8-K
Horizon Therapeutics Public Ltd Co 00-0000000 false 0001492426 0001492426 2022-08-03 2022-08-03

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2022

 

 

Horizon Therapeutics Public Limited Company

(Exact name of registrant as specified in its charter)

 

 

 

Ireland   001-35238   Not Applicable

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(IRS Employer

Identification No.)

70 St. Stephen’s Green, Dublin, D02 E2X4, Ireland

(Address of principal executive offices)

Registrant’s telephone number, including area code: 011-353-1-772-2100

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

 

Title of each class

 

Trading
Symbol(s)

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company

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

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On August 3, 2022, Horizon Therapeutics plc issued a press release announcing its financial results for the second quarter ended June 30, 2022. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02 and the exhibit hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

  

Description

99.1    Press Release of Horizon Therapeutics plc, dated August 3, 2022. 
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 3, 2022   HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY
    By:  

/s/ Aaron L. Cox

      Aaron L. Cox
      Executive Vice President and Chief Financial Officer
EX-99.1

Exhibit 99.1

 

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Horizon Therapeutics plc Reports Second-Quarter 2022 Financial Results and

Revises Full-Year 2022 Net Sales and Adjusted EBITDA Guidance

Second-Quarter 2022 Results:

— Net Sales of $876.4 Million; Orphan Segment Net Sales Increased 13% to $841.3 Million —

— GAAP Net Income of $61.0 Million; Adjusted EBITDA of $306.6 Million —

— TEPEZZA® (teprotumumab-trbw) Net Sales of $479.8 Million —

— KRYSTEXXA® (pegloticase injection) Net Sales of $167.8 Million —

— Cash Position of $1.89 Billion as of June 30, 2022 —

Revises Full-Year 2022 Guidance:

— Full-Year 2022 Net Sales Guidance of $3.53 Billion to $3.60 Billion,

Reflecting Revised Net Sales Expectations for TEPEZZA and Inflammation Segment —

— Full-Year 2022 Adjusted EBITDA Guidance of $1.30 Billion to $1.35 Billion —

— Full-Year 2022 TEPEZZA Net Sales Percentage Growth in the High-Teens —

Recent Company Highlights:

— Obtained U.S. FDA Approval for Expanded KRYSTEXXA Label to Include

Co-Administration with Methotrexate Based on Positive MIRROR Results

That Demonstrated Improved and Sustained Patient Response —

— UPLIZNA® (inebilizumab) Approved by European Commission for the Treatment of

Adult Patients with NMOSD; Commercial Launch Underway in Germany —

DUBLIN Aug. 3, 2022 – Horizon Therapeutics plc (Nasdaq: HZNP) today announced second-quarter 2022 financial results and revised its full-year 2022 net sales and adjusted EBITDA guidance.

“Double-digit net sales growth in our orphan segment drove our second-quarter performance, with very strong growth of KRYSTEXXA and an increasing contribution from UPLIZNA,” said Tim Walbert, chairman, president and chief executive officer, Horizon. “We were also pleased to receive FDA approval of our expanded KRYSTEXXA label in July, to include co-administration of KRYSTEXXA with methotrexate, which will enable many more patients to benefit from this important medicine.”

“We are revising our full-year guidance to reflect our expectation for TEPEZZA full-year net sales percentage growth in the high-teens and reflect recent generic competition in our inflammation segment. Importantly, our long-term outlook for TEPEZZA has not changed and we continue to estimate that our three key growth drivers TEPEZZA, KRYSTEXXA and UPLIZNA can generate aggregate global peak annual net sales of greater than $5.5 billion. We understand the dynamics impacting the pace of growth of TEPEZZA, and we are executing on our strategy to address them, including a more significant expansion of our TEPEZZA field force and implementing initiatives to drive further penetration. We are excited about the future prospects for Horizon, with our growth drivers, our expanding pipeline and our global expansion initiatives.”

 

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Financial Highlights

 

(in millions except for per share amounts and percentages)    Q2 22      Q2 21      %
Change
    YTD 22      YTD 21      %
Change
 

Net sales

   $ 876.4      $ 832.5        5     $ 1,761.7      $ 1,175.0        50  

Net income

     61.0        158.1        (61     265.2        34.8        NM  

Non-GAAP net income

     253.8        340.7        (26     569.6        345.5        65  

Adjusted EBITDA

     306.6        320.4        (4     677.8        363.2        87  

Earnings per share - diluted

     0.26        0.67        (61     1.12        0.15        NM  

Non-GAAP earnings per share - diluted

     1.07        1.45        (26     2.41        1.47        64  

Second Quarter and Recent Company Highlights

 

   

Revised Full-Year 2022 TEPEZZA Net Sales Expectations; Confirming Global Peak Annual Net Sales Expectations: Today, the Company announced that it expects TEPEZZA full-year 2022 net sales percentage growth in the high-teens compared to its previous guidance of mid-30s percentage growth. In its prior guidance, the Company expected TEPEZZA trends to continue to show positive progress in the post-Omicron recovery. Following further analysis, the Company determined it needed to increase its efforts to activate and support core thyroid eye disease (TED) treating physicians and to drive an urgency among ophthalmologists and endocrinologists to diagnose and refer TED patients. The Company is executing on several opportunities to accelerate growth, including evolving its commercial focus and increasing the size of its TEPEZZA field force to a greater extent than originally planned. The Company continues to invest significantly in direct-to-consumer advertising. A recent internal market analysis also confirmed the size of the market at more than 100,000 addressable TED patients in the U.S., supporting the Company’s expectation to generate global peak annual net sales of more than $3.5 billion.

 

   

FDA Approved Expanded Label for KRYSTEXXA to Include Co-Administration with Methotrexate: In July, the U.S. Food and Drug Administration (FDA) approved the supplemental Biologics License Application (sBLA) expanding the KRYSTEXXA label to include co-administration with methotrexate. The approval was based on 6-month and 12-month results from the MIRROR randomized controlled trial (RCT), which demonstrated significant improvement in response rate and sustained patient response of KRYSTEXXA with methotrexate compared to KRYSTEXXA with placebo (monotherapy). It also demonstrated significant reductions in infusion reactions in the KRYSTEXXA with methotrexate arm compared to monotherapy and no new safety signals were observed.

 

   

Advancing the Companys Global Expansion for UPLIZNA in Europe and Brazil: In April, the European Commission approved UPLIZNA for the treatment of adult patients with neuromyelitis optica spectrum disorder (NMOSD) who are Anti-Aquaporin-4 Immunoglobulin G Seropositive (AQP4-IgG+). The commercial launch of UPLIZNA in Germany is underway. In June, the Company submitted a regulatory filing to the Brazil National Health Surveillance Agency (ANVISA) for inebilizumab.

