MARAVAI LIFESCIENCES HOLDINGS, INC. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 99 Consolidated Balance Sheets 101 Consolidated Statements of Operations 102 Consolidated Statements of Comprehensive Income (Loss) 103 Consolidated Statements of Changes in Stockholders’/Member’s Equity 104 Consolidated Statements of Cash Flows 106 Notes to Consolidated Financial Statements 108 98 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Maravai LifeSciences Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Maravai LifeSciences Holdings, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ / member’s equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an unqualified opinion thereon. Adoption of ASU 2016-02, Leases As discussed in Note 1 to the consolidated financial statements, the Company changed its method for accounting for its leases as a result of the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), effective January 1, 2021. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 99 Table of Contents Payable to related parties pursuant to a Tax Receivable Agreement Description of the Matter As discussed in Notes 1 and 12 of the December 31, 2021 consolidated financial statements, the Company has recorded a $ 748.3 million payable to related parties pursuant to a Tax Receivable Agreement (TRA). The TRA liability represents the amount the Company estimates to pay to the counterparties to the TRA that are former owners of the Company who are related parties (pre-IPO owners). The liability is computed as 85% of the estimated cash tax savings to be received by the Company from utilizing the positive tax attributes contributed by pre-IPO owners. Auditing management’s accounting for the TRA liability is complex because of the application of the tax laws used to determine the tax basis upon which to calculate the corresponding TRA liability, and judgmental because of the applicable state apportionment factors and nexus considerations utilized in determining the appropriate blended state income tax rate. These factors involved subjective auditor judgment and audit effort in performing procedures and evaluating the appropriateness of the calculation of the tax basis and the blended tax rate. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures. How We Addressed the Matter in Our Audit Our audit procedures included, among others, testing the information used in the calculation of the TRA liability, and the involvement of professionals with specialized skills and knowledge to assist in (i) developing an independent calculation of the tax basis, (ii) comparing the independent calculation to management’s calculations to evaluate the reasonableness of the tax basis, (iii) evaluating the apportionment factors, nexus conclusions, and the resulting blended tax rate, and (iv) assessing management’s application of the tax laws. Evaluating management’s determination of the apportionment factors involved considering the current and expected activity levels of the Company and whether the apportionment factors were consistent with evidence obtained in other areas of the audit. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2016. Redwood City, California March 1, 2022 100 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value) December 31, 2021 2020 Assets Current assets: Cash $ 551,272 $ 236,184 Accounts receivable, net 117,512 51,018 Inventory 51,557 33,301 Prepaid expenses and other current assets 19,698 11,095 Total current assets 740,039 331,598 Property and equipment, net 46,332 101,305 Goodwill 152,766 224,275 Intangible assets, net 117,571 177,656 Deferred tax assets 808,117 431,699 Other assets 53,451 4,158 Total assets $ 1,918,276 $ 1,270,691 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 8,154 $ 8,171 Accrued expenses and other current liabilities 34,574 38,546 Deferred revenue 10,211 78,061 Current portion of payable to related parties pursuant to a Tax Receivable Agreement 34,838 — Current portion of long-term debt 6,000 6,000 Total current liabilities 93,777 130,778 Long-term debt, less current portion 524,591 528,614 Deferred tax liabilities — 8,609 Lease facility financing obligation, less current portion — 56,167 Payable to related parties pursuant to a Tax Receivable Agreement, less current portion 713,481 389,546 Other long-term liabilities 41,066 2,231 Total liabilities 1,372,915 1,115,945 Commitments and contingencies (Note 6) Stockholders' equity: Class A common stock, $ 0.01 par value - 500,000 shares authorized; 131,488 and 96,647 shares issued and outstanding as of December 31, 2021 and 2020, respectively 1,315 966 Class B common stock, $ 0.01 par value - 300,000 shares authorized; 123,669 and 160,974 shares issued and outstanding as of December 31, 2021 and 2020, respectively 1,237 1,610 Additional paid-in capital 128,386 85,125 Retained earnings 184,561 854 Accumulated other comprehensive loss — ( 44 ) Total stockholders' equity attributable to Maravai LifeSciences Holdings, Inc. 315,499 88,511 Non-controlling interest 229,862 66,235 Total stockholders' equity 545,361 154,746 Total liabilities and stockholders' equity $ 1,918,276 $ 1,270,691 The accompanying notes are an integral part of these consolidated financial statements. 101 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share and per unit amounts) Year Ended December 31, 2021 2020 2019 Revenue $ 799,240 $ 284,098 $ 143,140 Operating expenses: Cost of revenue 140,561 79,649 66,849 Research and development 15,219 9,304 3,627 Selling, general and administrative 100,064 94,245 48,354 Change in estimated fair value of contingent consideration — — 322 Gain on sale of business ( 11,249 ) — — Gain on sale and leaseback transaction — ( 19,002 ) — Total operating expenses 244,595 164,196 119,152 Income from operations 554,645 119,902 23,988 Other income (expense): Interest expense ( 30,260 ) ( 30,740 ) ( 29,959 ) Change in payable to related parties pursuant to a Tax Receivable Agreement 6,101 — — Loss on extinguishment of debt — ( 7,592 ) — Other income 279 126 118 Income (loss) before income taxes 530,765 81,696 ( 5,853 ) Income tax expense (benefit) 61,515 2,880 ( 652 ) Net income (loss) 469,250 78,816 ( 5,201 ) Net income (loss) attributable to non-controlling interests 287,213 ( 10,156 ) ( 731 ) Net income (loss) attributable to Maravai LifeSciences Holdings, Inc. $ 182,037 $ 88,972 $ ( 4,470 ) Net income (loss) per Class A common share/unit attributable to Maravai LifeSciences Holdings, Inc.: Basic $ 1.59 $ 7.43 $ ( 0.03 ) Diluted $ 1.56 $ 2.36 $ ( 0.03 ) Weighted average number of Class A common shares/units outstanding: Basic 114,791 10,351 253,917 Diluted 257,803 28,908 253,917 The accompanying notes are an integral part of these consolidated financial statements. 102 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2021 2020 2019 Net income (loss) $ 469,250 $ 78,816 $ ( 5,201 ) Other comprehensive income (loss): Foreign currency translation adjustments 55 ( 44 ) 34 Total other comprehensive income (loss) 469,305 78,772 ( 5,167 ) Comprehensive income (loss) attributable to non-controlling interests 287,224 ( 10,156 ) ( 731 ) Total comprehensive income (loss) attributable to Maravai LifeSciences Holdings, Inc. $ 182,081 $ 88,928 $ ( 4,436 ) The accompanying notes are an integral part of the consolidated financial statements. 103 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’/MEMBER’S EQUITY (in thousands) Class A Common Stock Class B Common Stock Member's Equity Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Stockholders'/Member's Equity December 31, 2018 $ 144,572 — $ — — $ — $ — $ — $ ( 167 ) $ 3,611 $ 148,016 Cumulative effect of adoption of ASC 606 326 — — — — — — — — 326 Repurchase of incentive units ( 227 ) — — — — — — — — ( 227 ) Equity-based compensation 1,328 — — — — — — — 351 1,679 Net loss ( 4,470 ) — — — — — — — ( 731 ) ( 5,201 ) Foreign currency translation adjustment — — — — — — — 34 — 34 December 31, 2019 141,529 — — — — — — ( 133 ) 3,231 144,627 Activity prior to initial public offering ("IPO") and related Organizational Transactions: Repurchase of MLSC Holdings, LLC ("MLSC") incentive units ( 9,140 ) — — — — — — — — ( 9,140 ) Distributions to non-controlling interests holders ( 88,880 ) — — — — — — — — ( 88,880 ) Unit-based compensation 1,793 — — — — — — — 1,483 3,276 Net income 88,118 — — — — — — — 98 88,216 Purchase of non-controlling interests in MLSC ( 161,615 ) — — — — — — — ( 4,812 ) ( 166,427 ) Foreign currency translation adjustment — — — — — — — ( 1 ) — ( 1 ) Effects of the IPO and related Organizational Transactions: Effects of Organizational Transactions 28,195 28,966 289 160,974 1,610 ( 200,390 ) — 114 10,236 ( 159,946 ) Issuance of Class A common stock in connection with the IPO, net of issuance costs of $$ 108,571 — 69,000 690 — — 1,753,742 — — — 1,754,432 Acquisition of preexisting LLC Units from MLSH 1 — — — — — ( 1,421,760 ) — ( 29 ) ( 2,538 ) ( 1,424,327 ) Non-controlling interest adjustment for purchase of LLC Units from Topco LLC with proceeds from IPO — — — — — ( 58,940 ) — ( 1 ) 58,941 — Repurchase and retirement of Class A common from MLSH 2 — ( 1,319 ) ( 13 ) — — ( 33,645 ) — — — ( 33,658 ) Equity-based compensation — — — — — 2,980 — — 17,407 20,387 Net loss — — — — — — ( 3,044 ) — ( 17,787 ) ( 20,831 ) 104 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. Class A Common Stock Class B Common Stock Member's Equity Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Stockholders'/Member's Equity Recognition of impact of entering into Tax Receivable Agreement $ — — $ — — $ — $ 42,776 $ — $ — $ — $ 42,776 Activity subsequent to the initial public offering and related Organizational Transactions: — Equity-based compensation — — — — — 362 — — 604 966 Net income — — — — — — 3,898 — 7,533 11,431 Foreign currency translation adjustment — — — — — — — 6 10 16 Tax distribution to non-controlling interest holder — — — — — — — — ( 8,171 ) ( 8,171 ) December 31, 2020 — 96,647 966 160,974 1,610 85,125 854 ( 44 ) 66,235 154,746 Cumulative effect of adoption of ASC 842, net of tax — — — — — — 1,670 — 2,784 4,454 Effect of exchanges of LLC Units — 34,734 348 ( 34,734 ) ( 348 ) 31,003 — — ( 31,003 ) — Recognition of impact of 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 taxes — 107 1 — — 1,669 — — — 1,670 Impact of cash contribution to Topco LLC, exchange and forfeiture of LLC Units, and forfeiture of Class B common stock by MLSH 1 — — — ( 2,571 ) ( 25 ) ( 46,206 ) — — 51,451 5,220 Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC — — — — — ( 809 ) — — 809 — Stock-based compensation — — — — — 4,645 — — 5,813 10,458 Distribution for tax liabilities to non-controlling interest holder — — — — — ( 41 ) — — ( 153,451 ) ( 153,492 ) Net income — — — — — — 182,037 — 287,213 469,250 Foreign currency translation adjustment — — — — — — — 44 11 55 December 31, 2021 $ — 131,488 $ 1,315 123,669 $ 1,237 $ 128,386 $ 184,561 $ — $ 229,862 $ 545,361 The accompanying notes are an integral part of the consolidated financial statements. 105 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2021 2020 2019 Operating activities Net income (loss) $ 469,250 $ 78,816 $ ( 5,201 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 6,413 5,517 3,810 Amortization of intangible assets 18,339 20,320 20,274 Non-cash operating lease expense 8,792 — — Amortization of deferred financing costs 2,676 1,825 1,734 Equity-based compensation expense 10,458 24,629 1,679 Loss on long-term debt refinancing — 7,592 — Deferred income taxes 46,904 ( 5,464 ) ( 1,159 ) Gain on sale of business ( 11,249 ) — — Gain on sale and leaseback transaction — ( 19,002 ) — Acquired and in-process research and development costs — 2,881 — Financing costs incurred for line of credit — ( 3,239 ) — Revaluation of liabilities payable to related parties pursuant to a Tax Receivable Agreement ( 6,101 ) — — Other ( 281 ) 2,419 688 Changes in operating assets and liabilities: Accounts receivable ( 70,391 ) ( 33,144 ) ( 1,888 ) Inventory ( 21,574 ) ( 19,099 ) 106 Prepaid expenses and other assets ( 9,513 ) ( 5,518 ) ( 1,983 ) Accounts payable 676 1,176 2,470 Accrued expenses and other current liabilities ( 3,457 ) 17,777 3,505 Other long-term liabilities ( 4,521 ) ( 2,519 ) — Deferred revenue ( 67,851 ) 77,220 80 Net cash provided by operating activities 368,570 152,187 24,115 Investing activities Cash paid for asset acquisition, net of cash acquired — ( 3,024 ) — Purchases of property and equipment ( 14,850 ) ( 25,408 ) ( 17,148 ) Proceeds from sale of building 548 34,500 — Proceeds from sale of business, net of cash divested 119,957 — — Net cash provided by (used in) investing activities 105,655 6,068 ( 17,148 ) Financing activities Distributions to non-controlling interests holders ( 153,451 ) ( 97,051 ) — Proceeds from borrowings of long-term debt, net of discount — 609,000 — Financing costs incurred for long-term debt — ( 9,295 ) — Repurchase of incentive units — ( 9,140 ) ( 227 ) Principal repayments of long-term debt ( 6,000 ) ( 411,875 ) ( 2,500 ) Payment of contingent consideration — ( 1,439 ) ( 1,300 ) Payments made on facility financing lease obligation and capital lease — ( 201 ) ( 140 ) Payments to MLSH 1 pursuant to the Tax Receivable Agreement ( 1,115 ) — — Payments to MLSH 2 pursuant to the Tax Receivable Agreement ( 192 ) — — Payment for non-controlling interests in MLSC — ( 120,005 ) — Payment to MLSH 2 for Blocker Mergers — ( 208,053 ) — 106 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. Year Ended December 31, 2021 2020 2019 Proceeds from issuance of Class A common stock sold in IPO, net of offering costs — 1,757,245 — Proceeds from issuance of Class B common stock sold to MLSH 1 — 1,687 — Purchase of LLC Units from MLSH 1 — ( 1,424,324 ) — Repurchase of Class A common stock from MLSH 2 — ( 33,658 ) — Proceeds from employee stock purchase plan and exercise of stock options, net of shares withheld for employee taxes 1,709 321 — Net cash (used in) provided by financing activities ( 159,049 ) 53,212 ( 4,167 ) Effects of exchange rate changes on cash ( 88 ) 17 34 Net increase in cash 315,088 211,484 2,834 Cash, beginning of period 236,184 24,700 21,866 Cash, end of period $ 551,272 $ 236,184 $ 24,700 Supplemental cash flow information Cash paid for interest $ 27,234 $ 28,916 $ 28,728 Cash paid for income taxes $ 22,473 $ 5,006 $ 802 Supplemental disclosures of non-cash investing and financing activities Property and equipment included in accounts payable and accrued expenses $ 2,149 $ 1,990 $ 2,765 Financing cost deducted from long-term debt proceeds $ — $ 6,000 $ — Building and improvements capitalized under lease financing transactions $ — $ 700 $ 51,200 Property and equipment under new capital lease $ — $ — $ 15 Exchange of units for MLSC non-controlling interests $ — $ 46,422 $ — Exchange of Class A common stock for the Blocker Mergers $ — $ 782,073 $ — Recognition of deferred tax assets from Organizational Transactions, subsequent exchanges and cash contribution $ 423,361 $ 441,984 $ — Recognition of liabilities under the Tax Receivable Agreement $ 366,179 $ 389,546 $ — IPO issuance costs included in accounts payable and accrued expenses $ — $ 2,816 $ — Receivable from lessor funded financing $ — $ 1,987 $ — The accompanying notes are an integral part of the consolidated financial statements. 107 Table of Contents MARAVAI TOPCO HOLDINGS, LLC AND SUBSIDIARIES NOTES TO THE 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”, “our”) provides critical products to enable the development of drugs, therapeutics, diagnostics, vaccines and 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 (see Note 2). 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. Our Protein Detection business sold innovative labeling and detection reagents for researchers in immunohistochemistry. Organization We were incorporated as a Delaware corporation in August 2020 for the purpose of facilitating an initial public offering (“IPO”) and other related organizational transactions, completed in November 2020 as discussed in Note 8, in order to operate and control all of the business and affairs of Maravai Topco Holdings, LLC (“Topco LLC”) and its consolidated subsidiaries. Maravai Life Sciences Holdings, LLC (“MLSH 1”) 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. 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 pre-IPO organizational transactions were considered transactions between entities under common control. As a result, the consolidated financial statements for periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include our accounts and the accounts of our subsidiaries. All intercompany transactions and accounts between the businesses comprising the Company have been eliminated in the accompanying consolidated financial statements. Variable Interest Entities The Company consolidates all entities that it controls through a majority voting interest or as the primary beneficiary of a variable interest entity (“VIE”). In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation event. 108 Table of Contents Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company to make judgements, 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 measurement of right-of-use assets and lease liabilities and related incremental borrowing rate, the payable to related parties pursuant to the Tax Receivable Agreement, and the realizability of our net deferred tax assets. Actual results could differ materially from those estimates. 