press release

Nov. 3, 2021, 7:01 a.m. EDT

Horizon Therapeutics plc Reports Record Third-Quarter 2021 Financial Results; Increasing Full-Year 2021 Net Sales and Adjusted EBITDA Guidance

-- Record Third-Quarter 2021 Net Sales of $1.037 Billion Increased 63 Percent; Third-Quarter 2021 GAAP Net Income of $326.5 Million; Record Adjusted EBITDA of $509.0 Million ---- Record TEPEZZA® (teprotumumab-trbw) Third-Quarter 2021 Net Sales of $616.4 Million; Increasing Full-Year 2021 Net Sales Guidance to Greater Than $1.625 Billion, Representing Year-Over-Year Growth of More Than 98 Percent ---- Record KRYSTEXXA® (pegloticase injection) Third-Quarter 2021 Net Sales of $158.1 Million; KRYSTEXXA Plus Immunomodulation Now at More Than 45 Percent; Increasing Full-Year 2021 Net Sales Guidance to Greater Than $550 Million, Representing Year-Over-Year Growth of More Than 35 Percent ---- Increasing Full-Year 2021 Net Sales Guidance to $3.16 Billion to $3.21 Billion, Representing 45 Percent Growth at the Midpoint; Increasing Full-Year 2021 Adjusted EBITDA Guidance to $1.315 Billion to $1.345 Billion, Representing 33 Percent Growth at the Midpoint ---- Announced Five New Programs for Development-Stage Candidates Daxdilimab (HZN-7734) and Dazodalibep (HZN-4920) ---- Announced Positive Topline Data from MIRROR Trial Evaluating the Use of KRYSTEXXA Plus Methotrexate; 71 Percent of Patients Achieved a Complete Response Rate at Month 6; Expect to Submit a Supplemental Biologics License Application (sBLA) to the U.S. FDA in the First Quarter of 2022 ---- Initiated Enrollment in TEPEZZA Chronic Thyroid Eye Disease (TED) Trial; Results Expected in Second Half of 2022 ---- Cash Position of $1.07 Billion; Achieved Gross Leverage Target of 2.0 Times at Sept. 30, 2021, Ahead of Year-End 2021 Goal --

DUBLIN, (BUSINESS WIRE) -- Horizon Therapeutics plc /zigman2/quotes/206690250/composite HZNP -1.24% today announced record third-quarter 2021 financial results and increased both its full-year 2021 net sales and adjusted EBITDA guidance.

“We generated record results in the third quarter and made significant progress executing our R&D strategy, further expanding our pipeline with five new programs,” said Tim Walbert, chairman, president and chief executive officer, Horizon. “In addition to our strong commercial execution with TEPEZZA and KRYSTEXXA, our expanded pipeline positions us to drive future growth and diversification, as well as address the unmet medical needs of many people living with rare, autoimmune and severe inflammatory diseases around the world.”

Financial Highlights
 
(in millions except for per share amounts and percentages) Q3 21 Q3 20 %Change YTD 21 YTD 20 %Change
 
Net sales $ 1,037.0 $ 636.4 63 $ 2,211.9 $ 1,455.1 52
Net income   326.5   292.8 12   361.3   199.2 81
Non-GAAP net income   413.8   392.2 6   802.5   559.2 44
Adjusted EBITDA   509.0   329.8 54   921.8   627.7 47
 
Earnings per share - diluted   1.38   1.31 5   1.54   0.95 62
Non-GAAP earnings per share - diluted   1.75   1.74 1   3.41   2.58 32

Third Quarter and Recent Company Highlights

  • Announced Five New R&D Programs and Highlighted Expanded Pipeline at Inaugural R&D Day: In September, the Company announced four new programs for its development-stage candidate daxdilimab (HZN-7734) in alopecia areata, discoid lupus erythematosus, dermatomyositis and lupus nephritis and one new program for its development-stage candidate dazodalibep (HZN-4920) in focal segmental glomerulosclerosis. The Company expects to initiate Phase 2 trials in each of these indications in 2022. The new programs, in addition to the Company’s R&D strategy and other key programs, were highlighted at the Company’s inaugural R&D Day in September .

  • Announced Positive Topline Data from KRYSTEXXA MIRROR Trial: In October, the Company announced positive topline results from the MIRROR Phase 4 randomized, placebo-controlled trial evaluating the use of KRYSTEXXA plus methotrexate. The MIRROR trial results demonstrated that 71 percent of patients who were randomized to receive KRYSTEXXA plus methotrexate achieved a complete response rate at Month 6 (p<0.001), a significant improvement from the 40 percent response rate in patients who were randomized to receive KRYSTEXXA plus placebo. In the Phase 3 clinical program, which evaluated KRYSTEXXA alone compared to placebo, 42 percent of patients receiving KRYSTEXXA achieved a complete response. The Company plans to submit a sBLA to the U.S. FDA in the first quarter of 2022. Full data from the trial is expected to be presented at future medical meetings. KRYSTEXXA plus immunomodulation is a core element of the Company’s strategy to maximize the value of KRYSTEXXA and enable more patients with uncontrolled gout to benefit from the medicine.

