Horizon Therapeutics plc (Nasdaq: HZNP) today announced third-quarter 2022 financial results and increased its full-year 2022 net sales and adjusted EBITDA guidance.
"Our third-quarter focus on clinical, commercial and operational execution drove continued progress across our portfolio," said Tim Walbert, chairman, president and chief executive officer, Horizon. "We advanced our pipeline, achieving several important R&D milestones, including completing enrollment in our TEPEZZA trial for chronic/low CAS thyroid eye disease and announcing positive Phase 2 topline results from our dazodalibep trial in Sjögren's syndrome. These achievements reflect our commitment to bring innovative medicines to more patients in need."
"Our successful launch of the KRYSTEXXA expanded label has driven increased use of KRYSTEXXA with immunomodulation. Encouraged by the momentum we are seeing, we increased our KRYSTEXXA U.S. peak annual net sales expectations to greater than $1.5 billion. We also see a significantly greater opportunity for TEPEZZA in various international markets and are increasing our ex-U.S. peak annual net sales expectations for TEPEZZA to greater than $1 billion."
Financial Highlights | |||||||||||||||||
(in millions except for per share amounts and percentages) | Q3 22 | Q3 21 | % Change |
YTD 22 | YTD 21 | % Change |
|||||||||||
Net sales | $ |
925.4 |
$ |
1,037.0 |
(11 |
) |
$ |
2,687.0 |
$ |
2,211.9 |
21 |
||||||
Net income |
|
135.8 |
|
326.5 |
(58 |
) |
|
401.1 |
|
361.3 |
11 |
||||||
Non-GAAP net income |
|
293.3 |
|
410.3 |
(29 |
) |
|
862.9 |
|
755.7 |
14 |
||||||
Adjusted EBITDA(1) |
|
335.3 |
|
505.0 |
(34 |
) |
|
1,013.1 |
|
868.3 |
17 |
||||||
Earnings per share - diluted |
|
0.58 |
|
1.38 |
(58 |
) |
|
1.70 |
|
1.54 |
10 |
||||||
Non-GAAP earnings per share - diluted |
|
1.25 |
|
1.74 |
(28 |
) |
|
3.66 |
|
3.21 |
14 |
(1) |
Third-quarter 2022 and 2021 adjusted EBITDA includes $19.0 million and $4.0 million, respectively, in acquired IPR&D and milestones expenses. Year-to-date 2022 and 2021 adjusted EBITDA includes $19.0 million and $47.0 million, respectively, in acquired IPR&D and milestones expenses. |
Third Quarter and Recent Company Highlights
Key Clinical Development Programs
Third-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. Beginning with the third quarter of 2022, the Company is separately presenting upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as "Acquired in-process research and development and milestones" expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item for the three and nine months ended September 30, 2022, would have historically been recorded to research and development ("R&D") expenses. The Company believes the new classification assists users of the financial statements in better understanding the payments incurred to acquire in-process research and development ("IPR&D"). Prior period condensed consolidated statements of comprehensive income have been reclassified to conform with the new classification.
Third-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, such as the exclusion of acquired IPR&D and milestones expenses, 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) | Q3 22 | Q3 21 | % Change |
YTD 22 | YTD 21 | % Change |
|||||||||||||
TEPEZZA®(1) | $ |
490.9 |
$ |
616.4 |
(20 |
) |
$ |
1,472.2 |
$ |
1,071.7 |
37 |
|
|||||||
KRYSTEXXA® |
|
191.6 |
|
158.1 |
21 |
|
|
500.1 |
|
395.2 |
27 |
|
|||||||
RAVICTI® |
|
84.3 |
|
76.2 |
10 |
|
|
238.1 |
|
217.6 |
9 |
|
|||||||
PROCYSBI®(2) |
|
57.8 |
|
49.3 |
17 |
|
|
155.1 |
|
142.5 |
9 |
|
|||||||
UPLIZNA®(3) |
|
43.8 |
|
18.7 |
134 |
|
|
112.9 |
|
35.0 |
222 |
|
|||||||
ACTIMMUNE® |
|
34.4 |
|
30.1 |
15 |
|
|
95.8 |
|
86.6 |
11 |
|
|||||||
BUPHENYL® |
|
1.7 |
|
1.9 |
(8 |
) |
|
5.3 |
|
5.8 |
(9 |
) |
|||||||
QUINSAIRTM |
|
0.2 |
|
0.3 |
(26 |
) |
|
0.9 |
|
0.7 |
16 |
|
|||||||
Orphan Net Sales | $ |
904.7 |
$ |
951.0 |
(5 |
) |
$ |
2,580.4 |
$ |
1,955.1 |
32 |
|
|||||||
Orphan Segment Operating Income | $ |
366.9 |
$ |
476.2 |
(23 |
) |
$ |
1,033.5 |
$ |
798.5 |
29 |
|
(1) |
TEPEZZA net sales in the third quarter of 2021 accounted for a larger share of full-year 2021 net sales due to a supply disruption caused by the U.S. government-mandated COVID-19 vaccine orders. |
(2) |
PROCYSBI net sales in the third quarter of 2022 benefitted from a $7.5 million partial release in the pricing review liability recorded during the three months ended September 30, 2022, as a result of a decision made by the Patented Medicines Prices Review Board (PMPRB) in September relating to PROCYSBI pricing in Canada. |
(3) |
Third-quarter and year-to-date 2022 UPLIZNA net sales included $3.2 million and $17.0 million, respectively, in international net sales, related primarily to revenue and milestone payments from the Company's international partners. |
Inflammation Segment |
||||||||||||||||||||
(in millions except for percentages) | Q3 22 | Q3 21 | % Change |
YTD 22 | YTD 21 | % Change |
||||||||||||||
RAYOS® | $ |
10.6 |
|
$ |
14.9 |
(29 |
) |
$ |
35.1 |
|
$ |
43.6 |
(19 |
) |
||||||
PENNSAID 2%®(1) |
|
7.6 |
|
|
48.0 |
(84 |
) |
|
66.6 |
|
|
142.7 |
(53 |
) |
||||||
DUEXIS®(2) |
|
2.0 |
|
|
20.9 |
(90 |
) |
|
3.2 |
|
|
62.5 |
(95 |
) |
||||||
VIMOVO® |
|
0.5 |
|
|
2.2 |
(78 |
) |
|
1.7 |
|
|
8.1 |
(79 |
) |
||||||
Inflammation Net Sales | $ |
20.7 |
|
$ |
86.0 |
(76 |
) |
$ |
106.6 |
|
$ |
256.9 |
(59 |
) |
||||||
Inflammation Segment Operating (Loss) Income | $ |
(10.8 |
) |
$ |
34.1 |
NM |
|
$ |
(2.0 |
) |
$ |
123.6 |
NM |
|
(1) |
On May 6, 2022, Apotex Inc. initiated an at-risk launch of generic PENNSAID 2% in the United States. |
(2) |
On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States. |
Cash Flow Statement and Balance Sheet Highlights
Revised 2022 Guidance
The Company increased its full-year 2022 net sales guidance to range between $3.59 billion and $3.61 billion, compared to the previous guidance range of $3.53 billion to $3.60 billion. The Company continues to expect TEPEZZA full-year 2022 net sales percentage growth in the high teens and is increasing KRYSTEXXA full-year 2022 net sales growth to approximately 25% compared to the previous guidance of more than 20%. The Company increased its full-year 2022 adjusted EBITDA guidance to range between $1.32 billion to $1.34 billion, compared to the previous guidance range of $1.268 billion to $1.318 billion, which includes $52.5 million of expected full-year 2022 acquired IPR&D and milestones expenses.
