Earnings call transcript: Maravai Lifesciences Q4 2024 misses EPS forecast

Maravai Lifesciences Holdings Inc (MRVI) reported its Q4 2024 earnings, revealing a larger-than-expected loss per share and slightly lower revenue than anticipated. The company posted an adjusted EPS of -$0.06, missing the forecast of -$0.04. Revenue came in at $56.6 million, just shy of the $56.67 million forecast. Following the announcement, Maravai’s stock fell 5.42% in aftermarket trading, closing at $2.27, near its 52-week low of $2.25. According to InvestingPro data, the stock’s RSI indicates oversold territory, suggesting potential for a technical rebound. InvestingPro analysis shows the stock trading below its Fair Value, with 8 additional real-time ProTips available to subscribers.

Key Takeaways

• Maravai Lifesciences missed its EPS forecast for Q4 2024.
• Revenue was slightly below expectations, impacting investor sentiment.
• The company ended 2024 with a net cash position of $22 million.
• Stock price dropped significantly in aftermarket trading.
• Ongoing strategic investments aim to drive long-term growth.

Company Performance

Maravai Lifesciences’ overall performance in 2024 showed a mix of challenges and strategic progress. The company reported a full-year revenue of $259 million, aligning closely with its guidance range, though InvestingPro data shows a revenue decline of 10.3% from the previous year. A GAAP net loss of $260 million highlighted financial pressures, up from a $138 million loss in 2023. The Nucleic Acid Production segment generated $196 million, while the Biologic Safety Testing segment contributed $63 million. Despite challenges, the company maintains strong liquidity with a current ratio of 7.53, indicating robust short-term financial health.

Financial Highlights

• Full Year Revenue: $259 million
• Q4 2024 Revenue: $57 million
• GAAP Net Loss for 2024: $260 million
• Adjusted EBITDA: $36 million (14% margin)
• Cash Position: $322 million with $300 million in long-term debt

Earnings vs. Forecast

Maravai Lifesciences reported an EPS of -$0.06, missing the forecasted -$0.04 by 50%. Revenue was slightly below expectations at $56.6 million versus the projected $56.67 million. This performance reflects ongoing challenges in aligning with market expectations.

Market Reaction

Following the earnings release, Maravai’s stock price fell by 5.42% in aftermarket trading, closing at $2.27. This decline positions the stock near its 52-week low of $2.25, reflecting investor concerns over the earnings miss and future growth prospects. InvestingPro’s comprehensive analysis indicates the stock is currently undervalued, with analysts setting price targets ranging from $3 to $12. Get detailed valuation metrics and access to the full Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

Outlook & Guidance

For 2025, Maravai projects base business revenue between $185 million and $225 million. The company expects Q1 revenues of $43 million to $45 million. Despite the absence of high-volume CleanCap revenue, Maravai plans to invest in commercial expansion and intellectual property protection. Capital expenditures are anticipated to decrease to between $15 million and $20 million in 2025. According to InvestingPro forecasts, analysts don’t expect profitability this year, though the company operates with a moderate debt level and maintains strong liquidity positions.

Executive Commentary

CEO Trey Martin emphasized the company’s focus on returning its base business to growth and leveraging strategic investments for long-term opportunities. "We believe the strategic investments we’ve made over the past several years and continue to make in 2025 have positioned us to capitalize on significant mid to long-term growth opportunities," Martin stated.

Risks and Challenges

• Revenue recognition timing errors and internal control weaknesses pose financial risks.
• Market saturation and competition in genomic medicine could impact growth.
• Macroeconomic pressures and reduced COVID-related revenue may affect profitability.
• Maintaining a strong cash position amidst high debt levels remains crucial.

Q&A

During the earnings call, analysts questioned Maravai’s strategies for improving customer visibility and expanding the Biologic Safety Testing segment in Europe and APAC. The company reiterated its commitment to maintaining its cost structure to support market expansion capabilities.

Full transcript - Maravai Lifesciences Holdings Inc (MRVI) Q4 2024:

Conference Operator: Greetings. Welcome to the Maravai Life Sciences Fourth Quarter twenty twenty four Results Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce Deb Hart, Head of Investor Relations. Thank you. You may begin.

Deb Hart, Head of Investor Relations, Maravai Life Sciences: Good afternoon, everyone. Thanks for joining us on our fourth quarter and year end ’20 ’20 ’4 earnings call. The slides accompanying today’s call are posted on our website and available at investors.maravai.com. As you can see from the agenda on Slide two, Trey Martin, Chief Executive Officer and Kevin Hirdy, Chief Financial Officer are joining me today. Following their prepared remarks, we’ll open the call for the question and answer session.

We remind you that management will make forward looking statements and refer to GAAP and non GAAP financial measures during today’s call. It is possible that actual results could differ from management’s expectations. We refer you to Slide three for more details on forward looking statements and our use of non GAAP financial measures. Our press release provides reconciliations to the most directly comparable GAAP measures, and we also provide a reconciliation of non GAAP financial information on our investor website. Please also refer to Maruvai’s SEC filings for additional information on the risks and uncertainties that may impact our operating results, performance and financial condition.

Now, I’ll turn the call over to Kevin.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Thank you, Deb, and good afternoon, everyone. Thank you for joining us today. We’re holding this call later than we have in the past and appreciate your patience as we work to close out our 2024 audit and complete our 10 K filing. Let me walk through the items that caused the delay and the outcome of each. Please turn to Slide five.

First, an error was identified during the year end financial close process with respect to revenue recognition timing associated with a single shipment that resulted in approximately $3,900,000 in revenue being recorded in the final week of the second quarter of twenty twenty four upon shipment when it should have been recorded in the first week of the third quarter of twenty twenty four upon receipt by the customer. Our contractual order terms typically result in revenue recognition upon shipment. However, the terms for this particular order were different and that difference was not communicated timely to our accounting team. Based on the shipping teams for this order, we should have recognized revenue upon receipt of the shipment by the customer or about a week later than we did. This timing error had no impact to the full year results and did not result from any override of controls, misconduct or fraud.