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 of 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 were delivered. 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 109 Table of Contents 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 (see Note 2), 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 exemption 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 at December 31, 2021. 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. Contract balances Contract assets are generated when contractual billing schedules differ from revenue recognition timing and the Company records contract receivable when it has an unconditional right to consideration. Contract assets balances, which are included in prepaid and other current assets, were no t material as of December 31, 2020. There were no contract asset balances as of 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 $ 12.6 million and $ 79.2 million as of December 31, 2021 and 2020, respectively. Contract liabilities are expected to be recognized into revenue within the next twelve months. 110 Table of Contents Disaggregation of Revenue The following tables summarize the revenue by segment and region for the periods presented (in thousands): Year Ended December 31, 2021 Nucleic Acid Production Biologics Safety Testing Protein Detection Total North America $ 280,369 $ 25,686 $ 11,016 $ 317,071 Europe, the Middle East and Africa 377,325 15,597 4,752 397,674 Asia Pacific 54,114 26,471 3,068 83,653 Latin and Central America 56 663 123 842 Total revenue $ 711,864 $ 68,417 $ 18,959 $ 799,240 Year Ended December 31, 2020 Nucleic Acid Production Biologics Safety Testing Protein Detection Total North America $ 115,216 $ 21,787 $ 13,343 $ 150,346 Europe, the Middle East and Africa 69,637 14,862 5,606 90,105 Asia Pacific 21,444 17,946 3,783 43,173 Latin and Central America 23 302 149 474 Total revenue $ 206,320 $ 54,897 $ 22,881 $ 284,098 Year Ended December 31, 2019 Nucleic Acid Production Biologics Safety Testing Protein Detection Total North America $ 49,757 $ 18,984 $ 15,284 $ 84,025 Europe, the Middle East and Africa 15,975 12,102 6,805 34,882 Asia Pacific 6,843 12,964 3,784 23,591 Latin and Central America 27 366 249 642 Total revenue $ 72,602 $ 44,416 $ 26,122 $ 143,140 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. Shipping and Handling Costs Shipping and handling costs, which are charged to customers, are included in revenue. Shipping and handling charges included in revenue were approximately $ 3.6 million, $ 3.3 million and $ 3.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. Freight and supplies costs directly associated with shipping products to customers are included as a component of cost of revenue. Research and Development Research and development (“R&D”) expenses include personnel costs, including salaries, benefits and equity-based compensation for laboratory personnel, outside contracted services, and costs of supplies. R&D costs are expensed as incurred. Payments made prior to the receipt of goods or services to be used in R&D are recognized as prepaid assets until the goods are received or services are rendered. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs incurred were approximately $ 1.3 million, $ 1.2 million and $ 1.1 million during the years ended December 31, 2021, 2020 and 2019, respectively. 111 Table of Contents Equity-Based Compensation Stock-Based Compensation The Company recognized stock-based compensation for all equity awards made to employees based upon the awards’ estimated grant date fair value. For equity awards that vest subject to the satisfaction of service requirements, compensation expense is measured based on the fair value of the award on the date of grant and expense is recognized on a straight-line basis over the requisite service period, which is typically four years . We account for forfeitures as they occur. Stock-based compensation is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The assumptions used in estimating the fair value of these awards, such as expected term, expected dividend yield, volatility and risk-free interest rate, represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s consolidated results of operations. The fair value of restricted stock units (“RSUs”) is determined based on the number of shares granted and the quoted market price of the Company’s Class A common stock on the date of grant. Unit-Based Compensation Up until the IPO, MLSH 1 had granted unit-based awards to certain executives of Topco LLC who are also executives of the Company in the form of non-vested units. Topco LLC’s controlled subsidiary, MLSC, also granted unit-based awards only to certain employees of its subsidiaries (collectively, the “Incentive Units”). All awards of Incentive Units were measured based on the fair value of the award on the date of grant. The Company recognizes compensation expense for MLSH 1 awards in its consolidated financial statements as MLSH 1 is considered to be the economic interest holder in Topco LLC. Compensation expense for the Incentive Units is recognized over their requisite service period. Forfeitures are recognized when they occur. The grant date fair value of Incentive Unit awards was determined by the Company’s Board of Directors with the assistance of management and an independent third-party valuation specialist. Income Taxes We are subject to U.S. federal and state income taxes. We are the controlling member of Topco LLC, which has been, and will continue to be, treated as a partnership for U.S. federal and state income tax purposes. Topco LLC’s previously wholly-owned U.S. subsidiary, Maravai Life Sciences, Inc. (“Maravai Inc.”) and its subsidiaries, were taxpaying entities in the U.S., Canada, and the U.K. Maravai Inc.’s subsidiaries were sold and Maravai Inc. ceased to be a regarded entity and was deemed liquidated for U.S. tax purposes during the year ended December 31, 2021. Topco LLC’s other subsidiaries are treated as pass-through entities for federal and state income tax purposes. The income or loss generated by these entities is not taxed at the LLC level. As required by U.S. tax law, income or loss generated by these LLCs passes through to their owners. As such, our tax provision consists solely of the activities of Maravai Inc. and its subsidiaries, prior to their disposal, as well as our share of income generated by Topco LLC. We account for income taxes under the asset and liability method of accounting. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We reduce the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of the deferred tax asset. The Company’s tax positions are subject to income tax audits. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is more likely than not that the position will be sustained upon examination. Significant judgment is required in determining the accounting for income taxes. In the ordinary course of business, many transactions and calculations arise where the ultimate tax outcome is uncertain. Our judgments, assumptions and estimates relative to the accounting for income taxes take into account current tax laws, our interpretation of current tax laws, and possible outcomes of future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from our assumptions and estimates used when determining the accounting for income taxes. Such differences, if identified in future periods, could have a material effect on the amounts recorded in our consolidated financial statements. Interest and penalties related to 112 Table of Contents unrecognized tax benefits are recognized in income tax expense in the accompanying consolidated statements of operations. The provision for income taxes includes the effects of any accruals that the Company believes are appropriate, as well as any related net interest and penalties. Payables to Related Parties Pursuant to the Tax Receivable Agreement In November 2020, we entered into a Tax Receivable Agreement (“TRA”) with MLSH 1 and MLSH 2. The TRA provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85 % of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize from exchanges of LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes of the Organization Transactions and (iii) certain other tax benefits related to our entering into the TRA, including tax benefits attributable to payments that we make under the TRA (collectively, the “Tax Attributes”). The payment obligations under the TRA are not conditioned upon any LLC Unitholder maintaining a continued ownership interest in us or Topco LLC and the rights of MLSH 1 and MLSH 2 under the TRA are assignable. We expect to benefit from the remaining 15 % of the tax benefits, if any, that we may actually realize. We accrue a liability for the payable to related parties for the TRA and a reduction to stockholders’ equity, when it is deemed probable that the Tax Attributes will be used to reduce our taxable income, as the contractual percentage of the benefit of Tax Attributes that we expected to receive over a period of time. The current portion, if any, of the liability is the amount estimated to be paid within one year of the consolidated balance sheet date. For purposes of estimating the value of the payable to related parties for the TRA, the tax benefit deemed realized by us and payable to MLSH 1 and MLSH 2 is computed by taking 85% of the difference of between our undiscounted forecasted cash income tax liability over the term of benefit of the Tax Attributes and the forecasted amount of such taxes that we would have been required to pay had there been no Tax Attributes. The TRA applies to each of our taxable years, beginning with the taxable year that the TRA is entered into. There is no maximum term for the TRA and the TRA will continue until all such tax benefits have been utilized or expired unless we exercise our right to terminate the TRA for an agreed-upon amount equal to the estimated present value of the remaining payments to be made under the agreement. We may record additional liabilities under the TRA when LLC Units of Topco LLC are exchanged in the future and as our estimates of the future utilization of the tax benefits change. If, due to a change in facts, these tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA. In this scenario, the reduction of the liability under the TRA would result in a benefit to our consolidated statement of operations. Subsequent adjustments to the payable to related parties for the TRA based on changes in anticipated future taxable income are recorded in our consolidated statement of operations. Non-Controlling Interests Non-controlling interests represent the portion of profit or loss, net assets and comprehensive loss of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities. Non-controlling interests consist of the following: • Until November, 2020 Topco LLC held a 70 % ownership interest in MLSC Holdings, LLC (“MLSC”) through its consolidated subsidiaries with the remaining 30 % being recorded as non-controlling interests in our consolidated financial statements as of December 31, 2019. MLSC net income or loss was attributed to the non-controlling interests using an attribution method, similar to the hypothetical liquidation at book value method, based on the distribution provisions of the MLSC Amended and Restated Limited Liability Company Agreement (“MLSC LLC Agreement”). In November 2020, and before the closing of the IPO, Topco LLC repurchased all of the outstanding non-controlling interests in MLSC for $ 166.4 million (see Note 11) . • In November 2020, we became the sole managing member of Topco LLC (see Note 8). As of December 31, 2021 and 2020, we owned approximately 52 % and 38 % of Topco LLC, respectively. Therefore, we report non-controlling interests based on LLC Units of Topco LLC held by MLSH 1 on our consolidated balance sheet as of December 31, 2021. 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 consolidated statements of operations and consolidated statements of comprehensive income (loss). MLSH 1 is entitled to exchange LLC Units, 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. 113 Table of Contents Segment Information The Company has historically operated in three reportable segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, allocates resources and assesses performance based upon discrete financial information at the segment level. All of our long-lived assets are located in the United States. After the divestiture of Vector in September 2021 (see Note 2), the Company no longer has the Protein Detection segment. The Company has reported the historical results of the Protein Detection business as such discrete financial information evaluated by the CODM for the periods presented included the information for this legacy segment. Cash Cash consists of deposits held at financial institutions. Accounts Receivable and Allowance for Credit Losses Accounts receivable primarily consist of amounts due from customers for product sales and services. Prior to January 1, 2021, the Company recognized estimated allowance for credit losses based on an assessment of a customer’s ability to pay, credit quality of the customer, age of receivable balances and current economic conditions. After January 1, 2021, the Company’s expected credit losses are developed using an estimated loss rate method that considers historical collection experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The estimated loss rates are applied to trade receivables with similar risk characteristics such as the length of time the balance has been outstanding, liquidity and financial position of the customer, and the geographic location of the customer. In certain instances, the Company may identify individual accounts receivable assets that do not share risk characteristics with other accounts receivable, in which case the Company records its expected credit losses on an individual asset basis. As of December 31, 2021 and 2020, the allowance for credit losses was approximately $ 0.3 million and $ 0.4 million, respectively. Write-offs of accounts receivable and recoveries were not significant during the years ended December 31, 2021 or 2020. Inventory Inventories consist of raw materials, work in process and finished goods. Inventories are stated at the lower of cost (weighted average cost) or net realizable value. Inventory costs include materials, direct labor and manufacturing overhead, which are related to the purchase or production of inventories. The Company regularly monitors for excess and obsolete inventory based on its estimates of expected sales volumes, production capacity and expiration of raw materials, work-in-process and finished products excess and obsolete inventories and reduces the carrying value of inventory accordingly. The Company writes down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected manufacturing requirements. Any write-downs of inventories are charged to cost of revenue. A change in the estimated timing or amount of demand for the Company’s products could result in reduction to the recorded value of inventory quantities on hand. Any significant unanticipated changes in demand or unexpected quality failures could have a significant impact on the value of inventory and reported operating results. During all periods presented in the accompanying consolidated financial statements, there have been no material adjustments related to a revised estimate of our inventory valuations. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives: Assets Useful Lives Leasehold improvements 5 - 15 years Furniture, fixtures, equipment and software 3 - 11 years Leasehold improvements are amortized over the shorter of the related lease term or useful life. Maintenance and repairs are charged to operations when incurred, while betterments or renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in the results of operations. 114 Table of Contents Property and equipment balances during 2020 included certain leased buildings in which the Company was considered an owner lessee (see Note 5). The leased buildings were being depreciated over the lease term to a residual value that will approximate the remaining lease financing obligation at the end of the lease and was derecognized on January 1, 2021 upon the Company’s adoption of the new lease accounting standard (see Note 5). Goodwill Goodwill represents the excess of consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. The Company conducts a goodwill impairment analysis at least annually and more frequently if changes in facts and circumstances indicate that the fair value of the Company’s reporting units may be less than carrying amount. In performing each annual impairment assessment and any interim impairment assessment, the Company determines if it should qualitatively assess whether it is more likely than not that the fair value of goodwill is less than its carrying amount (the qualitative impairment test). If it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if the Company elects not to perform the qualitative impairment test, the Company then performs a quantitative impairment test. The Company’s annual or interim quantitative impairment testing is performed by comparing the estimated fair value of the reporting unit to its carrying value. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying value of goodwill. Intangible Assets The Company’s finite-lived intangible assets represent purchased intangible assets and primarily consist of trade names, customer relationships, patents, and developed technology. Certain criteria are used in determining whether intangible assets acquired in a business combination must be recognized and reported separately. Finite-lived intangible assets are initially recognized at fair value, are subject to amortization and are subsequently stated at amortized cost. The Company’s finite-lived intangible assets are amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used. If that pattern cannot be reliably determined, the intangible assets are amortized using the straight-line method over their estimated useful lives and are tested for impairment along with other long-lived assets. Amortization related to patents and developed technology is allocated to cost of revenue whereas amortization associated with trade names and customer relationships is allocated to selling, general and administrative expenses. Impairment of Long-Lived and Intangible Assets The Company periodically reviews long-lived assets, including property and equipment, right-of-use operating lease assets and finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets is compared to the carrying value the assets to determine whether impairment exists. If the assets are determined to be impaired, the loss is measured based on the difference between the fair value and carrying value of the assets. If we determine that events and circumstances warrant a revision to the remaining period of amortization or depreciation for a specific long-lived asset, its remaining estimated useful life will be revised, and the remaining carrying amount of the long-lived asset will be depreciated or amortized prospectively over the revised remaining estimated useful life. No impairment loss was recognized for long-lived assets for any period presented. Debt Issuance Costs Costs incurred in connection with obtaining new debt financing are deferred and amortized over the life of the related financing. If such financing is settled or replaced prior to maturity with debt instruments that have substantially different terms, the settlement is treated as an extinguishment and the unamortized costs are charged to gain or loss on extinguishment of debt. If such financing is settled or replaced with debt instruments from the same lender that do not have substantially different terms, the new debt agreement is accounted for as a modification for the prior debt agreement and the unamortized costs remain capitalized, the new original issuance discount costs are capitalized, and any new third-party costs are charged to expense. Deferred costs are recognized as a direct reduction in the carrying amount of the debt instrument on the consolidated balance sheets and are amortized to interest expense over the term of the related debt using the effective interest method. Accumulated Other Comprehensive Loss Comprehensive income (loss) and its components encompass all changes in equity other than those with stockholders or member. Comprehensive income (loss) for the Company consists of foreign currency translation adjustments. There were no reclassifications out of accumulated other comprehensive loss during the periods presented. 115 Table of Contents Fair Value of Financial Instruments The Company defines fair value as the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company follows accounting guidance that has a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset or liability as of the measurement date. Instruments with readily available actively quoted prices, or for which fair value can be measured from actively quoted prices in an orderly market, will generally have a higher degree of market price transparency and a lesser degree of judgment used in measuring fair value. The three levels of the hierarchy are defined as follows: Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets; Level 2—Include other inputs that are directly or indirectly observable in the marketplace; and Level 3—Unobservable inputs which are supported by little or no market activity. As of December 31, 2021 and 2020, the carrying value of current assets and liabilities approximates fair value due to the short maturities of these instruments. The fair values of the Company’s long-term debt approximate carrying value, excluding the effect of unamortized debt discount, as it is based on borrowing rates currently available to the Company for debt with similar terms and maturities (Level 2 inputs). Leases Prior to January 1, 2021, the Company rented its office space and facilities under non-cancelable operating lease agreements and recognized related rent expense on a straight-line basis over the term of the lease. The Company’s lease agreements contained rent holidays, scheduled rent increases, and renewal options. Rent holidays and scheduled rent increases were included in the determination of rent expense to be recorded ratably over the lease term. The Company did not assume renewals in its determination of the lease term unless they were deemed to be reasonably assured at the inception of the lease. The Company began recognizing rent expense on the date that it obtained the legal right to use and control the leased space. Deferred rent consisted of the difference between cash payments and the recognition of rent expense on a straight-line basis for the buildings the Company occupied. In certain arrangements, the Company was involved in the construction of improvements to buildings it is leasing. To the extent the Company was involved with the structural improvements of the construction project or took on construction risk, the Company was considered to be the owner of the building and related improvements for accounting purposes during the construction period. The Company recorded the fair value of the building and related improvements subject to the lease within property and equipment on the balance sheet. Once a construction project was complete, the Company considered the requirements for sale-leaseback accounting treatment. If the Company concluded the arrangement did not qualify for sale-leaseback accounting treatment, the building and related improvements remained on the Company’s balance sheet and were subject to depreciation and assessment of impairment. Subsequent to January 1, 2021, as a result of the adoption of the new lease accounting standard, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present at the inception of the arrangement and if such a lease is classified as a financing lease or operating lease. Leases with a term greater than one year are included in other assets, accrued expenses and other current liabilities, and other long-term liabilities on our balance sheet as of December 31, 2021. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Right-of-use (“ROU”) assets represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease contract. Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. In determining the net present value of lease payments, the interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the ROU asset may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the ROU asset is impaired. The Company considers a lease term to be the noncancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option. The Company recognizes lease expense on a straight-line basis over the expected lease term. The Company has elected to not separate lease and non-lease components for its leased assets and accounts for all lease and non-lease components of its agreements as a single lease component. The lease components resulting in a ROU asset have been recorded on the balance sheet and amortized as lease expense on a straight-line basis over the lease term. 116 Table of Contents Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains the majority of its cash balances at multiple financial institutions that management believes are of high-credit quality and financially stable. Cash is deposited with major financial institutions in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held. The Company provides credit, in the normal course of business, to international and domestic distributors as well as certain customers, which are geographically dispersed. The Company attempts to limit its credit risk by performing ongoing credit evaluations of its customers and maintaining adequate allowances for potential credit losses. The following table summarizes revenue from each of our customers who individually accounted for 10% or more of our total revenue or accounts receivable for the periods presented: Revenue Accounts Receivable, net Years Ended December 31, As of December 31, 2021 2020 2019 2021 2020 BioNTech SE 29.5 % 16.7 % * * * Pfizer Inc. 23.3 % 14.2 % * 23.6 % 45.1 % CureVac N.V. 15.3 % * * 46.5 % 12.8 % Thermo Fisher Scientific Inc. * * 10.4 % * * Nacalai USA, Inc. * * * 11.6 % * ____________________ * Less than 10% For the year ended December 31, 2021, substantially all of the revenue recorded for BioNTech SE, Pfizer Inc., and CureVac N.V. was generated by our Nucleic Acid Production segment. For the year ended December 31, 2020, substantially all of the revenue recorded for BioNTech SE and Pfizer Inc. was generated by our Nucleic Acid Production segment. For the year ended December 31, 2019, 43.2 %, 30.1 %, and 26.7 %, of revenue recorded for Thermo Fisher Scientific Inc. was generated by our Nucleic Acid Production, Biologics Safety Testing and Protein Detection segments, respectively. Net Income (Loss) per Class A Common Share/Unit Attributable to Maravai LifeSciences Holdings, Inc. Basic net income (loss) per Class A Common share/unit attributable to Maravai LifeSciences Holdings, Inc. is computed by dividing net income (loss) attributable to us by the weighted average number of Class A Common shares/units outstanding during the period. The non-controlling interest, for historical periods prior to the IPO, is calculated pursuant to the terms of the MLSC LLC Agreement on a fully-distributed basis, taking into account the various classes of equity of MLSC, including the cumulative yields on MLSC’s preferred units. Diluted net income (loss) per Class A Common share/unit is calculated by giving effect to all potential weighted average dilutive LLC incentive units for historical periods prior to the IPO and stock options, restricted stock units, and Topco LLC Units, that together with an equal number of shares of our Class B common stock (together referred to as “Paired Interests”) are convertible into shares of our Class A Common stock, for the period after the IPO. For historical periods prior to the IPO, the weighted average number of common units outstanding during the period and the potential dilutive common unit equivalents is determined under the two-class method. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share/unit by application of the treasury stock method or if-converted method, as applicable. In periods in which the Company reports a net loss attributable to Maravai LifeSciences Holdings, Inc. diluted net loss per Class A Common share/unit attributable to the Company since dilutive equity instruments are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to Maravai LifeSciences Holdings, Inc. for the year ended December 31, 2019. Recently Adopted Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued, if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) , the FASB issued additional clarification related to reference rate reform, permitting entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and calculating price alignment interest in connection with reference rate reform activities under way in global 117 Table of Contents financial markets. The standards are effective for all entities upon issuance and we will apply the amendments prospectively through December 31, 2022. There was no impact to the Company’s consolidated financial statements for the year ended December 31, 2021 as a result of the adoption of these standards. In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which supersedes the guidance in Accounting Standards Codification (“ASC”) 840, Leases . The new standard, as amended by subsequent ASUs on Topic 842 and recent extensions issued by the FASB in response to COVID-19, requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a ROU asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar to the previous guidance for operating leases under ASC 840, Leases . The Company adopted this standard on January 1, 2021 using the modified retrospective approach and elected the package of practical expedients permitted under transition guidance, which allowed the Company to carry forward its historical assessments of: 1) whether contracts are or contain leases, 2) lease classification and 3) initial direct costs, where applicable. The Company elected the post-transition practical expedient to not separate lease components from non-lease components for all existing lease classes. The Company also elected a policy of not recording leases on its balance sheets when the leases have a term of 12 months or less. Leases with a term greater than one year are included in other assets, accrued expenses and other current liabilities, and other long-term liabilities as of December 31, 2021. Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. In determining the net present value of lease payments, the interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the ROU asset is impaired. The Company considers a lease term to be the noncancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option. The Company recognizes lease expense on a straight-line basis over the expected lease term. The impact of the adoption of Topic 842 on the balance sheet as of January 1, 2021 was as follows (in thousands): Balance as of December 31, 2020 Adjustments due to Adoption of Topic 842 Balance as of January 1, 2021 Assets: Prepaid expenses and other current assets $ 11,095 $ ( 1,987 ) $ 9,108 Property and equipment, net 101,305 ( 59,759 ) 41,546 Deferred tax assets 431,699 ( 424 ) 431,275 Other assets 4,158 57,227 61,385 Liabilities: Accrued expenses and other current liabilities 38,546 2,570 41,116 Lease facility financing obligation, less current portion 56,167 ( 56,167 ) — Other long-term liabilities 2,231 44,200 46,431 Stockholders' equity: Retained earnings 854 1,670 2,524 Non-controlling interest 66,235 2,784 69,019 The adjustments due to the adoption of Topic 842 primarily related to the recognition of operating lease ROU assets and lease liabilities for the Company’s operating leases. In addition, the adoption of Topic 842 resulted in a change to certain arrangements where we are involved with the construction of structural improvements or we take construction risk to buildings we are leasing. Where we are no longer the accounting owner of the construction project as a result of the adoption of Topic 842, such assets and liabilities are derecognized and accounted for in the same manner as other leasing arrangements. 118 Table of Contents In June 2016, the FASB issued ASU 2016-13 , Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which has been subsequently amended (“ASU 2016-13”). ASU 2016-13 revises the measurement of credit losses for most financial instruments measured at amortized cost, including trade receivables, from an incurred loss methodology to an expected loss methodology which results in earlier recognition of credit losses. Under the incurred loss model, a loss is not recognized until it is probable that the loss-causing event has already occurred. The new standard introduces a forward-looking expected credit loss model that requires an estimate of the expected credit losses over the life of the instrument by considering all relevant information including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. In addition, this standard also modifies the impairment model for available-for-sale debt securities, which are measured at fair value, by eliminating the consideration for the length of time fair value has been less than amortized cost when assessing credit loss for a debt security and provides for reversals of credit losses through income upon credit improvement. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-13 was not adopted until the fourth quarter of 2021. The Company’s adoption of this standard as of January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-15 was not adopted until the fourth quarter of 2021. The Company’s adoption of this standard as of January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to the Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). ASU 2018-17 changes how entities evaluate decision-making fees under the variable interest entity guidance. To determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportional basis, rather than in their entirety. All entities are required to apply the amendments in this ASU retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-17 was not adopted until the fourth quarter of 2021. The Company’s adoption of this standard as of January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC 606. ASU 2021-08 is effective for years beginning after December 31, 2022, including interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance (“ASU 2021-10). ASU 2021-10 provides guidance to increase the transparency of government assistance including the disclosure of i) the types of assistance, ii) an entity’s accounting for the assistance, and iii) the effect of the assistance on an entity’s financial statements. Under the new guidance, an entity is required to provide the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: i) information about the nature of the transactions and the related accounting policy used to account for the transactions, ii) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item and, ii) significant terms and conditions of the transactions, including commitments and contingencies. This update is effective for us on January 1, 2022, with early adoption permitted. The amendments should be applied either i) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial 119 Table of Contents application or ii) retrospectively to those transactions. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. 2. Acquisition and Divestiture Acquisition Mock V In March 2020, the Company acquired all of the outstanding shares of MockV Solutions, Inc. (“MockV”), a private entity, for $ 3.0 million, inclusive of acquisition costs of $ 0.2 million. The MockV technology acquired is a novel, proprietary viral clearance prediction tool that includes a non-infectious “mock virus particle” mimicking the physicochemical properties of live virus that may be present endogenously in the drug substance or introduced during bioproduction and will expand the Company biologics safety testing offerings. The transaction was accounted for as an asset acquisition as the acquired set of assets and activities did not meet the definition of a business. In connection with this acquisition, the Company acquired developed technology, an in-process research and development asset (“IPR&D”), an assembled workforce, and an insignificant amount of working capital balances. The relative fair value attributed to the acquired developed technology, assembled workforce, and working capital balances was insignificant. The IPR&D acquired was allocated a value of $ 2.9 million and the Company recognized a charge of $ 2.9 million related to the IPR&D as a component of research and development on the consolidated statement of operations because the technology had not yet reached technological feasibility and had no alternative future use. The Company must also make contingent cash payments (the “Earn-Outs”) of up to $ 9.0 million to the sellers of MockV based upon the achievement of long-term revenue targets. The Earn-Outs were determined to be contingent consideration that was not subject to derivative accounting and will be recognized when the contingency is resolved, and the consideration becomes paid or payable. As of December 31, 2021 and 2020, no such amounts were deemed to be payable. As the Company had no tax basis in the acquired IPR&D asset, and the acquired IPR&D asset was expensed prior to the measurement of any deferred taxes, no deferred taxes were recognized for the initial transaction. In November 2020, MockV was converted into a single member LLC and was deemed liquidated for income tax purposes. Divestiture Vector In August 2021, the Company entered into a definitive agreement to sell Vector Laboratories, Inc. and its subsidiaries (“Vector”) to Voyager Group Holdings, Inc. (“Voyager”), a third-party unrelated to the Company, for an all cash sale price of $ 124.0 million, subject to purchase price adjustments. The Company determined that the fair value of Vector, less estimated costs to sell, exceeded the book value of the Vector Disposal Group and there were no other indicators of asset impairment prior to the sale. The divestiture was completed in September, 2021, and the Company received total considerations of $ 121.9 million, which included $ 120.3 million in cash and $ 1.6 million in receivables to be collected based on the finalization of working capital adjustments. The sale price is also subject to adjustment based on the finalization of working capital. As a result of the divestiture, during the year ended December 31, 2021, the Company recognized a pre-tax gain on sale of $ 11.2 million, net of transactions costs of $ 0.9 million, in the consolidated statements of operations. The Company’s Protein Detection segment was comprised of Vector. The sale of Vector represents a strategic shift as the Company will no longer be in the protein detection business after the sale. However, the sale did not qualify for presentation as discontinued operations since the sale of the Protein Detection segment did not have a major effect on the Company’s operations or financial results. In connection with the divestiture, the Company entered into a Transition Services Agreement (“TSA”) with Voyager to help support its ongoing operations. Under the TSA, the Company will provide certain transition services to Voyager, including information technology, finance and ERP, marketing and commercial, human resources, employee benefits, and other limited services. Depending on the service, the initial period ranges from one month to five months and the extension period ranges from one month to eight months . Income from performing services under the TSA was recorded within other income in the consolidated statements of operations and was not significant for the year ended December 31, 2021. In August 2020, the Company entered into an agreement with an executive of Vector whereby the executive received incentive units of MLSH 1. In connection with the divestiture, MLSH 1 amended this executive’s incentive units resulting in the recognition of incremental unit-based compensation expense in the Company’s consolidated financial statements of $ 2.4 million. This unit-based compensation expense was recorded within selling, general and administrative in the consolidated statements of operations for the year ended December 31, 2021. 120 Table of Contents 3. Goodwill and Intangible Assets The Company’s goodwill of $ 152.8 million and $ 224.3 million as of December 31, 2021 and 2020 respectively, represents the excess of purchase consideration over the fair value of assets acquired and liabilities assumed. As of December 31, 2021, the Company had three reporting units, two of which are contained in the Nucleic Acid Production segment. As of December 31, 2020, the Company had four reporting units, two of which were contained in the Nucleic Acid Production segment. The Company performed a qualitative goodwill impairment analysis on each of its three reporting units during the fourth quarter of 2021 and concluded that it was more likely than not that the fair value of goodwill exceeded its carrying value and no further testing was required. The qualitative impairment test was elected for these three reporting units because of the growth in revenue and cashflows in excess of our initial projections. The Company has not recognized any goodwill impairment charges in any of the periods presented. The following table summarizes the activity in the Company’s goodwill by segment for the periods presented (in thousands): Nucleic Acid Production Biologics Safety Testing Protein Detection Total Balance as of December 31, 2020 $ 32,838 $ 119,928 $ 71,509 $ 224,275 Divestiture — — ( 71,509 ) ( 71,509 ) Balance as of December 31, 2021 $ 32,838 $ 119,928 $ — $ 152,766 Intangible assets are being amortized on a straight-line basis, which reflects the expected pattern in which the economic benefits of the intangible assets are being obtained, over an estimated useful life ranging from 5 to 14 years. The following are components of finite-lived intangible assets and accumulated amortization as of the periods presented: December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Estimated Useful Life Weighted Average Remaining Amortization Period (in thousands) (in years) (in years) Trade Names $ 7,120 $ 5,012 $ 2,108 5 - 10 2.9 Patents and Developed Technology 167,648 63,465 104,183 5 - 14 8.5 Customer Relationships 19,953 8,673 11,280 10 - 12 6.4 Total $ 194,721 $ 77,150 $ 117,571 8.1 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Estimated Useful Life Weighted Average Remaining Amortization Period (in thousands) (in years) (in years) Trade Names $ 11,490 $ 5,384 $ 6,106 5 - 15 6.3 Patents and Developed Technology 169,404 52,809 116,595 5 - 14 9.5 Customer Relationships 83,323 28,368 54,955 10 - 14 8.8 Total $ 264,217 $ 86,561 $ 177,656 9.1 The Company recognized $ 12.4 million, $ 12.7 million and $ 12.2 million of amortization expense from intangible assets directly linked with revenue generating activities within cost of revenue in the consolidated statement of operations for the years ended December 31, 2021, 2020, and 2019, respectively. Amortization expense for intangible assets that are not directly related to sales generating activities of $ 5.9 million, $ 7.6 million and $ 8.0 million was recorded as selling, general and administrative expenses for each of the years ended December 31, 2021, 2020, and 2019, respectively. In September 2021, the Company completed its divestiture of the Protein Detection segment (see Note 2). This resulted in the derecognition of $ 41.7 million in net intangible assets associated with the divested segment. 121 Table of Contents As of December 31, 2021, the estimated future amortization expense for finite-lived intangible assets were as follows (in thousands): 2022 $ 14,600 2023 14,417 2024 14,417 2025 14,417 2026 14,191 Thereafter 45,529 Total estimated amortization expense $ 117,571 4. Balance Sheet Components Inventory Inventory consisted of the following as of the periods presented (in thousands): December 31, 2021 December 31, 2020 Raw materials $ 19,726 $ 11,112 Work in process 21,382 18,333 Finished goods 10,449 3,856 Total inventory $ 51,557 $ 33,301 Property and equipment Property and equipment consisted of the following as of the periods presented (in thousands): December 31, 2021 December 31, 2020 Land $ — $ 818 Buildings — 2,129 Buildings capitalized under lease finance obligations — 61,202 Leasehold improvements 18,162 1,637 Furniture, fixtures, and equipment 31,065 23,157 Software 2,713 2,632 Total 51,940 91,575 Less accumulated depreciation ( 12,532 ) ( 10,647 ) Total 39,408 80,928 Construction in-progress 6,924 20,377 Total property and equipment, net $ 46,332 $ 101,305 Depreciation expense totaled approximately $ 6.4 million, $ 5.6 million, and $ 3.8 million for the years ended December 31, 2021, 2020, and 2019, respectively. 122 Table of Contents Accrued expenses and other current liabilities Accrued expenses consisted of the following as of the periods presented (in thousands): December 31, 2021 December 31, 2020 Employee related $ 18,894 $ 18,448 Lease liabilities, current portion 3,722 — Professional services 2,897 7,670 Customer deposits 2,429 1,091 Sales and use tax liability 1,296 2,896 Federal tax liability 102 2,290 Other 5,234 6,151 Total accrued expenses and other current liabilities $ 34,574 $ 38,546 5. Leases The Company leases facilities, including office, laboratory and manufacturing space under long-term non-cancelable operating leases. Burlingame, California Facility In January 2020, the Company completed the sale of land, building and related building improvements specific to its facility in Burlingame, California for approximately $ 34.5 million in cash. Simultaneously, with the close of the transaction, the Company leased the property for a two-and-a-half-year period, resulting in a total of $ 3.3 million in new lease obligations through December 31, 2021. The Company’s sale of the building and immediate leaseback of the facility qualified for sale-leaseback accounting. Upon adoption of ASC 842, the lease was reevaluated and classified as an operating lease. Given the Company was considered to retain more than a minor part but less than substantially all of the use of the property, the present value of the minimum lease payment over the lease term of $ 3.1 million was required to be deferred and recognized as a reduction of rent expense over the life of the lease. Net of the $ 3.1 million in deferred gain, the Company recognized a net gain on the sale of the asset of $ 19.0 million during the year ended December 31, 2020. In August 2020, the Company executed a six-month extension for the leased property, including escalating rent payments, with total incremental lease payments associated with the extension of $ 1.8 million. The unamortized deferred gain at the time of the modification, approximating $ 2.0 million, was amortized on a prospective basis over the extended lease term. Upon execution of the amendment inclusive of escalating rent payments, expense was being recognized on a straight-line basis and the difference between the recognized rent expense and the amounts paid under the lease was being recorded as deferred rent included in other short-term and long-term liabilities on the consolidated balance sheet as of December 31, 2020. Upon adoption of ASC 842, the Company reassessed the classification of the lease as of January 1, 2021 and determined it to be classified as an operating lease and the remaining unrecognized deferred gain of $ 1.7 million on adoption date was derecognized from the balance sheet. The lease was subsequently assumed by Voyager as part of the divestiture of Vector in September 2021 (see Note 2). Wateridge San Diego Facility In July 2018, the Company entered into a lease for a new manufacturing facility (the “Wateridge San Diego Facility Lease”). The lease included tenant improvement provisions for construction prior to occupancy. Construction on this new manufacturing facility began in 2018 and Company evaluated the extent of its financial and operational involvement in the tenant improvements of the new facility related to the Wateridge San Diego Facility Lease to determine whether it was considered the owner of the construction project. The Company concluded that it was deemed to be the owner of the facility for accounting purposes (even though it did not meet the definition for legal purposes) during the construction period and upon the completion of the construction. The Company therefore recorded the fair value of the building asset and improvements, which was estimated to be $ 59.0 million and the related lease facility financing obligation of $ 51.2 million. The difference between the gross asset value and the lease facility financing obligation represented the approximate $ 8.0 million of building improvement costs reimbursed by the Company. In September 2020, the Company amended its Wateridge San Diego Facility Lease agreement to provide for additional manufacturing and office space. The amended lease agreement provides for tenant improvements for construction prior to occupancy of $ 2.7 million, rent concessions, and escalating rent payments over the life of the lease which expires in May 2023. As of December 31, 2020, the anticipated tenant improvement allowance was recorded as a component of the lease facility financing obligation a $ 2.0 million receivable for lessor-funded financing within prepaid and other current assets, and $ 0.7 123 Table of Contents million in construction in progress for costs incurred to date as the Company has earned the right to this portion of the tenant allowance. Additionally, during 2020, the Company incurred incremental building improvement costs for the initially leased space. As of December 31, 2020, the Company had recognized $ 20.4 million and $ 1.7 million in construction in progress and accrued expenses, respectively, within the consolidated balance sheet specific to this facility. Upon adoption of Topic 842, the Company assessed the above Wateridge San Diego Facility Lease and determined that the Company was not the accounting owner of the construction projects and they would further be classified as operating leases. Given the Company had previously recognized the building and financing lease obligation for the Wateridge San Diego Facility Lease as a result of the transactions build-to-suit designation under legacy GAAP, the Company derecognized the $ 59.0 million leased building and $ 55.1 million lease financing obligation from the balance sheet on January 1, 2021. The unamortized cost incurred by the Company for lessor-owned tenant improvements of $ 8.0 million was recognized as a component of ROU Assets on January 1, 2021. Southport Facility The Company was also considered to be the accounting owner of its Southport, North Carolina leased facility (the “Southport Facility'') under legacy GAAP. Upon adoption of Topic 842, the Company analyzed the Southport Facility lease under the new guidance and determined that the lease would be classified as an operating lease. As the Company has previously recognized the building and financing lease obligation for the Southport Facility as a result of the transactions build-to-suit designation under legacy GAAP, the Company derecognized the $ 3.0 million leased building and $ 1.8 million lease financing obligation from the balance sheet on January 1, 2021. All of the Company's office space and manufacturing facilities are occupied under operating lease arrangements with various expiration dates through 2030, some of which include options to extend the term of the lease. The Company's leases have remaining lease terms of one year year to approximately 10 years, some of which may include options to extend the leases for up to 10 years. The Company does not have any leases that include residual value guarantees. The Company did not have any finance leases as of December 31, 2021. The following table