Exhibit 99.1
Horizon Pharma plc Announces Record Fourth-Quarter and Full-Year 2015 Financial Results and Confirms Full-Year 2016 Sales and Adjusted EBITDA Guidance
— Fourth-Quarter 2015 Net Sales of $244.5 Million, Up 135 Percent —
— Fourth-Quarter 2015 Adjusted EBITDA of $122.5 Million; GAAP Net Income of $24.0 Million —
— Fourth-Quarter 2015 Adjusted Operating Cash Flow of $154.0 Million; GAAP Operating Cash Flow of $134.9 Million —
— Full-Year 2015 Net Sales of $757.0 Million, Up 155 Percent —
— Full-Year 2015 Adjusted EBITDA of $362.1 Million; GAAP Net Income of $39.5 Million —
— Full-Year 2016 Net Sales Guidance of $1.025 to $1.050 Billion and Full-Year 2016 Adjusted EBITDA Guidance of $505 to $520 Million —
DUBLIN, IRELAND – February 29, 2016 – Horizon Pharma plc (NASDAQ: HZNP), a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs, announced its fourth-quarter and full-year 2015 financial results today and confirmed its full-year 2016 net sales and adjusted EBITDA guidance.
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | % | | | | | | | | | % | |
| (in millions except for per share amounts and percentages) | | Q4 15 | | | Q4 14 | | | Change | | | FY 15 | | | FY 14 | | | Change | |
| | | | | | |
Net sales | | $ | 244.5 | | | $ | 103.8 | | | | 135 | | | $ | 757.0 | | | $ | 297.0 | | | | 155 | |
Net income (loss) | | | 24.0 | | | | (31.6 | ) | | | NM | | | | 39.5 | | | | (263.6 | ) | | | NM | |
Adjusted non-GAAP net income | | | 102.4 | | | | 25.9 | | | | 295 | | | | 305.9 | | | | 72.1 | | | | 324 | |
Adjusted EBITDA | | | 122.5 | | | | 34.8 | | | | 252 | | | | 362.1 | | | | 87.1 | | | | 316 | |
| | | | | | |
Earnings (loss) per share - basic | | $ | 0.15 | | | $ | (0.27 | ) | | | NM | | | $ | 0.27 | | | $ | (3.15 | ) | | | NM | |
Adjusted non-GAAP earnings per share - basic | | | 0.64 | | | | 0.22 | | | | 191 | | | | 2.06 | | | | 0.86 | | | | 140 | |
Earnings (loss) per share - diluted | | | 0.15 | | | | (0.27 | ) | | | NM | | | | 0.25 | | | | (3.15 | ) | | | NM | |
Adjusted non-GAAP earnings per share - diluted | | | 0.63 | | | | 0.20 | | | | 215 | | | | 1.96 | | | | 0.76 | | | | 158 | |
“I am extremely proud of our dedicated employees for helping us deliver another year of exceptional, record-breaking financial performance for our shareholders,” said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma plc. “We exceeded all of our original financial goals while at the same time significantly expanding our patient access program, HorizonCares, to thousands of patients at a value of more than $1 billion in 2015. Our full-year 2015 net sales more than doubled and our adjusted EBITDA more than quadrupled from 2014. Our superior commercial execution and aggressive M&A activity have strategically strengthened and diversified the Company and positioned us well to deliver rapidly growing adjusted operating cash flows, sales and earnings.”
1
Fourth-Quarter and Full-Year 2015 Net Sales Results
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | % | | | | | | | | | % | |
| (in millions except for percentages) | | Q4 15 | | | Q4 14 | | | Change | | | FY 15 | | | FY14 | | | Change | |
Primary Care | | $ | 162.8 | | | $ | 72.1 | | | | 126 | | | $ | 504.0 | | | $ | 246.2 | | | | 105 | |
DUEXIS® | | | 60.4 | | | | 28.8 | | | | 110 | | | | 190.4 | | | | 83.2 | | | | 129 | |
VIMOVO® | | | 47.0 | | | | 43.3 | | | | 9 | | | | 166.6 | | | | 163.0 | | | | 2 | |
PENNSAID® 2% (1) | | | 55.4 | | | | — | | | | NM | | | | 147.0 | | | | — | | | | NM | |
Orphan | | | 68.2 | | | | 22.5 | | | | 202 | | | | 207.8 | | | | 25.3 | | | | NM | |
ACTIMMUNE® (2) | | | 28.1 | | | | 22.5 | | | | 25 | | | | 107.4 | | | | 25.3 | | | | NM | |
RAVICTI® (3) | | | 34.5 | | | | — | | | | NM | | | | 86.9 | | | | — | | | | NM | |
BUPHENYL® (3) | | | 5.6 | | | | — | | | | NM | | | | 13.5 | | | | — | | | | NM | |
Rheumatology | | | 13.5 | | | | 9.2 | | | | 47 | | | | 45.2 | | | | 25.5 | | | | 77 | |
RAYOS® | | | 11.1 | | | | 6.1 | | | | 82 | | | | 40.3 | | | | 19.0 | | | | 112 | |
LODOTRA® | | | 2.4 | | | | 3.1 | | | | -22 | | | | 4.9 | | | | 6.5 | | | | -24 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total net sales | | $ | 244.5 | | | $ | 103.8 | | | | 135 | | | $ | 757.0 | | | $ | 297.0 | | | | 155 | |
| (1) | PENNSAID 2% was acquired on October 17, 2014. (2) ACTIMMUNE was acquired on September 19, 2014. (3) RAVICTI and BUPHENYL were acquired on May 7, 2015. |
| • | | Fourth-quarter 2015 net sales of $244.5 million increased 135 percent compared to the fourth quarter of 2014 driven by strong growth in each of Horizon’s business units: orphan, primary care and rheumatology, as well as the addition of new medicines. |
| • | | Orphan Business Unit:ACTIMMUNE sales of $28.1 million increased 25 percent compared to the fourth quarter of 2014. RAVICTI and BUPHENYL sales in the fourth quarter were $34.5 million and $5.6 million, respectively. The orphan commercial organization continues to drive awareness of ACTIMMUNE and RAVICTI among both patients and physicians, leading to consistent patient additions throughout the quarter. The Company continued to make significant progress with clinical development programs for its orphan medicines: |
| | • | | The STEADFAST phase 3 trial for ACTIMMUNE in Friedreich’s ataxia is 70 percent enrolled and is on track for enrollment completion in the second quarter of 2016. Initial trial results are expected by the end of 2016. |
| | • | | The Company also initiated a phase 1 clinical study and began patient enrollment, in collaboration with Fox Chase Cancer Center, to evaluate ACTIMMUNE in combination with nivolumab (OPDIVO®, Bristol-Myers Squibb) in kidney and bladder cancers. |
| | • | | In November, RAVICTI was approved in Europe for use as an adjunctive therapy for chronic management of adult and pediatric patients two months of age and older with six subtypes of Urea Cycle Disorders (UCDs); commercial launch is expected in 2017. |
| | • | | In the U.S., the Company is pursuing an expanded RAVICTI indication for children with UCDs who are two months to two years of age and expects to submit a supplemental new drug application to the FDA in the second quarter of 2016. Importantly, this expanded indication, if approved, would allow physicians to start patients in this age group on RAVICTI instead of starting them on BUPHENYL as they do today. |
| | • | | On February 22, 2016, the Company announced RAVICTI is eligible for data protection in Canada. The regulatory review process will be reinitiated to obtain approval in Canada for the approximately 100 patients with UCDs. |
2
