What changed in this filing

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Item 9A. Controls and Procedures

2023-02-22 compared with 2022-02-17 · 311 added, 389 removed, 1229 unchanged (36% of the section changed)

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Integrated Framework , issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO).

We acquired Polymem S.A.

(“Polymem”) on July 1, 2021, Avitide Inc.

(“Avitide”) on September 20, 2021 and BioFlex Solutions LLC (“BioFlex”) and Newton T&M Corp.

(“NTM”) on December 16, 2021.

The financial results of each of these acquisitions are included in our audited consolidated financial statements as of December 31, 2021.

The Company's consolidated total assets as of December 31, 2021 includes $52.4 million, $253.3 million and $33.4 million from the Polymem, Avitide, and NTM and BioFlex businesses, respectively.

The Company's consolidated revenue for the year ended December 31, 2021 includes $2.3 million, $1.3 million and $0.1 million, from Polymem, Avitide, NTM and Bioflex businesses, respectively.

As these acquisitions occurred in the third or fourth quarter of 2021, the scope of our assessment of our internal control over financial reporting does not include these acquisitions.

These exclusions are in accordance with the SEC’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of such acquisition.

In connection with our initiative to integrate and enhance our global information technology systems and business processes, we continued the phased implementation of a new enterprise resource planning (“ERP”) system.

The implementation of the ERP system is done in phases and will continue until all current and future subsidiaries are using it.

The third phase of this project was completed during the second quarter of 2021.

As a result of this implementation, we modified certain existing internal controls over financial reporting as of December 31, 2021.

The Company is implementing the ERP system in phases and will continue until all current and future subsidiaries are using it.

The fourth phase of implementation was completed during the first quarter of 2022.

In addition, we completed the implementation of a lease accounting system, LeaseQuery, during the first quarter of 2022.

As a result of these implementations, we modified certain existing internal controls over financial reporting as well as implemented new controls and procedures related to the new ERP system and LeaseQuery system as of December 31, 2022.

Other than the foregoing, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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In our opinion, Repligen Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Polymem S.A.

("Polymem"), Avitide, Inc.

("Avitide"), Newton T&M Corp ("NTM") and Bio-Flex Solutions, LLC ("Bioflex"), which are included in the 2021 consolidated financial statements of the Company and constituted $52.4 million, $253.3 million and $33.4 million of total assets, respectively, as of December 31, 2021, and $2.3 million, $1.3 million and $0.1 million of revenues, respectively, for the year to date 2021.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Polymem, Avitide, NTM and Bioflex.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 22, 2023 expressed an unqualified opinion thereon.

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(d) Changes in Internal Control Over Financial Reporting

Other than the acquisition of Bioflex and NTM mentioned above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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First Supplemental Indenture, dated as of July 19, 2019, by and between Repligen Corporation and Wilmington Trust, National Association (filed as Exhibit 4.2 to Repligen Corporation’s Current Report on Form 8-K filed on July 22, 2019 and incorporated herein by reference).

Second Supplemental Indenture, dated as of March 4, 2022, by and between Repligen Corporation and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to Repligen Corporation's Form 8-K filed on March 8, 2022).

Form of 0.375% Convertible Senior Note due 2024 (included in Exhibit 4.3).

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Snodgres (filed as Exhibit 10.1 to Repligen Corporation’s Current Report on Form 8-K filed on July 15, 2014 and incorporated herein by reference).

Repligen Corporation Amended and Restated Non-Employee Directors’

Compensation Policy (filed as Exhibit 10.1 to Repligen Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and incorporated herein by reference).

Repligen Corporation Amended and Restated Non-Employee Directors' Compensation Policy.

Form of Indemnification Agreement (filed as Exhibit 10.1 to Repligen Corporation’s Current Report on Form 8-K filed on May 12, 2016 and incorporated herein by reference).

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Letter Agreement, dated as of September 3, 2016 by and between Repligen Corporation and Ralf Kuriyel (filed as Exhibit 10.17 to Repligen Corporation’s Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference).

Repligen Corporation Named Executive Officer Severance and Change in Control Plan, effective as of June 13, 2019 (filed as Exhibit 10.1 to Repligen Corporation’s Current Report on Form 8-K filed on June 19, 2019 and incorporated herein by reference).

Second Amended and Restated Employment Agreement, dated as of June 15, 2019, by and between Repligen Corporation and Tony J.

Hunt (filed as Exhibit 10.2 to Repligen Corporation’s Current Report on Form 8-K filed on June 19, 2019 and incorporated herein by reference).

Repligen Corporation Amended and Restated Severance and Change in Control Plan, effective as of May 26, 2022 (filed as Exhibit 10.1 to Repligen Corporation's Form 8-K filed June 1, 2022).

Third Amendment and Restated Employment Agreement, dated as of May 26, 2022, by and between Repligen Corporation and Tony J.

Hunt (filed as Exhibit 10.2 to Repligen Corporation's Form 8-K filed June 1, 2022).

First Amendment to Lease Agreement, dated as of July 7, 2020 by and between Repligen Corporation and U.S.

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February 22, 2023

/S/ K ONSTANTIN K ONSTANTINOV

Konstantin Konstantinov

February 22, 2023

/ S / M ARTIN D.

February 22, 2023

/ S / R OHIN M HATRE

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February 22, 2023

/ S / THOMAS F.

February 17, 2022

INDEX TO FINANCIAL STATEMENTS

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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, 2022, 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 22, 2023 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for convertible debt in 2022 due to the adoption of ASU No.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20).

Basis for Opinion

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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.

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.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,

by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for acquisitions

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of contingent consideration

Description of

As disclosed in Note 4 to the consolidated financial statements, during 2021, the Company completed three acquisitions for total aggregate consideration of approximately $321.3 million, net of cash acquired.

The most significant of these was the acquisition of Avitide, Inc.

As disclosed in Note 4 to the consolidated financial statements under the caption “Acquisitions”

and Note 3 under the caption “Fair Value Measurements”, during 2021, the Company completed the acquisition of Avitide, Inc.

for consideration of approximately $246.3 million, net of cash acquired.

The transactions were accounted for as business combinations.

In the acquisition of Avitide, Inc, the Company has recognized a liability for acquisition consideration that is contingent upon achieving certain performance targets.

The Company determines the fair value of these arrangements, both as part of the initial purchase price allocation, and on an ongoing basis each reporting period until the arrangements are settled.

As of December 31, 2021, the amount for future estimated contingent consideration is $94.2 million.

Auditing the Company's accounting for its acquisitions was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of identified intangible assets of $72.9 million, which principally consisted of customer relationships and developed technology.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The Company used a discounted cash flow model to measure the customer relationship and developed technology intangible assets.

The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates.

The significance of the estimations used by management to determine the fair value of contingent consideration was primarily due to the sensitivity of the respective fair values to the significant underlying assumptions.

The significant assumptions include estimation of the probability and timing of payment, future revenue forecasts, as well as the appropriate discount rate based on the estimated timing of payments.

The Company recognized a contingent consideration liability at the estimated fair value on the acquisition date in

connection with applying the acquisition accounting for business combinations.

Subsequent changes to the fair value of the contingent consideration liability are recorded within the consolidated statement of comprehensive income in the period of change.

At December 31, 2022, the Company had a $65.5 million contingent consideration liability, which represented a ‘Level 3’

fair value measurement in the fair value hierarchy due to the significant unobservable inputs used in determining the fair value and the use of management judgement about the assumptions market participants would use in pricing the liability.

Auditing the Company's accounting for its contingent consideration liability was complex and required significant auditor judgment due to the use of a Monte Carlo simulation model and the high degree of subjectivity in evaluating certain assumptions required to estimate the fair value of contingent payments.

In particular, the fair value measurement was sensitive to the significant assumptions underlying future revenue and production forecasts, as well as, the probability of achieving such forecasts.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

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Matter in Our

We tested the Company's controls over its accounting for acquisitions.

Our tests included controls over the process supporting the recognition and measurement of consideration transferred, customer relationship, and developed technology intangible assets.

We also tested management’s review of assumptions used in the valuation models.

For each of the Company's acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates, and tested the recognition of (1) the tangible assets acquired and liabilities assumed at fair value;

(2) the identifiable intangible assets acquired at fair value;

and (3) goodwill measured as a residual.

To test the estimated fair value of the customer relationship and developed technology intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

This includes comparing the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to the historical results of the acquired business and to other guidelines used by companies within the same industry.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's contingent consideration liability process including, among others, management's process to establish the significant assumptions and measure the liability.

Our tests included controls over management's review of assumptions used in the valuation model.

To test the estimated fair value of the contingent consideration liability, our audit procedures included, among others, inspecting the terms of the executed purchase agreement, assessing the Monte Carlo simulation model used and testing the key contractual inputs and significant assumptions discussed above.

We performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

This includes comparing the significant assumptions to current industry, market and economic trends, to the historical results of the acquired business and to other guidelines used by companies within the same industry.

We involved our valuation professionals to assist in our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.

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Cash and cash equivalents

Marketable securities held to maturity

Accounts receivable, net of reserves of $ 1,365 and $ 1,417 at

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Operating lease liability

Current contingent consideration

Accrued liabilities

Convertible senior notes, current portion, net

Convertible Senior Notes, net

Total current liabilities

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Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated earnings

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Selling, general and administrative

Contingent consideration expense

Contingent consideration

Total costs and operating expenses

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Investment income

Loss on conversion of debt

Interest expense

Amortization of debt issuance costs

Other expenses

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Balance at December 31, 2019

Issuance of common stock for debt

Reduction of equity component from

debt conversion, net of tax

Exercise of stock options and vesting

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Issuance of common stock pursuant

to the acquisition of

C Technologies, Inc.

