Jazz Pharmaceuticals Announces Second Quarter 2012 Results Company Reports Total Revenues of $130 Million

Adjusted EPS of $1.09

GAAP EPS of $0.45 Reflects Acquisition-Related Costs

Quarter Includes Partial-Period Operating Results of EUSA Pharma Business

Company Increases 2012 Financial Guidance

DUBLIN, Aug. 7, 2012 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the second quarter ended June 30, 2012.  These results include the first complete quarter of financial results following the Azur Pharma plc merger, as well as a partial month of results following completion of the acquisition of EUSA Pharma Inc. on June 12, 2012. Results for 2011 reflect only the financial results reported by Jazz Pharmaceuticals, Inc. 

"The first six months of 2012 have been a time of tremendous progress for Jazz Pharmaceuticals as we've delivered strong organic sales growth led by Xyrem® and completed two important transactions. The Azur and EUSA acquisitions added attractive new products to our portfolio, brought increased depth to our team and expanded our geographic footprint," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals.  "We are particularly pleased by our year-over-year and sequential growth in adjusted net income, and we remain committed to our strategy of increasing sales of our current products, growing our product portfolio through corporate development and investing in focused development programs."

Adjusted net income for the second quarter of 2012 was $66.2 million, or $1.09 per diluted share, reflecting both strong organic growth and the positive impact of the Azur Pharma and EUSA Pharma acquisitions.  GAAP net income for the second quarter of 2012 was impacted by various non-recurring acquisition-related expenses and non-cash amortization expenses.  For the quarter, GAAP net income was $27.1 million, or $0.45 per diluted share.  A reconciliation of GAAP net income to adjusted net income and the related per diluted share amounts is included with this press release.

Revenues and Product Sales

Total revenues for the quarter ended June 30, 2012 were $129.5 million, including net sales, royalties and contract revenues.

Total net sales for the second quarter of 2012 increased to $128.3 million, driven by significant growth in Xyrem (sodium oxybate) oral solution net sales, as well as the addition of net sales from the expanded product portfolio resulting from the merger with Azur Pharma and a partial month of sales of Erwinaze® (asparaginase Erwinia chrysanthemi) and other products from the EUSA Pharma acquisition.

Net sales for the second quarter of 2012 included:

  • Xyrem:  Net sales of Xyrem increased by 59% to $89.1 million for the second quarter of 2012, compared to net sales of $56.2 million in the second quarter of 2011. During the second quarter of 2012, approximately 9,850 patients were on active therapy with Xyrem.
  • Erwinaze/Erwinase: Worldwide net sales of Erwinaze/Erwinase were $6.0 million, reflecting results for the partial month following the completion of the EUSA Pharma acquisition.  For the full quarter, pro forma net sales were $32.9 million.
  • Psychiatry Products:  Net sales of the company's psychiatry products, including once-daily Luvox CR® (fluvoxamine maleate), FazaClo® (clozapine, USP) HD and FazaClo LD, were $19.8 million for the second quarter of 2012.  Net sales of Luvox CR increased 44% compared to the second quarter of 2011.  On a pro forma basis, total net sales of the FazaClo products were down 1% while the proportion of FazaClo HD sales increased from 20% to 36% compared to the prior year quarter.
  • Prialt:  Second quarter 2012 net sales of Prialt® (ziconotide) intrathecal infusion were $5.6 million, an increase of 12% from the prior year quarter on a pro forma basis.
  • Other:  Net sales of other products for the second quarter of 2012 were $7.9 million.

Other Financial Highlights

Additional financial information for the second quarter of 2012 includes:

  • Cost of product sales increased by $12.0 million compared to the second quarter of 2011 due to higher sales and $4.0 million of purchase accounting inventory fair value step-up.
  • Selling, general and administrative expenses increased by $38.5 million compared to the prior year quarter, primarily due to the inclusion of Azur Pharma and EUSA Pharma operations, and transaction and integration expenses of $10.6 million related to these acquisitions. Jazz Pharmaceuticals currently has approximately 650 employees worldwide.
  • Intangible asset amortization for the second quarter of 2012 was $15.8 million, related primarily to the company's expanded product portfolio. 
  • Jazz Pharmaceuticals financed the majority of the EUSA Pharma acquisition with a $475 million term loan. The company's cash and cash equivalents totaled $154.5 million at June 30, 2012.   

