Jazz Pharmaceuticals Announces Second Quarter 2018 Financial Results

Published: Aug 07, 2018

 

GAAP Diluted EPS of $1.50; Adjusted Diluted EPS of $3.49 Reflects Growth of 36%
Total Revenues of $500 Million, an Increase of 27%
Xyrem Product Sales Increased 19% to $356 Million; Raising 2018 Xyrem Sales Guidance to a Range of $1.35 to $1.38 Billion
Hematology/Oncology Product Sales were $127 Million
Significant Regulatory Progress with CHMP Positive Opinion for Vyxeos in the Treatment of High-Risk AML and U.S. FDA Acceptance with Priority Review of sNDA for Xyrem in the Treatment of Pediatric Narcolepsy
Collaboration with MD Anderson Cancer Center to Evaluate Potential Treatment Options for Hematologic Malignancies
Approval Granted by the U.S. Centers for Medicare and Medicaid Services for a New Technology Add-on Payment for Vyxeos for the Treatment of Adults with Newly Diagnosed t-AML or AML-MRC

DUBLIN, Aug. 7, 2018 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the second quarter of 2018 and updated financial guidance for 2018.

"We had another highly productive quarter, including strong commercial performance, achievement of significant regulatory and R&D milestones, and further strengthening of our balance sheet," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We head into the second half of 2018 focused on supporting our sales momentum, progressing our pre-clinical and clinical pipeline, deploying our resources to expand the business through R&D and corporate development activities, and preparing for multiple near-term regulatory milestones, including three potential marketing approvals."

GAAP net income for the second quarter of 2018 was $92.3 million, or $1.50 per diluted share, compared to $105.6 million, or $1.72 per diluted share, for the second quarter of 2017. GAAP net income for the second quarter of 2018 included an impairment charge of $42.9 million resulting from the company's decision to sell its rights related to Prialt.

Adjusted net income for the second quarter of 2018 was $214.6 million, or $3.49 per diluted share, compared to $157.4 million, or $2.56 per diluted share, for the second quarter of 2017. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

    Financial Highlights
    --------------------


                             Three Months Ended                 Six Months Ended
                                  June 30,                          June 30,
                                  --------                          --------

    (In thousands,
     except per share
     amounts and
     percentages)        2018                            2017 Change             2018       2017 Change
                         ----                            ---- ------             ----       ---- ------

    Total revenues                              $500,479              $394,386          27%             $945,092 $770,439   23%

    GAAP net income                              $92,321              $105,604        (13)%             $138,312 $192,115 (28)%

    Adjusted net
     income                                     $214,636              $157,354          36%             $397,007 $298,576   33%

    GAAP EPS                                       $1.50                 $1.72        (13)%                $2.26    $3.13 (28)%

    Adjusted EPS                                   $3.49                 $2.56          36%                $6.48    $4.87   33%

 

    Total Revenues
    --------------


                              Three Months Ended           Six Months Ended
                                   June 30,                    June 30,
                                   --------                    --------

    (In thousands)        2018                            2017                 2018            2017
                                                                             ----            ----

    Xyrem(R) (sodium
     oxybate) oral
     solution                                   $356,008                    $298,026                $672,785  $570,352

    Erwinaze(R) /
     Erwinase(R)
     (asparaginase
     Erwinia
     chrysanthemi)      58,713                            49,024                     109,340          100,412

    Defitelio(R)
     (defibrotide
     sodium) /
     defibrotide        40,498                            30,238                      75,559           66,138

    Vyxeos(R)
     (daunorubicin and
     cytarabine)
     liposome for
     injection          27,951                                 -                     54,179                -

    Prialt(R)
     (ziconotide)
     intrathecal
     infusion            8,921                             5,656                      15,047           13,373

    Other                4,004                             6,711                      10,032           13,058
                         -----                             -----                      ------           ------

    Product sales, net 496,095                           389,655                     936,942          763,333

    Royalties and
     contract revenues   4,384                             4,731                       8,150            7,106

    Total revenues                              $500,479                    $394,386                $945,092  $770,439
                                                ========                    ========                ========  ========

Total revenues increased 27% in the second quarter of 2018 compared to the same period in 2017 due to the contribution of strong sales from Xyrem, Erwinaze/Erwinase, Defitelio and the addition of Vyxeos following the launch in August 2017.

