JAZZ PHARMACEUTICALS PLC DUBLIN, Aug. 9, 2016 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the second quarter of 2016 and updated financial guidance for 2016.
"We have made significant progress in 2016, as we continue to build the foundation for future growth by further diversifying and strengthening our hematology/oncology portfolio with the addition of Vyxeos, a late-stage product candidate for the treatment of acute myeloid leukemia, through the acquisition of Celator Pharmaceuticals," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We achieved strong organic sales growth of our key products, including a significant contribution from the U.S. launch of Defitelio, received FDA approval of our manufacturing facility in Athlone, Ireland and entered into additional corporate development transactions with the potential to bring innovative treatment options to patients."
GAAP net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 was $111.3 million, or $1.80 per diluted share, compared to $88.1 million, or $1.40 per diluted share, for the second quarter of 2015.
The company has modified the calculation of its non-GAAP income tax provision and has reflected this modification in its 2015 and 2016 non-GAAP interim period results and full-year 2016 financial guidance in connection with the Securities and Exchange Commission's May 2016 guidance pertaining to non-GAAP financial measures. The company's modified calculation no longer includes the cash tax benefits the company realizes during the year from net operating losses and credits and deductible share-based compensation and now includes other deferred taxes and changes in unrecognized tax benefits. This modification does not change the amount of cash taxes that the company expects to pay in 2016 or in the future, and therefore has no impact on the company's future expected cash flows. This modification does not reflect a change in the amount of cash taxes that the company expects to pay in 2016, or in the future, or a change to the company's expected future cash flows.
Adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 was $162.6 million, or $2.63 per diluted share. Without giving effect to the modification described above, adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 would have been $174.3 million, or $2.82 per diluted share. Adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was $144.2 million, or $2.28 per diluted share. Without giving effect to the modification described above, adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was previously reported as $152.2 million, or $2.41 per diluted share. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Financial Highlights
--------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
(In thousands, except
per share amounts and
percentages) 2016 2015 Change 2016 2015 Change
---- ---- ------ ---- ---- ------
Total revenues $381,161 $333,747 14.2% $717,171 $643,050 11.5%
GAAP net income
attributable to Jazz
Pharmaceuticals plc $111,282 $88,114 26.3% $185,403 $158,814 16.7%
Adjusted net income
attributable to Jazz
Pharmaceuticals plc(1) $162,584 $144,151 12.8% $295,461 $259,666 13.8%
GAAP EPS attributable to
Jazz Pharmaceuticals
plc $1.80 $1.40 28.6% $2.98 $2.52 18.3%
Adjusted EPS
attributable to Jazz
Pharmaceuticals plc(1) $2.63 $2.28 15.4% $4.75 $4.12 15.3%
____________________________
1. Without giving effect to the
modification of the calculation of
non-GAAP income tax provision
described above, adjusted net income
attributable to Jazz Pharmaceuticals
plc would have been $174.3 million, or
$2.82 per diluted share, and was
previously reported as $152.2 million,
or $2.41 per diluted share, for the
three months ended June 30, 2016 and
2015, respectively. Without giving
effect to the modification described
above, adjusted net income
attributable to Jazz Pharmaceuticals
plc would have been $315.3 million, or
$5.07 per diluted share, and was
previously reported as $277.2 million,
or $4.40 per diluted share, for the
six months ended June 30, 2016 and
2015, respectively.
Total Revenues
--------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
(In thousands) 2016 2015 2016 2015
---- ----
Xyrem(R) (sodium oxybate) oral
solution $280,968 $247,846 $530,505 $460,536
Erwinaze(R) /Erwinase(R)
(asparaginase Erwinia
chrysanthemi) 49,748 46,151 100,921 96,504
Defitelio(R) (defibrotide sodium) /
defibrotide 33,246 15,257 51,143 32,620
Prialt(R) (ziconotide) intrathecal
infusion 8,073 7,138 14,282 13,902
Psychiatry 3,867 9,372 10,869 18,465
Other 3,208 6,342 5,306 17,114
----- ----- ----- ------
Product sales, net 379,110 332,106 713,026 639,141
Royalties and contract revenues 2,051 1,641 4,145 3,909
Total revenues $381,161 $333,747 $717,171 $643,050
======== ======== ======== ========
Net product sales increased 14% in the second quarter of 2016 compared to the same period in 2015 due to higher net product sales of Xyrem, Erwinaze and Defitelio.
