Le Lézard
Classified in: Health, Science and technology, Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Horizon Therapeutics plc Reports Record Second-Quarter 2020 Results; Increases TEPEZZA® Full-Year Net Sales Guidance to Greater Than $650 Million; Increases Full?Year 2020 Net Sales and Adjusted EBITDA Guidance


Horizon Therapeutics plc (Nasdaq: HZNP) today announced record second-quarter 2020 financial results. The Company increased its full-year 2020 net sales and adjusted EBITDA guidance on continued strength of TEPEZZA. In addition to increasing TEPEZZA full-year 2020 net sales guidance, the Company also increased its peak U.S. annual net sales estimate for the medicine.

"Driving our record second-quarter performance was the continued tremendous patient and physician response to TEPEZZA, along with our outstanding commercial execution, making the TEPEZZA launch one of the most successful rare disease medicine launches ever, despite a challenging COVID-19 environment," said Tim Walbert, chairman, president and chief executive officer, Horizon. "With TEPEZZA results having once again dramatically exceeded expectations, we increased both our TEPEZZA and Company full-year net sales guidance, as well as increased our TEPEZZA peak U.S. annual net sales estimate. We also continued to advance our clinical programs and improve our capital structure during the quarter. With our strong track record of strategic execution and driving value for patients and shareholders alike, Horizon is well positioned for long-term growth and success."

Financial Highlights

 

 

 

 

%

 

 

 

 

 

%

(in millions except for per share amounts and percentages)

Q2 20

 

Q2 19

 

Change

 

YTD 20

 

YTD 19

 

Change

 
Net sales

$

462.8

 

$

320.6

 

44

 

$

818.7

 

$

601.0

 

36

Net loss

 

(80.0

)

 

(5.1

)

NM

 

 

(93.6

)

 

(38.0

)

146

Non-GAAP net income

 

83.8

 

 

95.6

 

(12

)

 

167.0

 

 

149.6

 

12

Adjusted EBITDA

 

190.7

 

 

124.1

 

54

 

 

297.9

 

 

212.5

 

40

 
Loss per share - diluted

 

(0.42

)

 

(0.03

)

NM

 

 

(0.49

)

 

(0.21

)

133

Non-GAAP earnings per share - diluted

 

0.40

 

 

0.49

 

(18

)

 

0.80

 

 

0.80

 

-

Second-Quarter and Recent Company Highlights

Key Research and Development Programs

Second-Quarter Financial Results

Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

Second-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company's two segments, the orphan segment and the inflammation segment. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company's consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company's segment operating results.

Orphan Segment

 

 

 

 

 

%

 

 

 

 

 

%

(in millions except for percentages)

Q2 20

 

Q2 19

 

Change

 

YTD 20

 

YTD 19

 

Change

 
TEPEZZA®

 

165.9

 

-

NM

 

 

189.4

 

-

NM

 

KRYSTEXXA®

 

75.2

 

79.8

(6

)

 

168.5

 

132.1

28

 

RAVICTI®

 

65.6

 

50.4

30

 

 

126.7

 

100.3

26

 

PROCYSBI®

 

41.4

 

41.2

-

 

 

79.7

 

80.7

(1

)

ACTIMMUNE®

 

28.3

 

29.3

(3

)

 

54.8

 

51.0

7

 

BUPHENYL®

 

2.8

 

2.3

20

 

 

5.2

 

5.2

-

 

QUINSAIRTM

 

0.1

 

0.2

(65

)

 

0.3

 

0.4

(1

)

Orphan Net Sales

$

379.3

$

203.2

87

 

$

624.6

$

369.7

69

 

 
Orphan Segment Operating Income

$

151.5

$

63.7

138

 

$

205.9

$

100.4

105

 

Inflammation Segment

 
(in millions except for percentages) Q2 20 Q2 19 %
Change
YTD 20 YTD 19 %
Change
 
PENNSAID 2%®

 

35.0

 

51.5

(32

)

 

76.6

 

101.7

(25

)

DUEXIS®

 

27.8

 

30.0

(8

)

 

59.1

 

59.5

(1

)

RAYOS®

 

14.5

 

20.3

(29

)

 

32.7

 

39.7

(18

)

VIMOVO®(1)

 

6.2

 

14.6

(57

)

 

25.7

 

28.6

(10

)

MIGERGOT®(2)

 

-

 

1.0

NM

 

 

-

 

1.8

NM

 

Inflammation Net Sales

$

83.5

$

117.4

(29

)

$

194.1

$

231.3

(16

)

 
Inflammation Segment Operating Income

$

38.1

$

60.5

(37

)

$

90.0

$

111.9

(20

)

(1)

On Feb. 27, 2020, Dr. Reddy's Laboratory initiated an at-risk launch of generic VIMOVO in the United States.

(2)

In June 2019, the Company divested the rights to MIGERGOT.

Cash Flow Statement and Balance Sheet Highlights

Revised 2020 Guidance

The Company now expects full-year 2020 net sales to range between $1.85 billion to $1.90 billion, an increase from the previous guidance range of $1.40 billion to $1.45 billion. The Company now expects TEPEZZA full-year 2020 net sales of greater than $650 million, compared to the previous guidance of greater than $200 million. Full-year 2020 adjusted EBITDA is now expected to range between $725 million and $775 million, an increase from the previous guidance range of $450 million to $500 million.

Webcast

At 8 a.m. EST / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizontherapeutics.com. Please connect to the Company's website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.

About Horizon

Horizon is focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. Our pipeline is purposeful: we apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, please visit www.horizontherapeutics.com and follow us on Twitter, LinkedIn, Instagram and Facebook.

