Repligen Corp 10-Q for FY2023 Q1

Repligen Corp (RGEN)

10-Q 2023-05-02 For: 2023-03-31

Added on April 09, 2026

About this 10-Q

Repligen Corp filed this 10-Q on May 2, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $182.66M; down 11.5% from $206.4M a year earlier
Net income: $28.83M; down 38.6% from net income of $46.96M a year earlier
Diluted EPS: $0.51; down 37.0% from $0.81 a year earlier

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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)	Name of each exchange on which registered

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



Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
Emerging growth company	


		PAGE
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (interim periods unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	4

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	5

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

Signatures		33


	March 31,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	516,609		$	523,458
Marketable securities held to maturity		101,409			100,299
Accounts receivable, net of reserves of $1,539 and $1,365 at March 31, 2023 and December 31, 2022, respectively		133,488			116,247
Inventories, net		244,704			238,277
Prepaid expenses and other current assets		22,593			19,837
Total current assets		1,018,803			998,118
Noncurrent assets:
Property, plant and equipment, net		192,692			190,673
Intangible assets, net		346,595			353,676
Goodwill		856,301			855,513
Deferred tax assets		845			840
Operating lease right of use assets		121,810			125,023
Other noncurrent assets		1,188			815
Total noncurrent assets		1,519,431			1,526,540
Total assets	$	2,538,234		$	2,524,658
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	26,401		$	27,554
Operating lease liability		7,959			6,957
Current contingent consideration		27,834			13,950
Accrued liabilities		58,055			71,120
Convertible Senior Notes, net		285,072			284,615
Total current liabilities		405,321			404,196
Noncurrent liabilities:
Deferred tax liabilities		22,050			23,000
Noncurrent operating lease liability		127,665			131,389
Noncurrent contingent consideration		38,910			51,559
Other noncurrent liabilities		3,796			3,814
Total noncurrent liabilities		192,421			209,762
Total liabilities		597,742			613,958
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.01 par value; 80,000,000 shares authorized; 55,644,301 shares at March 31, 2023 and 55,557,698 shares at December 31, 2022 issued and outstanding		556			556
Additional paid-in capital		1,544,956			1,547,266
Accumulated other comprehensive loss		(31,121	)		(34,394	)
Accumulated earnings		426,101			397,272
Total stockholders’ equity		1,940,492			1,910,700
Total liabilities and stockholders’ equity	$	2,538,234		$	2,524,658


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


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


	Three Months Ended
	March 31,
	2023			2022
Revenue:
Products	$	182,621		$	206,363
Royalty and other revenue		39			37
Total revenue		182,660			206,400
Costs and operating expenses:
Cost of product revenue		81,845			82,356
Research and development		12,154			12,155
Selling, general and administrative		56,170			54,300
Contingent consideration		1,235			(2,411	)
Total costs and operating expenses		151,404			146,400
Income from operations		31,256			60,000
Other income (expenses):
Investment income		5,486			77
Interest expense		(270	)		(292	)
Amortization of debt issuance costs		(457	)		(452	)
Other income (expenses)		77			(402	)
Other income (expenses), net		4,836			(1,069	)
Income before income taxes		36,092			58,931
Income tax provision		7,263			11,967
Net income	$	28,829		$	46,964
Earnings per share:
Basic	$	0.52		$	0.85
Diluted (Note 10)	$	0.51		$	0.81
Weighted average common shares outstanding:
Basic		55,590			55,353
Diluted (Note 10)		57,049			58,816

Net income	$	28,829		$	46,964
Other comprehensive income (loss):
Foreign currency translation adjustment		3,273			(4,688	)
Comprehensive income	$	32,102		$	42,276


	Three Months Ended March 31, 2023
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2022		55,557,698		$	556		$	1,547,266		$	(34,394	)	$	397,272	$	1,910,700
Net income		—			—			—			—			28,829		28,829
Exercise of stock options and vesting of stock units		140,210			1			28			—			—		29
Tax withholding on vesting of restricted stock units		(53,607	)		(1	)		(9,592	)		—			—		(9,592	)
Stock-based compensation expense		—			—			7,254			—			—		7,254
Translation adjustment		—			—			—			3,273			—		3,273
Balance at March 31, 2023		55,644,301		$	556		$	1,544,956		$	(31,121	)	$	426,101	$	1,940,492


