In November 2020, the Company’s board of directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each of the first 10 calendar years during the term of the 2020 Plan, by the lesser of (i) 4% of the total number of shares of Class A common stock outstanding on each December 31 immediately prior to the date of increase or (ii) such number of shares of Class A common stock determined by our board of directors or compensation committee. Shares of Class A common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the 2020 Plan.

All awards granted under the 2020 Plan are intended to be treated as (i) stock options, including incentive stock options (“ISOs”), (ii) stock appreciation rights (“SARs”), (iii) restricted share awards (“RSAs”), (iv) restricted stock units (“RSUs”), (v) performance awards, (vi) dividend equivalents, or (vii) other stock or cash awards as may be determined by the plan’s administrator from time to time. The term of each option award shall be no more than 10 years from the date of grant. The exercise price of a stock option shall not be less than 100% (or, in the case of an ISO granted to a ten percent stockholder, 110%) of the fair market value of the shares on the date of grant. As of December 31, 2022, only stock options, RSUs and PSUs have been issued.

In November 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ESPP”) to assist employees in acquiring a stock ownership interest in the Company and to encourage them to remain in the employment of the Company. The ESPP permits eligible employees to purchase shares of Class A common stock at a discount through payroll deductions during specified six-month purchase periods. The price of shares purchased under the ESPP is equal to the lower of the grant date price less a 15% discount or a 15% discount to the market closing price on the date of purchase.

In October 2022, the Company issued PSUs to an executive employee under the 2020 Plan. The PSUs vest only if the executive employee satisfies a service-based vesting condition and market condition. The executive employee must remain employed through the third anniversary of the grant date. The award is eligible to vest based on the achievement of certain price targets of the Company’s stock price over a defined performance period.

Compensation expense recognized for these PSUs was insignificant for the year ended December 31, 2022. There was no compensation expense related to PSUs during the years ended December 31, 2021 or 2020.


	Number of Stock Options (in thousands)	Weighted Average Exercise Price per Stock Option		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2021	1,409	$	30.47	9.0	$	16,846
Granted	1,709	23.81
Exercised	(4)	26.08
Cancelled	(221)	31.64
Outstanding as of December 31, 2022	2,893	$	26.45	8.9	$	—
Exercisable as of December 31, 2022	726	$	28.75	8.2	$	—

The Company uses the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The assumptions and estimates are as follows:

•Expected term - The expected term represents the period that stock-based awards are expected to be outstanding. Our historical share option exercise information is limited due to a lack of sufficient data points and does not provide a reasonable basis upon which to estimate an expected term.

•Expected volatility - The expected volatility was derived from the historical stock volatilities of peer public companies within our industry that are considered to be comparable to our business over a period equivalent to the expected term of the stock-based awards, since our stock trading history is limited.

•Risk-free interest rate - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the stock-based awards’ expected term.


	Year Ended December 31,
	2022		2021		2020
Expected volatility	51.3	%	57.2	%	59.0	%
Risk-free interest rate	2.8	%	1.0	%	0.5	%
Expected term (in years)	6.1		6.1		6.1
Expected dividend yield	—	%	—	%	—	%

Stock-based compensation expense related to stock options was $8.1 million, $4.6 million and $0.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. The total fair value of stock options vested was $7.7 million and $4.3 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the total unrecognized stock-based compensation related to stock options was $27.7 million, which is expected be recognized over a weighted-average period of approximately 3.0 years.


	Restricted Stock Units (in thousands)	Weighted Average Fair Value per RSU at Grant Date
Balance as of December 31, 2021	90	$	31.96
Granted	1,375	23.99
Vested	(69)	33.25
Forfeited	(65)	27.30
Balance as of December 31, 2022	1,331	$	21.04

Stock-based compensation expense related to RSUs was $8.2 million, $0.8 million and $0.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. The total fair value of RSUs vested was $1.0 million and $0.9 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the total unrecognized equity-based compensation related to RSUs was $25.7 million, which is expected be recognized over a weighted-average period of approximately 2.4 years.