Xyrem net product sales increased 13% in the second quarter of 2016 compared to the same period in 2015.
Erwinaze/Erwinase net product sales increased 8% in the second quarter of 2016 compared to the same period in 2015. While Erwinaze net product sales increased, the company expects to continue to experience inventory and supply challenges, which may result in temporary disruptions in the company's ability to supply certain markets, including the U.S., from time to time. The company continues to work with distributors to prioritize delivery of drug to institutions for the treatment of patients who have been prescribed Erwinaze.
Defitelio/defibrotide net product sales increased $18.0 million in the second quarter of 2016 compared to the same period in 2015. The increase in net product sales was due to net sales of $9.5 million following the April 2016 launch of Defitelio in the U.S. and a significant increase in net product sales outside of the U.S.
Operating Expenses
------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
(In thousands,
except
percentages) 2016 2015 2016 2015
---- ---- ---- ----
GAAP:
Cost of product
sales $23,980 $21,813 $47,419 $50,111
Gross margin 93.7% 93.4% 93.3% 92.2%
Selling, general
and administrative $122,618 $107,132 $251,383 $219,520
% of total revenues 32.2% 32.1% 35.1% 34.1%
Research and
development $39,091 $27,833 $70,343 $55,014
% of total revenues 10.3% 8.3% 9.8% 8.6%
Acquired in-
process research
and development $ - $ - $8,750 $ -
Non-GAAP adjusted:
Cost of product
sales $23,017 $21,041 $45,657 $48,644
Gross margin 93.9% 93.7% 93.6% 92.4%
Selling, general
and administrative $99,488 $88,470 $202,099 $183,511
% of total revenues 26.1% 26.5% 28.2% 28.5%
Research and
development $35,562 $23,967 $63,524 $47,663
% of total revenues 9.3% 7.2% 8.9% 7.4%
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 2016 compared to the same period in 2015, on a GAAP
and on a non-GAAP adjusted basis, primarily due to higher headcount and
other expenses resulting from the expansion of the company's business.
-- Research and development (R&D) expenses increased in the second quarter
of 2016 compared to the same period in 2015, on a GAAP and on a non-GAAP
adjusted basis, primarily due to higher costs for clinical studies and
outside services for the development of JZP-110 and line extensions for
the company's existing products.
Cash Flow and Balance Sheet
As of June 30, 2016, cash, cash equivalents and investments were $916.4 million, and the outstanding principal balance of the company's long-term debt was $1.3 billion. Cash, cash equivalents and investments decreased from December 31, 2015 primarily due to repurchases under the company's share repurchase program and a $150.0 million milestone payment triggered by the U.S. Food and Drug Administration (FDA) approval of Defitelio on March 30, 2016, partially offset by cash generated by the business. During the six months ended June 30, 2016, the company repurchased 1.3 million ordinary shares for $163.2 million, at an average cost of $126.74 per ordinary share.
Recent Developments
In June 2016, the company received FDA approval for its manufacturing facility in Athlone, Ireland. Xyrem and certain development product candidates will be manufactured in this facility.
On July 12, 2016, the company completed its acquisition of Celator Pharmaceuticals, Inc. for approximately $1.5 billion.
On July 12, 2016, the company amended its existing credit agreement by increasing the revolving credit facility to $1.25 billion from $750 million and extending the maturity date of the term loan facility and revolving credit facility to July 2021 from June 2020. The company used borrowings of $1.0 billion under the company's revolving credit facility, together with cash on hand, to fund the Celator acquisition, resulting in an increase of the outstanding principal balance of long-term debt to approximately $2.3 billion.
On August 2, 2016, the U.S. Centers for Medicare and Medicaid Services approved a New Technology Add-on Payment (NTAP) for Defitelio after determining that Defitelio met the NTAP criteria for newness, substantial clinical improvement relative to existing therapies and specific cost thresholds. Beginning October 1, 2016, NTAP will provide incremental reimbursement to the standard diagnosis-related group based reimbursement for Defitelio, which should support Medicare beneficiaries' access to Defitelio when treated in certain inpatient hospital settings.