Tax withholding on vesting of

restricted stock

Equity component of 0.375 % senior

convertible notes, net of tax

Proceeds from issuance of common

stock, net of issuance costs

Stock-based compensation expense

Translation adjustment

Balance at December 31, 2019

Exercise of stock options and vesting

of stock units

Issuance of common stock pursuant

to the acquisition of ARTeSYN

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Balance at December 31, 2021

Issuance of common stock for debt

Exercise of stock options and vesting

of stock units

Tax withholding on vesting of

restricted stock

Stock-based compensation expense

Impact of the adoption of ASU 2020-06

Translation adjustment

Balance at December 31, 2022

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

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Deferred income taxes, net

Loss on conversion of debt

Changes in operating assets and liabilities, excluding impact of acquisitions:

Accounts receivable

Unbilled receivables

Prepaid expenses and other assets

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Cash flows from investing activities:

Purchase of marketable securities held to maturity

Additions to capitalized software costs

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Purchases of property, plant and equipment

Purchase of intellectual property

Other investing activities

Total cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of senior convertible notes, net of issuance costs

Proceeds from issuance of common stock, net of issuance costs

Exercise of stock options

Repayment of senior convertible notes

Proceeds from exercise of stock options

Repayment of Convertible Senior Notes

Payment of tax withholding obligation on vesting of restricted stock

Total cash provided by financing activities

Total cash (used in) provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash flow information:

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of ARTeSYN Biosolutions Holdings Ireland Limited

Fair value of 2,316,229 shares of common stock issued for conversion of

convertible notes

Fair value of common stock issued for acquisition of C Technologies, Inc.

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

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Repligen Corporation (NASDAQ:RGEN) is a global life sciences company that develops and commercializes highly innovative bioprocessing technologies and systems that increase efficiencies and flexibility in the process of manufacturing biological drugs.

The Company’s franchises include filtration (XCell ATF ® systems, TangenX SIUS ® flat sheet cassettes, Spectrum ® Hollow Fibers, KrosFlo ® systems and ProConnex ® single-use flow path assemblies), chromatography (OPUS ® Columns, chromatography resins, ELISA kits), process analytics (SoloVPE ® , FlowVPE ® and Flow VPX ® ) and proteins (Protein A affinity ligands and cell culture growth factors).

The Company’s franchises include filtration, chromatography, process analytics and proteins.

See Part I, Item 1.

"Business - Our Products", of this report for additional information related to the Company's products.

The Company’s bioprocessing products are sold to major life sciences companies, biopharmaceutical development companies and contract manufacturing organizations worldwide.

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for more information on the Company’s segment.

A majority of our 16 key manufacturing sites are located in the United States (California, Massachusetts, New Jersey and New York).

A majority of our 18 manufacturing sites are located in the United States (California, Massachusetts, New Hampshire, New Jersey, New York and Texas).

Outside the United States, we have manufacturing sites in Estonia, France, Germany, Ireland, the Netherlands and Sweden.

The Company is subject to a number of risks typically associated with companies in the biotechnology industry.

These risks principally include the Company’s dependence on key customers, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with the FDA and other governmental regulations and approval requirements, as well as the ability to grow the Company’s business and obtain adequate funding to finance this growth.

Food and Drug Association and other governmental regulations and approval requirements, as well as the ability to grow the Company’s business and obtain adequate funding to finance this growth.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and assumptions by management affect the Company’s revenue recognition for multiple element arrangements, allowance for credit losses, the net realizable value of inventory, valuations and purchase price allocations related to business combinations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets, contingent consideration, estimated fair values of intangible assets and goodwill, amortization methods and periods, warranty reserves, certain accrued expenses, stock-based compensation, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance.

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The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB, Repligen GmbH, Spectrum LifeSciences LLC and its subsidiaries (“Spectrum”), C Technologies, Inc.

(“C Technologies”), ARTeSYN Biosolutions Holdings Ireland Limited and its subsidiaries (“ARTeSYN”), Polymem S.A.

(“Polymem”), Avitide, Inc.

(“Avitide”), Newton T&M Corp ("NTM"), Bio-Flex Solutions, LLC ("BioFlex") and Repligen Singapore Pte.

("C Technologies"), ARTeSYN Biosolutions Holdings Ireland Ltd., ARTeSYN Biosolutions Ireland Limited and its subsidiaries (“ARTeSYN”), Polymem S.A.

(“Polymem”), Avitide, LLC (“Avitide”), Newton T&M Corp ("NTM"), Bio-Flex Solutions, LLC ("BioFlex"), Repligen Singapore Pte.

and Repligen UK Limited.

All significant intercompany accounts and transactions have been eliminated in consolidation.

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Highly liquid investments in money market mutual funds with an original maturity of three months or less are classified as cash equivalents.

All cash equivalents are carried at cost, which approximates fair value.

All cash equivalents are carried at cost, which

approximates fair value.

Restricted cash represents cash that is restricted as to withdrawal or usage.

There was no restriction on

the Company’s cash balance as of December 31, 2021 and 2020.

In connection with the Company’s acquisition of C Technologies on May 31, 2019, cash was held and due to employees based on their continued employment with the Company one year after the date of the close of the acquisition.

As of December 31, 2019, $ 9.0 million, which represented this amount due to employees, was carried as restricted cash on the Company’s consolidated balance sheet.

Subsequently, during the second quarter of 2020, this $ 9.0 million was paid to employees.

The following is a summary of the Company’s cash, cash equivalents, and restricted cash total as presented in the Company’s consolidated statements of cash flows for the years ended December 31, 2021, 2020 and 2019:

For the Years Ended December 31,

(Amounts in thousands)

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

There were no realized gains or losses on investments for the years ended December 31, 2021, 2020 and 2019 .

There was no restriction on the Company’s cash balance as of December 31, 2022 and 2021.

The Company’s cash, cash equivalents and restricted cash total as presented in the Company’s consolidated statements of cash flows for the years ended December 31, 2022, 2021 and 2020 was $ 523.5 million, $ 603.8 million and $ 717.3 million, respectively.

The beginning cash, cash equivalents and restricted cash balance of $ 537.4 million on the consolidated statement of cash flows for the year ended December 31, 2020 includes $ 9.0 million in restricted cash, which represented cash held and due to employees based on their continued employment with the Company one year after the acquisition of C Technologies in 2019.

The amount was subsequently paid to employees during 2020.

I nvestment Securities

We classify our investment securities in one of three categories:

held to maturity, trading, or available for sale.

Our investment portfolio at December 31, 2022 consists of an investment in U.S.

treasury bills classified as held to maturity which is included in the Company's consolidated balance sheets under marketable securities held to maturity.

Securities that we have the positive intent and ability to hold to maturity are classified as held to maturity and stated at amortized cost in the consolidated balance sheet.

Management determines the appropriate classification of securities at the time of purchase based upon management's intent with regards to such investment and reevaluates such designation as of each balance sheet date.

The Company's investment policy requires that it only invest in high rated securities and limit its exposure to any single-user.

Currently, all investment securities are held-to-maturity and are carried at amortized cost on the Company's consolidated balance sheet as of December 31, 2022, as marketable securities held to maturity.

There were no realized or unrealized gains or losses on investments recorded as of December 31, 2022, 2021 and 2020.

The Company classifies marketable securities as short-term when they have remaining contractual maturities of one year or less from the balance sheet date.

The Company periodically assesses its marketable securities for impairment or credit losses.

Fair Value Measurement

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The Company values inventory at cost or, if lower, net realizable value, using the first-in, first-out method.

The Company reviews its inventories at least quarterly and records a provision for

excess and obsolete inventory based on its estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products.

The Company reviews its inventories at least quarterly and records a provision for excess and obsolete inventory based on its estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products.

The Company writes down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of product revenue.

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The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense.

The Company is subject to a territorial tax system under the Tax Cuts and Jobs Act enacted in December 2017, in which the Company is required to provide for tax on Global Intangible Low-Taxed Income ("GILTI") earned by certain foreign subsidiaries.

The Company has adopted an accounting policy to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense.

Property, Plant & Equipment

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Certain systems development costs related to the purchase, development and installation of computer software developed or obtained for internal use are capitalized and depreciated over the estimated useful life of the related project.

Costs incurred prior

to the development stage, as well as maintenance, training costs, and general and administrative expenses are expensed as incurred.

Costs incurred prior to the development stage, as well as maintenance, training costs, and general and administrative expenses are expensed as incurred.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares and dilutive common share equivalents then outstanding.

Potential common share equivalents consist of restricted stock awards and the incremental common shares issuable upon the exercise of stock options and warrants.

The Company reports earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share," which establishes standards for computing and presenting EPS.

Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period.

Potential common share equivalents consist of restricted stock awards (including performance stock units) and the incremental common shares issuable upon the exercise of stock options and warrants.

Under the treasury stock method, unexercised “in-the-money”

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In periods when the Company has a net loss, stock awards are excluded from the calculation of earnings per share as their inclusion would have an antidilutive effect.

A reconciliation of basic and diluted share amounts is as follows:

A reconciliation of basic and diluted weighted average share outstanding is as follows:

For the Years Ended December 31,

(Amounts in thousands, except per share data)

Effect of dilutive securities:

Charges associated with convertible debt instruments, net of tax

Numerator for diluted earnings per share - net income available to common stockholders after the effect of dilutive securities

Weighted average shares used in computing net income per

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Convertible senior notes

Contingent consideration

Dilutive effect of unvested performance stock units

Dilutive potential common shares

Weighted average shares used in computing net income per

share - diluted

Denominator for diluted earnings per share - adjusted weighted average shares used in computing net income per share - diluted

Earnings per share:

At December 31, 2021, there were outstanding options to purchase 625,107 shares of the Company’s common stock at a weighted average exercise price of $ 54.15 per share and 606,685 shares of common stock issuable upon the vesting of stock units which include restricted stock units and performance stock units.

For the year ended December 31, 2021, 68,968 shares of the Company’s common stock were excluded from the calculation of diluted earnings per share because they would have had an anti-dilutive effect.

At December 31, 2020, there were outstanding options to purchase 696,711 shares of the Company’s common stock at a weighted average exercise price of $ 43.88 per share and 665,540 shares of common stock issuable upon the vesting of stock units.

For the year ended December 31, 2020, 98,048 shares of the Company’s common stock were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares and were therefore, anti-dilutive.

At December 31, 2019, there were outstanding options to purchase 957,559 shares of the Company’s common stock at a weighted average exercise price of $ 30.81 per share and 734,984 shares of common stock issuable upon the vesting of stock units.

For the year ended December 31, 2019, 104,316 shares of the Company’s common stock were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares and were therefore, anti-dilutive.

In July 2019, the Company issued $ 287.5 million aggregate principal amount of the 2019 Notes.

As provided by the terms of the indenture underlying the 2019 Notes, conversion of the 2019 Notes will be settled in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election.

As of December 31, 2021, the 2019 Notes were convertible.

The Company currently intends to settle the par value of the 2019 Notes in cash and any excess conversion premium in shares.