Xyrem net product sales increased 19% in the second quarter of 2018 compared to the same period in 2017.

Erwinaze/Erwinase net product sales increased 20% in the second quarter of 2018 compared to the same period in 2017. The company experienced supply disruptions during both periods and fluctuations in quarterly results reflect, in part, the timing of supply availability. The company expects continued supply challenges from time to time for the remainder of 2018.

Defitelio/defibrotide net product sales increased 34% in the second quarter of 2018 compared to the same period in 2017. The company continues to expect inter-quarter variability in Defitelio net sales given that veno-occlusive disease is an ultra-rare disease.

Vyxeos net product sales were $28.0 million in the second quarter of 2018.

    Operating Expenses
    ------------------


                                 Three Months Ended                            Six Months Ended
                                      June 30,                                     June 30,
                                      --------                                     --------

    (In thousands,
     except percentages)  2018                      2017       2018                     2017
                          ----                      ----       ----                     ----

    GAAP:

    Cost of product
     sales                        $34,714                            $28,672                     $68,633    $53,737

    Gross margin         93.0%                           92.6%                      92.7%        93.0%

    Selling, general and
     administrative              $158,579                           $132,328                    $365,792   $276,583

    % of total revenues  31.7%                           33.6%                      38.7%        35.9%

    Research and
     development                  $56,132                            $40,157                    $118,799    $85,085

    % of total revenues  11.2%                           10.2%                      12.6%        11.0%

    Impairment charges            $42,896                        $         -                    $42,896  $       -



                               Three Months Ended                       Six Months Ended
                                    June 30,                                June 30,
                                    --------                                --------

    (In thousands,
     except percentages)  2018                      2017       2018                     2017
                          ----                      ----       ----                     ----

    Non-GAAP adjusted:

    Cost of product
     sales                        $32,911                            $27,145                     $65,136    $50,964

    Gross margin         93.4%                           93.0%                      93.0%        93.3%

    Selling, general and
     administrative              $137,706                           $111,454                    $269,685   $229,904

    % of total revenues  27.5%                           28.3%                      28.5%        29.8%

    Research and
     development                  $51,423                            $35,298                     $98,715    $76,084

    % of total revenues  10.3%                            9.0%                      10.4%         9.9%

Operating expenses changed over the prior year period primarily due to the following:

  • Selling, general and administrative (SG&A) expenses increased in the second quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to higher expenses resulting from the expansion of the company's business, including pre-launch activities for the potential approvals of Vyxeos in the EU and solriamfetol in the U.S.
  • Research and development (R&D) expenses increased in the second quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to an increase in expenses related to the company's pre-clinical and clinical development programs, regulatory activities and support of partner programs.

Cash Flow and Balance Sheet

As of June 30, 2018, cash, cash equivalents and investments were $815.1 million and the outstanding principal balance of the company's long-term debt was $1.8 billion. During the six months ended June 30, 2018, the company generated $354.0 million of cash from operations, purchased a priority review voucher for $110.0 million and used $55.6 million to repurchase approximately 373,000 ordinary shares under the company's share repurchase program at an average cost of $149.16 per ordinary share.

In June 2018, the company refinanced its senior credit facilities to increase the borrowing capacity available under the revolving credit facility to $1.60 billion from $1.25 billion and to extend the maturity profile of the facilities to June 2023 from July 2021.

Recent Developments

At the Associated Professional Sleep Societies meeting in June 2018, the company presented long-term safety and efficacy results from its global multi-center studies evaluating Xyrem for the treatment of cataplexy in pediatric patients with narcolepsy and solriamfetol in adult patients with excessive sleepiness associated with obstructive sleep apnea and with narcolepsy.

In June 2018, the U.S. Food and Drug Administration (FDA) accepted for priority review the company's supplemental new drug application (sNDA) seeking revised labeling for Xyrem to include an indication to treat cataplexy and excessive daytime sleepiness in pediatric narcolepsy patients. The Prescription Drug User Fee Act goal date for an FDA decision is October 27, 2018.

In June 2018, the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending marketing authorization of Vyxeos for the treatment of adults with newly diagnosed t-AML or AML-MRC.

In July 2018, the company announced that data from the pivotal Phase 3 study of Vyxeos compared to standard of care cytarabine and daunorubicin (7+3) was published online in the Journal of Clinical Oncology.

