Jazz Pharmaceuticals Announces First Quarter 2014 Financial Results
"We are pleased with the progress made during the first quarter, highlighted by the completion of two transactions that have positioned us well for both near- and long-term growth," said
Adjusted net income attributable to
GAAP net loss attributable to
First Quarter 2014 Revenues and Product Sales
Total revenues for the first quarter of 2014 were
Tables showing actual and pro forma net product sales for the first quarter of 2014 compared to actual and pro forma net product sales for the first quarter of 2013 are included in this press release.
Net product sales for the first quarter of 2014 were as follows:
- Xyrem: Xyrem net sales increased by 36% to
$160.4 million in the first quarter of 2014 compared to$117.5 million in the first quarter of 2013. During the first quarter of 2014, the average number of active Xyrem patients was approximately 11,400. - Erwinaze/Erwinase: Erwinaze/Erwinase net sales increased by 12% to
$46.9 million in the first quarter of 2014 compared to$41.8 million in the first quarter of 2013. In connection with the EUSA Pharma acquisition in 2012, the company agreed to make a contingent payment of$50.0 million in cash if Erwinaze achieved net sales inthe United States of$124.5 million or more in 2013. This net sales milestone was achieved in the fourth quarter of 2013, and, as a result, the company made the contingent payment in the first quarter of 2014. - Defitelio/defibrotide: On
January 23, 2014 ,Jazz Pharmaceuticals plc acquired indirect majority control of Gentium S.p.A. Defitelio/defibrotide net sales in the first quarter since theJanuary 23, 2014 closing date of the Gentium acquisition were$12.2 million . Pro forma net sales of Defitelio/defibrotide were$15.1 million in the first quarter of 2014, an increase of 75% compared to pro forma net sales of$8.6 million in the first quarter of 2013. The pro forma information represents net sales of Defitelio/defibrotide as if the Gentium acquisition had closed onJanuary 1, 2013 . - Prialt® (ziconotide) intrathecal infusion: Net sales of Prialt were
$4.3 million in the first quarter of 2014, a decrease of 14% compared to$5.0 million in the first quarter of 2013. The decrease in net sales was due in part to the timing of shipments to the exclusive wholesale distributor and central pharmacy for Prialt. - Psychiatry Products: Net sales of the company's psychiatry products were
$9.9 million in the first quarter of 2014 compared to$17.7 million in the first quarter of 2013. The decrease was primarily due to the impact of generic competition. - Other: Net sales of other products for the first quarter of 2014 were
$11.3 million compared to$12.7 million in the first quarter of 2013. On a pro forma basis, net sales of other products for the first quarter of 2014 were$11.7 million compared to$14.1 million in the first quarter of 2013. The pro forma information includes net sales of active pharmaceutical ingredient by Gentium as if the Gentium acquisition had closed onJanuary 1, 2013 .
Operating Expenses and Other
Operating expenses for the first quarter of 2014 were
- Cost of product sales for the first quarter of 2014 was
$30.9 million on a GAAP basis compared to$27.2 million for the same period in 2013. The increase was primarily due to an increase in acquisition accounting inventory fair value step-up adjustments of$6.5 million , partially offset by lower cost of product sales primarily driven by product mix. Gross margin for the first quarter of 2014, as a percentage of product sales, was 87.4% compared to 86.0% for the same period in 2013. - Selling, general and administrative (SG&A) expenses for the first quarter of 2014 were
$106.4 million on a GAAP basis compared to$70.5 million for the same period in 2013. The increase was primarily due to an increase in transaction and integration costs and higher headcount and related expenses due to the expansion of the business. Adjusted SG&A expenses for the first quarter of 2014 were$76.5 million , or 31% of total revenues, compared to$56.5 million , or 29% of total revenues, for the same period in 2013. - Research and development (R&D) expenses for the first quarter of 2014 were
$18.1 million on a GAAP basis compared to$6.7 million for the same period in 2013. Adjusted R&D expenses for the first quarter of 2014 were$15.3 million , or 6% of total revenues, compared to$5.7 million , or 3% of total revenues, for the same period in 2013. The increase in R&D expenses was primarily driven by increased costs associated with the development of the sleep and hematology/oncology product candidates. - Acquired in-process research and development expenses for the first quarter of 2014 were
$127.0 million on a GAAP basis compared to$4.0 million for the same period in 2013. The increase was due to an upfront license fee and milestone payment of$127.0 million in connection with the acquisition of JZP-110 inJanuary 2014 .
