REPLIGEN CORP

Previous wording

Total revenue for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Total revenue for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

We focus on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers. These direct sales represented approximately 90.4% and 84.2% of our product revenue for each of the three months ended March 31, 2024 and 2023, respectively. 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.

Current wording

We focus on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers. These direct sales represented approximately 88.4% and 84.7% of our product revenue for each of the three months ended June 30, 2024 and 2023, respectively, and represented 89.4% and 84.4% of our product revenue for each of the six months ended June 30, 2024 and 2023. 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.

Previous wording

During the three months ended March 31, 2024, product revenue decreased by $31.3 million, or 17.1%, as compared to the same period of 2023. This is mainly due to a decrease in revenue from programs related to the COVID-19 pandemic as customers’ inventory has reduced at a slower pace than initially expected, which has primarily affected revenue from sales of our filtration products. In addition, revenue from our proteins franchise decreased during the three months ended March 31, 2024, as compared to March 31, 2023 due to weak demand reflecting the Cytiva (a standalone operating company owned by Danaher Corporation) drop-off since they are producing product in-house and lower forecast for ligands from other customers. Partially offsetting these decreases in revenue is an increase in revenue from the acquisitions of FlexBiosys and Metenova, both completed after March 31, 2023.Revenue from sales by the remaining franchises for the three months ended March 31, 2024 remained relatively in line with similar revenue from the same period of 2023.

Current wording

During the three and six months ended June 30, 2024, product revenue decreased by $5.1 million, or 3.2%, and $36.4 million, or 10.7%, respectively, as compared to the same periods of 2023. The decrease between the three and six-month periods is mainly due to a decrease in revenue from our proteins franchise due to weak demand, which reflects the Cytiva (a standalone operating company owned by Danaher Corporation) drop-off since they are producing product in-house and lower forecast for ligands from other customers. The decrease in revenue during the six-month periods also included a decrease in revenue from programs related to the COVID-19 pandemic as customers’ inventory has reduced at a slower pace than initially expected, which has primarily affected revenue from sales of our filtration products. Partially offsetting the decrease in revenue for the three and six month periods is an increase in revenue from the operations of acquisitions completed subsequent to the prior year comparable periods. In addition, the performance of our Alternating Tangential Filtration business, a part of our filtration franchise, was strong in the second quarter of 2024 as well as the first half of 2024 resulting in an increase in revenue during the three and six months ending June 30, 2024, as compared to the same periods of 2023. Revenue from sales by the remaining franchises for the three and six months ended June 30, 2024 remained relatively in line with similar revenue from the same periods of 2023.

Previous wording

Royalty and other revenues in the three months ended March 31, 2024 and 2023 relate to royalties received from a third-party systems manufacturer associated with our OPUS® chromatography columns. Royalty revenues are variable and are dependent on sales generated by our partners.

Current wording

Royalty and other revenues in the three and six months ended June 30, 2024 and 2023 relate to royalties received from a third-party systems manufacturer associated with our OPUS® chromatography columns. Royalty revenues are variable and are dependent on sales generated by our partners.

Previous wording

Total costs and operating expenses for the three months ended March 31, 2024 and 2023 were comprised of the following:

Current wording

Total costs and operating expenses for the three and six months ended June 30, 2024 and 2023 were comprised of the following:

Previous wording

Cost of goods sold decreased $5.5 million, or 6.7%, for the three months ended March 31, 2024, compared to the same period of 2023, primarily due to a decrease in costs associated with lower revenue as well as a decrease in employee-related costs resulting from a decline in manufacturing headcount since March 31, 2023. Partially offsetting this was an increase in cost of goods sold that relate to the operations of FlexBiosys and Metenova, which have been in our results of operations since the acquisition dates in April 2023 and October 2023, respectively and $0.6 million of one-time costs incurred from restructuring activities during the first quarter of 2024, for which there were no comparable costs in the same period of 2023.

