Full Press Release Details
Strong Execution Drove Record Revenues in 2022 of $3.7 billion , an increase of 18% over 2021 Positioned for Total Revenue and Net Income Growth in 2023 Xywav Enters 2023 as the Oxybate Therapy of Choice and Company's Largest Product by Net Sales Enhanced Investment in R&D to Advance Pipeline towards Key Value Inflection Points in 2023 and 2024 Company is Well-Positioned to Achieve Vision 2025
DUBLIN , March 1, 2023 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ ) today announced financial results for the full year and fourth quarter of 2022 and provided financial guidance for 2023.
"2022 was a year of significant execution across our business that exemplified our purpose to innovate to transform the lives of patients and their families and advanced Jazz towards achieving Vision 2025. Our substantial top-line growth was led by the strength of our commercial franchises, including the continued adoption of Xywav ® across both narcolepsy and idiopathic hypersomnia (IH), meaningful Epidiolex ® growth, and robust demand for Rylaze ® , driven by critical unmet patient need," said Bruce Cozadd , chairman and chief executive officer of Jazz Pharmaceuticals. "In addition to achieving considerable revenue growth in 2022, we generated $1.3 billion in cash from operations and significantly improved our operational efficiency in line with our objectives for Vision 2025. Our strong financial performance, alongside a more disciplined approach to capital allocation, allowed us to delever our balance sheet six months ahead of our stated target, while investing in multiple strategic transactions that have the potential to create meaningful long-term value for patients and shareholders. We are proud of our 2022 accomplishments, which position us in 2023 to grow our top-line revenues through continued commercial execution, enhance our pipeline investments in innovation, and demonstrate continued progress towards achieving Vision 2025."
"Building on several transformative years for R&D at Jazz, we have enhanced the breadth and depth of our pipeline, as well as our capabilities. In 2022, we added three promising candidates to our pipeline: zanidatamab, a late-stage novel HER2-targeted bispecific antibody with biparatopic binding, JZP441, an orexin-2 receptor agonist, and JZP898, a differentiated, conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule. We're very encouraged by the positive top-line results from the pivotal trial of zanidatamab in biliary tract cancers (BTC) and the first overall survival data for zanidatamab from the Phase 2 first-line (1L) metastatic gastroesophageal adenocarcinoma (GEA) trial that was announced at ASCO GI," said Rob Iannone , M.D., M.S.C.E., executive vice president, global head of research and development of Jazz Pharmaceuticals. "With the initiation of multiple clinical trials in 2022, we continue to expand our pipeline into disease areas with significant unmet patient need and market potential, including difficult-to-treat cancers and Parkinson's disease tremor, and we've rapidly progressed JZP441 since bringing it in-house to enable initial proof-of-concept in healthy volunteers in 2023. We enter 2023 with meaningfully increased investment in R&D, which coupled with our upcoming catalysts and expanded capabilities, gives us confidence in delivering sustainable long-term value."
Business and Execution
Business Updates
Key Commercial Products
Oxybate (Xywav and Xyrem):
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
Xywav for Narcolepsy:
Xywav for Idiopathic Hypersomnia (IH):
Xyrem (sodium oxybate) oral solution:
Epidiolex / Epidyolex (cannabidiol):
Zepzelca ® (lurbinectedin):
Rylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):
Corporate Development
Zanidatamab Agreement 1 :
Key Pipeline Highlights
Suvecaltamide (JZP385):
Financial Highlights
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| (In thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||
| Total revenues | $ 972,123 | $ 896,731 | $ 3,659,374 | $ 3,094,238 | |||
| GAAP net loss | $ (240,724) | $ (35,351) | $ (224,060) | $ (329,668) | |||
| Non-GAAP adjusted net income (loss) | $ (4,239) | $ 262,012 | $ 933,598 | $ 992,824 | |||
| GAAP loss per share | $ (3.82) | $ (0.57) | $ (3.58) | $ (5.52) | |||
| Non-GAAP adjusted EPS 1,2 | $ (0.07) | $ 4.21 | $ 13.20 | $ 16.23 |
| 1. | Adjusted EPS for the year ended December 31, 2022, was impacted by $1.48 per share following the adoption of ASU 2020-06. There was no related impact on adjusted EPS for the three months ended December 31, 2022, as the potential issue of ordinary shares upon exchange of the Company's Exchangeable Senior Notes was anti-dilutive. |
| 2. | The Company adopted ASU No. 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", (ASU 2020-06) on January 1, 2022. Following adoption, diluted EPS must be calculated using the if-converted method which assumes full conversion of our Exchangeable Senior Notes. |
GAAP net loss for 2022 was $(224.1) million , or $(3.58) per diluted share, compared to $(329.7) million, or $(5.52) per diluted share, for 2021. GAAP net loss for 4Q22 was $(240.7) million, or $(3.82) per diluted share, compared to $(35.4) million, or $(0.57) per diluted share, for 4Q21.