As it relates to this error, we have revised our quarterly results for the second and third quarters of twenty twenty four, basically for the shift in this revenue from Q2 to Q3, and those revised totals are presented in Note 18 in the notes of the consolidated financial statements in our Form 10 K. Secondly, we conducted an assessment of goodwill associated with our acquisition of Alphazyme and needed additional time to complete and conclude on the $11,900,000 noncash charge related to goodwill impairment. In connection with these matters, we determined that we did not maintain effective controls over our revenue process and our goodwill impairment assessment process and thus have identified these as material weaknesses in internal control over financial reporting. I’ll conclude on this topic by noting that our financial statements for 2024 received an unqualified opinion from our independent auditors, and I’d like to thank the hard work of our accounting team and audit committee to help get our 10 K filed within the fifteen day automatic extension period provided by Rule 12 12b-twenty five. Now let’s get to our Q4 and full year 2024 financial results on Slide six.

We reported fourth quarter revenues of $57,000,000 about the midpoint of our expectations for the quarter. We reported revenue of $259,000,000 for the full year, again near the midpoint of our stated revenue range of $255,000,000 to $265,000,000 which we mentioned previously in early January of this year. Biologic Safety Testing segment contributed $15,000,000 in Q4 and $63,000,000 for the full year. Our Nucleic Acid Production segment had revenue of $42,000,000 in Q4. This includes approximately $14,000,000 of high volume clean cap revenue for customers with commercialized vaccines.

For the full year, the nucleic acid production revenue was $196,000,000 with the base NAF revenue at $130,000,000 High volume clean cap revenues were $66,000,000 for the year. This includes the $50,000,000 in signed agreements at the beginning of 2024 and an additional $16,000,000 for high volume clean cap shipped to customers with commercialized vaccines in the year. Breaking down our full year revenues by customer type, we estimate that 48% of our 2024 revenue was from biopharma, twenty five percent for life science and diagnostics, five percent from CROs, CMOs and CDMOs, four percent from academia and roughly 18% of our revenue was shipped through distributors, including to the customer categories I just mentioned. Let’s turn to Slide seven. Our GAAP net loss before non controlling interests was $46,000,000 for the fourth quarter of twenty twenty four.

This compares to a GAAP net loss of $110,000,000 for the fourth quarter of twenty twenty three. GAAP net loss before non controlling interests for the year was $260,000,000 compared to a GAAP net loss of $138,000,000 for 2023. Adjusted EBITDA, a non GAAP measure, was a negative $1,000,000 for Q4 twenty twenty four compared to $21,000,000 of positive adjusted EBITDA in Q4 twenty twenty three. Our adjusted EBITDA in Q4 twenty twenty four lagged our expectations for the quarter by about $7,000,000 or so. About half of this variance was tied to lower product gross margin contributions from slightly lower overall revenues and unfavorable mix of product revenues, mostly lower GMP clean cap, unfavorable manufacturing operations variances and additional non cash E and L reserve for inventory at AlphaSign.

The other major components of the expense variance was led by $1,300,000 in bad debt expense associated with one of our NAP customers that made the decision to wind down operations in late Q4 following a less than desirable preclinical outcome. The additional SG and A variance was further due to higher external fees, including legal fees tied to our initiation of litigation to protect our trade secrets and audit and professional fees tied to our year end accounting work. Adjusted EBITDA for the year was $36,000,000 and adjusted EBITDA margin of 14% lower than anticipated as a result of the softer than anticipated Q4 bottom line performance that I just discussed. I will discuss EBITDA by segment in a few slides. Moving to Slide eight and some additional financial highlights.

We ended the year with $322,000,000 in cash, $300,000,000 in long term debt resulting in a $22,000,000 net cash position. As a reminder, we voluntarily paid down $228,000,000 of this term loan with cash on hand in December of twenty twenty four. This pay down was allowed under our debt agreement without penalty and is expected to lower our net interest expense for 2025. I will discuss 2025 guidance in a few slides. In the fourth quarter, we used $15,000,000 in cash and operating activities and ended 2024 with $7,000,000 in cash provided by operating end.

In 2024, we had gross capital expenditures of $30,000,000 and received $7,000,000 in BARDA offsets for a net total capital expenditure of $23,000,000 for the full year of 2024. Overall, we’ve invested over $150,000,000 in the past five years in building our capabilities across our purpose built manufacturing facilities for our business. We expect this intensive capital cycle to be winding down in 2025, but have positioned us with the facilities and capacity we expect to need to fully support the business over the foreseeable future. We view our state of the art facilities, capacity automation and quality processes as unique assets and key differentiators, enabling us to best serve our markets and provide for margin expansion with revenue growth over time. Depreciation and amortization ended the year at $48,000,000 in line with our expectation in previous guidance.

Interest expense net of interest income was $5,000,000 in Q4 twenty twenty four and ended the year at $20,000,000 in line with our expectations and guidance. Stock based compensation, a non cash charge was $11,000,000 in the quarter, $49,000,000 for the year consistent with our guidance of roughly $50,000,000 for the year. We ended 2024 with 142,000,000 Class A shares outstanding and 111,000,000 Class B shares outstanding for a total of $253,000,000 shares outstanding at twelvethirty onetwenty 4. For adjusted EPS, the diluted weighted average share count was $255,000,000 for Q4 and $254,000,000 shares for the full year of 2024. Let’s next turn to Slide nine and discuss segment performance in the quarter.

Our nucleic acid production segment, which includes both our Discovery and GMP products and services market under our TriLink Glen Research and Albazan brands, had revenues in the fourth quarter of $42,000,000 and adjusted EBITDA of $4,000,000 For the year, revenues for our NAP segment were $196,000,000 with adjusted EBITDA of $51,000,000 for a margin of 26%. Included in the revenues in the fourth quarter were the $14,000,000 in high volume clean cap product sales. Moving to Slide 10. Our Biologic Safety Testing segment, which includes products and services of our Cygnus brand, had revenues of $15,000,000 in the fourth quarter, adjusted EBITDA of $10,000,000 for a margin of 66%. For the year, revenue for this segment was $63,000,000 and adjusted EBITDA was $44,000,000 or a margin of about 70%.

