines by our customers’ competitors are determined or perceived to be more effective, we expect that demand for our COVID-19 related products and services will significantly decrease, which would have a material adverse effect on our revenue, results of operations and financial condition.
As the supply and manufacture of COVID-19 vaccines by our customers slows, or becomes no longer necessary, including if COVID-19 vaccines by our customers’ competitors are determined or perceived to be more effective, we expect that demand for high-volume sales of CleanCap® will continue to significantly decrease, which would have a material adverse effect on our revenue, results of operations and financial condition.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld information material to patentability from the USPTO, or made a misleading statement, during prosecution. Third parties may raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld information material to patentability from the USPTO, or made a misleading statement, during prosecution. 39 Table of Contents Third parties have raised similar claims in the past, and may raise similar claims in the future, before administrative bodies in the United States or abroad, even outside the context of litigation.
If we are unable to meet our ESG initiatives or evolving investor, industry, or customer expectations and standards, or we are perceived to have not responded adequately on any number of ESG matters, we risk damage to our brand and reputation, adverse impacts to our ability to secure government contracts, decreased desirability of our common stock to investors, or limited access to capital markets and other sources of financing.
If we are unable to meet our ESG initiatives or evolving investor, industry, or customer expectations and standards, we are perceived to have not responded adequately on any number of ESG matters, or we draw scrutiny from certain people or groups with an opposing viewpoint, we risk damage to our brand and reputation, adverse impacts to our ability to secure government contracts, decreased desirability of our common stock to investors, or limited access to capital markets and other sources of financing..
The market may not be receptive to our new products and services upon their introduction. We expect a portion of our future revenue growth to come from introducing new products, including plasmid DNA and GMP-grade mRNA. The commercial success of all of our products and services will depend upon their acceptance by the life science and biopharmaceutical industries.
The market may not be receptive to our new products and services upon their introduction. We expect a portion of our future revenue growth to come from introducing new products, including discovery mRNA offerings and IVT enzyme offerings. The commercial success of all of our products and services will depend upon their acceptance by the life science and biopharmaceutical industries.
We may also need to obtain additional licenses in the future to advance our research or allow commercialization of our future products and it is possible that we may be unable to do so at a reasonable cost or on reasonable terms, if at all.
We rely, in part, on intellectual property and technology which we have in-licensed. We may also need to obtain additional licenses in the future to advance our research or allow commercialization of our future products and it is possible that we may be unable to do so at a reasonable cost or on reasonable terms, if at all.
During each of the years ended December 31, 2022, 2021 and 2020, our results of operations and cash flows were significantly and positively impacted by a strong demand for our proprietary Cle anCap® ana logs and highly modified RNA products, particularly mRNA.
During each of the years ended December 31, 2022, 2021 and 2020, our results of operations and cash flows were significantly and positively impacted by high-volume sales of our proprietary Cle anCap® ana logs and highly modified RNA products, particularly mRNA, for commercial vaccines.
However, as a result of the general decrease in market demand for COVID-19 related products and services, including the supply and manufacture of COVID-19 vaccines, and in particular, following the end of U.S. federal public health emergency declaration and World Health Organization declaration of the end of the pandemic in early May 2022, we experienced substantial declines in COVID-19 related revenue during the year ended December 31, 2023.
However, as a result of the general decrease in market demand for COVID-19 related products and services, including the supply and manufacture of COVID-19 vaccines, and in particular, following the end of U.S. federal public health emergency declaration and World Health Organization declaration of the end of the pandemic in early May 2022, we experienced substantial declines in high-volume orders for CleanCap®.
Revenue from our largest customers were 19.3%, 61.2% and 68.1% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
Revenue from our largest customers were 20.8%, 19.3% and 61.2% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
If customers do not adopt our new products, services and technologies, our results of operations may suffer and, as a result, the market price of our Class A common stock may decline. It may be difficult for us to implement our strategies for revenue growth in light of competitive challenges. We face significant competition across many of our product lines.
If customers do not adopt our new products, services 26 Table of Contents and technologies, our results of operations may suffer and, as a result, the market price of our Class A common stock may decline. It may be difficult for us to implement our strategies for revenue growth in light of competitive challenges.
Therefore, we have less than 40% of the value of our total assets (exclusive of U.S. government securities and cash items) in “investment securities.” However, if we were to lose the 55 Table of Contents right to manage and control Topco LLC, interests in Topco LLC could be deemed to be “investment securities” under the 1940 Act.
Therefore, we have less than 40% of the value of our total assets (exclusive of U.S. government securities and cash items) in “investment securities.” However, if we were to lose the right to manage and control Topco LLC, interests in Topco LLC could be deemed to be “investment securities” under the 1940 Act. 51 Table of Contents We intend to conduct our operations so that we will not be deemed to be an investment company.
In addition, ethical, social, legal and financial concerns about gene therapy and nucleic acid vaccines, including COVID-19 vaccines, could result in additional regulations or limitations or even prohibitions on certain gene therapies or vaccine-related products.
In addition, ethical, social, legal and financial concerns about gene therapy and nucleic acid vaccines, including COVID-19 vaccines, and more recent vaccine skepticism trends, notwithstanding medical evidence about their effectiveness, could result in additional regulations or limitations or even prohibitions on certain gene therapies or certain vaccine-related products.
As of December 31, 2023, we had total current and long-term indebtedness outstanding of approximately $524.1 million, including term loans of $533.1 million, and unamortized debt issuance costs of $9.0 million. We may incur significant additional indebtedness in the future. If we increase our current indebtedness levels, the risks related to our indebtedness as set forth herein could intensify.
As of December 31, 2024, we had total current and long-term indebtedness outstanding of approximately $295.9 million, including term loans of $299.7 million less unamortized debt issuance costs of $3.8 million. We may incur significant additional indebtedness in the future. If we increase our current indebtedness levels, the risks related to our indebtedness as set forth herein could intensify.
Failure to anticipate and respond to competitors’ actions may impact our future revenue and profitability. Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.
Our use of distribution arrangements and marketing alliances to commercialize our products and services subject us to a number of risks, including the following: • we may be required to relinquish important rights to our products; • we may not be able to control the amount and timing of resources that our distributors or collaborators may devote to the distribution or marketing of our products; • our distributors or collaborators may experience financial difficulties; and • business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement.
Our use of distribution arrangements and marketing alliances to commercialize our products and services subject us to a number of risks, including the following: • we may be required to relinquish important rights to our products; • we may not be able to control the amount and timing of resources that our distributors or collaborators may devote to the distribution or marketing of our products; • our distributors or collaborators may experience financial difficulties; and • business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement. 31 Table of Contents We rely on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials and may not be able to find replacements or immediately transition to alternative suppliers.
In the event we, or our suppliers, produce products that fail to comply with required quality standards, we may incur delays in fulfilling orders, write-downs, damages resulting from product liability claims and harm to our reputation.
In the event we, or our suppliers, produce products that fail to comply with required quality standards, we may incur delays in fulfilling orders, write-downs, damages resulting from product liability claims and harm to our reputation. If we are unable to manufacture in specific quantities, our operating results will be harmed.
The foregoing numbers are merely estimates—the actual payments could differ materially. It is possible that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding Tax Receivable Agreement payments.
It is possible that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding Tax Receivable Agreement payments.
Additionally, the ongoing manufacture and supply of COVID-19 vaccines (including bivalent booster doses) by our customers is uncertain and subject to various political, social, economic, and regulatory factors that are outside of our control, including the emergence, duration and intensity of new virus variants; regional resurgences of the virus globally; the availability and administration of pediatric and booster vaccinations, vaccine supply constraints, vaccine hesitancy and the effectiveness of vaccines against new virus strains; competition faced by our customers from other COVID-19 vaccine manufacturers and the development and availability of antiviral therapeutic alternatives; the lapsing of the public health emergency declaration made pursuant to Section 319 of the Public Health Service Act in January 2020 with respect to the COVID-19 pandemic; political and social debate relating to the need for, efficacy of, or side effects related to one or more specific COVID-19 vaccines; and the U.S. economy and global economy, including impacts resulting from supply chain constraints, labor market shortages and inflationary pressures.
Additionally, the ongoing manufacture and supply of COVID-19 vaccines (including bivalent booster doses) by our customers is uncertain and subject to various political, social, economic, and regulatory factors that are outside of our control, including the emergence, duration and intensity of new virus variants; regional resurgences of the virus globally; the availability and administration of pediatric and booster vaccinations, vaccine supply constraints, vaccine hesitancy and the effectiveness of vaccines against new virus strains; competition faced by our customers from other COVID-19 vaccine manufacturers and the development and availability of antiviral therapeutic alternatives; political and social debate relating to the need for, efficacy of, or side effects related to one or more specific COVID-19 vaccines; the politicization of vaccinations and increase in vaccine skepticism; and the U.S. economy and global economy.
