REPLIGEN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Summary of Significant Accounting Policies

~~(Unaudited)~~

1.	~~Summary of Significant Accounting Policies~~

Basis

of Presentation

The consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company”, “Repligen”, “our” or “we”) in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form

10-Q

and Article 10 of Regulation

S-X

and do not include all of the information and footnote disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form

10-K

for the fiscal year ended December 31, ~~2020 (“Form 10-K”),~~2021, which was filed with the SEC on February ~~24, 2021.~~

17, 2022 (“Form 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The business and economic uncertainty resulting from the novel coronavirus

pandemic (“COVID-19”)

pandemic has made such estimates more difficult to calculate. Accordingly, actual results could differ from those estimates.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB, Repligen GmbH, Spectrum

LifeSciences LLC and its subsidiaries (“Spectrum”), C Technologies, Inc. ~~(“C Technologies”), Engineered Molding Technology LLC (“EMT”),~~

~~Non-Metallic~~

~~Solutions, Inc. (“NMS”)~~, ARTeSYN Biosolutions Holdings Ireland Limited (“ARTeSYN”), Polymem S.A. (“Polymem”), Avitide LLC, Newton T&M Corp ("NTM"), Bio-Flex Solutions, L.L.C. ("BioFlex") and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company made no material changes in the application of its significant accounting policies that were disclosed in its Form

10-K.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year. Certain prior year balances have been reclassified to conform to current year presentation.

Recent Accounting Standards Updates

We consider the applicability and impact of all Accounting Standards Updates (“ASUs” or “ASU”) on the Company’s consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations. Recently issued ASUs that we feel may be applicable to the Company are as follows:

Recently Issued Accounting ~~Standard~~Standards Updates – ~~Not Yet~~ Adopted

~~In August 2020,~~ During the ~~Financial Accounting Standards Board (“FASB”) issued~~Period

Effective January 1, 2022, the Company adopted ASU

2020-06,

“

Debt - Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic

815-40).”

using the modified retrospective method of adoption. ASU

2020-06

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

~~2020-06~~

~~also enhances transparency~~Consequently, a convertible instrument will be accounted for as a single liability measured at its amortized cost as long as no other features of such convertible instrument require bifurcation and ~~improves disclosures~~recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments will typically be closer to the coupon interest rate when applying the guidance in Topic 835, “Interest.” We now account for our 0.375% convertible ~~instruments and earnings per share guidance. ASU~~

~~2020-06~~

~~is effective for annual reporting periods beginning after December~~senior notes due July 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 is currently evaluating the timing and impact of2024 (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~~our consolidated financial ~~statements.~~statements, resulting in adjustments of $39.1 million, $17.3 million, and $27.6 million to the opening balances of additional paid-in capital, retained earnings and convertible senior notes,

current portion, net, respectively, on our consolidated balance sheet as of January 1, 2022. Additionally, due to the adoption of ASU 2020-06, we reversed the remaining balance of the deferred tax liability of $6.4 million, which was initially recorded in connection with the 2019 Notes. See Note 7, “Convertible Senior Notes,” for more information, including modified disclosures as required by ASU 2020-06 upon adoption.

Fair Value Measurements

~~Table of Contents~~

2.	~~Fair Value Measurements~~

The Company uses various valuation approaches in determining the fair value of its assets and liabilities. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:


Level 1 –		Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 –		Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3 –		Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2022 and December 31, 2021 (amounts in thousands):


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

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

	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	460,936	$	—	$	—	$	460,936

Liabilities:
Long-term contingent consideration	$	—	$	—	$	94,238	$	94,238

Cash and cash equivalents

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, cash and cash equivalents on the ~~Company’s~~Company's consolidated balance sheets included ~~$544.1~~$436.0 million and ~~$549.0~~$460.9 million, respectively, in a money market ~~account.~~accounts. These funds are valued on a recurring basis using Level 1 inputs.

Contingent Consideration – Earnout

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. 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. Refer to Note 3, "Acquisitions" below for additional information.

A reconciliation of the change in the fair value of contingent consideration - earnout is included in the following table (amounts in thousands):


Balance as of December 31, 2021	$	94,238
Contingent consideration		(2,411	)
Balance as of March 31, 2022	$	91,827

The recurring Level 3 fair value measurement of our contingent consideration earnout that we expect to be required to settle include the following significant unobservable inputs (amounts in thousands, except percentage data):


Contingent Consideration Earnout	Fair Value as of March 31, 2022		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
				Probability of
Commercialization-based			Monte Carlo	Success	100%	100%
payments	$	28,870	Simulation	Earnout Discount Rate	3.2%-4.2%	3.7%

				Volatility	26.4%	26.4%
Revenue and Volume-			Monte Carlo	Revenue & Volume
based payments	$	62,957	Simulation	Discount Rate	7.9%	7.9%
				Earnout Discount Rate	3.2%-4.2%	3.7%

(1)

Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

The Company estimates the fair value of the contingent consideration earnouts at each subsequent reporting period using a Monte Carlo simulation. Changes in the projected performance of the acquired business could result in a higher or lower contingent consideration obligation in the future.

There were 0 changes in revenue projections during the three months ended March 31, 2022 that would cause a material change in amounts reported as of March 31, 2022.

Fair Value Measured on a Nonrecurring Basis

During the three months ended March 31, 2022, there were no re-measurements to fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

Convertible Senior Notes

In July 2019, the Company issued ~~$287.5~~$287.5 million aggregate principal amount of the Company’s ~~0.375% Convertible Senior Notes due July 15, 2024 (the “2019 Notes”).~~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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the carrying value of the 2019 Notes was ~~$246.6~~$283.3 million and ~~$243.7~~$255.3 million, respectively, net of unamortized discount and issuance costs, and the fair value of the 2019 Notes was ~~$502.0~~$490.2 million and ~~$501.0~~$678.5 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 March 31, ~~2021.~~

2022. The 2019 Notes are discussed in more detail in Note ~~12,~~

7, “Convertible Senior Notes”to this report.

Acquisitions

~~to Part II, Item 8, “~~

~~Financial Statements~~

2021 Acquisitions

Bio-Flex Solutions L.L.C. and ~~Supplementary Data”~~

~~to our Form~~

~~10-K.~~

~~During the three months ended March 31,~~Newton T&M Corp.

On November 29, 2021, ~~there were no remeasurements to fair value of financial assets and liabilities that are not measured at fair value on a recurring basis.~~

3.	~~Acquisitions~~

~~ARTeSYN Biosolutions Holdings Ireland Limited~~

~~On October 27, 2020,~~ the Company entered into an Equity ~~and Asset~~ Purchase Agreement with ~~ARTeSYN, a company organized under the laws~~BioFlex, NTM and each of ~~Ireland, Third Creek Holdings, LLC, a Nevada limited liability company (“Third Creek”), Alphinity, LLC, a Nevada limited liability company (“Alphinity”,~~Ralph Meola and ~~together with Third Creek the “ARTeSYN Sellers”), and Michael Gagne, solely in his capacity as the representative of the ARTeSYN Sellers, pursuant~~Jason Nisler, to ~~which the Company acquired (i) all~~acquire 100% of the outstanding ~~equity~~ securities of ~~ARTeSYN~~BioFlex and ~~(ii) certain assets from Alphinity related to the business of ARTeSYN~~NTM (collectively, the ~~“ARTeSYN~~“NTM Acquisition”) ~~for approximately~~

~~$200 million, comprised of approximately $130~~

~~million in cash to the ARTeSYN Sellers and approximately~~

~~$70~~

~~million in the Company’s common stock to Third Creek.~~. The transaction closed on December ~~3, 2020.~~

16, 2021.

~~Table of Contents~~

~~ARTeSYN~~

NTM, which is headquartered in ~~Waterford, Ireland~~Newton, New Jersey, is the parent company of BioFlex and ~~conducts its operations~~focuses on manufacturing of products, while BioFlex, also headquartered in ~~Ireland,~~Newton, New Jersey, commercializes branded products to biotech customers. The NTM Acquisition complements and expands the ~~United States~~Company's filtration offering paths as the industry migrates to single-use flow paths solutions for monoclonal antibody ("mAb"), vaccine and ~~Estonia. Its suite of~~

~~single-use~~

~~solutions has been created~~cell and gene therapy ("C&GT") applications, with ~~the goal of enabling “abundance in medicine” by allowing 10x greater efficiency in biologics manufacturing.~~a focus on single-use fluid management components, including single-use clamps, adapters, end caps and hose assemblies. The ~~ARTeSYN team has created a number of solutions targeting the~~

~~single-use~~

~~space from~~

~~single-use~~

~~valves with fully disposable valve liners, XO~~

~~skeletal supports, a hybrid small parts offering for~~

~~de-bottlenecking~~

~~traditional facilities,~~NTM Acquisition streamlines and ~~fully automated SU process systems that have quickly become leading solutions~~increases control over many components in the ~~bioprocessing industry. In addition to its~~

Company's single-use

~~solutions, ARTeSYN also engages~~ supply chain which ultimately should drive reduced lead-times for Repligen customers in the ~~manufacture of large-scale systems to be used for biologics manufacturing. ARTeSYN has established downstream processing leadership with a suite of state of the art~~

~~single-use~~

systems for chromatography, filtration, continuous manufacturing and media/buffer prep workflows. In addition, the Company has integrated unique flow path assemblies utilizing EMT’s silicone extrusion and molding technology, to deliver highly differentiated, low

~~hold-up~~

~~volume systems that minimize product loss during processing.~~

coming years.

Consideration

Transferred

The ~~ARTeSYN~~NTM Acquisition was accounted for as a purchase of ~~a business~~businesses under ASC 805,

“Business Combinations”

~~. The ARTeSYN Acquisition was funded through payment~~and the Company engaged a third-party valuation firm to assist with the valuation of ~~$130.7 million in cash, as well as issuance~~the business acquired. Under the terms of ~~372,990 unregistered~~the Equity Purchase Agreement, all outstanding shares of ~~the Company’s common~~capital stock of BioFlex were acquired for consideration with a value totaling ~~$69.4~~

$31.8million, ~~contingent consideration of approximately~~

~~$1.5~~

which includes $3.0million ~~and settlement of preexisting invoices with~~deposited into an escrow against which the Company ~~of approximately~~

~~$2.3 million,~~may make claims for ~~a total purchase price of $204.0 million.~~ indemnification.

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

the ~~Company~~

.Company. The fair value of the net ~~tangible~~ assets acquired is estimated to be ~~$7.9~~$4.4 million, the fair value of the intangible assets acquired is estimated to be ~~$67.4~~$17.2 million, and the residual goodwill is estimated to be ~~$128.7~~

$10.2million. The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation. ~~Payment~~Acquisition-related costs are not included as a component of consideration transferred but are expensed in the ~~final consideration~~periods in which costs are incurred. The Company has incurred $1.2 million of transaction and integration costs associated with the NTM Acquisition from the date of acquisition to March 31, 2022, with $0.9 million of transaction and integration costs incurred during the three months ended March 31, 2022. The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for ~~working capital was made in April 2021.~~

the period ended March 31, 2022.

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.

~~Total~~

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) inventory; (2) deferred tax assets, net; (3) allocations to intangible assets such as trademark and tradename, developed technology and customer relationships as well as goodwill; (4) final consideration ~~transferred is as follows~~paid related to working capital adjustments; and (5) other assets and liabilities.

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


Cash and cash equivalents	$	2,870
Accounts receivable		1,408
Inventory		741
Prepaid expenses and other current assets		126
Property and equipment		34
Operating lease right of use asset		1,034
Customer relationships		13,240
Developed technology		3,540
Trademark and tradename		310
Non-competition agreements		60
Goodwill		10,184
Long term deferred tax asset		111
Accounts payable		(224	)
Accrued liabilities		(578	)
Operating lease liability		(1,030	)
Operating lease liability, long-term		(3	)
Fair value of net assets acquired	$	31,823

During the first quarter of 2022, the Company recorded net working capital adjustments of approximately $4,000 related to pre-acquisition liabilities, which is included in goodwill in the table above.

Acquired Goodwill

The goodwill of $10.2 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. Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.

Intangible Assets

Cash consideration
   $ 130,713
Equity consideration
   69,422
Contingent consideration
   1,548
Settlement of preexisting liabilities
   2,310

Fair value of net assets acquired

$
203,993

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


	Useful life	Fair Value
		(Amounts in thousands)

Customer relationships	10 years	$	13,240
Developed technology	11 years		3,540
Trademark and tradename	15 years		310
Non-competition agreements	3 years		60
		$	17,150

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.

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.

Consideration Transferred

The Avitide Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations” 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. The Avitide Acquisition was funded through payment of $75.0 million in cash, the issuance of 271,096 unregistered shares of the Company’s common stock totaling $83.0 million and contingent consideration with fair value of approximately $88.4 million.

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, the 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 ~~the~~ costs are incurred. The Company has incurred ~~$4.0~~

$3.2million inof transaction and integration costs associated with the ~~ARTeSYN~~Avitide Acquisition ~~in 2020 and an additional~~

from the date of acquisition to March 31, 2022 with $

~~0.5~~

0.6million of transaction and integration costs incurred during the ~~first quarter of 2021.~~three months ended March 31, 2022. The transaction costs are included in ~~selling, general and administrative (“SG&A”)~~operating expenses in the consolidated statements of comprehensive ~~income.~~

~~The consideration transferred includes approximately~~

~~$1.5~~

~~million related to consideration that was deferred at~~income in this report. During the ~~acquisition date, with payment~~first quarter of 2022, due to the ~~ARTeSYN Sellers contingent upon recognizing revenue on a large-scale system within 120 days~~change in market inputs used to prepare the valuation of the ~~acquisition date. This~~contingent consideration isobligation, the Company also recorded ~~at its estimated fair value as~~a contingent consideration adjustment of the acquisition date, which includes the assumption of high probability of such revenue being recognized. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments($2.4) million to the assets acquired and liabilities assumed with the corresponding offset to 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 are recorded to ourCompany's consolidated ~~statements~~statement of comprehensive income.