Current wording

Cost of goods sold decreased $2.0 million, or 2.5%, and $7.4 million, or 4.6% for the three and six months ended June 30, 2024, compared to the same periods of 2023, primarily due to a decrease in costs associated with lower revenue as well as a decrease in employee-related costs resulting from a decline in manufacturing headcount since June 30, 2023. Partially offsetting this was an increase in cost of goods sold that relates to the results of operations of FlexBiosys and Metenova, which have been in our consolidated results of operations since the acquisition dates in April 2023 and October 2023, respectively. There was also an increase in cost of goods sold during the three and six months ended June 30, 2024, as compared to the same periods of 2023 due to $0.5 million and $1.1 million, respectively, of costs incurred in 2024 from restructuring activities, for which there were no comparable costs in the same periods of 2023.

Previous wording

Gross margin was 49.5% and 55.2% in the three months ended March 31, 2024 and 2023, respectively. Lower margins were a result of lower overall sales and production volumes, and a change in product mix, where we saw a significant decline in revenue associated with higher-margin consumable products due to the decrease in COVID-19 vaccine demand.

Current wording

Gross margin was 49.8% and 50.2% in the three months ended June 30, 2024 and 2023, respectively and gross margin was 49.7% and 52.9% in the six months ended June 30, 2024 and 2023, respectively. Lower margins were a result of lower overall sales and production volumes, and a change in product mix, where we saw a significant decline in revenue associated with higher-margin consumable products due to the decrease in COVID-19 vaccine demand.

Previous wording

R&D expenses decreased $0.9 million, or 7.5%, during the three months ended March 31, 2024, compared to the same period of 2023. The decrease is primarily due to lower employee-related costs, including bonus paid during the first quarter of 2024. We also had a decrease in spending on new product development during the three months ended March 31, 2024. Offsetting these decreases was an increase in R&D expenses that relate to the operations of FlexBiosys and Metenova, which have been in our results of operations since the acquisition dates in April 2023 and October 2023, respectively, and $0.2 million of one-time costs incurred from restructuring activities during the first quarter, for which there were no comparable costs in the same period of 2023.

Current wording

R&D expenses increased $0.9 million, or 9.0%, during the three months ended June 30, 2024, compared to the same period of 2023. The increase is primarily due to an adjustment to decrease the bonus accrual recorded during the second quarter of 2023 for which there is no comparable amount recorded in the same period of 2024. The increase is also attributable to the operations of Metenova, which have been in our results of operations since the acquisition date in October 2023 and $0.3 million of costs from restructuring activities during the three months ended June 30, 2024, for which there were no comparable costs in the same period of 2023. Offsetting these increases were decreases in employee-related costs from a decrease in headcount since June 30, 2023 and a decrease in spending on new product development during the three months ended June 30, 2024.

Previous wording

R&D expense also includes payments made to expand our proteins product offering through our agreement with Navigo Proteins GmbH (“Navigo”). Such expenses were $0.9 million for the three months ended March 31, 2024, as compared to $1.1 million and for the same period in 2023, in the form of milestone payments to Navigo.

Current wording

R&D expense also includes payments made to expand our proteins product offering through our agreement with Navigo Proteins GmbH (“Navigo”). Such expenses were $0.9 million and $1.7 million for the three and six months ended June 30, 2024, as compared to $1.2 million and $2.3 million, respectively, for the same periods in 2023, in the form of milestone payments to Navigo.

Previous wording

SG&A costs increased by $5.5 million, or 9.8% during the three months ended March 31, 2024, as compared to the same period of 2023. The increase in SG&A costs partially relate to the operations of FlexBiosys and Metenova, which have been included in our results of operations since the acquisition dates in April 2023 and October 2023, respectively. In addition, there were $0.7 million in one-time costs incurred from restructuring activities during the first quarter, for which there were no comparable costs in the same period of 2023. We also had an increase in employee-related costs during the three months ended March 31, 2024, as compared to the same period of 2023 due to an increase in SG&A headcount since March 31, 2023 and our annual merit increase in salaries.