As detailed in these segment results, the combined adjusted EBITDA of our operating segments prior to our corporate shared service expenses was $95,000,000 for 2024, a combined margin of 37%. Corporate shared services impacting adjusted EBITDA, which includes centralized functions such as HR, finance and accounting, legal and information technology and incremental expenses associated with being a public company totaled $15,000,000 in the quarter and $59,000,000 for the year, down almost 10% from 2023 as a result of our cost reduction actions. Please let’s turn to Slide 11. Now overall, we’ve seen a high degree of variability in our revenues and our financial results in these past five years. The dynamics of the pandemic followed by the post pandemic market and various factors have created challenges in the accurate forecasting of financial results.

That having been said, we sit here today with a collection of assets, product and service offerings and market opportunities that we are very excited about. As we look at the sum of Merabuy today, prior to the dynamics of high volume clean cap, we had a 2024 base business of $193,000,000 in revenue. We look forward to 2025 acknowledging that full year visibility continues to be a challenge and various market political and global events will continue to evolve. We are focused on returning our base business to growth. We anticipate our base business, which excludes high volume clean cap to be about $185,000,000 to $2.00 $5,000,000 or to grow in the low single digits at the midpoint.

We currently do not have any binding commitments from our top customers for high volume clean cap demand for 2025. Thus, we believe it to be prudent to guide only to our base business as discussed without incorporating any high volume clean cap into our initial 2025 revenue guidance. To the extent commitments are received for high volume clean cap throughout the year, we will incorporate those into any guidance updates as we progress through 2025. Please note, we are focused on our base business growth for all our business units. This includes our discovery offerings within our NAP segment, which represent revenue contributions from the acquisitions of TriLink, MyChem, Molecular Assemblies and Officine Bio.

And further in our NAP segment are the GMP products and services under TriLink, the Oligo offerings branded under Glenn Research and the Alphazyme enzyme products. Finally, all of our products and services in our BST segment are branded as Cygnus. As a result of the overall revenue guidance expectations here of $185,000,000 to $2.00 $5,000,000 we do not anticipate being in a positive adjusted EBITDA position at these levels and thus we’re not providing guidance for that profitability metric in 2025 at this stage. We remain committed to a combination of funding areas of growth and strategic value while maintaining cost containment in other areas. We continue to manage our overall business and cost structure in a manner that we believe is appropriate, allows us to support our strategy.

In 2025, we will continue to invest in our commercial footprint expansion and intellectual property protection and prosecution. We expect to make those investments while also mindfully reducing spend in other areas. As for the cadence of estimated revenues, we are focused on execution across our business. We will see some variability mostly in GMP services over the course of the year as those builds will correspond to the timing needs of our customers and their corresponding clinical trial plans. We currently estimate our first quarter to be between $43,000,000 to $45,000,000 in total revenues, most likely slightly up our most recent Q4 twenty twenty four base business total, which was $43,000,000 Our total reported revenues of $57,000,000 less the $14,000,000 in high volume clean cap.

Now turn to Slide 12 and we’ll give you some additional full year views for 2025. We expect interest expense net of interest income between $14,000,000 and $16,000,000 depreciation and amortization between $50,000,000 and $55,000,000 equity based compensation, which we show as a reconciling item from GAAP to non GAAP EBITDA to be between $45,000,000 to $50,000,000 as of fully converted diluted share weighted average share count for the year of $256,000,000 shares. Finally, as we have discussed, capital expenditures are expected to decline to $15,000,000 to $20,000,000 in total for 2025, mostly tied to about a $10,000,000 expansion of our enzyme manufacturing capabilities. And we foresee total CapEx decreasing even further going to 2026. I’ll now turn the call back over to Trey.

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Thank you, Kevin. Twenty twenty four was both a challenging and pivotal year for our company. We navigated multiple headwinds that impacted our financial performance, but remained laser focused on building the foundation for future growth. We successfully delivered on key strategic initiatives, completing our multi year facility expansions, improving our turnaround times, launching approximately 50 innovative new products, acquired complementary assets and advanced critical partnerships. Although it may take more time for these efforts to be fully reflected in our financial performance, we’ve established many capabilities for future market growth.

Let’s turn to Slide 14. The pandemic was a transformative time for Maribai’s TriLink business that highlighted our Clean Cap franchise and led to significant reinvestment in the company. As we are forecasting on only our base business for 2025 without high volume clean cap, we wanted to share a reminder that Maravai is a consolidation of several category leading companies that roll up into our two reporting segments. Within our NAP segment, our TriLink discovery products and services will benefit from the two acquisitions that we’ve closed here in the first quarter of twenty twenty five. Officine Bio and Molecular Assemblies bring us unique assets and capabilities to create a new ecosystem in the life science tool space.

Our TriLink GMP products and services which are now utilizing our new Flanders 1 And 2 facilities and which are receiving excellent feedback from our customers are primed for future growth in the genomic medicines market. Our commercial investments for the GMP business began in 2024 and the funnel continues to grow with an impressive list of opportunities. Our Alphazyme enzyme business is adding new customers at an exciting rate and is also enabling our vertical integration across our supply chain inputs. Finally, we continue to serve the oligonucleotide synthesis market, both research and diagnostic with our Glenn Research portfolio of products and TriLink Discovery Oligo Services. Revenues by customer type within our NAP segment for 2024 were 56% biopharma, 32 life science and diagnostic, five percent academia, 1% CRO CDMO and about 6% through distributors.

Our Biologic Safety Testing segment branded products along with the new innovative Mach V line continues to be an amazing business for Marovai and a true category leader. Revenues by customer type within our BST segment for 2024 were 22% biopharma, three % life science and diagnostic, one % academia, 17% CDMO and about 58% through distributors. As we look ahead in 2025, we’re focused on a return to growth for the business units that comprise our base business. The biotech funding environment and our clinical customers current emphasis on later stage programs remains an ongoing dynamic in which we need to manage our business. We’ve taken steps to improve visibility into our participation in customers’ clinical programs to help us operate and predict our sales funnel with improved accuracy.