~~Table~~See Note 2, "Fair Value Measurements" for more information.

The preparation of ~~Contents~~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.

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


Cash consideration	$	74,962
Equity consideration		82,968
Contingent consideration - earnout		88,373
Fair value of net assets acquired	$	246,303

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 ~~December 3, 2020)~~September 20, 2021). Any such ~~revision~~revisions or changes may ~~be material.~~have a material impact on our accounting treatment of the Avitide Acquisition. The final allocation may include changes ~~to: (1)~~to long-term deferred ~~revenue; (2) inventory; (3) deferred tax~~ liabilities ~~net; (4) allocations~~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 ~~intangible assets such as tradenames, developed technology and customer relationships as well as goodwill; and (5) other assets and liabilities. In March 2021, the Company recorded a~~

~~0.1~~

~~million working capital adjustment related to settlement~~our consolidated statement of a

comprehensive income.

~~pre-acquisition~~

~~liability, which offset goodwill in the table below.~~

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


Cash and cash equivalents	$	572
Accounts receivable		228
Inventory		332
Prepaid expenses and other current assets		114
Property and equipment		1,862
Operating lease right of use asset		3,648
Customer relationships		24,580
Developed technology		20,650
Trademark and tradename		1,210
Non-competition agreements		210
Goodwill		199,245
Accounts payable		(215	)
Accrued liabilities		(2,183	)
Operating lease liability		(698	)
Operating lease liability, long-term		(2,950	)
Long term deferred tax liability		(244	)
Other liabilities		(58	)
Fair value of net assets acquired	$	246,303

Cash and cash equivalents
   $ 2,982
Accounts receivable
   4,811
Inventory
   8,592
Prepaid expenses and other current assets
   5,561
Property and equipment
   1,836
Operating lease right of use asset
   1,611
Other noncurrent assets
   26
Customer relationships
   38,400
Developed technology
   27,060
Trademark and tradename
   1,630
Non-competition
agreements
   300
Goodwill
   128,748
Accounts payable
   (2,251 )
Accrued liabilities
   (8,856 )
Deferred revenue
   (3,583 )
Deferred tax liabilities, net
   (1,240 )
Notes payable
   (24 )
Operating lease liability
   (417 )
Operating lease liability, long-term
   (1,193 )

Fair value of net assets acquired

$
203,993

Acquired Goodwill

The goodwill of ~~$128.7~~$199.2 million represents future economic benefits expected to arise from anticipated synergies from ~~combining operations~~the integration of Avitide. These synergies include certain cost savings, operating efficiencies and ~~commercial organizations~~other strategic benefits projected to ~~increase market presence and~~be achieved as a result of the ~~extension of existing customer relationships.~~Avitide Acquisition. Substantially all of the goodwill recorded is expected to be ~~deductible~~nondeductible for income tax purposes.

Intangible Assets

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


	Useful life	Fair Value
		(Amounts in thousands)

Customer relationships	13 years	$	24,580
Developed technology	15 years		20,650
Trademark and tradename	18 years		1,210
Non-competition agreements	3 years		210
		$	46,650

Useful life

Fair Value


(Amounts in thousands)

Customer relationships
   17 years    $ 38,400
Developed technology
   15 years    27,060
Trademark and tradename
   21 years    1,630
Non-competition
agreements
   3 years    300

      $ 67,390

~~Table of Contents~~

~~Non-Metallic~~

~~Solutions, Inc.~~

Polymem S.A.

On ~~October 15, 2020,~~June 22, 2021, the Company entered into a Stock Purchase Agreement with ~~NMS,~~Polymem S.A., a ~~Massachusetts corporation,~~company organized under the laws of France, and ~~each~~Jean-Michel Espenan and Franc Saux, acting together jointly and severally as the representatives of ~~William Malloneé and Derek Masser,~~ the ~~legal and beneficial owners of NMS, to purchase NMS, which~~sellers for $47.0 million. The transaction ~~subsequently~~ closed on ~~October 20, 2020~~July 1, 2021 (the ~~“NMS~~“Polymem Acquisition”).

~~NMS,~~

Polymem, which is headquartered in, ~~Auburn, Massachusetts,~~Toulouse, France, is a manufacturer of ~~fabricated plastics, custom containers,~~hollow fiber membranes, membrane modules and ~~related assemblies~~systems for industrial and ~~components used in~~bioprocessing applications. Polymem products will complement and expand the ~~manufacturing~~Company’s portfolio of ~~biologic drugs.~~hollow fiber systems and consumables. The acquisition substantially increases Repligen’s membrane and module manufacturing capacity and establishes a world-class center of ~~NMS allows Repligen~~excellence in Europe to ~~expand its line of~~

~~single-use~~

~~systems and associated integrated flow path assemblies, streamline~~address the ~~supply chain~~accelerating global demand for ~~current products, and gives the Company more flexibility to scale and expand~~

~~single-use~~

~~and systems portfolios.~~

these innovative products.

Consideration

Transferred

The ~~NMS~~Polymem Acquisition was accounted for as a purchase of a business under ASC 805,

“Business ~~Combinations.”~~

Combinations” 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 ~~$16.1~~approximately $47.0 million, which included ~~$1.3~~

approximately $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 ~~tangible~~ assets acquired is ~~estimated to be~~ approximately ~~$0.9~~$2.2 million, the fair value of the intangible assets acquired is ~~estimated to be $8.5~~approximately $9.1 million, and the residual goodwill is ~~estimated to be~~ approximately ~~$6.7~~$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 has incurred ~~$0.2~~

$4.7million of transaction and integration costs associated with the ~~NMS~~Polymem Acquisition ~~in 2020~~from the date of acquisition to March 31, 2022, with $1.6 million of transaction and

~~$0.2~~

~~million in 2021.~~ integration costs incurred during the three months ended March 31, 2022. The transaction costs are included in ~~SG&A~~operating expenses in the consolidated statements of comprehensive ~~income.~~

income for the period ended March 31, 2022.

Fair Value of Net Assets Acquired

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):



Cash and cash equivalents	$	353
Net working capital (excluding cash and inventory step-up)		414
Inventory step-up		543
Operating lease right of use assets		1,424
Property and equipment		3,145
Other assets		41
Developed technology		8,274
Trademark and tradenames		510
Non-compete agreements		312
Goodwill		35,680
Operating lease liability		(1,253	)
Long term deferred tax liability		(2,327	)
Other long-term liabilities		(143	)
Fair value of net assets acquired	$	46,973

Cash and cash equivalents
   $ 1,163
Accounts receivable
   415
Inventory
   334
Prepaid expenses and other current assets
   13
Property and equipment
   73
Operating lease right of use asset
   194
Customer relationships
   6,370
Developed technology
   1,810
Trademark and tradename
   190
Non-competition
agreements
   90
Goodwill
   6,713
Deferred tax assets
   24
Accounts payable
   (96 )
Accrued liabilities
   (999 )
Operating lease liability
   (136 )
Operating lease liability, long-term
   (59 )

Fair value of net assets acquired

$
16,099

Acquired Goodwill

The goodwill of ~~$6.7~~approximately $35.7 million represents future economic benefits expected to arise from anticipated synergies from the integration of ~~NMS.~~Polymem. These synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the ~~NMS~~Polymem Acquisition. Substantially all of the goodwill recorded is expected to be ~~deductible~~nondeductible for income tax purposes. ~~In February 2021, the Company recorded an adjustment to goodwill of $0.1 million related to the finalization of the working capital~~

~~true-up.~~

~~Table of Contents~~

Intangible Assets

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


	Useful life	Fair Value
		(Amounts in thousands)
Developed technology	13 years	$	8,274
Trademark and tradename	14 years		510
Non-competition agreements	5 years		312
		$	9,096

Revenue Recognition

Useful life

Fair Value


(Amounts in thousands)

Customer relationships
   14 years    $ 6,370
Developed technology
   12 years    1,810
Trademark and tradename
   15 years    190
Non-competition
agreements
   3 years    90

      $ 8,460

~~Engineered Molding Technology LLC~~

On July 13, 2020, the Company completed the acquisition of 100% of the membership interests of EMT, a New York limited liability company, pursuant to a Membership Interest Purchase Agreement, dated June 26, 2020, by and among the Company, EMT, and each of Michael Pandori and Todd Etesse, the legal and beneficial owners of EMT (such acquisition, the “EMT Acquisition”).

~~EMT, headquartered in Clifton Park, New York, is an innovator and manufacturer of~~

~~single-use~~

silicone assemblies and components used in the manufacturing of biologic drugs. EMT’s standard and custom molding as well as their over-molded connectors and silicone tubing products are key components in

~~single-use~~

~~filtration and chromatography systems. EMT’s products will complement and expand Repligen’s~~

~~single-use~~

~~product offerings.~~

~~Consideration Transferred~~

~~The EMT Acquisition was accounted for as a purchase of a business under ASC 805,~~

~~“Business Combinations”.~~

~~Total consideration paid was $28.5 million, which included $2.2~~

million deposited into an escrow account against which the Company may make claims for indemnification. Under the acquisition method of accounting, the net assets of EMT were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net tangible assets acquired is approximately

~~$1.5~~

~~million, the fair value of the intangible assets acquired is approximately~~

~~$14.4~~

~~million, and the residual goodwill is approximately~~

~~$12.6~~

million. The estimated consideration and preliminary purchase price information have been prepared using a preliminary valuation. 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 Repligen believes to be reasonable.

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

~~$1.2~~

~~million of transaction and integration related costs associated with the EMT Acquisition in 2020 and~~

~~$0.1~~

~~million during the first quarter of 2021. The transaction costs are included in SG&A expenses in the consolidated statements of comprehensive income.~~

~~Table of Contents~~

~~Fair~~

~~Value of Net Assets Acquired~~

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 preliminary valuation. The Company obtained this information during due diligence and through other sources. In the months after the closing, the Company obtained additional information about these assets and liabilities as it learned more about EMT. The Company refined the estimates of fair value to more accurately allocate the purchase price. Only items identified as of the acquisition date were considered for subsequent adjustment. We have made appropriate adjustments to the purchase price allocation during the measurement period, which ends on July 13, 2021. We consider these adjustments to be final. The components and allocation of the purchase price consist of the following (amounts in thousands):

Cash and cash equivalents
   $ 69
Accounts receivable
   1,057
Inventory
   449
Prepaid expenses and other current assets
   7
Property and equipment
   414
Operating lease right of use assets
   1,050
Customer relationships
   11,080
Developed technology
   2,910
Trademark and tradename
   320
Non-compete
agreements
   50
Goodwill
   12,585
Deferred tax asset
   46
Accounts payable
   (283 )
Accrued liabilities
   (190 )
Operating lease liability
   (211 )
Operating lease liability, long-term
   (839 )

Fair value of net assets acquired

$
28,514

~~Acquired Goodwill~~

The goodwill of $12.6 million represents future economic benefits expected to arise from anticipated synergies from the integration of EMT. These synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the EMT Acquisition. 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 EMT Acquisition and their estimated useful lives:~~

Useful life

Fair Value


(Amounts in thousands)

Customer relationships
   14 years    $ 11,080
Developed technology
   11 years    2,910
Trademark and tradename
   14 years    320
Non-competition
agreements
   3 years    50

      $ 14,360

4.	~~Revenue Recognition~~

The Company generates revenue from the sale of bioprocessing products, equipment devices, and related consumables used with these equipment devices to customers in the life science and biopharmaceutical industries. Under ASC 606,

“Revenue from Contracts with Customers,”

revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers.

~~Table of Contents~~

Disaggregation of Revenue

Revenues for the

three

months ended March

31,

2022 and 2021

~~and~~

~~2020~~

were as follows:


	Three Months Ended March 31,
	2022		2021
	(Amounts in thousands)
Product revenue	$	206,363	$	142,737
Royalty and other income		37		100
Total revenue	$	206,400	$	142,837

Three Months Ended


March 31,


2021

2020


(Amounts in thousands)

Product revenue
   $ 142,737    $ 76,060
Royalty and other income
   100    30

Total revenue
   $ 142,837    $ 76,090

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. Because all of its revenues are from bioprocessing customers, there are no differences in the nature, timing and uncertainty of the Company’s revenues and cash flows from any of its product lines. 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~~revenue is generated from a small number of 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 and revenue from significant customers can be found in Note 14,

“Segment Reporting,”

included in this report.

Except for the $10.9 million of revenue with MilliporeSigma for the three months ended March 31, 2020, there were no significant customers that represented 10% or more of total revenue for the periods presented in the table above.

For more information regarding our product revenue, see Note 5,

6, “Revenue Recognition”

included in Part II, Item 8, “

Financial Statements and Supplementary Data”

to our Form

~~10-K,~~

~~which was filed with the SEC on February 24, 2021.~~

10-K.

Contract Balances from Contracts with Customers

The following table provides information about receivables and deferred revenue from contracts with customers as of March 31, ~~2021~~2022 (amounts in thousands):


	March 31,		December 31,
	2022		2021
Balances from contracts with customers only:
Accounts receivable	$	122,435	$	117,420
Deferred revenue (included in accrued liabilities in the consolidated balance sheets)	$	20,078	$	14,848
Revenue recognized during periods presented relating to:
The beginning deferred revenue balance	$	9,063	$	13,708

2021

Balances from contracts with customers only:

Accounts receivable
   $ 90,207
Deferred revenue (included in accrued liabilities in the consolidated balance sheets)
   $ 14,253

Revenue recognized during the three-month period ended March 31, 2021 relating to:

The beginning deferred revenue balance
   $ 8,525
Changes in pricing related to products or services satisfied in previous periods
   $ 0

The timing of revenue recognition, billings and cash collections results in the accounts receivable and deferred revenue balances on the Company’s consolidated balance sheets.

A contract asset is created when the Company satisfies a performance obligation by transferring a promised good to the customer. Contract assets may represent conditional or unconditional rights to consideration. The right is conditional and recorded as a contract asset if the Company must first satisfy another performance obligation in the contract before it is entitled to payment from the customer. Contract assets are transferred to billed receivables once the right becomes unconditional. If the Company has the unconditional right to receive consideration from the customer, the contract asset is accounted for as a billed receivable and presented separately from other contract assets. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due.

