Jazz Pharmaceuticals Announces Third Quarter 2021 Financial Results And Raises Full Year Earnings Guidance

Jazz Pharmaceuticals Announces Third Quarter 2021 Financial Results And Raises Full Year Earnings Guidance

PR Newswire

DUBLIN, Nov. 9, 2021

DUBLIN, Nov. 9, 2021 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter of 2021 and updated financial guidance for 2021.

"Last year, we set the ambitious corporate objective of completing five key commercial launches through 2020 and 2021. With the launch of Xywav for idiopathic hypersomnia earlier this month, we have now accomplished this goal, demonstrating our significant execution capabilities and commitment to bring important new medicines forward for patients," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "The successful integration of GW underscores our ability to deliver on transformative M&A to grow our business. While there's more work to be done, I'm confident we have the right strategy, teams and capabilities in place to realize the blockbuster potential of Epidiolex and to discover, develop and launch additional novel, innovative medicines leveraging cannabinoid science. Our commercial execution, productive R&D engine and culture of commitment to patients and their families provide a strong foundation for significant and sustained growth."

Renée Galá, executive vice president and chief financial officer, added, "This is an exciting time of transformation for Jazz, underpinned by operational execution, financial discipline and strategic capital allocation across our business. We continue to deliver on our business and financial targets which has enabled us to rapidly reduce our net leverage ratio to 4.41 times in just five months following the close of the GW transaction. We have also delivered on revenue growth and diversification. Recently launched or acquired products now make up over 50% of net product sales, and we remain on track to meet our goal of at least 65% in 2022. In addition, our prior investments in corporate development are translating into near-term catalysts as we advance JZP385, JZP150 and Zepzelca into important new clinical trials. We will continue to prioritize disciplined capital allocation to assets and activities that drive growth and value, while remaining focused on achieving our net leverage ratio target of less than 3.51 times by the end of next year."

Key Highlights

____________________

1.

On a pro forma, non-GAAP adjusted basis

Business Updates

Neuroscience

Oxybate (Xyrem® and Xywav):

Xywav for Narcolepsy (calcium, magnesium, potassium, and sodium oxybates) oral solution:

Xywav for Idiopathic Hypersomnia

Xyrem (sodium oxybate) oral solution:

Epidiolex/Epidyolex (cannabidiol):

Sunosi® (solriamfetol):

Nabiximols:

JZP385:

JZP150:

Oncology

Zepzelca (lurbinectedin):

Rylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):

Vyxeos® (daunorubicin and cytarabine) liposome for injection: 

Defitelio® (defibrotide sodium) / defibrotide:

Financial Highlights


Three Months Ended

September 30,


Nine Months Ended

September 30,

(In thousands, except per share amounts)

2021


2020


2021


2020

Total revenues

$

838,115



$

600,888



$

2,197,507



$

1,698,050


GAAP net income (loss)

$

(52,833)



$

148,234



$

(294,317)



$

105,202


Adjusted net income1

$

261,418



$

242,109



$

730,812



$

475,258


GAAP EPS

$

(0.86)



$

2.64



$

(4.98)



$

1.87


Adjusted EPS1

$

4.20



$

4.31



$

12.02



$

8.44


____________________

1.

Commencing in 2020, following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, the Company no longer excludes upfront and milestone payments from the Company's non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. See "Non-GAAP Financial Measures" below.

GAAP net income (loss) for 3Q21 was ($52.8 million), or ($0.86) per diluted share, compared to $148.2 million, or $2.64 per diluted share, for 3Q20. 

Non-GAAP adjusted net income for 3Q21 was $261.4 million, or $4.20 per diluted share, compared to $242.1 million, or $4.31 per diluted share, for 3Q20.

Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Total Revenues


Three Months Ended

September 30,


Nine Months Ended

September 30,

(In thousands)

2021


2020


2021


2020

Xyrem

$

307,333



$

447,809



$

977,065



$

1,302,492


Xywav

153,063





352,643




Total Oxybate

460,396



447,809



1,329,708



1,302,492


Epidiolex/Epidyolex1

160,378





269,859




Sunosi

19,251



9,116



42,981



19,618


Sativex® (nabiximols)1

6,097





8,058




Total Neuroscience

646,122



456,925



1,650,606



1,322,110


Zepzelca

71,714



36,941



181,972



36,941


Vyxeos

34,688



30,825



99,296



90,113


Defitelio/defibrotide

57,705



50,241



155,420



140,387


Rylaze

20,674





20,674




Erwinaze/Erwinase



20,145



69,382



90,560


Total Oncology

184,781



138,152



526,744



358,001


Other

3,344



1,872



8,768



5,246


Product sales, net

834,247



596,949



2,186,118



1,685,357


Royalties and contract revenues

3,868



3,939



11,389



12,693


Total revenues

$

838,115



$

600,888



$

2,197,507



$

1,698,050


____________________

1.

