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 June 30, 2023


☐	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 August 2, 2023: 228,994,568.

HORIZON THERAPEUTICS PLC

INDEX


		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2023 and as of December 31, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	97
	Signatures	99

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,
	2023			2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,464,623		$	2,352,833
Restricted cash		4,791			4,755
Accounts receivable, net		717,417			676,347
Inventories, net		170,325			169,559
Prepaid expenses and other current assets		564,808			449,349
Total current assets		3,921,964			3,652,843
Property, plant and equipment, net		362,326			340,509
Developed technology and other intangible assets, net		2,486,565			2,664,777
In-process research and development		810,000			810,000
Goodwill		1,010,538			1,010,538
Deferred tax assets, net		444,306			431,814
Other long-term assets		263,042			204,135
Total assets	$	9,298,741		$	9,114,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	85,543		$	155,800
Accrued expenses and other current liabilities		496,669			457,557
Accrued trade discounts and rebates		319,469			319,780
Long-term debt—current portion		16,000			16,000
Total current liabilities		917,681			949,137
LONG-TERM LIABILITIES:
Long-term debt, net		2,541,458			2,546,837
Deferred tax liabilities, net		264,815			342,017
Other long-term liabilities		263,828			204,451
Total long-term liabilities		3,070,101			3,093,305
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2023 and December 31, 2022; 229,323,393 and 227,625,913 shares issued at June 30, 2023 and December 31, 2022, respectively; and 228,939,027 and 227,241,547 shares outstanding at June 30, 2023 and December 31, 2022, respectively		23			23
Treasury stock, 384,366 ordinary shares at June 30, 2023 and December 31, 2022		(4,585	)		(4,585	)
Additional paid-in capital		4,522,145			4,474,199
Accumulated other comprehensive income		21,612			12,528
Retained earnings		771,764			590,009
Total shareholders’ equity		5,310,959			5,072,174
Total liabilities and shareholders’ equity	$	9,298,741		$	9,114,616

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 June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net sales	$	944,959		$	876,411		$	1,777,018		$	1,761,656
Cost of goods sold		219,958			230,216			428,521			445,278
Gross profit		725,001			646,195			1,348,497			1,316,378
OPERATING EXPENSES:
Research and development		150,035			103,246			284,183			206,378
Selling, general and administrative		434,125			398,221			887,479			770,955
Impairment of goodwill		—			56,171			—			56,171
Gain on sale of asset		(2,000	)		—			(2,000	)		—
Total operating expenses		582,160			557,638			1,169,662			1,033,504
Operating income		142,841			88,557			178,835			282,874
OTHER EXPENSE, NET:
Interest expense, net		(12,098	)		(21,409	)		(27,638	)		(42,665	)
Foreign exchange gain		326			28			417			448
Other income (expense), net		4,183			(2,389	)		2,840			(3,131	)
Total other expense, net		(7,589	)		(23,770	)		(24,381	)		(45,348	)
Income before expense (benefit) for income taxes		135,252			64,787			154,454			237,526
Expense (benefit) for income taxes		8,181			3,813			(27,301	)		(27,709	)
Net income	$	127,071		$	60,974		$	181,755		$	265,235
Net income per ordinary share—basic	$	0.56		$	0.27		$	0.80		$	1.16
Weighted average ordinary shares outstanding—basic		228,743,143			230,020,004			228,571,356			229,559,715
Net income per ordinary share—diluted	$	0.54		$	0.26		$	0.78		$	1.12
Weighted average ordinary shares outstanding—diluted		233,935,591			236,166,384			233,938,149			236,077,147
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustments	$	1,409		$	(1,433	)	$	794		$	(1,893	)
Pension and other post-employment benefit plan remeasurements		179			(547	)		2,003			(222	)
Interest rate swap contracts designated as cash flow hedges		13,339			2,011			6,287			2,011
Other comprehensive income (loss)		14,927			31			9,084			(104	)
Comprehensive income	$	141,998		$	61,005		$	190,839		$	265,131

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			Earnings		Equity
Balances at December 31, 2022		227,625,913	$	23		384,366	$	(4,585	)	$	4,474,199		$	12,528		$	590,009	$	5,072,174
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		1,334,792		—		—		—			3,421			—			—		3,421
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(87,549	)		—			—		(87,549	)
Share-based compensation		—		—		—		—			58,673			—			—		58,673
Interest rate swap contracts designated as cash flow hedges		—		—		—		—			—			(7,052	)		—		(7,052	)
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			1,824			—		1,824
Foreign currency translation adjustments		—		—		—		—			—			(615	)		—		(615	)
Net income		—		—		—		—			—			—			54,684		54,684
Balances at March 31, 2023		228,960,705	$	23		384,366	$	(4,585	)	$	4,448,744		$	6,685		$	644,693	$	5,095,560
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		168,967		—		—		—			2,628			—			—		2,628
Issuance of ordinary shares in conjunction with the Employee Share Purchase Plan		193,721		—		—		—			14,912			—			—		14,912
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(4,506	)		—			—		(4,506	)
Share-based compensation		—		—		—		—			60,367			—			—		60,367
Interest rate swap contracts designated as cash flow hedges		—		—		—		—			—			13,339			—		13,339
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			179			—		179
Foreign currency translation adjustments		—		—		—		—			—			1,409			—		1,409
Net income		—		—		—		—			—			—			127,071		127,071
Balances at June 30, 2023		229,323,393	$	23		384,366	$	(4,585	)	$	4,522,145		$	21,612		$	771,764	$	5,310,959

Additional