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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 7, 2017
Date of Report (Date of earliest event reported)
 
 
JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
Ireland
 
001-33500
 
98-1032470
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File No.)
 
(IRS Employer
Identification No.)
Fifth Floor, Waterloo Exchange, Waterloo Road, Dublin 4, Ireland
(Address of principal executive offices, including zip code)
011-353-1-634-7800
(Registrant's telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨





Item 2.02. Results of Operations and Financial Condition.
On November 7, 2017, Jazz Pharmaceuticals plc (the “Company”) issued a press release (the “Press Release”) announcing financial results for the Company for the quarter ended September 30, 2017. A copy of the Press Release is furnished as Exhibit 99.1 to this current report.
The information in this Item 2.02 and in the Press Release furnished as Exhibit 99.1 to this current report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the Press Release furnished as Exhibit 99.1 to this current report shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
Number
Description
 
 
99.1






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY
 
 
 
 
By:
/s/ Matthew P. Young
 
Name:
Matthew P. Young
 
Title:
Executive Vice President and Chief Financial Officer
Date: November 7, 2017






Exhibit
Exhibit 99.1

https://cdn.kscope.io/397269a4aa66d3080dbf3dfe565ea8f7-jazzlogo1a01a01a02a01a04.jpg

JAZZ PHARMACEUTICALS ANNOUNCES THIRD QUARTER 2017
FINANCIAL RESULTS

Total Revenues Increased 10% to $412 Million

Launched Vyxeos in the U.S. in August 2017

Vyxeos EU Marketing Authorization Application Submission Completed, Accelerated Assessment Granted, Promising Innovative Medicine Designation Granted in UK

DUBLIN, November 7, 2017 -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter of 2017 and updated financial guidance for 2017.
“The third quarter of 2017 was highlighted by the approval and strong launch of Vyxeos in the U.S. for the treatment of adult patients with newly-diagnosed high-risk AML, leading to our increase in 2017 Vyxeos sales guidance," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. “While Xyrem has experienced lower than expected growth in 2017, and we are slightly decreasing our annual sales guidance accordingly, we remain confident in our ability to address the key drivers impacting Xyrem to position the product for solid future growth."
GAAP net income for the third quarter of 2017 was $63.5 million, or $1.03 per diluted share, compared to $89.8 million, or $1.45 per diluted share, for the third quarter of 2016. GAAP net income for the third quarter of 2017 included an upfront payment of $75.0 million to ImmunoGen, Inc. related to a collaboration and option agreement.
Adjusted net income for the third quarter of 2017 was $197.6 million, or $3.22 per diluted share, compared to $161.2 million, or $2.61 per diluted share, for the third quarter of 2016.
The tax provision and the effective tax rate for the third quarter of 2017 on both a GAAP and non-GAAP basis were favorably impacted by certain tax benefits. For further information, see "Operating Expenses and Income Tax Provision" below. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Financial Highlights
 
Three Months Ended
September 30,
 
 
 
Nine Months Ended
September 30,
 
 
(In thousands, except per share amounts and percentages)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Total revenues
$
411,855

 
$
374,181

 
10
 %
 
$
1,182,294

 
$
1,091,352

 
8
 %
GAAP net income
$
63,526

 
$
89,828

 
(29
)%
 
$
255,641

 
$
280,142

 
(9
)%
Adjusted net income
$
197,649

 
$
161,153

 
23
 %
 
$
496,225

 
$
461,525

 
8
 %
GAAP EPS
$
1.03

 
$
1.45

 
(29
)%
 
$
4.17

 
$
4.51

 
(8
)%
Adjusted EPS
$
3.22

 
$
2.61

 
23
 %
 
$
8.09

 
$
7.43

 
9
 %


1


Total Revenues

Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Xyrem® (sodium oxybate) oral solution
$
303,870