Net interest expense for the first quarter of 2014 was
As of
Recent Developments
During March through early
In
2014 Financial Guidance
Revenues |
$1,100-$1,160 million |
Total Net Product Sales |
$1,093-$1,153 million |
-Xyrem Net Sales |
$755-$775 million |
-Erwinaze/Erwinase Net Sales |
$185-$200 million |
-Defitelio/Defibrotide Net Sales |
$42-$52 million |
Adjusted Gross Margin %2,5 |
91-92% |
Adjusted SG&A Expenses3,5 |
$315-$325 million |
Adjusted R&D Expenses4,5 |
$55-$65 million |
GAAP Net Income Attributable to Jazz Pharmaceuticals plc Per Diluted Share |
$1.81-$2.30 |
Non-GAAP Adjusted Net Income Attributable to Jazz Pharmaceuticals plc Per Diluted Share 5 |
$8.00-$8.25 |
1. |
2014 guidance includes fair value estimates for the assets acquired and liabilities assumed in the Gentium acquisition and is subject to change if the company obtains additional information during the measurement period (up to one year from the acquisition date). |
2. |
Excludes $10-$12 million of acquisition accounting inventory fair value step-up adjustments and $3 million in share-based compensation expense from estimated GAAP gross margin of 90-91%. |
3. |
Excludes $55-$59 million of share-based compensation expense, $25-$30 million of transaction, integration and restructuring costs and $6-$7 million of depreciation expense from estimated GAAP SG&A expenses of $400-$420 million. |
4. |
Excludes $12-$13 million of share-based compensation expense from estimated GAAP R&D expenses of $67-$78 million. |
5. |
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the tables accompanying this press release. |
Conference Call Details
A replay of the conference call will be available through
About
Non-GAAP Financial Measures
To supplement
Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. 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; likewise, the company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Because of the non-standardized definitions, the non-GAAP financial measures as used by
As used in this press release, (i) the historical adjusted net income measures attributable to
"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 PLC |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
(In thousands, except per share amounts) |
||||||
(Unaudited) |
||||||
Three Months Ended |
||||||
2014 |
2013 |
|||||
Revenues: |
||||||
Product sales, net |
$ |
244,986 |
$ |
194,652 |
||
Royalties and contract revenues |
1,933 |
1,585 |
||||
Total revenues |
246,919 |
196,237 |
||||
Operating expenses: |
||||||
Cost of product sales (excluding amortization of acquired developed technologies) |
30,924 |
27,220 |
||||
Selling, general and administrative |
106,363 |
70,528 |
||||
Research and development |
18,109 |
6,747 |
||||
Acquired in-process research and development |
127,000 |
4,000 |
||||
Intangible asset amortization |
31,182 |
19,555 |
||||
Total operating expenses |
313,578 |
128,050 |
||||
Income (loss) from operations |
(66,659) |
68,187 |
||||
Interest expense, net |
(10,076) |
(7,399) |
||||
Foreign currency gain |
123 |
271 |
||||
Income (loss) before income tax provision |
(76,612) |
61,059 |
||||
Income tax provision |
17,027 |
17,634 |
||||
Net income (loss) |
(93,639) |
43,425 |
||||
Net loss attributable to noncontrolling interests, net of tax |
(989) |
— |
||||
Net income (loss) attributable to Jazz Pharmaceuticals plc |
$ |
(92,650) |
$ |
43,425 |
||
Net income (loss) per ordinary share attributable to Jazz Pharmaceuticals plc: |
||||||
Basic |
$ |
(1.58) |
$ |
0.74 |
||
Diluted |
$ |
(1.58) |
$ |
0.71 |
||
