mrvi-20210930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, 2021


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

Commission file number 001-39725

Maravai LifeSciences Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

8731

85-2786970

(State or other jurisdiction of incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer Identification No.)

10770 Wateridge Circle Suite 200

San Diego, California

92121

(Address of principal executive offices)

(Zip code)

______________________________

Registrant’s telephone number, including area code: (858) 546-0004

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.01 par value

MRVI

The Nasdaq Stock Market LLC

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	ý	Smaller reporting company	o
		Emerging growth company	ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

As of November 5, 2021, 131,458,704 shares of the registrant’s Class A common stock were outstanding and 126,239,611 shares of the registrant’s Class B common stock were outstanding.

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			Page
Forward-Looking Statements			3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020			6
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)			7
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)			8
Condensed Consolidated Statements of Changes in Stockholders'/Member's Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)			9
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)			12
Notes to Condensed Consolidated Financial Statements (unaudited)			14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
Item 3. Quantitative and Qualitative Disclosures About Market Risk			54
Item 4. Controls and Procedures			55

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			56
Item 1A. Risk Factors			56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			57
Item 3. Defaults Upon Senior Securities			57
Item 5. Other Information			57
Item 6. Exhibits			57
Signatures			59

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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENT

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

•our history of losses, the risk that we may continue to incur losses in the future and our ability to generate sufficient revenue to achieve or maintain profitability;

•the fluctuation of our operating results, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide;

•our dependence on a limited number of customers for a high percentage of our revenue;

•the use of certain of our products in the production of vaccines and therapies that represent relatively new and still-developing modes of treatment, which may experience unforeseen adverse events, negative clinical outcomes or increased regulatory scrutiny;

•the impact of COVID-19 and any pandemic, epidemic or outbreak of infectious disease;

•changes in economic conditions;

•our dependence on customers’ spending on and demand for outsourced nucleic acid production and biologics safety testing;

•competition with life science, pharmaceutical and biotechnology companies who are substantially larger than we are and potentially capable of developing new approaches that could make our products, services and technologies obsolete;

•the ability of our products and services to perform as expected and the reliability of the technology on which our products and services are based;

•the complexity of our products and the fact that they are subject to quality control requirements;

•our reliance on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials and our inability to find replacements or immediately transition to alternative suppliers;

•our dependence on a stable and adequate supply of quality raw materials from our suppliers, and the risk of adverse impacts from price increases or interruptions of such supply;

•disruptions at our sites;

•our ability to manufacture in specific quantities;

•natural disasters, geopolitical unrest, war, terrorism, public health issues such as COVID-19 or other catastrophic events that could disrupt the supply, delivery or demand of products and services;

•our ability to secure additional financing for future strategic transactions;

•our reliance on third-party package delivery services and adverse impacts arising from significant disruptions of these services, damages or losses sustained during shipping or significant increases in prices;

•our ability to continue to hire and retain skilled personnel;

•our ability to successfully identify and implement distribution arrangements and marketing alliances;

•the market acceptance of our life science reagents;

•the market receptivity to our new products and services upon their introduction;

•our ability to implement our strategies for revenue growth;

•the accuracy of our estimates of market opportunity and forecasts of market growth;

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•product liability lawsuits;

•the application of privacy laws, security laws, regulations, policies and contractual obligations related to data privacy and security;

•our ability to efficiently manage our growth;

•the success of any opportunistic acquisitions;

•the integrity of our internal computer systems;

•the impact of export and import control laws and regulations;

•risks related to Brexit;

•changes in political, economic or governmental regulations;

•financial, operating, legal and compliance risks associated with global operations;

•risks associated with our acquisitions and divestitures;

•impacts from foreign currency exchange rates;

•the risk that our products could become subject to more onerous regulation in the future;

•our ability to use net operating loss and tax credit carryforwards;

•the fact that our activities are and will continue to be subject to extensive government regulation;

•the risk that we may be required to record a significant charge to earnings if our goodwill or other amortizable intangible assets become impaired;

•unfavorable accounting charges or effects driven by changes in accounting principles or guidance;

•impacts on our financial results from our revenue recognition and other factors;

•fluctuations in our effective tax rate;

•environmental risks;

•our ability to obtain, maintain and enforce intellectual property protection for our current and future products;

•our ability to protect the confidentiality of our proprietary information;

•our ability to protect our intellectual property throughout the world, including risks associated with lawsuits to protect our patents or with respect to the infringement, misappropriations or other violations of intellectual property rights of third parties;

•risks associated with failures to comply with our obligations under license agreements;

•potential changes in patent law in the United States and other jurisdictions;

•our ability to obtain and maintain our patent protection;

•impact of claims by third parties that we or our employees, consultants or independent contractors have infringed, misappropriated or otherwise violated their intellectual property;

•our reliance on confidentiality agreements;

•threats not related to intellectual property; and

•other risks addressed in our Annual Report on Form 10-K for the year ended December 31, 2020, as well as other documents on file with the Securities and Exchange Commission.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

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The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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Part I.