In August 2018, the company announced that the United States Centers for Medicare and Medicaid Services granted approval for a New Technology Add-on Payment for Vyxeos for the treatment of adults with newly diagnosed, therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplasia-related changes (AML-MRC).

In August 2018, the company and The University of Texas MD Anderson Cancer Center announced a five-year collaboration to evaluate potential treatment options for hematologic malignancies, with a near-term focus on Vyxeos.

    2018 Financial Guidance
    -----------------------


                        Jazz Pharmaceuticals is updating its full year 2018 financial
                       guidance as follows (in millions, except per share amounts and
                                                                        percentages):


    Revenues                                                            $1,880-$1,930

    Total net product sales                                             $1,865-$1,910

    -Xyrem net sales*                                                   $1,350-$1,380

    -Erwinaze/Erwinase net sales                                            $190-$220

    -Defitelio/defibrotide net sales                                        $145-$165

    -Vyxeos net sales*                                                      $115-$135

    GAAP gross margin %                                                         93%

    Non-GAAP adjusted gross margin %1,5                                           93%

    GAAP SG&A expenses*                                                     $655-$694

    Non-GAAP adjusted SG&A expenses2,5                                      $525-$555

    GAAP R&D expenses                                                       $232-$255

    Non-GAAP adjusted R&D expenses3,5                                       $205-$225

    GAAP effective tax rate*                                                  22%-25%

    Non-GAAP adjusted effective tax rate4,5                                   17%-19%

    GAAP net income per diluted share*                                    $5.70-$6.90

    Non-GAAP adjusted net income per diluted
     share5                                                             $12.75-$13.25

    *             Updated August 7, 2018.


    1.             Excludes $6-$9 million of
                   share-based compensation
                   expense from estimated GAAP
                   gross margin.

    2.             Excludes $73-$82 million of
                   share-based compensation
                   expense and $57 million of
                   estimated loss contingency
                   from estimated GAAP SG&A
                   expenses.

    3.             Excludes $16-$19 million of
                   share-based compensation
                   expense and $11 million of
                   milestone payments from
                   estimated GAAP R&D expenses.

    4.             Excludes the income tax effect
                   of adjustments between GAAP
                   reported and non-GAAP
                   adjusted net income.

    5.             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
                   2018 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. EDT (9:30 p.m. IST) to provide a business and financial update and discuss its 2018 second quarter results. The live webcast may be accessed from the Investors section of the company's website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 4989706.

A replay of the conference call will be available through August 14, 2018 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 4989706. An archived version of the webcast will be available for at least one week in the Investors section of the company's website at www.jazzpharmaceuticals.com.

About Jazz Pharmaceuticals plc

Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is an international biopharmaceutical company focused on improving patients' lives by identifying, developing and commercializing meaningful products that address unmet medical needs. The company has a diverse portfolio of products and product candidates with a focus in the areas of sleep and hematology/oncology. In these areas, Jazz Pharmaceuticals markets Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi), Defitelio® (defibrotide sodium) and Vyxeos® (daunorubicin and cytarabine) liposome for injection in the U.S. and markets Erwinase® and Defitelio® (defibrotide) in countries outside the U.S. For country-specific product information, please visit www.jazzpharmaceuticals.com/products. For more information, please visit www.jazzpharmaceuticals.com and follow us on Twitter at @JazzPharma.