| • | | Primary Care Business Unit:Horizon’s primary care medicines address important unmet needs for hundreds of thousands of patients in the United States, providing pain relief associated with osteoarthritis and rheumatoid arthritis. It is estimated that NSAID-induced GI toxicity each year causes more than 16,500 deaths and 107,000 hospitalizations. DUEXIS and VIMOVO significantly reduce the risk of NSAID-induced ulcers and provide benefits through a fixed-dose combination therapy resulting in a reduction of the number of pills taken. In addition, PENNSAID 2% is indicated for osteoarthritis of the knee, which according to the Centers for Disease Control and Prevention, may develop in nearly one out of every two people by the age of 85. PENNSAID 2% is a topical NSAID that is applied directly to the knee and contains a powerful penetrating agent that helps ensure that diclofenac sodium is absorbed through the skin to the site of inflammation and pain. Prescription and sales growth of DUEXIS, VIMOVO and PENNSAID 2% were driven by their differentiated clinical benefits, strong commercial execution and focus on patient access through the Company’s HorizonCares program. DUEXIS sales of $60.4 million increased 110 percent compared to the fourth quarter of 2014; VIMOVO sales of $47.0 million increased 9 percent compared to the fourth quarter of 2014; PENNSAID 2% sales of $55.4 million increased 26 percent sequentially compared to third quarter 2015. The aggregate sales of DUEXIS, VIMOVO and PENNSAID 2% of $162.8 million in the fourth quarter were driven by an increase of 107 percent in total prescriptions versus the fourth quarter of 2014. In the fourth quarter, the Company began an expansion of its primary care sales force to add approximately 50 representatives, bringing the total sales force size to 375 representatives in the first quarter of 2016. |
| • | | Rheumatology Business Unit:RAYOS sales of $11.1 million increased 82 percent compared to the fourth quarter of 2014 and full-year RAYOS sales of $40.3 million more than doubled compared to full year 2014 as a result of continued strong commercial execution. In addition, on January 14, 2016, Horizon acquired Crealta Holdings LLC and the orphan biologic medicine KRYSTEXXA. KRYSTEXXA is the first and only FDA-approved medicine indicated to treat chronic refractory gout, which is a type of arthritis that occurs when uric acid build up in the blood remains high and inflammation persists even after treatment with conventional therapies. Chronic refractory gout impacts 40,000 to 50,000 people in the United States. This acquisition leverages Horizon’s existing rheumatology expertise and infrastructure. In addition, the Company is now expanding the legacy KRYSTEXXA account manager team of 15 to approximately 40. This expansion is expected to be completed in the second quarter of 2016 and will bring the total sales force size to approximately 85 representatives commercializing KRYSTEXXA. |
3
Fourth-Quarter 2015 Financial Results
Note: For additional detail and reconciliation of these non-GAAP amounts to the most directly comparable GAAP financial measures, please refer to the detailed tables at the end of this release.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q4 2015 | | | Q4 2014 | |
| | | (Unaudited) | | | (Unaudited) | |
| (in millions, except per share amounts) | | U.S. GAAP | | | Adjustments | | | Non-GAAP | | | U.S. GAAP | | | Adjustments | | | Non-GAAP | |
| | | | | | |
Net sales | | $ | 244.5 | | | $ | — | | | $ | 244.5 | | | $ | 103.8 | | | $ | — | | | $ | 103.8 | |
Gross profit | | | 177.0 | | | | 47.0 | | | | 224.0 | | | | 71.2 | | | | 20.3 | | | | 91.5 | |
Research and development | | | 13.7 | | | | (2.8 | ) | | | 10.9 | | | | 6.9 | | | | (0.4 | ) | | | 6.5 | |
Sales and marketing | | | 63.4 | | | | (7.7 | ) | | | 55.7 | | | | 33.3 | | | | (1.1 | ) | | | 32.2 | |
General and administrative | | | 61.9 | | | | (27.5 | ) | | | 34.4 | | | | 22.0 | | | | (5.4 | ) | | | 16.6 | |
Total operating expenses | | | 139.0 | | | | (38.0 | ) | | | 101.0 | | | | 62.2 | | | | (6.9 | ) | | | 55.3 | |
Interest expense, net | | | 20.1 | | | | (5.5 | ) | | | 14.6 | | | | 10.2 | | | | (2.2 | ) | | | 8.0 | |
Loss on sale of long-term investments | | | 29.0 | | | | (29.0 | ) | | | — | | | | — | | | | — | | | | — | |
Loss on induced conversion of debt and debt extinguishment | | | — | | | | — | | | | — | | | | 29.4 | | | | (29.4 | ) | | | — | |
Other expense, net | | | 0.1 | | | | — | | | | 0.1 | | | | 3.0 | | | | (2.9 | ) | | | 0.1 | |
Expense (benefit) for income taxes | | | (35.5 | ) | | | 41.1 | | | | 5.6 | | | | (2.8 | ) | | | — | | | | (2.8 | ) |
Net income | | | 24.0 | | | | 78.4 | | | | 102.4 | | | | (31.6 | ) | | | 57.5 | | | | 25.9 | |
EBITDA (1) | | | 60.1 | | | | 62.4 | | | | 122.5 | | | | 4.9 | | | | 29.9 | | | | 34.8 | |
| | | | | | |
Earnings per share - basic | | $ | 0.15 | | | $ | 0.49 | | | $ | 0.64 | | | $ | (0.27 | ) | | $ | 0.49 | | | $ | 0.22 | |
Earnings per share - diluted | | $ | 0.15 | | | $ | 0.48 | | | $ | 0.63 | | | $ | (0.27 | ) | | $ | 0.47 | | | $ | 0.20 | |
| (1) | EBITDA is a non-GAAP measure. |
| • | | Under U.S. generally accepted accounting principles (GAAP) in the fourth quarter of 2015, the gross profit ratio was 72.4 percent compared to 68.5 percent in the fourth quarter of 2014. The adjusted gross profit ratio in the fourth quarter of 2015 was 91.6 percent compared to 88.1 percent in the fourth quarter of 2014. |
| • | | On a GAAP basis in the fourth quarter of 2015, total operating expenses were 56.8 percent of sales, research & development (R&D) expenses were 5.6 percent of sales, sales & marketing (S&M) expenses were 25.9 percent of sales and general & administration (G&A) expenses were 25.3 percent of sales. Adjusted total operating expenses in the fourth quarter of 2015 were 41.4 percent of sales, adjusted R&D expenses were 4.5 percent of sales, adjusted S&M expenses were 22.8 percent of sales and adjusted G&A expenses were 14.1 percent of sales. |
| • | | On a GAAP basis in the fourth quarter of 2015, net income was $24.0 million compared to a loss of $31.6 million in the fourth quarter of 2014. Adjusted net income in the fourth quarter of 2015 was $102.4 million compared to $25.9 million in the fourth quarter of 2014. |
| • | | On an unadjusted basis in the fourth quarter of 2015, EBITDA was $60.1 million, or 24.6 percent of sales. Adjusted EBITDA in the fourth quarter of 2015 was $122.5 million, or 50.1 percent of sales, compared to $34.8 million, or 33.5 percent of sales, in the fourth quarter of 2014. |
| • | | On a GAAP basis in the fourth quarter of 2015 and 2014, diluted earnings (loss) per share were $0.15 and ($0.27), respectively. Adjusted diluted earnings per share in the fourth quarter of 2015 and 2014 were $0.63 and $0.20, respectively, representing growth of 215 percent. Weighted average shares outstanding used for calculating earnings per share in the fourth quarter of 2015 were 159.4 million and 163.8 million for basic and diluted earnings per share, respectively. |
4
Cash Flow Statement and Balance Sheet Highlights
| • | | On a GAAP basis in the fourth quarter of 2015, operating cash flow was $134.9 million. Adjusted operating cash flow in the fourth quarter of 2015 was $154.0 million, which excludes cash payments for transaction-related costs. |
| • | | The Company had cash and cash equivalents of $859.6 million as of December 31, 2015, an increase of $640.8 million from December 31, 2014. In January 2016, the Company used approximately $510 million for the acquisition of Crealta Holdings LLC in an all cash transaction. |
| • | | Total principal amount of debt outstanding was $1.273 billion as of December 31, 2015, which is comprised of $475 million in 6.625 percent senior notes due 2023, $398 million in senior secured term loans due 2021, and $400 million of 2.5 percent exchangeable senior notes due 2022. |
| • | | As of December 31, 2015, the Company had a total debt to last 12 months (LTM) adjusted EBITDA leverage ratio of 3.5x and a net debt to LTM adjusted EBITDA leverage ratio of 1.1x. |
Conference Call
At 8 a.m. EST / 1 p.m. IST today, the Company will host a live conference call and webcast to review its financial and operating results and provide a general business update.
