Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2018	Feb. 20, 2019	Jun. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	HZNP
Entity Registrant Name	HORIZON PHARMA PLC
Entity Central Index Key	0001492426
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		169,619,321
Entity Public Float			$ 2.7

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 958,712	$ 751,368
Restricted cash	3,405	6,529
Accounts receivable, net	464,730	405,214
Inventories, net	50,751	61,655
Prepaid expenses and other current assets	70,828	43,402
Total current assets	1,548,426	1,268,168
Property and equipment, net	20,101	20,405
Intangible assets, net	2,125,226	2,447,733
Goodwill	426,441	426,441
Deferred tax assets, net	3,148	3,470
Other assets	23,029	36,081
Total assets	4,146,371	4,202,298
CURRENT LIABILITIES:
Long-term debt—current portion		10,625
Accounts payable	30,284	34,681
Accrued expenses	205,593	175,697
Accrued trade discounts and rebates	457,763	501,753
Accrued royalties—current portion	63,363	65,328
Deferred revenues—current portion	4,901	6,885
Total current liabilities	761,904	794,969
LONG-TERM LIABILITIES:
Exchangeable notes, net	332,199	314,384
Long-term debt, net of current	1,564,485	1,576,646
Accrued royalties, net of current	285,374	279,316
Deferred revenues, net of current		9,713
Deferred tax liabilities, net	93,630	157,945
Other long-term liabilities	54,622	68,015
Total long-term liabilities	2,330,310	2,406,019
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized; 169,244,520 and 164,785,083 shares issued at December 31, 2018 and December 31, 2017, respectively, and 168,860,154 and 164,400,717 shares outstanding at December 31, 2018 and December 31, 2017, respectively	17	16
Treasury stock, 384,366 ordinary shares at December 31, 2018 and December 31, 2017	(4,585)	(4,585)
Additional paid-in capital	2,374,966	2,248,979
Accumulated other comprehensive loss	(1,523)	(983)
Accumulated deficit	(1,314,718)	(1,242,117)
Total shareholders’ equity	1,054,157	1,001,310
Total liabilities and shareholders' equity	4,146,371	4,202,298
Developed Technology [Member]
CURRENT ASSETS:
Intangible assets, net	2,120,596	2,442,292
Customer Relationships [Member]
CURRENT ASSETS:
Intangible assets, net	$ 4,630	$ 5,441

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Ordinary shares, nominal value	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	300,000,000	300,000,000
Ordinary shares, shares issued	169,244,520	164,785,083
Ordinary shares, shares outstanding	168,860,154	164,400,717
Treasury stock, ordinary shares	384,366	384,366

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Net sales	$ 1,207,570	$ 1,056,231	$ 981,120
Cost of goods sold	422,317	537,334	392,001
Gross profit	785,253	518,897	589,119
OPERATING EXPENSES:
Research and development	82,762	224,962	60,707
Selling, general and administrative	692,485	655,093	603,048
Impairment of long-lived assets	50,302	22,270	71,260
Gain on sale of assets	(42,688)
Total operating expenses	782,861	902,325	735,015
Operating income (loss)	2,392	(383,428)	(145,896)
OTHER EXPENSE, NET:
Interest expense, net	(121,692)	(126,523)	(86,610)
Foreign exchange loss	(192)	(260)	(1,005)
Gain on divestiture		6,267
Loss on debt extinguishment		(978)
Other income, net	346	588	6,697
Total other expense, net	(121,538)	(120,906)	(80,918)
Loss before benefit for income taxes	(119,146)	(504,334)	(226,814)
Benefit for income taxes	(44,959)	(102,749)	(61,251)
Net loss	$ (74,187)	$ (401,585)	$ (165,563)
Net (loss) income per ordinary share - basic and diluted	$ (0.45)	$ (2.46)	$ (1.03)
Weighted average ordinary shares outstanding—basic and diluted	166,155,405	163,122,663	160,699,543
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Foreign currency translation adjustments	$ (826)	$ 2,067	$ (302)
Pension remeasurements	286	36	(133)
Other comprehensive (loss) income	(540)	2,103	(435)
Comprehensive loss	$ (74,727)	$ (399,482)	$ (165,998)

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Ordinary Shares [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2015	$ 1,313,145	$ 16	$ (4,585)	$ 2,001,552	$ (2,651)	$ (681,187)
Beginning balance, shares at Dec. 31, 2015		160,069,067	384,366
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	3,875			3,875
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		1,245,637
Ordinary shares withheld for payment of employees’ withholding tax liability	(5,539)			(5,539)
Issuance of ordinary shares in conjunction with ESPP purchases	6,540			6,540
Issuance of ordinary shares in conjunction with ESPP purchases, shares		513,659
Issuance of ordinary shares in conjunction with PSU vesting, shares		13,584
Share-based compensation	113,019			113,019
Issuance of ordinary shares in conjunction with warrant exercises	8			8
Issuance of ordinary shares in conjunction with warrant exercises, shares		163,009
Currency translation adjustment	(302)				(302)
Pension remeasurements	(133)				(133)
Net loss	(165,563)					(165,563)
Ending balance at Dec. 31, 2016	1,265,050	$ 16	$ (4,585)	2,119,455	(3,086)	(846,750)
Ending balance, shares at Dec. 31, 2016		162,004,956	384,366
Cumulative effect adjustments from adoption of ASU 2016-09 and 2014-09 and 2016-16	7,210					7,210
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	2,167			2,167
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		1,117,876
Ordinary shares withheld for payment of employees’ withholding tax liability	(6,533)			(6,533)
Issuance of ordinary shares in conjunction with ESPP purchases	7,082			7,082
Issuance of ordinary shares in conjunction with ESPP purchases, shares		822,231
Issuance of ordinary shares in conjunction with PSU vesting, shares		25,000
Share-based compensation	125,019			125,019
Issuance of ordinary shares in conjunction with warrant exercises	1,789			1,789
Issuance of ordinary shares in conjunction with warrant exercises, shares		915,020
Shares repurchased	(992)					(992)
Shares repurchased, shares		(100,000)
Currency translation adjustment	2,067				2,067
Pension remeasurements	36				36
Net loss	(401,585)					(401,585)
Ending balance at Dec. 31, 2017	1,001,310	$ 16	$ (4,585)	2,248,979	(983)	(1,242,117)
Ending balance, shares at Dec. 31, 2017		164,785,083	384,366
Cumulative effect adjustments from adoption of ASU 2016-09 and 2014-09 and 2016-16	1,586					1,586
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	16,973	$ 1		16,972
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		3,541,933
Ordinary shares withheld for payment of employees’ withholding tax liability	(14,455)			(14,455)
Issuance of ordinary shares in conjunction with ESPP purchases	8,610			8,610
Issuance of ordinary shares in conjunction with ESPP purchases, shares		917,504
Share-based compensation	114,860			114,860
Currency translation adjustment	(826)				(826)
Pension remeasurements	286				286
Net loss	(74,187)					(74,187)
Ending balance at Dec. 31, 2018	$ 1,054,157	$ 17	$ (4,585)	$ 2,374,966	$ (1,523)	$ (1,314,718)
Ending balance, shares at Dec. 31, 2018		169,244,520	384,366

