Jazz Pharmaceuticals Announces Full Year And Fourth Quarter 2019 Financial Results

Jazz Pharmaceuticals Announces Full Year And Fourth Quarter 2019 Financial Results

PR Newswire

DUBLIN, Feb. 25, 2020

Record Total Revenues Increased 14% to $2.2 Billion in 2019

2019 GAAP Diluted EPS Increased 25% to $9.09 & Adjusted Diluted EPS Increased 18% to $16.23

More than 25 Innovative R&D Programs Across a Robust Early- to Late-Stage Pipeline Fueled by Increasing R&D Investment

Entered Into Exclusive U.S. License Agreement for Lurbinectedin Effective First Quarter 2020; NDA for Treatment of Relapsed SCLC Accepted with Priority Review and PDUFA Action Date of August 16, 2020

Regulatory Approval of Sunosi in EU and NDA Submission in U.S. for JZP-258 in First Quarter 2020

Six Launches in Major Markets since 2016; Four Launches Anticipated in 2020 - 2021

Jazz Appoints Renée Galá as Executive Vice President and Chief Financial Officer

Jazz Appoints Samantha Pearce as Senior Vice President, Europe and Rest of World

DUBLIN, Feb. 25, 2020 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the full year and the fourth quarter of 2019 and provided financial guidance for 2020.

"With more than $2 billion of revenue and double-digit top- and bottom-line growth, we delivered strong 2019 financial results while making significant investments to support the continued robust evolution of our business," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "Strong execution of our long-term sustainable growth strategy has led to six major product approvals in the past four years, and we look forward to further diversification of our revenue base through corporate development activities and by delivering on other key priorities, including the European launch of Sunosi, the anticipated U.S. launches of lurbinectedin and JZP-258, and pre-launch activities for JZP-458."

"Backed by a growing commitment to R&D, we have made significant progress strengthening and advancing our R&D pipeline with the goal of providing important new therapeutic options and improved patient outcomes in difficult-to-treat diseases," said Robert Iannone, M.D., M.S.C.E., executive vice president, research and development, of Jazz Pharmaceuticals. "Our R&D organization remains focused on optimizing and diversifying our portfolio through internal efforts and external opportunities, including utilizing innovative technologies, and working through partnerships and collaborations designed to bring new life-changing therapeutics to patients."

Financial Highlights






















Three Months Ended
December 31,




Year Ended
December 31,



(In thousands, except per share amounts and percentages)

2019


2018


Change


2019


2018


Change

Total revenues

$

581,740



$

476,457



22%


$

2,161,761



$

1,890,922



14%

GAAP net income

$

73,992



$

159,470



(54)%


$

523,367



$

447,098



17%

Adjusted net income

$

253,243



$

219,951



15%


$

934,231



$

838,613



11%

GAAP EPS

$

1.29



$

2.64



(51)%


$

9.09



$

7.30



25%

Adjusted EPS

$

4.42



$

3.64



21%


$

16.23



$

13.70



18%

GAAP net income for 2019 was $523.4 million, or $9.09 per diluted share, compared to $447.1 million, or $7.30 per diluted share, for 2018. GAAP net income for the fourth quarter of 2019 was $74.0 million, or $1.29 per diluted share, compared to $159.5 million, or $2.64 per diluted share, for the fourth quarter of 2018. The decrease in GAAP net income and EPS in the fourth quarter of 2019 compared to the fourth quarter of 2018 was primarily due to the amortization of the $111.1 million cost of the priority review voucher utilized in connection with the company's JZP-258 new drug application (NDA) submission.

