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 ) 85 Consolidated Balance Sheets 88 Consolidated Statements of Operations 89 Consolidated Statements of Comprehensive (Loss) Income 90 Consolidated Statements of Changes in Stockholders’ Equity 91 Consolidated Statements of Cash Flows 93 Notes to Consolidated Financial Statements 95 84 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, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 February 29, 2024 expressed an unqualified opinion thereon. 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 Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill Impairment Assessment Description of the Matter At December 31, 2023, the Company has recorded goodwill of $326.0 million. As discussed in Note 1 to the consolidated financial statements, goodwill is tested at the reporting unit level for impairment at least annually or more frequently if indicators of potential impairment exist. Under the goodwill impairment assessment, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the amount of the excess carrying amount of the reporting unit over its fair value. During the current year the Company executed a quantitative assessment over the goodwill balance assigned to each reporting unit. Auditing the Company’s recoverability test for goodwill impairment assessment was challenging due to subjective estimates and assumptions used by the Company to determine fair value of the reporting units. The estimates were subject to higher uncertainty due to management judgements over significant assumptions, including revenue growth rates and valuation related discount rates. 85 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill impairment process, including controls over management’s review of its projected financial information utilized in the valuation of its reporting units. Our audit procedures over the Company’s goodwill impairment assessment included, among others, assessing the reasonableness of significant assumptions, specifically revenue growth rates, discount rates and assessing the completeness and accuracy of the underlying data used by the Company in its analyses. We evaluated whether significant assumptions were reasonable by comparing them to industry data and current market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit. We performed various sensitivity analyses around the assumptions to understand the impact on the fair value calculation. We also involved our valuation specialists to assist us in evaluating the reasonableness of the Company’s valuation methodologies and certain significant assumptions used by the Company. Payable to related parties pursuant to a Tax Receivable Agreement Description of the Matter As discussed in Notes 1 and 14 of the December 31, 2023 consolidated financial statements, the Company has a Tax Receivable Agreement (TRA) with certain related party investors (TRA investors). The TRA liability represents a contractual commitment to distribute 85% of any tax benefits, realized or deemed to be realized by the Company to the TRA investors. As of December 31, 2023, the Company has recorded a TRA liability of $7.1 million after concluding it was probable that, based on estimates of future taxable income, the Company will owe a payment to the TRA investors. As of December 31, 2023, the Company has not recognized the remaining $665.3 million liability under the TRA after concluding it was not probable that the Company will be able to realize benefits based on estimates of future taxable income. 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 assumptions around the timing and amount of taxable income in the future which impacts the recognition of the TRA liability. These factors involved subjective auditor judgment and audit effort in performing procedures and evaluating the appropriateness of the calculation of the tax basis. 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 We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the computation and recognition of the Company’s TRA liability, including testing management's controls over the completeness and accuracy of the underlying data used in the valuation and recognition, and controls over management's review of the assumptions discussed above. Our audit procedures included, among others, testing the information used in the calculation and recognition of the TRA liability including projections of future taxable income and the involvement of professionals with specialized skills and knowledge to assist in developing an independent calculation of the tax basis, comparing the independent calculation to management’s calculations to evaluate the reasonableness of the tax basis, assessing management’s application of the tax laws, and verifying the calculation of the TRA liability was in accordance with the terms set out in the TRA. Revenue with distributors Description of the Matter During the year ended December 31, 2023, the Company’s revenues were $288.9 million, of which a portion relates to products sold to distributors. Its distributor customers resell the products to end users. Revenues from product sales are recognized when control is transferred to the Company’s customer. 86 Table of Contents Auditing the Company’s product sales to distributors was challenging, specifically related to the effort required to audit the respective sales activity to assess whether incentives were provided that were not properly recognized. This involved judgmentally assessing factors including distributor customer ordering patterns, contractual terms, incentives offered and after shipment credits or free goods as described in Note 1 to the consolidated financial statements. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s process to monitor appropriate terms and conditions for these transactions. This includes testing relevant controls over the information systems that are important to the initiation, recording and billing of revenue transactions as well as controls over the completeness and accuracy of the data used. Our audit procedures over the Company’s product sales to distributor customers included, among others, performing analytical procedures to detect and investigate anomalies within the data. We also examined the terms and conditions of selected new or amended contracts with distributor customers and its impact on the Company’s recognition model. We also confirmed the terms and conditions of contracts directly with a selection of distributor customers, including whether there are side agreements and terms not formally included in the contract that may impact the Company’s revenue recognition. In addition, we obtained written representations from members of the commercial organization regarding the completeness of the terms and conditions reported to the legal and accounting departments. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2016. San Mateo, California February 29, 2024 87 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 574,962 $ 632,138 Accounts receivable, net 54,605 138,624 Inventory 51,397 43,152 Prepaid expenses and other current assets 17,830 25,798 Government funding receivable 1,118 8,190 Total current assets 699,912 847,902 Property and equipment, net 162,900 52,694 Goodwill 326,029 283,668 Intangible assets, net 220,987 216,663 Deferred tax assets — 765,799 Other assets 77,622 115,589 Total assets $ 1,487,450 $ 2,282,315 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 10,729 $ 5,991 Accrued expenses and other current liabilities 60,237 53,371 Deferred revenue 3,360 3,088 Current portion of payable to related parties pursuant to the Tax Receivable Agreement 7,069 42,254 Current portion of long-term debt 5,440 5,440 Current portion of finance lease liabilities 633 — Total current liabilities 87,468 110,144 Long-term debt, less current portion 518,707 521,997 Finance lease liabilities, less current portion 31,897 — Payable to related parties pursuant to the Tax Receivable Agreement, less current portion — 675,956 Other long-term liabilities 59,494 68,975 Total liabilities 697,566 1,377,072 Commitments and contingencies (Note 9) Stockholders’ equity: Class A common stock, $ 0.01 par value - 500,000 shares authorized; 132,228 and 131,692 shares issued and outstanding as of December 31, 2023 and 2022, respectively 1,322 1,317 Class B common stock, $ 0.01 par value - 300,000 shares authorized; 119,094 and 123,669 shares issued and outstanding as of December 31, 2023 and 2022 1,191 1,237 Additional paid-in capital 128,503 137,898 Retained earnings 285,737 404,766 Total stockholders’ equity attributable to Maravai LifeSciences Holdings, Inc. 416,753 545,218 Non-controlling interest 373,131 360,025 Total stockholders’ equity 789,884 905,243 Total liabilities and stockholders’ equity $ 1,487,450 $ 2,282,315 The accompanying notes are an integral part of these consolidated financial statements. 88 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended December 31, 2023 2022 2021 Revenue $ 288,945 $ 883,001 $ 799,240 Operating expenses: Cost of revenue 148,743 168,957 140,561 Selling, general and administrative 151,390 129,259 100,064 Research and development 17,280 18,369 15,219 Change in estimated fair value of contingent consideration ( 3,286 ) ( 7,800 ) — Restructuring 6,466 — — Gain on sale of business — — ( 11,249 ) Total operating expenses 320,593 308,785 244,595 (Loss) income from operations ( 31,648 ) 574,216 554,645 Other income (expense): Interest expense ( 45,892 ) ( 20,414 ) ( 30,260 ) Interest income 27,727 2,338 — Loss on extinguishment of debt — ( 208 ) — Change in payable to related parties pursuant to the Tax Receivable Agreement 668,886 ( 4,102 ) 6,101 Other (expense) income ( 1,337 ) ( 358 ) 279 Income before income taxes 617,736 551,472 530,765 Income tax expense 756,111 60,809 61,515 Net (loss) income ( 138,375 ) 490,663 469,250 Net (loss) income attributable to non-controlling interests ( 19,346 ) 270,458 287,213 Net (loss) income attributable to Maravai LifeSciences Holdings, Inc. $ ( 119,029 ) $ 220,205 $ 182,037 Net (loss) income per Class A common share attributable to Maravai LifeSciences Holdings, Inc.: Basic $ ( 0.90 ) $ 1.67 $ 1.59 Diluted $ ( 0.90 ) $ 1.67 $ 1.56 Weighted average number of Class A common shares outstanding: Basic 131,919 131,545 114,791 Diluted 131,919 255,323 257,803 The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands) Year Ended December 31, 2023 2022 2021 Net (loss) income $ ( 138,375 ) $ 490,663 $ 469,250 Other comprehensive income: Foreign currency translation adjustments — — 55 Total other comprehensive (loss) income ( 138,375 ) 490,663 469,305 Comprehensive (loss) income attributable to non-controlling interests ( 19,346 ) 270,458 287,224 Total comprehensive (loss) income attributable to Maravai LifeSciences Holdings, Inc. $ ( 119,029 ) $ 220,205 $ 182,081 The accompanying notes are an integral part of the consolidated financial statements. 90 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands) Class A Common Stock Class B Common Stock Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Stockholders’ Equity 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 — Equity-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 Issuance of Class A common stock under employee equity plans, net of shares withheld for employee taxes 204 2 — — 2,303 — — — 2,305 91 Table of Contents Class A Common Stock Class B Common Stock Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Stockholders’ Equity Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC — — — — ( 864 ) — — 864 — Equity-based compensation — — — — 9,623 — — 9,047 18,670 Distribution for tax liabilities to non-controlling interest holder — — — — 141 — — ( 150,206 ) ( 150,065 ) Impact of change to deferred tax asset associated with cash contribution to Topco LLC — — — — ( 1,691 ) — — — ( 1,691 ) Net income — — — — — 220,205 — 270,458 490,663 December 31, 2022 131,692 1,317 123,669 1,237 137,898 404,766 — 360,025 905,243 Effects of Structuring Transactions — — ( 4,575 ) ( 46 ) ( 25,404 ) — — 26,392 942 Issuance of Class A common stock under employee equity plans, net of shares withheld for employee taxes 536 5 — — 116 — — — 121 Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC — — — — 754 — — ( 754 ) — Equity-based compensation — — — — 18,167 — — 16,421 34,588 Distribution for tax liabilities to non-controlling interest holder — — — — — — — ( 9,607 ) ( 9,607 ) Impact of change to deferred tax asset associated with equity-based compensation — — — — ( 3,028 ) — — — ( 3,028 ) Net loss — — — — — ( 119,029 ) — ( 19,346 ) ( 138,375 ) December 31, 2023 132,228 $ 1,322 119,094 $ 1,191 $ 128,503 $ 285,737 $ — $ 373,131 $ 789,884 The accompanying notes are an integral part of the consolidated financial statements. 