Note Regarding Use of Non-GAAP Financial Measures

EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by Horizon as non-GAAP financial measures. Horizon provides certain other financial measures such as non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax rate, non-GAAP operating cash flow, net leverage ratio and net debt, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon's performance, operations, expenses, profitability and cash flows. Adjustments to Horizon's GAAP figures as well as EBITDA exclude acquisition and/or divestiture-related expenses, charges related to the discontinuation of ACTIMMUNE development for Friedreich's ataxia, gain or loss from divestiture, gain or loss from sale of assets, upfront, progress and milestone payments related to license and collaboration agreements, litigation settlements, loss on debt extinguishment, costs of debt refinancing, drug manufacturing harmonization costs, restructuring and realignment costs, the income tax effect on pre-tax non-GAAP adjustments and other non-GAAP income tax adjustments, as well as non-cash items such as share-based compensation, depreciation and amortization, non-cash interest expense, long-lived asset impairment charges and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon's financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company's historical and expected 2020 financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon's management uses for planning and forecasting purposes and measuring the Company's performance. For example, adjusted EBITDA is used by Horizon as one measure of management performance under certain incentive compensation arrangements. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon has not provided a reconciliation of its full-year 2020 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items such as acquisition/divestiture-related expenses and share-based compensation that are a component of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon's stock price, the variability associated with the size or timing of acquisitions/divestitures and other factors. These components of net income (loss) could significantly impact Horizon's actual net income (loss).

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon's full-year 2020 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including potential growth in net sales of certain of Horizon's medicines; development plans; expected timing of clinical trials, studies and regulatory submissions; potential market opportunity for and benefits of Horizon's medicines and medicine candidates; and business and other statements that are not historical facts. These forward-looking statements are based on Horizon's 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 that Horizon's actual future financial and operating results may differ from its expectations or goals; Horizon's ability to grow net sales from existing medicines; impacts of the COVID-19 pandemic and actions taken to slow its spread, including impacts on net sales of Horizon's medicines and potential delays in clinical trials; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; risks relating to Horizon's ability to successfully implement its business strategies; risks inherent in developing novel medicine candidates and existing medicines for new indications; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including potential generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon operates and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Horizon's filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

Horizon Therapeutics plc

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
Net sales

$

462,779

 

$

320,647

 

$

818,688

 

$

601,018

 

Cost of goods sold

 

121,515

 

 

89,163

 

 

218,931

 

 

177,305

 

Gross profit

 

341,264

 

 

231,484

 

 

599,757

 

 

423,713

 

 
OPERATING EXPENSES:
Research and development

 

81,068

 

 

28,314

 

 

108,277

 

 

50,039

 

Selling, general and administrative

 

222,332

 

 

167,095

 

 

470,107

 

 

339,394

 

Loss on sale of assets

 

-

 

 

10,963

 

 

-

 

 

10,963

 

Total operating expenses

 

303,400

 

 

206,372

 

 

578,384

 

 

400,396

 

Operating income

 

37,864

 

 

25,112

 

 

21,373

 

 

23,317

 

 
OTHER EXPENSE, NET:
Interest expense, net

 

(18,571

)

 

(22,033

)

 

(35,915

)

 

(49,563

)

Loss on debt extinguishment

 

(17,254

)

 

(11,878

)

 

(17,254

)

 

(17,464

)

Foreign exchange gain

 

283

 

 

76

 

 

1,059

 

 

15

 

Other income (expense), net

 

632

 

 

(1,272

)

 

1,074

 

 

(1,083

)

Total other expense, net

 

(34,910

)

 

(35,107

)

 

(51,036

)

 

(68,095

)

 
Income (Loss) before expense (benefit) for income taxes

 

2,954

 

 

(9,995

)

 

(29,663

)

 

(44,778

)

Expense (benefit) for income taxes

 

82,964

 

 

(4,875

)

 

63,938

 

 

(6,795

)

Net loss

$

(80,010

)

$

(5,120

)

$

(93,601

)

$

(37,983

)

 
Net loss per ordinary share - basic and diluted

$

(0.42

)

$

(0.03

)

$

(0.49

)

$

(0.21

)

 
Weighted average ordinary shares outstanding - basic and diluted

 

192,705,535

 

 

185,327,383

 

 

191,426,864

 

 

178,866,391

 

Horizon Therapeutics plc

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

 
As of
June 30,
2020
    December 31,
2019
ASSETS
CURRENT ASSETS:    
Cash and cash equivalents

$

718,062

 

   

$

1,076,287

 

Restricted cash

 

3,625

 

   

 

3,752

 

Accounts receivable, net

 

543,755

 

   

 

408,685

 

Inventories, net

 

66,099

 

   

 

53,802

 

Prepaid expenses and other current assets

 

157,548

 

   

 

143,577

 

Total current assets

 

1,489,089

 

   

 

1,686,103

 

Property and equipment, net

 

138,801

 

   

 

30,159

 

Developed technology and other intangible assets, net

 

1,891,100

 

   

 

1,702,628

 

Goodwill

 

413,669

 

   

 

413,669

 

Deferred tax assets, net

 

564,643

 

   

 

555,165

 

Other assets

 

40,889

 

   

 

48,310

 

Total assets

$

4,538,191

 

   

$

4,436,034

 

     
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Exchangeable Senior Notes?current

$

174,504

 

   

$

-

 

Accounts payable

 

106,015

 

   

 

21,514

 

Accrued expenses

 

415,545

 

   

 

235,234

 

Accrued trade discounts and rebates

 

288,592

 

   

 

466,421

 

Total current liabilities

 

984,656

 

   

 

723,169

 

     
LONG-TERM LIABILITIES:    
Exchangeable Senior Notes, net

 

-

 

   

 

351,533

 

Long-term debt, net

 

1,002,318

 

   

 

1,001,308

 

Deferred tax liabilities, net

 

99,164

 

   

 

94,247

 

Other long-term liabilities

 

90,201

 

   

 

80,328

 

Total long-term liabilities

 