Webcast
At 8 a.m. EDT / 12 p.m. GMT 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 a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory 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, visit www.horizontherapeutics.com and follow us on Twitter, LinkedIn, Instagram and Facebook.
Note Regarding Use of Non-GAAP Financial Measures
Horizon provides certain non-GAAP financial measures, including EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted EBITDA, 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 benefit (expense) and tax rate, non-GAAP operating cash flow and certain other non-GAAP income statement line items, 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 exclude, as applicable, acquisition and/or divestiture-related costs, manufacturing facility start-up costs, restructuring and realignment costs, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, non-cash interest expense, goodwill and long-lived assets impairment charges, gain (loss) on equity security investments and sales of assets, 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 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. 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 2022 adjusted EBITDA guidance to expected GAAP net income (loss) guidance because certain items such as acquisition/divestiture-related expenses and share-based compensation that are components of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon's share price, the variability associated with the size and/or timing of acquisitions/divestitures, and other factors. These components of net income (loss) could significantly impact Horizon's GAAP 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 2022 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including projected growth in net sales of certain of Horizon's medicines; estimates of peak annual net sales; development, manufacturing and commercialization plans; expected timing of clinical trials and, availability of clinical data; expected future milestones, pipeline expansions and regulatory approvals; potential market opportunities 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 supplies and net sales of Horizon's medicines and potential delays in clinical trials; impacts of the on-going war between Russia and Ukraine; changes in inflation, interest rates and general economic conditions; acquisitions, such as the risk that acquired businesses or products will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the related transactions will not occur; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; Horizon's ability to successfully implement its business strategies, including the risks that its TEPEZZA growth and global expansion initiatives and strategies may not be successful and that new challenges to TEPEZZA growth may arise in the future; 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 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 September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||||
Net sales | $ |
925,359 |
|
$ |
1,036,992 |
|
$ |
2,687,015 |
|
$ |
2,211,946 |
|
||||||
Cost of goods sold |
|
234,132 |
|
|
251,640 |
|
|
679,410 |
|
|
553,003 |
|
||||||
Gross profit |
|
691,227 |
|
|
785,352 |
|
|
2,007,605 |
|
|
1,658,943 |
|
||||||
OPERATING EXPENSES: | ||||||||||||||||||
Research and development (1) |
|
114,058 |
|
|
89,549 |
|
|
320,436 |
|
|
244,076 |
|
||||||
Acquired in-process research and development and milestones (1) |
|
19,000 |
|
|
4,000 |
|
|
19,000 |
|
|
47,000 |
|
||||||
Selling, general and administrative |
|
397,563 |
|
|
360,260 |
|
|
1,168,518 |
|
|
1,047,456 |
|
||||||
Impairment of goodwill |
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
||||||
Impairment of long-lived asset |
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
||||||
Gain on sale of asset |
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
||||||
Total operating expenses |
|
530,621 |
|
|
453,809 |
|
|
1,564,125 |
|
|
1,348,903 |
|
||||||
Operating income |
|
160,606 |
|
|
331,543 |
|
|
443,480 |
|
|
310,040 |
|
||||||
OTHER EXPENSE, NET: | ||||||||||||||||||
Interest expense, net |
|
(22,480 |
) |
|
(22,977 |
) |
|
(65,145 |
) |
|
(59,018 |
) |
||||||
Foreign exchange loss |
|
(768 |
) |
|
(476 |
) |
|
(320 |
) |
|
(1,363 |
) |
||||||
Other (expense) income, net |
|
(2,277 |
) |
|
(849 |
) |
|
(5,408 |
) |
|
2,113 |
|
||||||
Total other expense, net |
|
(25,525 |
) |
|
(24,302 |
) |
|
(70,873 |
) |
|
(58,268 |
) |
||||||
Income before benefit for income taxes |
|
135,081 |
|
|
307,241 |
|
|
372,607 |
|
|
251,772 |
|
||||||
Benefit for income taxes |
|
(758 |
) |
|
(19,302 |
) |
|
(28,467 |
) |
|
(109,537 |
) |
||||||
Net income | $ |
135,839 |
|
$ |
326,543 |
|
$ |
401,074 |
|
$ |
361,309 |
|
||||||
Net income per ordinary share - basic | $ |
0.59 |
|
$ |
1.44 |
|
$ |
1.75 |
|
$ |
1.61 |
|
||||||
Weighted average ordinary shares outstanding - basic |
|
230,333,287 |
|
|
226,096,747 |
|
|
229,820,406 |
|
|
225,053,704 |
|
||||||
Net income per ordinary share - diluted | $ |
0.58 |
|
$ |
1.38 |
|
$ |
1.70 |
|
$ |
1.54 |
|
||||||
Weighted average ordinary shares outstanding - diluted |
|
235,385,570 |
|
|
236,198,789 |
|
|
235,923,030 |
|
|
235,256,424 |
|
||||||
(1) |