Item 1. Financial Statements and Supplementary Data

MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)


	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash	$	547,898	$	236,184
Accounts receivable, net	65,939		51,018
Inventory	56,246		33,301
Prepaid expenses and other current assets	17,395		11,095

Total current assets	687,478		331,598
Property and equipment, net	108,322		101,305
Goodwill	152,766		224,275
Intangible assets, net	121,225		177,656
Deferred tax assets	820,786		431,699
Other assets	4,106		4,158
Total assets	$	1,894,683	$	1,270,691
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	8,917	$	8,171
Accrued expenses and other current liabilities	31,422		38,546
Deferred revenue	66,715		78,061
Current portion of payable to related parties pursuant to a Tax Receivable Agreement	1,298		—
Current portion of long-term debt	6,000		6,000

Total current liabilities	114,352		130,778
Long-term debt, less current portion	525,584		528,614
Deferred tax liabilities	—		8,609
Lease facility financing obligation, less current portion	55,324		56,167
Payable to related parties pursuant to a Tax Receivable Agreement	744,254		389,546
Other long-term liabilities	1,553		2,231
Total liabilities	1,441,067		1,115,945
Lease commitments (Note 5)
Stockholders' equity:
Class A common stock, $0.01 par value - 500,000 shares authorized; 131,420 and 96,647 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	1,314		966
Class B common stock, $0.01 par value - 300,000 shares authorized; 126,240 and 160,974 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	1,262		1,610
Additional paid-in capital	172,611		85,125
Accumulated other comprehensive loss	—		(44)
Retained earnings	127,450		854
Total stockholders' equity attributable to Maravai LifeSciences Holdings, Inc.	302,637		88,511
Non-controlling interest	150,979		66,235
Total stockholders' equity	453,616		154,746
Total liabilities and stockholders' equity	$	1,894,683	$	1,270,691

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

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MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share and per unit amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	204,810	$	87,859	$	570,796	$	185,745
Operating expenses:
Cost of revenue	32,047		19,760		99,928		56,254
Research and development	1,950		1,868		6,046		7,212
Selling, general and administrative	25,189		20,510		72,511		52,624

Gain on sale of business	(11,249)		—		(11,249)		—
Gain on sale and leaseback transaction	—		—		—		(19,002)
Total operating expenses	47,937		42,138		167,236		97,088
Income from operations	156,873		45,721		403,560		88,657
Other income (expense):
Interest expense	(8,545)		(7,089)		(25,827)		(21,934)

Change in payable to related parties pursuant to a Tax Receivable Agreement	3,246		—		9,132		—
Other income	78		32		78		132
Income before income taxes	151,652		38,664		386,943		66,855
Income tax expense (benefit)	18,842		(359)		43,937		2,511
Net income	132,810		39,023		343,006		64,344
Net income attributable to non-controlling interests	78,536		73		216,410		582
Net income attributable to Maravai LifeSciences Holdings, Inc.	$	54,274	$	38,950	$	126,596	$	63,762

Net income per Class A common share/unit attributable to Maravai LifeSciences Holdings, Inc.:
Basic	$	0.46	$	0.12	$	1.16	$	0.21
Diluted	$	0.45	$	0.12	$	1.14	$	0.21

Weighted average number of Class A common shares/units outstanding:
Basic	118,433		253,917		109,174		253,917
Diluted	258,028		253,917		257,799		253,917

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

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MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	132,810	$	39,023	$	343,006	$	64,344
Other comprehensive income:
Foreign currency translation adjustments	39		30		55		(31)

Total other comprehensive income	132,849		39,053		343,061		64,313
Comprehensive income attributable to non-controlling interests	78,536		73		216,421		582
Total comprehensive income attributable to Maravai LifeSciences Holdings, Inc.	$	54,313	$	38,980	$	126,640	$	63,731

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

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MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’/MEMBER’S EQUITY

(in thousands)

(Unaudited)


	Three Months Ended September 30, 2021
	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Non-Controlling Interest		Total Stockholders'/Member's Equity
June 30, 2021	114,352	$	1,143	143,308	$	1,433	$	118,208	$	(39)	$	73,176	$	139,220	$	333,141
Effect of exchange of LLC Units	17,068	171		(17,068)	(171)		18,669		—		—		(18,669)		—
Recognition of impact of Tax Receivable Agreement due to exchanges of LLC Units	—	—		—	—		34,060		—		—		—		34,060