See also “— Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide ” below.
See also “— Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide ” below. 20 Table of Contents Our operating results are prone to significant fluctuations, which may make our future operating results difficult to predict and could cause our actual operating results to fall below expectations or any guidance we may provide.
We expect to experience 24 Table of Contents further declines in COVID-19 related revenue for the aforementioned reasons, as well as a result of unused inventory of our products that our customers have on hand, which are not indication-specific.
We expect to experience further declines in high-volume sales of CleanCap® for the aforementioned reasons, as well as a result of unused inventory of our products that our customers have on hand, which are not indication-specific.
Regulatory agencies may in the future take action against us or our customers for failure to comply with applicable regulations governing clinical trials and the development and testing of therapeutic products.
There are significant risks at each stage of the regulatory scheme for our customers. 35 Table of Contents Regulatory agencies may in the future take action against us or our customers for failure to comply with applicable regulations governing clinical trials and the development and testing of therapeutic products.
We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid or unenforceable or will be threatened by third parties. In addition, third parties may challenge the validity, enforceability, ownership, inventorship or scope of any of our patents.
We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid or unenforceable or will be threatened by third parties.
These difficulties may be heightened as a result of the Reduction in Force. The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect the development of our products and services and our business, financial condition, results of operations, cash flows and prospects.
The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect the development of our products and services and our business, financial condition, results of operations, cash flows and prospects.
See also “— The extent and duration of our revenue associated with COVID-19 related products and services are uncertain and are dependent, in important respects, on factors outside our control.” Our future success depends on our ability to maintain these relationships, to increase our penetration among these existing customers and to establish new relationships.
See also “— The extent and duration of our revenue associated with high-volume sales of CleanCap® for commercial phase vaccine programs is uncertain and are dependent, in important respects, on factors outside our control.” Our future success depends on our ability to maintain these relationships, to increase our penetration among these existing customers and to establish new relationships.
Our reagents are sold primarily to biopharmaceutical and academic organizations developing novel vaccines and therapies and performing basic research. Research and development spending by our customers and the availability of government research funding can fluctuate due to changes in available resources, mergers of pharmaceutical and biotechnology companies, spending priorities, general economic conditions and institutional and governmental budgetary policies.
Research and development spending by our customers and the availability of government research funding can fluctuate due to changes in available resources, institutional and governmental budgetary policies, mergers of pharmaceutical and biotechnology companies, spending priorities, and general economic conditions.
Additionally, changes in legal and regulatory requirements related to ESG have been issued in the E.U., its Member States and other countries, particularly with respect to climate change, emission reduction and environmental stewardship in the U.S., amongst other regulatory efforts, the SEC has proposed rules to enhance and standardize climate-related disclosures in public company filings.
Additionally, changes in legal and regulatory requirements related to ESG have been issued in the State of California and the E.U., its Member States and other countries, particularly with respect to climate change, emission reduction and environmental stewardship, amongst other regulatory efforts.
Additionally, regulatory authorities and our customers may conduct scheduled or unscheduled periodic inspections of our facilities to monitor our regulatory compliance or compliance with our quality agreements with our customers. There are significant risks at each stage of the regulatory scheme for our customers.
Additionally, regulatory authorities and our customers may conduct scheduled or unscheduled periodic inspections of our facilities to monitor our regulatory compliance or compliance with our quality agreements with our customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have adopted security-control principles based on the National Institute of 59 Table of Contents Standards and Technology Cybersecurity Framework (NIST), other global standards, and contractual requirements, as applicable. We also leverage government partnerships, industry and government associations, third-party benchmarking, audits, threat intelligence feeds, and other similar resources to inform our cybersecurity efforts and allocate resources.
Biggest changeWe have adopted security-control principles based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST”), other global standards, and contractual requirements, as applicable. We also leverage government partnerships, industry and government associations, third-party benchmarking, audits, threat intelligence feeds, and other similar resources to inform our cybersecurity efforts and allocate resources.
See “ Our internal computer systems, or those of our customers, collaborators or other contractors, have been and may in the future be subject to cyber-attacks or security breaches, which could result in a material disruption of our product development programs or otherwise adversely affect our business, financial condition, results of operations, cash flows and prospects ” within Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
See “ Our internal computer systems, or those of our customers, collaborators or other contractors, have been and may 56 Table of Contents in the future be subject to cyber-attacks or security breaches, which could result in a material disruption of our product development programs or otherwise adversely affect our business, financial condition, results of operations, cash flows and prospects ” within Item 1A, “Risk Factors” in this Annual Report on Form 10-K.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe facilities serve as the principal hub of operations for our nucleic acid production business and were purpose built to expand the capacity of this business segment while adding specialized capabilities in the form of clean rooms, air handling, waste and 60 Table of Contents solvent handling, and GMP capabilities.
Biggest changeThe facilities serve as the principal hub of operations for our nucleic acid production business and were purpose built to expand the capacity of this business segment while adding specialized capabilities in the form of clean rooms, air handling, waste and solvent handling, and GMP capabilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest change“Risk Factors—Risks Related to Our Intellectual Property—Intellectual property litigation and other proceedings could cause us to spend substantial resources and distract our personnel from their normal responsibilities” and “Risk Factors—Risks Related to Our Intellectual Property—If we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our current or future products.” Item 4.
Biggest change“Risk Factors—Risks Related to Our Intellectual Property—Intellectual property 57 Table of Contents litigation and other proceedings could cause us to spend substantial resources and distract our personnel from their normal responsibilities” and “Risk Factors—Risks Related to Our Intellectual Property—If we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our current or future products.” Item 4.
Mine Safety Disclosures Not applicable. 61 Table of Contents Part II.
Mine Safety Disclosures Not applicable. 58 Table of Contents Part II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (1) (2) 8,683,194 $ 9.76 57,526,943 Total 8,683,194 $ 9.76 57,526,943 ____________________ (1) Includes 10,482,025 shares that remain available for purchase under the 2020 Employee Stock Purchase Plan and 56,107,859 shares of common stock that remain available for grant under the 2020 Omnibus Incentive Plan.
Biggest changePlan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (1) (2) 11,023,468 $ 6.01 62,828,656 Total 11,023,468 $ 6.01 62,828,656 ____________________ (1) Includes 10,215,364 shares of our Class A common stock that remain available for purchase under the 2020 Employee Stock Purchase Plan and 65,088,616 shares of our Class A common stock that remain available for grant under the 2020 Omnibus Incentive Plan.
The 2020 Employee Stock Purchase Plan also provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each calendar year during the term of the plan, equal to the lesser of (a) 1.25% of the aggregate number of shares and shares of Class B common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board, provided that the shares reserved under the ESPP shall not exceed an aggregate of 10,948,877 shares.
The 2020 Employee Stock Purchase Plan also provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each calendar year during the term of the plan, equal to the lesser of (a) 1.25% of the aggregate number of shares and shares of Class B common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board, provided that the shares reserved under the ESPP shall not exceed an aggregate of 10,948,877 shares of our Class A common stock.
Stock Performance Graph The following graph shows the total stockholder’s return on an investment of $100 in cash at market close on November 20, 2020 (the first day of trading of our common stock), through December 31, 2023 for (i) our Class A common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index.
Stock Performance Graph The following graph shows the total stockholder’s return on an investment of $100 in cash at market close on November 20, 2020 (the first day of trading of our common stock), through December 31, 2024 for (i) our Class A common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index.
The 2020 Omnibus Incentive Plan provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each calendar year during the term of the Plan, equal to the lesser of (a) 4.0% of the aggregate number of shares and shares of Class B common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the Board.
The 2020 Omnibus Incentive Plan provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each calendar year during the term of the Plan, equal to the lesser of (a) 4.0% of the aggregate number of shares and shares of Class B common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by our Board of Directors (the “Board”).
Additionally, 62 Table of Contents because we are a holding company, our ability to pay dividends on our Class A common stock may be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us.
Additionally, 59 Table of Contents because we are a holding company, our ability to pay dividends on our Class A common stock may be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us.
(2) The weighted average exercise price includes restricted stock unit and performance stock unit awards that can be exercised for no consideration. The weighted average exercise price excluding these restricted stock units and performance stock units is $20.55. Item 6. Reserved
(2) The weighted average exercise price includes restricted stock unit and performance stock unit awards that can be exercised for no consideration. The weighted average exercise price excluding these restricted stock units and performance stock units is $20.18. Item 6. Reserved
As of February 21, 2024, there was one holder of record of our Class B common stock. Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.
As of March 11, 2025, there was one holder of record of our Class B common stock. Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.
Any future determination to pay dividends will be at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, including our Credit Agreement (the “Credit Agreement”) entered into in October 2020, and will depend on our results of operations, financial conditions, capital requirements and other factors that our Board deems relevant.
