UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
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Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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1
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes No
The number of shares outstanding of the registrant’s common stock on April 25, 2022 was
2
Table of Contents
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PAGE
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PART I - |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (interim periods unaudited) |
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Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
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Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021 |
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Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 |
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II - |
OTHER INFORMATION |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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3
PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
REPLIGEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands, except share data)
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March 31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of reserves of $ |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Noncurrent assets: |
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Property, plant and equipment, net |
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Intangible assets, net |
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Goodwill |
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Deferred tax assets |
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Operating lease right of use assets |
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Other noncurrent assets |
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Total noncurrent assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Operating lease liability |
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Current contingent consideration |
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Accrued liabilities |
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Convertible senior notes, current portion, net |
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Total current liabilities |
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Noncurrent liabilities: |
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Deferred tax liabilities |
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Noncurrent operating lease liability |
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Noncurrent contingent consideration |
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Other noncurrent liabilities |
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Total noncurrent liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Accumulated earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, amounts in thousands, except per share data)
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Three Months Ended |
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2022 |
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2021 |
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Revenue: |
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Products |
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$ |
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$ |
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Royalty and other revenue |
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Total revenue |
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Costs and operating expenses: |
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Cost of product revenue |
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Research and development |
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Selling, general and administrative |
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Contingent consideration |
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Total costs and operating expenses |
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Income from operations |
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Other income (expenses): |
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Investment income |
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Interest expense |
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Amortization of debt issuance costs |
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Other expenses |
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( |
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( |
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Other expenses, net |
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( |
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Income before income taxes |
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Income tax provision |
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Net income |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Diluted (Note 12) |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted (Note 12) |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustment |
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( |
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Comprehensive income |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
5
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, amounts in thousands, except share data)
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Three Months Ended March 31, 2022 |
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Common Stock |
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Number of |
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Par |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Impact of the adoption of ASU 2020-06 |
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— |
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— |
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( |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Issuance of common stock for debt conversion |
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( |
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— |
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— |
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Exercise of stock options and vesting of stock |
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— |
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— |
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Tax withholding on vesting of restricted stock units |
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( |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Translation adjustment |
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— |
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— |
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— |
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( |
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— |
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( |
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Other |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Three Months Ended March 31, 2021 |
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Common Stock |
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Number of |
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Par |
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Additional |
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Accumulated |
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Retained |
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Total |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Issuance of common stock for debt conversion |
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— |
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— |
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Exercise of stock options and vesting of stock |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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True-up of costs related to the December 2020 issuance |
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— |
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— |
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— |
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— |
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Translation adjustment |
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— |
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— |
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— |
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( |
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— |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
6
REPLIGEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
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Three Months Ended |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Inventory step-up amortization |
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Depreciation and amortization |
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Amortization of debt discount and issuance costs |
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Stock-based compensation expense |
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Deferred income taxes, net |
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Contingent consideration |
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Other |
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Changes in operating assets and liabilities, excluding impact of acquisitions: |
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Accounts receivable |
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Unbilled receivables |
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Inventories |
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Prepaid expenses and other assets |
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Other assets |
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Accounts payable |
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Accrued expenses |
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( |
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( |
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Long-term liabilities |
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( |
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Total cash provided by operating activities |
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Cash flows from investing activities: |
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Acquisitions, net of cash acquired |
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Additions to capitalized software costs |
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( |
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( |
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Purchases of property, plant and equipment |
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Sale of property, plant and equipment |
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Total cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options |
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Payment of tax withholding obligation on vesting of restricted stock |
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Repayment of convertible senior notes |
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( |
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( |
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Total cash (used in) provided by financing activities |
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( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
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( |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities: |
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Assets acquired under operating leases |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
7
REPLIGEN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company”, “Repligen”, “our” or “we”) in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 17, 2022 (“Form 10-K”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The business and economic uncertainty resulting from the novel coronavirus pandemic (“COVID-19”) pandemic has made such estimates more difficult to calculate. Accordingly, actual results could differ from those estimates.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB, Repligen GmbH, Spectrum® LifeSciences LLC and its subsidiaries (“Spectrum”), C Technologies, Inc., ARTeSYN Biosolutions Holdings Ireland Limited (“ARTeSYN”), Polymem S.A. (“Polymem”), Avitide LLC, Newton T&M Corp ("NTM"), Bio-Flex Solutions, L.L.C. ("BioFlex") and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company made no material changes in the application of its significant accounting policies that were disclosed in its Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year. Certain prior year balances have been reclassified to conform to current year presentation.
Recent Accounting Standards Updates
We consider the applicability and impact of all Accounting Standards Updates (“ASUs” or “ASU”) on the Company’s consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations. Recently issued ASUs that we feel may be applicable to the Company are as follows:
Recently Issued Accounting Standards Updates – Adopted During the Period
Effective January 1, 2022, the Company adopted ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)” using the modified retrospective method of adoption. ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. Consequently, a convertible instrument will be accounted for as a single liability measured at its amortized cost as long as no other features of such convertible instrument require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments will typically be closer to the coupon interest rate when applying the guidance in Topic 835, “Interest.” We now account for our 0.375% convertible senior notes due July 15, 2024 (the "2019 Notes") as a single liability measured at amortized cost. As a result, the adoption of ASU 2020-06 had a material impact on our consolidated financial statements, resulting in adjustments of $
8
current portion, net, respectively, on our consolidated balance sheet as of January 1, 2022. Additionally, due to the adoption of ASU 2020-06, we reversed the remaining balance of the deferred tax liability of $
9
The Company uses various valuation approaches in determining the fair value of its assets and liabilities. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
Level 1 – |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. |
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Level 2 – |
Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. |
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Level 3 – |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.
Fair Value Measured on a Recurring Basis
Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2022 and December 31, 2021 (amounts in thousands):
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As of March 31, 2022 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Money market accounts |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Liabilities: |
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Short-term contingent consideration |
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$ |
— |
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$ |
— |
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$ |
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$ |
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Long-term contingent consideration |
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$ |
— |
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$ |
— |
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$ |
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$ |
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