Stock-based compensation	—	—		—	—		1,614		—		—		1,953		3,567
Distribution for tax liabilities to non-controlling interest holder	—	—		—	—		60		—		—		(50,061)		(50,001)
Net income	—	—			—		—		—		54,274		78,536		132,810
Foreign currency translation adjustment	—	—		—	—		—		39		—		—		39
September 30, 2021	131,420	$	1,314	126,240	$	1,262	$	172,611	$	—	$	127,450	$	150,979	$	453,616

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MARAVAI LIFESCIENCES HOLDINGS, INC.


	Nine Months Ended September 30, 2021
	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Non-Controlling Interest		Total Stockholders'/Member's Equity
December 31, 2020	96,647	$	966	160,974	$	1,610	$	85,125	$	(44)	$	854	$	66,235	$	154,746
Effect of exchanges of LLC Units	34,734	348		(34,734)	(348)		30,520		—		—		(30,520)		—
Recognition of impact of Tax Receivable Agreement due to exchanges of LLC Units	—	—		—	—		53,000		—		—		—		53,000
Issuance of Class A common stock under employee equity plans	39	—		—	—		785		—		—		—		785
Non-controlling interest adjustment for changes in proportionate ownership in Topco LLC	—	—		—	—		(420)		—		—		420		—
Stock-based compensation	—	—		—	—		3,507		—		—		4,721		8,228
Distribution for tax liabilities to non-controlling interest holder	—	—		—	—		94		—		—		(106,298)		(106,204)
Net income	—	—		—	—		—		—		126,596		216,410		343,006
Foreign currency translation adjustment	—	—		—	—		—		44		—		11		55
September 30, 2021	131,420	$	1,314	126,240	$	1,262	$	172,611	$	—	$	127,450	$	150,979	$	453,616


	Three Months Ended September 30, 2020
	Units	Amount		Contributed Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total Member's Equity
June 30, 2020	253,917	$	—	$	184,628	$	(194)	$	(17,569)	$	3,916	$	170,781
Repurchase of incentive units	—	—		(9,140)		—		—		—		(9,140)
Unit-based compensation	—	—		542		—		—		1,307		1,849
Distributions to non-controlling interest holders	—	—		(122)		—		—		—		(122)
Net income	—	—		—		—		38,950		73		39,023
Recognition of repurchase liability for non-controlling interests	—	—		(161,131)		—		—		(5,296)		(166,427)
Foreign currency translation adjustment	—	—		—		30		—		—		30
September 30, 2020	253,917	$	—	$	14,777	$	(164)	$	21,381	$	—	$	35,994

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MARAVAI LIFESCIENCES HOLDINGS, INC.


	Nine Months Ended September 30, 2020
	Units	Amount		Contributed Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Non-Controlling Interest		Total Member's Equity
December 31, 2019	253,917	$	—	$	183,910	$	(133)	$	(42,381)	$	3,231	$	144,627
Repurchase of incentive units	—	—		(9,140)		—		—		—		(9,140)
Unit-based compensation	—	—		1,450		—		—		1,483		2,933
Distributions to non-controlling interests holders	—	—		(312)		—		—		—		(312)
Net income	—	—		—		—		63,762		582		64,344
Recognition of repurchase liability for non-controlling interests	—	—		(161,131)		—		—		(5,296)		(166,427)
Foreign currency translation adjustment	—	—		—		(31)		—		—		(31)
September 30, 2020	253,917	$	—	$	14,777	$	(164)	$	21,381	$	—	$	35,994

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

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MARAVAI LIFESCIENCES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Operating activities:
Net income	$	343,006	$	64,344
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	6,623		4,756
Amortization of intangible assets	14,685		15,156

Amortization of deferred financing costs	1,995		1,296
Equity-based compensation expense	8,228		2,933
Deferred income taxes	29,438		(1,275)
Gain on sale of business	(11,249)		—
Gain on sale and leaseback transaction	—		(19,002)
Acquired and in-process research and development costs	—		2,881