Beginning with the third quarter of 2022, the Company is separately presenting upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as "Acquired in-process research and development and milestones" expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item for the three and nine months ended September 30, 2022, would have historically been recorded to research and development ("R&D") expenses. The Company believes the new classification assists users of the financial statements in better understanding the payments incurred to acquire in-process research and development ("IPR&D"). Prior period condensed consolidated statements of comprehensive income have been reclassified to conform with the new classification. |
Horizon Therapeutics plc Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share data) |
||||||||||||
As of | ||||||||||||
September 30, 2022 |
December 31, 2021 |
|||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ |
2,130,527 |
|
$ |
1,580,317 |
|
||||||
Restricted cash |
|
4,743 |
|
|
3,839 |
|
||||||
Accounts receivable, net |
|
646,386 |
|
|
632,775 |
|
||||||
Inventories, net |
|
190,258 |
|
|
225,730 |
|
||||||
Prepaid expenses and other current assets |
|
440,095 |
|
|
357,106 |
|
||||||
Total current assets |
|
3,412,009 |
|
|
2,799,767 |
|
||||||
Property, plant and equipment, net |
|
317,692 |
|
|
292,298 |
|
||||||
Developed technology and other intangible assets, net |
|
2,757,694 |
|
|
2,960,118 |
|
||||||
In-process research and development |
|
810,000 |
|
|
880,000 |
|
||||||
Goodwill |
|
1,010,538 |
|
|
1,066,709 |
|
||||||
Deferred tax assets, net |
|
516,317 |
|
|
538,098 |
|
||||||
Other long-term assets |
|
203,612 |
|
|
140,738 |
|
||||||
Total assets | $ |
9,027,862 |
|
$ |
8,677,728 |
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Accounts payable | $ |
32,113 |
|
$ |
30,125 |
|
||||||
Accrued expenses and other current liabilities |
|
457,288 |
|
|
523,015 |
|
||||||
Accrued trade discounts and rebates |
|
355,213 |
|
|
317,431 |
|
||||||
Long-term debt?current portion |
|
16,000 |
|
|
16,000 |
|
||||||
Total current liabilities |
|
860,614 |
|
|
886,571 |
|
||||||
LONG-TERM LIABILITIES: | ||||||||||||
Long-term debt, net |
|
2,549,140 |
|
|
2,555,233 |
|
||||||
Deferred tax liabilities, net |
|
385,121 |
|
|
390,455 |
|
||||||
Other long-term liabilities |
|
199,300 |
|
|
173,076 |
|
||||||
Total long-term liabilities |
|
3,133,561 |
|
|
3,118,764 |
|
||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
SHAREHOLDERS' EQUITY: | ||||||||||||
Ordinary shares, $0.0001 nominal value; 600,000,000 shares | ||||||||||||
authorized at September 30, 2022 and December 31, 2021; | ||||||||||||
229,076,182 and 227,760,936 shares issued at September 30, 2022 | ||||||||||||
and December 31, 2021, respectively; and 228,691,816 and 227,376,570 shares | ||||||||||||
outstanding at September 30, 2022 and December 31, 2021, respectively |
|
23 |
|
|
23 |
|
||||||
Treasury stock, 384,366 ordinary shares at September 30, 2022 and December 31, 2021 |
|
(4,585 |
) |
|
(4,585 |
) |
||||||
Additional paid-in capital |
|
4,424,509 |
|
|
4,373,337 |
|
||||||
Accumulated other comprehensive income (loss) |
|
7,460 |
|
|
(14,987 |
) |
||||||
Retained earnings |
|
606,280 |
|
|
318,605 |
|
||||||
Total shareholders' equity |
|
5,033,687 |
|
|
4,672,393 |
|
||||||
Total liabilities and shareholders' equity | $ |
9,027,862 |
|
$ |
8,677,728 |
|
||||||
Horizon Therapeutics plc | |||||||||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income | $ |
135,839 |
|
$ |
326,543 |
|
$ |
401,074 |
|
$ |
361,309 |
|
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization expense |
|
99,081 |
|
|
94,480 |
|
|
291,619 |
|
|
257,216 |
|
|||||||
Equity-settled share-based compensation |
|
45,066 |
|
|
54,804 |
|
|
137,515 |
|
|
170,394 |
|
|||||||
Acquired IPR&D and milestones |
|
15,000 |
|
|
- |
|
|
15,000 |
|
|
40,000 |
|
|||||||
Impairment of goodwill |
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
|||||||
Impairment of long-lived asset |
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
|||||||
Amortization of debt discount and deferred financing costs |
|
2,232 |
|
|
1,500 |
|
|
6,136 |
|
|
3,740 |
|
|||||||
Gain on sale of asset |
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
|||||||
Deferred income taxes |
|
11,686 |
|
|
(129,819 |
) |
|
8,654 |
|
|
(147,934 |
) |
|||||||
Foreign exchange and other adjustments |
|
(2,870 |
) |
|
1,958 |
|
|
7,696 |
|
|
5,006 |
|
|||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable |
|
26,832 |
|
|
(39,762 |
) |
|
(13,681 |
) |
|
(107,776 |
) |
|||||||
Inventories |
|
13,376 |
|
|
21,219 |
|
|
35,409 |
|
|
(10,494 |
) |
|||||||
Prepaid expenses and other current assets |
|
(3,079 |
) |
|
34,333 |
|
|
(74,657 |
) |
|
(60,790 |
) |
|||||||
Accounts payable |
|
11,125 |
|
|
(2,666 |
) |
|
(855 |
) |
|
7,640 |
|
|||||||
Accrued trade discounts and rebates |
|
18,057 |
|
|
(2,825 |
) |
|
38,289 |
|
|
(50,838 |
) |
|||||||
Accrued expenses and other current liabilities |
|
11,913 |
|
|
59,021 |
|
|
(64,988 |
) |
|
34,380 |
|
|||||||
Other non-current assets and liabilities |
|
(17,794 |
) |
|
(7,746 |
) |
|
(11,931 |
) |
|
(15,510 |
) |
|||||||
Net cash provided by operating activities |
|
366,464 |
|
|
411,040 |
|
|
831,451 |
|
|
496,714 |
|
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Payments for acquisitions, net of cash acquired |
|
- |
|
|
(67,945 |
) |
|
(3,122 |
) |
|
(2,843,275 |
) |
|||||||
Purchases of property, plant and equipment |
|
(14,816 |
) |
|
(27,440 |
) |
|
(39,168 |
) |
|
(59,695 |
) |
|||||||
Payments for long-term investments |
|
(2,209 |
) |
|
(2,219 |
) |
|
(7,056 |
) |
|
(13,385 |
) |
|||||||
Receipts from long-term investments |
|
- |
|
|
- |
|
|
4,416 |
|
|
3,588 |
|
|||||||
Proceeds from sale of asset |
|
- |
|
|
2,000 |
|
|
- |
|
|
2,000 |
|
|||||||
Payments related to license and collaboration agreements |
|
(15,000 |