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Goodwill and Intangible Assets

~~Table of Contents~~

5.	~~Goodwill~~ ~~and Intangible Assets~~

Goodwill

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,

“Intangibles – Goodwill and Other”

~~.The~~. The following table represents the change in the carrying value of goodwill for the three months ended March 31, ~~2021~~2022 (amounts in thousands):



Balance as of December 31, 2021	$	860,362
Measurement period adjustment - BioFlex		4
Cumulative translation adjustment		(878	)
Balance as of March 31, 2022	$	859,488

Balance at December 31, 2020
   $ 618,305
Measurement period adjustment - NMS
   (71 )
Measurement period adjustment - ARTeSYN
   90
Cumulative translation adjustment
   (807 )

Balance at March 31, 2021
   $ 617,517

During each of the fourth quarters of ~~2020, 2019~~2021 and ~~2018,~~2020, the Company completed its annual impairment assessments and concluded that goodwill was not impaired in any of those years. The Company has not identified any “triggering” events which indicate an impairment of goodwill in the three months ended March 31, ~~2021.~~

2022.

Intangible Assets

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 ~~SG&A~~selling, general and administrative expenses in the Company’s statements of comprehensive income. 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 our products or changes in the size of the market for the Company’s products. An impairment results if the carrying value of the asset exceeds the estimated fair value of the asset. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its intangible assets are recoverable at March 31, ~~2021.~~

2022.

Indefinite-lived assets are reviewed for impairment at least annually. There has been no0 impairment of the Company’s intangible assets for the periods presented.

Intangible assets, net consisted of the following at March 31, ~~2021:~~

March 31, 2021


Gross
Carrying
Value

Accumulated

Amortization

Net
Carrying
Value

Weighted
Average
Useful Life

(in years)


(Amounts in thousands)

Finite-lived intangible assets:

Technology - developed
   $ 114,080    $ (16,016 )    $ 98,064    17
Patents
   240    (240 )    —      8
Customer relationships
   217,227    (40,338 )    176,889    16
Trademarks
   5,892    (616 )    5,276    20
Other intangibles
   2,140    (1,399 )    741    3

Total finite-lived intangible assets
   339,579    (58,609 )    280,970    16
Indefinite-lived intangible asset:

Trademarks
   700    —      700    —

Total intangible assets
   $ 340,279    $ (58,609 )    $ 281,670

2022:

~~Table of Contents~~


	March 31, 2022
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology - developed	$	145,894	$	(23,742	)	$	122,152		17
Patents		240		(240	)		0		8
Customer relationships		254,074		(54,813	)		199,261		15
Trademarks		7,693		(988	)		6,705		19
Other intangibles		2,829		(1,719	)		1,110		4
Total finite-lived intangible assets		410,730		(81,502	)		329,228		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	411,430	$	(81,502	)	$	329,928

Intangible assets consisted of the following at December 31, ~~2020:~~2021:


	December 31, 2021
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology - developed	$	146,097	$	(21,553	)	$	124,544		17
Patents		240		(240	)		0		8
Customer relationships		254,699		(50,719	)		203,980		15
Trademarks		7,699		(877	)		6,822		19
Other intangibles		2,839		(1,611	)		1,228		4
Total finite-lived intangible assets		411,574		(75,000	)		336,574		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	412,274	$	(75,000	)	$	337,274

December 31, 2020


Gross
Carrying
Value

Accumulated

Amortization

Net
Carrying
Value

Weighted
Average
Useful Life

(in years)


(Amounts in thousands)

Finite-lived intangible assets:

Technology - developed
   $ 114,217    $ (14,444 )    $ 99,773    17
Patents
   240    (240 )    —      8
Customer relationships
   217,790    (37,333 )    180,457    16
Trademarks
   5,893    (541 )    5,352    20
Other intangibles
   2,142    (1,324 )    818    3

Total finite-lived intangible assets
   340,282    (53,882 )    286,400    16
Indefinite-lived intangible asset:

Trademarks
   700    —      700    —

Total intangible assets
   $ 340,982    $ (53,882 )    $ 287,100

Amortization expense for finite-lived intangible assets was ~~$5.2~~$6.6 million and ~~$3.9~~$5.2 million for each of the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively. As of March 31, ~~2021,~~2022, the Company expects to record the following amortization expense in future periods (amounts in thousands):


	Estimated
	Amortization
For the Years Ended December 31,	Expense
2022 (remaining nine months)	$	19,850
2023		26,350
2024		25,764
2025		25,425
2026		25,425
2027 and thereafter		206,414
Total	$	329,228

Consolidated Balance Sheet Detail

Estimated


Amortization

For the Three Months Ended March 31,

Expense

2021 (remaining nine months)
   $ 15,558
2022
   20,742
2023
   20,625
2024
   20,057
2025
   19,790
2026 and thereafter
   184,198

Total
   $ 280,970

6.	~~Consolidated Balance Sheet Detail~~

Inventories, net

Inventories, net consists of the following:



	March 31,		December 31,
	2022		2021
	(Amounts in thousands)
Raw materials	$	137,294	$	123,321
Work-in-process		8,294		8,119
Finished products		68,187		53,054
Total inventories, net	$	213,775	$	184,494

March 31,

December 31,


2021

2020


(Amounts in thousands)

Raw materials
   $ 66,893    $ 48,746
Work-in-process
   8,203    8,084
Finished products
   34,424    38,195

Total inventories, net
   $ 109,520    $ 95,025

~~Table of Contents~~

Property, Plant

and Equipment

Property, plant and equipment consist of the following:



	March 31,			December 31,
	2022			2021
	(Amounts in thousands)
Land	$	952		$	1,023
Buildings		722			764
Leasehold improvements		56,745			52,505
Equipment		73,450			70,983
Furniture, fixtures and office equipment		10,472			9,137
Computer hardware and software		25,826			22,380
Construction in progress		54,344			38,446
Other		470			443
Total property, plant and equipment		222,981			195,681
Less - Accumulated depreciation		(75,354	)		(70,717	)
Total property, plant and equipment, net	$	147,627		$	124,964

March 31,

December 31,


2021

2020


(Amounts in thousands)

Land
   $ 1,023    $ 1,023
Buildings
   997    1,007
Leasehold improvements
   32,127    31,331
Equipment
   44,096    43,072
Furniture, fixtures and office equipment
   8,699    8,714
Computer hardware and software
   16,003    15,397
Construction in progress
   19,349    14,927
Other
   437    455

Total property, plant and equipment
   122,731    115,926
Less - Accumulated depreciation
   (50,488 )    (49,056 )

Total property, plant and equipment, net
   $ 72,243    $ 66,870

Depreciation ~~expense~~

expenses totaled ~~$3.3~~$5.2 million and ~~$2.5~~$3.3 million for each of the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Accrued Liabilities

Accrued liabilities consist of the following:



	March 31,		December 31,
	2022		2021
	(Amounts in thousands)
Employee compensation	$	23,579	$	42,147
Deferred revenue		20,078		14,848
Income taxes payable		5,908		4,984
Other		15,549		13,519
Total accrued liabilities	$	65,114	$	75,498

Convertible Senior Notes

March 31,

December 31,


2021

2020


(Amounts in thousands)

Employee compensation
   $ 14,026    $ 20,288
Income taxes payable
   1,217    1,423
Royalty and license fees
   1,418    466
Warranties
   1,311    1,576
Professional fees
   1,159    1,425
Deferred revenue
   14,253    15,318
Other
   9,044    12,589

Total accrued liabilities
   $ 42,428    $ 53,085

7.	~~Convertible Senior Notes~~

0.375% Convertible Senior Notes due 2024

On July 19, 2019, the Company issued ~~$287.5~~$287.5 million aggregate principal

pursuant to the

2019 Notes, which includes the underwriters’ exercise in full of an option to purchase an additional ~~$37.5~~$37.5 million aggregate principal amount of 2019 Notes (the “Notes Offering”). The net proceeds of the Notes Offering, after deducting underwriting discounts and commissions and other related offering expenses payable by the Company, were approximately ~~$278.5~~$278.5 million. The 2019 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of ~~0.375%~~0.375% per year. Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. The 2019 Notes will mature on July 15, 2024, unless earlier repurchased or converted in accordance with their terms.

During the first quarter of ~~2021,~~2022, the closing price of the Company’s common stock exceeded ~~130%~~130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the second quarter of ~~2021,~~2022, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes. These conditions ~~were~~

~~also~~

have been met ~~during~~since the fourth quarter of ~~2020 and as~~2020. As a result, ~~the Company received notices from note holders that they would convert $5,000~~$15,000 in aggregate principal amount of the 2019 Notes have been converted by the noteholders since the issuance of ~~which $1,000 principal were settled~~the 2019 Notes, including $4,000 during the first quarter of ~~2021.~~

2022. The ~~conversion~~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~~

~~$1,000 on the conversion of these notes, which is included in other (expenses) income o~~

~~our consolidated statements of comprehensive income for the three months ended March 31, 2021.~~holders. The Company continues to classify the carrying value of the 2019 Notes as current liabilities on the Company’s consolidated balance sheet at March 31, ~~2021.~~

~~Table~~2022.

Prior to the adoption of ~~Contents~~

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 recorded at issuance related to the 2019 Notes was $52.1 million, which was recorded in additional paid-in capital in our 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 sheet. 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 for the three months ended March 31, 2022.

The net carrying value of the liability component of the 2019 Notes is as follows:


	March 31,			December 31,
	2022			2021
	(Amounts in thousands)
0.375% convertible senior notes due 2024:
Principal amount	$	287,485		$	287,489
Unamortized debt discount		0			(28,220	)
Unamortized debt issuance costs		(4,218	)		(4,011	)
Net carrying amount	$	283,267		$	255,258

March 31,

December 31,


2021

2020


(Amounts in thousands)

0.375% Convertible Senior Notes due 2024:

Principal amount
   $ 287,499    $ 287,500
Unamortized debt discount
   (35,843 )    (38,317 )
Unamortized debt issuance costs
   (5,095 )    (5,446 )

Net carrying amount
   $ 246,561    $ 243,737

~~Interest~~

The following table sets forth total interest expense recognized onrelated to the 2019 Notes for the three months ended March 31, 2021 was $0.3 million, $2.5 million and $0.4 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The effective interest rate on the 2019 Notes is 5.1%, which included the interest on the 2019 Notes, amortization of the debt discount and debt issuance costs. Notes:


	Three Months Ended
	March 31,
	2022			2021
	(Amounts in thousands)
Contractual interest expense	$	270		$	270
Amortization of debt issuance costs		452			352
Amortization of debt discount		0			2,478
Total	$	722		$	3,100
Effective interest rate of the liability component		0.3	%		1.2	%

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the carrying value of the 2019 Notes was ~~$246.6~~$283.3 million and ~~$243.7~~$255.3 million, respectively, net of unamortized discount, and the fair value of the 2019 Notes was ~~$502.0~~$490.2 million and ~~$501.0~~$678.5 million, respectively. The fair value of the 2019 Notes was determined based on the most recent trade activity of the 2019 Notes at March 31, 2022 and December 31, 2021.

Stockholders’ Equity

8.	~~Stockholders’ Equity~~

Stock Option and Incentive Plans

Under the Company’s current 2018 Stock Option and Incentive Plan (the “2018 Plan”), the number of shares of the Company’s common stock that are reserved and available for issuance is

2,778,000, plus the number of shares of common stock available for issuance under the Company’s previous plans. The shares of common stock underlying any awards under the 2018 Plan and previous plans (together, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by exercise) ~~shall be~~are added back to the shares of stock available for issuance under the 2018 Plan. At March 31, ~~2021, 2,179,921~~2022, 1,954,613 shares were available for future ~~grant~~

grants under the 2018 Plan.

Stock-Based Compensation

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded stock-based compensation expense of ~~$6.5~~$7.9 million and ~~$4.2~~$6.5 million, respectively, for share-based awards granted under the Plans. The following table presents stock-based compensation expense in the Company’s consolidated statements of comprehensive income:


	Three Months Ended March 31,
	2022		2021
	(Amounts in thousands)
Cost of product revenue	$	622	$	506
Research and development		799		716
Selling, general and administrative		6,494		5,319
Total stock-based compensation	$	7,915	$	6,541

Three Months Ended

March 31,


2021

2020


(Amounts in thousands)

Cost of product revenue
   $ 506    $ 433
Research and development
   716    372
Selling, general and administrative
   5,319    3,360

Total stock-based compensation
   $ 6,541    $ 4,165

The 2018 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Employee grants under the Plans generally vest over a three to five-year period, with

~~20%-33%~~

20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to

non-employee

directors under the Plans generally vest over one year. In the first quarter of 2018, to create a longer-term retention incentive, the Company’s Compensation Committee granted long-term incentive compensation awards to its Chief Executive Officer ~~consisting~~which consisted of both stock options and restricted stock units (“RSUs”) that are subject to time-based vesting over nine ~~years.~~years. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At March 31, ~~2021,~~2022, options to purchase ~~697,118~~650,059 shares and ~~654,250~~591,377 stock units were outstanding under the Plans.

~~Table of Contents~~

Stock Options

The Company uses the B

~~ack-Scholes~~Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date and ~~the Company uses the value of the common stock as of the grant date to value RSUs. The Company~~ measures stock-based compensation costs for stock options at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a

straight-line basis. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

Information regarding option activity for the three months ended March 31, 2022 under the Plans is summarized below:


	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2021		625,107		$	54.15		6.29	$	131,707
Granted		34,473		$	189.21
Exercised		(9,521	)	$	31.12
Forfeited/expired/cancelled		0		$	0
Options outstanding at March 31, 2022		650,059		$	61.65		6.27	$	82,990
Options exercisable at March 31, 2022		376,069		$	42.55		5.61	$	54,931
Vested and expected to vest at March 31, 2022(1)		631,360					6.26	$	80,798

(1)

Represents the number of vested options as of March 31, 2022 plus the number of unvested options expected to vest as of March 31, 2022 based on the unvested outstanding options at March 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 March 31, 2022, the last business day of the first quarter of 2022, of $188.09 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 March 31, 2022. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 and 2021 was $1.4 million and $2.5 million, respectively.