I’ll speak to this in a moment. To navigate this period responsibly, we continue to streamline our operations and corporate support cost structures while investing in key commercial and strategic initiatives. The capacity and capabilities that reside within our cost base should allow for a high rate of variable margin contribution as the business returns to growth. As a brief aside, we estimate that our Maravai wide supply chain is over 95% sourced from vendors here in The United States, which should serve to protect us from any potential tariff policies that could impact the cost of sales profile. Our focus for 2025 will be to execute our return to growth strategy for all base businesses regardless of market conditions.

We are taking several steps to diversify our base business with new products and services. Importantly, our confidence and our abilities to respond to the market is unwavering. We believe the strategic investments we’ve made over the past several years and continue to make in 2025 have positioned us to capitalize on significant mid to long term growth opportunities. We’re focused on building a diversified growing predictable franchise as a life science tool provider. Turning to Slide 15, let me walk you through these investments and our opportunities to drive further growth.

First, our new Flanders I and II facilities are fully operational built to support the GMP chemistry and mRNA businesses for the next decade and ready to scale as demand accelerates. With modest fixed overhead costs, we expect improved margins as we bring in additional customers this year. In Flanders 2, we recently secured additional scope of work with an existing cell therapy customer extending our support from their Phase twothree pivotal trial and now support their late stage and commercial launch activities. This reinforces our new ability to support customers throughout the drug development pipeline and grow our revenue as their programs advance over time. Second, in 2024, we launched about 50 new products across our five brands, including expanded Oligo services, custom chemistries, new catalog chemistry and mRNA offerings, differentiated enzymes and additional cell system and host cell DNA detection kits from Cygnus.

We believe these innovations are crucial to strengthening our competitive position and driving revenue diversification. We will continue to add additional products, services and capabilities at a high rate to drive base business growth. Third, our recent strategic acquisitions and newly acquired assets from Officine A and Molecular Assemblies are expected to give us the tools, technologies and team to establish a best in class DNA and RNA design and discovery platform. This will enable us to offer an integrated solution for mRNA candidate design that accelerates our clients work using our own chemistries, enzymes and proprietary technologies as inputs. This vertical integration is unique in the industry and enhances our ability to reduce costs and improve margins while broadening our capabilities in a rapidly evolving market.

Our customers benefit from working with one partner who has expertise in all the input areas. A key bottleneck in mRNA therapeutic discovery is the ability to execute high throughput screens of many design variants to define the best possible lead candidates. We will now have an AI driven bioinformatics platform that enables the design of experiments and the scaled out manufacturing system to build as many combinations as possible of proprietary caps, modified chemistries, UTR sequences and tailing strategies to meet our customers’ needs and enhance their candidates’ performance. Fourth, our recent partnerships including a large new distribution agreement with VWR in Europe and additional CleanCap supply agreements allow for broader reach quickly. These will get CleanCap and our NAP product portfolio into more license holders.

These licensees represent global customers spanning the spectrum from large pharma to innovative biotech and a mix of clinical, commercial, academic, CDMO enablement and nucleic acid manufacturing platforms. These new agreements are expected to provide us with greater visibility into customers’ phase advancement with disclosure requirements for IND and or BLA filings. With this added disclosure requirement, three customers reported to us IND or IND equivalent acceptance during Q4. All of these efforts should add to the revenue diversification of the company so that our future growth is not dependent on both clean cap reagent inputs for COVID vaccines alone, but company wide through the broad contribution from each of our businesses as we continue to build on our strong foundation, expand our customer relationships and constantly improve our offerings. Because our entire business is 100% consumables and we have heavier exposure to early stage discovery work in NAP and clinical trial starts in BST, we believe we will be an early beneficiary as the macro environment for life science improves, which could provide additional tailwinds.

Finally, I mentioned our challenges last year in demand and forecasting demand. To address this, we’ve enhanced our ability to track and anticipate clinical market trends. Our clinical trial business intelligence platform, which we developed in house over the last several quarters provides real time insights into mRNA and RNA related programs, including new program starts and phase progression for clinical trials. This reduces our reliance on costly consulting services, but more importantly brings us closer to the data and gives us proprietary insight when blended with our own commercial data. Please turn to Slide 16 to review our findings.

We’re seeing continued growth in mRNA and gene editing programs with roughly 1,500 discovery and development stage candidates currently in the pipeline we track. Focusing on discovery remains critical to our strategy to drive adoption of our technologies in customer programs and we are engaging customers early in the development process. Our ability to support them from preclinical projects through GMP and commercialization gives us a strong competitive edge which we’ve enhanced further with our recent acquisitions and new product innovations. Currently, we estimate that 70% of target programs are in the preclinical phase while 30% have entered the clinic. We continue to estimate clean cap market share at approximately 30% for clinical stage programs we track and closer to 40% at the discovery stage, which should drive increased future participation in clinical programs.

The growing number of clinical mRNA programs now estimated at four forty seven with CleanCap customers representing about 30% indicates positive pipeline momentum. According to our data of these 136 clinical programs, 43% are in Phase I, 43% are in Phase II and 14% are in Phase III or IV. Despite fluctuations in preclinical candidate numbers due to the funding challenges and other market dynamics, the overall program count remains strong with over 1,000 programs estimated. Currently, we are engaged with customers representing about 40% of preclinical drug candidates. When funding conditions improve, we expect these programs to accelerate.

However, even in the current environment, our market position remains strong. While not every preclinical program will advance, our discovery customers who buy products and service from us and enter the development pipeline have the potential to generate seven to 10 times more revenue per program as they progress through clinical stages, presenting a significant opportunity for growth. As these programs progress, we are now well positioned to provide critical GMP services to these customers along with our GMP reagents. The recently completed capacity investments at Flanders II allow us to support the customer’s program progression from Phase two clinical material through commercialization. Double clicking into our pipeline data on Slide 17, for CleanCap customer programs, you’ll notice that we’re involved across multiple modalities including gene editing.

