Horizon Pharma plc Announces Record Fourth-Quarter and Full-Year 2015 Financial Results and Confirms Full-Year 2016 Sales and Adjusted EBITDA Guidance
DUBLIN, IRELAND -- (Marketwired) -- 02/29/16 -- 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."
Fourth-Quarter and Full-Year 2015 Net
Sales Results
(in millions except for % %
percentages) Q4 15 Q4 14 Change FY 15 FY 14 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.
- 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.
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 U.S. Non- U.S. Non-
per share amounts) GAAP Adjustments GAAP GAAP Adjustments 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.
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 at http://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
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 visit www.horizonpharma.com. Follow @HZNPplc on Twitter or view careers on our LinkedIn 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.
Horizon Pharma plc
Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, 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
============ ============ ============ ============
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
============= =============
Horizon Pharma plc
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Twelve Months Ended
Dec. 31, 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
========== ========== =========== ==========
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. Twelve Months Ended Dec.
31, 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.
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 Twelve Months Ended
31, 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.
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended December 31, 2015
(Unaudited)
Research & Sales &
Sales COGS Development Marketing
-------- -------- ----------- ----------
GAAP as reported 244,538 (67,573) (13,689) (63,352)
Non-GAAP Adjustments (in
thousands):
Loss on sale of long-term
investments(1) - - - -
Acquisition related
costs(2) - - 967 -
Amortization and accretion:
Intangible amortization
expense(3) - 41,504 - 202
Amortization of debt
discount and deferred
financing costs(4) - - - -
Accretion of royalty
liability(5) - 6,517 - -
Amortization of inventory
step-up adjustment(6) - 860 - -
Remeasurement of royalties
for products acquired
through business
combinations(7) - 6,874 - -
Share-based compensation(8) - - 1,878 7,491
Depreciation expense(9) - 189 - -
Royalties for products
acquired through business
combinations(10) - (8,944) - -
Income tax adjustments(11) - - - -
-------- -------- ----------- ----------
Total of non-GAAP
adjustments - 47,000 2,845 7,693
-------- -------- ----------- ----------
Adjusted Non-GAAP 244,538 (20,573) (10,844) (55,659)
======== ======== =========== ==========
Loss on Sale
General & Interest of Long-term
Administrative Expense Investments
---------------- -------- ------------
GAAP as reported (61,875) (20,120) (29,032)
Non-GAAP Adjustments (in
thousands):
Loss on sale of long-term
investments(1) - - 29,032
Acquisition related
costs(2) 6,413 - -
Amortization and accretion:
Intangible amortization
expense(3) - - -
Amortization of debt
discount and deferred
financing costs(4) - 5,482 -
Accretion of royalty
liability(5) - - -
Amortization of inventory
step-up adjustment(6) - - -
Remeasurement of royalties
for products acquired
through business
combinations(7) - - -
Share-based compensation(8) 18,621 - -
Depreciation expense(9) 2,423 - -
Royalties for products
acquired through business
combinations(10) - - -
Income tax adjustments(11) - - -
---------------- -------- ------------
Total of non-GAAP
adjustments 27,457 5,482 29,032
---------------- -------- ------------
Adjusted Non-GAAP (34,418) (14,638) -
================ ======== ============
Loss on Induced Income
Debt Conversion Tax
& Debt (Benefit)
Extinguishment Other Expense Total
---------------- -------- --------- --------
GAAP as reported - (359) 35,456 23,994
Non-GAAP Adjustments (in
thousands):
Loss on sale of long-term
investments(1) - - - 29,032
Acquisition related
costs(2) - - - 7,380
Amortization and accretion:
Intangible amortization
expense(3) - - - 41,706
Amortization of debt
discount and deferred
financing costs(4) - - - 5,482
Accretion of royalty
liability(5) - - - 6,517
Amortization of inventory
step-up adjustment(6) - - - 860
Remeasurement of royalties
for products acquired
through business
combinations(7) - - - 6,874
Share-based compensation(8) - - - 27,990
Depreciation expense(9) - - - 2,612
Royalties for products
acquired through business
combinations(10) - - - (8,944)
Income tax adjustments(11) - - (41,067) (41,067)
---------------- -------- --------- --------
Total of non-GAAP
adjustments - - (41,067) 78,442
---------------- -------- --------- --------
Adjusted Non-GAAP - (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)
Research & Sales &
Sales COGS Development Marketing
-------- -------- ----------- ----------
GAAP as reported 103,841 (32,680) (6,859) (33,344)
