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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-39725
Maravai LifeSciences Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware85-2786970
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
10770 Wateridge Circle, Suite 200
San Diego, California
92121
(Address of principal executive offices)
(Zip code)
______________________________
Registrant’s telephone number, including area code: (858) 546-0004
______________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par valueMRVIThe Nasdaq Stock Market LLC
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerýAccelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes    No  x
As of October 28, 2022, 131,539,642 shares of the registrant’s Class A common stock were outstanding and 123,669,196 shares of the registrant’s Class B common stock were outstanding.
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TABLE OF CONTENTS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this report, including, without limitation, statements under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements often may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of the timing or nature of our future operating or financial performance or other events. All forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results to differ materially from those that we expected, including:
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 of our control.
Certain of our products are used by customers in the production of vaccines and therapies, some of which represent relatively new and still-developing modes of treatment. Unforeseen adverse events, negative clinical outcomes, development of alternative therapies, or increased regulatory scrutiny of these and their financial cost may damage public perception of the safety, utility, or efficacy of these vaccines and therapies or other modes of treatment and may harm our customers’ ability to conduct their business. Such events may negatively impact our revenue and have an adverse effect on our performance.
We are dependent on our customers’ spending on and demand for outsourced nucleic acid production and biologics safety testing products and services. A reduction in spending or demand could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
We compete with life science, pharmaceutical and biotechnology companies who are substantially larger than we are and potentially capable of developing new approaches that could make our products, services and technology obsolete.
If our products and services do not perform as expected or the reliability of the technology on which our products and services are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products and services, increased costs and damage to our reputation.
Our products are highly complex and are subject to quality control requirements.
Our success depends on the market acceptance of our life science reagents. Our reagents may not achieve or maintain significant commercial market acceptance.
Until the 2020 fiscal year, we had incurred losses for each fiscal year since inception. We may incur losses in the future, and we may not be able to generate sufficient revenue to maintain profitability.
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.
Product liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing products and limit commercialization of any products that we may develop.
Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
We depend on a limited number of customers for a high percentage of our revenue. If we cannot maintain our current relationships with customers, fail to sustain recurring sources of revenue with our existing customers, or if we fail to enter into new relationships, our future operating results will be adversely affected.
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.
Our products could become subject to more onerous regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay or prevent commercialization of our products, thereby materially and adversely affecting our business, financial condition, results of operations, cash flows and prospects.
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If we are unable to obtain, maintain and enforce intellectual property protection for our current or future products, or if the scope of our intellectual property protection is not sufficiently broad, our ability to commercialize our products successfully and to compete effectively may be materially adversely affected.
If we fail to comply with our obligations under any license agreements, disagree over contract interpretation, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are necessary to our business.
Our existing indebtedness could adversely affect our business and growth prospects.
Our principal asset is our interest in Maravai Topco Holdings, LLC (“Topco LLC”), and, accordingly, we depend on distributions from Topco LLC to pay our taxes and expenses, including payments under a tax receivable agreement with the former owners of Topco LLC (the “Tax Receivable Agreement” or “TRA”). Topco LLC’s ability to make such distributions may be subject to various limitations and restrictions.
Conflicts of interest could arise between our shareholders and Maravai Life Sciences Holdings, LLC (“MLSH 1”), the only other member of Topco LLC, which may impede business decisions that could benefit our shareholders.
The Tax Receivable Agreement requires us to make cash payments to MLSH 1 and Maravai Life Sciences Holdings 2, LLC (“MLSH 2”), an entity through which certain of our former owners hold their interests in the Company, in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make will be substantial.
Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1 and MLSH 2 that will not benefit the other common shareholders to the same extent as they will benefit MLSH 1 and MLSH 2.
GTCR, LLC (“GTCR”) controls us, and its interests may conflict with ours or yours in the future.
Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management, even if beneficial to our shareholders.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause our actual results to differ materially from our expectations or cautionary statements are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in this Quarterly Report on Form 10-Q.
The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