) |
|
(46,500 |
) |
|
(40,000 |
) |
|
(46,500 |
) |
|||||||
Net cash used in investing activities |
|
(32,025 |
) |
|
(142,104 |
) |
|
(84,930 |
) |
|
(2,957,267 |
) |
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Net proceeds from term loans |
|
- |
|
|
- |
|
|
- |
|
|
1,574,993 |
|
|||||||
Repayment of term loans |
|
(4,000 |
) |
|
(4,000 |
) |
|
(12,000 |
) |
|
(8,000 |
) |
|||||||
Proceeds from the issuance of ordinary shares in conjunction with ESPP program |
|
- |
|
|
- |
|
|
13,884 |
|
|
11,482 |
|
|||||||
Proceeds from the issuance of ordinary shares in connection with stock option exercises |
|
1,258 |
|
|
12,174 |
|
|
23,280 |
|
|
40,013 |
|
|||||||
Payment of employee withholding taxes relating to share-based awards |
|
(3,420 |
) |
|
(16,429 |
) |
|
(123,947 |
) |
|
(158,077 |
) |
|||||||
Repurchase of ordinary shares |
|
(88,209 |
) |
|
- |
|
|
(88,209 |
) |
|
- |
|
|||||||
Net cash (used in) provided by financing activities |
|
(94,371 |
) |
|
(8,255 |
) |
|
(186,992 |
) |
|
1,460,411 |
|
|||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash |
|
(2,098 |
) |
|
(4,452 |
) |
|
(8,415 |
) |
|
(10,951 |
) |
|||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
237,970 |
|
|
256,229 |
|
|
551,114 |
|
|
(1,011,093 |
) |
|||||||
Cash, cash equivalents and restricted cash, beginning of the period(1) |
|
1,897,300 |
|
|
816,157 |
|
|
1,584,156 |
|
|
2,083,479 |
|
|||||||
Cash, cash equivalents and restricted cash, end of the period(1) | $ |
2,135,270 |
|
$ |
1,072,386 |
|
$ |
2,135,270 |
|
$ |
1,072,386 |
|
(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 September 30, |
Nine Months Ended September 30, |
||||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||||
GAAP net income | $ |
135,839 |
|
$ |
326,543 |
|
$ |
401,074 |
|
$ |
361,309 |
|
|||||
Non-GAAP adjustments: | |||||||||||||||||
Acquisition/divestiture-related costs |
|
825 |
|
|
9,228 |
|
|
3,437 |
|
|
88,166 |
|
|||||
Loss on equity security investments |
|
1,247 |
|
|
- |
|
|
6,331 |
|
|
- |
|
|||||
Restructuring and realignment costs |
|
7,731 |
|
|
680 |
|
|
9,521 |
|
|
7,703 |
|
|||||
Manufacturing facility start-up costs |
|
2,024 |
|
|
1,712 |
|
|
4,413 |
|
|
1,712 |
|
|||||
Amortization and step-up: | |||||||||||||||||
Intangible amortization expense |
|
92,951 |
|
|
90,368 |
|
|
273,546 |
|
|
245,260 |
|
|||||
Inventory step-up expense |
|
21,779 |
|
|
8,912 |
|
|
66,342 |
|
|
16,914 |
|
|||||
Amortization of debt discount and deferred financing costs |
|
2,232 |
|
|
1,500 |
|
|
6,136 |
|
|
3,740 |
|
|||||
Impairment of long-lived asset |
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
|||||
Impairment of goodwill |
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
|||||
Gain on sale of asset |
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
|||||
Share-based compensation |
|
45,066 |
|
|
54,804 |
|
|
137,515 |
|
|
170,394 |
|
|||||
Depreciation |
|
6,130 |
|
|
4,112 |
|
|
18,073 |
|
|
11,956 |
|
|||||
Litigation settlement |
|
- |
|
|
5,000 |
|
|
- |
|
|
5,000 |
|
|||||
Total of pre-tax non-GAAP adjustments |
|
179,985 |
|
|
176,316 |
|
|
581,485 |
|
|
561,216 |
|
|||||
Income tax effect of pre-tax non-GAAP adjustments |
|
(24,623 |
) |
|
(36,602 |
) |
|
(121,754 |
) |
|
(141,665 |
) |
|||||
Other non-GAAP income tax adjustments |
|
2,079 |
|
|
(56,007 |
) |
|
2,079 |
|
|
(25,126 |
) |
|||||
Total of non-GAAP adjustments |
|
157,441 |
|
|
83,707 |
|
|
461,810 |
|
|
394,425 |
|
|||||
Non-GAAP net income | $ |
293,280 |
|
$ |
410,250 |
|
$ |
862,884 |
|
$ |
755,734 |
|
|||||
Non-GAAP Earnings Per Share: | |||||||||||||||||
Weighted average ordinary shares - Basic |
|
230,333,287 |
|
|
226,096,747 |
|
|
229,820,406 |
|
|
225,053,704 |
|
|||||
Non-GAAP Earnings Per Share - Basic: | |||||||||||||||||
GAAP earnings per share - Basic | $ |
0.59 |
|
$ |
1.44 |
|
$ |
1.75 |
|
$ |
1.61 |
|
|||||
Non-GAAP adjustments |
|
0.68 |
|
|
0.37 |
|
|
2.00 |
|
|
1.75 |
|
|||||
Non-GAAP earnings per share - Basic | $ |
1.27 |
|
$ |
1.81 |
|
$ |
3.75 |
|
$ |
3.36 |
|
|||||
Weighted average ordinary shares - Diluted | |||||||||||||||||
Weighted average ordinary shares - Basic |
|
230,333,287 |
|
|
226,096,747 |
|
|
229,820,406 |
|
|
225,053,704 |
|
|||||
Ordinary share equivalents |
|
5,052,283 |
|
|
10,102,042 |
|
|
6,102,624 |
|
|
10,202,720 |
|
|||||
Weighted average ordinary shares - Diluted |
|
235,385,570 |
|
|
236,198,789 |
|
|
235,923,030 |
|
|
235,256,424 |
|
|||||
Non-GAAP Earnings Per Share - Diluted | |||||||||||||||||
GAAP earnings per share - Diluted | $ |
0.58 |
|
$ |
1.38 |
|
$ |
1.70 |
|
$ |
1.54 |
|
|||||
Non-GAAP adjustments |
|
0.67 |
|
|
0.36 |
|
|
1.96 |
|
|
1.67 |
|
|||||
Non-GAAP earnings per share - Diluted | $ |
1.25 |
|
$ |
1.74 |
|
$ |
3.66 |
|
$ |
3.21 |
|
Horizon Therapeutics plc GAAP to Non-GAAP Reconciliations EBITDA and Adjusted EBITDA (Unaudited) (in thousands) |
|||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||||
GAAP net income | $ |
135,839 |
|
$ |
326,543 |
|
$ |
401,074 |
|
$ |
361,309 |
|
|||||
Depreciation |
|
6,130 |
|
|
4,112 |
|
|
18,073 |
|
|
11,956 |
|
|||||
Amortization and step-up: | |||||||||||||||||
Intangible amortization expense |
|
92,951 |
|
|
90,368 |
|
|
273,546 |
|
|
245,260 |
|
|||||
Inventory step-up expense |
|
21,779 |
|
|
8,912 |
|
|
66,342 |
|
|
16,914 |
|
|||||
Interest expense, net (including amortization of | |||||||||||||||||
debt discount and deferred financing costs) |
|
22,480 |
|
|
22,977 |
|
|
65,145 |
|
|
59,018 |
|
|||||
Benefit for income taxes |
|
(758 |
) |
|
(19,302 |
) |
|
(28,467 |
) |
|
(109,537 |
) |
|||||