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 reported GAAP net income (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 non-GAAP adjustments. In this regard, the components of non-GAAP adjusted net income, including non-GAAP cost of product sales, non-GAAP selling, general and administrative expenses and non-GAAP research and development 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 believes that each of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors and analysts. In particular, the company believes that each of these non-GAAP financial measures, when considered together with the company's financial information prepared in accordance with GAAP, can enhance investors' and analysts' ability to meaningfully compare the company's results from period to period and to its forward-looking guidance, and to identify operating trends in the company's business. In addition, these non-GAAP financial measures are regularly used by investors and analysts to model and track the company's financial performance. Jazz Pharmaceuticals' management also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate the company's business and to make operating decisions, and compensation of executives is based in part on certain of these non-GAAP financial measures. Because these non-GAAP financial measures are important internal measurements for Jazz Pharmaceuticals' management, the company also believes that these non-GAAP financial measures are useful to investors and analysts since these measures allow for greater transparency with respect to key financial metrics the company uses in assessing its own operating performance and making operating decisions.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with the company's condensed consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future there may be other items that the company may exclude for purposes of its non-GAAP financial measures; and the company has ceased, and may in the future cease, to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Likewise, the company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to Jazz Pharmaceuticals' future financial and operating results, including 2018 financial guidance, the company's expectations for supporting its sales momentum, progressing its pre-clinical and clinical pipeline, deploying resources to expand its business through R&D and corporate development activities, and preparing for multiple near-term regulatory milestones, the company's expectations for future Erwinaze supply challenges and inter-quarter variability in Defitelio net sales, 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 Xyrem; effectively commercializing the company's other products and product candidates; the time-consuming and uncertain regulatory approval process, including the risk that the company's regulatory submissions, including the solriamfetol new drug application, the Xyrem sNDA and the marketing authorization application for Vyxeos in the European Union, may not be approved by applicable regulatory authorities in a timely manner or at all; protecting and enhancing the company's intellectual property rights; 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; government investigations and other actions, including the risk that the company may not ultimately reach a final settlement with the U.S. Department of Justice to resolve an investigation relating to the company's support of 501(c)(3) organizations that provide financial assistance to Medicare patients; obtaining and maintaining appropriate pricing and reimbursement for the company's products; pharmaceutical product development and the uncertainty of clinical success, including risks related to failure or delays in initiating or completing clinical trials; identifying and acquiring, in-licensing or developing additional products or product candidates, financing these transactions and successfully integrating acquired businesses; the ability to achieve expected future financial performance and results and the uncertainty of future tax and other provisions and estimates; 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 plc's Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and future filings and reports by the company, including the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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. The forward-looking statements herein are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the company on its website or otherwise. The company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

                                                                           JAZZ PHARMACEUTICALS PLC

                                                                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                                   (In thousands, except per share amounts)

                                                                                 (Unaudited)


                                            Three Months Ended                                            Six Months Ended
                                               June 30,                                                June 30,
                                                                                                        --------

                                       2018                  2017                      2018                     2017
                                       ----                  ----                      ----                     ----

    Revenues:

    Product sales, net                      $496,095                                          $389,655                       $936,942  $763,333

    Royalties and contract
     revenues                         4,384                             4,731                                 8,150              7,106
                                      -----                             -----                                 -----              -----

    Total revenues                  500,479                           394,386                               945,092            770,439

    Operating expenses:

    Cost of product sales
     (excluding amortization
     of intangible assets)           34,714                            28,672                                68,633             53,737

    Selling, general and
     administrative                 158,579                           132,328                               365,792            276,583

    Research and development         56,132                            40,157                               118,799             85,085

    Intangible asset
     amortization                    54,959                            26,186                               107,966             51,851

    Impairment charges               42,896                                 -                               42,896                  -

    Acquired in-process
     research and
     development                          -                            2,000                                     -             2,000
                                        ---                            -----                                   ---             -----

    Total operating expenses        347,280                           229,343                               704,086            469,256
                                    -------                           -------                               -------            -------

    Income from operations          153,199                           165,043                               241,006            301,183

    Interest expense, net          (19,646)                         (18,294)                             (40,251)          (37,138)

    Foreign exchange loss           (2,697)                          (5,427)                              (4,425)           (6,891)

    Loss on extinguishment
     and modification of
     debt                           (1,425)                                -                              (1,425)                 -
                                     ------                               ---                               ------                ---

    Income before income tax
     provision and equity in
     loss of investees              129,431                           141,322                               194,905            257,154

    Income tax provision             36,524                            35,515                                55,670             64,675

    Equity in loss of
     investees                          586                               203                                   923                364
                                        ---                               ---                                   ---                ---

    Net income                               $92,321                                          $105,604                       $138,312  $192,115
                                             =======                                          ========                       ========  ========


    Net income per ordinary share:

    Basic                                      $1.53                                             $1.76                          $2.30     $3.20
                                               =====                                             =====                          =====     =====

    Diluted                                    $1.50                                             $1.72                          $2.26     $3.13
                                               =====                                             =====                          =====     =====

    Weighted-average
     ordinary shares used in
     per share calculations
     - basic                         60,177                            60,100                                60,053             59,991
                                     ======                            ======                                ======             ======

    Weighted-average
     ordinary shares used in
     per share calculations
     - diluted                       61,438                            61,463                                61,309             61,321
                                     ======                            ======                                ======             ======

 

