MARAVAI LIFESCIENCES HOLDINGS, INC.
For the period ended Dec 31, 2024. Filed Mar 18, 2025.
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FY2024 · Filed Mar 18, 2025
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Maravai LifeSciences Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Maravai LifeSciences Holdings, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 18, 2025 expressed an adverse opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Alphazyme Goodwill Impairment Assessment | |
| Description of the Matter | As discussed in Note 1 to the consolidated financial statements, goodwill is tested at the reporting unit level for impairment at least annually or more frequently if indicators of potential impairment exist. Under the goodwill impairment assessment, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the amount of the excess carrying amount of the reporting unit over its fair value, up to the total amount of goodwill included in the reporting unit. During the current year, the Company performed a quantitative assessment over the goodwill balance assigned to each reporting unit as of September 30, 2024 and at December 31, 2024. As discussed in Note 4 to the consolidated financial statements, as a result of the interim impairment assessment as of December 31, 2024, the Company recorded an impairment loss relating to the Alphazyme reporting unit, which is contained in the Nucleic Acid Production segment, in the amount of $11.9 million. Total goodwill as of December 31, 2024 was $159.9 million and represented 16% of total assets. |
|---|---|
| Auditing the Company’s goodwill impairment assessments for the Alphazyme reporting unit as of September 30, 2024 and December 31, 2024 was challenging and judgmental due to the estimation required by management to determine the fair value of the reporting unit. In particular, the estimates are affected by the certain significant assumptions including the revenue projections and the discount rate used to determine the fair value of the reporting unit. These assumptions specific to the Alphazyme reporting unit could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | Our audit procedures over the Company’s goodwill impairment assessment for the Alphazyme reporting unit included, among others, assessing the reasonableness of significant assumptions discussed above, and assessing the completeness and accuracy of the underlying data used by the Company in its analyses. We evaluated whether significant assumptions were reasonable by comparing them to industry data and current market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We also involved our valuation specialists to assist us in evaluating the reasonableness of the Company’s valuation methodologies and certain significant assumptions used by the Company. |
| Revenue with distributors | |
| Description of the Matter | During the year ended December 31, 2024, the Company’s revenues were $259.2 million, of which a portion relates to products sold to distributors. Its distributor customers resell the products to end users. |
| Auditing the Company’s product sales to distributors was challenging, specifically related to the effort required to audit the respective sales activity to assess whether incentives were provided that were not properly recognized. These audit procedures involved judgmentally assessing factors including distributor customer ordering patterns, contractual terms, incentives offered, and after shipment credits or free goods as described in Note 1 to the consolidated financial statements. | |
| How We Addressed the Matter in Our Audit | Our audit procedures over the Company’s product sales to distributor customers included, among others, performing analytical procedures to detect and investigate anomalies within the data. We also examined the terms and conditions of selected new or amended contracts with distributor customers and the impact of those terms and conditions on the Company’s recognition model. We also confirmed the terms and conditions of contracts directly with a selection of distributor customers, including whether there are side agreements and terms not formally included in the contract that may impact the Company’s revenue recognition. In addition, we directly obtained written representations from members of the commercial organization regarding the completeness of the terms and conditions reported to the legal and accounting departments. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2016.
San Mateo, California
March 18, 2025
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