Net product sales for Epidiolex and Sativex are included from the closing of the acquisition of GW Pharmaceuticals plc (GW Acquisition) on May 5, 2021.

Total revenues increased 39% in 3Q21 compared to the same period in 2020.

Operating Expenses and Effective Tax Rate


Three Months Ended

September 30,


Nine Months Ended

September 30,

(In thousands, except percentages)

2021


2020


2021


2020

GAAP:








Cost of product sales

$

145,224


$

42,095


$

304,607


$

98,760

Gross margin

82.6%


92.9%


86.1%


94.1%

Selling, general and administrative

$

363,682


$

207,255


$

1,053,221


$

607,061

% of total revenues

43.4%


34.5%


47.9%


35.8%

Research and development

$

141,036


$

78,647


$

350,305


$

243,676

% of total revenues

16.8%


13.1%


15.9%


14.4%

Acquired in-process research and development

$


$

10,000


$


$

215,250

Impairment charge

$


$


$


$

136,139

Income tax provision (benefit)

$

(18,057)


$

19,283


$

228,583


$

22,750

Effective tax rate

26.7%


11.5%


N/A (1)


17.5%

____________________

(1)

Our effective tax rate for the nine months ended September 30, 2021 on a GAAP basis is not a meaningful metric.

 


Three Months Ended

September 30,


Nine Months Ended

September 30,

(In thousands, except percentages)

2021


2020


2021


2020

Non-GAAP adjusted:








Cost of product sales

$

58,872


$

40,176


$

147,291


$

93,247

Gross margin

92.9%


93.3%


93.3%


94.5%

Selling, general and administrative

$

278,552


$

186,281


$

776,392


$

544,471

% of total revenues

33.2%


31.0%


35.3%


32.1%

Research and development

$

124,470


$

71,184


$

310,925


$

222,165

% of total revenues

14.9%


11.8%


14.1%


13.1%

Acquired in-process research and development

$


$

10,000


$


$

215,250

Income tax provision

$

43,589


$

38,268


$

111,510


$

116,040

Effective tax rate

14.1%


13.6%


13.3%


19.5%

Operating expenses changed over the prior year period primarily due to the following:

Cash Flow and Balance Sheet

As of September 30, 2021, cash and cash equivalents were $671.8 million, and the outstanding principal balance of the Company's long-term debt was $6.6 billion compared to $7.1 billion as of June 30, 2021. In addition, the Company had undrawn borrowing capacity under a revolving credit facility of $500.0 million.

For the nine months ended September 30, 2021, the Company generated $600.8 million of cash from operations.

During the third quarter, and aligned to its stated deleveraging target, the Company made significant debt repayments of $477.6 million which included the repayment on maturity of the remaining balance on its 1.875% exchangeable senior notes due 2021 and a voluntary payment on its term loan B.

2021 Financial Guidance1

Jazz Pharmaceuticals is updating its full year 2021 financial guidance. This guidance reflects the Company's current and future expected operational performance, including COVID-19 related impacts, the strength of its underlying operations and the prioritization of new and ongoing value creating development projects.

The Company is raising its full-year earnings guidance, resulting in a reduced GAAP net loss and increased non-GAAP adjusted net income (ANI) on an absolute and per share basis. The updated non-GAAP ANI range exceeds the upper end of the prior range. The Company is reducing both SG&A and R&D expense guidance on a GAAP and non-GAAP adjusted basis, reflecting progress within its transformation initiatives, improved financial discipline and strategic capital allocation. The Company is narrowing its net sales guidance range for neuroscience and oncology, with a reduced mid-point for oncology net sales guidance which reflects the ongoing impacts of COVID-19 on our legacy products and the Rylaze competitive landscape at launch in 3Q21, resulting in a reduced mid-point for total revenues guidance.