Revaluation of liabilities under Tax Receivable Agreement	(9,132)		—
Other	(875)		1,341
Changes in operating assets and liabilities:
Accounts receivable	(18,851)		(55,420)
Inventory	(26,263)		(12,384)
Prepaid expenses and other assets	(7,590)		(971)
Accounts payable	1,543		130
Accrued expenses and other current liabilities	(10,076)		8,838
Other long-term liabilities	267		300
Deferred revenue	(11,346)		59,833
Net cash provided by operating activities	310,403		72,756
Investing activities:
Cash paid for asset acquisition, net of cash acquired	—		(3,024)
Purchases of property and equipment	(9,188)		(16,559)
Proceeds from sale of building	548		34,500
Proceeds from sale of business, net of cash divested	119,957		—
Net cash provided by investing activities	111,317		14,917
Financing activities:
Distributions for tax liabilities to non-controlling interests holders	(106,298)		(312)
Proceeds from borrowings of long-term debt, net of discount	—		15,000
Financing costs incurred for long-term debt	—		(250)
Principal repayments of long-term debt	(4,500)		(1,875)
Payments made on facility financing lease obligation and capital lease	(582)		(23)
Proceeds from employee stock purchase plan	1,329		—
Net cash (used in) provided by financing activities	(110,051)		12,540
Effects of exchange rate changes on cash	45		(31)


Net increase in cash	311,714		100,182
Cash, beginning of period	236,184		24,700
Cash, end of period	$	547,898	$	124,882

Supplemental cash flow information:
Cash paid for interest	$	23,030	$	19,407
Cash paid for income taxes	$	16,569	$	3,506

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MARAVAI LIFESCIENCES HOLDINGS, INC.


	Nine Months Ended September 30,
	2021		2020
Supplemental disclosures of non-cash investing and financing activities:
Property and equipment included in accounts payable and accrued expenses	$	826	$	5,163
Building and improvements capitalized under lease financing transaction	$	4,793	$	—
Recognition of liabilities under Tax Receivable Agreement	$	365,139	$	—
Recognition of deferred tax assets as a result of exchange of LLC Units	$	418,140	$	—
Deferred financing costs included in accounts payable and accrued expenses	$	—	$	2,574
Repurchase liability for incentive units	$	—	$	9,140
Repurchase liability for noncontrolling interests	$	—	$	166,427
Receivable from lessor funded financing	$	—	$	2,686

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

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MARAVAI LIFESCIENCES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Organization and Significant Accounting Policies

Description of Business

Maravai LifeSciences Holdings, Inc. (the “Company”, and together with its consolidated subsidiaries, “Maravai”, “we”, “us”, “our”) was formed as a Delaware corporation in August 2020 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock, facilitating certain organizational transactions and to operate the business of Maravai Topco Holdings, LLC (“Topco LLC”) and its consolidated subsidiaries.

We are a leading life sciences company providing critical products to enable the development of drug therapies, diagnostics, novel vaccines and support research on human diseases. Our products address the key phases of biopharmaceutical development and include complex nucleic acids for diagnostic and therapeutic applications and antibody-based products to detect impurities during the production of biopharmaceutical products.

The Company is headquartered in San Diego, California and has historically operated in three principal businesses: Nucleic Acid Production, Biologics Safety Testing, and Protein Detection. In September 2021, the Company completed the divestiture of its Protein Detection business (see Note 2). Our Nucleic Acid Production business manufactures and sells products used in the fields of gene therapy, vaccines, nucleoside chemistry, oligonucleotide therapy and molecular diagnostics, including reagents used in the chemical synthesis, modification, labelling and purification of deoxyribonucleic acid (“DNA”) and ribonucleic acid (“RNA”). Our core Nucleic Acid Production offerings include messenger ribonucleic acid (“mRNA”), long and short oligonucleotides, our proprietary CleanCap® capping technology and oligonucleotide building blocks. Our Biologics Safety Testing business sells highly specialized analytical products for use in biologic manufacturing process development, including custom product-specific development antibody and assay development services. Our Protein Detection business sold innovative labeling and detection reagents for researchers in immunohistochemistry.

Organizational Transactions and Initial Public Offering

In November 2020, the Company completed its IPO and sold 69,000,000 shares of Class A common stock at a public offering price of $27.00 per share and received proceeds of $1.8 billion, net of underwriting discounts and commissions, which the Company used to purchase previously-issued and newly-issued LLC units in Topco LLC, to pay Maravai Life Sciences Holdings 2, LLC (“MLSH 2”) as consideration for certain organizational transactions that occurred before the IPO, and to purchase outstanding shares of Class A common stock from MLSH 2.

Immediately prior to, and in connection with, the completion of our IPO, the Company completed a series of organizational transactions (“Organizational Transactions”), including:

•The amendment and restatement of Topco LLC’s operating agreement (the “New LLC Operating Agreement”) to, among other things, (i) modify Topco LLC’s capital structure by replacing the membership interests held by Topco LLC’s existing owners with a new class of Topco LLC units (the “LLC Units”) and (ii) appoint the Company as the sole managing member of Topco LLC;

•Amend and restate the Company’s certificate of incorporation to among other things, authorize the Company to issue two classes of common stock: Class A common stock and Class B common stock;

•The issuance of shares of the Company’s Class B common stock to Maravai Life Sciences Holdings, LLC (“MLSH 1”), which was Topco LLC’s pre-IPO owner on a one-to-one basis with the number of LLC Units owned; and

•The acquisition, by merger, of two members of Topco LLC (“the Blocker Entities”), for which we issued shares of Class A common stock and paid cash as consideration (“the Blocker Mergers”).