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (74,187)	$ (401,585)	$ (165,563)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense	275,729	283,244	221,665
Equity-settled share-based compensation	114,860	125,019	113,019
Royalty accretion	59,476	51,263	40,616
Impairment of long-lived assets	50,302	22,270	71,260
Amortization of debt discount and deferred financing costs	22,751	21,619	18,546
Deferred income taxes	(64,491)	(132,231)	(65,561)
Gain on sale of assets	(42,688)
Royalty liability remeasurement	(3,383)	13,004	(713)
Gain on divestiture		(2,934)
Acquired in-process research and development expense		159,171
Loss on debt extinguishment		978
Foreign exchange and other adjustments	332	(1,466)	420
Changes in operating assets and liabilities:
Accounts receivable	(59,697)	(84,444)	(68,271)
Inventories	10,280	108,371	67,633
Prepaid expenses and other current assets	(25,313)	5,110	(28,239)
Accounts payable	(4,593)	(16,521)	32,065
Deferred revenues	(395)	4,468	1,114
Other non-current assets and liabilities	(10,440)	5,720	4,455
Net cash provided by operating activities	194,543	284,340	369,456
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets	44,424
Payment related to license agreements	(12,000)
Purchases of property and equipment	(4,771)	(4,336)	(15,725)
Payments for acquisitions, net of cash acquired		(167,220)	(1,354,921)
Proceeds from divestiture, net of cash divested		69,371
Net cash provided by (used in) investing activities	27,653	(102,185)	(1,370,646)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from term loans	818,026	1,693,512	364,297
Repayment of term loans	(845,749)	(1,622,749)	(4,000)
Payment of contingent consideration		(20,000)
Repurchase of ordinary shares		(992)
Proceeds from the issuance of ordinary shares in connection with warrant exercises		1,789	8
Proceeds from the issuance of ordinary shares through an employee stock purchase plan	8,610	7,082	6,540
Proceeds from the issuance of ordinary shares in connection with stock option exercises	16,972	2,167	3,875
Payment of employee withholding taxes relating to share-based awards	(14,455)	(6,533)	(5,539)
Net cash (used in) provided by financing activities	(16,596)	54,276	657,074
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(1,380)	5,316	(1,210)
Net increase (decrease) in cash, cash equivalents and restricted cash	204,220	241,747	(345,326)
Cash, cash equivalents and restricted cash, beginning of the year	757,897	516,150	861,476
Cash, cash equivalents and restricted cash, end of the year	962,117	757,897	516,150
Supplemental cash flow information:
Cash paid for interest	112,468	113,790	60,817
Cash paid for income taxes	53,058	2,548	22,339
Cash paid for debt extinguishment		145
Supplemental non-cash flow information:
Purchases of property and equipment included in accounts payable and accrued expenses	1,101		700
Purchases of acquired in-process research and development included in accounts payable and accrued expenses		12,000
Accrued Trade Discounts and Rebates [Member]
Changes in operating assets and liabilities:
Accrued liabilities	(44,028)	205,487	112,381
Accrued Expenses and Accrued Royalties [Member]
Changes in operating assets and liabilities:
Accrued liabilities	$ (9,972)	$ (82,203)	14,629
2024 Senior Notes [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from term loans			$ 291,893

Basis of Presentation

12 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries.

Overview

The Company is focused on researching, developing and commercializing innovative medicines that address unmet treatment needs for rare and rheumatic diseases. By expanding its growing pipeline of medicines in development and exploring all potential uses for currently marketed medicines, the Company strives to make a powerful difference for patients, their caregivers and physicians. The Company has two reportable segments, referred to as the “orphan and rheumatology segment” and the “primary care segment”. The Company currently markets eleven medicines in the areas of orphan diseases, rheumatology and primary care.

The Company’s currently marketed medicines are:

Orphan and Rheumatology

KRYSTEXXA^® (pegloticase injection), for intravenous infusion

RAVICTI^® (glycerol phenylbutyrate) oral liquid

PROCYSBI^® (cysteamine bitartrate) delayed-release capsules, for oral use

ACTIMMUNE^® (interferon gamma-1b) injection, for subcutaneous use

RAYOS^® (prednisone) delayed-release tablets

BUPHENYL^® (sodium phenylbutyrate) Tablets and Powder

QUINSAIR™ (levofloxacin) solution for inhalation

Primary Care

PENNSAID^® (diclofenac sodium topical solution) 2% w/w, (“PENNSAID 2%”), for topical use

DUEXIS^® (ibuprofen/famotidine) tablets, for oral use

VIMOVO^® (naproxen/esomeprazole magnesium) delayed-release tablets, for oral use

MIGERGOT^® (ergotamine tartrate & caffeine suppositories), for rectal use

Revision of Prior Period Financial Statements

During the course of preparing the Company’s consolidated financial statements for the year ended December 31, 2018, the Company identified an error in the measurement of the contingent royalty liability calculation pertaining to the royalty end date for one of its medicines. The royalty end date for KRYSTEXXA is approximately two and one half years earlier than the date originally assumed in the calculations. As a result of the error, accrued royalties, net of current, and cost of goods sold had been overstated and shareholders’ equity had been understated. The Company concluded that the amounts were not material to any of its previously issued consolidated financial statements. The Company has revised the accompanying consolidated balance sheet as at December 31, 2017, and the consolidated statements of comprehensive (loss) income and of cash flows for the years ended December 31, 2017 and 2016. Total shareholders’ equity at December 31, 2016, was understated by $1.3 million. The impact on the consolidated statements of cash flows consisted of adjustments to reconcile net (loss) income to net cash provided by operating activities and changes in operating assets and liabilities for all periods presented. There was no impact on total operating, investing or financing cash flows for any prior period. See Note 23 for revisions to the Company’s unaudited quarterly financial information. The following are selected line items from the Company’s annual consolidated financial statements illustrating the effect of the revisions:

	Consolidated Balance Sheet as of
	December 31, 2017
	As Previously Reported			Revision			As Revised
Developed technology, net	$	2,443,949		$	(1,657	)	$	2,442,292
Total assets		4,203,955			(1,657	)		4,202,298
Accrued royalties, net of current		291,185			(11,869	)		279,316
Total long-term liabilities		2,417,888			(11,869	)		2,406,019
Accumulated deficit		(1,252,329	)		10,212			(1,242,117	)
Total shareholders’ equity		991,098			10,212			1,001,310
Total liabilities and shareholders' equity		4,203,955			(1,657	)		4,202,298

	Consolidated Statements of Comprehensive Loss
	For the Twelve Months Ended December 31, 2017									For the Twelve Months Ended December 31, 2016
	As Previously Reported			Revision			As Revised			As Previously Reported			Revision			As Revised
Cost of goods sold	$	546,275		$	(8,941	)	$	537,334		$	393,272		$	(1,271	)	$	392,001
Gross profit		509,956			8,941			518,897			587,848			1,271			589,119
Operating loss		(392,369	)		8,941			(383,428	)		(147,167	)		1,271			(145,896	)
Loss before benefit for income taxes		(513,275	)		8,941			(504,334	)		(228,085	)		1,271			(226,814	)
Net loss		(410,526	)		8,941			(401,585	)		(166,834	)		1,271			(165,563	)
Net loss per ordinary share—basic		(2.52	)		0.06			(2.46	)		(1.04	)		0.01			(1.03	)
Net loss per ordinary share—diluted		(2.52	)		0.06			(2.46	)		(1.04	)		0.01			(1.03	)
Comprehensive loss		(408,423	)		8,941			(399,482	)		(167,269	)		1,271			(165,998	)

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”).

The impairment recorded during the year ended December 31, 2017 of $22.3 million of the asset recognized in connection with the acquisition of certain rights to interferon gamma-1b, as further described in Note 4, was previously included within “selling, general and administrative” expenses. Additionally, during the year ended December 31, 2016, an impairment of a non-current asset of $5.3 million was included within “selling, general and administrative” expenses, and an impairment of in-process research and development expenses was included on an “impairment of in-process research and development” line item. For prior-period comparisons, the Company now includes these amounts in the “impairment of long-lived assets” line in its consolidated statement of comprehensive loss.

Principles of Consolidation

The consolidated financial statements include the Company’s accounts and those of its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Segment Information

Effective as of the second quarter of 2018, management realigned the Company’s reportable segments to reflect changes in the manner in which the chief operating decision maker (“CODM”) assesses financial information for decision-making purposes. See Note 13 for further details. The Company determined that it operates in two reportable segments, an orphan and rheumatology segment and a primary care segment. The Company’s reportable segments are reported in a manner consistent with the internal reporting provided to the CODM. The Company’s CODM has been identified as its chief executive officer. The Company has no transactions between reportable segments.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation and Transactions

The reporting currency of the Company and its subsidiaries is the U.S. dollar.

The U.S. dollar is the functional currency for the Company’s Ireland and United States-based businesses and the majority of its subsidiaries. The Company has foreign subsidiaries that have the Euro and the Canadian Dollar as their functional currency. Foreign currency-denominated assets and liabilities of these subsidiaries are translated into U.S. dollars based on exchange rates prevailing at the end of the period, revenues and expenses are translated at average exchange rates prevailing during the corresponding period, and shareholders’ equity accounts are translated at historical exchange rates as of the date of any equity transaction. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of accumulated other comprehensive (loss) income.

Gains and losses resulting from foreign currency transactions are reflected within the Company’s results of operations.

Revenue Recognition

On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, and subsequent amendments (ASC 606 or new guidance), using the modified retrospective method. The Company applied the new guidance to all contracts with customers within the scope of the standard that were in effect on January 1, 2018 and recognized the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of retained earnings. Comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. In the United States, the Company sells its medicines primarily to wholesale distributors and specialty pharmacy providers. In other countries, the Company sells its medicines primarily to wholesale distributors and other third-party distribution partners. These customers subsequently resell the Company’s medicines to health care providers and patients. In addition, the Company enters into arrangements with health care providers and payers that provide for government-mandated or privately negotiated discounts and allowances related to the Company’s medicines. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company's contracts have a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales are recognized when the customer obtains control of the Company’s medicines, which occurs at a point in time, typically upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and is generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. The Company sells its medicines to wholesale pharmaceutical distributors and pharmacies under agreements with payment terms typically less than 90 days. The Company’s process for estimating reserves established for these variable consideration components does not differ materially from the Company’s historical practices.

Medicine Sales Discounts and Allowances

The nature of the Company’s contracts gives rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts are recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applies significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.

Commercial Rebates

The Company participates in certain commercial rebate programs. Under these rebate programs, the Company pays a rebate to the commercial entity or third-party administrator of the program. The Company calculates accrued commercial rebate estimates using the expected value method. The Company accrues estimated rebates based on contract prices, estimated percentages of medicine that will be prescribed to qualified patients and estimated levels of inventory in the distribution channel and records the rebate as a reduction of revenue. Accrued commercial rebates are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Distribution Service Fees

The Company includes distribution service fees paid to its wholesalers for distribution and inventory management services as a reduction to revenue. The Company calculates accrued distribution service fee estimates using the most likely amount method. The Company accrues estimated distribution fees based on contractually determined amounts, typically as a percentage of revenue. Accrued distribution service fees are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Patient Access Programs

The Company offers discount card and other programs such as its HorizonCares program to patients under which the patient receives a discount on his or her prescription. In certain circumstances when a patient’s prescription is rejected by a managed care vendor, the Company will pay for the full cost of the prescription. The Company reimburses pharmacies for this discount through third-party vendors. The Company reduces gross sales by the amount of actual co-pay and other patient assistance in the period based on invoices received. The Company also records an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors that have not yet been prescribed/dispensed to a patient. The Company calculates accrued co-pay and other patient assistance fee estimates using the expected value method. The estimate is based on contract prices, estimated percentages of medicine that will be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance fees are included in “accrued trade discounts and rebates” on the consolidated balance sheet. Patient access programs include both co-pay assistance and fully bought down prescriptions.

