Full Press Release Details
DUBLIN , Aug. 3, 2022 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ ) today announced financial results for the second quarter of 2022, affirmed 2022 financial guidance 1 and provided business updates.
"We've had a highly productive second quarter across commercial, R&D and corporate development that has resulted in meaningful progress towards Vision 2025. We have also achieved an important milestone and for the first time there are now more patients taking Xywav ® than Xyrem ® ," said Bruce Cozadd , chairman and CEO of Jazz Pharmaceuticals. "Execution remains our primary focus as we aim to maximize the value of Xywav in idiopathic hypersomnia (IH) and narcolepsy, grow Epidiolex ® in the U.S. and expand the launch of Epidyolex ® globally, build on the successful launch of Rylaze ® and progress the development program for Zepzelca ® . We are also advancing a number of mid- and late-stage programs in our pipeline with multiple Investigational New Drug (IND) applications expected through 2023, and are pleased our pan-RAF inhibitor, JZP815, was cleared by the FDA to enter clinical development."
"We have achieved our net leverage 2 ratio target ahead of our stated timeline and therefore our focus will be to continue to manage the balance sheet through disciplined capital allocation, providing us with further flexibility to pursue corporate development opportunities," said Renée Galá, executive vice president and chief financial officer of Jazz Pharmaceuticals. "Our strong second quarter financial results and top- and bottom-line growth put us well on track to achieve our 2022 financial guidance. Operational excellence will also remain a key area of focus for us as we build the foundation for future growth and progress toward achieving Vision 2025."
Business and Execution
_______________________
| 1. | The Company has updated its GAAP guidance primarily to reflect the impact of foreign currency exchange movements on non-USD denominated amortization and inventory step up expense. The Company is affirming its non-GAAP adjusted guidance. |
| 2. | On a pro forma non-GAAP adjusted basis. Non-GAAP net leverage ratio is a non-GAAP financial measure. For further information, see "Non-GAAP Financial Measures." |
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
JZP441 (DSP-0187) Agreement:
JZP898 (WTX-613) Agreement:
Sunosi (solriamfetol) Strategic Divestiture:
Key Pipeline Highlights
Suvecaltamide (JZP385):
| Financial Highlights | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (In thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||
| Total revenues | $ 932,878 | $ 751,811 | $ 1,746,599 | $ 1,359,392 | |||
| GAAP net income (loss) | $ 34,665 | $ (363,316) | $ 36,312 | $ (241,484) | |||
| Adjusted net income | $ 305,465 | $ 240,575 | $ 567,399 | $ 469,394 | |||
| GAAP EPS | $ 0.55 | $ (6.11) | $ 0.57 | $ (4.17) | |||
| Adjusted EPS 1,2 | $ 4.30 | $ 3.90 | $ 8.03 | $ 7.82 |
| _______________________ | |
| 1. | Adjusted EPS for the three and six months ended June 30, 2022 was impacted by $0.51 per share and $0.95 per share, respectively, following the adoption of ASU 2020-06. |
| 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 income (loss) in 2Q22 was $34.7 million , or $0.55 per diluted share, compared to $(363.3) million , or $(6.11) per diluted share, for 2Q21. Non-GAAP adjusted net income in 2Q22 was $305.5 million , or $4.30 per diluted share, compared to $240.6 million , or $3.90 per diluted share, for 2Q21. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
| Total Revenues | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | |||
| Xyrem | $ 269,421 | $ 334,182 | $ 516,918 | $ 669,732 | |||
| Xywav | 235,025 | 124,164 | 421,105 | 199,580 | |||
| Total Oxybate | 504,446 | 458,346 | 938,023 | 869,312 | |||
| Epidiolex/Epidyolex 1 | 175,289 | 109,481 | 333,182 | 109,481 | |||
| Sunosi 2 | 12,966 | 12,124 | 28,844 | 23,730 | |||
| Sativex ® (nabiximols) 1 | 4,142 | 1,961 | 8,884 | 1,961 | |||
| Total Neuroscience | 696,843 | 581,912 | 1,308,933 | 1,004,484 | |||
| Zepzelca | 68,285 | 55,924 | 127,623 | 110,258 | |||
| Rylaze | 72,954 | — | 127,174 | — | |||
| Vyxeos | 33,890 | 31,453 | 67,647 | 64,608 | |||
| Defitelio/defibrotide | 54,696 | 48,096 | 104,185 | 97,715 | |||
| Erwinaze/Erwinase | — | 28,314 | — | 69,382 | |||
| Total Oncology | 229,825 | 163,787 | 426,629 | 341,963 | |||
| Other | 1,632 | 2,641 | 2,575 | 5,424 | |||
| Product sales, net | 928,300 | 748,340 | 1,738,137 | 1,351,871 | |||
| Royalties and contract revenues | 4,578 | 3,471 | 8,462 | 7,521 | |||
| Total revenues | $ 932,878 | $ 751,811 | $ 1,746,599 | $ 1,359,392 |
| __________________________ | |
| 1. | Net product sales for Epidiolex / Epidyolex and Sativex are included from the acquisition of GW on May 5, 2021. |
| 2. | Net product sales for Sunosi U.S. are included until the date of divestment to Axsome of May 9, 2022. |
Total revenues increased 24% in 2Q22 compared to the same period in 2021.
| Operating Expenses and Effective Tax Rate | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| GAAP: | |||||||
| Cost of product sales | $ 124,208 | $ 119,194 | $ 239,492 | $ 159,383 | |||
| Gross margin | 86.6 % | 84.1 % | 86.2 % | 88.2 % | |||
| Selling, general and administrative | $ 366,473 | $ 429,031 | $ 675,286 | $ 689,539 | |||
| % of total revenues | 39.3 % | 57.1 % | 38.7 % | 50.7 % | |||
| Research and development | $ 139,047 | $ 132,696 | $ 269,028 | $ 209,269 | |||
| % of total revenues | 14.9 % | 17.7 % | 15.4 % | 15.4 % | |||
| Acquired in-process research and development | $ 69,148 | $ — | $ 69,148 | $ — | |||
| Income tax expense (benefit) | $ (16,112) | $ 228,621 | $ (15,576) | $ 246,640 | |||
| Effective tax rate (1) | (76.7) % | (168.0) % | (57.0) % | (65,946.5) % |
| _____________________________ | |
| 1. | The fluctuations in the GAAP effective tax rates for the three and six months ended June 30, 2022 and 2021 are as a result of changes in the mix of pre-tax income and losses across our jurisdictions and the impact of the change in the statutory tax rate in the U.K. on the 2021 periods. |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| Non-GAAP adjusted: | |||||||
| Cost of product sales | $ 53,245 | $ 50,226 | $ 101,451 | $ 88,419 | |||
| Gross margin | 94.3 % | 93.3 % | 94.2 % | 93.5 % | |||
| Selling, general and administrative | $ 281,493 | $ 269,440 | $ 540,194 | $ 497,840 | |||
| % of total revenues | 30.2 % | 35.8 % | 30.9 % | 36.6 % | |||
| Research and development | $ 123,719 | $ 118,525 | $ 240,178 | $ 186,455 | |||
| % of total revenues | 13.3 % | 15.8 % | 13.8 % | 13.7 % | |||
| Acquired in-process research and development | $ 69,148 | $ — | $ 69,148 | $ — | |||
| Income tax expense | $ 38,387 | $ 30,262 | $ 93,610 | $ 67,921 | |||
| Effective tax rate | 11.1 % | 11.2 % | 14.0 % | 12.8 % |
Operating expenses increased in 2Q22 over the prior year period primarily due to the following:
Cash Flow and Balance Sheet
As of June 30, 2022, cash, cash equivalents and investments were $771 .3 million, and the outstanding principal balance of the Company's long-term debt was $6 .1 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 .0 million. For the six months ended June 30, 2022, the Company generated $512 .0 million of cash from operations. In 1Q22 the Company repaid in full the $251 .0 million remaining aggregate principal amount of the Euro Term Loan B.
2022 Financial Guidance
The Company has updated its GAAP guidance primarily to reflect the impact of foreign currency exchange movements on non-USD denominated amortization and inventory step up expense. The Company is affirming its non-GAAP adjusted guidance.
| (In millions) | August 3, 2022 | May 4, 2022 | |
| Revenues | $3,500 - $3,700 | $3,500 - $3,700 | |
| –Neuroscience (includes potential Xyrem authorized generic royalties) | $2,600 - $2,800 | $2,600 - $2,800 | |
| –Oncology | $840 - $920 | $840 - $920 |
| GAAP: | |||
| (In millions, except per share amounts and percentages) | August 3, 2022 | May 4, 2022 | |
| Gross margin % | 85 % | 84 % | |
| SG&A expenses | $1,299 - $1,389 | $1,299 - $1,389 | |
| SG&A expenses as % of total revenues | 35 % - 40 % | 35 % - 40 % | |
| R&D expenses | $621 - $669 | $621 - $669 | |
| R&D expenses as % of total revenues | 17 % - 19 % | 17 % - 19 % | |
| Acquired in-process research and development expenses | $69 | $65 | |
| Effective tax rate | (22) % - 1,104 % | (30) % - 117 % | |
| Net income | $90 - $255 | $15 - $200 | |
| Net income per diluted share 5 | $1.45 - $3.95 | $0.25 - $3.20 | |
| Weighted-average ordinary shares used in per share calculations | 63 - 72 | 63 - 72 |
| Non-GAAP: | |||
| (In millions, except per share amounts and percentages) | August 3, 2022 | May 4, 2022 | |
| Gross margin % | 93 % 1,6 | 93 % | |
| SG&A expenses | $1,080 - $1,130 2,6 | $1,080 - $1,130 | |
| SG&A expenses as % of total revenues | 29 % - 32 % | 29 % - 32 % | |
| R&D expenses | $560 - $600 3,6 | $560 - $600 | |
| R&D expenses as % of total revenues | 15 % - 17 % | 15 % - 17 % | |
| Acquired in-process research and development expenses | $69 | $65 | |
| Effective tax rate | 10 % - 12 % 4,6 | 10 % - 12 % | |
| Net income | $1,180 - $1,250 6 | $1,180 - $1,250 | |
| Net income per diluted share 5 | $16.70 - $17.70 6 | $16.70 - $17.70 | |
| Weighted-average ordinary shares used in per share calculations | 72 | 72 |
| ____________________________ | |
| 1. | Excludes $270-$300 million of amortization of acquisition-related inventory fair value step-up, $13-$15 million of share-based compensation expense and $2 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP gross margin. |
| 2. | Excludes $148-$168 million of share-based compensation expense, $31-$41 million of transaction and integration related expenses relating to the acquisition of GW and $40-$50 million of costs related to the disposal of Sunosi from estimated GAAP SG&A expenses. |
| 3. | Excludes $59-$67 million of share-based compensation expense and $2 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP R&D expenses. |
| 4. | Excludes the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income. |
| 5. | Non-GAAP adjusted EPS guidance for 2022 reflects dilution of $2.05, at the midpoint, post adoption of ASU 2020-06. Diluted EPS calculations for 2022 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 $29 million on a GAAP basis, when dilutive, and $25 million on a non-GAAP basis, 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 2022 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. IST ) to provide a business and financial update and discuss its 2022 second quarter results.
Interested parties may register for the call in advance here or via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com . Please connect to the website prior to the start of the call to ensure adequate time for any software downloads that may be necessary.
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. For more information, please visit www.jazzpharmaceuticals.com and follow @JazzPharma on Twitter.
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 (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 (and the related per share measure) and its line item components exclude from GAAP reported net income (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 (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, 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 measure. The Company also uses a pro forma non-GAAP net leverage ratio calculated as net debt (defined as total GAAP debt, net of cash, cash equivalents and investments) divided by Adjusted EBITDA for the most recent period of four consecutive completed fiscal quarters. EBITDA is defined as net income (loss) before income taxes, interest expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain other charges and adjustments as detailed in the pro forma 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 2022 financial guidance and the Company's expectations related thereto; Vision 2025 and the Company's progress related thereto; the Company's strategy to maximize the value of Xywav in IH and narcolepsy, grow Epidiolex in the U.S., expand the launch of Epidyolex globally and progress the development program for Zepzelca; the Company's advancement of pipeline programs and the timing of planned regulatory activities and submissions related thereto; the Company's capital allocation and corporate development strategy; the expected divestiture of ex-U.S. Sunosi to Axsome and the anticipated benefits of the Sunosi divestiture; 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; the Company's ability to realize the commercial potential of its products; the Company's views and expectations relating to its patent portfolio, including with respect to expected patent protection; 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, including for nabiximols and Rylaze, and the anticipated timing thereof; potential regulatory approvals, including for Rylaze; the anticipated launch of Epidyolex in France in 2022; 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: Jazz's and Axsome's ability to complete the proposed divestiture of ex-U.S. Sunosi on the proposed terms or on the anticipated timeline, or at all; 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; 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, including the risk that the Company's sBLA seeking approval for a revised dosing label for Rylaze may not be approved by FDA 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 and the risk that the legacy GW Pharmaceuticals business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; 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 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 acquiring, in-licensing or developing additional products or product candidates, 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 to fund its debt service obligations, de-lever and meet its stated leverage targets; the Company's ability to achieve expected future financial performance and results and the uncertainty of future tax, accounting and other provisions and estimates; the possibility that, if the Company does not achieve the perceived benefits of the acquisition of GW Pharmaceuticals as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company's ordinary shares could decline; the Company's ability to achieve expected future financial performance and results and the uncertainty of future tax 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 Annual Report on Form 10-K for the year ended December 31, 2021, and future filings and reports by the Company including the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 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 June 30, | Six Months Ended June 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| Revenues: | |||||||
| Product sales, net | $ 928,300 | $ 748,340 | $ 1,738,137 | $ 1,351,871 | |||
| Royalties and contract revenues | 4,578 | 3,471 | 8,462 | 7,521 | |||
| Total revenues | 932,878 | 751,811 | 1,746,599 | 1,359,392 | |||
| Operating expenses: | |||||||
| Cost of product sales (excluding amortization of acquired developed technologies) | 124,208 | 119,194 | 239,492 | 159,383 | |||
| Selling, general and administrative | 366,473 | 429,031 | 675,286 | 689,539 | |||
| Research and development | 139,047 | 132,696 | 269,028 | 209,269 | |||
| Intangible asset amortization | 148,456 | 140,480 | 320,550 | 208,672 | |||
| Acquired in-process research and development | 69,148 | — | 69,148 | — | |||
| Total operating expenses | 847,332 | 821,401 | 1,573,504 | 1,266,863 | |||
| Income (loss) from operations | 85,546 | (69,590) | 173,095 | 92,529 | |||
| Interest expense, net | (63,189) | (69,420) | (133,873) | (96,796) | |||
| Foreign exchange gain (loss) | (1,343) | 2,950 | (11,883) | 3,893 | |||
| Income (loss) before income tax expense (benefit) and equity in loss (gain) of investees | 21,014 | (136,060) | 27,339 | (374) | |||
| Income tax expense (benefit) | (16,112) | 228,621 | (15,576) | 246,640 | |||
| Equity in loss (gain) of investees | 2,461 | (1,365) | 6,603 | (5,530) | |||
| Net income (loss) | $ 34,665 | $ (363,316) | $ 36,312 | $ (241,484) | |||
| Net income (loss) per ordinary share: | |||||||
| Basic | $ 0.56 | $ (6.11) | $ 0.58 | $ (4.17) | |||
| Diluted | $ 0.55 | $ (6.11) | $ 0.57 | $ (4.17) | |||
| Weighted-average ordinary shares used in per share calculations - basic | 62,436 | 59,448 | 62,152 | 57,966 | |||
| Weighted-average ordinary shares used in per share calculations - diluted | 63,431 | 59,448 | 63,171 | 57,966 |
| JAZZ PHARMACEUTICALS PLC PRO FORMA NET PRODUCT SALES (In thousands) (Unaudited) | |||||||
| The following unaudited pro forma information represents the net product sales for the three and six months ended June 30, 2022, compared to the same periods in 2021, as if the acquisition of GW had been completed on January 1, 2021: | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| Xyrem | $ 269,421 | $ 334,182 | $ 516,918 | $ 669,732 | |||
| Xywav | 235,025 | 124,164 | 421,105 | 199,580 | |||
| Total Oxybate | 504,446 | 458,346 | 938,023 | 869,312 | |||
| Epidiolex/Epidyolex | 175,289 | 155,868 | 333,182 | 304,129 | |||
| Sunosi 1 | 12,966 | 12,124 | 28,844 | 23,730 | |||
| Sativex (nabiximols) | 4,142 | 3,548 | 8,884 | 7,729 | |||
| Total Neuroscience | 696,843 | 629,886 | 1,308,933 | 1,204,900 | |||
| Zepzelca | 68,285 | 55,924 | 127,623 | 110,258 | |||
| Rylaze | 72,954 | — | 127,174 | — | |||
| Vyxeos | 33,890 | 31,453 | 67,647 | 64,608 | |||
| Defitelio/defibrotide | 54,696 | 48,096 | 104,185 | 97,715 | |||
| Erwinaze/Erwinase | — | 28,314 | — | 69,382 | |||
| Total Oncology | 229,825 | 163,787 | 426,629 | 341,963 | |||
| Other | 1,632 | 2,641 | 2,575 | 5,424 | |||
| Product sales, net | $ 928,300 | $ 796,314 | $ 1,738,137 | $ 1,552,287 |
| ____________________________ | |
| 1. | Net product sales for Sunosi U.S. are included until the date of divestment to Axsome of May 9, 2022. |
| JAZZ PHARMACEUTICALS PLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||
| June 30, 2022 | December 31, 2021 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 711,265 | $ 591,448 | |
| Investments | 60,000 | — | |
| Accounts receivable, net of allowances | 594,034 | 563,360 | |
| Inventories | 861,705 | 1,072,721 | |
| Prepaid expenses | 108,304 | 131,413 | |
| Other current assets | 255,525 | 252,392 | |
| Total current assets | 2,590,833 | 2,611,334 | |
| Property, plant and equipment, net | 239,523 | 256,837 | |
| Operating lease assets | 78,365 | 86,586 | |
| Intangible assets, net | 6,237,959 | 7,152,328 | |
| Goodwill | 1,687,648 | 1,827,609 | |
| Deferred tax assets, net | 320,550 | 311,103 | |
| Deferred financing costs | 10,643 | 12,029 | |
| Other non-current assets | 34,612 | 40,813 | |
| Total assets | $ 11,200,133 | $ 12,298,639 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ 74,161 | $ 100,298 | |
| Accrued liabilities | 593,207 | 666,304 | |
| Current portion of long-term debt | 31,000 | 31,000 | |
| Income taxes payable | 5,796 | 9,608 | |
| Deferred revenue | 1,278 | 2,093 | |
| Total current liabilities | 705,442 | 809,303 | |
| Deferred revenue, non-current | 231 | 463 | |
| Long-term debt, less current portion | 5,989,998 | 6,018,943 | |
| Operating lease liabilities, less current portion | 77,845 | 87,200 | |
| Deferred tax liabilities, net | 1,096,416 | 1,300,541 | |
| Other non-current liabilities | 129,420 | 116,998 | |
| Total shareholders' equity | 3,200,781 | 3,965,191 | |
| Total liabilities and shareholders' equity | $ 11,200,133 | $ 12,298,639 |
| JAZZ PHARMACEUTICALS PLC SUMMARY OF CASH FLOWS (In thousands) (Unaudited) | |||
| Six Months Ended June 30, | |||
| 2022 | 2021 | ||
| Net cash provided by operating activities | $ 512,015 | $ 326,692 | |
| Net cash used in investing activities | (126,454) | (5,175,238) | |
| Net cash (used in) provided by financing activities | (260,034) | 4,682,312 | |
| Effect of exchange rates on cash and cash equivalents | (5,710) | (135) | |
| Net increase (decrease) in cash and cash equivalents | $ 119,817 | $ (166,369) |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (In thousands, except per share amounts) (Unaudited) | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| GAAP reported net income (loss) | $ 34,665 | $ (363,316) | $ 36,312 | $ (241,484) | |||
| Intangible asset amortization | 148,456 | 140,480 | 320,550 | 208,672 | |||
| Share-based compensation expense | 53,850 | 43,411 | 101,479 | 77,896 | |||
| Transaction and integration related expenses 1 | 6,939 | 133,328 | 18,069 | 141,590 | |||
| Non-cash interest expense 2 | 5,572 | 22,322 | 17,740 | 38,010 | |||
| Acquisition accounting inventory fair value step-up | 68,282 | 65,991 | 132,225 | 65,991 | |||
| Costs related to disposal of a business 3 | 42,200 | — | 50,210 | — | |||
| Income tax effect of above adjustments | (54,499) | (53,021) | (109,186) | (72,661) | |||
| Impact of U.K. tax rate change | — | 251,380 | — | 251,380 | |||
| Non-GAAP adjusted net income | $ 305,465 | $ 240,575 | $ 567,399 | $ 469,394 | |||
| GAAP reported net income (loss) per diluted share 4 | $ 0.55 | $ (6.11) | $ 0.57 | $ (4.17) | |||
| Non-GAAP adjusted net income per diluted share 4 | $ 4.30 | $ 3.90 | $ 8.03 | $ 7.82 | |||
| Weighted-average ordinary shares used in diluted per share calculations - GAAP | 63,431 | 59,448 | 63,171 | 57,966 | |||
| Weighted-average ordinary shares used in diluted per share calculations - non-GAAP | 72,475 | 61,686 | 72,214 | 60,047 |
| _____________________ | |
| Explanation of Adjustments and Certain Line Items: | |
| 1. | Transaction and integration expenses related to the acquisition of GW. |
| 2. | Non-cash interest expense associated with debt discount and debt issuance costs. |
| 3. | Loss on disposal of Sunosi U.S. to Axsome and related transaction and restructuring costs. |
| 4. | Diluted EPS was calculated using the "if-converted" method in relation to the Exchangeable Senior Notes. As such, Non-GAAP adjusted net income per diluted share for the three and six months ended June 30, 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 $6.3 million and $12.6 million, respectively. There was no impact on GAAP reported net income per diluted share for the three and six months ended June 30, 2022 as the Exchangeable Senior Notes were anti-dilutive. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS - FOR THE THREE MONTHS ENDED JUNE 30, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||
| Three months ended June 30, 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 expense (benefit) | Effective tax rate (1) | |||||||||
| GAAP Reported | $ 124,208 | 86.6 % | $ 366,473 | $ 139,047 | $ 148,456 | $ 69,148 | $ 63,189 | $ (16,112) | (76.7) % | ||||||||
| Non-GAAP Adjustments: | |||||||||||||||||
| Intangible asset amortization | — | — | — | — | (148,456) | — | — | — | — | ||||||||
| Share-based compensation expense | (2,605) | 0.3 | (36,447) | (14,798) | — | — | — | — | — | ||||||||
| Costs related to the disposal of a business | — | — | (42,200) | — | — | — | — | — | — | ||||||||
| Transaction and integration related expenses | (76) | — | (6,333) | (530) | — | — | — | — | — | ||||||||
| Non-cash interest expense | — | — | — | — | — | — | (5,572) | — | — | ||||||||
| Acquisition accounting inventory fair value step- up | (68,282) | 7.4 | — | — | — | — | — | — | — | ||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | 54,499 | 87.8 | ||||||||
| Total of non-GAAP adjustments | (70,963) | 7.7 | (84,980) | (15,328) | (148,456) | — | (5,572) | 54,499 | 87.8 | ||||||||
| Non-GAAP Adjusted | $ 53,245 | 94.3 % | $ 281,493 | $ 123,719 | $ — | $ 69,148 | $ 57,617 | $ 38,387 | 11.1 % |
| Three months ended June 30, 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 (1) | ||||||||
| GAAP Reported | $ 119,194 | 84.1 % | $ 429,031 | $ 132,696 | $ 140,480 | $ 69,420 | $ 228,621 | (168.0) % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (140,480) | — | — | — | |||||||
| Share-based compensation expense | (2,572) | 0.4 | (30,046) | (10,793) | — | — | — | — | |||||||
| Transaction and integration related costs | (405) | — | (129,545) | (3,378) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (22,322) | — | — | |||||||
| Acquisition accounting inventory fair value step- up | (65,991) | 8.8 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 53,021 | (5.5) | |||||||
| Impact of U.K. tax rate change | — | — | — | — | — | — | (251,380) | 184.7 | |||||||
| Total of non-GAAP adjustments | (68,968) | 9.2 | (159,591) | (14,171) | (140,480) | (22,322) | (198,359) | 179.2 | |||||||
| Non-GAAP Adjusted | $ 50,226 | 93.3 % | $ 269,440 | $ 118,525 | $ — | $ 47,098 | $ 30,262 | 11.2 % |
| __________________________ | |
| (1) | The fluctuations in the GAAP effective tax rates for the three months ended June 30, 2022 and 2021 are as a result of changes in the mix of pre-tax income and losses across our jurisdictions and the impact of the change in the statutory tax rate in the U.K. on the 2021 period. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS - FOR THE SIX MONTHS ENDED JUNE 30, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||
| Six months ended June 30, 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 expense (benefit) | Effective tax rate (1) | |||||||||
| GAAP Reported | $ 239,492 | 86.2 % | $ 675,286 | $ 269,028 | $ 320,550 | $ 69,148 | $ 133,873 | $ (15,576) | (57.0) % | ||||||||
| Non-GAAP Adjustments: | |||||||||||||||||
| Intangible asset amortization | — | — | — | — | (320,550) | — | — | — | — | ||||||||
| Share-based compensation expense | (5,421) | 0.4 | (68,961) | (27,097) | — | — | — | — | — | ||||||||
| Costs related to the disposal of a business | — | — | (50,210) | — | — | — | — | — | — | ||||||||
| Transaction and integration related expenses | (395) | — | (15,921) | (1,753) | — | — | — | — | — | ||||||||
| Non-cash interest expense | — | — | — | — | — | — | (17,740) | — | — | ||||||||
| Acquisition accounting inventory fair value step- up | (132,225) | 7.6 | — | — | — | — | — | — | — | ||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | 109,186 | 71.0 | ||||||||
| Total of non-GAAP adjustments | (138,041) | 8.0 | (135,092) | (28,850) | (320,550) | — | (17,740) | 109,186 | 71.0 | ||||||||
| Non-GAAP Adjusted | $ 101,451 | 94.2 % | $ 540,194 | $ 240,178 | $ — | $ 69,148 | $ 116,133 | $ 93,610 | 14.0 % |
| Six months ended June 30, 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 (1) | ||||||||
| GAAP Reported | $ 159,383 | 88.2 % | $ 689,539 | $ 209,269 | $ 208,672 | $ 96,796 | $ 246,640 | (65,946.5) % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (208,672) | — | — | — | |||||||
| Share-based compensation expense | (4,568) | 0.4 | (53,892) | (19,436) | — | — | — | — | |||||||
| Transaction and integration related costs | (405) | — | (137,807) | (3,378) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (38,010) | — | — | |||||||
| Acquisition accounting inventory fair value step- up | (65,991) | 4.9 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 72,661 | (1,254.6) | |||||||
| Impact of U.K. tax rate change | — | — | — | — | — | — | (251,380) | 67,213.9 | |||||||
| Total of non-GAAP adjustments | (70,964) | 5.3 | (191,699) | (22,814) | (208,672) | (38,010) | (178,719) | 65,959.3 | |||||||
| Non-GAAP Adjusted | $ 88,419 | 93.5 % | $ 497,840 | $ 186,455 | $ — | $ 58,786 | $ 67,921 | 12.8 % |
| __________________________ | |
| (1) | The fluctuations in the GAAP effective tax rates for the six months ended June 30, 2022 and 2021 are as a result of changes in the mix of pre-tax income and losses across our jurisdictions and the impact of the change in the statutory tax rate in the U.K. on the 2021 period. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATION OF PRO FORMA GAAP NET INCOME TO PRO FORMA NON-GAAP ADJUSTED EBITDA AND CALCULATION OF PRO FORMA NON-GAAP NET LEVERAGE RATIO (In thousands, except ratio) (Unaudited) | |
| The following table provides a reconciliation of the Company's pro forma GAAP net income to pro forma non-GAAP Adjusted EBITDA (calculated in accordance with the Credit Agreement) for the last twelve months, or LTM, ended June 30, 2022 and the calculation of the Company's pro forma non-GAAP net leverage ratio: | |
| LTM Ended June 30, 2022 | |
| Pro forma GAAP net income 2 | $ 34,320 |
| Interest expense, net | 315,842 |
| Income tax benefit | (46,100) |
| Depreciation and amortization 3 | 649,740 |
| Pro forma non-GAAP EBITDA | 953,802 |
| Transaction and integration related expenses | 120,190 |
| Share-based compensation expense 3 | 183,726 |
| Acquisition accounting inventory fair value step-up | 289,319 |
| Upfront and milestone payments | 87,648 |
| Costs related to the disposal of a business | 50,210 |
| Other | (44,387) |
| Expected cost synergies 4 | 20,000 |
| Pro forma non-GAAP Adjusted EBITDA 1 | $ 1,660,508 |
| At June 30, 2022 | |
| Calculation of Net Debt: | |
| Total GAAP debt | $ 6,144,000 |
| Cash, cash equivalents and investments | (771,265) |
| Net Debt | $ 5,372,735 |
| Calculation of Pro Forma Non-GAAP Net Leverage Ratio: | |
| Pro forma non-GAAP Net Leverage Ratio | 3.2 |
| _________________________ | |
| 1. | Pro forma non-GAAP Adjusted EBITDA is calculated in accordance with the definition of Consolidated Adjusted EBITDA as set out in the Credit Agreement. |
| 2. | Pro forma GAAP net income is derived from the GAAP financial statements of the Company for the LTM ended June 30, 2022 and, in accordance with the Credit Agreement reflects the divestment of Sunosi U.S. to Axsome on a pro forma basis as if the divestment had occurred at the beginning of the LTM ended June 30, 2022. |
| 3. | Excludes the portion of these adjustments related to the Sunosi U.S. business. |
| 4. | Expected cost synergies of $45 million from initiatives implemented following the acquisition of GW are assumed to be realized pro-rata through 2022. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2022 NET INCOME GUIDANCE (In millions, except per share amounts) (Unaudited) | |
| GAAP net income | $90 - $255 |
| Intangible asset amortization | 600 - 620 |
| Acquisition accounting inventory fair value step-up | 270 - 300 |
| Share-based compensation expense | 220 - 250 |
| Transaction and integration related expenses | 35 - 45 |
| Costs related to disposal of a business | 40 - 50 |
| Non-cash interest expense | 45 - 55 |
| Income tax effect of above adjustments | (215) - (230) |
| Non-GAAP adjusted net income | $1,180 - $1,250 |
| GAAP net income per diluted share | $1.45 - $3.95 |
| Non-GAAP adjusted net income per diluted share 1 | $16.70 - $17.70 |
| Weighted-average ordinary shares used in per share calculations - GAAP | 63 - 72 |
| Weighted-average ordinary shares used in per share calculations - non-GAAP | 72 |
| _______________ | |
| 1. | Non-GAAP adjusted EPS guidance for 2022 reflects dilution of $2.05, at the midpoint, post adoption of ASU 2020-06. |
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