Any future determination to pay dividends will be at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, including our credit agreement, and will depend on our results of operations, financial conditions, capital requirements and other factors that our Board deems relevant.
Equity Compensation Plan Information The following table sets forth information as of December 31, 2023 regarding shares of our Class A common stock that may be issued under the Company’s equity compensation plans, consisting of our 2020 Omnibus Incentive Plan (the “2020 Plan”) and our 2020 Employee Stock Purchase Plan (the “ESPP”).
Equity Compensation Plan Information The following table sets forth information as of December 31, 2024 regarding shares of our Class A common stock that may be issued under the Company’s equity compensation plans, consisting of our 2020 Omnibus Incentive Plan and our 2020 Employee Stock Purchase Plan.
Holders of Common Stock As of February 21, 2024, there were two holders of record of our Class A common stock. This number does not include a greater number of beneficial holders of our Class A common stock whose shares are held by clearing houses, banks, brokers and other financial institutions which are aggregated into a single holder of record.
Holders of Common Stock As of March 11, 2025, there were two holders of record of our Class A common stock. This number does not include a greater number of beneficial holders of our Class A common stock whose shares are held by clearing houses, banks, brokers and other financial institutions which are aggregated into a single holder of record.

Item 7. Management's Discussion & Analysis

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

110 edited+71 added−90 removed46 unchanged
Biggest changeAs of December 31, 2023, all of our long-lived assets were located within the United States. 70 Table of Contents The following schedule includes revenue and adjusted EBITDA for each of our reportable operating segments (in thousands): Year Ended December 31, 2023 2022 Revenue: Nucleic Acid Production $ 224,769 $ 813,076 Biologics Safety Testing 64,179 69,932 Total reportable segments’ revenue 288,948 883,008 Intersegment eliminations (3) (7) Total $ 288,945 $ 883,001 Segment adjusted EBITDA: Nucleic Acid Production $ 82,658 $ 638,337 Biologics Safety Testing 46,908 54,841 Total reportable segments’ adjusted EBITDA 129,566 693,178 Reconciliation of total reportable segments’ adjusted EBITDA to income before income taxes Amortization (27,356) (24,269) Depreciation (12,898) (7,566) Interest expense (45,892) (20,414) Interest income 27,727 2,338 Corporate costs, net of eliminations (64,257) (55,378) Other adjustments: Acquisition contingent consideration 3,286 7,800 Acquisition integration costs (12,695) (13,362) Equity-based compensation (34,588) (18,670) Merger and acquisition related expenses (4,392) (2,416) Financing costs — (1,078) Acquisition related tax adjustment (1,293) (349) Tax Receivable Agreement liability adjustment 668,886 (4,102) Chief Executive Officer transition costs (28) (2,426) Restructuring costs (1) (6,567) — Other (1,763) (1,814) Income before income taxes 617,736 551,472 Income tax expense (756,111) (60,809) Net (loss) income $ (138,375) $ 490,663 ___________________ (1) Equity-based compensation benefit of $0.1 million related to forfeited equity awards in connection with the restructuring is included on the equity-based compensation line item.
Biggest changeAs of December 31, 2024, all of our long-lived assets were located within the United States. 67 Table of Contents The following schedules include revenue, expenses, and adjusted EBITDA for each of the Company’s reportable segments for the periods presented (in thousands): Year Ended December 31, 2024 Nucleic Acid Production Biologics Safety Testing Total Revenue $ 196,345 $ 62,840 $ 259,185 Less: Cost of revenue (1) 94,694 9,918 Selling and marketing (1) 20,722 2,921 General and administrative (1) 20,370 4,197 Research and development (1) 9,713 1,960 Other segment items (2) 33 3 Adjusted EBITDA 50,813 43,841 $ 94,654 Reconciliation of total reportable segments’ adjusted EBITDA to loss before income taxes Amortization (27,531) Depreciation (20,852) Interest expense (47,700) Interest income 27,403 Corporate costs, net of eliminations (58,732) Other adjustments: Acquisition contingent consideration 2,003 Acquisition integration costs (5,559) Stock-based compensation (49,415) Merger and acquisition related expenses (1,728) Loss on extinguishment of debt (3,187) Acquisition related tax adjustment (2,306) Tax Receivable Agreement liability adjustment (40) Goodwill impairment (166,151) Restructuring costs (3) (11) Other (2,330) Loss before income taxes (261,482) Income tax benefit 1,860 Net loss $ (259,622) 68 Table of Contents Year Ended December 31, 2023 Nucleic Acid Production Biologics Safety Testing Total Revenue $ 224,769 $ 64,176 $ 288,945 Intersegment revenues — 3 3 224,769 64,179 288,948 Elimination of intersegment revenues (3) Total consolidated revenues $ 288,945 Less: Cost of revenue (1) 94,040 9,620 Selling and marketing (1) 18,580 2,295 General and administrative (1) 22,474 4,242 Research and development (1) 7,010 1,077 Other segment items (2) 7 37 Adjusted EBITDA 82,658 46,908 $ 129,566 Reconciliation of total reportable segments’ adjusted EBITDA to income before income taxes Amortization (27,356) Depreciation (12,898) Interest expense (45,892) Interest income 27,727 Corporate costs, net of eliminations (64,257) Other adjustments: Acquisition contingent consideration 3,286 Acquisition integration costs (12,695) Stock-based compensation (34,588) Merger and acquisition related expenses (4,392) Acquisition related tax adjustment (1,293) Tax Receivable Agreement liability adjustment 668,886 Restructuring costs (3) (6,567) Other (1,791) Income before income taxes 617,736 Income tax expense (756,111) Net loss $ (138,375) ___________________ (1) Expenses are adjusted to remove the impact of certain items that management believes do not directly reflect our core operations, and, therefore, are not included in measuring segment performance.
Such indicators could include, but are not limited to, current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate, operational performance of the business or key personnel. We perform our annual impairment test in the fourth quarter.
Such indicators could include, but are not limited to, current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate, operational performance of the business or loss of key personnel. We perform our annual impairment test in the fourth quarter.
The mandatory prepayment shall be reduced to 25% or 0% of the calculated excess cash flow if the Company’s first lien net leverage ratio was equal to or less than 4.75:1.00 or 4.25:1.00, respectively; however, no prepayment is required to the extent excess cash flow calculated for the respective period is equal to or less than $10.0 million.
The excess cash flow shall be reduced to 25% or 0% of the calculated excess cash flow if the Company’s first lien net leverage ratio was equal to or less than 4.75:1.00 or 4.25:1.00, respectively, however, no prepayment shall be required to the extent excess cash flow calculated for the respective period is equal to or less than $10.0 million.
Income Tax Expense As a result of our ownership of LLC Units in Topco LLC, we are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Topco LLC and will be taxed at the prevailing corporate tax rates.
Income Tax Expense (Benefit) As a result of our ownership of LLC Units in Topco LLC, we are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Topco LLC and will be taxed at the prevailing corporate tax rates.
Adjusted EBITDA assists management in comparing the segment performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the core operations and, therefore, are not included in measuring segment performance.
Adjusted EBITDA assists management in comparing the segment performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations and, therefore, are not included in measuring segment performance.
Payment made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets until the goods are received or services are rendered. We expect our research and development costs to increase to support our research and development efforts, including meeting our customers’ needs.
Payment made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets until the goods are received or services are rendered. We expect our research and development costs will increase to support our research and development efforts, including meeting our customers’ needs.
(10) For the year ended December 31, 2023, refers to severance payments, legal settlement amounts, inventory step-up charges in connection with the acquisition of Alphazyme, certain working capital and other adjustments related to the acquisition of MyChem, and other non-recurring costs.
For the year ended December 31, 2023, refers to severance payments, legal settlement amounts, inventory step-up charges in connection with the acquisition of Alphazyme, certain working capital and other adjustments related to the acquisition of MyChem, and other non-recurring costs.
Other limitations include that Adjusted EBITDA and Adjusted Free Cash Flow do not reflect: • all expenditures or future requirements for capital expenditures or contractual commitments; • changes in our working capital needs; • provision for income taxes, which may be a necessary element of our costs and ability to operate; • the costs of replacing the assets being depreciated, which will often have to be replaced in the future; • the non-cash component of employee compensation expense; and • the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations.
Other limitations include that Adjusted EBITDA do not reflect: • all expenditures or future requirements for capital expenditures or contractual commitments; • changes in our working capital needs; • provision for income taxes, which may be a necessary element of our costs and ability to operate; • the costs of replacing the assets being depreciated, which will often have to be replaced in the future; • the non-cash component of employee compensation expense; and • the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations.
(7) For the year ended December 31, 2023, refers to the adjustment of our Tax Receivable Agreement liability primarily due to remeasuring the non-current portion of the liability to zero as we no longer consider the payments under the agreement to be probable.