And as the heat map on the right indicates, the top disease target of these programs is now cancer, which cumulatively makes up an estimated 38% of the programs in development. Today 80% of the pipeline we track is for development programs other than infectious disease. As I mentioned earlier, we’ve also strengthened our license and supply agreements requiring customers to disclose milestone achievements like IND and BLA submissions. All this provides us with greater visibility to forecast as the early stage programs advance. Turning to Slide 18, we will continue to focus on innovation to move the industry forward and build new revenue streams as a leading mRNA producer and raw material supplier.

We know our ability to provide products and services supporting the entire customer lifecycle is a resounding value proposition for customer choice. With the acquisition of Officine A and the asset acquisition of molecular assemblies, plus our enzyme portfolio expansion through Alphazyme, our TriLINK discovery products and TriLINK GMP capabilities, we can incorporate raw materials and production expertise into our end to end service and supply offering, scaling from early research to clinical product, which is totally unique in this industry. We firmly believe in our ability to enable the next generation of medicines and I’m confident that the foundation we built can drive sustainable profitable growth for our base business in the years ahead. This concludes our prepared remarks. Kevin and I are happy to answer your questions.

So I’ll turn the call back to the operator for instructions.

Conference Operator: Thank you. Our first question is from Matt Stanton with Jefferies. Please proceed.

Matt Stanton, Analyst, Jefferies: Hey, thanks for taking the question. Maybe just for Kevin, as it relates to kind of the profitability picture here in 2025. Understand you’re not guiding on EBITDA margins, but is there any kind of guardrails you can give us in terms of gross margins? Obviously, $66,000,000 coming out is a big headwind, but are there other cost actions and levers at your disposal? You’ve obviously had a lot of capacity over the last year’s too, but I think people are trying to anchor to some type of profitability metric as we move forward on this base business revenue.

So any more color you can give us just maybe what you’re thinking about on the gross margin level for 2025 and other cost levers at your disposal as you kind of return to profitability or look to return to profitability? Thanks.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. Thanks, Matt. I appreciate the question. Yes. Look, certainly, the cost structure is always on our mind.

As we look at our cost structure for 2025, we see it looking very consistent with 2024. We’re putting in cost measures to limit certain costs, reduce them and to offset the increases we’re making in certain other areas. Certainly, the acquisitions that we’ve made, the continued expansion of our commercial footprint and the commitment to defend and prosecute our intellectual property around clean cap are all strategic investments and we’re making offsets to keep our cost structure very consistent with how it looks versus 2024. When it comes to the overall margin profile, I’ll tell you, you obviously can do the math and taking our $24,000,000 revenues of the $259,000,000 our adjusted EBITDA of $36,000,000 and see we had $223,000,000 cost structure there. About $200,000,000 of that or so we consider fixed, meaning it’s a combination of those things that aren’t necessarily the variable inputs to our revenue generation.

And that area is going to that $200,000,000 is going to stay relatively flat year over year. And as we look at our variable component of our revenue, that’s generally ranges between 1012%. So that kind of gives you a good sense of what we’re seeing in the $20,000,000 to $230,000,000 revenue range based on some of those inputs is roughly where we’re adjusted EBITDA neutral as we sit here.

Conference Operator: Terry, can you go to the next question please? Yes. Our next question is from Doug Schenkel with Wolfe Research. Please proceed.

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Hey, good afternoon guys. Thanks for taking the questions. So improving visibility was a clear point of emphasis in your prepared remarks.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: I

Trey Martin, Chief Executive Officer, Maravai Life Sciences: was just wondering if one, beyond tracking market data, are you implementing processes with key customers to ensure better visibility there? Two, how do we get comfortable that the launch of 50 new products won’t hinder these improvement efforts? And then third, does carving out high value clean cap essentially wall off your area of lowest visibility from the perspective of setting financial guidance for this year? Thank you. Yes, I think we can go in reverse order.

And yes, you’re absolutely right that the high volume clean cap, last year we had a firm commitment of about $50,000,000 We’ve reported that ended up at $66,000,000 but these commitments are completely based on the timing of a handful of very large customers’ clinical programs. We do have quarterly updates required, but obviously in the case of last year, we had dynamic movement in. At this point, as Kevin reported, we have no firm commitment for this year and that has been the biggest swing and the biggest difficult dynamic for predictability that is obviously material. We mentioned that our updated agreements and we are proud of the increase in the number of license agreements we’ve signed this year. Our updated agreements have mandatory disclosure requirements for certain clinical trial milestones that our legacy pandemic era agreements did not.

And so we’re hoping that that drives visibility with the larger those would be GMP, clean cap customers specifically. Obviously, when someone is using our new service offering, we have very, very intimate visibility of the timing of their program, their expected stage and all things that are involved. So all of those are ways that we hoped we can add significant visibility going forward to the clinical or the GMP business, which is of course the material orders.

Conference Operator: Our next question is from Matt Larew with William Blair. Please proceed.

Matt Larew, Analyst, William Blair: Good afternoon. I was hoping you could speak a

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: little bit

Matt Larew, Analyst, William Blair: to segment growth and cadence. So obviously, Kevin, you referenced $43,000,000 to $45,000,000 in the first quarter. I think that’s sort of down low double digits at the midpoint and in order to hit the midpoint in your guidance, it seems like you’d have to in the back after you’re growing high single or low double digits. So maybe speak to the underlying market assumptions that are embedded in that. And if you can give my color in terms of DST versus NAP that would be up there as well.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes, happy to do that, Matt. Yes, I think as I mentioned, the first quarter here on the base business, and we’ll be referring to that a lot respectively, be up a little bit from where the fourth quarter left us. We then see some increased timing based upon our forecast currently coming through Q2 and into the back half of the year. Some of that comes from the visibility we have with what’s going on at Flanders and scheduling those GMP programs. And that’s really going to be the largest driver of quarter to quarter volatility for us is when those programs come through and we do those builds.