2016 Financial Guidance*
Jazz Pharmaceuticals is updating its full year 2016 financial guidance primarily due to the acquisition of Celator Pharmaceuticals and modification of the calculation of non-GAAP income tax provision, as follows (in millions, except per share amounts and percentage):
Revenues $1,485-$1,530
Total net product sales $1,477-$1,522
-Xyrem net sales $1,095-$1,130
-Erwinaze/Erwinase net sales $190-$215
-Defitelio/defibrotide net sales $105-$125
GAAP gross margin % 93%
Non-GAAP adjusted gross margin %1,4 93%
GAAP SG&A expenses $499-$529
Non-GAAP adjusted SG&A expenses2,4 $400-$415
GAAP R&D expenses $149-$161
Non-GAAP adjusted R&D expenses3,4 $135-$145
GAAP net income per diluted share $5.66-$6.56
Non-GAAP adjusted net income per diluted share4 $9.90-$10.30
____________________________
* Updated August 9, 2016. The company's 2016
financial guidance remains subject to
final acquisition accounting adjustments
for the acquisition of Celator
Pharmaceuticals.
1. Excludes $5 million of share-based
compensation expense from estimated GAAP
gross margin.
2. Excludes $78-$86 million of share-based
compensation expense, $15-$22 million of
transaction and integration related costs
and $6 million of expenses related to
certain legal proceedings and
restructuring from estimated GAAP SG&A
expenses.
3. Excludes $14-$16 million of share-based
compensation expense from estimated GAAP
R&D expenses.
4. 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 2016 Net
Income Guidance" provided on the last
page 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 2016 second quarter results. 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 +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 44700140.
A replay of the conference call will be available through August 16, 2016 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 44700140. An archived version of the webcast will be available for at least one week in the Investors & Media 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) and Defitelio® (defibrotide sodium) 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. In particular, the company presents non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc (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 tax effect of non-GAAP adjustments and, for the comparable 2015 periods, adjust for the amount attributable to noncontrolling interests. In this regard, the components of non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc, 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 information to management, investors and analysts by excluding items that may not be indicative of the company's core operating results and business outlook, such as intangible asset amortization, share-based compensation expense, upfront and milestone payments, expenses related to certain legal proceedings and restructuring, transaction and integration related costs, non-cash interest and loss on extinguishment and modification of debt, and by including the above-mentioned tax effect and noncontrolling interest adjustments. Jazz Pharmaceuticals' management 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. In addition, Jazz Pharmaceuticals believes that these non-GAAP financial measures are useful to investors because they enhance investors' ability to compare the company's results from period to period; allow for greater transparency with respect to key financial metrics the company uses in making operating decisions; and are regularly used by investors and analysts to model and track the company's financial performance.
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. In this regard, the company has modified the calculation of its non-GAAP income tax provision and accordingly, commencing with the company's presentation of non-GAAP adjusted net income (and the related per share measures) for the three and six months ended June 30, 2016, the income tax effect of the adjustments between GAAP reported and non-GAAP adjusted results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). For purposes of comparability, the non-GAAP income tax provision and the corresponding income tax adjustment to arrive at non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc (and the related per share measures) for the comparable 2015 periods are presented on the same basis. 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 2016 financial guidance, the company's manufacturing plans, the expected impact of NTAP designation for Defitelio, 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 competitive products; regulatory restrictions and requirements applicable to Xyrem and ongoing patent litigation and related proceedings; effectively commercializing the company's other products and product candidates; 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; the difficulty and uncertainty of pharmaceutical product development and the uncertainty of clinical success; identifying and acquiring, in-licensing or developing additional products or product candidates, financing these transactions and successfully integrating acquired businesses such as Celator Pharmaceuticals, Inc.; the extent to which hospitals will take advantage of the NTAP program with respect to Defitelio; the ability to achieve 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 March 31, 2016 and future filings and reports by the company, including the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. 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 INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Product sales, net $379,110 $332,106 $713,026 $639,141