The weighted average grant date fair value of options granted during the three months ended March 31, 2022 and 2021 was $79.96 and $92.35, respectively. The total fair value of stock options that vested during the three months ended March 31, 2022 and 2021 was $2.0 million and $1.9 million, respectively.

Stock Units

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. The Company recognizes expense on awards with service-based vesting over the employee's requisite service period on a straight-line basis. Prior to 2020, the Company issued performance stock units to certain employees which are tied to the achievement of certain ~~Company~~company financial goal metrics and the passage of time. ~~During~~Since 2020, the Company has implemented a formal ~~program~~programs that ~~issued~~issue performance stock units to certain employees set to vest upon the achievement of individual goals and financial goals of the Company, as well as the passage of time. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. ~~The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.~~

~~Information regarding option activity for the three months ended March 31, 2021 under the Plans is summarized below:~~

Shares

Weighted

average

exercise

price

Weighted-

Average
Remaining
Contractual
Term

(in Years)

Aggregate
Intrinsic Value

(in Thousands)

Options outstanding at December 31, 2020
   696,711    $ 43.88    6.90    $ 102,958
Granted
   21,547    $ 215.58
Exercised
   (15,140 )    $ 33.25
Forfeited/expired/cancelled
   (6,000 )    $ 48.05

Options outstanding at March 31, 2021
   697,118    $ 49.39    6.76    $ 101,554

Options exercisable at March 31, 2021
   384,757    $ 34.20    6.00    $ 61,641

Vested and expected to vest at March 31, 2021
(1)
   669,196       6.72    $ 98,009

~~(1)~~

Represents the number of vested options as of March 31, 2021 plus the number of unvested options expected to vest as of March 31, 2021 based on the unvested outstanding options at March 31, 2021 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 March 31, 2021, the last business day of the first quarter of 2021, of $194.41 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 March 31, 2021. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020 was $2.5 million and $4.7 million, respectively.

The weighted average grant date fair value of options granted during the three months ended March 31, 2021 and 2020 was $92.35 and $41.77, respectively. The total fair value of stock options that vested during the three months ended March 31, 2021 and 2020 was $1.9 million and $2.0 million, respectively.

~~Table of Contents~~

~~The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant.~~ Information regarding stock unit activity, which includes activity for RSUs and performance stock units, for the three months ended March 31, ~~2021~~2022 under the Plans is summarized below:


	Shares			Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Unvested at December 31, 2021		606,685			3.07	$	160,674
Awarded		124,139
Vested		(130,978	)
Forfeited/expired/cancelled		(8,469	)
Unvested at March 31, 2022		591,377			3.09	$	111,232
Vested and expected to vest at March 31, 2022(1)		574,925			2.73	$	108,138

(1)

Represents the number of vested stock units as of March 31, 2022 plus the number of unvested stock units expected to vest as of March 31, 2022 based on the unvested outstanding stock units at March 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.

Shares

Weighted-

Average
Remaining

Contractual

Term

(in Years)

Aggregate
Intrinsic Value

(in
Thousands)

Unvested at December 31, 2020
   665,540    3.32    $ 127,904
Awarded
   119,148
Vested
   (122,765 )
Forfeited/expired/cancelled
   (7,673 )

Unvested at March 31, 2021
   654,250    3.09    $ 127,193

Unvested and expected to vest at March 31, 2021
(1)
   639,254    2.94    $ 124,277

~~(1)~~

Represents the number of vested stock units as of March 31, 2021 plus the number of unvested stock units expected to vest as of March 31, 2021 based on the unvested outstanding stock units at March 31, 2021 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 March 31, ~~2021,~~2022, the last business day of the first quarter of ~~2021,~~2022, of

~~$194.41~~ $188.09 per share, as stock units do not have an exercise price) that would have been received by the stock unit holders had all holders exercised on March 31, ~~2021.~~2022. The aggregate intrinsic value of stock units vested during the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$27.1~~$30.2 million and ~~$11.8~~$27.1 million, respectively.

The weighted average grant date fair value of stock units ~~vested~~granted during the three months ended March 31, 2022 and 2021 was $196.36and ~~2020 was $209.13 and $86.75,~~$209.13, respectively. The total fair value of stock units that vested during the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$6.5~~$14.2 million and ~~$5.3~~$6.5 million, respectively.

As of March 31, ~~2021,~~2022, there was ~~$65.4~~$77.4 million of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of ~~3.25~~3.14 years. The Company expects ~~1,894,207~~1,786,096 unvested options and stock units to vest over the next five ~~years.~~years.

Commitments and Contingencies

9.	~~Commitments and Contingencies~~

In June 2018, the Company secured an agreement with Navigo Proteins (“Navigo”) for the exclusive

co-development

of multiple affinity ligands for which ~~Repligen~~the Company holds commercialization rights. The Company is manufacturing and ~~has agreed to supply~~supplying the first of these ligands,

NGL-Impact

, exclusively to Purolite Life Sciences, an Ecolab Inc. company (“Purolite”), who ~~will pair~~is pairing the Company’s high-performance ligand with Purolite’s agarose jetting base bead technology used in their Jetted A50 Protein A resin product. 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. The Company has proceeded with scaling up and manufacturing this ligand and the development and validation of the related affinity chromatography resin, which ~~will be~~is marketed by the Company. In September 2021, the Company and Navigo successfully completed co-development of a novel affinity ligand that addresses aggravation issues associated with pH sensitive antibodies and Fc-fusion proteins. The Company is manufacturing and supplying this ligand, NGL-Impact® HipH, to Purolite for use in a platform use resin product. The Navigo and Purolite agreements are supportive of the Company’s strategy to secure and reinforce the Company’s proteins business. The Company made royalty payments to Navigo

of $

0.4 million and $0.3

million for the three months ended March

31,

2022 and 2021,

. respectively.

~~NaN royalty payments were made to Navigo during the three months ended March 31, 2020.~~10.

Accumulated Other Comprehensive Loss

~~Table of Contents~~

~~10.~~

~~Accumulated Other~~

~~Comprehensive (Loss) Income~~

The following shows the changes in the components of accumulated other comprehensive ~~(loss) income~~loss for the three months ended March 31, ~~2021~~2022 which consisted of only foreign currency translation adjustments for the periods shown (amounts in thousands):

Foreign


Currency


Translation


Adjustment

Balance as of December 31, 2020
   $ 2,085
Other comprehensive loss
   (9,579 )

Balance at March 31, 2021
   $ (7,494 )

~~11.~~	~~Income Taxes~~
		Foreign
		Currency
		Translation
		Adjustment

Balance at December 31, 2021		$	(16,886	)
Other comprehensive loss			(4,688	)
Balance at March 31, 2022		$	(21,574	)

11.

Income Taxes

For the three months ended March 31, 2022 and 2021,

we recorded an income tax provision of ~~$3.7 million.~~$12.0 million and $3.7 million, respectively. The Company’s effective tax rate for the three months ended March 31, ~~2021~~2022 was ~~11%,~~20.3% compared to ~~8.1%~~11.0% for

the corresponding period in 2021. The increase in the ~~prior year. The~~ effective tax rates ~~for the three months ended March 31, 2021 and 2020 were lower than the U.S. statutory rate of 21%~~was primarily due to ~~business tax credits~~higher income before taxes and lower windfall benefits recognized on stock option exercises and the vesting of stock units.

12.

Earnings Per Share

~~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.

~~The Company’s tax returns are subject to examination by federal, state and international tax authorities for the following periods:~~


~~Jurisdiction~~		Fiscal Years Subject to Examination

~~United States - federal and state~~		~~2017-2020~~
~~Sweden~~		~~2013-2020~~

~~12.~~

~~Earnings Per Share~~

The Company reports earnings per share ("EPS") in accordance with ASC 260,

“Earnings Per Share,”

which establishes standards for computing and presenting 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 RSUs, performance stock units and the incremental common shares issuable upon the exercise of stock options. ~~Under the treasury stock method, unexercised~~

~~“in-the-money”~~

stock options and warrants are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase common shares at the average market price during the period. 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.

~~Table of Contents~~

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


	Three Months Ended March 31,
	2022		2021
	(Amounts in thousands, except per share data)
Numerator:
Net income	$	46,964	$	29,450
Effect of dilutive securities:
Charges associated with convertible debt instruments, net of tax		387		0
Numerator for diluted earnings per share - net income available to common stockholders after the effect of dilutive securities	$	47,351	$	29,450

Denominator:
Weighted average shares used in computing net income per share - basic		55,353		54,805
Effect of dilutive shares:
Options and stock units		726		964
Convertible Senior Notes		2,726		1,092
Dilutive effect of unvested performance stock units		11		8
Dilutive potential common shares		3,463		2,064
Denominator for diluted earnings per share - adjusted weighted average shares used in computing net income per share - diluted		58,816		56,869

Earnings per share:
Basic	$	0.85	$	0.54
Diluted	$	0.81	$	0.52

Three Months Ended

March 31,


2021

2020


(Amounts in thousands, except per share data)

Net income
   $ 29,450    $ 9,815

Weighted average shares used in computing net income per share - basic    54,805    52,139
Effect of dilutive shares:

Options and stock units
   964    970
Convertible
S
enior
N
otes
   1,092    —
Dilutive effect of unvested performance stock units
   8    —

Dilutive potential common shares
   2,064    970

Weighted average shares used in computing net income per share - diluted
   56,869    53,109

Earnings per share:

Basic
   $ 0.54    $ 0.19

Diluted
   $ 0.52    $ 0.18

At March 31, ~~2021,~~2022, there were outstanding options to purchase ~~697,118~~650,059 shares of the Company’s common stock at a weighted average exercise price of ~~$49.39~~$61.65 per share and ~~654,250~~591,377 shares of common stock issuable upon the vesting of stock units, which include RSUs and performance stock units. For the three months ended March 31, ~~2021, 94,236~~2022, 137,247 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 March 31, 2020, there were outstanding options to purchase 915,518 shares of the Company’s common stock at a weighted average exercise price of $32.91 per share and 716,630 common stock issuable upon the vesting of stock units, which include RSUs and performance stock units. For the three months ended March 31, 2020, 39,711 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~~$287.5 million aggregate principal amount of 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 ~~will be~~could have been settled in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. ~~As of~~On March ~~31, 2021,~~4, 2022, we entered into the Second Supplemental Indenture for the 2019 Notes, ~~were convertible. The~~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 ~~currently intends~~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 ~~provided by~~ mentioned in Note 7, "Convertible Senior Notes," the ~~terms~~Company adopted ASU 2020-06 effective January 1, 2022. Under ASU 2020-06, the Company is required to reflect the dilutive effect of the ~~indenture underlying~~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 ~~has~~had the choice to settle the conversion of the 2019 Notes in cash, stock or a ~~choice~~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 ~~cash, shares or any~~a combination of ~~the two. The Company currently intends to settle the par value~~cash and shares of the ~~2019 Notes in cash~~Company's common stock, and ~~any~~from March 5, 2022 forward, only the excess ~~conversion~~ premium inwill be settled with shares. ~~The~~Under the if-converted method of calculating dilutive shares, the Company ~~applies~~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 three months ended March 31, 2022, the Company excluded interest charges of $0.4 million (net of tax) from the numerator.

Prior to the adoption of ASU 2020-06, the Company applied the provisions of ASC 260,

“Earnings Per Share”,

Subsection

10-45-44,

to determine the diluted weighted average shares outstanding as it ~~relates~~related to the conversion spread on its convertible notes. Accordingly, the par value of the 2019 Notes iswas not included in the calculation of diluted income per share, but the dilutive effect of the conversion premium iswas considered in the calculation of diluted net income per share using the treasury stock method. The dilutive impact of the 2019 Notes iswas based on the difference between the Company’s current period average stock price and the conversion price of the 2019 Notes, provided there iswas a premium. Pursuant to this accounting standard, there iswas no dilution from the accreted principal of the 2019 Notes. For the three months ended March 31, 2021, the dilutive effect of the conversion premium included in the calculation of diluted earnings was

1,091,776 shares. ~~There was 0 dilutive effect of the conversion premium included in the calculation of diluted earnings per share for the three months ended March 31, 2020.~~

13.

Related Party Transactions

~~13.~~

~~Related Party Transactions~~

Certain facilities leased by Spectrum are owned by Roy Eddleman, the former owner of Spectrum. As of March 31, ~~2021,~~2022, Mr. Eddleman owned greater than 5%5% of the Company’s outstanding shares and the Company considers him to be a related party.

~~Table of Contents~~

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

yCompany incurred rent expense totaling

$0.2 million for each of the three ~~months~~month periods ended March 31, ~~2021~~2022 and ~~2020 related to these leases.~~2021.

14.

Segment Reporting

~~14.~~

~~Segment Reporting~~

The Company views its operations,

makes decisions regarding how to allocate resources and manages its business as 1 reportable segment and one reporting unit. As a result, the financial information disclosed herein represents all of the material financial information related to the Company.

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


	Three Months Ended
	March 31,
	2022			2021
Revenue by customers' geographic locations:
North America		40	%		42	%
Europe		43	%		39	%
APAC/Other		17	%		19	%
Total revenue		100	%		100	%

Three Months Ended


March 31,


2021

2020

Revenue by customers’ geographic locations:

North America
   42 % 48 %
Europe
   39 % 41 %
APAC/Other
   19 % 11 %

Total revenue
   100 % 100 %

Concentrations of Credit Risk and Significant Customers

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. Treasury obligations) and type of instrument is limited. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had no investments associated with foreign exchange contracts, options contracts or other foreign hedging arrangements.