As you know, those are somewhat periodic. And then from there heading into the back half of the year, I think what we see is the completion of the integration of the two acquisitions we did in the first quarter and how those acquisitions bring a differentiated customer experience and offering for the discovery part of TriLink. And I think that’s the one area that we’re really looking to stabilize. It’s probably been one of the more volatile. Again, that’s where we have RUO products, chemistry products, oligo products, a lot of research products.

And I think that’s the one area that’s been under pressure over the last couple of years particularly. And we look for the acquisitions and some of the work we’ve been doing with the new product as well as the new product introductions to drive some growth going into the back half of the year. And that kind of stacks up from that roughly $43,000,000 to $45,000,000 then stepping that up into the those $50,000,000 or so a quarter revenue totals you need to get to the midpoint of our guide.

Conference Operator: Our next question is from Sabu Nambi with Guggenheim. Please proceed. Hi, this is Ricky on

Ricky, Analyst, Guggenheim: for Sibu. Thanks for taking our question. So you’d made the large voluntary debt repayment at the end of the year. And so just wondering how we should think about your capital allocation priorities for the coming year in 2025? And also maybe as a follow-up for that too, what your appetite

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: for M and A would be going forward? Thank you. Yes. We thought it was prudent to lower our cash interest expense for a couple of reasons. One, our interest rate cap that it served us very well in 2024 helped limit down our interest expense by a couple of million dollars and provide us with good cash flow expired in January.

And we didn’t put in a new cap at this stage, still assessing the rate volatility. And we also didn’t see M and A for us in the higher range of what we are generally looking at. So we didn’t need that extra gross up that we’ve been carrying for a while. I think we’re still interested in things, certainly. We have some more financial constraints than we probably used to have, but you can see that we’ve already printed two deals here in 2025 and continue to look at things that are complementary from a technology perspective at the right price point.

For us, that price point is probably a lot smaller than it was, but we still see assets out there that are available and we’re very active in evaluating them in both sides of the business. And we think there’s some opportunities there. We’re not going to shy away from getting things done if the business case makes sense and we could do it financially. Certainly with CapEx coming down and interest rates coming or interest expenses coming down that frees up a little cash for us as well to address those. We’re going to continue to evaluate things.

I’d say fundamentally though, we’re happy with the collection of assets. We do have a good lift and a lot of activity to integrate the two businesses that we just took on and really look forward to seeing how those will drive a better customer experience and revenue in the discovery area. Trey, you want to expand on that at all? No, that

Trey Martin, Chief Executive Officer, Maravai Life Sciences: was excellent. As was asked in the previous question, there is a bit of staging. We’re tucking in the assets of molecular assemblies and the front end of Officine A onto TriLink. And as Kevin said, both of those projects are expected to be finished right around the midpoint of the year and start to drive further growth in the specifically in the discovery area in both of those cases in the back half.

Conference Operator: Our next question is from Tidjis Savat with Morgan Stanley. Please proceed.

Tidjis Savat, Analyst, Morgan Stanley: Hey guys, good evening. Maybe Kevin, one for you on the guide. Can you just elaborate a little bit on any sort of headwinds you’re baking in from the ongoing changes at NIH and FDA in the context of your academic or biotech customers spend in? And what are you assuming for China growth this year?

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes, I’ll take both of those there, Tejas. Thanks for the questions. Yes, as you know, our academic exposure is pretty small directly. There’s certainly a halo and trickle down effect of that spend from a government perspective that will impact some of the research part of our business. But again, that’s relatively small as we look at the different components of our business.

So we don’t have a direct side to NIH funding. So I don’t see that as a huge headwind, but we do contemplate that certainly on the lower end of our guidance range. And again, we would see that more again in the discovery area as we move forward there.

Matt Larew, Analyst, William Blair: And the

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: second part of the question was China, yes. So China just getting to China specifically, we saw China do $13,600,000 over the full year that was split $11,900,000 in BST, $1,700,000 in nucleic acid production. And really our exposure there as you know is really in the BST part of the business. That really didn’t it’s been bouncing around a little bit, didn’t move all that much if we look at it specifically. We did $3,400,000 in China in BST in Q4.

And if I look back over the last four quarters before that going back to Q3 and then back to Q4 twenty twenty three, it’s bounced around between $2,100,000 and $4,200,000 So it kind of has been leveling out more in that $3,000,000 range. We see that as we’re calling that basically flat for 2025. And if there is any churn there, I think we’re seeing churn within the region within anything. So we’ve already seen some examples of some CDMO type business flexing out of China and going to other parts of the Asia Pac region and the Cygnus kits moving with that business. So So it might be some temporary shifts, but we’re not anticipating any growth.

We think based working with our distributor, as you know, most of our all of our revenue there through the Cygnus segment is through one of our distributors and has been for a while. They’re calling the year flat. We’re keeping a close eye on it. And the only disruption we’ve seen thus far was picked up in another region very quickly. So we feel that there’s not a lot of exposure there.

Tidjis Savat, Analyst, Morgan Stanley: Got it. That’s super helpful. And then wondering just, Trey, philosophical question on that fixed cost structure. I know you’ve talked about it in the past as something that opens up the possibility of significant leverage as the top line recovers. But I guess my question is just more on why such a high fixed cost structure and why you’ve taken this sort of strategic decision to keep that $200,000,000 run rate intact.

Are there any levers you can pull if things get worse for some reason in the context of what you’re seeing in the near term in your end markets? Yes,

Trey Martin, Chief Executive Officer, Maravai Life Sciences: there certainly are. We are pulling some of those levers incrementally as Kevin implied. The fundamental decision roughly the $200,000,000 cost structure is to keep all the capabilities that we have built over the last couple of years available for market expansion. That’s really the fundamental part of the strategy and we realize that this is a different situation than we’ve been in before, but that’s fundamentally it to make a material change in that cost structure where we are basically running one building unit per business unit would require compromising our ability to respond to any market return.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. To break that cost structure down just a little bit more for everyone, that breaks down roughly half of that cost structure is our labor force, roughly five eighty employees as we sit here today. And even at the midpoint of our 25 base business guide, it’s right around $340,000 in revenue per head. So very consistent with the universe of life science tools companies that are out there. So we don’t we think we’re in decent shape there, but we need to continue to invest in expansion of our commercial.