Guidance provided as of

(In millions)

August 3, 2021


November 9, 2021

Revenues

$3,020 - $3,180


$3,020 - $3,100

-Neuroscience

$2,260 - $2,360


$2,275 - $2,345

-Oncology

$715 - $835


$715 - $735

GAAP:


Guidance provided as of

(In millions, except per share amounts and percentages)

August 3, 2021


November 9, 2021

Gross margin %

85%


85%

SG&A expenses

$1,468 - $1,560


$1,400 - $1,451

SG&A expenses as % of total revenues

46% - 52%


45% - 48%

R&D Expenses

$542 - $596


$514 - $548

R&D expenses as % of total revenues

17% - 20%


17% - 18%

Effective tax rate

(58%) - (102%)


(110%) - (183%)

Net loss

($560) - ($400)


($420) - ($320)

Net loss per diluted share

($9.40) - ($6.70)


($7.00) - ($5.40)2

Weighted-average ordinary shares used in per share calculations

60


60

Non-GAAP:


Guidance provided as of

(In millions, except per share amounts and percentages)

August 3, 2021


November 9, 2021

Gross margin %

93%


93%3,7

SG&A expenses

$1,120 - $1,180


$1,060 - $1,1004,7

SG&A expenses as % of total revenues

35% - 39%


34% - 36%

R&D Expenses

$500 - $540


$465 - $4855,7

R&D expenses as % of total revenues

16% - 18%


15% - 16%

Effective tax rate

13% - 15%


11% - 13%6,7

Adjusted net income

$830 - $910


$925 - $965

Net income per diluted share

$13.40 - $14.70


$15.10 - $15.802,7

Weighted-average ordinary shares used in per share calculations

62


61

____________________

1.

The Company's 2021 financial guidance includes the anticipated results of the acquired GW business from the date of acquisition (May 5, 2021) and related acquisition accounting adjustments, which are subject to change if the Company obtains additional information during the measurement period (up to one year from the GW Acquisition date); any such change could be material.

2.

The Company expects the GW Acquisition to be dilutive to both GAAP and non-GAAP adjusted net income per diluted share in 2021. On a GAAP basis, this is expected to be primarily due to an increase in the amortization of acquisition-related intangible assets and transaction and integration related expenses, the amortization of inventory fair value step-up, increased interest expense and an increase in number of outstanding shares relating to the GW Acquisition. On a non-GAAP adjusted basis, this is expected to be due to increased cash interest expense and an increase in the number of outstanding shares.

3.

Excludes $205-$225 million of amortization of acquisition-related inventory fair value step-up, $10-$12 million of share-based compensation expense and $1-$4 million of transaction and integration related expenses relating to the GW Acquisition from estimated GAAP gross margin.

4.

Excludes $222-$231 million of transaction and integration related expenses relating to the GW acquisition and $118-$120 million of share-based compensation expense from estimated GAAP SG&A expenses.

5.

Excludes $42-$48 million of share-based compensation expense and $7-$15 million of transaction and integration related expenses relating to the GW Acquisition from estimated GAAP R&D expenses.

6.

Excludes the income tax effect of adjustments between GAAP net loss and non-GAAP adjusted net income and an expense of approximately $251 million arising on the remeasurement of our U.K. net deferred tax liability, which arose primarily in relation to the GW Acquisition, due to a change in the statutory tax rate in the U.K. following enactment of the UK Finance Act 2021.

7.

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 2021 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. ET (9:30 p.m. GMT) to provide a business and financial update and discuss its 3Q21 results. 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 5888822.

A replay of the conference call will be available through November 16, 2021 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 5888822. 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

Jazz Pharmaceuticals plc (NASDAQ: JAZZ) is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in neuroscience and oncology. Within these therapeutic areas, we are identifying new options for patients by actively exploring small molecules and biologics, and through innovative delivery technologies and cannabinoid science. Jazz is headquartered in Dublin, Ireland and has employees around the globe, serving patients in nearly 75 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 GAAP reported net income (loss) (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 the non-GAAP adjustments and impact of the change in the statutory tax rate in the U.K. 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. The Company also uses a pro forma net leverage ratio, which is calculated using net debt and pro forma adjusted earnings before interest, tax, depreciation and amortization (Adjusted EBITDA), which are non-GAAP financial measures. Pro forma non-GAAP net leverage ratio is used by management to measure the Company's ability to repay outstanding debt obligations and the Company believes it is a meaningful metric to investors and analysts in evaluating the Company's financial leverage. Pro forma non-GAAP net leverage ratio is calculated by the Company as net debt (defined as total debt, net of cash and cash equivalents) divided by pro forma non-GAAP Adjusted EBITDA. EBITDA is defined as net income (loss) before income taxes, interest expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain other charges and adjustments as detailed in the reconciliation tables that follow and is calculated in accordance with the definition of Consolidated Adjusted EBITDA as set out in the Company's credit agreement entered into in May 2021 (the Credit Agreement). 