Current wording

SG&A costs increased by $15.7 million, or 32.1% during the three months ended June 30, 2024 and increased $21.2 million, or 20.2% during the six months ended June 30, 2024, as compared to the same periods of 2023. The increase in SG&A costs partially relate to the results of operations of FlexBiosys and Metenova, which have been included in our consolidated results of operations since the acquisition dates in April 2023 and October 2023, respectively. SG&A expenses also increased during the three and six months ended June 30, 2024, as compared to the same period of 2023 due to increases in employee-related costs, stock-based compensation, professional services and amortization. In addition, there were $0.2 million and $0.9 million in costs incurred from restructuring activities during the three and six months ended June 30, 2024, respectively, for which there were no comparable costs in the same periods of 2023. The increase in employee-related costs during the three and six months ended June 30, 2024, as compared to the same period of 2023 was due to an increase in SG&A headcount since June 30, 2023. Also included in this increase was the impact of an adjustment recorded during the second quarter of 2023 to decrease the bonus accrual, resulting in an increase to the expense for the three and six months ended June 30, 2024, as compared to the same period of 2023. In addition, the increase in employee-related costs for the six month period was also a result of our annual merit increase in salaries which occurred in the first quarter of 2024. During the second quarter of 2024, we recorded the incremental stock compensation expense of $4.4 million associated with the modification of our Chief Executive Officer’s (“CEO”) unvested equity awards resulting from the announcement of his transition from CEO to Executive Chair of our Board, which was announced on June 12, 2024 and effective September 1, 2024. For more information on the CEO’s transition to Executive Chair of our Board. See Note 9,”Stockholders’ Equity - Chief Executive Officer Accounting Modifications”included in this report. Professional fees increased primarily due to added legal services during the second quarter of 2024.

Previous wording

Contingent consideration expense represents the change in fair value of the contingent consideration obligation included in current and noncurrent contingent consideration on the condensed consolidated balance sheets as of the end of each period. Remeasurement 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 condensed consolidated statements of comprehensive (loss) income. Expected results and a change in market inputs used to calculate the discount rate, resulted in a change of $1.2 million to the expense reported for the three months ended March 31, 2023. No adjustment was recorded for the three months ended March 31, 2024 as management’s assessment was that the balances of the contingent consideration obligations already represented fair value.

Current wording

Contingent consideration expense represents the change in fair value of the contingent consideration obligation included in current and noncurrent contingent consideration on the condensed consolidated balance sheets as of the end of each period. Remeasurement 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 condensed consolidated statements of comprehensive income (loss). Expected results and a change in market inputs used to calculate the discount rate, resulted in a change reported for the three and six months ended June 30, 2023 of $1.8 million and $3.0 million, respectively. No adjustment was recorded for the three and six months ended June 30, 2024 as management’s assessment was that the balances of the contingent consideration obligations already represented fair value.

Previous wording

Investment income includes income earned on invested cash balances. Our investment income increased by $3.5 million for the three months ended March 31, 2024, as compared to the same period of 2023 due to an increase in interest rates on higher average invested cash balances since March 31, 2023. Offsetting this increase was a decrease in interest earned in 2023 on U.S. treasury bills purchased at the end of 2022, for which there was no comparable amount recorded in 2024. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.

Current wording

Investment income includes income earned on invested cash balances. Our investment income increased by $3.4 million and $7.0 million for the three and six months ended June 30, 2024, as compared to the same periods of 2023 due to an increase in interest rates on higher average invested cash balances since June 30, 2023. Offsetting this increase was a decrease in interest earned in 2023 on U.S. treasury bills purchased at the end of 2022, for which there was no comparable amount recorded in 2024. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.

