Jazz Pharmaceuticals Announces Third Quarter 2012 Results
"During the third quarter, we completed the integration of EUSA Pharma's U.S. commercial business, and our R&D group is working to coordinate worldwide Erwinaze® and Asparec® development activities," said
Third quarter 2012 adjusted income from continuing operations, which excluded contributions from the discontinued women's health business, was
GAAP income from continuing operations for the third quarter of 2012 was
GAAP net income was impacted by various acquisition-related expenses, which included transaction, integration and restructuring expenses, as well as certain non-cash expenses. A reconciliation of certain GAAP to non-GAAP adjusted information is included with this press release.
Revenues and Product Sales
Total revenues for the quarter ended
A significant increase in total net sales for the third quarter of 2012 over the prior year third quarter resulted from the addition of net sales from the expanded product portfolio acquired in the Azur Pharma and EUSA Pharma transactions, as well as continued growth in net sales of Xyrem® (sodium oxybate) oral solution.
Net sales from continuing operations for the third quarter of 2012 included:
- Xyrem: Net sales of Xyrem increased by 64% to
$102.6 million for the third quarter of 2012, compared to net sales of$62.5 million in the third quarter of 2011. During the third quarter of 2012, the average number of active Xyrem patients was approximately 10,200. - Erwinaze/Erwinase: Worldwide net sales of Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi) were
$31.7 million . Erwinaze was approved by the U.S.FDA inNovember 2011 . - Prialt: Third quarter 2012 net sales of Prialt® (ziconotide) intrathecal infusion were
$5.4 million , compared to$5.0 million in the prior year quarter on a pro forma basis. - Psychiatry Products: Net sales of the company's psychiatry products, including once-daily Luvox CR® (fluvoxamine maleate), FazaClo® (clozapine, USP) HD and FazaClo LD, were
$21.0 million for the third quarter of 2012. Net sales of these products in the prior year quarter were$19.7 million on a pro forma basis. - Other: Net sales of other products for the third quarter of 2012 were
$13.4 million . These products include other non-promoted products acquired in the EUSA Pharma and Azur Pharma transactions.
Other Financial Highlights
- Cost of product sales increased by
$28.7 million compared to the third quarter of 2011 due to higher net sales and$10.3 million of purchase accounting inventory fair value step-up. - Selling, general and administrative expenses increased by
$30.4 million compared to the prior year quarter, primarily due to increased headcount and related expenses from the addition of the Azur Pharma and EUSA Pharma businesses. - Intangible asset amortization for the third quarter of 2012 was
$19.7 million , related primarily to the company's expanded product portfolio. - Interest expense increased by
$7.6 million compared to the third quarter of 2011 due to inclusion of a full quarter's interest under the company's term loan which had a balance of$462.3 million as ofSeptember 30, 2012 .
