MARAVAI LIFESCIENCES HOLDINGS, INC.MRVI
MARAVAI LIFESCIENCES HOLDINGS, INC. Income Taxes Disclosure
Income Taxes
As of December 31, 2025 and 2024, we are subject to U.S. federal, state and foreign income taxes with respect to our allocable share of any taxable income or loss of Topco LLC, as well as any stand-alone income or loss we generate. Topco LLC is organized as a limited liability company and treated as a partnership for U.S. federal tax purposes and generally does not pay income taxes on its taxable income in most jurisdictions. Instead, Topco LLC’s taxable income or loss is passed through to its members, including us.
Components of loss from continuing operations before income taxes for the periods presented were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | (224,242) | $ | (261,579) | $ | 617,681 | |||||||||||
| International | (10,732) | 97 | 55 | ||||||||||||||
Total loss from continuing operations | $ | (234,974) | $ | (261,482) | $ | 617,736 | |||||||||||
Income tax (benefit) expense consisted of the following for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current tax (benefit) expense | |||||||||||||||||
| Federal | $ | (3,012) | $ | (1,621) | $ | 405 | |||||||||||
| State and local | (1,285) | (278) | 756 | ||||||||||||||
| International | 105 | 28 | 8 | ||||||||||||||
Total current tax (benefit) expense | (4,192) | (1,871) | 1,169 | ||||||||||||||
Deferred tax (benefit) expense | |||||||||||||||||
| Federal | $ | — | $ | — | $ | 663,968 | |||||||||||
| State and local | — | — | 90,974 | ||||||||||||||
| International | (20) | 11 | — | ||||||||||||||
Total deferred tax expense | (20) | 11 | 754,942 | ||||||||||||||
| Total provision for income taxes | $ | (4,212) | $ | (1,860) | $ | 756,111 | |||||||||||
A reconciliation of the provision for income taxes to the amount computed by applying 21% statutory U.S. federal income tax rate to loss before income taxes after the adoption of ASU 2023-09 is as follows:
| December 31, 2025 | December 31, 2025 | ||||||||||
U.S. federal statutory income tax rate | $ | (49,345) | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effects (1) | (1,286) | 0.5 | |||||||||
Foreign tax effects | |||||||||||
Italy | |||||||||||
Foreign rate differential | (736) | 0.3 | |||||||||
Other | 2,968 | (1.3) | |||||||||
Other foreign jurisdictions | 107 | — | |||||||||
Tax credits | |||||||||||
Research and development credits | (1,342) | 0.6 | |||||||||
Changes in valuation allowances | 28,358 | (12.1) | |||||||||
Nontaxable or nondeductible items | |||||||||||
Income of non-controlling interest | 20,997 | (8.9) | |||||||||
Deferred tax revaluation | (1,491) | 0.6 | |||||||||
Changes in unrecognized tax benefits | (2,744) | 1.2 | |||||||||
Other adjustments | 302 | (0.1) | |||||||||
Total income tax benefit | $ | (4,212) | 1.8% | ||||||||
___________________
(1)State taxes in California contributed to the majority (greater than 50 percent) of the tax effect in this category..