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 in 2020, the Company no longer excludes upfront and milestone payments from the Company's non-GAAP adjusted net income, its line item components and non-GAAP adjusted net income per diluted share. 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.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to: the Company's growth prospects and future financial and operating results, including the Company's updated 2021 financial guidance and the Company's expectations related thereto; the Company's commercial expectations, including its expectations for significant and sustained growth, its ability to realize the commercial potential of its products, including the blockbuster potential for Epidiolex and ability of Zepzelca to gain market share, and the value and growth potential of its products, including our ability to discover, develop and launch additional novel, innovative medicines leveraging cannabinoid science; the Company's net product sales, goals for net product sales from new and acquired products and net leverage goals; the Company's views and expectations relating to its patent portfolio, including with respect to expected patent protection and additional patents being issued, and the anticipated timing thereof; planned or anticipated clinical trial events, including with respect to initiations, enrollment and data read-outs, and the anticipated timing thereof; planned or anticipated regulatory submissions and filings, including for nabiximols, Epidiolex and Rylaze, and the anticipated timing thereof; the anticipated launch of Epidiolex in France 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 the Company's oxybate products, Zepzelca and other key marketed products; effectively launching and commercializing the Company's other products and product candidates; obtaining and maintaining adequate coverage and reimbursement for the Company's products; the time-consuming and uncertain regulatory approval process, including the risk that the Company's current and/or planned regulatory submissions may not be submitted, accepted or approved by applicable regulatory authorities in a timely manner or at all, including the risk that the Company's sBLA seeking approval for a revised dosing label for Rylaze may not be approved by FDA 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 and assessing patients such as those being experienced, and expected to continue to be experienced, by the Company as a result of the effects of the COVID-19 pandemic; the Company's failure to realize the expected benefits of its acquisition of GW Pharmaceuticals, including the blockbuster potential of Epidiolex, our ability to discover, develop and launch additional novel, innovative medicines leveraging cannabinoid science, the risk that the legacy GW Pharmaceuticals business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the ultimate duration and severity of the COVID-19 pandemic and resulting global economic, financial, and healthcare system disruptions and the current and potential future negative impacts to the Company's business operations and financial results; regulatory initiatives and changes in tax laws; market volatility; protecting and enhancing the Company's intellectual property rights and the Company's commercial success being dependent upon the Company obtaining, maintaining and defending intellectual property protection for its products and product candidates; delays or problems in the supply or manufacture of the Company's products and product candidates; complying with applicable U.S. and non-U.S. regulatory requirements, including those governing the research, development, manufacturing and distribution of controlled substances; government investigations, legal proceedings and other actions; 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 and license agreements with third parties; the sufficiency of the Company's cash flows and capital resources to fund its debt service obligations, de-lever and meet its stated leverage targets; the Company's ability to achieve expected future financial performance and results and the uncertainty of future tax, accounting and other provisions and estimates; the possibility that, if the Company does not achieve the perceived benefits of the acquisition of GW Pharmaceuticals as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company's ordinary shares could decline; 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' Securities and Exchange Commission filings and reports, including the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, and future filings and reports by the Company, including the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. 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 (LOSS)

(In thousands, except per share amounts)

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020

Revenues:








Product sales, net

$

834,247



$

596,949



$

2,186,118



$

1,685,357


Royalties and contract revenues

3,868



3,939



11,389



12,693


Total revenues

838,115



600,888



2,197,507



1,698,050


Operating expenses:








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

145,224



42,095



304,607



98,760


Selling, general and administrative

363,682



207,255



1,053,221



607,061


Research and development

141,036



78,647



350,305



243,676


Intangible asset amortization

159,804



66,684



368,476



192,505


Acquired in-process research and development



10,000





215,250


Impairment charge







136,139


Total operating expenses

809,746



404,681



2,076,609



1,493,391


Income from operations

28,369



196,207



120,898



204,659


Interest expense, net

(93,372)