U.S. Dial-In Number: +1 888.338.8373
International Dial-In Number: +1 973.872.3000
Passcode: 39817228
The live webcast and a replay may be accessed by visiting Horizon’s website athttp://ir.horizon-pharma.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 conference call will be available approximately two hours after the call and accessible through one of the following telephone numbers, using the passcode below:
Replay U.S. Dial-In Number: +1 855.859.2056
Replay International Dial-In Number: +1 404.537.3406
Passcode: 39817228
5
About Horizon Pharma plc
Horizon Pharma plc is a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. The Company markets nine medicines through its orphan, primary care and rheumatology business units. Horizon Pharma’s global headquarters are in Dublin, Ireland. For more information, please visitwww.horizonpharma.com. Follow@HZNPplc on Twitter or view careers on ourLinkedIn page.
Note Regarding Use of Non-GAAP Financial Measures
EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by Horizon as non-GAAP financial measures. Horizon provides certain other financial measures such as adjusted net income, adjusted net income per share, adjusted gross profit and gross profit ratio, adjusted operating and other expenses and adjusted cash from operations, each of which include adjustments to GAAP figures. Adjustments to Horizon’s GAAP figures as well as EBITDA exclude acquisition-related expenses, loss on debt extinguishment and loss on sale of long-term investments, as well as non-cash items such as share-based compensation, depreciation and amortization, royalty accretion, non-cash interest expense, 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 believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial 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 2016 financial results and trends. 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 reconciliation of its 2016 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items that are a component of net income (loss) cannot be reasonably projected, due to the significant impact of changes in Horizon’s stock price on share-based compensation, the variability associated with acquisition-related expenses due to timing and other factors.
Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements related to Horizon Pharma’s expected full-year 2016 net sales and adjusted EBITDA guidance, expected financial performance in future periods, expected timing of clinical, regulatory and commercial events, anticipated expansion of Horizon Pharma’s sales force and other statements that are not historical facts. These forward-looking statements are based on Horizon Pharma’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 full-year 2016 financial and operating results may differ from its expectations; Horizon Pharma’s ability to grow net sales from existing products; the availability of coverage and adequate reimbursement and pricing from government and third-party payors and risks relating to the success of Horizon’s patient support program; risks associated with clinical development and regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including potential 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 Pharma operates and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in Horizon’s filings and reports with the U.S. Securities and Exchange Commission (“SEC”). Horizon Pharma undertakes no duty or obligation to update any forward-looking statements contained in this presentation as a result of new information.
6
Contacts:
Investors:
John Thomas
Executive Vice President, Strategy and Investor Relations
investor-relations@horizonpharma.com
Tina Ventura
Vice President, Investor Relations
investor-relations@horizonpharma.com
U.S. Media:
Geoff Curtis
Senior Vice President, Corporate Communications
gcurtis@horizonpharma.com
Ireland Media:
Ray Gordon
Gordon MRM
ray@gordonmrm.ie
7
Horizon Pharma plc
Consolidated Statements of Operations
(in thousands, except share and per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Twelve Months Ended December 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | | | | | |
REVENUES: | | | | | | | | | | | | | | | | |
Net sales | | $ | 244,538 | | | $ | 103,841 | | | $ | 757,044 | | | $ | 296,955 | |
Cost of goods sold | | | 67,573 | | | | 32,680 | | | | 219,502 | | | | 78,753 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 176,965 | | | | 71,161 | | | | 537,542 | | | | 218,202 | |
| | | | | | | | | | | | | | | | |
| | | | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
Research and development | | | 13,689 | | | | 6,859 | | | | 41,865 | | | | 17,460 | |
Sales and marketing | | | 63,352 | | | | 33,344 | | | | 220,444 | | | | 120,276 | |
General and administrative | | | 61,875 | | | | 21,975 | | | | 219,861 | | | | 88,957 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 138,916 | | | | 62,178 | | | | 482,170 | | | | 226,693 | |
| | | | | | | | | | | | | | | | |
Operating income (loss) | | | 38,049 | | | | 8,983 | | | | 55,372 | | | | (8,491 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
OTHER (EXPENSE) INCOME, NET: | | | | | | | | | | | | | | | | |
Interest expense, net | | | (20,120 | ) | | | (10,218 | ) | | | (69,900 | ) | | | (23,826 | ) |
Foreign exchange loss | | | (227 | ) | | | (829 | ) | | | (1,237 | ) | | | (3,905 | ) |
Loss on sale of long-term investments | | | (29,032 | ) | | | — | | | | (29,032 | ) | | | — | |
Bargain purchase gain | | | — | | | | — | | | | — | | | | 22,171 | |
Loss on derivative fair value | | | — | | | | — | | | | — | | | | (214,995 | ) |
Loss on induced conversion of debt and debt extinguishment | | | — | | | | (29,390 | ) | | | (77,624 | ) | | | (29,390 | ) |
Other expense, net | | | (132 | ) | | | (3,010 | ) | | | (10,291 | ) | | | (11,251 | ) |
| | | | | | | | | | | | | | | | |
Total other expense, net | | | (49,511 | ) | | | (43,447 | ) | | | (188,084 | ) | | | (261,196 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Loss before benefit for income taxes | | | (11,462 | ) | | | (34,464 | ) | | | (132,712 | ) | | | (269,687 | ) |
BENEFIT FOR INCOME TAXES | | | (35,456 | ) | | | (2,817 | ) | | | (172,244 | ) | | | (6,084 | ) |
| | | | | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | 23,994 | | | $ | (31,647 | ) | | $ | 39,532 | | | $ | (263,603 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings (loss) per share - basic | | $ | 0.15 | | | $ | (0.27 | ) | | $ | 0.27 | | | $ | (3.15 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average shares outstanding - basic | | | 159,410,594 | | | | 116,333,365 | | | | 148,788,020 | | | | 83,751,129 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings (loss) per share - diluted | | $ | 0.15 | | | $ | (0.27 | ) | | $ | 0.25 | | | $ | (3.15 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average shares outstanding - diluted | | | 163,834,135 | | | | 116,333,365 | | | | 155,923,251 | | | | 83,751,129 | |
| | | | | | | | | | | | | | | | |
8
Horizon Pharma plc
Consolidated Balance Sheets
(in thousands, except share data)
| | | | | | | | |
| | | As of | |
| | | Dec. 31, 2015 | | | Dec. 31, 2014 | |
| | |
ASSETS | | | | | | | | |
CURRENT ASSETS: | | | | | | | | |
Cash and cash equivalents | | $ | 859,616 | | | $ | 218,807 | |
Restricted cash | | | 1,860 | | | | 738 | |
Accounts receivable, net | | | 210,437 | | | | 73,915 | |