A reconciliation of the provision for income taxes to the amount computed by applying 21% statutory U.S. federal income tax rate to income (loss) before income taxes prior to the adoption of ASU 2023-09 is as follows:
| December 31, 2024 | December 31, 2023 | ||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State and local taxes, net of federal benefits | (0.1) | 14.9 | |||||||||
| Deferred tax revaluation | 1.0 | 1.2 | |||||||||
| Income of non-controlling interest | (9.2) | 0.8 | |||||||||
| Research and development credits | 0.2 | — | |||||||||
| Valuation allowance | (13.2) | 87.6 | |||||||||
| Nondeductible TRA movement | — | (3.0) | |||||||||
| Other | 1.0 | — | |||||||||
| Effective tax rate | 0.7 | % | 122.5 | % | |||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss and tax credit carryforwards. Significant items comprising the net deferred tax assets and liabilities were as follows as of the periods presented below (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Investment in Topco LLC | $ | 558,379 | $ | 584,279 | |||||||
Net operating loss | 156,308 | 93,759 | |||||||||
| Capital loss carryforward | 3,337 | 3,252 | |||||||||
Disallowed interest carryforward | 13,487 | 10,047 | |||||||||
Research and development credit carryforward | 3,115 | — | |||||||||
Stock based compensation | 6,001 | — | |||||||||
| Other | 373 | 1,775 | |||||||||
| Total deferred tax assets | 741,000 | 693,112 | |||||||||
| Valuation allowance | (740,946) | (693,112) | |||||||||
| Total deferred tax assets, net of valuation allowance | 54 | — | |||||||||
| Deferred tax liabilities | |||||||||||
| Intangible assets | (2,286) | — | |||||||||
| Other | — | (11) | |||||||||
| Total deferred tax liabilities | (2,286) | (11) | |||||||||
Total net deferred tax liabilities | $ | (2,232) | $ | (11) | |||||||
As a result of the Organizational Transactions, IPO, and subsequent exchanges and financing, we acquired LLC Units and recognized a deferred tax asset for the difference between the financial reporting and tax basis of our investment in Topco LLC which included net deferred tax assets of $0.0 million primarily associated with: (i) $558.4 million related to temporary differences in the book basis as compared to the tax basis of our Company’s investment in Topco LLC, (ii) $6.0 million related to temporary differences between financial accounting expenses and future tax deductions associated with stock-based compensation, (iii) $3.1 million related to research and development credit carryforwards, (iv) $3.3 million related to the capital loss carryforwards, (v) $156.3 million related to net operating loss carryforwards, (vi) $13.5 million related to disallowed interest carryforwards, and (vii) $740.9 million valuation allowance on these and other items.
The valuation allowance increased by $47.8 million and $51.0 million during the years ended December 31, 2025 and 2024, respectively.
The realizability of the Company’s deferred tax asset related to its investment in Topco LLC depends on the Company receiving allocations of tax deductions for its tax basis in the investment and on the Company generating sufficient taxable income to fully offset such deductions. Management assesses the available positive and negative evidence to estimate whether
sufficient future taxable income will be generated to permit use of existing deferred tax assets. A significant piece of objective evidence evaluated during the year ended December 31, 2025 was our current year and projected future pre-tax losses. Due to our recent history of current year and projected near-term pre-tax losses, we determined that the negative evidence outweighs the positive evidence and so it is more likely than not that our deferred tax assets will not be utilized, and therefore the Company recorded a full valuation allowance on its U.S. federal and state deferred tax assets. The objective negative evidence is difficult to overcome and limits the ability to consider other subjective evidence, such as projections of future growth. It is possible in the foreseeable future that there may be sufficient positive evidence, and that the objective negative evidence related to pre-tax losses will no longer be present, in which event the Company could release a portion or all of the valuation allowance. Release of any amount of valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings.
Net operating loss (“NOL”) and tax credit carryforwards as of December 31, 2025 were as follows (in millions):
| Amount | Expiration Years | ||||||||||
Net operating losses, federal | $ | 136.1 | Does not expire | ||||||||
Net operating losses, state | 20.2 | Varies by state | |||||||||
Net operating losses, foreign | 0.1 | Varies by jurisdiction | |||||||||
Capital loss carryforward, federal | 2.9 | 2026 | |||||||||
Capital loss carryforward, state | 0.5 | Varies by state | |||||||||
Disallowed interest carryforward, federal | 13.5 | Does not expire | |||||||||
| Tax credits, federal | 1.9 | 2043 | |||||||||
| Tax credits, state | 1.2 | CA - Do not expire | |||||||||
As of December 31, 2025 and 2024, the Company had $1.0 million and $3.6 million of unrecognized tax benefits, all of which would affect the effective tax rate if recognized. The Company recognizes interest related to uncertain tax benefits as a component of income tax expense, which was immaterial during the year ended December 31, 2025.