4

Part I.
Item 1. Financial Statements and Supplementary Data
MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
September 30, 2022December 31, 2021
Assets
Current assets:
Cash$617,446 $551,272 
Accounts receivable, net114,069 117,512 
Inventory62,424 51,557 
Prepaid expenses and other current assets23,432 19,698 
Government funding receivable18,155  
Total current assets835,526 740,039 
Property and equipment, net48,420 46,332 
Goodwill283,535 152,766 
Intangible assets, net222,899 117,571 
Deferred tax assets771,120 808,117 
Other assets87,399 53,451 
Total assets$2,248,899 $1,918,276 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$9,459 $8,154 
Accrued expenses and other current liabilities60,187 34,574 
Deferred revenue5,822 10,211 
Current portion of payable to related parties pursuant to the Tax Receivable Agreement34,747 34,838 
Current portion of long-term debt5,440 6,000 
Total current liabilities115,655 93,777 
Long-term debt, less current portion522,824 524,591 
Payable to related parties pursuant to the Tax Receivable Agreement, less current portion711,232 713,481 
Other long-term liabilities57,519 41,066 
Total liabilities1,407,230 1,372,915 
Stockholders’ equity:
Class A common stock, $0.01 par value - 500,000 shares authorized; 131,540 and 131,488 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
1,315 1,315 
Class B common stock, $0.01 par value - 300,000 shares authorized; 123,669 shares issued and outstanding as of September 30, 2022 and December 31, 2021
1,237 1,237 
Additional paid-in capital134,077 128,386 
Retained earnings367,132 184,561 
Total stockholders’ equity attributable to Maravai LifeSciences Holdings, Inc.503,761 315,499 
Non-controlling interest337,908 229,862 
Total stockholders’ equity841,669 545,361 
Total liabilities and stockholders’ equity$2,248,899 $1,918,276 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021
(as adjusted)*
20222021
(as adjusted)*
Revenue$191,263 $204,810 $678,288 $570,796 
Operating expenses:
Cost of revenue38,176 32,221 115,704 101,423 
Selling, general and administrative30,795 26,512 92,056 74,483 
Research and development5,389 1,946 13,358 6,035 
Change in estimated fair value of contingent consideration  (7,800) 
Gain on sale of business (11,249) (11,249)
Total operating expenses74,360 49,430 213,318 170,692 
Income from operations116,903 155,380 464,970 400,104 
Other income (expense):
Interest expense(3,136)(7,685)(10,234)(23,238)
Loss on extinguishment of debt  (208) 
Change in payable to related parties pursuant to the Tax Receivable Agreement 3,246 2,340 9,132 
Other (expense) income(4)78 (1,272)78 
Income before income taxes113,763 151,019 455,596 386,076 
Income tax expense14,110 18,842 52,362 43,937 
Net income99,653 132,177 403,234 342,139 
Net income attributable to non-controlling interests55,184 78,215 220,663 215,932 
Net income attributable to Maravai LifeSciences Holdings, Inc.$44,469 $53,962 $182,571 $126,207 
Net income per Class A common share attributable to Maravai LifeSciences Holdings, Inc.:
Basic$0.34 $0.46 $1.39 $1.16 
Diluted$0.34 $0.44 $1.37 $1.13 
Weighted average number of Class A common shares outstanding:
Basic131,540 118,433 131,518 109,174 
Diluted131,651 258,028 255,323 257,799 
____________________
*As adjusted to reflect the impact of the adoption of Accounting Standards Codification 842 (“ASC 842”). See Note 1 to the condensed consolidated financial statements for a summary of the adjustments.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021
(as adjusted)*
20222021
(as adjusted)*
Net income$99,653 $132,177 $403,234 $342,139 
Other comprehensive income:
Foreign currency translation adjustments 39  55 
Total other comprehensive income99,653 132,216 403,234 342,194 
Comprehensive income attributable to non-controlling interests55,184 78,215 220,663 215,943 
Total comprehensive income attributable to Maravai LifeSciences Holdings, Inc.$44,469 $54,001 $182,571 $126,251 
____________________
*As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements for a summary of the adjustments.
The accompanying notes are an integral part of the condensed consolidated financial statements.
7

MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)

Three Months Ended September 30, 2022
Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-In CapitalRetained EarningsNon-Controlling InterestTotal Stockholders’ Equity
June 30, 2022131,539$1,315 123,669$1,237 $131,373 $322,663 $317,204 $773,792 
Issuance of Class A common stock under employee equity plans, net of shares withheld for employee taxes1 — — — 25 — — 25 
Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC— — — — (35)— 35  
Stock-based compensation— — — — 2,443 — 2,297 4,740 
Distribution for tax liabilities to non-controlling interest holder— — — — 271 — (36,812)(36,541)
Net income— — — — — 44,469 55,184 99,653 
September 30, 2022131,540$1,315 123,669$1,237 $134,077 $367,132 $337,908 $841,669 

Nine Months Ended September 30, 2022
Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-In CapitalRetained EarningsNon-Controlling InterestTotal Stockholders’ Equity
December 31, 2021131,488$1,315 123,669$1,237 $128,386 $184,561 $229,862 $545,361 
Issuance of Class A common stock under employee equity plans, net of shares withheld for employee taxes52 — — — 1,173 — — 1,173 
Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC— — — — (529)— 529  
Stock-based compensation— — — — 6,532 — 6,143 12,675 
Distribution for tax liabilities to non-controlling interest holder— — — — 206 — (119,289)(119,083)
Impact of change to deferred tax asset associated with cash contribution to Topco LLC
— — — — (1,691)— — (1,691)
Net income— — — — — 182,571 220,663 403,234 
September 30, 2022131,540$1,315 123,669$1,237 $134,077 $367,132 $337,908 $841,669 
8

Three Months Ended September 30, 2021
Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsNon-Controlling InterestTotal Stockholders’ Equity
June 30, 2021
(as adjusted)*
114,352$1,143 143,308$1,433 $118,486 $(39)$74,769 $141,569 $337,361 
Effect of exchange of LLC Units
17,068 171 (17,068)(171)18,874 — — (18,874) 
Recognition of impact of the Tax Receivable Agreement due to exchanges of LLC Units
— — — — 34,060 — — — 34,060 
Stock-based compensation— — — — 1,614 — — 1,953 3,567 
Distribution for tax liabilities to non-controlling interest holder— — — — 60 — — (50,061)(50,001)
Net income— — — — — — 53,962 78,215 132,177 
Foreign currency translation adjustment— — — — — 39 — — 39 
September 30, 2021
(as adjusted)*
131,420$1,314 126,240$1,262 $173,094 $ $128,731 $152,802 $457,203 
____________________
*As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements for a summary of the adjustments.

9

Nine Months Ended September 30, 2021
Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsNon-Controlling InterestTotal Stockholders’ Equity
December 31, 202096,647$966 160,974$1,610 $85,125 $(44)$854 $66,235 $154,746 
Cumulative effect of adoption of ASC 842, net of tax— — — — — — 1,670 2,784 4,454 
Effect of exchange of LLC Units
34,734 348 (34,734)(348)31,003 — — (31,003) 
Recognition of impact of the Tax Receivable Agreement due to exchanges of LLC Units
— — — — 53,000 — — — 53,000 
Issuance of Class A common stock under employee equity plans, net of shares withheld for employee taxes39 — — — 785 — — — 785 
Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC— — — — (420)— — 420  
Stock-based compensation— — — — 3,507 — — 4,721 8,228 
Distribution for tax liabilities to non-controlling interest holder— — — — 94 — — (106,298)(106,204)
Net income— — — — — — 126,207 215,932 342,139 
Foreign currency translation adjustment— — — — — 44 — 11 55 
September 30, 2021
(as adjusted)*
131,420$1,314 126,240$1,262 $173,094 $ $128,731 $152,802 $457,203 
____________________
*As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements for a summary of the adjustments.
The accompanying notes are an integral part of the condensed consolidated financial statements.
10

MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Nine Months Ended
September 30,
20222021
(as adjusted)*
Operating activities:
Net income$403,234 $342,139 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation5,604 4,668 
Amortization of intangible assets18,033 14,685 
Amortization of right-of-use assets4,437 5,111 
Amortization of deferred financing costs2,134 1,995 
Stock-based compensation expense12,675 8,228 
Loss on extinguishment of debt208  
Deferred income taxes35,307 29,438 
Change in estimated fair value of contingent consideration(7,800) 
Gain on sale of business (11,249)
Revaluation of liabilities under the Tax Receivable Agreement(2,340)(9,132)
Other(5,529)177 
Changes in operating assets and liabilities:
Accounts receivable3,502 (18,851)
Inventory(9,814)(27,051)
Prepaid expenses and other assets(36,375)(6,037)
Accounts payable1,890 1,543 
Accrued expenses and other current liabilities14,114 (10,927)
Deferred revenue(4,388)(11,346)
Other long-term liabilities1,750 (3,564)
Net cash provided by operating activities436,642 309,827 
Investing activities:
Cash paid for acquisition of a business, net of cash acquired(238,836) 
Purchases of property and equipment(10,876)(9,194)
Proceeds from sale of building 548 
Proceeds from sale of business, net of cash divested620 119,957 
Net cash (used in) provided by investing activities(249,092)111,311 
Financing activities:
Distributions for tax liabilities to non-controlling interests holders(119,289)(106,298)
Proceeds from borrowings of long-term debt8,455  
Principal repayments of long-term debt(12,535)(4,500)
Proceeds from employee stock purchase plan and exercise of stock options, net of shares withheld for employee taxes
1,993 1,329 
Net cash used in financing activities(121,376)(109,469)
Effects of exchange rate changes on cash 45 
Net increase in cash66,174 311,714 
Cash, beginning of period551,272 236,184 
Cash, end of period$617,446 $547,898 
11

Nine Months Ended
September 30,
20222021
(as adjusted)*
Supplemental cash flow information:
Cash paid for interest$11,416 $20,612 
Cash paid for income taxes$19,581 $16,569 
Supplemental disclosures of non-cash activities:
Property and equipment included in accounts payable and accrued expenses$1,799 $866 
Accrued receivable for capital expenditures to be reimbursed under a government contract$1,105 $ 
Right-of-use assets obtained in exchange for new operating lease liabilities$7,872 $ 
Fair value of contingent consideration liability recorded in connection with acquisition of a business$7,800 $ 
Accrued consideration payable
$10,000 $ 
Recognition of liabilities under the Tax Receivable Agreement$ $365,139 
Recognition of deferred tax assets as a result of exchange of LLC Units$ $418,140 
____________________
*As adjusted to reflect the impact of the adoption of ASC 842. See Note 1 to the condensed consolidated financial statements for a summary of the adjustments.
The accompanying notes are an integral part of the condensed consolidated financial statements.
12