Sales Returns

Consistent with industry practice, the Company maintains a return policy that allows customers to return medicines within a specified period prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the medicine expiration date or the time that the medicine is dispensed to the patient. The majority of medicine returns result from medicine dating, which falls within the range set by the Company’s policy, and are settled through the issuance of a credit to the customer. The Company calculates sales returns using the expected value method. The estimate of the provision for returns is based upon the Company’s historical experience with actual returns. The return period is known to the Company based on the shelf life of medicines at the time of shipment. The Company records sales returns in “accrued expenses” and as a reduction of revenue.

Prompt Pay Discounts

As an incentive for prompt payment, the Company offers a 2% cash discount to most customers. The Company calculates accrued prompt pay discounts using the most likely amount method. The Company expects that all eligible customers will comply with the contractual terms to earn the discount. The Company records the discount as an allowance against “accounts receivable, net” and a reduction of revenue.

Government Rebates

The Company participates in certain federal government rebate programs such as Medicare Coverage Gap and Medicaid. The Company calculates accrued government rebate estimates using the expected value method. The Company accrues estimated rebates based on percentages of medicine sold to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be prescribed to qualified patients and records the rebates as a reduction of revenue. Accrued government rebates are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Government Chargebacks

The Company provides discounts to federal government qualified entities with whom the Company has contracted. These federal entities purchase medicines from the wholesale pharmaceutical distributors at a discounted price and the wholesale pharmaceutical distributors then charge back to the Company the difference between the current retail price and the contracted price that the federal entities paid for the medicines. The Company calculates accrued government chargeback estimates using the expected value method. The Company accrues estimated chargebacks based on contract prices, sell-through sales data obtained from third-party information and estimated levels of inventory in the distribution channel and records the chargeback as a reduction of revenue. Accrued government chargebacks are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Bad Debt Expense

The Company’s medicines are sold to wholesale pharmaceutical distributors and pharmacies. The Company monitors its accounts receivable balances to determine the impact, if any, of such factors as changes in customer concentration, credit risk and the realizability of its accounts receivable, and records a bad debt reserve when applicable.

Inventories

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out convention. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs. The Company reviews its inventory balance and purchase obligations to assess if it has obsolete or excess inventory and records a charge to “cost of goods sold” when applicable.

Inventories acquired in business combinations are recorded at their estimated fair values. “Step-up” represents the write-up of inventory from the lower of cost or net realizable value (the historical book value as previously recorded on the acquired company’s balance sheet) to fair market value at the acquisition date. Inventory step-up expense is recorded in the consolidated statement of comprehensive loss based on actual sales, or usage, using the first-in, first-out convention.

Inventories exclude medicine sample inventory, which is included in other current assets and is expensed as a component of “selling, general and administrative” expense when shipped to sales representatives.

Cost of Goods Sold

The Company recognizes cost of goods sold in connection with its sales of each of its distributed medicines. Cost of goods sold includes all costs directly related to the acquisition of the Company’s medicines from its third-party manufacturers, including freight charges and other direct expenses such as insurance and supply chain costs. Cost of goods sold also includes amortization of intellectual property as described in the intangible assets accounting policy below, inventory step-up expense, drug substance harmonization costs, share-based compensation, charges relating to discontinuation of clinical trials, royalty payments to third parties, royalty accretion expense, changes in estimates associated with the contingent royalty liability as described in the accrued contingent royalty accounting policy below and loss on inventory purchase commitments.

Pre-clinical Studies and Clinical Trial Accruals

The Company’s pre-clinical studies and clinical trials have historically been conducted by third-party contract research organizations and other vendors. Pre-clinical study and clinical trial expenses are based on the services received from these contract research organizations and vendors. Payments depend on factors such as the milestones accomplished, successful enrollment of certain numbers of patients and site initiation. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual accordingly.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share (“EPS”) reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

Cash and Cash Equivalents

The Company considers all highly liquid investments, readily convertible to cash, that mature within three months or less from date of purchase to be cash equivalents. Cash and cash equivalents primarily consist of cash balances and money market funds. The Company generally invests excess cash in money market funds and other financial instruments with short-term durations, based upon operating requirements.

Restricted Cash

Restricted cash consists primarily of balances in interest-bearing money market accounts required by a vendor for the Company’s sponsored employee business credit card program and collateral for a letter of credit.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities.

Business Combinations

The Company accounts for business combinations in accordance with the guidance in Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”) under which acquired assets and liabilities are measured at their respective estimated fair values as of the acquisition date. The Company may be required, as in the case of intangible assets, contingent royalties or derivatives, to determine the fair value associated with these amounts by estimating the fair value using an income approach under the discounted cash flow method, which may include revenue projections and other assumptions made by the Company to determine the fair value.

Provision for Income Taxes

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. The Company also accounts for the uncertainty in income taxes by utilizing a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or are expected to be taken on an income tax return. Deferred tax assets and deferred tax liabilities are netted by jurisdiction on the Company’s consolidated balance sheets.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, (“SAB 118”), which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the date of enactment for companies to complete the accounting under ASC 740, Income Taxes. In accordance with SAB 118, we reflected the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 was complete. To the extent that our accounting for certain income tax effects of the Tax Act was incomplete but we could determine a reasonable estimate, we recorded a provisional estimate in the consolidated financial statements. As of December 31, 2017, we had not completed our accounting for the effects of the Tax Act. However, we made reasonable estimates of the effects on our income tax provision with respect to certain items, primarily the revaluation of our existing U.S. deferred tax balances and the write-off of our U.S. deferred tax assets resulting from interest expense carryforwards under Section 163(j) of the Internal Revenue Code, as amended of the Code (“Section 163(j)”). In other cases, we were not been able to make reasonable estimates and continued to account for those items based on our existing accounting under the provisions of the tax laws that were in effect prior to enactment. We recognized a net income tax benefit of $74.9 million for the year ended December 31, 2017, associated with the items we could reasonably estimate; refer to Note 21 of the Notes to consolidated financial statements. This benefit reflects the revaluation of our U.S. net deferred tax liability based on the new U.S. federal tax rate of 21 percent, partially offset by the write-off of the deferred tax asset related to our U.S. interest expense carryforwards.

On April 2, 2018, the U.S. Treasury Department and the U.S. Internal Revenue Service issued Notice 2018-28 (“the Notice”) which provides guidance for computing the business interest expense limitation under the Tax Act and clarifies the treatment of interest disallowed and carried forward under Section 163(j) of the Tax Act. In accordance with the measurement period provisions under SAB 118 and the guidance in the Notice the Company reinstated the deferred tax asset related to its U.S. interest expense carryforwards under Section 163(j) based on the new U.S. federal tax rate of 21 percent plus applicable state tax rates. The impact of the deferred tax asset reinstatement in accordance with SAB 118 was a $37.4 million increase to the Company’s benefit for income taxes and a corresponding decrease to the U.S. group net deferred tax liability position. The impact of this reinstatement has been recognized as a discrete tax adjustment during the year ended December 31, 2018 and resulted in a 31.4% increase in the Company’s effective tax rate during the period. Other than the reinstatement of the Company’s U.S interest expense carryforwards under Section 163(j), as described previously, in the fourth quarter of 2018, the Company completed our analysis to determine the effect of the Tax Act and recorded immaterial adjustments as of December 31, 2018 which related to return to provision adjustments which impacted the Company’s U.S. net deferred tax liabilities.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes and an accelerated method for income tax reporting purposes. Upon retirement or sale of an asset, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Repair and maintenance costs are charged to expenses as incurred and improvements are capitalized.

Leasehold improvements are amortized on a straight-line basis over the term of the applicable lease, or the useful life of the assets, whichever is shorter.

Depreciation and amortization periods for the Company’s property and equipment are as follows:

Machinery and equipment		5 to 7 years
Furniture and fixtures		3 to 5 years
Computer equipment		3 years
Software		3 years
Trade show equipment		3 years

The Company capitalizes software development costs associated with internal use software, including external direct costs of materials and services and payroll costs for employees devoting time to a software project. Costs incurred during the preliminary project stage, as well as costs for maintenance and training, are expensed as incurred.

Software includes internal-use software acquired and modified to meet the Company’s internal requirements. Amortization commences when the software is ready for its intended use.

Intangible Assets

Definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews its intangible assets when events or circumstances may indicate that the carrying value of these assets is not recoverable and exceeds their fair value. The Company measures fair value based on the estimated future discounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable. The estimated useful lives, from the date of acquisition, for all identified intangible assets that are subject to amortization are between five and thirteen years.

Indefinite-lived intangible assets consist of capitalized in-process research and development (“IPR&D”). IPR&D assets represent capitalized incomplete research projects that the Company acquired through business combinations. Such assets are initially measured at their acquisition date fair values and are tested for impairment, until completion or abandonment of research and development efforts associated with the projects. An IPR&D asset is considered abandoned when research and development efforts associated with the asset have ceased, and there are no plans to sell or license the asset or derive value from the asset. At that point, the asset is considered to be impaired and is written off. Upon successful completion of each project, the Company will make a determination about the then remaining useful life of the intangible asset and begin amortization. The Company tests its indefinite-lived intangibles, including IPR&D assets, for impairment annually during the fourth quarter and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Impairment loss, if any, is recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability. The Company tests goodwill for impairment annually during the fourth quarter and whenever indicators of impairment exist by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is performed. If the Company concludes that goodwill is impaired, it will record an impairment charge in its consolidated statement of comprehensive loss.

Research and Development Expenses

Research and development expenses include, but are not limited to, payroll and other personnel expenses, consultant expenses, expenses incurred under agreements with contract research organizations to conduct clinical trials, expenses incurred to manufacture clinical trial materials and acquired IPR&D assets. Research and development expenses were $82.8 million, $225.0 million and $60.7 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Advertising Expenses

We expense the costs of advertising as incurred. Advertising expenses were $21.6 million, $19.2 million and $14.4 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Deferred Financing Costs

Costs incurred in connection with debt financings have been capitalized to “Long-term debt, net of current” and “Exchangeable notes, net” in the Company’s consolidated balance sheets as deferred financing costs, and are charged to interest expense using the effective interest method over the terms of the related debt agreements. These costs include document preparation costs, commissions, fees and expenses of investment bankers and underwriters, and accounting and legal fees.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and investments. The Company’s investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding the Company’s cash, cash equivalents and investments to the extent recorded on the balance sheet.

The purchase cost of ACTIMMUNE is denominated in Euros and is subject to foreign currency risk. The Company has contracts relating to RAVICTI, QUINSAIR and PROCYSBI for sales in Canada which sales are denominated in Canadian dollars and are subject to foreign currency risk. The Company also incurs certain operating expenses in currencies other than the U.S. dollar in relation to its Irish operations and foreign subsidiaries. Therefore, the Company is subject to volatility in cash flows due to fluctuations in foreign currency exchange rates, particularly changes in the Euro and the Canadian dollar.

Historically, the Company’s accounts receivable balances have been highly concentrated with a select number of customers consisting primarily of large wholesale pharmaceutical distributors who, in turn, sell the medicines to pharmacies, hospitals and other customers. As of December 31, 2018 and 2017, the Company’s top four customers accounted for approximately 85% and 74%, respectively, of the Company’s total outstanding accounts receivable balances, after the reclassification adjustments as described in this Note 2.

The Company depends on single-source suppliers and manufacturers for certain of its medicines, medicine candidates and their active pharmaceutical ingredients.

Comprehensive Loss

Comprehensive loss is composed of net loss and other comprehensive loss (“OCI”). OCI includes certain changes in shareholders’ equity that are excluded from net loss, which consist of foreign currency translation adjustments and pension remeasurements. The Company reports the effect of significant reclassifications out of accumulated OCI on the respective line items in net loss if the amount being reclassified is required under GAAP to be reclassified in its entirety to net loss. For other amounts that are not required under GAAP to be reclassified in their entirety to net loss in the same reporting period, the Company cross-references other disclosures required under GAAP that provide additional detail about those amounts.

Share-Based Compensation

The Company accounts for employee share-based compensation by measuring and recognizing compensation expense for all share-based payments based on estimated grant date fair values. The Company uses the straight-line method to allocate compensation cost to reporting periods over each awardee’s requisite service period, which is generally the vesting period. The Company adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”) on January 1, 2017 and has elected to retain a forfeiture rate after adoption.

Accrued Contingent Royalties

The Company’s accrued contingent royalties consist of the contingent royalty obligations assumed by the Company related to the Company’s acquisitions of rights to certain of its medicines. At the time of each acquisition, the Company assigned an estimated fair value to its contingent liability for royalties. The estimated royalty liability is based on anticipated revenue streams utilizing the income approach under the discounted cash flow method. The estimated liability for royalties is increased or decreased over time to reflect the change in its present value and accretion expense is recorded as part of cost of goods sold. The Company evaluates the adequacy of the estimated contingent royalty liability at least annually in the fourth quarter, or whenever events or changes in circumstances indicate that an evaluation of the estimate is necessary. As part of its evaluation, the Company adjusts the carrying value of the liability to the present value of the revised estimated cash flows using the original discount rate. Any adjustment to the liability is recorded as an increase or reduction in cost of goods sold. The royalty liability is included in current and long-term accrued royalties on the consolidated balance sheets.

Contingencies

From time to time, the Company may become involved in claims and other legal matters arising in the ordinary course of business. The Company records accruals for loss contingencies to the extent that it concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. Legal fees and other expenses related to litigation are expensed as incurred and included in “selling, general and administrative” expenses.

Recent Accounting Pronouncements

From time to time, the Company adopts new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies.

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The standard aims to achieve a consistent application of revenue recognition, resulting in a single revenue model to be applied by reporting companies under GAAP. Under this model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The standard is required to be applied retrospectively to each prior reporting period presented or modified retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company elected to utilize the modified retrospective method. The performance obligations identified by the Company under Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts With Customers, are similar to the unit of account and performance obligation determination under ASC Topic 605, Revenue Recognition. The implementation of this guidance did not have a material impact on the Company’s consolidated financial statements as the timing of revenue recognition for its primary revenue stream, product sales, did not significantly change. Certain of the Company’s contracts for sales outside the United States include variable consideration that the Company was precluded from recognizing because the amounts were contingent. The Company concluded that this standard required a cumulative-effect adjustment of certain deferred revenues under these contracts that were originally expected to be recognized in the future. Upon adoption on January 1, 2018, the Company reclassified $11.3 million of deferred revenue directly to retained earnings. Following this reclassification, no amounts remained in deferred revenue relating to these contracts. In addition, as a result of the adoption of ASU No. 2014-09, the Company now presents all allowances for medicine returns in accrued expenses on the consolidated balance sheet. This resulted in a reclassification of $37.9 million of allowances for medicine returns from “accounts receivable, net” to “accrued expenses” in the consolidated balance sheet at December 31, 2017, and a reclassification of $22.6 million and $0.8 million between the “accounts receivable” and “accrued expenses and accrued royalties” line items within the changes in operating assets and liabilities section of the consolidated statement of cash flow for the years ended December 31, 2017 and December 31, 2016, respectively.

Effective January 1, 2018, the Company adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU No. 2016-16”). ASU No. 2016-16 was issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Previously, GAAP prohibited the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party which has resulted in diversity in practice and increased complexity within financial reporting. ASU No. 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and does not require new disclosures. Upon adoption, the Company applied the modified retrospective basis through a cumulative-effect adjustment to retained earnings and the Company reclassified $9.3 million of unrecognized deferred charges directly to retained earnings.

Effective January 1, 2018, the Company adopted ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU No. 2017-09”). The amendment amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC Topic 718, Compensation- Stock Compensation. Upon adoption, the Company applied the prospective method and will account for future modifications, if any, under this guidance. The adoption of ASU No. 2017-09 did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 addresses diversity in practice related to the classification and presentation of changes in restricted cash on the statement of cash flows. ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

Effective January 1, 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”). ASU No. 2016-15 provides guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle.

The following table summarizes the adjustments made to conform prior period classifications as a result of the adoption of ASU No. 2016-18 and ASU No. 2016-15 (in thousands):

	For the Year Ended December 31, 2017
	As filed			ASU No. 2016-18 Reclassification (2)			ASU No. 2016-15 Reclassification (3)			As adjusted
Net cash provided by operating activities	$	280,208		$	—		$	4,132		$	284,340
Net cash used in investing activities		(101,619	)		(566	)		—			(102,185	)
Net cash provided by financing activities		58,408			—			(4,132	)		54,276
Cash, cash equivalents and restricted cash, beginning of the period (1)		509,055			7,095			—			516,150
Cash, cash equivalents and restricted cash, end of the period (1)		751,368			6,529			—			757,897

	For the Year Ended December 31, 2016
	As filed			ASU No. 2016-18 Reclassification (2)			ASU No. 2016-15 Reclassification (3)			As adjusted
Net cash provided by operating activities	$	369,456		$	—		$	—		$	369,456
Net cash used in investing activities		(1,375,881	)		5,235			—			(1,370,646	)
Net cash provided by financing activities		657,074			—			—			657,074
Cash, cash equivalents and restricted cash, beginning of the period (1)		859,616			1,860			—			861,476
Cash, cash equivalents and restricted cash, end of the period (1)		509,055			7,095			—			516,150

(1)

Cash, cash equivalents and restricted cash, beginning of the period and end of the period presented in the “As filed” column in the table above excludes restricted cash.

(2)

$1.9 million, $7.1 million and $6.5 million in the tables above represent the Company’s restricted cash balance at December 31, 2015, 2016 and 2017, respectively.

(3)

Upon adoption of ASU No. 2016-15, the Company reclassified prepayment penalties and debt extinguishment costs of $3.8 million and $0.3 million, respectively, from operating activities to financing activities.

Effective January 1, 2018, the Company adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”), to eliminate the second step of the goodwill impairment test. ASU No. 2017-04 requires an entity to measure a goodwill impairment loss as the amount by which the carrying value of a reporting unit exceeds its fair value. Additionally, an entity should include the income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when measuring a goodwill impairment loss, if applicable. The adoption of ASU No. 2017-04 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). Under ASU No. 2016-02, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For leases with a term of twelve months or less, the lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities by class of underlying assets. ASU No. 2016-02 becomes effective for the Company beginning in the first quarter of 2019. The guidance can be applied using either a modified retrospective approach at the beginning of the earliest period presented, or at the beginning of the period in which it is adopted. The Company will adopt this standard in the first quarter of 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The Company does not expect the adoption will have a material impact on its consolidated statement of comprehensive loss. However, the new standard requires the Company to establish approximately $38.0 million of liabilities and corresponding right-of-use assets of $36.0 million on its consolidated balance sheet for leases, primarily related to operating leases on rented office properties, that existed as of the January 1, 2019, adoption date. The Company also expects to elect to not recognize lease assets and liabilities for leases with a term of twelve months or less.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU No. 2018-07”). ASU No. 2018-07 largely aligns the accounting for share-based payment awards issued to employees and non-employees. The Company will adopt ASU No. 2018-07 in the first quarter of 2019, and it does not expect the adoption of ASU No. 2018-07 to have a material impact on the Company’s consolidated financial statements and related disclosures.

In June 2018, the FASB issued ASU No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (“ASU No. 2018-08”). The new guidance applies to all entities that receive or make contributions, including business entities. The Company will adopt the standard in the first quarter of 2019, using prospective application to any new agreements entered into after the effective date. The Company does not expect the adoption of ASU No. 2018-08 to have a material impact on the Company’s consolidated financial statements and related disclosures.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not, or are not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

Net Loss per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Loss per Share

NOTE 3 – NET LOSS PER SHARE

The following table presents basic and diluted net loss per share for the years ended December 31, 2018, 2017 and 2016 (in thousands, except share and per share data):

	For the Years Ended December 31,
	2018			2017			2016
Basic and diluted loss per share calculation:
Net loss	$	(74,187	)	$	(401,585	)	$	(165,563	)
Weighted average of ordinary shares outstanding		166,155,405			163,122,663			160,699,543
Basic and diluted net loss per share	$	(0.45	)	$	(2.46	)	$	(1.03	)

Basic net loss per share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period. Diluted net loss per share reflects the potential dilution beyond shares for basic net loss per share that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

The outstanding securities listed in the table below were excluded from the computation of diluted loss per ordinary share for the years ended December 31, 2018, 2017 and 2016 due to being anti-dilutive:

	For the Years Ended December 31,
	2018		2017		2016
Stock options		6,406,914		12,887,595		7,515,297
Restricted stock units		2,299,254		1,095,768		492,030
Performance stock units		1,248,632		2,742,301		5,247,987
Employee stock purchase plan shares		265,886		63,445		56,805
Warrants		—		388,841		1,123,737
		10,220,686		17,177,950		14,435,856

The potentially dilutive impact of the March 2015 private placement of $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022 (the “Exchangeable Senior Notes”) by Horizon Pharma Investment Limited (“Horizon Investment”), a wholly owned subsidiary of the Company, is determined using a method similar to the treasury stock method. Under this method, no numerator or denominator adjustments arise from the principal and interest components of the Exchangeable Senior Notes because the Company has the intent and ability to settle the Exchangeable Senior Notes’ principal and interest in cash. Instead, the Company is required to increase the diluted net (loss) income per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net (loss) income per share purposes, the conversion spread obligation is calculated based on whether the average market price of the Company’s ordinary shares over the reporting period is in excess of the exchange price of the Exchangeable Senior Notes. There was no calculated spread added to the denominator for the years ended December 31, 2018, 2017 and 2016.

Acquisitions, Divestitures and Other Arrangements

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Acquisitions, Divestitures and Other Arrangements

NOTE 4 –ACQUISITIONS, DIVESTITURES AND OTHER ARRANGEMENTS

Sale of RAVICTI and AMMONAPS Rights outside of North America and Japan

On December 28, 2018, the Company sold its rights to RAVICTI and AMMONAPS (known as BUPHENYL in the United States) outside of North America and Japan to Medical Need Europe AB, part of the Immedica Group, for $35.0 million (the “Immedica transaction”). The Company previously distributed RAVICTI and AMMONAPS through a commercial partner in Europe and other non-U.S. markets. The Company has retained the rights to RAVICTI and BUPHENYL in North America and Japan.

Pursuant to ASC 805 (as amended by ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU No. 2017-01”)), the Company accounted for the Immedica transaction as a sale of assets, specifically a sale of intellectual property rights.

The gain on sale of assets recorded to the consolidated statement of comprehensive loss during the year ended December 31, 2018, was determined as follows (in thousands):

Cash proceeds	$	35,000
Less net assets sold:
Developed technology		(4,443	)
Transaction costs		(197	)
Gain on sale of assets	$	30,360

Acquisition and Subsequent Sale of Additional Rights to Interferon Gamma-1b

On June 30, 2017, the Company completed its acquisition of certain rights to interferon gamma-1b from Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) in all territories outside of the United States, Canada and Japan and in connection therewith, paid Boehringer Ingelheim International €19.5 million ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406). Boehringer Ingelheim International commercialized interferon gamma-1b as IMUKIN in an estimated thirty countries, primarily in Europe and the Middle East. Upon closing, during the year ended December 31, 2017, the Company accounted for the payment as the acquisition of an asset which was immediately impaired as projections for future net sales of IMUKIN in these territories did not exceed the related costs, and included the payment in the “impairment of long-lived assets” line item in its consolidated statement of comprehensive loss.

On July 24, 2018, the Company sold its rights to interferon gamma-1b in all territories outside the United States, Canada and Japan to Clinigen Group plc (“Clinigen”) for an upfront payment of €7.5 million ($8.8 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1683) and a potential additional contingent consideration payment of €3.0 million ($3.5 million when converted using a Euro-to-Dollar exchange rate of 1.1673) (the “IMUKIN sale”). The Company continues to market interferon gamma-1b as ACTIMMUNE in the United States.

Pursuant to ASC No. 2017-01, the Company accounted for the IMUKIN sale as a sale of assets, specifically a sale of intellectual property rights and a sale of inventory.

The gain on sale of assets recorded to the consolidated statement of comprehensive loss during the year ended December 31, 2018, was determined as follows (in thousands):

Cash proceeds including $715 for inventory	$	9,477
Contingent consideration receivable		3,502
Less net assets sold:
Inventory		(623	)
Transaction costs		(28	)
Gain on sale of assets	$	12,328

Acquisition of River Vision

On May 8, 2017, the Company acquired 100% of the equity interests in River Vision Development Corp. (“River Vision”) for upfront cash payments totaling approximately $150.3 million, including cash acquired of $6.3 million, with additional potential future milestone and royalty payments contingent on the satisfaction of certain regulatory milestones and sales thresholds. Pursuant to ASU No. 2017-01, the Company accounted for the River Vision acquisition as the purchase of an IPR&D asset and, pursuant to ASC Topic 730, Research and Development, recorded the purchase price as research and development expense during the year ended December 31, 2017. Further, the Company recognized approximately $32.4 million of federal net operating losses, $2.2 million of state net operating losses and $9.5 million of federal tax credits. The acquired tax attributes were set up as deferred tax assets which were further netted within the net deferred tax liabilities of the U.S. group, offset by a deferred credit recorded in long-term liabilities. The deferred tax assets were further netted with the net deferred tax liabilities of the U.S. group.

Under the agreement for the acquisition of River Vision, the Company is required to pay up to $325.0 million upon the attainment of various milestones related to U.S. Food and Drug Administration (“FDA”) approval and net sales thresholds for teprotumumab. The agreement also includes a royalty payment of three percent of the portion of annual worldwide net sales exceeding $300.0 million (if any). Under separate agreements, the Company is also required to pay up to CHF103.0 million ($104.9 million when converted using a CHF-to-Dollar exchange rate at December 31, 2018 of 1.0185) upon the attainment of various milestones related to approval, filing and net sales thresholds for teprotumumab. During the year ended December 31, 2017, CHF2.0 million ($2.0 million when converted using a CHF-to-Dollar exchange rate at the date of payment of 1.0169) was paid in relation to these milestones. The separate agreement also includes a royalty payment of between nine percent and twelve percent of a portion of annual worldwide net sales.

Divestiture of PROCYSBI and QUINSAIR rights in EMEA Regions

On June 23, 2017, the Company completed the sale of its European subsidiary that owned the marketing rights to PROCYSBI and QUINSAIR in Europe, the Middle East and Africa (“EMEA”) regions (the “Chiesi divestiture”) to Chiesi Farmaceutici S.p.A. (“Chiesi”) for an upfront payment of $72.5 million, which reflects $3.1 million of cash divested, with additional potential milestone payments based on sales thresholds.

Pursuant to ASU No. 2017-01, the Company accounted for the Chiesi divestiture as a sale of a business. The Company determined that the sale of the business and its assets in connection with the Chiesi divestiture did not constitute a strategic shift and that it did not and will not have a major effect on its operations and financial results. Accordingly, the operations associated with the Chiesi divestiture are not reported in discontinued operations.

The gain on divestiture recorded during the year ended December 31, 2017 was determined as follows (in thousands):

Cash proceeds	$	72,462
Add reimbursement of royalties		27,101
Less net assets sold:
Developed technology		(47,261	)
Goodwill		(16,285	)
Other		(24,482	)
Transaction and other costs		(5,268	)
Gain on divestiture	$	6,267

Under the terms of its agreement with Chiesi, the Company will continue to pay third parties for the royalties on sales of PROCYSBI and QUINSAIR in the EMEA regions, and Chiesi will reimburse the Company for those royalties. At the date of divestiture, the Company recorded an asset of $27.1 million to “other assets”, which represented the estimated amounts that are expected to be reimbursed from Chiesi for the PROCYSBI and QUINSAIR royalties. These estimated royalties are accrued in “accrued expenses” and “other long-term liabilities”.

Transaction and other costs primarily relate to professional and license fees attributable to the divestiture.

Licensing Agreement

On December 12, 2017, the Company entered into an agreement to license HZN-003 (formerly MEDI4945), a potential next-generation biologic for uncontrolled gout, from MedImmune LLC (“MedImmune”), the global biologics research and development arm of the AstraZeneca Group. HZN-003 is a pre-clinical, genetically engineered uricase derivative with optimized uricase and optimized PEGylation technology that has the potential to improve the response rate to the biologic as well as the potential for subcutaneous dosing. Under the terms of the agreement, the Company agreed to pay MedImmune an upfront cash payment of $12.0 million with additional potential future milestone payments of up to $153.5 million contingent on the satisfaction of certain development and sales thresholds. The $12.0 million upfront payment was accounted for as the acquisition of an asset and was recorded as “research and development” expenses in the consolidated statement of comprehensive loss during the year ended December 31, 2017 and included in “accrued expenses” as of December 31, 2017. The upfront payment was subsequently paid in January 2018.

Inventories

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Inventories

NOTE 5 – INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture of finished goods or the purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs.

The components of inventories as of December 31, 2018 and 2017 consisted of the following (in thousands):

	As of December 31,
	2018		2017
Raw materials	$	5,092	$	4,553
Work-in-process		27,068		27,589
Finished goods		18,591		29,513
Inventories, net	$	50,751	$	61,655

Finished goods at December 31, 2017 included $17.0 million of stepped-up KRYSTEXXA inventory. During the year ended December 31, 2018, the Company recorded the remaining $17.0 million of KRYSTEXXA inventory step-up expense to cost of goods sold. During the year ended December 31, 2017, the Company recorded $78.3 million of KRYSTEXXA inventory step-up expense, and $40.8 million of PROCYSBI and QUINSAIR inventory step-up expense. In addition, during the year ended December 31, 2017, the Company recorded $3.2 million of inventory step-up expense to “gain on divestiture” relating to PROCYSBI and QUINSAIR in connection with the Chiesi divestiture in June 2017.

KRYSTEXXA inventory step-up was fully expensed by March 31, 2018. As a result, the costs of goods sold related to KRYSTEXXA have decreased significantly beginning with the second quarter of 2018 to levels consistent with the historical costs of goods sold before the Company’s acquisition of Crealta Holdings LLC.

Because inventory step-up expense is acquisition-related, will not continue indefinitely and has a significant effect on the Company’s gross profit, gross margin percentage and net income (loss) for all affected periods, the Company discloses balance sheet and income statement amounts related to inventory step-up within the notes to the consolidated financial statements.