  • Initiated Enrollment in TEPEZZA Chronic TED Trial : In September, the first patient was enrolled in a Phase 4 randomized, placebo-controlled clinical trial to evaluate the safety and efficacy of TEPEZZA for the treatment of chronic TED. TED is a serious, progressive and potentially vision-threatening rare autoimmune disease. It begins with an acute phase where inflammatory signs and symptoms, such as eye pain, swelling, proptosis (eye bulging) and diplopia (double vision), progress over time. The acute stage is followed by a chronic phase in which inflammation is no longer present or has markedly diminished; however, significant signs and symptoms may remain and continue to impact the quality of life. The objective of the trial is to generate clinical data to better inform physicians and payers about the safety and efficacy of TEPEZZA in patients with chronic TED. Results are expected in the second half of 2022.

  • Presented New UPLIZNA® (inebilizumab-cdon) Data at Key Medical Meetings: New UPLIZNA data were presented at the 15th World Congress on Controversies in Neurology (CONy Virtual) , including end-of-study data from the open-label extension period of the Phase 3 trial in patients with neuromyelitis optica spectrum disorder (NMOSD). The data indicated that UPLIZNA may provide durable efficacy and a favorable safety profile for African Americans with NMOSD. Multiple new data were also presented at the virtual 37 [th] Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) in October. Additionally, a new analysis of data from the Phase 3 trial was published in the that highlighted a sustained effect on attack risk in people with NMOSD who were treated with UPLIZNA for four or more years.

  • Acquired Biologics Manufacturing Facility in Waterford, Ireland: In July, the Company completed the acquisition of a biologics drug product manufacturing facility in Waterford, Ireland. The Company intends to use the manufacturing facility to support the growth of the Company’s on-market medicines, including TEPEZZA, KRYSTEXXA and UPLIZNA, as well as development-stage biologics.

  • Continued to Demonstrate Gender and Ethnicity Pay Equity: A second study conducted by Aon, a leading compensation consulting firm, showed that Horizon continues to demonstrate both gender and ethnicity pay equity. This study was a follow-on study to the gender and pay ethnicity study Aon conducted in 2019. The Company maintained its gender and ethnicity pay equity despite having grown significantly in the two years since the first study, as well as having completed the acquisition of Viela Bio, which included the addition of a significant number of employees.

  • Multiple Additional Recognitions as a Best Workplace: In September, the Company was named one of the “ 2021 Best Workplaces for Women™” by Fortune and Great Place to Work [®] for the first time. In addition, the Company was also recognized as one of PEOPLE's “100 Companies That Care [®] ” for the third year. In July, Fortune and Great Place to Work named the Company to the “ Best Workplaces for Millennials™ ” list for the second consecutive year and the Company was the highest ranked biotechnology company on the list. In addition, in October the Company was named one of the Top 100 Adoption-Friendly Workplaces by the Dave Thomas Foundation for Adoption for the third consecutive year. Most recently, Horizon was named to Newsweek’s inaugural “Most Loved Workplaces” list, ranking among the top 100 companies recognized for employee happiness and satisfaction at work and was the highest-ranked company in the biotechnology and pharmaceutical category. To date in 2021, the Company has received 11 workplace-related recognitions, reflecting the high level of engagement of its employees.

Key Clinical Development Programs

  • Daxdilimab (HZN-7734) , an anti-ILT7 human monoclonal antibody that depletes certain dendritic cells. Depleting these cells may interrupt the cycle of inflammation that causes tissue damage in diseases such as lupus, and a variety of other autoimmune conditions.

  • Dazodalibep (HZN-4920) , a CD40 ligand antagonist that blocks T cell interaction with the CD40-expressing B cells, disrupting the overactivation of the CD40 ligand co-stimulatory pathway. Several autoimmune diseases are associated with the overactivation of this pathway.

  • HZN-825 , an oral lysophosphatidic acid receptor 1 (LPAR1) antagonist that prevents gene activation.

  • UPLIZNA , an anti-CD19 humanized monoclonal antibody that depletes B cells, including the pathogenic cells that produce autoantibodies.

  • TEPEZZA , an insulin-like growth factor type 1 receptor (IGF-1R) antagonist monoclonal antibody.

  • KRYSTEXXA , a recombinant uricase enzyme that converts urate into a water-soluble liquid, allantoin, that can be easily excreted from the body.

  • HZN-1116 Autoimmune Disease Trial: Phase 1 trial initiated in July 2021 to evaluate HZN-1116, a monoclonal antibody, in patients with autoimmune diseases.

Third-Quarter Financial Results

Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

  • Net Sales: Third-quarter 2021 net sales were $1.037 billion, an increase of 63 percent compared to the third quarter of 2020.

  • Gross Profit: Under U.S. GAAP, the third-quarter 2021 gross profit ratio was 75.7 percent compared to 76.2 percent in the third quarter of 2020. The non-GAAP gross profit ratio in the third quarter of 2021 was 85.4 percent compared to 86.7 percent in the third quarter of 2020.