Inventories, net | | | 18,376 | | | | 16,865 | |
Prepaid expenses and other current assets | | | 15,858 | | | | 14,370 | |
| | | | | | | | |
Total current assets | | | 1,106,147 | | | | 324,695 | |
| | | | | | | | |
Property and equipment, net | | | 14,020 | | | | 7,241 | |
Developed technology, net | | | 1,609,049 | | | | 696,963 | |
In-process research and development | | | 66,000 | | | | 66,000 | |
Other intangible assets, net | | | 7,061 | | | | 7,870 | |
Goodwill | | | 253,811 | | | | — | |
Deferred tax assets, net, non-current | | | 2,278 | | | | — | |
Other assets | | | 8,581 | | | | 11,564 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 3,066,947 | | | $ | 1,114,333 | |
| | | | | | | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
Convertible debt, net | | $ | — | | | $ | 48,334 | |
Long-term debt—current portion | | | 4,000 | | | | — | |
Accounts payable | | | 16,590 | | | | 21,011 | |
Accrued expenses | | | 100,046 | | | | 46,625 | |
Accrued trade discounts and rebates | | | 183,769 | | | | 76,115 | |
Accrued royalties—current portion | | | 51,700 | | | | 25,325 | |
Deferred revenues—current portion | | | 1,447 | | | | 1,261 | |
| | | | | | | | |
Total current liabilities | | | 357,552 | | | | 218,671 | |
| | | | | | | | |
| | |
LONG-TERM LIABILITIES: | | | | | | | | |
Exchangeable notes, net | | | 283,675 | | | | — | |
Long-term debt, net, net of current | | | 857,440 | | | | 297,169 | |
Accrued royalties, net of current | | | 123,519 | | | | 48,887 | |
Deferred revenues, net of current | | | 8,785 | | | | 8,144 | |
Deferred tax liabilities, net, non-current | | | 113,400 | | | | — | |
Other long-term liabilities | | | 9,431 | | | | 1,258 | |
| | | | | | | | |
Total long-term liabilities | | | 1,396,250 | | | | 355,458 | |
| | | | | | | | |
| | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | |
SHAREHOLDERS’ EQUITY: | | | | | | | | |
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized; 160,069,067 and 124,425,853 issued at December 31, 2015 and December 31, 2014 respectively, and 159,684,701 and 124,041,487 outstanding at December 31, 2015 and | | | | | | | | |
December 31, 2014, respectively. | | | 16 | | | | 13 | |
Treasury stock, 384,366 ordinary shares at December 31, 2015 and December 31, 2014 | | | (4,585 | ) | | | (4,585 | ) |
Additional paid-in capital | | | 2,001,552 | | | | 1,269,858 | |
Accumulated other comprehensive loss | | | (2,651 | ) | | | (4,363 | ) |
Accumulated deficit | | | (681,187 | ) | | | (720,719 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 1,313,145 | | | | 540,204 | |
| | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 3,066,947 | | | $ | 1,114,333 | |
| | | | | | | | |
9
Horizon Pharma plc
Consolidated Statements of Cash Flows
(in thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended Dec. 31, | | | Twelve Months Ended Dec. 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 23,994 | | | $ | (31,647 | ) | | $ | 39,532 | | | $ | (263,603 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | 44,318 | | | | 16,347 | | | | 138,343 | | | | 34,009 | |
Share-based compensation | | | 27,300 | | | | 3,087 | | | | 83,553 | | | | 13,198 | |
Royalty accretion | | | 6,517 | | | | 3,403 | | | | 20,088 | | | | 9,020 | |
Royalty liability remeasurement | | | 6,874 | | | | (2,373 | ) | | | 21,151 | | | | 10,660 | |
Bargain purchase gain | | | — | | | | — | | | | — | | | | (22,171 | ) |
Loss on derivative revaluation | | | — | | | | — | | | | — | | | | 214,995 | |
Loss on induced conversions of debt and debt extinguishment | | | — | | | | 11,709 | | | | 21,581 | | | | 11,709 | |
Amortization of debt discount and deferred financing costs | | | 5,482 | | | | 2,186 | | | | 18,810 | | | | 9,273 | |
Loss on sale of long-term investments | | | 29,032 | | | | — | | | | 29,032 | | | | — | |
Foreign exchange loss | | | 227 | | | | 829 | | | | 1,237 | | | | 3,905 | |
Other | | | 131 | | | | — | | | | 258 | | | | 11 | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Accounts receivable | | | 10,604 | | | | 5,850 | | | | (124,766 | ) | | | (46,183 | ) |
Inventories | | | (603 | ) | | | 7,044 | | | | 12,216 | | | | 7,173 | |
Prepaid expenses and other current assets | | | 597 | | | | (7,117 | ) | | | 1,014 | | | | (9,208 | ) |
Accounts payable | | | (46,575 | ) | | | (1,172 | ) | | | (8,362 | ) | | | 9,383 | |
Accrued trade discounts and rebates | | | 58,910 | | | | 7,977 | | | | 94,046 | | | | 54,090 | |
Accrued expenses and accrued royalties | | | 9,117 | | | | (2,066 | ) | | | 20,169 | | | | (1,270 | ) |
Deferred revenues | | | (450 | ) | | | (238 | ) | | | 1,693 | | | | (562 | ) |
Deferred income taxes | | | (46,535 | ) | | | (4,238 | ) | | | (180,549 | ) | | | (7,516 | ) |
Payment of original issue discount upon repayment of 2014 Term Loan Facility | | | — | | | | — | | | | (3,000 | ) | | | — | |
Other non-current assets and liabilities | | | 5,998 | | | | 498 | | | | 8,120 | | | | 636 | |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 134,938 | | | | 10,079 | | | | 194,166 | | | | 27,549 | |
| | | | | | | | | | | | | | | | |
| | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | |
Payments for acquisitions, net of cash acquired | | | — | | | | (45,000 | ) | | | (1,022,361 | ) | | | (224,220 | ) |
Proceeds from liquidation of available-for-sale investments | | | — | | | | — | | | | 64,623 | | | | — | |
Purchases of long-term investments | | | — | | | | — | | | | (71,813 | ) | | | — | |
Procceds from sale of long-term investments | | | 42,781 | | | | — | | | | 42,781 | | | | — | |
Purchases of property and equipment | | | (2,642 | ) | | | (1,663 | ) | | | (7,156 | ) | | | (3,500 | ) |
Change in restricted cash | | | (1,000 | ) | | | — | | | | (1,122 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | 39,139 | | | | (46,663 | ) | | | (995,048 | ) | | | (227,720 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | |
Net proceeds from the issuance of Exchangable Senior Notes | | | — | | | | — | | | | 387,181 | | | | — | |
Net proceeds from the issuance of 2023 Senior Notes | | | — | | | | — | | | | 462,340 | | | | — | |
Net proceeds from the 2015 Term Loan Facility | | | — | | | | — | | | | 391,506 | | | | — | |
Net proceeds from the 2014 Term Loan Facility | | | — | | | | — | | | | — | | | | 286,966 | |
Repayment of the 2015 Term Loan Facility | | | (1,000 | ) | | | — | | | | (2,000 | ) | | | — | |
Repayment of the 2014 Term Loan Facility | | | — | | | | — | | | | (297,000 | ) | | | — | |
Net proceeds from the issuance of ordinary shares | | | 58 | | | | — | | | | 475,685 | | | | — | |
Proceeds from the issuance of common stock in connection with warrant exercises | | | — | | | | 5,199 | | | | 18,124 | | | | 38,461 | |
Proceeds from the issuance of common stock through ESPP programs | | | 2,911 | | | | 1,025 | | | | 4,452 | | | | 1,674 | |
Proceeds from the issuance of common stock in connection with stock option exercises | | | 615 | | | | 989 | | | | 5,217 | | | | 2,693 | |
Payment of employee withholding taxes relating to share-based awards | | | (690 | ) | | | (894 | ) | | | (3,024 | ) | | | (894 | ) |
Proceeds from the settlement of capped call transactions | | | — | | | | — | | | | — | | | | 9,385 | |
| | | | | | | | | | | | | | | | |
Net cash provided by financing activities | | | 1,894 | | | | 6,319 | | | | 1,442,481 | | | | 338,285 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Effect of foreign exchange rate changes on cash | | | (641 | ) | | | 291 | | | | (790 | ) | | | 213 | |