EBITDA | $ |
278,421 |
|
$ |
433,610 |
|
$ |
795,713 |
|
$ |
584,920 |
|
|||||
Other non-GAAP adjustments: | |||||||||||||||||
Share-based compensation |
|
45,066 |
|
|
54,804 |
|
|
137,515 |
|
|
170,394 |
|
|||||
Loss on equity security investments |
|
1,247 |
|
|
- |
|
|
6,331 |
|
|
- |
|
|||||
Acquisition/divestiture-related costs |
|
825 |
|
|
9,228 |
|
|
3,437 |
|
|
88,166 |
|
|||||
Manufacturing facility start-up costs |
|
2,024 |
|
|
1,712 |
|
|
4,413 |
|
|
1,712 |
|
|||||
Restructuring and realignment costs |
|
7,731 |
|
|
680 |
|
|
9,521 |
|
|
7,703 |
|
|||||
Impairment of goodwill |
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
|||||
Impairment of long-lived asset |
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
|||||
Gain on sale of asset |
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
|||||
Litigation settlement |
|
- |
|
|
5,000 |
|
|
- |
|
|
5,000 |
|
|||||
Total of other non-GAAP adjustments |
|
56,893 |
|
|
71,424 |
|
|
217,388 |
|
|
283,346 |
|
|||||
Adjusted EBITDA | $ |
335,314 |
|
$ |
505,034 |
|
$ |
1,013,101 |
|
$ |
868,266 |
|
Horizon Therapeutics plc GAAP to Non-GAAP Reconciliations Operating Income (Unaudited) (in thousands) |
|||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||||
GAAP operating income | $ |
160,606 |
|
$ |
331,543 |
|
$ |
443,480 |
|
$ |
310,040 |
|
|||||
Non-GAAP adjustments: | |||||||||||||||||
Acquisition/divestiture-related costs |
|
825 |
|
|
9,224 |
|
|
3,437 |
|
|
89,241 |
|
|||||
Restructuring and realignment costs |
|
7,731 |
|
|
680 |
|
|
9,521 |
|
|
7,703 |
|
|||||
Manufacturing facility start-up costs |
|
2,024 |
|
|
1,712 |
|
|
4,413 |
|
|
1,712 |
|
|||||
Amortization and step-up: | |||||||||||||||||
Intangible amortization expense |
|
92,951 |
|
|
90,368 |
|
|
273,546 |
|
|
245,260 |
|
|||||
Inventory step-up expense |
|
21,779 |
|
|
8,912 |
|
|
66,342 |
|
|
16,914 |
|
|||||
Impairment of long-lived asset |
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
|||||
Impairment of goodwill |
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
|||||
Gain on sale of asset |
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
|||||
Share-based compensation |
|
45,066 |
|
|
54,804 |
|
|
137,515 |
|
|
170,394 |
|
|||||
Depreciation |
|
6,130 |
|
|
4,111 |
|
|
18,073 |
|
|
11,955 |
|
|||||
Litigation settlement |
|
- |
|
|
5,000 |
|
|
- |
|
|
5,000 |
|
|||||
Total of non-GAAP adjustments |
|
176,506 |
|
|
174,811 |
|
|
569,018 |
|
|
558,550 |
|
|||||
Non-GAAP operating income | $ |
337,112 |
|
$ |
506,354 |
|
$ |
1,012,498 |
|
$ |
868,590 |
|
|||||
Foreign exchange loss |
|
(768 |
) |
|
(476 |
) |
|
(320 |
) |
|
(1,363 |
) |
|||||
Other (expense) income, net |
|
(1,030 |
) |
|
(844 |
) |
|
923 |
|
|
1,039 |
|
|||||
Adjusted EBITDA | $ |
335,314 |
|
$ |
505,034 |
|
$ |
1,013,101 |
|
$ |
868,266 |
|
Horizon Therapeutics plc GAAP to Non-GAAP Reconciliations Gross Profit and Operating Cash Flow (Unaudited) (in thousands, except percentages) |
||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Non-GAAP Gross Profit: | ||||||||||||||||
GAAP gross profit | $ |
691,227 |
|
$ |
785,352 |
|
$ |
2,007,605 |
|
$ |
1,658,943 |
|
||||
Non-GAAP gross profit adjustments: | ||||||||||||||||
Acquisition/divestiture-related costs |
|
273 |
|
|
(204 |
) |
|
(1,150 |
) |
|
(75 |
) |
||||
Intangible amortization expense |
|
91,868 |
|
|
89,892 |
|
|
271,032 |
|
|
244,382 |
|
||||
Inventory step-up expense |
|
21,779 |
|
|
8,912 |
|
|
66,342 |
|
|
16,914 |
|
||||
Share-based compensation |
|
2,167 |
|
|
1,795 |
|
|
6,638 |
|
|
6,875 |
|
||||
Depreciation |
|
56 |
|
|
55 |
|
|
167 |
|
|
227 |
|
||||
Total of Non-GAAP adjustments |
|
116,143 |
|
|
100,450 |
|
|
343,029 |
|
|
268,323 |
|
||||
Non-GAAP gross profit | $ |
807,370 |
|
$ |
885,802 |
|
$ |
2,350,634 |
|
$ |
1,927,266 |
|
||||
GAAP gross profit % |
|
74.7 |
% |
|
75.7 |
% |
|
74.7 |
% |
|
75.0 |
% |
||||
Non-GAAP gross profit % |
|
87.2 |
% |
|
85.4 |
% |
|
87.5 |
% |
|
87.1 |
% |
||||
GAAP cash provided by operating activities | $ |
366,464 |
|
$ |
411,040 |
|
$ |
831,451 |
|
$ |
496,714 |
|
||||
Cash payments for acquisition/divestiture-related costs |
|
167 |
|
|
15,839 |
|
|
5,363 |
|
|
136,073 |
|
||||
Cash payments for restructuring and realignment costs |
|
1,635 |
|
|
583 |
|
|
2,779 |
|
|
1,803 |
|
||||
Cash payments for manufacturing facility start-up costs |
|
114 |
|
|
869 |
|
|
2,777 |
|
|
869 |
|
||||
Non-GAAP operating cash flow | $ |
368,380 |
|
$ |
428,331 |
|
$ |
842,370 |
|
$ |
635,459 |
|
Horizon Therapeutics plc GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited) (in millions, except percentages and per share amounts) |
|||||||||||
Q3 2022 | |||||||||||
Pre-tax Net Income |
Income Tax (Benefit) Expense |
Tax Rate | Net Income | Diluted Earnings Per Share |
|||||||
As reported - GAAP | $ |
135.1 |
$ |
(0.8 |
) |
(0.6 |
)% |
$ |
135.8 |
$ |
0.58 |
Non-GAAP adjustments |
|
180.0 |
|
22.5 |
|
|
157.4 |
||||
Non-GAAP | $ |
315.1 |
$ |
21.8 |
|
6.9 |
% |
$ |
293.3 |
$ |
1.25 |
Q3 2021 | |||||||||||
Pre-tax Net Income |
Income Tax (Benefit) Expense |
Tax Rate | Net Income | Diluted Earnings Per Share |
|||||||
As reported - GAAP | $ |
307.2 |
$ |
(19.3 |
) |
(6.3 |
)% |
$ |
326.5 |
$ |
1.38 |
Non-GAAP adjustments |
|
176.3 |
|
92.6 |
|
|
83.7 |
||||
Non-GAAP | $ |
483.6 |
$ |
73.3 |
|
15.2 |
% |
$ |
410.3 |
$ |
1.74 |
YTD 2022 | |||||||||||
Pre-tax Net Income |
Income Tax (Benefit) Expense |
Tax Rate | Net Income | Diluted Earnings Per Share |
|||||||
As reported - GAAP | $ |
372.6 |
$ |
(28.5 |
) |
(7.6 |
)% |
$ |
401.1 |
$ |
1.70 |
Non-GAAP adjustments |
|