Non-GAAP adjusted net income for 2022 was $933.6 million , or $13.20 per diluted share, compared to $992.8 million , or $16.23 per diluted share, for 2021. Non-GAAP adjusted net loss for 4Q22 was $(4.2) million, or $(0.07) per diluted share, compared to non-GAAP adjusted net income of $262 .0 million, or $4.21 per diluted share, for 4Q21.
Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | |||
| Xyrem | $ 247,496 | $ 288,765 | $ 1,020,453 | $ 1,265,830 | |||
| Xywav | 281,384 | 182,654 | 958,425 | 535,297 | |||
| Total Oxybate | 528,880 | 471,419 | 1,978,878 | 1,801,127 | |||
| Epidiolex/Epidyolex 1 | 206,998 | 193,786 | 736,398 | 463,645 | |||
| Sativex 1 | 4,721 | 4,649 | 16,825 | 12,707 | |||
| Sunosi 2 | — | 14,933 | 28,844 | 57,914 | |||
| Total Neuroscience | 740,599 | 684,787 | 2,760,945 | 2,335,393 | |||
| Zepzelca | 71,969 | 64,836 | 269,912 | 246,808 | |||
| Rylaze | 80,972 | 64,955 | 281,659 | 85,629 | |||
| Vyxeos | 30,266 | 34,764 | 127,980 | 134,060 | |||
| Defitelio/defibrotide | 40,653 | 42,511 | 194,290 | 197,931 | |||
| Erwinaze/Erwinase | — | — | — | 69,382 | |||
| Total Oncology | 223,860 | 207,066 | 873,841 | 733,810 | |||
| Other | 3,067 | 1,030 | 6,643 | 9,798 | |||
| Product sales, net | 967,526 | 892,883 | 3,641,429 | 3,079,001 | |||
| Royalties and contract revenues | 4,597 | 3,848 | 17,945 | 15,237 | |||
| Total revenues | $ 972,123 | $ 896,731 | $ 3,659,374 | $ 3,094,238 |
| 1. | Net product sales for Epidiolex / Epidyolex and Sativex are included from the acquisition of GW Pharmaceuticals plc, or GW, on May 5, 2021. |
| 2. | Net product sales for Sunosi U.S. are included until the date of divestment to Axsome Therapeutics, or Axsome, on May 9, 2022. |
Total revenues increased 18% in 2022 and 8% in 4Q22 compared to the same periods in 2021.
Operating Expenses and Effective Tax Rate
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| GAAP: | |||||||
| Cost of product sales | $ 167,364 | $ 136,153 | $ 540,517 | $ 440,760 | |||
| Gross margin | 82.7 % | 84.8 % | 85.2 % | 85.7 % | |||
| Selling, general and administrative | $ 383,203 | $ 398,462 | $ 1,416,967 | $ 1,451,683 | |||
| % of total revenues | 39.4 % | 44.4 % | 38.7 % | 46.9 % | |||
| Research and development | $ 172,555 | $ 155,443 | $ 590,453 | $ 505,748 | |||
| % of total revenues | 17.8 % | 17.3 % | 16.1 % | 16.3 % | |||
| Acquired in-process research and development | $ 375,000 | $ — | $ 444,148 | $ — | |||
| Impairment charge | $ — | $ — | $ 133,648 | $ — | |||
| Income tax expense (benefit) (1) | $ (100,042) | $ (12,467) | $ (158,645) | $ 216,116 | |||
| Effective tax rate (1) | 29.4 % | 27.8 % | 42.6 % | (191.5) % |
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| Non-GAAP adjusted: | |||||||
| Cost of product sales | $ 93,386 | $ 58,110 | $ 251,941 | $ 205,401 | |||
| Gross margin | 90.3 % | 93.5 % | 93.1 % | 93.3 % | |||
| Selling, general and administrative | $ 319,763 | $ 328,656 | $ 1,134,703 | $ 1,105,048 | |||
| % of total revenues | 32.9 % | 36.7 % | 31.0 % | 35.7 % | |||
| Research and development | $ 160,105 | $ 140,101 | $ 521,085 | $ 451,026 | |||
| % of total revenues | 16.5 % | 15.6 % | 14.2 % | 14.6 % | |||
| Acquired in-process research and development | $ 375,000 | $ — | $ 444,148 | $ — | |||
| Income tax expense (benefit) (1) | $ (43,301) | $ 37,254 | $ 94,695 | $ 148,764 | |||
| Effective tax rate (1) | 92.6 % | 12.3 % | 9.1 % | 13.0 % |
Changes in operating expenses in 2022 and 4Q22 over the prior year periods are primarily due to the following:
Cash Flow and Balance Sheet As of December 31, 2022, cash and cash equivalents were $881 .5 million, and the outstanding principal balance of the Company's long-term debt was $5 .8 billion compared to $6 .4 billion as of December 31, 2021. In addition, the Company had undrawn borrowing capacity under a revolving credit facility of $500 million . For the year ended December 31, 2022, the Company generated $1,272 .0 million of cash from operations. In September 2022 the Company made a voluntary payment of $300 .0 million on the Dollar Term Loan and in March 2022 the Company repaid in full the $251 .0 million remaining aggregate principal amount of the Euro Term Loan B.