Prior to the IPO, the Company’s parent, MLSH 1, granted unit-based awards (“MLSH 1 Incentive Units”) to certain executives of the Company in the form of non-vested units. Our controlled subsidiary, MLSC, granted unit-based awards (“MLSC Incentive Units”) only to certain employees of its subsidiaries.

Topco LLC’s majority-owned subsidiary during the periods preceding the Organizational Transactions and wholly-owned subsidiary subsequent to the Organizational Transactions, issued incentive units (the “MLSC Incentive Units”) to its employees. All MLSC Incentive Units were settled during 2020. The MLSC Incentive Units were subject to either a combination of service, market or performance vesting conditions. Vested MLSC Incentive Units were treated as common units for purposes of distributions.

In September 2020, Topco LLC entered into agreements (the “Repurchase Agreements”) to repurchase all remaining and outstanding MLSC Incentive Units, including the 1,500,000 MLSC Incentive Units, accelerated the vesting of all remaining unvested time-based MLSC Incentive Units and also removed the performance condition associated with the performance-based MLSC Incentive Units. The total compensation cost recognized for these transactions approximated $0.8 million. Topco LLC paid $9.1 million to settle the Repurchase Agreements in October 2020.

Unit-based compensation expense related to MLSC Incentive Unit awards was approximately $1.5 million for the year ended December 31, 2020. The total fair value of the MLSC Incentive Units vested was $0.9 million for the year ended December 31, 2020.

Prior to the Organizational Transactions, Topco LLC entered into agreements with certain executives and board members whereby those employees and board members were granted incentive units in MLSH 1, a related party. All MLSH 1 Incentive Unit awards were subject to a market condition which is subject to the achievement of a certain investment return threshold that increased on a compounding basis annually and a service condition subject to their continued employment. Certain MLSH 1 Incentive Unit awards contained a performance condition tied to the achievement of certain cash distribution multiples. All vested MLSH 1 Incentive Unit awards are subject to repurchase for fair value at MLSH 1’s option upon a voluntary or involuntary separation event that is not deemed to be for cause. Upon the IPO, the performance condition was met for certain MLSH 1 Incentive Units and the Company recorded an additional $3.5 million of equity-based compensation expense.

The MLSH 1 Incentive Unit awards that include market and service conditions provide for cliff-vesting generally over four or five years. The MLSH 1 Incentive Unit awards that include market and performance conditions provide for full vesting upon meeting the performance condition. The fair value of MLSH 1 Incentive Unit awards was measured at the grant date and recognized as expense over the requisite service period for the awards.

In November 2020, and before the IPO, MLSH 1 Incentive Unit awards were modified to allow for vesting subsequent to the termination of the employment for two employees (i.e. improbable-probable modification). The calculation of the incremental equity-based compensation expense was based on the new fair value of the award measured as of the date of modification. As a result of the modification and based on the performance condition being satisfied, the Company recognized an incremental equity-based compensation expense of $16.7 million for the year ended December 31, 2020.

In connection with the divestiture of its Protein Detection business, the Company recognized incremental unit-based compensation expense of $2.4 million related to an amended agreement with an executive of Vector (see Note 2). This unit-based compensation expense was recorded within selling, general and administrative expenses in the consolidated statements of income for the year ended December 31, 2021.

Unit-based compensation expense related to MLSH 1 Incentive Unit awards was approximately $0.7 million, $3.9 million and $22.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.


	Number of Unvested MLSH 1 Incentive Units (in thousands)	Weighted Average Grant Date Fair Value Per Unit
Balance as of December 31, 2021	159	$	22.20
Forfeited	(6)	17.44
Vested	(76)	20.39
Balance as of December 31, 2022	77	$	24.34

As of December 31, 2022, total unrecognized compensation cost related to unvested MLSH 1 Incentive Units subject to service condition is $0.5 million which is expected to be recognized over a weighted average period of 1.6 years.


	Year Ended December 31,
	2022		2021		2020
Cost of sales	$	4,192	$	1,915	$	282
Selling, general and administrative	13,349		8,263		24,216
Research and development	1,129		280		131
Total equity-based compensation	$	18,670	$	10,458	$	24,629