-- First-Quarter 2018 Orphan and Rheumatology Net Sales of $172.2 Million Increased 11 Percent;
Represented 77 Percent of Total Company Net Sales --
-- First-Quarter 2018 KRYSTEXXA Net Sales Growth of 48 Percent;
Increasing Full-Year 2018 Net Sales Growth Guidance to More Than 65 Percent --
-- 50 Percent of Patients Now Enrolled in Teprotumumab Phase 3 Clinical Trial --
-- Establishing New Operating Structure Effective in Second-Quarter 2018,
With Two Operating Segments: Orphan and Rheumatology; Primary Care --
-- First-Quarter 2018 Net Sales of $223.9 Million;
First-Quarter 2018 GAAP Net Loss of $157.3 Million; Adjusted EBITDA of $33.6 Million --
-- Increasing Full-Year 2018 Net Sales Guidance Range to $1.170 Billion to $1.200 Billion and
Adjusted EBITDA Guidance Range to $390 Million to $415 Million --
DUBLIN, Ireland, May 09, 2018 (GLOBE NEWSWIRE) -- Horizon Pharma plc (NASDAQ:HZNP) announced its first-quarter 2018 financial results today and increased its full-year 2018 net sales and adjusted EBITDA guidance. The Company also announced that, effective in the second-quarter 2018, the Company is realigning its operating structure and will report financial results as two separate operating segments: its strategic growth business, orphan and rheumatology; and primary care. The new operating structure reflects the evolution of the Company’s strategy and vision of transitioning Horizon Pharma to a biopharmaceutical company focused on rare disease medicines.
“Our orphan and rheumatology medicines represented approximately 77 percent of the Company’s first-quarter net sales and generated double-digit growth driven by 48 percent growth of KRYSTEXXA,” said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma plc. “Our decision to operate orphan and rheumatology separately from primary care marks a pivotal next step in our ongoing strategic transformation to a company focused on rare disease medicines. We made significant advancements during the first quarter toward our goal, including progress ahead of our expectations in the Phase 3 clinical trial for our key rare disease medicine in development, teprotumumab, which is now 50 percent enrolled.”
Financial Highlights
(in millions except for per share amounts and percentages) | Q1 18 | Q1 17 | % Change | |||||||
Net sales | $ | 223.9 | $ | 220.9 | 1 | |||||
Net loss | (157.3 | ) | (90.6 | ) | (74 | ) | ||||
Non-GAAP net income | 4.8 | 35.0 | (86 | ) | ||||||
Adjusted EBITDA | 33.6 | 51.9 | (35 | ) | ||||||
Net loss per share - diluted | (0.96 | ) | (0.56 | ) | (71 | ) | ||||
Non-GAAP earnings per share - diluted | 0.03 | 0.21 | (86 | ) | ||||||
First-Quarter and Recent Company Highlights
Research and Development
Orphan Candidates and Programs:
Rheumatology Pipeline Candidates and Programs:
New Operating Structure Aligned with Long-term Strategy
Given the Company’s focus on rare disease medicines, effective in the second quarter of 2018, the Company is realigning its structure to operate its strategic growth business, orphan and rheumatology, separate from its primary care business. The new structure allows the Company to more efficiently allocate its resources to address unmet treatment needs for patients with rare diseases.
As part of the new operating structure, the Company has realigned its commercial operations under a new leadership position, executive vice president and chief commercial officer, and recently promoted Vikram Karnani to that role. Karnani was most recently senior vice president, rheumatology business unit, leading the successful growth to date of KRYSTEXXA. In addition, aligned with the new operating structure, the Company is adding critical R&D leadership roles to support the orphan and rheumatology segment, including recently hired clinical development heads for both of these therapeutic areas.
As a result of these changes, in the second quarter of 2018, the Company will begin reporting its financial results as two separate operating segments: the orphan and rheumatology segment, the Company’s strategic rare disease-focused business and the primary care segment, reporting net sales and operating income for each segment.