 
$
285,907

 
$
874,222

 
$
816,412

Erwinaze® / Erwinase® (asparaginase Erwinia chrysanthemi)
49,173

 
42,986

 
149,585

 
143,907

Defitelio® (defibrotide sodium) / defibrotide
31,213

 
28,137

 
97,351

 
79,280

VyxeosTM (daunorubicin and cytarabine) liposome for injection
9,719

 
—

 
9,719

 
—

Prialt® (ziconotide) intrathecal infusion
7,930

 
8,783

 
21,303

 
23,065

Other
6,066

 
5,808

 
19,124

 
21,983

Product sales, net
407,971

 
371,621

 
1,171,304

 
1,084,647

Royalties and contract revenues
3,884

 
2,560

 
10,990

 
6,705

Total revenues
$
411,855

 
$
374,181

 
$
1,182,294

 
$
1,091,352

Net product sales increased 10% in the third quarter of 2017 compared to the same period in 2016 primarily due to an increase in net product sales of our lead marketed products.
Xyrem net product sales increased 6% in the third quarter of 2017 compared to the same period in 2016. Xyrem net product sales growth in the 2017 period was negatively impacted by payer mix, one fewer shipping day, and operational changes that delayed some prescription fulfillment.
Erwinaze/Erwinase net product sales increased 14% in the third quarter of 2017 compared to the same period in 2016. The company experienced supply disruptions during both periods; however, net product sales were higher in the third quarter of 2017 compared to the same period in 2016 due to the timing of product availability. The company expects that additional supply disruptions may occur in 2017 and into 2018.
Defitelio/defibrotide net product sales increased 11% in the third quarter of 2017 compared to the same period in 2016 primarily due to an increase in U.S. net product sales. The company expects continued inter-quarter variability in Defitelio net sales given that veno-occlusive disease is an ultra-rare disease.
Vyxeos net product sales in the third quarter of 2017 were $9.7 million. Vyxeos launched in the U.S. on August 11, 2017.

Operating Expenses and Income Tax Provision
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except percentages)
2017
 
2016
 
2017
 
2016
GAAP:
 
 
 
 
 
 
 
Cost of product sales
$
31,203

 
$
24,311

 
$
84,940

 
$
71,730

Gross margin
92.4
%
 
93.5
%
 
92.7
%
 
93.4
%
Selling, general and administrative
$
124,523

 
$
124,368

 
$
401,106

 
$
375,751

% of total revenues
30.2
%
 
33.2
%
 
33.9
%
 
34.4
%
Research and development
$
47,362

 
$
47,796

 
$
132,447

 
$
118,139

% of total revenues
11.5
%
 
12.8
%
 
11.2
%
 
10.8
%
Acquired in-process research and development
$
75,000

 
$
15,000

 
$
77,000

 
$
23,750

Income tax provision
$
1,239

 
$
26,437

 
$
65,914

 
$
100,888

Effective tax rate
1.9
%
 
22.7
%
 
20.5
%
 
26.5
%

2


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except percentages)
2017
 
2016
 
2017
 
2016
Non-GAAP adjusted:
 
 
 
 
 
 
 
Cost of product sales
$
29,630

 
$
22,963

 
$
80,594

 
$
68,620

Gross margin
92.7
%
 
93.8
%
 
93.1
%
 
93.7
%
Selling, general and administrative
$
103,620

 
$
94,534

 
$
333,524

 
$
296,633

% of total revenues
25.2
%
 
25.3
%
 
28.2
%
 
27.2
%
Research and development
$
42,712

 
$
43,323

 
$
118,796

 
$
106,847

% of total revenues
10.4
%
 
11.6
%
 
10.0
%
 
9.8
%
Income tax provision
$
24,410

 
$
38,500

 
$
104,307

 
$
129,663

Effective tax rate
11.0
%
 
19.3
%
 
17.4
%
 
21.9
%
Operating expenses changed over the prior year period primarily due to the following:
•
Selling, general and administrative (SG&A) expenses increased in the third quarter of 2017 compared to the same period in 2016 on a GAAP and on a non-GAAP adjusted basis due to higher headcount and other expenses resulting from the expansion of the company’s business, including the launch of Vyxeos in the U.S. SG&A expenses in the third quarter of 2016 on a GAAP basis included transaction and integration costs of $10.3 million.
•
Research and development (R&D) expenses were consistent on a GAAP and on a non-GAAP adjusted basis in the third quarter of 2017 compared to the same period in 2016. R&D expenses in the third quarter of 2017 reflected an increase in expenses related to the company's ongoing clinical development programs and regulatory activities, including an increase in headcount, and a decrease in JZP-110 costs following the completion of three Phase 3 studies this year.
The tax provision and the effective tax rate for the third quarter of 2017 on both a GAAP and non-GAAP basis were favorably impacted by the release of a valuation allowance held against certain foreign net operating losses and the release of reserves related to uncertain tax positions upon the expiration of a statute of limitation.