(27,428)



(190,168)



(72,134)


Foreign exchange gain (loss)

(2,631)



(639)



1,262



(2,235)


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

(67,634)



168,140



(68,008)



130,290


Income tax provision (benefit)

(18,057)



19,283



228,583



22,750


Equity in (gain) loss of investees

3,256



623



(2,274)



2,338


Net income (loss)

$

(52,833)



$

148,234



$

(294,317)



$

105,202










Net income (loss) per ordinary share:








Basic

$

(0.86)



$

2.67



$

(4.98)



$

1.89


Diluted

$

(0.86)



$

2.64



$

(4.98)



$

1.87


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

61,284



55,545



59,084



55,637


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

61,284



56,236



59,084



56,297


 

JAZZ PHARMACEUTICALS PLC

PRO FORMA NET PRODUCT SALES

(In thousands)

(Unaudited)


The following unaudited pro forma information represents the net product sales for the three and nine months ended September 30, 2021, compared to the same periods in 2020, as if the GW Acquisition had been completed on January 1, 2020:



Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020

Xyrem

$

307,333



$

447,809



$

977,065



$

1,302,492


Xywav

153,063





352,643




Total Oxybate

460,396



447,809



1,329,708



1,302,492


Epidiolex/Epidyolex

160,378



132,538



464,508



366,421


Sunosi

19,251



9,116



42,981



19,618


Sativex® (nabiximols)

6,097



4,309



13,825



12,182


Total Neuroscience

646,122



593,772



1,851,022



1,700,713


Zepzelca

71,714



36,941



181,972



36,941


Vyxeos

34,688



30,825



99,296



90,113


Defitelio/defibrotide

57,705



50,241



155,420



140,387


Rylaze

20,674





20,674




Erwinaze/Erwinase



20,145



69,382



90,560


Total Oncology

184,781



138,152



526,744



358,001


Other

3,344



1,872



8,768



5,246


Product sales, net

$

834,247



$

733,796



$

2,386,534



$

2,063,960


 

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



September 30,

2021


December 31,

2020

ASSETS




Current assets:




Cash and cash equivalents

$

671,780



$

1,057,769


Investments



1,075,000


Accounts receivable, net of allowances

499,023



396,490


Inventories

1,137,851



95,396


Prepaid expenses

94,474



62,422


Other current assets

225,098



152,491


Total current assets

2,628,226



2,839,568


Property, plant and equipment, net

255,006



127,935


Operating lease assets

89,628



129,169


Intangible assets, net

7,282,579



2,195,051


Goodwill

1,849,547



958,303


Deferred tax assets, net

314,666



254,916


Deferred financing costs

12,724



5,238


Other non-current assets

45,776



25,721


Total assets

$

12,478,152



$

6,535,901


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

63,815



$

26,945


Accrued liabilities

603,715



352,732


Current portion of long-term debt

31,000



246,322


Income taxes payable

34,256



25,200


Deferred revenue

2,267



2,546


Total current liabilities

735,053



653,745


Deferred revenue, non-current

986



2,315


Long-term debt, less current portion

6,247,287



1,848,516


Operating lease liabilities, less current portion

89,359



140,035


Deferred tax liabilities, net

1,329,184



130,397


Other non-current liabilities

137,806



101,148


Total shareholders' equity

3,938,477



3,659,745


Total liabilities and shareholders' equity

$

12,478,152



$

6,535,901


 

JAZZ PHARMACEUTICALS PLC

SUMMARY OF CASH FLOWS

(In thousands)

(Unaudited)



Nine Months Ended

September 30,


2021


2020

Net cash provided by operating activities

$

600,752



$

713,377


Net cash used in investing activities

(5,202,051)



(1,080,889)


Net cash provided by financing activities

4,217,131



472,195


Effect of exchange rates on cash and cash equivalents

(1,821)



(85)


Net increase (decrease) in cash and cash equivalents

$

(385,989)



$

104,598


 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

(In thousands, except per share amounts)

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020

GAAP reported net income (loss)

$

(52,833)



$

148,234



$

(294,317)



$

105,202


Intangible asset amortization

159,804



66,684



368,476



192,505


Share-based compensation expense

45,535



30,356



123,431



89,614


Transaction and integration related expenses1

59,867





201,457




Non-cash interest expense2

28,045



15,820



66,055



45,088


Acquisition accounting inventory fair value step-up

82,646





148,637




Impairment charge3







136,139


Income tax effect of above adjustments

(61,646)