 

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Presented New KRYSTEXXA Data at EULAR 2022: In June, new data from the MIRROR RCT were presented at The EULAR 2022 European Congress of Rheumatology conference, showing KRYSTEXXA with methotrexate resulted in significant efficacy and safety improvements compared to KRYSTEXXA with placebo during Month 6. The MIRROR RCT demonstrated that 71% of patients receiving KRYSTEXXA with methotrexate achieved a complete response, a more than 30 percentage-point improvement compared to patients who were randomized to receive KRYSTEXXA with placebo (p<0.0001). Additionally, infusion reactions were seen in 4% of patients receiving KRYSTEXXA with methotrexate compared to 31% in patients randomized to receive KRYSTEXXA with placebo.

 

   

Presented New TEPEZZA Data at ENDO 2022: In June, an analysis of pooled data from TEPEZZA clinical trials was presented at the annual conference of the Endocrine Society, ENDO 2022, reinforcing the safety profile in people with TED. Hyperglycemic events were reported in 10% of patients who received TEPEZZA, compared to 1.2% of patients who received placebo. All hyperglycemic events reported in TEPEZZA patients were controlled with medicine, did not cause treatment disruption and were most often seen in patients with pre-existing diabetes.

 

   

Announced Positive Topline Proof-of-Concept Results from Dazodalibep Rheumatoid Arthritis Clinical Trial: In May, the Company announced positive topline results from the Phase 2 randomized placebo-controlled trial of dazodalibep in patients with rheumatoid arthritis (RA). The primary endpoint of the trial was met across all doses, a statistically significant change from baseline in DAS28-CRP, a standardized measure of disease activity in RA trials, at Day 113. In addition, dazodalibep was well tolerated across all doses. The impact observed after various doses will inform the dosing regimen for other studies with dazodalibep. Data from the trial will be presented at an upcoming medical meeting.

 

   

Presented New UPLIZNA Data at Key Medical Meetings: In June, data from the Phase 3 trial were presented at the Consortium of Multiple Sclerosis Centers (CMSC) Annual Meeting that showed no significant differences in disease attacks or disability outcomes in patients with a specific genetic variation, often linked to poor treatment response, compared to those without. Additionally in June, a new analysis of data from the Phase 3 trial was presented at the 8th Congress of the European Academy of Neurology (EAN) meeting, showing that European Union (EU) study participants receiving UPLIZNA had similar outcomes to non-EU patients. In April, multiple new data from the Phase 3 trial were presented at the American Academy of Neurology (AAN) 2022 Annual Meeting, including data showing no significant differences in attacks between NMOSD patients treated with UPLIZNA who previously experienced one pre-study attack and those who had experienced two or more pre-study attacks. At the same meeting, a separate analysis showed long-term treatment with UPLIZNA improved pain and quality of life outcomes for at least three years.

 

   

Initiated Enrollment in Alopecia Areata Clinical Trial: In May, the first patient was enrolled in a Phase 2 clinical trial to evaluate daxdilimab in patients with alopecia areata, an autoimmune disorder characterized by nonscarring hair loss.

 

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Received Multiple Best Workplace Awards and Other ESG Recognitions: The Company has recently been recognized by Fortune in several best workplace awards – in April, the Company was named one of Fortune’s “100 Best Companies to Work For®” for the second consecutive year, retaining the highest ranked position in the biotechnology/pharmaceutical category. In June, the Company was named one of Fortune’s “Best Workplaces in Chicago 2022” for the sixth consecutive year, ranking third overall on the list, and in July as one of Fortune’s “Best Workplaces for Millennials” for the third consecutive year. The Company also was recognized by Seramount as a “Top 75 Company for Executive Women” and more recently, as a “Best Company for Multicultural Women.” In other environmental, social and governance (ESG) achievements, in May, the Company was recognized in the U.S. PatientView survey of patient groups, ranking second in overall corporate reputation among patients familiar with the Company. Also in May, the Company received an International Corporate Social Responsibility Excellence Award for its #RAREis Adoption Fund.

Key Clinical Development Programs

 

   

Daxdilimab, an anti-ILT7 human monoclonal antibody that depletes certain dendritic cells. Depleting these cells may interrupt the cycle of inflammation that causes tissue damage in diseases such as lupus, and a variety of other autoimmune conditions.

 

   

Systemic Lupus Erythematosus (SLE) Trial: Phase 2 randomized placebo-controlled trial underway to evaluate daxdilimab in patients with SLE, a disease in which the body’s immune system attacks its own tissues and organs. The trial completed enrollment in the second quarter of 2022.

 

   

Alopecia Areata Trial: Phase 2 open-label trial initiated in May 2022 to evaluate daxdilimab in patients with alopecia areata, an autoimmune disorder characterized by nonscarring hair loss.

 

   

Discoid Lupus Erythematosus (DLE) Trial: Planned Phase 2 randomized placebo-controlled trial to evaluate daxdilimab in patients with DLE, a rare, chronic, inflammatory skin condition characterized by lesions that result in scarring.

 

   

Lupus Nephritis Trial: Planned Phase 2 trial to evaluate daxdilimab in patients with lupus nephritis, a rare, autoimmune and inflammatory condition of the kidney.

 

   

Dermatomyositis Trial: Planned Phase 2 trial to evaluate daxdilimab in patients with dermatomyositis, a rare autoimmune disorder characterized by rashes, debilitating muscle weakness and interstitial lung disease.

 

   

Dazodalibep, a CD40 ligand antagonist that blocks T-cell interaction with CD40-expressing B-cells, disrupting the overactivation of the CD40 ligand co-stimulatory pathway. Several autoimmune diseases are associated with the overactivation of this pathway.

 

   

Sjögren’s Syndrome Trial: Phase 2 randomized placebo-controlled trial underway to evaluate dazodalibep in patients with Sjögren’s syndrome, a chronic, systemic autoimmune condition that impacts exocrine glands, including the salivary and tear glands. The trial completed enrollment in the second quarter of 2022.

 

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Rheumatoid Arthritis Trial: Phase 2 randomized placebo-controlled trial to evaluate dazodalibep in patients with RA. Topline results were announced in May 2022. The trial met the primary endpoint and dazodalibep was well tolerated. The trial results will inform the dosing regimen for other studies with dazodalibep.

 

   

Kidney Transplant Rejection Trial: Phase 2 open-label trial underway to evaluate dazodalibep in kidney transplant rejection patients.

 

   

Focal Segmental Glomerulosclerosis (FSGS) Trial: Planned Phase 2 trial to evaluate dazodalibep in patients with FSGS, a rare kidney disorder characterized by scarring of glomeruli.

