JAZZ PHARMACEUTICALS PLC DUBLIN, Nov. 9, 2015 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter of 2015 and updated financial guidance for 2015.
"During the quarter, we remained focused on our mission of delivering important and meaningful products to patients. We are pleased that we have received FDA Priority Review status on our defibrotide NDA, an important step toward our objective to bring defibrotide to patients in the U.S. for the treatment of hepatic veno-occlusive disease with evidence of multi-organ dysfunction, a rare and often fatal complication of hematopoietic stem cell transplantation," said Bruce C. Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. "We also advanced our research and development pipeline, implemented our approved Xyrem REMS, grew key product sales, and remain well-positioned to further diversify and expand our product portfolio through our corporate development efforts."
Adjusted net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2015 was $159.3 million, or $2.52 per diluted share, compared to $143.9 million, or $2.30 per diluted share, for the third quarter of 2014.
GAAP net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2015 was $88.0 million, or $1.39 per diluted share, compared to $25.8 million, or $0.41 per diluted share, for the third quarter of 2014. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Third Quarter 2015 Revenues and Product Sales
Total revenues for the third quarter of 2015 were $340.9 million, an increase of 11% over total revenues of $306.6 million for the third quarter of 2014. The increase in total revenues was driven by higher net product sales of Xyrem® (sodium oxybate) oral solution and Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi). Total revenues include net product sales, royalties and contract revenues.
Net product sales for the third quarter of 2015 were as follows:
-- Xyrem: Xyrem net sales increased by 19% to $242.9 million in the third
quarter of 2015 compared to $204.3 million in the third quarter of 2014.
During the third quarter of 2015, the average number of active Xyrem
patients in the U.S. was approximately 12,450.
-- Erwinaze/Erwinase: Erwinaze/Erwinase net sales increased by 8% to $56.3
million in the third quarter of 2015 compared to $52.1 million in the
third quarter of 2014.
-- Defitelio® (defibrotide): Defitelio/defibrotide net sales increased to
$19.6 million in the third quarter of 2015 compared to $18.9 million in
the third quarter of 2014. Product volume was in line with expectations,
but sales were impacted by unfavorable foreign currency exchange
movements.
-- Prialt® (ziconotide) intrathecal infusion: Prialt net sales were $6.0
million in the third quarter of 2015 compared to $6.3 million in the
third quarter of 2014.
-- Psychiatry products: Net sales of the company's psychiatry products were
$9.9 million in the third quarter of 2015 compared to $10.8 million in
the third quarter of 2014.
-- Other: Net sales of other products in the third quarter of 2015 were
$3.9 million compared to $11.9 million in the third quarter of 2014. In
March 2015, the company completed the sale of certain products and the
related business that the company acquired as part of the acquisition of
EUSA Pharma Inc. in 2012.
Tables showing actual net product sales for the three and nine months ended September 30, 2015 and 2014 and pro forma net product sales for the nine months ended September 30, 2014 are included in this press release.
Operating Expenses and Other
Operating expenses for the third quarter of 2015 were $209.3 million compared to $248.5 million for the third quarter of 2014. Operating expenses changed over the prior year period primarily due to the following:
-- Cost of product sales for the third quarter of 2015 was $28.4 million
compared to $27.0 million for the same period in 2014. Gross margin for
the third quarter of 2015 was 91.6% compared to 91.1% for the same
period in 2014.
-- Selling, general and administrative (SG&A) expenses for the third
quarter of 2015 on a GAAP basis were $104.0 million compared to $93.5
million for the same period in 2014. Adjusted SG&A expenses for the
third quarter of 2015 were $84.5 million, or 25% of total revenues,
compared to $78.7 million, or 26% of total revenues, for the same period
in 2014. The increase in both GAAP and adjusted SG&A expenses was
primarily due to higher headcount and other expenses resulting from the
expansion of the company's business.
-- Research and development (R&D) expenses for the third quarter of 2015
were $50.8 million on a GAAP basis compared to $22.4 million for the
same period in 2014. The increase resulted primarily from a $25.0
million milestone payment that was triggered by the acceptance for
filing by the FDA of the first new drug application (NDA) for
defibrotide. The milestone was paid in October 2015. Adjusted R&D
expenses for the third quarter of 2015 were $23.0 million, or 7% of
total revenues, compared to $18.4 million, or 6% of total revenues, for
the same period in 2014. Both GAAP and adjusted R&D expenses increased
due to higher clinical studies and outside services costs for the
development of new product candidates and line extensions for the
company's existing products.
