SEC Filing | Horizon Therapeutics plc

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10-Q

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, 2022


☐	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		98-1195602
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

70 St. Stephen’s Green Dublin 2, D02 E2X4, 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 October 27, 2022: 226,621,465.

HORIZON THERAPEUTICS PLC

INDEX


		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2022 and as of December 31, 2021 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	56
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	106
Item 6.	Exhibits	107
	Signatures	109

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
	September 30,			December 31,
	2022			2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,130,527		$	1,580,317
Restricted cash		4,743			3,839
Accounts receivable, net		646,386			632,775
Inventories, net		190,258			225,730
Prepaid expenses and other current assets		440,095			357,106
Total current assets		3,412,009			2,799,767
Property, plant and equipment, net		317,692			292,298
Developed technology and other intangible assets, net		2,757,694			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		203,612			140,738
Total assets	$	9,027,862		$	8,677,728
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	32,113		$	30,125
Accrued expenses and other current liabilities		457,288			523,015
Accrued trade discounts and rebates		355,213			317,431
Long-term debt—current portion		16,000			16,000
Total current liabilities		860,614			886,571
LONG-TERM LIABILITIES:
Long-term debt, net		2,549,140			2,555,233
Deferred tax liabilities, net		385,121			390,455
Other long-term liabilities		199,300			173,076
Total long-term liabilities		3,133,561			3,118,764
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at September 30, 2022 and December 31, 2021; 229,076,182 and 227,760,936 shares issued at September 30, 2022 and December 31, 2021, respectively; and 228,691,816 and 227,376,570 shares outstanding at September 30, 2022 and December 31, 2021, respectively		23			23
Treasury stock, 384,366 ordinary shares at September 30, 2022 and December 31, 2021		(4,585	)		(4,585	)
Additional paid-in capital		4,424,509			4,373,337
Accumulated other comprehensive income (loss)		7,460			(14,987	)
Retained earnings		606,280			318,605
Total shareholders’ equity		5,033,687			4,672,393
Total liabilities and shareholders’ equity	$	9,027,862		$	8,677,728

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

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands, except share and per share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Net sales	$	925,359		$	1,036,992		$	2,687,015		$	2,211,946
Cost of goods sold		234,132			251,640			679,410			553,003
Gross profit		691,227			785,352			2,007,605			1,658,943
OPERATING EXPENSES:
Research and development		114,058			89,549			320,436			244,076
Acquired in-process research and development and milestones		19,000			4,000			19,000			47,000
Selling, general and administrative		397,563			360,260			1,168,518			1,047,456
Impairment of goodwill		—			—			56,171			—
Impairment of long-lived asset		—			—			—			12,371
Gain on sale of asset		—			—			—			(2,000	)
Total operating expenses		530,621			453,809			1,564,125			1,348,903
Operating income		160,606			331,543			443,480			310,040
OTHER EXPENSE, NET:
Interest expense, net		(22,480	)		(22,977	)		(65,145	)		(59,018	)
Foreign exchange loss		(768	)		(476	)		(320	)		(1,363	)
Other (expense) income, net		(2,277	)		(849	)		(5,408	)		2,113
Total other expense, net		(25,525	)		(24,302	)		(70,873	)		(58,268	)
Income before benefit for income taxes		135,081			307,241			372,607			251,772
Benefit for income taxes		(758	)		(19,302	)		(28,467	)		(109,537	)
Net income	$	135,839		$	326,543		$	401,074		$	361,309
Net income per ordinary share—basic	$	0.59		$	1.44		$	1.75		$	1.61
Weighted average ordinary shares outstanding—basic		230,333,287			226,096,747			229,820,406			225,053,704
Net income per ordinary share—diluted	$	0.58		$	1.38		$	1.70		$	1.54
Weighted average ordinary shares outstanding—diluted		235,385,570			236,198,789			235,923,030			235,256,424
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Interest rate swap contracts designated as cash flow hedges	$	23,874		$	—		$	25,885		$	—
Pension and other post-employment benefit plan remeasurements		250			—			28			(287	)
Foreign currency translation adjustments		(1,573	)		(514	)		(3,466	)		(1,100	)
Other comprehensive income (loss)		22,551			(514	)		22,447			(1,387	)
Comprehensive income	$	158,390		$	326,029		$	423,521		$	359,922

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			Retained		Shareholders’
	Shares		Amount		Shares		Amount			Capital			Income (Loss)			Earnings		Equity
Balances at December 31, 2021		227,760,936	$	23		384,366	$	(4,585	)	$	4,373,337		$	(14,987	)	$	318,605	$	4,672,393
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		2,112,964		—		—		—			9,071			—			—		9,071
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(115,108	)		—			—		(115,108	)
Share-based compensation		—		—		—		—			47,347			—			—		47,347
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			325			—		325
Foreign currency translation adjustments		—		—		—		—			—			(460	)		—		(460	)
Net income		—		—		—		—			—			—			204,261		204,261
Balances at March 31, 2022		229,873,900	$	23		384,366	$	(4,585	)	$	4,314,647		$	(15,122	)	$	522,866	$	4,817,829
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		660,784		—		—		—			12,951			—			—		12,951
Issuance of ordinary shares in conjunction with Employee Share Purchase Plan		182,109		—		—		—			13,884			—			—		13,884
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(5,419	)		—			—		(5,419	)
Share-based compensation		—		—		—		—			45,281			—			—		45,281
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			(547	)		—		(547	)
Foreign currency translation adjustments		—		—		—		—			—			(1,433	)		—		(1,433	)
Interest rate swap contracts designated as cash flow hedges		—		—		—		—			—			2,011			—		2,011
Net income		—		—		—		—