| | | | | | | | | | | | | | | | |
| | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | | 175,330 | | | | (29,974 | ) | | | 640,809 | | | | 138,327 | |
CASH AND CASH EQUIVALENTS, beginning of the period | | | 684,286 | | | | 248,781 | | | | 218,807 | | | | 80,480 | |
| | | | | | | | | | | | | | | | |
CASH AND CASH EQUIVALENTS, end of the period | | $ | 859,616 | | | $ | 218,807 | | | $ | 859,616 | | | $ | 218,807 | |
| | | | | | | | | | | | | | | | |
10
Horizon Pharma plc
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Unaudited)
(in thousands, except share and per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended Dec. 31, | | | Twelve Months Ended Dec. 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Adjusted Non-GAAP Net Income: | | | | | | | | | | | | | | | | |
| | | | |
GAAP Net Income (Loss) | | $ | 23,994 | | | $ | (31,647 | ) | | $ | 39,532 | | | $ | (263,603 | ) |
Non-GAAP Adjustments: | | | | | | | | | | | | | | | | |
Remeasurement of royalties for products acquired through business combinations | | | 6,874 | | | | (2,373 | ) | | | 21,151 | | | | 10,660 | |
Acquisition related costs | | | 7,380 | | | | 3,184 | | | | 72,221 | | | | 48,835 | |
Loss on sale of long-term investments | | | 29,032 | | | | — | | | | 29,032 | | | | — | |
Loss on derivative revaluation | | | — | | | | — | | | | — | | | | 214,995 | |
Secondary offering costs | | | — | | | | 2,857 | | | | — | | | | 2,857 | |
Loss on induced conversion of debt and debt extinguishment | | | — | | | | 29,390 | | | | 77,624 | | | | 29,390 | |
Bargain purchase gain | | | — | | | | — | | | | — | | | | (22,171 | ) |
Amortization and accretion: | | | | | | | | | | | | | | | | |
Intangible amortization expense | | | 41,706 | | | | 15,836 | | | | 132,923 | | | | 32,306 | |
Amortization of debt discount and deferred financing costs | | | 5,482 | | | | 2,186 | | | | 18,810 | | | | 9,273 | |
Accretion of royalty liabilities | | | 6,517 | | | | 3,403 | | | | 20,088 | | | | 9,020 | |
Amortizaton of inventory step-up adjustment | | | 860 | | | | 9,525 | | | | 11,495 | | | | 11,065 | |
Share-based compensation | | | 27,990 | | | | 3,087 | | | | 85,786 | | | | 13,198 | |
Depreciation expense | | | 2,612 | | | | 509 | | | | 5,420 | | | | 1,702 | |
Royalties for products acquired through business combinations (1) | | | (8,944 | ) | | | (6,202 | ) | | | (29,834 | ) | | | (18,264 | ) |
| | | | | | | | | | | | | | | | |
Total of pre-tax non-GAAP adjustments | | | 119,509 | | | | 61,402 | | | | 444,716 | | | | 342,866 | |
| | | | | | | | | | | | | | | | |
Income tax adjustments (2) | | | (41,067 | ) | | | (3,876 | ) | | | (178,395 | ) | | | (7,143 | ) |
| | | | | | | | | | | | | | | | |
Total of non-GAAP adjustments | | | 78,442 | | | | 57,526 | | | | 266,321 | | | | 335,723 | |
| | | | | | | | | | | | | | | | |
Adjusted Non-GAAP Net Income | | $ | 102,436 | | | $ | 25,879 | | | $ | 305,853 | | | $ | 72,120 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted Non-GAAP Earnings Per Share: | | | | | | | | | | | | | | | | |
| | | | |
Weighted average shares - Basic | | | 159,410,594 | | | | 116,333,365 | | | | 148,788,020 | | | | 83,751,129 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted Non-GAAP Earnings Per Share - Basic: | | | | | | | | | | | | | | | | |
GAAP earnings (loss) per share - Basic | | $ | 0.15 | | | $ | (0.27 | ) | | $ | 0.27 | | | $ | (3.15 | ) |
Non-GAAP adjustments | | | 0.49 | | | | 0.49 | | | | 1.79 | | | | 4.01 | |
| | | | | | | | | | | | | | | | |
Adjusted Non-GAAP earnings per share - Basic | | $ | 0.64 | | | $ | 0.22 | | | $ | 2.06 | | | $ | 0.86 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average shares - Diluted | | | | | | | | | | | | | | | | |
Weighted average shares - Basic | | | 159,410,594 | | | | 116,333,365 | | | | 148,788,020 | | | | 83,751,129 | |
Ordinary share equivalents | | | 4,423,541 | | | | 20,657,476 | | | | 7,135,231 | | | | 20,737,726 | |
| | | | | | | | | | | | | | | | |
Weighted average shares - Diluted | | | 163,834,135 | | | | 136,990,841 | | | | 155,923,251 | | | | 104,488,855 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted Non-GAAP Net Income - Diluted | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP Net Income | | $ | 102,436 | | | $ | 25,879 | | | $ | 305,853 | | | $ | 72,120 | |
Add: Convertible debt interest expense, net of taxes | | | — | | | | 1,208 | | | | — | | | | 6,834 | |
| | | | | | | | | | | | | | | | |
Adjusted Non-GAAP Net Income - Diluted | | $ | 102,436 | | | $ | 27,087 | | | $ | 305,853 | | | $ | 78,954 | |
| | | | | | | | | | | | | | | | |
| | | | |
GAAP earnings (loss) per share - Diluted | | $ | 0.15 | | | $ | (0.27 | ) | | $ | 0.25 | | | $ | (3.15 | ) |
Non-GAAP adjustments | | | 0.48 | | | | 0.49 | | | | 1.71 | | | | 4.01 | |
Diluted earnings per share effect of ordinary share equivalents | | | — | | | | (0.02 | ) | | | — | | | | (0.10 | ) |
| | | | | | | | | | | | | | | | |
Adjusted Non-GAAP earnings per share - Diluted | | $ | 0.63 | | | $ | 0.20 | | | $ | 1.96 | | | $ | 0.76 | |
| | | | | | | | | | | | | | | | |
| (1) | Royalties for products acquired through business combinations relate to VIMOVO, ACTIMMUNE, RAVICTI and BUPHENYL. |
| (2) | Adjustments to convert the income tax benefit to the estimated amount of taxes that are payable in cash. |
11
Horizon Pharma plc
Additional GAAP to Non-GAAP Reconciliations (Unaudited)
EBITDA, Gross Profit and Operating Cash Flow
(in thousands, except percentages)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended Dec 31, | | | Twelve Months Ended Dec 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
EBITDA and Adjusted EBITDA: | | | | | | | | | | | | | | | | |
GAAP Net Income (Loss) | | $ | 23,994 | | | $ | (31,647 | ) | | $ | 39,532 | | | $ | (263,603 | ) |
Depreciation | | | 2,612 | | | | 509 | | | | 5,420 | | | | 1,702 | |
Amortization and accretion: | | | | | | | | | | | | | | | | |
Intangible amortization expense | | | 41,706 | | | | 15,836 | | | | 132,923 | | | | 32,306 | |
Accretion of royalty liabilities | | | 6,517 | | | | 3,403 | | | | 20,088 | | | | 9,020 | |
Amortization of deferred revenue | | | (208 | ) | | | (166 | ) | | | (962 | ) | | | (644 | ) |
Amortizaton of inventory step-up adjustment | | | 860 | | | | 9,525 | | | | 11,495 | | | | 11,065 | |
Interest expense, net (including amortization of debt discount and deferred financing costs) | | | 20,120 | | | | 10,218 | | | | 69,900 | | | | 23,826 | |
Benefit for income taxes | | | (35,456 | ) | | | (2,817 | ) | | | (172,244 | ) | | | (6,084 | ) |
| | | | | | | | | | | | | | | | |
EBITDA | | $ | 60,145 | | | $ | 4,861 | | | $ | 106,152 | | | $ | (192,412 | ) |
| | | | | | | | | | | | | | | | |
Non-GAAP adjustments: | | | | | | | | | | | | | | | | |
Remeasurement of royalties for products acquired through business combinations | | | 6,874 | | | | (2,373 | ) | | | 21,151 | | | | 10,660 | |
Acquisition related costs | | | 7,380 | | | | 3,184 | | | | 72,221 | | | | 48,835 | |
Loss on sale of long-term investments | | | 29,032 | | | | — | | | | 29,032 | | | | — | |
Loss on derivative revaluation | | | — | | | | — | | | | — | | | | 214,995 | |
Loss on induced conversion of debt and debt extinguishment | | | — | | | | 29,390 | | | | 77,624 | | | | 29,390 | |
Bargain purchase gain | | | — | | | | — | | | | — | | | | (22,171 | ) |