Non-GAAP adjusted net income for 2019 was $934.2 million, or $16.23 per diluted share, compared to $838.6 million, or $13.70 per diluted share, for 2018. Non-GAAP adjusted net income for the fourth quarter of 2019 was $253.2 million, or $4.42 per diluted share, compared to $220.0 million, or $3.64 per diluted share, for the fourth quarter of 2018. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Key Corporate and R&D Updates

Corporate

Sunosi® (solriamfetol)

JZP-258

Defitelio® (defibrotide sodium) / defibrotide

Vyxeos® (daunorubicin and cytarabine) liposome for injection

JZP-458

Lurbinectedin

 

Select 2020 Objectives 




Sleep and Neuroscience


Sunosi


Initiate European rolling launch in Germany mid-2020


Initiate Phase 3 study for EDS in major depressive disorder mid-2020


JZP-258


Submit NDA for cataplexy and EDS in narcolepsy patients 7 years and older January 2020


Obtain U.S. approval as early as 3Q20


Launch as early as 4Q20


Complete enrollment in Phase 3 study in idiopathic hypersomnia 2H20


JZP-385


Initiate Phase 2b study in essential tremor 4Q20




Hematology and Oncology


Defitelio


Conduct interim analysis in Phase 3 study for prevention of hepatic veno-occlusive disease study to determine final enrollment 1H20


Report top-line results from Phase 2 study for prevention of aGvHD 2H20


Lurbinectedin


Obtain U.S. accelerated approval for relapsed SCLC and launch 3Q20


JZP-458


Conduct interim analysis in pivotal Phase 2/3 clinical study in ALL/LBL


Submit Biologics License Application (BLA) to FDA as early as 4Q20


Corporate Development


Expand portfolio through multiple acquisitions or partnerships

 

Total Revenues


















Three Months Ended
December 31,


Year Ended
December 31,

(In thousands)

2019


2018


2019


2018

Xyrem® (sodium oxybate) oral solution

$

435,352



$

374,830



$

1,642,525



$

1,404,866


Erwinaze® / Erwinase® (asparaginase Erwinia chrysanthemi)

54,920



24,265



177,465



174,739


Defitelio® (defibrotide sodium) / defibrotide

47,779



37,712



172,938



149,448


Vyxeos® (daunorubicin and cytarabine) liposome for injection

31,521



25,618



121,407



100,835


Sunosi® (solriamfetol)

2,727





3,714




Other

4,227



4,909



17,552



39,585


Product sales, net

576,526



467,334



2,135,601



1,869,473


Royalties and contract revenues

5,214



9,123



26,160



21,449


Total revenues

$

581,740



$

476,457



$

2,161,761



$

1,890,922


Total revenues increased 14% in 2019 and 22% in the fourth quarter of 2019 compared to the same periods in 2018.

Xyrem net product sales increased 17% in 2019 and 16% in the fourth quarter of 2019 compared to the same periods in 2018.

Erwinaze/Erwinase net product sales in 2019 were consistent with net product sales in 2018 and higher in the fourth quarter of 2019 compared to the same period of 2018 due to the timing of supply availability. The company experienced limited product availability during 2019 and 2018 due to ongoing supply and manufacturing issues at the sole manufacturer.

Defitelio/defibrotide net product sales increased 16% in 2019 and 27% in the fourth quarter of 2019 compared to the same periods in 2018. The company continues to expect inter-quarter variability in Defitelio net sales.

Vyxeos net product sales increased 20% in 2019 and 23% in the fourth quarter of 2019 compared to the same periods in 2018 primarily due to the ongoing European launch.

Sunosi net product sales were $3.7 million in 2019 following the U.S. launch in July 2019.

Operating Expenses and Effective Tax Rate














Three Months Ended
December 31,


 

Year Ended
December 31,

(In thousands, except percentages)

2019


2018


2019


2018

GAAP:








Cost of product sales

$

35,348


$

26,337


$

127,930


$

121,544

Gross margin

93.9%


94.4%


94.0%


93.5%

Selling, general and administrative

$

214,275


$

161,865


$

736,942


$

683,530

% of total revenues

36.8%


34.0%


34.1%


36.1%

Research and development

$

97,382


$

56,657


$

299,726


$

226,616

% of total revenues

16.7%


11.9%


13.9%


12.0%

Impairment charges

$


$


$


$

42,896

Acquired in-process research and development

$


$


$

109,975


$

Income tax provision (benefit)