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt extinguistment(12) - - - -
Acquisition related
costs(2) - - - -
Secondary offering
costs(13) - - - -
Amortization and
accretion:
Intangible amortization
expense (3) - 15,633 - 203
Amortization of debt
discount and deferred
financing costs(4) - - - -
Accretion of royalty
liability(5) - 3,403 - -
Amortization of
inventory step-up
adjustment(6) - 9,525 - -
Remeasurement of
royalties for products
acquired through
business combinations(7) - (2,373) - -
Share-based
compensation(8) - - 363 896
Depreciation expense(9) - 99 - -
Royalties for products
acquired through
business
combinations(10) - (6,202) - -
Income tax
adjustments(11) - - - -
-------- -------- ----------- ----------
Total of non-GAAP
adjustments - 20,085 363 1,099
-------- -------- ----------- ----------
Adjusted Non-GAAP 103,841 (12,595) (6,496) (32,246)
======== ======== =========== ==========
Loss on Sale
General & Interest of Long-term
Administrative Expense Investments
---------------- -------- ------------
GAAP as reported (21,975) (10,218) -
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt extinguistment(12) - - -
Acquisition related
costs(2) 3,184 - -
Secondary offering
costs(13) - - -
Amortization and
accretion:
Intangible amortization
expense (3) - - -
Amortization of debt
discount and deferred
financing costs(4) - 2,186 -
Accretion of royalty
liability(5) - - -
Amortization of
inventory step-up
adjustment(6) - - -
Remeasurement of
royalties for products
acquired through
business combinations(7) - - -
Share-based
compensation(8) 1,828 - -
Depreciation expense(9) 410 - -
Royalties for products
acquired through
business
combinations(10) - - -
Income tax
adjustments(11) - - -
---------------- -------- ------------
Total of non-GAAP
adjustments 5,422 2,186 -
---------------- -------- ------------
Adjusted Non-GAAP (16,553) (8,032) -
================ ======== ============
Loss on Induced Income
Debt Conversion Tax
& Debt (Benefit)
Extinguishment Other Expense Total
---------------- -------- --------- --------
GAAP as reported (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
Secondary offering
costs(13) - 2,857 - 2,857
Amortization and
accretion:
Intangible amortization
expense (3) - - - 15,836
Amortization of debt
discount and deferred
financing costs(4) - - - 2,186
Accretion of royalty
liability(5) - - - 3,403
Amortization of
inventory step-up
adjustment(6) - - - 9,525
Remeasurement of
royalties for products
acquired through
business combinations(7) - - - (2,373)
Share-based
compensation(8) - - - 3,087
Depreciation expense(9) - - - 509
Royalties for products
acquired through
business
combinations(10) - - - (6,202)
Income tax
adjustments(11) - - (3,876) (3,876)
---------------- -------- --------- --------
Total of non-GAAP
adjustments 29,390 2,857 (3,876) 57,526
---------------- -------- --------- --------
Adjusted Non-GAAP - (982) (1,059) 25,879
================ ======== ========= ========
Horizon Pharma plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Twelve Months Ended December 31, 2015
(Unaudited)
Research & Sales &
Sales COGS Development Marketing
-------- --------- ----------- ----------
GAAP as reported 757,044 (219,502) (41,865) (220,444)
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt
extinguistment(12) - - - -
Loss on sale of long-
term investments(1) - - - -
Acquisition related
costs(2) - 23 3,219 -
Amortization and
accretion:
Intangible
amortization
expense(3) - 132,113 - 810
Amortization of debt
discount and
deferred financing
costs(4) - - - -
Accretion of royalty
liability(5) - 20,088 - -
Amortization of
inventory step-up
adjustment(6) - 11,495 - -
Remeasurement of
royalties for products
acquired through
business
combinations(7) - 21,151 - -
Share-based
compensation(8) - - 6,590 23,062
Depreciation expense(9) - 457 - -
Royalties for products
acquired through
business
combinations(10) - (29,834) - -
Income tax
adjustments(11) - - - -
-------- --------- ----------- ----------
Total of non-GAAP
adjustments - 155,493 9,809 23,872
-------- --------- ----------- ----------
Adjusted Non-GAAP 757,044 (64,009) (32,056) (196,572)
======== ========= =========== ==========
Loss on Sale
General & Interest of Long-term
Administrative Expense Investments
---------------- -------- ------------
GAAP as reported (219,861) (69,900) (29,032)
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt
extinguistment(12) - - -
Loss on sale of long-
term investments(1) - - 29,032
Acquisition related
costs(2) 58,979 - -
Amortization and
accretion:
Intangible
amortization
expense(3) - - -
Amortization of debt
discount and
deferred financing
costs(4) - 18,810 -
Accretion of royalty
liability(5) - - -
Amortization of
inventory step-up
adjustment(6) - - -
Remeasurement of
royalties for products
acquired through
business
combinations(7) - - -
Share-based
compensation(8) 56,134 - -
Depreciation expense(9) 4,963 - -
Royalties for products
acquired through
business
combinations(10) - - -
Income tax
adjustments(11) - - -