-- Acquired in-process research and development expenses of $75.0 million
incurred during the third quarter of 2014 related to an upfront payment
made for rights to defibrotide in the Americas.
Net interest expense for the third quarter of 2015 was $12.7 million compared to $14.5 million for the third quarter of 2014. In June 2015, the company refinanced its existing term loans and revolving credit facility and obtained a more favorable interest rate, which reduced interest expense.
As of September 30, 2015, cash and cash equivalents were $998.9 million, and the outstanding principal balance of the company's long-term debt was $1.4 billion. Cash and cash equivalents increased from December 31, 2014 primarily due to cash generated by the business. In October 2015, the company repaid its revolving credit facility balance of $80.0 million.
During the nine months ended September 30, 2015, the company repurchased 0.1 million ordinary shares for $21.3 million at an average cost of $172.43 per ordinary share under its $200 million share repurchase program announced in 2013. The company completed this share repurchase program in August 2015.
Recent Developments
On November 5, 2015, the company's board of directors authorized a new share repurchase program pursuant to which the company is authorized to repurchase a number of ordinary shares having an aggregate purchase price of up to $300 million, exclusive of any brokerage commissions. Under this program, which has no expiration date, the company may repurchase ordinary shares from time to time on the open market. The timing and amount of repurchases will be at management's discretion and will depend on a variety of factors, including the price of the company's ordinary shares, alternative investment opportunities, restrictions under the company's credit agreement, corporate and regulatory requirements and market conditions. The share repurchase program may be modified, suspended or discontinued at any time without prior notice.
2015 Financial Guidance
Jazz Pharmaceuticals is updating its full year 2015 financial guidance, which is as follows:
Revenues $1,320-$1,340 million
Total net product sales $1,313-$1,332 million
-Xyrem net sales $950-$965 million
-Erwinaze/Erwinase net sales $200-$210 million
-Defitelio/defibrotide net sales $70-$75 million
Adjusted gross margin %1, 5 92-93%
Adjusted SG&A expenses2, 5 $355-$365 million
Adjusted R&D expenses3, 5 $95-$105 million
Adjusted interest expense4,5 $34-$36 million
GAAP net income attributable to Jazz
Pharmaceuticals plc per diluted share $5.42-$5.63
Non-GAAP adjusted net income attributable to
Jazz Pharmaceuticals plc per diluted share5 $9.45-$9.60
_____________________________
1. Excludes $3 million of share-based compensation expense from estimated
GAAP gross margin of 92-93%.
2. Excludes $74-$77 million of share-based compensation expense and $1-
$2 million of transaction, integration and restructuring costs from
estimated GAAP SG&A expenses of $430-$444 million.
3. Excludes a $25 million milestone payment made in October 2015 in
connection with the acceptance for filing by the FDA of the first NDA
for defibrotide for VOD and $13-$15 million of share-based
compensation expense from estimated GAAP R&D expenses of $133-$145
million.
4. Excludes non-cash interest expense of $22-$25 million from estimated
GAAP interest expense of $56-$61 million.
5. 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 and discuss its 2015 third quarter results and 2015 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 +1 800 706 7741 in the U.S., or +1 617 614 3471 outside the U.S., and entering passcode 42845707.