  • Operating Expenses: R&D expenses were 9.0 percent of net sales and SG&A expenses were 34.7 percent of net sales. Non-GAAP R&D expenses were 7.2 percent of net sales and non-GAAP SG&A expenses were 29.0 percent of net sales.

  • Income Tax Expense (Benefit): On a GAAP basis in the third quarter of 2021, income tax benefit was $19.3 million. Third-quarter non-GAAP income tax expense was $73.8 million.

  • Net Income: In the third-quarter of 2021, net income on a GAAP and non-GAAP basis was $326.5 million and $413.8 million, respectively.

  • Adjusted EBITDA: Third-quarter 2021 adjusted EBITDA was $509.0 million.

  • Earnings per Share: On a GAAP basis, diluted earnings per share in the third quarter of 2021 and 2020 were $1.38 and $1.31, respectively. Non-GAAP diluted earnings per share in the third quarter of 2021 and 2020 were $1.75 and $1.74, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the third quarter of 2021 were 236.2 million.

Third-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments, the orphan segment and the inflammation segment. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.

Orphan Segment
(in millions except for percentages) Q3 21 Q3 20 %Change YTD 21 YTD 20 %Change
 
 
TEPEZZA [®]   616.4   286.9 115     1,071.7   476.3 125  
KRYSTEXXA [®]   158.1   108.5 46     395.2   276.9 43  
RAVICTI [®(1)]   76.2   64.6 18     217.6   191.4 14  
PROCYSBI [®]   49.3   43.1 14     142.5   122.8 16  
ACTIMMUNE [®]   30.1   28.3 6     86.6   83.1 4  
UPLIZNA [®(2)]   18.7   - NM     35.0   - NM  
BUPHENYL [®(1)]   1.9   3.2 (42 )   5.8   8.4 (31 )
QUINSAIR [TM]   0.3   0.2 84     0.7   0.5 47  
Orphan Net Sales $ 951.0 $ 534.8 78   $ 1,955.1 $ 1,159.4 69  
 
Orphan Segment Operating Income $ 476.2 $ 274.7 73   $ 798.5 $ 480.6 66  
[(1) On Oct. 27, 2020, the Company sold its rights to develop and commercialize RAVICTI and BUPHENYL in Japan to Medical Need Europe AB, part of the Immedica Group. The Company has retained the rights to RAVICTI and BUPHENYL in North America.]
[(2) UPLIZNA was acquired on March 15, 2021.]
  • Third-quarter 2021 net sales of the orphan segment, the Company’s strategic growth segment, were $951.0 million, an increase of 78 percent over the prior year’s quarter, driven by the strong performance of TEPEZZA, KRYSTEXXA, RAVICTI, PROCYSBI and ACTIMMUNE. The orphan segment represented 92 percent of total company third-quarter net sales.

  • KRYSTEXXA third-quarter 2021 net sales increased 46 percent year-over-year driven by increased adoption of KRYSTEXXA plus immunomodulation, which now exceeds 45 percent. In addition, the Company continues to see strong uptake of KRYSTEXXA from both rheumatologists and nephrologists.

  • Third-quarter 2021 orphan segment operating income was $476.2 million, which includes additional investment associated with TEPEZZA, UPLIZNA and the Company’s pipeline programs.

Inflammation Segment
(in millions except for percentages) Q3 21 Q3 20 %Change YTD 21 YTD 20 %Change
 
PENNSAID 2% [®]   48.0   50.3 (5 )   142.7   126.9 12  
DUEXIS [®(1)]   20.9   27.9 (25 )   62.5   87.1 (28 )
RAYOS [®]   14.9   18.1 (18 )   43.6   50.8 (14 )
VIMOVO [®(2)]   2.2   5.3 (58 )   8.1   30.9 (74 )
Inflammation Net Sales $ 86.0 $ 101.6 (15 ) $ 256.9 $ 295.7 (13 )
 
Inflammation Segment Operating Income $ 34.1 $ 55.1 (38 ) $ 123.6 $ 145.1 (15 )
 
[(1) On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States.]
[(2) On Feb. 27, 2020, Dr. Reddy’s Laboratory initiated an at-risk launch of generic VIMOVO in the United States.]
  • Third-quarter 2021 net sales of the inflammation segment were $86.0 million, and segment operating income was $34.1 million.

Cash Flow Statement and Balance Sheet Highlights

  • On a GAAP basis, operating cash flow in the third quarter of 2021 was $411.0 million. Non-GAAP operating cash flow was $432.3 million.

  • As of Sept. 30, 2021, the Company had cash and cash equivalents of $1.069 billion.

  • As of Sept. 30, 2021, the total principal amount of debt outstanding was $2.610 billion, and the gross-debt-to-last-12-months adjusted EBITDA leverage ratio was 2.0 times.