Cash Flow and Balance Sheet
As of September 30, 2017, cash, cash equivalents and investments were $452.6 million, and the outstanding principal balance of the company’s long-term debt was $1.8 billion. In the third quarter of 2017, the company sold $575.0 million aggregate principal amount of 1.50% exchangeable senior notes due 2024 and used the net proceeds to repay $500.0 million of outstanding borrowings under the company's revolving credit facility. During the nine months ended September 30, 2017, the company repaid a total of $850.0 million of borrowings under the company's revolving credit facility, made an upfront payment of $75.0 million to ImmunoGen, Inc. and used $56.4 million to repurchase approximately 398,000 ordinary shares under the company's share repurchase program at an average cost of $141.73 per ordinary share.

Recent Developments
•
In August 2017, the company and ImmunoGen, Inc. entered into a collaboration and option agreement granting the company rights to opt into exclusive, worldwide licenses to develop and commercialize two early-stage, hematology-related antibody-drug conjugate (ADC) programs, as well as an additional program to be designated during the term of the agreement. The programs covered under the agreement include IMGN779, a CD33-targeted ADC for the treatment of acute myeloid leukemia (AML) in Phase 1 testing, and IMGN632, a CD123-targeted ADC for hematological malignancies expected to enter clinical testing before the end of the year.

3


•
In November 2017, the company submitted a Marketing Authorization Application (MAA) for Vyxeos to the European Medicines Authority (EMA) for the treatment of high-risk AML patients. Separately, the EMA granted Vyxeos an accelerated assessment review and the UK Medicines and Healthcare Products Regulatory Agency granted Vyxeos the Promising Innovative Medicine designation.

2017 Financial Guidance
Jazz Pharmaceuticals is updating its full year 2017 financial guidance as follows (in millions, except per share amounts and percentages):
Revenues
$1,600-$1,650
Total net product sales
$1,590-$1,630
-Xyrem net sales
$1,180-$1,200
-Erwinaze/Erwinase net sales
$200-$215
-Defitelio/defibrotide net sales
$130-$150
-Vyxeos net sales
$20-$30
GAAP gross margin %
93%
Non-GAAP adjusted gross margin %1,4
93%
GAAP SG&A expenses
$521-$551
Non-GAAP adjusted SG&A expenses2,4
$440-$460
GAAP R&D expenses
$180-$200
Non-GAAP adjusted R&D expenses3,4
$165-$180
GAAP net income per diluted share
$5.30-$6.30
Non-GAAP adjusted net income per diluted share4
$10.70-$11.20
____________________________
1.
Excludes $5 million of share-based compensation expense from estimated GAAP gross margin.
2.
Excludes $75-$85 million of share-based compensation expense and $6 million of expenses related to certain legal proceedings and restructuring from estimated GAAP SG&A expenses.
3.
Excludes $15-$20 million of share-based compensation expense from estimated GAAP R&D expenses.
4.
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 2017 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 2017 third quarter 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 95499424.
A replay of the conference call will be available through November 14, 2017 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 95499424. 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.


4


About Jazz Pharmaceuticals plc
Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is an international biopharmaceutical company focused on improving patients’ lives by identifying, developing and commercializing meaningful products that address unmet medical needs. The company has a diverse portfolio of products and product candidates with a focus in the areas of sleep and hematology/oncology. In these areas, Jazz Pharmaceuticals markets Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi), Defitelio® (defibrotide sodium) and Vyxeos™ (daunorubicin and cytarabine) liposome for injection in the U.S. and markets Erwinase® and Defitelio® (defibrotide) in countries outside the U.S. For more information, please visit www.jazzpharmaceuticals.com.

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, non-GAAP adjusted income tax provision 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. In this regard, the components of non-GAAP adjusted net income, including non-GAAP cost of product sales, non-GAAP selling, general and administrative expenses and non-GAAP research and development 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 condensed 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. 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

