REPLIGEN CORP

Previous wording

As the overall market for biologics continues to grow and expand, our customers – primarily large biopharmaceutical companies and contract development and manufacturing organizations and other life sciences companies (integrators) – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our products help 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, recombinant proteins, vaccines and cell and gene therapies – that are improving human health worldwide. Increasingly, our technologies are being implemented to overcome challenges in processing plasmid DNA (a starting material for the production of mRNA) and gene delivery vectors such as lentivirus and adeno-associated viral vectors. For more information regarding our business, products and acquisitions, see Part I, Item 1,“Business”, included in our 2023 Annual Report on Form 10-K which was filed with the Securities and Exchange Commission (“SEC”) on February 22, 2024 (“Form 10-K”).

Current wording

As the overall market for biologics continues to grow and expand, our customers – primarily large biopharmaceutical companies and contract development and manufacturing organizations and other life sciences companies (integrators) – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our products help 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, recombinant proteins, vaccines and cell and gene therapies – that are improving human health worldwide. Increasingly, our technologies are being implemented to overcome challenges in processing plasmid DNA (a starting material for the production of mRNA) and gene delivery vectors such as lentivirus and adeno-associated viral vectors. For more information regarding our business, products and acquisitions, see Part I, Item 1,“Business”, included in our 2023 Annual Report on Form 10-K, as amended, which was filed with the Securities and Exchange Commission (“SEC”) on November 18, 2024 (“Form 10-K/A”).

Previous wording

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 condensed 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, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in our Form 10-K.

Current wording

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 condensed consolidated financial statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 3, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in our Form 10-K/A.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Royalty and other revenues in the three and nine months ended September 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

Costs of goods sold and operating expenses

Current wording

Costs of goods sold and operating expenses (As Restated)

Previous wording

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

Current wording

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

Previous wording

Research and development (“R&D”) expenses are related to bioprocessing products, which include personnel, supplies and other research expenses. Due to 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.

Current wording

Research and development (“R&D”) expenses are related to the development of products supporting bioprocessing operations. The expenses include personnel compensation, supplies, and other research expenses. Due to the fact that these various programs share personnel and fixed costs, we have not provided historical costs incurred by project.

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 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.

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 $1.1 million and $2.9 million for the three and nine months ended September 30, 2024, as compared to $0.8 million and $3.1 million, respectively, for the same periods in 2023, in the form of milestone payments to Navigo.

Previous wording

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.

Current wording

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

Previous 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.

Current wording

One of the primary drivers of this increase was the incremental stock compensation expense of $17.4 million for the three months ended September 30, 2024 and $22.4 million for the nine months ended September 30, 2024, associated with the modification of our former 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 former CEO’s transition to Executive Chair of our Board, see Note 10, “Stockholders’ Equity - Chief Executive Officer Accounting Modifications”included in this report.

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 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.

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 nine months ended September 30, 2023 of $(34.3) million and $(31.3) million, respectively. No adjustment was recorded for the three and nine months ended September 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 $3.4 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.

Current wording

Investment income includes income earned on invested cash balances. Our investment income increased by $2.5 million and $9.4 million for the three and nine months ended September 30, 2024, as compared to the same periods of 2023 due to an increase in interest rates on higher average invested cash balances since September 30, 2023. Offsetting this increase was a decrease in interest earned 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 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.

Current wording

Interest expense for the three and nine months ended September 30, 2024 is primarily from contractual coupon interest on the convertible debt outstanding as of September 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 of the 2019 Notes for the three months ended September 30, 2024 was immaterial. Interest expense for the nine months ended September 30, 2024 was $0.1 million of interest on the 2019 Notes, compared to $0.3 million and $0.8 million, respectively of interest expense on the 2019 Notes in the same periods of 2023. Interest expense for the three and nine months ended September 30, 2024 also includes $1.5 million and $4.5 million, respectively, of contractual coupon interest on the 2023 Notes as well as $3.5 million and $10.2 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 nine months ended September 30, 2024, for which there were no comparable costs in the same periods of 2023. See Note 9,“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 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.

