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Market Closed:

JAZZ PHARMACEUTICALS ANNOUNCES SECOND QUARTER 2018 FINANCIAL RESULTS

Hamilton, Bermuda – August 8, 2018 – In a filing with the Bermuda Stock Exchange (“BSX”), Jazz Pharmaceuticals plc (Nasdaq: JAZZ) whose Secured Loan Notes are listed on the BSX announced its 2018 second quarter financial results.  The full filing stated:

 

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, August 7, 2018 -- 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.


 


 

 

 

(In thousands, except per share amounts and


Three Months Ended June 30,


Six Months Ended June 30,


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 June 30,


Six Months Ended June 30,


(In thousands)                                                                                            2018                        2017                        2018                        2017

Xyrem® (sodium oxybate) oral solution

$

356,008

$

298,026

$

672,785

$

570,352

 

Defitelio®(defibrotidesodium)/defibrotide                           40,498

30,238

75,559

66,138

 

 

Prialt®(ziconotide)intrathecalinfusion                                   8,921

5,656

15,047

13,373

 

 
Erwinaze® / Erwinase® (asparaginase Erwinia

 

chrysanthemi)

58,713

49,024

109,340

100,412

Vyxeos® (daunorubicin and cytarabine) liposome forinjection

 

27,951

 

 

54,179

 

Other

4,004

6,711

10,032

13,058

Royalties and contract revenues

4,384

4,731

8,150

7,106

 

 

 

Productsales,net                                                           496,095

389,655

936,942

763,333

 

 

Totalrevenues

$

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.


 

   
 

Grossmargin                                                                      93.0%

92.6%

92.7%

93.0%

 

 
 
 

%oftotalrevenues                                                             31.7%

33.6%

38.7%

35.9%

 

 
 
 

%oftotalrevenues                                                              11.2%

10.2%

12.6%

11.0%

 

 
 

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

Selling, general and administrative

$     158,579

$     132,328

$     365,792

$     276,583

Research and development

$       56,132

$       40,157

$     118,799

$       85,085

Impairment charges

$       42,896

$             

$       42,896

$             

 

 

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

(In thousands, except percentages)

2018

2017

2018

2017

 

Cost of product sales

 

$       32,911

 

$       27,145

 

$       65,136

 

$       50,964

Selling, general and administrative

$     137,706

$      111,454

$     269,685

$     229,904

Research and development

$       51,423

$       35,298

$       98,715

$       76,084

 

 

Non-GAAPadjusted:

 

 

 

 

 

Grossmargin                                                                      93.4%

93.0%

93.0%

93.3%

 

 

%oftotalrevenues                                                             27.5%

28.3%

28.5%

29.8%

 

 

%oftotalrevenues                                                             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.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)(Unaudited)

 

 


Three Months Ended June 30,


Six Months Ended June 30,


 

Selling,generalandadministrative                                                     158,579

132,328

365,792

276,583

 

 

Intangibleassetamortization                                                                  54,959

26,186

107,966

51,851

 

 

Incomefromoperations                                                                           153,199

165,043

241,006

301,183

 

 

Foreignexchangeloss                                                                                                                      (2,697)

(5,427)

(4,425)

(6,891)

 

 

Incomebeforeincometaxprovisionandequityinlossof

investees                                                                                                        129,431

 

141,322

 

194,905

 

257,154

 

 

 

Revenues:

 

 

 

 

 

Operatingexpenses:

 

 

 

 

 
2018                       2017                        2018                       2017

 

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

 

Cost of product sales (excluding amortization ofintangible assets)

 

 

34,714

 

 

28,672

 

 

68,633

 

 

53,737

Research and development

56,132

40,157

118,799

85,085

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

Interest expense, net

(19,646)

(18,294)

(40,251)

(37,138)

Loss on extinguishment and modification of debt

(1,425)

(1,425)

 

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-averageordinarysharesusedinpershare

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


CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)(Unaudited)

 

 

 

 

 

 

 

 

 

June 30,

2018

 

December31,

2017

ASSETS

 

 

 

 

Currentassets:

Cashandcashequivalents

 

485,081

$

386,035

Investments

 

330,000

 

215,000

Accountsreceivable,netofallowances

 

278,441

 

224,129

Inventories

 

46,156

 

43,245

Prepaidexpenses

 

33,586

 

23,182

Othercurrentassets

 

55,634

 

76,686

Assetsheld forsale

 

78,033

 

Totalcurrentassets

 

1,306,931

 

968,277

Property,plantandequipment,net

 

188,086

 

170,080

Intangibleassets,net

 

2,842,277

 

2,979,127

Goodwill

 

936,493

 

947,537

Deferredtaxassets,net

 

40,997

 

34,559

Deferredfinancingcosts

 

10,779

 

7,673

Othernon-currentassets

 

23,404

 

16,419

Totalassets

 

5,348,967

$

5,123,672

LIABILITIESANDSHAREHOLDERS’EQUITY

Currentliabilities:

 

 

 

 

Accountspayable

 

31,379

$

24,368

Accruedliabilities

 

258,794

 

198,779

Currentportionoflong-termdebt

 

33,387

 

40,605

Incometaxespayable

 

17,934

 

21,577

Deferredrevenue

 

6,456

 

8,618

Totalcurrentliabilities

 

347,950

 

293,947

Deferredrevenue,non-current

 

12,288

 

16,115

Long-termdebt,lesscurrentportion

 

1,558,314

 

1,540,433

Deferredtaxliabilities,net

 

354,932

 

383,472

Othernon-currentliabilities

 

205,731

 

176,608

Totalshareholders’equity

 

2,869,752

 

2,713,097

Totalliabilitiesandshareholders’equity

 

5,348,967

$

5,123,672

 

 
$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

$


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 June 30,


 

Six Months Ended June 30,


 

GAAPreportednetincome

$

92,321

$

105,604

$

138,312

$

192,115

 

 

Share-basedcompensationexpense                                                       26,312

27,260

50,615

52,453

 

 

Impairmentchargesanddisposalcosts                                                 43,969

43,969

 

 

Expensesrelatedtocertainlegalproceedings                                              

6,000

 

 
2018                       2017                        2018                       2017

 

Intangible asset amortization

54,959

26,186

107,966

51,851

Estimated loss contingency

57,000

Upfront and milestone payments

11,000

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-GAAPadjustednetincomeperdilutedshare

$

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


RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATIONCERTAIN LINE ITEMS AND OTHER INFORMATION

(In thousands, except per share amounts and percentages)(Unaudited)

 

 

Three Months Ended

 

 

June 30, 2018

 

 

June 30, 2017

 

GAAP

Reported

 

Adjustments

Non-GAAP

Adjusted

GAAP

Reported

 

Adjustments

Non-GAAP

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 equity in loss of investees

and

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


 

 

Total revenues                                              $      945,092

 

$            

 

$    945,092

 

$     770,439

 

$                       $     770,439

 

 

GAAP

 

Non-GAAP

GAAP

 

Non-GAAP

Reported

Adjustments

Adjusted

Reported

Adjustments

Adjusted

 

 
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 equity in loss of investees

and

194,905

 

292,054

(l)

486,959

 

257,154

 

121,683

(l)

378,837

Net income

$

138,312

$

258,695

(m)

$

397,007

$

192,115

$

106,461

(m)

$

298,576

 

 
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 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.


(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.

 

 

 

 

 

Contacts:

 

Investors:

Kathee Littrell

Vice President, Investor RelationsJazz Pharmaceuticals plc

Ireland, +353 1 634 7887

U.S., +1 650 496 2717

 

Media:

Jacqueline Kirby

Vice President, Corporate Affairs & Government RelationsJazz Pharmaceuticals plc

Ireland, +353 1 697 2141

U.S., +1 215 867 4910

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