MARAVAI LIFESCIENCES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.Organization and Significant Accounting Policies
Description of Business
Maravai LifeSciences Holdings, Inc. (the “Company”, and together with its consolidated subsidiaries, “Maravai”, “we”, “us”, and “our”) provides critical products to enable the development of drugs, therapeutics, diagnostics and vaccines and to support research on human diseases. Our products address the key phases of biopharmaceutical development and include complex nucleic acids for diagnostic and therapeutic applications and antibody-based products to detect impurities during the production of biopharmaceutical products.
The Company is headquartered in San Diego, California, and has historically operated in three principal businesses: Nucleic Acid Production, Biologics Safety Testing and Protein Detection. In September 2021, the Company completed the divestiture of its Protein Detection business. Our Nucleic Acid Production business manufactures and sells products used in the fields of gene therapy, vaccines, nucleoside chemistry, oligonucleotide therapy and molecular diagnostics, including reagents used in the chemical synthesis, modification, labelling and purification of deoxyribonucleic acid (“DNA”) and ribonucleic acid (“RNA”). Our core Nucleic Acid Production offerings include messenger ribonucleic acid (“mRNA”), long and short oligonucleotides, our proprietary CleanCap® capping technology and oligonucleotide building blocks. Our Biologics Safety Testing business sells highly specialized analytical products for use in biologic manufacturing process development, including custom product-specific development antibody and assay development services.
Organization
We were incorporated as a Delaware corporation in August 2020 for the purpose of facilitating an initial public offering (“IPO”). Immediately prior to the IPO, we effected a series of organizational transactions (the “Organizational Transactions”), which, together with the IPO, were completed in November 2020, that resulted in the Company operating, controlling all of the business affairs and becoming the ultimate parent company of Maravai Topco Holdings, LLC (“Topco LLC”) and its consolidated subsidiaries. Maravai Life Sciences Holdings, LLC (“MLSH 1”), which is controlled by investment entities affiliated with GTCR, is the only other member of Topco LLC.
The Company is the sole managing member of Topco LLC, which operates and controls TriLink Biotechnologies, LLC (“TriLink”), Glen Research, LLC, MockV Solutions, LLC and Cygnus Technologies, LLC (“Cygnus”) and their respective subsidiaries. Prior to the Company’s divestiture of its Protein Detection business in September 2021, Topco LLC also operated and controlled Vector Laboratories, Inc. and its subsidiaries (“Vector”).
Basis of Presentation
The Company operates and controls all of the business and affairs of Topco LLC, and, through Topco LLC and its subsidiaries, conducts its business. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Topco LLC and also have a substantial financial interest in Topco LLC, we consolidate the financial results of Topco LLC, and a portion of our net income is allocated to the non-controlling interests in Topco LLC held by MLSH 1.
The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and accounts between the businesses comprising the Company have been eliminated in the accompanying consolidated financial statements.
Unaudited Interim Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to Form 10-Q of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any future period.
The condensed consolidated balance sheet presented as of December 31, 2021 has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by
13

Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the Company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) filed with the SEC.
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue and expenses, and related disclosures. These estimates form the basis for judgments the Company makes about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company bases its estimates and judgments on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions the Company may undertake in the future. Significant estimates include, but are not limited to, the payable to related parties pursuant to the Tax Receivable Agreement (as defined in Note 10), the realizability of our net deferred tax assets, and valuation of goodwill and intangible assets acquired in business combinations. Actual results could differ materially from those estimates.
Significant Accounting Policies
A description of the Company’s significant accounting policies is included in Note 1 of the Notes to the Consolidated Financial Statements included in its 2021 Form 10-K. Except as noted below, there have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2022.
Revenue Recognition
The Company generates revenue primarily from the sale of products and, to a much lesser extent, services in the fields of nucleic acid production, biologics safety testing and protein detection. Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The majority of the Company’s contracts include only one performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account for revenue recognition. The Company also recognizes revenue from other contracts that may include a combination of products and services, the provision of solely services, or from license fee arrangements which may be associated with the delivery of product. Where there is a combination of products and services, the Company accounts for the promises as individual performance obligations if they are concluded to be distinct. Performance obligations are considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. As a practical expedient, we do not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less. Contracts with customers are evaluated on a contract-by-contract basis as contracts may include multiple types of goods and services as described below.
Nucleic Acid Production
Nucleic Acid Production revenue is generated from the manufacture and sale of highly modified, complex nucleic acids products to support the needs of our customers’ research, therapeutic and vaccine programs. The primary offering of products includes CleanCap®, mRNA and specialized oligonucleotides. Contracts typically consist of a single performance obligation. We also sell nucleic acid products for labeling and detecting proteins in cells and tissue samples research. The Company recognizes revenue from these products in the period in which the performance obligation is satisfied by transferring control to the customer. Revenue for nucleic acid catalog products is recognized at a single point in time, generally upon shipment to the customer. Revenue for contracts for certain custom nucleic acid products, with an enforceable right to payment and a reasonable margin for work performed to date, is recognized over time, based on a cost-to-cost input method over the manufacturing period. Payments received from customers in advance of manufacturing their products is recorded as deferred revenue until the products are delivered.
14