presents supplemental balance sheet information related to the Company's operating leases as of the period presented below (in thousands). Line Item in the Consolidated Balance Sheet December 31, 2021 Right-of-use assets Other assets $ 49,095 Lease liabilities, current portion Accrued expenses and other current liabilities 3,722 Non-current lease liabilities Other long-term liabilities 40,906 The components of the net lease costs reflected in the Company's consolidated statement of operations were as follows for the period presented (in thousands): Year Ended December 31, 2021 Operating lease costs $ 8,792 Variable lease costs 1,759 Total lease costs $ 10,551 The weighted average remaining lease term and weighted average discount rate related to the Company's ROU assets and lease liabilities for its operating leases were as follows as of December 31, 2021: Weighted average remaining lease term (in years) 8.2 Weighted average discount rate 5.1 % 124 Table of Contents Supplemental information concerning the cash flow impact arising from the Company's leases recorded in the Company's consolidated statement of cash flows is detailed in the following table for the period presented (in thousands): Year Ended December 31, 2021 Cash paid for amounts included in lease liabilities: Operating cash flows used for operating leases $ 6,335 As of December 31, 2021, the Company expects that its future minimum lease payments will become due and payable as follows (in thousands): Operating Leases 2022 $ 5,904 2023 6,354 2024 6,535 2025 6,521 2026 6,604 Thereafter 23,342 Total minimum lease payments $ 55,260 Less: interest ( 10,632 ) Total lease liabilities $ 44,628 Lease Agreements Not Yet Commenced as of December 31, 2021 Leland Facility In June 2021, the Company entered into a 10 year lease for a new manufacturing facility (the “Leland Facility”) with the option to extend the lease term for four 5-year periods. The lease includes tenant improvement provisions for construction prior to occupancy of $ 3.6 million, a free rent period, and escalating rent payments over the life of the lease, which expires in 2032. The total future minimum lease payments under the lease agreement are $ 12.7 million, with an option to extend subject to certain conditions. Construction on this new manufacturing facility began in November 2021. As of December 31, 2021, the Company did not have access to the space, concluded that the leasehold improvements were lessor owned, and determined that the lease has not yet commenced for accounting purposes. Flanders San Diego Facility In August 2021, the Company entered into an eleven year operating lease for a new manufacturing facility (the “Flanders San Diego Facility”) consisting of two buildings. The lease included tenant improvement provisions for construction prior to occupancy. The lease includes tenant improvement provisions for construction prior to occupancy of up to $ 11.5 million, rent abatement clauses, and escalating rent payments over the life of the lease, which expires in 2032. The total future minimum lease payments under the lease agreement are $ 37.2 million, with optional term extensions subject to certain requirements. Construction on the first and second building began in November 2021. The Company concluded that it was not deemed to be the accounting owner of either buildings for accounting purposes during the construction period. As of December 31, 2021, the Company did not have access to the space, concluded that the leasehold improvements were lessor owned, and determined that the lease has not yet commenced for accounting purposes. Prior to January 1, 2021, the Company accounted for leases under ASC 840. Rent expense for each of the years ended December 31, 2020 and 2019 were approximately $ 3.2 million and $ 2.5 million, respectively. 125 Table of Contents As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and under the previous lease accounting standard, minimum annual payments under the Company’s non-cancelable lease agreements, capital lease agreements, and lease financing obligations were as follows (in thousands): Capital Leases Lease Facility Financing Obligations Operating Leases 2021 $ 50 $ 4,126 $ 2,777 2022 25 4,648 3,062 2023 — 5,014 1,336 2024 — 5,109 1,371 2025 — 5,071 1,104 Thereafter — 24,232 5,286 Total minimum payments 75 48,200 $ 14,936 Less: amount representing interest ( 16 ) ( 27,830 ) Present value of future minimum lease payments 59 20,370 Residual value of lease facility financing obligations — 36,547 Less: short-term lease facility financing obligations ( 36 ) ( 750 ) Long-term lease facility financing obligations $ 23 $ 56,167 Operating leases in the table above includes future minimum lease payments for the ground lease for the Southport Facility, Wateridge San Diego Facility, and Burlingame, California Facility. 6. Commitments and Contingencies Legal Proceedings The Company is involved in various legal proceedings arising in the normal course of business. The Company accrues for a loss contingency when it determines that it is probable, after consultation with counsel, that a liability has been incurred and the amount of such loss can be reasonably estimated. The Company believes that the results of any such contingencies, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Indemnification Agreements In the ordinary course of business, we may provide indemnification of varying scope and terms to vendors, lessors, customers and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties, and losses arising from breach of representations, warranties and covenants to counterparties set forth in agreements with such parties. We have also agreed to our directors and officers to the maximum extent permitted under applicable state laws pursuant to standard director and officer indemnification agreements and our corporate charter and bylaws. The maximum potential amount of future payments that we could be required to make under these indemnification agreements is, in many cases, unlimited. We have not incurred any material costs as a result of such indemnifications and are not currently aware of any indemnification claims. 7. Long-Term Debt 2020 Credit Agreements In October 2020, Maravai Intermediate Holdings, LLC (“Intermediate”), a wholly-owned subsidiary of Topco LLC, along with its subsidiaries (the “New Borrowers”), entered into a credit agreement (the “Credit Agreement”) to refinance existing $ 400.0 million long-term debt with a new $ 780.0 million facility. The Credit Agreement provides for a First Lien Term Loan (the “Term Loan”) of $ 600.0 million, maturing October 2027, and a Revolving Credit Facility (the “Revolving Credit Facility”) for up to $ 180.0 million in funding. The Credit Agreement amended and restated the Company’s prior credit agreement as of August 2018 (the “First and Second Lien Credit Agreements”). In November 2020, the Company repaid $ 50.0 million of principal balance of the First Lien Term Loan using proceeds from the IPO. 126 Table of Contents Borrowings under the Credit Agreement bear interest (a) initially, at our option, either (i) at the Base Rate plus 3.25 % per annum or (ii) the Adjusted Eurocurrency Rate plus 4.25 % per annum and (b) after delivery of the compliance certificate for the fiscal quarter ended March 31, 2021, at our option, either at (i) the Base Rate plus the applicable margin of 3.25 % per annum with a stepdown to 3.00 % based on Intermediate’s first lien net leverage ratio or (ii) the Adjusted Eurocurrency Rate plus the margin of 4.25 % per annum with a stepdown to 4.00 % based on Intermediate’s first lien net leverage ratio. Interest rates will also decrease an additional 0.25 % in any period if the Company’s credit ratings issued by Moody’s and S&P are B2 or better and B or better, respectively. The Base Rate is defined as the greatest of (i) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (ii) the Federal Reserve Bank of New York Rate (“NYFRB”) plus 0.50 % per annum, (iii) the Adjusted Eurocurrency Rate for a one month interest period plus 1.00 % per annum, (iv) solely with respect to the initial term loans, 2.00 % per annum and (v) for any loans that are not initial term loans, 1.00 % per annum. The “Adjusted Eurocurrency Rate” is defined as the greater of (a) with respect to the initial term loans the greater of (i) the Eurocurrency Rate for such interest period multiplied by the Statutory Reserve Rate (as such term is defined in the Credit Agreement), and (ii) 1.00 % and (b) with respect to the revolving loans, the greater of (i) the Eurocurrency Rate for such interest period multiplied by the Statutory Reserve Rate (as such term is defined in the Credit Agreement), and (ii) 0 %. The “Eurocurrency Rate” is defined as the London Inter-bank Offered Rate (“LIBOR”) as displayed by Reuters (which if negative will be deemed to be 0 %) or, if LIBOR is unavailable, a rate based on historical LIBOR, as determined by the administrative agent under the Credit Agreement. The Term Loan contains prepayment provisions that allow for, at the Company’s option, to prepay all or a portion of the principal amount at any time. Subject to certain exceptions and limitations and reinvestment rights, the Company is required to repay borrowings under the Term Loan and Revolving Credit Facility with the proceeds of certain occurrences, such as the incurrence of debt and certain asset sales or dispositions. Commending with the fiscal year ended December 31, 2021, and each fiscal year thereafter, the Credit Agreement requires mandatory prepayments on the Term Loan principal upon certain excess cash flow, subject to certain step-downs based on the Company’s first lien net leverage ratio. The excess cash flow shall be reduced to 25 % or 0 % if the first lien net leverage ratio was equal to or less than 4.75 :1.00 or 4.25 :1.00, respectively, however, no prepayment shall be required to the extent excess cash flow calculated for such period is equal to or less than $ 10.0 million. As of December 31, 2021, our first lien net leverage ratio was less than 4.25 :1.00 thus the prepayment provision was not triggered. The Term Loan is repayable in quarterly payments of $ 1.5 million which began on on March 31, 2021, with all remaining outstanding principal due at maturity in October 2027. All outstanding amounts drawn under the Revolving Credit Facility will become due at maturity in October 2025. Accrued interest under the Credit Agreement is generally payable quarterly in arrears on the date of any repayment or prepayment and at maturity. In addition to paying interest on outstanding principal under the Credit Agreement we are required to pay a commitment fee to the lenders under the Revolving Credit Facility for any unutilized commitments at 0.375 % per annum, with one stepdown to 0.25 % per annum based on Intermediate’s first lien net leverage ratio calculation. As of December 31, 2021, the interest rate on the Term Loan was 4.75 % per annum. The Credit Agreement also provides for a $ 20.0 million limit for letters of credit, which remained unused as of December 31, 2021. Borrowings under the Credit Agreement are unconditionally guaranteed by Topco LLC, together with the existing and future material domestic subsidiaries of Topco LLC (subject to certain exceptions), as specified in the respective guaranty agreements. Borrowings under the Credit Agreement are also secured by a first-priority lien and security interest in substantially all of the assets (subject to certain exceptions) of existing and future material domestic subsidiaries of Topco LLC that are loan parties. The accounting related to entering into the Credit Agreement and using the proceeds to pay off the First and Second Lien Credit Agreements were evaluated on a creditor-by-creditor basis to determine whether each transaction should be accounted for as a modification or extinguishment. Certain creditors under the First and Second Lien Credit Agreements did not participate in this refinancing transaction and ceased being creditors of the Company and the repayment of their related outstanding debt balances has been accounted for as an extinguishment of debt. Proceeds of borrowings from new lenders were accounted for as a new debt financing. The Company recorded a loss on extinguishment of debt of $ 7.6 million in the accompanying consolidated statement of operations for the year ended December 31, 2020. For the remainder of the creditors, this transaction was accounted for as a modification because the present value of cash flows between the two term loans before and after the transaction was less than 10% on a creditor-by-creditor basis. As part of the refinancing, the Company incurred $ 15.8 million of various costs, of which $ 6.0 million related to an original issuance discount, and were all capitalized in the accompanying balance sheet within long-term debt, and are subject to amortization over the term of the refinanced debt as an adjustment to interest expense using the effective interest method. 127 Table of Contents We also incurred $ 3.5 million of financing-related fees related to the Revolving Credit Facility. As of December 31, 2021 and 2020, $ 2.7 million and $ 3.4 million, respectively, of such unamortized debt issuance costs are recorded as assets within other assets on our consolidated balance sheets as there is no balance outstanding related to the Revolving Credit Facility. In conjunction with the Company’s divestiture of the Protein Detection segment, the Company transferred, per the existing terms of the Credit Agreement, the portion of the Term Loan held by Vector of $ 118.4 million to Intermediate in its entirety. This amount was not assumed by Voyager as part of the divestiture. Total outstanding debt and loan covenant requirements remained unchanged as a result of the divestiture. The Credit Agreement contains certain covenants, including, among other things, covenants limiting our ability to incur or prepay existing certain indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes in the nature of the business. Additionally, the Credit Facility also requires us to maintain a certain net leverage ratio. All obligations under the Credit Facility are unconditionally guaranteed by the assets of substantially all of our subsidiaries. The Company was in compliance with these covenants as of December 31, 2021. First and Second Lien Credit Agreement In August 2018, Maravai Intermediate Holdings, LLC (“Intermediate”), a wholly-owned subsidiary of ours, along with its subsidiaries (together with Intermediate, the “Borrowers”) entered into a first lien credit agreement (the “First Lien Credit Agreement”) with leading institutions for term loan borrowings (the “First Lien Term Loan”) totaling $ 250.0 million and a second lien credit agreement (the “Second Lien Credit Agreement”) for term loan borrowings (the “Second Lien Term Loan”) totaling $ 100.0 million, to refinance a combined debt agreement entered into in 2017, including repayment of all outstanding senior secured credit facilities and senior subordinated notes outstanding and to allow for a $ 52.0 million distribution to our members. The First Lien Credit Agreement also provided for a revolving credit facility (the “Revolving Credit Facility”) of $ 50.0 million for letters of credit and loans to be used for working capital and other general corporate financing purposes, of which $ 15.0 million was drawn down in March 2020 to provide financing for the acquisition of MockV and other operating uses. Borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement were unconditionally guaranteed by Topco LLC and the existing and future material domestic subsidiaries of Topco LLC (subject to certain exceptions as specified in the respective guaranty agreements, and are secured by a lien and security interest in substantially all of the assets of existing and future material domestic subsidiaries of Topco LLC that are loan parties). The refinancing of the previous debt was accounted for as a modification and also as an extinguishment of the related outstanding debt balances. Borrowings under the First Lien Credit Agreement bore interest at variable rates as defined in the respective agreements that could be elected at our option. Accrued interest under the First Lien Credit Agreement was generally payable quarterly in arrears on the date of any repayment or prepayment and at maturity. An annual commitment fee was applied to the daily unutilized amount under the Revolving Credit Facility at 0.50 % per annum, with one stepdown to 0.375 % per annum based on Intermediate’s first lien net leverage ratio calculation. Interest Rate Cap In the first fiscal quarter of 2021, the Company entered into a new interest rate cap agreement to manage a portion of its variable interest rate risk on its outstanding long-term debt. The contract, effective March 31, 2021, entitles the Company to receive from the counterparty at each calendar quarter end the amount, if any, by which a specified defined floating market rate exceeds the cap strike interest rate, applied to the contract’s notional amount of $ 415.0 million The floating rate of interest is reset at the end of each three month period. The contract expires on March 31, 2023. The interest rate cap agreement has not been designated as a hedging relationship and its fair value was insignificant for all periods presented. The Company’s long-term debt consisted of the following as of the periods