The Company is the sole managing member of Topco LLC, which operates and controls TriLink Biotechnologies, LLC, Glen Research, LLC, MockV Solutions, LLC and Cygnus Technologies, LLC (“Cygnus”) and their respective subsidiaries. Prior to the Company’s divestiture of its Protein Detection business in September 2021, Topco LLC also operated and controlled Vector Laboratories, Inc. and its subsidiaries. MLSH 1 is the only other member of Topco LLC.

The Organizational Transactions were considered transactions between entities under common control. As a result, the consolidated financial statements for periods prior to the IPO and the Organizational Transactions have been adjusted to combine the previously separate entities for presentation purposes.

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Exchanges and Secondary Offerings

April 2021 Exchange and Secondary Offering

In April 2021, MLSH 1 executed an exchange of 17,665,959 LLC Units (paired with the corresponding shares of Class B common stock) in return for 17,665,959 shares of the Company’s Class A common stock. The corresponding shares of Class B common stock were subsequently cancelled and retired. The Company immediately completed a secondary offering (“April 2021 Secondary Offering”) of 20,700,000 shares of its Class A common stock by MLSH 1 and MLSH 2, which included 3,034,041 shares of Class A common stock previously held by MLSH 2, which included the full exercise of the underwriters’ option to purchase up to 2,700,000 additional shares of Class A common stock, at a price of $31.25 per share.

The selling stockholders were responsible for the underwriting discounts and commissions of the April 2021 Secondary Offering and received all of the net proceeds of $624.2 million from the sale of shares of Class A common stock. The Company was responsible for the offering costs associated with the April 2021 Secondary Offering of $1.0 million which were recorded within selling, general and administrative in the condensed consolidated statements of income.

September 2021 Exchange and Secondary Offering

In September 2021, MLSH 1 executed an exchange of 17,068,559 LLC Units (paired with the corresponding shares of Class B common stock) in return for 17,068,559 shares of the Company’s Class A common stock. The corresponding shares of Class B common stock were subsequently cancelled and retired. Shortly after the exchange, the Company completed a secondary offering (“September 2021 Secondary Offering”) of 20,000,000 shares of its Class A common stock by MLSH 1 and MLSH 2, which included 2,931,441 shares of Class A common stock previously held by MLSH 2 at a price of $50.00 per share.

The selling stockholders were responsible for the underwriting discounts and commissions of the September 2021 Secondary Offering and received all of the net proceeds of $977.5 million from the sale of shares of Class A common stock. The Company was responsible for the offering costs associated with the September 2021 Secondary Offering of $0.9 million which were recorded within selling, general and administrative in the condensed consolidated statements of income.

Basis of Presentation

The Company operates and controls all of the business and affairs of Topco LLC, and through Topco LLC and its subsidiaries, conducts its business. Because we manage and operate the business and control the strategic decisions and day-to-day operations of Topco LLC and also have a substantial financial interest in Topco LLC, we consolidate the financial results of Topco LLC, and a portion of our net income is allocated to the non-controlling interests in Topco LLC held by MLSH 1.

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and accounts between the businesses comprising the Company have been eliminated in the accompanying consolidated financial statements.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to Form 10-Q of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any future period.

The condensed consolidated balance sheet presented as of December 31, 2020, has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the Company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the 2020 financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue and expenses, and related disclosures. These estimates form the basis for judgments the Company makes about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company bases its estimates and judgments on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. These estimates are based on

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management’s knowledge about current events and expectations about actions the Company may undertake in the future. Significant estimates include, but are not limited to, revenue recognition, the net realizable value of inventory, 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, estimated fair values of intangible assets and goodwill, the payable to related parties pursuant to the Tax Receivable Agreement (“TRA”), amortization methods and periods, the fair value of leased buildings and other assumptions associated with lease financing transactions, the estimated fair value of our long-term debt, equity-based compensation, the valuation of incentive units, allowance for doubtful accounts, and accounting for income taxes and assessment of valuation allowances. Actual results could differ materially from those estimates.

Significant Accounting Policies

A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the year ended December 31, 2020. Except as noted below, there have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2021.