$

(34,523)


$

5,144


$

(73,154)


$

80,162

Effective tax rate

(84.7)%


3.1%


(16.1)%


15.1%















Three Months Ended
December 31,



Year Ended
December 31,

(In thousands, except percentages)

2019


2018


 

2019


 

2018

Non-GAAP adjusted:








Cost of product sales

$

34,063


$

24,725


$

121,293


$

114,910

Gross margin

94.1%


94.7%


94.3%


93.9%

Selling, general and administrative

$

196,935


$

142,107


$

658,245


$

548,687

% of total revenues

33.9%


29.8%


30.4%


29.0%

Research and development

$

90,070


$

51,304


$

274,497


$

196,579

% of total revenues

15.5%


10.8%


12.7%


10.4%

Acquired in-process research and development

$


$


$

5,700


$

Income tax provision

$

(2,366)


$

29,220


$

132,030


$

148,515

Effective tax rate

(0.9)%


11.7%


12.3%


15.0%

Operating expenses increased over the prior year periods primarily due to the following:

The effective tax rate for the fourth quarter of 2019 on both a GAAP and on a non-GAAP adjusted basis included a benefit of $31.6 million for the years 2015 to 2019 resulting from the application of the Italian patent box incentive. The effective tax rate for 2019 on a GAAP basis included a one-time tax benefit of $112.3 million resulting from an intra-entity intellectual property asset transfer.

Cash Flow and Balance Sheet

As of December 31, 2019, cash, cash equivalents and investments were $1.1 billion, and the outstanding principal balance of the company's long-term debt was $1.8 billion. In 2019, the company generated $776.4 million of cash from operations, used $301.5 million to repurchase shares under the company's share repurchase program, made milestone payments totaling $80.5 million related to Sunosi, and made upfront payments of $52.5 million to acquire Cavion, Inc. (Cavion) and $56.0 million to Codiak BioSciences, Inc. (Codiak) under a collaboration agreement.

In 2019, the company repurchased approximately 2.3 million ordinary shares under the company's share repurchase program at an average cost of $133.97 per ordinary share. As of December 31, 2019, the remaining amount authorized for share repurchases under the company's share repurchase program was $577.7 million.

2020 Financial Guidance

Jazz Pharmaceuticals' full year 2020 financial guidance as follows (in millions, except per share amounts and percentages):


GAAP and Non-GAAP Adjusted

Revenues

$2,320 - $2,400

Total net product sales

$2,305 - $2,375

-Oxybate franchise net sales

$1,710 - $1,760

-Sunosi net sales

$30 - $50

-Erwinaze/Erwinase net sales

$185 - $215

-Defitelio/defibrotide net sales

$180 - $200

-Vyxeos net sales

$135 - $165

 



GAAP

Non-GAAP Adjusted

Gross margin %

94%

94%1,6

SG&A expenses

$855 - $903

$770 - $8102,6

SG&A expenses as % of total revenues

36% - 39%

32% - 35%

R&D Expenses

$312 - $348

$285 - $3153,6

R&D expenses as % of total revenues

13% - 15%

12% - 14%

Acquired in-process research and development expenses

$200

$2004

Effective tax rate

15% - 23%

18% - 20%5,6

Net income per diluted share

$5.90 - $7.15

$12.50 - $13.404,6

____________________________

1.

Excludes $8-$9 million of share-based compensation expense from estimated GAAP gross margin.



2.

Excludes $85-$93 million of share-based compensation expense from estimated GAAP SG&A expenses.



3.

Excludes $27-$33 million of share-based compensation expense from estimated GAAP R&D expenses.



4.

Beginning with the presentation of the company's financial guidance for 2020, following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, the company will no longer exclude upfront and milestone payments from the company's non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. The impact of this change to the company's 2020 non-GAAP adjusted net income and non-GAAP adjusted EPS guidance is approximately $175 million or $3.13 per diluted share, respectively, related to the post-tax impact of the $200 million upfront payment made to PharmaMar in January 2020.