5


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 2017 financial guidance, the company’s ability to address the key drivers impacting Xyrem to position the product for solid future growth, the company’s expectation for future Erwinaze supply disruptions, the company's expectation for continued inter-quarter variability in Defitelio net sales, the company’s expectation that IMGN632 will enter clinical testing and the timing thereof 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, such as the potential U.S. introduction of a generic version of Xyrem before the entry dates specified in the company's settlements with certain companies that had filed abbreviated new drug applications with the U.S. Food and Drug Administration seeking approval to market a generic version of Xyrem or on terms that are different from those contemplated by the settlements; ongoing patent litigation and related proceedings; effectively commercializing the company’s other products and product candidates; the time-consuming and uncertain regulatory approval process, including the risk that the company’s regulatory submissions, including the Vyxeos MAA, may not be approved by applicable regulatory authorities in a timely manner or at all; 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; complying with applicable U.S. and non-U.S. regulatory requirements; government investigations and other actions; obtaining and maintaining appropriate pricing and reimbursement for the company’s products; pharmaceutical product development and the uncertainty of clinical success, including risks related to failure or delays in initiating or completing clinical trials; identifying and acquiring, in-licensing or developing additional products or product candidates, financing these transactions and successfully integrating acquired businesses; potential restrictions on the company’s ability and flexibility to pursue share repurchases and future strategic opportunities as a result of its substantial outstanding debt obligations; the ability to achieve expected future financial performance and results; 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 June 30, 2017 and future filings and reports by the company, including the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.  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 timing of events to differ materially from those anticipated.  The forward-looking statements herein are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the company on its website or otherwise.  The company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

6


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,
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
Product sales, net
$
407,971

 
$
371,621

 
$
1,171,304

 
$
1,084,647

Royalties and contract revenues
3,884

 
2,560

 
10,990

 
6,705

Total revenues
411,855

 
374,181

 
1,182,294

 
1,091,352

Operating expenses:
 
 
 
 
 
 
 
Cost of product sales (excluding amortization of intangible assets)
31,203

 
24,311

 
84,940

 
71,730

Selling, general and administrative
124,523

 
124,368

 
401,106

 
375,751

Research and development
47,362

 
47,796

 
132,447

 
118,139

Acquired in-process research and development
75,000

 
15,000

 
77,000

 
23,750

Intangible asset amortization
47,313

 
26,453

 
99,164

 
75,832

Total operating expenses
325,401

 
237,928

 
794,657

 
665,202

Income from operations
86,454

 
136,253

 
387,637

 
426,150

Interest expense, net
(19,192
)
 
(18,498
)
 
(56,330
)
 
(42,811
)
Foreign exchange loss
(2,224
)
 
(749
)
 
(9,115
)
 
(1,568
)
Loss on extinguishment and modification of debt
—

 
(638
)
 
—

 
(638
)
Income before income tax provision and equity in loss of investees
65,038

 
116,368

 
322,192

 
381,133

Income tax provision
1,239

 
26,437

 
65,914

 
100,888

Equity in loss of investees
273

 
103

 
637

 
103

Net income
$
63,526

 
$
89,828

 
$
255,641

 
$
280,142

 
 
 
 
 
 
 
 
Net income per ordinary share:
 
 
 
 
 
 
 
Basic
$
1.06

 
$
1.49

 
$
4.26

 
$
4.62

Diluted
$
1.03

 
$
1.45

 
$
4.17

 
$
4.51

Weighted-average ordinary shares used in per share calculations - basic
60,108

 
60,437

 
60,030

 
60,692

Weighted-average ordinary shares used in per share calculations - diluted
61,436

 
61,795

 
61,360

 
62,150







7


JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

 
September 30,
2017
 
December 31,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
252,615

 
$
365,963

Investments
200,000

 
60,000

Accounts receivable, net of allowances
258,616

 
234,244

Inventories
41,344

 
34,051

Prepaid expenses
29,249

 
24,501

Other current assets
49,120

 
29,310

Total current assets
830,944

 
748,069

Property and equipment, net
159,386

 
107,490

Intangible assets, net
3,019,035

 
3,012,001

Goodwill
941,428

 
893,810

Deferred tax assets, net, non-current
23,662

 
15,060

Deferred financing costs
8,149

 
9,737

Other non-current assets
16,420

 
14,060

Total assets
$
4,999,024

 
$
4,800,227

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
29,972

 
$
22,415

Accrued liabilities
179,890

 
193,268

Current portion of long-term debt
36,094

 
36,094

Income taxes payable
13,603

 
4,506

Deferred revenue
8,618

 
1,123

Total current liabilities
268,177

 
257,406

Deferred revenue, non-current
18,270

 
2,601

Long-term debt, less current portion
1,543,819

 
1,993,531

Deferred tax liability, net, non-current
540,964

 
556,733

Other non-current liabilities
158,497

 
112,617

Total shareholders’ equity
2,469,297

 
1,877,339

Total liabilities and shareholders’ equity
$
4,999,024

 
$
4,800,227


8


JAZZ PHARMACEUTICALS PLC
SUMMARY OF CASH FLOWS
(In thousands)
(Unaudited)