1,191,683

 

   

 

1,527,416

 

     
COMMITMENTS AND CONTINGENCIES    
SHAREHOLDERS' EQUITY:    
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2020 and December 31, 2019; 199,991,807 and 188,402,040 shares issued at June 30, 2020 and December 31, 2019, respectively, and 199,607,441 and 188,017,674 shares outstanding at June 30, 2020 and December 31, 2019, respectively

 

20

 

   

 

19

 

Treasury stock, 384,366 ordinary shares at June 30, 2020 and December 31, 2019

 

(4,585

)

   

 

(4,585

)

Additional paid-in capital

 

3,067,586

 

   

 

2,797,602

 

Accumulated other comprehensive loss

 

(1,886

)

   

 

(1,905

)

Accumulated deficit

 

(699,283

)

   

 

(605,682

)

Total shareholders' equity

 

2,361,852

 

   

 

2,185,449

 

Total liabilities and shareholders' equity

$

4,538,191

 

   

$

4,436,034

 

Horizon Therapeutics plc

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss

$

(80,010

)

$

(5,120

)

$

(93,601

)

$

(37,983

)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense

 

73,655

 

 

59,126

 

 

139,396

 

 

118,017

 

Equity-settled share-based compensation

 

27,057

 

 

21,367

 

 

83,478

 

 

48,915

 

Acquired in-process research and development expense

 

47,517

 

 

-

 

 

47,517

 

 

-

 

Loss on debt extinguishment

 

17,254

 

 

11,878

 

 

17,254

 

 

17,464

 

Amortization of debt discount and deferred financing costs

 

5,248

 

 

5,771

 

 

10,817

 

 

11,622

 

Loss on sale of assets

 

-

 

 

10,963

 

 

-

 

 

10,963

 

Deferred income taxes

 

(2,479

)

 

(2,759

)

 

(4,561

)

 

(1,257

)

Foreign exchange and other adjustments

 

851

 

 

84

 

 

661

 

 

493

 

Changes in operating assets and liabilities:
Accounts receivable

 

(118,256

)

 

9,019

 

 

(135,125

)

 

69,787

 

Inventories

 

2,101

 

 

343

 

 

(12,343

)

 

(504

)

Prepaid expenses and other current assets

 

4,543

 

 

(17,807

)

 

(20,410

)

 

(17,696

)

Accounts payable

 

55,004

 

 

5,138

 

 

83,555

 

 

11,554

 

Accrued trade discounts and rebates

 

(47,781

)

 

(8,247

)

 

(177,721

)

 

(59,151

)

Accrued expenses

 

109,592

 

 

(6,736

)

 

81,505

 

 

(28,071

)

Deferred revenues

 

-

 

 

2,477

 

 

-

 

 

2,410

 

Other non-current assets and liabilities

 

5,305

 

 

5,770

 

 

16,586

 

 

873

 

Net cash provided by operating activities

 

99,601

 

 

91,267

 

 

37,008

 

 

147,436

 

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets

 

-

 

 

6,000

 

 

-

 

 

6,000

 

Payments for acquisitions

 

(157,105

)

 

-

 

 

(262,305

)

 

-

 

Change in escrow deposit for property purchase

 

-

 

 

-

 

 

6,000

 

 

-

 

Purchases of property and equipment

 

(966

)

 

(5,009

)

 

(119,970

)

 

(6,858

)

Net cash (used in) provided by investing activities

 

(158,071

)

 

991

 

 

(376,275

)

 

(858

)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes

 

-

 

 

(258,282

)

 

-

 

 

(258,282

)

Net proceeds from the issuance of ordinary shares

 

-

 

 

(957

)

 

-

 

 

326,793

 

Repayment of term loans

 

-

 

 

(518,026

)

 

-

 

 

(818,026

)

Net proceeds from term loans

 

-

 

 

517,378

 

 

-

 

 

517,378

 

Proceeds from the issuance of ordinary shares in conjunction with ESPP program

 

7,979

 

 

5,465

 

 

7,979

 

 

5,465

 

Proceeds from the issuance of ordinary shares in connection with stock option exercises

 

18,837

 

 

1,987

 

 

25,887

 

 

12,029

 

Payment of employee withholding taxes relating to share-based awards

 

(6,345

)

 

(7,203

)

 

(53,009

)

 

(24,374

)

Net cash provided by (used in) financing activities

 

20,471

 

 

(259,638

)

 

(19,143

)

 

(239,017

)

 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

1,424

 

 

576

 

 

58

 

 

58

 

 
Net decrease in cash, cash equivalents and restricted cash

 

(36,575

)

 

(166,804

)

 

(358,352

)

 

(92,381

)

Cash, cash equivalents and restricted cash, beginning of the period(1)

 

758,262

 

 

1,036,540

 

 

1,080,039

 

 

962,117

 

Cash, cash equivalents and restricted cash, end of the period(1)

$

721,687

 

$

869,736

 

$

721,687

 

$

869,736

 

(1)

 

Amounts include restricted cash balance in accordance with ASU No. 2016-18. Cash and cash equivalents excluding restricted cash are shown on the balance sheet.

Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Net Income and Earnings Per Share (Unaudited)
(in thousands, except share and per share data)
 
 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
 
GAAP net loss

$

(80,010

)

$

(5,120

)

$

(93,601

)

$

(37,983

)

Non-GAAP adjustments:
Acquisition/divestiture-related costs

 

47,103

 

 

1,200

 

 

47,097

 

 

2,546

 

Restructuring and realignment costs

 

-

 

 

13

 

 

-

 

 

33

 

Amortization and step-up:
Intangible amortization expense

 

66,749

 

 

57,683

 

 

125,324

 

 

115,100

 

Inventory step-up expense

 

-

 

 

(25

)

 

-

 

 

90

 

Amortization of debt discount and deferred financing costs

 

5,248

 

 

5,710

 

 

10,817

 

 

11,622

 

Impairment of long-lived assets

 

1,072

 

 

-

 

 

1,072

 

 

-

 

Loss on sale of assets

 

-

 

 

10,963

 

 

-

 

 

10,963

 

Share-based compensation

 

27,057

 

 

21,367

 

 

83,478

 

 

48,915

 

Depreciation

 

6,907

 

 

1,443

 

 

14,072

 

 

2,916

 

Litigation settlements

 

-

 

 

1,000

 

 

-

 

 

1,000

 

Upfront, progress and milestone payments related to license and collaboration agreements

 

3,000

 

 

4,000

 

 

3,000

 

 

6,000

 

Fees related to refinancing activities

 

-

 

 

1,033

 

 

54

 

 

1,175

 

Loss on debt extinguishment

 

17,254

 

 

11,878

 

 

17,254

 

 

17,464

 

Drug substance harmonization costs

 

-

 

 

234

 

 

290

 

 

314

 

Charges relating to discontinuation of Friedreich's ataxia program

 

-

 

 

1,300

 

 

-

 

 

1,221

 

Total of pre-tax non-GAAP adjustments

 

174,390

 

 

117,799

 

 

302,458

 

 

219,359

 

Income tax effect of pre-tax non-GAAP adjustments

 

(25,797

)

 

(15,621

)

 

(57,059

)

 

(30,372

)

Other non-GAAP income tax adjustments

 

15,210

 

 

(1,452

)

 

15,210

 

 

(1,452

)

Total of non-GAAP adjustments

 

163,803

 

 

100,726

 

 

260,609

 

 

187,535

 

Non-GAAP Net Income

$

83,793

 

$

95,606

 

$

167,008

 

$

149,552

 

 
Non-GAAP Earnings Per Share:
Weighted average ordinary shares - Basic

 

192,705,535

 

 

185,327,383

 

 

191,426,864

 

 

178,866,391

 

 
Non-GAAP Earnings Per Share - Basic:
GAAP loss per share - Basic

$

(0.42

)

$

(0.03

)

$

(0.49

)

$

(0.21

)

Non-GAAP adjustments

 

0.85

 

 

0.55

 

 

1.36

 

 

1.05

 

Non-GAAP earnings per share - Basic

$

0.43

 

$

0.52

 

$

0.87

 

$

0.84

 

 
Non-GAAP Net Income

$

83,793

 

$

95,606

 

$

167,008

 

$

149,552

 

Effect of assumed exchange of Exchangeable Senior Notes, net of tax

 

1,692

 

 

-

 

 

3,567

 

 

-

 

Numerator - non-GAAP Net Income

$

85,485

 

$

95,606

 

$

170,575

 

$

149,552

 

 
Weighted average ordinary shares - Diluted
Weighted average ordinary shares - Basic

 

192,705,535

 

 

185,327,383

 

 

191,426,864

 

 

178,866,391

 

Ordinary share equivalents

 

21,838,670

 

 

7,897,507

 

 

22,084,476

 

 

7,658,133

 

Denominator - weighted average ordinary shares ? Diluted

 

214,544,205

 

 

193,224,890

 

 

213,511,340

 

 

186,524,524

 

 
Non-GAAP Earnings Per Share - Diluted
GAAP loss per share - Diluted

 

(0.42

)

 

(0.03

)

 

(0.49

)

 

(0.21

)

Non-GAAP adjustments

 

0.85

 

 

0.55

 

 

1.36

 

 

1.05

 

Diluted earnings per share effect of ordinary share equivalents

 

(0.03

)

 

(0.03

)

 

(0.07

)

 

(0.04

)

Non-GAAP earnings per share - Diluted

$

0.40

 

$

0.49

 

$

0.80

 

$

0.80

 

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

EBITDA (Unaudited)

(in thousands)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
 
 
GAAP net loss

$

(80,010

)

$

(5,120

)

$

(93,601

)

$

(37,983

)

Depreciation

 

6,907

 

 

1,443

 

 

14,072

 

 

2,916

 

Amortization and step-up:
Intangible amortization expense

 

66,749

 

 

57,683

 

 

125,324

 

 

115,100

 

Inventory step-up expense

 

-

 

 

(25

)

 

-

 

 

90

 

Interest expense, net (including amortization of debt discount and deferred financing costs)

 

18,571

 

 

22,033

 

 

35,915

 

 

49,563

 

Expense (benefit) for income taxes

 

82,964

 

 

(4,875

)

 

63,938

 

 

(6,795

)

EBITDA

$

95,181

 

$

71,139

 

$

145,648

 

$

122,891

 

Other non-GAAP adjustments:
Acquisition/divestiture-related costs

 

47,103

 

 

1,200

 

 

47,097

 

 

2,546

 

Restructuring and realignment costs

 

-

 

 

13

 

 

-

 

 

33

 

Impairment of long-lived assets

 

1,072

 

 

-

 

 

1,072

 

 

-

 

Loss on sale of assets

 

-

 

 

10,963

 

 

-

 

 

10,963

 

Share-based compensation

 

27,057

 

 

21,367

 

 

83,478

 

 

48,915

 

Litigation settlements

 

-

 

 

1,000

 

 

-

 

 

1,000

 

Upfront, progress and milestone payments related to license and collaboration agreements

 

3,000

 

 

4,000

 

 

3,000

 

 

6,000

 

Fees related to refinancing activities

 

-

 

 

1,033

 

 

54

 

 

1,175

 

Loss on debt extinguishment

 

17,254

 

 

11,878

 

 

17,254

 

 

17,464

 

Drug substance harmonization costs

 

-

 

 

234

 

 

290

 

 

314

 

Charges relating to discontinuation of Friedreich's ataxia program

 

-

 

 

1,300

 