Concentration of credit risk with respect to accounts receivable is limited to customers to whom the Company makes significant sales. While a reserve for the potential

write-off

of accounts receivable is maintained, the Company has not written off any significant accounts to date. To control credit risk, the Company performs regular credit evaluations of its customers’ financial condition.

~~NaN revenue~~

Revenue from ~~customers represented 10%~~sales to Pfizer Inc. generated $21.1 million, or ~~more~~10% of the ~~Company’s~~Company's total revenue for the three months ended March 31, ~~2021. Revenue~~2022. There was 0 revenue from ~~MilliporeSigma~~customers that represented ~~14%~~10% or more of the ~~Company’s~~Company's total revenue for the three months ended March 31, ~~2020.~~

At2021.

No accounts receivable balance from a specific customer represented 10% or more of the Company's total trade accounts receivable at March 31, ~~2021, there were 0~~2022. Significant accounts receivable balances ~~with customers~~ representing ~~10%~~10% or more of the Company’s total trade accounts receivable ~~balance. At December 31, 2020, the~~and royalties came from our accounts receivable balance outstanding with ~~Cytiva represented 11% of the Company’s total trade~~Pfizer Inc at December 31, 2021. The Company's accounts receivable ~~balances.~~

~~Table~~and other receivable balances with Pfizer at December 31, 2021 was 14% of ~~Contents~~our total accounts receivable and other receivable balance.

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Repligen and its subsidiaries, collectively doing business as Repligen Corporation (“Repligen”, “we”, “our”, or ~~“the Company”~~the “Company”) 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.

As the overall market for biologics continues to grow and expand, our customers – primarily large biopharmaceutical companies and contract development and manufacturing organizations – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our products are helping to set new standards for the way biologics are manufactured. We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAb”), recombinant proteins, vaccines and cell and gene therapies ("C&GT") – that are improving human health worldwide. For more information regarding our business, products and acquisitions, see Part I, Item 1,

“Business”

included in our ~~2020~~2021 Annual Report on Form

10-K

(“ (“Form

10-K”),

which was filed with the Securities and Exchange Commission (“SEC”) on February ~~24, 2021.~~

17, 2022.

We currently operate as one bioprocessing business, with a comprehensive suite of products to serve both upstream and downstream processes in biological drug manufacturing. Building on over 3540 years of industry expertise, we have developed a broad and diversified product portfolio that reflects our passion for innovation and the customer-first culture that drives our entire organization. We continue to capitalize on opportunities to maximize the value of our product platform through both organic growth initiatives (internal innovation and commercial leverage) and targeted acquisitions.

2021 Acquisitions

~~ARTeSYN Biosolutions Holdings Ireland Limited~~

Bio-Flex Solutions LLC and Newton T&M Corp.

On ~~October 27, 2020,~~November 29, 2021, the Company entered into an Equity Purchase Agreement with Bio-Flex Solutions, L.L.C. ("BioFlex"), Newton T&M Corp ("NTM") and each of Ralph Meola and Jason Nisler, to acquire 100% of the outstanding securities of BioFlex and NTM (collectively, the “NTM Acquisition”). The transaction closed on December 16, 2021.

NTM, which is headquartered in Newton, New Jersey, is the parent company of BioFlex and focuses on manufacturing of products, while BioFlex, also headquartered in Newton, New Jersey, commercializes branded products to biotech customers. The NTM Acquisition complements and expands our filtration offering paths as the industry migrates to single-use flow paths solutions for mAb, vaccine and cell and gene therapy ("C&GT") applications, with a focus on single-use fluid management components, including single-use clamps, adapters, end caps and hose assemblies. The NTM Acquisition streamlines and increases control over many components in our single-use supply chain which ultimately should drive reduced lead-times for our customers in the coming years.

Acquisition of Avitide, Inc.

On September 16, 2021, we entered into an ~~Equity~~Agreement and ~~Asset~~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, 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”).

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 us a new platform for affinity resin development, including C&GT, and advances and expands our proteins franchise to address the unique purification needs of gene therapies and other emerging modalities.

Acquisition of Polymem S.A.

On June 22, 2021, we entered into a Stock Purchase Agreement with ~~ARTeSYN Biosolutions Holdings Ireland Limited~~Polymem S.A. (“~~ARTeSYN”~~Polymem”), a company organized under the laws of ~~Ireland, Third Creek Holdings, LLC, a Nevada limited liability company (“Third Creek”), Alphinity, LLC, a Nevada limited liability company (“Alphinity”,~~France, and Jean-Michel Espenan and Franc Saux, acting together ~~with Third Creek the “ARTeSYN Sellers”),~~jointly and ~~Michael Gagne, solely in his capacity~~severally as the ~~representative~~representatives of the ~~ARTeSYN Sellers, pursuant to~~sellers, which the Company acquired (i) all of the outstanding equity securities of ARTeSYN and (ii) certain assets from Alphinity related to the business of ARTeSYN (collectively, the “ARTeSYN Acquisition”) for approximately $200 million, comprised of approximately $130 million in cash to the ARTeSYN Sellers and approximately $70 million in our common stock to Third Creek. The transactionsubsequently closed on ~~December 3, 2020.~~

~~ARTeSYN~~July 1, 2021.

Polymem, which is headquartered in ~~Waterford, Ireland and conducts its operations in Ireland, the United States and Estonia. Its suite of~~

~~single-use~~

solutions has been created with the goal of enabling “abundance in medicine” by allowing 10x greater efficiency in biologics manufacturing. The ARTeSYN team has created a number of solutions targeting the

~~single-use~~

~~space from~~

~~single-use~~

~~valves with fully disposable valve liners, XO~~

~~skeletal supports, a hybrid small parts offering for~~

~~de-bottlenecking~~

~~traditional facilities, and fully automated SU process systems that have quickly become leading solutions in the bioprocessing industry. In addition to its~~

~~single-use~~

solutions, ARTeSYN also engages in the manufacture of large-scale systems to be used for biologics manufacturing. ARTeSYN has established downstream processing leadership with a suite of state of the art

~~single-use~~

systems for chromatography, filtration, continuous manufacturing and media/buffer prep workflows. In addition, we have integrated unique flow path assemblies utilizing Engineered Molding Technology LLC’s (“EMT”) silicone extrusion and molding technology, to deliver highly differentiated, low

~~hold-up~~

~~volume systems that minimize product loss during processing.~~

~~Non-Metallic~~

~~Solutions, Inc.~~

~~On October 15, 2020, we executed 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”).

~~NMS, headquartered in Auburn, Massachusetts,~~Toulouse, France, is a manufacturer of ~~fabricated plastics, custom containers, and related assemblies and components used in the manufacturing of biologic drugs. The acquisition of NMS allows us to expand its line of~~

~~single-use~~

~~systems and associated integrated flow path assemblies, streamline the supply chain for current products, and gives us more flexibility to scale and expand~~

~~single-use~~

hollow fiber membranes, membrane modules and systems ~~portfolios.~~

~~Table of Contents~~

~~Engineered Molding Technology LLC~~

On July 13, 2020, we completed the acquisition of 100% of the membership interests of EMT, a New York limited liability company, pursuant to a Membership Interest Purchase Agreement, dated June 26, 2020, byfor industrial and ~~among the Company, EMT, and each of Michael Pandori and Todd Etesse, the legal and beneficial owners of EMT (such acquisition, the “EMT Acquisition”).~~

~~EMT, headquartered in Clifton Park, New York, is an innovator and manufacturer of~~

~~single-use~~

~~filtration and chromatography systems. EMT’s~~bioprocessing applications. Polymem products will complement and expand Repligen’s portfolio of hollow fiber systems and consumables. The acquisition substantially increases our

~~single-use~~

~~product offerings.~~

membrane and module manufacturing capacity and establishes a world-class center of excellence in Europe to address the accelerating global demand for these innovative products.

Critical Accounting Policies and Estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 2 to the consolidated financial statements included in our Form

10-K.

Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.

Revenues

Total revenue for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were as follows:

Three Months Ended

March 31,
   Increase/(Decrease)
   2021    2020    $ Change    % Change
   (Amounts in thousands, except for percentage data)
Revenue:
Products    $ 142,737    $ 76,060    $ 66,677    87.7 %
Royalty and other    100    30    70    233.3 %

Total revenue    $ 142,837    $ 76,090    $ 66,747    87.7 %


	Three Months Ended March 31,				Increase/(Decrease)
	2022		2021		$ Change			% Change
	(Amounts in thousands, except for percentage data)
Revenue:
Products	$	206,363	$	142,737	$	63,626			44.6	%
Royalty and other		37		100		(63	)		(63.0	%)
Total revenue	$	206,400	$	142,837	$	63,563			44.5	%

Product revenues

~~Direct~~

Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers. These direct sales represented approximately ~~80%~~87% and ~~76%~~80% of our product revenue for each of the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. We expect that direct sales will continue to account for an increasing percentage of our product revenues, as the largest customer of our OEM products diversified its supply chain in 2020. Sales of our bioprocessing products can be impacted by the timing of large-scale production orders and the regulatory approvals for such antibodies, which may result in significant quarterly fluctuations.

Revenues from our filtration franchise include the sales of our XCell ATF® systems and consumables; Spectrum filtration systems, including KrosFlo®; SIUS® filtration products and systems; the fluid management assemblies and components offered by Engineered Molding Technology LLC, Non-Metallic Solutions, Inc. ARTeSYN Biosolutions Holdings Ireland Limited ("ARTeSYN") and BioFlex, the latter of which was acquired on December 16, 2021; the hollow fiber membrane technology offered by Polymem, which we acquired on July 1, 2021; and our ARTeSYN filtration systems. Revenue from our chromatography products includes the sale of our OPUS pre-packed chromatography columns, ~~chromatography resins and~~ ELISA test ~~kits.~~kits and chromatography systems from Spectrum and ARTeSYN. Revenue from our filtration products includes the sale of our XCell ATF systems and consumables, KrosFlo filtration products, SIUS filtration products, the silicone-molded products offered by EMT, which we acquired in the third quarter of 2020 and the products offered by NMS and ARTeSYN, which were both acquired during the fourth quarter of 2020. Revenue from proteinproteins products includes the sale of our Protein A ligands and cell culture growth ~~factors.~~factors, and sales of affinity products, including adeno-associated virus resins offered by Avitide, which we acquired on September 20, 2021. Revenue from our process analytics products includes the sale of our

SoloVPE®, FlowVPE® and FlowVPX® systems, consumables and service. Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue.

~~Table of Contents~~

During the three months ended March 31, ~~2021,~~2022, product revenue increased by ~~$66.7~~$63.6 million, or ~~87.7%,~~44.6% as compared to the same period of ~~2020. The increase is~~2021, due to ~~the~~exceptionally robust demand for our filtration, chromatography and process analytics products. There is continued adoption of our products by ~~our~~ key bioprocessing customers ~~particularly our chromatography and filtration products. Beginning in~~across all key product lines. Since the second quarter of 2020, we have experienced ~~an increase in overall sales as a result of~~ accelerated demand ~~which was from broad-based covering mAb, gene therapy and~~

~~COVID-19~~

across all of our franchises due to the critical needs of customers working on ~~vaccines~~the novel coronavirus pandemic (“COVID-19”) vaccines. However, fluctuations in vaccination rates will drive future demand of our products from these customers and ~~therapeutics. We expect there will be a continued~~the recognition of revenue related to COVID-19. In addition, we have recently seen an increased demand for C&GT and monoclonal antibody manufacturing. There was also an approximately $6 million increase in ~~direct sales during~~revenue due to our 2021 ~~especially from~~

~~COVID-19~~

~~customers as they~~

~~scale-up~~

~~and move vaccine and therapy drug candidates through clinical trial processes. During the first quarter of 2021, we also saw good performance from our recent~~ acquisitions ~~EMT, NMS and ARTeSYN,~~ which were acquired in the second half of ~~2020. Revenue from these acquisitions represented $10.9 million, or 7.6%, of total revenue for the three months ended March 31,~~ 2021. Additionally, we saw a $3.0 million increase in revenue related to our process analytics business associated with our acquisition of C Technologies, Inc. (“C Technologies”) in 2019, which was due to an increase in demand for our SoloVPE systems.

Royalty revenues

Royalty revenues in the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 relate to royalties received from a third-party systems manufacturer associated with our OPUS PD chromatography columns. Royalty revenues are variable and are dependent on sales generated by our partner.

Costs of product revenue and operating expenses

Total costs and operating expenses for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were comprised of the following:

Three Months Ended

March 31,
   Increase/(Decrease)
   2021    2020    $ Change    % Change
   (Amounts in thousands, except for percentage data)
Cost of product revenue    $ 59,747    $ 31,982    $ 27,765    86.8 %
Research and development    7,612    4,702    2,910    61.9 %
Selling, general and administrative    39,095    27,500    11,595    42.2 %

Total costs and operating expenses    $ 106,454    $ 64,184    $ 42,270    65.9 %


	Three Months Ended March 31,					Increase/(Decrease)
	2022			2021		$ Change			% Change
	(Amounts in thousands, except for percentage data)
Cost of product revenue	$	82,356		$	59,747	$	22,609			37.8	%
Research and development		12,155			7,612		4,543			59.7	%
Selling, general and administrative		54,300			39,095		15,205			38.9	%
Contingent consideration		(2,411	)		—		(2,411	)		100.0	%
Total costs and operating expenses	$	146,400		$	106,454	$	39,946			37.5	%

Cost of product revenue

Cost of product revenue increased ~~86.8%~~37.8% in the three months ended March 31, ~~2021,~~2022, compared to the same period of ~~2020,~~2021, due primarily to the increase in product revenue mentioned above and costs associated with higher product volume. ~~An increase~~In addition, in order to support our rapid growth and increased demand for our products, we continue to invest in our manufacturing infrastructure through increased manufacturing headcount resulted in higher employee-related costs for the three months ended March 31, 2021, compared to the same period of 2020. Recent acquisitions during the second half of 2020, resulted in an increase in costs of product revenueand increased occupancy costs. Our depreciation expense increased during the three months ended March 31, 2022, as manufacturing equipment was placed in service during the second half of 2021. The impact on cost of product revenue from our three 2021 ~~for~~acquisitions was $4.8 million, which has also contributed to the increase in cost of product revenue as there were no comparable ~~amounts during 2020.~~

costs for these acquisitions in the first quarter of 2021.

