Maravai LifeSciences Holdings, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 1, 2022. This is an annual report, not a standalone fourth-quarter results report. Amounts below are in U.S. dollars; financial comparisons are FY2021 versus FY2020 unless noted.
Business context
Maravai supplies life-sciences products, principally nucleic acids and biologics-safety testing products. Following its September 2021 sale of Vector Laboratories, it operates in Nucleic Acid Production and Biologics Safety Testing. The company attributed exceptional nucleic-acid growth to CleanCap and mRNA demand, including COVID-19 vaccine production and broader mRNA programs.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Revenue | $799.2 million | $284.1 million | +181.3% |
| Gross profit / margin | $658.7 million / 82.4% | $204.4 million / 72.0% | Margin expanded, primarily with favorable product mix |
| Operating income / margin | $554.6 million / 69.4% | $119.9 million / 42.2% | +362.6% operating income |
| Net income, consolidated | $469.3 million | $78.8 million | +495.4%; FY2021 includes $61.5 million income-tax expense |
| Net income attributable to Maravai Holdings | $182.0 million | $89.0 million | FY2021 earnings include $287.2 million attributable to non-controlling interests |
| Basic / diluted EPS | $1.59 / $1.56 | $7.43 / $2.36 | Comparability is affected by the 2020 IPO and changing share/unit counts |
| Adjusted EBITDA (non-GAAP) | $582.8 million | $169.2 million | 72.9% / 59.5% of revenue, respectively |
| Operating cash flow | $368.6 million | $152.2 million | FY2021 included a $176.6 million net cash outflow from changes in operating assets and liabilities |
| Adjusted Free Cash Flow (non-GAAP) | $565.8 million | $141.8 million | Defined by the company as Adjusted EBITDA less capital expenditures; not GAAP cash flow |
Nucleic Acid Production revenue rose 245.0% to $711.9 million (89.1% of total); Biologics Safety Testing increased 24.6% to $68.4 million. Protein Detection revenue was $19.0 million before its divestiture and was down 17.1% year over year. Research and development expense was $15.2 million, up 63.6%; selling, general and administrative expense was $100.1 million, up 6.2%.
At year-end, cash was $551.3 million and current assets were $740.0 million against current liabilities of $93.8 million. Long-term debt had $544.0 million principal outstanding ($530.6 million net of unamortized issuance costs); there were no revolver borrowings. The company reported $368.6 million of operating cash flow and $17.0 million of capital expenditures. Cash exceeded reported debt principal by about $7.3 million, before considering other liabilities. Interest expense was $30.3 million. A $415.0 million notional interest-rate cap ran through March 2023.
Material changes and notable items
- Revenue increased sharply, with Nucleic Acid Production driving nearly all of the growth. BioNTech, Pfizer and CureVac represented 29.5%, 23.3% and 15.3% of FY2021 revenue, respectively—68.1% combined.
- Vector Laboratories was sold in September for $121.9 million of stated consideration, including $120.3 million cash and $1.6 million in receivables subject to working-capital finalization. Maravai recorded an $11.2 million pretax gain. The sale was not presented as discontinued operations.
- The $748.3 million Tax Receivable Agreement (TRA) liability is a significant obligation: the agreement generally requires payment to former owners of 85% of specified realized or deemed-realized tax benefits. The company estimated payments of approximately $34.8–$63.0 million annually over the next 15 years, subject to assumptions and timing; certain events can accelerate payments.
- Topco LLC tax distributions to owners totaled $283.2 million in 2021, including $129.7 million to Maravai Holdings and $153.5 million distributed to non-controlling interest holders. The company also contributed $110.0 million to Topco LLC in December to move accumulated cash to operating businesses.
- FY2020 included a $19.0 million gain on a facility sale-and-leaseback and a $7.6 million debt-extinguishment loss. FY2021 included the Vector sale gain and a $6.1 million benefit from remeasurement of the TRA liability. These items affect year-over-year comparisons.
Outlook, risks and contingencies
The filing gives no specific revenue, earnings or cash-flow guidance. Management said existing cash, operating cash generation and access to credit were expected to cover cash requirements for the next 12 months and beyond. It planned continued investment in research, commercial capabilities and manufacturing capacity; estimated 2022 capital expenditures of approximately $39.2 million for the Flanders San Diego facility and $5.1 million for the Leland facility.
Key uncertainties include the possibility that COVID-19 vaccine-related demand declines, customer concentration and order variability, dependence on a limited number of suppliers, quality-control and manufacturing risks, and competition or regulatory changes affecting mRNA and gene-therapy markets. Debt carries variable-rate exposure and restrictive covenants; the company reported covenant compliance at year-end and a first-lien net leverage ratio below 4.25x. Other significant considerations include the TRA’s cash demands, GTCR’s voting control, and the allocation of substantial earnings to non-controlling interests.
After year-end, Maravai completed the MyChem acquisition for a $250.0 million gross purchase price, subject to adjustments, plus potential cash earn-outs of up to $60.0 million. A January 2022 credit-agreement amendment replaced LIBOR-based pricing with SOFR-based pricing and reduced stated interest margins. The auditor issued an unqualified opinion on the financial statements and internal controls; the TRA liability was identified as a critical audit matter.
Important facts for investors to verify
- How much FY2021 CleanCap and other revenue depended on COVID-19 programs, and how customer orders or forecasts are changing.
- The sustainability of unusually high reported gross and Adjusted EBITDA margins, including the effects of product mix and non-GAAP adjustments.
- The TRA liability’s assumptions, expected payment schedule, possible acceleration, and interaction with cash available to the parent company.
- Customer and supplier concentration, including the continuing importance of BioNTech, Pfizer and CureVac and the ability to serve demand without quality or capacity constraints.
- MyChem’s acquisition accounting, integration progress, total consideration and earn-out exposure; and the actual cost and timing of planned facility investments.
- Debt interest costs after the 2022 amendment, covenant headroom, and the effect of non-controlling interests and share-count changes on per-share results.