Nov 6 2013
Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter ended September 30, 2013 and updated 2013 financial guidance.
"We continued to deliver strong growth and profitability during the third quarter while further strengthening our cash position," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. "With disciplined investments and successful execution of our corporate growth strategy, we believe we are well positioned to continue to generate significant growth and shareholder value."
Adjusted net income for the third quarter of 2013 was $109.4 million, or $1.78 per diluted share, compared to $78.6 million, or $1.29 per diluted share, for the third quarter of 2012.
GAAP net income for the third quarter of 2013 was $75.4 million, or $1.23 per diluted share. GAAP income from continuing operations for the third quarter of 2012 was $33.6 million, or $0.56 per diluted share, and GAAP net income for the third quarter of 2012 was $33.2 million, or $0.55 per diluted share. GAAP net income for the third quarter of 2012 included GAAP loss from discontinued operations of $0.4 million, or $0.01 per diluted share.
Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Third Quarter 2013 Revenues and Product Sales
Total revenues for the third quarter of 2013 were $232.2 million, compared to total revenues of $175.5 million for the third quarter of 2012. This increase was driven primarily by increased net sales of Xyrem and Erwinaze. Total revenues include net sales, royalties and contract revenues.
Tables showing net sales for the three and nine months ended September 30, 2013 compared to actual and pro forma net sales for the same periods in 2012 are included in this press release.
Net sales for the third quarter of 2013 were as follows:
Xyrem® (sodium oxybate) oral solution: Xyrem net sales increased by 50% to $153.7 million in the third quarter of 2013 compared to $102.6 million in the third quarter of 2012. During the third quarter of 2013, the average number of active Xyrem patients was approximately 11,000.
Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi): Erwinaze/ Erwinase worldwide net sales increased by 39% to $44.1 million in the third quarter of 2013 compared to $31.7 million in the third quarter of 2012.
Prialt® (ziconotide) intrathecal infusion: Net sales of Prialt were $11.0 million in the third quarter of 2013 compared to net sales of $5.4 million for the same period of 2012. During the third quarter of 2013, net sales included a $5.7 million sale to Eisai Co., the European distributor of Prialt. During 2012, the sale to Eisai occurred during the three months ended March 31, 2012.
Psychiatry Products: Net sales of the company's psychiatry products were $10.7 million in the third quarter of 2013 compared to net sales of $21.0 million for the same period of 2012. This decrease was primarily due to the impact of generic competition.
Other: Net sales of other products for the third quarter of 2013 were $10.9 million compared to net sales of $13.4 million in the same period of 2012.
Operating Expenses and Other
Operating expenses for the third quarter of 2013 were $131.6 million compared to $120.2 million for the third quarter of 2012. Operating expenses changed over the prior year period for the following reasons:
Cost of product sales for the third quarter of 2013 was $24.3 million compared to $32.6 million for the same period in 2012. The decrease in the 2013 period was primarily due to a decrease in acquisition accounting inventory fair value step-up adjustments of $9.8 million. Gross margin for the third quarter of 2013, as a percentage of product sales, was 89.5% compared to 81.3% for the same period in 2012.
Selling, general and administrative ("SG&A") and research and development ("R&D") expenses for the third quarter of 2013 totaled $87.8 million on a GAAP basis compared to $67.8 million for the same period of 2012. The increase reflected higher headcount and related expenses due to the expansion of the business and an increase in the fair value of contingent consideration related to the acquisition of EUSA Pharma in June 2012, partially offset by lower transaction and integration costs. Adjusted combined SG&A and R&D expenses for the third quarter of 2013 totaled $69.5 million compared to $57.9 million for the same period in 2012.
Net interest expense in the third quarter of 2013 was $6.2 million. As of September 30, 2013, cash and cash equivalents were $588.5 million, and the balance of the company's term loans was $551.1 million. Cash and cash equivalents increased from December 31, 2012 primarily due to the cash generated from the business and the net proceeds of term loans that were refinanced in June 2013, offset in part by funds used by the company to repurchase its ordinary shares under the company's share repurchase program and increases in working capital.
In May 2013, the board of directors authorized the use of up to $200 million to repurchase the company's ordinary shares. In the third quarter of 2013, the company repurchased 0.6 million shares for $48.8 million at an average cost of $80.91 per share. As of September 30, 2013, a total of 1.4 million shares had been repurchased for $102.4 million at an average cost of $70.64 per share.
During the fourth quarter of 2012, the company sold its women's health business. Financial results from the women's health business are reported as discontinued operations for the 2012 periods.
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business update and discuss its third quarter 2013 results and updated 2013 financial 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 +1 800 591 6942 in the U.S., or +1 617 614 4909 outside the U.S., and entering passcode 48257479.
A replay of the conference call will be available through November 12, 2013 by dialing +1 888 286 8010 in the U.S., or +1 617 801 6888 outside the U.S., and entering passcode 18933289.