Biologics Safety Testing
The Company’s Biologics Safety Testing revenue is associated with the sale of bioprocess impurity detection kit products. We also enter into contracts that include custom antibody development, assay development and antibody affinity extraction services. These products and services enable the detection of impurities that occur in the manufacturing of biologic drugs and other therapeutics. The Company recognizes revenue from the sale of bioprocess impurity detection kits in the period in which the performance obligation is satisfied by transferring control to the customer. Custom antibody development contracts consist of a single performance obligation, typically with an enforceable right to payment and a reasonable margin for work performed to date. Revenue is recognized over time based on a cost-to-cost input method over the contract term. Where an enforceable right to payment does not exist, revenue is recognized at a point in time when control is transferred to the customer. Assay development service contracts consist of a single performance obligation. Revenue is recognized at a point in time when a successful antigen test and report is provided to the customer. Affinity extraction services, which generally occur over a short period of time, consist of a single performance obligation to perform the extraction service and provide a summary report to the customer. Revenue is recognized either over time or at a point in time depending on contractual payment terms with the customer.
Protein Detection
Prior to the divestiture of its Protein Detection business in September 2021, the Company also manufactured and sold protein labeling and detection reagents to customers that were used for basic research and development. The contracts to sell these catalog products consisted of a single performance obligation to deliver the reagent products. Revenue from these contracts was recognized at a point in time, generally upon shipment of the final product to the customer.
The Company elected the practical expedient to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less. The Company had no material unfulfilled performance obligations for contracts with an original length greater than one year for any period presented.
The Company accepts returns only if the products do not meet customer specifications, and historically, the Company’s volume of product returns has not been significant. Further, no warranties are provided for promised goods and services other than assurance type warranties.
Revenue for an individual contract is recognized at the related transaction price, which is the amount the Company expects to be entitled to in exchange for transferring the products and/or services. The transaction price for product sales is calculated at the contracted product selling price. The transaction price for a contract with multiple performance obligations is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined based on the prices charged to customers, which are directly observable. Standalone selling price of services are mostly based on time and materials. Generally, payments from customers are due when goods and services are transferred. As most contracts contain a single performance obligation, the transaction price is representative of the standalone selling price charged to customers. Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods. Variable consideration has not been material to our consolidated financial statements.
Sales taxes
Sales taxes collected by the Company are not included in the transaction price as revenue as they are ultimately remitted to a governmental authority.
Shipping and handling costs
The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Accordingly, revenue for shipping and handling is recognized at the same time that the related product revenue is recognized.
Contract costs
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred when the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing and general and administrative expenses. The costs to fulfill the contracts are determined to be immaterial and are recognized as an expense when incurred.
15