2021 Guidance

The Company now expects full-year 2021 net sales to range between $3.16 billion and $3.21 billion, representing 45 percent growth at the midpoint and an increase from the previous range of $3.025 billion to $3.125 billion. The company now expects TEPEZZA full-year 2021 net sales of greater than $1.625 billion with year-over-year growth of more than 60 percent in the fourth quarter, compared to the previous guidance of greater than $1.550 billion with year-over-year growth of more than 50 percent in the fourth quarter. The Company now expects KRYSTEXXA full-year 2021 net sales of greater than $550 million, compared to the previous guidance of greater than $500 million. Full-year 2021 adjusted EBITDA is now expected to range between $1.315 billion and $1.345 billion, representing 33 percent growth at the midpoint and an increase from the previous guidance range of $1.26 billion to $1.30 billion.

Webcast

At 8 a.m. EST / 12 p.m. GMT today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizontherapeutics.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 webcast will be available approximately two hours after the live webcast.

About Horizon

Horizon is focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Our pipeline is purposeful: we apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, please visit www.horizontherapeutics.com and follow us on Twitter , LinkedIn , Instagram and Facebook .

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 non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax (benefit) and tax rate and non-GAAP operating cash flow, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon’s GAAP figures as well as EBITDA exclude acquisition and/or divestiture-related expenses, gain or loss from divestiture, gain or loss from sale of assets, upfront, progress and milestone payments related to license and collaboration agreements, litigation settlements, loss on debt extinguishment, costs of debt refinancing, drug manufacturing harmonization costs, restructuring and realignment costs, the income tax effect on pre-tax non-GAAP adjustments and other non-GAAP income tax adjustments, as well as non-cash items such as share-based compensation, depreciation and amortization, non-cash interest expense, long-lived asset impairment charges 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 maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial and operating 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 2021 financial results and trends and to facilitate comparisons between periods and with respect to projected information. 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. For example, adjusted EBITDA is used by Horizon as one measure of management performance under certain incentive compensation arrangements. 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 a reconciliation of its full-year 2021 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items such as acquisition/divestiture-related expenses and share-based compensation that are a component of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon’s stock price, the variability associated with the size or timing of acquisitions/divestitures and other factors. These components of net income (loss) could significantly impact Horizon’s actual net income (loss).

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon’s full-year 2021 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including potential growth in net sales of certain of Horizon’s medicines; development, manufacturing and commercialization plans; expected timing of clinical trials, availability of clinical data and regulatory submissions; potential market opportunity for and benefits of Horizon’s medicines and medicine candidates and business and other statements that are not historical facts. These forward-looking statements are based on Horizon’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 future financial and operating results may differ from its expectations or goals; Horizon’s ability to grow net sales from existing medicines; impacts of the COVID-19 pandemic and actions taken to slow its spread, including impacts on supplies and net sales of Horizon’s medicines and potential delays in clinical trials; the fact that Horizon’s full-year 2021 net sales, adjusted EBITDA and TEPEZZA net sales guidance and the expected timing of certain TEPEZZA clinical trials assume that future committed manufacturing slots for TEPEZZA are not cancelled and are run successfully, which could be impacted by additional government-mandated COVID-19 vaccine production orders and other risks associated with the manufacture of biologic medicines; risks associated with acquisitions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; risks relating to Horizon’s ability to successfully implement its business strategies, including its manufacturing and global expansion strategy; risks inherent in developing novel medicine candidates and existing medicines for new indications; risks associated with 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 operates and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Horizon’s filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

Horizon Therapeutics plc
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
 
Net sales $ 1,036,992   $ 636,427   $ 2,211,946   $ 1,455,115  
Cost of goods sold   251,640     151,475     553,003     370,406  
Gross profit   785,352     484,952     1,658,943     1,084,709  
 
OPERATING EXPENSES:
Research and development   93,549     30,206     291,076     138,483  
Selling, general and administrative   360,260     226,164     1,047,456     696,271  
Impairment of long-lived asset   -     -     12,371     -  
Gain on sale of asset   -     -     (2,000 )   -  
Total operating expenses   453,809     256,370     1,348,903     834,754  
Operating income   331,543     228,582     310,040     249,955  
 
OTHER EXPENSE, NET:
Interest expense, net   (22,977 )   (12,185 )   (59,018 )   (48,100 )
Loss on debt extinguishment   -     (14,602 )   -     (31,856 )
Foreign exchange (loss) gain   (476 )   (753 )   (1,363 )   306  
Other (expense) income, net   (849 )   717     2,113     1,791  
Total other expense, net   (24,302 )   (26,823 )   (58,268 )   (77,859 )
 
Income before benefit for income taxes   307,241     201,759     251,772     172,096  
Benefit for income taxes   (19,302 )   (91,081 )   (109,537 )   (27,143 )
Net income $ 326,543   $ 292,840   $ 361,309   $ 199,239  
 
Net income per ordinary share - basic $ 1.44   $ 1.38   $ 1.61   $ 1.00  
 
Weighted average ordinary shares outstanding - basic   226,096,747     212,320,219     225,053,704     198,413,779  
 