(18,985)



(134,307)



(93,290)


Impact of U.K. tax rate change4





251,380




Non-GAAP adjusted net income

$

261,418



$

242,109



$

730,812



$

475,258










GAAP reported net income (loss) per diluted share

$

(0.86)



$

2.64



$

(4.98)



$

1.87


Non-GAAP adjusted net income per diluted share

$

4.20



$

4.31



$

12.02



$

8.44


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

61,284



56,236



59,084



56,297


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

62,285



56,236



60,805



56,297


____________________

Explanation of Adjustments and Certain Line Items:

1.

Transaction and integration expenses related to the GW Acquisition.

2.

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

3.

Impairment charge related to the Company's decision to stop enrollment in its Phase 3 clinical trial of defibrotide for the prevention of veno-occlusive disease.

4.

Expense arising on the remeasurement of the Company's U.K. net deferred tax liability, which arose primarily in relation to the GW Acquisition, due to a change in the statutory tax rate in the U.K. following enactment of the UK Finance Act 2021.

 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS - FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

(In thousands, except percentages)

(Unaudited)



Three months ended September 30, 2021


Cost of product sales


Gross margin


Selling, general and administrative


Research and development


Intangible asset amortization


Interest expense, net


Income tax provision (benefit)


Effective tax rate

GAAP Reported

$

145,224



82.6 %


$

363,682



$

141,036



$

159,804



$

93,372



$

(18,057)



26.7 %

Non-GAAP Adjustments:
















Intangible asset amortization









(159,804)








Share-based compensation expense

(2,763)




0.3


(31,752)



(11,020)










Transaction and integration related expenses

(943)




0.1


(53,378)



(5,546)










Non-cash interest expense











(28,045)






Acquisition accounting inventory fair value step-up

(82,646)




9.9













Income tax effect of above adjustments













61,646




(12.6)

Total of non-GAAP adjustments

(86,352)




10.3


(85,130)



(16,566)



(159,804)



(28,045)



61,646




(12.6)

Non-GAAP Adjusted

$

58,872



92.9 %


$

278,552



$

124,470



$



$

65,327



$

43,589



14.1 %

 


Three months ended September 30, 2020


Cost of product sales


Gross margin


Selling, general and administrative


Research and development


Intangible asset amortization


Interest
expense, net


Income tax provision


Effective tax rate

GAAP Reported

$

42,095



92.9 %


$

207,255



$

78,647



$

66,684



$

27,428



$

19,283



11.5 %

Non-GAAP Adjustments:
















Intangible asset amortization









(66,684)








Share-based compensation expense

(1,919)




0.4


(20,974)



(7,463)










Non-cash interest expense











(15,820)






Income tax effect of above adjustments













18,985




2.1

Total of non-GAAP adjustments

(1,919)




0.4


(20,974)



(7,463)



(66,684)



(15,820)



18,985




2.1

Non-GAAP Adjusted

$

40,176



93.3 %


$

186,281



$

71,184



$



$

11,608



$

38,268



13.6 %

 

JAZZ PHARMACEUTICALS PLC

RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS - FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

(In thousands, except percentages)

(Unaudited)



Nine months ended September 30, 2021


Cost of product sales


Gross margin


Selling, general and administrative


Research and development


Intangible asset amortization


Interest expense, net


Income tax provision


Effective tax rate

GAAP Reported

$

304,607



86.1 %


$

1,053,221



$

350,305



$

368,476



$

190,168



$

228,583



N/A (1)

Non-GAAP Adjustments:
















Intangible asset amortization









(368,476)








Share-based compensation expense

(7,331)




0.3


(85,644)



(30,456)










Transaction and integration related expenses

(1,348)




0.1


(191,185)



(8,924)










Non-cash interest expense











(66,055)






Acquisition accounting inventory fair value step-up

(148,637)




6.8













Income tax effect of above adjustments













134,307



N/A (1)

Impact of U.K. tax rate change













(251,380)



N/A (1)

Total of non-GAAP adjustments

(157,316)




7.2


(276,829)



(39,380)



(368,476)



(66,055)



(117,073)



N/A (1)

Non-GAAP Adjusted

$

147,291



93.3 %


$

776,392



$

310,925



$



$

124,113



$

111,510



13.3 %

__________________________

(1)

Due to the impact of the U.K tax change, the GAAP effective tax rate is not a meaningful metric.