2023 Financial Guidance Jazz Pharmaceuticals' full year 2023 financial guidance is as follows:
| (In millions) | Guidance |
| Revenues | $3,675 - $3,875 |
| –Neuroscience (includes Xyrem authorized generic royalties) | $2,675 - $2,825 |
| –Oncology | $950 - $1,050 |
| (In millions, except per share amounts and percentages) | GAAP | Non-GAAP | |
| Gross margin % | 89 % | 93% 1,6 | |
| SG&A expenses | $1,197 - $1,277 | $1,045 - $1,105 2,6 | |
| SG&A expenses as % of total revenues | 31% - 35% | 27% - 30% | |
| R&D expenses | $739 - $797 | $675 - $725 3,6 | |
| R&D expenses as % of total revenues | 19% - 22% | 17% - 20% | |
| Effective tax rate | (32)% - (8)% | 9% - 11% 4,6 | |
| Net income | $410 - $560 | $1,240 - $1,310 6 | |
| Net income per diluted share 5 | $5.90 - $7.90 | $16.90 - $17.85 6 | |
| Weighted-average ordinary shares used in per share calculations 5 | 75 | 75 |
| 1. | Excludes $135-$155 million of amortization of acquisition-related inventory fair value step-up and $14-$16 million of share-based compensation expense. |
| 2. | Excludes $152-$172 million of share-based compensation expense. |
| 3. | Excludes $64-$72 million of share-based compensation expense. |
| 4. | Excludes 41%-19% from the GAAP effective tax rate of (32%)-(8%) relating to the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income, resulting in a non-GAAP adjusted effective tax rate of 9%-11%. |
| 5. | Diluted EPS calculations for 2023 include 9 million shares related to the assumed conversion of the Exchangeable Senior Notes and the associated interest expense add-back to net income of $28 million and $25 million, on a GAAP and on a non-GAAP adjusted basis, respectively, under the "if converted" method. |
| 6. | See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and, in the table titled "Reconciliation of GAAP to non-GAAP Adjusted 2023 Net Income Guidance" at the end of this press release. |
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. ET ( 9:30 p.m. GMT ) to provide a business and financial update and discuss its 2022 full year and 4Q22 results and 2023 guidance.
Interested parties may register for the call in advance here or via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com . To ensure a timely connection, it is recommended that participants register at least 15 minutes prior to the scheduled webcast.
A replay of the webcast will be available via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com .
About Jazz Pharmaceuticals
Jazz Pharmaceuticals plc (NASDAQ: JAZZ ) is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in neuroscience and oncology. Within these therapeutic areas, we are identifying new options for patients by actively exploring small molecules and biologics, and through innovative delivery technologies and cannabinoid science. Jazz is headquartered in Dublin, Ireland and has employees around the globe, serving patients in nearly 75 countries. Please visit www.jazzpharmaceuticals.com for more information.
Non-GAAP Financial Measures
To supplement Jazz Pharmaceuticals' financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP (also referred to as adjusted or non-GAAP adjusted) financial measures in this press release and the accompanying tables. In particular, the Company presents non-GAAP adjusted net income (loss) (and the related per share measure) and its line item components, as well as certain non-GAAP adjusted financial measures derived therefrom, including non-GAAP adjusted gross margin percentage and non-GAAP adjusted effective tax rate. Non-GAAP adjusted net income (loss) (and the related per share measure) and its line item components exclude from GAAP reported net loss (and the related per share measure) and its line item components certain items, as detailed in the reconciliation tables that follow, and in the case of non-GAAP adjusted net income (loss) (and the related per share measure), adjust for the income tax effect of the non-GAAP adjustments and the impact of the change in the statutory tax rate in the U.K. In this regard, the components of non-GAAP adjusted net income (loss), including non-GAAP adjusted cost of product sales, SG&A expenses and R&D expenses, are income statement line items prepared on the same basis as, and therefore components of, the overall non-GAAP adjusted net income (loss) measure.