presented (in thousands): December 31, 2021 December 31, 2020 First Lien Term Loan $ 544,000 $ 550,000 Unamortized debt issuance costs ( 13,409 ) ( 15,386 ) Total long-term debt 530,591 534,614 Less: current portion ( 6,000 ) ( 6,000 ) Total long-term debt, less current portion $ 524,591 $ 528,614 128 Table of Contents There were no balances outstanding on the Company’s Revolving Credit Facility as of December 31, 2021. As of December 31, 2021, the aggregate future principal maturities of the Company’s debt obligations for each of the next five years, based on contractual due dates, were as follows (in thousands): 2022 $ 6,000 2023 6,000 2024 6,000 2025 6,000 2026 6,000 Thereafter 514,000 Total long-term debt $ 544,000 8. Stockholders’ / Member’s Equity Initial Public Offering In November 2020, the Company completed its IPO and sold 69,000,000 shares of Class A common stock at a public offering price of $ 27.00 per share, inclusive of the 9,000,000 shares of Class A common stock purchased by underwriters pursuant to the underwriters’ option to purchase additional shares at the initial public offering price, less underwriting discounts and commissions. The Company received net proceeds from the IPO of approximately $ 1.8 billion after deducting underwriting discounts and commissions, which was used to purchase 55,823,011 of previously-issued and 3,703,704 of newly-issued Topco LLC Units for approximately $ 94.5 million. Immediately prior to, and in connection with, the completion of our IPO, the Company completed a series of organizational transactions (“Organizational Transactions”), including: • The amendment and restatement of Topco LLC’s operating agreement (the “New LLC Operating Agreement”) to, among other things, (i) modify Topco LLC’s capital structure by replacing the membership interests held by Topco LLC’s existing owners with a new class of Topco LLC units (the “LLC Units”) and (ii) appoint the Company as the sole managing member of Topco LLC. • Amend and restate the Company’s certificate of incorporation to among other things, authorize the Company to issue two classes of common stock: Class A common stock and Class B common stock. • The issuance of shares of the Company’s Class B common stock to Maravai Life Sciences Holdings, LLC (“MLSH 1”) which was Topco LLC’s pre-IPO owner on a one-to-one basis with the number of LLC Units owned; and • The acquisition, by merger, of two members of Topco LLC (“the Blocker Entities”), for which we issued 28,965,664 shares of Class A common stock and paid cash of $ 208.1 million as consideration (“the Blocker Mergers”).Prior to the Organizational Transactions, Topco LLC had established a single class of common units with MLSH 1 as its sole member. Topco LLC was authorized to issue up to 253,916,941 common units. All authorized 253,916,941 common units were issued and outstanding prior to the Organizational Transactions. MLSH 1 as the member, was not obligated to make capital contributions to Topco LLC. Topco LLC’s profits and losses were allocated to MLSH 1 as determined by the Board of Directors. Topco LLC’s common units have no conversion rights, special preferences or redemption rights. No capital contributions were received by Topco LLC from MLSH 1 in 2019. Prior to the Organizational Transactions, a distribution was made by Topco LLC to MLSH 1 in the amount of $ 88.6 million, with a subsequent distribution of $ 8.2 million in December 2020, totaling $ 96.7 million of distributions for the year ended December 31, 2020. There were no distributions made to MLSH 1 during the year ended December 31, 2019. Amendment and Restatement of Certificate of Incorporation In connection with the Organizational Transactions, the Company’s certificate of incorporation was amended and restated to, among other things, provide for the (i) authorization of 500,000,000 shares of Class A common stock with a par value of $ 0.01 per share; (ii) authorization of 300,000,000 shares of Class B common stock with a par value of $ 0.01 per share; (iii) authorization of 50,000,000 shares of preferred stock with a par value of $ 0.01 per share. Holders of Class A and Class B common stock are entitled to one vote per share. Except as otherwise required in the Certificate of Incorporation or by applicable law, the holders of Class A common stock and Class B common stock shall vote together as a single class on all matters on which stockholders are generally entitled to vote. Holders of the Class A common stock are 129 Table of Contents entitled to receive dividends, and upon the Company’s dissolution or liquidation, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A common stock will be entitled to receive the Company’s pro rata remaining assets available for distribution. Holders of Maravai’s Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon dissolution or liquidation of Maravai. Holders of Class A and Class B common stock do not have preemptive or subscription rights. As of December 31, 2021, no preferred stock was outstanding. We are required to, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock outstanding and the number of LLC Units owned by us and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by the MLSH 1 and the number of LLC Units owned by the MLSH 1. We may issue shares of Class B common stock only to the extent necessary to maintain these ratios. Shares of Class B common stock are transferable only together with an equal number of LLC Units if we, at the election of MLSH 1, exchange LLC Units for shares of Class A common stock. All Class B common stock that is transferred shall be automatically retired and cancelled and shall no longer be outstanding. In November 2020, we received $ 1.7 million from MLSH 1 for the issuance of 168,654,981 shares of Class B common stock. Recapitalization of Topco LLC Topco LLC’s Board of Directors adopted the amended and restated Topco LLC’s operating agreement in November 2020 to, among other things, appoint us as Topco LLC’s sole managing member and to provide that Topco LLC’s members would not have voting rights or any other control or authority over Topco LLC or its business. The amended and restated operating agreement also revised the tax rate applicable to the tax distributions that Topco LLC is required to make to the holders of LLC Units, including us, as described in Note 12. Blocker Mergers Pursuant to the Blocker Mergers, we acquired the Blocker Entities (together with 37,119,801 LLC Units held by the Blocker Entities), by merger, from MLSH 2. We issued an aggregate of 28,965,664 shares of Class A common stock and paid $ 208.1 million in cash to MLSH 2 in consideration of the Blocker Mergers. Upon consummation of the Blocker Mergers, we recognized the acquired LLC Units at carrying value, as these transactions are considered to be between entities under common control. There were no tax attributes acquired from the Blocker Entities as they had been fully utilized prior to the mergers. Repurchase of Class A Common Stock From MLSH 2 In November 2020, we repurchased 1,319,148 shares of Class A common stock from MLSH 2, a related party, for $ 33.7 million. These shares were immediately retired. 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 $ 31.25 per share. The selling stockholders were responsible for the underwriting discounts and commissions of the April 2021 Secondary Offering and received all of the net proceeds of $ 624.2 million from the sale of shares of Class A common stock. The Company was responsible for the offering costs associated with the April 2021 Secondary Offering of $ 1.0 million which were recorded within selling, general and administrative in the consolidated statements of operations. September 2021 Exchange and Secondary Offering In September 2021, MLSH 1 executed an exchange of 17,068,559 LLC Units (paired with the corresponding shares of Class B common stock) in return for 17,068,559 shares of the Company’s Class A common stock. The corresponding shares of Class B common stock were subsequently cancelled and retired. Shortly after the exchange, the Company completed a secondary offering (“September 2021 Secondary Offering”) of 20,000,000 shares of its Class A common stock by MLSH 1 and MLSH 2, which included 2,931,441 shares of Class A common stock previously held by MLSH 2 at a price of $ 50.00 per share. The selling stockholders were responsible for the underwriting discounts and commissions of the September 2021 Secondary Offering and received all of the net proceeds of $ 977.5 million from the sale of shares of Class A common stock. The Company 130 Table of Contents was responsible for the offering costs associated with the September 2021 Secondary Offering of $ 0.9 million which were recorded within selling, general and administrative in the consolidated statements of operations. Cash Contribution, Exchange, and Forfeiture Agreement In December 2021, the Company entered into a Cash Contribution, Exchange and Forfeiture Agreement (the “Contribution Agreement”) with Topco LLC and MLSH 1, a related party. Pursuant to the Contribution Agreement, the Company contributed $ 110.0 million of cash to Topco LLC in exchange for 2,732,919 newly-issued units LLC Units of Topco LLC at a price per unit of $ 40.25 , which was equal to the 50-day volume-weighted average price of the Company’s Class A common stock as calculated on December 31, 2021. Immediately following the contribution, the Company and MLSH 1 agreed to forfeit 2.036 % of their respective LLC Units of Topco LLC and an equal number of shares of the Company’s Class B common stock, par value $ 0.01 per share, for no consideration. The purpose of the Contribution Agreement was to reduce the excess cash that had accumulated at the Company as a result of quarterly tax distributions it has received from Topco LLC since its IPO. 9. Net Income (Loss) Per Class A Common Share/Unit Attributable to Maravai LifeSciences Holdings, Inc. Net income (loss) per unit for periods prior to our IPO have not been retrospectively adjusted to give effect to the Organizational Transactions described in Note 8 and the 69,000,000 shares of Class A common stock sold in our IPO. Additionally, basic net income per Class A common stock for the year ended December 31, 2020, has been calculated by dividing net income for the period, adjusted for preferred unit dividends attributable to MLSC non-controlling interests and net income (loss) attributable to non-controlling interests, by the weighted average Class A common stock outstanding during the period. Basic net income per Class A common stock for the year ended December 31, 2021, has been calculated by dividing net income for the period, adjusted for net income attributable to non-controlling interests, by the weighted average Class A common stock outstanding during the period. Diluted net income (loss) per Class A common share/unit gives effect to potentially dilutive securities by application of the treasury stock method or if-converted method, as applicable. Diluted net income per share of Class A common stock attributable to the Company is computed by adjusting the net income and the weighted-average number of shares of Class A common stock outstanding to give effect to potentially diluted securities. Prior to the Organizational Transactions, the members’ equity of MLSC was comprised of Class A and Class B preferred units, MLSC Incentive Units and MLSC common units, each with participation rights. The MLSC preferred units were entitled to cumulative dividends of 8.0 % compounded annually, up to an additional 4.0 %, also compounded annually, to the extent of remaining unallocated earnings. The preferred unitholders of MLSC were required, however, to share a portion of the additional 4.0 % in dividends with the holders of MLSC Incentive Units based on a formula defined in the MLSC LLC Agreement. The Company determined that vested MLSC Incentive Units and MLSC Class A and B preferred units were participating securities under the two-class method at the MLSC subsidiary level, however, they do not have a contractual obligation to share in losses, and therefore no undistributed losses have been allocated to them. MLSH 1 Incentive Units are granted by the parent of the Company, and as a result, do not represent potential common units of the Company. In September 2020, the Company entered into a Sale and Rollover Agreement and repurchased a majority of the outstanding MLSC Class B preferred units as well as entering into an agreement that resulted in an exchange of the remaining MLSC Class B preferred units and MLSC common units into 69,599 of MLSH 1 common units in November 2020 upon the IPO. Included in the preferred unit dividends attributable to non-controlling interests line item for the year ended December 31, 2020, is a $ 10.2 million deemed dividend representing the excess of the fair value of the Class B preferred units, determined as of the date of the Sale and Rollover Agreement, over their related carrying value. In September 2020, the Company also agreed and subsequently repurchased all MLSC Incentive Units, however, such incentive units remained outstanding until October 2020, and had the potential to be dilutive to earnings per unit until they were repurchased. Prior to the Organizational Transactions and IPO, basic net loss per common unit attributable to our member for the year ended December 31, 2019 is based on the weighted average number of common units outstanding during the period. Diluted net loss per common unit is computed by adjusting the net loss and the weighted-average number of common units outstanding to give effect to potentially dilutive securities. 131 Table of Contents The following table presents the computation of basic and diluted net income per common share/unit attributable to the Company for the periods presented (in thousands, except per share and per unit amounts): Year Ended December 31, 2021 2020 2019 Net income (loss) per Class A common share/unit: Numerator—basic: Net income (loss) $ 469,250 $ 78,816 $ ( 5,201 ) Less: preferred unit dividends attributable to the MLSC non-controlling interests — ( 15,270 ) ( 5,681 ) Less: (income) loss attributable to common non-controlling interests ( 287,213 ) 13,342 2,396 Net income (loss) attributable to Maravai LifeSciences Holdings, Inc.—basic $ 182,037 $ 76,888 $ ( 8,486 ) Numerator—diluted: Net income (loss) attributable to Maravai LifeSciences Holdings, Inc.—basic $ 182,037 $ 76,888 $ ( 8,486 ) Net income (loss) effect of dilutive securities: Effect of dilutive employee stock purchase plan, RSUs and options $ 132 $ — $ — Effect of the assumed conversion of Class B common stock 220,187 ( 8,802 ) — Net income (loss) attributable to Maravai LifeSciences Holdings, Inc.—diluted $ 402,356 $ 68,086 $ ( 8,486 ) Denominator—basic: Weighted average Class A common shares/units outstanding—basic (1) 114,791 10,351 253,917 Net income (loss) per Class A common share/unit—basic $ 1.59 $ 7.43 $ ( 0.03 ) Denominator—diluted: Weighted average Class A common shares/units outstanding—basic (1) 114,791 10,351 253,917 Weighted average effect of dilutive securities: Effect of dilutive employee stock purchase plan, RSUs and options 153 1 — Effect of the assumed conversion of Class B common stock 142,859 18,556 — Weighted average Class A common shares/units outstanding—diluted (1) 257,803 28,908 253,917 Net income (loss) per Class A common share/unit—diluted $ 1.56 $ 2.36 $ ( 0.03 ) ____________________ (1) Amounts for the years ended December 31, 2021 and 2020 represent shares of Class A common stock outstanding. Amounts for the year ended December 31, 2019 represent Topco LLC units outstanding. Shares of Class B common stock do not share in the earnings or losses of the Company, and are therefore not participating securities. As such, a separate presentation of basic and diluted net income (loss) per share for Class B common stock under the two-class method has not been presented. The following table presents potentially dilutive securities excluded from the computation of diluted net income (loss) per share/unit for the periods presented because their effect would have been anti-dilutive for the periods presented (in thousands): Year Ended December 31, 2021 2020 2019 Time-based incentive units — — 11,396 Performance-based incentive units — — 2,849 Stock options 355 1,535 — Shares estimated to be purchased under employee stock purchase plan 12 51 — 367 1,586 14,245 10. Equity Incentive Plans Stock-Based Compensation In November 2020, the Company’s board of directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each of the 132 Table of Contents first 10 calendar years during the term of the 2020 Plan, by the lesser of (i) 4 % of the total number of shares of Class A common stock outstanding on each December 31 immediately prior to the date of increase or (ii) such number of shares of Class A common stock determined by our board of directors or compensation committee. Shares of Class A common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the 2020 Plan. All awards granted under the 2020 Plan are intended to be treated as (i) stock options, including incentive stock options (“ISOs”), (ii) stock appreciation rights (“SARs”), (iii) restricted share awards (“RSAs”), (iv) restricted stock units (“RSUs”), (v) dividend equivalents, or (vi) other stock or cash awards as may be determined by the plan’s administrator from time to time. The term of each option award shall be no more than 10 years from the date of grant. The exercise price of a stock option shall not be less than 100 % (or, in the case of an ISO granted to a ten percent stock holder, 110 %) of the fair market value of the shares on the date of grant. As of December 31, 2021, only stock options and restricted stock units have been issued. In November 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ESPP”) to assist employees in acquiring a stock ownership interest in the Company and to encourage them to remain in the employment of the Company. The ESPP permits eligible employees to purchase shares of Class A common stock at a discount through payroll deductions during specified six-month purchase periods. The price of shares purchased under the ESPP is equal to the lower of the grant date price less a 15 % discount or a 15 % discount to the market closing price on the date of purchase. Compensation expense recognized for the ESPP was insignificant for all periods presented. Stock Options The following table summarizes information related to stock options: Number of Stock Options (in thousands) Weighted Average Exercise Price per Stock Option Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2020 1,514 $ 26.98 9.9 $ 1,621 Granted 454 39.98 Exercised ( 5 ) 27.00 Cancelled ( 554 ) 28.80 Outstanding as of December 31, 2021 1,409 $ 30.47 9.0 $ 16,846 Exercisable as of December 31, 2021 282 $ 26.98 8.8 $ 4,200 The Company uses the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The assumptions and estimates are as follows: • Expected term - The expected term represents the period that stock-based awards are expected to be outstanding. Our historical share option exercise information is limited due to a lack of sufficient data points and does not provide a reasonable basis upon which to estimate an expected term. • Expected volatility - The expected volatility was derived from the historical stock volatilities of peer public companies within our industry that are considered to be comparable to our business over a period equivalent to the expected term of the stock-based awards, since our stock trading history is limited. • Risk-free interest rate - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the stock-based awards’ expected term. • Expected dividend yield - The expected dividend yield is zero as we have no plans to make dividend payments. 