REPLIGEN CORP [RGEN] Filings

10-Q 1 rgen-20220331.htm 10-Q 10-Q

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 March 31, 2022

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-14656

REPLIGEN CORPORATION

(Exact Name of Registrant as Specified in its Charter)



Delaware	04-2729386
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

41 Seyon Street, Bldg. 1, Suite 100 Waltham, MA	02453
(Address of Principal Executive Offices)	(Zip Code)

(781) 250-0111

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

Common Stock, par value $0.01 per share	RGEN	The Nasdaq Global Select Market

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  No 

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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:



Large accelerated filer		Accelerated filer	

Non-accelerated filer		Smaller reporting company	

Emerging growth company	

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 55,433,161.

Table of Contents



		PAGE

PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (interim periods unaudited)

	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021		4

	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021		5

	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021		6

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021		7

	Notes to Unaudited Consolidated Financial Statements		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37

Item 4.	Controls and Procedures		38

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings		39

Item 1A.	Risk Factors		39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 3.	Defaults Upon Senior Securities		39

Item 4.	Mine Safety Disclosures		39

Item 5.	Other Information		39

Item 6.	Exhibits		40

Signatures				41

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

REPLIGEN CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share data)


	March 31,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	584,640		$	603,814
Accounts receivable, net of reserves of $1,364 and $1,417 at March 31, 2022 and December 31, 2021, respectively		122,435			117,420
Inventories, net		213,775			184,494
Prepaid expenses and other current assets		23,939			25,949
Total current assets		944,789			931,677
Noncurrent assets:
Property, plant and equipment, net		147,627			124,964
Intangible assets, net		329,928			337,274
Goodwill		859,488			860,362
Deferred tax assets		1,611			1,903
Operating lease right of use assets		99,750			101,559
Other noncurrent assets		631			615
Total noncurrent assets		1,439,035			1,426,677
Total assets	$	2,383,824		$	2,358,354
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	38,280		$	36,203
Operating lease liability		9,882			8,303
Current contingent consideration		27,790			—
Accrued liabilities		65,114			75,498
Convertible senior notes, current portion, net		283,267			255,258
Total current liabilities		424,333			375,262
Noncurrent liabilities:
Deferred tax liabilities		25,858			33,480
Noncurrent operating lease liability		100,435			102,492
Noncurrent contingent consideration		64,037			94,238
Other noncurrent liabilities		2,760			2,815
Total noncurrent liabilities		193,090			233,025
Total liabilities		617,423			608,287
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.01 par value; 80,000,000 shares authorized; 55,429,046 shares at March 31, 2022 and 55,321,457 shares at December 31, 2021 issued and outstanding		554			553
Additional paid-in capital		1,529,144			1,572,340
Accumulated other comprehensive loss		(21,574	)		(16,886	)
Accumulated earnings		258,277			194,060
Total stockholders’ equity		1,766,401			1,750,067
Total liabilities and stockholders’ equity	$	2,383,824		$	2,358,354

The accompanying notes are an integral part of these consolidated financial statements.

REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, amounts in thousands, except per share data)


	Three Months Ended March 31,
	2022			2021
Revenue:
Products	$	206,363		$	142,737
Royalty and other revenue		37			100
Total revenue		206,400			142,837
Costs and operating expenses:
Cost of product revenue		82,356			59,747
Research and development		12,155			7,612
Selling, general and administrative		54,300			39,095
Contingent consideration		(2,411	)		—
Total costs and operating expenses		146,400			106,454
Income from operations		60,000			36,383
Other income (expenses):
Investment income		77			52
Interest expense		(292	)		(2,754	)
Amortization of debt issuance costs		(452	)		(352	)
Other expenses		(402	)		(224	)
Other expenses, net		(1,069	)		(3,278	)
Income before income taxes		58,931			33,105
Income tax provision		11,967			3,655
Net income	$	46,964		$	29,450
Earnings per share:
Basic	$	0.85		$	0.54
Diluted (Note 12)	$	0.81		$	0.52
Weighted average common shares outstanding:
Basic		55,353			54,805
Diluted (Note 12)		58,816			56,869

Net income	$	46,964		$	29,450
Other comprehensive income (loss):
Foreign currency translation adjustment		(4,688	)		(9,579	)
Comprehensive income	$	42,276		$	19,871

The accompanying notes are an integral part of these consolidated financial statements.

REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands, except share data)


	Three Months Ended March 31, 2022
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2021		55,321,457		$	553		$	1,572,340		$	(16,886	)	$	194,060	$	1,750,067
Impact of the adoption of ASU 2020-06		—			—			(39,070	)		—			17,253		(21,817	)
Net income		—			—			—			—			46,964		46,964
Issuance of common stock for debt conversion		8			0			(2	)		—			—		(2	)
Exercise of stock options and vesting of stock units		170,990			2			295			—			—		297
Tax withholding on vesting of restricted stock units		(63,409	)		(1	)		(12,310	)		—			—		(12,311	)
Stock-based compensation expense		—			—			7,915			—			—		7,915
Translation adjustment		—			—			—			(4,688	)		—		(4,688	)
Other		—			—			(24	)		—			—		(24	)
Balance at March 31, 2022		55,429,046		$	554		$	1,529,144		$	(21,574	)	$	258,277	$	1,766,401


	Three Months Ended March 31, 2021
	Common Stock
	Number of Shares		Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2020		54,760,837	$	548	$	1,460,748	$	2,085		$	65,769	$	1,529,150
Net income		—		—		—		—			29,450		29,450
Issuance of common stock for debt conversion		3		0		1		—			—		1
Exercise of stock options and vesting of stock units		138,405		1		507		—			—		508
Stock-based compensation expense		—		—		6,541		—			—		6,541
True-up of costs related to the December 2020 issuance of common stock		—		—		145		—			—		145
Translation adjustment		—		—		—		(9,579	)		—		(9,579	)
Balance at March 31, 2021		54,899,245	$	549	$	1,467,942	$	(7,494	)	$	95,219	$	1,556,216

The accompanying notes are an integral part of these consolidated financial statements.

REPLIGEN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)


	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net income	$	46,964		$	29,450
Adjustments to reconcile net income to net cash provided by operating activities:
Inventory step-up amortization		-			1,598
Depreciation and amortization		11,834			8,444
Amortization of debt discount and issuance costs		452			2,828
Stock-based compensation expense		7,915			6,541
Deferred income taxes, net		1,045			789
Contingent consideration		(2,411	)		—
Other		73			6
Changes in operating assets and liabilities, excluding impact of acquisitions:
Accounts receivable		(6,269	)		(19,779	)
Unbilled receivables		11			—
Inventories		(30,037	)		(17,025	)
Prepaid expenses and other assets		272			(2,414	)
Other assets		1,310			538
Accounts payable		2,200			3,725
Accrued expenses		(9,999	)		(4,906	)
Long-term liabilities		(247	)		(533	)
Total cash provided by operating activities		23,113			9,262
Cash flows from investing activities:
Acquisitions, net of cash acquired		—			71
Additions to capitalized software costs		(1,027	)		(1,484	)
Purchases of property, plant and equipment		(27,204	)		(7,584	)
Sale of property, plant and equipment		17			—
Total cash used in investing activities		(28,214	)		(8,997	)
Cash flows from financing activities:
Proceeds from exercise of stock options		296			508
Payment of tax withholding obligation on vesting of restricted stock		(12,311	)		—
Repayment of convertible senior notes		(6	)		(1	)
Total cash (used in) provided by financing activities		(12,021	)		507
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,052	)		(6,746	)
Net decrease in cash, cash equivalents and restricted cash		(19,174	)		(5,974	)
Cash, cash equivalents and restricted cash, beginning of period		603,814			717,292
Cash and cash equivalents, end of period	$	584,640		$	711,318
Supplemental disclosure of non-cash investing and financing activities:
Assets acquired under operating leases	$	1,119		$	3,182

The accompanying notes are an integral part of these consolidated financial statements.

REPLIGEN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Summary of Significant Accounting Policies

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 $39.1 million, $17.3 million, and $27.6 million to the opening balances of additional paid-in capital, retained earnings and convertible senior notes,

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 $6.4 million, which was initially recorded in connection with the 2019 Notes. See Note 7, “Convertible Senior Notes,” for more information, including modified disclosures as required by ASU 2020-06 upon adoption.

Fair Value Measurements

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.

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.

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):


	As of March 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	435,969	$	—	$	—	$	435,969

Liabilities:
Short-term contingent consideration	$	—	$	—	$	27,790	$	27,790
Long-term contingent consideration	$	—	$	—	$	64,037	$	64,037