Previous wording

Interest expense for the three months ended March 31, 2024 is primarily from contractual coupon interest on the convertible debt outstanding as of March 31, 2024. On December 14, 2023, we entered into a privately negotiated exchange and subscription agreement with certain holders of our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”) and certain new investors pursuant to which we issued $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2023 Notes”). Interest expense for the three months ended March 31, 2024 includes $0.1 million of interest on the 2019 Notes, compared to $0.3 million of interest expense on the 2019 Notes in the same period of 2023. Interest expense for the three months ended March 31, 2024 also includes $1.5 million of contractual coupon interest on the 2023 Notes as well as $3.3 million in accretion of the $82.1 million debt discount on the modified notes, which includes the accretion of an increase in principal and the accretion of increased fair value of the conversion option for the three months ended March 31, 2024, for which there were no comparable costs in the same period of 2023. See Note 8,“Convertible Senior Notes,”to our condensed consolidated financial statements included in this report for more information on this transaction.

Current wording

Interest expense for the three and six months ended June 30, 2024 is primarily from contractual coupon interest on the convertible debt outstanding as of June 30, 2024. On December 14, 2023, we entered into a privately negotiated exchange and subscription agreement with certain holders of our 0.375% Convertible Senior Notes due 2024 (the “2019 Notes”) and certain new investors pursuant to which we issued $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2023 Notes”). Interest expense for the three and six months ended June 30, 2024 was $0.1 million of interest on the 2019 Notes for each period, compared to $0.3 million and $0.5 million, respectively of interest expense on the 2019 Notes in the same periods of 2023. Interest expense for the three and six months ended June 30, 2024 also includes $1.5 million and $3.0 million, respectively, of contractual coupon interest on the 2023 Notes as well as $3.4 million and $6.7 million, respectively, in accretion of the $82.1 million debt discount on the modified notes, which includes the accretion of an increase in principal and the accretion of increased fair value of the conversion option for the three and six months ended June 30, 2024, for which there were no comparable costs in the same periods of 2023. See Note 8,“Convertible Senior Notes,”to our condensed consolidated financial statements included in this report for more information on this transaction.

Previous wording

Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the condensed consolidated statements of comprehensive (loss) income. For the three months ended March 31, 2024, amortization of debt issuance costs included $0.1 million of amortization of costs related to the 2019 Notes and $0.4 million of amortization of costs related to the 2023 Notes, compared to $0.5 million of amortization related to the 2019 Notes recorded in the three months ended March 31, 2023.

Current wording

Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the condensed consolidated statements of comprehensive income (loss). For the three and six months ended June 30, 2024, amortization of debt issuance costs included $0.1 million and $0.2 million, respectively, of amortization of costs related to the 2019 Notes and $0.4 million and $0.8 million, respectively, of amortization of costs related to the 2023 Notes, compared to $0.5 million and $0.9 million, respectively, of amortization related to the 2019 Notes recorded in the three and six months ended June 30, 2023.

Previous wording

The change in other (expenses) income for the three months ended March 31, 2024, compared to the same period of 2023, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries.

Current wording

The change in other (expenses) income for the three and six months ended June 30, 2024, compared to the same periods of 2023, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries.

Previous wording

Income tax provision for the three months ended March 31, 2024 and 2023 was as follows:

Current wording

Income tax provision for the three and six months ended June 30, 2024 and 2023 was as follows:

Previous wording

For the three months ended March 31, 2024 and 2023, we recorded an income tax provision of approximately $20 thousand and $7.3 million, respectively. The effective tax rate was 0.9% and 20.1% for the three months ended March 31, 2024 and 2023, respectively, and is based upon the estimated income for the year ending December 31, 2024 and the composition of income in different jurisdictions. The difference in effective tax rates between the periods was primarily due to lower income before income taxes and stock windfall tax benefits. Our effective tax rates for the three months ended March 31, 2024 and 2023 were lower than the U.S. statutory rate of 21% primarily due to stock windfall tax benefits.

Current wording

For the three and six months ended June 30, 2024, we recorded an income tax provision of $1.9 million, in each respective period. The effective tax rate was 35.9% and 25.8% for the three and six months ended June 30, 2024, respectively, and is based upon the estimated income for the year ending December 31, 2024 and the composition of income in different jurisdictions. The difference in effective tax rates between the periods was primarily due to lower income before income taxes and nondeductible stock compensation, partially offset by stock windfall tax benefits. Our effective tax rates for the three and six months ended June 30, 2024 were higher than the U.S. statutory rate of 21% primarily due to nondeductible stock compensation partially offset by stock windfall tax benefits.