The Company also uses a non-GAAP net leverage ratio calculated as net debt (defined as total GAAP debt, net of cash and cash equivalents) divided by non-GAAP adjusted EBITDA for the most recent period of four consecutive completed fiscal quarters. EBITDA is defined as net loss before income taxes, interest expense, depreciation and amortization. Non-GAAP adjusted EBITDA is defined as EBITDA further adjusted to exclude certain other charges and adjustments as detailed in the non-GAAP net leverage ratio reconciliation table that follows and is calculated in accordance with the definition of Adjusted Consolidated EBITDA as set out in the Company's credit agreement entered into in May 2021 (the Credit Agreement).
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements related to: the Company's growth prospects and future financial and operating results, including the Company's 2023 financial guidance and the Company's expectations related thereto and anticipated catalysts; the Company's expectations for total revenue growth in 2023 and anticipated product sales; expectations of continued growth in net sales of Xywav, Epidiolex/Epidyolex and the oncology portfolio; Vision 2025 and the Company's progress related thereto; the Company's development, regulatory and commercialization strategy; the Company's advancement of pipeline programs and the timing of development activities, regulatory activities and submissions related thereto; the Company's expectations for the potential of strategic transactions to create meaningful value for patients and shareholders; the Company's expectations with respect to its products and product candidates and the potential of the Company's products and product candidates, including the potential of zanidatamab to transform the current standard of care in multiple HER2-expressing cancers; expectations with respect to the Company's license agreement with Zymeworks Inc.; expectations that Xywav will remain the oxybate of choice in 2023; the Company's capital allocation and corporate development strategy; the potential successful future development, manufacturing, regulatory and commercialization activities; the Company's expectation of sustainable growth and enhanced value as part of its Vision 2025; growing and diversifying the Company's revenue, investing in its pipeline of novel therapies, and delivering innovative therapies for patients and the potential benefits of such therapies; the Company's ability to realize the commercial potential of its products; the Company's net product sales and goals for net product sales from new and acquired products; the Company's views and expectations relating to its patent portfolio, including with respect to expected patent protection, as well as expectations with respect to exclusivity; planned or anticipated clinical trial events, including with respect to initiations, enrollment and data read-outs, and the anticipated timing thereof; the Company's clinical trials confirming clinical benefit or enabling regulatory submissions; planned or anticipated regulatory submissions and filings, and the anticipated timing thereof; potential regulatory approvals, including for Rylaze; the anticipated launch of Epidyolex in new markets and indications; and other statements that are not historical facts. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties.
Actual results and the timing of events could differ materially from those anticipated in such forward- looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with: maintaining or increasing sales of and revenue from the Company's oxybate products, Zepzelca and other key marketed products; effectively launching and commercializing the Company's other products and product candidates; the successful completion of development and regulatory activities with respect to the Company's product candidates, obtaining and maintaining adequate coverage and reimbursement for the Company's products; the time-consuming and uncertain regulatory approval process, including the risk that the Company's current and/or planned regulatory submissions may not be submitted, accepted or approved by applicable regulatory authorities in a timely manner or at all; the costly and time-consuming pharmaceutical product development and the uncertainty of clinical success, including risks related to failure or delays in successfully initiating or completing clinical trials and assessing patients such as those being experienced, and expected to continue to be experienced, by the Company as a result of the effects of the COVID-19 pandemic; the Company's failure to realize the expected benefits of its acquisition of GW Pharmaceuticals, including the failure to realize the blockbuster potential of Epidiolex; the ultimate duration and severity of the COVID-19 pandemic and resulting global economic, financial, and healthcare system disruptions and the current and potential future negative impacts to the Company's business operations and financial results; geopolitical events, including the conflict between Russia and Ukraine and related sanctions; macroeconomic conditions, including global financial markets, rising interest rates and inflation; regulatory initiatives and changes in tax laws; market volatility; protecting and enhancing the Company's intellectual property rights and the Company's commercial success being dependent upon the Company obtaining, maintaining and defending intellectual property protection for its products and product candidates; delays or problems in the supply or manufacture of the Company's products and product candidates; complying with applicable U.S. and non-U.S. regulatory requirements, including those governing the research, development, manufacturing and distribution of controlled substances; government investigations, legal proceedings and other actions; identifying and consummating corporate development transactions, financing these transactions and successfully integrating acquired product candidates, products and businesses; the Company's ability to realize the anticipated benefits of its collaborations and license agreements with third parties; the sufficiency of the Company's cash flows and capital resources; the Company's ability to achieve targeted or expected future financial performance and results and the uncertainty of future tax, accounting and other provisions and estimates; the Company's ability to meet its projected long-term goals and objectives, including as part of Vision 2025, in the time periods that the Company anticipates, or at all, and the inherent uncertainty and significant judgments and assumptions underlying the Company's long-term goals and objectives; and other risks and uncertainties affecting the Company, including those described from time to time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals' Securities and Exchange Commission filings and reports, including the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 , and future filings and reports by the Company including the Company's Annual Report on Form 10-K for the year ended December 31, 2022 . Other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated.