 

-

 

 

1,221

 

Total of other non-GAAP adjustments

 

95,486

 

 

52,988

 

 

152,245

 

 

89,631

 

Adjusted EBITDA

$

190,667

 

$

124,127

 

$

297,893

 

$

212,522

 

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Operating Income (Unaudited)

(in thousands)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
 
GAAP operating income

$

37,864

$

25,112

 

$

21,373

$

23,317

Non-GAAP adjustments:
Acquisition/divestiture-related costs

 

46,988

 

73

 

 

47,272

 

1,275

Restructuring and realignment costs

 

-

 

13

 

 

-

 

33

Amortization and step-up:
Intangible amortization expense

 

66,749

 

57,683

 

 

125,324

 

115,100

Inventory step-up expense

 

-

 

(25

)

 

-

 

90

Impairment of long-lived assets

 

1,072

 

-

 

 

1,072

 

-

Loss on sale of assets

 

-

 

10,963

 

 

-

 

10,963

Share-based compensation

 

27,057

 

21,367

 

 

83,478

 

48,915

Depreciation

 

6,907

 

1,443

 

 

14,072

 

2,916

Litigation settlements

 

-

 

1,000

 

 

-

 

1,000

Upfront, progress and milestone payments related to
license and collaboration agreements

 

3,000

 

4,000

 

 

3,000

 

6,000

Fees related to refinancing activities

 

-

 

1,033

 

 

54

 

1,175

Drug substance harmonization costs

 

-

 

234

 

 

290

 

314

Charges relating to discontinuation of Friedreich's ataxia program

 

-

 

1,300

 

 

-

 

1,221

Total of non-GAAP adjustments

 

151,773

 

99,084

 

 

274,562

 

189,002

Non-GAAP operating income

$

189,637

$

124,196

 

$

295,935

$

212,319

 
Orphan segment operating income

 

151,541

 

63,696

 

 

205,897

 

100,400

Inflammation segment operating income

 

38,096

 

60,500

 

 

90,038

 

111,919

Total segment operating income

$

189,637

$

124,196

 

$

295,935

$

212,319

 
Foreign exchange gain

 

283

 

76

 

 

1,059

 

15

Other income (expense), net

 

747

 

(145

)

 

899

 

188

Adjusted EBITDA

$

190,667

$

124,127

 

$

297,893

$

212,522

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Gross Profit and Operating Cash Flow (Unaudited)

(in thousands, except percentages)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

2020

 

2019

 

2020

 

2019

 
Non-GAAP Gross Profit:
 
GAAP gross profit

$

341,264

 

$

231,484

 

$

599,757

 

$

423,713

 

Non-GAAP gross profit adjustments:
Acquisition/divestiture-related costs

 

-

 

 

-

 

 

-

 

 

1,114

 

Intangible amortization expense

 

66,547

 

 

57,481

 

 

124,921

 

 

114,699

 

Inventory step-up expense

 

-

 

 

(25

)

 

-

 

 

90

 

Share-based compensation

 

1,288

 

 

951

 

 

3,977

 

 

1,990

 

Depreciation

 

90

 

 

158

 

 

418

 

 

317

 

Drug substance harmonization costs

 

-

 

 

234

 

 

290

 

 

314

 

Charges relating to discontinuation of Friedreich's ataxia program

 

-

 

 

1,300

 

 

-

 

 

1,221

 

Total of Non-GAAP adjustments

 

67,925

 

 

60,099

 

 

129,606

 

 

119,745

 

Non-GAAP gross profit

$

409,189

 

$

291,583

 

$

729,363

 

$

543,458

 

 
GAAP gross profit %

 

73.7

%

 

72.2

%

 

73.3

%

 

70.5

%

Non-GAAP gross profit %

 

88.4

%

 

90.9

%

 

89.1

%

 

90.4

%

 
 
 
GAAP cash provided by operating activities

$

99,601

 

$

91,267

 

$

37,008

 

$

147,436

 

Cash payments for acquisition/divestiture-related costs

 

-

 

 

142

 

 

(17

)

 

495

 

Cash payments for restructuring and realignment costs

 

94

 

 

839

 

 

189

 

 

2,882

 

Cash payments for upfront, progress and milestone payments related to license and collaboration agreement

 

-

 

 

-

 

 

-

 

 

2,000

 

Cash payments drug substance harmonization costs

 

290

 

 

25

 

 

290

 

 

672

 

Cash payments for discontinuation of Friedreich's ataxia program

 

-

 

 

1,659

 

 

-

 

 

2,589

 

Cash payments relating to refinancing activities

 

-

 

 

1,797

 

 

73

 

 

1,806

 

Non-GAAP operating cash flow

$

99,985

 

$

95,729

 

$

37,543

 

$

157,880

 

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

EBITDA (Unaudited) - 2019

(in thousands)

 

Twelve Months
Ended December 31,

2019

 
GAAP net income

$

573,020

 

Depreciation

 

6,733

 

Amortization and step-up:
Intangible amortization expense

 

230,424

 

Inventory step-up expense

 

89

 

Interest expense, net (including amortization of
debt discount and deferred financing costs)

 

87,089

 

Benefit for income taxes

 

(593,244

)

EBITDA

$

304,111

 

Other non-GAAP adjustments:
Acquisition/divestiture-related costs

 

3,556

 

Restructuring and realignment costs

 

237

 

Share-based compensation

 

91,215

 

Litigation settlements

 

1,000

 

Upfront, progress and milestone payments related to license and collaboration agreements

 

9,073

 

Fees related to refinancing activities

 

2,292

 

Loss on debt extinguishment

 

58,835

 

Drug substance harmonization costs

 

457

 

Charges relating to discontinuation of Friedreich's ataxia program

 

1,076

 

Gain on sale of assets

 

10,963

 

Total of other non-GAAP adjustments

 