133 Table of Contents A summary of the assumptions used to estimate the fair value of stock option grants for the years presented is as follows : Year Ended December 31, 2021 2020 Expected volatility 57.2 % 59.0 % Risk-free interest rate 1.0 % 0.5 % Expected term (in years) 6.1 6.1 Expected dividend yield — % — % Stock-based compensation expense related to stock options was $ 4.6 million and $ 0.6 million for the years ended December 31, 2021 and 2020, respectively. The total fair value of stock options vested was $ 4.3 million for the year ended December 31, 2021. As of December 31, 2021, the total unrecognized stock-based compensation related to stock options was $ 18.0 million, which is expected be recognized over a weighted-average period of approximately 3.2 years. Restricted Stock Units The Company began granting restricted stock unit awards to non-employee directors during 2020. The following table summarizes RSU activity: Restricted Stock Units (in thousands) Weighted Average Fair Value per RSU at Grant Date Balance as of December 31, 2020 71 $ 27.00 Granted 43 37.46 Vested ( 24 ) 27.00 Balance as of December 31, 2021 90 $ 31.96 Stock-based compensation expense related to RSUs was $ 0.8 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively. The total fair value of RSUs vested was $ 0.9 million for the year ended December 31, 2021. As of December 31, 2021, the total unrecognized equity-based compensation related to RSUs was $ 2.6 million, which is expected be recognized over a weighted-average period of approximately 1.4 years. Unit-Based Compensation Prior to the IPO, the Company’s parent, MLSH 1, granted unit-based awards (“MLSH 1 Incentive Units”) to certain executives of the Company in the form of non-vested units. Our controlled subsidiary, MLSC, granted unit-based awards (“MLSC Incentive Units”) only to certain employees of its subsidiaries. MLSC Incentive Units Topco LLC’s majority-owned subsidiary during the periods preceding the Organizational Transactions and wholly-owned subsidiary subsequent to the Organizational Transactions, issued incentive units (the “MLSC Incentive Units”) to its employees. All MLSC Incentive Units were settled during 2020. The MLSC Incentive Units were subject to either a combination of service, market or performance vesting conditions. Vested MLSC Incentive Units were treated as common units for purposes of distributions. In September 2020, Topco LLC entered into agreements (the “Repurchase Agreements”) to repurchase all remaining and outstanding MLSC Incentive Units, including the 1,500,000 MLSC Incentive Units, accelerated the vesting of all remaining unvested time-based MLSC Incentive Units and also removed the performance condition associated with the performance-based MLSC Incentive Units. The total compensation cost recognized for these transactions approximated $ 0.8 million. Topco LLC paid $ 9.1 million to settle the Repurchase Agreements in October 2020. Unit-based compensation expense related to MLSC Incentive Unit awards was approximately $ 1.5 million and $ 0.4 million for the years ended December 31, 2020 and 2019, respectively. The total fair value of the MLSC Incentive Units vested was $ 0.9 million and $ 0.6 million for the years ended December 31, 2020 and 2019, respectively. 134 Table of Contents MLSH 1 Incentive Units Prior to the Organizational Transactions, Topco LLC entered into agreements with certain executives and board members whereby those employees and board members were granted incentive units in MLSH 1, a related party. All MLSH 1 Incentive Unit awards were subject to a market condition which is subject to the achievement of a certain investment return threshold that increased on a compounding basis annually and a service condition subject to their continued employment. Certain MLSH 1 Incentive Unit awards contained a performance condition tied to the achievement of certain cash distribution multiples. All vested MLSH 1 Incentive Unit awards are subject to repurchase for fair value at MLSH 1’s option upon a voluntary or involuntary separation event that is not deemed to be for cause. Upon the IPO, the performance condition was met for certain MLSH 1 Incentive Units and the Company recorded an additional $ 3.5 million of equity-based compensation expense. The MLSH 1 Incentive Unit awards that include market and service conditions provide for cliff-vesting generally over four or five years . The MLSH 1 Incentive Unit awards that include market and performance conditions provide for full vesting upon meeting the performance condition. The fair value of MLSH 1 Incentive Unit awards was measured at the grant date and recognized as expense over the requisite service period for the awards. In November 2020, and before the IPO, MLSH 1 Incentive Unit awards were modified to allow for vesting subsequent to the termination of the employment for two employees (i.e. improbable-probable modification). The calculation of the incremental equity-based compensation expense was based on the new fair value of the award measured as of the date of modification. As a result of the modification and based on the performance condition being satisfied, the Company recognized an incremental equity-based compensation expense of $ 16.7 million for the year ended December 31, 2020. In connection with the divestiture of its Protein Detection business, the Company recognized incremental unit-based compensation expense of $ 2.4 million related to an amended agreement with an executive of Vector (see Note 2). This unit-based compensation expense was recorded within selling, general and administrative in the consolidated statements of operations for the year ended December 31, 2021. Unit-based compensation expense related to MLSH 1 Incentive Unit awards was approximately $ 3.9 million, $ 22.3 million, and $ 1.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. MLSH 1 Incentive Unit award activity during year ended December 31, 2021 is as follows: Number of Unvested MLSH 1 Incentive Units (in thousands) Weighted Average Grant Date Fair Value Per Unit Balance as of December 31, 2020 349 $ 17.47 Forfeited ( 13 ) 46.78 Vested ( 177 ) 9.78 Balance as of December 31, 2021 159 $ 22.20 As of December 31, 2021, total unrecognized compensation cost related to unvested MLSH 1 Incentive Units subject to service condition is $ 1.3 million which is expected to be recognized over a weighted average period of 2.1 years. Equity-Based Compensation The following table summarizes the total equity-based compensation expense included in the Company’s consolidated statements of operations for the periods presented (in thousands): Year Ended December 31, 2021 2020 2019 Cost of sales $ 1,915 $ 282 $ 22 Research and development 280 131 211 Selling, general and administrative 8,263 24,216 1,446 Total equity-based compensation $ 10,458 $ 24,629 $ 1,679 11. Repurchase of Non-Controlling Interests In September 2020, Topco LLC and MLSH 1 entered into a Sale and Rollover Agreement with the President of Cygnus Technologies and his affiliated entity (collectively, the “Investors”) to purchase 43,264 MLSC Class B preferred units and 135 Table of Contents 18,387,206 MLSC common units held by the Investors for approximately $ 120.0 million. In October 2020, Topco LLC repurchased $ 120.0 million of the MLSC Class B preferred and common units for cash. In addition, the Sale and Rollover Agreement provided that the remaining 16,736 MLSC Class B preferred units and 7,112,794 MLSC common units held by the Investors were exchanged upon the IPO into MLSH 1 common units for $ 46.6 million (the “Exchange”). In November 2020, and before the IPO, MLSH 1 exchanged its MLSH 1 common units for the remaining MLSC Class B preferred and common units and contributed the MLSC Class B preferred and common units to Topco LLC in a common control transaction. The difference between the consideration to be paid to the Investors associated with the non-controlling interests of $ 166.4 million and the carrying amount of the non-controlling interests in MLSC of $ 4.8 million was recorded, in the activity prior to the IPO and related Organizational Transactions, as a $ 161.6 million reduction in members’ equity in the consolidated statement of stockholders’/members’ equity. In November 2020, the MLSC LLC Agreement was amended and restated to recapitalize the outstanding equity into 1,000 common units. 12. Income Taxes As of December 31, 2021, we are subject to U.S. federal and state income taxes with respect to our allocable share of any taxable income or loss of Topco LLC, as well as any stand-alone income or loss we generate. Topco LLC is organized as a limited liability company and treated as a partnership for federal tax purposes and generally does not pay income taxes on its taxable income in most jurisdictions. Instead, Topco LLC’s taxable income or loss is passed through to its members, including us. As of December 31, 2020, we were also subject to U.S. federal and state corporate income taxes with respect to Maravai Inc. and its subsidiaries who are taxpaying entities in the U.S., Canada, and the U.K. During the year ended December 31, 2021, Maravai Inc.’s subsidiaries were sold and Maravai Inc. ceased to be a regarded entity and was deemed liquidated for U.S. tax purposes. Maravai Inc. and its subsidiaries’ activity prior to their disposal is included in our continuing operations. Components of income (loss) from continuing operations before income taxes for the periods presented were as follows (in thousands): Year Ended December 31, 2021 2020 2019 U.S. $ 530,853 $ 82,012 $ ( 5,581 ) International ( 88 ) ( 316 ) ( 272 ) Total income (loss) from continuing operations $ 530,765 $ 81,696 $ ( 5,853 ) Income tax expense (benefit) consisted of the following for the periods presented (in thousands): Year Ended December 31, 2021 2020 2019 Current tax expense Federal $ 9,291 $ 6,093 $ 505 State and local 1,623 2,251 2 International 3,697 — — Total current tax expense 14,611 8,344 507 Deferred tax expense (benefit) Federal $ 36,564 $ ( 3,922 ) $ ( 1,224 ) State and local 10,340 ( 1,542 ) 65 Total deferred tax expense (benefit) 46,904 ( 5,464 ) ( 1,159 ) Total provision (benefit) for income taxes $ 61,515 $ 2,880 $ ( 652 ) 136 Table of Contents A reconciliation between the Company’s effective tax rate and the applicable U.S. federal statutory income tax rate as of the periods presented is summarized as follows: As of December 31, 2021 2020 2019 Federal statutory rate 21.0 % 21.0 % 21.0 % State and local taxes, net of federal benefits 2.2 0.3 ( 1.1 ) Deferred tax revaluation — ( 1.8 ) — Income of non-controlling interest ( 11.4 ) ( 18.9 ) — Rate effect from pass-through entity — — ( 11.1 ) Taxable (loss) gain on subsidiary liquidation ( 0.7 ) 2.7 — Equity-based compensation 0.1 1.3 ( 0.8 ) Research and development credits ( 0.4 ) ( 0.1 ) 0.9 Uncertain tax positions — — 2.5 Valuation allowance 0.1 ( 1.5 ) — Other 0.7 0.5 ( 0.3 ) Effective tax rate 11.6 % 3.5 % 11.1 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss and tax credit carryforwards. Significant items comprising the net deferred tax assets were as follows as of the periods presented below (in thousands): December 31, 2021 December 31, 2020 Deferred tax assets Investment in Topco LLC $ 675,855 $ 360,861 Deductions to be received for Tax Receivable Agreement payments 154,093 81,123 Other 1,249 6,110 Total deferred tax assets 831,197 448,094 Valuation allowance ( 23,080 ) ( 13,663 ) Total deferred tax assets, net of valuation allowance 808,117 434,431 Deferred tax liabilities Intangible assets — ( 11,341 ) Total deferred tax liabilities — ( 11,341 ) Total net deferred tax asset $ 808,117 $ 423,090 As a result of the Organizational Transactions, IPO, and subsequent exchanges and financing, we acquired LLC Units and recognized a deferred tax asset for the difference between the financial reporting and tax basis of our investment in Topco LLC which included net deferred tax assets of $ 808.1 million primarily associated with: (i) $ 675.9 million related to temporary differences in the book basis as compared to the tax basis of our Company’s investment in Topco LLC and (ii) $ 154.1 million related to tax benefits from future deductions attributable to payments under the TRA and (iii) $ 23.1 million valuation allowance on these items. The valuation allowance increased by $ 9.4 million and $ 12.1 million during the years ended December 31, 2021 and 2020, respectively. The realizability of the Company’s deferred tax asset related to its investment in Topco LLC depends on the Company receiving allocations of tax deductions for its tax basis in the investment and on the Company generating sufficient taxable income to fully offset such deductions. We believe it is more likely than not that the Company will generate sufficient taxable income in the future to fully realize any deductions allocated to it from Topco LLC associated with the reversal of its tax basis as of December 31, 2021. However, a portion of the deferred tax asset may only be realizable through the sale or liquidation of the investment and our ability to generate sufficient capital gains. Therefore, the change in the valuation allowance during 137 Table of Contents December 31, 2021, is primarily due to the establishment of a $ 23.1 million valuation allowance to reflect the deferred tax asset that is more likely than not to not be realized. Net operating loss (“NOL”) and tax credit carryforwards as of December 31, 2021 were as follows (in millions): Amount Expiration Years Net operating losses, state (1) $ 6.9 Beginning in 2034 Tax credits, state 0.3 CA - Do not expire ____________________ (1) The carryforward rules for state net operating losses vary from state to state with some states not having an expiration date. As of December 31, 2021 and 2020, the Company had insignificant unrecognized tax benefits, all of which would affect the effective tax rate if recognized. The Company does not expect any significant increases or decreases to our unrecognized tax benefits in the next twelve months. The Company recognizes interest related to uncertain tax benefits as a component of income tax expense. The aggregate changes in the balance of the Company’s unrecognized tax benefits were as follows for the periods presented (in thousands): Year Ended December 31, 2021 2020 2019 Balance, beginning of year $ 220 $ 208 $ 136 Gross increases based on tax positions related to current year 232 62 5 Gross increases based on tax positions related to prior years — — 105 Gross decreases based on tax positions related to prior years ( 211 ) ( 50 ) ( 38 ) Balance, end of year $ 241 $ 220 $ 208 The Company files income tax returns in the U.S. federal jurisdiction and various states and is not under audit by taxing authorities in any of these jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations for years before 2017 except for utilization of NOL carryforwards. Payable to Related Parties Pursuant to the TRA Pursuant with our IPO, we entered into a TRA with MLSH 1 and MLSH 2. The TRA provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85 % of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of the Organizational Transactions, IPO, and subsequent exchanges. Based on our current projections of taxable income, and before deduction of any specially allocated depreciation and amortization, we anticipate having enough taxable income to utilize most of these tax benefits. Accordingly, in November 2020 a liability of $ 389.5 million payable to the MLSH 1 and MLSH 2 under the TRAs was established. This liability was increased by $ 137.7 million and $ 227.4 million as a result of the April 2021 Secondary Offering and September 2021 Secondary Offering, respectively. The liability also increased by $ 1.0 million as a result of the Company’s cash contribution to Topco LLC in December 2021. During the year ended December 31, 2021, the Company recognized a gain of $ 6.1 million on TRA liability adjustment reflecting a change in the tax benefit obligation attributable to a change in the expected tax benefit. The remeasurement was primarily due to changes in our estimated state apportionment and the corresponding reduction of our estimated state tax rate. The liability, represents approximately 85 % of the calculated tax savings we anticipate being able to utilize in future years. The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRA. Additionally, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA. In this scenario, the reduction of the liability under the TRA would result in a benefit to our consolidated statement of operations. We made payments of $ 1.