| JAZZ PHARMACEUTICALS PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands, except per share amounts) (Unaudited) | |||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| Revenues: | |||||||
| Product sales, net | $ 967,526 | $ 892,883 | $ 3,641,429 | $ 3,079,001 | |||
| Royalties and contract revenues | 4,597 | 3,848 | 17,945 | 15,237 | |||
| Total revenues | 972,123 | 896,731 | 3,659,374 | 3,094,238 | |||
| Operating expenses: | |||||||
| Cost of product sales (excluding amortization of acquired developed technologies) | 167,364 | 136,153 | 540,517 | 440,760 | |||
| Selling, general and administrative | 383,203 | 398,462 | 1,416,967 | 1,451,683 | |||
| Research and development | 172,555 | 155,443 | 590,453 | 505,748 | |||
| Intangible asset amortization | 137,387 | 157,293 | 599,169 | 525,769 | |||
| Acquired in-process research and development | 375,000 | — | 444,148 | — | |||
| Impairment charge | — | — | 133,648 | — | |||
| Total operating expenses | 1,235,509 | 847,351 | 3,724,902 | 2,923,960 | |||
| Income (loss) from operations | (263,386) | 49,380 | (65,528) | 170,278 | |||
| Interest expense, net | (74,125) | (88,598) | (288,242) | (278,766) | |||
| Foreign exchange loss | (2,482) | (5,612) | (19,014) | (4,350) | |||
| Loss before income tax expense (benefit) and equity in loss of investees | (339,993) | (44,830) | (372,784) | (112,838) | |||
| Income tax expense (benefit) | (100,042) | (12,467) | (158,645) | 216,116 | |||
| Equity in loss of investees | 773 | 2,988 | 9,921 | 714 | |||
| Net loss | $ (240,724) | $ (35,351) | $ (224,060) | $ (329,668) | |||
| Net loss per ordinary share: | |||||||
| Basic | $ (3.82) | $ (0.57) | $ (3.58) | $ (5.52) | |||
| Diluted | $ (3.82) | $ (0.57) | $ (3.58) | $ (5.52) | |||
| Weighted-average ordinary shares used in per share calculations - basic | 63,052 | 61,503 | 62,539 | 59,694 | |||
| Weighted-average ordinary shares used in per share calculations - diluted | 63,052 | 61,503 | 62,539 | 59,694 |
| JAZZ PHARMACEUTICALS PLC PRO FORMA NET PRODUCT SALES (In thousands) (Unaudited) | |||
| The following unaudited pro forma information represents the net product sales for the twelve months ended December 31, 2022, compared to the same period in 2021, as if the acquisition of GW had been completed on January 1, 2021: | |||
| Year Ended December 31, | |||
| 2022 | 2021 | ||
| Xyrem | $ 1,020,453 | $ 1,265,830 | |
| Xywav | 958,425 | 535,297 | |
| Total Oxybate | 1,978,878 | 1,801,127 | |
| Epidiolex/Epidyolex | 736,398 | 658,294 | |
| Sativex | 16,825 | 18,474 | |
| Sunosi 1 | 28,844 | 57,914 | |
| Total Neuroscience | 2,760,945 | 2,535,809 | |
| Zepzelca | 269,912 | 246,808 | |
| Rylaze | 281,659 | 85,629 | |
| Vyxeos | 127,980 | 134,060 | |
| Defitelio/defibrotide | 194,290 | 197,931 | |
| Erwinaze/Erwinase | — | 69,382 | |
| Total Oncology | 873,841 | 733,810 | |
| Other | 6,643 | 9,798 | |
| Product sales, net | $ 3,641,429 | $ 3,279,417 |
| JAZZ PHARMACEUTICALS PLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||
| December 31, 2022 | December 31, 2021 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 881,482 | $ 591,448 | |
| Accounts receivable, net of allowances | 651,493 | 563,360 | |
| Inventories | 714,061 | 1,072,721 | |
| Prepaid expenses | 91,912 | 131,413 | |
| Other current assets | 267,192 | 252,392 | |
| Total current assets | 2,606,140 | 2,611,334 | |
| Property, plant and equipment, net | 228,050 | 256,837 | |
| Operating lease assets | 73,326 | 86,586 | |
| Intangible assets, net | 5,794,437 | 7,152,328 | |
| Goodwill | 1,692,662 | 1,827,609 | |
| Deferred tax assets, net | 376,247 | 311,103 | |
| Deferred financing costs | 9,254 | 12,029 | |
| Other non-current assets | 55,139 | 40,813 | |
| Total assets | $ 10,835,255 | $ 12,298,639 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ 90,758 | $ 100,298 | |
| Accrued liabilities | 803,255 | 666,304 | |
| Current portion of long-term debt | 31,000 | 31,000 | |
| Income taxes payable | 7,717 | 9,608 | |
| Deferred revenue | 463 | 2,093 | |
| Total current liabilities | 933,193 | 809,303 | |
| Deferred revenue, non-current | — | 463 | |