The Company applies the provisions of ASC 260, “Earnings Per Share”, Subsection 10-45-44, to determine the diluted weighted average shares outstanding as it relates to the conversion spread on its convertible notes.

Accordingly, the par value of the 2019 Notes is not included in the calculation of diluted income per share, but the dilutive effect of the conversion premium is considered in the calculation of diluted net income per share using the treasury stock method.

The dilutive impact of the 2019 Notes is based on the difference between the Company’s current period average stock price and the conversion price of the convertible notes, provided there is a premium.

Pursuant to this accounting standard, there is no dilution from the accreted principal of the 2019 Notes.

For the years ended December 31, 2021, 2020 and 2019, the dilutive effect of the conversion premium included in the calculation of diluted earnings was 1,253,168 shares, 366,534 shares and 1,123,139 shares, respectively.

In 2022, the Company will adopt Accounting Standards Update No.

("ASU") 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)." Once adopted, the 2019 Notes will be subject to the "if-converted" method for calculating diluted earnings per share.

Under the "if-converted" method, diluted earnings per share will be calculated assuming that all of the convertible notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive.

The Company is currently evaluating the impact of the adoption of ASU 2020-06 on the Company's consolidated financial statements.

For the years ended December 31, 2022, 2021 and 2020 , 177,318 shares, 68,968 shares and 98,048 shares, respectively, of the Company’s common stock were excluded from the calculation of diluted earnings per share because they would have had an anti-dilutive effect for years presented.

In July 2019, the Company issued $ 287.5 million aggregate principal amount of our 0.375% Convertible Senior Notes due 2024 (the "2019 Notes").

As provided by the terms of the indenture underlying the 2019 Notes, prior to March 4, 2022, conversion of the 2019 Notes could have been settled in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election.

On March 4, 2022, we entered into the Second Supplemental Indenture for the 2019 Notes, which irrevocably elected to settle the conversion of the 2019 Notes using a combination of cash and shares of the Company's common stock, settling the par value of the 2019 Notes in cash and any excess conversion premium in shares.

As provided by the terms of the Second Supplemental Indenture underlying the 2019 Notes, the Company irrevocably elected to settle the conversion obligation for the 2019 Notes in a combination of cash and shares of the Company's common stock.

This means the Company will settle the par value of the 2019 Notes in cash and any excess conversion premium in shares.

As mentioned in Note 13, "Convertible Senior Notes," the Company adopted ASU 2020-06 effective January 1, 2022.

Under ASU 2020-06, the Company is required to reflect the dilutive effect of the convertible securities by application of the "if-converted" method, which means the denominator of the EPS calculation would include the total number of shares assuming the 2019 Notes had been fully converted at the beginning of the period.

Prior to March 4, 2022, the Company had the choice to settle the conversion of the 2019 Notes in cash, stock or a combination of the two.

Therefore, from January 1, 2022 (the date the Company adopted ASU 2020-06) to March 4, 2022, the Company included 3,474,429 shares in the denominator of the EPS calculation, applying the if converted method.

Subsequent to March 4, 2022, after the Second Supplemental Indenture became effective, the Company irrevocably elected to settle the conversion obligation for the 2019 Notes in a combination of cash and shares of the Company's common stock, and from March 5, 2022 forward, only the excess premium will be settled with shares.

Under the if-converted method of calculating dilutive shares, the Company was also required to exclude amortization of debt issuance costs and interest charges applicable to the convertible debt from the numerator of the dilutive EPS calculation for the period from January 1, 2022 to March 4, 2022, as if the interest on convertible debt was never recognized for that period.

For the year ended

December 31, 2022, the Company excluded interest charges of $ 0.4 million (net of tax) from the numerator and included 1,359,957 shares in the calculation of diluted earnings as the dilutive effect of the conversion premium.

Prior to the adoption of ASU 2020-06, the Company applied the provisions of ASC 260-10-45-44, to determine the diluted weighted average shares outstanding as it related to the conversion spread on its convertible notes.

Accordingly, the par value of the 2019 Notes was not included in the calculation of diluted EPS, but the dilutive effect of the conversion premium was considered in the calculation of diluted EPS using the treasury stock method.

The dilutive impact of the 2019 Notes was based on the difference between the Company’s current period average stock price and the conversion price of the convertible notes, provided there is a premium.

Pursuant to this accounting standard, there was no dilution from the accreted principal of the 2019 Notes.

For the years ended December 31, 2021 and 2020, the dilutive effect of the conversion premium included in the calculation of diluted earnings was 1,253,168 shares and 366,534 shares, respectively.

Segment Reporting

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(2) 2020 revenue for filtration products includes revenue related to EMT from July 13, 2020, NMS from October 20, 2020, and ARTeSYN from December 3, 2020 through December 31, 2020.

(3) 2019 revenue includes process analytics revenue related to C Technologies from June 1, 2019 through December 31, 2019.

(4) Revised 2020 and 2019 revenue in the table above reflects a shift in revenue from chromatography products to proteins products of approximately $ 3 million and $ 4 million, respectively.

(3) Revised 2020 revenue in the table above reflects a shift in product revenue from chromatography products to proteins products of approximately $ 3 million.

These changes are consistent with the current year presentation of product revenue.

Revenue from filtration products includes the XCell ATF ® systems and consumables as well as the KrosFlo ® and SIUS ® filtration products.

Revenue from chromatography products includes the OPUS chromatography PPCs, chromatography resins and ELISA test kits.

Revenue from chromatography products includes the OPUS ® chromatography pre-packed columns ("PPC"), chromatography resins and ELISA test kits.

Revenue from process analytics products includes the SoloVPE ® , FlowVPE ® and FlowVPX ® devices.

Revenue from protein

products includes the Protein A affinity ligands and cell culture growth factors.

Revenue from protein products includes the Protein A affinity ligands and cell culture growth factors.

Other revenue primarily consists of revenue from the sale of operating room products to hospitals as well as freight revenue.

The following table represents the Company’s total revenue by geographic area (based on the location of the customer):

The following table represents the Company’s total revenue by our country of domicile (the United States) and other countries where our major subsidiaries are domiciled for the periods presented (based on the location of the customer):

For the Years Ended December 31,

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Total revenue

The following table represents the Company’s total assets by geographic area:

The following table represents the Company’s total assets by our country of domicile (the United States) and other countries where our major subsidiaries are domiciled for the periods presented:

(Amounts in thousands)

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Total assets by geographic location

The following table represents the Company’s long-lived assets by geographic area:

The following table represents the Company’s long-lived assets by our country of domicile (the United States) and other countries where our major subsidiaries are domiciled for the periods presented:

(Amounts in thousands)

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Financial instruments that subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, marketable securities and accounts receivable.

Per the Company’s investment policy, cash equivalents and marketable securities are invested in financial instruments with high credit ratings and credit exposure to any one issue, issuer (with the exception of U.S.

Per the Company’s investment policy, cash equivalents and marketable securities are invested in financial instruments with high credit ratings, limit its credit exposure to any one issuer (with the exception of U.S.

treasury obligations) and type of instrument is limited.

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financial condition.

Revenue from significant customers that represent 10% or more of the Company’s total revenue is as follows:

For the Years Ended December 31,

MilliporeSigma

There was no revenue from customers that represented 10 % or more of the Company's total revenue for the year ended December 31, 2022.

Revenue from Pfizer Inc.

accounted for 10 % of total revenue for the year ended December 31, 2021, and MilliporeSigma accounted for 11 % of total revenues in the year ended December 31, 2020.

Significant accounts receivable balances representing 10 % or more of the Company’s total trade accounts receivable balances at December 31, 2022 and 2021 is as follows:

Purolite (an Ecolab Inc.

Business Combinations, Goodwill and Intangible Assets

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These changes in the fair value of contingent consideration are recorded to contingent consideration expense in our consolidated statements of comprehensive income.

For the year ended December 31, 2021, we recorded $ 5.9 million of contingent consideration expense related to the change in estimated contingent consideration obligation related to the Avitide Acquisition.

For the years ended December 31, 2022 and 2021 , we recorded ($ 28.7 ) million and $ 5.9 million, respectively, of contingent consideration expense related to the change in estimated contingent consideration obligation related to the acquisition of Avitide (the "Avitide Acquisition").

The Company uses the income approach to determine the fair value of certain identifiable intangible assets including customer relationships and developed technology.

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Discount rates used to arrive at a present value as of the date of acquisition are based on the time value of money and certain industry-specific risk factors.

The Company believes the estimated purchased customer relationships, developed technologies, trademark/tradename, patents, non-compete agreements and in-process R&D amounts so determined represent the fair value at the date of acquisition, and do not exceed the amount a third-party would pay for such assets.

The Company believes the estimated purchased customer relationships, developed technologies, trademark/tradename, patents, non-compete agreements and in-process research and development ("R&D") amounts so determined represent the fair value at the date of acquisition, and do not exceed the amount a third-party would pay for such assets.

Goodwill is not amortized and is tested for impairment at least annually at the reporting unit level.

In 2019, the Company reorganized its reporting structure and changed the way the CODM views the Company’s operations and allocates its resources.

Accordingly, the Company operates as one reporting unit as of the goodwill impairment measurement date of December 31, 2021.

The Company operates as one reporting unit as of the goodwill impairment measurement date of December 31, 2022.

During the qualitative assessment of the Company’s one reporting unit during the 2022 goodwill impairment testing, it was determined that it was not more likely than not that its fair value was less than its carrying amount.

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Intangible assets with a definite life are amortized over their useful lives using the straight-line method and the amortization expense is recorded within cost of product revenue, research and development and selling, general and administrative expense in the consolidated statements of comprehensive income.

Intangible assets and their related useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable.

Intangible assets and their related useful lives are reviewed at least annually to determine if any adverse conditions existed that would indicate the carrying value of these assets may not be recoverable.

More frequent impairment assessments are conducted if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, a loss of a significant customer, or a significant change in the marketplace, including changes in the prices paid for the Company’s products or changes in the size of the market for the Company’s products.

If impairment indicators are present, the Company determines whether the underlying intangible asset is recoverable through estimated future undiscounted cash flows.

If impairment indicators are present, the Company determines whether the underlying

intangible asset is recoverable through estimated future undiscounted cash flows.

If the asset is not found to be recoverable, it is written down to the estimated fair value of the asset based on the sum of the future discounted cash flows expected to result from the use and disposition of the asset.

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The Company expenses advertising costs as they are incurred.