A replay of the conference call will be available through November 16, 2015 by dialing +1 888 286 8010 in the U.S., or +1 617 801 6888 outside the U.S., and entering passcode 49857476. 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 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 and Erwinaze® (asparaginase Erwinia chrysanthemi) in the U.S., and markets Erwinase® and Defitelio® (defibrotide) in countries outside the U.S. 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 the company's 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; 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. In this regard, commencing with the company's presentation of 2015 non-GAAP financial measures, the company no longer includes an adjustment for depreciation expense in its non-GAAP adjusted financial measures. Likewise, for purposes of comparability, non-GAAP adjusted financial measures for 2014 included in this press release and accompanying tables do not include an adjustment for depreciation expense. 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 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 reported net income (loss) attributable to Jazz Pharmaceuticals plc (and the related per share measures), as applicable, intangible asset amortization, share-based compensation expense, upfront and milestone payments, restructuring charges, transaction and integration costs, impairment charges, acquisition accounting inventory fair value step-up adjustments, non-cash interest expense and loss on extinguishment and modification of debt; 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, restructuring charges and transaction and integration costs; (iii) the historical adjusted R&D expense measures exclude from GAAP R&D expenses the defibrotide NDA acceptance milestone, share-based compensation expense and transaction and integration costs; (iv) the adjusted net income attributable to Jazz Pharmaceuticals plc (and the related per share measures) guidance exclude from estimated GAAP net income attributable to Jazz Pharmaceuticals plc (and the related per share measures) intangible asset amortization, share-based compensation expense, upfront and milestone payments, transaction, integration and restructuring costs, non-cash interest expense and loss on extinguishment and modification of debt; and adjust the income tax provision to the estimated amount of taxes that are payable in cash; (v) the adjusted gross margin percentage guidance excludes from estimated GAAP gross margin percentage share-based compensation expense; (vi) the adjusted SG&A expenses guidance excludes from estimated GAAP SG&A expenses share-based compensation expense and transaction, integration and restructuring costs; (vii) the adjusted R&D expenses guidance excludes from estimated GAAP R&D expenses the defibrotide NDA acceptance milestone and share-based compensation expense; and (viii) the adjusted interest expense guidance excludes from estimated GAAP interest expense non-cash interest 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 or operating results, including its 2015 financial guidance, diversification and expansion of the company's product portfolio 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, such as the potential introduction of generic competition or other sodium oxybate products that compete with Xyrem; the significant regulatory restrictions and requirements applicable to Xyrem and potential impact of changes to these restrictions and requirements, as well as the company's ongoing patent litigation and related proceedings, including the timing of related events; the company's ability to effectively commercialize its other lead marketed products; the company's ability to effectively commercialize its product candidates (including defibrotide in the U.S. if the company's NDA is approved by the FDA), including the need to establish pricing and reimbursement support; the company's ability to protect and enhance the company's intellectual property rights; delays or problems in the supply or manufacture of the company's products and product candidates, which could impact the company's ability to meet commercial demand or conduct or complete clinical trials; obtaining and maintaining appropriate pricing and reimbursement for the company's products in an increasingly challenging environment; the challenges of compliance with the requirements of U.S. and non-U.S. regulatory agencies; the challenges of achieving and maintaining commercial success of the company's products; the risks and costs associated with business combination or product or product candidate acquisition transactions; the