Recent Transaction and Balance Sheet Update
On
2012 Financial Guidance
2012 Guidance for |
|
Revenues |
$575-585 million |
Total Net Product Sales |
$570-580 million |
-Xyrem Net Sales |
$375-380 million |
-Erwinaze/Erwinase Net Sales (partial year)1 |
$65-69 million |
Adjusted Gross Margin %2 |
88-91% |
Adjusted Combined SG&A and R&D Expenses3 |
$200-205 million |
GAAP Income from Continuing Operations |
$140-151 million |
Adjusted Net Income4 |
$280-286 million |
GAAP Income from Continuing Operations Per Diluted Share |
$2.34-$2.49 |
Adjusted Net Income Per Diluted Share4 |
$4.65-$4.75 |
1. |
Expected sales from and after the completion of the EUSA acquisition on June 12, 2012. |
2. |
Excludes $17‑18 million of purchase accounting inventory fair value step-up and $1 million of share‑based compensation expense from estimated GAAP Gross Margin of 85-88%. |
3. |
Excludes $22‑24 million of transaction, integration and restructuring costs, $22‑23 million of share‑based compensation expense, and $2 million related to a change in the fair value of contingent consideration from estimated GAAP Combined SG&A and R&D Expenses of $245-250 million. |
4. |
See "Non‑GAAP Financial Measures" below. A reconciliation of GAAP to non‑GAAP adjusted 2012 financial guidance is included with this press release. |
Conference Call Details
An archived version of the webcast will be available for at least one week in the Investors & Media section of the
About
Non-GAAP Financial Measures
To supplement
This press release also includes, with respect to the company's 2012 financial guidance, the non-GAAP financial measures "adjusted gross margin percentage" and "adjusted combined selling, general and administrative and research and development expenses". As used in this press release, "adjusted gross margin percentage" and "adjusted combined selling, general and administrative and research and development expenses" exclude from GAAP gross margin percentage and GAAP combined selling, general and administrative and research and development expenses, respectively, as applicable, share-based compensation expense, purchase accounting inventory fair value step-up adjustments, transaction and integration costs, restructuring charges and change in fair value of contingent consideration. The company believes that, similar to the presentation of adjusted net income and adjusted net income per diluted share, these non-GAAP financial measures are also helpful in understanding the company's 2012 financial guidance, particularly in light of the effect of various acquisition and divestiture transactions effected by the company during 2012. They are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP.
"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 INCOME |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
2012 |
2011 |
2012 |
2011 |
||||
Revenues: |
|||||||
Product sales, net |
$ 174,130 |
$ 72,216 |
$ 398,585 |
$ 185,583 |
|||
Royalties and contract revenues |
1,385 |
1,077 |
3,691 |
3,158 |
|||
Total revenues |
175,515 |
73,293 |
402,276 |
188,741 |
|||
Operating expenses: |
|||||||
Cost of product sales |
32,629 |
3,901 |
52,662 |
10,080 |
|||
Selling, general and administrative |
60,924 |
30,547 |
162,505 |
72,552 |
|||
Research and development |
6,920 |
3,279 |
13,200 |
10,356 |
|||
Intangible asset amortization |
19,742 |
1,862 |
43,444 |
5,586 |
|||
Total operating expenses |
120,215 |
39,589 |
271,811 |
98,574 |
|||
Income from operations |
55,300 |
33,704 |
130,465 |
90,167 |
|||
Interest expense, net |
(7,750) |
(125) |
(9,199) |
(1,559) |
|||
Foreign exchange and other |
(1,099) |