Gross margin was 60.1% and 58.2% in the three months ended March 31, ~~2021. The gross margin for the three months ended March 31,~~2022 and 2021, ~~includes $1.6 million of amortization of inventory~~

~~step-up~~

~~associated with the ARTeSYN Acquisition. The gross margin for the three months ended March 31, 2020 was 58.0%. Excluding the~~

~~step-up~~

~~amortization, gross margin for the three months ended March 31, 2021 was 59.3%.~~respectively. The increase in gross margin ~~excluding the inventory~~

~~step-up~~

~~amortization,~~ in the three months ended March 31, ~~2021,~~2022, as compared to the same period of ~~2020,~~2021, is due primarily to the increase in revenue mentioned above, and favorable product mix, partially offset by an increase in employee-related costs from a rise in manufacturing headcount, ~~subsequent~~an increase in occupancy costs due to added capacity in 2021 and an increase in depreciation expense mentioned above. The gross margin for the three months ended March 31, 2021 also includes $1.6 million of amortization of inventory step-up associated with the ARTeSYN Aquisition in December 2020. Gross margins may fluctuate in future quarters based on expected production volume and product mix.

Research and development expenses

Research and development (“R&D”) expenses are related to bioprocessing products, which include personnel, supplies and other research expenses. Due to the size of the Company and the fact that these various programs share personnel and fixed

costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided historical costs incurred by project.

~~Table of Contents~~

R&D expenses increased ~~61.9%~~$4.5 million, or 59.7%, during the three months ended March 31, ~~2021,~~2022, compared to the same period of ~~2020.~~2021. The increase during the period is primarily due to spending on new product development and investments newly acquired businesses during the ~~addition of $1.0 million of R&D expenses incurred by our recent ARTeSYN Acquisition~~period, for which there were ~~not~~no comparable costs in ~~2020, and due to the ramp up of project spending for new product development during~~ the first quarter of 2021.

The increase during the period is also due in part to the increase in employee related costs, as the number of R&D employees has increased since March 31, 2021.

R&D expense also includes investments made to expand our proteins product offering through our development agreement with Navigo Proteins GmbH (“Navigo”). We invested $0.4 million for the three months ended March 31, 2022, as compared to $0.3 million in 2021, in the form of milestone payments to Navigo.

We expect our R&D expenses for the remainder of ~~2021~~2022 to gradually increase to support new product development.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses include the costs associated with selling our commercial products and costs required to support our marketing efforts, including legal, accounting, patent, shareholder services, amortization of intangible assets and other administrative functions.

During the three months ended March 31, ~~2021,~~2022, SG&A costs increased by ~~$11.6~~$15.2 million, or ~~42.2%~~38.9%, as compared to the same period of ~~2020.~~2021. The increase is partially due to the continued expansion of our customer-facing activities to drive sales of our bioprocessing products, and the continued buildout of our administrative infrastructure, primarily through increased headcount, to support expected future growth. ~~Stock-based compensation expense and other employee-related~~Employee-related costs increased during the three months ended March 31, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, resulting from anthe 55% increase in general and administrative headcount period over the period and a 42% increase in selling and marketing headcount period over period. ~~In addition, $3.2~~These costs include stock-based compensation, which increased $1.2 million ~~of the increase in SG&A costs~~ for the three months ended March 31, ~~2021, was related~~2022, as compared to the ~~2020 acquisitions~~same period of ~~EMT, NMS~~2021. In addition, SG&A costs increased for the three months ended March 31, 2022 due to the addition of Polymem, Avitide and ~~ARTeSYN in~~BioFlex during the second half of ~~2020.~~

2021 for which there are no comparable costs in the three months ended March 31, 2021.

Contingent consideration expense

Contingent consideration expense represents the change in fair value of the contingent consideration obligation included in current and noncurrent contingent consideration on the consolidated balance sheets as of the end of each period. Re-measurement of the contingent consideration obligation is done each quarter and the carrying value of the obligation is adjusted to the current fair value through our consolidated statement of comprehensive income. We recorded an adjustment to the fair value of the contingent consideration obligation for the three months ended March 31, 2022 of ($2.4) million.

Other expenses, net

The table below provides detail regarding our other expenses, net:

Three Months Ended

March 31,
   Increase/(Decrease)
   2021    2020    $ Change % Change
   (Amounts in thousands, except for percentage data)
Investment income    $ 52    $ 1,364    $ (1,312 ) (96.2 %)
Interest expense    (3,106 )    (2,976 )    (130 ) 4.4 %
Other expenses    (224 )    382    (606 ) (158.6 %)

Total other expense, net    $ (3,278 )    $ (1,230 )    $ (2,048 ) 166.5 %


	Three Months Ended March 31,						Increase/(Decrease)
	2022			2021			$ Change			% Change
	(Amounts in thousands, except for percentage data)
Investment income	$	77		$	52		$	25			48.1	%
Interest expense		(292	)		(2,754	)		2,462			(89.4	%)
Amortization of debt issuance costs		(452	)		(352	)		(100	)		28.4	%
Other expenses		(402	)		(224	)		(178	)		79.5	%
Total other expense, net	$	(1,069	)	$	(3,278	)	$	2,209			(67.4	%)

Investment income

Investment income includes income earned on invested cash balances. ~~The decrease of $1.3 million in 2021, as~~Our investment income remained relatively stable for three months ended March 31, 2022, compared to the same period of ~~2020, was attributable to a decrease in interest rates on our invested cash balances. In March 2020, in response to the outbreak of~~

~~COVID-19~~

and to stay ahead of disruptions and economic slowdown, the Federal Reserve reduced federal funds rates to a range of 0.0% to 0.25%, which will continue to affect our investment income in future periods.2021. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.

Interest expense

Interest expense in the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 is primarily from our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”), which were issued in July 2019. Interest expense ~~increased $0.1 million~~ for the three months ended March ~~30,~~31, 2022 includes the contractual coupon interest on the 2019 Notes. For the three months ended March 31, 2021, interest expense includes the amortization of the debt discount as ~~compared~~well as the contractual coupon interest. As a result of our adoption of ASU 2020-06, "Debt - Debt with Conversion Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)," effective January 1, 2022, the equity portion of the debt conversion feature recorded upon the issuance of the 2019 Notes, or the debt discount, was reversed along with the total amortization taken on that discount. Since there was no debt discount, no amortization was taken in the three months ended March 31, 2022.

Amortization of debt issuance costs

In accounting for the transaction costs related to the ~~same periods in 2020.~~

~~The~~issuance of the 2019 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2019 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to amortization of debt issuance costs on the ~~2019 Notes was $2.8 million for~~consolidated statements of comprehensive income. Amortization of debt issuance costs increased during the three months ended March 31, 2022, as compared to the same period of 2021. ~~Amortization~~This is a result of the decrease in the balance of debt issuance costs that are being amortized. As these costs decrease, the carrying value of the debt increases and interest calculated based on the ~~2019 Notes was $2.7 million for the three months ended March 31, 2020.~~

~~Contractual coupon interest incurred on the 2019 Notes for the three months ended March 31, 2021 and 2020 was $0.3 million for both periods.~~

~~Table of Contents~~

carrying value increases as well.

Other expenses

The change in other expenses, net during the three months ended March 31, ~~2021,~~2022, compared to the same period of ~~2020,~~2021, is primarily attributable to realized foreign currency losses related to amounts due from

non-Swedish

krona-based customers and vendors.

Income tax provision

Income tax provision for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 was as follows:

Three Months Ended

March 31,
Increase/(Decrease)
   2021 2020 $ Change    % Change
   (Amounts in thousands, except for percentage data)
Income tax provision    $ 3,655 $ 861 $ 2,794    324.5 %
Effective tax rate    11.0 % 8.1 %


	Three Months Ended March 31,						Increase/(Decrease)
	2022			2021			$ Change		% Change
	(Amounts in thousands, except for percentage data)
Income tax provision	$	11,967		$	3,655		$	8,312		227.4	%
Effective tax rate		20.3	%		11.0	%

For the three months ended March 31, 2022, we recorded an income tax provision of $12.0 million. The effective tax rate was 20.3% for the three months ended March 31, 2022 and is based upon the estimated income for the year ending December 31, 2022 and the composition of income in different jurisdictions. The increase in effective tax rates was primarily due to higher income before income taxes and lower windfall benefits recognized on stock option exercises and the vesting of stock units. Our effective tax rate for the three months ended March 31, 2022 was lower than the U.S. statutory rate of 21% primarily due to windfall benefits on stock option exercises and the vesting of stock units. For the three months ended March 31, 2021, we recorded an income tax provision of $3.7 million. The effective tax rate was 11.0% for the three months ended March 31, 2021 and is based upon the estimated income for the year ending December 31, 2021 and the composition of income in different jurisdictions. ~~The~~Our effective tax rate for the three months ended March 31, 2021 was lower than the U.S. statutory rate of 21% primarily due to business tax credits and windfall benefits on stock option exercises and the vesting of stock units. For the three months ended March 31, 2020, we recorded an income tax provision of $0.9 million. The effective tax rate was 8.1% for the three months ended March 31, 2020 and is based upon the estimated income for the year ending December 31, 2020 and the composition of income in different jurisdictions. The effective tax rate for the three months ended March 31, 2020 was lower than the U.S. statutory rate of 21% primarily due to business tax credits and windfall benefits on stock option exercise and the vesting of stock units.

Non-GAAP

Financial Measures

We provide

non-GAAP

adjusted income from operations; adjusted net income; and adjusted EBITDA as supplemental measures to GAAP measures regarding our operating performance. These financial measures exclude the items detailed below

and, therefore, have not been calculated in accordance with GAAP. A detailed explanation and a reconciliation of each

non-GAAP

financial measure to its most comparable GAAP financial measure are provided below.

We include this financial information because we believe these measures provide a more accurate comparison of our financial results between periods and more accurately reflect how management reviews its financial results. We excluded the impact of certain acquisition-related items because we believe that the resulting charges do not accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Non-GAAP

adjusted income from operations

Non-GAAP

adjusted income from operations is measured by taking income from operations as reported in accordance with GAAP and excluding inventory step-up charges, acquisition and integration costs, contingent consideration fair value adjustments, and intangible amortization ~~and inventory~~

~~step-up~~

~~charges~~ booked through our consolidated statements of comprehensive income. The following is a reconciliation of income from operations in accordance with GAAP to

non-GAAP

adjusted income from operations for the three months ended March 31, ~~2021~~2022 and ~~2020:~~

Three Months Ended

March 31,

   2021    2020
   (Amounts in thousands)
GAAP income from operations    $ 36,383    $ 11,906
Non-GAAP
adjustments to income from operations:

Inventory
step-up
charges
   1,598    —
Acquisition and integration costs    2,551    2,553
Intangible amortization    5,162    3,878

Non-GAAP
adjusted income from operations
   $ 45,694    $ 18,337

~~Table of Contents~~

2021:


	Three Months Ended March 31,
	2022			2021
	(Amounts in thousands)
GAAP income from operations	$	60,000		$	36,383
Non-GAAP adjustments to income from operations:
Inventory step-up charges		—			1,598
Acquisition and integration costs		3,189			2,551
Contingent consideration		(2,411	)		—
Intangible amortization		6,593			5,162
Non-GAAP adjusted income from operations	$	67,371		$	45,694

Non-GAAP

adjusted net income

Non-GAAP

adjusted net income is measured by taking net income as reported in accordance with GAAP and excluding acquisition and integration costs, intangible amortization, inventory

step-up

charges, loss on conversion of debt,

non-cash

interest expense, amortization of debt issuance costs, contingent consideration fair value adjustments and the tax effects of these items. The following are reconciliations of net income in accordance with GAAP to

non-GAAP

adjusted net income for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended March 31,
	2022						2021
				Fully Diluted						Fully Diluted
				Earnings per						Earnings per
	Amount			Share*			Amount			Share*
	(Amounts in thousands, except per share data)
GAAP net income	$	46,964		$	0.81		$	29,450		$	0.52
Non-GAAP adjustments to net income:
Inventory step-up charges		—			—			1,598			0.03
Acquisition and integration costs		3,189			0.05			2,551			0.04
Contingent consideration		(2,411	)		(0.04	)		—			—
Intangible amortization		6,593			0.11			5,162			0.09
Loss on conversion of debt		—			—			1			0.00
Amortization of debt issuance costs(1)		452			0.00			352			0.01
Non-cash interest expense(1)		—			—			2,476			0.04
Tax effect of non-GAAP charges		(1,042	)		(0.02	)		(2,822	)		(0.05	)
Non-GAAP adjusted net income	$	53,745		$	0.92		$	38,768		$	0.68

(1)

See Note 12, "Earnings Per Share," for more information on the effects of adopting 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),” which we adopted effective January 1, 2022, to these financial statement line items.

   Three Months Ended March 31,
   2021    2020
      Fully
Diluted    Fully
Diluted
      Earnings
per    Earnings
per
   Amount    Share    Amount Share
   (Amounts in thousands, except per share data)
GAAP net income    $ 29,450    $ 0.52    $ 9,815 $ 0.18
Non-GAAP
adjustments to net income:

Inventory
step-up
charges
   1,598    0.03    —   —
Acquisition and integration costs    2,551    0.04    2,553 0.05
Intangible amortization    5,162    0.09    3,878 0.07
Loss on conversion of debt    1    —      —   —
Non-cash
interest expense
   2,828    0.05    2,691 0.05
Tax effect of
non-GAAP
charges
   (2,822 )    (0.05 )    (2,177 ) (0.04 )

Non-GAAP
adjusted net income
   $ 38,768    $ 0.68    $ 16,760 $ 0.32

~~Per share totals may not add due to rounding.~~

* Per share totals may not add due to rounding.