Advertising expense for the years ended December 31, 2021, 2020 and 2019 was less than $ 0.6 million, $ 0.3 million and $ 0.1 million, respectively.

Advertising expense for the years ended December 31, 2022, 2021 and 2020 was $ 0.6 million, $ 0.6 million and $ 0.3 million, respectively.

Recent Accounting Standards Updates

We consider the applicability and impact of all Accounting Standards Updates on the Company’s consolidated financial statements.

We consider the applicability and impact of all ASUs on the Company’s consolidated financial statements.

Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations.

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Recently Issued Accounting Standard Updates –

Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08, “Business Combinations (Topic 805) –

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.”

ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers,”

as if it had originated the contracts.

This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

ASU 2021-08 will be effective for us for the first quarter of 2023, with early adoption permitted.

The adoption impact of the new standard will depend on the magnitude of future acquisitions.

The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

In August 2020, the FASB issued ASU 2020-06, “

Adopted During the Fiscal Year

Effective January 1, 2022, the Company adopted ASU 2020-06, “

Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)”

using the modified retrospective method of adoption.

ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract.

ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance.

ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

This update permits the use of either the modified retrospective or fully retrospective method of transition.

The Company does not believe the impact of the adoption of ASU 2020-06 will have a significant impact on its consolidated financial statements when adopted, beginning in the first quarter of 2022.

Consequently, a convertible instrument is now accounted for as a single liability measured at its amortized cost as long as no other features of such convertible instrument require bifurcation and recognition as derivatives.

By removing those separation models, the interest rate of convertible debt instruments will typically be closer to the coupon interest rate when applying the guidance in Topic 835, “Interest.”

The Company now accounts for its 0.375% convertible senior notes due July 15, 2024 (the "2019 Notes") as a single liability measured at amortized cost.

As a result, the adoption of ASU 2020-06 had a material impact on the Company's consolidated financial statements, resulting in adjustments of $ 39.1 million, $ 17.3 million and $ 27.6 million to the opening balances of additional paid-in capital, retained earnings and Convertible Senior Notes, net, respectively, on the Company's consolidated balance sheet as of January 1, 2022.

Additionally, due to the adoption of ASU 2020-06, the Company reversed the remaining balance of the deferred tax liability of $ 6.4 million, which was initially recorded in connection with the 2019 Notes.

See Note 13, “Convertible Senior Notes,”

for more information, including our modified disclosures as required by ASU 2020-06 upon adoption.

Fair Value Measurements

Cash, Cash Equivalents and Marketable Securities Held to Maturity

The following table summarizes the Company's cash, cash equivalents and marketable securities held to maturity as of December 31, 2022:

As of December 31, 2022

(Amounts in thousands)

Cash and cash equivalents:

Cash and money market funds

Total cash and cash equivalents

Marketable securities held to maturity:

treasury bills - short-term

Total cash, cash equivalents and marketable securities

During the fourth quarter of 2022, the Company purchased $ 100.0 million of 6-month U.S.

treasury bills with the positive intent and ability to hold them until maturity.

Therefore, the Company classified this investment as held to maturity and stated it at amortized cost on the consolidated balance sheet.

There is no comparable investment as of December 31, 2021.

The amortized cost and fair value of the Company's held to maturity securities by contractual maturity at December 31, 2022 are summarized below.

There is no comparable investment as of December 31, 2021:

December 31, 2022

Maturity of one year or less

Fair Value Measured on a Recurring Basis

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Money market accounts

Contingent consideration - earnout obligation

Short-term contingent consideration

Long-term contingent consideration

As of December 31, 2021

Money market accounts

Cash and cash equivalents

As of December 31, 2021 and 2020, cash and cash equivalents on the Company’s consolidated balance sheets included $ 460.9 million and $ 549.0 million, respectively, in money market accounts.

These funds are valued on a recurring basis using Level 1 inputs.

Long-term contingent consideration

Contingent Consideration –

On September 20, 2021, the Company completed the acquisition of Avitide (the "Avitide Acquisition"), a privately-held affinity ligand discovery and development company headquartered in Lebanon, New Hampshire.

On September 20, 2021, the Company completed the Avitide Acquisition.

Avitide is a privately-held affinity ligand discovery and development company headquartered in Lebanon, New Hampshire.

The transaction consisted of upfront payments of $ 150.0 million and up to an additional $ 125.0 million (undiscounted) in contingent consideration earnout payments made equally in cash and the Company's common stock over a three-year performance period beginning January 1, 2022 and ending December 31, 2024.

See Note 4, "Acquisitions" below for additional information.

During 2022, a change in market inputs and a shift in revenue and volume projections, due to the expected timing of achievement over the three-year performance period, resulted in a material change in amounts reported as of December 31, 2022 .

A reconciliation of the change in fair value of contingent consideration –

earnout is included in the following table (amounts in thousands):

Balance as of December 31, 2020

Acquisition date fair value of contingent consideration - earnout

Contingent consideration expense

Balance as of December 31, 2021

Balance at December 31, 2021

Decrease in fair value of contingent consideration earnouts

Balance at December 31, 2022

The recurring Level 3 fair value measurement of our contingent consideration –

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December 31, 2022

(amounts in thousands)

Valuation Technique

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Changes in the projected performance of the acquired business could result in a higher or lower contingent consideration obligation in the future.

During the fourth quarter of 2021, we recorded a contingent consideration expense of $ 5.9 million to the Company’s consolidated statement of comprehensive income.

Fair Value Measured on a Nonrecurring Basis

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Convertible Senior Notes

In July 2019, the Company issued $ 287.5 million aggregate principal amount of the Company’s 0.375 % Convertible Senior Notes due July 15, 2024 (the “2019 Notes”).

In July 2019, the Company issued $ 287.5 million aggregate principal amount of the 2019 Notes.

Interest is payable semi-annually in arrears on January 15 and July 15 of each year.

The 2019 Notes will mature on July 15, 2024, unless earlier converted or repurchased in accordance with their terms.

At December 31, 2021 and 2020, the carrying value of the 2019 Notes was $ 255.3 million and $ 243.7 million, respectively, net of unamortized discount, and the fair value of the 2019 Notes was $ 678.5 million and $ 501.0 million, respectively.

The fair value of the 2019 Notes is a Level 1 valuation and was determined based on the most recent trade activity of the 2019 Notes as of December 31, 2021.

At December 31, 2022, the carrying value of the 2019 Notes was $ 284.6 million, net of unamortized debt issuance costs and the fair value of the 2019 Notes was $ 452.0 million.

At December 31, 2021 , prior to the adoption of ASU 2020-06, the carrying value of the 2019 Notes was $ 255.3 million, net of unamortized discount and unamortized issuance costs, and the fair value of the 2019 Notes was $ 678.5 million.

The fair value of the 2019 Notes is a Level 1 valuation and was determined based on the most recent trade activity of the 2019 Notes as of December 31, 2022 and 2021.

The 2019 Notes are discussed in more detail in Note 13, “Convertible Senior Notes,”

to these consolidated financial statements.

There were no remeasurements to fair value during the year ended December 31, 2021 of financial assets and liabilities that are not measured at fair value on a recurring basis.

2021 Acquisitions

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The NTM Acquisition was accounted for as a purchase of businesses under ASC 805, “Business Combinations”

and engaged a third-party valuation firm to assist with the valuation of the business acquired.

and the Company engaged a third-party valuation firm to assist with the valuation of the business acquired.

Under the terms of the Equity Purchase Agreement, all outstanding shares of capital stock of BioFlex were acquired for consideration with a value totaling $ 31.6 million, which includes $ 3.0 million deposited into an escrow against which the Company may make claims for indemnification.

Under the acquisition method of accounting, the assets acquired and liabilities assumed of BioFlex were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

The fair value of the net assets acquired assumed is estimated to be $ 4.4 million, the fair value of the intangible assets acquired is estimated to be $ 17.2 million, and the residual goodwill is estimated to be $ 10.2 million.

The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation.

The fair value of the net assets acquired is $ 4.6 million, the fair value of the intangible assets acquired is $ 17.2 million, and the residual goodwill is $ 9.8 million.

Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred.

The Company incurred $ 0.3 million of transaction and integration costs associated with the NTM Acquisition from the date of acquisition to December 31, 2021.

The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the period ended December 31, 2021.

The preparation of the valuation required the use of significant assumptions and estimates.

Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates.

These estimates were based on assumptions that the Company believes to be reasonable.

However, actual results may differ from these estimates.

The Company incurred $ 3.0 million of transaction and integration costs associated with the NTM Acquisition from the date of acquisition to December 31, 2022 , with $ 2.7 million of transaction and integration costs incurred in 2022 and $ 0.3 million incurred in 2021.

The transaction and integration costs are included in operating expenses in the consolidated statements of comprehensive income for the periods ended December 31, 2022 and 2021.

Fair Value of Net Assets Acquired

The preliminary allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the preliminary valuation.

The purchase accounting for this acquisition is not finalized.

As additional information becomes available, the Company may further revise its preliminary purchase price allocation during the remainder of the measurement period.

Any such revisions or changes may have a material impact on our accounting treatment of the NTM Acquisition.

The final allocation may include changes to:

(1) deferred revenue;

(2) inventory;

(3) deferred tax assets, net;

(4) allocations to intangible assets such as trademark and tradename, developed technology and customer relationships as well as goodwill;

(5) final consideration paid related to working capital adjustments;

and (6) other assets and liabilities.

The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the final valuation.

The Company has made appropriate adjustments to the purchase price allocation during the measurement period, which ended December 16, 2022.

The components and estimated allocation of the purchase price consist of the following (amounts in thousands):

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Fair value of net assets acquired

During 2022, the Company recorded net working capital adjustments of approximately $ 0.3 million related to pre-acquisition liabilities, which are included in goodwill and accrued liabilities in the table above.

Acquired Goodwill

The goodwill of $ 9.8 million represents future economic benefits expected to arise from anticipated synergies from the integration of BioFlex and NTM into the Company.

These synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the NTM Acquisition.

These synergies include certain operating efficiencies and strategic benefits projected to be achieved as a result of the NTM Acquisition.

Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.

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Avitide, Inc.

On September 16, 2021, the Company entered into an Agreement and Plan of Merger and Reorganization (“Avitide Merger Agreement”) with Avalon Merger Sub, Inc., a Delaware corporation and a wholly owned direct subsidiary of the Company, Avalon Merger Sub LLC, a Delaware limited liability company and a wholly owned direct subsidiary of the Company, Avitide, Inc.