First-Quarter 2018 Total Company Financial Results
Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.
First-Quarter Orphan and Rheumatology Net Sales
(in millions except for percentages) | Q1 18 | Q1 17 | % Change | ||||||
Orphan | $ | 114.7 | $ | 112.5 | 2 | ||||
RAVICTI® | 49.1 | 43.9 | 12 | ||||||
PROCYSBI®(1) | 34.9 | 34.3 | 2 | ||||||
ACTIMMUNE® | 24.9 | 26.2 | (5 | ) | |||||
BUPHENYL® | 5.7 | 6.3 | (9 | ) | |||||
QUINSAIRTM(1) | 0.1 | 1.8 | (93 | ) | |||||
Rheumatology | 57.5 | 42.8 | 35 | ||||||
KRYSTEXXA® | 46.7 | 31.6 | 48 | ||||||
RAYOS® | 10.7 | 10.3 | 4 | ||||||
LODOTRA® | 0.1 | 0.9 | (87 | ) | |||||
Orphan and Rheumatology Net Sales | $ | 172.2 | $ | 155.3 | 11 | ||||
(1) On June 23, 2017, Horizon Pharma completed the divestiture of a European subsidiary that owned the marketing rights to PROCYSBI and QUINSAIR in Europe, the Middle East and Africa to Chiesi Farmaceutici S.p.A. Horizon Pharma retains marketing rights for the two medicines in the United States, Canada, Latin America and Asia. |
First-Quarter Primary Care Net Sales
(in millions except for percentages) | Q1 18 | Q1 17 | % Change | ||||
Primary Care | |||||||
PENNSAID® 2% | 26.8 | 41.6 | (36 | ) | |||
DUEXIS® | 15.7 | 17.7 | (12 | ) | |||
VIMOVO® | 8.4 | 4.9 | 72 | ||||
MIGERGOT® | 0.8 | 1.4 | (47 | ) | |||
Primary Care Net Sales | 51.7 | 65.6 | (21 | ) |
Cash Flow Statement and Balance Sheet Highlights
Full-Year 2018 Guidance
The Company now expects full-year 2018 net sales guidance of $1.170 billion to $1.200 billion, an increase from the previous range of $1.150 billion to $1.180 billion. Full-year 2018 adjusted EBITDA is now expected to be $390 million to $415 million, an increase from the previous range of $370 million to $395 million. Company guidance now assumes a delay in the implementation of a U.S. government rule related to 340B entity drug pricing to July 1, 2019, following the U.S. Department of Health and Human Services’ proposal to delay the effective date to that date. As a result, the Company now expects full-year 2018 net sales growth for KRYSTEXXA of more than 65 percent.
Webcast
At 8 a.m. EST / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizon-pharma.com. Please connect to the Company's website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.
About Horizon Pharma plc
Horizon Pharma plc is focused on researching, developing and commercializing innovative medicines that address unmet treatment needs for rare and rheumatic diseases. By fostering a growing pipeline of medicines in development and exploring all potential uses for currently marketed medicines, we strive to make a powerful difference for patients, their caregivers and physicians. For us, it’s personal: by living up to our own potential, we are helping others live up to theirs. For more information, please visit www.horizonpharma.com. Follow @HZNPplc on Twitter, like us on Facebook or explore career opportunities on LinkedIn.