178,704

 

Adjusted EBITDA

$

482,815

 

Horizon Therapeutics plc

Net Debt Reconciliation (Unaudited)

(in thousands)

       
      As of
      June 30,
2020
    December 31,
2019
    June 30,
2019
               
Long-term debt, net      

$

1,002,318

   

$

1,001,308

   

$

1,025,096

Exchangeable Senior Notes, current (1)      

 

174,504

   

 

-

   

 

-

Exchangeable Senior Notes, net      

 

-

   

 

351,533

   

 

341,682

Total Debt      

 

1,176,822

   

 

1,352,841

   

 

1,366,778

Debt discount      

 

29,226

   

 

59,922

   

 

70,754

Deferred financing fees      

 

4,934

   

 

5,263

   

 

5,494

Total Principal Amount of Debt      

 

1,210,982

   

 

1,418,026

   

 

1,443,026

               
Less: cash and cash equivalents      

 

718,062

   

 

1,076,287

   

 

865,997

Net Debt      

$

492,920

   

$

341,739

   

$

577,029

(1)

 

On June 3, 2020, the Company issued a notice of redemption for all of the outstanding Exchangeable Senior Notes. During the three months ended June 30, 2020, the Company issued an aggregate of 7,225,368 of its ordinary shares to noteholders as a result of exchanges of $207.0 million in aggregate principal amount of Exchangeable Senior Notes. As of June 30, 2020, an aggregate principal amount of $193.0 million of Exchangeable Senior Notes were outstanding, which was partially offset by $18.5 million of unamortized debt discount on the consolidated balance sheet.

Horizon Therapeutics plc

GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited)

(in millions, except percentages and per share amounts)

 
Q2 2020

Pre-tax Net
(Loss) Income

Income Tax
(Benefit) Expense
Tax Rate Net Income
(Loss)
Diluted Earnings
(Loss) Per Share
As reported - GAAP

$

3.0

 

$

83.0

 

NM

 

$

(80.0

)

$

(0.42

)

Non-GAAP adjustments

 

174.4

 

 

10.6

 

 

148.6

 

Non-GAAP

$

177.3

 

$

93.6

 

52.8

%

$

83.8

 

$

0.40

 

 
 
Q2 2019
Pre-tax Net
(Loss) Income
Income Tax
(Benefit) Expense
Tax Rate Net Income
(Loss)
Diluted Earnings
(Loss) Per Share
As reported - GAAP

$

(10.0

)

$

(4.9

)

48.8

%

$

(5.1

)

$

(0.03

)

Non-GAAP adjustments

 

117.8

 

 

17.1

 

 

100.7

 

Non-GAAP

$

107.8

 

$

12.2

 

11.3

%

$

95.6

 

$

0.49

 

 
 
YTD 2020
Pre-tax Net
(Loss) Income
Income Tax
(Benefit) Expense
Tax Rate Net Income
(Loss)
Diluted Earnings
(Loss) Per Share
As reported - GAAP

$

(29.7

)

$

63.9

 

NM

 

$

(93.6

)

$

(0.49

)

Non-GAAP adjustments

 

302.5

 

 

41.8

 

 

245.4

 

Non-GAAP

$

272.8

 

$

105.8

 

39.0

%

$

167.0

 

$

0.80

 

 
 
YTD 2019
Pre-tax Net
(Loss) Income
Income Tax
(Benefit) Expense
Tax Rate Net Income
(Loss)
Diluted Earnings
(Loss) Per Share
As reported - GAAP

$

(44.8

)

$

(6.8

)

15.2

%

$

(38.0

)

$

(0.21

)

Non-GAAP adjustments

 

219.4

 

 

31.8

 

 

187.5

 

Non-GAAP

$

174.6

 

$

25.0

 

14.3

%

$

149.5

 

$

0.80

 

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended June 30, 2020 and June 30, 2019 (Unaudited)

(in thousands)

 
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended June 30, 2020
(Unaudited)
 
 
Income Tax
Research & Selling, General Loss on Debt Interest Other Benefit
COGS Development & Administrative Extinguishment Expense Expense (Expense)
 
GAAP as reported

$

(121,515

)

$

(81,068

)

$

(222,332

)

$

(17,254

)

$

(18,571

)

$

632

 

$

(82,964

)

 
Non-GAAP Adjustments (in thousands):
 
Acquisition/divestiture-related costs(1)

 

-

 

 

47,328

 

 

(340

)

 

-

 

 

-

 

 

115

 

 

-

 

Amortization and step-up:
Intangible amortization expense(2)

 

66,547

 

 

-

 

 

202

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of debt discount and deferred financing costs(3)

 

-

 

 

-

 

 

-

 

 

-

 

 

5,248

 

 

-

 

 

-

 

Impairment of long lived assets(4)

 

-

 

 

-

 

 

1,072

 

 

-

 

 

-

 

 

-

 

 

-

 

Share-based compensation(5)

 

1,288

 

 

2,552

 

 

23,217

 

 

-

 

 

-

 

 

-

 

 

-

 

Depreciation(6)

 

90

 

 

18

 

 

6,799

 

 

-

 

 

-

 

 

-

 

 

-

 

Upfront, progress and milestone payments related to license and collaboration agreements(7)

 

-

 

 

3,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on debt extinguishment(8)

 

-

 

 

-

 

 

-

 

 

17,254

 

 

-

 

 

-

 

 

-

 

Income tax effect on pre-tax non-GAAP adjustments(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(25,797

)

Other non-GAAP income tax adjustments(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

15,210

 

Total of non-GAAP adjustments

 

67,925

 

 

52,898

 

 

30,950

 

 

17,254

 

 

5,248

 

 

115

 

 

(10,587

)

 
Non-GAAP

$

(53,590

)

$

(28,170

)

$

(191,382

)