For the year ended December 31, 2023, refers to the adjustment of our Tax Receivable Agreement liability primarily due to remeasuring the non-current portion of the liability to zero as we no longer consider the payments under the agreement to be probable.
The TRA provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to 74 Table of Contents realize, from exchanges of LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes of the entities acquired from MLSH 1 and MLSH 2 in connection with the Organizational Transactions, Topco LLC and subsidiaries of Topco LLC that existed prior to the IPO, and (iii) certain other tax benefits related to our entering into the TRA, including tax benefits attributable to payments that we make under the TRA (collectively, the “Tax Attributes”).
The TRA provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, from exchanges of LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes of the entities acquired from MLSH 1 and MLSH 2 in connection with the Organizational Transactions, Topco LLC and subsidiaries of Topco LLC that existed prior to the IPO, and (iii) certain other tax benefits related to our entering into the TRA, including tax benefits attributable to payments that we make under the TRA (collectively, the “Tax Attributes”).
In these situations, our obligations under the TRA could have a material adverse effect on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be no assurance that we will be able to finance our obligations under the TRA.
In these situations, our obligations under the TRA could have a material adverse effect on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. There can be no assurance that we will be able to finance our obligations under the TRA.
Unless otherwise noted or the context otherwise requires, references in this Annual Report on Form 10-K to “we,” “us” or “our” refer to Maravai LifeSciences Holdings, Inc. and its subsidiaries. This discussion and analysis generally addresses 2023 and 2022 items and year-over-year comparisons between 2023 and 2022.
Unless otherwise noted or the context otherwise requires, references in this Annual Report on Form 10-K to “we,” “us” or “our” refer to Maravai LifeSciences Holdings, Inc. and its subsidiaries. This discussion and analysis generally addresses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023.
During the year ended December 31, 2023, we determined that making a payment under the non-current portion of the TRA was not probable under Accounting Standards Codification 450 - Contingencies as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore, that it is more likely than not that we will not generate sufficient future taxable income to utilize related tax benefits that would result in a payment under the TRA.
During the year ended December 31, 2023, we determined that making a payment under the non-current portion of the TRA was not probable under Accounting Standards Codification 450 - Contingencies as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore, that it is more likely than not that we will not generate sufficient 75 Table of Contents future taxable income to utilize related tax benefits that would result in a payment under the TRA.
Research and Development Research and development costs primarily consist of salaries, benefits, equity-based compensation expense, outside contracted services, cost of supplies, in-process research and development costs from asset acquisitions and allocated facilities costs for employees engaged in research and development of products and services. We expense all research and development costs in the period in which they are incurred.
Research and Development Research and development costs primarily consist of salaries, benefits, stock-based compensation expense, outside contracted services, cost of supplies, in-process research and development costs from asset acquisitions and allocated facilities costs for employees engaged in research and development of products and services. We expense all research and development costs in the period in which they are incurred.
Determining the fair value of intangible assets acquired requires management to use significant judgment and estimates, including the selection of valuation methodologies, assumptions about future net cash flows, discount rates and market 82 Table of Contents participants. Each of these factors can significantly affect the value attributed to the identifiable intangible asset acquired in a business combination.
Determining the fair value of intangible assets acquired requires management to use significant judgment and estimates, including the selection of valuation methodologies, assumptions about future net cash flows, discount rates and market participants. Each of these factors can significantly affect the value attributed to the identifiable intangible asset acquired in a business combination.
The overall change in Other income (expense) was primarily attributable to a $668.9 million gain related to the payable to related parties pursuant to the Tax Receivable Agreement as we concluded that it was not probable that we will be able to realize the remaining tax benefits based on estimates of future taxable income.
The overall change in Other (expense) income was primarily attributable to the prior year $668.9 million gain related to the payable to related parties pursuant to the Tax Receivable Agreement as we concluded that it was not probable that we will be able to realize the remaining tax benefits based on estimates of future taxable income.
However, to the extent we continue to experience declines in our stock price or experience other impairment indicators, such as industry and market considerations or a decline in financial performance, or that the fair values of our reporting units are less than their carrying values, there could be a risk of goodwill impairment of our reporting units in future periods.
However, to the extent that we continue to experience declines in financial performance or experience other impairment indicators, such as industry and market considerations, or that the fair values of our reporting units are less than their carrying values, there could be a risk of goodwill impairment of our reporting units in future periods.
See Note 8 to our consolidated financial statements for additional information. (2) Represents finance lease payment obligations, excluding any renewal options we are reasonably certain to execute and have recognized as lease liabilities. See Note 8 to our consolidated financial statements for additional information. (3) Represents long-term debt principal maturities, excluding interest.
See Note 8 to our consolidated financial statements for additional information. (2) Represents finance lease payment obligations, excluding any renewal options we are reasonably certain to execute and have recognized as lease liabilities. See Note 8 to our consolidated financial statements for additional information. (3) Represents long-term debt principal maturities, excluding interest and unamortized debt issuance costs.
Our estimates are based on historical 79 Table of Contents experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Our estimates are based on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
If the carrying value of a reporting unit exceeds its estimated fair value, an impairment loss will be recognized for the amount in which the carrying amount exceeds the reporting unit’s fair value.
If the carrying value of a reporting unit exceeds its estimated fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.
Discussions of 2021 items and year-over-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023. 63 Table of Contents Overview We are a leading life sciences company providing critical products to enable the development of drug therapies, diagnostics, novel vaccines and support research on human diseases.
Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our 2023 Annual Report on Form 10-K filed with the SEC on February 29, 2024. 60 Table of Contents Overview We are a leading life sciences company providing critical products to enable the development of drug therapies, diagnostics, novel vaccines and support research on human diseases.
During the year ended December 31, 2023 and 2022, intersegment revenue was immaterial between the Nucleic Acid Production and Biologics Safety Testing segments. The intersegment sales and the related gross margin on inventory recorded at the end of the period are eliminated for consolidation purposes.
There was no intersegment revenue during the year ended December 31, 2024. During the year ended December 31, 2023, intersegment revenue was immaterial between the Nucleic Acid Production and Biologics Safety Testing segments. The intersegment sales and the related gross margin on inventory recorded at the end of the period are eliminated for consolidation purposes.
If we had determined that making a payment under the TRA and generating sufficient future taxable income was probable, we would have also recorded a liability pursuant to the TRA, net of current portion, of approximately $665.3 million in the consolidated balance sheet.
If we had determined that making a payment under the TRA and generating sufficient future taxable income was probable, we would have also recorded a liability pursuant to the TRA, net of current portion, of approximately $683.8 million in the consolidated balance sheet.
The purchase price, which includes the fair value of consideration transferred, is attributed to the fair value of the assets acquired and liabilities assumed. The excess of the purchase price of the acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill.
The purchase price, which includes the fair value of consideration transferred, is attributed to the fair value of the assets acquired and 78 Table of Contents liabilities assumed. The excess of the purchase price of the acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill.
During the year ended December 31, 2023, we determined that making a payment under the non-current 75 Table of Contents portion of the TRA was not probable under Accounting Standards Codification 450 - Contingencies since a valuation allowance has been recorded against our deferred tax assets and we do not believe we will generate sufficient future taxable income to utilize related tax benefits and result in a payment under the TRA.
During the years ended December 31, 2024 and 2023, we determined that making a payment under the non-current portion of the TRA was not probable under Accounting Standards Codification 450 - Contingencies since a valuation allowance has been recorded against our deferred tax assets and we do not believe we will generate sufficient future taxable income to utilize related tax benefits and result in a payment under the TRA.
Relationship with GTCR, LLC (“GTCR”) As of December 31, 2023, investment entities affiliated with GTCR collectively controlled approximately 56% of the voting power of our common stock, which enables GTCR to control the vote of all matters submitted to a vote of our shareholders and to control the election of members of the Board and all other corporate decisions.
Relationship with GTCR, LLC (“GTCR”) As of December 31, 2024, investment entities affiliated with GTCR collectively controlled approximately 52% of the voting power of our common stock, which enables GTCR to control the vote of all matters submitted to a vote of our shareholders and to control the election of members of our Board of Directors and all other corporate decisions.
We may also be required to make certain payments of $9.3 million to its sellers and certain employees as of various dates but primarily through December 31, 2025 as long as these individuals continue to be employed by the Company.
We may also be required to make certain retention payments of $9.3 million, of which $6.6 million is accrued as of December 31, 2024, to its sellers and certain employees as of various dates but primarily through December 31, 2025 as long as these individuals continue to be employed by the Company.
An annual commitment fee is applied to the daily unutilized amount under the Revolving Credit Facility at 0.375% per annum, with one stepdown to 0.25% per annum based on Intermediate’s first lien net leverage ratio. Debt Covenants The Credit Agreement includes financial covenants.
An annual commitment fee is applied to the daily unutilized amount under the Revolving Credit Facility at 0.375% per annum, with one stepdown to 0.25% per annum based on Intermediate’s first lien net leverage ratio calculation.