92 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 2021 Operating activities: Net (loss) income $ ( 138,375 ) $ 490,663 $ 469,250 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 12,898 7,566 6,413 Amortization of intangible assets 27,356 24,269 18,339 Amortization of operating lease right-of-use assets 8,527 6,268 8,792 Amortization of deferred financing costs 2,929 2,788 2,676 Equity-based compensation expense 34,588 18,670 10,458 Loss on extinguishment of debt — 208 — Deferred income taxes 754,942 42,318 46,904 Change in estimated fair value of contingent consideration ( 3,286 ) ( 7,800 ) — Gain on sale of business — — ( 11,249 ) Revaluation of liabilities under the Tax Receivable Agreement ( 668,886 ) 4,102 ( 6,101 ) Other ( 2,313 ) ( 7,993 ) ( 281 ) Changes in operating assets and liabilities: Accounts receivable 84,395 ( 22,272 ) ( 70,391 ) Inventory 649 9,459 ( 21,574 ) Prepaid expenses and other assets 8,136 ( 52,873 ) ( 9,513 ) Government funding receivable — 16,973 — Accounts payable 5,284 ( 1,578 ) 676 Accrued expenses and other current liabilities 15,108 8,503 ( 3,457 ) Deferred revenue 250 ( 7,123 ) ( 67,851 ) Other long-term liabilities ( 15,978 ) 3,829 ( 4,521 ) Net cash provided by operating activities 126,224 535,977 368,570 Investing activities: Cash paid for acquisition, net of cash acquired ( 69,622 ) ( 238,969 ) — Purchases of property and equipment ( 65,553 ) ( 17,090 ) ( 14,850 ) Proceeds from government assistance allocated to property and equipment 12,865 1,105 — Prepaid lease payments on finance lease yet to commence — ( 13,278 ) — Proceeds from sale of building — — 548 Proceeds from sale of business, net of cash divested — 620 119,957 Net cash (used in) provided by investing activities ( 122,310 ) ( 267,612 ) 105,655 Financing activities: Distributions to non-controlling interests holders ( 9,607 ) ( 150,206 ) ( 153,451 ) Proceeds from borrowings of long-term debt, net of discount — 8,455 — Principal repayments of long-term debt ( 5,440 ) ( 13,895 ) ( 6,000 ) Payments of finance lease liabilities ( 332 ) — — Proceeds from derivative instruments 6,168 — — Payment of acquisition consideration holdback ( 9,706 ) — — Payments to MLSH 1 pursuant to the Tax Receivable Agreement ( 35,661 ) ( 29,108 ) ( 1,115 ) Payments to MLSH 2 pursuant to the Tax Receivable Agreement ( 6,492 ) ( 5,103 ) ( 192 ) Shares withheld for employee taxes, net of proceeds from issuance of Class A common stock under employee equity plans ( 20 ) 2,358 1,709 93 Table of Contents Year Ended December 31, 2023 2022 2021 Net cash used in financing activities ( 61,090 ) ( 187,499 ) ( 159,049 ) Effects of exchange rate changes on cash — — ( 88 ) Net (decrease) increase in cash and cash equivalents ( 57,176 ) 80,866 315,088 Cash and cash equivalents, beginning of period 632,138 551,272 236,184 Cash and cash equivalents, end of period $ 574,962 $ 632,138 $ 551,272 Supplemental cash flow information: Cash paid for interest $ 44,256 $ 20,198 $ 27,234 Cash (refunded) paid for income taxes, net $ ( 2,987 ) $ 23,032 $ 22,473 Supplemental disclosures of non-cash activities: Property and equipment included in accounts payable and accrued expenses $ 2,011 $ 1,701 $ 2,149 Accrued receivable for capital expenditures to be reimbursed under a government contract $ 1,118 $ — $ — Right-of-use assets obtained in exchange for new finance lease liabilities $ 32,862 $ — $ — Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,931 $ 17,513 $ — Fair value of contingent consideration liability recorded in connection with acquisition of a business $ 5,289 $ 7,800 $ — Accrued consideration payable for MyChem acquisition $ — $ 10,000 $ — Recognition of deferred tax assets as a result of exchanges of LLC Units and cash contribution $ — $ — $ 423,361 Recognition of liabilities under the Tax Receivable Agreement $ — $ — $ 366,179 The accompanying notes are an integral part of the consolidated financial statements. 94 Table of Contents MARAVAI LIFESCIENCES HOLDINGS, INC. 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”, and “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, and custom enzyme development and manufacturing. 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”). Immediately prior to the IPO, we effected a series of organizational transactions (the “Organizational Transactions”), which, together with the IPO, were completed in November 2020, that resulted in the Company operating, controlling all of the business affairs and becoming the ultimate parent company of Maravai Topco Holdings, LLC (“Topco LLC”) and its consolidated subsidiaries. Maravai Life Sciences Holdings, LLC (“MLSH 1”), which is controlled by investment entities affiliated with GTCR, is the only other member of Topco LLC. The Company is the sole managing member of Topco LLC, which operates and controls TriLink Biotechnologies, LLC (“TriLink”), Glen Research, LLC, MockV Solutions, LLC, Cygnus Technologies, LLC and Alphazyme, LLC (“Alphazyme”) and their respective subsidiaries. Prior to the Company’s divestiture of its Protein Detection business in September 2021, Topco LLC also operated and controlled Vector Laboratories, Inc. and its subsidiaries (“Vector”). Basis of Presentation The Company operates and controls all of the business and affairs of Topco LLC, and, through Topco LLC and its subsidiaries, conducts its business. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Topco LLC and also have a substantial financial interest in Topco LLC, we consolidate the financial results of Topco LLC, and a portion of our net (loss) income is allocated to the non-controlling interests in Topco LLC held by MLSH 1. 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 (i) the power to direct the economically significant activities of the entity and (ii) 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. 95 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 (as defined in Note 14), the realizability of our net deferred tax assets, and valuation of goodwill and intangible assets acquired in business combinations. Actual results could differ materially from those estimates. 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 and biologics safety testing. Prior to September 2021, the Company also generated revenue from its Protein Detection business. Products are sold primarily through a direct sales force and through distributors in certain international markets where the Company does not have a direct commercial presence. Revenue is recognized when control of promised goods or services is transferred to a customer or distributor in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Distributors are the principal in all sales transactions with its customers. 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. Revenue from sales to customers through distributors are recognized consistent with the policies and practices for direct sales to customers, as described above. 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, specialized oligonucleotides, and enzymes. 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 or distributor. Revenue for nucleic acid catalog products is recognized at a single point in time, generally upon shipment to the customer or distributor. 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 host cell protein, bioprocess impurity detection, viral clearance prediction kits and associated products. We also enter into contracts that include custom 96 Table of Contents antibody development, assay development, antibody affinity extraction and mass spectrometry services. These products and services enable the detection of impurities that occur in the manufacturing of biologic drugs and other therapeutics including cell and gene therapies. The Company recognizes revenue from the sale of kits and products 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, mass spectrometry and other analytical services, which generally occur over a short period of time, consist of a single performance obligation to perform the service and provide a summary report to the customer. Revenue is recognized upon delivery of the report to the customer. The Company elected the practical expedient to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less. The Company had no material unfulfilled performance obligations for contracts with an original length greater than one year for any period presented. The Company accepts returns only if the products do not meet customer specifications and historically, the Company’s volume of product returns has not been significant. Further, no warranties are provided for promised goods and services other than assurance type warranties. Revenue for an individual contract is recognized at the related transaction price, which is the amount the Company expects to be entitled to in exchange for transferring the products and/or services. The transaction price for product sales is calculated at the contracted product selling price. The transaction price for a contract with multiple performance obligations is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined based on the prices charged to customers, which are directly observable. Standalone selling price of services are mostly based on time and materials. Generally, payments from customers are due when goods and services are transferred. As most contracts contain a single performance obligation, the transaction price is representative of the standalone selling price charged to customers. Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods. Variable consideration has not been material to our consolidated financial statements. Sales taxes Sales taxes collected by the Company are not included in the transaction price as revenue as they are ultimately remitted to a governmental authority. Shipping and handling costs The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Accordingly, revenue for shipping and handling is recognized at the same time that the related product revenue is recognized. Contract costs The Company recognizes the incremental costs of obtaining contracts as an expense when incurred when the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing and general and administrative expenses. The costs to fulfill the contracts are determined to be immaterial and are recognized as an expense when incurred. 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. There were no contract asset balances as of December 31, 2023 or 2022. 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 $ 5.5 million and $ 4.8 million as of December 31, 2023 and 2022, respectively. Contract liabilities are expected to be recognized into revenue within the next twelve months. 97 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, 2023 Nucleic Acid Production Biologics Safety Testing Total North America $ 114,459 $ 26,596 $ 141,055 Europe, the Middle East and Africa 34,390 15,532 49,922 Asia Pacific 75,716 21,725 97,441 Latin and Central America 204 323 527 Total revenue $ 224,769 $ 64,176 $ 288,945 Year Ended December 31, 2022 Nucleic Acid Production Biologics Safety Testing Total North America $ 312,119 $ 27,354 $ 339,473 Europe, the Middle East and Africa 415,298 17,628 432,926 Asia Pacific 85,508 24,286 109,794 Latin and Central America 144 664 808 Total revenue $ 813,069 $ 69,932 $ 883,001 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 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 $ 3.5 million, $ 3.2 million and $ 3.6 million for the years ended December 31, 2023, 2022 and 2021, 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 $ 2.9 million, $ 2.5 million and $ 1.3 million during the years ended December 31, 2023, 2022 and 2021, respectively. Restructuring Costs Restructuring costs relate to a cost realignment plan implemented by the Company in November 2023 to optimize business operations and match them to current market conditions. Restructuring costs are comprised of severance and other employee-related costs, facility and other exit costs, professional fees and other restructuring costs. 98 Table of Contents Employee separation costs principally consist of one-time termination benefits and other post-employment benefits. One-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed over the future service period. Other post-employment benefits are expensed when the obligation is probable and the benefit amounts are estimable. Other costs associated with restructuring activities, including facility and other exist costs and professional fees, are expensed as they are incurred. 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 between two to 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. For performance stock units (“PSUs”) which are subject to service and market conditions, 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 regardless if the market condition is satisfied. If the grantee is terminated prior to meeting both conditions, any previously recognized expense is reversed. The Company estimates the fair value of PSUs using the Monte Carlo simulation model. The assumptions used in estimating the fair value of these awards, such as expected term, volatility and risk-free interest rate, represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. For PSUs which are subject to a performance condition, compensation expense is recognized on a straight-line basis over the requisite service period when the achievement of such performance condition is determined probable, and upon achieving such performance condition that was not previously considered as probable, records a cumulative catch-up adjustment to reflect the portion of the grantee’s requisite service that has been provided to date. If a performance condition is not determined probable or is not met, no compensation expense is recognized, and any previously recognized expense is reversed. The fair value of such PSUs is determined based on 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 wholly-owned subsidiary, Maravai LifeSciences International Holdings, Inc., is a taxpaying entity for U.S. and foreign jurisdictions and had limited activity subject to a transfer pricing arrangement during the year ended December 31, 2023. Topco LLC’s other subsidiaries are treated as pass-through 99 Table of Contents 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, and Maravai LifeSciences International Holdings, Inc., as well as our share of income or loss 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 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 statements 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 statements of operations. 