- |
(1,357) |
- |
|||
Loss on extinguishment of debt |
- |
(1,097) |
- |
(1,097) |
|||
Income from continuing operations before provision for income tax expense |
46,451 |
32,482 |
119,909 |
87,511 |
|||
Provision for income tax expense |
12,856 |
- |
24,966 |
- |
|||
Income from continuing operations |
33,595 |
32,482 |
94,943 |
87,511 |
|||
Loss from discontinued operations |
(386) |
- |
(6,908) |
- |
|||
Net income |
$ 33,209 |
$ 32,482 |
$ 88,035 |
$ 87,511 |
|||
Basic income (loss) per share: |
|||||||
Income from continuing operations |
$ 0.59 |
$ 0.77 |
$ 1.69 |
$ 2.12 |
|||
Loss from discontinued operations |
(0.01) |
- |
(0.12) |
- |
|||
Net income |
$ 0.58 |
$ 0.77 |
$ 1.57 |
$ 2.12 |
|||
Diluted income (loss) per share: |
|||||||
Income from continuing operations |
$ 0.56 |
$ 0.69 |
$ 1.59 |
$ 1.88 |
|||
Loss from discontinued operations |
(0.01) |
- |
(0.12) |
- |
|||
Net income |
$ 0.55 |
$ 0.69 |
$ 1.47 |
$ 1.88 |
|||
Weighted-average ordinary shares used in per share computations: |
|||||||
Basic |
57,703 |
42,028 |
56,198 |
41,206 |
|||
Diluted |
60,883 |
47,241 |
59,846 |
46,577 |
|||
JAZZ PHARMACEUTICALS PLC |
|||||||
SUMMARY OF PRODUCT SALES, NET |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
2012 |
2011 |
2012 |
2011 |
||||
Xyrem |
$ 102,615 |
$ 62,547 |
$ 265,149 |
$ 161,503 |
|||
Erwinaze/Erwinase (1) |
31,652 |
- |
37,660 |
- |
|||
Prialt (1) |
5,413 |
- |
20,491 |
- |
|||
Psychiatry: |
|||||||
Luvox CR |
11,605 |
9,669 |
31,634 |
24,080 |
|||
FazaClo LD (1) |
6,370 |
- |
17,905 |
- |
|||
FazaClo HD (1) |
3,057 |
- |
8,979 |
- |
|||
Other (1) |
13,418 |
- |
16,767 |
- |
|||
Total |
$ 174,130 |
$ 72,216 |
$ 398,585 |
$ 185,583 |
|||
(1) |
Net sales for the three and nine months ended September 30, 2012 reported by Jazz Pharmaceuticals plc include net sales from the historic Azur Pharma business for the period from July 1, 2012 through September 30, 2012 and from January 18, 2012 through September 30, 2012, respectively, and net sales from the historic EUSA Pharma business for the period from July 1, 2012 through September 30, 2012 and from June 12, 2012 through September 30, 2012, respectively. Net sales from women's health products are included in discontinued operations. |
||||||||||
The following unaudited pro forma information represents the combined net product sales for the three and nine months ended September 30, 2012 and 2011, respectively, as if the merger with Azur Pharma, the acquisition of EUSA Pharma and disposition of the women's health business had each been completed on January 1, 2011: |
|||||||||||
SUMMARY OF PRODUCT SALES, NET (PRO FORMA) |
|||||||||||
(In thousands) |
|||||||||||
(Unaudited) |
|||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
2012 |
2011 |
2012 |
2011 |
||||||||
Xyrem |
$ 102,615 |
$ 62,547 |
$ 265,149 |
$ 161,503 |
|||||||
Erwinaze/Erwinase |
31,652 |
9,638 |
97,447 |
25,686 |
|||||||
Prialt |
5,413 |
4,984 |
20,830 |
14,827 |
|||||||
Psychiatry: |
|||||||||||
Luvox CR |
11,605 |
9,669 |
31,634 |
24,080 |
|||||||
FazaClo LD |
6,370 |
7,713 |
18,138 |
22,015 |
|||||||
FazaClo HD |
3,057 |
2,322 |
9,109 |
5,538 |
|||||||
Other |
13,418 |
12,322 |
38,708 |
39,935 |
|||||||
Total pro forma net sales |
$ 174,130 |
$ 109,195 |
$ 481,015 |
$ 293,584 |
|||||||
JAZZ PHARMACEUTICALS PLC |
|||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(In thousands) |
|||
(Unaudited) |
|||
September 30, |
December 31, |
||
2012 |
2011 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 189,793 |
$ 82,076 |
|
Marketable securities |
- |
75,822 |
|
Accounts receivable |
88,304 |
34,374 |
|
Inventories |