5.

Excludes the income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income.



6.

See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2020 Net Income Guidance" at the end of this press release.

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business and financial update and discuss its 2019 full year and fourth quarter results and provide 2020 financial guidance. The live webcast may be accessed from the Investors section of the company's website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 9837779.

A replay of the conference call will be available through March 3, 2020 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 9837779. An archived version of the webcast will be available for at least one week in the Investors section of the company's website at www.jazzpharmaceuticals.com.

About Jazz Pharmaceuticals plc 

Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is a global biopharmaceutical company dedicated to developing life-changing medicines for people with serious diseases — often with limited or no options. We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in key therapeutic areas. Our focus is in neuroscience, including sleep medicine and movement disorders, and in oncology, including hematologic and solid tumors. We actively explore new options for patients including novel compounds, small molecule advancements, biologics and innovative delivery technologies. Jazz is headquartered in Dublin, Ireland and has employees around the globe, serving patients in more than 90 countries. For more information, please visit www.jazzpharmaceuticals.com and follow @JazzPharma on Twitter.

Non-GAAP Financial Measures

To supplement Jazz Pharmaceuticals' financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the company uses certain non-GAAP (also referred to as adjusted or non-GAAP adjusted) financial measures in this press release and the accompanying tables. In particular, the company presents non-GAAP adjusted net income (and the related per share measure) and its line item components, as well as certain non-GAAP adjusted financial measures derived therefrom, including non-GAAP adjusted gross margin percentage and non-GAAP adjusted effective tax rate. Non-GAAP adjusted net income (and the related per share measure) and its line item components exclude from reported GAAP net income (and the related per share measure) and its line item components certain items, as detailed in the reconciliation tables that follow, and in the case of non-GAAP adjusted net income (and the related per share measure), adjust for the income tax effect of non-GAAP adjustments and, as applicable, the income tax benefit related to an intra-entity intellectual property asset transfer and the impact of the U.S. Tax Cuts and Job Act (U.S. Tax Act). In this regard, the components of non-GAAP adjusted net income, including non-GAAP cost of product sales, non-GAAP SG&A expenses and non-GAAP R&D expenses, are income statement line items prepared on the same basis as, and therefore components of, the overall non-GAAP adjusted net income measure.