The aggregate changes in the balance of the Company’s unrecognized tax benefits were as follows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | 3,583 | $ | 5,198 | $ | 6,257 | |||||||||||
| Gross increases based on tax positions related to current year | 262 | 179 | 99 | ||||||||||||||
| Gross increases based on tax positions related to prior years | 218 | 73 | — | ||||||||||||||
Gross decreases based on laps of the statute of limitation | (3,038) | (1,867) | (1,158) | ||||||||||||||
| Balance, end of year | $ | 1,025 | $ | 3,583 | $ | 5,198 | |||||||||||
The Company files income tax returns in the U.S. federal jurisdiction and various states and is not under audit by taxing authorities in any of these jurisdictions. With exceptions for certain states, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations for years before 2022.
Payable to Related Parties Pursuant to the Tax Receivable Agreement
We are a party to a TRA with MLSH 1 and MLSH 2. The TRA provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of certain tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of the Organizational Transactions, IPO and any subsequent purchases or exchanges of LLC Units of Topco LLC. The Company expects to benefit from the remaining 15% of any cash tax savings that it realizes.
We recognize the amount of TRA payments expected to be paid within the next 12 months and classify this amount as current. This determination is based on our estimate of taxable income for the year ended December 31, 2025. As of December 31, 2025, there was no current liability under the TRA.
As of December 31, 2023, the Company has derecognized the remaining non-current liability under the TRA after concluding it was not probable that the Company will be able to realize the remaining tax benefits based on estimates of future taxable income. There have been no changes to our position as of December 31, 2025. The estimation of liability under the TRA is by
its nature imprecise and subject to significant assumptions regarding the amount, character, and timing of the taxable income in the future. If the Company concludes in a future period that the tax benefits are more likely than not to be realized and releases its valuation allowance, the corresponding TRA liability amounts may be considered probable at that time and recorded on the consolidated balance sheet and within earnings.
We did not make any payments to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2025. We made payments of $7.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2024, of which $0.2 million was related to interest. We made payments of $42.6 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended December 31, 2023, of which $0.4 million was related to interest. As of December 31, 2025 and 2024, there were no liabilities under the TRA.
Tax Distributions to Topco LLC’s Owners
Topco LLC is subject to an operating agreement put in place at the date of the Organizational Transactions (“LLC Operating Agreement”). The LLC Operating Agreement has numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Topco LLC. These tax distributions are computed based on an assumed income tax rate equal to the sum of (i) the maximum combined marginal federal and state income tax rate applicable to an individual and (ii) the net investment income tax. The assumed income tax rate ranges from 46.7% to 54.1% in certain cases where the qualified business income deduction is unavailable.
In addition, under the tax rules, Topco LLC is required to allocate taxable income disproportionately to its unit holders. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of taxable income on a per unit basis, but are made pro rata based on ownership, Topco LLC is required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes Topco LLC would have otherwise paid if it were taxed on its taxable income at the assumed income tax rate. Topco LLC is subject to entity level taxation in certain states and certain of its subsidiaries are subject to entity level U.S. and foreign income taxes. As a result, the accompanying consolidated statements of operations include income tax expense related to those states and to U.S. and foreign jurisdictions where Topco LLC or any of our subsidiaries are subject to income tax.
During the year ended December 31, 2025, Topco LLC did not pay any tax distributions to its unit holders. During the year ended December 31, 2024, Topco LLC paid tax distributions of $1.1 million to its owners, including $0.6 million to us. During the year ended December 31, 2023, Topco LLC paid tax distributions of $20.3 million to its owners, including $10.7 million to us.
As of December 31, 2025, no amounts for tax distributions have been accrued.
Recent Legislation
On July 4, 2025, a budget and reconciliation bill commonly referred to as the One Big Beautiful Bill Act ("OBBBA") was enacted into law in the U.S. The OBBBA includes significant provisions, such as the extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. In accordance with ASC 740, the Company has evaluated the impact of the new tax law during the year. As the Company maintains a full valuation allowance on its U.S. deferred tax assets, the Company concluded the legislation does not have a material impact on its consolidated financial statements for the year ended December 31, 2025. We will continue to evaluate the impact of the legislation on future periods.About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.