30,300 |
3,909 |
|
Prepaid expenses |
7,127 |
1,690 |
|
Other current assets |
9,942 |
1,260 |
|
Assets held for sale |
59,546 |
- |
|
Total current assets |
385,012 |
199,131 |
|
Property and equipment, net |
6,671 |
1,557 |
|
Intangible assets, net |
876,959 |
14,585 |
|
Goodwill |
437,652 |
38,213 |
|
Other long-term assets |
20,405 |
87 |
|
Total assets |
$ 1,726,699 |
$ 253,573 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 20,535 |
$ 5,129 |
|
Accrued liabilities |
123,632 |
34,783 |
|
Current portion of long-term debt |
26,719 |
- |
|
Purchased product rights liability |
5,743 |
4,500 |
|
Liability under government settlement |
- |
7,320 |
|
Deferred revenue |
1,943 |
1,138 |
|
Total current liabilities |
178,572 |
52,870 |
|
Deferred revenue, non-current |
7,129 |
7,915 |
|
Long-term debt, less current portion |
435,631 |
- |
|
Contingent consideration |
36,200 |
- |
|
Deferred tax liability |
180,919 |
- |
|
Other non-current liabilities |
2,161 |
- |
|
Total shareholders' equity |
886,087 |
192,788 |
|
Total liabilities and shareholders' equity |
$ 1,726,699 |
$ 253,573 |
|
JAZZ PHARMACEUTICALS PLC |
|||||||||||
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION |
|||||||||||
CERTAIN LINE ITEMS |
|||||||||||
(In thousands, except per share amounts) |
|||||||||||
(Unaudited) |
|||||||||||
Three Months Ended |
|||||||||||
September 30, 2012 |
September 30, 2011 |
||||||||||
GAAP |
Adjustment |
Non-GAAP |
GAAP |
Adjustment |
Non-GAAP |
||||||
Total revenues |
$ 175,515 |
$ - |
$ 175,515 |
$ 73,293 |
$ (285) |
(g) |
$ 73,008 |
||||
Cost of product sales |
32,629 |
(10,771) |
(a) |
21,858 |
3,901 |
(201) |
(c) |
3,700 |
|||
Selling, general and administrative |
60,924 |
(9,275) |
(b) |
51,649 |
30,547 |
(8,130) |
(h) |
22,417 |
|||
Research and development |
6,920 |
(681) |
(c) |
6,239 |
3,279 |
(838) |
(c) |
2,441 |
|||
Intangible asset amortization |
19,742 |
(19,742) |
- |
1,862 |
(1,862) |
- |
|||||
Interest expense, net |
7,750 |
(1,261) |
(d) |
6,489 |
125 |
- |
125 |
||||
Loss on extinguishment of debt |
- |
- |
- |
1,097 |
(1,097) |
- |
|||||
Provision for income tax expense |
12,856 |
(3,263) |
(e) |
9,593 |
- |
- |
- |
||||
Income from continuing operations |
33,595 |
44,993 |
78,588 |
32,482 |
11,843 |
44,325 |
|||||
Income (loss) from discontinued operations |
(386) |
3,372 |
(f) |
2,986 |
- |
- |
- |
||||
Diluted income (loss) per share: |
|||||||||||
Income from continuing operations |
$ 0.56 |
$ 1.29 |
$ 0.69 |
$ 0.94 |
|||||||
Income (loss) from discontinued operations |
(0.01) |
0.05 |
- |
- |
|||||||
Total |
0.55 |
1.34 |
0.69 |
0.94 |
|||||||
(a) |
Purchase accounting inventory fair value step-up of $10,336, share-based compensation expense of $344 and restructuring expense of $91. |
(b) |
Share-based compensation expense of $5,330, restructuring charges of $1,542, transaction and integration costs of $1,503, and change in fair value of contingent consideration of $900. |
(c) |
Share-based compensation expense. |
(d) |
Non-cash interest expense primarily associated with debt discount and debt issuance costs. |
(e) |
Tax related to acquisition restructuring of $9,529 partially offset by the tax effect of non-GAAP pre-tax adjustments of $6,266. |
(f) |
Intangible asset amortization of $2,009, purchase accounting inventory fair value step-up of $1,106 and share-based compensation expense of $257. |
(g) |
Revenue related to upfront and milestone payments. |
(h) |
Transaction and integration costs of $5,974 and share-based compensation expense of $2,156. |
JAZZ PHARMACEUTICALS PLC |
|||||||||||
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION |
|||||||||||
CERTAIN LINE ITEMS |
|||||||||||
(In thousands, except per share amounts) |
|||||||||||
(Unaudited) |
|||||||||||
Nine Months Ended |
|||||||||||
September 30, 2012 |
September 30, 2011 |
||||||||||
GAAP |
Adjustment |
Non-GAAP |
GAAP |
Adjustment |
Non-GAAP |
||||||
Total revenues |
$ 402,276 |
$ - |
$ 402,276 |
$ 188,741 |
$ (854) |
(g) |
$ 187,887 |
||||
Cost of product sales |
52,662 |
(15,766) |
(a) |
36,896 |
10,080 |
(430) |
(c) |
9,650 |
|||
Selling, general and administrative |
162,505 |
(32,848) |
(b) |
129,657 |
72,552 |
(12,960) |
(h) |
59,592 |
|||
Research and development |
13,200 |
(1,718) |
(c) |
11,482 |
10,356 |
(2,342) |
(c) |
8,014 |
|||
Intangible asset amortization |
43,444 |
(43,444) |
- |
5,586 |
(5,586) |
- |
|||||
Interest expense, net |
9,199 |
(1,569) |
(d) |
7,630 |
1,559 |
(394) |
(d) |
1,165 |
|||
Loss on extinguishment of debt |
- |
- |
- |
1,097 |
(1,097) |
- |
|||||
Provision for income tax expense |
24,966 |
(6,160) |
(e) |
18,806 |
- |
- |
- |
||||
Income from continuing operations |
94,943 |
101,505 |
196,448 |
87,511 |
21,955 |
109,466 |
|||||
Income (loss) from discontinued operations |
(6,908) |
11,185 |
(f) |
4,277 |
- |
- |
- |
||||
Diluted income (loss) per share: |
|||||||||||
Income from continuing operations |
$ 1.59 |
$ 3.28 |
$ 1.88 |
$ 2.35 |
|||||||
Income (loss) from discontinued operations |
(0.12) |
0.07 |
- |
- |
|||||||
Total |
1.47 |
3.35 |
1.88 |
2.35 |
|||||||
(a) |
Purchase accounting inventory fair value step-up of $14,676, share-based compensation expense of $999 and restructuring expense of $91. |
(b) |
Transaction and integration costs of $17,692, share-based compensation expense of $11,967, restructuring charges of $2,089 and change in fair value of contingent consideration of $1,100. |
(c) |
Share-based compensation expense. |
(d) |
Non-cash interest expense primarily associated with debt discount and debt issuance costs. |
(e) |
Tax related to acquisition restructuring of $15,379 partially offset by the tax effect of non-GAAP pre-tax adjustments of $9,219. |
(f) |
Intangible asset amortization of $7,571, purchase accounting inventory fair value step-up of $3,146 and share-based compensation expense of $468. |
(g) |
Revenue related to upfront and milestone payments. |
(h) |
Share-based compensation expense of $6,986 and transaction and integration costs of $5,974. |
JAZZ PHARMACEUTICALS PLC |
|||
CONDENSED CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS |
|||
(In thousands) |
|||
(Unaudited) |
|||
Three Months Ended September 30, 2012 |
Nine Months Ended September 30, 2012 |
||
Product sales, net |
$ 8,086 |
$ 19,277 |
|
Loss from discontinued operations |
$ (386) |
$ (6,908) |
|
JAZZ PHARMACEUTICALS PLC |
|
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2012 FINANCIAL GUIDANCE |
|
(In millions, except per share amounts) |
|
GAAP income from continuing operations |
$140 - 151 |
Intangible asset amortization |
63 |
Share-based compensation expense |
23-24 |
Purchase accounting inventory fair value step-up |
17 - 18 |
Transaction, integration and restructuring costs |
22 - 24 |
Change in fair value of contingent consideration |
2 |
Other non-cash expense |
3 |
Income tax adjustments |
5-6 |
Adjusted net income |
$280 - 286 |
GAAP income from continuing operations per diluted share |
$2.34 - $2.49 |
Adjusted net income per diluted share |
$4.65 - $4.75 |
Shares used in computing per diluted share amounts |
60 |
SOURCE
Ami Knoefler, Executive Director, Investor Relations & Corporate Communications, Ireland, + 353 1 638 1032, U.S., +1-650-496-2947