("Avitide"), a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of Avitide's securityholders to purchase Avitide.

The transaction closed on September 20, 2021 and on the terms set forth in the Avitide Merger Agreement (the "Avitide Acquisition").

as the representative, agent and attorney-in-fact of Avitide's securityholders to purchase Avitide.

The transaction closed on September 20, 2021, and on the terms set forth in the Avitide Merger Agreement.

Avitide, which is headquartered in Lebanon, New Hampshire, offers diverse libraries and leading technology in affinity ligand discovery and development resulting in best-in-class ligand discovery and development lead-times.

The acquisition gives the Company a new platform for affinity resin development, including C&GT, and advances and expands the Company’s proteins and chromatography franchise to address the unique purification needs of gene therapies and other emerging modalities.

The acquisition gives the Company a new platform for affinity resin development, including C&GT, and advances and expands the Company’s proteins and chromatography franchises to address the unique purification needs of gene therapies and other emerging modalities.

Consideration Transferred

The Avitide Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations”

and engaged a third-party valuation firm to assist with the valuation of the business acquired.

Under the terms of the Merger Agreement, all outstanding shares of capital stock of Avitide were cancelled and converted into the right to receive merger consideration with a value totaling up to $ 275.0 million, which consisted of upfront payments in aggregate of $ 150.0 million ($ 149.4 million, net of cash acquired) and up to an additional $ 125.0 million (undiscounted) in contingent consideration earnout payments if certain performance targets are achieved.

and the Company engaged a third-party valuation firm to assist with the valuation of the business acquired.

Under the terms of the Avitide Merger Agreement, all outstanding shares of capital stock of Avitide were cancelled and converted into the right to receive merger consideration with a value totaling up to $ 275.0 million, which consisted of upfront payments in aggregate of $ 150.0 million ($ 149.4 million, net of cash acquired) and up to an additional $ 125.0 million (undiscounted) in contingent consideration earnout payments if certain performance targets are achieved.

Total consideration paid also included $ 0.8 million deposited into an escrow account against which the Company may make claims for indemnification.

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Under the acquisition method of accounting, the assets acquired and liabilities assumed of Avitide were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

The fair value of the net assets acquired is estimated to be $ 0.4 million, fair value of the intangible assets acquired is estimated to be $ 46.7 million, and the residual goodwill is estimated to be $ 199.2 million.

The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation.

Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred.

The Company incurred $ 2.6 million of transaction and integration costs associated with the Avitide Acquisition from the date of acquisition to December 31, 2021.

The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the period ended December 31, 2021.

During the fourth quarter of 2021, the Company also recorded a contingent consideration expense of $ 5.9 million to the Company’s consolidated statement of comprehensive income.

The fair value of the net assets acquired is $ 2.1 million, fair value of the intangible assets acquired is $ 46.7 million, and the residual goodwill is $ 197.5 million.

The Company has incurred $ 5.6 million of transaction and integration costs associated with the Avitide Acquisition from the date of acquisition to December 31, 2022, with $ 3.0 million of transaction and integration costs incurred in 2022 and $ 2.6 million in 2021.

The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the periods ended December 31, 2022 and 2021.

During 2022 and 2021, due to the change in market inputs and a shift in revenue and volume projections, due to the expected timing of achievement over the three-year performance period, the Company recorded contingent consideration adjustments of ($ 28.7 ) million and $ 5.9 million to the Company’s consolidated statement of comprehensive income in 2022 and 2021, respectively.

See Note 3, "Fair Value Measurements" for additional information.

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Fair Value of Net Assets Acquired

The preliminary allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the preliminary valuation.

As additional information becomes available, the Company may further revise its preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from September 20, 2021).

Any such revisions or changes may have a material impact on our accounting treatment of the Avitide Acquisition.

The final allocation may include changes to long term deferred tax liabilities and goodwill.

Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments will be recorded to our consolidated statement of comprehensive income.

The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the final valuation of Avitide.

The Company has made appropriate adjustments to the purchase price allocation during the measurement period, which ended on September 20, 2022.

The components and estimated allocation of the purchase price consist of the following (amounts in thousands):

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Non-competition agreements

Long term deferred tax asset

Accounts payable

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Operating lease liability, long-term

Long term deferred tax liability

Other liabilities

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Substantially all of the goodwill recorded is expected to be nondeductible for income tax purposes.

During 2022, the Company recorded adjustments to goodwill of $ 1.8 million related to a change in estimated tax benefits associated with the net operating loss carryforward filed on the Avitide pre-acquisition tax return.

The offset of these adjustments is included in long term deferred tax asset in the table above.

Intangible Assets

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Non-competition agreements

On June 22, 2021, the Company entered into a Stock Purchase Agreement with Polymem S.A.

(“Polymem”), a company organized under the laws of France, and Jean-Michel Espenan and Franc Saux, acting together jointly and severally as the

representatives of the sellers pursuant to which Repligen acquired all of the outstanding common stock of Polymem for $ 47.0 million in cash.

On June 22, 2021, the Company entered into a Stock Purchase Agreement with Polymem, a company organized under the laws of France, and Jean-Michel Espenan and Franc Saux, acting together jointly and severally as the representatives of the sellers pursuant to which Repligen acquired all of the outstanding common stock of Polymem for $ 47.0 million in cash.

The transaction closed on July 1, 2021 (the “Polymem Acquisition.”).

Polymem, which is headquartered in, Toulouse, France, is a manufacturer of hollow fiber membranes, membrane modules and systems for industrial and bioprocessing applications.

Polymem, which is headquartered in, Toulouse, France, is a manufacturer of hollow fiber ("HF") membranes, membrane modules and systems for industrial and bioprocessing applications.

Polymem products will complement and expand the Company’s portfolio of HF systems and consumables.

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Consideration Transferred

The Company accounted for the Polymem Acquisition as a purchase of a business under ASC 805, “Business Combinations”

and engaged a third-party valuation firm to assist with the valuation of the business acquired.

The Company accounted for the Polymem Acquisition as a purchase of a business under ASC 805 and the Company engaged a third-party valuation firm to assist with the valuation of the business acquired.

Payment for the transaction was denominated in Euros but is reflected here in U.S.

dollars for presentation purposes based on an exchange rate of 0.8437 as of July 1, 2021, the date of acquisition.

Total consideration paid was approximately $47.0 million, which included approximately $ 4.3 million deposited into an escrow account against which the Company may make claims for indemnification.

The fair value of the net assets acquired is approximately $ 2.2 million, the fair value of the intangible assets acquired is approximately $ 9.1 million, and the residual goodwill is approximately $ 35.7 million.

Total consideration paid was $ 47.0 million, which included $ 4.3 million deposited into an escrow account against which the Company may make claims for indemnification.

Under the acquisition method of accounting, the assets acquired and liabilities assumed of Polymem were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

The fair value of the net assets acquired is $ 2.2 million, the fair value of the intangible assets acquired is $ 9.1 million, and the residual goodwill is $ 35.7 million.

Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred.

The Company incurred $ 3.1 million of transaction and integration costs associated with the Polymem Acquisition from the date of acquisition to December 31, 2021.

The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the period ended December 31, 2021.

The Company incurred $ 8.2 million of transaction and integration costs associated with the Polymem Acquisition from the date of acquisition to December 31, 2022, with $ 5.1 million incurred in 2022 and $ 3.1 million incurred from the date of acquisition to December 31, 2021.

The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the periods ended December 31, 2022 and 2021.

Fair Value of Net Assets Acquired

The preliminary allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the preliminary valuation.

The final allocation may include changes to final payments made related to working capital adjustments, long term deferred tax liabilities and goodwill.

Any such revisions or changes may have a material impact on our accounting treatment of the Polymem Acquisition.

The components and estimated allocation of the purchase price consist of the following (amounts in thousands):

The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the final valuation of Polymem.

The Company has made appropriate adjustments to the purchase price allocation during the measurement period, which ended on July 1, 2022.

The components and final allocation of the purchase price consist of the following (amounts in thousands):

Cash and cash equivalents

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Acquired Goodwill

The goodwill of approximately $ 35.7 million represents future economic benefits expected to arise from anticipated synergies from the integration of Polymem.

These synergies include certain cost savings, operating efficiencies and other strategic benefits

projected to be achieved as a result of the Polymem Acquisition.

The goodwill of $ 35.7 million represents future economic benefits expected to arise from anticipated synergies from the integration of Polymem.

These synergies include certain operating efficiencies and strategic benefits projected to be achieved as a result of the Polymem Acquisition.

Substantially all of the goodwill recorded is expected to be nondeductible for income tax purposes.

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In addition, the Company has integrated unique flow path assemblies utilizing the Company’s silicone extrusion and molding technology, to deliver highly differentiated, low hold-up volume systems that minimize product loss during processing.

The ARTeSYN portfolio expands on the market success of the Company’s hollow fiber systems and complements its chromatography and TFF filtration product lines.

Consideration Transferred

The ARTeSYN Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations”

The ARTeSYN Acquisition was funded through payment of $ 130.7 million in cash, as well as issuance of 372,990 unregistered shares of the Company’s common stock totaling $ 69.4 million, contingent consideration of approximately $ 1.5 million, and settlement of preexisting invoices with the Company of approximately $ 2.3 million, for a total purchase price of $ 204.0 million.

Under the acquisition method of accounting, the assets acquired and liabilities assumed of ARTeSYN were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

The fair value of the net tangible assets acquired is estimated to be $ 8.0 million, the fair value of the intangible assets acquired is estimated to be $ 67.4 million, and the residual goodwill is estimated to be $ 128.6 million.

The estimated consideration and purchase price information was prepared using a valuation.

Payment of the final consideration for working capital was made in April 2021.

The preparation of the valuation required the use of significant assumptions and estimates.

Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates.

estimates were based on assumptions that the Company believes to be reasonable.

However, actual results may differ from these estimates.

Total consideration transferred is as follows (amounts in thousands):

Cash consideration

Equity consideration

Contingent consideration

Settlement of preexisting liabilities

Fair value of net assets acquired

The ARTeSYN portfolio expands on the market success of the Company’s HF systems and complements its chromatography and tangential flow filtration ("TFF") product lines.

Acquisition related costs are not included as a component of consideration transferred but are expensed in the periods in which the costs are incurred.

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The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the period ended December 31, 2021.