                                                JAZZ PHARMACEUTICALS PLC

                                         CONDENSED CONSOLIDATED BALANCE SHEETS

                                                     (In thousands)

                                                      (Unaudited)


                                                      June 30,                 December 31,
                                                           2018                          2017
                                                           ----                          ----

                             ASSETS

    Current assets:

    Cash and cash
     equivalents                                                    $485,081                      $386,035

    Investments                                         330,000                         215,000

    Accounts
     receivable,
     net of
     allowances                                         278,441                         224,129

    Inventories                                          46,156                          43,245

    Prepaid
     expenses                                            33,586                          23,182

    Other current
     assets                                              55,634                          76,686

    Assets held
     for sale                                            78,033                               -
                                                         ------                             ---

    Total current
     assets                                           1,306,931                         968,277

    Property,
     plant and
     equipment,
     net                                                188,086                         170,080

    Intangible
     assets, net                                      2,842,277                       2,979,127

    Goodwill                                            936,493                         947,537

    Deferred tax
     assets, net                                         40,997                          34,559

    Deferred
     financing
     costs                                               10,779                           7,673

    Other non-
     current
     assets                                              23,404                          16,419
                                                         ------                          ------

    Total assets                                                  $5,348,967                    $5,123,672
                                                                  ==========                    ==========

                 LIABILITIES AND SHAREHOLDERS'
                             EQUITY

    Current liabilities:

    Accounts
     payable                                                         $31,379                       $24,368

    Accrued
     liabilities                                        258,794                         198,779

    Current
     portion of
     long-term
     debt                                                33,387                          40,605

    Income taxes
     payable                                             17,934                          21,577

    Deferred
     revenue                                              6,456                           8,618
                                                          -----

    Total current
     liabilities                                        347,950                         293,947

    Deferred
     revenue,
     non-current                                         12,288                          16,115

    Long-term
     debt, less
     current
     portion                                          1,558,314                       1,540,433

    Deferred tax
     liabilities,
     net                                                354,932                         383,472

    Other non-
     current
     liabilities                                        205,731                         176,608

    Total
     shareholders'
     equity                                           2,869,752                       2,713,097

    Total
     liabilities
     and
     shareholders'
     equity                                                       $5,348,967                    $5,123,672
                                                                  ==========                    ==========

 

                         JAZZ PHARMACEUTICALS PLC

                          SUMMARY OF CASH FLOWS

                              (In thousands)

                               (Unaudited)


                                   Six Months Ended
                                     June 30,
                                     --------

                          2018                          2017
                          ----                          ----

    Net cash
     provided by
     operating
     activities                   $353,983                       $299,631

    Net cash used in
     investing
     activities      (237,383)                       (33,725)

    Net cash used in
     financing
     activities       (18,702)                      (396,155)

    Effect of
     exchange rates
     on cash and
     cash
     equivalents         1,148                           3,499
                         -----                           -----

    Net increase
     (decrease) in
     cash and cash
     equivalents                   $99,046                     $(126,750)
                                   =======                      =========

 

                                                                    JAZZ PHARMACEUTICALS PLC

                                               RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

                                                            (In thousands, except per share amounts)

                                                                          (Unaudited)


                                    Three Months Ended                                            Six Months Ended
                                       June 30,                                                June 30,
                                       --------                                                --------

                               2018                  2017                      2018                     2017
                               ----                  ----                      ----                     ----

    GAAP reported net
     income                          $92,321                                          $105,604                       $138,312  $192,115

    Intangible asset
     amortization            54,959                            26,186                               107,966             51,851

    Share-based
     compensation expense    26,312                            27,260                                50,615             52,453

    Estimated loss
     contingency                  -                                -                               57,000                  -

    Impairment charges and
     disposal costs          43,969                                 -                               43,969                  -

    Upfront and milestone
     payments                     -                                -                               11,000                  -

    Expenses related to
     certain legal
     proceedings                  -                                -                                    -             6,000

    Non-cash interest
     expense                 10,887                             5,764                                21,504             11,379

    Income tax effect      (13,812)                          (7,460)                             (33,359)          (15,222)

    Non-GAAP adjusted net
     income                         $214,636                                          $157,354                       $397,007  $298,576
                                    ========                                          ========                       ========  ========


    GAAP reported net
     income per diluted
     share                             $1.50                                             $1.72                          $2.26     $3.13
                                       =====                                             =====                          =====     =====