Weighted-average ordinary shares used in calculating net income (loss) per ordinary share attributable to Jazz Pharmaceuticals plc: |
||||||
Basic |
58,526 |
58,358 |
||||
Diluted |
58,526 |
61,511 |
JAZZ PHARMACEUTICALS PLC |
||||||
SUMMARY OF PRODUCT SALES, NET |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
Three Months Ended March 31, |
||||||
2014 |
2013 |
|||||
Xyrem |
$ |
160,378 |
$ |
117,526 |
||
Erwinaze/Erwinase |
46,920 |
41,816 |
||||
Defitelio/defibrotide |
12,209 |
— |
||||
Prialt |
4,309 |
4,986 |
||||
Psychiatry |
9,866 |
17,650 |
||||
Other |
11,304 |
12,674 |
||||
Total net product sales |
$ |
244,986 |
$ |
194,652 |
The following unaudited pro forma information represents the net product sales for the three months ended March 31, 2014 and 2013, respectively, as if the Gentium acquisition had been completed on January 1, 2013: |
||||||
SUMMARY OF PRODUCT SALES, NET (PRO FORMA) |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
Three Months Ended March 31, |
||||||
2014 |
2013 |
|||||
Xyrem |
$ |
160,378 |
$ |
117,526 |
||
Erwinaze/Erwinase |
46,920 |
41,816 |
||||
Defitelio/defibrotide |
15,106 |
8,610 |
||||
Prialt |
4,309 |
4,986 |
||||
Psychiatry |
9,866 |
17,650 |
||||
Other |
11,710 |
14,068 |
||||
Total pro forma net product sales |
$ |
248,289 |
$ |
204,656 |
JAZZ PHARMACEUTICALS PLC |
||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
March 31, 2014 |
December 31, 2013 |
|||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
245,874 |
$ |
636,504 |
||
Investments |
5,502 |
— |
||||
Accounts receivable, net of allowances |
154,986 |
124,805 |
||||
Inventories |
36,988 |
28,669 |
||||
Prepaid expenses |
14,335 |
7,183 |
||||
Deferred tax assets, net |
35,888 |
33,613 |
||||
Other current assets |
23,747 |
33,843 |
||||
Total current assets |
517,320 |
864,617 |
||||
Property and equipment, net |
30,048 |
14,246 |
||||
Intangible assets, net |
1,755,861 |
812,396 |
||||
Goodwill |
763,763 |
450,456 |
||||
Deferred tax assets, net, non-current |
94,250 |
74,597 |
||||
Deferred financing costs |
25,896 |
14,605 |
||||
Other non-current assets |
9,296 |
7,304 |
||||
Total assets |
$ |
3,196,434 |
$ |
2,238,221 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||
Current liabilities: |
||||||
Accounts payable |
$ |
72,538 |
$ |
21,005 |
||
Accrued liabilities |
147,737 |
119,718 |
||||
Current portion of long-term debt |
9,513 |
5,572 |
||||
Income taxes payable |
824 |
336 |
||||
Contingent consideration |
— |
50,000 |
||||
Deferred tax liability, net |
6,259 |
6,259 |
||||
Deferred revenue |
1,138 |
1,138 |
||||
Total current liabilities |
238,009 |
204,028 |
||||
Deferred revenue, non-current |
5,433 |
5,718 |
||||
Long-term debt, less current portion |
1,189,096 |
544,404 |
||||
Deferred tax liability, net, non-current |
471,993 |
168,497 |
||||
Other non-current liabilities |
25,395 |
20,040 |
||||
Total Jazz Pharmaceuticals plc shareholders' equity |
1,248,893 |
1,295,534 |
||||
Noncontrolling interests |
17,615 |
— |
||||
Total liabilities and shareholders' equity |
$ |
3,196,434 |
$ |
2,238,221 |
JAZZ PHARMACEUTICALS PLC |
||||||
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION |
||||||
(In thousands, except per share amounts) |
||||||
(Unaudited) |
||||||
Three Months Ended March 31, |
||||||
2014 |
2013 |
|||||
GAAP reported net income (loss) attributable to Jazz Pharmaceuticals plc |
$ |
(92,650) |
$ |
43,425 |
||
Intangible asset amortization |
31,182 |
19,555 |
||||
Share-based compensation expense |
13,815 |
8,757 |
||||
Acquisition accounting inventory fair value step-up adjustments |
8,022 |
1,545 |
||||
Transaction and integration costs |