Royalties and contract
revenues 2,051 1,641 4,145 3,909
----- ----- ----- -----
Total revenues 381,161 333,747 717,171 643,050
Operating expenses:
Cost of product sales
(excluding amortization
of intangible assets) 23,980 21,813 47,419 50,111
Selling, general and
administrative 122,618 107,132 251,383 219,520
Research and development 39,091 27,833 70,343 55,014
Acquired in-process
research and
development - - 8,750 -
Intangible asset
amortization 26,737 23,668 49,379 48,345
Total operating expenses 212,426 180,446 427,274 372,990
------- ------- ------- -------
Income from operations 168,735 153,301 289,897 270,060
Interest expense, net (12,121) (15,812) (24,313) (32,057)
Foreign currency gain
(loss) - (1,914) (819) 331
Loss on extinguishment
and modification of
debt - (16,815) - (16,815)
--- ------- --- -------
Income before income tax
provision 156,614 118,760 264,765 221,519
Income tax provision 45,332 30,647 79,362 62,706
------ ------ ------ ------
Net income 111,282 88,113 185,403 158,813
Net loss attributable to
noncontrolling
interests, net of tax - (1) - (1)
Net income attributable
to Jazz Pharmaceuticals
plc $111,282 $88,114 $185,403 $158,814
======== ======= ======== ========
Net income attributable to Jazz
Pharmaceuticals plc per ordinary share:
Basic $1.84 $1.44 $3.05 $2.60
===== ===== ===== =====
Diluted $1.80 $1.40 $2.98 $2.52
===== ===== ===== =====
Weighted-average
ordinary shares used in
per share calculations
- basic 60,499 61,190 60,821 60,998
====== ====== ====== ======
Weighted-average
ordinary shares used in
per share calculations
- diluted 61,833 63,090 62,154 63,028
====== ====== ====== ======
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2016 2015
---- ----
ASSETS
Current assets:
Cash and
cash
equivalents $867,966 $988,785
Investments 48,409 -
Accounts
receivable,
net of
allowances 231,837 209,685
Inventories 33,291 19,451
Prepaid
expenses 23,143 20,699
Other
current
assets 26,244 19,047
Total
current
assets 1,230,890 1,257,667
Property
and
equipment,
net 93,476 85,572
Intangible
assets,
net 1,300,761 1,185,606
Goodwill 661,845 657,139
Deferred
tax
assets,
net, non-
current 117,507 122,863
Deferred
financing
costs 6,610 7,209
Other non-
current
assets 37,005 27,548
------ ------
Total
assets $3,448,094 $3,343,604
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts
payable $28,406 $21,807
Accrued
liabilities 157,622 164,070
Current
portion of
long-term
debt 37,500 37,587
Income
taxes
payable 1,761 1,808
Deferred
revenue 1,432 1,370
-----
Total
current
liabilities 226,721 226,642
Deferred
revenue,
non-
current 3,161 3,721
Long-term
debt, less
current
portion 1,141,652 1,150,857
Deferred
tax
liability,
net, non-
current 289,906 294,485
Other non-
current
liabilities 94,196 69,253
Total
shareholders'
equity 1,692,458 1,598,646
Total
liabilities
and
shareholders'
equity $3,448,094 $3,343,604
========== ==========
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
GAAP reported net income
attributable to Jazz
Pharmaceuticals plc $111,282 $88,114 $185,403 $158,814
Intangible asset
amortization 26,737 23,668 49,379 48,345
Share-based
compensation expense 25,433 23,300 49,616 44,119
Upfront and milestone
payments - - 8,750 -
Expenses related to
certain legal
proceedings and
restructuring - - 6,060 553
Transaction and
integration related
costs 2,189 - 2,189 155
Non-cash interest
expense 5,414 6,032 10,776 12,048
Loss on extinguishment
and modification of
debt - 16,815 - 16,815
Income tax effect of
adjustments (1) (8,471) (13,776) (16,712) (21,181)
Adjustments for amount
attributable to
noncontrolling
interests (2) - (2) - (2)
--- --- --- ---
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc $162,584 $144,151 $295,461 $259,666
======== ======== ======== ========
GAAP reported net income
attributable to Jazz
Pharmaceuticals plc per
diluted share $1.80 $1.40 $2.98 $2.52
===== ===== ===== =====
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc per diluted share
(3) $2.63 $2.28 $4.75 $4.12
===== ===== ===== =====
Weighted-average
ordinary shares used in
diluted per share
calculations 61,833 63,090 62,154 63,028
====== ====== ====== ======
(1) The income tax effect of the adjustments between GAAP reported and non-GAAP adjusted net income takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax
jurisdiction(s).