    Non-GAAP adjusted net
     income per diluted
     share                             $3.49                                             $2.56                          $6.48     $4.87
                                       =====                                             =====                          =====     =====

    Weighted-average
     ordinary shares used
     in diluted per share
     calculations            61,438                            61,463                                61,309             61,321
                             ======                            ======                                ======             ======

 

                                                                                                                            JAZZ PHARMACEUTICALS PLC

                                                                                                        RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

                                                                                                                    CERTAIN LINE ITEMS AND OTHER INFORMATION

                                                                                                            (In thousands, except per share amounts and percentages)

                                                                                                                                   (Unaudited)


                                                                            Three Months Ended
                                                                            ------------------

                                           June 30, 2018                                                                   June 30, 2017
                                                                                                                             -------------

                             GAAP               Adjustments          Non-GAAP                              GAAP                    Adjustments                 Non-GAAP
                           Reported                                  Adjusted                           Reported                                               Adjusted
                           --------                                  --------                           --------                                               --------

    Total revenues                   $500,479                                 $                       -                                            $500,479                                $394,386                  $      -      $394,386

    Cost of product sales
     (excluding
     amortization of
     intangible assets)       34,714                         (1,803)              (a)                       32,911                                    28,672                      (1,527)            (a)    27,145

    Selling, general and
     administrative          158,579                        (20,873)              (b)                      137,706                                   132,328                     (20,874)            (b)   111,454

    Research and
     development              56,132                         (4,709)              (c)                       51,423                                    40,157                      (4,859)            (c)    35,298

    Intangible asset
     amortization             54,959                        (54,959)                                             -                                   26,186                     (26,186)                        -

    Impairment charges        42,896                        (42,896)                                             -                                        -                           -                        -

    Acquired in-process
     research and
     development                   -                              -                                             -                                    2,000                            -                    2,000

    Interest expense, net     19,646                        (10,887)              (d)                        8,759                                    18,294                      (5,764)            (d)    12,530

    Foreign exchange loss      2,697                               -                                         2,697                                     5,427                            -                    5,427

    Loss on extinguishment
     and modification of
     debt                      1,425                               -                                         1,425                                         -                           -                        -

    Income before income
     tax provision and
     equity in loss of
     investees               129,431                         136,127               (e)                      265,558                                   141,322                       59,210             (e)   200,532

    Income tax provision      36,524                          13,812               (f)                       50,336                                    35,515                        7,460             (f)    42,975

    Effective tax rate (g)     28.2%                                                             19.0%                                   25.1%                                              21.4%

    Equity in loss of
     investees                   586                               -                                           586                                       203                            -                      203

    Net income                        $92,321                                                  $122,315               (h)                           $214,636                                $105,604                   $51,750 (h)   $157,354

    Net income per diluted
     share                              $1.50                                                                               $3.49                                         $1.72                                         $2.56

 

                                                        JAZZ PHARMACEUTICALS PLC

                                   RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

                                                CERTAIN LINE ITEMS AND OTHER INFORMATION

                                        (In thousands, except per share amounts and percentages)

                                                              (Unaudited)


                                                                                                                                                                            Six Months Ended
                                                                                                                                                                            ----------------

                                                                                                     June 30, 2018          June 30, 2017


                                                                                                          GAAP               Adjustments            Non-GAAP             GAAP             Adjustments           Non-GAAP
                                                                                                        Reported                                    Adjusted           Reported                                 Adjusted
                                                                                                        --------                                    --------           --------                                 --------

    Total revenues                                                                                                 $945,092                                 $        -                                $945,092                           $770,439                  $       -      $770,439

    Cost of product sales
     (excluding amortization of
     intangible assets)                                                                                     68,633                          (3,497)           (i)         65,136                         53,737                 (2,773)            (i)    50,964

    Selling, general and
     administrative                                                                                        365,792                         (96,107)           (j)        269,685                        276,583                (46,679)             (j)   229,904

    Research and development                                                                               118,799                         (20,084)           (k)         98,715                         85,085                 (9,001)            (k)    76,084

    Intangible asset amortization                                                                          107,966                        (107,966)                             -                        51,851                (51,851)                         -

    Impairment charges                                                                                      42,896                         (42,896)                            -                             -                      -                        -

    Acquired in-process research
     and development                                                                                             -                               -                            -                         2,000                       -                    2,000

