SEC Filing | Horizon Therapeutics plc

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hznp-10q_20210630.htm

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 June 30, 2021

☐	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 July 29, 2021: 225,893,375.

HORIZON THERAPEUTICS PLC

INDEX

		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2021 and as of December 31, 2020 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (Unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	57
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 6.	Exhibits	114
	Signatures	116

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except nominal value and share data)

	As of			As of
	June 30,			December 31,
	2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	812,319		$	2,079,906
Restricted cash		3,839			3,573
Accounts receivable, net		735,433			659,701
Inventories, net		258,676			75,283
Prepaid expenses and other current assets		365,113			251,945
Total current assets		2,175,380			3,070,408
Property and equipment, net		220,142			189,037
Developed technology and other intangible assets, net		3,119,709			1,782,962
In-process research and development		880,000			—
Goodwill		1,069,031			413,669
Deferred tax assets, net		610,559			560,841
Other assets		132,595			55,699
Total assets	$	8,207,416		$	6,072,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	51,947		$	37,710
Accrued expenses and other current liabilities		478,499			485,567
Accrued trade discounts and rebates		306,364			352,463
Long-term debt—current portion		16,000			—
Total current liabilities		852,810			875,740
LONG-TERM LIABILITIES:
Long-term debt, net		2,560,444			1,003,379
Deferred tax liabilities, net		549,078			66,474
Other long-term liabilities		171,448			101,672
Total long-term liabilities		3,280,970			1,171,525
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2021 and December 31, 2020; 226,099,787 and 221,721,674 shares issued at June 30, 2021 and December 31, 2020, respectively, and 225,715,421 and 221,337,308 shares outstanding at June 30, 2021 and December 31, 2020, respectively		22			22
Treasury stock, 384,366 ordinary shares at June 30, 2021 and December 31, 2020		(4,585	)		(4,585	)
Additional paid-in capital		4,260,337			4,245,945
Accumulated other comprehensive loss		(1,018	)		(145	)
Accumulated deficit		(181,120	)		(215,886	)
Total shareholders’ equity		4,073,636			4,025,351
Total liabilities and shareholders' equity	$	8,207,416		$	6,072,616

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

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands, except share and per share data)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Net sales	$	832,548		$	462,779		$	1,174,954		$	818,688
Cost of goods sold		200,995			121,515			301,363			218,931
Gross profit		631,553			341,264			873,591			599,757
OPERATING EXPENSES:
Research and development		139,834			81,068			197,527			108,277
Selling, general and administrative		355,204			222,332			687,196			470,107
Impairment of long-lived asset		—			—			12,371			—
Gain on sale of asset		(2,000	)		—			(2,000	)		—
Total operating expenses		493,038			303,400			895,094			578,384
Operating income (loss)		138,515			37,864			(21,503	)		21,373
OTHER EXPENSE, NET:
Interest expense, net		(22,581	)		(18,571	)		(36,041	)		(35,915	)
Loss on debt extinguishment		—			(17,254	)		—			(17,254	)
Foreign exchange (loss) gain		(39	)		283			(887	)		1,059
Other (expense) income, net		(262	)		632			2,962			1,074
Total other expense, net		(22,882	)		(34,910	)		(33,966	)		(51,036	)
Income (loss) before (benefit) expense for income taxes		115,633			2,954			(55,469	)		(29,663	)
(Benefit) expense for income taxes		(42,484	)		82,964			(90,235	)		63,938
Net income (loss)	$	158,117		$	(80,010	)	$	34,766		$	(93,601	)
Net income (loss) per ordinary share—basic	$	0.70		$	(0.42	)	$	0.15		$	(0.49	)
Weighted average ordinary shares outstanding—basic		225,119,684			192,705,535			224,523,538			191,426,864
Net income (loss) per ordinary share—diluted	$	0.67		$	(0.42	)	$	0.15		$	(0.49	)
Weighted average ordinary shares outstanding—diluted		235,191,860			192,705,535			234,719,830			191,426,864
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustments	$	235		$	344		$	(586	)	$	19
Pension remeasurements		—			—			(287	)		—
Other comprehensive income (loss)		235			344			(873	)		19
Comprehensive income (loss)	$	158,352		$	(79,666	)	$	33,893		$	(93,582	)

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

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, 2020		221,721,674	$	22		384,366	$	(4,585	)	$	4,245,945		$	(145	)	$	(215,886	)	$	4,025,351
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		3,305,947		—		—		—			19,843			—			—			19,843
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(128,261	)		—			—			(128,261	)
Share-based compensation		—		—		—		—			62,296			—			—			62,296
Currency translation adjustment		—		—		—		—			—			(821	)		—			(821	)
Pension remeasurements		—		—		—		—			—			(287	)		—			(287	)
Net loss		—		—		—		—			—			—			(123,351	)		(123,351	)
Balances at March 31, 2021		225,027,621	$	22		384,366	$	(4,585	)	$	4,199,823		$	(1,253	)	$	(339,237	)	$	3,854,770
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		597,169		—		—		—			7,996			—			—			7,996
Issuance of ordinary shares in conjunction with Employee Share Purchase Plan		474,997		—		—		—			11,482			—			—			11,482
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(13,388	)		—			—			(13,388	)
Share-based compensation		—		—		—		—			54,424			—			—			54,424
Currency translation adjustment		—		—		—		—			—			235			—			235
Net income		—		—		—		—			—			—			158,117			158,117
Balances at June 30, 2021		226,099,787	$	22		384,366	$	(4,585	)	$	4,260,337		$	(1,018	)	$	(181,120	)	$	4,073,636

										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, 2019		188,402,040	$	19		384,366	$	(4,585	)	$	2,797,602		$	(1,905	)	$	(605,682	)	$	2,185,449
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		2,560,573		—		—		—			7,049			—			—			7,049
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(46,664	)		—			—			(46,664	)
Share-based compensation		—		—		—		—			56,421			—			—			56,421
Currency translation adjustment		—		—		—		—			—			(325	)		—			(325	)
Net loss		—		—