And we’re continuing to do that and getting that more intimacy with the customer there that we believe serving us well and filling up the pipeline nicely. And the other large part of that, as Trey mentioned, is roughly $40,000,000 or so in annual facility costs. And that’s spread over seven facilities, none of which have a single cost that’s much more significant than the average. So we feel all of those building expenses are really part of why we have the leverage and the capabilities that we have. And I think all of them have revenue profiles that recover that quickly.

So I think that when you look at that, we think the cost structure there is reasonable. We are looking at other things though and always will. And certainly to the extent we don’t return to growth. We’ll continue to look at the cost lever to be able to extend the time for which we do return to growth, but we’re still working with the base set of assets that we have.

Conference Operator: Our next question is from Dan Arias with Stifel. Please proceed.

Dan Arias, Analyst, Stifel: Yes, hi guys. Thanks for the questions. Kevin, when you say that you’re forecasting the base business only and excluding high volume clean cap, does that mean that COVID vaccine contributions have been scrubbed from the forecast entirely or is it just the obvious customers that have been taken out? I mean, how much of anything within the forecast really has anything to do with COVID marketed development stage combo vaccine and sort of anything in between?

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. I mean, we think it’s basically zero down. I mean, we’re taking out everyone that has a commercialized vaccine in their demand. We’re not taking it out. They’re not giving us any forecast.

So we’re by default taking it out. As you know, we’ve never had a year where that’s roughly been less than $60,000,000 going back to 2020. So it’s certainly unique to have zero. We don’t feel there’s anything else out there. I mean, we don’t know, of course, when we ship Clean Cap to a customer, if it’s a small order, what they’re potentially using it for.

But when we look at our clinical data insights, when we take that and put it against our active customer base, we don’t see any indications that there’s any material amount of COVID that could be in those numbers, given that our product is fungible and not marked for the end indication. We think that what we’re doing in the guide that we’re giving is reflective of no COVID revenue for ’25.

Dan Arias, Analyst, Stifel: Okay. And then maybe just what percentage of revenue did the top 10 customers come to comprise for 2024? And what do you think that that will be for 2025?

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. If you’ll give me a second, I have that. I just don’t want to misquote

Trey Martin, Chief Executive Officer, Maravai Life Sciences: it here. Yes. I’ve got it. I’ll let Kevin look at the 25%. We were top 10% was 48% in 23%, forty six % in 24%.

And so I think we’re showing a gradual diversification there.

Conference Operator: Our next question is from Catherine Schulte with Baird. Please proceed.

Catherine Schulte, Analyst, Baird: Hey guys, thanks for the questions. Maybe first, just what are you assuming for revenue contribution from your recent acquisitions that you mentioned? And then second, if we back out the $66,000,000 of high volume clean cap in 2024 and I think it was $61,000,000 in 2023, that implies base NAP was down about 20% for the year and I think down close to thirty percent in the fourth quarter. So are those COVID numbers comparable? Is that the right math?

And if so, what makes you confident in that base business stabilizing here in 2025?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Yes, I’ll take the latter half of that. Thank you, Catherine. The Q4 twenty twenty three number had a pretty large multimillion dollar essentially take or pay chemistry order in it that skewed the Q4 results in comparison here. There’s not a large overriding similar order in Q4 twenty twenty four. And we do view that well, not COVID specific, but specific of the era that within 2023, we had contracts for take or pay on more things than just clean cap.

And that was specifically in Q4 twenty twenty three. And then Kevin, the other side of that was our contribution for the small acquisitions.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. So Molecular Assembly is really more of a supply chain technology vertical integration play for us and I think specific on the revenue line there other than how it’s going to complement what we’re doing in discovery. As it relates to Efficientate Bio, we’re looking at low single digit millions, dollars 1 million or $2,000,000 distinctly from that company. We didn’t buy them for their revenue contribution. We bought them for their software platform.

And basically, the revenues that they have today their cost structure. And so we’ll be looking for both their contributions in helping us take their very unique website capabilities and e commerce capabilities over to TriLink Discovery and then as well continue to support them in the marketing of their AI platform.

Catherine Schulte, Analyst, Baird: Great. And then, no, you don’t want to guide to adjusted EBITDA, but anyway just put some guardrails on how you think about cash burn for the year?

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: Yes. I mean, look, I think we gave you a pretty good view of what our cost base is and what our variable cost base is. So I think that’s a pretty simple math equation. When you look at the CapEx and the cash interest that we gave you and then you layer in the two acquisitions, I think the sum of all those pieces will get you a relatively direct total. And again, the larger variable there is do we end up getting any drop ins for vaccine revenues that toggle that one way or the other and we’ll put it at you each quarterly as that comes through.

Conference Operator: Our next question is from Matt Sykes with Goldman Sachs. Please proceed.

Deb Hart, Head of Investor Relations, Maravai Life Sciences0: Hi, good afternoon. Thanks for taking my questions. Maybe just shifting the focus to BST. I know that the growth hasn’t necessarily achieved what it had historically even in sort of the pre IPO financials, it was a double digit grower. But just given the amount of EBITDA contribution that it now represents, I mean, it’s getting pretty close to where NAP is in total EBITDA in 2024.

Could you just maybe talk a little bit about the strategy to try to drive further growth? Maybe talk a little bit about what your current penetration in market share is? And then are there any strategies like doing more direct, less distribution or anything that you’ve kind of come up with to help drive growth in that segment, just given how important that level of profitability is going to be over the course of this year?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Yes. Thank you. Those are good observations because you can see from the numbers that we reported that a significant part of the channel for Cygnus is distribution. And a significant reason that it’s so profitable is that it’s not a direct the direct sales force is essentially U. S.

