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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-35238

 

HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 

 

Ireland

 

Not Applicable

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

Connaught House, 1st Floor

1 Burlington Road, Dublin 4, D04 C5Y6, Ireland

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

011 353 1 772 2100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary shares, nominal value $0.0001 per share

HZNP

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of November 1, 2019: 187,302,229

 

 

 

 


HORIZON THERAPEUTICS PLC

INDEX

 

 

 

 

 

Page

 

 

 

No.

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

Condensed Consolidated Balance Sheets as of September 30, 2019 and as of December 31, 2018 (Unaudited)

 

1

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

2

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

3

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

35

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

53

Item 4.

Controls and Procedures

 

53

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

54

Item 1A.

Risk Factors

 

54

Item 6.

Exhibits

 

98

 

Signatures

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data)

 

 

As of

 

As of

 

 

September 30,

 

December 31,

 

 

2019

 

2018

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

883,964

 

$

958,712

 

Restricted cash

 

3,746

 

 

3,405

 

Accounts receivable, net

 

396,626

 

 

464,730

 

Inventories, net

 

58,505

 

 

50,751

 

Prepaid expenses and other current assets

 

135,963

 

 

68,218

 

Total current assets

 

1,478,804

 

 

1,545,816

 

Property and equipment, net

 

26,202

 

 

20,101

 

Developed technology, net

 

1,756,493

 

 

1,945,639

 

Other intangible assets, net

 

4,024

 

 

4,630

 

Goodwill

 

413,669

 

 

413,669

 

Deferred tax assets, net

 

45

 

 

3,148

 

Other assets

 

42,185

 

 

8,959

 

Total assets

$

3,721,422

 

$

3,941,962

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Long-term debt, current portion

$

 

$

 

Accounts payable

 

26,906

 

 

30,284

 

Accrued expenses

 

204,164

 

 

215,739

 

Accrued trade discounts and rebates

 

404,544

 

 

457,763

 

Deferred revenues, current portion

 

 

 

4,901

 

Total current liabilities

 

635,614

 

 

708,687

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Exchangeable notes, net

 

346,541

 

 

332,199

 

Long-term debt, net of current

 

1,000,819

 

 

1,564,485

 

Deferred tax liabilities, net

 

112,968

 

 

107,768

 

Other long-term liabilities

 

69,907

 

 

38,717

 

Total long-term liabilities

 

1,530,235

 

 

2,043,169

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Ordinary shares, $0.0001 nominal value; 600,000,000 and 300,000,000 shares authorized at September 30, 2019 and December 31, 2018, respectively;

187,174,795 and 169,244,520 shares issued at September 30, 2019 and December

31, 2018, respectively, and 186,790,429 and 168,860,154 shares outstanding at

September 30, 2019 and December 31, 2018, respectively

 

19

 

 

17

 

Treasury stock, 384,366 ordinary shares at September 30, 2019 and December 31, 2018

 

(4,585

)

 

(4,585

)

Additional paid-in capital

 

2,761,068

 

 

2,374,966

 

Accumulated other comprehensive loss

 

(2,475

)

 

(1,523

)

Accumulated deficit

 

(1,198,454

)

 

(1,178,769

)

Total shareholders’ equity

 

1,555,573

 

 

1,190,106

 

Total liabilities and shareholders' equity

$

3,721,422

 

$

3,941,962

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

Net sales

$

335,466

 

 

$

325,311

 

 

$

936,484

 

 

$

852,027

 

 

Cost of goods sold

 

89,949

 

 

 

91,077

 

 

 

267,254

 

 

 

292,702

 

 

Gross profit

 

245,517

 

 

 

234,234

 

 

 

669,230

 

 

 

559,325

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

24,572

 

 

 

21,169

 

 

 

74,611

 

 

 

63,079

 

 

Selling, general and administrative

 

172,326

 

 

 

161,585

 

 

 

511,720

 

 

 

517,858

 

 

(Gain) loss on sale of assets

 

 

 

 

(12,303

)

 

 

10,963

 

 

 

(12,303

)

 

Impairment of long-lived assets

 

 

 

 

1,603

 

 

 

 

 

 

35,249

 

 

Total operating expenses

 

196,898

 

 

 

172,054

 

 

 

597,294

 

 

 

603,883

 

 

Operating income (loss)

 

48,619

 

 

 

62,180

 

 

 

71,936

 

 

 

(44,558

)

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(20,428

)

 

 

(30,437

)

 

 

(69,991

)

 

 

(91,921

)

 

Loss on debt extinguishment

 

(41,371

)

 

 

 

 

 

(58,835

)

 

 

 

 

Foreign exchange (loss) gain

 

(40

)

 

 

35

 

 

 

(25

)

 

 

(81

)

 

Other income (expense), net

 

890

 

 

 

337

 

 

 

(193

)

 

 

834

 

 

Total other expense, net

 

(60,949

)

 

 

(30,065

)

 

 

(129,044

)

 

 

(91,168

)

 

(Loss) income before (benefit) expense for income taxes

 

(12,330

)

 

 

32,115

 

 

 

(57,108

)

 

 

(135,726

)

 

(Benefit) expense for income taxes

 

(30,564

)

 

 

(1,266

)

 

 

(37,359

)

 

 

4,301

 

 

Net income (loss)

$

18,234

 

 

$

33,381

 

 

$

(19,749

)

 

$

(140,027

)

 

Net income (loss) per ordinary share—basic

$

0.10

 

 

$

0.20

 

 

$

(0.11

)

 

$

(0.84

)

 

Weighted average ordinary shares outstanding—basic

 

186,470,141

 

 

 

167,047,104

 

 

 

181,949,838

 

 

 

166,018,603

 

 

Net income (loss) per ordinary share— diluted

$

0.09

 

 

$

0.19

 

 

$

(0.11

)

 

$

(0.84

)

 

Weighted average ordinary shares outstanding—diluted

 

194,171,967

 

 

 

172,485,757

 

 

 

181,949,838

 

 

 

166,018,603

 

 

OTHER COMPREHENSIVE LOSS, NET OF TAX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

$

(809

)

 

$

(133

)

 

$

(952

)

 

$

(567

)

 

Pension remeasurements

 

 

 

 

 

 

 

 

 

 

289

 

 

Other comprehensive loss

 

(809

)

 

 

(133

)

 

 

(952

)

 

 

(278

)

 

Comprehensive income (loss)

$

17,425

 

 

$

33,248

 

 

$

(20,701

)

 

$

(140,305

)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


 

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Ordinary Shares

 

 

Treasury Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2018

 

 

169,244,520

 

 

$

17

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,374,966

 

 

$

(1,523

)

 

$

(1,178,769

)

 

$

1,190,106

 

Cumulative effect adjustments from adoption of ASU 2016-02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

64

 

Issuance of ordinary shares - public offering

 

 

14,081,632

 

 

 

1

 

 

 

 

 

 

 

 

 

326,848

 

 

 

 

 

 

 

 

 

326,849

 

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units, performance stock units and stock option exercises

 

 

1,804,196

 

 

 

 

 

 

 

 

 

 

 

 

10,042

 

 

 

 

 

 

 

 

 

10,042

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,171

)

 

 

 

 

 

 

 

 

(17,171

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,548

 

 

 

 

 

 

 

 

 

27,548

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(487

)

 

 

 

 

 

(487

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,863

)

 

 

(32,863

)

Balances at March 31, 2019

 

 

185,130,348

 

 

$

18

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,722,233

 

 

$

(2,010

)

 

$

(1,211,568

)

 

$

1,504,088

 

Issuance of ordinary shares - public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

 

 

 

 

 

 

(55

)

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units and stock option exercises

 

 

781,026

 

 

 

1

 

 

 

 

 

 

 

 

 

1,986

 

 

 

 

 

 

 

 

 

1,987

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,203

)

 

 

 

 

 

 

 

 

(7,203

)

Issuance of ordinary shares in conjunction with ESPP program

 

 

558,856

 

 

 

 

 

 

 

 

 

 

 

 

5,465

 

 

 

 

 

 

 

 

 

5,465

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,367

 

 

 

 

 

 

 

 

 

21,367

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

344

 

 

 

 

 

 

344

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,120

)

 

 

(5,120

)

Balances at June 30, 2019

 

 

186,470,230

 

 

$

19

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,743,793

 

 

$

(1,666

)

 

$

(1,216,688

)

 

$

1,520,873

 

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units and stock option exercises

 

 

704,189

 

 

 

 

 

 

 

 

 

 

 

 

4,207

 

 

 

 

 

 

 

 

 

4,207

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,086

)

 

 

 

 

 

 

 

 

(5,086

)

Issuance of ordinary shares in conjunction with ESPP program

 

 

376

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,151