difficulty and uncertainty of pharmaceutical product development, including the timing thereof, and the uncertainty of clinical success; the inherent uncertainty associated with the regulatory approval process, including the risk that the company may be unable to obtain regulatory approval for defibrotide in the U.S. in a timely manner or at all; the company's potential inability to identify and acquire, in-license or develop additional products or product candidates to grow its business; possible restrictions on the company's ability and flexibility to pursue certain future corporate development and other opportunities as a result of its substantial outstanding debt obligations; the uncertainty of expected future financial performance and results; 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 June 30, 2015 and future filings and reports by the company, including the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015. 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 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Product sales, net $338,754 $304,407 $977,895 $838,493
Royalties and contract
revenues 2,118 2,177 6,027 6,240
----- ----- ----- -----
Total revenues 340,872 306,584 983,922 844,733
Operating expenses:
Cost of product sales
(excluding amortization
and impairment of
intangible assets) 28,385 26,994 78,496 88,610
Selling, general and
administrative 104,044 93,501 323,564 300,420
Research and development 50,784 22,423 105,798 60,622
Acquired in-process
research and development - 75,000 - 202,000
Intangible asset
amortization 26,127 30,630 74,472 94,607
Impairment charges - - - 32,806
Total operating expenses 209,340 248,548 582,330 779,065
------- ------- ------- -------
Income from operations 131,532 58,036 401,592 65,668
Interest expense, net (12,650) (14,530) (44,707) (36,035)
Foreign currency gain
(loss) (977) 6,483 (646) 6,680
Loss on extinguishment and
modification of debt - - (16,815) -
--- --- ------- ---
Income before income tax
provision 117,905 49,989 339,424 36,313
Income tax provision 29,945 24,221 92,651 60,598
------ ------ ------ ------
Net income (loss) 87,960 25,768 246,773 (24,285)
Net income (loss)
attributable to
noncontrolling interests,
net of tax - 2 (1) (1,060)
Net income (loss)
attributable to Jazz
Pharmaceuticals plc $87,960 $25,766 $246,774 $(23,225)
======= ======= ======== ========
Net income (loss) attributable to Jazz
Pharmaceuticals plc per ordinary share:
Basic $1.43 $0.43 $4.04 $(0.39)
===== ===== ===== ======
Diluted $1.39 $0.41 $3.91 $(0.39)
===== ===== ===== ======
Weighted-average ordinary
shares used in per share
calculation - basic 61,435 60,305 61,145 59,457
====== ====== ====== ======
Weighted-average ordinary
shares used in per share
calculation - diluted 63,154 62,680 63,072 59,457
====== ====== ====== ======
JAZZ PHARMACEUTICALS PLC
SUMMARY OF PRODUCT SALES, NET
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2015 2014 2015 2014
---- ---- ---- ----
Xyrem $242,899 $204,337 $703,435 $556,081
Erwinaze/Erwinase 56,317 52,121 152,821 146,910
Defitelio/defibrotide 19,639 18,892 52,259 51,345
Prialt 6,042 6,282 19,944 16,422
Psychiatry 9,910 10,833 28,375 32,431
Other 3,947 11,942 21,061 35,304
Total net product sales $338,754 $304,407 $977,895 $838,493
======== ======== ======== ========
The following unaudited pro forma information represents net product sales for the nine months ended September 30, 2014 as if the company's acquisition of Gentium S.p.A. had been completed on January 1, 2014:
SUMMARY OF PRODUCT SALES, NET (PRO FORMA)
(In thousands)
(Unaudited)
Nine Months
Ended
September 30,
2014
Xyrem $556,081
Erwinaze/Erwinase 146,910
Defitelio/defibrotide 54,242
Prialt 16,422
Psychiatry 32,431
Other 35,710
Total pro forma net product sales $841,796
========
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2015 2014
---- ----
ASSETS
Current assets:
Cash and cash equivalents $998,859 $684,042
Accounts receivable, net of
allowances 195,816 186,371
Inventories 30,018 30,037
Prepaid expenses 21,275 12,800
Deferred tax assets, net 50,006 48,440
Other current assets 18,969 21,322
Assets held for sale - 32,833
--- ------
Total current assets 1,314,943 1,015,845
Property and equipment, net 83,452 58,363
Intangible assets, net 1,270,777 1,437,435
Goodwill 669,029 702,713
Deferred tax assets, net,
non-current 76,391 75,494
Deferred financing costs 24,315 33,174
Other non-current assets 25,393 15,931
------ ------
Total assets $3,464,300 $3,338,955
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $29,124 $25,126
Accrued liabilities 166,375 164,091
Current portion of long-
term debt 117,589 9,428