2012 Financial Guidance

Jazz Pharmaceuticals is also providing the following updated financial guidance for 2012, which reflects the EUSA Pharma acquisition and expected results from and after June 12, 2012:

Total Revenues

$605-$615 million

Total Net Product Sales

$600-$610 million

  -Xyrem Net Sales 

  -Erwinaze/Erwinase Net Sales

$375-$380 million

$65-$69 million

Total Gross Margin %1

85%-88%

Combined SG&A and R&D expenses2

$260-$270 million

GAAP Net Income

$139-$154 million

GAAP Net Income Per Diluted Share           

$2.34-$2.57

Adjusted Net Income3                                    

$282-$291 million

Adjusted Net Income Per Diluted Share3

$4.70-$4.85



1.

Includes $19 million of purchase accounting inventory fair value step-up.  

2.

Includes share-based compensation, transaction and integration costs and change in fair value of contingent consideration related to the Azur Pharma and EUSA Pharma transactions of $49-$52 million.

3.

A reconciliation of GAAP net income to adjusted net income and the related per diluted share amounts is included with this press release.

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EDT (9:30 p.m. IST) to provide a business and financial update and discuss 2012 second quarter results and 2012 guidance.  The live webcast may be accessed from the Investors & Media section of the company's website at www.jazzpharmaceuticals.com.  Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary.  Investors may participate in the conference call by dialing +1 866-804-6921 in the U.S., or +1 857-350-1667 outside the U.S., and entering passcode 13817577.

An archived version of the webcast will be available for at least one week in the Investors & Media section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.

About Jazz Pharmaceuticals

Jazz Pharmaceuticals plc is a specialty biopharmaceutical company focused on improving patients' lives by identifying, developing and commercializing products that address unmet medical needs. The company has a diverse portfolio of products in the areas of narcolepsy, oncology, pain, psychiatry and women's health. The company's U.S. marketed products in these areas include: Xyrem® (sodium oxybate), Erwinaze® (asparaginase Erwinia chrysanthemi), Prialt® (ziconotide) intrathecal infusion, FazaClo® (clozapine, USP) HD and FazaClo LD, Luvox CR® (fluvoxamine maleate) and Elestrin® (estradiol gel). Outside of the U.S., Jazz Pharmaceuticals also has a number of products marketed by its international division, EUSA Pharma.

Non-GAAP Financial Measures

To supplement Jazz Pharmaceuticals' financial results presented on a GAAP basis, the company uses the non-GAAP measures adjusted net income and adjusted net income per diluted share as shown in the tables below.  The company believes that these non-GAAP financial measures are helpful in understanding its past financial performance and potential future results.  They are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP.  Jazz Pharmaceuticals' management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions.  Compensation of executives is based in part on the performance of the company's business based on these non-GAAP measures.  In addition, Jazz Pharmaceuticals believes that the use of these non-GAAP measures enhances the ability of investors to compare its results from period to period.  Adjusted net income and adjusted net income per diluted share, as used by Jazz Pharmaceuticals, may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the company's competitors and other companies.  The non-GAAP historical financial measures and 2012 financial guidance exclude amortization of intangible assets, share-based compensation, purchase accounting inventory fair value step-up adjustments, transaction and integration costs, change in fair value of contingent consideration, other non-cash items and income tax adjustments. 

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to Jazz Pharmaceuticals' future financial results, strategy and growth potential, including 2012 financial guidance, and other statements that are not historical facts.  These forward-looking statements are based on Jazz Pharmaceuticals' 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 and uncertainties associated with maintaining and increasing sales of and revenue from Xyrem, such as the potential introduction of generic competition and changed or increased regulatory restrictions on Xyrem, as well as similar risks related to effectively commercializing the company's other marketed products, including Erwinaze and Prialt; successfully integrating and growing Jazz Pharmaceuticals' combined business operations after the Azur Pharma merger and EUSA Pharma acquisition, which may be more difficult, time-consuming or costly than expected, particularly in light of the company's expanded international footprint; obtaining appropriate pricing and reimbursement for the company's products in an increasingly challenging environment; ongoing regulation and oversight by U.S. and foreign regulatory agencies; dependence on key customers and sole source suppliers; the company's ability to protect intellectual property rights with respect to its products; the difficulty and uncertainty of pharmaceutical product development and the uncertainty of clinical success and regulatory approval; and potential restrictions on the company's ability and flexibility to pursue future opportunities as a result of its substantial outstanding debt obligations; as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results; and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals plc's Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, as updated by the Current Reports on Form 8-K filed on June 4, 2012 and July 9, 2012, respectively, and future filings and reports by the company, including the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.  