The consideration transferred includes approximately $ 1.5 million related to consideration that was deferred at the acquisition date, with payment to the ARTeSYN Sellers contingent upon recognizing revenue on a large-scale system within 120 days of the acquisition date.

This consideration is recorded at its estimated fair value as of the acquisition date, which includes the assumption of high probability of such revenue being recognized.

Fair Value of Net Assets Acquired

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Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.

Intangible Assets

The following table sets forth the components of the identified intangible assets associated with the ARTeSYN Acquisition and their estimated useful lives:

(Amounts in thousands)

Customer relationships

Developed technology

Trademark and tradename

Non-competition agreements

Non-Metallic Solutions, Inc.

On October 15, 2020, the Company entered into a Stock Purchase Agreement with NMS, a Massachusetts corporation, and each of William Malloneé

On October 15, 2020, the Company entered into a Stock Purchase Agreement with Non-Metallic Solutions, Inc.

("NMS"), a Massachusetts corporation, and each of William Malloneé

and Derek Masser, the legal and beneficial owners of NMS, to purchase NMS, which transaction subsequently closed on October 20, 2020 (the “NMS Acquisition”).

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The acquisition of NMS allows Repligen to expand its line of single-use systems and associated integrated flow path assemblies and streamline the supply chain for current products, providing more flexibility to scale and expand the Company's single-use and systems portfolios.

Consideration Transferred

The NMS Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations.”

Total consideration paid was $ 16.1 million, which included $ 1.3 million deposited into an escrow account against which the Company may make claims for indemnification.

The fair value of the net tangible assets acquired was $ 0.9 million, the fair value of the intangible assets acquired was $ 8.5 million, and the residual goodwill was $ 6.7 million.

Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred.

The Company incurred $ 0.2 million of transaction and integration costs associated with the NMS Acquisition from the date of acquisition to December 31, 2020, and $ 0.5 million in 2021.

The transaction costs are included in SG&A expenses in the consolidated statements of comprehensive income.

Fair Value of Net Assets Acquired

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Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.

Intangible Assets

The following table sets forth the components of the identified intangible assets associated with the NMS Acquisition and their estimated useful lives:

(Amounts in thousands)

Customer relationships

Developed technology

Trademark and tradename

Non-competition agreements

Revenue, Net Income and Pro Forma Presentation

The Company has included the operating results of our 2021 acquisitions of Polymem, Avitide and NTM and the 2020 acquisitions of ARTeSYN, NMS and EMT in its consolidated statements of comprehensive income since their respective acquisition dates.

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Finance leases are immaterial to the Company’s consolidated financial statements.

The Company determines if an arrangement qualifies

as a lease and what type of lease it is at inception.

The Company determines if an arrangement qualifies as a lease and what type of lease it is at inception.

The Company elected the package of practical expedients permitted under the transition guidance within the new lease standard, which among other things, allowed it to continue to account for existing leases based on the historical lease classification.

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When determining if a renewal option is reasonably certain of being exercised, the Company considers several economic factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, underlying contractual obligations, or specific characteristics unique to that particular lease that would make it reasonably certain that the Company would exercise such options.

As of December 31, 2021 and 2020 , operating lease right of use assets were $ 101.6 million and $ 25.2 million, respectively and operating lease liabilities were $ 110.8 million and $ 31.7 million, respectively.

The Company acquired Polymem, Avitide, BioFlex and NTM in 2021 and entered into their respective facility leases as well as a few immaterial leases on their respective acquisition dates.

As a result, the operating right of use asset and operating lease liability balances increased by a total of $ 6.1 million in 2021 related to these acquisitions.

Effective November 1, 2021, the Company extended its lease for the Waltham, Massachusetts facility to October 2030 and expanded into a vacated space within the same building, adding another 21,244 square feet to the Company’s headquarters.

As a result, the operating right of use asset and operating lease liability balances increased by a total of $ 43.0 million and $ 47.2 million, respectively.

Amounts related to financing leases were immaterial.

As of December 31, 2022 and 2021, operating lease right of use assets wer e $ 125.0 million and $ 101.6 million, respectively and operating lease liabilities were $ 138.3 million and $ 110.8 million, respectively.

The Company signed the Sixth Amendment of Lease for our headquarters in Waltham, Massachusetts in September 2021 to expand the facility by 74,108 square feet.

The facility expanded by 21,244 square feet immediately.

The remaining 52,864 square feet commenced in June 2022.

As a result of this and the expansion of facilities in Bridgewater, New Jersey and Clifton Park, New York, the operating right of use asset and operating lease liability balances increased by a total of $ 23.5 million in 2022, net of the normal amortization of existing leases.

The maturities of the Company’s operating lease liabilities as of December 31, 2022 are as follows (amounts in thousands):

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Total future minimum lease payments

amount of lease payment representing interest

Less lease incentives

Less amount of lease payment representing interest

Total operating lease liabilities

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However, given that the Company’s revenues are generated in different geographic regions, factors such as regulatory and geopolitical factors within those regions could impact the nature, timing and uncertainty of the Company’s revenues and cash flows.

In addition, a significant portion of the Company’s revenues are generated from two customers;

therefore, economic factors specific to these two customers could impact the nature, timing and uncertainty of the Company’s revenues and cash flows.

In addition, a significant portion of the Company’s revenues are generated from a few customers;

therefore, economic factors specific to these customers could impact the nature, timing and uncertainty of the Company’s revenues and cash flows.

Disaggregated revenue from contracts with customers by geographic region can be found in Note 2, “Summary of Significant Accounting Policies –

Segment Reporting,”

Revenue from significant customers that represent 10 % or more of the Company’s total revenue is as follows (amounts in thousands):

For the Years Ended December 31,

MilliporeSigma

There was no revenue from customers that represented 10 % or more of the Company's total revenue for the year ended December 31, 2022.

Revenue from Pfizer Inc.

was $ 68.3 million, or 10 %, of the Company's total revenue for the year ended December 31, 2021 and MilliporeSigma accounted for $ 39.5 million, or 11 % of total revenues in the year ended December 31, 2020.

Filtration Products

The Company’s filtration products generate revenue through the sale of KrosFlo ® HF TFF systems, TangenX ® flat sheet cassettes, Spectrum ® HF filters, membranes and modules, XCell ATF systems and related consumables.

Supporting our systems, we also sell ProConnex single-use flow path assemblies and custom silicone-based, single-use flow path assemblies and components from Polymem, BioFlex, NMS and ARTeSYN, four acquisitions completed in 2021 and 2020.

The Company’s filtration products generate revenue through the sale of KrosFlo hollow fiber ("HF") TFF systems, TangenX ® flat sheet ("FS") cassettes, Spectrum ® HF filters, membranes and modules, XCell ATF systems and related consumables.

Supporting our systems, we also sell ProConnex ® Flow Path assemblies and custom silicone-based, single-use flow path assemblies and components from Polymem, BioFlex, NMS and ARTeSYN, four acquisitions completed in 2021 and 2020.

The Company’s KrosFlo systems are used in the filtration, isolation, purification and concentration of biologics and diagnostic products.

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Training and installation services do not significantly modify or customize these systems and therefore represent a distinct performance obligation.

The Company’s TangenX flat sheet cassettes (SIUS ® , SIUS Gamma ® and PRO) are not highly interdependent on one another and are therefore considered distinct products that represent separate performance obligations.

Product revenue from the sale of TangenX flat sheet cassettes is generally recognized at a point in time upon transfer of control of the customer.

The Company’s TangenX FS cassettes (SIUS, SIUS Gamma ® and PRO) are not highly interdependent on one another and are therefore considered distinct products that represent separate performance obligations.

Product revenue from the sale of TangenX FS cassettes is generally recognized at a point in time upon transfer of control of the customer.

The Company’s other filtration product offerings are not highly interdependent of one another and are therefore considered distinct products that represent separate performance obligations.

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therefore, revenue recognized is based on the amount billable to the customer in accordance with the practical expedient under ASC 606-10-55-18.

On October 20, 2020, the Company completed the NMS Acquisition and added their fabricated plastics, custom containers and related assemblies and components to its filtration franchise.

These products will complement and expand Repligen’s single-use product offerings.

On December 3, 2020, the Company completed the ARTeSYN Acquisition and added its suite of single-use solutions with the goal of enabling “abundance of medicine”

by allowing ten times greater efficiency in biologics manufacturing.

On July 1, 2021, the Company completed the Polymem Acquisition and added its hollow fiber membranes, membrane modules and systems for industrial and bioprocessing applications to its filtration franchise.

On December 16, 2021, the Company completed the NTM Acquisition and added its single-use flow paths solutions for solution for mAb, vaccine and C&GT applications to its filtration franchise, including single-use clamps, adapters, end caps and hose assemblies.

Chromatography Products

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Accounts receivable

Deferred revenue (included in accrued liabilities in

the consolidated balance sheets)

Revenue recognized during years presented relating to:

Deferred revenue (included in accrued liabilities and

other noncurrent liabilities in the consolidated

balance sheets)

Revenue recognized during periods presented relating to:

The beginning deferred revenue balance

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ASU 2016-13 replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables.

The guidance requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of

losses for receivables that are current or not yet due.

The guidance requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due.

Upon adoption, changes in the allowance were not material for the transition period starting January 1, 2020 through December 31, 2020.

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It is based on assessment of anticipated payment and all other historical, current and future information that is reasonably available.

The accounts receivable balance on the Company’s consolidated balance sheet as of December 31, 2021 was $ 117.4 million, net of $ 1.4 million of allowances.

The accounts receivable balance on the Company’s consolidated balance sheet as of December 31, 2022 was $ 116.2 million, net o f $ 1.4 million of allowances.

The following table provides a roll-forward of the allowance for credit losses in 2022 that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (amounts in thousands):

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Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed.

Goodwill acquired in a business combination and determined to have an indefinite useful life is not amortized, but instead is tested for impairment at least annually in accordance with ASC 350.

Goodwill acquired in a business combination and determined to have an indefinite useful life is not amortized,

but instead is tested for impairment at least annually in accordance with ASC 350.