Revenue Recognition

The Company generates revenue from the sale of products and services and the performance of services in the fields of nucleic acid production, biologics safety testing, and protein detection. Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The majority of the Company’s contracts include only one performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account for revenue recognition. The Company also recognizes revenue from other contracts that may include a combination of products and services, the provision of solely services, or from license fee arrangements which may be associated with the delivery of product. Where there is a combination of products and services, the Company accounts for the promises as individual performance obligations if they are concluded to be distinct. Performance obligations are considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. As a practical expedient, we do not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less. Contracts with customers are evaluated on a contract-by-contract basis as contracts may include multiple types of goods and services as described below.

Revenue for an individual contract is recognized at the related transaction price, which is the amount the Company expects to be entitled to in exchange for transferring the products and/or services. The transaction price for product sales is calculated at the contracted product selling price. The transaction price for a contract with multiple performance obligations is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined based on the prices charged to customers, which are directly observable. Standalone selling price of services are mostly based on time and materials. Generally, payments from customers are due when goods and services are transferred. As most contracts contain a single performance obligation, the transaction price is representative of the standalone selling price charged to customers. Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods. Variable consideration has not been material to our consolidated financial statements.

The Company accepts returns only if the products do not meet customer specifications and historically, the Company’s volume of product returns has not been significant. Further, no warranties are provided for promised goods and services other than assurance type warranties.

The Company has elected the practical exemption to not disclose the unfulfilled performance obligations for contracts with an original length of one year or less. The Company had no material unfulfilled performance obligations for contracts with an original length greater than one year for any period presented.

Nucleic Acid Production

Nucleic Acid Production revenue is generated from the manufacture and sale of highly modified, complex nucleic acids products to support the needs of our of customers’ research, therapeutic and vaccine programs. The primary offering of products include; CleanCap®, mRNA, and specialized oligonucleotides. Contracts typically consist of a single performance

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obligation. The Company recognizes revenue from these products in the period in which the performance obligation is satisfied by transferring control to the customer. Revenue for nucleic acid catalog products is recognized at a single point in time, generally upon shipment to the customer. Revenue for contracts for certain custom nucleic acid products, with an enforceable right to payment and a reasonable margin for work performed to date, is recognized over time, based on a cost-to-cost input method over the manufacturing period.

Biologics Safety Testing

The Company’s Biologics Safety Testing revenue is associated with the sale of bioprocess impurity detection kit products. We also enter into contracts that include custom antibody development, assay development, antibody affinity extraction, and mass spectrometry services. These products and services enable the detection of impurities that occur in the manufacturing of biologic drugs and other therapeutics. The Company recognizes revenue from the sale of bioprocess impurity detection kits in the period in which the performance obligation is satisfied by transferring control to the customer. Custom antibody development contracts consist of a single performance obligation, typically with an enforceable right to payment and a reasonable margin for work performed to date. Revenue is recognized over time based on a cost-to-cost input method over the contract term. Where an enforceable right to payment does not exist, revenue is recognized at a point in time when control is transferred to the customer. Assay development service contracts consist of a single performance obligation, revenue is recognized at a point in time when a successful antigen test and report is provided to the customer. Affinity extraction services, which generally occur over a short period of time, consist of a single performance obligation to perform the extraction service and provide a summary report to the customer. Revenue is recognized either over time or at a point in time depending on contractual payment terms with the customer.

Protein Detection

Prior to the divestiture of its Protein Detection business in September 2021 (see Note 2), the Company also manufactured and sold protein labeling and detection reagents to customers that were used for basic research and development. The contracts to sell these catalog products consisted of a single performance obligation to deliver the reagent products. Revenue from these contracts was recognized at a point in time, generally upon shipment of the final product to the customer.

Sales taxes

Sales taxes collected by the Company are not included in the transaction price as revenue as they are ultimately remitted to a governmental authority.

Shipping and handling costs

Shipping and handling costs, which are charged to customers, are included in revenue and is recognized at the same time that the related product revenue is recognized.

Contract costs

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred when the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing and general and administrative expenses. The costs to fulfill the contracts are determined to be immaterial and are recognized as an expense when incurred.

Contract balances

Contract assets are generated when contractual billing schedules differ from revenue recognition timing and the Company records a contract receivable when it has an unconditional right to consideration. Contract assets balances, which are included in prepaid and other current assets, was not material as of December 31, 2020. There were no contract asset balances as of September 30, 2021.

Contract liabilities include billings in excess of revenue recognized, such as customer deposits and deferred revenue. Customer deposits, which are included in accrued expenses, are recorded when cash payments are received or due in advance of performance. Deferred revenue is recorded when the Company has unsatisfied performance obligations. Total contract liabilities were $69.9 million and $79.2 million as of September 30, 2021 and December 31, 2020, respectively. Contract liabilities are expected to be recognized into revenue within the next twelve months.