| Long-term debt, less current portion | 5,693,341 | 6,018,943 | |
| Operating lease liabilities, less current portion | 71,838 | 87,200 | |
| Deferred tax liabilities, net | 944,337 | 1,300,541 | |
| Other non-current liabilities | 106,812 | 116,998 | |
| Total shareholders' equity | 3,085,734 | 3,965,191 | |
| Total liabilities and shareholders' equity | $ 10,835,255 | $ 12,298,639 |
| JAZZ PHARMACEUTICALS PLC SUMMARY OF CASH FLOWS (In thousands) (Unaudited) | |||
| Year Ended December 31, | |||
| 2022 | 2021 | ||
| Net cash provided by operating activities | $ 1,271,977 | $ 778,507 | |
| Net cash used in investing activities | (446,230) | (5,212,143) | |
| Net cash (used in) provided by financing activities | (529,491) | 3,970,522 | |
| Effect of exchange rates on cash and cash equivalents | (6,222) | (3,207) | |
| Net increase (decrease) in cash and cash equivalents | $ 290,034 | $ (466,321) |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (In thousands, except per share amounts) (Unaudited) | |||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| GAAP reported net loss | $ (240,724) | $ (35,351) | $ (224,060) | $ (329,668) | |||
| Intangible asset amortization | 137,387 | 157,293 | 599,169 | 525,769 | |||
| Impairment charge 1 | — | — | 133,648 | — | |||
| Share-based compensation expense | 61,767 | 46,490 | 218,194 | 169,921 | |||
| Transaction and integration related expenses 2 | — | 42,253 | 23,560 | 243,710 | |||
| Non-cash interest expense 3 | 5,971 | 26,600 | 37,973 | 92,655 | |||
| Acquisition accounting inventory fair value step-up | 70,203 | 74,448 | 273,392 | 223,085 | |||
| (Income) costs related to disposal of a business 4 | (1,783) | — | 47,756 | — | |||
| Restructuring and other costs 5 | 19,681 | — | 77,306 | — | |||
| Income tax effect of above adjustments | (56,741) | (58,214) | (253,340) | (192,521) | |||
| Impact of U.K. tax rate change | — | 8,493 | — | 259,873 | |||
| Non-GAAP adjusted net income (loss) | $ (4,239) | $ 262,012 | $ 933,598 | $ 992,824 | |||
| GAAP reported net loss per diluted share 6 | $ (3.82) | $ (0.57) | $ (3.58) | $ (5.52) | |||
| Non-GAAP adjusted net income (loss) per diluted share 6 | $ (0.07) | $ 4.21 | $ 13.20 | $ 16.23 | |||
| Weighted-average ordinary shares used in diluted per share calculations - GAAP | 63,052 | 61,503 | 62,539 | 59,694 | |||
| Weighted-average ordinary shares used in diluted per share calculations - non-GAAP | 63,052 | 62,218 | 72,608 | 61,164 |
| Explanation of Adjustments and Certain Line Items: | |
| 1. | Impairment charge related to the IPR&D asset impairment following the discontinuation of our nabiximols program. |
| 2. | Transaction and integration expenses related to the acquisition of GW. |
| 3. | Non-cash interest expense associated with debt discount and debt issuance costs. |
| 4. | Loss on disposal of Sunosi U.S. to Axsome and associated costs. |
| 5. | Includes restructuring costs and costs related to program terminations. |
| 6. | Diluted EPS for the 2022 periods was calculated using the "if-converted" method in relation to the Exchangeable Senior Notes. There was no impact on GAAP reported net loss per diluted share for the three and twelve months ended December 31, 2022, as the Exchangeable Senior Notes were anti-dilutive. There was no impact on non-GAAP adjusted net loss per diluted share for the three months ended December 31, 2022, as the Exchangeable Senior Notes were anti-dilutive. Non-GAAP adjusted net income per diluted share for the year ended December 31, 2022 includes 9.0 million shares related to the assumed conversion of the Exchangeable Senior Notes and the associated interest expense add-back to adjusted net income of $25.2 million. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS - FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||
| Three months ended December 31, 2022 | |||||||||||||||||
| Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Acquired IPR&D | Interest expense, net | Income tax benefit | Effective tax rate (1) | |||||||||
| GAAP Reported | $ 167,364 | 82.7 % | $ 383,203 | $ 172,555 | $ 137,387 | $ 375,000 | $ 74,125 | $ (100,042) | 29.4 % | ||||||||
| Non-GAAP Adjustments: | |||||||||||||||||