 

   

HZN-825, an oral lysophosphatidic acid receptor 1 (LPAR1) antagonist designed to prevent gene activation.

 

   

Diffuse Cutaneous Systemic Sclerosis Trial: Pivotal Phase 2b trial underway to evaluate HZN-825 in diffuse cutaneous systemic sclerosis.

 

   

Idiopathic Pulmonary Fibrosis Trial: Pivotal Phase 2b trial underway to evaluate HZN-825 in idiopathic pulmonary fibrosis, the most common form of interstitial lung disease.

 

   

UPLIZNA, an anti-CD19 humanized monoclonal antibody that depletes B-cells, including the pathogenic cells that produce autoantibodies.

 

   

Myasthenia Gravis Trial: Phase 3 randomized placebo-controlled trial underway to evaluate UPLIZNA in patients with myasthenia gravis, a chronic, rare, autoimmune neuromuscular disease that affects voluntary muscles, especially those that control the eyes, mouth, throat and limbs.

 

   

IgG4-Related Disease Trial: Phase 3 randomized placebo-controlled trial underway to evaluate UPLIZNA in patients with IgG4-related disease, which is a group of disorders marked by tumor-like swelling and fibrosis of affected organs, such as the pancreas, salivary glands and kidneys.

 

   

TEPEZZA, an insulin-like growth factor type 1 receptor (IGF-1R) antagonist monoclonal antibody.

 

   

Chronic/Low Clinical Activity Score (CAS) TED Trial: Phase 4 randomized placebo-controlled trial underway to evaluate TEPEZZA in chronic/low-CAS TED.

 

   

TED in Japan (OPTIC-J) Trial: Phase 3 randomized placebo-controlled trial in Japan underway to evaluate TEPEZZA in patients with moderate-to-severe active TED.

 

   

Subcutaneous (SC) Administration Trial: Phase 1b trial initiated in July 2022 to explore the pharmacokinetics, safety, tolerability, efficacy and immunogenicity of subcutaneous administration of TEPEZZA in patients with TED.

 

   

Diffuse Cutaneous Systemic Sclerosis Exploratory Trial: Phase 1 exploratory trial underway to evaluate TEPEZZA in diffuse cutaneous systemic sclerosis.

 

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KRYSTEXXA, a recombinant uricase enzyme that converts urate into a water-soluble liquid, allantoin, that can be easily excreted from the body.

 

   

Shorter Infusion Duration Trial: Phase 4 open-label trial underway to evaluate the impact of administering KRYSTEXXA with methotrexate over a shorter infusion duration in patients with uncontrolled gout.

 

   

Monthly Dosing Trial: Phase 4 open-label trial underway to evaluate monthly dosing of KRYSTEXXA with methotrexate in patients with uncontrolled gout.

 

   

Retreatment Trial: Phase 4 open-label trial underway to evaluate KRYSTEXXA with methotrexate in patients who were not complete responders to KRYSTEXXA monotherapy.

 

   

HZN-1116, a fully human monoclonal antibody designed to bind and neutralize the function of the FLT3-ligand, thereby reducing both conventional and plasmacytoid dendritic cells.

 

   

Autoimmune Disease Trial: Phase 1 trial underway to evaluate HZN-1116 in patients with autoimmune diseases.

Second-Quarter Financial Results

Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

 

   

Net Sales: Second-quarter 2022 net sales were $876.4 million, an increase of 5% compared to the second quarter of 2021.

 

   

Gross Profit: Under U.S. GAAP, the second-quarter 2022 gross profit ratio was 73.7% compared to 75.9% in the second quarter of 2021. The non-GAAP gross profit ratio in the second quarter of 2022 was 86.3% compared to 87.7% in the second quarter of 2021.

 

   

Operating Expenses: R&D expenses were 11.8% of net sales and SG&A expenses were 45.4% of net sales in the second quarter of 2022. Second-quarter non-GAAP R&D expenses were 10.9% of net sales and non-GAAP SG&A expenses were 40.2% of net sales.

 

   

Income Tax Expense: On a GAAP basis in the second quarter of 2022, income tax expense was $3.8 million. Second-quarter non-GAAP income tax expense was $33.7 million.

 

   

Net Income: In the second quarter of 2022, net income on a GAAP and non-GAAP basis was $61.0 million and $253.8 million, respectively.

 

   

Adjusted EBITDA: Second-quarter 2022 adjusted EBITDA was $306.6 million.

 

   

Earnings per Share: On a GAAP basis, diluted earnings per share in the second quarter of 2022 and 2021 were $0.26 and $0.67, respectively. Non-GAAP diluted earnings per share in the second quarter of 2022 and 2021 were $1.07 and $1.45, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the second quarter of 2022 were 236.2 million.

 

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Second-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments, the orphan segment and the inflammation segment. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, such as the exclusion of upfront and milestone payments related to license and collaboration agreements, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.

Orphan Segment

 

(in millions except for percentages)    Q2 22      Q2 21      %
Change
    YTD 22      YTD 21      %
Change
 

TEPEZZA®

   $ 479.8      $ 453.3        6     $ 981.3      $ 455.3        116  

KRYSTEXXA®

     167.8        130.3        29       308.5        237.1        30  

RAVICTI®

     75.7        68.4        11       154.1        141.3        9  

PROCYSBI®

     47.7        49.8        (4     97.3        93.1        4  

UPLIZNA®(1)

     38.6        14.5        167       69.1        16.3        323  

ACTIMMUNE®

     30.0        27.8        8       61.3        56.5        9  

BUPHENYL®

     1.4        2.2        (39     3.5        3.9        (10

QUINSAIRTM

     0.3        0.2        51       0.6        0.5        46  
  

 

 

    

 

 

      

 

 

    

 

 

    

Orphan Net Sales

   $ 841.3      $ 746.5        13     $ 1,675.7      $ 1,004.0        67  
  

 

 

    

 

 

      

 

 

    

 

 

    

Orphan Segment Operating Income

   $ 315.1      $ 321.2        (2   $ 666.6      $ 322.3        107  

 

  (1)

Second-quarter and year-to-date 2022 UPLIZNA net sales included $8.6 million and $13.8 million, respectively, in revenue and milestone payments from the Company’s international partners.

 

   

Second-quarter 2022 net sales of the orphan segment, the Company’s strategic growth segment, were $841.3 million, driven by the growth of TEPEZZA, KRYSTEXXA, UPLIZNA, RAVICTI and ACTIMMUNE. Second-quarter 2022 orphan segment operating income was $315.1 million.