$

-

 

$

(13,323

)

$

747

 

$

(93,551

)

 
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended June 30, 2019
(Unaudited)
 
 
Income Tax
Research & Selling, General Loss/(Gain) on Loss on Debt Interest Other Benefit
COGS Development & Administrative Sale of Assets Extinguishment Expense Income, net (Expense)
 
GAAP as reported

$

(89,163

)

$

(28,314

)

$

(167,095

)

$

(10,963

)

$

(11,878

)

$

(22,033

)

$

(1,272

)

$

4,875

 

 
Non-GAAP Adjustments (in thousands):
 
Acquisition/divestiture-related costs(1)

 

-

 

 

-

 

 

73

 

 

-

 

 

-

 

 

-

 

 

1,127

 

 

-

 

Restructuring and realignment costs(11)

 

-

 

 

-

 

 

13

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization and step-up:
Intangible amortization expense(2)

 

57,481

 

 

-

 

 

202

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Inventory step-up expense

 

(25

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of debt discount and deferred financing costs(3)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

5,710

 

 

-

 

 

-

 

Loss on sale of assets(12)

 

-

 

 

-

 

 

-

 

 

10,963

 

 

-

 

 

-

 

 

-

 

 

-

 

Share-based compensation(5)

 

951

 

 

2,343

 

 

18,073

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Depreciation(6)

 

158

 

 

-

 

 

1,285

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Litigation settlements(13)

 

-

 

 

-

 

 

1,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Upfront, progress and milestone payments related to license and collaboration agreements(7)

 

-

 

 

4,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on debt extinguishment(8)

 

-

 

 

-

 

 

-

 

 

-

 

 

11,878

 

 

-

 

 

-

 

 

-

 

Fees related to refinancing activities (14)

 

-

 

 

-

 

 

1,033

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Drug substance harmonization costs(15)

 

234

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Charges relating to discontinuation of Friedreich's ataxia program(16)

 

1,300

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Income tax effect on pre-tax non-GAAP adjustments(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(15,621

)

Other non-GAAP income tax adjustments(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,452

)

Total of non-GAAP adjustments

 

60,099

 

 

6,343

 

 

21,679

 

 

10,963

 

 

11,878

 

 

5,710

 

 

1,127

 

 

(17,073

)

 
Non-GAAP

$

(29,064

)

$

(21,971

)

$

(145,416

)

$

-

 

$

-

 

$

(16,323

)

$

(145

)

$

(12,198

)

 

-

 

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Six Months Ended June 30, 2020 and June 30, 2019 (Unaudited)

(in thousands)

 
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Six Months Ended June 30, 2020
(Unaudited)
 
 
Income Tax
Research & Selling, General Interest Other Loss on Debt Benefit
COGS Development & Administrative Expense Expense Extinguishment (Expense)
 
GAAP as reported

$

(218,931

)

$

(108,277

)

$

(470,107

)

$

(35,915

)

$

1,074

 

$

(17,254

)

$

(63,938

)

 
Non-GAAP Adjustments (in thousands):
 
Acquisition/divestiture-related costs(1)

 

-

 

 

47,328

 

 

(56

)

 

-

 

 

(175

)

 

-

 

 

-

 

Amortization and step-up:
Intangible amortization expense(2)

 

124,921

 

 

-

 

 

403

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of debt discount and deferred financing costs(3)

 

-

 

 

-

 

 

-

 

 

10,817

 

 

-

 

 

-

 

 

-

 

Impairment of long lived assets(4)

 

-

 

 

-

 

 

1,072

 

 

-

 

 

-

 

 

-

 

 

-

 

Share-based compensation(5)

 

3,977

 

 

8,928

 

 

70,573

 

 

-

 

 

-

 

 

-

 

 

-

 

Depreciation(6)

 

418

 

 

43

 

 

13,611

 

 

-

 

 

-

 

 

-

 

 

-

 

Upfront, progress and milestone payments related to license and collaboration agreements(7)

 

-

 

 

3,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Fees related to refinancing activities (14)

 

-

 

 

-

 

 

54

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on debt extinguishment(8)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

17,254

 

 

-

 

Drug substance harmonization costs(15)

 

290

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Income tax effect on pre-tax non-GAAP adjustments(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(57,059

)

Other non-GAAP income tax adjustments(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

15,210

 

Total of non-GAAP adjustments

 

129,606

 

 

59,299

 

 

85,657

 

 

10,817

 

 

(175

)

 

17,254

 

 

(41,849

)

 
Non-GAAP

$

(89,325

)

$

(48,978

)

$

(384,450

)

$

(25,098

)

$

899

 

$

-

 

$

(105,787

)

 
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Six Months Ended June 30, 2019
(Unaudited)
 
 
Income Tax
Research & Selling, General Loss on Debt Loss/(Gain) on Interest Other Benefit
COGS Development & Administrative Extinguishment Sale of Assets Expense Income (Expense)
 
GAAP as reported

$

(177,305

)

$

(50,039

)

$

(339,394

)

$

(17,464

)

$

(10,963

)

$

(49,563

)

 

(1,083

)

$

6,795

 

 
Non-GAAP Adjustments (in thousands):
 
Acquisition/divestiture-related costs(1)

 

1,114

 

 

-

 

 

164

 

 

-

 

 

-

 

 

-

 

 

1,268

 

 

-

 

Restructuring and realignment costs(11)

 

-

 

 

-

 

 

33

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization and step-up:
Intangible amortization expense(2)

 

114,699

 

 

-

 

 

401

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Inventory step-up expense

 

90

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of debt discount and deferred financing costs(3)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

11,622

 

 

-

 

 

-

 

Impairment of long lived assets(4)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on sale of assets(12)

 

-

 

 

-

 

 

-

 

 

-

 

 

10,963

 

 

-

 

 

-

 

 