Based. So we see opportunity for Cygnus in as Kevin sort of hinted, specifically in Europe and APAC outside of China as I think projects shift from China, things go with them, but that creates a little bit of a disruptive lag. The other we’re getting traction year over year here on Mach V, which is a brand new method of doing viral clearance. And we’re seeing good signs there. And of course recently announced that we’re moving into host cell DNA detection, which is another large chunk of the biologics market.

So both of those two growth factors in addition to the services, which have grown nicely and have honestly helped buffer that period of geographic shift. Those growth factors, those three for Cygnus, we continue to emphasize and lean on as we move forward.

Deb Hart, Head of Investor Relations, Maravai Life Sciences0: Got it. That’s really helpful. And then just for my follow-up, just going back to the high volume clean cap customers, I can understand the demand picture issues that exist there, but I’m also wondering just do you have visibility into what inventories they’re carrying of things that you ship might have maybe last year or even the year before? And is that part of the issue that they just have overstock and they just need to work through that? Or do you not even have visibility into what levels of inventory those specific customers are holding?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: It’s the latter still. It’s still the pandemic era agreements and the communication people because of strategic supply chain concerns, people certainly bought as much as they could and they’re not keen to give us exact inventory totals as you might imagine. But all of our we have been improving significantly our interactions with all of our pandemic era, high volume clean cap customers and trying to drive that intimacy working with them not only just as a reagent supplier, but hopefully as a deeper partner.

Conference Operator: Our next question is from Brandon Couillard with Wells Fargo. Please proceed.

Dan Arias, Analyst, Stifel: Hey, thanks. Good afternoon, guys. Kevin, can you just share with us the high volume clean cap revenue numbers for the first, second and third quarter of last year so we can get to a base business, baseline?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Can.

Kevin Hirdy, Chief Financial Officer, Maravai Life Sciences: So if we’re looking at 24 basically and round numbers here first quarter, fourth quarter ’9, ’20 ’5, ’17, ’14.

Dan Arias, Analyst, Stifel: Okay, got it. And then Trey, it’d be helpful if you could just maybe talk a little bit more about how the pipeline at Planters two is developing, how it may stack up right now

Matt Larew, Analyst, William Blair: and maybe compared to where you thought you’d

Dan Arias, Analyst, Stifel: be three or six months ago?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Absolutely. Yes, that is some good news. The funnel has been growing there significantly. We were really proud. I’ve mentioned in our public comments before that we it’s not trivial to get people to jump into a brand new facility.

Many of you, all 15 of our sell side folks here have seen this facility in person. And we were able to get some Phase two and Phase two, Phase three commitments early. As we announced in the prepared remarks, we have now a commitment to go through commercial and that’s just a really good response to a brand new facility in that industry. The funnel there is working well, but at the same time as we’ve one of our reasons for caution there is what we talked about last year with customer programs sliding out for reasons that have nothing to do with our partnership, but their clinical interactions with regulatory agencies or their funding, etcetera, etcetera. So the good news is that the funnel has built really nicely.

And the dynamic there is that we look to the predictability is a little better there because if we’re talking about a Q3 or Q4 program, we’re really booking that now. So you’re usually booking a couple of quarters ahead in that business.

Conference Operator: Sherry, we’ll take one last question and then Trey has some closing remarks. Thank you. Our final question will be from Anna Snokowski with KeyBanc Capital Markets. Please proceed.

Deb Hart, Head of Investor Relations, Maravai Life Sciences1: Hi. Thanks for taking my question. This is Anna on for Paul Knight. I have two questions, but maybe to start, how is traction of new products such as CleanScribe and what is the overall strategy of new products? Are they more commercial facing or would you view them as preclinical focused?

Trey Martin, Chief Executive Officer, Maravai Life Sciences: Yes, largely preclinical focused. You could say that the ability to support Phase three in commercial was a new product in quotes, but that’s a service business obviously. So the 50 new products we call out there are across all of the other business units, essentially Cygnus and TriLink Discovery, Alphazyme and so on. And yes, we’ve been really excited by the traction of CleanScribe. There’s clearly market demand.

This is one thing that we’ve identified before. In the pandemic, people did not necessarily have time for process improvement. They had to scale what they had. We’re really happy about the early look at CleanScribe being a differentiated enzyme that improves process and lowers impurity. And the uptake of that has been great.

Alphazyme has added more customers there than any other product in our history together. So, yes, and that starts as you asked within the discovery area and we’re hopeful that like M6, which took one just one year from discovery launch to GMP that this can move very quickly as well. And as Kevin has mentioned, our last large CapEx project for the company is to essentially extend the capability for Alphazyme to make enzymes that will be used in late phase programs.

Deb Hart, Head of Investor Relations, Maravai Life Sciences1: Got it. That’s helpful.

Trey Martin, Chief Executive Officer, Maravai Life Sciences: So with that, I see we’re at time. So I’ll just make a few closing remarks here. I’d like to thank everybody for your time today and and your patience as we work with the independent auditors to close the books for 2024, to get our materials filed within the grace period and to schedule and execute this call. We feel that despite the ongoing challenges and uncertainty in the biopharma and life science sectors, we’re encouraged by pipeline progression we see for mRNA, gene editing and cell therapy. We’re laser focused on what we can control, which is driving innovation, expanding our customer base, protecting our IP and managing our costs effectively.

We’re confident in our differentiated technologies, our products and our world class services. We have a strong balance sheet. We have a net cash position and a manageable debt position that gives us flexibility and we will remain diligent in our cost control as we’ve mentioned several times today. Through organic and inorganic investments, we believe we’ve built a solid foundation for long term profitable sustainable growth and value creation across our base businesses. We’re a unique player here in the genomic medicine space and we have a vertical U.

S. Supply chain and truly differentiated performance with our proprietary technologies. We remain committed to executing our strategic vision and delivering strong results to unlock the full potential of our business for all shareholders. Thank you.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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