Net income per ordinary share - diluted $ 1.38   $ 1.31   $ 1.54   $ 0.95  
 
Weighted average ordinary shares outstanding - diluted   236,198,789     223,743,903     235,256,424     208,678,460  
Horizon Therapeutics plc
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
 
As of
September 30,2021 December 31,2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,068,547   $ 2,079,906  
Restricted cash   3,839     3,573  
Accounts receivable, net   775,371     659,701  
Inventories, net   237,434     75,283  
Prepaid expenses and other current assets   328,730     251,945  
Total current assets   2,413,921     3,070,408  
Property, plant and equipment, net   285,837     189,037  
Developed technology and other intangible assets, net   3,051,135     1,782,962  
In-process research and development   880,000     -  
Goodwill   1,069,031     413,669  
Deferred tax assets, net   782,852     560,841  
Other assets   125,912     55,699  
Total assets $ 8,608,688   $ 6,072,616  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 50,724   $ 37,710  
Accrued expenses and other current liabilities   483,833     485,567  
Accrued trade discounts and rebates   303,486     352,463  
Long-term debt—current portion   16,000     -  
Total current liabilities   854,043     875,740  
 
LONG-TERM LIABILITIES:
Long-term debt, net   2,557,864     1,003,379  
Deferred tax liabilities, net   591,552     66,474  
Other long-term liabilities   155,015     101,672  
Total long-term liabilities   3,304,431     1,171,525  
 
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares
authorized at September 30, 2021 and December 31, 2020;
227,026,047 and 221,721,674 shares issued at September 30, 2021
and December 31, 2020, respectively; and 226,641,681 and 221,337,308 shares
outstanding at September 30, 2021 and December 31, 2020, respectively   22     22  
Treasury stock, 384,366 ordinary shares at September 30, 2021 and December 31, 2020   (4,585 )   (4,585 )
Additional paid-in capital   4,310,886     4,245,945  
Accumulated other comprehensive loss   (1,532 )   (145 )
Retained earnings (accumulated deficit)   145,423     (215,886 )
Total shareholders' equity   4,450,214     4,025,351  
Total liabilities and shareholders' equity $ 8,608,688   $ 6,072,616  
Horizon Therapeutics plc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 326,543   $ 292,840   $ 361,309   $ 199,239  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense   94,480     70,510     257,216     209,906  
Equity-settled share-based compensation   54,804     30,356     170,394     113,834  
Acquired in-process research and development expense   -     -     46,500     47,517  
Loss on debt extinguishment   -     14,602     -     31,856  
Impairment of long-lived asset   -     -     12,371     -  
Amortization of debt discount and deferred financing costs   1,500     1,208     3,740     12,025  
Gain on sale of asset   -     -     (2,000 )   -  
Deferred income taxes   (129,819 )   (3,480 )   (147,934 )   (8,041 )
Foreign exchange and other adjustments   1,958     423     (1,494 )   1,084  
Changes in operating assets and liabilities:
Accounts receivable   (39,762 )   (162,267 )   (107,776 )   (297,392 )
Inventories   21,219     (10,986 )   (10,494 )   (23,329 )
Prepaid expenses and other current assets   34,333     (62,816 )   (60,790 )   (83,226 )
Accounts payable   (2,666 )   (65,846 )   7,640     17,709  
Accrued trade discounts and rebates   (2,825 )   34,170     (50,838 )   (143,551 )
Accrued expenses and other current liabilities   59,021     (24,675 )   34,380     56,830  
Other non-current assets and liabilities   (7,746 )   (5,176 )   (15,510 )   11,410  
Net cash provided by operating activities   411,040     108,863     496,714     145,871  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment   (27,440 )   (13,429 )   (59,695 )   (133,399 )
Payments for long-term investments, net   (2,219 )   (8,937 )   (9,797 )   (8,937 )
Payments for acquisitions, net of cash acquired   (67,945 )   -     (2,843,275 )   (262,305 )
Change in escrow deposit for property purchase   -     -     -     6,000  
Proceeds from sale of asset   2,000     -     2,000     -  
Payments related to license agreements   (46,500 )   -     (46,500 )   -  
Net cash used in investing activities   (142,104 )   (22,366 )   (2,957,267 )   (398,641 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes   -     (1,739 )   -     (1,739 )
Net proceeds from the issuance of ordinary shares   -     919,995     -     919,995  
Net proceeds from term loans   -     -     1,574,993     -  
Repayment of term loans   (4,000 )   -     (8,000 )   -  
Proceeds from the issuance of ordinary shares in conjunction with ESPP program   -     -     11,482     7,979  
Proceeds from the issuance of ordinary shares in connection with stock option exercises   12,174     8,112     40,013     33,999  
Payment of employee withholding taxes relating to share-based awards   (16,429 )   (6,743 )   (158,077 )   (59,752 )
Net cash (used in) provided by financing activities   (8,255 )   919,625     1,460,411     900,482  
 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash   (4,452 )   1,166     (10,951 )   1,225  
 