100 Table of Contents Non-Controlling Interests Non-controlling interests re present the portion of profit or loss, net assets and comprehensive (loss) income of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities. In November 2020, following the completion of the Organizational Transactions, we became the sole managing member of Topco LLC. As of December 31, 2023 , we held approximately 52.6 % of the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately 47.4 % of the outstanding LLC Units of Topco LLC. Therefore, we report non-controlling interests based on the percentage of LLC Units of Topco LLC held by MLSH 1 on our consolidated balance sheet as of December 31, 2023. 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 (loss) income. 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. Distributions of $ 9.6 million, $ 150.2 million and $ 153.5 million for tax liabilities were made to MLSH 1 during the years ended December 31, 2023, 2022 and 2021, respectively. 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 Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The CODM 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, 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. As of December 31, 2023, the Company operated in two reportable segments: Nucleic Acid Production and Biologics Safety Testing. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The carrying value of these cash equivalents approximates fair value. Cash and cash equivalents consist of deposits held at financial institutions and money market funds. Accounts Receivable and Allowance for Credit Losses Accounts receivable primarily consist of amounts due from customers for product sales and services. 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. The allowance for credit losses was approximately $ 1.4 million and $ 2.2 million as of December 31, 2023 and 2022, respectively. Write-offs of accounts receivable were $ 0.7 million during the year ended December 31, 2023. Write-offs of accounts receivable were not significant during the years ended December 31, 2022 and 2021. There were $ 0.5 million of recoveries during the year ended December 31, 2023. Recoveries were not significant during the years ended December 31, 2022 and 2021. 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, which relate to the purchase or production of inventories, include materials, direct labor and manufacturing overhead. 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, and reduces the carrying value of inventory accordingly. The Company writes down inventory that has become 101 Table of Contents 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. Government Assistance The consideration awarded to the Company by the U.S. Department of Defense is outside the scope of the contracts with customers, income tax, funded research and development, and contribution guidance. This is because the awarding entity is not considered to be a customer, the receipt of the funding is not predicated on the Company’s income tax position, there are no refund provisions, and the entity is not receiving reciprocal value for their support provided to the Company. The Company’s elected policy is to recognize such assistance as a reduction to the carrying amount of the assets associated with the award when it is reasonably assured that the funding will be received as evidenced through the existence of an arrangement, amounts eligible for reimbursement are determinable and have been incurred or paid, the applicable conditions under the arrangement have been met, and collectability of amounts due is reasonably assured. 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 Estimated Useful Life Leasehold improvements 12 years Furniture, fixtures, equipment and software 3 - 7 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. The Company records certain government grants earned related to capital projects as a reduction to property and equipment. Goodwill Goodwill represents the excess of consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is reviewed for impairment. Goodwill is allocated to the Company’s reporting units, which are components of our business for which discrete cash flow information is available one level below its operating segment. 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 quantitative impairment test is performed using a one-step process. The process is to compare the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit is impaired and an impairment loss is recognized in an amount equal to that excess up to the total amount of goodwill included in the reporting unit. 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 102 Table of Contents 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 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 of 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 or intangible 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 Income (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. 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, 2023 and 2022, 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). Acquisitions The Company evaluates mergers, acquisitions and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or an acquisition of assets. The Company first identifies the acquiring entity by determining if the target is a legal entity or a group of assets or liabilities. If control over a legal entity is being evaluated, the Company also evaluates if the target is a variable interest or voting interest entity. For acquisitions of voting interest entities, the 103 Table of Contents Company applies a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an acquisition of assets. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. The Company accounts for its business combinations using the acquisition method of accounting which requires that the assets acquired and liabilities assumed of acquired businesses be recorded at their respective fair values at the date of acquisition. The purchase price, which includes the fair value of consideration transferred, is attributed to the fair value of the assets acquired and liabilities assumed. The purchase price may also include contingent consideration. The Company assesses whether such contingent consideration is subject to liability classification and fair value measurement or meets the definition of a derivative. Contingent consideration liabilities are recognized at their estimated fair value on the acquisition date. Contingent consideration arrangements that are determined to be compensatory in nature are recognized as post combination expense in our consolidated statements of operations ratably over the implied service period beginning in the period it becomes probable such amounts will become payable. The excess of the purchase price of the acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed twelve months from the acquisition date. The results of acquired businesses are included in the Company’s consolidated financial statements from the date of acquisition. Transaction costs directly attributable to acquired businesses are expensed as incurred. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies and assumptions about future net cash flows, discount rates and market participants. Each of these factors can significantly affect the value attributed to the identifiable intangible asset acquired in a business combination. Contingent Consideration Contingent consideration represents additional consideration that may be transferred to former owners of an acquired entity in the future if certain future events occur or conditions are met. Contingent consideration resulting from the acquisition of a business is recorded at fair value on the acquisition date. Such contingent consideration is re-measured to its estimated fair value at each reporting date with the change in fair value recognized within operating expenses in the Company’s consolidated statements of operations. Subsequent changes in the fair value of the contingent consideration are classified as an adjustment to cash flows from operating activities in the consolidated statements of cash flows because the change in fair value is an input in determining net (loss) income. Cash paid in settlement of contingent consideration liabilities are classified as cash flows from financing activities up to the acquisition date fair value with any excess classified as cash flows from operating activities. Changes in the fair value of contingent consideration liabilities associated with the acquisition of a business can result from updates to assumptions such as the expected timing or probability of achieving customer-related performance targets, specified sales milestones, changes in projected revenue or changes in discount rates. Judgment is used in determining those assumptions as of the acquisition date and for each subsequent reporting period. Therefore, any changes in the fair value will impact the Company’s results of operations in such reporting period, thereby resulting in potential variability in the Company’s operating results until such contingencies are resolved. Leases 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 finance lease or operating lease. Finance leases with a term greater than one year are included in property and equipment, current portion of finance lease liabilities, and finance lease liabilities, less current portion on our consolidated balance sheets. Operating 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 consolidated balance sheets. The Company has elected not to recognize on the consolidated 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. 104 Table of Contents 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. Variable lease payments, for items such as maintenance and utilities, are not included in the calculation of the ROU asset and the related lease liability and are recognized as this lease expense is incurred. 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. 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, 2023 2022 2021 2023 2022 Nacalai USA, Inc. 19.3 % * * 27.3 % 20.3 % CureVac N.V. * * 15.3 % 13.0 % 15.7 % BioNTech SE * 34.8 % 29.5 % * 12.0 % Pfizer Inc. * 26.4 % 23.3 % * 19.2 % ____________________ * Less than 10% For the year ended December 31, 2023, all of the revenue recorded for Nacalai USA, Inc. was generated by the Nucleic Acid Production Segment. For the year ended December 31, 2022, 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, 2021, substantially all of the revenue recorded for BioNTech SE, Pfizer Inc and CureVac N.V. was generated by our Nucleic Acid Production segment. Net (Loss) Income per Class A Common Share Attributable to Maravai LifeSciences Holdings, Inc. Basic net (loss) income per Class A common share attributable to Maravai LifeSciences Holdings, Inc. is computed by dividing net (loss) income attributable to us by the weighted average number of Class A common shares outstanding during the period. Diluted net income per Class A common share is calculated by giving effect to all potential weighted average dilutive stock options, restricted stock units, performance stock units and Topco LLC Units, that together with an equal number of shares of our Class B common stock are convertible into shares of our Class A common stock. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share 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 attributable to the Company is the same as basic net loss per Class A common share 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, 2023. Recently Adopted Accounting Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves segment disclosure requirements, primarily through enhanced disclosures about significant expenses. ASU 2023-07 requires disclosures to include significant segment expenses that are regularly provided to the CODM and included within each 105 Table of Contents reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources, and the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in this ASU address investor requests for more transparency about income tax information through improvements to tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures. 2. Acquisitions and Divestiture Acquisitions Alphazyme, LLC On January 18, 2023, the Company completed the acquisition of Alphazyme, LLC (“Alphazyme”), a privately-held original equipment manufacturer (“OEM”) and provider of custom, scalable, molecular biology enzymes to customers in the genetic analysis and nucleic acid synthesis markets. The acquisition will expand the Company’s internal enzyme product portfolio and increase the Company’s differentiated mRNA manufacturing services and product offerings. Alphazyme’s ability to manufacture custom enzymes allows the Company to expand into near adjacent markets and raise our enzyme vertical. The Company acquired Alphazyme for a total purchase consideration of $ 75.3 million, which is inclusive of net working capital adjustments. As a result of the acquisition, the Company owns all the outstanding equity interest in Alphazyme. The total cash consideration was paid using existing cash on hand. The transaction was accounted for as an acquisition of a business as Alphazyme consisted of inputs and processes applied to those inputs that had the ability to contribute to the creation of outputs. For the year ended December 31, 2023, the Company incurred $ 4.1 million in transaction costs associated with the acquisition of Alphazyme, which were recorded within selling, general and administrative expenses in the consolidated statements of operations. The acquisition date fair value of consideration transferred to acquire Alphazyme consisted of the following (in thousands): Cash paid (1) $ 70,037 Fair value of contingent consideration 5,289 Total consideration transferred $ 75,326 ____________________ (1) Represents cash consideration paid at closing of $ 70.1 million, net of a purchase price adjustment received in June 2023 of $ 0.1 million. Pursuant to the Securities Purchase Agreement (the “Alphazyme SPA”) between the Company and sellers of Alphazyme, additional payments to the sellers of Alphazyme are dependent upon meeting or exceeding defined revenue targets during fiscal years 2023 through 2025 (the “Alphazyme Performance Payments”). The Alphazyme SPA provides for a total maximum Alphazyme Performance Payments of $ 75.0 million. The Alphazyme Performance Payments were recorded as contingent consideration and was included as part of the purchase consideration. The Company estimated the fair value of the Alphazyme Performance Payments contingent consideration based on a Monte-Carlo simulation model which utilized an income approach. The estimated fair value was based on Alphazyme revenue projections, expected payout term, volatility and risk adjusted discount rates which are Level 3 inputs (see Note 5). The first performance period applicable to the Alphazyme Performance Payments ended on December 31, 2023, and it was determined that the defined revenue target was not achieved. Consequently, no payment was made to the sellers of Alphazyme. 