We generated total consolidated revenue of $288.9 million and $883.0 million for the years ended December 31, 2023 and 2022, respectively, through the following segments: (i) Nucleic Acid Production and (ii) Biologics Safety Testing.
We generated total consolidated revenue of $259.2 million and $288.9 million for the years ended December 31, 2024 and 2023, respectively, through the following segments: (i) Nucleic Acid Production and (ii) Biologics Safety Testing.
We made payments of $35.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2022, of which $1.1 million is related to interest. This determination was based on our taxable income for the year ended December 31, 2021.
We made payments of $7.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2024, of which $0.2 million is related to interest. This determination was based on our taxable income for the year ended December 31, 2023.
As of December 31, 2023, the Company has derecognized the remaining non-current liability under the TRA after concluding it was not probable that the Company will be able to realize the remaining tax benefits based on estimates of future taxable income.
As of December 31, 2023, the Company has derecognized the remaining non-current liability under the TRA after concluding it was not probable that the Company will be able to realize the remaining tax benefits based on estimates of future taxable income. There have been no changes to our position as of December 31, 2024.
This determination was based on our estimate of taxable income for the year ended December 31, 2023. As of December 31, 2023, our current liability under the TRA was $7.1 million.
This determination was based on our estimate of taxable income for the year ended December 31, 2024. As of December 31, 2024, we did not have a current liability under the TRA. As of December 31, 2023, our current liability under the TRA was $7.1 million.
In addition, Adjusted EBITDA and Adjusted Free Cash Flow may not be comparable to similarly titled measures used by other companies in our industry or across different industries. Components of Results of Operations Revenue Our revenue consists primarily of product revenue and, to a much lesser extent, service revenue.
In addition, Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries. Components of Results of Operations Revenue Our revenue consists primarily of product revenue and, to a much lesser extent, service revenue.
Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of LLC Unit exchanges and the resulting amounts we are likely to pay out to LLC Unitholders of Topco LLC pursuant to the TRA.
Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of LLC Unit exchanges and the resulting amounts we are likely to pay out to LLC Unitholders of Topco LLC pursuant to the TRA. The foregoing numbers are estimates and the actual payments could differ materially.
Liquidity and Capital Resources Overview We have financed our operations primarily from cash flow from operations, borrowings under long-term debt agreements and, to a lesser extent, the sale of our Class A common stock. As of December 31, 2023, we had cash and cash equivalents of $575.0 million and retained earnings of $285.7 million.
Liquidity and Capital Resources Overview We have financed our operations primarily from cash flow from operations, borrowings under long-term debt agreements and, to a lesser extent, the sale of our Class A common stock. As of December 31, 2024, we had cash and cash equivalents of $322.4 million and retained earnings of $140.9 million.
The Credit Agreement also contains negative and affirmative covenants in addition to the financial covenant, including covenants that restrict our ability to, among other things, incur or prepay certain indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, and make changes in the nature of the business.
The Credit Agreement contains certain covenants, including, among other things, covenants limiting our ability to incur or prepay certain indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes to the nature of the business.
We present Adjusted EBITDA and Adjusted Free Cash Flow because we believe they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry, and they facilitate comparisons on a consistent basis across reporting periods.
We present Adjusted EBITDA because we believe this performance measure is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and they facilitate comparisons of performance on a consistent basis across reporting periods.
As a result, we remeasured the non-current portion of the liability due under the Tax Receivable Agreement to zero, as of December 31, 2023, and recorded a corresponding gain on Tax Receivable Agreement liability remeasurement.
As a result, we remeasured the non-current portion of the liability due under the Tax Receivable Agreement to zero as of December 31, 2023 and recorded a corresponding gain on Tax Receivable Agreement liability remeasurement. There have been no changes to our position as of December 31, 2024.
As of December 31, 2023, we held approximately 52.6% of the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately 47.4% of the outstanding LLC Units of Topco LLC. 68 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2024, we held approximately 56.2% of the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately 43.8% of the outstanding LLC Units of Topco LLC. 65 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
Generally, any late payments will continue to accrue interest at LIBOR (or a Replacement Rate, as applicable) plus 500 basis points until such payments are made. Given the cessation of LIBOR, we have transitioned to the Secured Overnight Financing Rate (“SOFR”) as the applicable Replacement Rate as allowable under the Tax Receivable Agreement.
Generally, any late payments will continue to accrue interest at LIBOR (or a Replacement Rate, as applicable) plus 500 basis points until such payments are made. Given the cessation of LIBOR, we transitioned to SOFR as the applicable Replacement Rate as allowable under the TRA.
Operating Expenses Selling, General and Administrative Our selling, general and administrative expenses primarily consist of salaries, benefits and equity-based compensation expense for our employees in our commercial sales functions, marketing, executive, accounting and finance, legal and human resource functions as well as travel expenses, professional services fees, such as consulting, audit, tax and legal fees, general corporate costs and allocated costs, including facilities, information technology and amortization of intangibles.
Costs of services were not material for the years ended December 31, 2024 and 2023. 63 Table of Contents Operating Expenses Selling, General and Administrative Our selling, general and administrative expenses primarily consist of salaries, benefits and stock-based compensation expense for our employees in our commercial sales functions, marketing, executive, accounting and finance, legal and human resource functions as well as travel expenses, professional services fees, such as consulting, audit, tax and legal fees, general corporate costs and allocated costs, including facilities, information technology and amortization of intangibles.
Tax distributions are required under the terms of the Topco LLC Agreement. As of December 31, 2023, we have made tax distributions equal to the estimated obligation due for 2023. See Note 14 to our consolidated financial statements for additional information regarding tax distributions.
As of December 31, 2024, we have made tax distributions equal to the estimated obligation due for 2024. See Note 14 to our consolidated financial statements for additional information regarding tax distributions.
Cost of revenue also includes adjustments for excess, obsolete or expired inventory, and idle capacity. Cost of revenue associated with our services primarily consists of personnel and related costs, equity-based compensation expense, cost of materials and allocated costs, including facilities and information technology costs. Costs of services were not material for the years ended December 31, 2023 and 2022.
Cost of revenue also includes adjustments for excess, obsolete or expired inventory, and idle capacity. Cost of revenue associated with our services primarily consists of personnel and related costs, stock-based compensation expense, cost of materials and allocated costs, including facilities and information technology costs.
Further, we believe they are helpful in highlighting trends in our operating results because they exclude items that are not indicative of our core operating performance.
Further, we believe this performance measure is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.
During the years ended December 31, 2023 and 2022, the Company made distributions of $9.6 million and $150.2 million, respectively, for tax liabilities to MLSH 1 under this agreement.
During the years ended December 31, 2024 and 2023, we made cash distributions of $0.5 million and $9.6 million, respectively, for tax liabilities to MLSH 1 under this agreement.
Interest expense also consists of changes in the fair value of our interest rate cap agreement. Interest Income Interest income consists of interest earned on our cash balances and short-term investments in money market funds held at financial institutions.
Interest Income Interest income consists of interest earned on our cash balances and short-term investments in money market funds held at financial institutions.
Other Income (Expense) Other income (expense) includes the following for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2023 2022 Change 2023 2022 Interest expense $ (45,892) $ (20,414) 124.8 % (15.9) % (2.3) % Interest income 27,727 2,338 1085.9 % 9.6 % 0.2 % Loss on extinguishment of debt — (208) * — % 0.0 % Change in payable to related parties pursuant to the Tax Receivable Agreement 668,886 (4,102) * 231.5 % (0.5) % Other expense (1,337) (358) 273.5 % (0.5) % 0.0 % Total other income (expense), net $ 649,384 $ (22,744) * 224.7 % (2.6) % ____________________ * Not meaningful Other expense was $22.7 million for the year ended December 31, 2022 compared to Other income of $649.4 million for the year ended December 31, 2023, representing a change of $672.1 million.
Other Income (Expense) Other income (expense) includes the following for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2024 2023 Year-Over-Year Change 2024 2023 Interest expense $ (47,700) $ (45,892) 3.9 % (18.4) % (15.9) % Interest income 27,403 27,727 (1.2) % 10.5 % 9.6 % Loss on extinguishment of debt (3,187) — * (1.2) % — % Change in payable to related parties pursuant to the Tax Receivable Agreement (40) 668,886 * 0.0 % 231.5 % Other expense (2,341) (1,337) 75.1 % (0.9) % (0.5) % Total other (expense) income, net $ (25,865) $ 649,384 * (10.0) % 224.7 % ____________________ * Not meaningful Other income was $649.4 million for the year ended December 31, 2023 compared to Other expense of $25.9 million for the year ended December 31, 2024, representing a change of $675.2 million.
During the year ended December 31, 2023, we recognized a full valuation allowance against our deferred tax assets and recorded a corresponding income tax expense.