Note Regarding Use of Non-GAAP Financial Measures
EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by Horizon Pharma as non-GAAP financial measures. Horizon Pharma provides certain other financial measures such as non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP tax rate and non-GAAP operating cash flow, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon Pharma’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon Pharma's GAAP figures as well as EBITDA exclude acquisition and/or divestiture-related expenses, charges related to the discontinuation of ACTIMMUNE development for Friedreich’s ataxia, gain from divestiture, an upfront fee for a license of a patent, a litigation settlement, loss on debt extinguishment, costs of debt refinancing, drug manufacturing harmonization costs, restructuring and realignment costs, as well as non-cash items such as share-based compensation, depreciation and amortization, royalty accretion, non-cash interest expense, long-lived asset impairment charges, impacts of contingent royalty liability remeasurements and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon Pharma believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon Pharma's financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company’s historical and expected 2018 financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon Pharma's management uses for planning and forecasting purposes and measuring the Company's performance. For example, adjusted EBITDA is used by Horizon Pharma as one measure of management performance under certain incentive compensation arrangements. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon Pharma has not provided a reconciliation of its full-year 2018 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items such as acquisition/divestiture-related expenses and share-based compensation that are a component of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon Pharma's stock price, the variability associated with the size or timing of acquisitions/divestitures and other factors. These components of net income (loss) could significantly impact Horizon Pharma’s actual net income (loss).
Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements related to Horizon Pharma's full-year 2018 net sales and adjusted EBITDA guidance, expected growth of certain medicines, estimated peak annual net sales of certain of Horizon Pharma’s medicines and pipeline candidates, expected financial performance in future periods, expected timing and scope of clinical trials, including the Phase 3 clinical trial of teprotumumab, expected increases in investment in Horizon Pharma’s rare disease medicine pipeline and the impact thereof, expected enhancements to Horizon Pharma’s R&D function, potential market opportunity for Horizon Pharma’s medicines in approved and potential additional indications, and business and other statements that are not historical facts. These forward-looking statements are based on Horizon Pharma's current expectations 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 that Horizon Pharma’s actual future financial and operating results may differ from its expectations or goals; Horizon Pharma’s ability to grow net sales from existing products; the availability of coverage and adequate reimbursement and pricing from government and third-party payers and risks relating to Horizon Pharma’s ability to successfully implement its business strategies; risks inherent in developing novel medicine candidates, such as teprotumumab, and existing medicines for new indications; risks related to acquisition integration and achieving projected benefits; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including potential generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon Pharma operates and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Horizon Pharma's filings and reports with the SEC. Horizon Pharma undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.