17,733 |
1,022 |
||||
Restructuring charges |
— |
949 |
||||
Change in fair value of contingent consideration |
— |
4,500 |
||||
Upfront license fees and milestone payments |
127,000 |
4,000 |
||||
Depreciation |
1,309 |
575 |
||||
Non-cash interest expense |
1,638 |
1,229 |
||||
Income tax adjustments |
(5,944) |
(1,132) |
||||
Adjustments for amount attributable to noncontrolling interests |
(1,258) |
— |
||||
Non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc |
$ |
100,847 |
$ |
84,425 |
||
GAAP reported net income (loss) attributable to Jazz Pharmaceuticals plc per diluted share |
$ |
(1.58) |
$ |
0.71 |
||
Non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc per diluted share |
$ |
1.61 |
$ |
1.37 |
||
Shares used in computing GAAP reported net income (loss) attributable to Jazz Pharmaceuticals plc per diluted share amounts |
58,526 |
61,511 |
||||
Shares used in computing non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc per diluted share amounts |
62,517 |
61,511 |
JAZZ PHARMACEUTICALS PLC |
||||||||||||||||||||||
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION |
||||||||||||||||||||||
CERTAIN LINE ITEMS AND OTHER INFORMATION |
||||||||||||||||||||||
(In thousands, except per share amounts and percentages) |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||
March 31, 2014 |
March 31, 2013 |
|||||||||||||||||||||
GAAP Reported |
Adjustments |
Non-GAAP Adjusted * |
GAAP Reported |
Adjustments |
Non-GAAP Adjusted * |
|||||||||||||||||
Total revenues |
$ |
246,919 |
$ |
— |
$ |
246,919 |
$ |
196,237 |
$ |
— |
$ |
196,237 |
||||||||||
Cost of product sales |
30,924 |
(8,208) |
(a) |
22,716 |
27,220 |
(2,296) |
(a) |
24,924 |
||||||||||||||
Selling, general and administrative |
106,363 |
(29,890) |
(b) |
76,473 |
70,528 |
(13,988) |
(b) |
56,540 |
||||||||||||||
Research and development |
18,109 |
(2,781) |
(c) |
15,328 |
6,747 |
(1,064) |
(c) |
5,683 |
||||||||||||||
Acquired in-process research and development |
127,000 |
(127,000) |
— |
4,000 |
(4,000) |
— |
||||||||||||||||
Intangible asset amortization |
31,182 |
(31,182) |
— |
19,555 |
(19,555) |
— |
||||||||||||||||
Interest expense, net |
10,076 |
(1,638) |
(d) |
8,438 |
7,399 |
(1,229) |
(d) |
6,170 |
||||||||||||||
Foreign currency gain |
123 |
— |
123 |
271 |
— |
271 |
||||||||||||||||
Income (loss) before income tax provision |
(76,612) |
200,699 |
(e) |
124,087 |
61,059 |
42,132 |
(e) |
103,191 |
||||||||||||||
Income tax provision |
17,027 |
5,944 |
(f) |
22,971 |
17,634 |
1,132 |
(f) |
18,766 |
||||||||||||||
Effective tax rate (g) |
N/A |
(h) |
18.5% |
28.9% |
18.2% |
|||||||||||||||||
Net income (loss) |
(93,639) |
194,755 |
(i) |
101,116 |
43,425 |
41,000 |
(i) |
84,425 |
||||||||||||||
Net income (loss) attributable to noncontrolling interests, net of tax |
(989) |
1,258 |
(j) |
269 |
— |
— |
(j) |
— |
||||||||||||||
Net income (loss) attributable to Jazz Pharmaceuticals plc |
$ |
(92,650) |
$ |
193,497 |
(k) |
$ |
100,847 |
$ |
43,425 |
$ |
41,000 |
(k) |
$ |
84,425 |
||||||||
Net income (loss) attributable to Jazz Pharmaceuticals plc per diluted share |
$ |
(1.58) |
$ |
1.61 |
$ |
0.71 |
$ |
1.37 |
JAZZ PHARMACEUTICALS PLC |
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION |
CERTAIN LINE ITEMS AND OTHER INFORMATION |
(In thousands) |
(Unaudited) |
* Non-GAAP adjusted net income attributable to
Explanation of Adjustments and Certain Line Items: |
|
(a) |
Acquisition accounting inventory fair value step-up adjustments of $8,022 and $1,545, share-based compensation expense of $181 and $709, depreciation expense of $5 and $0, and restructuring charges of $0 and $42 for the three months ended March 31, 2014 and 2013, respectively. |