During the year ended December 31, 2023, we recognized a full valuation allowance against our deferred tax assets and recorded a corresponding income tax expense. There have been no changes to our position as of December 31, 2024.
Our businesses also continue to see headwinds from a general contraction in economic activity in Asia, particularly in China, which may negatively impact our revenue derived from those markets. See more information under Part I, Item 1.
Our businesses also continue to see headwinds from a general contraction in economic activity in Asia, particularly in China, which may negatively impact our revenue derived from those markets. See more information under Part I, Item 1. Business. How We Assess Our Business We consider a variety of financial and operating measures in assessing the performance of our business.
Change in Payable to Related Parties Pursuant to the Tax Receivable Agreement During the year ended December 31, 2023, we determined that making a payment under the Tax Receivable Agreement for subsequent years was not probable under Accounting Standards Codification 450 - Contingencies as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore, that it is more likely than not that we will not 67 Table of Contents generate sufficient future taxable income to utilize related tax benefits that would result in a payment under the Tax Receivable Agreement.
Loss on extinguishment of debt Loss on extinguishment of debt represents the write-off of remaining unamortized debt issuance costs in connection with the voluntary partial prepayment of our Term Loan and the write-off of capitalized financing costs for the refinancing of our revolving credit facility. 64 Table of Contents Change in Payable to Related Parties Pursuant to the Tax Receivable Agreement During the years ended December 31, 2024 and 2023, we determined that making a payment under the Tax Receivable Agreement for subsequent years was not probable under Accounting Standards Codification 450 - Contingencies as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore, that it is more likely than not that we will not generate sufficient future taxable income to utilize related tax benefits that would result in a payment under the Tax Receivable Agreement.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.” Please also see the section titled “Forward Looking Statements.” We were incorporated in August 2020 and, pursuant to the organizational transactions described in Note 1 to our consolidated financial statements, became a holding company whose principal asset is a controlling equity interest in Topco LLC.
“Risk Factors.” Please also see the section titled “Special Note Regarding Forward Looking Statements.” We were incorporated in August 2020 and, pursuant to the organizational transactions described in Note 1 to our consolidated financial statements, became a holding company whose principal asset is a controlling equity interest in Topco LLC.
Borrowings under the Credit Agreement are unconditionally guaranteed by Topco LLC, along with the existing and future material domestic subsidiaries of Topco LLC (subject to certain exceptions) as specified in the respective guaranty agreements, and are secured by a lien and security interest in substantially all of the assets of existing and future material domestic subsidiaries of Topco LLC that are loan parties.
Borrowings under the Credit Agreement are unconditionally guaranteed by Topco LLC, together with the existing and future material domestic subsidiaries of Topco LLC (subject to certain exceptions), as specified in the respective guaranty agreements.
This discussion and analysis reflects our historical consolidated results of operations and financial position, and contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in or implied by these forward-looking statements.
This discussion and analysis reflects our historical consolidated results of operations and financial position, and contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A.
Our primary customers are biopharmaceutical companies who are pursuing novel research and product development programs. Our customers also include a range of government, academic and biotechnology institutions. As of December 31, 2023, we employed a team of over 650 employees, approximately 24% of whom have advanced degrees.
Our primary end customers are biopharmaceutical companies who are pursuing novel research and product development programs. Our customers also include a range of government, academic and biotechnology institutions. As of December 31, 2024, we employed a team of ove r 570 fu ll-time employees, approximatel y 28% of whom have advanced degrees.
These were partially offset by a non-cash loss on the change in estimated fair value of contingent consideration $7.8 million, and a net cash outflow from the change in our operating assets and liabilities of $45.1 million, which is net of government funding of $17.0 million.
These were partially offset by a net loss of $259.6 million, net cash outflow from the change in our operating assets and liabilities of $12.6 million, and non-cash gain on the change in estimated fair value of contingent consideration of $2.0 million.
Commencing with the fiscal year ended December 31, 2021, and each fiscal year thereafter, the Credit Agreement requires that we make mandatory prepayments on the Term Loan principal out of certain excess cash flow, subject to certain step-downs based on the Company’s first lien net leverage ratio.
The Credit Agreement requires that we make mandatory prepayments on the Term Loan principal upon certain excess cash flow, subject to certain step-downs based on the Company’s first lien net leverage ratio.
If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, management performs a quantitative goodwill impairment test. In performing the quantitative impairment test, management considers a number of factors to determine the fair value of a reporting unit, including an independent valuation to conduct this test.
If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, management performs a quantitative goodwill impairment test.
We generated revenue of $288.9 million and $883.0 million for the years ended December 31, 2023 and 2022, respectively. Total revenue by segment was $224.8 million in Nucleic Acid Production and $64.2 million in Biologics Safety Testing for the year ended December 31, 2023.
Total revenue by segment was $196.3 million in Nucleic Acid Production and $62.8 million in Biologics Safety Testing for the year ended December 31, 2024. Total revenue by segment was $224.8 million in Nucleic Acid Production and $64.2 million in Biologics Safety Testing for the year ended December 31, 2023.
Adjusted EBITDA is also a component of the financial covenant under our credit agreement that governs our ability to access more than $63.0 million in aggregate letters of credit and available borrowings under our revolving credit facility. In addition, if we borrow more than $63.0 million, we are required to maintain a specified net leverage ratio.
Adjusted EBITDA is also a component of the financial covenant under our credit agreement that governs our ability to access more than $58.5 million in aggregate letters of credit and available borrowings under the $167.0 million revolving credit facility provided under our credit agreement (the “Revolving Credit Facility”).
Operating Expenses Operating expenses include the following for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2023 2022 Change 2023 2022 Cost of revenue $ 148,743 $ 168,957 (12.0) % 51.5 % 19.1 % Selling, general and administrative 151,390 129,259 17.1 % 52.4 % 14.7 % Research and development 17,280 18,369 (5.9) % 6.0 % 2.1 % Change in estimated fair value of contingent consideration (3,286) (7,800) (57.9) % (1.1) % (0.9) % Restructuring 6,466 — * 2.2 % — % Total operating expenses $ 320,593 $ 308,785 3.8 % 111.0 % 35.0 % ____________________ * Not meaningful Cost of Revenue Cost of revenue decreased by $20.2 million from $169.0 million for the year ended December 31, 2022 to $148.7 million for the year ended December 31, 2023, or 12.0%.
Operating Expenses Operating expenses include the following for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2024 2023 Year-Over-Year Change 2024 2023 Cost of revenue $ 150,876 $ 148,743 1.4 % 58.2 % 51.5 % Selling, general and administrative 161,771 151,390 6.9 % 62.5 % 52.4 % Research and development 19,221 17,280 11.2 % 7.4 % 6.0 % Change in estimated fair value of contingent consideration (2,003) (3,286) (39.0) % (0.8) % (1.1) % Goodwill impairment 166,151 — * 64.1 % — % Restructuring (1,214) 6,466 * (0.5) % 2.2 % Total operating expenses $ 494,802 $ 320,593 54.3 % 190.9 % 111.0 % ____________________ * Not meaningful Cost of Revenue Cost of revenue increased by $2.2 million from $148.7 million for the year ended December 31, 2023 to $150.9 million for the year ended December 31, 2024, or 1.4%.
Selling, General and Administrative Selling, general and administrative expenses increased by $22.1 million from $129.3 million for the year ended December 31, 2022 to $151.4 million for the year ended December 31, 2023, or 17.1%.
Selling, General and Administrative Selling, general and administrative expenses increased by $10.4 million from $151.4 million for the year ended December 31, 2023 to $161.8 million for the year ended December 31, 2024, or 6.9%.
We may in the future incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. In particular, we expect to incur meaningful share-based compensation expense in the future.
In particular, we expect to incur meaningful share-based compensation expense in the future.
Other Trends and Uncertainties While we believe that the long-term trend of biopharmaceutical customers relying on outside parties to provide important inputs and services for their clinical research and manufacturing remains a long-term growth driver for us, we believe that recent industry trends and uncertainties, including changes in our customers’ spending priorities and budgetary policies and practices, which negatively impacted our revenue and operating results in the year ended December 31, 2023, may continue and result in slower growth and/or cause a further decline in our revenues during the year ending December 31, 2024.
While we believe that the long-term trend of biopharmaceutical customers relying on outside parties to provide important inputs and services for their clinical research and manufacturing remains a long-term growth driver for us, lower demand for research and discovery products within our Nucleic Acid Production business coupled with slower than expected mRNA clinical trial progressions negatively impacted our revenue and operating results in the year ended December 31, 2024, which trend may continue and result in slower growth and/or cause a further decline in our revenues in the future.
As of December 31, 2023, our first lien net leverage ratio was less than 4.25:1.00. Thus, a mandatory prepayment on the Term Loan out of excess cash flow was not required. The Term Loan became repayable in quarterly payments of $1.4 million beginning in March 2022, with all remaining outstanding principal due in October 2027.