106 Table of Contents The Alphazyme SPA also provides that the Company will pay certain employees of Alphazyme an additional amount totaling $ 9.3 million (the “Alphazyme Retention Payments”) as of various dates but primarily through December 31, 2025 as long as these individuals continue to be employed by the Company. The Company considers the payment of the Alphazyme Retention Payments as probable and is recognizing compensation expense related to these payments in the post-acquisition period ratably over the service period of approximately three years . For the year ended December 31, 2023, the Company recorded $ 2.2 million of compensation expense related to the Alphazyme Retention Payments within selling, general and administrative expenses in the consolidated statements of operations. Compensation expense related to the Alphazyme Retention Payments recorded within cost of revenue and research and development expenses were not material. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Cash $ 288 Inventory 7,246 Other current assets 660 Intangible assets, net 31,680 Other assets 5,043 Total identifiable assets acquired 44,917 Current liabilities ( 482 ) Other long-term liabilities ( 11,470 ) Total liabilities assumed ( 11,952 ) Net identifiable assets acquired 32,965 Goodwill 42,361 Net assets acquired $ 75,326 We recorded the preliminary purchase price allocation in the first quarter of 2023. During the third quarter of 2023, we recorded a measurement period adjustment resulting in a decrease to goodwill of $ 0.4 million, with an equal offset to other long-term liabilities. The acquisition was accounted for under the acquisition method of accounting, and therefore, the total purchase price was allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their respective fair values as of the acquisition date. Purchase consideration in excess of the amounts recognized for the net assets acquired was recognized as goodwill. Goodwill is primarily attributable to expanded synergies expected from the acquisition associated with a vertical supply integration. All of the goodwill acquired in connection with the acquisition of Alphazyme was allocated to the Company’s Nucleic Acid Production segment. None of the goodwill recognized is expected to be deductible for income tax purposes. Upon closing of the acquisition, approximately $ 1.5 million was placed into escrow to cover potential working capital adjustments and approximately $ 3.0 million was placed into escrow to secure certain representations and warranties pursuant to the terms of the Alphazyme SPA. These amounts are included in the total purchase consideration of $ 75.3 million. The $ 1.5 million was released from escrow during the second quarter of 2023, of which the Company received $ 0.1 million related to net working capital adjustments. Because the remaining $ 3.0 million held in escrow is not controlled by the Company, this amount is not included in the accompanying consolidated balance sheet as of December 31, 2023. The following table summarizes the estimated fair values of Alphazyme’s identifiable intangible assets as of the date of acquisition and their estimated useful lives: Estimated Fair Value (in thousands) Estimated Useful Life (in years) Trade names $ 220 5 Developed technology 31,000 12 Customer relationships 460 12 Total $ 31,680 107 Table of Contents The trade name and customer relationship intangible assets are related to Alphazyme’s name, customer loyalty and customer relationships. The developed technology intangible asset is related to its unique manufacturing process optimization capability to both scale production and achieve quality standards. The fair value of these intangible assets was based on Alphazyme’s projected revenues and was estimated using an income approach, specifically the relief from royalty method for trade names, the multi-period excess earnings method for developed technology, and the distributor method for customer relationships. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by discounting future net cash flows to their present value at market-based rates of return utilizing Level 3 inputs. The useful lives for these intangible assets were determined based upon the remaining period for which the assets were expected to contribute directly or indirectly to future cash flows. Key quantitative assumptions used in the determination of fair value of the developed technology intangible included revenue growth rates ranging from 3.0 % to 55.0 %, a discount rate of 17.8 % and an assumed technical obsolescent curve of 5.0 %. The carrying value of the remaining assets acquired or liabilities assumed was estimated to equal their fair values based on their short-term nature. These estimates were based on the assumption that the Company believes to be reasonable; however, actual results may differ from these estimates. MyChem, LLC On January 27, 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 acquisition will vertically integrate the Company’s supply chain and expand its product offerings for inputs used in the development of therapeutics and vaccines. The Company acquired MyChem for a total purchase consideration of $ 257.9 million, which is inclusive of net working capital adjustments. As a result of the acquisition, the Company owns all the outstanding equity interest in MyChem. The total cash consideration was paid using existing cash on hand. The transaction was accounted for as an acquisition of a business as MyChem consisted of inputs and processes applied to those inputs that had the ability to contribute to the creation of outputs. For the year ended December 31, 2022, the Company incurred $ 3.5 million in transaction costs associated with the acquisition of MyChem, which were recorded within selling, general and administrative expenses in the consolidated statements of operations. The acquisition date fair value of consideration transferred to acquire MyChem consisted of the following (in thousands): Cash paid (1) $ 240,145 Consideration payable 10,000 Fair value of contingent consideration 7,800 Total consideration transferred $ 257,945 ____________________ (1) Represents cash consideration paid at closing of $ 240.0 million and a purchase price adjustment paid in November 2022 of $ 0.1 million. Pursuant to the Securities Purchase Agreement (the “MyChem SPA”) between the Company and sellers of MyChem, additional payments to the sellers of MyChem are dependent upon meeting or exceeding defined revenue targets during fiscal 2022 (the “MyChem Performance Payment”). The MyChem SPA provides for a total maximum Performance Payment of $ 40.0 million. The MyChem Performance Payment was recorded as contingent consideration and was included as part of the purchase consideration. The Company estimated the fair value of the MyChem Performance Payment contingent consideration based on a Monte-Carlo simulation model which utilized an income approach. The estimated fair value was based on MyChem revenue projections, expected payout term, volatility and risk adjusted discount rates which are Level 3 inputs (see Note 5). The performance period applicable to the MyChem Performance Payment ended as of December 31, 2022 and it was determined that none of the defined revenue thresholds were achieved. Consequently, no payment was made to the sellers of MyChem. The MyChem SPA also provides that the Company will pay to the sellers of MyChem an additional $ 20.0 million (the “MyChem Retention Payment”) as of the second anniversary of the closing of the acquisition date as long as two senior employees who are also the sellers of MyChem continue to be employed by TriLink. The Company considers the payment of the Retention Payment as probable and is recognizing compensation expense related to this payment in the post-acquisition period ratably over the expected service period of two years . For the year ended December 31, 2023, the Company recorded $ 4.3 million of compensation expense related to the MyChem Retention Payment within cost of revenue in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, the Company recorded $ 5.1 million and $ 9.3 108 Table of Contents million, respectively, of compensation expense related to the MyChem Retention Payment within research and development expenses in the consolidated statements of operations. The MyChem SPA further provides that the Company will pay to the sellers of MyChem an additional amount of up to $ 10.0 million subject to the completion of certain calculations associated with acquired inventory, which has been recorded within accrued expenses and other current liabilities on the consolidated balance sheet as of December 31, 2022. During the first quarter of 2023, but subsequent to the end of the measurement period, these calculations were completed and a payment of $ 9.7 million was made by the Company to the sellers. The remaining $ 0.3 million was recorded as non-cash gain within current year operations. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Cash $ 1,176 Current assets 2,741 Intangible assets, net 123,360 Other assets 8,585 Total identifiable assets acquired 135,862 Current liabilities ( 420 ) Other long-term liabilities ( 8,399 ) Total liabilities assumed ( 8,819 ) Net identifiable assets acquired 127,043 Goodwill 130,902 Net assets acquired $ 257,945 We recorded the preliminary purchase price allocation in the first quarter of 2022. During the fourth quarter of 2022, we recorded measurement period adjustments resulting in an increase to goodwill of $ 0.1 million and a decrease to other assets and current liabilities of $ 0.7 million. The acquisition was accounted for under the acquisition method of accounting, and therefore, the total purchase price was allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their respective fair values as of the acquisition date. Purchase consideration in excess of the amounts recognized for the net assets acquired was recognized as goodwill. Goodwill is primarily attributable to expanded synergies expected from the acquisition associated with a vertical supply integration. There were no tax impacts associated with the acquisition due to the pass-through income tax treatment of MyChem. All of the goodwill acquired in connection with the acquisition of MyChem was allocated to the Company’s Nucleic Acid Production segment and is deductible to Topco LLC for income tax purposes. Upon closing of the acquisition, approximately $ 1.0 million was placed into escrow to cover potential working capital adjustments and approximately $ 12.5 million was placed into escrow to secure certain representations and warranties pursuant to the terms of the MyChem SPA. These amounts are included in the total purchase consideration of $ 257.9 million. The Company released the $ 1.0 million in escrow and paid out an additional $ 0.1 million related to net working capital adjustments during the fourth quarter of 2022. During the first quarter of 2023, but subsequent to the end of the measurement period, $ 12.4 million of the amounts in escrow to secure certain representations and warranties was released to the sellers and the remaining $ 0.1 million was released to the Company for indemnification of pre-closing liabilities, which was recorded within current year operations. The following table summarizes the estimated fair values of MyChem’s identifiable intangible assets as of the date of acquisition and their estimated useful lives: Estimated Fair Value (in thousands) Estimated Useful Life (in years) Trade names $ 460 3 Developed technology 121,000 12 Customer relationships 1,900 12 Total $ 123,360 109 Table of Contents The trade name and customer relationship intangible assets are related to MyChem’s name, customer loyalty and customer relationships. The developed technology intangible asset is related to processes and techniques for synthesizing and developing ultra-pure nucleotides. The fair value of these intangible assets was based on MyChem’s projected revenues and was estimated using an income approach, specifically the multi-period excess earnings method. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by discounting future net cash flows to their present value at market-based rates of return utilizing Level 3 inputs. The useful lives for these intangible assets were determined based upon the remaining period for which the assets were expected to contribute directly or indirectly to future cash flows. Key quantitative assumptions used in the determination of fair value of the developed technology intangible included revenue growth rates ranging from 3.0 % to 30.6 %, a discount rate of 16.5 % and an assumed technical obsolescent curve range of 5.0 % to 7.5 %. Pursuant to the terms of the MyChem SPA, the Company recognized an indemnification asset of $ 8.0 million within other assets, which represented the seller’s obligation to reimburse pre-acquisition income tax liabilities assumed in the acquisition and was recorded within other long-term liabilities. The carrying value of the remaining assets acquired or liabilities assumed was estimated to equal their fair values based on their short-term nature. Divestiture Vector Laboratories, Inc. In August 2021, the Company entered into a definitive agreement to sell 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 final net proceeds were $ 120.7 million, which were inclusive of working capital adjustments. 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 expenses in the consolidated statements of operations for the year ended December 31, 2021. 3. Restructuring In November 2023, the Company implemented a cost realignment plan (the “Cost Realignment Plan”) that included the termination of approximately 15 % of the Company’s workforce, the termination of certain leases, and other actions to reduce expenses, all as part of a plan to optimize business operations and match them to current market conditions. The reduction in force was completed on January 5, 2024, following the end of the sixty-day notification period required by the Worker Adjustment and Retraining Notification Act. The Company expects the remaining actions under the Cost Realignment Plan to be substantially complete during the first quarter of 2024. 110 Table of Contents The Company’s restructuring charges by segment and unallocated corporate costs, which are recorded as restructuring expenses on the consolidated statements of operations, were as follows for the year ended December 31, 2023 (in thousands): Severance and Other Employee Costs Stock-Based Compensation Expense (Benefit) Facility and Other Exit Costs Professional Fees and Other Total Nucleic Acid Production $ 2,470 $ 168 $ 638 $ 190 $ 3,466 Corporate 1,833 ( 269 ) 1,351 85 3,000 Total $ 4,303 $ ( 101 ) $ 1,989 $ 275 $ 6,466 The following table summarizes the activity for accrued restructuring costs, which is recorded within accrued expenses and other current liabilities on the consolidated balance sheets, for the period presented (in thousands): Severance and Other Employee Costs Stock-Based Compensation Expense (Benefit) Facility and Other Exit Costs Professional Fees and Other Total Balance as of December 31, 2022 $ — $ — $ — $ — $ — Charges 4,303 ( 101 ) 1,989 275 6,466 Non-cash charges — 101 — — 101 Cash payments ( 1,760 ) — ( 1,989 ) ( 4 ) ( 3,753 ) Balance as of December 31, 2023 $ 2,543 $ — $ — $ 271 $ 2,814 The Company does not expect to incur additional restructuring costs relating to the Cost Realignment Plan, however the Company expects an additional benefit totaling $ 1.2 million for the forfeiture of equity awards upon the termination of certain impacted employees in January 2024, of which $ 0.8 million relates to the Nucleic Acid Production segment and $ 0.4 million relates to unallocated corporate costs. 4. Goodwill and Intangible Assets The Company’s goodwill of $ 326.0 million and $ 283.7 million as of December 31, 2023 and 2022, respectively, represents the excess of purchase consideration over the fair value of assets acquired and liabilities assumed. As of December 31, 2023, the Company had four reporting units, three of which are contained in the Nucleic Acid Production segment. During the year ended December 31, 2023, the Company recorded goodwill of $ 42.4 million in connection with the acquisition of Alphazyme that was completed in January 2023 (see Note 2). As of December 31, 2022, the Company had three reporting units, two of which were contained in the Nucleic Acid Production segment. Due to the sustained decline in its stock price and the announcement of the Cost Realignment Plan in November 2023, the Company performed a quantitative goodwill impairment analysis on each of its four reporting units during the fourth quarter of 2023 and concluded that the fair value of goodwill exceeded its carrying value. 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 period presented (in thousands): Nucleic Acid Production Biologics Safety Testing Total Balance as of December 31, 2022 $ 163,740 $ 119,928 $ 283,668 Acquisition 42,361 — 42,361 Balance as of December 31, 2023 $ 206,101 $ 119,928 $ 326,029 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 3 to 14 years. 111 Table of Contents The following are components of finite-lived intangible assets and accumulated amortization as of the periods presented (in thousands): December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Estimated Useful Life Weighted Average Remaining Amortization Period (in thousands) (in years) (in years) Trade Names $ 7,800 $ 6,369 $ 1,431 3 - 10 2.8 Patents and Developed Technology 319,649 109,800 209,849 10 - 14 8.9 Customer Relationships 22,313 12,606 9,707 10 - 12 5.9 Total $ 349,762 $ 128,775 $ 220,987 8.7 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Estimated Useful Life Weighted Average Remaining Amortization Period (in thousands) (in years) (in years) Trade Names $ 7,580 $ 5,746 $ 1,834 3 - 10 3.5 Patents and Developed Technology 288,649 85,058 203,591 10 - 14 9.5 Customer Relationships 21,853 10,615 11,238 10 - 12 6.5 Total $ 318,082 $ 101,419 $ 216,663 9.3 During the first quarter of 2023, the Company recorded intangible assets of $ 31.7 million in connection with the acquisition of Alphazyme that was completed in January 2023 (see Note 2). The Company recognized $ 24.8 million, $ 21.5 million and $ 12.4 million of amortization expense from intangible assets directly linked with revenue generating activities within cost of revenue in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, respectively. Amortization expense for intangible assets that are not directly related to sales generating activities of $ 2.6 million, $ 2.8 million and $ 5.9 million was recorded as selling, general and administrative expenses for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the estimated future amortization expense for finite-lived intangible assets were as follows (in thousands): 2024 $ 27,478 2025 27,335 2026 27,098 2027 26,082 2028 25,862 Thereafter 87,132 Total estimated amortization expense $ 220,987 112 Table of Contents 5. Fair Value Measurements The following table summarizes the Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy as of the periods presented (in thousands): Fair Value Measurements as of December 31, 2023 Level 1 Level 2 Level 3 Total Assets Money market funds $ 418,685 $ — $ — $ 418,685 Interest rate cap — 8,559 — 8,559 Total assets $ 418,685 $ 8,559 $ — $ 427,244 Liabilities Current portion of contingent consideration $ — $ — $ 131 $ 131 Contingent consideration, non-current — — 1,872 1,872 Total liabilities $ — $ — $ 2,003 $ 2,003 Fair Value Measurements as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets Interest rate cap $ — $ 11,362 $ — $ 11,362 Contingent Consideration In connection with the acquisition of Alphazyme (see Note 2), the Company is required to make contingent payments to the sellers of up to $ 75.0 million, subject to achieving certain revenue thresholds. The preliminary fair value of the liability for the contingent payments recognized upon the acquisition as part of the purchase accounting opening balance sheet totaled $ 5.3 million. The preliminary fair value of the contingent consideration was determined using a Monte-Carlo simulation-based model discounted to present value. Assumptions used in this calculation are expected revenue, a discount rate of 17.8 % and various probability factors. The ultimate settlement of the contingent consideration could deviate from current estimates based on the actual results of these financial measures. The contingent consideration has three performance payments spanning over three years beginning 2024. This liability is considered to be a Level 3 financial liability that is remeasured each reporting period. Changes in fair value of contingent consideration are recognized as a gain or loss and recorded within change in estimated fair value of contingent consideration in the consolidated statements of operations. During the year ended December 31, 2023, the Company recorded a decrease of $ 3.3 million in the estimated fair value of contingent consideration. This was due to a change in estimates associated with Alphazyme revenue projections reaching thresholds that would trigger a contingent payment per the Alphazyme SPA. In connection with the acquisition of MyChem (see Note 2), the Company is required to make contingent payments to the sellers of up to $ 40.0 million, subject to achieving certain revenue thresholds. The preliminary fair value of the liability for the contingent payments recognized upon the acquisition as part of the purchase accounting opening balance sheet totaled $ 7.8 million. The preliminary fair value of the contingent consideration was determined using a Monte-Carlo simulation-based model discounted to present value. Assumptions used in this calculation are expected revenue, a discount rate of 16.9 % and various probability factors. The ultimate settlement of the contingent consideration could deviate from current estimates based on the actual results of these financial measures. The contingent consideration projected year of payment was 2023. This liability is considered to be a Level 3 financial liability that is remeasured each reporting period. Changes in fair value of contingent consideration are recognized as a gain or loss and recorded within change in estimated fair value of contingent consideration in the consolidated statements of operations. During the second quarter of 2022, the Company recorded a $ 7.8 million decrease in the estimated fair value of contingent consideration. This was due to a change in the estimate associated with MyChem revenue projections reaching thresholds that would trigger a contingent payment per the MyChem SPA. The contingent consideration expired as of December 31, 2022 and the revenue thresholds were not achieved. 113 Table of Contents The following table provides a reconciliation of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods presented (in thousands): Contingent Consideration Balance as of December 31, 2021 $ — Contingent consideration related to the acquisition of MyChem 7,800 Change in estimated fair value of contingent consideration ( 7,800 ) Balance as of December 31, 2022 — Contingent consideration related to the acquisition of Alphazyme 5,289 Change in estimated fair value of contingent consideration ( 3,286 ) Balance as of December 31, 2023 $ 2,003 6. Balance Sheet Components Inventory Inventory consisted of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Raw materials $ 19,338 $ 13,486 Work-in-process 12,680 21,950 Finished goods 19,379 7,716 Total inventory $ 51,397 $ 43,152 Property and equipment Property and equipment consist ed of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Finance lease right-of-use assets $ 78,599 $ — Leasehold improvements 24,874 20,095 Furniture, fixtures, and equipment 48,793 35,907 Software 3,211 3,004 Total 155,477 59,006 Less accumulated depreciation ( 32,214 ) ( 19,502 ) Total 123,263 39,504 Construction in-progress 39,637 13,190 Total property and equipment, net $ 162,900 $ 52,694 Depreciation expense totaled approximately $ 12.9 million, $ 7.6 million and $ 6.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. 