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2021. No payments were made during the year ended December 31, 2020. As of December 31, 2021 and 2020, our liabilities under the TRA were $ 748.3 million and $ 389.5 million, respectively. Tax Distributions to Topco LLC’s Owners Topco LLC is subject to an operating agreement put in place at the date of the Organizational Transactions. The agreement has numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This 138 Table of Contents agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Topco LLC. These tax distributions are computed based on an assumed income tax rate equal to the sum of (i) the maximum combined marginal federal and state income tax rate applicable to an individual and (ii) the net investment income tax. The assumed income tax rate ranges from 46.7 % to 54.1 % in certain cases where the qualified business income deduction is unavailable. In addition, under the tax rules, Topco LLC is required to allocate taxable income disproportionately to its unit holders. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of taxable income on a per unit basis, but are made pro rata based on ownership, Topco LLC is required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes Topco LLC would have otherwise paid if it were taxed on its taxable income at the assumed income tax rate. Topco LLC is subject to entity level taxation in certain states and certain of its subsidiaries are subject to entity level U.S. and foreign income taxes. As a result, the accompanying consolidated statements of operations include income tax expense related to those states and to U.S. and foreign jurisdictions where Topco LLC or any of our subsidiaries are subject to income tax. During the year ended December 31, 2021, Topco LLC paid tax distributions of $ 283.2 million to its owners, including $ 129.7 to us. During the year ended December 31, 2020, Topco LLC paid tax distributions of $ 13.1 million to its owners, including $ 4.9 million to us. No tax distributions were made by Topco LLC for the year ended December 31, 2019. As of December 31, 2021, no amounts for tax distributions have been accrued as such payments were made during 2021. 13. Employee Benefit Plans The Company sponsors a 401(k) plan (the “Maravai LifeSciences 401(k) Plan”) pursuant to which eligible employees can elect to contribute to the 401(k) Plan, subject to certain limitations, on a pretax basis. The Company provides for a cash match of up to 50 % of employee contributions up to the first 6 % of salary. Total contributions by the Company to the Maravai LifeSciences 401(k) Plan was approximately $ 1.3 million, $ 1.0 million, and $ 1.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. 14. Related Party Transactions MLSH 1’s majority owner is GTCR, LLC (“GTCR”). The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are executives or MLSH 1. The Company’s CEO, CFO and General Counsel are executives of MLSH 2. Advisory and Services Agreement with GTCR Prior to the IPO, GTCR, provided subsidiaries of the Company with financial and management consulting services through an advisory services agreement. This advisory services agreement also provided that the Company pay placement fees to GTCR of 1.0 % of the gross amount of any debt or equity financings as well as quarterly management fees. The advisory services agreement was terminated in connection with the IPO. The Company also reimburses GTCR for out-of-pocket expenses incurred while providing the above professional services. During the year ended December 31, 2020, the Company entered into the Credit Agreement (see Note 7) and paid GTCR a $ 3.7 million placement fee. No such placement fees were incurred during the years ended December 31, 2021 and 2019. For the year ended December 31, 2020, the Company incurred approximately $ 4.2 million in management fees to GTCR. All other amounts paid or payable under these agreements to GTCR were insignificant for all periods presented. Director Nomination Agreement with GTCR In connection with the IPO, the Company entered into a Director Nomination Agreement with GTCR. The Director Nomination Agreement provides GTCR the right to nominate to the Board a number of designees equal to at least: (i) 100 % of the total number of directors comprising the Board, so long as GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 40 % of the total amount of shares of Class A common stock and Class B common stock it owns, (ii) 40 % of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 30 % but less than 40 % of the total amount of shares of Class A common stock and Class B common stock it owns, (iii) 30 % of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 20 % but less than 30 % of the total amount of shares of Class A common stock and Class B common stock it owns, (iv) 20 % of the total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 10 % but less than 20 % of the total amount of shares of Class A common stock and Class B common stock it owns and (v) one director, in the event that GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least 5 % of the total amount of shares of Class A common stock and Class B common stock it owns. In addition, GTCR shall be entitled to 139 Table of Contents designate the replacement for any of its Board designees whose Board service terminates prior to the end of the director’s term, regardless of GTCR’s beneficial ownership at that time. GTCR shall also have the right to have its designees participate on committees of the Company/s Board proportionate to its voting power, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement also prohibits the Company from increasing or decreasing the size of our Board without the prior written consent of GTCR. This agreement will terminate at such time as GTCR beneficially owns less than 5 % of the shares of Class A and Class B common stock it beneficially owned at the date of the IPO. Registration Rights Agreement with MLSH 1 and MLSH 2 In connection with the IPO, Company entered into a registration rights agreement with MLSH 1 and MLSH 2. MLSH 1 and MLSH 2 are entitled to request that the Company register their shares of capital stock on a long-form or short-form registration statement on one or more occasions in the future, which registrations may be “shelf registrations.” MLSH 1 and MLSH 2 are also entitled to participate in certain of our registered offerings, subject to the restrictions in the registration rights agreement. During 2021, the Company registered shares of Class A shares held by MLSH 1 which were subsequently sold in an offering as selling shareholders as well as facilitated secondary offering transactions related to current year exchanges (see Note 8). Exchange Agreement with MLSH 1 In connection with the IPO, the Company entered into an exchange agreement with MLSH 1, whereby MLSH 1 may surrender their LLC Units to Topco LLC or, at our election, exchange its LLC Units for shares of our 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. MLSH 1 is also required to deliver to us an equivalent number of shares of Class B common stock to effectuate an exchange. MLSH 1 executed two exchanges under this agreement during 2021 (see Note 8). Payable to Related Parties Pursuant to a Tax Receivable Agreement Concurrent with the completion of the IPO, the Company entered into a TRA with MLSH 1 and MLSH 2. During the year the Company made TRA payments to both MLSH 1 and MLSH 2 (see Note 12). Cash Contribution, Exchange and Forfeiture Agreement with MLSH 1 In December 2021, the Company entered into a Cash Contribution, Exchange and Forfeiture Agreement (the “Contribution Agreement”) with MLSH 1 (see Note 8). Topco LLC Operating Agreement MLSH 1 is party to the Topco LLC operating agreement put in place at the date of the Organizational Transactions. This agreement includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Topco LLC. During the year ended December 31, 2021 and 2020, the Company made distributions of $ 153.5 million and $ 8.2 million for tax liabilities to MLSH 1 under this agreement. Other Distributions In October 2020, the Company made a $ 88.6 million distribution to MLSH 1. Contract Development and Manufacturing Agreement with Curia Global GTCR has significant influence over Curia Global. During the year-ended December 31, 2021, the Company paid $ 7.4 million to Curia Global (“Curia”), an entity for which GTCR exercises significant influence, for contract manufacturing and development services. Such amounts were included in research and development expense on the consolidated statement of operations for the year-ended December 31, 2021. Maravai LifeSciences Foundation In December 2021, the Company established a new charitable foundation to promote causes tied to Maravai’s mission. During the year ended December 31, 2021, the Company contributed $ 2.0 million to the Foundation. The Company does not control the Foundation’s activities, and accordingly, does not consolidate the Foundation. 15. Segments Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and 140 Table of Contents in assessing performance. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. Segment results are presented in the same manner as we present our operations internally to make operating decisions and assess performance. The accounting policies for the segments are the same as those described in Significant Accounting Policies (see Note 1). The Company’s financial performance is reported in three segments. A description of each segment follows: • Nucleic Acid Production : focuses on the manufacturing and sale of highly modified nucleic acids products to support the needs of customers’ research, therapeutic and vaccine programs. This segment also provides research products for labeling and detecting proteins in cells and tissue samples. • Biologics Safety Testing : focuses on manufacturing and selling biologics safety and impurity tests and assay development services that are utilized by our customers in their biologic drug manufacturing spectrum. • Protein Detection : focused on manufacturing and selling labeling and visual detection reagents to scientific research customers for their tissue-based protein detection and characterization needs. The Company completed the divestiture of its Protein Detection business in September 2021 (see Note 2). The Company has determined that adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) is the profit or loss measure that the CODM uses to make resource allocation decisions and evaluate segment performance. Adjusted EBITDA assists management in comparing the segment performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the core operations and, therefore, are not included in measuring segment performance. The Company defines Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, certain non-cash items, and other adjustments that we do not consider in our evaluation of ongoing operating performance from period to period. Corporate costs are managed on a standalone basis and not allocated to segments. The following tables include financial information relating to the operating segments for the periods presented (in thousands): Year Ended December 31, 2021 Nucleic Acid Production Biologics Safety Testing Protein Detection Corporate Eliminations Total Revenue $ 712,520 $ 68,417 $ 18,959 $ — $ ( 656 ) $ 799,240 Adjusted EBITDA $ 565,254 $ 54,440 $ 6,391 $ ( 43,270 ) $ 5 $ 582,820 Year Ended December 31, 2020 Nucleic Acid Production Biologics Safety Testing Protein Detection Corporate Eliminations Total Revenue $ 207,597 $ 54,897 $ 22,881 $ — $ ( 1,277 ) $ 284,098 Adjusted EBITDA $ 133,822 $ 44,516 $ 9,225 $ ( 18,189 ) $ ( 209 ) $ 169,165 Year Ended December 31, 2019 Nucleic Acid Production Biologics Safety Testing Protein Detection Corporate Eliminations Total Revenue $ 72,602 $ 44,416 $ 26,122 $ — $ — $ 143,140 Adjusted EBITDA $ 22,229 $ 36,371 $ 14,603 $ ( 11,189 ) $ — $ 62,014 During the years ended December 31, 2021 and 2020, intersegment revenue was $ 0.7 million and $ 1.3 million, respectively. The intersegment sales and the related gross margin on inventory recorded at the end of the period are eliminated for consolidation purposes in the Eliminations column. Internal selling prices for intersegment sales are consistent with the segment’s normal retail price offered to external parties. There was no commission expense recognized for intersegment sales for the years ended December 31, 2021and 2020. Intersegment revenue represents intersegment revenue between the Nucleic Acid Production and Protein Detection segments. There was no inter-segment activity for the year ended December 31, 2019. The Company does not allocate assets to its reportable segments as they are not included in the review performed by the CODM for purposes of assessing segment performance and allocating resources. 141 Table of Contents A reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, is set forth below for the periods presented (in thousands): Year Ended December 31, 2021 2020 2019 Net income (loss) $ 469,250 $ 78,816 $ ( 5,201 ) Add: Amortization 18,339 20,320 20,274 Depreciation 6,413 5,593 3,810 Interest expense 30,260 30,740 29,959 Income tax expense (benefit) 61,515 2,880 ( 652 ) EBITDA 585,777 138,349 48,190 Acquisition contingent consideration — — 322 Acquisition integration costs 44 3,857 6,170 Amortization of purchase accounting inventory step-up — — 1,856 Acquired in-process research and development costs — 2,881 — Equity-based compensation 10,458 24,629 1,679 GTCR management fees — 680 523 Gain on sale of business ( 11,249 ) — — Gain on sale and leaseback transaction — ( 19,002 ) — Merger and acquisition related expenses 1,508 395 3,274 Financing costs 2,383 9,784 — Tax receivable agreement liability adjustment ( 6,101 ) — — Loss on extinguishment of debt — 7,592 — Adjusted EBITDA $ 582,820 $ 169,165 $ 62,014 16. Subsequent Events Amendment No. 2 to the Credit Agreement In January 2022, certain subsidiaries of the Company entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement, dated as of October 19, 2020, among Intermediate, Cygnus, and TriLink, as the borrowers, Topco LLC, as holdings, the lenders from time-to-time party thereto and Morgan Stanley Senior Funding, Inc., as administrative and collateral agent (as amended, supplemented or otherwise modified, the “Credit Agreement”). The Amendment replaces the LIBOR based interest rate with a Term Secured Overnight Financing Rate (“SOFR”) based rate. The Amendment also reduces the interest rate margins applicable to the term and revolving facilities under the Credit Agreement. The previous interest rate margin on the facilities was, with respect to each LIBOR-based loan, 3.75 % to 4.25 % and, with respect to each base rate-based loan, 2.75 % to 3.25 % (depending, in each case, on consolidated first lien leverage). Following the Amendment, the interest rate margin on the facilities is 3.00 %, with respect to each Term SOFR-based loan, and 2.00 %, with respect to each base rate-based loan. Further, the Amendment reduces the base rate floor for the term loans from 2.00 % to 1.50 %, sets the floor for Term SOFR-based term loans at 0.50 % and sets the floor for Term SOFR-based revolving loans at 0.00 %. No other significant terms under the Credit Agreement were changed in connection with the Amendment. Acquisition of MyChem, LLC In January 2022, the Company completed the acquisition of MyChem, LLC (“MyChem”), a privately-held San Diego, California-based provider of ultra-pure nucleotides to customers in the diagnostics, pharma, genomics and research markets. The consideration to acquire MyChem comprised of gross purchase price $ 250.0 million, subject to purchase price adjustments, and potential earn out payments payable in cash of up to $ 60.0 million. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 142 Table of Contents