---------------- -------- ------------
Total of non-GAAP
adjustments 120,076 18,810 29,032
---------------- -------- ------------
Adjusted Non-GAAP (99,785) (51,090) -
================ ======== ============
Loss on Induced Income
Debt Conversion Tax
& Debt (Benefit)
Extinguishment Other Expense Total
---------------- --------- --------- ---------
GAAP as reported (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
Acquisition related
costs(2) - 10,000 - 72,221
Amortization and
accretion:
Intangible
amortization
expense(3) - - - 132,923
Amortization of debt
discount and
deferred financing
costs(4) - - - 18,810
Accretion of royalty
liability(5) - - - 20,088
Amortization of
inventory step-up
adjustment(6) - - - 11,495
Remeasurement of
royalties for products
acquired through
business
combinations(7) - - - 21,151
Share-based
compensation(8) - - - 85,786
Depreciation expense(9) - - - 5,420
Royalties for products
acquired through
business
combinations(10) - - - (29,834)
Income tax
adjustments(11) - - (178,395) (178,395)
---------------- --------- --------- ---------
Total of non-GAAP
adjustments 77,624 10,000 (178,395) 266,321
---------------- --------- --------- ---------
Adjusted Non-GAAP - (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)
Research & Sales &
Sales COGS Development Marketing
-------- --------- ----------- ----------
GAAP as reported 296,955 (78,753) (17,460) (120,276)
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt
extinguistment(12) - - - -
Bargain purchase
gain(14) - - - -
Loss on derivative
revaluation(15) - - - -
Acquisition related
costs(2) - - - -
Secondary offering
costs(13) - - - -
Amortization and
accretion:
Intangible
amortization expense
(3) - 32,076 - 230
Amortization of debt
discount and
deferred financing
costs(4) - - - -
Accretion of royalty
liability(5) - 9,020 - -
Amortization of
inventory step-up
adjustment(6) - 11,065 - -
Remeasurement of
royalties for products
acquired through
business
combinations(7) - 10,660 - -
Share-based
compensation(8) - - 1,515 4,174
Depreciation expense(9) - 369 - -
Royalties for products
acquired through
business
combinations(10) - (18,264) - -
Income tax
adjustments(11) - - - -
-------- --------- ----------- ----------
Total of non-GAAP
adjustments - 44,926 1,515 4,404
-------- --------- ----------- ----------
Adjusted Non-GAAP 296,955 (33,827) (15,945) (115,873)
======== ========= =========== ==========
Loss on Sale
General & Interest of Long-term
Administrative Expense Investments
---------------- -------- ------------
GAAP as reported (88,957) (23,826) -
Non-GAAP Adjustments (in
thousands):
Loss on induced
conversion of debt and
debt
extinguistment(12) - - -
Bargain purchase
gain(14) - - -
Loss on derivative
revaluation(15) - - -
Acquisition related
costs(2) 40,613 - -
Secondary offering
costs(13) - - -
Amortization and
accretion:
Intangible
amortization expense
(3) - - -
Amortization of debt
discount and
deferred financing
costs(4) - 9,273 -
Accretion of royalty
liability(5) - - -
Amortization of
inventory step-up
adjustment(6) - - -
Remeasurement of
royalties for products
acquired through
business
combinations(7) - - -
Share-based
compensation(8) 7,509 - -
Depreciation expense(9) 1,333 - -
Royalties for products
acquired through
business
combinations(10) - - -
Income tax
adjustments(11) - - -
---------------- -------- ------------
Total of non-GAAP
adjustments 49,455 9,273 -
---------------- -------- ------------
Adjusted Non-GAAP (39,502) (14,553) -
================ ======== ============
Loss on Induced Income
Debt Conversion Tax
& Debt (Benefit)
Extinguishment Other Expense Total
---------------- --------- --------- ---------
GAAP as reported (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) - 8,222 - 48,835
Secondary offering
costs(13) - 2,857 - 2,857
Amortization and
accretion:
Intangible
amortization expense
(3) - - - 32,306
Amortization of debt
discount and
deferred financing
costs(4) - - - 9,273
Accretion of royalty
liability(5) - - - 9,020
Amortization of
inventory step-up
adjustment(6) - - - 11,065
Remeasurement of
royalties for products
acquired through
business
combinations(7) - - - 10,660
Share-based
compensation(8) - - - 13,198
Depreciation expense(9) - - - 1,702
Royalties for products
acquired through
business
combinations(10) - - - (18,264)
Income tax
adjustments(11) - - (7,143) (7,143)
---------------- --------- --------- ---------
Total of non-GAAP
adjustments 29,390 203,903 (7,143) 335,723
---------------- --------- --------- ---------
Adjusted Non-GAAP - (4,077) (1,059) 72,120
================ ========= ========= =========
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.
(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.
Contacts: Investors: John Thomas Executive Vice President, Strategy and Investor Relations [email protected] Tina Ventura Vice President, Investor Relations [email protected] U.S. Media: Geoff Curtis Senior Vice President, Corporate Communications [email protected] Ireland Media: Ray Gordon Gordon MRM [email protected]
Source: Horizon Pharma plc