Secondary offering costs | | | — | | | | 2,857 | | | | — | | | | 2,857 | |
Share-based compensation | | | 27,990 | | | | 3,087 | | | | 85,786 | | | | 13,198 | |
Royalties for products acquired through business combinations (1) | | | (8,944 | ) | | | (6,202 | ) | | | (29,834 | ) | | | (18,264 | ) |
| | | | | | | | | | | | | | | | |
Total of Non-GAAP adjustments | | $ | 62,332 | | | $ | 29,943 | | | $ | 255,980 | | | $ | 279,500 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 122,477 | | | $ | 34,804 | | | $ | 362,132 | | | $ | 87,088 | |
| | | | | | | | | | | | | | | | |
| | | | |
Non-GAAP Gross Profit: | | | | | | | | | | | | | | | | |
GAAP net sales | | $ | 244,538 | | | $ | 103,841 | | | $ | 757,044 | | | $ | 296,955 | |
GAAP cost of goods sold | | | 67,573 | | | | 32,680 | | | | 219,502 | | | | 78,753 | |
| | | | | | | | | | | | | | | | |
GAAP gross profit | | $ | 176,965 | | | $ | 71,161 | | | $ | 537,542 | | | $ | 218,202 | |
| | | | | | | | | | | | | | | | |
| | | | |
GAAP gross profit % | | | 72.4 | % | | | 68.5 | % | | | 71.0 | % | | | 73.5 | % |
| | | | |
Non-GAAP Gross Profit: | | | | | | | | | | | | | | | | |
GAAP gross profit | | $ | 176,965 | | | $ | 71,161 | | | $ | 537,542 | | | $ | 218,202 | |
Non-GAAP gross profit adjustments: | | | | | | | | | | | | | | | | |
Remeasurement of royalties for products acquired through business combinations | | | 6,874 | | | | (2,373 | ) | | | 21,151 | | | | 10,660 | |
Intangible amortization expense (COGS only) | | | 41,504 | | | | 15,836 | | | | 132,113 | | | | 32,306 | |
Accretion of royalty liabilities | | | 6,517 | | | | 3,403 | | | | 20,088 | | | | 9,020 | |
Amortizaton of inventory step-up adjustment | | | 860 | | | | 9,525 | | | | 11,495 | | | | 11,065 | |
Depreciation (COGS only) | | | 189 | | | | 109 | | | | 457 | | | | 369 | |
Royalties for products acquired through business combinations (1) | | | (8,944 | ) | | | (6,202 | ) | | | (29,834 | ) | | | (18,264 | ) |
| | | | | | | | | | | | | | | | |
Total of Non-GAAP adjustments | | $ | 47,000 | | | $ | 20,298 | | | $ | 155,470 | | | $ | 45,156 | |
| | | | | | | | | | | | | | | | |
Non-GAAP gross profit | | $ | 223,965 | | | $ | 91,459 | | | $ | 693,012 | | | $ | 263,358 | |
| | | | | | | | | | | | | | | | |
| | | | |
Non-GAAP gross profit % | | | 91.6 | % | | | 88.1 | % | | | 91.5 | % | | | 88.7 | % |
| | | | |
Adjusted Operating Cash Flow: | | | | | | | | | | | | | | | | |
| | | | |
GAAP cash provided by operating activities | | $ | 134,938 | | | $ | 10,079 | | | $ | 194,166 | | | $ | 27,549 | |
Cash payments of acquistion related costs | | | 19,033 | | | | 5,796 | | | | 68,185 | | | | 48,946 | |
Cash payments for induced debt conversion | | | — | | | | 16,690 | | | | 10,472 | | | | 16,690 | |
Cash payment for debt extinguishment | | | — | | | | — | | | | 45,367 | | | | — | |
Payment of original issue discount on debt extinguishment | | | — | | | | — | | | | 3,000 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted operating cash flow | | $ | 153,971 | | | $ | 32,565 | | | $ | 321,190 | | | $ | 93,185 | |
| | | | | | | | | | | | | | | | |
| (1) | Royalties for products acquired through business combinations relate to VIMOVO, ACTIMMUNE, RAVICTI and BUPHENYL. |
12
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended December 31, 2015
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Sales | | | COGS | | | Research &
Development | | | Sales &
Marketing | | | General &
Administrative | | | Interest
Expense | | | Loss on Sale
of Long-term
Investments | | | Loss on Induced
Debt Conversion
& Debt
Extinguishment | | | Other | | | Income Tax
(Benefit)
Expense | | | Total | |
| | | | | | | | | | | |
GAAP as reported | | | 244,538 | | | | (67,573 | ) | | | (13,689 | ) | | | (63,352 | ) | | | (61,875 | ) | | | (20,120 | ) | | | (29,032 | ) | | | — | | | | (359 | ) | | | 35,456 | | | | 23,994 | |
| | | | | | | | | | | |
Non-GAAP Adjustments (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on sale of long-term investments(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29,032 | | | | — | | | | — | | | | — | | | | 29,032 | |
Acquisition related costs(2) | | | — | | | | — | | | | 967 | | | | — | | | | 6,413 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,380 | |
Amortization and accretion: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible amortization expense(3) | | | — | | | | 41,504 | | | | — | | | | 202 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 41,706 | |
Amortization of debt discount and deferred financing costs(4) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,482 | | | | — | | | | — | | | | — | | | | — | | | | 5,482 | |
Accretion of royalty liability(5) | | | — | | | | 6,517 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,517 | |
Amortization of inventory step-up adjustment(6) | | | — | | | | 860 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 860 | |
Remeasurement of royalties for products acquired through business combinations(7) | | | — | | | | 6,874 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,874 | |
Share-based compensation(8) | | | — | | | | — | | | | 1,878 | | | | 7,491 | | | | 18,621 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,990 | |
Depreciation expense(9) | | | — | | | | 189 | | | | — | | | | — | | | | 2,423 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,612 | |
Royalties for products acquired through business combinations(10) | | | — | | | | (8,944 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (8,944 | ) |
Income tax adjustments(11) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (41,067 | ) | | | (41,067 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total of non-GAAP adjustments | | | — | | | | 47,000 | | | | 2,845 | | | | 7,693 | | | | 27,457 | | | | 5,482 | | | | 29,032 | | | | — | | | | — | | | | (41,067 | ) | | | 78,442 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP | | | 244,538 | | | | (20,573 | ) | | | (10,844 | ) | | | (55,659 | ) | | | (34,418 | ) | | | (14,638 | ) | | | — | | | | — | | | | (359 | ) | | | (5,611 | ) | | | 102,436 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended December 31, 2014
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Sales | | | COGS | | | Research &
Development | | | Sales &
Marketing | | | General &
Administrative | | | Interest
Expense | | | Loss on Sale
of Long-term
Investments | | | Loss on Induced
Debt Conversion
& Debt
Extinguishment | | | Other | | | Income Tax
(Benefit)
Expense | | | Total | |
| | | | | | | | | | | |
GAAP as reported | | | 103,841 | | | | (32,680 | ) | | | (6,859 | ) | | | (33,344 | ) | | | (21,975 | ) | | | (10,218 | ) | | | — | | | | (29,390 | ) | | | (3,839 | ) | | | 2,817 | | | | (31,647 | ) |
| | | | | | | | | | | |
Non-GAAP Adjustments (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on induced conversion of debt and debt extinguistment(12) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29,390 | | | | — | | | | — | | | | 29,390 | |
Acquisition related costs(2) | | | — | | | | — | | | | — | | | | — | | | | 3,184 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,184 | |
Secondary offering costs(13) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,857 | | | | — | | | | 2,857 | |
Amortization and accretion: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible amortization expense(3) | | | — | | | | 15,633 | | | | — | | | | 203 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,836 | |