Previous wording

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Subsequently, the U.S. Treasury, Federal Reserve and FDIC announced that SVB depositors would have access to all of their money. We have a banking relationship with SVB and hold cash, cash equivalents and marketable securities of $0.1 million as of March 31, 2024 in SVB depository accounts to cover short-term operational payments. While we have not experienced any losses in such accounts, the failure of SVB in 2023 caused us to utilize our accounts at other financial institutions in order to mitigate potential operational risks stemming from the temporary inability to access funds in our SVB operating accounts. As a result of bank failures, such as SVB, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired and could negatively impact the financial institutions with which we have direct arrangements, or the financial services industry or economy in general.

Current wording

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Subsequently, the U.S. Treasury, Federal Reserve and FDIC announced that SVB depositors would have access to all of their money. We have a banking relationship with SVB and hold cash, cash equivalents and marketable securities of $0.2 million as of June 30, 2024 in SVB depository accounts to cover short-term operational payments. While we have not experienced any losses in such accounts, the failure of SVB in 2023 caused us to utilize our accounts at other financial institutions in order to mitigate potential operational risks stemming from the temporary inability to access funds in our SVB operating accounts. As a result of bank failures, such as SVB, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired and could negatively impact the financial institutions with which we have direct arrangements, or the financial services industry or economy in general.

Previous wording

At March 31, 2024, we had cash and cash equivalents of $780.6 million compared to cash and cash equivalents of $751.3 million at December 31, 2023.

Current wording

At June 30, 2024, we had cash and cash equivalents of $809.1 million compared to cash and cash equivalents of $751.3 million at December 31, 2023.

Previous wording

On December 14, 2023, the Company issued $600.0 million aggregate principal amount of its 2023 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its outstanding 2019 Notes and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”). Pursuant to the Exchange and Subscription Agreements, the Company exchanged $217.7 million of its 2019 Notes for $309.9 million aggregate principal amount of the 2023 Notes (the “Exchange Transaction”) and issued $290.1 million aggregate principal amount of the 2023 Notes (the “Subscription Transactions”) for $290.1 million in cash. Proceeds from the Subscription Transactions amounted to $276.1 million after debt issuance costs of $13.9 million. The 2023 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 1.00% per year. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2024.

Current wording

On December 14, 2023, the Company issued $600.0 million aggregate principal amount of its 2023 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its outstanding 2019 Notes and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”). Pursuant to the Exchange and Subscription Agreements, the Company exchanged $217.7 million of its 2019 Notes for $309.9 million aggregate principal amount of the 2023 Notes (the “Exchange Transaction”) and issued $290.1 million aggregate principal amount of the 2023 Notes (the “Subscription Transactions”) for $290.1 million in cash. Proceeds from the Subscription Transactions amounted to $276.1 million after debt issuance costs of $13.9 million. The 2023 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 1.00% per year. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2024. The 2023 Notes will mature on December 15, 2028, unless earlier redeemed, repurchased or converted. During the first quarter of 2024, the closing price of the Company's common stock did not exceed 130% of the conversion price of the 2023 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2023 Notes are not convertible at the option of the holders of the 2023 Notes during the third quarter of 2024, the quarter immediately following the quarter when the conditions are met, as stated in the indenture governing the 2023 Notes. For more information on the 2023 Notes, see Note 8,"Convertible Senior Notes," to this report.