(2) The noncontrolling interests' share of the above adjustments as applicable.
(3) Commencing with the company's earnings release for the second quarter of 2016, the company modified the calculation of its non-GAAP income tax provision. The following table sets forth the impact of the modification on
non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc per diluted share and is provided for informational purposes only during the periods affected by the modification.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Non-GAAP adjusted net
income attributable to
Jazz Pharmaceuticals
plc per diluted share $2.63 $2.28 $4.75 $4.12
Impact attributable to
the modified
calculation of non-
GAAP income tax
provision 0.19 0.13 0.32 0.28
---- ---- ---- ----
$2.82 $2.41 $5.07 $4.40
===== ===== ===== =====
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS AND OTHER INFORMATION
(In thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended
------------------
June 30, 2016 June 30, 2015
-------------
GAAP Reported Adjustments Non-GAAP Adjusted GAAP Reported Adjustments Non-GAAP Adjusted
------------- ----------- ----------------- ------------- ----------- -----------------
Total revenues $381,161 $ - $381,161 $333,747 $ - $333,747
Cost of product sales
(excluding amortization
of intangible assets) 23,980 (963) (a) 23,017 21,813 (772) (a) 21,041
Selling, general and
administrative 122,618 (23,130) (b) 99,488 107,132 (18,662) (b) 88,470
Research and development 39,091 (3,529) (c) 35,562 27,833 (3,866) (c) 23,967
Intangible asset
amortization 26,737 (26,737) - 23,668 (23,668) -
Interest expense, net 12,121 (5,414) (d) 6,707 15,812 (6,032) (d) 9,780
Foreign currency loss - - - 1,914 - 1,914
Loss on extinguishment
and modification of
debt - - - 16,815 (16,815) -
Income before income tax
provision 156,614 59,773 (e) 216,387 118,760 69,815 (e) 188,575
Income tax provision 45,332 8,471 (f) 53,803 30,647 13,776 (f) 44,423
Effective tax rate (g) 28.9% 24.9% 25.8% 23.6%
Net income 111,282 51,302 (h) 162,584 88,113 56,039 (h) 144,152
Net income (loss)
attributable to
noncontrolling
interests, net of tax - - (i) - (1) 2 (i) 1
Net income attributable
to Jazz Pharmaceuticals
plc $111,282 $51,302 (j) $162,584 $88,114 $56,037 (j) $144,151
Net income attributable
to Jazz Pharmaceuticals
plc per diluted share $1.80 $2.63 $1.40 $2.28
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS AND OTHER INFORMATION
(In thousands, except per share amounts and percentages)
(Unaudited)
Six Months Ended
----------------
June 30, 2016 June 30, 2015
------------- -------------
GAAP Reported Adjustments Non-GAAP Adjusted GAAP Reported Adjustments Non-GAAP Adjusted
------------- ----------- ----------------- ------------- ----------- -----------------
Total revenues $717,171 $ - $717,171 $643,050 $ - $643,050
Cost of product sales
(excluding amortization
of intangible assets) 47,419 (1,762) (k) 45,657 50,111 (1,467) (k) 48,644
Selling, general and
administrative 251,383 (49,284) (l) 202,099 219,520 (36,009) (l) 183,511
Research and development 70,343 (6,819) (m) 63,524 55,014 (7,351) (m) 47,663
Acquired in-process
research and
development 8,750 (8,750) - - - -
Intangible asset
amortization 49,379 (49,379) - 48,345 (48,345) -
Interest expense, net 24,313 (10,776) (d) 13,537 32,057 (12,048) (d) 20,009
Foreign currency (gain)
loss 819 - 819 (331) - (331)
Loss on extinguishment
and modification of
debt - - - 16,815 (16,815) -
Income before income tax
provision 264,765 126,770 (n) 391,535 221,519 122,035 (n) 343,554
Income tax provision 79,362 16,712 (f) 96,074 62,706 21,181 (f) 83,887
Effective tax rate (g) 30.0% 24.5% 28.3% 24.4%
Net income 185,403 110,058 (o) 295,461 158,813 100,854 (o) 259,667
Net income (loss)
attributable to
noncontrolling
interests, net of tax - - (i) - (1) 2 (i) 1
Net income attributable
to Jazz Pharmaceuticals
plc $185,403 $110,058 (p) $295,461 $158,814 $100,852 (p) $259,666
Net income attributable
to Jazz Pharmaceuticals
plc per diluted share $2.98 $4.75 $2.52 $4.12
_____________________________
Explanation of Adjustments and Certain Line Items
(in thousands):
(a) Share-based compensation expense of
$963 and $772 for the three months
ended June 30, 2016 and 2015,
respectively.