Amortization of debt discount and deferred financing costs(4) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,186 | | | | — | | | | — | | | | — | | | | — | | | | 2,186 | |
Accretion of royalty liability(5) | | | — | | | | 3,403 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,403 | |
Amortization of inventory step-up adjustment(6) | | | — | | | | 9,525 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,525 | |
Remeasurement of royalties for products acquired through business combinations(7) | | | — | | | | (2,373 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,373 | ) |
Share-based compensation(8) | | | — | | | | — | | | | 363 | | | | 896 | | | | 1,828 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,087 | |
Depreciation expense(9) | | | — | | | | 99 | | | | — | | | | — | | | | 410 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 509 | |
Royalties for products acquired through business combinations(10) | | | — | | | | (6,202 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (6,202 | ) |
Income tax adjustments(11) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,876 | ) | | | (3,876 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total of non-GAAP adjustments | | | — | | | | 20,085 | | | | 363 | | | | 1,099 | | | | 5,422 | | | | 2,186 | | | | — | | | | 29,390 | | | | 2,857 | | | | (3,876 | ) | | | 57,526 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP | | | 103,841 | | | | (12,595 | ) | | | (6,496 | ) | | | (32,246 | ) | | | (16,553 | ) | | | (8,032 | ) | | | — | | | | — | | | | (982 | ) | | | (1,059 | ) | | | 25,879 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
13
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Twelve Months Ended December 31, 2015
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Sales | | | COGS | | | Research &
Development | | | Sales &
Marketing | | | General &
Administrative | | | Interest
Expense | | | Loss on Sale
of Long-term
Investments | | | Loss on Induced
Debt Conversion
& Debt
Extinguishment | | | Other | | | Income Tax
(Benefit) Expense | | | Total | |
| | | | | | | | | | | |
GAAP as reported | | | 757,044 | | | | (219,502 | ) | | | (41,865 | ) | | | (220,444 | ) | | | (219,861 | ) | | | (69,900 | ) | | | (29,032 | ) | | | (77,624 | ) | | | (11,528 | ) | | | 172,244 | | | | 39,532 | |
| | | | | | | | | | | |
Non-GAAP Adjustments (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on induced conversion of debt and debt extinguistment(12) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 77,624 | | | | — | | | | — | | | | 77,624 | |
Loss on sale of long-term investments(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29,032 | | | | — | | | | — | | | | — | | | | 29,032 | |
Acquisition related costs(2) | | | — | | | | 23 | | | | 3,219 | | | | — | | | | 58,979 | | | | — | | | | — | | | | — | | | | 10,000 | | | | — | | | | 72,221 | |
Amortization and accretion: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible amortization expense(3) | | | — | | | | 132,113 | | | | — | | | | 810 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 132,923 | |
Amortization of debt discount and deferred financing costs(4) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,810 | | | | — | | | | — | | | | — | | | | — | | | | 18,810 | |
Accretion of royalty liability(5) | | | — | | | | 20,088 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 20,088 | |
Amortization of inventory step-up adjustment(6) | | | — | | | | 11,495 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,495 | |
Remeasurement of royalties for products acquired through business combinations(7) | | | — | | | | 21,151 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 21,151 | |
Share-based compensation(8) | | | — | | | | — | | | | 6,590 | | | | 23,062 | | | | 56,134 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 85,786 | |
Depreciation expense(9) | | | — | | | | 457 | | | | — | | | | — | | | | 4,963 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,420 | |
Royalties for products acquired through business combinations(10) | | | — | | | | (29,834 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (29,834 | ) |
Income tax adjustments(11) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (178,395 | ) | | | (178,395 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total ofnon-GAAP adjustments | | | — | | | | 155,493 | | | | 9,809 | | | | 23,872 | | | | 120,076 | | | | 18,810 | | | | 29,032 | | | | 77,624 | | | | 10,000 | | | | (178,395 | ) | | | 266,321 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AdjustedNon-GAAP | | | 757,044 | | | | (64,009 | ) | | | (32,056 | ) | | | (196,572 | ) | | | (99,785 | ) | | | (51,090 | ) | | | — | | | | — | | | | (1,528 | ) | | | (6,151 | ) | | | 305,853 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Twelve Months Ended December 31, 2014
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Sales | | | COGS | | | Research &
Development | | | Sales &
Marketing | | | General &
Administrative | | | Interest
Expense | | | Loss on Sale
of Long-term
Investments | | | Loss on Induced
Debt Conversion
& Debt
Extinguishment | | | Other | | | Income Tax
(Benefit) Expense | | | Total | |
| | | | | | | | | | | |
GAAP as reported | | | 296,955 | | | | (78,753 | ) | | | (17,460 | ) | | | (120,276 | ) | | | (88,957 | ) | | | (23,826 | ) | | | — | | | | (29,390 | ) | | | (207,980 | ) | | | 6,084 | | | | (263,603 | ) |
| | | | | | | | | | | |
Non-GAAP Adjustments (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on induced conversion of debt and debt extinguistment(12) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29,390 | | | | — | | | | — | | | | 29,390 | |
Bargain purchase gain(14) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (22,171 | ) | | | — | | | | (22,171 | ) |
Loss on derivative revaluation(15) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 214,995 | | | | — | | | | 214,995 | |
Acquisition related costs(2) | | | — | | | | — | | | | — | | | | — | | | | 40,613 | | | | — | | | | — | | | | — | | | | 8,222 | | | | — | | | | 48,835 | |
Secondary offering costs(13) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,857 | | | | — | | | | 2,857 | |
Amortization and accretion: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible amortization expense(3) | | | — | | | | 32,076 | | | | — | | | | 230 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32,306 | |
Amortization of debt discount and deferred financing costs(4) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,273 | | | | — | | | | — | | | | — | | | | — | | | | 9,273 | |
Accretion of royalty liability(5) | | | — | | | | 9,020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,020 | |
Amortization of inventory step-up adjustment(6) | | | — | | | | 11,065 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,065 | |
Remeasurement of royalties for products acquired through business combinations(7) | | | — | | | | 10,660 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,660 | |
Share-based compensation(8) | | | — | | | | — | | | | 1,515 | | | | 4,174 | | | | 7,509 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,198 | |
Depreciation expense(9) | | | — | | | | 369 | | | | — | | | | — | | | | 1,333 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,702 | |
Royalties for products acquired through business combinations(10) | | | — | | | | (18,264 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (18,264 | ) |