Previous wording

During the first quarter of 2024, the closing price of our 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 2024, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes. These conditions have been met each quarter since the third quarter of 2020. As a result, as of the date of this filing and excluding the Exchange Transaction mentioned above, $0.3 million aggregate principal amount of the 2019 Notes have been requested for conversion by the note holders since the issuance of the 2019 Notes and all but $0.1 million of the requests have been settled as of March 31, 2024. The conversions resulted in the issuance of a nominal number of shares of our common stock to the note holders. Since the 2019 Notes mature within one year of the report date, we classify the carrying value of the 2019 Notes as current liabilities on our condensed consolidated balance sheet at March 31, 2024.

Current wording

The remaining 2019 Notes are convertible at the option of the holders as of June 30, 2024 at any time regardless of prior conditions that were in place and will be convertible until the close of business on July 11, 2024, the second trading day immediately preceding the maturity date of the 2019 Notes during the second quarter of 2024, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes. As of the date of this filing, excluding the Exchange Transaction mentioned above, the Company has received requests to convert $0.3 million aggregate principal amount of the 2019 Notes and all but $5,000 in aggregate principal requested prior to June 30, 2024 have been settled as of June 30, 2024. These conversions resulted in the issuance of a nominal number of shares of the Company’s common stock to the note holders. The remaining $5,000 in aggregate principal will settle with the 2019 Notes that are submitted for conversion prior to July 11, 2024. We will use proceeds from the Exchange Transaction to finance in part, the settlement upon conversion of the remaining 2019 Notes at maturity on July 15, 2024.

Previous wording

For the three months ended March 31, 2024, our operating activities provided cash of $44.7 million reflecting net income of $2.1 million and non-cash charges totaling $28.4 million primarily related to depreciation, intangible amortization, amortization of debt discount and issuance costs, stock-based compensation charges, deferred income taxes and contingent consideration fair value adjustments. A decrease in accounts receivable provided $6.7 million of cash and was primarily driven by lower revenue. We also had a decrease in inventory manufactured that provided $3.2 million, a net increase in accounts payable and accrued expenses of $5.7 million, primarily due to an increase in unearned revenue and accrued employee bonuses, and a net increase in operating lease liability due to new operating leases entered into during 2024 provided cash of $3.0 million. An increase in prepaid expenses, primarily related to subscriptions and taxes consumed $4.6 million. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.

Current wording

For the six months ended June 30, 2024, our operating activities provided cash of $86.9 million reflecting net income of $5.4 million and non-cash charges totaling $56.6 million primarily related to depreciation, intangible amortization, amortization of debt discount and issuance costs, stock-based compensation charges and deferred income taxes. We had a decrease in inventory manufactured that provided $10.5 million, a net increase in accounts payable and accrued expenses of $9.9 million, primarily due to an increase in unearned revenue and accrued employee bonuses, and a net increase in operating lease liability due to new operating leases entered into during 2024 providing cash of $7.5 million. An increase in prepaid expenses, primarily related to subscriptions and taxes consumed $2.0 million. The remaining cash used in operating activities resulted from unfavorable changes in various other working capital accounts.

Previous wording

For the three months ended March 31, 2023, our operating activities provided cash of $11.2 million reflecting net income of $28.8 million and non-cash charges totaling $22.2 million primarily related to depreciation, amortization, contingent consideration adjustments, deferred income taxes and stock-based compensation charges. An increase in accounts receivable consumed $16.8 million of cash and was primarily driven by the timing of collections from customers. Additionally, we had an increase in inventory of $5.8 million. A decrease in accounts payable consumed $1.2 million due to timing of payments to vendors. An increase in prepaid expenses due to payment of subscriptions consumed $2.8 million and a decrease in accrued liabilities consumed $13.3 million primarily related to the payment of employee bonuses during the three months ended March 31, 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.

Current wording

For the six months ended June 30, 2023, our operating activities provided cash of $45.6 million reflecting net income of $48.9 million and non-cash charges totaling $44.3 million primarily related to depreciation, amortization, contingent consideration fair value adjustments, deferred income taxes and stock-based compensation charges. An increase in accounts receivable consumed $4.6 million of cash and was primarily driven by the timing of collections from customers. Additionally, we had an increase in inventory of $2.5 million and an $11.5 million increase in prepaid expenses, primarily due to prepaid taxes and subscriptions. A decrease in accounts payable consumed $3.9 million due to timing of payments to vendors. A decrease in accrued liabilities consumed $26.2 million primarily related to the payment of employee bonuses during the six months ended June 30, 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.