114 Table of Contents Other assets Other assets consisted of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Operating lease right-of-use assets $ 59,746 $ 63,896 Interest rate cap 8,559 11,362 Indemnification asset (see Note 2) 6,388 7,682 Prepaid lease payments — 27,253 Other 2,929 5,396 Total other assets $ 77,622 $ 115,589 Accrued expenses and other current liabilities Accrued expenses consisted of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Accrued MyChem Retention Payments, current portion (see Note 2) $ 19,446 $ — Employee related 12,905 19,873 Accrued interest payable 9,202 7,700 Operating lease liabilities, current portion 6,780 6,269 Accrued restructuring costs (see Note 3) 2,814 — Professional services 2,277 4,093 Customer deposits 2,156 1,665 Sales and use tax liability 1,001 1,029 Inventory holdback liability — 10,000 Other 3,656 2,742 Total accrued expenses and other current liabilities $ 60,237 $ 53,371 Other long-term liabilities Other long-term liabilities consisted of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Operating lease liabilities, non-current $ 47,510 $ 51,556 Acquisition related tax liability (see Note 2) 6,388 7,682 Accrued Alphayzme Retention Payments, non-current (see Note 2) 3,202 — Contingent consideration, non-current 1,872 — Accrued MyChem Retention Payments, non-current (see Note 2) — 9,324 Other 522 413 Total other long-term liabilities $ 59,494 $ 68,975 7. Government Assistance Cooperative Agreement In May 2022, TriLink entered into a cooperative agreement (the “Cooperative Agreement”) with the U.S. Department of Defense, as represented by the Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense on behalf of the Biomedical Advanced Research and Development Authority (“BARDA”), within the U.S. Department of Health and Human Services (“HHS”), to advance the development of domestic manufacturing capabilities and to expand TriLink’s domestic production capacity in its San Diego manufacturing campus (the “Flanders San Diego Facility”) for products critical to the development and manufacture of mRNA vaccines and therapeutics. The Cooperative Agreement has since transitioned from the U.S. Department of Defense to the HHS as of January 2023. The Flanders San Diego Facility consists of two buildings (“Flanders I” and “Flanders II”), however, the Cooperative Agreement is exclusively involved in Flanders I. 115 Table of Contents The Cooperative Agreement requires the Company to provide the U.S. Government with conditional priority access and certain preferred pricing obligations for a 10-year period from the completion of the construction project for the production of a medical countermeasure (or a component thereof) that the Company manufactures in the Flanders San Diego Facility during a declared public health emergency. Pursuant to certain requirements, BARDA awarded TriLink an amount equal to $ 38.8 million or 50 % of the construction and validation costs currently budgeted for the Flanders San Diego Facility. The contract period of performance is May 2022 through January 2034, which is the effective date of the Cooperative Agreement through the anticipated expiration of the 10-year conditional priority access period. Amounts reimbursed are subject to audit and may be recaptured by the HHS in certain circumstances. During the year ended December 31, 2023, the Company has received $ 12.9 million of reimbursements under the Cooperative Agreement with an equal offset recorded to property and equipment on the consolidated balance sheet. As of December 31, 2023, the Company has recorded a receivable of $ 1.1 million, with an equal offset to property and equipment on the consolidated balance sheet. During the year ended December 31, 2022, the Company has received $ 18.1 million of reimbursements under the Cooperative Agreement, with offsets recorded to: (i) prepaid lease payments associated with Flanders I within other assets of $ 17.0 million; and (ii) property and equipment of $ 1.1 million. As of December 31, 2022, the Company has recorded a receivable of $ 8.2 million, with an equal offset recorded to prepaid lease payments associated with Flanders I within other assets on the consolidated balance sheet. 8. Leases All of the Company's facilities, including office, laboratory and manufacturing space, are occupied under long-term non-cancelable lease arrangements with various expiration dates through 2038, some of which include options to extend up to 20 years. The Company does not have any leases that include residual value guarantees. In January 2023, the Company assumed Alphazyme’s existing facility lease in Jupiter, Florida, in connection with the acquisition of Alphazyme (see Note 2). The lease term began in January 2023 and will end in January 2032. The lease is for 10 years with the option to extend for one additional 5-year period. In February 2023, the Company entered into an agreement to expand the existing Alphazyme facility lease for additional space. The lease term will run concurrently with and as part of the initial lease term. In March 2023 and June 2023, the Company’s leases for Flanders I and Flanders II, respectively, commenced. The Company entered into the lease agreement in August 2021. The leases are for eleven years with the option to extend for one additional 5-year period. The Company is reasonably certain to execute the renewal option and has, therefore, recognized this as part of its ROU assets and lease liabilities. The lease includes tenant improvement provisions, rent abatement clauses, and escalating rent payments over the life of the lease. In December 2023, as part of the Cost Realignment Plan, the Company terminated a facility lease in San Diego, California and recorded a non-cash loss for early lease termination in the consolidated statements of operations (see Note 3). The Company has a $ 0.5 million outstanding letter of credit as security for a lease agreement for a facility in San Diego, California, which reduced the availability of credit under the Revolving Credit Facility (see Note 10). 116 Table of Contents The following table presents supplemental balance sheet information related to the Company's leases as of the periods presented below (in thousands): Line Item in the Consolidated Balance Sheets December 31, 2023 December 31, 2022 Right-of-use assets Finance leases Property and equipment, net $ 75,382 $ — Operating leases Other assets 59,746 63,896 Total right-of-use assets $ 135,128 $ 63,896 Current lease liabilities Finance leases Current portion of finance lease liabilities $ 633 $ — Operating leases Accrued expenses and other current liabilities 6,780 6,269 Total current lease liabilities $ 7,413 $ 6,269 Non-current lease liabilities Finance leases Finance lease liabilities, less current portion $ 31,897 $ — Operating leases Other long-term liabilities 47,510 51,556 Total non-current lease liabilities $ 79,407 $ 51,556 The components of the net lease costs reflected in the Company's consolidated statements of operations were as follows for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Finance lease costs: Depreciation of leased assets $ 3,217 $ — $ — Interest on lease liabilities 1,696 — — Total finance lease costs 4,913 — — Operating lease costs 12,417 8,800 8,792 Variable lease costs 3,940 2,742 1,759 Total lease costs $ 21,270 $ 11,542 $ 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 leases were as follows as of the periods presented below: December 31, 2023 December 31, 2022 Weighted average remaining lease term (in years): Finance leases 14.2 * Operating leases 7.3 7.9 Weighted average discount rate: Finance leases 8.4 % * Operating leases 6.7 % 6.5 % ____________________ * The Company did not have any finance leases as of December 31, 2022. 117 Table of Contents Supplemental information concerning the cash flow impact arising from the Company's leases recorded in the Company's consolidated statements of cash flows is detailed in the following table for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Cash paid for amounts included in lease liabilities: Financing cash flows used for finance leases $ 332 $ — $ — Operating cash flows used for finance leases 1,696 — — Operating cash flows used for operating leases 10,306 7,049 6,335 Non-cash transactions: Right-of-use assets obtained in exchange for new finance lease liabilities $ 32,862 $ — $ — Right-of-use assets obtained in exchange for new operating lease liabilities 3,931 17,513 — As of December 31, 2023, the Company expects that its future minimum lease payments will become due and payable as follows (in thousands): Finance Leases Operating Leases Total 2024 $ 3,327 $ 10,224 $ 13,551 2025 3,427 10,392 13,819 2026 3,530 10,039 13,569 2027 3,636 8,561 12,197 2028 3,745 8,666 12,411 Thereafter 40,357 25,432 65,789 Total minimum lease payments 58,022 73,314 131,336 Less: interest ( 25,492 ) ( 19,024 ) ( 44,516 ) Total lease liabilities $ 32,530 $ 54,290 $ 86,820 9. Commitments and Contingencies Unconditional Purchase Obligations In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers. These are agreements to purchase products and services that are enforceable, legally binding, and specify terms that include provisions with respect to quantities, pricing and timing of purchases. Amounts purchased under these obligations totaled $ 3.0 million for the year ended December 31, 2023. Such amounts were not material for the years ended December 31, 2022 and 2021. As of December 31, 2023, future minimum commitments under these obligations totaled $ 3.3 million which relates to the year ending December 31, 2024. 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 118 Table of Contents 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. 10. Long-Term Debt Credit Agreement In October 2020, Maravai Intermediate Holdings, LLC (“Intermediate”), a wholly-owned subsidiary of Topco LLC, along with certain of its subsidiaries (together with Intermediate, the “Borrowers”), entered into a credit agreement (as amended, the “Credit Agreement”), which provides for a term loan facility and a revolving credit facility. In January 2022, the Company entered into an amendment (the “Amendment”) to refinance the term loan and to replace London Interbank Offered Rate (“LIBOR”) with a Term Secured Overnight Financing Rate (“SOFR”) based rate. As amended, the Credit Agreement provides for a $ 600.0 million term loan facility, maturing October 2027 (the “Tranche B Term Loan”), and a $ 180.0 million revolving credit facility (the “Revolving Credit Facility”). The interest rate margins applicable to the Tranche B Term Loan and Revolving Credit Facility is 3.00 %, with respect to each Term SOFR-based loan, and 2.00 %, with respect to each Base Rate-based loan. Further, the interest rate floor for Base Rate term loans, Term SOFR-based term loans, and Term SOFR-based revolving loans are 1.50 %, 0.50 % and 0.00 %, respectively. As of December 31, 2023, the interest rate on the Tranche B Term Loan was 8.40 % per annum. The Credit Agreement also provides for a $ 20.0 million limit for letters of credit. As of December 31, 2023, the Company had a $ 0.5 million outstanding letter of credit as security for a lease agreement, which reduced the availability of credit under the Revolving Credit Facility by $ 0.5 million. 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 Amendment was 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 Tranche B Term Loan did not participate in this refinancing transaction, were repaid their principal and interest of $ 8.5 million 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 of $ 8.5 million were accounted for as a new debt financing. The Company recorded a loss on extinguishment of debt of $ 0.2 million in the accompanying consolidated statements of operations during the year ended December 31, 2022. For the remainder of the creditors, this transaction was accounted for as a modification because the change in 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 $ 0.9 million of various costs, of which an insignificant amount was 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. We also incurred $ 0.3 million of financing-related fees related to the Revolving Credit Facility in connection with the debt refinancing activities in January 2022. As of December 31, 2023, unamortized debt issuance costs totaled $ 1.4 million and are recorded as assets within other assets on the accompanying consolidated balance sheet as there is no balance outstanding related to the Revolving Credit Facility. Commencing with the fiscal year ended December 31, 2021, and each fiscal year thereafter, the Credit Agreement requires that we make mandatory prepayments on the Tranche B 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 % of the calculated excess cash flow if the Company’s first lien net leverage ratio was equal to or less than 4.75 :1.00 or 4.25 :1.00, respectively, however, no prepayment shall be required to the extent excess cash flow calculated for the respective period is equal to or less than $ 10.0 million. As of December 31, 2023, the Company’s first lien net leverage ratio was less than 4.25 :1.00. Thus, a mandatory prepayment on the Tranche B Term Loan out of our excess cash flow was not required. The Tranche B Term Loan is repayable in quarterly payments of $ 1.4 million which began in March 2022, with all remaining outstanding principal due in October 2027. The Tranche B Term Loan includes prepayment provisions that allow the Company, 119 Table of Contents at our option, to repay all or a portion of the principal amount at any time. The Revolving Credit Facility allows the Company to repay and borrow from time to time until October 2025, at which time all amounts borrowed must be repaid. Subject to certain exceptions and limitations, we are required to repay borrowings under the Tranche B Term Loan and Revolving Credit Facility with the proceeds of certain occurrences, such as the incurrence of debt, certain equity contributions and certain asset sales or dispositions. Accrued interest under the Credit Agreement is payable by us (a) quarterly in arrears with respect to Base Rate loans, (b) at the end of each interest rate period (or at each three-month interval in the case of loans with interest periods greater than three months) with respect to Term SOFR Rate loans, (c) on the date of any repayment or prepayment and (d) at maturity (whether by acceleration or otherwise). An annual commitment fee is applied to the daily unutilized amount under the Revolving Credit Facility at 0.375 % per annum, with one stepdown to 0.25 % per annum based on Intermediate’s first lien net leverage ratio calculation. The Credit Agreement contains certain covenants, including, among other things, covenants limiting our ability to incur or prepay certain indebtedness, pay dividends or distributions, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments and make changes to the nature of the business. Additionally, the Credit Agreement also requires us to maintain a certain net leverage ratio if the outstanding debt balance on the Revolving Credit Facility exceeds 35.0 % of the aggregate amount of available credit of $ 180.0 million. The Company was in compliance with these covenants as of December 31, 2023. Interest Rate Cap In the first quarter of 2021, the Company entered into an interest rate cap agreement to manage a portion of its variable interest rate risk on its outstanding long-term debt. The contract, which was 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 was set to expire on March 31, 2023. In May 2022, the Company amended the interest rate cap agreement, effective June 30, 2022, to increase the contract’s notional amount to $ 500.0 million and to extend the maturity date to January 19, 2025. Additionally, the floating rate option changed from a LIBOR-based rate to a SOFR-based rate. Other provisions remained unchanged as a result of the amendment. Premiums paid to amend the interest rate cap agreement were immaterial. The interest rate cap agreement has not been designated as a hedging relationship and has been recognized on the consolidated balance sheet at fair value of $ 8.6 million within other assets with changes in fair value recognized within interest expense in the consolidated statements of operations. Proceeds from the interest rate cap agreement are reflected in cash flows used in financing activities in the consolidated statements of cash flows. The Company’s long-term debt consisted of the following as of the periods presented (in thousands): December 31, 2023 December 31, 2022 Tranche B Term Loan $ 533,120 $ 538,560 Unamortized debt issuance costs ( 8,973 ) ( 11,123 ) Total long-term debt 524,147 527,437 Less: current portion ( 5,440 ) ( 5,440 ) Total long-term debt, less current portion $ 518,707 $ 521,997 There were no balances outstanding on the Company’s Revolving Credit Facility as of December 31, 2023 and 2022. As of December 31, 2023, the aggregate future principal maturities of the Company’s debt obligations based on contractual due dates were as follows (in thousands): 2024 $ 5,440 2025 5,440 2026 5,440 2027 516,800 Total long-term debt $ 533,120 120 Table of Contents 11. Stockholders’ Equity Amendment and Restatement of Certificate of Incorporation In November 2020, 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 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, 2023, 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. Exchanges and Secondary Offerings April 2021 Exchange and Secondary Offering In April 2021, MLSH 1 executed an exchange of 17,665,959 Topco LLC units (the “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 Maravai Life Sciences Holdings 2, LLC (“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 expenses 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 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 expenses 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 121 Table of Contents 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. Structuring Transactions In connection with the Company’s acquisition of Alphazyme (see Note 2), the Company undertook a series of structuring transactions (the “Structuring Transactions”), including: • On January 18, 2023, the Company acquired all of the outstanding membership interests in Alphazyme (see Note 2). • On January 19, 2023, the Company entered into a contribution agreement (the “Contribution Agreement”) with Alphazyme Holdings, Inc. (“Alphazyme Holdings”), a wholly owned subsidiary of the Company, pursuant to which the Company contributed all such membership interests in Alphazyme (the “Alphazyme Membership Interest”) to Alphazyme Holdings. • On January 22, 2023, Alphazyme Holdings entered into a contribution and exchange agreement (the “Contribution and Exchange Agreement”) with Topco LLC, pursuant to which it contributed all of the Alphazyme Membership Interests to TopCo LLC in exchange for 5,059,134 newly-issued LLC Units of Topco LLC at a price per unit of $ 13.87 , which was equal to the 50-day volume-weighted average price of the Company’s Class A common stock as calculated on January 18, 2023 (the “Contribution and Exchange”). • Immediately following the Contribution and Exchange, the Company entered into a forfeiture agreement (the “Forfeiture Agreement”) with Alphazyme Holdings, TopCo LLC and MLSH 1, a related party, pursuant to which each of the Company (together with Alphazyme Holdings) and MLSH 1 agreed to forfeit 5,059,134 and 4,871,970 LLC Units, respectively, representing 3.7 % of the Company’s (together with Alphazyme Holdings) and MLSH 1’s 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, were forfeited by MLSH 1, in each case for no consideration. These were considered transactions between entities under common control. As a result, the consolidated financial statements for periods prior to the these transactions have been adjusted to combine the previously separate entities for presentation purposes. 12. Net (Loss) Income Per Class A Common Share Attributable to Maravai LifeSciences Holdings, Inc. Basic net (loss) income per Class A common share has been calculated by dividing net (loss) income for the period, adjusted for net (loss) income attributable to non-controlling interests, by the weighted average number of Class A common shares outstanding during the period. Diluted net (loss) income per Class A common share gives effect to potentially dilutive securities by application of the treasury stock method or if-converted method, as applicable. Diluted net (loss) income per Class A common share attributable to the Company is computed by adjusting the net (loss) income and the weighted average number of Class A common shares outstanding to give effect to potentially diluted securities. In periods in which the Company reports a net loss attributable to Maravai LifeSciences Holdings, Inc., diluted net loss per Class A common share attributable to the Company is the same as basic net loss per Class A common share 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, 2023. 122 Table of Contents The following table presents the computation of basic and diluted net (loss) income per common share attributable to the Company for the periods presented (in thousands, except per share amounts): Year Ended December 31, 2023 2022 2021 Numerator: Net (loss) income $ ( 138,375 ) $ 490,663 $ 469,250 Less: loss (income) attributable to common non-controlling interests 19,346 ( 270,458 ) ( 287,213 ) Net (loss) income attributable to Maravai LifeSciences Holdings, Inc.—basic ( 119,029 ) 220,205 182,037 Net (loss) income effect of dilutive securities: Effect of dilutive employee stock purchase plan, RSUs and options $ — 87 132 Effect of the assumed conversion of Class B common stock — 205,984 220,187 Net (loss) income attributable to Maravai LifeSciences Holdings, Inc.—diluted $ ( 119,029 ) $ 426,276 $ 402,356 Denominator: Weighted average Class A common shares outstanding—basic 131,919 131,545 114,791 Weighted average effect of dilutive securities: Effect of dilutive employee stock purchase plan, RSUs and options — 109 153 Effect of the assumed conversion of Class B common stock — 123,669 142,859 Weighted average Class A common shares outstanding—diluted 131,919 255,323 257,803 Net (loss) income per Class A common share attributable to Maravai LifeSciences Holdings, Inc.: Basic $ ( 0.90 ) $ 1.67 $ 1.59 Diluted $ ( 0.90 ) $ 1.67 $ 1.56 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 (loss) income 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 (loss) income per share for the periods presented because their effect would have been anti-dilutive for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Restricted stock units 3,181 74 — Stock options 4,246 2,769 355 Shares estimated to be purchased under employee stock purchase plan — 13 12 Shares of Class B common stock 119,094 — — Total 126,521 2,856 367 Shares underlying contingently issuable awards that have not met the necessary conditions as of the end of a reporting period are not included in the calculation of diluted net (loss) income per Class A common share attributable to the Company for that period. The Company had contingently issuable PSUs outstanding that did not meet the market and performance conditions as of December 31, 2023 and 2022 and, therefore, were excluded from the calculation of diluted net (loss) income per Class A common share attributable to the Company. The maximum number of potentially dilutive shares that could be issued upon vesting for such awards was insignificant as of December 31, 2023 and 2022. These amounts were also excluded from the potentially dilutive securities in the table above. The Company had no contingently issuable PSUs outstanding as of December 31, 2021. 123 Table of Contents 13. 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 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) performance awards, (vi) dividend equivalents, or (vii) 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 stockholder, 110 %) of the fair market value of the shares on the date of grant. As of December 31, 2023, only stock options, RSUs and PSUs 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. The Company began issuing PSUs during 2022 to certain executive employees under the 2020 Plan. Certain PSUs vest only if the executive employee satisfies a service-based vesting condition and market condition. The executive employee must remain employed through the third anniversary of the grant date. The award is eligible to vest based on the achievement of certain price targets of the Company’s stock price over a defined performance period. Certain other PSUs are subject to a performance condition being satisfied. The award is eligible to vest upon achievement of certain revenue-based performance goals and are subject to continued service over a defined performance period. Compensation expense recognized for these PSUs were insignificant for the years ended December 31, 2023 and 2022. There was no compensation expense related to PSUs during the year ended December 31, 2021. 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, 2022 2,893 $ 26.45 8.9 $ — Granted 2,270 14.76 Cancelled ( 858 ) 25.11 Outstanding as of December 31, 2023 4,305 $ 20.55 8.5 $ 19 Exercisable as of December 31, 2023 1,456 $ 24.76 7.7 $ — 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 and is determined using the simplified method. 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. 124 Table of Contents • 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. 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, 2023 2022 2021 Expected volatility 48.0 % 51.3 % 57.2 % Risk-free interest rate 3.6 % 2.8 % 1.0 % Expected term (in years) 6.5 6.1 6.1 Expected dividend yield — % — % — % Stock-based compensation expense related to stock options was $ 11.5 million, $ 8.1 million and $ 4.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. The total fair value of stock options vested was $ 11.9 million, $ 7.7 million and $ 4.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the total unrecognized stock-based compensation related to stock options was $ 26.3 million, which is expected be recognized over a weighted-average period of approximately 2.7 years. Restricted Stock Units The Company has granted restricted stock unit awards to employees and non-employee directors and contractors. The following table summarizes information related to RSUs: Restricted Stock Units (in thousands) Weighted Average Fair Value per RSU at Grant Date Balance as of December 31, 2022 1,331 $ 21.04 Granted 3,507 13.66 Vested ( 278 ) 23.66 Forfeited ( 616 ) 20.30 Balance as of December 31, 2023 3,944 $ 15.35 Stock-based compensation expense related to RSUs was $ 20.2 million, $ 8.2 million and $ 0.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. The total fair value of RSUs vested was $ 5.0 million, $ 1.0 million and $0.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the total unrecognized equity-based compensation related to RSUs was $ 43.7 million, which is expected be recognized over a weighted-average period of approximately 2.0 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. 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. 125 Table of Contents 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 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 expenses 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 $ 0.2 million, $ 0.7 million and $ 3.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. MLSH 1 Incentive Unit award activity during year ended December 31, 2023 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, 2022 77 $ 24.34 Forfeited ( 12 ) 20.08 Vested ( 33 ) 22.24 Balance as of December 31, 2023 32 $ 28.15 As of December 31, 2023, total unrecognized compensation cost related to unvested MLSH 1 Incentive Units subject to service condition is $ 0.1 million which is expected to be recognized over a weighted average period of 1.0 year. 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, 2023 2022 2021 Cost of sales $ 7,324 $ 4,192 $ 1,915 Selling, general and administrative 24,650 13,349 8,263 Research and development 2,715 1,129 280 Restructuring ( 101 ) — — Total equity-based compensation $ 34,588 $ 18,670 $ 10,458 14. Income Taxes As of December 31, 2023 and 2022, 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. Components of income from continuing operations before income taxes for the periods presented were as follows (in thousands): Year Ended December 31, 2023 2022 2021 U.S. $ 617,681 $ 551,472 $ 530,853 International 55 — ( 88 ) Total income from continuing operations $ 617,736 $ 551,472 $ 530,765 126 Table of Contents Income tax expense consisted of the following for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Current tax expense Federal $ 405 $ 16,312 $ 9,291 State and local 756 2,173 1,623 International 8 6 3,697 Total current tax expense 1,169 18,491 14,611 Deferred tax expense Federal $ 663,968 $ 39,924 $ 36,564 State and local 90,974 2,394 10,340 Total deferred tax expense 754,942 42,318 46,904 Total provision for income taxes $ 756,111 $ 60,809 $ 61,515 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: December 31, 2023 December 31, 2022 December 31, 2021 Federal statutory rate 21.0 % 21.0 % 21.0 % State and local taxes, net of federal benefits 14.9 0.6 2.2 Deferred tax revaluation 1.2 0.3 — Income of non-controlling interest 0.8 ( 10.3 ) ( 11.4 ) Taxable (loss) gain on subsidiary liquidation — — ( 0.7 ) Equity-based compensation — — 0.1 Research and development credits — ( 0.1 ) ( 0.4 ) Valuation allowance 87.6 0.1 0.1 Nondeductible TRA movement ( 3.0 ) — — Other — ( 0.6 ) 0.7 Effective tax rate 122.5 % 11.0 % 11.6 % 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, 2023 December 31, 2022 Deferred tax assets Investment in Topco LLC $ 595,796 $ 636,498 Net operating loss 40,980 — Deductions to be received for the Tax Receivable Agreement payments 1,408 148,681 Capital loss carryforward 3,256 3,265 Other 712 1,131 Total deferred tax assets 642,152 789,575 Valuation allowance ( 642,152 ) ( 23,776 ) Total deferred tax assets, net of valuation allowance $ — $ 765,799 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 127 Table of Contents which included net deferred tax assets of $ 0.0 million primarily associated with: (i) $ 595.8 million related to temporary differences in the book basis as compared to the tax basis of our Company’s investment in Topco LLC, (ii) $ 1.4 million related to tax benefits from future deductions attributable to payments under the TRA, (iii) $ 3.3 million related to the capital loss carryforwards generated during the sale of Vector, (iv) $ 41.0 million related to net operating loss carryforwards, and (v) $ 642.2 million valuation allowance on these and other items. The valuation allowance increased by $ 618.4 million and $ 0.7 million during the years ended December 31, 2023 and 2022, 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. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing deferred tax assets. A significant piece of objective evidence evaluated during the year ended December 31, 2023 was our current year and projected future pre-tax losses. Due to our recent history of current year and projected near-term pre-tax losses, we determined that the negative evidence outweighs the positive evidence and so it is more likely than not that our deferred tax assets will not be utilized, and therefore the Company recorded a full valuation allowance on its U.S. federal and state deferred tax assets. The objective negative evidence is difficult to overcome and limits the ability to consider other subjective evidence, such as projections of future growth. It is possible in the foreseeable future that there may be sufficient positive evidence, and that the objective negative evidence related to pre-tax losses will no longer be present, in which event the Company could release a portion or all of the valuation allowance. Release of any amount of valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. Alphazyme was treated as a regarded corporation for U.S. federal and state income tax purposes at the time of acquisition. The Company recorded the initial contribution of Alphazyme to Topco LLC through its deferred tax asset related to the investment in Topco LLC, which was offset by a valuation allowance against the deferred tax asset. The Company also recorded a deferred tax liability for the difference between book basis and tax basis in the net assets of Alphazyme through purchase accounting. However, for the year ended December 31, 2023, Alphazyme became a disregarded entity for U.S. federal and state income tax purposes, which became effective immediately following the acquisition and prior to the contribution to Topco LLC. The change in Alphazyme’s tax status resulted in an income tax benefit of $ 8.8 million from the reversal of the Company’s deferred tax liability related to its ownership of Alphazyme, as well as an income tax expense of $ 17.1 million from the impact of the reversal to the Company’s deferred tax asset for its investment in Topco LLC. Net operating loss (“NOL”) and tax credit carryforwards as of December 31, 2023 were as follows (in millions): Amount Expiration Years Net operating losses, federal $ 36.3 Does not expire Net operating losses, state 4.7 Varies by state Capital loss carryforward 3.3 2026 Tax credits, federal 0.3 2043 Tax credits, state 0.3 CA - Do not expire As of December 31, 2023 and 2022, the Company had $ 5.2 million and $ 6.3 million of unrecognized tax benefits, all of which would affect the effective tax rate if recognized. The Company expects our unrecognized tax benefits may decrease by $ 2.6 million in the next twelve months due to statute expiration. The Company recognizes interest related to uncertain tax benefits as a component of income tax expense, including $ 0.3 million recognized during the year ended December 31, 2023. 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, 2023 2022 2021 Balance, beginning of year $ 6,257 $ 241 $ 220 Gross increases based on tax positions related to current year 99 130 232 Gross increases based on tax positions related to prior years — 6,775 — Gross decreases based on tax positions related to prior years ( 1,158 ) ( 889 ) ( 211 ) Balance, end of year $ 5,198 $ 6,257 $ 241 128 Table of Contents 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 exceptions for certain states, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations for years before 2020. Payable to Related Parties Pursuant to the Tax Receivable Agreement We are a party to 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 certain 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 any subsequent purchases or exchanges of LLC Units of Topco LLC. The Company expects to benefit from the remaining 15 % of any cash tax savings that it realizes. We recognize the amount of TRA payments expected to be paid within the next 12 months and classify this amount as current. This determination is based on our estimate of taxable income for the year ended December 31, 2023. As of December 31, 2023, the current liability under the TRA was $ 7.1 million. As of December 31, 2023, the Company has derecognized the remaining $ 665.3 million non-current liability under the TRA after concluding it was not probable that the Company will be able to realize the remaining tax benefits based on estimates of future taxable income. The estimation of liability under the TRA is by its nature imprecise and subject to significant assumptions regarding the amount, character, and timing of the taxable income in the future. If the Company concludes in a future period that the tax benefits are more likely than not to be realized and releases its valuation allowance, the corresponding TRA liability amounts may be considered probable at that time and recorded on the consolidated balance sheet and within earnings. We made payments of $ 42.6 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2023, of which $ 0.4 million is related to interest. We made payments of $ 35.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2022, of which $ 1.1 million was related to interest. As of December 31, 2023 and 2022, our liabilities under the TRA were $ 7.1 million and $ 718.2 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 (“LLC Operating Agreement”). The LLC Operating Agreement has numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This 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, 2023, Topco LLC paid tax distributions of $ 20.3 million to its owners, including $ 10.7 million to us. During the year ended December 31, 2022, Topco LLC paid tax distributions of $ 310.0 million to its owners, including $ 159.8 million to us. During the year ended December 31, 2021, Topco LLC paid tax distributions of $ 283.2 million to its owners, including $ 129.7 million to us. As of December 31, 2023, no amounts for tax distributions have been accrued as such payments were made during the period. 15. 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 $ 2.1 million, $ 1.6 million and $ 1.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. 129 Table of Contents 16. Related Party Transactions MLSH 1’s majority owner is GTCR, LLC (“GTCR”). The Company’s Executive Chairman of the Board, Chief Financial Officer (“CFO”) and General Counsel are executives of MLSH 1 and MLSH 2. 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 the exchanges (see Note 11). 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 11). Payable to Related Parties Pursuant to the Tax Receivable Agreement Concurrent with the completion of the IPO, the Company entered into a TRA with MLSH 1 and MLSH 2. During the years ended December 31, 2023, 2022 and 2021, the Company made TRA payments to both MLSH 1 and MLSH 2 (see Note 14). Cash Contribution, Exchange and Forfeiture Agreement with MLSH 1 In December 2021, the Company entered into a Cash Contribution, Exchange and Forfeiture Agreement with MLSH 1 (see Note 11). 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 years ended December 31, 2023, 2022 and 2021, the Company made distributions of $ 9.6 million, $ 150.2 million and $ 153.5 million for tax liabilities to MLSH 1 under this agreement, respectively. Contract Development and Manufacturing Agreement with Curia Global GTCR has significant influence over Curia Global (“Curia”). During the years ended December 31, 2023 and 2022, the Company paid insignificant amounts to Curia for contract manufacturing and development services. During the year ended December 31, 2021, the Company paid $ 7.4 million to Curia. Such amounts were included in research and development expenses on the consolidated statements of operations. 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. 17. 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 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 130 Table of Contents 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 the manufacturing and sale of host cell protein, bioprocess impurity detection, viral clearance prediction kits and associated products. This segment also provides services for custom antibody development, assay development, antibody affinity extraction and mass spectrometry 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 (loss) 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, net of eliminations, are managed on a standalone basis and not allocated to segments. 131 Table of Contents The following schedule includes revenue and adjusted EBITDA for each of the Company’s reportable operating segments (in thousands): Year Ended December 31, 2023 2022 2021 Revenue: Nucleic Acid Production $ 224,769 $ 813,076 $ 712,520 Biologics Safety Testing 64,179 69,932 68,417 Protein Detection — — 18,959 Total reportable segments’ revenue 288,948 883,008 799,896 Intersegment eliminations ( 3 ) ( 7 ) ( 656 ) Total $ 288,945 $ 883,001 $ 799,240 Segment adjusted EBITDA: Nucleic Acid Production $ 82,658 $ 638,337 $ 565,254 Biologics Safety Testing 46,908 54,841 54,440 Protein Detection — — 6,391 Total reportable segments’ adjusted EBITDA 129,566 693,178 626,085 Reconciliation of total reportable segments’ adjusted EBITDA to income before income taxes Amortization ( 27,356 ) ( 24,269 ) ( 18,339 ) Depreciation ( 12,898 ) ( 7,566 ) ( 6,413 ) Interest expense ( 45,892 ) ( 20,414 ) ( 30,260 ) Interest income 27,727 2,338 — Corporate costs, net of eliminations ( 64,257 ) ( 55,378 ) ( 43,265 ) Other adjustments: Acquisition contingent consideration 3,286 7,800 — Acquisition integration costs ( 12,695 ) ( 13,362 ) ( 44 ) Equity-based compensation ( 34,588 ) ( 18,670 ) ( 10,458 ) Gain on sale of business — — 11,249 Merger and acquisition related expenses ( 4,392 ) ( 2,416 ) ( 1,508 ) Financing costs — ( 1,078 ) ( 2,383 ) Acquisition related tax adjustment ( 1,293 ) ( 349 ) — Tax Receivable Agreement liability adjustment 668,886 ( 4,102 ) 6,101 Chief Executive Officer transition costs ( 28 ) ( 2,426 ) — Restructuring costs (1) ( 6,567 ) — — Other ( 1,763 ) ( 1,814 ) — Income before income taxes 617,736 551,472 530,765 Income tax expense ( 756,111 ) ( 60,809 ) ( 61,515 ) Net (loss) income $ ( 138,375 ) $ 490,663 $ 469,250 ___________________ (1) Equity-based compensation benefit of $ 0.1 million related to forfeited equity awards in connection with the restructuring is included on the equity-based compensation line item. During the years ended December 31, 2023 and 2022, intersegment revenue was immaterial between the Nucleic Acid Production and Biologics Safety Testing segments. During the year ended December 31, 2021, intersegment revenue was $ 0.7 million between the Nucleic Acid Production and Protein Detection segments. The intersegment sales and the related gross margin on inventory recorded at the end of the period are eliminated for consolidation purposes. 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, 2023, 2022 and 2021. 132 Table of Contents 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. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.