| Intangible asset amortization | — | — | — | — | (137,387) | — | — | — | — | ||||||||
| Share-based compensation expense | (3,835) | 0.4 | (43,875) | (14,057) | — | — | — | — | — | ||||||||
| Income related to the disposal of a business | — | — | 1,783 | — | — | — | — | — | — | ||||||||
| Restructuring and other costs | 60 | — | (21,348) | 1,607 | — | — | — | — | — | ||||||||
| Non-cash interest expense | — | — | — | — | — | — | (5,971) | — | — | ||||||||
| Acquisition accounting inventory fair value step- up | (70,203) | 7.2 | — | — | — | — | — | — | — | ||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | 56,741 | 63.2 | ||||||||
| Total of non-GAAP adjustments | (73,978) | 7.6 | (63,440) | (12,450) | (137,387) | — | (5,971) | 56,741 | 63.2 | ||||||||
| Non-GAAP Adjusted | $ 93,386 | 90.3 % | $ 319,763 | $ 160,105 | $ — | $ 375,000 | $ 68,154 | $ (43,301) | 92.6 % |
| Three months ended December 31, 2021 | |||||||||||||||
| Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Interest expense, net | Income tax expense (benefit) | Effective tax rate | ||||||||
| GAAP Reported | $ 136,153 | 84.8 % | $ 398,462 | $ 155,443 | $ 157,293 | $ 88,598 | $ (12,467) | 27.8 % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (157,293) | — | — | — | |||||||
| Share-based compensation expense | (3,260) | 0.4 | (32,029) | (11,201) | — | — | — | — | |||||||
| Transaction and integration related costs | (335) | — | (37,777) | (4,141) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (26,600) | — | — | |||||||
| Acquisition accounting inventory fair value step-up | (74,448) | 8.3 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 58,214 | (18.0) | |||||||
| Impact of U.K. tax rate change | — | — | — | — | — | — | (8,493) | 2.5 | |||||||
| Total of non-GAAP adjustments | (78,043) | 8.7 | (69,806) | (15,342) | (157,293) | (26,600) | 49,721 | (15.5) | |||||||
| Non-GAAP Adjusted | $ 58,110 | 93.5 % | $ 328,656 | $ 140,101 | $ — | $ 61,998 | $ 37,254 | 12.3 % |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS - FOR THE YEAR ENDED DECEMBER 31, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||||
| Year ended December 31, 2022 | |||||||||||||||||||
| Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Impairment charge | Acquired IPR&D | Interest expense, net | Income tax expense (benefit) | Effective tax rate (1) | ||||||||||
| GAAP Reported | $ 540,517 | 85.2 % | $ 1,416,967 | $ 590,453 | $ 599,169 | $ 133,648 | $ 444,148 | $ 288,242 | $ (158,645) | 42.6 % | |||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||
| Intangible asset amortization | — | — | — | — | (599,169) | — | — | — | — | — | |||||||||
| Share-based compensation expense | (12,416) | 0.3 | (148,726) | (57,052) | — | — | — | — | — | — | |||||||||
| Impairment charge | — | — | — | — | — | (133,648) | — | — | — | — | |||||||||
| Costs related to the disposal of a business | — | — | (47,756) | — | — | — | — | — | — | — | |||||||||
| Restructuring and other costs | (2,299) | 0.1 | (64,723) | (10,284) | — | — | — | — | — | ||||||||||
| Transaction and integration related expenses | (469) | — | (21,059) | (2,032) | — | — | — | — | — | — | |||||||||
| Non-cash interest expense | — | — | — | — | — | — | — | (37,973) | — | — | |||||||||
| Acquisition accounting inventory fair value step-up | (273,392) | 7.5 | — | — | — | — | — | — | — | — | |||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | — | 253,340 | (33.5) | |||||||||
| Total of non- GAAP adjustments | (288,576) | 7.9 | (282,264) | (69,368) | (599,169) | (133,648) | — | (37,973) | 253,340 | (33.5) | |||||||||
| Non-GAAP Adjusted | $ 251,941 | 93.1 % | $ 1,134,703 | $ 521,085 | $ — | $ — | $ 444,148 | $ 250,269 | $ 94,695 | 9.1 % |
| Year ended December 31, 2021 | |||||||||||||||
| Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Interest expense, net | Income tax expense | Effective tax rate (2) | ||||||||
| GAAP Reported | $ 440,760 | 85.7 % | $ 1,451,683 | $ 505,748 | $ 525,769 | $ 278,766 | $ 216,116 | (191.5) % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (525,769) | — | — | — | |||||||
| Share-based compensation expense | (10,591) | 0.3 | (117,673) | (41,657) | — | — | — | — | |||||||
| Transaction and integration related costs | (1,683) | 0.1 | (228,962) | (13,065) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (92,655) | — | — | |||||||
| Acquisition accounting inventory fair value step-up | (223,085) | 7.2 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 192,521 | (25.8) | |||||||
| Impact of U.K. tax rate change | — | — | — | — | — | — | (259,873) | 230.3 | |||||||
| Total of non-GAAP adjustments | (235,359) | 7.6 | (346,635) | (54,722) | (525,769) | (92,655) | (67,352) | 204.5 | |||||||
| Non-GAAP Adjusted | $ 205,401 | 93.3 % | $ 1,105,048 | $ 451,026 | $ — | $ 186,111 | $ 148,764 | 13.0 % |
| (1) | The GAAP effective tax rate was derived from the income tax benefit, which included the tax impacts of the payments made for acquired IPR&D and the impairment of acquired IPR&D related to nabiximols. The non-GAAP adjusted effective tax rate was derived from the income tax benefit, which included the tax impact of payments for acquired IPR&D made in the period. |
| (2) | The GAAP effective tax rate was derived from the income tax expense, which included an expense of $259.9 million related to the change in the statutory tax rate in the U.K. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA CALCULATED IN ACCORDANCE WITH OUR CREDIT AGREEMENT AND CALCULATION OF NON-GAAP NET LEVERAGE RATIO (In thousands, except ratio) (Unaudited) | |
| The following table provides a reconciliation of the Company's GAAP net loss to non-GAAP Adjusted EBITDA (as calculated in accordance with the Credit Agreement) for the last twelve months, or LTM, ended December 31, 2022 and the calculation of the Company's non-GAAP net leverage ratio: | |
| LTM Ended December 31, 2022 | |
| GAAP net loss | $ (224,060) |
| Interest expense, net | 288,242 |
| Income tax benefit | (158,646) |
| Depreciation and amortization | 629,471 |
| Non-GAAP EBITDA | 535,007 |
| Transaction and integration related expenses | 23,560 |
| Share-based compensation expense | 218,194 |
| Acquisition accounting inventory fair value step-up | 273,392 |
| Restructuring and other costs | 77,306 |
| Impairment charge | 133,648 |
| Upfront and milestone payments | 450,396 |
| Costs related to the disposal of a business | 47,756 |
| Other | (79,693) |
| Non-GAAP adjusted EBITDA related to the Sunosi business 2 | 35,021 |
| Non-GAAP Adjusted EBITDA 1 | $ 1,714,587 |
| At December 31, 2022 | |
| Calculation of Net Debt: | |
| Total GAAP debt | $ 5,828,500 |
| Cash and cash equivalents | (881,482) |
| Net Debt | $ 4,947,018 |
| Calculation of Non-GAAP Net Leverage Ratio: | |
| Non-GAAP Net Leverage Ratio based on non-GAAP Adjusted EBITDA 1 | 2.9 |
| 1. | Non-GAAP Adjusted EBITDA is calculated in accordance with the definition of Consolidated Adjusted EBITDA as set out in the Credit Agreement. |
| 2. | In accordance with the Credit Agreement, non-GAAP Adjusted EBITDA reflects the divestment of Sunosi to Axsome as if the divestment had occurred at the beginning of the LTM ended December 31, 2022, and this adjustment represents the non-GAAP Adjusted EBITDA of the Sunosi business for the period. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2023 NET INCOME GUIDANCE (In millions, except per share amounts) (Unaudited) | |
| GAAP net income | $410 - $560 |
| Intangible asset amortization | 555 - 595 |
| Acquisition accounting inventory fair value step-up | 135 - 155 |
| Share-based compensation expense | 230 - 260 |
| Non-cash interest expense | 20 - 30 |
| Income tax effect of above adjustments | (190) - (210) |
| Non-GAAP adjusted net income | $1,240 - $1,310 |
| GAAP net income per diluted share | $5.90 - $7.90 |
| Non-GAAP adjusted net income per diluted share | $16.90 - $17.85 |
| Weighted-average ordinary shares used in per share calculations - GAAP and non-GAAP | 75 |
Investors: Andrea N. Flynn , Ph.D. Vice President, Head, Investor Relations Jazz Pharmaceuticals plc [email protected] Ireland +353 1 634 3211 U.S. +1 650 496 2717
Media: Kristin Bhavnani Head of Global Corporate Communications Jazz Pharmaceuticals plc [email protected] Ireland +353 1 637 2141 U.S. +1 215 867 4948
SOURCE Jazz Pharmaceuticals plc