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Disaggregation of Revenue

The following tables summarize the revenue by segment and region for the periods presented (in thousands):


	Three Months Ended September 30, 2021
	Nucleic Acid Production		Biologics Safety Testing		Protein Detection		Total
North America	$	73,622	$	7,203	$	3,067	$	83,892
Europe, the Middle East and Africa	103,929		3,811		1,392		109,132
Asia Pacific	5,332		5,441		795		11,568
Latin and Central America	18		171		29		218
Total revenue	$	182,901	$	16,626	$	5,283	$	204,810


	Nine Months Ended September 30, 2021
	Nucleic Acid Production		Biologics Safety Testing		Protein Detection		Total
North America	$	207,469	$	20,052	$	11,016	$	238,537
Europe, the Middle East and Africa	257,873		12,059		4,752		274,684
Asia Pacific	33,977		19,844		3,068		56,889
Latin and Central America	35		528		123		686
Total revenue	$	499,354	$	52,483	$	18,959	$	570,796


	Three Months Ended September 30, 2020
	Nucleic Acid Production		Biologics Safety Testing		Protein Detection		Total
North America	$	36,814	$	6,035	$	3,735	$	46,584
Europe, the Middle East and Africa	27,083		3,830		1,423		32,336
Asia Pacific	3,759		4,204		901		8,864
Latin and Central America	—		45		30		75
Total revenue	$	67,656	$	14,114	$	6,089	$	87,859


	Nine Months Ended September 30, 2020
	Nucleic Acid Production		Biologics Safety Testing		Protein Detection		Total
North America	$	82,523	$	16,217	$	9,577	$	108,317
Europe, the Middle East and Africa	32,731		10,974		4,002		47,707
Asia Pacific	13,296		13,356		2,730		29,382
Latin and Central America	19		225		95		339
Total revenue	$	128,569	$	40,772	$	16,404	$	185,745

The following table provides a disaggregation of revenue based on the pattern of revenue recognition for the periods presented (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue recognized at a point in time	$	194,946	$	86,437	$	539,661	$	181,041
Revenue recognized over time	9,864		1,422		31,135		4,704
Total revenue	$	204,810	$	87,859	$	570,796	$	185,745

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Non-Controlling Interests

Non-controlling interests represent the portion of profit or loss, net assets and comprehensive income of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities. Non-controlling interests consist of the following:

•Until November 2020, Topco LLC held a 70% ownership interest in MLSC Holdings, LLC (“MLSC”) through its consolidated subsidiaries with the remaining 30% being recorded as non-controlling interests in our consolidated financial statements. MLSC net income or loss was attributed to the non-controlling interests using an attribution method, similar to the hypothetical liquidation at book value method, based on the distribution provisions of the MLSC Amended and Restated Limited Liability Company Agreement (“MLSC LLC Agreement”). In November 2020, and before the closing of the IPO, Topco LLC repurchased all of the outstanding non-controlling interests in MLSC for $166.4 million.

•In November 2020, based on the Organizational Transactions described above, we became the sole managing member of Topco LLC. Until the April 2021 Secondary Offering, we held approximately 38% of the outstanding LLC Units of Topco LLC, and approximately 62% of the outstanding LLC Units of Topco LLC were held by MLSH 1. After the April 2021 Secondary Offering and until the September 2021 Secondary Offering, we held approximately 44% of the outstanding LLC Units of Topco LLC, and approximately 56% of the outstanding LLC Units of Topco LLC were held by MLSH 1. As of September 30, 2021, as a result of the September 2021 Secondary Offering, we hold approximately 51% of the outstanding LLC Units of Topco LLC, and MLSH 1 holds approximately 49% of the outstanding LLC Units of Topco LLC. Therefore, we report non-controlling interests based on LLC Units of Topco LLC held by MLSH 1 on our condensed consolidated balance sheet as of September 30, 2021. Income or loss attributed to the non-controlling interest in Topco LLC is based on the LLC Units outstanding during the period for which the income or loss is generated and is presented on the condensed consolidated statements of income and consolidated statements of comprehensive income.

MLSH 1 is entitled to exchange LLC Units, together with an equal number of shares of our Class B common stock (together referred to as “Paired Interests”), for shares of Class A common stock on a one-for-one basis or, at our election, for cash, from a substantially concurrent public offering or private sale (based on the price of our Class A common stock in such public offering or private sale). As such, future exchanges of Paired Interests by MLSH 1 will result in a change in ownership and reduce or increase the amount recorded as non-controlling interests and increase or decrease additional paid-in-capital when Topco LLC has positive or negative net assets, respectively. In April 2021 and September 2021, MLSH 1 executed an exchange of Paired Interests prior to the April 2021 Secondary Offering and September 2021 Secondary Offering, respectively.