 
Nine Months Ended
September 30,
 
2017
 
2016
Net cash provided by operating activities
$
488,528

 
$
411,696

Net cash used in investing activities
(237,072
)
 
(1,749,296
)
Net cash provided by (used in) financing activities
(369,127
)
 
713,032

Effect of exchange rates on cash and cash equivalents
4,323

 
2,350

Net decrease in cash and cash equivalents
$
(113,348
)
 
$
(622,218
)





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,
 
2017
 
2016
 
2017
 
2016
GAAP reported net income
$
63,526

 
$
89,828

 
$
255,641

 
$
280,142

Intangible asset amortization
47,313

 
26,453

 
99,164

 
75,832

Share-based compensation expense
27,126

 
24,874

 
79,579

 
74,490

Upfront and milestone payments
75,000

 
15,000

 
75,000

 
23,750

Transaction and integration related costs
—

 
10,781

 
—

 
12,970

Expenses related to certain legal proceedings and restructuring
—

 
—

 
6,000

 
6,060

Non-cash interest expense
7,855

 
5,642

 
19,234

 
16,418

Loss on extinguishment and modification of debt
—

 
638

 
—

 
638

Income tax effect of adjustments (1)
(23,171
)
 
(12,063
)
 
(38,393
)
 
(28,775
)
Non-GAAP adjusted net income
$
197,649

 
$
161,153

 
$
496,225

 
$
461,525

 
 
 
 
 
 
 
 
GAAP reported net income per diluted share
$
1.03

 
$
1.45

 
$
4.17

 
$
4.51

Non-GAAP adjusted net income per diluted share
$
3.22

 
$
2.61

 
$
8.09

 
$
7.43

Weighted-average ordinary shares used in diluted per share calculations
61,436

 
61,795

 
61,360

 
62,150

_____________________________
(1)
The income tax effect of the adjustments between GAAP reported and non-GAAP adjusted net income takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s).


9


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
 
September 30, 2017
 
September 30, 2016
 
GAAP Reported
 
Adjustments
 
Non-GAAP Adjusted
 
GAAP Reported
 
Adjustments
 
Non-GAAP Adjusted
Total revenues
$
411,855

 
$
—

 
$
411,855

 
$
374,181

 
$
—

 
$
374,181

Cost of product sales (excluding amortization of intangible assets)
31,203

 
(1,573
)
(a) 
29,630

 
24,311

 
(1,348
)
(a) 
22,963

Selling, general and administrative
124,523

 
(20,903
)
(b) 
103,620

 
124,368

 
(29,834
)
(b) 
94,534

Research and development
47,362

 
(4,650
)
(c) 
42,712

 
47,796

 
(4,473
)
(c) 
43,323

Acquired in-process research and development
75,000

 
(75,000
)
 
—

 
15,000

 
(15,000
)
 
—

Intangible asset amortization
47,313

 
(47,313
)
 
—

 
26,453

 
(26,453
)
 
—

Interest expense, net
19,192

 
(7,855
)
(d) 
11,337

 
18,498

 
(5,642
)
(d) 
12,856

Foreign currency loss
2,224

 
—

 
2,224

 
749

 
—

 
749

Loss on extinguishment and modification of debt
—

 
—

 
—

 
638

 
(638
)
 
—

Income before income tax provision and equity in loss of investees
65,038

 
157,294

(e) 
222,332

 
116,368

 
83,388

(e) 
199,756

Income tax provision
1,239

 
23,171

(f) 
24,410

 
26,437

 
12,063

(f) 
38,500

Effective tax rate (g)
1.9
%
 
 
 
11.0
%
 
22.7
%
 
 
 
19.3
%
Equity in loss of investees
273

 
—

 
273

 
103

 
—

 
103

Net income
$
63,526

 
$
134,123

(h) 
$
197,649

 
$
89,828

 
$
71,325

(h) 
$
161,153

Net income per diluted share
$
1.03

 
 
 
$
3.22

 
$
1.45

 
 
 
$
2.61


10


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)

 
Nine Months Ended
 
September 30, 2017
 
September 30, 2016
 
GAAP Reported
 
Adjustments
 
Non-GAAP Adjusted
 
GAAP Reported
 
Adjustments
 
Non-GAAP Adjusted
Total revenues
$
1,182,294

 
$
—

 
$
1,182,294

 
$
1,091,352

 
$
—

 
$
1,091,352

Cost of product sales (excluding amortization of intangible assets)
84,940

 
(4,346
)
(i) 
80,594

 
71,730

 
(3,110
)
(i) 
68,620

Selling, general and administrative
401,106

 
(67,582
)
(j) 
333,524

 
375,751

 
(79,118
)
(j) 
296,633

Research and development
132,447

 
(13,651
)
(k) 
118,796

 
118,139

 
(11,292
)
(k) 
106,847

Acquired in-process research and development
77,000

 
(75,000
)
 