Net increase (decrease) in cash, cash equivalents and restricted cash   256,229     1,007,288     (1,011,093 )   648,937  
Cash, cash equivalents and restricted cash, beginning of the period [(1)]   816,157     721,688     2,083,479     1,080,039  
Cash, cash equivalents and restricted cash, end of the period(1) $ 1,072,386   $ 1,728,976   $ 1,072,386   $ 1,728,976  
 
[(1) Amounts include restricted cash balance in accordance with ASU No. 2016-18. Cash and cash equivalents excluding restricted cash are shown on the balance sheet.]
Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Net Income and Earnings Per Share (Unaudited)
(in thousands, except share and per share data)
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
 
GAAP net income $ 326,543   $ 292,840   $ 361,309   $ 199,239  
Non-GAAP adjustments:
Acquisition/divestiture-related costs   9,228     199     88,166     47,296  
Restructuring and realignment costs   680     -     7,703     -  
Manufacturing plant start-up costs   1,712     -     1,712     -  
Amortization and step-up:
Intangible amortization expense   90,368     65,353     245,260     190,677  
Inventory step-up expense   8,912     -     16,914     -  
Amortization of debt discount and deferred financing costs   1,500     1,208     3,740     12,025  
Impairment of long-lived assets   -     -     12,371     1,072  
Gain on sale of asset   -     -     (2,000 )   -  
Share-based compensation   54,804     30,356     170,394     113,834  
Depreciation   4,112     5,157     11,956     19,229  
Litigation settlement   5,000     -     5,000     -  
Upfront, progress and milestone payments related to
license and collaboration agreements   4,000     -     53,500     3,000  
Fees related to refinancing activities   -     -     -     54  
Loss on debt extinguishment   -     14,602     -     31,856  
Drug substance harmonization costs   -     193     -     483  
Total of pre-tax non-GAAP adjustments   180,316     117,068     614,716     419,526  
Income tax effect of pre-tax non-GAAP adjustments   (37,102 )   (23,063 )   (148,353 )   (80,122 )
Other non-GAAP income tax adjustments   (56,007 )   5,331     (25,126 )   20,541  
Total of non-GAAP adjustments   87,207     99,336     441,237     359,945  
Non-GAAP net income $ 413,750   $ 392,176   $ 802,546   $ 559,184  
 
 
Non-GAAP Earnings Per Share:
 
Weighted average ordinary shares - Basic   226,096,747     212,320,219     225,053,704     198,413,779  
 
Non-GAAP Earnings Per Share - Basic:
GAAP earnings per share - Basic $ 1.44   $ 1.38   $ 1.61   $ 1.00  
Non-GAAP adjustments   0.39     0.47     1.96     1.82  
Non-GAAP earnings per share - Basic $ 1.83   $ 1.85   $ 3.57   $ 2.82  
 
Non-GAAP net income $ 413,750   $ 392,176   $ 802,546   $ 559,184  
Effect of assumed exchange of Exchangeable Senior Notes, net of tax   -     223     -     3,789  
Numerator - non-GAAP net income $ 413,750   $ 392,399   $ 802,546   $ 562,973  
 
Weighted average ordinary shares - Diluted
Weighted average ordinary shares - Basic   226,096,747     212,320,219     225,053,704     198,413,779  
Ordinary share equivalents   10,102,042     12,959,618     10,202,720     19,431,212  
Denominator - weighted average ordinary shares – Diluted   236,198,789     225,279,837     235,256,424     217,844,991  
 
Non-GAAP Earnings Per Share - Diluted
GAAP earnings per share - Diluted $ 1.38   $ 1.31   $ 1.54   $ 0.95  
Non-GAAP adjustments   0.37     0.43     1.87     1.63  
Non-GAAP earnings per share - Diluted $ 1.75   $ 1.74   $ 3.41   $ 2.58  
Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
EBITDA and Adjusted EBITDA (Unaudited)
(in thousands)
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
 
 
 
GAAP net income $ 326,543   $ 292,840   $ 361,309   $ 199,239  
Depreciation   4,112     5,157     11,956     19,229  
Amortization and step-up:
Intangible amortization expense   90,368     65,353     245,260     190,677  
Inventory step-up expense   8,912     -     16,914     -  
Interest expense, net (including amortization of
debt discount and deferred financing costs)   22,977     12,185     59,018     48,100  
Benefit for income taxes   (19,302 )   (91,081 )   (109,537 )   (27,143 )
EBITDA $ 433,610   $ 284,454   $ 584,920   $ 430,102  
Other non-GAAP adjustments:
Acquisition/divestiture-related costs   9,228     199     88,166     47,296  
Restructuring and realignment costs   680     -     7,703     -  
Manufacturing plant start-up costs   1,712     -     1,712     -  
Impairment of long-lived assets   -     -     12,371     1,072  
Gain on sale of asset   -     -     (2,000 )   -  
Share-based compensation   54,804     30,356     170,394     113,834  
Litigation settlement   5,000     -     5,000     -  
Upfront, progress and milestone payments related to
license and collaboration agreements   4,000     -     53,500     3,000  
Fees related to refinancing activities   -     -     -     54  
Loss on debt extinguishment   -     14,602     -     31,856  
Drug substance harmonization costs   -     193     -     483  
Total of other non-GAAP adjustments   75,424     45,350     336,846     197,595  
Adjusted EBITDA $ 509,034   $ 329,804   $ 921,766   $ 627,697  
Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Operating Income (Unaudited)
(in thousands)
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
         