(b) Share-based compensation expense of
$20,949 and $18,662 and transaction
and integration related costs of
$2,181 and $0 for the three months
ended June 30, 2016 and 2015,
respectively.
(c) Share-based compensation expense of
$3,521 and $3,866 and transaction
and integration related costs of $8
and $0 for the three months ended
June 30, 2016 and 2015,
respectively.
(d) Non-cash interest expense
associated with debt discount and
debt issuance costs for the
respective three- and six-month
periods.
(e) Sum of adjustments (a) through (d)
plus the adjustments for intangible
asset amortization and loss on
extinguishment and modification of
debt, as applicable, for the
respective three-month period.
(f) Income tax effect of the adjustments
between GAAP reported and non-GAAP
adjusted net income takes into
account the tax treatment and
related tax rate(s) that apply to
each adjustment in the applicable
tax jurisdiction(s) in the
respective three-and six-month
periods.
(g) Income tax provision divided by
income before income tax provision
for the respective three- and six-
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 six-month
periods.
(j) Net of adjustments (h) and (i) for
the respective three-month period.
(k) Share-based compensation expense of
$1,652 and $1,467 and expenses
related to certain legal
proceedings and restructuring of
$110 and $0 for the six months
ended June 30, 2016 and 2015,
respectively.
(l) Share-based compensation expense of
$41,153 and $35,301, expenses
related to certain legal
proceedings and restructuring of
$5,950 and $553 and transaction and
integration related costs of $2,181
and $155 for the six months ended
June 30, 2016 and 2015,
respectively.
(m) Share-based compensation expense of
$6,811 and $7,351 and transaction
and integration related costs of $8
and $0 for the six months ended
June 30, 2016 and 2015,
respectively.
(n) Sum of adjustments (k), (l), (m) and
(d) plus the adjustments for
acquired in-process research and
development expenses, intangible
asset amortization and loss on
extinguishment and modification of
debt, as applicable, for the
respective six-month period.
(o) Net of adjustments (n) and (f) for
the respective six-month period.
(p) Net of adjustments (o) and (i) for
the respective six-month period.
JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2016 NET INCOME GUIDANCE*
(In millions, except per share amounts)
(Unaudited)
GAAP net income $351 - $407
Intangible asset amortization 100 - 110
Share-based compensation expense 97 - 107
Upfront and milestone payments 24
Transaction and integration related
costs 15 - 22
Expenses related to certain legal
proceedings and restructuring 6
Non-cash interest expense 20 - 24
Income tax effect of adjustments (37) - (27)
Non-GAAP adjusted net income $615 - $640
===========
GAAP net income per diluted share(1) $5.66-$6.56
===========
Non-GAAP adjusted net income per
diluted share 1 $9.90-$10.30
============
Weighted-average ordinary shares
used in per share calculations 62
_____________________________
* Updated August 9, 2016. The company's 2016
financial guidance remains subject to
final acquisition accounting adjustments
for the acquisition of Celator
Pharmaceuticals.
1. The change in GAAP guidance from the
company's May 10, 2016 guidance is
primarily due to the acquisition of
Celator, which increased estimated SG&A
and R&D expenses, and net interest
expense. The change in non-GAAP guidance
is primarily due to the acquisition of
Celator, and the modification of the
calculation of the company's non-GAAP
income tax provision of approximately
$0.55 per share.
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SOURCE Jazz Pharmaceuticals plc