Income tax adjustments(11) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (7,143 | ) | | | (7,143 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total of non-GAAP adjustments | | | — | | | | 44,926 | | | | 1,515 | | | | 4,404 | | | | 49,455 | | | | 9,273 | | | | — | | | | 29,390 | | | | 203,903 | | | | (7,143 | ) | | | 335,723 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Non-GAAP | | | 296,955 | | | | (33,827 | ) | | | (15,945 | ) | | | (115,873 | ) | | | (39,502 | ) | | | (14,553 | ) | | | — | | | | — | | | | (4,077 | ) | | | (1,059 | ) | | | 72,120 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
14
NOTES FOR CERTAIN INCOME STATEMENT LINE ITEMS - NON-GAAP ADJUSTED
(in thousands)
| (1) | During the three months ended September 30, 2015, the Company purchased 2,250,000 shares of common stock of Depomed, Inc. (“Depomed”) representing 3.75 percent of Depomed’s then outstanding common stock. The shares were acquired at a cost of $71,813. During the three months ended December 31, 2015, following the Company’s decision to withdraw its offer to acquire Depomed, the Company sold all of its shares in Depomed, receiving sales proceeds of $42,781. Following this sale, the Company recognized a loss of $29,032 in the consolidated statement of comprehensive income (loss). |
| (2) | Expenses, including legal and consulting fees, incurred in connection with the Company’s acquisitions of Vidara Therapeutics International Public Limited Company (“Vidara”), Hyperion Therapeutics, Inc. (“Hyperion”) and Crealta Holdings LLC (“Crealta”), and its withdrawn offer to acquire Depomed, have been excluded as non-recurring items. |
| (3) | Intangible amortization expenses are associated with the Company’s intellectual property rights, developed technology and customer relationships of VIMOVO, LODOTRA, RAYOS, ACTIMMUNE, PENNSAID 2%, RAVICTI and BUPHENYL. |
| (4) | Represents amortization of debt discount and deferred financing costs associated with the Company’s debt. |
| (5) | Represents accretion expense associated with the ACTIMMUNE, VIMOVO, RAVICTI and BUPHENYL royalties for the three and twelve months ended December 31, 2015, and represents accretion expense associated with the ACTIMMUNE and VIMOVO royalties for the three and twelve months ended December 31, 2014. |
| (6) | In connection with the Hyperion acquisition, the RAVICTI and BUPHENYL inventory was stepped up in value to $8,682 and during the three and twelve months ended December 31, 2015, the Company recognized in cost of goods sold $860 and $8,341, respectively, of step-up inventory costs related to RAVICTI and BUPHENYL inventory sold. In connection with the Vidara acquisition, the ACTIMMUNE inventory was stepped up in value to $14,218 and during the three and twelve months ended December 31, 2014, the Company recognized in cost of goods sold $9,525 and $11,065, respectively, of step-up inventory costs related to ACTIMMUNE. During the first quarter of 2015, the Company recognized in cost of goods sold the remaining $3,154 of step-up inventory costs related to ACTIMMUNE. |
| (7) | At the time of the Company’s acquisition of the rights to VIMOVO, ACTIMMUNE, RAVICTI and BUPHENYL, the Company estimated the fair value of contingent royalties payable to third parties using an income approach under the discounted cash flow method, which included revenue projections and other assumptions the Company made to determine the fair value. If the Company significantly over performs or underperforms against its original revenue projections or it becomes necessary to make changes to assumptions as a result of a triggering event, the Company is required to reassess the fair value of the contingent royalties payable. Any subsequent adjustments to fair value is recorded in the period such adjustment is made as either an increase or decrease to royalties payable, with a corresponding increase or decrease in cost of goods sold, in accordance with established accounting policies. |
| | During the three and twelve months ended December 31, 2015, the Company recorded a charge of $6,874 and $21,151, respectively, to cost of goods sold to adjust the amount of the contingent royalty liabilities relating to VIMOVO, ACTIMMUNE and RAVICTI. During the three and twelve months ended December 31, 2014, the Company recorded a net decrease of $2,373 and a net charge of $10,660, respectively, to cost of goods sold to adjust the amount of the contingent royalty liability relating to ACTIMMUNE and VIMOVO. |
| (8) | Represents share-based compensation expense associated with the Company’s stock option, restricted stock unit, and performance stock unit grants to its employees and non-employees, its cash-settled long-term incentive program, and its employee stock purchase plan. |
| (9) | Represents depreciation expense related to the Company’s property, equipment and leasehold improvements. |
| (10) | Royalties of $8,944 and $29,834 were incurred during the three and twelve months ended December 31, 2015, respectively, based on each period’s net sales for VIMOVO, ACTIMMUNE, RAVICTI and BUPHENYL. Royalties of $6,202 and $18,264 were incurred during the three and twelve months ended December 31, 2014, respectively, based on each period’s net sales for VIMOVO and ACTIMMUNE. |
15
| (11) | Represents adjustments to convert the income tax benefit to the estimated amount of taxes that are payable in cash. |
| (12) | During the six months ended June 30, 2015, the Company recorded a loss on induced debt conversions of $77,624, which represented an early redemption payment of $45,366, the write-down of $21,581 in debt discount and deferred financing costs, $10,005 in additional exchange consideration to debt holders and $672 in expenses incurred in connection with the induced debt conversions. Following these induced debt conversions in the six months ended June 30, 2015, there were no convertible senior notes remaining outstanding. During the three and twelve months ended December 31, 2014, the Company recorded a loss on induced debt conversions of $29,390 as result of induced conversions of convertible senior notes in the fourth quarter of 2014. |
| (13) | Represents legal, consulting and investment advisory fees associated with the Company’s secondary offering in the fourth quarter of 2014. |
| (14) | The bargain purchase gain of $22,171 was the result of the Vidara acquisition. Identifiable assets and liabilities of Vidara, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the fair value of the net assets acquired over the value of consideration was recorded as a bargain purchase gain. |
| (15) | During the six months ended June 30, 2014, the Company recorded non-cash charges of $214,995 related to the increase in the fair value of the embedded derivative associated with its convertible senior notes. The loss on the derivative revaluation was primarily due to an increase in the market value of the Company’s common stock. The loss on derivative revaluation was a permanent tax difference and was not deductible for income tax reporting purposes. On June 27, 2014, the derivative liability was re-measured to a final fair value and the entire fair value of the derivative liability of $324,405 was reclassified to additional paid-in capital. As such, there was no derivative revaluation subsequent to June 2014. |
16