    Interest expense, net                                                                                   40,251                         (21,504)           (d)         18,747                         37,138                (11,379)             (d)    25,759

    Foreign exchange loss                                                                                    4,425                                -                        4,425                          6,891                       -                    6,891

    Loss on extinguishment and
     modification of debt                                                                                    1,425                                -                        1,425                              -                      -                        -

    Income before income tax
     provision and equity in loss
     of investees                                                                                          194,905                          292,054            (l)        486,959                        257,154                 121,683             (l)   378,837

    Income tax provision (benefit)                                                                          55,670                           33,359            (f)         89,029                         64,675                  15,222             (f)    79,897

    Effective tax rate (g)                                                                                   28.6%                                              18.3%                           25.2%                                     21.1%

    Equity in loss of investees                                                                                923                                -                          923                            364                       -                      364

    Net income                                                                                                     $138,312                                   $258,695              (m)                $397,007                           $192,115                   $106,461 (m)   $298,576

    Net income per diluted share                                                                                      $2.26                                                        $6.48                                 $3.13                                         $4.87

    Explanation of Adjustments and Certain Line
     Items (in thousands):


    (a)               Share-based compensation expense
                      of $1,803 and $1,527 for the three
                      months ended June 30, 2018 and
                      2017, respectively.

    (b)               Share-based compensation expense
                      of $19,800 and $20,874 and
                      disposal costs of $1,073 and $0
                      for the three months ended June
                      30, 2018 and 2017, respectively.

    (c)               Share-based compensation expense
                      of $4,709 and $4,859 for the three
                      months ended June 30, 2018 and
                      2017, respectively.

    (d)               Non-cash interest expense
                      associated with debt discount and
                      debt issuance costs for the
                      respective three-month period.

    (e)               Sum of adjustments (a) through (d)
                      plus the adjustment for intangible
                      asset amortization and impairment
                      charges, as applicable, for the
                      respective three-month period.

    (f)               Income tax effect of adjustments
                      between GAAP reported and non-
                      GAAP adjusted net income for the
                      respective three-and six-month
                      periods.

    (g)               Income tax provision divided by
                      income before income tax provision
                      and equity in loss of investees
                      for the respective three- and
                      six-month periods.

    (h)               Net of adjustments (e) and (f) for
                      the respective three-month
                      period.

    (i)               Share-based compensation expense
                      of $3,497 and $2,773 for the six
                      months ended June 30, 2018 and
                      2017, respectively.

    (j)               Estimated loss contingency of
                      $57,000 and $0, share-based
                      compensation expense of $38,034
                      and $40,679, disposal costs of
                      $1,073 and $0 and expenses related
                      to certain legal proceedings of $0
                      and $6,000 for the six months
                      ended June 30, 2018 and 2017,
                      respectively.

    (k)               Upfront and milestone payments of
                      $11,000 and $0 and share-based
                      compensation expense of $9,084 and
                      $9,001 for the six months ended
                      June 30, 2018 and 2017,
                      respectively.

    (l)               Sum of adjustments (i), (j), (k)
                      and (d) plus the adjustment for
                      intangible asset amortization and
                      impairment charges, as applicable,
                      for the respective six-month
                      period.

    (m)               Net of adjustments (l) and (f) for
                      the respective six-month period.

 

                        JAZZ PHARMACEUTICALS PLC

          RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2018 NET
                             INCOME GUIDANCE

                (In millions, except per share amounts)

                              (Unaudited)


    GAAP net income*                                    $355 - $420

    Intangible asset amortization                   200 - 220

    Share-based compensation expense*               95 - 110

    Estimated loss contingency                                   57

    Impairment charges and disposal
     costs*                                                      44

    Milestone payments                                           11

    Non-cash interest expense                        40 - 50

    Income tax effect of adjustments*              (50) - (65)

    Non-GAAP adjusted net income                        $780 - $815
                                                        ===========


    GAAP net income per diluted share*                  $5.70-$6.90
                                                        ===========

    Non-GAAP adjusted net income per
     diluted share                                    $12.75-$13.25
                                                      =============


    Weighted-average ordinary shares
     used in per share calculations*                             62

    * Updated August 7,
     2018.

 

 

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SOURCE Jazz Pharmaceuticals plc

Company Codes: NASDAQ-NMS:JAZZ

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