-

 

Share-based compensation(5)

 

1,990

 

 

4,979

 

 

41,946

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Depreciation(6)

 

317

 

 

-

 

 

2,599

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Litigation settlements(13)

 

-

 

 

-

 

 

1,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Upfront, progress and milestone payments related to license and collaboration agreements(7)

 

-

 

 

6,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Fees related to refinancing activities(14)

 

-

 

 

-

 

 

1,175

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on debt extinguishment(8)

 

-

 

 

-

 

 

-

 

 

17,464

 

 

-

 

 

-

 

 

-

 

 

-

 

Drug substance harmonization costs(15)

 

314

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Charges relating to discontinuation of Friedreich's ataxia program(16)

 

1,221

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Income tax effect on pre-tax non-GAAP adjustments(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(30,372

)

Other non-GAAP income tax adjustments(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,452

)

Total of non-GAAP adjustments

 

119,745

 

 

10,979

 

 

47,318

 

 

17,464

 

 

10,963

 

 

11,622

 

 

1,268

 

 

(31,824

)

 
Non-GAAP

$

(57,560

)

$

(39,060

)

$

(292,076

)

$

-

 

$

-

 

$

(37,941

)

$

185

 

$

(25,029

)

NOTES FOR CERTAIN INCOME STATEMENT LINE ITEMS - NON-GAAP

  1. Represents expenses, including legal and consulting fees, incurred in connection with our acquisitions and divestitures. Costs recovered from subleases of acquired facilities and reimbursed expenses incurred under transition arrangements for divestitures are also reflected in this line item. In addition, the three and six months ended June 30, 2020 amounts include the Curzion acquisition payment of $45.0 million, which was recorded as a research and development expense.
  2. Intangible amortization expenses are associated with our intellectual property rights, developed technology and customer relationships related to TEPEZZA, KRYSTEXXA, RAVICTI, PROCYSBI, ACTIMMUNE, BUPHENYL, RAYOS, PENNSAID 2%, VIMOVO and MIGERGOT.
  3. Represents amortization of debt discount and deferred financing costs associated with our debt.
  4. During the three and six months ended June 30, 2020, we recorded an impairment charge of $1.1 million related to the Novato, California office lease, which was obtained through an acquisition.
  5. Represents share-based compensation expense associated with our stock option, restricted stock unit and performance stock unit grants to our employees and non-employee directors, and our employee share purchase plan.
  6. Represents depreciation expense related to our property, equipment, software and leasehold improvements.
  7. During the six months ended June 30, 2020, we recognized a $3.0 million progress payment in relation to the collaboration agreement with HemoShear Therapeutics, LLC, or HemoShear, which was subsequently paid in July 2020. During the six months ended June 30, 2019, we recorded an upfront cash payment of $2.0 million and a $4.0 million progress payment in relation to the collaboration agreement with HemoShear.
  8. During the six months ended June 30, 2020, we recorded a loss on debt extinguishment of $17.3 million in the condensed consolidated statements of comprehensive loss, which reflects the partial redemption of our Exchangeable Senior Notes. During the six months ended June 30, 2019, we recorded a loss on debt extinguishment of $17.5 million in the condensed consolidated statements of comprehensive loss, which reflected the write-off of the deferred financing fees and debt discount fees related to the prepayment of $250.0 million of 2023 Senior Notes and term loan repayment of $300.0 million.
  9. Income tax adjustments on pre-tax non-GAAP adjustments represent the estimated income tax impact of each pre-tax non-GAAP adjustment based on the statutory income tax rate of the applicable jurisdictions for each non-GAAP adjustment.
  10. During the three months ended June 30, 2020, following the publication by the U.S. Treasury of Final Regulations for Section 267A (commonly referred to as the "Anti-Hybrid Rules") on April 8, 2020, we recorded a write off of a deferred tax asset related to certain interest expense accrued to a foreign related party during the year ended December 31, 2019 and recognized a corresponding one-time tax provision, resulting in a non-GAAP tax adjustment of $15.2 million. During the three months ended June 30, 2019, we released a reserve related to an uncertain tax position in connection with an acquisition resulting in a non-GAAP tax adjustment of $1.5 million.
  11. Represents expenses, including severance costs and consulting fees, related to restructuring and realignment activities.
  12. During the six months ended June 30, 2019, we recorded a loss of $11.0 million on the sale of our rights to MIGERGOT.
  13. The Company recorded $1.0 million of expense during the three months ended June 30, 2019, for litigation settlements.
  14. Represents arrangement and other fees relating to our refinancing activities.
  15. During the year ended December 31, 2016, we entered into a definitive agreement to acquire certain rights to interferon gamma-1b, marketed as IMUKIN in an estimated thirty countries primarily in Europe and the Middle East, or the IMUKIN purchase agreement. We already owned the rights to interferon gamma-1b marketed as ACTIMMUNE in the United States, Canada and Japan. In connection with the IMUKIN purchase agreement, we also committed to pay our contract manufacturer certain amounts related to the harmonization of the manufacturing processes for ACTIMMUNE and IMUKIN drug substance, or the harmonization program. At the time we entered into the IMUKIN purchase agreement and the harmonization program commitment was made, we had anticipated achieving certain benefits should the Phase 3 clinical trial evaluating ACTIMMUNE for the treatment of Friedreich's ataxia, be successful. If the study had been successful and if U.S. marketing approval had subsequently been obtained, we had forecasted significant increases in demand for the medicine and the harmonization program would have resulted in significant benefits for us. Following our discontinuation of the FA program, we determined that certain assets, including an upfront payment related to the IMUKIN purchase agreement, were impaired, and the costs under the harmonization program would no longer have benefit to us and should be expensed as incurred.
  16. Represents expenses incurred relating to discontinuation of Friedreich's ataxia program and a reduction to previous charges recorded. 

 


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