The following table represents the changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021 (amounts in thousands):

Balance as of December 31, 2020

Measurement period adjustment - C Technologies

Acquisition of EMT

Acquisition of NMS

Acquisition of ARTeSYN

Cumulative translation adjustment

Balance as of December 31, 2020

Measurement period adjustment - NMS

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Balance as of December 31, 2021

Measurement period adjustment - BioFlex

Measurement period adjustment - Avitide

Cumulative translation adjustment

Balance as of December 31, 2022

During each of the fourth quarters of 2022, 2021 and 2020, the Company completed its annual impairment assessments and concluded that goodwill was not impaired in any of those years.

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Intangible assets with a definitive life are amortized over their useful lives using the straight-line method, and the amortization expense is recorded within cost of product revenue and selling, general and administrative expense in the Company’s consolidated statements of comprehensive income.

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Total intangible assets

(1) Includes an upfront payment paid to DRS Daylight Solutions, Inc.

("Daylight") in September 2022 to exclusively license and commercialization rights to use certain technology and intellectual property which Daylight owns.

The expected useful life of this technology is 15 years, which is the term of the exclusive License Agreement ("Daylight Agreement") and the period the Company expects to be able to utilize the license and which the technology will contribute directly to cash flows.

See Note 12, "Commitments and Contingencies" for more information on this transaction.

Intangible assets consisted of the following at December 31, 2021:

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Employee compensation

Income taxes payable

Royalty and license fees

Professional fees

Deferred revenue

Income taxes payable

Total accrued liabilities

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Federal net operating loss carryforwards of $ 7.3 million will expire at various dates through 2037 .

The total state net operating loss carryforwards will expire at various dates through 2041, while the foreign net operating loss carryforwards do not expire.

The other $ 27.1 million of the federal net operating loss carryforwards have unlimited carryforward periods.

The state net operating loss carryforwards will expire at various dates through 2041, while the foreign net operating loss carryforwards do not expire.

The other $ 35.6 million of federal net operating loss carryforwards have unlimited carryforward periods.

At December 31, 2022 , the Company had state business tax credits carryforwards of $ 3.8 million available to reduce future domestic income taxes.

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Deferred tax assets:

Temporary timing differences:

Stock-based compensation expense

Operating leases

Total temporary timing differences

Capitalized research and development

Net operating loss carryforwards

Tax business credits carryforwards

Business tax credit carryforwards

Total deferred tax assets

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Total net deferred tax liabilities

The net change in the total valuation allowance for the year ended December 31, 2021 and 2020 was a decrease of approximately $ 9,000 and an increase of $ 0.7 million, respectively.

The net change in the total valuation allowance for the year ended December 31, 2022 and 2021 was a decrease of approximately $ 0.7 million and a decrease of $ 9,000 , respectively.

The reconciliation of the federal statutory rate to the effective income tax rate for the years ended December 31, 2022, 2021 and 2020 is as follows:

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Business tax credits

Permanent differences:

Stock-based compensation expense

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Executive compensation

Contingent consideration

Change in U.S.

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Change in valuation allowance

Return to provision adjustments

Income tax provision

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of tax positions taken in the current period

Gross amounts of decreases in unrecognized tax benefits as a result

Gross amounts of increases and (decreases) in unrecognized tax benefits as a result

of tax positions taken in the prior period

Gross amounts of decrease due to release

Gross amounts of decreases due to release

Balance of gross unrecognized tax benefits, end of period

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The Company classifies interest and penalties related to income taxes as components of its income tax provision.

In 2021, a net benefit of approximately $ 29,000 was recorded to the income tax provision related to interest and penalties while in 2020 and 2019, net expenses of approximately $ 17,000 and $ 5,000 , respectively, were recorded.

In 2022, a net expense of approximately $ 24,000 was recorded to the income tax provision related to interest and penalties while in 2021 and 2020, net (benefit)/expenses of approximately ($ 29,000 ) and $ 17,000 , respectively, were recorded.

The amount of interest and penalties recorded in the accompanying consolidated balance sheets was approximately $ 52,000 and $ 29,000 as of December 31, 2022 and 2021, respectively.

The Company does not anticipate the amount of unrecognized tax benefits to change over the next twelve months.

On March 27, 2020, President Trump signed the $ 2.2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

The CARES Act, the third congressional bill to address COVID-19, provides for loans and other benefits to businesses, expanded unemployment insurance, direct payments to those with middle-income and below wages, new appropriations funding for healthcare and other priorities, and tax changes, including deferrals of employer payroll tax liabilities, coupled with an employee retention tax credit and rollbacks of TCJA limitations on net operating losses (“NOLs”) and the Section 163(j) business interest limitation and a TCJA technical correction on qualified improvement property.

The Company evaluated the provisions of the CARES Act and no provision had a material effect on the Company’s financial position or results of operations at December 31, 2020 and for the year then ended.

The Company is subject to a territorial tax system under the Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 (the “2017 Tax Act”), in which the Company is required to provide for tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.

The Company has adopted an accounting policy to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense.

The Company also considered the impact of the newly issued tax regulations in recording its income tax accounts for the year ended December 31, 2020 which reduced the foreign earnings subject to taxation under GILTI provisions for the year ended December 31, 2018 and prospectively.

On August 16, 2022, the United States enacted the Inflation Reduction Act of 2022 ("IRA"), which, among other things, implements a 15 % alternative minimum tax on global adjusted financial statement income of certain large corporations, a 1 % excise tax on net stock repurchases and several tax incentives to promote clean energy and will become effective beginning in

The Company evaluated the provisions of the IRA and no provision had, or will have a material effect on our consolidated financial position or results of operations as of December 31, 2022.

As of December 31, 2022 , the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $ 148.2 million.

Because $ 5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the 2017 Tax Act, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company’s foreign investments would generally be limited to foreign and state taxes.

At December 31, 2021 , the Company has not provided for taxes on outside basis differences of its foreign subsidiaries, as the Company has the ability and intent to indefinitely reinvest the undistributed earnings of its foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict its plan to indefinitely reinvest.

Because $ 5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act enacted in December 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes.

At December 31, 2022 , the Company has not provided for taxes on outside basis differences of its foreign subsidiaries as it is not practicable and the Company has the ability and intent to indefinitely reinvest the undistributed earnings of its foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict its plan to indefinitely reinvest.

Stockholders’

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Under the 2018 Plan the number of shares of the Company’s common stock that are reserved and available for issuance shall be 2,778,000 plus the number of shares of common stock available for issuance under the Company’s Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan”).

The shares of common

stock underlying any awards under the 2018 Plan, 2012 Plan and the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan,”

The shares of common stock underlying any awards under the 2018 Plan, 2012 Plan and the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan,”

and together with the 2018 Plan and 2012 Plan, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan.

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(1) Represents the number of vested options as of December 31, 2022 plus the number of unvested options expected to vest as of December 31, 2022, based on the unvested outstanding options at December 31, 2022 adjusted for estimated forfeiture rates of 8 % for awards granted to non-executive level employees and 3 % for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 31, 2021, the last business day of 2021, of $ 264.84 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2021.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 31, 2022, the last business day of 2022, of $ 169.31 per share and the exercise price of

each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2022.

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 14.1 million, $ 20.3 million and $ 36.6 million, respectively.

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The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved.

Information regarding stock unit activity, which includes

activity for restricted stock units and performance stock units, for the year ended December 31, 2021 under the Plans is summarized below:

(in Thousands)

Information regarding stock unit activity, which includes activity for restricted stock units and performance stock units, for the year ended December 31, 2022 under the Plans is summarized below:

Weighted Average

Unvested at December 31, 2021

Forfeited/expired/cancelled

Forfeited/cancelled

Unvested at December 31, 2022

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(1) Represents the number of vested stock units as of December 31, 2022, plus the number of unvested stock units expected to vest as of December 31, 2022, based on the unvested outstanding stock units at December 31, 2022 adjusted for estimated forfeiture rates of 8 % for awards granted to non-executive level employees and 3 % for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on December 31, 2021, the last business day of 2021, of $ 264.84 per share, as stock units do not have an exercise price) that would have been received by the stock unitholders had all holders exercised on December 31, 2021.

The aggregate intrinsic value of stock units vested during the years ended December 31, 2022, 2021 and 2020 was $ 43.9 million, $ 46.5 million and $ 28.3 million, respectively.

The weighted average grant date fair value of stock units granted during the years ended December 31, 2021, 2020 and 2019 was $ 222.17 , $ 109.69 and $ 67.22 , respectively.

The total fair value of stock units that vested during the years ended December 31, 2022, 2021 and 2020 was $ 22.7 million, $ 13.9 million and $ 10.85 million, respectively.

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Commitments and Contingencies

Licensing and Research Agreements

License Agreement

On September 19, 2022, the Company entered into the Daylight Agreement with Daylight, giving the Company exclusive license and commercialization rights to use certain technology and intellectual property subject to conditions set forth in the Daylight Agreement.

The Company agreed to pay Daylight (i) an initial, one-time, non-refundable, non-creditable upfront cash payment and (ii) certain quarterly royalty payments.

Pursuant to the Daylight Agreement, the Company obtains the exclusive, non-transferrable, right and license to use specifically in the field of bioprocessing, the Daylight intellectual property called Culpeo ® QCL-IR Liquid Analyzer ("Culpeo"), which is a

compact, intelligent spectrometer that uses the power of quantum cascade lasers ("QCLs") to analyze and identify chemicals.

Under the Daylight Agreement, the Company assumes responsibility for the commercialization and sale of Culpeo, in addition to the ability to incorporate the intellectual property into optimized products over the term of the Daylight Agreement.

Daylight will continue to sell the products in the specified fields of Aerospace and Defense.

Collaboration Agreements

The Company licenses certain technologies that are, or may be, incorporated into its technology under several agreements and also has entered into several clinical research agreements that require the Company to fund certain research projects.

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The Company also signed a long-term supply agreement with Purolite for NGL-Impact and other potential additional affinity ligands that may advance from the Company’s Navigo collaboration.

In September 2020, the Company and Navigo successfully completed co-development of an affinity ligand targeting the SARS-CoV-2 spike protein, to be utilized in the purification of COVID-19 vaccines.

In September 2020, the Company and Navigo successfully completed co-development of an affinity ligand targeting the SARS-CoV-2 spike protein, to be utilized in the purification of vaccines for the COVID-19 pandemic, including emerging variants of the SARS-CoV-2 coronavirus.

The Company has proceeded with scaling up and manufacturing this ligand and the development and validation of the related affinity chromatography resin, which is marketed by the Company.

In September 2021, the Company and Navigo successfully completed co-development of a novel affinity ligand that addresses aggregation issues associated with pH

sensitive antibodies and Fc-fusion proteins.