 

 

 JAZZ PHARMACEUTICALS PLC 

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

 (In thousands, except per share amounts) 

 (Unaudited) 



Three Months Ended June 30,


Six Months Ended June 30,


2012


2011


2012


2011

 Revenues: 








 Product sales, net 

$  128,310


$  63,464


$  235,646


$  113,367

 Royalties and contract revenues 

1,229


1,103


2,307


2,081

 Total revenues 

129,539


64,567


237,953


115,448

 Operating expenses: 








 Cost of product sales 

15,370


3,370


26,128


6,179

 Selling, general and administrative 

60,638


22,094


107,637


42,005

 Research and development 

2,321


3,382


6,280


7,077

 Intangible asset amortization 

15,751


1,862


29,264


3,724

 Total operating expenses 

94,080


30,708


169,309


58,985

 Income from operations 

35,459


33,859


68,644


56,463

 Interest expense, net 

(1,481)


(657)


(1,450)


(1,434)

 Other expense 

(240)


-


(258)


-

 Income before provision for income  








 tax expense 

33,738


33,202


66,936


55,029

 Provision for income tax expense 

6,593


-


12,110


-

 Net income  

$    27,145


$  33,202


$    54,826


$    55,029









 Net income per share: 








 Basic 

$        0.48


$      0.81


$        0.99


$        1.35

 Diluted 

$        0.45


$      0.71


$        0.92


$        1.19









 Weighted-average ordinary shares used  








 in computing net income per share: 








 Basic 

56,952


41,209


55,437


40,788

 Diluted 

60,554


46,601


59,319


46,238

















 JAZZ PHARMACEUTICALS PLC 

 SUMMARY OF PRODUCT SALES, NET 

 (In thousands) 

 (Unaudited) 



Three Months Ended June 30,


Six Months Ended June 30,


2012


2011


2012


2011

Xyrem

$    89,097


$  56,178


$  162,534


$    98,956

Erwinaze/Erwinase (1)

6,007


-


6,007


-

Prialt (1)

5,555


-


15,077


-

Psychiatry:








    Luvox CR

10,471


7,286


20,029


14,411

    FazaClo LD (1)

5,956


-


11,535


-

    FazaClo HD (1)

3,362


-


5,922


-

Other (1)

7,862


-


14,542


-

Total

$  128,310


$  63,464


$  235,646


$  113,367


















(1)

Net sales for the three and six months ended June 30, 2012 reported by Jazz Pharmaceuticals plc include net sales from the historic Azur Pharma business for the period from April 1, 2012 through June 30, 2012 and from January 18, 2012 through June 30, 2012 and  net product sales from the historic EUSA Pharma business for the period from June 12, 2012 through June 30, 2012.



The following unaudited pro forma information represents the combined net product sales for the three and six months ended June 30, 2012 and 2011, respectively, as if the merger with Azur Pharma and the acquisition of EUSA Pharma had each been completed on January 1, 2011:


 

  

 SUMMARY OF PRODUCT SALES, NET (PRO FORMA) 

 (In thousands) 

 (Unaudited) 










Three Months Ended June 30,


Six Months Ended June 30,


2012


2011


2012


2011

Xyrem

$   89,097


$   56,178


$ 162,534


$   98,956

Erwinaze/Erwinase

32,888


8,882


65,795


16,048

Prialt 

5,555


4,969


15,417


9,843

Psychiatry:








    Luvox CR

10,471


7,286


20,029


14,411

    FazaClo LD

5,956


7,557


11,768


14,302

    FazaClo HD

3,362


1,901


6,052


3,216

Other

17,447


21,311


36,346


43,085

Total pro forma net sales

$ 164,776


$ 108,084


$ 317,941


$ 199,861











 

  

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 (Unaudited) 






June 30,


December 31,


2012


2011

ASSETS




Current assets:




Cash and cash equivalents

$      154,543


$      82,076

Marketable securities

-


75,822

Accounts receivable, net 

78,130


34,374

Inventories

48,355


3,909

Prepaid expenses

5,906


1,690

Other current assets

13,508


1,260

Total current assets

300,442


199,131

Property and equipment, net

4,631


1,557

Intangible assets, net

927,409


14,585

Goodwill

446,236


38,213

Other long-term assets

19,226


87

Total assets

$   1,697,944


$    253,573





LIABILITIES AND SHAREHOLDERS' EQUITY 




Current liabilities:




Accounts payable

$        34,505


$        5,129

Accrued liabilities

125,080


34,783

Current portion of long-term debt 

23,750


-

Purchased product rights liability

6,972


4,500

Liability under government settlement

-


7,320

Deferred revenue

2,011


1,138

Total current liabilities

192,318


52,870

Deferred revenue, non-current

7,356


7,915

Long-term debt, less current portion 

444,190


-

Contingent consideration

35,300


-

Deferred tax liability

185,706


-

Other non-current liabilities

1,615


-

Total shareholders' equity 

831,459


192,788

Total liabilities and shareholders' equity 

$   1,697,944


$    253,573











 

  

 JAZZ PHARMACEUTICALS PLC 

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RECONCILIATION OF NON-GAAP ADJUSTMENTS 

 (In thousands, except per share amounts) 

 (Unaudited) 














Three Months Ended


June 30, 2012


June 30, 2011


GAAP


Adjustments


Non-GAAP


GAAP


Adjustments


Non-GAAP

Revenues:












Product sales, net

$ 128,310


$          -


$   128,310


$  63,464


$          -


$   63,464

Royalties and contract revenues

1,229


-


1,229


1,103


(284)

(e)

819

Total revenues

129,539


-


129,539


64,567


(284)


64,283

Operating expenses:












Cost of product sales

15,370


(4,305)

(a)(b)

11,065


3,370


(149)

(b)

3,221

Selling, general and administrative

60,638


(15,283)

(b)(c)

45,355


22,094


(2,418)

(b)

19,676

Research and development

2,321


(522)

(b)

1,799


3,382


(848)

(b)

2,534

Intangible asset amortization

15,751


(15,751)


-


1,862


(1,862)


-

Total operating expenses

94,080


(35,861)


58,219


30,708


(5,277)


25,431

Income from operations

35,459


35,861


71,320


33,859


4,993


38,852

Interest expense, net

(1,481)


267

(d)

(1,214)


(657)


188

(d)

(469)

Other expense

(240)


-


(240)


-


-


-

Income before provision for income 












tax expense

33,738


36,128


69,866


33,202


5,181


38,383

Provision for income tax expense

6,593


(2,897)


3,696


-


-


-

Net income 

$   27,145


$   39,025


$     66,170


$  33,202


$     5,181


$   38,383













Net income per share:












Basic

$      0.48




$        1.16


$     0.81




$      0.93

Diluted

$      0.45




$        1.09


$     0.71




$      0.82













Weighted-average ordinary shares used 











in computing net income per share:












Basic

56,952




56,952


41,209




41,209

Diluted

60,554




60,554


46,601




46,601













(a) Purchase accounting inventory fair value step-up of $4,011.

(b) Share-based compensation expense.

(c) Transaction and integration costs of $10,641 plus change in fair value of contingent consideration of $200.

(d) Interest associated with debt discount and debt issuance costs and, to a small extent, liability under a 2007 government litigation settlement.

(e) Revenue related to upfront and milestone payments.

