Contract balances
Contract assets are generated when contractual billing schedules differ from revenue recognition timing and the Company records a contract receivable when it has an unconditional right to consideration. There were no contract asset balances as of September 30, 2022 and December 31, 2021.
Contract liabilities include billings in excess of revenue recognized, such as customer deposits and deferred revenue. Customer deposits, which are included in accrued expenses, are recorded when cash payments are received or due in advance of performance. Deferred revenue is recorded when the Company has unsatisfied performance obligations. Total contract liabilities were $7.4 million and $12.6 million as of September 30, 2022 and December 31, 2021, respectively. Contract liabilities are expected to be recognized as revenue within the next twelve months.
Disaggregation of revenue
The following tables summarize the revenue by segment and region for the periods presented (in thousands):
Three Months Ended September 30, 2022
Nucleic Acid ProductionBiologics Safety TestingTotal
North America$91,130$6,583$97,713
Europe, the Middle East and Africa77,7554,06981,824
Asia Pacific5,9315,54111,472
Latin and Central America65189254
Total revenue$174,881$16,382$191,263
Nine Months Ended September 30, 2022
Nucleic Acid ProductionBiologics Safety TestingTotal
North America$252,563$21,274$273,837
Europe, the Middle East and Africa322,56613,344335,910
Asia Pacific48,53519,47468,009
Latin and Central America115417532
Total revenue$623,779$54,509$678,288
Three Months Ended September 30, 2021
Nucleic Acid ProductionBiologics Safety TestingProtein DetectionTotal
North America$73,622$7,203$3,067$83,892
Europe, the Middle East and Africa103,9293,8111,392109,132
Asia Pacific5,3325,44179511,568
Latin and Central America1817129218
Total revenue$182,901$16,626$5,283$204,810
Nine Months Ended September 30, 2021
Nucleic Acid ProductionBiologics Safety TestingProtein DetectionTotal
North America$207,469$20,052$11,016$238,537
Europe, the Middle East and Africa257,87312,0594,752274,684
Asia Pacific33,97719,8443,06856,889
Latin and Central America35528123686
Total revenue$499,354$52,483$18,959$570,796
Total revenue is attributed to geographic regions based on the bill-to location of the transaction. For all periods presented, the majority of our revenue was recognized at a point in time.
16

Non-Controlling Interests
Non-controlling interests represent the portion of profit or loss, net assets and comprehensive income of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities.
In November 2020, following the completion of the Organizational Transactions, we became the sole managing member of Topco LLC. As of September 30, 2022, we held approximately 51.5% of the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately 48.5% of the outstanding LLC Units of Topco LLC. Therefore, we report non-controlling interests based on the percentage of LLC Units of Topco LLC held by MLSH 1 on the condensed consolidated balance sheet as of September 30, 2022. Income or loss attributed to the non-controlling interest in Topco LLC is based on the LLC Units outstanding during the period for which the income or loss is generated and is presented on the condensed consolidated statements of income and condensed consolidated statements of comprehensive income.
MLSH 1 is entitled to exchange its LLC Units of Topco LLC, together with an equal number of shares of our Class B common stock (together referred to as “Paired Interests”), for shares of Class A common stock on a one-for-one basis or, at our election, for cash, from a substantially concurrent public offering or private sale (based on the price of our Class A common stock in such public offering or private sale). As such, future exchanges of Paired Interests by MLSH 1 will result in a change in ownership and reduce or increase the amount recorded as non-controlling interests and increase or decrease additional paid-in-capital when Topco LLC has positive or negative net assets, respectively. In April 2021 and September 2021, MLSH 1 executed an exchange of Paired Interests prior to the April 2021 Secondary Offering and September 2021 Secondary Offering, respectively. For the nine months ended September 30, 2022, MLSH 1 did not exchange any Paired Interests.
Exchanges and Secondary Offerings
April 2021 Exchange and Secondary Offering
In April 2021, MLSH 1 executed an exchange of 17,665,959 LLC Units (paired with the corresponding shares of Class B common stock) in return for 17,665,959 shares of the Company’s Class A common stock. The corresponding shares of Class B common stock were subsequently cancelled and retired. The Company immediately completed a secondary offering (“April 2021 Secondary Offering”) of 20,700,000 shares of its Class A common stock by MLSH 1 and MLSH 2, which included 3,034,041 shares of Class A common stock previously held by MLSH 2, which included the full exercise of the underwriters’ option to purchase up to 2,700,000 additional shares of Class A common stock, at a price of $