Adjusted EBITDA

Adjusted EBITDA is measured by taking net income as reported in accordance with GAAP, excluding investment income, interest expense, taxes, depreciation and amortization, acquisition and integration costs, inventory

step-up

charges, ~~and~~ loss on conversion of debt and contingent consideration fair value adjustments booked through our consolidated statements of comprehensive income. The following is a reconciliation of net income in accordance with GAAP to adjusted EBITDA for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended March 31,
	2022			2021
	(Amounts in thousands)
GAAP net income	$	46,964		$	29,450
Non-GAAP EBITDA adjustments to net income:
Investment income		(77	)		(52	)
Interest expense		292			278
Non-cash interest expense(1)		—			2,476
Amortization of debt issuance costs		452			352
Income tax provision		11,967			3,655
Depreciation		5,213			3,255
Intangible amortization		6,621			5,189
EBITDA	$	71,432		$	44,603
Other non-GAAP adjustments:
Inventory step-up charges		—			1,598
Acquisition and integration costs		3,189			2,551
Contingent consideration		(2,411	)		—
Loss on conversion of debt		—			1
Adjusted EBITDA	$	72,210		$	48,753

(1)

See Note 12, "Earnings Per Share," for more information on the effects of adopting ASU 2020-06, which we adopted effective January 1, 2022.

Three Months Ended

March 31,

   2021    2020
   (Amounts in thousands)
GAAP net income    $ 29,450    $ 9,815
Non-GAAP
EBITDA adjustments to net income:

Investment income    (52 )    (1,364 )
Interest expense    3,106    2,976
Tax provision    3,655    861
Depreciation    3,255    2,485
Amortization    5,189    3,905

EBITDA    44,603    18,678
Other
non-GAAP
adjustments:

Inventory
step-up
charges
   1,598    —
Loss on conversion of debt    1    —
Acquisition and integration costs    2,551    2,553

Adjusted EBITDA    $ 48,753    $ 21,231

Liquidity and Capital Resources

We have financed our operations primarily through revenues derived from product sales, the issuance of the 2019 Notes ~~(defined below)~~ in July 2019 and the issuance of common stock in our December 2020, July 2019 and May 2019 public offerings. Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue.

~~Table of Contents~~

At March 31, ~~2021,~~2022, we had cash and cash equivalents ~~(excluding restricted cash)~~ of ~~$711.3~~$584.6 million compared to cash and cash equivalents ~~(excluding restricted cash)~~ of ~~$717.3~~$603.8 million at December 31, ~~2020.~~

On December 8, 2020, the Company completed a public offering in which 1,725,000 shares of its common stock, including the underwriters’ full exercise of an option to purchase up to an additional 225,000 shares, were sold to the public at a price of $181.00 per share. The total proceeds received by the Company from this offering, net of underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $297.8 million.

~~In 2020, we acquired three companies for an aggregate of $175.0 million in cash, net of cash acquired.~~

2021.

During the first quarter of ~~2021,~~2022, the closing price of the Company’s common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the second quarter of ~~2021,~~2022, the quarter immediately following the quarter when the conditions are met, ~~per~~as stated in the ~~First Supplemental Indenture underlying~~terms of the 2019 Notes. These conditions ~~were~~have been met ~~during~~since the fourth quarter of ~~2020 as well and as~~2020. As a result, ~~the Company received notices from note holders that they would convert $5,000~~$15,000 in aggregate principal amount of the 2019 Notes have been converted by the noteholders since the issuance of ~~which $1,000 principal were settled~~the 2019 Notes, including $4,000 during the first ~~quarter.~~quarter of 2022. The ~~conversion~~conversions resulted in the issuance of a nominal number of shares of the Company’s common stock to the ~~holder, and~~noteholders. The Company continues to classify the Company recorded a loss of less than $1,000 on the conversion of these notes, which is included in other (expenses) income on our consolidated statements of comprehensive income for the three months ended March 31, 2021. The 2019 Notes have a face value of $287.5 million and a carrying value and a carrying value of ~~$246.6 million and continue to be classified~~the 2019 Notes as current liabilities on the Company’s consolidated balance sheet ~~as of~~at March 31, ~~2021.~~

~~We intend~~2022.

Cash flows


	Three Months Ended March 31,						Increase/(Decrease)
	2022			2021			$ Change
	(Amounts in thousands)
Operating activities	$	23,113		$	9,262		$	13,851
Investing activities		(28,214	)		(8,997	)		(19,217	)
Financing activities		(12,021	)		507			(12,528	)
Effect of exchange rate changes on cash and cash equivalents		(2,052	)		(6,746	)		4,694
Net decrease in cash and cash equivalents	$	(19,174	)	$	(5,974	)	$	(13,200	)

Operating activities

For the three months ended March 31, 2022, our operating activities provided cash of $23.1 million reflecting net income of $47.0 million and non-cash charges totaling $18.9 million primarily related to ~~use the net proceeds from the Offerings for working capital~~depreciation, amortization, inventory step-up amortization, contingent consideration adjustments, deferred income taxes and ~~other general corporate purposes, including to fund possible acquisitions~~stock-based compensation charges. An increase in accounts receivable consumed $6.3 million of ~~or investments in, complementary businesses, products, services and technologies, such as the acquisitions executed in 2020 as mentioned in Note 3,~~

~~“Acquisitions,”~~

~~included in this report. It is the Company’s policy and intent to settle the face value of the 2019 Notes in~~ cash and ~~any excess conversion premium~~was primarily driven by the 44.5% year-to-date increase in ~~shares~~revenues. An increase in inventory manufactured of ~~our common stock.~~

~~In July 2020, the Company entered into a First Amendment~~$30.0 million supports expected increases in future revenue. A decrease in accrued liabilities of $10.0 million relates to the ~~lease agreement for its Marlborough, Massachusetts facility, expanding~~payout of employee bonus and a decrease in our estimated income tax provision during the leased space by 66,939 square feet. In December 2020, the Company signed the Second Amendment to the lease agreement, changing the commencement date from April 1, 2021 to January 1, 2021. As a result, under the amended lease agreement, the Company will pay an additional $5.7 million in base rent over the lifefirst quarter of ~~the lease, which expires on November 30, 2028.~~

~~Cash flows~~

Three Months Ended

March 31,

Increase/(Decrease)


2021

2020

$ Change


(Amounts in thousands)

Operating activities    $ 9,262    $ 9,530    $ (268 )
Investing activities    (8,997 )    (5,037 )    (3,960 )
Financing activities    507    1,589    (1,082 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash    (6,746 )    (4,923 )    (1,823 )

Net (decrease) increase in cash, cash equivalents and restricted cash    $ (5,974 )    $ 1,159    $ (7,133 )

~~Operating activities~~

2022.

For the three months ended March 31, 2021, our operating activities provided cash of $9.3 million reflecting net income of $29.5 million and

non-cash

charges totaling $20.2 million primarily related to depreciation, amortization, deferred income taxes, amortization of debt discount and issuance costs, and stock-based compensation charges. An increase in accounts receivable, consumed $19.8 million of cash and was primarily driven by the 87.7%

year-to-date

increase in revenues. An increase in inventory manufactured of $17.0 million supports expected increases in future revenue. An increase in accounts payable of $3.7 million was primarily due to increased inventory purchases to support customer orders. These are offset by a $4.9 million decrease in accrued liabilities primarily related to payment of employee bonuses during the three months ended March 31, 2021 and related to a decrease in deferred revenue related to products shipped during the first quarter of 2021. The remaining net cash used in operating activities resulted from unfavorable changes in various other working capital accounts.

~~Table of Contents~~

~~For the three months ended March 31, 2020, our operating activities provided cash of $9.5 million reflecting net income of $9.8 million~~

~~and non-cash charges~~

totaling $13.4 million primarily related to depreciation, amortization, amortization of debt discount and issuance costs and stock-based compensation charges. An increase in accounts receivable consumed $2.4 million of cash and was primarily driven by the 25.5%

~~year-to-date~~

increase in revenues. An increase in inventory consumed $7.2 million to support future revenue, as well as inventory acquired in the C Technologies acquisition in 2019. A decrease in accounts payable and accrued liabilities of $5.7 million was due to the accrued liabilities acquired in the C Technologies acquisition in 2019, the timing of payments of payables, payment of the 2019 incentive compensation programs and an adjustment to the tax liability for the quarter. The remaining cash used in operating activities resulted from unfavorable changes in various other working capital accounts.

Investing activities

Our investing activities consumed ~~$9.0~~$28.2 million of cash during the three months ended March 31, ~~2021, primarily related~~2022 mainly due to ~~the ongoing~~ capital expenditures as we continue to increase our manufacturing capacity worldwide. Of these expenditures, ~~$1.5~~$1.0 million represented capitalized costs related to our

internal-use

software.

~~Capital expenditures~~

Financing activities

Our financing activities consumed $12.0 million of cash for the three months ended March 31, ~~2020~~2022, which included ~~$0.9 million for capitalized costs related~~cash disbursed in relation to ~~our~~

~~internal-use~~

~~software.~~

~~Financing activities~~

~~Cash provided~~shares withheld to cover employee income tax due upon the vesting and release of restricted stock units of $12.3 million. This was partially offset by ~~financing activities of $0.5 million for the three months ended March 31, 2021 included~~ proceeds received from stock option exercises during the ~~period. Proceeds from stock option exercises during the three months ended March 31, 2020 were $1.6~~period of $0.3 million.

Working capital ~~increased~~decreased by ~~approximately $29.6~~$36.0 million to ~~$613.0~~$520.5 million at March 31, ~~2021~~2022 from ~~$583.4~~$556.4 million at December 31, ~~2020~~2021 due to the various changes noted above.

Our future capital requirements will depend on many factors, including the following:

•

the expansion of our bioprocessing business;

•

the ability to sustain sales and profits of our bioprocessing products;

•

our ability to acquire additional bioprocessing products;

•

the scope of and progress made in our R&D activities;

•

contingent consideration earnout payments resulting from our acquisitions;

•

the extent of any share repurchase activity; and

•

the success of any proposed financing efforts.

Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next 24 months from the date of this filing. We expect operating expenses for the rest of the year to increase as we continue to expand our bioprocessing business. We expect to incur continued spending related to the development and expansion of our bioprocessing product lines and expansion of our commercial capabilities for the foreseeable future. Our future capital requirements may include, but are not limited to, purchases of property, plant and equipment, the acquisition of additional bioprocessing products and technologies to complement our existing manufacturing capabilities, and continued investment in our intellectual property portfolio.

We plan to continue to invest in our bioprocessing business and in key R&D activities associated with the development of new bioprocessing products. We actively evaluate various strategic transactions on an ongoing basis, including ~~licensing or~~ acquiring complementary products, technologies or businesses that would complement our existing portfolio. We continue to seek to acquire such potential assets that may offer us the best opportunity to create value for our shareholders. In order to acquire such assets, we may need to seek additional financing to fund these investments. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of any such acquisition-related

~~Table of Contents~~

financing needs or lower demand for our products, we may seek to sell common or preferred equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt funding. The sale of equity and convertible debt securities may result in dilution to our shareholders, and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, if at all.

~~Off-Balance~~

~~Sheet Arrangements~~

~~We do not have any special purpose entities or~~

~~off-balance~~

~~sheet financing arrangements as of March 31, 2021.~~

Net Operating Loss Carryforwards

At December 31, ~~2020, we~~2021, the Company had federal net operating loss carryforwards of ~~$6.4~~$46.2 million, ~~remaining.~~state net operating loss carryforwards of $4.0 million, and foreign net operating loss carryforwards of $6.1 million. Federal net operating loss carryforwards of $19.1 million will expire at various dates through 2037. The other $27.1 million of the federal net operating loss carryforwards have unlimited carryforward periods. The total state net operating loss carryforwards will expire at various dates through 2041, while the foreign net operating loss carryforwards do not expire. We had business tax credits carryforwards of ~~$9.4~~$2.7 million available to reduce future federal and state income taxes, if any. The business tax credits carryforwards will continue to expire at various dates through December ~~2039.~~2041. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant shareholders.

Effects of Inflation

Our assets are primarily monetary, consisting of cash, cash equivalents and marketable securities. Because of their liquidity, these assets are not directly affected by inflation. Since we intend to retain and continue to use our equipment, furniture and fixtures and leasehold improvements, we believe that the incremental inflation related to replacement costs of such items will not materially affect our operations. However, the rate of inflation affects our expenses, such as those for employee compensation and contract services, which could increase our level of expenses and the rate at which we use our resources.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form

10-Q

contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form

10-Q

do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form

10-Q

which are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position, potential impairment of future earnings, management’s strategy, plans and objectives

for future operations or acquisitions, product development and sales, product candidate research, development and regulatory approval, SG&A expenditures, intellectual property, development and manufacturing plans, availability of materials and product and adequacy of capital resources, our financing plans, and the projected continued impact of, and response to, ~~the~~

COVID-19

~~coronavirus pandemic and the related downturn of the U.S. and global economies~~ constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. The Company undertakes no obligation to publicly update or revise the statements in light of future developments. In addition, other written and oral statements that constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as “expect,” “seek,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “project,” or variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation, risks associated with the following: the ~~ultimate~~ impact of ~~the coronavirus pandemic~~COVID-19 on demand for our products and on our business or financial results; the success of current and future collaborative or supply relationships, including our agreements with Cytiva, ~~(formerly GE Healthcare),~~ MilliporeSigma and Purolite; our ability to successfully grow our bioprocessing business, including as a result of acquisitions, commercialization or partnership opportunities, and our ability to develop and commercialize products; our ability to obtain required regulatory approvals; our compliance with all U.S. Food and Drug Administration regulations, our ability to obtain, maintain and protect intellectual property rights for our products; the risk of litigation regarding our patent and other intellectual property rights; the risk of litigation with collaborative partners; our ~~limited~~ manufacturing capabilities and our dependence on third-party manufacturers and value-added resellers; the effect of ~~the pandemic of the novel coronavirus disease,~~COVID-19, including

~~Table of Contents~~

mitigation efforts and economic effects, on our business operations and the operations of our customers and suppliers; our ability to hire and retain skilled personnel; the market acceptance of our products, reduced demand for our products that adversely impacts our future revenues, cash flows, results of operations and financial condition; our ability to integrate Polymem, Avitide and BioFlex businesses successfully into our business and achieve the expected benefits of the acquisitions; our ability to compete with larger, better financed life sciences companies; our history of losses and expectation of incurring losses; our ability to generate future revenues; our ability to successfully integrate our recently acquired businesses; our ability to raise additional capital to fund potential acquisitions; our volatile stock price; and the effects of our anti-takeover provisions. Further information on potential risk factors that could affect our financial results are included in the filings made by us from time to time with the SEC including under the sections entitled “Risk Factors” in our Form

10-K.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have historically held investments in commercial paper, U.S. Government and agency securities as well as corporate bonds and other debt securities. As a result, we have been exposed to potential loss from market risks that may occur as a result of changes in interest rates, changes in credit quality of the issuer or otherwise. We do not have any such investments as of March 31, ~~2021.~~2022. As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of March 31, ~~2021.~~

2022.

