Horizon Pharma (HZNP) Enters Settlement agreement with Express Scripts (ESRX); Will Pay $65M
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Horizon Pharma (Nasdaq: HZNP) disclosed the following in a U.S. SEC filing on Thursday:
Item 1.01 Entry into a Material Definitive Agreement.
On September 26, 2016, Horizon Pharma USA, Inc., an indirect wholly-owned subsidiary of Horizon Pharma plc (“Horizon Pharma”) entered into a settlement agreement and mutual release with Express Scripts, Inc. to settle litigation pending in the Delaware Superior Court, Newcastle County.
In November 2015, Express Scripts sued Horizon Pharma for breach of contract seeking payment of $166.2 million in rebates relating to Horizon Pharma medicines DUEXIS®, RAYOS® and VIMOVO®. Horizon Pharma counterclaimed against Express Scripts, contesting the amount owed and contending Express Scripts had breached the rebate agreement. Under the terms of the settlement, each party will be released from any and all claims relating to the litigation without admitting any fault or wrongdoing. In the settlement, Horizon Pharma will pay Express Scripts $65 million.
The settlement amount will be paid to Express Scripts in installments, with 50 percent of the installment paid in the fourth quarter of 2016, 25 percent in the first quarter of 2017 and 25 percent in the second quarter of 2017.
In accordance with U.S. GAAP, Horizon Pharma expects that the settlement payment will be recorded as a reduction in GAAP net sales in the third quarter of fiscal 2016. Due to its non-recurring and unusual nature, Horizon Pharma expects to exclude the litigation settlement from non-GAAP net sales, adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share as a non-GAAP adjustment.
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