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 nine months ended September 30, 2024, amortization of debt issuance costs included $0.2 million of amortization of costs related to the 2019 Notes. For the three and nine months ended September 30, 2024, amortization of debt issuance costs included $0.4 million and $1.2 million, respectively, of amortization of costs related to the 2023 Notes. For the three and nine months ended September 30, 2023, amortization of debt issuance costs included $0.5 million and $1.4 million, respectively, of amortization related to the 2019 Notes.

Previous 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.

Current wording

The change in other (expenses) income for the three and nine months ended September 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 and six months ended June 30, 2024 and 2023 was as follows:

Current wording

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

Previous 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.

Current wording

For the three and nine months ended September 30, 2024, we recorded an income tax benefit of $(0.5) million and an income tax expense of $3.2 million, respectively. The effective tax rate was 43.0% and 27.8% for the three and nine months ended September 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, nondeductible stock compensation and nonrecurring tax benefits from nontaxable contingent consideration and a deductible foreign exchange loss on certain long-term intercompany debt. Our effective tax rates for the three and nine months ended September 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

For the three and six months ended June 30, 2023, we recorded an income tax provision of $5.1 million and $12.4 million, respectively. The effective tax rate was 20.3% and 20.2% for the three and six months ended June 30, 2023, respectively, and is based upon the estimated income for the year ending December 31, 2023 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 increased benefits from business tax credits partially offset by nondeductible contingent consideration and lower foreign-derived intangible income. Our effective tax rates for three and six months ended June 30, 2023 were lower than the U.S. statutory rate of 21% primarily due to business tax credits, foreign-derived intangible income and stock windfall tax benefits recognized on stock option exercises and the vesting of stock units.

Current wording

For the three and nine months ended September 30, 2023, we recorded an income tax benefit of $(5.5) million and an income tax expense of $2.8 million, respectively. The effective tax rate was (48.7%) and 5.1% for the three and nine months ended September 30, 2023, respectively, and is based upon the estimated income for the year ending December 31, 2023 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 increased benefits from business tax credits, nontaxable contingent consideration and a deductible foreign exchange loss on certain long-term intercompany debt, partially offset by lower foreign-derived intangible income and nondeductible executive compensation. Our effective tax rates for three and nine months ended September 30, 2023 were lower than the U.S. statutory rate of 21% primarily due to business tax credits, foreign-derived intangible income, windfall tax benefits on stock option exercise and the vesting of stock units, nontaxable contingent consideration and a deductible foreign exchange loss on certain long-term intercompany debt.

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 $0.2 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.

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 $0.3 million as of September 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 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.

Current wording

At September 30, 2024, we had cash and cash equivalents of $784.0 million compared to cash and cash equivalents of $751.3 million at December 31, 2023.

Previous 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.

Current wording

Working capital increased by $76.8 million to $1,023.2 million at September 30, 2024 from $946.4 million at December 31, 2023 due to the various changes noted below.

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. 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.

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 third 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 fourth 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 9,"Convertible Senior Notes," to this report.

Previous 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.

Current wording

For the nine months ended September 30, 2024, our operating activities provided cash of $136.2 million reflecting net income of $8.4 million and non-cash charges totaling $113.3 million primarily related to depreciation and intangible amortization, amortization of debt discount and issuance costs, stock-based compensation, deferred income taxes and operating lease right of use asset amortization. Accounts receivable increased by $4.6 million, while inventory manufactured decreased by $20.1 million. Accounts payable and accrued liabilities had a net increase of $7.1 million, primarily due to an increase in unearned revenue and accrued employee payroll and bonuses, and there was a net increase in operating lease liability due to new operating leases entered into during 2024 providing cash of $5.8 million. Prepaid expenses increased by $1.8 million, primarily related to prepayment of corporate taxes. The remaining cash used in operating activities resulted from unfavorable changes in various other working capital accounts.

Previous 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.