 
GAAP operating income $ 331,543   $ 228,582   $ 310,040   $ 249,955
Non-GAAP adjustments:
Acquisition/divestiture-related costs   9,224     144     89,241     47,416
Restructuring and realignment costs   680     -     7,703     -
Manufacturing plant start-up costs   1,712     -     1,712     -
Amortization and step-up:
Intangible amortization expense   90,368     65,353     245,260     190,677
Inventory step-up expense   8,912     -     16,914     -
Impairment of long-lived assets   -     -     12,371     1,072
Gain on sale of asset   -     -     (2,000 )   -
Share-based compensation   54,804     30,356     170,394     113,834
Depreciation   4,111     5,157     11,955     19,229
Litigation settlement   5,000     -     5,000     -
Upfront, progress and milestone payments related to
license and collaboration agreements   4,000     -     53,500     3,000
Fees related to refinancing activities   -     -     -     54
Drug substance harmonization costs   -     193     -     483
Total of non-GAAP adjustments   178,811     101,203     612,050     375,765
Non-GAAP operating income $ 510,354   $ 329,785   $ 922,090   $ 625,720
 
Orphan segment operating income   476,225     274,687     798,514     480,584
Inflammation segment operating income   34,129     55,098     123,576     145,136
Total segment operating income $ 510,354   $ 329,785   $ 922,090   $ 625,720
 
Foreign exchange (loss) gain   (476 )   (753 )   (1,363 )   306
Other (expense) income, net   (844 )   772     1,039     1,671
Adjusted EBITDA $ 509,034   $ 329,804   $ 921,766   $ 627,697
Horizon Therapeutics plc
 
Three Months Ended September 30,   Nine Months Ended September 30,
2021   2020   2021   2020
Non-GAAP Gross Profit:
 
GAAP gross profit $ 785,352   $ 484,952   $ 1,658,943   $ 1,084,709  
Non-GAAP gross profit adjustments:
Acquisition/divestiture-related costs   (204 )   -     (75 )   -  
Intangible amortization expense   89,892     65,149     244,382     190,070  
Inventory step-up expense   8,912     -     16,914     -  
Share-based compensation   1,795     1,566     6,875     5,543  
Depreciation   55     17     227     435  
Drug substance harmonization costs   -     193     -     483  
Total of Non-GAAP adjustments   100,450     66,925     268,323     196,531  
Non-GAAP gross profit $ 885,802   $ 551,877   $ 1,927,266   $ 1,281,240  
 
GAAP gross profit %   75.7 %   76.2 %   75.0 %   74.5 %
Non-GAAP gross profit %   85.4 %   86.7 %   87.1 %   88.1 %
 
 
 
GAAP cash provided by operating activities $ 411,040   $ 108,863   $ 496,714   $ 145,871  
Cash payments for acquisition/divestiture-related costs   15,839     97     136,073     80  
Cash payments for restructuring and realignment costs   583     -     1,803     189  
Cash payments for manufacturing start-up costs   869     -     869     -  
Cash payments for upfront, progress and milestone payments related to
license and collaboration agreement   4,000     -     7,000     -  
Cash payments drug substance harmonization costs   -     -     -     290  
Cash payments relating to refinancing activities   -     -     -     73  
Non-GAAP operating cash flow $ 432,331   $ 108,960   $ 642,459   $ 146,503  
Horizon Therapeutics plc
 
Twelve Months Ended December 31,
2020
 
GAAP net income $ 389,796  
Depreciation   24,303  
Amortization and step-up:
Intangible amortization expense   255,148  
Inventory step-up expense   -  
Interest expense, net (including amortization of
debt discount and deferred financing costs)   59,616  
Expense for income taxes   11,849  
EBITDA $ 740,712  
Other non-GAAP adjustments:
Acquisition/divestiture-related costs   49,196  
Restructuring and realignment costs   (141 )
Impairment of long-lived assets   1,713  
Gain on sale of assets   (4,883 )
Share-based compensation   146,627  
Upfront, progress and milestone payments related to
license and collaboration agreements   33,000  
Fees related to refinancing activities   54  
Loss on debt extinguishment   31,856  
Drug substance harmonization costs   542  
Total of other non-GAAP adjustments   257,964  
Adjusted EBITDA $ 998,676  
Horizon Therapeutics plc
 
Q3 2021
Pre-tax Net(Loss) Income Income Tax(Benefit) Expense Tax Rate Net Income(Loss) Diluted Earnings(Loss) Per Share
As reported - GAAP $ 307.2 $ (19.3 ) (6.3 )% $ 326.5 $ 1.38
Non-GAAP adjustments   180.3   93.1     87.2
Non-GAAP $ 487.6 $ 73.8   15.1 % $ 413.8 $ 1.75
 
 
Q3 2020
Pre-tax Net(Loss) Income Income Tax(Benefit) Expense Tax Rate Net Income(Loss) Diluted Earnings(Loss) Per Share
As reported - GAAP $ 201.8 $ (91.1 ) (45.1 )% $ 292.8 $ 1.31
Non-GAAP adjustments   117.1   17.7     99.3
Non-GAAP $ 318.8 $ (73.3 ) (23.0 )% $ 392.2 $ 1.74
 
 
YTD 2021
Pre-tax Net(Loss) Income Income Tax(Benefit) Expense Tax Rate Net Income(Loss) Diluted Earnings(Loss) Per Share
As reported - GAAP $ 251.8 $ (109.5 ) (43.5 )% $ 361.3 $ 1.54
Non-GAAP adjustments   614.7   173.5     441.2
Non-GAAP $ 866.5 $ 64.0   7.4 % $ 802.5 $ 3.41
 
 
YTD 2020
Pre-tax Net(Loss) Income Income Tax(Benefit) Expense Tax Rate Net Income(Loss) Diluted Earnings(Loss) Per Share
As reported - GAAP $ 172.1 $ (27.1 ) (15.8 )% $ 199.2 $ 0.95
Non-GAAP adjustments   419.5   59.6     359.9
Non-GAAP $ 591.6 $ 32.4   5.5 % $ 559.2 $ 2.58
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended September 30, 2021 (Unaudited)
(in thousands)
 
 
Income Tax
Research & Selling, General Interest Other Benefit
COGS Development & Administrative Expense Expense, net (Expense)
 
GAAP as reported $ (251,640 ) $ (93,549 ) $ (360,260 ) $ (22,977 ) $ (849 ) $ 19,302  
 
Non-GAAP Adjustments:
 
Acquisition/divestiture-related costs [(1)]   (204 )   15     9,415     -     2     -  
Restructuring and realignment costs [(2)]   -     -     680     -     -     -  
Manufacturing plant start-up costs [(3)]   -     -     1,712     -     -     -  
Amortization and step-up:
Intangible amortization expense [(4)]   89,892     -     476     -     -     -  
Inventory step-up expense [(5)]   8,912     -     -     -     -     -  
Amortization of debt discount and deferred financing costs [(6)]   -     -     -     1,500     -     -  
Share-based compensation [(7)]   1,795     15,075     37,934     -     -     -  
Depreciation [(8)]   55     125     3,932     -     -     -  
Litigation settlement [(9)]   -     -     5,000     -     -     -  
Upfront, progress and milestone payments related to license
and collaboration agreements [(10)]   -     4,000     -     -     -     -  
Income tax effect on pre-tax non-GAAP adjustments [(11)]   -     -     -     -     -     (37,102 )
Other non-GAAP income tax adjustments [(12)]   -     -     -     -     -     (56,007 )
Total of non-GAAP adjustments   100,450     19,215     59,149     1,500     2     (93,109 )
 
Non-GAAP $ (151,190 ) $ (74,334 ) $ (301,111 ) $ (21,477 ) $ (847 ) $ (73,807 )
 
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended September 30, 2020 (Unaudited)
(in thousands)
 
 
Income Tax
Research & Selling, General Loss on Debt Interest Other Benefit
COGS Development & Administrative Extinguishment Expense Income, net (Expense)
 
GAAP as reported $ (151,475 ) $ (30,206 ) $ (226,164 ) $ (14,602 ) $ (12,185 ) $ 717   $ 91,081  
 
Non-GAAP Adjustments:
 
Acquisition/divestiture-related costs [(1)]   -     36     108     -     -     55     -  
Amortization and step-up:
Intangible amortization expense [(4)]   65,149     -     204     -     -     -     -  
Amortization of debt discount and deferred financing costs [(6)]   -     -     -     -     1,208     -     -  
Share-based compensation [(7)]   1,566     2,453     26,337     -     -     -     -  
Depreciation [(8)]   17     29     5,111     -     -     -     -  
Loss on debt extinguishment [(13)]   -     -     -     14,602     -     -     -  
Drug substance harmonization costs [(14)]   193     -     -     -     -     -     -  
Income tax effect on pre-tax non-GAAP adjustments [(11)]   -     -     -     -     -     -     (23,063 )
Other non-GAAP income tax adjustments [(12)]   -     -     -     -     -     -     5,331  
Total of non-GAAP adjustments   66,925     2,518     31,760     14,602     1,208     55     (17,732 )
 
Non-GAAP $ (84,550 ) $ (27,688 ) $ (194,404 ) $ -   $ (10,977 ) $ 772   $ 73,349  
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Nine Months Ended September 30, 2021 (Unaudited)
(in thousands)
 
 
Income Tax
Research & Selling, General Gain on Impairment of Interest Other Income Benefit
COGS Development & Administrative Sale of Asset Long-lived assets Expense (Expense), net (Expense)