Distributions of $50.1 million and $106.3 million for tax liabilities were made to MLSH 1 during the three and nine months ended September 30, 2021, respectively. Distributions of $0.1 million and $0.3 million for tax liabilities were made to the non-controlling interest holders of MLSC during the three and nine months ended September 30, 2020.

Segment Information

The Company has historically operated in three reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, allocates resources and assesses performance based upon discrete financial information at the segment level. Substantially all of our long-lived assets are located in the United States. The Company divested its Protein Detection business in September 2021 (see Note 2). The Company has reported the historical results of the Protein Detection business as such discrete financial information evaluated by the CODM for the periods presented included the information for this legacy segment.

Net Income per Class A Common Share/Unit Attributable to Maravai LifeSciences Holdings, Inc.

Basic net income per Class A Common share/unit attributable to Maravai LifeSciences Holdings, Inc. is computed by dividing net income attributable to us by the weighted average number of Class A Common shares/units outstanding during the period. The non-controlling interest, for historical periods prior to the IPO, is calculated pursuant to the terms of the MLSC LLC Agreement on a fully-distributed basis, taking into account the various classes of equity of MLSC, including the cumulative yields on MLSC’s preferred units. Diluted net income per Class A Common share/unit is calculated by giving effect to all potential weighted average dilutive LLC incentive units for historical periods prior to the IPO and stock options, restricted stock units, and Topco LLC Units, that together with an equal number of shares of our Class B common stock (together referred to as “Paired Interests”) are convertible into shares of our Class A Common stock, for the periods after the IPO. For historical periods prior to the IPO, the weighted average number of common units outstanding during the period and the potential dilutive common unit equivalents is determined under the two-class method. The dilutive effect of outstanding awards, if any, is

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reflected in diluted earnings per share/unit by application of the treasury stock method or if-converted method, as applicable. The Company reported net income attributable to Maravai LifeSciences Holdings, Inc. for the three and nine months ended September 30, 2021 and 2020.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:


Assets						Useful Lives
Buildings						20 - 35 years
Building improvements						5 - 15 years
Furniture, fixtures, equipment and software						3 - 11 years

Leasehold improvements are amortized over the shorter of the related lease term or useful life.

Maintenance and repairs are charged to operations when incurred, while betterments or renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in the results of operations.

The Company is considered to be an owner lessee of certain buildings (Note 5). The leased buildings are being depreciated over the lease term to a residual value that will approximate the remaining lease financing obligation at the end of the lease.

Property and equipment also includes a leased building which is recorded as construction in process during the period of construction at its fair value plus the cost of improvements incurred during the construction period (Note 5).

Impairment of Long-Lived and Intangible Assets

The Company periodically reviews long-lived assets, including property and equipment and finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets is compared to the carrying value the assets to determine whether impairment exists. If the assets are determined to be impaired, the loss is measured based on the difference between the fair value and carrying value of the assets. No impairment loss was recognized for long-lived or finite-lived intangible assets during the three and nine months ended September 30, 2021 and 2020.

Fair Value of Financial Instruments

The Company defines fair value as the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company follows accounting guidance that has a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset or liability as of the measurement date. Instruments with readily available actively quoted prices, or for which fair value can be measured from actively quoted prices in an orderly market, will generally have a higher degree of market price transparency and a lesser degree of judgment used in measuring fair value. The three levels of the hierarchy are defined as follows:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2—Include other inputs that are directly or indirectly observable in the marketplace; and

Level 3—Unobservable inputs which are supported by little or no market activity.

As of September 30, 2021 and December 31, 2020, the carrying value of current assets and liabilities approximates fair value due to the short maturities of these instruments. The fair values of the Company’s long-term debt approximate carrying value, excluding the effect of unamortized debt discount, as it is based on borrowing rates currently available to the Company for debt with similar terms and maturities (Level 2 inputs).

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains substantially all of its cash balances at a financial institution that management believes is of high credit-quality and is financially stable. Cash is deposited with major financial institutions in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held. The Company provides credit, in the

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normal course of business, to international and domestic distributors and customers, which are geographically dispersed. The Company attempts to limit its credit risk by performing ongoing credit evaluations of its customers and maintaining adequate allowances for potential credit losses.

The following table summarizes revenue from each of our customers who individually accounted for 10% or more of our total revenue or accounts receivable for the periods presented: