JAZZ PHARMACEUTICALS PLC DUBLIN, Nov. 4, 2014 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter ended September 30, 2014 and updated financial guidance for full year 2014.
"We successfully executed on key goals across the business, from strong sales growth of Xyrem, Erwinaze and Defitelio, to advances in our clinical development programs, and to furtherance of our regulatory efforts in preparation for the planned submission of a new drug application for defibrotide in the U.S. in the first half of 2015," said Bruce C. Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. "We're pleased with the substantial progress we've made towards meeting our 2014 goals and creating long-term shareholder value."
Adjusted net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 was $145.8 million, or $2.33 per diluted share, compared to $109.4 million, or $1.78 per diluted share, for the third quarter of 2013.
GAAP net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 was $25.8 million, or $0.41 per diluted share, compared to $75.4 million, or $1.23 per diluted share, for the third quarter of 2013. GAAP net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 included an upfront payment of $75.0 million for the rights to defibrotide in the Americas. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Third Quarter 2014 Revenues and Product Sales
Total revenues for the third quarter of 2014 were $306.6 million, an increase of 32% over total revenues of $232.2 million for the third quarter of 2013. This increase was driven primarily by net product sales of Xyrem® (sodium oxybate) oral solution, Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi) and Defitelio® (defibrotide). Total revenues include net product sales, royalties and contract revenues.
Net product sales for the third quarter of 2014 were as follows:
-- Xyrem: Xyrem net sales increased by 33% to $204.3 million in the third
quarter of 2014 compared to $153.7 million in the third quarter of 2013.
During the third quarter of 2014, the average number of active Xyrem
patients increased to 12,050.
-- Erwinaze/Erwinase: Erwinaze/Erwinase net sales increased by 18% to $52.1
million in the third quarter of 2014 compared to $44.1 million in the
third quarter of 2013.
-- Defitelio/defibrotide: Defitelio/defibrotide net sales in the third
quarter of 2014 were $18.9 million compared to pro forma net sales of
$13.1 million in the third quarter of 2013. Jazz Pharmaceuticals plc
acquired indirect majority control of Gentium S.p.A. (Gentium) on
January 23, 2014. The pro forma information represents net sales of
Defitelio/defibrotide as if the acquisition of Gentium had closed on
January 1, 2013.
-- Prialt® (ziconotide) intrathecal infusion: Net sales of Prialt were
$6.3 million in the third quarter of 2014 compared to $11.0 million in
the third quarter of 2013. The decrease in net sales was primarily due
to the timing of shipments to Eisai Co., the European distributor of
Prialt.
-- Psychiatry products: Net sales of the company's psychiatry products were
$10.8 million in the third quarter of 2014 compared to $10.7 million in
the third quarter of 2013.
-- Other: Net sales of other products in the third quarter of 2014 were
$11.9 million compared to $10.9 million in the third quarter of 2013. On
a pro forma basis, net sales of other products for the third quarter of
2013 were $13.1 million, which included net sales of active
pharmaceutical ingredients by Gentium as if the acquisition of Gentium
had closed on January 1, 2013.
Tables showing actual and pro forma net product sales for the three and nine months ended September 30, 2014 compared to actual and pro forma net product sales for the same periods in 2013 are included in this press release.
Operating Expenses and Other
Operating expenses for the third quarter of 2014 were $248.5 million on a GAAP basis compared to $131.6 million for the third quarter of 2013. Operating expenses increased over the prior year period primarily due to the following:
-- Cost of product sales for the third quarter of 2014 was $27.0 million on
a GAAP basis compared to $24.3 million for the same period in 2013. The
increase was primarily due to higher net sales. Gross margin for the
third quarter of 2014, as a percentage of net product sales, was 91.1%
compared to 89.5% for the same period in 2013, primarily due to a change
in product mix.
-- Selling, general and administrative (SG&A) expenses for the third
quarter of 2014 were $93.5 million on a GAAP basis compared to $75.0
million for the same period in 2013. Adjusted SG&A expenses for the
third quarter of 2014 were $77.2 million, or 25% of total revenues,
compared to $59.6 million, or 26% of total revenues, for the same period
in 2013. The increase was primarily due to higher headcount and expenses
resulting from the expansion of the company's business.
-- Research and development (R&D) expenses for the third quarter of 2014
were $22.4 million on a GAAP basis compared to $11.8 million for the
same period in 2013. Adjusted R&D expenses for the third quarter of 2014
were $18.1 million, or 6% of total revenues, compared to $9.9 million,
or 4% of total revenues, for the same period in 2013. The increase in
R&D expenses was primarily driven by increased costs from the
development of the company's product candidates and life cycle
management of the company's existing products.
-- Acquired in-process research and development expense for the third
quarter of 2014 was $75.0 million on a GAAP basis compared to $1.0
million for the same period in 2013. The increase was due to an upfront
payment made in connection with the acquisition of the rights to
defibrotide in the Americas in August 2014.
Net interest expense for the third quarter of 2014 was $14.5 million compared to $6.2 million for the third quarter of 2013. The increase was due to the company's increased debt levels following the acquisition of Gentium in January 2014 and the sale, in August 2014, of $575.0 million principal amount of 1.875% exchangeable senior notes due 2021, resulting in net proceeds to the company of $558.9 million. A portion of the net proceeds from the sale of exchangeable senior notes was used to repay total outstanding borrowings of $300 million under the company's revolving credit facility.
Foreign currency gain during the third quarter of 2014 was $6.5 million primarily due to the strengthening of the U.S. dollar against the Euro.
As of September 30, 2014, cash and cash equivalents were $575.0 million and the principal balance of the company's long-term debt was $1.5 billion. Cash and cash equivalents decreased from December 31, 2013 primarily due to funds used to acquire Gentium, JZP-110 and the rights to defibrotide in the Americas, make a contingent consideration payment to the former equity holders of EUSA Pharma, repurchase ordinary shares under the company's share repurchase program and fund capital expenditures, offset in part by the net proceeds from the company's term loans, exchangeable senior notes and cash generated by the business.
In the nine months ended September 30, 2014, the company repurchased 0.2 million ordinary shares under its share repurchase program for $30.0 million at an average cost of $131.88 per ordinary share. As of September 30, 2014, the remaining amount under the current share repurchase program was $33.6 million.
Recent Developments
-- The first patient has enrolled in the Phase 3 clinical trial of Xyrem in
pediatric narcolepsy patients with cataplexy.
-- The first patient has received a dose of JZP-416 in the pivotal Phase 2
clinical trials in children who have experienced a hypersensitivity
reaction to treatment with pegaspargase therapy for acute lymphoblastic
leukemia.
-- The Phase 1 clinical trial of JZP-386 completed enrollment during the
third quarter. The trial was a first-in-human trial evaluating the
safety, pharmacokinetics, and pharmacodynamics of JZP-386, a
deuterium-modified sodium oxybate compound licensed from Concert
Pharmaceuticals.
2014 Financial Guidance
Jazz Pharmaceuticals' updated full year 2014 financial guidance is as follows:
Revenues $1,150-$1,170 million
Total net product sales $1,142-$1,160 million
-Xyrem net sales $765-$780 million
-Erwinaze/Erwinase net sales $190-$200 million
-Defitelio/defibrotide net sales $65-$70 million
Adjusted gross margin %1,4 91-92%
Adjusted SG&A expenses2,4 $315-$325 million
Adjusted R&D expenses3,4 $65-$75 million
GAAP net income attributable to Jazz
Pharmaceuticals plc per diluted share $0.73-$1.05
Non-GAAP adjusted net income attributable to
Jazz Pharmaceuticals plc per diluted share4 $8.20-$8.35
1. Excludes $10 million of
acquisition accounting inventory
fair value step-up adjustments,
$4 million in share-based
compensation expense and $1
million of depreciation expense
from estimated GAAP gross margin
of 90-91%.
2. Excludes $55-$59 million of
share-based compensation
expense, $25-$30 million of
transaction and integration costs
and $5 million of depreciation
expense from estimated GAAP SG&A
expenses of $400-$420 million.
3. Excludes $11-$12 million of
share-based compensation expense
and $1 million of depreciation
expense from estimated GAAP R&D
expenses of $77-$88 million.
4. See "Non-GAAP Financial Measures"
below. Reconciliations of non-GAAP
adjusted guidance measures are
included above and in the tables
accompanying this press release.
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business and financial update, discuss its 2014 third quarter results and update 2014 financial guidance. The live webcast may be accessed from the Investors & Media 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 +1 866 318 8615 in the U.S., or +1 617 399 5134 outside the U.S., and entering passcode 57934182.
A replay of the conference call will be available through November 11, 2014 by dialing +1 888 286 8010 in the U.S., or +1 617 801 6888 outside the U.S., and entering passcode 24997214. An archived version of the webcast will be available for at least one week in the Investors & Media section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.
About Jazz Pharmaceuticals plc
Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is a specialty biopharmaceutical company focused on improving patients' lives by identifying, developing and commercializing differentiated products that address unmet medical needs. The company has a diverse portfolio of products and/or product candidates in the areas of sleep, hematology/oncology, pain and psychiatry. The company's U.S. marketed products in these areas include: Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi), Prialt® (ziconotide) intrathecal infusion, Versacloz® (clozapine) oral suspension, FazaClo® (clozapine, USP) HD and FazaClo LD. Jazz Pharmaceuticals also has a number of products marketed outside the United States, including Erwinase® and Defitelio® (defibrotide). For more information, please visit www.jazzpharmaceuticals.com.
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. The company believes that each of these non-GAAP financial measures is helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition and divestiture transactions effected by the company. They are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. Jazz Pharmaceuticals' management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Compensation of executives is based in part on the performance of the company's business based on certain of these non-GAAP financial measures. In addition, Jazz Pharmaceuticals believes that the presentation of these non-GAAP financial measures is useful to investors because it enhances the ability of investors to compare its results from period to period and allows for greater transparency with respect to key financial metrics the company uses in making operating decisions, and also because the company's investors and analysts regularly use them to model and track the company's financial performance.
Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. 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; likewise, the company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Because of the non-standardized definitions, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the company's competitors and other companies.
As used in this press release, (i) the historical adjusted net income measures attributable to Jazz Pharmaceuticals plc (and the related per share measures) exclude from GAAP net income (loss) attributable to Jazz Pharmaceuticals plc, as applicable, intangible asset amortization, share-based compensation expense, intangible asset impairment, upfront and milestone payments, transaction and integration costs, acquisition accounting inventory fair value step-up adjustments, restructuring charges, change in fair value of contingent consideration, depreciation expense, loss on extinguishment and modification of debt and non-cash interest expense; adjust the income tax provision to the estimated amount of taxes that are payable in cash; and adjust for the amount attributable to noncontrolling interests; (ii) the historical adjusted SG&A expense measures exclude from GAAP SG&A expenses, as applicable, share-based compensation expense, transaction and integration costs, restructuring charges, change in fair value of contingent consideration and depreciation expense; (iii) the historical adjusted R&D expense measures exclude from GAAP R&D expenses, as applicable, share-based compensation expense, transaction and integration costs and depreciation expense; (iv) the adjusted net income attributable to Jazz Pharmaceuticals plc (and the related per share) guidance measures exclude from estimated GAAP net income attributable to Jazz Pharmaceuticals plc intangible asset amortization and depreciation expense, share-based compensation expense, intangible asset impairment, upfront and milestone payments, transaction and integration costs, acquisition accounting inventory fair value step-up adjustments and non-cash interest expense; adjust the income tax provision to the estimated amount of taxes that are payable in cash; and adjust for the amount attributable to noncontrolling interests; (v) the adjusted gross margin percentage guidance excludes from estimated GAAP gross margin percentage share-based compensation expense, acquisition accounting inventory fair value step-up adjustments and depreciation expense; (vi) the adjusted SG&A expenses guidance excludes from estimated GAAP SG&A expenses share-based compensation expense, transaction and integration costs and depreciation expense; and (vii) the adjusted R&D expenses guidance excludes from estimated GAAP R&D expenses share-based compensation expense and depreciation expense.
"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 results, including 2014 financial guidance, the company's plans to submit a new drug application for defibrotide in the United States and the timing thereof, the potential for creating long-term shareholder value, and other statements that are not historical facts. These forward-looking statements are based on Jazz Pharmaceuticals' current expectations 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 and increasing sales of and revenue from Xyrem, such as the potential introduction of generic competition or other sodium oxybate products that compete with Xyrem and changed or increased regulatory restrictions on or requirements with respect to Xyrem, as well as similar risks related to effectively commercializing the company's other marketed products, including Erwinaze and Defitelio; protecting and enhancing the company's intellectual property rights; delays or problems in the supply or manufacture of the company's products, particularly with respect to certain products as to which the company maintains limited inventories, and dependence on single source suppliers, including the risk that the company may not be able to obtain and supply sufficient product to meet commercial demand or to meet requirements for clinical trial supplies; obtaining appropriate pricing and reimbursement for the company's products in an increasingly challenging environment, including the need to obtain appropriate pricing and reimbursement approvals for Defitelio in European countries representing a significant market opportunity for Defitelio and the need to obtain and maintain reimbursement for Xyrem in the United States in an environment in which the company is subject to increasingly restrictive conditions for reimbursement required by third party payors; ongoing regulation and oversight by U.S. and non-U.S. regulatory agencies; the challenges of obtaining sustained acceptance of the company's products by patients, physicians and payors; the difficulty and uncertainty of pharmaceutical product development, including the timing thereof, and the uncertainty of clinical success, such as the risk that results from preclinical studies and/or early clinical trials may not be predictive of results obtained in later and larger clinical trials planned or anticipated to be conducted for the company's product candidates; the inherent uncertainty associated with the regulatory approval process, including the risks that the company may be required to conduct additional time-consuming and costly clinical trials as a condition of regulatory approval of defibrotide in the United States and that the company may otherwise be unable to obtain or maintain any regulatory approval for defibrotide in the United States; risks associated with business combination or product or product candidate acquisition transactions, such as the risks that the acquired businesses, including the acquired Gentium business, will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, and that the company may otherwise fail to realize the anticipated benefits (commercial or otherwise) from such acquisition transactions, including the acquisition of Gentium and acquisition of the rights to defibrotide in the Americas; the company's ability to identify and acquire, in-license or develop additional products or product candidates to grow its business; and possible restrictions on the company's ability and flexibility to pursue certain future opportunities as a result of its substantial outstanding debt obligations; as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results; and those other risks detailed 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and future filings and reports by the company, including the Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events or changes in its expectations.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Product sales, net $304,407 $230,386 $838,493 $631,602
Royalties and contract
revenues 2,177 1,774 6,240 5,047
----- ----- ----- -----
Total revenues 306,584 232,160 844,733 636,649
Operating expenses:
Cost of product sales
(excluding amortization
of acquired developed
technologies and
intangible asset
impairment) 26,994 24,252 88,610 76,503
Selling, general and
administrative 93,501 74,970 300,420 223,004
Research and development 22,423 11,826 60,622 27,823
Acquired in-process
research and
development 75,000 988 202,000 4,988
Intangible asset
amortization 30,630 19,564 94,607 58,518
Intangible asset
impairment - - 32,806 -
--- --- ------ ---
Total operating expenses 248,548 131,600 779,065 390,836
------- ------- ------- -------
Income from operations 58,036 100,560 65,668 245,813
Interest expense, net (14,530) (6,202) (36,035) (20,743)
Foreign currency gain
(loss) 6,483 (614) 6,680 (728)
Loss on extinguishment
and modification of
debt - - - (3,749)
--- --- --- ------
Income before income tax
provision 49,989 93,744 36,313 220,593
Income tax provision 24,221 18,335 60,598 59,574
------ ------ ------ ------
Net income (loss) 25,768 75,409 (24,285) 161,019
Net income (loss)
attributable to
noncontrolling
interests, net of tax 2 - (1,060) -
Net income (loss)
attributable to Jazz
Pharmaceuticals plc $25,766 $75,409 $(23,225) $161,019
======= ======= ======== ========
Net income (loss) per ordinary share
attributable to Jazz Pharmaceuticals plc:
Basic $0.43 $1.30 $(0.39) $2.76
===== ===== ====== =====
Diluted $0.41 $1.23 $(0.39) $2.62
===== ===== ====== =====
Weighted-average ordinary shares used in
calculating net income (loss) per
ordinary share attributable to Jazz
Pharmaceuticals plc:
Basic 60,305 58,217 59,457 58,437
====== ====== ====== ======
Diluted 62,680 61,519 59,457 61,532
====== ====== ====== ======
JAZZ PHARMACEUTICALS PLC
SUMMARY OF PRODUCT SALES, NET
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Xyrem $204,337 $153,664 $556,081 $404,932
Erwinaze/Erwinase 52,121 44,078 146,910 130,754
Defitelio/defibrotide 18,892 - 51,345 -
Prialt 6,282 11,046 16,422 20,726
Psychiatry 10,833 10,679 32,431 40,093
Other 11,942 10,919 35,304 35,097
Total net product sales $304,407 $230,386 $838,493 $631,602
======== ======== ======== ========
The following unaudited pro forma information represents the net product sales for the three and nine months ended September 30, 2014 and 2013, respectively, as if the acquisition of Gentium had been completed on January 1, 2013:
SUMMARY OF PRODUCT SALES, NET (PRO FORMA)
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------
2014 2013 2014 2013
---- ---- ---- ----
Xyrem $204,337 $153,664 $556,081 $404,932
Erwinaze/Erwinase 52,121 44,078 146,910 130,754
Defitelio/defibrotide 18,892 13,142 54,242 31,842
Prialt 6,282 11,046 16,422 20,726
Psychiatry 10,833 10,679 32,431 40,093
Other 11,942 13,095 35,710 41,097
Total pro forma net product
sales $304,407 $245,704 $841,796 $669,444
======== ======== ======== ========
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2014 2013
---- ----
ASSETS
Current assets:
Cash and
cash
equivalents $575,040 $636,504
Accounts
receivable,
net of
allowances 187,604 124,805
Inventories 37,612 28,669
Prepaid
expenses 24,206 7,183
Deferred
tax
assets,
net 35,696 33,613
Other
current
assets 18,362 33,843
------
Total
current
assets 878,520 864,617
Property
and
equipment,
net 44,205 14,246
Intangible
assets,
net 1,550,624 812,396
Goodwill 724,388 450,456
Deferred
tax
assets,
net,
non-
current 101,249 74,597
Deferred
financing
costs 35,068 14,605
Other
non-
current
assets 13,482 7,304
------ -----
Total
assets $3,347,536 $2,238,221
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts
payable $29,671 $21,005
Accrued
liabilities 161,476 119,718
Current
portion
of long-
term
debt 9,444 5,572
Income
taxes
payable 15,755 336
Contingent
consideration - 50,000
Deferred
tax
liability,
net 6,259 6,259
Deferred
revenue 1,138 1,138
-----
Total
current
liabilities 223,743 204,028
Deferred
revenue,
non-
current 4,784 5,718
Long-
term
debt,
less
current
portion 1,331,340 544,404
Deferred
tax
liability,
net,
non-
current 413,460 168,497
Other
non-
current
liabilities 33,596 20,040
Total
Jazz
Pharmaceuticals
plc
shareholders'
equity 1,340,523 1,295,534
Noncontrolling
interests 90 -
--- ---
Total
liabilities
and
shareholders'
equity $3,347,536 $2,238,221
========== ==========
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
GAAP reported net income
(loss) attributable to
Jazz Pharmaceuticals
plc $25,766 $75,409 $(23,225) $161,019
Intangible asset
amortization 30,630 19,564 94,607 58,518
Share-based
compensation expense 18,251 11,876 50,618 32,139
Intangible asset
impairment - - 32,806 -
Upfront and milestone
payments 75,000 988 202,000 4,988
Transaction and
integration costs 878 113 23,518 1,846
Acquisition accounting
inventory fair value
step-up adjustments - 512 10,477 3,143
Restructuring charges - - - 1,457
Change in fair value of
contingent
consideration - 5,000 - 12,900
Depreciation 1,868 895 5,037 2,065
Loss on extinguishment
and modification of
debt - - - 3,749
Non-cash interest
expense 4,065 1,083 7,603 3,505
Income tax adjustments (10,649) (6,043) (27,493) (3,198)
Adjustments for amount
attributable to
noncontrolling
interests (2) - (1,504) -
--- --- ------ ---
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc $145,807 $109,397 $374,444 $282,131
======== ======== ======== ========
GAAP reported net income
(loss) attributable to
Jazz Pharmaceuticals
plc per diluted share $0.41 $1.23 $(0.39) $2.62
===== ===== ====== =====
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc per diluted share $2.33 $1.78 $5.99 $4.59
===== ===== ===== =====
Shares used in computing
GAAP reported net
income (loss)
attributable to Jazz
Pharmaceuticals plc per
diluted share amounts 62,680 61,519 59,457 61,532
====== ====== ====== ======
Shares used in computing
non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc per diluted share
amounts 62,680 61,519 62,532 61,532
====== ====== ====== ======
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
------------------
September 30, 2014 September 30, 2013
------------------
GAAP Reported Adjustments Non-GAAP Adjusted * GAAP Reported Adjustments Non-GAAP Adjusted *
------------- ----------- ------------------- ------------- ----------- -------------------
Total revenues $306,584 $ - $306,584 $232,160 $ - $232,160
Cost of product sales 26,994 (413) (a) 26,581 24,252 (1,103) (a) 23,149
Selling, general and
administrative 93,501 (16,259) (b) 77,242 74,970 (15,345) (b) 59,625
Research and development 22,423 (4,325) (c) 18,098 11,826 (1,948) (c) 9,878
Acquired in-process
research and
development 75,000 (75,000) - 988 (988) -
Intangible asset
amortization 30,630 (30,630) - 19,564 (19,564) -
Interest expense, net 14,530 (4,065) (d) 10,465 6,202 (1,083) (d) 5,119
Foreign currency (gain)
loss (6,483) - (6,483) 614 - 614
Income before income tax
provision 49,989 130,692 (e) 180,681 93,744 40,031 (e) 133,775
Income tax provision 24,221 10,649 (f) 34,870 18,335 6,043 (f) 24,378
Effective tax rate (g) 48.5% (o) 19.3% 19.6% 18.2%
Net income 25,768 120,043 (h) 145,811 75,409 33,988 (h) 109,397
Net income attributable
to noncontrolling
interests, net of tax 2 2 (i) 4 - - (i) -
Net income attributable
to Jazz Pharmaceuticals
plc $25,766 $120,041 (j) $145,807 $75,409 $33,988 (j) $109,397
Net income attributable
to Jazz Pharmaceuticals
plc per diluted share $0.41 $2.33 $1.23 $1.78
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)
Nine Months Ended
-----------------
September 30, 2014 September 30, 2013
------------------
GAAP Reported Adjustments Non-GAAP Adjusted * GAAP Reported Adjustments Non-GAAP Adjusted *
------------- ----------- ------------------- ------------- ----------- -------------------
Total revenues $844,733 $ - $844,733 $636,649 $ - $636,649
Cost of product sales 88,610 (12,695) (k) 75,915 76,503 (5,032) (k) 71,471
Selling, general and
administrative 300,420 (66,269) (l) 234,151 223,004 (43,953) (l) 179,051
Research and development 60,622 (10,686) (m) 49,936 27,823 (4,565) (m) 23,258
Acquired in-process
research and
development 202,000 (202,000) - 4,988 (4,988) -
Intangible asset
amortization 94,607 (94,607) - 58,518 (58,518) -
Intangible asset
impairment 32,806 (32,806) - - - -
Interest expense, net 36,035 (7,603) (d) 28,432 20,743 (3,505) (d) 17,238
Foreign currency (gain)
loss (6,680) - (6,680) 728 - 728
Loss on extinguishment
and modification of
debt - - - 3,749 (3,749) -
Income before income tax
provision 36,313 426,666 (n) 462,979 220,593 124,310 (n) 344,903
Income tax provision 60,598 27,493 (f) 88,091 59,574 3,198 (f) 62,772
Effective tax rate (g) 166.9% (o) 19.0% 27.0% 18.2%
Net income (loss) (24,285) 399,173 (p) 374,888 161,019 121,112 (p) 282,131
Net income attributable
to noncontrolling
interests, net of tax (1,060) 1,504 (i) 444 - - (i) -
Net income (loss)
attributable to Jazz
Pharmaceuticals plc $(23,225) $397,669 (q) $374,444 $161,019 $121,112 (q) $282,131
Net income (loss)
attributable to Jazz
Pharmaceuticals plc per
diluted share $(0.39) $5.99 $2.62 $4.59
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS AND OTHER INFORMATION
(In thousands)
(Unaudited)
* Non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc and its line item components and related non-GAAP adjusted financial measures shown in the tables above are not meant to be considered in isolation or as a substitute for comparable GAAP reported measures, and should be read in conjunction with the condensed consolidated financial statements prepared in accordance with GAAP. The company believes that each of these non-GAAP adjusted financial measures is helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition and divestiture transactions effected by the company. Company management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Compensation of executives is based in part on the performance of the company's business based on certain of these non-GAAP financial measures. In addition, the company believes that the presentation of these non-GAAP adjusted financial measures is useful to investors because it enhances the ability of investors to compare its results from period to period and allows for greater transparency with respect to key financial metrics the company uses in making operating decisions, and also because the company's investors and analysts regularly use them to model and track the company's financial performance. Specifically, the company believes that each of these non-GAAP adjusted financial measures provides useful information to management, investors and analysts by excluding, as applicable, intangible asset amortization, share-based compensation expense, intangible asset impairment, upfront and milestone payments, transaction and integration costs, acquisition accounting inventory fair value step-up adjustments, restructuring charges, change in fair value of contingent consideration, depreciation expense, loss on extinguishment and modification of debt and non-cash interest expense that may not be indicative of the company's core operating results and business outlook, and by including adjustments to convert the income tax provision to the estimated amount of taxes that are payable in cash and adjustments for the amount attributable to noncontrolling interests. Investors should note that these non-GAAP adjusted financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP adjusted financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. 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 adjusted financial measures; likewise, the company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP adjusted financial measures. Because of the non-standardized definitions, the non-GAAP adjusted financial measures appearing in the tables above may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the company's competitors and other companies.
Explanation of Adjustments and Certain Line Items:
(a) Share-based compensation expense
of $240 and $591, depreciation
expense of $173 and $0,
acquisition accounting inventory
fair value step-up adjustments
of $0 and $512 for the three
months ended September 30, 2014
and 2013, respectively.
(b) Share-based compensation expense
of $14,834 and $9,354,
depreciation expense of $1,425
and $878, change in fair value of
contingent consideration of $0
and $5,000 and transaction and
integration costs of $0 and $113
for the three months ended
September 30, 2014 and 2013,
respectively.
(c) Share-based compensation expense
of $3,177 and $1,931, transaction
and integration costs of $878 and
$0 and depreciation expense of
$270 and $17 for the three months
ended September 30, 2014 and
2013, respectively.
(d) Non-cash interest expense
associated with debt
discount and debt issuance
costs for the respective
three- and nine-month
periods.
(e) Sum of adjustments (a) through
(d) plus the adjustments for
acquired in-process research
and development and intangible
asset amortization for the
respective three-month period.
(f) Adjustments to convert the
income tax provision to the
estimated amount of taxes
payable in cash for the
respective three- and nine-
month periods.
(g) Income tax provision
divided by income before
income tax provision for
the respective three- and
nine-month periods.
(h) Net of adjustments (e) and (f)
for the respective three-
month period.
(i) Adjustments for amount
attributable to noncontrolling
interests for the respective
three- and nine-month period.
(j) Net of adjustments (h) and (i)
for the respective three-
month period.
(k) Acquisition accounting inventory
fair value step-up adjustments
of $10,477 and $3,143, share-
based compensation expense of
$1,705 and $1,788, depreciation
expense of $513 and $0,
restructuring charges of $0 and
$68 and transaction and
integration costs of $0 and $33
for the nine months ended
September 30, 2014 and 2013,
respectively.
(l) Share-based compensation expense
of $40,051 and $25,898,
transaction and integration costs
of $22,394 and $1,758,
depreciation expense of $3,824
and $2,008, change in fair value
of contingent consideration of $0
and $12,900, and restructuring
charges of $0 and $1,389 for nine
months ended September 30, 2014
and 2013, respectively.
(m) Share-based compensation expense
of $8,862 and $4,453, transaction
and integration costs of $1,124
and $55 and depreciation expense
of $700 and $57 for nine months
ended September 30, 2014 and
2013, respectively.
(n) Sum of adjustments (k), (l), (m) and
(d) plus the adjustments for
acquired in-process research and
development, amortization and
impairment of intangible assets and
loss on extinguishment and
modification of debt for the
respective nine-month period.
(o) After adjusting the income
before income tax provision
for the three months ended
September 30, 2014 by
excluding an upfront payment
of $75,000 for rights to
defibrotide in the Americas,
we would have had income
before income tax provision
of $124,989, resulting in an
effective tax rate of 19.4%
for the three months ended
September 30, 2014 based on
the income tax provision of
$24,221, compared to 19.6%
for the same period in 2013.
After adjusting the income
before income tax provision
for the nine months ended
September 30, 2014 by
excluding a total of $202,000
in upfront and milestone
payments for rights to JZP-
110 and to defibrotide in the
Americas, we would have had
income before income tax
provision of $238,313,
resulting in an effective tax
rate of 25.4% for the nine
months ended September 30,
2014 based on the income tax
provision of $60,598,
compared to 27.0% for the
same period in 2013. The
decreases in the effective
tax rates for the three and
nine months ended September
30, 2014 compared to the same
periods in 2013 were
primarily due to changes in
income mix among the various
jurisdictions in which we
operate.
(p) Net of adjustments (n) and (f)
for the respective nine-
month period.
(q) Net of adjustments (p) and (i)
for the respective nine-
month period.
JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2014 GUIDANCE
(In millions, except per share amounts)
(Unaudited)
GAAP net income attributable to Jazz
Pharmaceuticals plc $46 - $66
Intangible asset amortization and
depreciation 129 - 134
Share-based compensation expense 70 - 75
Intangible asset impairment 33
Upfront and milestone payments 202
Transaction and integration costs 25 - 30
Acquisition accounting inventory fair
value step-up 10
Non-cash interest expense 13-15
Income tax adjustments (30) - (20)
Adjustments for amount attributable to
noncontrolling interests (2)
---
Non-GAAP adjusted net income
attributable to Jazz Pharmaceuticals
plc $513 - $526
===========
GAAP net income attributable to Jazz
Pharmaceuticals plc per diluted share $0.73 - $1.05
=============
Non-GAAP adjusted net income
attributable to Jazz Pharmaceuticals
plc per diluted share $8.20- $8.35
============
Weighted-average ordinary shares used
in per share computations 62 - 63
SOURCE Jazz Pharmaceuticals plc