581.5 |
|
119.7 |
|
|
461.8 |
||||
Non-GAAP | $ |
954.1 |
$ |
91.2 |
|
9.6 |
% |
$ |
862.9 |
$ |
3.66 |
YTD 2021 | |||||||||||
Pre-tax Net Income |
Income Tax (Benefit) Expense |
Tax Rate | Net Income | Diluted Earnings Per Share |
|||||||
As reported - GAAP | $ |
251.8 |
$ |
(109.5 |
) |
(43.5 |
)% |
$ |
361.3 |
$ |
1.54 |
Non-GAAP adjustments |
|
561.2 |
|
166.8 |
|
|
394.4 |
||||
Non-GAAP | $ |
813.0 |
$ |
57.3 |
|
7.0 |
% |
$ |
755.7 |
$ |
3.21 |
Horizon Therapeutics plc | |||||||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | |||||||||||||||||||||||
For the Three Months Ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Income Tax | |||||||||||||||||||||||
Research & | Acquired IPR&D |
Selling, General | Interest | Other Income | Benefit | ||||||||||||||||||
COGS | Development (16) | and milestones (16) | & Administrative | Expense | (Expense), net | (Expense) | |||||||||||||||||
GAAP as reported | $ |
(234,132 |
) |
$ |
(114,058 |
) |
$ |
(19,000 |
) |
$ |
(397,563 |
) |
$ |
(22,480 |
) |
$ |
(2,277 |
) |
$ |
758 |
|
||
Non-GAAP Adjustments: | |||||||||||||||||||||||
Acquisition/divestiture-related costs(1) |
|
273 |
|
|
(803 |
) |
|
- |
|
|
1,355 |
|
|
- |
|
|
- |
|
|
- |
|
||
Loss on equity security investments(2) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,247 |
|
|
- |
|
||
Restructuring and realignment costs(3) |
|
- |
|
|
538 |
|
|
- |
|
|
7,193 |
|
|
- |
|
|
- |
|
|
- |
|
||
Manufacturing facility start-up costs(4) |
|
- |
|
|
- |
|
|
- |
|
|
2,024 |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization and step-up: | |||||||||||||||||||||||
Intangible amortization expense(5) |
|
91,868 |
|
|
- |
|
|
- |
|
|
1,083 |
|
|
- |
|
|
- |
|
|
- |
|
||
Inventory step-up expense(6) |
|
21,779 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization of debt discount and deferred financing costs(7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,232 |
|
|
- |
|
|
- |
|
||
Share-based compensation(8) |
|
2,167 |
|
|
5,590 |
|
|
- |
|
|
37,309 |
|
|
- |
|
|
- |
|
|
- |
|
||
Depreciation(9) |
|
56 |
|
|
309 |
|
|
- |
|
|
5,765 |
|
|
- |
|
|
- |
|
|
- |
|
||
Income tax effect on pre-tax non-GAAP adjustments(10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(24,623 |
) |
||
Other non-GAAP income tax adjustments(11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,079 |
|
||
Total of non-GAAP adjustments (17) |
|
116,143 |
|
|
5,634 |
|
|
- |
|
|
54,729 |
|
|
2,232 |
|
|
1,247 |
|
|
(22,544 |
) |
||
Non-GAAP (17) | $ |
(117,989 |
) |
$ |
(108,424 |
) |
$ |
(19,000 |
) |
$ |
(342,834 |
) |
$ |
(20,248 |
) |
$ |
(1,030 |
) |
$ |
(21,786 |
) |
||
Horizon Therapeutics plc | |||||||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | |||||||||||||||||||||||
For the Three Months Ended September 30, 2021 (Unaudited) | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Income Tax | |||||||||||||||||||||||
Research & | Acquired IPR&D |
Selling, General | Interest | Other Income | Benefit | ||||||||||||||||||
COGS | Development (16) | and milestones (16) | & Administrative | Expense | (Expense), net | (Expense) | |||||||||||||||||
GAAP as reported | $ |
(251,640 |
) |
$ |
(89,549 |
) |
$ |
(4,000 |
) |
$ |
(360,260 |
) |
$ |
(22,977 |
) |
$ |
(849 |
) |
$ |
19,302 |
|
||
Non-GAAP Adjustments: | |||||||||||||||||||||||
Acquisition/divestiture-related costs(1) |
|
(204 |
) |
|
15 |
|
|
- |
|
|
9,415 |
|
|
- |
|
|
2 |
|
|
- |
|
||
Restructuring and realignment costs(3) |
|
- |
|
|
- |
|
|
- |
|
|
680 |
|
|
- |
|
|
- |
|
|
- |
|
||
Manufacturing facility start-up costs(4) |
|
- |
|
|
- |
|
|
- |
|
|
1,712 |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization and step-up: | |||||||||||||||||||||||
Intangible amortization expense(5) |
|
89,892 |
|
|
- |
|
|
- |
|
|
476 |
|
|
- |
|
|
- |
|
|
- |
|
||
Inventory step-up expense(6) |
|
8,912 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization of debt discount and deferred financing costs(7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,500 |
|
|
- |
|
|
- |
|
||
Share-based compensation(8) |
|
1,795 |
|
|
15,075 |
|
|
- |
|
|
37,934 |
|
|
- |
|
|
- |
|
|
- |
|
||
Depreciation(9) |
|
55 |
|
|
125 |
|
|
- |
|
|
3,932 |
|
|
- |
|
|
- |
|
|
- |
|
||
Litigation settlement(12) |
|
- |
|
|
- |
|
|
- |
|
|
5,000 |
|
|
- |
|
|
- |
|
|
- |
|
||
Income tax effect on pre-tax non-GAAP adjustments(10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(36,602 |
) |
||
Other non-GAAP income tax adjustments(11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(56,007 |
) |
||
Total of non-GAAP adjustments (17) |
|
100,450 |
|
|
15,215 |
|
|
- |
|
|
59,149 |
|
|
1,500 |
|
|
2 |
|
|
(92,609 |
) |
||
Non-GAAP (17) | $ |
(151,190 |
) |
$ |
(74,334 |
) |
$ |
(4,000 |
) |
$ |
(301,111 |
) |
$ |
(21,477 |
) |
$ |
(847 |
) |
$ |
(73,307 |
) |
||
|
- |
|
Horizon Therapeutics plc | |||||||||||||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | |||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
Income Tax | |||||||||||||||||||||||||||||
Research & | Acquired IPR&D |
Selling, General | Impairment of | Interest | Other Income | Benefit | |||||||||||||||||||||||
COGS | Development (16) | and milestones (16) | & Administrative | goodwill | Expense | (Expense), net | (Expense) | ||||||||||||||||||||||
GAAP as reported | $ |
(679,410 |
) |
$ |
(320,436 |
) |
$ |
(19,000 |
) |
$ |
(1,168,518 |
) |
$ |
(56,171 |
) |
$ |
(65,145 |
) |
$ |
(5,408 |
) |
$ |
28,467 |
|
|||||
Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
Acquisition/divestiture-related costs(1) |
|
(1,150 |
) |
|
2,000 |
|
|
- |
|
|