Current wording

For the nine months ended September 30, 2023, our operating activities provided cash of $84.9 million reflecting net income of $52.0 million and non-cash charges totaling $40.7 million primarily related to depreciation and amortization, contingent consideration fair value adjustments, deferred income taxes, non-cash interest income, stock-based compensation charges and operating lease right of use asset amortization. A decrease in accounts receivable provided $8.3 million of cash and was primarily driven by lower revenue. Additionally, we had a decrease in inventory manufactured that provided $26.0 million of which $17.2 million was related to the Restructuring Plan. An increase in prepaid expenses, primarily related to prepaid taxes and subscriptions consumed $12.7 million. A decrease in accounts payable and accrued expenses consumed $21.3 million and was due to the timing of payments to vendors as well as the payment of employee bonuses related to 2022 during the nine months ended September 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 $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.

Current wording

Our investing activities consumed $21.6 million of cash during the nine months ended September 30, 2024, which was primarily driven by capital expenditures of $22.9 million during 2024. Included in this amount were capitalized costs related to our internal-use software for the nine months ended September 30, 2024.

Previous 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.

Current wording

Our investing activities provided $46.6 million of cash during the nine months ended September 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 $27.8 million in cash (net of cash received) for the FlexBiosys Acquisition. Capital expenditures consumed $27.8 million in 2023 as we continue to increase our manufacturing capacity worldwide. Of these expenditures, $2.7 million represented capitalized costs related to our internal-use software for the nine months ended September 30, 2023.

Previous 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.

Current wording

Our financing activities consumed $84.4 million of cash for the nine months ended September 30, 2024, driven primarily by the settlement of the 2019 Notes of $69.9 million, of which $69.6 million occurred in the three months ended September 30, 2024. A further $9.4 million was disbursed in cash 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 $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.

Current wording

Our financing activities consumed $19.2 million of cash for the nine months ended September 30, 2023, primarily for $12.2 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 $7.3 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of Avitide in September 2021. This was partially offset by proceeds received from stock option exercises during the period.

Previous 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%.

Current wording

The effect of exchange rate changes on cash during the nine months ended September 30, 2024 is a result of using multiple currencies across the group, with the Euro and Swedish Krona being significant currencies for the group outside of the US Dollar.

Previous wording

Net Operating Loss Carryforwards

Current wording

Net Operating Loss Carryforwards (As Restated)

Previous wording

At December 31, 2023, the Company had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $1.5 million and foreign net operating loss carryforwards of $4.9 million. The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. We had state business tax credits carryforwards of $5.0 million available to reduce future federal and state income taxes. The business tax credits carryforwards will expire at various dates through December 2043. 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.

Current wording

At December 31, 2023, the Company had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $4.8 million and foreign net operating loss carryforwards of $4.9 million. The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. We had federal and state business tax credits carryforwards of $5.8 million available to reduce future federal and state income taxes. The business tax credits carryforwards will expire at various dates through December 2043. 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.

Previous wording

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, expectations and beliefs for recently-completed acquisitions, product development and sales, restructuring activities and the expected results thereof, 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, COVID-19 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 success of current and future collaborative or supply relationships, including our agreements with Cytiva, MilliporeSigma and Purolite Life Sciences, an Ecolab Inc. company; 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 manufacturing capabilities and our dependence on third-party manufac…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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 success of current and future collaborative or supply relationships, including our agreements with Cytiva, MilliporeSigma and Purolite Life Sciences, an Ecolab Inc. company; 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 manufacturing capabilities and our dependence on third-party manufacturers and value-added resellers; 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 acquired 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; risks related to the restatement of our consolidated financial statements included in our Form 10-K/A and for other periods impacted by the restatement identified in our Current Report on Form 8-K filed with the SEC on September 18, 2024; our plans to mitigate our material weaknesses in our internal controls over financial reporting; the impact of the restatement on our reputation and investor confidence in us and the increased possibility of legal proceedings and regulatory inquiries; 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”…

Excerpt shortened here; the source contains the full paragraph.