 

   

KRYSTEXXA second-quarter 2022 net sales increased 29% year-over-year driven by higher adoption of KRYSTEXXA with immunomodulation, which now exceeds 50% of new patient starts. In addition, the Company continues to see strong uptake of KRYSTEXXA from both rheumatologists and nephrologists.

 

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Inflammation Segment

 

(in millions except for percentages)    Q2 22     Q2 21      %
Change
    YTD 22      YTD 21      %
Change
 

PENNSAID 2%®(1)

   $ 23.6     $ 48.9        (52   $ 59.0      $ 94.8        (38

RAYOS®

     11.1       13.4        (17     24.6        28.7        (14

VIMOVO®

     0.3       1.6        (81     1.2        5.9        (80

DUEXIS®(2)

     0.1       22.1        (100     1.2        41.6        (97
  

 

 

   

 

 

      

 

 

    

 

 

    

Inflammation Net Sales

   $ 35.1     $ 86.0        (59   $ 86.0      $ 171.0        (50
  

 

 

   

 

 

      

 

 

    

 

 

    

Inflammation Segment Operating (Loss) Income

   $ (6.6   $ 46.8        NM     $ 8.8      $ 89.4        (90

 

  (1)

On May 6, 2022, Apotex Inc. initiated an at-risk launch of generic PENNSAID 2% in the United States.

  (2)

On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States.

 

Second-quarter 2022 net sales of the inflammation segment were $35.1 million and segment operating loss was $6.6 million. Net sales were impacted by an at-risk launch of generic PENNSAID 2%® (diclofenac sodium) initiated on May 6, 2022, by Apotex Inc. in the United States.

Cash Flow Statement and Balance Sheet Highlights

 

Second-quarter 2022 operating cash flow on a GAAP and non-GAAP basis was $249.2 million and $251.4 million, respectively.

 

As of June 30, 2022, the Company had cash and cash equivalents of $1.89 billion.

 

As of June 30, 2022, the total principal amount of debt outstanding was $2.60 billion.

Revised 2022 Guidance

The Company now expects full-year 2022 net sales to range between $3.53 billion and $3.60 billion, updated from the previous guidance range of $3.9 billion to $4.0 billion. The Company now expects TEPEZZA full-year 2022 net sales percentage growth in the high-teens, compared to the previous guidance of mid-30s percentage growth. The Company continues to expect KRYSTEXXA full-year 2022 net sales growth of more than 20%. The Company expects inflammation segment second-half 2022 net sales of less than $30 million due to an at-risk launch of a generic PENNSAID 2% initiated on May 6, 2022. Full-year 2022 adjusted EBITDA is now expected to range between $1.30 billion and $1.35 billion, updated from the previous guidance range of $1.63 billion to $1.70 billion.

Webcast

At 8 a.m. EDT / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizontherapeutics.com. Please connect to the Company’s website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.

 

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About Horizon

Horizon is a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Our pipeline is purposeful: We apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, visit www.horizontherapeutics.com and follow us on Twitter, LinkedIn, Instagram and Facebook.

Note Regarding Use of Non-GAAP Financial Measures

Horizon provides certain non-GAAP financial measures, including EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax benefit (expense) and tax rate, non-GAAP operating cash flow and certain other non-GAAP income statement line items, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon’s GAAP figures exclude, as applicable, acquisition and/or divestiture-related costs, manufacturing plant start-up costs, restructuring and realignment costs, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, non-cash interest expense, goodwill and long-lived assets impairment charges, gain (loss) on equity security investments and sales of assets, and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company’s historical and expected financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon’s management uses for planning and forecasting purposes and measuring the Company’s performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon has not provided a reconciliation of its full-year 2022 adjusted EBITDA guidance to expected GAAP net income (loss) guidance because certain items such as acquisition/divestiture-related expenses and share-based compensation that are components of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon’s share price, the variability associated with the size and/or timing of acquisitions/divestitures, and other factors. These components of net income (loss) could significantly impact Horizon’s GAAP net income (loss).

 

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Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon’s full-year 2022 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including projected growth in net sales of certain of Horizon’s medicines; development, manufacturing and commercialization plans, including the anticipated timing and impact of actions designed to accelerate growth of TEPEZZA; expected timing of clinical trials, availability of clinical data; expected future milestones, pipeline expansions and regulatory approvals; potential market opportunities for, and benefits of, Horizon’s medicines and medicine candidates and business and other statements that are not historical facts. These forward-looking statements are based on Horizon’s current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks that Horizon’s actual future financial and operating results may differ from its expectations or goals; Horizon’s ability to grow net sales from existing medicines; impacts of the COVID-19 pandemic and actions taken to slow its spread, including impacts on supplies and net sales of Horizon’s medicines and potential delays in clinical trials; impacts of the on-going war between Russia and Ukraine; changes in inflation, interest rates and general economic conditions; the fact that Horizon’s full-year 2022 net sales, adjusted EBITDA and TEPEZZA growth rate guidance and the expected timing of certain TEPEZZA clinical trials assume that future committed manufacturing slots for TEPEZZA are not cancelled and are run successfully, which could be impacted by additional government-mandated COVID-19 vaccine production orders and other risks associated with the manufacture of biologic medicines; acquisitions, such as the risk that acquired businesses or products will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the related transactions will not occur; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; Horizon’s ability to successfully implement its business strategies, including the risks that its TEPEZZA growth and global expansion initiatives and strategies may not be successful and that new challenges to TEPEZZA growth may arise in the future; risks inherent in developing novel medicine candidates and existing medicines for new indications; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon operates, and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in Horizon’s filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

 

Contacts:      
Investors:    U.S. Media:   
Tina Ventura    Geoff Curtis   
Senior Vice President,    Executive Vice President,   
Chief Investor Relations Officer    Corporate Affairs & Chief Communications Officer            
investor-relations@horizontherapeutics.com    media@horizontherapeutics.com   
Erin Linnihan    Ireland Media:   
Executive Director,    Ray Gordon   
Investor Relations    Gordon MRM   
investor-relations@horizontherapeutics.com    ray@gordonmrm.ie   
Ruth Venning      
Executive Director,      

Investor Relations and ESG

investor-relations@horizontherapeutics.com

     

 

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Horizon Therapeutics plc

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2022     2021     2022     2021  

Net sales

   $ 876,411     $ 832,548     $ 1,761,656     $ 1,174,954  

Cost of goods sold

     230,216       200,995       445,278       301,363  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     646,195       631,553       1,316,378       873,591  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Research and development

     103,246       139,834       206,378       197,527  

Selling, general and administrative

     398,221       355,204       770,955       687,196  

Impairment of goodwill

     56,171       —         56,171       —    

Impairment of long-lived asset

     —         —         —         12,371  

Gain on sale of asset

     —         (2,000     —         (2,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     557,638       493,038       1,033,504       895,094  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     88,557       138,515       282,874       (21,503
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER EXPENSE, NET:

        

Interest expense, net

     (21,409     (22,581     (42,665     (36,041

Foreign exchange gain (loss)

     28       (39     448       (887

Other (expense) income, net

     (2,389     (262     (3,131     2,962  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (23,770     (22,882     (45,348     (33,966
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before expense (benefit) for income taxes

     64,787       115,633       237,526       (55,469

Expense (benefit) for income taxes

     3,813       (42,484     (27,709     (90,235
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 60,974     $ 158,117     $ 265,235     $ 34,766  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per ordinary share - basic

   $ 0.27     $ 0.70     $ 1.16     $ 0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding - basic

     230,020,004       225,119,684       229,559,715       224,523,538  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per ordinary share - diluted

   $ 0.26     $ 0.67     $ 1.12     $ 0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding - diluted

     236,166,384       235,191,860       236,077,147       234,719,830  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Horizon Therapeutics plc

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

 

     As of  
     June 30,
2022
    December 31,
2021
 

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 1,892,563     $ 1,580,317  

Restricted cash

     4,737       3,839  

Accounts receivable, net

     673,307       632,775  

Inventories, net

     203,680       225,730  

Prepaid expenses and other current assets

     428,807       357,106  
  

 

 

   

 

 

 

Total current assets

     3,203,094       2,799,767  
  

 

 

   

 

 

 

Property, plant and equipment, net

     302,260       292,298  

Developed technology and other intangible assets, net

     2,850,643       2,960,118  

In-process research and development

     810,000       880,000  

Goodwill

     1,010,538       1,066,709  

Deferred tax assets, net

     516,317       538,098  

Other long-term assets

     160,621       140,738  
  

 

 

   

 

 

 

Total assets

   $ 8,853,473     $ 8,677,728  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Accounts payable

   $ 18,538     $ 30,125  

Accrued expenses and other current liabilities

     419,036       523,015  

Accrued trade discounts and rebates

     337,487       317,431  

Long-term debt - current portion

     16,000       16,000  
  

 

 

   

 

 

 

Total current liabilities

     791,061       886,571  
  

 

 

   

 

 

 

LONG-TERM LIABILITIES:

    

Long-term debt, net

     2,550,989       2,555,233  

Deferred tax liabilities, net

     366,247       390,455  

Other long-term liabilities

     199,645       173,076  
  

 

 

   

 

 

 

Total long-term liabilities

     3,116,881       3,118,764  
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY:

    

Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2022 and December 31, 2021; 230,716,793 and 227,760,936 shares issued at June 30, 2022 and December 31, 2021, respectively; and 230,332,427 and 227,376,570 shares outstanding at June 30, 2022 and December 31, 2021, respectively

     23       23  

Treasury stock, 384,366 ordinary shares at June 30, 2022 and December 31, 2021

     (4,585     (4,585

Additional paid-in capital

     4,381,344       4,373,337  

Accumulated other comprehensive loss

     (15,091     (14,987

Retained earnings

     583,840       318,605  
  

 

 

   

 

 

 

Total shareholders’ equity

     4,945,531       4,672,393  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 8,853,473     $ 8,677,728  
  

 

 

   

 

 

 

 

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Horizon Therapeutics plc

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

     Three Months Ended
June 30,
    Six Months Ended June 30,  
     2022     2021     2022     2021  

CASH FLOWS FROM OPERATING ACTIVITIES:

        

Net income

   $ 60,974     $ 158,117     $ 265,235     $ 34,766  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation and amortization expense

     97,426       91,916       192,538       162,736  

Equity-settled share-based compensation

     45,149       54,424       92,449       115,590  

Acquired in-process research and development expense

     —         46,500       2,000       46,500  

Impairment of goodwill

     56,171       —         56,171       —    

Impairment of long-lived asset

     —         —         —         12,371  

Amortization of debt discount and deferred financing costs

     2,327       1,467       3,904       2,240  

Gain on sale of asset

     —         (2,000     —         (2,000

Deferred income taxes

     30,864       10,656       (3,032     (18,115

Foreign exchange and other adjustments

     7,376       1,988       8,566       (3,452

Changes in operating assets and liabilities:

        

Accounts receivable

     11,152       (292,589     (40,513     (68,014

Inventories

     22,818       (18,053     22,033       (31,713

Prepaid expenses and other current assets

     (38,373     (29,548     (71,578     (95,123

Accounts payable

     (48,047     9,313       (11,980     10,306  

Accrued trade discounts and rebates

     (27,047     (19,277     20,232       (48,013

Accrued expenses and other current liabilities

     36,874       87,322       (76,901     (24,641

Other non-current assets and liabilities

     (8,468     (10,834     5,863       (7,764
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     249,196       89,402       464,987       85,674  
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

        

Payments for acquisitions, net of cash acquired

     —         (67,972     (3,122     (2,775,330

Purchases of property, plant and equipment

     (10,154     (13,922     (24,352     (32,255

Payments for long-term investments

     (6,443     (3,770     (4,847     (11,473

Receipts from long-term investments

     4,416       —         4,416       3,895  

Payments related to license agreements

     —         —         (25,000     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (12,181     (85,664     (52,905     (2,815,163
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

        

Net proceeds from term loans

     —         (2,619     —         1,574,993  

Repayment of term loans

     (4,000     (4,000     (8,000     (4,000

Proceeds from the issuance of ordinary shares in conjunction with ESPP program

     13,884       11,482       13,884       11,482  

Proceeds from the issuance of ordinary shares in connection with stock option exercises

     12,951       7,996       22,022       27,839  

Payment of employee withholding taxes relating to share-based awards

     (5,419     (13,387     (120,527     (141,648
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     17,416       (528     (92,621     1,468,666  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

     (4,396     (2,500     (6,317     (6,498
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

     250,035       710       313,144       (1,267,321

Cash, cash equivalents and restricted cash, beginning of the period(1)

     1,647,265       815,448       1,584,156       2,083,479  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of the period(1)

   $ 1,897,300     $ 816,158     $ 1,897,300     $ 816,158  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Amounts include restricted cash balance in accordance with ASU No. 2016-18. Cash and cash equivalents excluding restricted cash are shown on the balance sheet.

 

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Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Net Income and Earnings Per Share (Unaudited)

(in thousands, except share and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2022     2021     2022     2021  

GAAP net income

   $ 60,974     $ 158,117     $ 265,235     $ 34,766  

Non-GAAP adjustments:

        

Acquisition/divestiture-related costs

     1,023       29,830       2,612       78,938  

Loss on equity security investments

     438       —         5,084       —    

Restructuring and realignment costs

     1,253       930       1,790       7,023  

Manufacturing plant start-up costs

     1,582       —         2,389       —    

Amortization and step-up:

        

Intangible amortization expense

     91,335       88,523       180,595       154,892  

Inventory step-up expense

     17,362       7,091       44,563       8,002  

Amortization of debt discount and deferred financing costs

     2,327       1,467       3,904       2,240  

Impairment of long-lived asset

     —         —         —         12,371  

Impairment of goodwill

     56,171       —         56,171       —    

Gain on sale of asset

     —         (2,000     —         (2,000

Share-based compensation

     45,149       54,424       92,449       115,590  

Depreciation

     6,091       3,393       11,943       7,844  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total of pre-tax non-GAAP adjustments

     222,731       183,658       401,500       384,900  

Income tax effect of pre-tax non-GAAP adjustments

     (29,919     (31,934     (97,131     (105,063

Other non-GAAP income tax adjustments

     —         30,881       —         30,881  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total of non-GAAP adjustments

     192,812       182,605       304,369       310,718  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 253,786     $ 340,722     $ 569,604     $ 345,484  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Earnings Per Share:

        

Weighted average ordinary shares - Basic

     230,020,004       225,119,684       229,559,715       224,523,538  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Earnings Per Share - Basic

        

GAAP earnings per share - Basic

   $ 0.27     $ 0.70     $ 1.16     $ 0.15  

Non-GAAP adjustments

     0.83       0.81       1.32       1.39  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per share - Basic

   $ 1.10     $ 1.51     $ 2.48     $ 1.54  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares - Diluted

        

Weighted average ordinary shares - Basic

     230,020,004       225,119,684       229,559,715       224,523,538  

Ordinary share equivalents

     6,146,380       10,072,176       6,517,432       10,196,292  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares - Diluted

     236,166,384       235,191,860       236,077,147       234,719,830  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Earnings Per Share - Diluted

        

GAAP earnings per share - Diluted

   $ 0.26     $ 0.67     $ 1.12     $ 0.15  

Non-GAAP adjustments

     0.81       0.78       1.29       1.32  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per share - Diluted

   $ 1.07     $ 1.45     $ 2.41     $ 1.47  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

EBITDA and Adjusted EBITDA (Unaudited)

(in thousands)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2022      2021     2022     2021  

GAAP net income

   $ 60,974      $ 158,117     $ 265,235     $ 34,766  

Depreciation

     6,091        3,393       11,943       7,844  

Amortization and step-up:

         

Intangible amortization expense

     91,335        88,523       180,595       154,892  

Inventory step-up expense

     17,362        7,091       44,563       8,002  

Interest expense, net (including amortization of debt discount and deferred financing costs)

     21,409        22,581       42,665       36,041  

Expense (benefit) for income taxes

     3,813        (42,484     (27,709     (90,235
  

 

 

    

 

 

   

 

 

   

 

 

 

EBITDA

   $ 200,984      $ 237,221     $ 517,292     $ 151,310  
  

 

 

    

 

 

   

 

 

   

 

 

 

Other non-GAAP adjustments:

         

Share-based compensation

     45,149        54,424       92,449       115,590  

Loss on equity security investments

     438        —         5,084       —    

Acquisition/divestiture-related costs

     1,023        29,830       2,612       78,938  

Manufacturing plant start-up costs

     1,582        —         2,389       —    

Restructuring and realignment costs

     1,253        930       1,790       7,023  

Impairment of goodwill

     56,171        —         56,171       —    

Impairment of long-lived asset

     —          —         —         12,371  

Gain on sale of asset

     —          (2,000     —         (2,000
  

 

 

    

 

 

   

 

 

   

 

 

 

Total of other non-GAAP adjustments

     105,616        83,184       160,495       211,922  
  

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 306,600      $ 320,405     $ 677,787     $ 363,232  
  

 

 

    

 

 

   

 

 

   

 

 

 

 

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Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Operating Income (Unaudited)

(in thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2022     2021     2022      2021  

GAAP operating income (loss)

   $ 88,557     $ 138,515     $ 282,874      $ (21,503

Non-GAAP adjustments:

         

Acquisition/divestiture-related costs

     1,023       30,626       2,612        80,017  

Restructuring and realignment costs

     1,253       930       1,790        7,023  

Manufacturing plant start-up costs

     1,582       —         2,389        —    

Amortization and step-up:

         

Intangible amortization expense

     91,335       88,523       180,595        154,892  

Inventory step-up expense

     17,362       —         44,563        8,002  

Impairment of long-lived asset

     —         7,091       —          12,371  

Impairment of goodwill

     56,171       —         56,171        —    

Gain on sale of asset

     —         (2,000     —          (2,000

Share-based compensation

     45,149       54,424       92,449        115,590  

Depreciation

     6,091       3,393       11,943        7,844  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total of non-GAAP adjustments

     219,966       182,987       392,512        383,739  
  

 

 

   

 

 

   

 

 

    

 

 

 

Non-GAAP operating income

   $ 308,523     $ 321,502     $ 675,386      $ 362,236  
  

 

 

   

 

 

   

 

 

    

 

 

 

Foreign exchange gain (loss)

     28       (39     448        (887

Other (expense) income, net

     (1,951     (1,058     1,953        1,883  
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 306,600     $ 320,405     $ 677,787      $ 363,232  
  

 

 

   

 

 

   

 

 

    

 

 

 

 

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Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Gross Profit and Operating Cash Flow (Unaudited)

(in thousands, except percentages)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2022     2021     2022     2021  

Non-GAAP Gross Profit:

        

GAAP gross profit

   $ 646,195     $ 631,553     $ 1,316,378     $ 873,591  

Non-GAAP gross profit adjustments:

        

Acquisition/divestiture-related costs

     (119     (76     (1,423     129  

Intangible amortization expense

     90,439       88,321       179,164       154,490  

Inventory step-up expense

     17,362       7,091       44,563       8,002  

Share-based compensation

     2,294       3,144       4,471       5,080  

Depreciation

     55       57       111       172  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total of Non-GAAP adjustments

     110,031       98,537       226,886       167,873  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 756,226     $ 730,090     $ 1,543,264     $ 1,041,464  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross profit %

     73.7     75.9     74.7     74.4

Non-GAAP gross profit %

     86.3     87.7     87.6     88.6

GAAP cash provided by operating activities

   $ 249,196     $ 89,402     $ 464,987     $ 85,674  

Cash payments for acquisition/divestiture-related costs

     748       56,042       5,196       120,234  

Cash payments for restructuring and realignment costs

     570       1,220       1,144       1,220  

Cash payments for manufacturing start-up costs

     895       —         2,663       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating cash flow

   $ 251,409     $ 146,664     $ 473,990     $ 207,128  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Horizon Therapeutics plc

GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited)

(in millions, except percentages and per share amounts)

 

     Q2 2022  
     Pre-tax Net
Income
    Income Tax
Expense
    Tax Rate     Net Income      Diluted Earnings Per
Share
 

As reported - GAAP

   $ 64.8     $ 3.8       5.9   $ 61.0      $ 0.26  

Non-GAAP adjustments

     222.7       29.9         192.8     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Non-GAAP

   $ 287.5     $ 33.7       11.7   $ 253.8      $ 1.07  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     Q2 2021  
     Pre-tax Net
Income
    Income Tax
(Benefit) Expense
    Tax Rate     Net Income      Diluted Earnings Per
Share
 

As reported - GAAP

   $ 115.6     $ (42.5     (36.7 )%    $ 158.1      $ 0.67  

Non-GAAP adjustments

     183.7       1.1         182.6     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Non-GAAP

   $ 299.3     $ (41.4     (13.8 )%    $ 340.7      $ 1.45  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     YTD 2022  
     Pre-tax Net
Income
    Income Tax
(Benefit) Expense
    Tax Rate     Net Income      Diluted Earnings Per
Share
 

As reported - GAAP

   $ 237.5     $ (27.7     (11.7 )%    $ 265.2      $ 1.12  

Non-GAAP adjustments

     401.5       97.1         304.4     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Non-GAAP

   $ 639.0     $ 69.4       10.9   $ 569.6      $ 2.41  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
     YTD 2021  
     Pre-tax Net
Income
(loss)
    Income Tax
(Benefit) Expense
    Tax Rate     Net Income      Diluted Earnings Per
Share
 

As reported - GAAP

   $ (55.5   $ (90.2     162.7   $ 34.8      $ 0.15  

Non-GAAP adjustments

     384.9       74.2         310.7     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Non-GAAP

   $ 329.4     $ (16.1     (4.9 )%    $ 345.5      $ 1.47  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended June 30, 2022 (Unaudited)

(in thousands)

 

     COGS     Research &
Development
     Selling, General
& Administrative
     Impairment of
goodwill
     Interest
Expense
     Other
Expense, net
     Income Tax
(Expense)
 

GAAP as reported

   $ (230,216)     $ (103,246)      $ (398,221)      $ (56,171)      $ (21,409)      $ (2,389)      $ (3,813)  

Non-GAAP Adjustments:

                   

Acquisition/divestiture-related costs(1)

     (119     803        339        —          —          —          —    

Loss on equity security investments(2)

     —         —          —          —          —          438        —    

Restructuring and realignment costs(3)

     —         —          1,253        —          —          —          —    

Manufacturing plant start-up costs(4)

     —         —          1,582        —          —          —          —    

Amortization and step-up:

                   

Intangible amortization expense(5)

     90,439       —          896        —          —          —          —    

Inventory step-up expense(6)

     17,362       —          —          —          —          —          —    

Amortization of debt discount and deferred financing costs(7)

     —         —          —          —          2,327        —          —    

Share-based compensation(8)

     2,294       6,742        36,113        —          —          —          —    

Depreciation(9)

     55       267        5,769        —          —          —          —    

Impairment of goodwill (10)

     —         —          —          56,171        —          —          —    

Income tax effect on pre-tax non-GAAP adjustments(11)

     —         —          —          —          —          —          (29,919
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total of non-GAAP adjustments (15)

     110,031       7,812        45,952        56,171        2,327        438        (29,919
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP (15)

   $ (120,185)     $ (95,434)      $ (352,269)      $ —        $ (19,082)      $ (1,951)      $ (33,732)  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended June 30, 2021 (Unaudited)

(in thousands)

 

     COGS     Research &
Development
     Selling, General
& Administrative
     Gain on
Sale of asset
    Interest
Expense
     Other
Expense, net
    Income Tax
Benefit
(Expense)
 

GAAP as reported

   $ (200,995)     $ (139,834)      $ (355,204)      $ 2,000     $ (22,581)      $ (262)     $ 42,484  

Non-GAAP Adjustments:

                 

Acquisition/divestiture-related costs(1)

     (76     —          30,701        —         —          (795     —    

Restructuring and realignment costs(3)

     —         —          930        —         —          —         —    

Amortization and step-up:

                 

Intangible amortization expense(5)

     88,321       —          202        —         —          —         —    

Inventory step-up expense(6)

     7,091       —          —          —         —          —         —    

Amortization of debt discount and deferred financing costs(7)

     —         —          —          —         1,467        —         —    

Gain on sale of asset(12)

     —         —          —          (2,000     —          —         —    

Share-based compensation(8)

     3,144       12,160        39,120        —         —          —         —    

Depreciation(9)

     57       117        3,219        —         —          —         —    

Income tax effect on pre-tax non-GAAP adjustments(11)

     —         —          —          —         —          —         (31,934

Other non-GAAP income tax adjustments(13)

     —         —          —          —         —          —         30,881  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total of non-GAAP adjustments (15)

     98,537       12,277        74,172        (2,000     1,467        (795     (1,053
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP (15)

   $ (102,458)     $ (127,557)      $ (281,032)      $ —       $ (21,114)      $ (1,057)     $ 41,431  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

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Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Six Months Ended June 30, 2022 (Unaudited)

(in thousands)

 

     COGS     Research &
Development
     Selling, General
& Administrative
     Impairment of
goodwill
     Interest
Expense
     Other Income
(Expense), net
     Income Tax
Benefit
(Expense)
 

GAAP as reported

   $ (445,278)     $ (206,378)      $ (770,955)      $ (56,171)      $ (42,665)      $ (3,131)      $ 27,709  

Non-GAAP Adjustments:

                   

Acquisition/divestiture-related costs(1)

     (1,423     2,804        1,231        —          —          —          —    

Loss on equity security investments(2)

     —         —          —          —          —          5,084        —    

Restructuring and realignment costs(3)

     —         —          1,790        —          —          —          —    

Manufacturing plant start-up costs(4)

     —         —          2,389        —          —          —          —    

Amortization and step-up:

                   

Intangible amortization expense(5)

     179,164       —          1,431        —          —          —          —    

Inventory step-up expense(6)

     44,563       —          —          —          —          —          —    

Amortization of debt discount and deferred financing costs(7)

     —         —          —          —          3,904        —          —    

Share-based compensation(8)

     4,471       15,720        72,258        —          —          —          —    

Depreciation(9)

     111       493        11,339        —          —          —          —    

Impairment of goodwill(10)

     —         —          —          56,171        —          —          —    

Income tax effect on pre-tax non-GAAP adjustments(11)

     —         —          —          —          —          —          (97,131
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total of non-GAAP adjustments (15)

     226,886       19,017        90,438        56,171        3,904        5,084        (97,131
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP (15)

   $ (218,392)     $ (187,361)      $ (680,517)      $ —        $ (38,761)      $ 1,953      $ (69,422)  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Six Months Ended June 30, 2021 (Unaudited)

(in thousands)

 

     COGS      Research &
Development
     Selling, General
& Administrative
     Impairment of
Long-lived assets
     Gain on
Sale of Assets
    Interest
Expense
     Other Income
(Expense), net
    Income Tax
Benefit
(Expense)
 

GAAP as reported

   $ (301,363)      $ (197,527)      $ (687,196)      $ (12,371)      $ 2,000     $ (36,041)        2,962     $ 90,235  

Non-GAAP Adjustments:

                     

Acquisition/divestiture-related costs(1)

     129        3        79,885        —          —         —          (1,079     —    

Restructuring and realignment costs(3)

     —          —          7,023        —          —         —          —         —    

Amortization and step-up:

                 —           

Intangible amortization expense(5)

     154,490        —          402        —          —         —          —         —    

Inventory step-up expense(6)

     8,002        —          —          —          —         —          —         —    

Amortization of debt discount and deferred financing costs(7)

     —          —          —          —          —         2,240        —         —    

Impairment of long lived assets(14)

     —          —          —          12,371        —         —          —         —    

Gain on sale of asset(12)

     —          —          —          —          (2,000     —          —         —    

Share-based compensation(8)

     5,080        17,776        92,734        —          —         —          —         —    

Depreciation(9)

     172        166        7,506        —          —         —          —         —    

Income tax effect on pre-tax non-GAAP adjustments(11)

     —          —          —          —          —         —          —         (105,063

Other non-GAAP income tax adjustments(13)

     —          —          —          —          —         —          —         30,881  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total of non-GAAP adjustments (15)

     167,873        17,945        187,550        12,371        (2,000     2,240        (1,079     (74,182
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP (15)

   $ (133,490)      $ (179,582)      $ (499,646)      $ —        $ —       $ (33,801)      $ 1,883     $ 16,053  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

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NOTES FOR CERTAIN INCOME STATEMENT LINE ITEMS - NON-GAAP

 

1.

Primarily represents transaction and integration costs, including, advisory, legal, consulting and certain employee-related costs, incurred in connection with our acquisitions and divestitures. Costs recovered from subleases of acquired facilities and reimbursed expenses incurred under transition arrangements for divestitures are also reflected in this line item.

 

2.

We held investments in equity securities with readily determinable fair values of $8.1 million as of June 30, 2022, which are included in other long-term assets in the condensed consolidated balance sheet. For the three and six months ended June 30, 2022, we recognized a net unrealized loss of $0.4 million and $5.1 million, respectively, due to the change in fair value of these securities.

 

3.

Represents rent and maintenance charges as a result of vacating the leased Lake Forest office in the first quarter of 2021.

 

4.

During the three and six months ended June 30, 2022, we recorded $1.6 million and $2.4 million, respectively, of manufacturing plant start-up costs related to our biologic drug product manufacturing facility in Waterford.

 

5.

Intangible amortization expenses are primarily associated with our developed technology related to TEPEZZA, KRYSTEXXA, RAVICTI, PROCYSBI, UPLIZNA, ACTIMMUNE, BUPHENYL and RAYOS.

 

6.

During the three and six months ended June 30, 2022, we recognized in cost of goods sold $17.4 million and $44.6 million, respectively, for inventory step-up expense related to UPLIZNA inventory revalued in connection with the Viela acquisition. We recorded $7.1 million and $8.0 million, respectively, of UPLIZNA inventory step-up expense in cost of goods sold during the three and six months ended June 30, 2021. Because inventory step-up expense is related to an acquisition, will not continue indefinitely and has a significant effect on our gross profit, gross margin percentage and net income for all affected periods, we exclude inventory step-up expense from our non-GAAP financial measures.

 

7.

Represents amortization of debt discount and deferred financing costs associated with our debt.

 

8.

Represents share-based compensation expense associated with our stock option, restricted stock unit and performance stock unit grants to our employees and non-employee directors, and our employee share purchase plan.

 

9.

Represents depreciation expense related to our property, plant, equipment, software and leasehold improvements.

 

10.

Our interim goodwill impairment test in the second quarter of 2022 indicated an impairment which represented the difference between the estimated fair value of the inflammation reporting unit and its carrying value. As a result, we recognized an impairment charge of $56.2 million in June 2022 representing the full amount of goodwill for the inflammation reporting unit.

 

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11.

Income tax adjustments on pre-tax non-GAAP adjustments represent the estimated income tax impact of each pre-tax non-GAAP adjustment based on the statutory income tax rate of the applicable jurisdictions for each non-GAAP adjustment.

 

12.

During the six months ended June 30, 2021, gain on sale of asset represents a $2.0 million contingent consideration payment related to the sale of MIGERGOT in 2019. The contingent consideration was triggered during the second quarter of 2021 and it was received in July 2021.

 

13.

During the three months ended June 30, 2021, we recognized a U.S. federal and state tax liability on U.S. taxable income generated from an intercompany transfer and license of intellectual property from a U.S. subsidiary to an Irish subsidiary which was partially offset by the recognition of a deferred tax asset in the Irish subsidiary, resulting in a non-GAAP tax adjustment of $34.0 million. We also recognized $3.1 million of tax benefit relating to the release of a valuation allowance which was originally recognized on state net operating losses acquired through the acquisition of Viela. These state net operating losses are now usable, resulting in a non-GAAP tax adjustment of $3.1 million.

 

14.

During the six months ended June 30, 2021, we recorded a right-of-use asset impairment charge of $12.4 million as a result of vacating the leased Lake Forest office.

 

15.

Following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, we no longer exclude upfront and milestone payments related to license and collaboration agreements from our non-GAAP financial measures and its line-item components. Adjusted EBITDA and non-GAAP net income for the three and six months ended June 30, 2021, includes $46.5 million and $49.5 million, respectively, of upfront and milestone payments related to license and collaboration agreements. These amounts continue to be excluded from our segment operating income (loss) and from certain measures contained in our credit agreement that are relevant to, among other things, the calculation of the interest rate.

 

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