The company believes that each of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors and analysts. In particular, the company believes that each of these non-GAAP financial measures, when considered together with the company's financial information prepared in accordance with GAAP, can enhance investors' and analysts' ability to meaningfully compare the company's results from period to period and to its forward-looking guidance, and to identify operating trends in the company's business. In addition, these non-GAAP financial measures are regularly used by investors and analysts to model and track the company's financial performance. Jazz Pharmaceuticals' management also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate the company's business and to make operating decisions, and compensation of executives is based in part on certain of these non-GAAP financial measures. Because these non-GAAP financial measures are important internal measurements for Jazz Pharmaceuticals' management, the company also believes that these non-GAAP financial measures are useful to investors and analysts since these measures allow for greater transparency with respect to key financial metrics the company uses in assessing its own operating performance and making operating decisions.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future there may be other items that the company may exclude for purposes of its non-GAAP financial measures; and the company has ceased, and may in the future cease, to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. For example, commencing with the presentation of the company's financial guidance for 2020, the company will no longer exclude upfront and milestone payments from the company's non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. Accordingly, while certain of such payments are excluded from its non-GAAP financial measures for the year ended December 31, 2019, as detailed in the reconciliation tables that follow, such presentation is made solely for comparability and transition purposes and will not be continued going forward. Likewise, the company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to Jazz Pharmaceuticals' future financial and operating results, including the company's 2020 financial guidance and 2020 planned milestones and the anticipated timing thereof, including the rolling launch of Sunosi in Europe and the potential approval and launch of lurbinectedin and JZP-258 in the U.S.; the company's clinical development, planned BLA submission and pre-launch activities for JZP-458; the company's expectation of continuing to diversity its revenue base; the company's expectation of strengthening and advancing its pipeline to provide new therapeutic options to improve patient outcomes in difficult-to-treat diseases; the company's expectation of diversifying its portfolio through internal efforts and external opportunities; the company's expectations of inter-quarter variability in Defitelio net sales; and other statements that are not historical facts. These forward-looking statements are based on the company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with: maintaining or increasing sales of and revenue from Xyrem; effectively commercializing the company's other products and product candidates, including with respect to Sunosi and, if approved, lurbinectedin and JZP-258; the time-consuming and uncertain regulatory approval process, including the risk that the company's current and planned regulatory submissions may not be submitted, accepted or approved by applicable regulatory authorities in a timely manner or at all; the costly and time-consuming pharmaceutical product development and the uncertainty of clinical success, including risks related to failure or delays in successfully initiating or completing clinical trials; protecting and enhancing the company's intellectual property rights; delays or problems in the supply or manufacture of the company's products and product candidates; the company's ability to maintain rights to its products and product candidates, including Erwinaze; complying with applicable U.S. and non-U.S. regulatory requirements; government investigations and other actions; obtaining and maintaining adequate coverage and reimbursement for the company's products; identifying and acquiring, in-licensing or developing additional products or product candidates, financing these transactions and successfully integrating acquired product candidates, products and businesses; the company's ability to realize the anticipated benefits of its collaborations with third parties for the development of product candidates; the company's ability to achieve expected future financial performance and results and the uncertainty of future tax and other provisions and estimates; and other risks and uncertainties affecting the company, including those described from time to time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals plc's Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and future filings and reports by the company, including the company's Annual Report on Form 10-K for the year ended December 31, 2019. Other risks and uncertainties of which the company is not currently aware may also affect the company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated.

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


















Three Months Ended
December 31,


Year Ended
December 31,


2019


2018


2019


2018

Revenues:








Product sales, net

$

576,526



$

467,334



$

2,135,601



$

1,869,473


Royalties and contract revenues

5,214



9,123



26,160



21,449


Total revenues

581,740



476,457



2,161,761



1,890,922


Operating expenses:








Cost of product sales (excluding amortization of acquired developed technologies)

35,348



26,337



127,930



121,544


Selling, general and administrative

214,275



161,865



736,942



683,530


Research and development

97,382



56,657



299,726



226,616


Intangible asset amortization

173,490



46,543



354,814



201,498


Impairment charges







42,896


Acquired in-process research and development





109,975




Total operating expenses

520,495



291,402



1,629,387



1,276,084


Income from operations

61,245



185,055



532,374



614,838


Interest expense, net

(18,244)



(17,904)



(72,261)



(77,075)


Foreign exchange loss

(2,234)



(1,694)



(5,811)



(6,875)


Loss on extinguishment and modification of debt







(1,425)


Income before income tax provision (benefit) and equity in loss of investees

40,767



165,457



454,302



529,463


Income tax provision (benefit)

(34,523)



5,144



(73,154)



80,162


Equity in loss of investees

1,298



843



4,089



2,203


Net income

$

73,992



$

159,470



$

523,367



$

447,098










Net income per ordinary share:








Basic

$

1.31



$

2.69



$

9.22



$

7.45


Diluted

$

1.29



$

2.64



$

9.09



$

7.30


Weighted-average ordinary shares used in per share calculations - basic

56,418



59,323



56,749



59,976


Weighted-average ordinary shares used in per share calculations - diluted

57,262



60,413



57,550



61,221


 

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)










December 31,


2019


2018

ASSETS




Current assets:




Cash and cash equivalents

$

637,344



$

309,622


Investments

440,000



515,000


Accounts receivable, net of allowances

355,987



263,838


Inventories

78,608



52,956


Prepaid expenses

39,434



25,017


Other current assets

78,895



67,572


Total current assets

1,630,268



1,234,005


Property, plant and equipment, net

131,506



200,358


Operating lease assets

139,385




Intangible assets, net

2,440,977



2,731,334


Goodwill

920,018



927,630


Deferred tax assets, net

221,403



57,879


Deferred financing costs

7,426



9,589


Other non-current assets

47,914



42,696


Total assets

$

5,538,897



$

5,203,491


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

47,545



$

40,602


Accrued liabilities

267,873



264,887


Current portion of long-term debt

33,387



33,387


Income taxes payable

10,965



1,197


Deferred revenue

4,720



5,414


Total current liabilities

364,490



345,487


Deferred revenue, non-current

4,861



9,581


Long-term debt, less current portion

1,573,870



1,563,025


Operating lease liabilities, less current portion

151,226




Deferred tax liabilities, net

224,095



309,097


Other non-current liabilities

109,374



218,879


Total shareholders' equity

3,110,981



2,757,422


Total liabilities and shareholders' equity

$

5,538,897



$

5,203,491


 

JAZZ PHARMACEUTICALS PLC

SUMMARY OF CASH FLOWS

(In thousands)

(Unaudited)










Year Ended
December 31,


2019


2018

Net cash provided by operating activities

$

776,401



$

798,904


Net cash used in investing activities

(155,300)



(394,487)


Net cash used in financing activities

(293,745)



(479,130)


Effect of exchange rates on cash and cash equivalents

366



(1,700)


Net increase (decrease) in cash and cash equivalents

$

327,722



$

(76,413)


 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

(In thousands, except per share amounts)

(Unaudited)


















Three Months Ended
December 31,


Year Ended
December 31,


2019


2018


2019


2018

GAAP reported net income

$

73,992



$

159,470



$

523,367



$

447,098


Intangible asset amortization

173,490



46,543



354,814



201,498


Share-based compensation expense

25,937



26,723



110,563



102,441


Loss contingency (a)







57,000


Impairment charges and disposal costs (b)







43,969


Upfront and milestone payments (c)





104,275



11,000


Non-cash interest expense (d)

11,981



11,291



46,396



43,960


Income tax effect of above adjustments

(32,157)



(13,751)



(92,910)



(60,896)


Income tax benefit related to intra-entity intellectual property asset transfer





(112,274)




U.S. Tax Act impact



(10,325)





(7,457)


Non-GAAP adjusted net income

$

253,243



$

219,951



$

934,231



$

838,613










GAAP reported net income per diluted share

$

1.29



$

2.64



$

9.09



$

7.30


Non-GAAP adjusted net income per diluted share

$

4.42



$

3.64



$

16.23



$

13.70


Weighted-average ordinary shares used in diluted per share calculations

57,262



60,413



57,550



61,221


________________________________________________

Explanation of Adjustments and Certain Line Items (in thousands):



(a)

Relates to a civil settlement agreement with the U.S. Department of Justice and the Office of the Inspector General.

(b)

Resulting from the company's sale of its rights related to Prialt® (ziconotide) intrathecal infusion.

(c)

For the year ended December 31, 2019, the amount includes $48,275 attributed to acquired in-process research and development expense related to the acquisition of Cavion and a $56,000 upfront payment to Codiak under a collaboration agreement.

(d)

Non-cash interest expense associated with debt discount and debt issuance costs.