As of December 31, 2024, the Company’s first lien net leverage ratio was less than 4.25:1.00. Thus, a mandatory prepayment on the Term Loan out of our excess cash flow was not required.
There was no commission expense recognized for intersegment sales for the years ended December 31, 2023 and 2022. 71 Table of Contents Non-GAAP Financial Measures Adjusted EBITDA A reconciliation of net (loss) income to Adjusted EBITDA, which is a non-GAAP measure, is set forth below (in thousands): Year Ended December 31, 2023 2022 Net (loss) income $ (138,375) $ 490,663 Add: Amortization 27,356 24,269 Depreciation 12,898 7,566 Interest expense 45,892 20,414 Interest income (27,727) (2,338) Income tax expense 756,111 60,809 EBITDA 676,155 601,383 Acquisition contingent consideration (1) (3,286) (7,800) Acquisition integration costs (2) 12,695 13,362 Equity-based compensation (3) 34,588 18,670 Merger and acquisition related expenses (4) 4,392 2,416 Financing costs (5) — 1,078 Acquisition related tax adjustment (6) 1,293 349 Tax Receivable Agreement liability adjustment (7) (668,886) 4,102 Chief Executive Officer transition costs (8) 28 2,426 Restructuring costs (9) 6,567 — Other (10) 1,763 1,814 Adjusted EBITDA $ 65,309 $ 637,800 ____________________ (1) Refers to the change in the estimated fair value of contingent consideration related to completed acquisitions.
There was no commission expense recognized for intersegment sales for the years ended December 31, 2024 and 2023. 69 Table of Contents Adjusted EBITDA (Non-GAAP Financial Measure) A reconciliation of net loss to Adjusted EBITDA, which is a non-GAAP measure, is set forth below (in thousands): Year Ended December 31, 2024 2023 Net loss $ (259,622) $ (138,375) Add: Amortization 27,531 27,356 Depreciation 20,852 12,898 Interest expense 47,700 45,892 Interest income (27,403) (27,727) Income tax (benefit) expense (1,860) 756,111 EBITDA (192,802) 676,155 Acquisition contingent consideration (1) (2,003) (3,286) Acquisition integration costs (2) 5,559 12,695 Stock-based compensation (3) 49,415 34,588 Merger and acquisition related expenses (4) 1,728 4,392 Loss on extinguishment of debt (5) 3,187 — Acquisition related tax adjustment (6) 2,306 1,293 Tax Receivable Agreement liability adjustment (7) 40 (668,886) Goodwill impairment (8) 166,151 — Restructuring costs (9) 11 6,567 Other (10) 2,330 1,791 Adjusted EBITDA $ 35,922 $ 65,309 ____________________ (1) Refers to the change in the estimated fair value of contingent consideration related to completed acquisitions.
Assuming no changes in the relevant tax law, we expect that probable future payments under the TRA relating to the purchase by the Company of LLC Units from MLSH 1 and the corresponding tax attributes to be approximately $7.1 million. This determination is based on our estimate of taxable income for the year ended December 31, 2023.
We expect to fund these payments using cash on hand and cash generated from operations. We do not expect any probable future payments under the TRA relating to the purchase by the Company of LLC Units from MLSH 1 and the corresponding tax attributes. This determination is based on our taxable income for the year ended December 31, 2024.
We also intend to continue making investments in our overall infrastructure and business segments to support our growth. We incurred aggregate selling, general, and administrative expenses of $151.4 million and $129.3 million for the years ended December 31, 2023 and 2022, respectively. Our research and development efforts are geared towards meeting our customers’ needs.
We incurred aggregate selling, general, and administrative expenses of $161.8 million and $151.4 million for the years ended December 31, 2024 and 2023, respectively. Our research and development efforts are geared towards meeting our customers’ needs. We incurred research and development expenses of $19.2 million and $17.3 million for the years ended December 31, 2024 and 2023, respectively.
Biologics Safety Testing Segment Our Biologics Safety Testing segment focuses on manufacturing and selling biologics safety and impurity tests and assay development services that are utilized by our customers in their biologic drug manufacturing activities. 66 Table of Contents Cost of Revenue Cost of revenue associated with our products primarily consists of manufacturing related costs incurred in the production process, including personnel and related costs, equity-based compensation expense, inventory write-downs, costs of materials, labor and overhead, packaging and delivery costs and allocated costs, including facilities, information technology, depreciation, and amortization of intangibles.
Cost of Revenue Cost of revenue associated with our products primarily consists of manufacturing related costs incurred in the production process, including personnel and related costs, stock-based compensation expense, inventory write-downs, costs of materials, labor and overhead, packaging and delivery costs and allocated costs, including facilities, information technology, depreciation, and amortization of intangibles.
We plan to utilize our existing cash on hand, together with cash generated from operations, primarily to fund our commercial and marketing activities associated with our products and services, continued research and development initiatives, and ongoing investments into our manufacturing facilities to create efficiencies and build capacity.
Our principal uses of cash have been to fund operations, acquisitions and capital expenditures, as well as make tax distributions to MLSH 1, make TRA payments to MLSH 1 and MLSH 2 and make interest payments and mandatory principal payments on our long-term debt. 73 Table of Contents We plan to utilize our existing cash on hand, together with cash generated from operations, primarily to fund our commercial and marketing activities associated with our products and services, continued research and development initiatives, and ongoing investments into our manufacturing facilities to create efficiencies and build capacity.
As of December 31, 2023, our first lien net leverage ratio was less than 4.25:1.00. In connection with our acquisition of Alphazyme, we may be required to make additional payments of up to $75.0 million to the sellers of Alphazyme dependent upon meeting or exceeding defined revenue targets during fiscal years 2023 through 2025.
In connection with our acquisition of Alphazyme, which was completed in January 2023, we were initially required to make contingent payments of up to $75.0 million to the sellers of Alphazyme dependent upon Alphazyme meeting or exceeding defined revenue targets during each of the fiscal years 2023 through 2025.
These include severance and other employee-related costs of $4.3 million, offset by a $0.1 million equity-based compensation benefit, facility and other exit costs of $2.0 million, and professional fees and other associated costs of $0.3 million. See Note 3 to our consolidated financial statements for additional information.
For the year ended December 31, 2023, restructuring costs include severance and other employee-related costs of $4.3 million, offset by a $0.1 million stock-based compensation benefit, facility and other exit costs of $2.0 million, and professional fees and other associated costs of $0.3 million.
See Notes 2 and 5 to our consolidated financial statements for additional information. Restructuring Restructuring costs for the year ended December 31, 2023 relate to the Cost Realignment Plan, which was implemented in November 2023.
As a result, we recorded goodwill impairment of $11.9 million during the year ended December 31, 2024. See Note 4 to our consolidated financial statements for additional information. Restructuring Restructuring costs (benefit) for the years ended December 31, 2024 and 2023 relate to the Cost Realignment Plan, which was implemented in November 2023.
During the years ended December 31, 2023 and 2022, the Company made distributions of $9.6 million and $150.2 million, respectively, for tax liabilities to MLSH 1. We are also a party to a Tax Receivable Agreement, or TRA, with MLSH 1, who is primarily owned by GTCR, and MLSH 2 (see Note 14 to our consolidated financial statements).
We are also a party to a Tax Receivable Agreement, or TRA, with MLSH 1, which is primarily owned by GTCR, and MLSH 2 (see Note 14 to our consolidated financial statements).
For the year ended December 31, 2022, refers to the adjustment of our Tax Receivable Agreement liability primarily due to changes in our estimated state apportionment and the corresponding change of our estimated state tax rate. (8) Refers to legal fees and other costs associated with the Chief Executive Officer leadership transition that occurred during July 2023.
(7) For the year ended December 31, 2024, refers to the adjustment of the Tax Receivable Agreement liability primarily due to changes in our estimated state apportionment and the corresponding change of our estimated state tax rate.
Nucleic Acid Production revenue decreased from $813.1 million for the year ended December 31, 2022 to $224.8 million for the year ended December 31, 2023, representing a decrease of $588.3 million, or 72.4%. The decrease in Nucleic Acid Production was primarily driven by decreased revenue from our proprietary CleanCap analogs as demand decreased from COVID-19 vaccine manufacturers.
Nucleic Acid Production revenue decreased from $224.8 million for the year ended December 31, 2023 to $196.3 million for the year ended December 31, 2024, representing a decrease of $28.4 million, or 12.6%. The decrease in Nucleic Acid Production was primarily driven by lower demand for research and discovery products.
We had a net loss of $138.4 million for the fiscal year ended December 31, 2023. We also had positive cash flow from operations of $126.2 million. We have relied on revenue derived from product and services sales, and equity and debt financings to fund our operations to date.
We had positive cash flow from operations of $7.5 million. We have historically relied on revenue derived from product and services sales, and proceeds from equity and debt financings to fund our operations to date.