 JAZZ PHARMACEUTICALS PLC 

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RECONCILIATION OF NON-GAAP ADJUSTMENTS 

 (In thousands, except per share amounts) 

 (Unaudited) 














Six Months Ended


June 30, 2012


June 30, 2011


GAAP


Adjustments


Non-GAAP


GAAP


Adjustments


Non-GAAP

Revenues:












Product sales, net

$ 235,646


$           -


$  235,646


$ 113,367


$           -


$  113,367

Royalties and contract revenues

2,307


-


2,307


2,081


(569)

(e)

1,512

Total revenues

237,953


-


237,953


115,448


(569)


114,879

Operating expenses:












Cost of product sales

26,128


(7,035)

(a)(b)

19,093


6,179


(229)

(b)

5,950

Selling, general and administrative

107,637


(23,783)

(b)(c)

83,854


42,005


(4,830)

(b)

37,175

Research and development

6,280


(1,037)

(b)

5,243


7,077


(1,504)

(b)

5,573

Intangible asset amortization

29,264


(29,264)


-


3,724


(3,724)


-

Total operating expenses

169,309


(61,119)


108,190


58,985


(10,287)


48,698

Income from operations

68,644


61,119


129,763


56,463


9,718


66,181

Interest expense, net

(1,450)


309

(d)

(1,141)


(1,434)


394

(d)

(1,040)

Other expense

(258)


-


(258)


-


-


-

Income before provision for income 












tax expense

66,936


61,428


128,364


55,029


10,112


65,141

Provision for income tax expense

12,110


(2,897)


9,213


-


-


-

Net income 

$  54,826


$   64,325


$  119,151


$  55,029


$    10,112


$    65,141













Net income per share:












Basic

$      0.99




$       2.15


$      1.35




$       1.60

Diluted

$      0.92




$       2.01


$      1.19




$       1.41













Weighted-average ordinary shares used 











in computing net income per share:












Basic

55,437




55,437


40,788




40,788

Diluted

59,319




59,319


46,238




46,238













(a) Purchase accounting inventory fair value step-up of $6,380.

(b) Share-based compensation expense. 

(c) Transaction and integration costs of $16,736 plus change in fair value of contingent consideration of $200.

(d) Interest associated with debt discount and debt issuance costs and, to a small extent, liability under a 2007 government litigation settlement.

(e) Revenue related to upfront and milestone payments.















 

  

JAZZ PHARMACEUTICALS PLC

 RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES 

 (In thousands, except per share amounts) 

 (Unaudited) 



Three Months Ended June 30,


Six Months Ended June 30,


2012


2011


2012


2011









 GAAP net income  

$  27,145


$  33,202


$    54,826


$  55,029

 Intangible asset amortization 

15,751


1,862


29,264


3,724

 Share-based compensation expense 

5,258


3,415


8,539


6,563

 Purchase accounting inventory fair value step-up 

4,011


-


6,380


-

 Transaction and integration costs 

10,641


-


16,736


-

 Change in fair value of contingent consideration 

200


-


200


-

 Other non-cash expense (income) 

267


(96)


309


(175)

 Income tax adjustments 

2,897


-


2,897


-

 Adjusted net income  

$  66,170


$  38,383


$  119,151


$  65,141









 GAAP net income per diluted share 

$     0.45


$     0.71


$       0.92


$     1.19

 Adjusted net income per diluted share 

$     1.09


$     0.82


$       2.01


$     1.41









 Shares used in computing GAAP and adjusted 








 net income per diluted share amounts 

60,554


46,601


59,319


46,238



















 

  

 JAZZ PHARMACEUTICALS PLC 

 RECONCILIATION OF GAAP TO NON-GAAP 2012 FINANCIAL GUIDANCE 

 (In millions, except per share amounts) 



 GAAP net income 

$139 - $154

 Intangible asset amortization 

70

 Share-based compensation expense 

25 - 26

 Purchase accounting inventory fair value step-up 

18 - 20

 Transaction and integration costs 

22 - 24

 Change in fair value of contingent consideration 

2

 Other non-cash expense 

3

 Income tax adjustments 

(2 - 3)

 Adjusted net income 

$282 - $291



 GAAP net income per diluted share 

$2.34 - $2.57

 Adjusted net income per diluted share 

$4.70 - $4.85



 Shares used in computing GAAP and adjusted 


 net income per diluted share amounts 

60




SOURCE Jazz Pharmaceuticals plc



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