2,000

 
23,750

 
(23,750
)
 
—

Intangible asset amortization
99,164

 
(99,164
)
 
—

 
75,832

 
(75,832
)
 
—

Interest expense, net
56,330

 
(19,234
)
(d) 
37,096

 
42,811

 
(16,418
)
(d) 
26,393

Foreign currency loss
9,115

 
—

 
9,115

 
1,568

 
—

 
1,568

Loss on extinguishment and modification of debt
—

 
—

 
—

 
638

 
(638
)
 
—

Income before income tax provision and equity in loss of investees
322,192

 
278,977

(l) 
601,169

 
381,133

 
210,158

(l) 
591,291

Income tax provision
65,914

 
38,393

(f) 
104,307

 
100,888

 
28,775

(f) 
129,663

Effective tax rate (g)
20.5
%
 
 
 
17.4
%
 
26.5
%
 
 
 
21.9
%
Equity in loss of investees
637

 
—

 
637

 
103

 
—

 
103

Net income
$
255,641

 
$
240,584

(m) 
$
496,225

 
$
280,142

 
$
181,383

(m) 
$
461,525

Net income per diluted share
$
4.17

 
 
 
$
8.09

 
$
4.51

 
 
 
$
7.43

_____________________________
Explanation of Adjustments and Certain Line Items (in thousands):
(a)
Share-based compensation expense of $1,573 and $1,307 and transaction and integration related costs of $0 and $41 for the three months ended September 30, 2017 and 2016, respectively.
(b)
Share-based compensation expense of $20,903 and $19,511 and transaction and integration related costs of $0 and $10,323 for the three months ended September 30, 2017 and 2016, respectively.
(c)
Share-based compensation expense of $4,650 and $4,056 and transaction and integration related costs of $0 and $417 for the three months ended September 30, 2017 and 2016, respectively.
(d)
Non-cash interest expense associated with debt discount and debt issuance costs for the respective three- and nine-month periods.
(e)
Sum of adjustments (a) through (d) plus the adjustments for acquired in-process research and development, intangible asset amortization and loss on extinguishment and modification of debt for the respective three-month period.
(f)
Income tax effect of the adjustments between GAAP reported and non-GAAP adjusted net income takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s) for the respective three- and nine-month periods.
(g)
Income tax provision divided by income before income tax provision and equity in loss of investees for the respective three- and nine-month periods.
(h)
Net of adjustments (e) and (f) for the respective three-month period.
(i)
Share-based compensation expense of $4,346 and $2,959, expenses related to certain legal proceedings and restructuring of $0 and $110 and transaction and integration related costs of $0 and $41 for the nine months ended September 30, 2017 and 2016, respectively.
(j)
Share-based compensation expense of $61,582 and $60,664, expenses related to certain legal proceedings and restructuring of $6,000 and $5,950 and transaction and integration related costs of $0 and $12,504 for the nine months ended September 30, 2017 and 2016, respectively.
(k)
Share-based compensation expense of $13,651 and $10,867 and transaction and integration related costs of $0 and $425 for the nine months ended September 30, 2017 and 2016, respectively.
(l)
Sum of adjustments (i), (j), (k) and (d) plus the adjustments for acquired in-process research and development, intangible asset amortization and loss on extinguishment and modification of debt, as applicable, for the respective nine-month period.
(m)
Net of adjustments (l) and (f) for the respective nine-month period.


11


JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2017 NET INCOME GUIDANCE
(In millions, except per share amounts)
(Unaudited)

GAAP net income
$325 - $385
Intangible asset amortization
130 - 165
Share-based compensation expense
95 - 110
Upfront and milestone payments
75
Expenses related to certain legal proceedings and restructuring
6
Non-cash interest expense
30 - 35
Income tax effect of adjustments
(50) - (60)
Non-GAAP adjusted net income
$655 - $685
 
 
GAAP net income per diluted share
$5.30-$6.30
Non-GAAP adjusted net income per diluted share 
$10.70-$11.20
 
 
Weighted-average ordinary shares used in per share calculations
61




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


12