Income taxes payable 16,357 7,588
Deferred tax liability, net 9,417 9,430
Deferred revenue 1,330 1,138
-----
Total current liabilities 340,192 216,801
Deferred revenue, non-
current 3,646 4,499
Long-term debt, less
current portion 1,172,103 1,333,000
Deferred tax liability, net,
non-current 325,216 375,054
Other non-current
liabilities 59,666 38,393
Total Jazz Pharmaceuticals
plc shareholders' equity 1,563,463 1,371,144
Noncontrolling interests 14 64
--- ---
Total liabilities and
shareholders' equity $3,464,300 $3,338,955
========== ==========
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,
------------- -------------
2015 2014 * 2015 2014 *
---- ----- ---- -----
GAAP reported net income
(loss) attributable to
Jazz Pharmaceuticals plc $87,960 $25,766 $246,774 $(23,225)
Intangible asset
amortization 26,127 30,630 74,472 94,607
Share-based compensation
expense 23,114 18,251 67,233 50,618
Upfront and milestone
payments 25,000 75,000 25,000 202,000
Restructuring charges - - 553 -
Transaction and integration
costs - 878 155 23,518
Impairment charges - - - 32,806
Acquisition accounting
inventory fair value step-
up adjustments - - - 10,477
Non-cash interest expense 5,300 4,065 17,348 7,603
Loss on extinguishment and
modification of debt - - 16,815 -
Income tax adjustments (8,162) (10,649) (11,762) (27,493)
Adjustments for amount
attributable to
noncontrolling interests - (2) (2) (1,504)
--- --- --- ------
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals plc $159,339 $143,939 $436,586 $369,407
======== ======== ======== ========
GAAP reported net income
(loss) attributable to
Jazz Pharmaceuticals plc
per diluted share $1.39 $0.41 $3.91 $(0.39)
===== ===== ===== ======
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals plc
per diluted share $2.52 $2.30 $6.92 $5.91
===== ===== ===== =====
Weighted-average ordinary
shares used in diluted per
share calculation - GAAP 63,154 62,680 63,072 59,457
====== ====== ====== ======
Weighted-average ordinary
shares used in diluted per
share calculation - non-
GAAP 63,154 62,680 63,072 62,532
====== ====== ====== ======
_____________________________
* For purposes of comparability with its 2015 presentation, the
company's non-GAAP adjusted financial measures for 2014 do not
include an adjustment for depreciation expense. See "Non-GAAP
Financial Measures" in the accompanying press release for
additional information.
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, 2015 September 30, 2014
------------------
GAAP Reported Adjustments Non-GAAP Adjusted * GAAP Reported Adjustments Non-GAAP Adjusted *
------------- ----------- ------------------- ------------- ----------- -------------------
Total revenues $340,872 $ - $340,872 $306,584 $ - $306,584
Cost of product sales
(excluding amortization
and impairment of
intangible assets) 28,385 (786) (a) 27,599 26,994 (240) (a) 26,754
Selling, general and
administrative 104,044 (19,542) (b) 84,502 93,501 (14,834) (b) 78,667
Research and development 50,784 (27,786) (c) 22,998 22,423 (4,055) (c) 18,368
Acquired in-process
research and development - - - 75,000 (75,000) -
Intangible asset
amortization 26,127 (26,127) - 30,630 (30,630) -
Interest expense, net 12,650 (5,300) (d) 7,350 14,530 (4,065) (d) 10,465
Foreign currency (gain)
loss 977 - 977 (6,483) - (6,483)
Income before income tax
provision 117,905 79,541 (e) 197,446 49,989 128,824 (e) 178,813
Income tax provision 29,945 8,162 (f) 38,107 24,221 10,649 (f) 34,870
Effective tax rate (g) 25.4% 19.3% 48.5% (o) 19.5%
Net income 87,960 71,379 (h) 159,339 25,768 118,175 (h) 143,943
Net income attributable to
noncontrolling interests,
net of tax - - - 2 2 (i) 4
Net income attributable to
Jazz Pharmaceuticals plc $87,960 $71,379 $159,339 $25,766 $118,173 (j) $143,939
Net income attributable to
Jazz Pharmaceuticals plc
per diluted share $1.39 $2.52 $0.41 $2.30
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, 2015 September 30, 2014
------------------
GAAP Reported Adjustments Non-GAAP Adjusted * GAAP Reported Adjustments Non-GAAP Adjusted *
------------- ----------- ------------------- ------------- ----------- -------------------
Total revenues $983,922 $ - $983,922 $844,733 $ - $844,733
Cost of product sales
(excluding amortization
and impairment of
intangible assets) 78,496 (2,253) (k) 76,243 88,610 (12,182) (k) 76,428
Selling, general and
administrative 323,564 (55,551) (l) 268,013 300,420 (62,445) (l) 237,975
Research and development 105,798 (35,137) (m) 70,661 60,622 (9,986) (m) 50,636
Acquired in-process
research and development - - - 202,000 (202,000) -
Intangible asset
amortization 74,472 (74,472) - 94,607 (94,607) -
Impairment charges - - - 32,806 (32,806) -