	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


	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net income	$	28,829		$	46,964
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,252			11,834
Amortization of debt issuance costs		457			452
Stock-based compensation		7,254			7,915
Deferred income taxes, net		(1,124	)		1,045
Contingent consideration		1,235			(2,411	)
Other		(857	)		73
Changes in operating assets and liabilities, excluding impact of acquisitions:
Accounts receivable		(16,832	)		(6,269	)
Inventories		(5,845	)		(30,037	)
Prepaid expenses and other assets		(2,799	)		283
Operating lease right of use assets		3,349			1,514
Other assets		(434	)		(204	)
Accounts payable		(1,194	)		2,200
Accrued expenses		(13,326	)		(9,999	)
Operating lease liabilities		(2,870	)		(17	)
Long-term liabilities		59			(230	)
Total cash provided by operating activities		11,154			23,113
Cash flows from investing activities:
Additions to capitalized software costs		(924	)		(1,027	)
Purchases of property, plant and equipment		(8,509	)		(27,204	)
Other investing activities		—			17
Total cash used in investing activities		(9,433	)		(28,214	)
Cash flows from financing activities:
Proceeds from exercise of stock options		29			296
Payment of tax withholding obligation on vesting of restricted stock		(9,592	)		(12,311	)
Repayment of Convertible Senior Notes		—			(6	)
Total cash used in financing activities		(9,563	)		(12,021	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		993			(2,052	)
Net decrease in cash, cash equivalents and restricted cash		(6,849	)		(19,174	)
Cash, cash equivalents and restricted cash, beginning of period		523,458			603,814
Cash and cash equivalents, end of period	$	516,609		$	584,640
Supplemental disclosure of non-cash investing and financing activities:
Assets acquired under operating leases	$	179		$	1,119


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


	As of March 31, 2023
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and money market funds	$	516,609	$	—	$	—	$	516,609
Total cash and cash equivalents		516,609		—		—		516,609
Marketable securities held to maturity:
U.S. treasury bills - short-term		101,409		58		—		101,467
Total cash, cash equivalents and marketable securities	$	618,018	$	58	$	—	$	618,076

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and money market funds	$	523,458	$	—	$	—	$	523,458
Total cash and cash equivalents		523,458		—		—		523,458
Marketable securities held to maturity:
U.S. treasury bills - short-term		100,299		24		—		100,323
Total cash, cash equivalents and marketable securities	$	623,757	$	24	$	—	$	623,781


	March 31, 2023				December 31, 2022
	Amortized Costs		Estimated Fair Value		Amortized Costs		Estimated Fair Value
Maturity of one year or less	$	101,409	$	101,467	$	100,299	$	100,323
Total	$	101,409	$	101,467	$	100,299	$	100,323


	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	339,044	$	—	$	—	$	339,044
Liabilities:
Short-term contingent consideration(1)	$	—	$	—	$	27,834	$	27,834
Long-term contingent consideration	$	—	$	—	$	38,910	$	38,910

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	343,929	$	—	$	—	$	343,929
Liabilities:
Short-term contingent consideration	$	—	$	—	$	13,950	$	13,950
Long-term contingent consideration	$	—	$	—	$	51,559	$	51,559


Contingent Consideration Earnout	Fair Value as of March 31, 2023		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
				Probability of
Commercialization-based			Monte Carlo	Success	100%	100%
payments	$	18,974	Simulation	Earnout Discount Rate	5.9%-6.1%	6.0%

				Volatility	23.6%	23.6%
Revenue and Volume-			Monte Carlo	Revenue & Volume
based payments	$	33,301	Simulation	Discount Rate	6.4%	6.4%
				Earnout Discount Rate	5.9%-6.1%	6.0%