Year Ended December 31, 2023 2022 Change (in thousands, except per share data) Revenue $ 288,945 $ 883,001 (67.3) % Operating expenses: Cost of revenue (1) 148,743 168,957 (12.0) % Selling, general and administrative (1) 151,390 129,259 17.1 % Research and development (1) 17,280 18,369 (5.9) % Change in estimated fair value of contingent consideration (3,286) (7,800) (57.9) % Restructuring (1) 6,466 — * Total operating expenses 320,593 308,785 3.8 % (Loss) income from operations (31,648) 574,216 (105.5) % Other income (expense), net 649,384 (22,744) (2955.2) % Income before income taxes 617,736 551,472 12.0 % Income tax expense 756,111 60,809 1143.4 % Net (loss) income $ (138,375) $ 490,663 (128.2) % Net (loss) income attributable to non-controlling interests (19,346) 270,458 (107.2) % Net (loss) income attributable to Maravai LifeSciences Holdings, Inc. $ (119,029) $ 220,205 (154.1) % Net (loss) income per Class A common share attributable to Maravai LifeSciences Holdings, Inc.: Basic $ (0.90) $ 1.67 Diluted $ (0.90) $ 1.67 Weighted average number of Class A common shares outstanding: Basic 131,919 131,545 Diluted 131,919 255,323 Non-GAAP measures: Adjusted EBITDA $ 65,309 $ 637,800 Adjusted Free Cash Flow $ 12,621 $ 586,052 ____________________ * Not meaningful (1) Includes equity-based compensation expense as follows (in thousands, except percentages): Year Ended December 31, 2023 2022 Change Cost of revenue $ 7,324 $ 4,192 74.7 % Selling, general and administrative 24,650 13,349 84.7 % Research and development 2,715 1,129 140.5 % Restructuring (101) — * Total equity-based compensation expense $ 34,588 $ 18,670 85.3 % 69 Table of Contents Revenue Consolidated revenue by segment was as follows for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2023 2022 Change 2023 2022 Nucleic Acid Production $ 224,769 $ 813,069 (72.4) % 77.8 % 92.1 % Biologics Safety Testing 64,176 69,932 (8.2) % 22.2 % 7.9 % Total revenue $ 288,945 $ 883,001 (67.3) % 100.0 % 100.0 % Total revenue was $288.9 million for the year ended December 31, 2023 compared to $883.0 million for the year ended December 31, 2022, representing a decrease of $594.1 million, or 67.3%.
Year Ended December 31, 2024 2023 Year-Over-Year Change (in thousands, except per share data) Revenue $ 259,185 $ 288,945 (10.3) % Operating expenses: Cost of revenue (1) 150,876 148,743 1.4 % Selling, general and administrative (1) 161,771 151,390 6.9 % Research and development (1) 19,221 17,280 11.2 % Change in estimated fair value of contingent consideration (2,003) (3,286) (39.0) % Goodwill impairment 166,151 — * Restructuring (1) (1,214) 6,466 * Total operating expenses 494,802 320,593 54.3 % Loss from operations (235,617) (31,648) 644.5 % Other (expense) income, net (25,865) 649,384 (104.0) % (Loss) income before income taxes (261,482) 617,736 (142.3) % Income tax (benefit) expense (1,860) 756,111 (100.2) % Net loss $ (259,622) $ (138,375) 87.6 % Net loss attributable to non-controlling interests (114,776) (19,346) 493.3 % Net loss attributable to Maravai LifeSciences Holdings, Inc. $ (144,846) $ (119,029) 21.7 % Net loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc., basic and diluted $ (1.05) $ (0.90) Weighted average number of Class A common shares outstanding, basic and diluted 137,906 131,919 Adjusted EBITDA (Non-GAAP financial measure) $ 35,922 $ 65,309 ____________________ * Not meaningful (1) Includes stock-based compensation expense as follows (in thousands, except percentages): Year Ended December 31, 2024 2023 Year-Over-Year Change Cost of revenue $ 9,649 $ 7,324 31.7 % Selling, general and administrative 36,023 24,650 46.1 % Research and development 4,968 2,715 83.0 % Restructuring (1,225) (101) 1112.9 % Total stock-based compensation expense $ 49,415 $ 34,588 42.9 % 66 Table of Contents Revenue Consolidated revenue by segment was as follows for the periods presented (in thousands, except percentages): Year Ended December 31, Percentage of Revenue 2024 2023 Year-Over-Year Change 2024 2023 Nucleic Acid Production $ 196,345 $ 224,769 (12.6) % 75.8 % 77.8 % Biologics Safety Testing 62,840 64,176 (2.1) % 24.2 % 22.2 % Total revenue $ 259,185 $ 288,945 (10.3) % 100.0 % 100.0 % Total revenue was $259.2 million for the year ended December 31, 2024 compared to $288.9 million for the year ended December 31, 2023, representing a decrease of $29.8 million, or 10.3%.
Goodwill We evaluate goodwill at the reporting unit level 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.
We believe the following discussion addresses our most critical accounting estimates used in the preparation of our consolidated financial statements, which require subjective and complex judgments. 77 Table of Contents Goodwill We evaluate goodwill at the reporting unit level on an annual basis and on an interim basis 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.
Our international sales, primarily in Europe and Asia Pacific, are effected through a combination of third-party distributors as well as via a direct sales model. The percentage of our total revenue derived from customers in North America was 48.8% and 38.4% for the years ended December 31, 2023 and 2022, respectively.
We primarily utilize a direct sales model for our sales to our customers in North America. Our international sales, primarily in Europe and Asia Pacific, are through a combination of third-party distributors as well as via a direct sales model.
We believe our cash on hand, cash generated from operations and continued access to our credit facilities, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. We expect to spend approximately $2.8 million in restructuring costs primarily during the first quarter of 2024 associated with the Cost Realignment Plan using existing cash on hand.
We believe our cash on hand, cash generated from operations and continued access to our credit facilities, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed2 unchanged
Biggest changeWe had $533.1 million of outstanding borrowings under our Term Loan and no outstanding borrowings under our Revolving Credit Facility as of December 31, 2023. For the year ended December 31, 2023, the effect of a hypothetical 100 basis point increase or decrease in overall interest rates would have changed our interest expense by approximately $5.4 million.
Biggest changeFor the year ended December 31, 2024, the effect of a hypothetical 100 basis point increase or decrease in overall interest rates would have changed our interest expense by approximately $6.1 million. We had cash and cash equivalents of $322.4 million as of December 31, 2024.
As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the U.S. dollar, results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates.
As we endeavor to expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the U.S. dollar, results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates.
To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 83 Table of Contents
To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 79 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of December 31, 2023, our primary exposure to interest rate risk was associated with our variable rate long-term debt.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of December 31, 2024, our primary exposure to interest rate risk was associated with our variable rate long-term debt.
Although approximately 51.2% of our revenue for the year ended December 31, 2023 was derived from international sales, primarily in Europe and Asia Pacific, all of these sales are denominated in U.S. dollars. The majority of our expenses are generally denominated in the currencies in which they are incurred, which is primarily in the United States.
Although approximately 51.0% of our revenue for the year ended December 31, 2024 was derived from international sales, primarily in Europe and Asia Pacific, all of these sales are denominated in U.S. dollars. The majority of our expenses are generally denominated in the currencies in which they are incurred, which is primarily in the United States.
As of December 31, 2023, we have an interest rate cap agreement in place to hedge a portion of our variable interest rate risk on our outstanding long-term debt.
As of December 31, 2024, we have an interest rate cap agreement in place to economically hedge a portion of our variable interest rate risk on our outstanding long-term debt.
The agreement has a contract notional amount of $500.0 million and entitles us to receive from the counterparty at each calendar quarter end the amount, if any, by which a specified floating market rate exceeds the cap strike interest rate. The floating interest rate is reset at the end of each three-month period. The contract expires on January 19, 2025.
The agreement has a contract notional amount of $500.0 million and entitles us to receive from the counterparty at each calendar quarter end the amount, if any, by which a specified floating market rate exceeds the cap strike interest rate. The floating interest rate is reset at the end of each three-month period.
We had cash and cash equivalents of $575.0 million as of December 31, 2023. Given the short-term nature of our investments, we do not believe there is any material risk to the value of our investments with increases or decreases in interest rates. Foreign Currency Risk All of our revenue is denominated in U.S. dollars.
Given the short-term nature of our investments, we do not believe there is any material risk to the value of our investments with increases or decreases in interest rates. Foreign Currency Risk All of our revenue is denominated in U.S. dollars.
Added
The contract expired on January 19, 2025 and was not renewed. We had $299.7 million of outstanding borrowings under our Term Loan and no outstanding borrowings under our Revolving Credit Facility as of December 31, 2024.

Other MRVI 10-K year-over-year comparisons