Interest expense, net 44,707 (17,348) (d) 27,359 36,035 (7,603) (d) 28,432
Foreign currency (gain)
loss 646 - 646 (6,680) - (6,680)
Loss on extinguishment and
modification of debt 16,815 (16,815) - - - -
Income before income tax
provision 339,424 201,576 (n) 541,000 36,313 421,629 (n) 457,942
Income tax provision 92,651 11,762 (f) 104,413 60,598 27,493 (f) 88,091
Effective tax rate (g) 27.3% 19.3% 166.9% (o) 19.2%
Net income (loss) 246,773 189,814 (p) 436,587 (24,285) 394,136 (p) 369,851
Net income attributable to
noncontrolling interests,
net of tax (1) 2 (i) 1 (1,060) 1,504 (i) 444
Net income (loss)
attributable to Jazz
Pharmaceuticals plc $246,774 $189,812 (q) $436,586 $(23,225) $392,632 (q) $369,407
Net income (loss)
attributable to Jazz
Pharmaceuticals plc per
diluted share $3.91 $6.92 $(0.39) $5.91
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, upfront and milestone payments,
restructuring charges, transaction and
integration costs, impairment charges,
acquisition accounting inventory fair
value step-up adjustments, non-cash
interest expense and loss on
extinguishment and modification of debt
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; 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 adjusted financial measures. In
this regard, commencing with the
company's presentation of 2015 non-GAAP
financial measures, the company no longer
includes an adjustment for depreciation
expense in its non-GAAP adjusted
financial measures. For purposes of
comparability, non-GAAP adjusted
financial measures for 2014 included
herein do not include an adjustment for
depreciation expense. In addition,
because of the non-standardized
definitions of non-GAAP adjusted
financial measures, the non-GAAP
adjusted financial measures appearing
herein 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
$786 and $240 for the three months
ended September 30, 2015 and 2014,
respectively.
(b) Share-based compensation expense of
$19,542 and $14,834 for the three
months ended September 30, 2015 and
2014, respectively.
(c) Milestone of $25,000 and $0, share-
based compensation expense of $2,786
and $3,177 and transaction and
integration costs of $0 and $878 for
the three months ended September 30,
2015 and 2014, respectively.
(d) Non-cash interest expense associated
with debt discount and debt issuance
costs for the respective three- and
nine-month period.
(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 that are 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
periods.
(j) Net of adjustments (h) and (i) for the
respective three-month period.
(k) Share-based compensation expense of
$2,253 and $1,705 and acquisition
accounting inventory fair value step-
up adjustments of $0 and $10,477 for
the nine months ended September 30,
2015 and 2014, respectively.
(l) Share-based compensation expense of
$54,843 and $40,051, restructuring
charges of $553 and $0 and
transaction and integration costs of
$155 and $22,394 for the nine months
ended September 30, 2015 and 2014,
respectively.
(m) Milestone of $25,000 and $0, share-
based compensation expense of $10,137
and $8,862 and transaction and
integration costs of $0 and $1,124
for the nine months ended September
30, 2015 and 2014, respectively.
(n) Sum of adjustments (k), (l), (m) and
(d) plus the adjustments for acquired
in-process research and development
expenses, intangible asset
amortization, impairment charges and
loss on extinguishment and
modification of debt, as applicable,
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, the company 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. 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, the company 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.
(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 2015 GUIDANCE
(In millions, except per share amounts)
(Unaudited)
GAAP net income attributable to Jazz
Pharmaceuticals plc $341 - $355
Intangible asset amortization 95 - 100
Share-based compensation expense 90 - 95
Upfront and milestone payments 25
Transaction, integration and restructuring
costs 1 - 2
Non-cash interest expense 22 - 25
Loss on extinguishment and modification of
debt 17
Income tax adjustments (10) - 0
Non-GAAP adjusted net income attributable
to Jazz Pharmaceuticals plc $595 - $605
===========
GAAP net income attributable to Jazz
Pharmaceuticals plc per diluted share $5.42 - $5.63
=============
Non-GAAP adjusted net income attributable
to Jazz Pharmaceuticals plc per diluted
share $9.45 - $9.60
=============
Weighted-average ordinary shares used in
per share computations 63
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SOURCE Jazz Pharmaceuticals