 


Nine months ended September 30, 2020


Cost of product sales


Gross margin


Selling, general and administrative


Research and development


Intangible asset amortization


Impairment charge


Interest expense, net


Income tax provision


Effective tax rate

GAAP Reported

$

98,760



94.1 %


$

607,061



$

243,676



$

192,505



$

136,139



$

72,134



$

22,750



17.5 %

Non-GAAP Adjustments:


















Intangible asset
amortization









(192,505)










Share-based
compensation expense

(5,513)




0.4


(62,590)



(21,511)












Impairment charge











(136,139)








Non-cash interest expense













(45,088)






Income tax effect of
above adjustments















93,290




2.0

Total of non-GAAP adjustments

(5,513)




0.4


(62,590)



(21,511)



(192,505)



(136,139)



(45,088)



93,290




2.0

Non-GAAP Adjusted

$

93,247



94.5 %


$

544,471



$

222,165



$



$



$

27,046



$

116,040



19.5 %

 

JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF PRO FORMA GAAP NET LOSS TO PRO FORMA NON-GAAP ADJUSTED EBITDA AND CALCULATION OF PRO FORMA NON-GAAP NET LEVERAGE RATIO

(In thousands, except ratio)

(Unaudited)


The following table provides a reconciliation of the Company's pro forma GAAP net loss to pro forma non-GAAP Adjusted EBITDA for the last twelve months, or LTM, ended September 30, 2021 and the calculation of the Company's pro forma non-GAAP net leverage ratio:



LTM Ended

September 30, 2021

Pro forma GAAP net loss1

$

(378,637)


Interest expense, net

218,149


Income tax expense

240,817


Depreciation and amortization

468,310


Pro forma non-GAAP EBITDA

548,639


Transaction and integration related expenses

378,631


Share-based compensation expense

192,420


Acquisition accounting inventory fair value step-up

148,637


Expected cost synergies2

45,000


Upfront and milestone payments

42,365


Other

6,597


Pro forma non-GAAP Adjusted EBITDA3

$

1,362,289





At September 30,

2021

Calculation of Net Debt:


Total debt4

$

6,669,271


Cash and cash equivalents

(671,780)


Net Debt

$

5,997,491




Calculation of Pro Forma Non-GAAP Net Leverage Ratio:


Pro forma non-GAAP Net Leverage Ratio

4.4


____________________

1.

Pro forma net loss is derived from the GAAP financial statements of the Company and GW Pharmaceuticals plc for the LTM ended September 30, 2021.

2.

The Company expects to implement initiatives to achieve at least $45 million in annual run-rate cost synergies following the GW Acquisition.

3.

Pro forma non-GAAP Adjusted EBITDA is calculated in accordance with the definition of Consolidated Adjusted EBITDA as set out in the Credit Agreement.

4.

Debt principal balance, reflecting the impact of the Company's current hedging arrangements on the Euro term loan B, in accordance with the Credit Agreement.

 

JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2021 NET INCOME GUIDANCE

(In millions, except per share amounts)

(Unaudited)


GAAP net loss

($420) - ($320)

Intangible asset amortization

525 - 535

Acquisition accounting inventory fair value step-up

205 - 225

Share-based compensation expense

170 - 180

Transaction and integration related expenses

230 - 250

Non-cash interest expense

90 - 100

Income tax effect of above adjustments

(185) - (195)

Impact of UK tax rate change

251

Non-GAAP adjusted net income

 $925 - $965



GAAP net loss per diluted share

($7.00) - ($5.40)

Non-GAAP adjusted net income per diluted share

$15.10 - $15.80



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

60

Weighted-average ordinary shares used in per share calculations - non-GAAP

61

Contacts:

Investors:
Andrea N. Flynn, Ph.D.
Vice President, Head, Investor Relations
Jazz Pharmaceuticals plc
InvestorInfo@jazzpharma.com
Ireland +353 1 634 3211
U.S. +1 650 496 2717

Media:
Kristin Bhavnani
Head of Global Corporate Communications
Jazz Pharmaceuticals plc
CorporateAffairsMediaInfo@jazzpharma.com
Ireland +353 1 697 2141
U.S. +1 215 867 4948

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