2,587 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Loss on equity security investments(2) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,331 |
|
|
- |
|
|||||
Restructuring and realignment costs(3) |
|
- |
|
|
538 |
|
|
- |
|
|
8,983 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Manufacturing facility start-up costs(4) |
|
- |
|
|
- |
|
|
- |
|
|
4,413 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Amortization and step-up: | |||||||||||||||||||||||||||||
Intangible amortization expense(5) |
|
271,032 |
|
|
- |
|
|
- |
|
|
2,514 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Inventory step-up expense(6) |
|
66,342 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Amortization of debt discount and deferred financing costs(7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,136 |
|
|
- |
|
|
- |
|
|||||
Share-based compensation(8) |
|
6,638 |
|
|
21,308 |
|
|
- |
|
|
109,569 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Depreciation(9) |
|
167 |
|
|
802 |
|
|
- |
|
|
17,104 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Impairment of goodwill(13) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
56,171 |
|
|
- |
|
|
- |
|
|
- |
|
|||||
Income tax effect on pre-tax non-GAAP adjustments(10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(121,754 |
) |
|||||
Other non-GAAP income tax adjustments(11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,079 |
|
|||||
Total of non-GAAP adjustments (17) |
|
343,029 |
|
|
24,648 |
|
|
- |
|
|
145,170 |
|
|
56,171 |
|
|
6,136 |
|
|
6,331 |
|
|
(119,675 |
) |
|||||
Non-GAAP (17) | $ |
(336,381 |
) |
$ |
(295,788 |
) |
$ |
(19,000 |
) |
$ |
(1,023,348 |
) |
$ |
- |
|
$ |
(59,009 |
) |
$ |
923 |
|
$ |
(91,208 |
) |
|||||
Horizon Therapeutics plc | |||||||||||||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | |||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2021 (Unaudited) | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
Income Tax | |||||||||||||||||||||||||||||
Research & | Acquired IPR&D |
Selling, General | Impairment of | Gain on | Interest | Other Income | Benefit | ||||||||||||||||||||||
COGS | Development (16) | and milestones (16) | & Administrative | Long-lived asset | Sale of Asset | Expense | (Expense), net | (Expense) | |||||||||||||||||||||
GAAP as reported | $ |
(553,003 |
) |
$ |
(244,076 |
) |
$ |
(47,000 |
) |
$ |
(1,047,456 |
) |
$ |
(12,371 |
) |
$ |
2,000 |
|
$ |
(59,018 |
) |
|
2,113 |
|
$ |
109,537 |
|
||
Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
Acquisition/divestiture-related costs(1) |
|
(75 |
) |
|
18 |
|
|
- |
|
|
89,300 |
|
|
- |
|
|
- |
|
|
- |
|
|
(1,077 |
) |
|
- |
|
||
Restructuring and realignment costs(3) |
|
- |
|
|
- |
|
|
- |
|
|
7,703 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Manufacturing facility start-up costs(4) |
|
- |
|
|
- |
|
|
- |
|
|
1,712 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization and step-up: |
|
- |
|
||||||||||||||||||||||||||
Intangible amortization expense(5) |
|
244,382 |
|
|
- |
|
|
- |
|
|
878 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Inventory step-up expense(6) |
|
16,914 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Amortization of debt discount and deferred financing costs(7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,740 |
|
|
- |
|
|
- |
|
||
Impairment of long lived asset(14) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
12,371 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Gain on sale of asset(15) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,000 |
) |
|
- |
|
|
- |
|
|
- |
|
||
Share-based compensation(8) |
|
6,875 |
|
|
32,851 |
|
|
- |
|
|
130,668 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Depreciation(9) |
|
227 |
|
|
291 |
|
|
- |
|
|
11,438 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Litigation settlement(12) |
|
- |
|
|
- |
|
|
- |
|
|
5,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Income tax effect on pre-tax non-GAAP adjustments(10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(141,665 |
) |
||
Other non-GAAP income tax adjustments(11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(25,126 |
) |
||
Total of non-GAAP adjustments (17) |
|
268,323 |
|
|
33,160 |
|
|
- |
|
|
246,699 |
|
|
12,371 |
|
|
(2,000 |
) |
|
3,740 |
|
|
(1,077 |
) |
|
(166,791 |
) |
||
Non-GAAP (17) | $ |
(284,680 |
) |
$ |
(210,916 |
) |
$ |
(47,000 |
) |
$ |
(800,757 |
) |
$ |
- |
|
$ |
- |
|
$ |
(55,278 |
) |
$ |
1,036 |
|
$ |
(57,254 |
) |
||
NOTES FOR CERTAIN INCOME STATEMENT LINE ITEMS - NON-GAAP
|
|
1. | Primarily represents transaction and integration costs, including, advisory, legal, consulting and certain employee-related costs, 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. |
|
|
2. | We held investments in equity securities with readily determinable fair values of $6.9 million as of September 30, 2022, which are included in other long-term assets in the condensed consolidated balance sheet. For the three and nine months ended September 30, 2022, we recognized a net unrealized loss of $1.2 million and $6.3 million, respectively, due to the change in fair value of these securities. |
|
|
3. |
Primarily represents severance and consulting costs related to the winding down of our inflammation segment in the third quarter of 2022 and rent and maintenance charges as a result of vacating the leased Lake Forest office in the first quarter of 2021. |
|
|