Previous wording

Our investing activities consumed $8.4 million of cash during the three months ended March 31, 2024, which was due to capital expenditures during the first quarter of 2024, which consumed $8.4 million in cash. Included in this amount for the three months ended March 31, 2024 were capitalized costs related to our internal-use software for the three months ended March 31, 2024.

Current wording

Our investing activities consumed $15.8 million of cash during the six months ended June 30, 2024, which was due to capital expenditures during 2024. Included in this amount were capitalized costs related to our internal-use software for the six months ended June 30, 2024.

Previous wording

Our investing activities consumed $9.4 million of cash during the three months ended March 31, 2023, which was due to capital expenditures in 2023 as we continued to increase our manufacturing capacity worldwide. Of these expenditures, $0.9 million represented capitalized costs related to our internal-use software for the three months ended March 31, 2023.

Current wording

Our investing activities provided $55.4 million of cash during the six months ended June 30, 2023, primarily due to the maturity of our short-term investment in U.S. treasury securities in June 2023, which provided cash of $102.3 million. We used $28.1 million in cash (net of cash received) for the FlexBiosys Acquisition. Capital expenditures consumed $18.8 million in 2023 as we continued to increase our manufacturing capacity worldwide. Of these expenditures, $2.1 million represented capitalized costs related to our internal-use software for the six months ended June 30, 2023.

Previous wording

Our financing activities consumed $9.6 million of cash during the three months ended March 31, 2023, primarily for cash disbursed in relation to shares withheld to cover employee income tax due upon the vesting and release of restricted stock units. This was partially offset by proceeds received from stock option exercises during the period.

Current wording

Our financing activities consumed $14.7 million of cash for the six months ended June 30, 2024, primarily for $8.9 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units and the payments of $2.2 million and $5.2 million to settle the cash portion of the contingent earnout obligations related to our acquisition of FlexBiosys in April 2023 and Avitide in September 2021, respectively. These payments were partially offset by proceeds received from stock option exercises during the period.

Previous wording

Our financing activities consumed $9.0 million of cash for the three months ended March 31, 2024, primarily for $7.6 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units and the payment of $2.2 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of FlexBiosys in April 2023. This was partially offset by proceeds received from stock option exercises during the period.

Current wording

Our financing activities consumed $18.4 million of cash during the six months ended June 30, 2023, primarily for $11.1 million of cash disbursed in relation to shares withheld to cover employee income tax due upon the vesting and release of restricted stock units and the payment of $7.3 million to settle the cash portion of the contingent earnout obligation related to our acquisition of Avitide. This was partially offset by proceeds received from stock option exercises during the period.

Previous wording

Working capital increased by $1.8 million to $954.7 million at March 31, 2024 from $952.9 million at December 31, 2023 due to the various changes noted above.

Current wording

Working capital increased by $31.7 million to $984.6 million at June 30, 2024 from $952.9 million at December 31, 2023 due to the various changes noted above.

Previous wording

The effect of exchange rate changes on cash during the three months ended March 31, 2024 is a result of the weakening of the Swedish krona against the U.S. dollar by 6% and the weakening of the Euro against the U.S. dollar by 2%.

Current wording

The effect of exchange rate changes on cash during the six months ended June 30, 2024 is a result of the weakening of the Swedish krona against the U.S. dollar by 5% and the weakening of the Euro against the U.S. dollar by 3%.

Previous wording

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 remainder of the fiscal 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.

Current wording

Absent acquisitions of additional products, product candidates or intellectual property and absent the need to satisfy any debt conversions, 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 remainder of the fiscal 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.

Previous wording

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 acquiring 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 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.

Current wording

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 acquiring 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 financing needs, the need to fund debt conversions, or due to 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.