 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS - FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 and 2018

(In thousands)

(Unaudited)


























Three months ended December 31, 2019


Cost of product sales


Selling, general and administrative


Research and development


Intangible asset amortization


Interest expense, net


Income tax provision (benefit)

GAAP Reported

$

35,348



$

214,275



$

97,382



$

173,490



$

18,244



$

(34,523)


Non-GAAP Adjustments:












Intangible asset amortization







(173,490)






Share-based compensation expense

(1,285)



(17,340)



(7,312)








Non-cash interest expense









(11,981)




Income tax effect of above adjustments











32,157


Total of Non-GAAP adjustments

(1,285)



(17,340)



(7,312)



(173,490)



(11,981)



32,157


Non-GAAP Adjusted

$

34,063



$

196,935



$

90,070



$



$

6,263



$

(2,366)




























Three months ended December 31, 2018


Cost of product sales


Selling, general and administrative


Research and development


Intangible asset amortization


Interest expense, net


Income tax provision (benefit)

GAAP Reported

$

26,337



$

161,865



$

56,657



$

46,543



$

17,904



$

5,144


Non-GAAP Adjustments:












Intangible asset amortization







(46,543)






Share-based compensation expense

(1,612)



(19,758)



(5,353)








Non-cash interest expense









(11,291)




Income tax effect of above adjustments











13,751


U.S. Tax Act impact











10,325


Total of Non-GAAP adjustments

(1,612)



(19,758)



(5,353)



(46,543)



(11,291)



24,076


Non-GAAP Adjusted

$

24,725



$

142,107



$

51,304



$



$

6,613



$

29,220


 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS - FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

(In thousands)

(Unaudited)






























Year ended December 31, 2019


Cost of product sales


Selling, general and administrative


Research and development


Intangible asset amortization


Acquired IPR&D


Interest expense, net


Income tax provision (benefit)

GAAP Reported

$

127,930



$

736,942



$

299,726



$

354,814



$

109,975



$

72,261



$

(73,154)


Non-GAAP Adjustments:














Intangible asset amortization







(354,814)








Share-based compensation expense

(6,637)



(78,697)



(25,229)










Upfront & milestone payments









(104,275)






Non-cash interest expense











(46,396)




Income tax effect of above adjustments













92,910


Income tax benefit related to intra-entity intellectual property asset transfer













112,274


Total of Non-GAAP adjustments

(6,637)



(78,697)



(25,229)



(354,814)



(104,275)



(46,396)



205,184


Non-GAAP Adjusted

$

121,293



$

658,245



$

274,497



$



$

5,700



$

25,865



$

132,030
































Year ended December 31, 2018


Cost of product sales


Selling, general and administrative


Research and development


Intangible asset amortization


Impairment charges


Interest expense, net


Income tax provision (benefit)

GAAP Reported

$

121,544



$

683,530



$

226,616



$

201,498



$

42,896



$

77,075



$

80,162


Non-GAAP Adjustments:














Intangible asset amortization







(201,498)








Share-based compensation expense

(6,634)



(76,770)



(19,037)










Loss contingency



(57,000)












Impairment charges and disposal costs



(1,073)







(42,896)






Upfront & milestone payments





(11,000)










Non-cash interest expense











(43,960)




Income tax effect of above adjustments













60,896


U.S. Tax Act impact













7,457


Total of Non-GAAP adjustments

(6,634)



(134,843)



(30,037)



(201,498)



(42,896)



(43,960)



68,353


Non-GAAP Adjusted

$

114,910



$

548,687



$

196,579



$



$



$

33,115



$

148,515


 

JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2020 NET INCOME GUIDANCE

(In millions, except per share amounts)

(Unaudited)



GAAP net income

$330 - $400

Intangible asset amortization

250 - 270

Share-based compensation expense

120 -135

Non-cash interest expense

45 - 55

Income tax effect of adjustments

(65) - (90)

Non-GAAP adjusted net income

$700 - $750



GAAP net income per diluted share

$5.90 - $7.15

Non-GAAP adjusted net income per diluted share

$12.50 - $13.40



Weighted-average ordinary shares used in per share calculations

56

Contacts:

Investors:
Kathee Littrell
Vice President, Investor Relations
Jazz Pharmaceuticals plc
Ireland, +353 1 634 7887
U.S., +1 650 496 2717

Media:
Jacqueline Kirby
Vice President, Corporate Affairs & Government Relations
Jazz Pharmaceuticals plc
Ireland, +353 1 697 2141
U.S., +1 215 867 4910

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