(b) |
Transaction and integration costs of $17,599 and $1,022, share-based compensation expense of $11,175 and $7,005, depreciation expense of $1,116 and $554, change in fair value of contingent consideration of $0 and $4,500 and restructuring charges of $0 and $907 for the three months ended March 31, 2014 and 2013, respectively. |
(c) |
Share-based compensation expense of $2,459 and $1,043, depreciation expense of $188 and $21 and transaction and integration costs of $134 and $0 for the three months ended March 31, 2014 and 2013, respectively. |
(d) |
Non-cash interest expense associated with debt discount and debt issuance costs for the respective three-month period. |
(e) |
Sum of adjustments (a) through (d) plus the adjustments for acquired in-process research and development and intangible asset amortization for the respective three-month period. |
(f) |
Adjustments to convert the income tax provision to the estimated amount of taxes payable in cash for the respective three-month period. |
(g) |
Income tax provision divided by income before income tax provision for the respective three-month period (for the three months ended March 31, 2014, on a non-GAAP adjusted basis only). |
(h) |
The GAAP effective tax rate for the three months ended March 31, 2014 is not meaningful because there was a loss before income tax provision during the period. After adjusting the loss before income tax provision by excluding an upfront fee and milestone payment of $127,000 for JZP-110, we would have had income before income tax provision of $50,388, resulting in an effective tax rate of 33.8% for the three months ended March 31, 2014 based on the income tax provision of $17,027, compared to 28.9% for the same period in 2013. This increase was primarily due to a higher level of profits subject to U.S. federal and state income taxes in the 2014 period, and higher losses in other jurisdictions where no tax benefit is available in the year. |
(i) |
Net of adjustments (e) and (f) for the respective three-month period. |
(j) |
Adjustments for amount attributable to noncontrolling interests for the respective three-month period. |
(k) |
Net of adjustments (i) and (j) for the respective three-month period. |
JAZZ PHARMACEUTICALS PLC |
|
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2014 GUIDANCE |
|
(In millions, except per share amounts) |
|
(Unaudited) |
|
GAAP net income attributable to Jazz Pharmaceuticals plc |
$113 - $144 |
Intangible asset amortization and depreciation |
133 - 139 |
Share-based compensation expense |
70 - 75 |
Acquisition accounting inventory fair value step-up |
10 - 12 |
Transaction, integration and restructuring costs |
25 - 30 |
Upfront license fees and milestone payments |
127 |
Non-cash interest expense |
7 |
Income tax adjustments |
(5) - 5 |
Adjustments for amount attributable to noncontrolling interests |
(2) - (1) |
Non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc |
$496 - $520 |
GAAP net income attributable to Jazz Pharmaceuticals plc per diluted share |
$1.81 - $2.30 |
Non-GAAP adjusted net income attributable to Jazz Pharmaceuticals plc per diluted share |
$8.00 - $8.25 |
Weighted-average ordinary shares used in per share computations |
62 - 63 |
SOURCE
Investors, Kathee Littrell, Vice President, Investor Relations, Jazz Pharmaceuticals plc, Ireland, + 353 1 634 7887, U.S., + 1 650 496 2717, or Media, Laurie Hurley, Vice President, Corporate Affairs, Jazz Pharmaceuticals plc, Ireland, + 353 1 634 7894, U.S., + 1 650 496 2796