	March 31, 2023
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology - developed	$	190,620	$	(33,983	)	$	156,637		16
Patents		240		(240	)		—		8
Customer relationships		253,181		(70,844	)		182,337		16
Trademarks		7,687		(1,431	)		6,256		19
Other intangibles		2,819		(2,154	)		665		4
Total finite-lived intangible assets		454,547		(108,652	)		345,895		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	455,247	$	(108,652	)	$	346,595


	December 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	$	190,463	$	(30,992	)	$	159,471		16
Patents		240		(240	)		—		8
Customer relationships		252,934		(66,559	)		186,375		15
Trademarks		7,682		(1,319	)		6,363		19
Other intangibles		2,811		(2,044	)		767		4
Total finite-lived intangible assets		454,130		(101,154	)		352,976		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	454,830	$	(101,154	)	$	353,676


	Estimated
	Amortization
For the Years Ended December 31,	Expense
2023 (remaining nine months)	$	22,073
2024		28,628
2025		28,370
2026		28,388
2027		28,302
2028 and thereafter		210,134
Total	$	345,895


Balance at December 31, 2022	$	65,509
Increase in fair value of contingent consideration earnouts		1,235
Balance at March 31, 2023	$	66,744


Balance at December 31, 2022	$	855,513
Cumulative translation adjustment		788
Balance at March 31, 2023	$	856,301



	March 31, 2023			December 31, 2022
	(Amounts in thousands)
0.375% Convertible Senior Notes due 2024:
Principal amount	$	287,470		$	287,470
Unamortized debt issuance costs		(2,398	)		(2,855	)
Net carrying amount	$	285,072		$	284,615


	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2022		609,965		$	71.74
Granted		42,982		$	181.03
Exercised		(1,300	)	$	22.41
Forfeited/expired/cancelled		(2,000	)	$	199.71
Options outstanding at March 31, 2023		649,647		$	78.68
Options exercisable at March 31, 2023		374,084		$	54.57
Vested and expected to vest at March 31, 2023(1)		633,533		$	78.10		5.91	$	60,647


	Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		531,034		$	142.57
Awarded		130,929		$	180.05
Vested		(123,938	)	$	118.33
Forfeited/cancelled		(21,529	)	$	195.74
Unvested at March 31, 2023		516,496		$	154.72
Vested and expected to vest at March 31, 2023(1)		479,766		$	153.33


	Three Months Ended March 31,				Increase/(Decrease)
	2023		2022		$ Change			% Change
	(Amounts in thousands, except for percentage data)
Revenue:
Products	$	182,621	$	206,363	$	(23,742	)		(11.5	%)
Royalty and other		39		37		2			5.4	%
Total revenue	$	182,660	$	206,400	$	(23,740	)		(11.5	%)


	Three Months Ended March 31,
	2023						2022
				Fully Diluted						Fully Diluted
				Earnings per						Earnings per
	Amount			Share			Amount			Share
	(Amounts in thousands, except per share data)
GAAP net income	$	28,829		$	0.51		$	46,964		$	0.81
Non-GAAP adjustments to net income:
Acquisition and integration costs		1,037			0.02			3,189			0.05
Contingent consideration		1,235			0.02			(2,411	)		(0.04	)
Intangible amortization		7,324			0.13			6,593			0.11
Amortization of debt issuance costs(1)		457			0.01			452			0.00
Tax effect of non-GAAP charges		(2,583	)		(0.05	)		(1,042	)		(0.02	)
Non-GAAP adjusted net income	$	36,299		$	0.64		$	53,745		$	0.92


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).

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

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

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	REPLIGEN CORPORATION

Date: May 2, 2023	By:	/S/ TONY J. HUNT
		Tony J. Hunt
		President and Chief Executive Officer
		(Principal executive officer)
		Repligen Corporation

Date: May 2, 2023	By:	/S/ JON SNODGRES
		Jon Snodgres
		Chief Financial Officer
		(Principal financial officer)
		Repligen Corporation