Contacts: | |
Investors: | U.S. Media: |
Tina Ventura | Geoff Curtis |
Senior Vice President, | Senior Vice President, |
Investor Relations | Corporate Affairs & Chief Communications Officer |
investor-relations@horizonpharma.com | media@horizonpharma.com |
Ruth Venning | Ireland Media: |
Executive Director, | Ray Gordon |
Investor Relations | Gordon MRM |
investor-relations@horizonpharma.com | ray@gordonmrm.ie |
Horizon Pharma plc | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
(in thousands, except share and per share data) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net Sales | $ | 223,881 | $ | 220,859 | ||||
Cost of goods sold | 116,092 | 139,116 | ||||||
Gross profit | 107,789 | 81,743 | ||||||
OPERATING EXPENSES: | ||||||||
Research and development | 17,645 | 13,061 | ||||||
Selling, general and administrative | 179,599 | 174,065 | ||||||
Impairment of long-lived asset | 37,853 | - | ||||||
Total operating expenses | 235,097 | 187,126 | ||||||
Operating loss | (127,308 | ) | (105,383 | ) | ||||
OTHER EXPENSE, NET: | ||||||||
Interest expense, net | (30,454 | ) | (31,983 | ) | ||||
Foreign exchange loss | (110 | ) | (259 | ) | ||||
Loss on debt extinguishment | - | (533 | ) | |||||
Other income, net | 178 | 35 | ||||||
Total other expense, net | (30,386 | ) | (32,740 | ) | ||||
Loss before benefit for income taxes | (157,694 | ) | (138,123 | ) | ||||
Benefit for income taxes | (367 | ) | (47,553 | ) | ||||
Net loss | $ | (157,327 | ) | $ | (90,570 | ) | ||
Net loss per ordinary share - basic and diluted | $ | (0.96 | ) | $ | (0.56 | ) | ||
Weighted average ordinary shares outstanding - basic and diluted | 164,549,502 | 161,972,052 | ||||||
Horizon Pharma plc | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(in thousands, except share data) | ||||||||
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 674,330 | $ | 751,368 | ||||
Restricted cash | 6,390 | 6,529 | ||||||
Accounts receivable, net | 404,208 | 405,214 | ||||||
Inventories, net | 47,365 | 61,655 | ||||||
Prepaid expenses and other current assets | 52,805 | 43,402 | ||||||
Total current assets | 1,185,098 | 1,268,168 | ||||||
Property and equipment, net | 19,488 | 20,405 | ||||||
Developed technology, net | 2,338,942 | 2,443,949 | ||||||
Other intangible assets, net | 5,241 | 5,441 | ||||||
Goodwill | 426,441 | 426,441 | ||||||
Deferred tax assets, net | 859 | 3,470 | ||||||
Other assets | 26,776 | 36,081 | ||||||
Total assets | $ | 4,002,845 | $ | 4,203,955 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Long-term debt—current portion | $ | 38,446 | $ | 10,625 | ||||
Accounts payable | 41,271 | 34,681 | ||||||
Accrued expenses | 180,448 | 175,697 | ||||||
Accrued trade discounts and rebates | 429,701 | 501,753 | ||||||
Accrued royalties—current portion | 65,534 | 65,328 | ||||||
Deferred revenues—current portion | 3,812 | 6,885 | ||||||
Total current liabilities | 759,212 | 794,969 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Exchangeable notes, net | 318,669 | 314,384 | ||||||
Long-term debt, net, net of current | 1,547,912 | 1,576,646 | ||||||
Accrued royalties, net of current | 291,456 | 291,185 | ||||||
Deferred revenues, net of current | - | 9,713 | ||||||
Deferred tax liabilities, net | 157,472 | 157,945 | ||||||
Other long-term liabilities | 67,029 | 68,015 | ||||||
Total long-term liabilities | 2,382,538 | 2,417,888 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY: | ||||||||