4. | During the three and nine months ended September 30, 2022, we recorded $2.0 million and $4.4 million, respectively, of manufacturing facility start-up costs related to our drug product biologics manufacturing facility in Waterford, Ireland. During the three and nine months ended September 30, 2021, we recorded $1.7 million of manufacturing facility start-up costs related to the purchase of our drug product biologics manufacturing facility in Waterford, Ireland from EirGen in July 2021. |
|
|
5. | Intangible amortization expenses are primarily associated with our developed technology related to TEPEZZA, KRYSTEXXA, RAVICTI, PROCYSBI, UPLIZNA, ACTIMMUNE, BUPHENYL and RAYOS. |
|
|
6. | During the three and nine months ended September 30, 2022, we recognized in cost of goods sold $21.8 million and $66.3 million, respectively, for inventory step-up expense related to UPLIZNA inventory revalued in connection with the Viela acquisition. We recorded $8.9 million and $16.9 million, respectively, of UPLIZNA inventory step-up expense in cost of goods sold during the three and nine months ended September 30, 2021. Because inventory step-up expense is related to an acquisition, will not continue indefinitely and has a significant effect on our gross profit, gross margin percentage and net income for all affected periods, we exclude inventory step-up expense from our non-GAAP financial measures. |
|
|
7. | Represents amortization of debt discount and deferred financing costs associated with our debt. |
|
|
8. | 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. |
|
|
9. | Represents depreciation expense related to our property, plant, equipment, software and leasehold improvements. |
|
|
10. | 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. |
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11. | During the three and nine months ended September 30, 2022, we recognized tax expense attributable to state tax legislation enacted during the period, resulting in a non-GAAP tax adjustment of $2.1 million. |
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During the three and nine months ended September 30, 2021, other non-GAAP income tax adjustments resulted primarily from the recognition of a reduction in the state tax rate expected to apply to the reversal of temporary differences between the book values and tax bases of certain assets acquired through the Viela acquisition. The reduction in state tax rate resulted in a reduction in the deferred tax liability relating to these assets and a non-GAAP tax adjustment of $51.3 million. In addition, during the nine months ended September 30, 2021, we recognized a U.S. federal and state tax liability on U.S. taxable income generated from an intercompany transfer and license of intellectual property from a U.S. subsidiary to an Irish subsidiary which was partially offset by the recognition of a deferred tax asset in the Irish subsidiary, resulting in a non-GAAP tax adjustment of $26.2 million. |
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12. | We recorded $5.0 million of expense during the three and nine months ended September 30, 2021 for litigation settlements. |
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13. | Our interim goodwill impairment test in the second quarter of 2022 indicated an impairment which represented the difference between the estimated fair value of the inflammation reporting unit and its carrying value. As a result, we recognized an impairment charge of $56.2 million in June 2022 representing the full amount of goodwill for the inflammation reporting unit. |
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14. | During the nine months ended September 30, 2021, we recorded a right-of-use asset impairment charge of $12.4 million as a result of vacating the leased Lake Forest office. |
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15. | During the nine months ended September 30, 2021, gain on sale of asset represents a $2.0 million contingent consideration payment related to the sale of MIGERGOT in 2019. The contingent consideration was triggered during the second quarter of 2021 and it was received in July 2021. |
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16. |
Beginning with the third quarter of 2022, the Company is separately presenting upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as "Acquired in-process research and development and milestones" expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item for the three and nine months ended September 30, 2022, would have historically been recorded to research and development ("R&D") expenses. The Company believes the new classification assists users of the financial statements in better understanding the payments incurred to acquire in-process research and development ("IPR&D"). Prior period condensed consolidated statements of comprehensive income have been reclassified to conform with the new classification. No non-GAAP adjustments to IPR&D and milestones expenses for the three and nine months ended September 30, 2022, and September 30, 2021. |
17. | Following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, we no longer exclude acquired IPR&D and milestones expenses from our non-GAAP financial measures and its line item components. Adjusted EBITDA and non-GAAP net income for the three and nine months ended September 30, 2021, includes $4.0 million and $47.0 million, respectively, of acquired IPR&D and milestones expenses. These amounts continue to be excluded from our segment operating income (loss) and from certain measures contained in our credit agreement that are relevant to, among other things, the calculation of the interest rate. |
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