We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. We believe that the conservative nature of our investments mitigates our interest rate exposure, and our investment policy limits the amount of our credit exposure to any one issue, issuer (with the exception of U.S. agency obligations) and type of instrument. We do not expect any material losses from our marketable security investments and therefore believe that our potential interest rate exposure is limited.

Foreign Exchange Risk

The reporting currency of the Company is U.S. dollars, and the functional currency of each of our foreign subsidiaries is its respective local currency. Our foreign currency exposures include the Swedish krona, Euro, British pound, Chinese yuan, Japanese yen, Singapore dollar, South Korean won and Indian rupee; of these, the primary foreign currency exposures are the Swedish krona, Euro and British pound. Exchange gains or losses resulting from the translation between the transactional currency and the functional currency are included in net income. Fluctuations in exchange rates may adversely affect our results

of operations, financial position and cash flows. We currently do not seek to hedge this exposure to fluctuations in exchange rates.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, with the participation of the principal executive officer and the principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules

13a-15(e)

15d-15(e)

under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

~~hanges~~

Changes in Internal Control

~~There~~

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 Company is implementing the ERP system in phases through 2024. 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. The implementation of the ERP and LeaseQuery systems is expected to, among other things, automate a number of accounting and reporting processes and activities, thereby decreasing the amount of manual processes previously required. 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 during the three months ended March 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 March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

~~ITEM 1A.~~

~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

The matters discussed in this Quarterly Report on

Form 10-Q include

forward-looking statements that involve risks or uncertainties. These statements are neither promises nor guarantees but are based on various assumptions by management regarding future circumstances, over many of which Repligen has little or no control. A number of important risks and uncertainties, including those identified under the caption

“Risk Factors”

in Part I, Item 1A of our Form

10-K

for the period ended December 31, ~~2020~~2021 and in subsequent filings, could cause our actual results to differ materially from those in the forward-looking statements. There are no material changes to the risk factors described in our Form

10-K

for the period ended December 31, ~~2020.~~

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

~~ITEM 3.~~

~~DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

~~ITEM 5.~~

~~OTHER INFORMATION~~

(a)

~~None.~~

34 Exhibits

~~Table of Contents~~

~~ITEM 6.~~

~~EXHIBITS~~

~~(a) Exhibits~~


Exhibit Number		Document Description

3.1		Restated Certificate of Incorporation, dated June 30, 1992 and amended September 17, 1999 (filed as Exhibit 3.1 to Repligen Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).

3.2		Certificate of Amendment to the Certificate of Incorporation of Repligen Corporation, effective as of May 16, 2014 (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form 8-K filed on May 19, 2014 and incorporated herein by reference).

3.3		Third Amended and Restated Bylaws (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form 8-K filed on January 28, 2021 and incorporated herein by reference).

~~10.1 +#~~ 4.1		Second Supplemental Indenture, dated as of March 4, 2022, by and between Repligen Corporation ~~Amended~~ and ~~Restated~~ ~~Non-Employee~~Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to Repligen Corporation's Current Report on Form 8-K filed on March 8, 2022 and incorporated herein by reference). ~~Directors’ Compensation Policy.~~

31.1 +		Rule 13a-14(a)/15d-14(a) Certification. ~~Certification.~~

31.2 +		Rule 13a-14(a)/15d-14(a) Certification. ~~Certification.~~

32.1 *		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS+		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH+		Inline XBRL Taxonomy Extension Schema Document.

101.CAL+		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF+		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB+		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE+		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104+		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

#	~~Management contract or compensatory plan or arrangement.~~

+	~~Filed herewith.~~

*	~~Furnished herewith.~~

+ Filed herewith.

* Furnished herewith.

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			~~REPLIGEN CORPORATION~~
			REPLIGEN CORPORATION
~~Date: May 4, 2021~~			~~By:~~	~~/S/ TONY J. HUNT~~
Date: April 27, 2022	By:	/S/ TONY J. HUNT
		Tony J. Hunt
				President and Chief Executive Officer
				(Principal executive officer)
				Repligen Corporation

Date: ~~May 4, 2021~~April 27, 2022	By:		~~By:~~	/~~S/ JON SNODGRES~~S/ JON SNODGRES
				Jon Snodgres
				Chief Financial Officer
				(Principal financial officer)
				Repligen Corporation


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

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


Title of each class	Trading Symbol(s)	~~Trading~~ ~~Symbol(s)~~	Name of each exchange on which registered

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



Large accelerated filer		☒	Accelerated filer	☐ 

Non-accelerated filer		☐	Smaller reporting company	☐ 

Emerging growth company		☐


					~~PAGE~~
		PAGE

PART I -			FINANCIAL INFORMATION

Item 1.			Financial Statements (interim periods unaudited)

			Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021			3	4

			Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021			4	5

			Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021			5	6

			Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021			6	7

			Notes to Unaudited Consolidated Financial Statements			7	8

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24	28

Item 3.			Quantitative and Qualitative Disclosures About Market Risk			33	37

Item 4.			Controls and Procedures			33	38

PART II -			OTHER INFORMATION

Item 1.			Legal Proceedings			34	39

Item 1A.			Risk Factors			34	39

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			34	39

Item 3.			Defaults Upon Senior Securities			34	39

Item 4.			Mine Safety Disclosures			34	39

Item 5.			Other Information			34	39

Item 6.	Exhibits		~~Exhibits~~			35	40

Signatures				41
						36


	March 31,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	711,318		$	717,292
Accounts receivable, net of reserves of $755 and $762 at March 31, 2021 and December 31, 2020, respectively		90,207			71,389
Inventories, net		109,520			95,025
Prepaid expenses and other current assets		15,290			18,676

Total current assets		926,335			902,382
Noncurrent assets:
Property, plant and equipment, net		72,243			66,870
Intangible assets, net		281,670			287,100
Goodwill		617,517			618,305
Deferred tax assets		2,000			2,481
Operating lease right of use assets		27,033			25,176
Other noncurrent assets		529			573

Total noncurrent assets		1,000,992			1,000,505

Total assets	$	1,927,327		$	1,902,887

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,569		$	16,880
Operating lease liability		3,770			5,254
Accrued liabilities		42,428			53,085
Convertible S enior N otes, current portion, net		246,561			243,737

Total current liabilities		313,328			318,956
Noncurrent liabilities:
Deferred tax liabilities		26,709			27,032
Noncurrent o perating lease liability		29,559			26,425
Other noncurrent liabilities		1,515			1,324

Total noncurrent liabilities		57,783			54,781

Total liabilities		371,111			373,737

Commitments and contingencies (Note 9)		0			0
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, 0 shares issued or outstanding		0—			0—
Common stock, $0.01 par value; 80,000,000 shares authorized; 54,899,245 shares at March 31, 2021 and 54,760,837 shares at December 31, 2020 issued and outstanding		549			548
Additional paid-in capital		1,467,942			1,460,748
Accumulated other comprehensive (loss) income		(7,494	)		2,085
Retained earnings		95,219			65,769

Total stockholders’ equity		1,556,216			1,529,150

Total liabilities and stockholders’ equity	$	1,927,327		$	1,902,887


	Three Months Ended March 31,
	2021			2020
Revenue:
Products	$	142,737		$	76,060
Royalty and other revenue		100			30

Total revenue		142,837			76,090

Costs and operating expenses:
Cost of product revenue		59,747			31,982
Research and development		7,612			4,702
Selling, general and administrative		39,095			27,500

Total costs and operating expenses		106,454			64,184

Income from operations		36,383			11,906

Other income (expenses):
Investment income		52			1,364
Interest expense		(3,106	)		(2,976	)
Other (expenses) income		(224	)		382

Other expenses, net		(3,278	)		(1,230	)

Income before income taxes		33,105			10,676
Income tax provision		3,655			861

Net income	$	29,450		$	9,815

Earnings per share:
Basic	$	0.54		$	0.19

Diluted	$	0.52		$	0.18

Weighted average common shares outstanding:
Basic		54,805			52,139

Diluted		56,869			53,109

Net income	$	29,450		$	9,815
Other comprehensive income (loss):
Foreign currency translation adjustment		(9,579	)		(5,579	)

Comprehensive income	$	19,871		$	4,236


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

Balance at March 31, 2021		54,899,245	$	549	$	1,467,942	$	(7,494	)	$	95,219	$	1,556,216


	Three Months Ended March 31, 2020
	Common Stock
	Number of Shares		Par Value		Additional Paid- In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
Balance at December 31, 2019		52,078,258	$	521	$	1,068,431	$	(15,027	)	$	5,843	$	1,059,768
Net income		—		—		—		—			9,815		9,815
Exercise of stock options and vesting of stock units		199,825		2		1,587		—			—		1,589
Stock-based compensation expense		—		—		4,165		—			—		4,165
Translation adjustment		—		—		—		(5,579	)		—		(5,579	)

Balance at March 31, 2020		52,278,083	$	523	$	1,074,183	$	(20,606	)	$	15,658	$	1,069,758


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


Cash consideration	$	130,713
Equity consideration		69,422
Contingent consideration		1,548
Settlement of preexisting liabilities		2,310

Fair value of net assets acquired	$	203,993


Cash and cash equivalents	$	2,982
Accounts receivable		4,811
Inventory		8,592
Prepaid expenses and other current assets		5,561
Property and equipment		1,836
Operating lease right of use asset		1,611
Other noncurrent assets		26
Customer relationships		38,400
Developed technology		27,060
Trademark and tradename		1,630
Non-competition agreements		300
Goodwill		128,748
Accounts payable		(2,251	)
Accrued liabilities		(8,856	)
Deferred revenue		(3,583	)
Deferred tax liabilities, net		(1,240	)
Notes payable		(24	)
Operating lease liability		(417	)
Operating lease liability, long-term		(1,193	)

Fair value of net assets acquired	$	203,993


Cash and cash equivalents	$	1,163
Accounts receivable		415
Inventory		334
Prepaid expenses and other current assets		13
Property and equipment		73
Operating lease right of use asset		194
Customer relationships		6,370
Developed technology		1,810
Trademark and tradename		190
Non-competition agreements		90
Goodwill		6,713
Deferred tax assets		24
Accounts payable		(96	)
Accrued liabilities		(999	)
Operating lease liability		(136	)
Operating lease liability, long-term		(59	)

Fair value of net assets acquired	$	16,099


Cash and cash equivalents	$	69
Accounts receivable		1,057
Inventory		449
Prepaid expenses and other current assets		7
Property and equipment		414
Operating lease right of use assets		1,050
Customer relationships		11,080
Developed technology		2,910
Trademark and tradename		320
Non-compete agreements		50
Goodwill		12,585
Deferred tax asset		46
Accounts payable		(283	)
Accrued liabilities		(190	)
Operating lease liability		(211	)
Operating lease liability, long-term		(839	)

Fair value of net assets acquired	$	28,514


Balance at December 31, 2020	$	618,305
Measurement period adjustment - NMS		(71	)
Measurement period adjustment - ARTeSYN		90
Cumulative translation adjustment		(807	)

Balance at March 31, 2021	$	617,517


	March 31, 2021
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology - developed	$	114,080	$	(16,016	)	$	98,064		17
Patents		240		(240	)		—		8
Customer relationships		217,227		(40,338	)		176,889		16
Trademarks		5,892		(616	)		5,276		20
Other intangibles		2,140		(1,399	)		741		3

Total finite-lived intangible assets		339,579		(58,609	)		280,970		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—

Total intangible assets	$	340,279	$	(58,609	)	$	281,670


	December 31, 2020
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology - developed	$	114,217	$	(14,444	)	$	99,773		17
Patents		240		(240	)		—		8
Customer relationships		217,790		(37,333	)		180,457		16
Trademarks		5,893		(541	)		5,352		20
Other intangibles		2,142		(1,324	)		818		3

Total finite-lived intangible assets		340,282		(53,882	)		286,400		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—

Total intangible assets	$	340,982	$	(53,882	)	$	287,100


	Estimated
	Amortization
For the Three Months Ended March 31,	Expense
2021 (remaining nine months)	$	15,558
2022		20,742
2023		20,625
2024		20,057
2025		19,790
2026 and thereafter		184,198

Total	$	280,970


	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2020		696,711		$	43.88		6.90	$	102,958
Granted		21,547		$	215.58
Exercised		(15,140	)	$	33.25
Forfeited/expired/cancelled		(6,000	)	$	48.05

Options outstanding at March 31, 2021		697,118		$	49.39		6.76	$	101,554

Options exercisable at March 31, 2021		384,757		$	34.20		6.00	$	61,641

Vested and expected to vest at March 31, 2021 (1)		669,196					6.72	$	98,009


	Shares			Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Unvested at December 31, 2020		665,540			3.32	$	127,904
Awarded		119,148
Vested		(122,765	)
Forfeited/expired/cancelled		(7,673	)

Unvested at March 31, 2021		654,250			3.09	$	127,193

Unvested and expected to vest at March 31, 2021 (1)		639,254			2.94	$	124,277