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized; | ||||||||
165,359,893 and 164,785,083 shares issued at March 31, 2018 and | ||||||||
December 31, 2017, respectively, and 164,975,527 and 164,400,717 shares | ||||||||
outstanding at March 31, 2018 and December 31, 2017, respectively | 17 | 16 | ||||||
Treasury stock, 384,366 ordinary shares at March 31, 2018 and December 31, 2017 | (4,585 | ) | (4,585 | ) | ||||
Additional paid-in capital | 2,274,254 | 2,248,979 | ||||||
Accumulated other comprehensive loss | (520 | ) | (983 | ) | ||||
Accumulated deficit | (1,408,071 | ) | (1,252,329 | ) | ||||
Total shareholders' equity | 861,095 | 991,098 | ||||||
Total liabilities and shareholders' equity | $ | 4,002,845 | $ | 4,203,955 | ||||
Horizon Pharma plc | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
(in thousands) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (157,327 | ) | $ | (90,570 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||||||||
Depreciation and amortization expense | 68,907 | 71,483 | ||||||
Equity-settled share-based compensation | 27,833 | 28,837 | ||||||
Royalty accretion | 14,718 | 12,959 | ||||||
Royalty liability remeasurement | (2,151 | ) | (2,944 | ) | ||||
Impairment of long-lived asset | 37,853 | - | ||||||
Amortization of debt discount and deferred financing costs | 5,496 | 5,423 | ||||||
Deferred income taxes | 1,680 | (47,695 | ) | |||||
Loss on debt extinguishment | - | 533 | ||||||
Foreign exchange and other adjustments | (120 | ) | 787 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,064 | (94,377 | ) | |||||
Inventories | 14,290 | 37,050 | ||||||
Prepaid expenses and other current assets | (9,805 | ) | (2,445 | ) | ||||
Accounts payable | 6,528 | 36,078 | ||||||
Accrued trade discounts and rebates | (72,120 | ) | 116,079 | |||||
Accrued expenses and accrued royalties | 4,454 | (46,040 | ) | |||||
Deferred revenues | (1,484 | ) | (618 | ) | ||||
Other non-current assets and liabilities | (627 | ) | 266 | |||||
Net cash (used in) provided by operating activities | (60,811 | ) | 24,806 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payment related to license agreement | (12,000 | ) | - | |||||
Purchases of property and equipment | (665 | ) | (1,423 | ) | ||||
Net cash used in investing activities | (12,665 | ) | (1,423 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Repayment of term loans | (2,125 | ) | (772,750 | ) | ||||
Net proceeds from term loans | - | 847,768 | ||||||
Proceeds (refunds) related to the ESPP plan | 14 | (173 | ) | |||||
Proceeds from the issuance of ordinary shares in connection with stock option exercises | 945 | 544 | ||||||
Payment of employee withholding taxes relating to share-based awards | (3,517 | ) | (4,277 | ) | ||||
Net cash (used in) provided by financing activities | (4,683 | ) | 71,112 | |||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 982 | (298 | ) | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (77,177 | ) | 94,197 | |||||
Cash, cash equivalents and restricted cash, beginning of the period(1) | 757,897 | 516,150 | ||||||
Cash, cash equivalents and restricted cash, end of the period(1) | $ | 680,720 | $ | 610,347 | ||||
(1) Amounts include restricted cash balance in accordance with ASU No. 2016-18. |
Horizon Pharma plc | ||||||||
GAAP to Non-GAAP Reconciliations | ||||||||
Net Income and Earnings Per Share (Unaudited) | ||||||||
(in thousands, except share and per share data) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
GAAP net loss | $ | (157,327 | ) | $ | (90,570 | ) | ||
Non-GAAP adjustments: | ||||||||
Impairment of long-lived asset | 37,853 | - | ||||||
Remeasurement of royalties for medicines acquired through business combinations | (2,151 | ) | (2,944 | ) | ||||
Acquisition/divestiture-related costs | 3,911 | 10,039 | ||||||
Restructuring and realignment costs | 3,342 | - | ||||||
Amortization, accretion and step-up: | ||||||||
Intangible amortization expense | 67,355 | 69,677 | ||||||
Accretion of royalty liabilities | 14,719 | 12,959 | ||||||
Amortization of debt discount and deferred financing costs | 5,496 | 5,423 | ||||||
Inventory step-up expense | 17,076 | 40,595 | ||||||
Share-based compensation | 27,833 | 28,469 | ||||||
Depreciation expense | 1,552 | 1,806 | ||||||
Charges relating to discontinuation of Friedreich's ataxia program | 950 | - | ||||||
Drug substance harmonization costs | 804 | 4,299 | ||||||
Upfront and milestone payments related to license agreements | 90 | - | ||||||
Fees related to term loan refinancings | 27 | 4,143 | ||||||
Loss on debt extinguishment | - | 533 | ||||||
Royalties for medicines acquired through business combinations | (12,521 | ) | (11,317 | ) | ||||
Total of pre-tax non-GAAP adjustments | 166,336 | 163,682 | ||||||
Income tax effect of pre-tax non-GAAP adjustments | 31,683 | (38,103 | ) | |||||
Other non-GAAP income tax adjustments | (35,893 | ) | - | |||||
Total of non-GAAP adjustments | 162,126 | 125,579 | ||||||
Non-GAAP Net Income | $ | 4,799 | $ | 35,009 | ||||
Non-GAAP Earnings Per Share: | ||||||||
Weighted average shares - Basic | 164,549,502 | 161,972,052 | ||||||
Non-GAAP Earnings Per Share - Basic: | ||||||||
GAAP loss per share - Basic | (0.96 | ) | (0.56 | ) | ||||
Non-GAAP adjustments | 0.99 | 0.78 | ||||||
Non-GAAP earnings per share - Basic | 0.03 | 0.22 | ||||||
Weighted average shares - Diluted | ||||||||
Weighted average shares - Basic | 164,549,502 | 161,972,052 | ||||||
Ordinary share equivalents | 3,201,430 | 2,895,016 | ||||||
Weighted average shares - Diluted | 167,750,932 | 164,867,068 | ||||||
Non-GAAP Earnings Per Share - Diluted | ||||||||
GAAP loss per share - Diluted | (0.96 | ) | (0.56 | ) | ||||
Non-GAAP adjustments | 0.99 | 0.78 | ||||||
Diluted earnings per share effect of ordinary share equivalents | - | (0.01 | ) | |||||
Non-GAAP earnings per share - Diluted | 0.03 | 0.21 | ||||||
Horizon Pharma plc | |||||||||||
GAAP to Non-GAAP Reconciliations | |||||||||||
EBITDA, Gross Profit and Operating Cash Flow (Unaudited) | |||||||||||
(in thousands, except percentages) | |||||||||||
Three Months Ended March 31, | |||||||||||
2018 | 2017 | ||||||||||
EBITDA and Adjusted EBITDA: | |||||||||||
GAAP net loss | $ | (157,327 | ) | $ | (90,570 | ) | |||||
Depreciation | 1,552 | 1,806 | |||||||||
Amortization, accretion and step-up: | |||||||||||
Intangible amortization expense | 67,355 | 69,677 | |||||||||
Accretion of royalty liabilities | 14,719 | 12,959 | |||||||||
Amortization of deferred revenue | - | (204 | ) | ||||||||
Inventory step-up expense | 17,076 | 40,595 | |||||||||
Interest expense, net (including amortization of | |||||||||||
debt discount and deferred financing costs) | 30,454 | 31,983 | |||||||||
Benefit for income taxes | (367 | ) | (47,553 | ) | |||||||
EBITDA | $ | (26,538 | ) | $ | 18,693 | ||||||
Other non-GAAP adjustments: | |||||||||||
Impairment of long-lived asset | 37,853 | - | |||||||||
Remeasurement of royalties for medicines acquired through business combinations | (2,151 | ) | (2,944 | ) | |||||||
Acquisition/divestiture-related costs | 3,911 | 10,039 | |||||||||
Restructuring and realignment costs | 3,342 | - | |||||||||
Share-based compensation | 27,833 | 28,469 | |||||||||
Charges relating to discontinuation of Friedreich's ataxia program | 950 | - | |||||||||
Drug substance harmonization costs | 804 | 4,299 | |||||||||
Upfront and milestone payments related to license agreements | 90 | - | |||||||||
Fees related to term loan refinancing | 27 | 4,143 | |||||||||
Loss on debt extinguishment | - | 533 | |||||||||
Royalties for medicines acquired through business combinations | (12,521 | ) | (11,317 | ) | |||||||
Total of other non-GAAP adjustments | 60,138 | 33,222 | |||||||||
Adjusted EBITDA | $ | 33,600 | $ | 51,915 | |||||||
GAAP gross profit | $ | 107,789 | $ | 81,743 | |||||||
Non-GAAP gross profit adjustments: | |||||||||||
Acquisition/divestiture-related costs | 19 | 80 | |||||||||
Share-based compensation | 783 | 428 | |||||||||
Remeasurement of royalties for medicines acquired through business combinations | (2,151 | ) | (2,944 | ) | |||||||
Intangible amortization expense | 67,155 | 69,474 | |||||||||
Accretion of royalty liabilities | 14,719 | 12,959 | |||||||||
Inventory step-up expense | 17,076 | 40,595 | |||||||||
Depreciation | 176 | 183 | |||||||||
Charges relating to discontinuation of Friedreich's ataxia program | 950 | - | |||||||||
Drug substance harmonization costs | 804 | 4,299 | |||||||||
Royalties for medicines acquired through business combinations | (12,521 | ) | (11,317 | ) | |||||||
Total of Non-GAAP adjustments | 87,010 | 113,757 | |||||||||
Non-GAAP gross profit | $ | 194,799 | $ | 195,500 | |||||||
GAAP gross profit % | 48.1 | % | 37.0 | % | |||||||
Non-GAAP gross profit % | 87.0 | % | 88.5 | % | |||||||
Non-GAAP operating cash flow: | |||||||||||
GAAP cash provided by operating activities | $ | (60,811 | ) | $ | 24,806 | ||||||
Cash payments for acquisition/divestiture-related costs | 3,958 | 20,392 | |||||||||
Cash payment for litigation settlement | - | 16,250 | |||||||||
Cash payments for upfront and milestone payments related to licence agreement | 275 | - | |||||||||
Cash payments for charges relating to clinical trial wind-down costs | 3,399 | 482 | |||||||||
Cash payments relating to term loan refinancing | 18 | 3,312 | |||||||||
Cash payments for restructuring and realignment costs | 447 | - | |||||||||
Non-GAAP operating cash flow | $ | (52,714 | ) | $ | 65,242 | ||||||
Horizon Pharma plc | ||||||||||||||
GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited) | ||||||||||||||
(in millions, except percentages) | ||||||||||||||
Q1 2018 | ||||||||||||||
Pre-tax Net (Loss) Income | Income Tax (Benefit) Expense | Tax Rate | Net (Loss) Income | Diluted (Loss) Earnings Per Share | ||||||||||
As reported - GAAP | $ | (157.7 | ) | $ | (0.4 | ) | 0.2 | % | $ | (157.2 | ) | $ | (0.96 | ) |
Non-GAAP adjustments | 166.3 | 4.2 | 162.1 | |||||||||||
Non-GAAP | $ | 8.6 | $ | 3.8 | 44.5 | % | $ | 4.9 | $ | 0.03 | ||||
Q1 2017 | ||||||||||||||
Pre-tax Net (Loss) Income | Income Tax (Benefit) Expense | Tax Rate | Net (Loss) Income | Diluted (Loss) Earnings Per Share | ||||||||||
As reported - GAAP | $ | (138.1 | ) | $ | (47.6 | ) | 34.4 | % | $ | (90.6 | ) | $ | (0.56 | ) |
Non-GAAP adjustments | 163.7 | 38.1 | 125.7 | |||||||||||
Non-GAAP | $ | 25.6 | $ | (9.4 | ) | (37.0 | )% | $ | 35.0 | $ | 0.21 | |||
Horizon Pharma plc | ||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | ||||||||||||||||||
For the Three Months Ended March 31, 2018 | ||||||||||||||||||
(in thousands) (Unaudited) | ||||||||||||||||||
Income Tax | ||||||||||||||||||
Research & | Selling, General | Impairment of | Interest | Benefit | ||||||||||||||
COGS | Development | & Administrative | long lived asset | Expense | (Expense) | |||||||||||||
GAAP as reported | $ | (116,092 | ) | $ | (17,645 | ) | $ | (179,599 | ) | $ | (37,853 | ) | $ | (30,454 | ) | $ | 367 | |
Non-GAAP Adjustments (in thousands): | ||||||||||||||||||
Impairment of long-lived asset(1) | - | - | - | 37,853 | - | - | ||||||||||||
Remeasurement of royalties for medicines acquired through business combinations(2) | (2,151 | ) | - | - | - | - | - | |||||||||||
Acquisition/divestiture-related costs(3) | 19 | (85 | ) | 3,977 | - | - | - | |||||||||||
Restructuring and realignment costs (4) | - | - | 3,342 | - | - | - | ||||||||||||
Amortization, accretion and step-up: | ||||||||||||||||||
Intangible amortization expense(5) | 67,155 | - | 200 | - | - | - | ||||||||||||
Amortization of debt discount and deferred financing costs(6) | - | - | - | - | 5,496 | - | ||||||||||||
Accretion of royalty liability(7) | 14,719 | - | - | - | - | - | ||||||||||||
Inventory step-up expense(8) | 17,076 | - | - | - | - | - | ||||||||||||
Share-based compensation(9) | 783 | 2,440 | 24,610 | - | - | - | ||||||||||||
Depreciation expense(10) | 176 | - | 1,376 | - | - | - | ||||||||||||
Drug substance harmonization costs (11) | 804 | - | - | - | - | - | ||||||||||||
Upfront and milestone payments related to license agreements(12) | - | 90 | - | - | - | - | ||||||||||||
Fees related to term loan refinancing (13) | - | - | 27 | - | - | - | ||||||||||||
Charges relating to discontinuation of Friedreich's ataxia program (14) | 950 | - | - | - | - | - | ||||||||||||
Royalties for medicines acquired through business combinations(15) | (12,521 | ) | - | - | - | - | - | |||||||||||
Income tax effect on pre-tax non-GAAP adjustments(16) | - | - | - | - | - | 31,683 | ||||||||||||
Other non-GAAP income adjustments(17) | - | - | - | - | - | (35,893 | ) | |||||||||||
Total of non-GAAP adjustments | 87,010 | 2,445 | 33,532 | 37,853 | 5,496 | (4,210 | ) | |||||||||||
Non-GAAP | $ | (29,082 | ) | $ | (15,200 | ) | $ | (146,067 | ) | $ | - | $ | (24,958 | ) | $ | (3,843 | ) | |
Horizon Pharma plc | ||||||||||||||||||
Certain Income Statement Line Items - Non-GAAP Adjusted | ||||||||||||||||||
For the Three Months Ended March 31, 2017 | ||||||||||||||||||
(in thousands) (Unaudited) | ||||||||||||||||||
Income Tax | ||||||||||||||||||
Research & | Selling, General | Interest | Loss on Debt | Benefit | ||||||||||||||
COGS | Development | & Administrative | Expense | Extinguishment | (Expense) | |||||||||||||
GAAP as reported | $ | (139,116 | ) | $ | (13,061 | ) | $ | (174,065 | ) | $ | (31,983 | ) | $ | (533 | ) | $ | 47,553 | |
Acquisition/divestiture-related costs(3) | 80 | 177 | 9,782 | - | - | - | ||||||||||||
Amortization, accretion and step-up: | ||||||||||||||||||
Intangible amortization expense(5) | 69,474 | - | 203 | - | - | - | ||||||||||||
Amortization of debt discount and deferred financing costs(6) | - | - | - | 5,423 | - | - | ||||||||||||
Accretion of royalty liability(7) | 12,959 | - | - | - | - | - | ||||||||||||
Inventory step-up expense(8) | 40,595 | - | - | - | - | - | ||||||||||||
Share-based compensation(9) | 428 | 2,049 | 25,992 | - | - | - | ||||||||||||
Depreciation expense(10) | 183 | - | 1,623 | - | - | - | ||||||||||||
Drug substance harmonization costs (11) | 4,299 | - | - | - | - | - | ||||||||||||
Remeasurement of royalties for medicines acquired through business combinations(2) | (2,944 | ) | - | - | - | - | - | |||||||||||
Fees related to term loan refinancing (13) | - | - | 4,143 | - | - | - | ||||||||||||
Loss on debt extinguishment(18) | - | - | - | - | 533 | - | ||||||||||||
Royalties for medicines acquired through business combinations(15) | (11,317 | ) | - | - | - | - | - | |||||||||||
Income tax effect on pre-tax non-GAAP adjustments(16) | - | - | - | - | - | (38,103 | ) | |||||||||||
Total of non-GAAP adjustments | 113,757 | 2,226 | 41,743 | 5,423 | 533 | (38,103 | ) | |||||||||||
Non-GAAP | $ | (25,359 | ) | $ | (10,835 | ) | $ | (132,322 | ) | $ | (26,560 | ) | $ | - | $ | 9,450 | ||
NOTES FOR CERTAIN INCOME STATEMENT LINE ITEMS - NON-GAAP