In September 2021, the Company and Navigo successfully completed co-development of a novel affinity ligand that addresses aggregation issues associated with pH sensitive antibodies and Fc-fusion proteins.

The Company is manufacturing and supplying this ligand, NGL-Impact ® HipH, to Purolite.

The Navigo and Purolite agreements are supportive of the Company’s strategy to secure and reinforce the Company’s proteins business.

The Company made payments to Navigo of $ 2.3 million and $ 0.9 million in the years ended December 31, 2021 and 2020, respectively, in connection with this program, which are recorded to research and development expenses in the Company’s consolidated statements of comprehensive income.

The Company made payments to Navigo of $ 2.6 million, $ 2.3 million and $ 0.9 million in the years ended December 31, 2022, 2021 and 2020, respectively, in connection with this program, which are recorded to research and development expenses in the Company’s consolidated statements of comprehensive income.

Purchase Orders, Supply Agreements and Other Contractual Obligations

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0.375% Convertible Senior Notes due 2024

On July 19, 2019, the Company issued $ 287.5 million aggregate principal amount of 0.375 % Convertible Senior Notes due 2024 (“2019 Notes”), which includes the underwriters’

On July 19, 2019, the Company issued $ 287.5 million aggregate principal amount of the 2019 Notes, which includes the underwriters’

exercise in full of an option to purchase an additional $ 37.5 million aggregate principal amount of 2019 Notes (the “Notes Offering”).

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The 2019 Notes are not redeemable by the Company prior to maturity.

Holders of 2019 Notes may require the Company to repurchase their 2019 Notes upon the occurrence of a fundamental change prior to maturity at a repurchase price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but

excluding, the date of repurchase.

In connection with certain corporate events, the Company will, under certain circumstances, increase the conversion rate for holders of 2019 Notes who elect to convert their 2019 Notes in connection with such corporate events.

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These conditions have been met since the third quarter of 2020.

As a result, $ 11,000 aggregate principal amount of the 2019 Notes have been converted by the noteholders since December 31, 2020.

The conversions resulted in the issuance of a nominal number of shares of the Company’s common stock to the note holders, and the Company recorded a loss of approximately $ 13,000 on the conversion of these notes, which is included in other expenses, net on our consolidated statements of comprehensive income in 2021.

As of the date of this filing, the Company received requests to convert an additional $ 2,000 aggregate principal amount of 2019 Notes which we intend to pay or deliver, as the case may be, the settlement amount to be determined –

paying the amount in excess of the aggregate principal portion of the converted notes in shares of our common stock.

These conversions will be settled during the first quarter of 2022.

The Company accounts for the 2019 Notes as separate liability and equity components.

The Company determined the carrying amount of the liability component as the present value of its cash flows using a discount rate of 4.5 % based on comparative convertible transactions for similar companies.

The proceeds allocated to the debt conversion feature were $ 52.1 million.

This amount was calculated by deducting the carrying value of the liability component from the principal amount of the 2019 Notes as a whole.

The difference represents a debt discount that is amortized to interest expense on the Company’s consolidated statements of comprehensive income over the term of the 2019 Notes using the effective interest rate method.

The Company will assess the equity classification of the cash conversion feature quarterly, and it is not remeasured as long as it continues to meet the conditions for equity classification.

The Company allocates transaction costs related to the issuance of the 2019 Notes to the liability and equity components using the same proportions as the initial carrying value of the 2019 Notes.

Transaction costs related to the liability component were $ 7.4 million and are being amortized to interest expense using the effective interest method over the term of the 2019 Notes.

Transaction costs attributable to the equity component were $ 1.6 million and are netted with the equity component of the 2019 Notes in stockholders’

equity of the Company’s consolidated balance sheet at December 31, 2021.

Interest expense recognized on the 2019 Notes in 2021 was $ 1.1 million, $ 10.1 million and $ 1.4 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively.

As a result, as of the date of this filing, the Company has received requests to convert $ 30,000 aggregate principal amount of the 2019 Notes all of which have settled.

The conversions resulted in the issuance of a nominal number of shares of the Company’s common stock to the note holders.

Prior to the adoption of ASU 2020-06, the Company accounted for the 2019 Notes as a liability and equity component where the carrying value of the liability component was valued based on a similar debt instrument.

In accounting for the issuance of the 2019 Notes, the Company separated the 2019 Notes into liability and equity components.

The carrying value of the liability component was calculated as the present value of its cash flows using a discount rate of 4.5 % based on comparative convertible transactions for similar companies.

The carrying value of the equity component representing the conversion option was

determined by deducting the fair value of the liability component from the par value of the 2019 Notes as a whole.

The excess of the principal amount of the liability component over its carrying value amount, referred to as the debt discount, was amortized to interest expense on our consolidated statements of comprehensive income over the five-year term of the 2019 Notes.

The equity component was not re-measured as long as it continued to meet the conditions for equity classification.

The equity component related to the 2019 Notes recorded at issuance was $ 52.1 million, which was recorded in additional paid-in capital on the Company's consolidated balance sheets.

In accounting for the transaction costs related to the issuance of the 2019 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2019 Notes using the same proportions as the initial carrying value of the 2019 Notes.

Transaction costs related to the liability component were $ 7.4 million and are amortized to interest expense using the effective interest method over the five-year term of the 2019 Notes.

Transaction costs attributable to the equity component were $ 1.6 million and are netted with the equity component of the 2019 Notes in stockholders' equity of the Company's consolidated balance sheets.

Additionally, the Company recorded a net deferred tax liability of $ 11.4 million.

Effective January 1, 2022, the Company adopted ASU 2020-06.

After adoption, the Company now accounts for the 2019 Notes as a single liability measured at amortized cost.

As the equity component is no longer required to be split into a separate component, the Company recorded a net adjustment for the initial $ 50.4 million that was allocated to additional paid-in capital and $ 22.9 million of life-to-date interest expense recorded as amortization of debt discount.

Additionally, the net deferred tax liability recorded for the 2019 Notes was reversed.

The principal amount of the liability over its carrying amount is amortized to interest expense over the five-year term of the 2019 Notes.

Since the 2019 Notes are classified as a single liability, there is no debt discount required to be amortized in 2022.

Interest expense recognized on the 2019 Notes in 2022 was $ 1.1 million and $ 1.8 mill ion for the contractual coupon interest and the amortization of the debt issuance costs, respectively.

The effective interest rate on the 2019 Notes is 1.01 %, which included the interest on the 2019 Notes, amortization of the debt discount and debt issuance costs.

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The Company is not aware of any events of default, current events or market conditions that would allow holders to call or convert the 2019 Notes as of December 31, 2022 .

Conversion of the 2.125% Convertible Senior Notes due 2021

The Company utilized a portion of the proceeds from the issuance of the 2019 Notes to settle its outstanding 2.125 % Convertible Senior Notes due 2021 (the “2016 Notes”) during the third quarter of 2019.

On July 16, 2019, the Company entered into separate privately negotiated agreements with certain holders of the 2016 Notes to exchange an aggregate of $ 92.0 million principal aggregate amount of the 2016 Notes for shares of the Company’s common stock, together with cash, in private placement transactions (the “Note Exchanges”).

On July 19, 2019 and July 22, 2019, the Company used approximately $ 92.3 million (including $ 0.3 million of accrued interest) and 1,850,155 shares of its common stock valued at $ 161.0 million to settle the Note Exchanges for total consideration of $ 253.3 million, of which $ 163.6 million was allocated to reacquiring the equity component of the 2016 Notes.

The Company allocated the consideration transferred to the liability and equity components using the same proportions as the initial carrying value of the 2016 Notes.

The transaction resulted in a loss on extinguishment of debt of $ 4.6 million in the Company’s consolidated statements of comprehensive income in 2019.

On July 19, 2019, the Company issued a Notice of Redemption in respect of the 2016 Notes, which provided that, on September 23, 2019, the Company would redeem all 2016 Notes that had not been converted, repurchased or exchanged prior to such date at a redemption price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest.

On September 23, 2019, the Company used $ 23.0 million and 466,045 shares of its common stock valued at $ 37.8 million to settle the remaining 2016 Notes for a total of $ 60.8 million, of which $ 38.3 million was allocated to reacquiring the equity component of the 2016 Notes.

This transaction resulted in a loss on extinguishment of debt of $ 1.1 million recorded on the Company’s consolidated statements of comprehensive income.

The total loss in 2019 of $ 5.7 million represents the difference between the fair value of the liability component of the 2016 Notes and its related carrying value immediately before the exchange.

Accumulated Other Comprehensive Income (Loss)

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Balance at December 31, 2020

Other comprehensive income

Other comprehensive loss

Balance at December 31, 2021

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When an employee terminates or retires, these premium payments cease for that employee and the Company has no further pension-related obligations for that employee.

The Company contributed $ 1.0 million to the defined contribution plan in 2021 and $ 0.6 million for each of the years ended December 31, 2020 and 2019.

The Company contributed $ 1.1 million, $ 1.0 million and $ 0.6 million, respectively to the defined contribution plan for the years ended December 31, 2022, 2021 and 2020 .

Related Party Transactions

Certain facilities leased by Spectrum, a company we acquired in 2017, are owned by Roy Eddleman, the former owner of Spectrum.

As of December 31, 2021, Mr.

Eddleman owned greater than 5 % of the Company’s outstanding shares and the Company considers him to be a related party.

The lease amounts paid to this shareholder prior to the public offering were negotiated in connection with the acquisition of Spectrum.

Certain facilities leased by Spectrum are owned by the Roy Eddleman Living Trust (the "Trust").

As of December 31, 2022 , the Trust owned greater than 5 % of the Company's outstanding shares.

Therefore, the Company considers the Trust to be a related party.

The lease amounts paid to the Trust prior to the public offering were negotiated in connection with the acquisition of Spectrum.

The Company incurred rent expense related to these leases totaling $ 0.7 million for the years ended December 31, 2022, 2021 and 2020 .

At December 31, 2020, the Company had an outstanding tax liability of $ 0.5 million due to the seller of C Technologies.

This tax liability was paid subsequent to year end in January 2021 and concluded the remaining tax liability the Company had with the seller due to the 338(h)(10) tax election.

The Company paid the seller a total of $ 0.3 million and $ 1.6 million related to the tax liability associated with the 338(h)(10) election as of December 31, 2020 and 2019, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures