Full Press Release Details
DUBLIN , Nov. 9, 2022 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ ) today announced financial results for the third quarter of 2022, and raised the mid-point of 2022 total revenue guidance.
"Our execution across our business continues to chart a clear path to delivering on Vision 2025. We have further strengthened our operations, and our business is performing well as we've diversified our revenue streams and rapidly deleveraged, while delivering meaningful top- and bottom-line growth. We have also achieved another important milestone — exiting October 2022 , there are now more narcolepsy patients taking Xywav ® than Xyrem ® ," said Bruce Cozadd , chairman and CEO of Jazz Pharmaceuticals. "We're pleased with the performance across our key products: compelling Xywav adoption across both narcolepsy and idiopathic hypersomnia (IH) continues to drive oxybate durability, Epidiolex ® delivered significant year-over-year growth driven by underlying demand, strong demand for Rylaze ® underscores the substantial unmet need and Zepzelca ® remains the treatment of choice in second-line small cell lung cancer (SCLC). Based on this performance, we are raising the mid-point for our 2022 full year revenue guidance and continue to focus on long-term sustainable growth."
"We have prioritized and invested in key programs leading to significant progress across our pipeline. I'm pleased to announce we have enrolled the first patients in both our Phase 1 clinical trial of JZP815, a pan-RAF inhibitor, and our Phase 3 trial of Epidyolex ® in Japan ," said Rob Iannone , M.D., M.S.C.E., executive vice president, global head of research and development of Jazz Pharmaceuticals. "Upon close of the transaction, we are excited to further expand our pipeline with zanidatamab, a novel HER2-targeted bispecific antibody in late-stage trials with the potential to transform the current standard of care in multiple HER2-expressing cancers, and also through the initiation of a Phase 2 clinical trial evaluating suvecaltamide (JZP385) in Parkinson's disease tremor. We also continue to advance the JZP441 orexin-2 receptor agonist program. Together, this pipeline progress underscores an exciting time for R&D at Jazz as we look to deliver innovative therapies for patients in critical need."
Business and Execution
| _______________________ | |
| 1. | Pending transaction close. |
| 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
Zanidatamab Agreement 1 :
| _______________________ | |
| 1. | Subject to closing conditions, Jazz to obtain exclusive development and commercialization rights to zanidatamab across all indications in the United States, Europe, Japan and all other territories except for those Asia/Pacific territories previously licensed by Zymeworks. |
Key Pipeline Highlights
Suvecaltamide (JZP385):
Financial Highlights
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (In thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||
| Total revenues | $ 940,652 | $ 838,115 | $ 2,687,251 | $ 2,197,507 | |||
| GAAP net income (loss) | $ (19,648) | $ (52,833) | $ 16,664 | $ (294,317) | |||
| Adjusted net income | $ 370,438 | $ 261,418 | $ 937,837 | $ 730,812 | |||
| GAAP EPS | $ (0.31) | $ (0.86) | $ 0.26 | $ (4.98) | |||
| Adjusted EPS 1,2 | $ 5.17 | $ 4.20 | $ 13.21 | $ 12.02 |
| _______________________ | |
| 1. | Adjusted EPS for the three and nine months ended September 30, 2022 was impacted by $0.63 per share and $1.59 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 loss in 3Q22 was $(19.6) million, or $(0.31) per diluted share, compared to $(52.8) million, or $(0.86) per diluted share, for 3Q21. Non-GAAP adjusted net income in 3Q22 was $370 .4 million, or $5.17 per diluted share, compared to $261 .4 million, or $4.20 per diluted share, for 3Q21. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | |||
| Xyrem | $ 256,039 | $ 307,333 | $ 772,957 | $ 977,065 | |||
| Xywav | 255,936 | 153,063 | 677,041 | 352,643 | |||
| Total Oxybate | 511,975 | 460,396 | 1,449,998 | 1,329,708 | |||
| Epidiolex/Epidyolex 1 | 196,218 | 160,378 | 529,400 | 269,859 | |||
| Sativex 1 | 3,220 | 6,097 | 12,104 | 8,058 | |||
| Sunosi 2 | — | 19,251 | 28,844 | 42,981 | |||
| Total Neuroscience | 711,413 | 646,122 | 2,020,346 | 1,650,606 | |||
| Zepzelca | 70,320 | 71,714 | 197,943 | 181,972 | |||
| Rylaze | 73,513 | 20,674 | 200,687 | 20,674 | |||
| Vyxeos | 30,067 | 34,688 | 97,714 | 99,296 | |||
| Defitelio/defibrotide | 49,452 | 57,705 | 153,637 | 155,420 | |||
| Erwinaze/Erwinase | — | — | — | 69,382 | |||
| Total Oncology | 223,352 | 184,781 | 649,981 | 526,744 | |||
| Other | 1,001 | 3,344 | 3,576 | 8,768 | |||
| Product sales, net | 935,766 | 834,247 | 2,673,903 | 2,186,118 | |||
| Royalties and contract revenues | 4,886 | 3,868 | 13,348 | 11,389 | |||
| Total revenues | $ 940,652 | $ 838,115 | $ 2,687,251 | $ 2,197,507 |
| __________________________ | |
| 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 12% in 3Q22 compared to the same period in 2021.
Operating Expenses and Effective Tax Rate
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| GAAP: | |||||||
| Cost of product sales | $ 133,661 | $ 145,224 | $ 373,153 | $ 304,607 | |||
| Gross margin | 85.7 % | 82.6 % | 86.0 % | 86.1 % | |||
| Selling, general and administrative | $ 358,478 | $ 363,682 | $ 1,033,764 | $ 1,053,221 | |||
| % of total revenues | 38.1 % | 43.4 % | 38.5 % | 47.9 % | |||
| Research and development | $ 148,870 | $ 141,036 | $ 417,898 | $ 350,305 | |||
| % of total revenues | 15.8 % | 16.8 % | 15.6 % | 15.9 % | |||
| Acquired in-process research and development | $ — | $ — | $ 69,148 | $ — | |||
| Impairment charge | $ 133,648 | $ — | $ 133,648 | $ — | |||
| Income tax expense (benefit) | $ (43,027) | $ (18,057) | $ (58,603) | $ 228,583 | |||
| Effective tax rate (1) | 71.6 % | 26.7 % | 178.7 % | (336.1) % |
| _____________________________ | |
| 1. | The fluctuations in the GAAP effective tax rates for the three and nine months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired in-process research and development (IPR&D) asset and costs related to restructuring in 2022 and the impact of the change in the statutory tax rate in the U.K in 2021. |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (In thousands, except percentages) | 2022 | 2021 | 2022 | 2021 | |||
| Non-GAAP adjusted: | |||||||
| Cost of product sales | $ 57,103 | $ 58,872 | $ 158,554 | $ 147,291 | |||
| Gross margin | 93.9 % | 92.9 % | 94.1 % | 93.3 % | |||
| Selling, general and administrative | $ 274,747 | $ 278,552 | $ 814,941 | $ 776,392 | |||
| % of total revenues | 29.2 % | 33.2 % | 30.3 % | 35.3 % | |||
| Research and development | $ 120,802 | $ 124,470 | $ 360,980 | $ 310,925 | |||
| % of total revenues | 12.8 % | 14.9 % | 13.4 % | 14.1 % | |||
| Acquired in-process research and development | $ — | $ — | $ 69,148 | $ — | |||
| Income tax expense | $ 44,386 | $ 43,589 | $ 137,996 | $ 111,510 | |||
| Effective tax rate | 10.6 % | 14.1 % | 12.7 % | 13.3 % |
Changes in operating expenses in 3Q22 over the prior year period are primarily due to the following:
Cash Flow and Balance Sheet
As of September 30, 2022, cash, cash equivalents and investments were $899 .4 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 nine months ended September 30, 2022, the Company generated $930 .0 million of cash from operations. In 3Q22 the Company made a voluntary payment of $300 .0 million on the Dollar Term Loan and 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 raised the mid-point of 2022 total revenue guidance to $3.65 billion driven by increases in the guidance mid-point for both our Neuroscience and Oncology therapeutic areas.
| (In millions) | November 9, 2022 | August 3, 2022 | |
| Revenues | $3,600 - $3,700 | $3,500 - $3,700 | |
| –Neuroscience (includes potential Xyrem authorized generic royalties) | $2,700 - $2,800 | $2,600 - $2,800 | |
| –Oncology | $860 - $920 | $840 - $920 |
| (In millions, except per share amounts and percentages) | November 9, 2022 | August 3, 2022 | |
| Gross margin % | 85 % | 85 % | |
| SG&A expenses | $1,328 - $1,391 | $1,299 - $1,389 | |
| SG&A expenses as % of total revenues | 36% - 39% | 35% - 40% | |
| R&D expenses | $560 - $596 | $621 - $669 | |
| R&D expenses as % of total revenues | 15% - 17% | 17% - 19% | |
| Impairment charge | $134 | - | |
| Acquired in-process research and development expenses | $119 1 | $69 | |
| Effective tax rate | (88)% - 179% | (22)% - 1,104% | |
| Net income | $50 - $175 | $90 - $255 | |
| Net income per diluted share | $0.75 - $2.75 | $1.45 - $3.95 | |
| Weighted-average ordinary shares used in per share calculations | 64 | 63 - 72 |
| (In millions, except per share amounts and percentages) | November 9, 2022 | August 3, 2022 | |
| Gross margin % | 93% 2,7 | 93 % | |
| SG&A expenses | $1,090 - $1,120 3,7 | $1,080 - $1,130 | |
| SG&A expenses as % of total revenues | 29% - 31% | 29% - 32% | |
| R&D expenses | $490 - $520 4,7 | $560 - $600 | |
| R&D expenses as % of total revenues | 13% - 14% | 15% - 17% | |
| Acquired in-process research and development expenses | $119 1 | $69 | |
| Effective tax rate | 10% - 12% 5,7 | 10% - 12% | |
| Net income | $1,225 - $1,275 7 | $1,180 - $1,250 | |
| Net income per diluted share 6 | $17.20 - $17.85 7 | $16.70 - $17.70 | |
| Weighted-average ordinary shares used in per share calculations | 73 | 72 |
| ____________________________ | |
| 1. | Includes anticipated $50 million payment to Zymeworks in connection with an exclusive licensing agreement for zanidatamab, subject to HSR Clearance. Should Jazz decide to continue the collaboration following readout of the top-line clinical data from HERIZON-BTC-01, Zymeworks is eligible to receive a second payment of $325 million, and therefore Jazz's acquired IPR&D expenses would increase accordingly. |
| 2. | Excludes $260-$280 million of amortization of acquisition-related inventory fair value step-up, $11-$12 million of share-based compensation expense, $2 million of restructuring costs and $1 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP gross margin. |
| 3. | Excludes $133-$146 million of share-based compensation expense, $43 million of restructuring and other costs, $22-$32 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. |
| 4. | Excludes $56-$62 million of share-based compensation expense, $12 million of restructuring costs and $2 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP R&D expenses. |
| 5. | Excludes the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income. |
| 6. | 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 $25 million, on a non-GAAP basis, under the "if converted" method. |
| 7. | 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. GMT ) to provide a business and financial update and discuss its 2022 third 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 . 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 (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 advancement of pipeline programs and the timing of planned regulatory activities and submissions related thereto; the potential of zanidatamab to transform the current standard of care in multiple HER2-expressing cancers and deliver significant long-term value and meaningfully contribute to Vision 2025, and expectations to leverage the Company's existing integrated capabilities and global infrastructure to commercialize zanidatamab efficiently, subject to approval; expectations with respect to the Company's license agreement with Zymeworks Inc., including HSR Clearance and payments thereunder; 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 long-term 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 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 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.
| JAZZ PHARMACEUTICALS PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands, except per share amounts) (Unaudited) | |||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| Revenues: | |||||||
| Product sales, net | $ 935,766 | $ 834,247 | $ 2,673,903 | $ 2,186,118 | |||
| Royalties and contract revenues | 4,886 | 3,868 | 13,348 | 11,389 | |||
| Total revenues | 940,652 | 838,115 | 2,687,251 | 2,197,507 | |||
| Operating expenses: | |||||||
| Cost of product sales (excluding amortization of acquired developed technologies) | 133,661 | 145,224 | 373,153 | 304,607 | |||
| Selling, general and administrative | 358,478 | 363,682 | 1,033,764 | 1,053,221 | |||
| Research and development | 148,870 | 141,036 | 417,898 | 350,305 | |||
| Intangible asset amortization | 141,232 | 159,804 | 461,782 | 368,476 | |||
| Acquired in-process research and development | — | — | 69,148 | — | |||
| Impairment charge | 133,648 | — | 133,648 | — | |||
| Total operating expenses | 915,889 | 809,746 | 2,489,393 | 2,076,609 | |||
| Income from operations | 24,763 | 28,369 | 197,858 | 120,898 | |||
| Interest expense, net | (80,244) | (93,372) | (214,117) | (190,168) | |||
| Foreign exchange gain (loss) | (4,649) | (2,631) | (16,532) | 1,262 | |||
| Loss before income tax expense (benefit) and equity in loss (gain) of investees | (60,130) | (67,634) | (32,791) | (68,008) | |||
| Income tax expense (benefit) | (43,027) | (18,057) | (58,603) | 228,583 | |||
| Equity in loss (gain) of investees | 2,545 | 3,256 | 9,148 | (2,274) | |||
| Net income (loss) | $ (19,648) | $ (52,833) | $ 16,664 | $ (294,317) | |||
| Net income (loss) per ordinary share: | |||||||
| Basic | $ (0.31) | $ (0.86) | $ 0.27 | $ (4.98) | |||
| Diluted | $ (0.31) | $ (0.86) | $ 0.26 | $ (4.98) | |||
| Weighted-average ordinary shares used in per share calculations - basic | 62,785 | 61,284 | 62,365 | 59,084 | |||
| Weighted-average ordinary shares used in per share calculations - diluted | 62,785 | 61,284 | 63,388 | 59,084 |
JAZZ PHARMACEUTICALS PLC PRO FORMA NET PRODUCT SALES (In thousands) (Unaudited)
The following unaudited pro forma information represents the net product sales for the nine months ended September 30, 2022, compared to the same period in 2021, as if the acquisition of GW had been completed on January 1, 2021:
| Nine Months Ended September 30, | |||
| 2022 | 2021 | ||
| Xyrem | $ 772,957 | $ 977,065 | |
| Xywav | 677,041 | 352,643 | |
| Total Oxybate | 1,449,998 | 1,329,708 | |
| Epidiolex/Epidyolex | 529,400 | 464,508 | |
| Sativex | 12,104 | 13,825 | |
| Sunosi 1 | 28,844 | 42,981 | |
| Total Neuroscience | 2,020,346 | 1,851,022 | |
| Zepzelca | 197,943 | 181,972 | |
| Rylaze | 200,687 | 20,674 | |
| Vyxeos | 97,714 | 99,296 | |
| Defitelio/defibrotide | 153,637 | 155,420 | |
| Erwinaze/Erwinase | — | 69,382 | |
| Total Oncology | 649,981 | 526,744 | |
| Other | 3,576 | 8,768 | |
| Product sales, net | $ 2,673,903 | $ 2,386,534 |
| ____________________________ | |
| 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) | |||
| September 30, 2022 | December 31, 2021 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 839,358 | $ 591,448 | |
| Investments | 60,000 | — | |
| Accounts receivable, net of allowances | 601,179 | 563,360 | |
| Inventories | 728,074 | 1,072,721 | |
| Prepaid expenses | 92,877 | 131,413 | |
| Other current assets | 250,016 | 252,392 | |
| Total current assets | 2,571,504 | 2,611,334 | |
| Property, plant and equipment, net | 216,339 | 256,837 | |
| Operating lease assets | 73,728 | 86,586 | |
| Intangible assets, net | 5,570,394 | 7,152,328 | |
| Goodwill | 1,592,635 | 1,827,609 | |
| Deferred tax assets, net | 314,965 | 311,103 | |
| Deferred financing costs | 9,949 | 12,029 | |
| Other non-current assets | 35,153 | 40,813 | |
| Total assets | $ 10,384,667 | $ 12,298,639 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ 102,249 | $ 100,298 | |
| Accrued liabilities | 668,390 | 666,304 | |
| Current portion of long-term debt | 31,000 | 31,000 | |
| Income taxes payable | 10,444 | 9,608 | |
| Deferred revenue | 871 | 2,093 | |
| Total current liabilities | 812,954 | 809,303 | |
| Deferred revenue, non-current | 116 | 463 | |
| Long-term debt, less current portion | 5,695,814 | 6,018,943 | |
| Operating lease liabilities, less current portion | 72,984 | 87,200 | |
| Deferred tax liabilities, net | 933,670 | 1,300,541 | |
| Other non-current liabilities | 123,935 | 116,998 | |
| Total shareholders' equity | 2,745,194 | 3,965,191 | |
| Total liabilities and shareholders' equity | $ 10,384,667 | $ 12,298,639 |
| JAZZ PHARMACEUTICALS PLC SUMMARY OF CASH FLOWS (In thousands) (Unaudited) | |||
| Nine Months Ended September 30, | |||
| 2022 | 2021 | ||
| Net cash provided by operating activities | $ 930,006 | $ 600,752 | |
| Net cash used in investing activities | (121,852) | (5,202,051) | |
| Net cash (used in) provided by financing activities | (549,087) | 4,217,131 | |
| Effect of exchange rates on cash and cash equivalents | (11,157) | (1,821) | |
| Net increase (decrease) in cash and cash equivalents | $ 247,910 | $ (385,989) |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (In thousands, except per share amounts) (Unaudited) | |||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| GAAP reported net income (loss) | $ (19,648) | $ (52,833) | $ 16,664 | $ (294,317) | |||
| Intangible asset amortization | 141,232 | 159,804 | 461,782 | 368,476 | |||
| Impairment charge 1 | 133,648 | — | 133,648 | — | |||
| Share-based compensation expense | 54,948 | 45,535 | 156,427 | 123,431 | |||
| Transaction and integration related expenses 2 | 5,491 | 59,867 | 23,560 | 201,457 | |||
| Non-cash interest expense 3 | 14,262 | 28,045 | 32,002 | 66,055 | |||
| Acquisition accounting inventory fair value step-up | 70,964 | 82,646 | 203,189 | 148,637 | |||
| (Income) costs related to disposal of a business 4 | (671) | — | 49,539 | — | |||
| Restructuring and other costs 5 | 57,625 | — | 57,625 | — | |||
| Income tax effect of above adjustments | (87,413) | (61,646) | (196,599) | (134,307) | |||
| Impact of U.K. tax rate change | — | — | — | 251,380 | |||
| Non-GAAP adjusted net income | $ 370,438 | $ 261,418 | $ 937,837 | $ 730,812 | |||
| GAAP reported net income (loss) per diluted share 6 | $ (0.31) | $ (0.86) | $ 0.26 | $ (4.98) | |||
| Non-GAAP adjusted net income per diluted share 6 | $ 5.17 | $ 4.20 | $ 13.21 | $ 12.02 | |||
| Weighted-average ordinary shares used in diluted per share calculations - GAAP | 62,785 | 61,284 | 63,388 | 59,084 | |||
| Weighted-average ordinary shares used in diluted per share calculations - non-GAAP | 72,860 | 62,285 | 72,432 | 60,805 |
| ________________________________________________ | |
| 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. As such, Non-GAAP adjusted net income per diluted share for the three and nine months ended September 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 $18.9 million, respectively. There was no impact on GAAP reported net income (loss) per diluted share for the three and nine months ended September 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 SEPTEMBER 30, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||
| Three months ended September 30, 2022 | |||||||||||||||||
| Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Impairment charge | Interest expense, net | Income tax expense (benefit) | Effective tax rate (1) | |||||||||
| GAAP Reported | $ 133,661 | 85.7 % | $ 358,478 | $ 148,870 | $ 141,232 | $ 133,648 | $ 80,244 | $ (43,027) | 71.6 % | ||||||||
| Non-GAAP Adjustments: | |||||||||||||||||
| Intangible asset amortization | — | — | — | — | (141,232) | — | — | — | — | ||||||||
| Share-based compensation expense | (3,160) | 0.3 | (35,890) | (15,898) | — | — | — | — | — | ||||||||
| Impairment charge | — | — | — | — | — | (133,648) | — | — | — | ||||||||
| Income related to the disposal of a business | — | — | 671 | — | — | — | — | — | — | ||||||||
| Restructuring and other costs | (2,359) | 0.3 | (43,375) | (11,891) | — | — | — | — | — | ||||||||
| Transaction and integration related expenses | (75) | — | (5,137) | (279) | — | — | — | — | — | ||||||||
| Non-cash interest expense | — | — | — | — | — | — | (14,262) | — | — | ||||||||
| Acquisition accounting inventory fair value step-up | (70,964) | 7.6 | — | — | — | — | — | — | |||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | 87,413 | (61.0) | ||||||||
| Total of non-GAAP adjustments | (76,558) | 8.2 | (83,731) | (28,068) | (141,232) | (133,648) | (14,262) | 87,413 | (61.0) | ||||||||
| Non-GAAP Adjusted | $ 57,103 | 93.9 % | $ 274,747 | $ 120,802 | $ — | $ — | $ 65,982 | $ 44,386 | 10.6 % |
| Three months ended September 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 | $ 145,224 | 82.6 % | $ 363,682 | $ 141,036 | $ 159,804 | $ 93,372 | $ (18,057) | 26.7 % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (159,804) | — | — | — | |||||||
| Share-based compensation expense | (2,763) | 0.3 | (31,752) | (11,020) | — | — | — | — | |||||||
| Transaction and integration related costs | (943) | 0.1 | (53,378) | (5,546) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (28,045) | — | — | |||||||
| Acquisition accounting inventory fair value step-up | (82,646) | 9.9 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 61,646 | (12.6) | |||||||
| Total of non-GAAP adjustments | (86,352) | 10.3 | (85,130) | (16,566) | (159,804) | (28,045) | 61,646 | (12.6) | |||||||
| Non-GAAP Adjusted | $ 58,872 | 92.9 % | $ 278,552 | $ 124,470 | $ — | $ 65,327 | $ 43,589 | 14.1 % |
| __________________________ | |
| (1) | The fluctuations in the GAAP effective tax rates for the three months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired IPR&D asset and costs related to restructuring in 2022. |
| JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS - FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021 (In thousands, except percentages) (Unaudited) | |||||||||||||||||||
| Nine months ended September 30, 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 | $ 373,153 | 86.0 % | $ 1,033,764 | $ 417,898 | $ 461,782 | $ 133,648 | $ 69,148 | $ 214,117 | $ (58,603) | 178.7 % | |||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||
| Intangible asset amortization | — | — | — | — | (461,782) | — | — | — | — | — | |||||||||
| Share-based compensation expense | (8,581) | 0.3 | (104,851) | (42,995) | — | — | — | — | — | — | |||||||||
| Impairment charge | — | — | — | — | — | (133,648) | — | — | — | — | |||||||||
| Costs related to the disposal of a business | — | — | (49,539) | — | — | — | — | — | — | — | |||||||||
| Restructuring and other costs | (2,359) | 0.1 | (43,375) | (11,891) | — | — | — | — | — | ||||||||||
| Transaction and integration related expenses | (470) | — | (21,058) | (2,032) | — | — | — | — | — | — | |||||||||
| Non-cash interest expense | — | — | — | — | — | — | — | (32,002) | — | — | |||||||||
| Acquisition accounting inventory fair value step-up | (203,189) | 7.7 | — | — | — | — | — | — | — | — | |||||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | — | — | 196,599 | (166.0) | |||||||||
| Total of non-GAAP adjustments | (214,599) | 8.1 | (218,823) | (56,918) | (461,782) | (133,648) | — | (32,002) | 196,599 | (166.0) | |||||||||
| Non-GAAP Adjusted | $ 158,554 | 94.1 % | $ 814,941 | $ 360,980 | $ — | $ — | $ 69,148 | $ 182,115 | $ 137,996 | 12.7 % |
| Nine months ended September 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 | $ 304,607 | 86.1 % | $ 1,053,221 | $ 350,305 | $ 368,476 | $ 190,168 | $ 228,583 | (336.1) % | |||||||
| Non-GAAP Adjustments: | |||||||||||||||
| Intangible asset amortization | — | — | — | — | (368,476) | — | — | — | |||||||
| Share-based compensation expense | (7,331) | 0.3 | (85,644) | (30,456) | — | — | — | — | |||||||
| Transaction and integration related costs | (1,348) | 0.1 | (191,185) | (8,924) | — | — | — | — | |||||||
| Non-cash interest expense | — | — | — | — | — | (66,055) | — | — | |||||||
| Acquisition accounting inventory fair value step-up | (148,637) | 6.8 | — | — | — | — | — | — | |||||||
| Income tax effect of above adjustments | — | — | — | — | — | — | 134,307 | (20.2) | |||||||
| Impact of U.K. tax rate change | — | — | — | — | — | — | (251,380) | 369.6 | |||||||
| Total of non-GAAP adjustments | (157,316) | 7.2 | (276,829) | (39,380) | (368,476) | (66,055) | (117,073) | 349.4 | |||||||
| Non-GAAP Adjusted | $ 147,291 | 93.3 % | $ 776,392 | $ 310,925 | $ — | $ 124,113 | $ 111,510 | 13.3 % |
| __________________________ | |
| (1) | The fluctuations in the GAAP effective tax rates for the nine months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired IPR&D asset and costs related to restructuring in 2022 and the impact of the change in the statutory tax rate in the U.K in 2021. |
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 September 30, 2022 and the calculation of the Company's pro forma non-GAAP net leverage ratio:
| LTM Ended September 30, 2022 | |
| Pro forma GAAP net income 2 | $ 46,278 |
| Interest expense, net | 302,714 |
| Income tax benefit | (71,070) |
| Depreciation and amortization 3 | 632,668 |
| Pro forma non-GAAP EBITDA | 910,590 |
| Transaction and integration related expenses | 65,813 |
| Share-based compensation expense 3 | 195,790 |
| Acquisition accounting inventory fair value step-up | 277,638 |
| Restructuring and other costs | 57,625 |
| Impairment charge | 133,648 |
| Upfront and milestone payments | 85,400 |
| Costs related to the disposal of a business | 49,539 |
| Other | (61,829) |
| Expected cost synergies 4 | 10,000 |
| Pro forma non-GAAP Adjusted EBITDA 1 | $ 1,724,214 |
| At September 30, 2022 | |
| Calculation of Net Debt: | |
| Total GAAP debt | $ 5,836,250 |
| Cash, cash equivalents and investments | (899,358) |
| Net Debt | $ 4,936,892 |
| Calculation of Pro Forma Non-GAAP Net Leverage Ratio: | |
| Pro forma non-GAAP Net Leverage Ratio | 2.9 |
| ____________________________________ | |
| 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 September 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 September 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 | $50 - $175 |
| Intangible asset amortization | 590 - 610 |
| Acquisition accounting inventory fair value step-up | 260 - 280 |
| Share-based compensation expense | 200 - 220 |
| Impairment charge | 134 |
| Restructuring and other costs | 58 |
| Transaction and integration related expenses | 25 - 35 |
| Costs related to disposal of a business | 40 - 50 |
| Non-cash interest expense | 35 - 45 |
| Income tax effect of above adjustments | (240) - (255) |
| Non-GAAP adjusted net income | $1,225 - $1,275 |
| GAAP net income per diluted share | $0.75 - $2.75 |
| Non-GAAP adjusted net income per diluted share 1 | $17.20 - $17.85 |
| Weighted-average ordinary shares used in per share calculations - GAAP | 64 |
| Weighted-average ordinary shares used in per share calculations - non-GAAP | 73 |
| ____________________________________ | |
| 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