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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35238

 

HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 

 

Ireland

 

98-1195602

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

70 St. Stephen’s Green

Dublin 2, D02 E2X4, Ireland

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

011 353 1 772 2100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary shares, nominal value $0.0001 per share

HZNP

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of October 27, 2022: 226,621,465.

 

 


HORIZON THERAPEUTICS PLC

INDEX

 

 

 

 

 

Page

 

 

 

No.

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and as of December 31, 2021 (Unaudited)

 

1

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 

2

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 

3

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

55

Item 4.

Controls and Procedures

 

56

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

57

Item 1A.

Risk Factors

 

57

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

106

Item 6.

Exhibits

 

107

 

Signatures

 

109

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except nominal value and share data)

 

 

As of

 

As of

 

 

September 30,

 

December 31,

 

 

2022

 

2021

 

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

$

2,130,527

 

$

1,580,317

 

Restricted cash

 

4,743

 

 

3,839

 

Accounts receivable, net

 

646,386

 

 

632,775

 

Inventories, net

 

190,258

 

 

225,730

 

Prepaid expenses and other current assets

 

440,095

 

 

357,106

 

Total current assets

 

3,412,009

 

 

2,799,767

 

Property, plant and equipment, net

 

317,692

 

 

292,298

 

Developed technology and other intangible assets, net

 

2,757,694

 

 

2,960,118

 

In-process research and development

 

810,000

 

 

880,000

 

Goodwill

 

1,010,538

 

 

1,066,709

 

Deferred tax assets, net

 

516,317

 

 

538,098

 

Other long-term assets

 

203,612

 

 

140,738

 

Total assets

$

9,027,862

 

$

8,677,728

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable

$

32,113

 

$

30,125

 

Accrued expenses and other current liabilities

 

457,288

 

 

523,015

 

Accrued trade discounts and rebates

 

355,213

 

 

317,431

 

Long-term debt—current portion

 

16,000

 

 

16,000

 

Total current liabilities

 

860,614

 

 

886,571

 

LONG-TERM LIABILITIES:

 

 

 

 

Long-term debt, net

 

2,549,140

 

 

2,555,233

 

Deferred tax liabilities, net

 

385,121

 

 

390,455

 

Other long-term liabilities

 

199,300

 

 

173,076

 

Total long-term liabilities

 

3,133,561

 

 

3,118,764

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at September 30, 2022 and December 31, 2021; 229,076,182 and 227,760,936 shares issued at September 30, 2022 and December 31, 2021, respectively; and 228,691,816 and 227,376,570 shares outstanding at September 30, 2022 and December 31, 2021, respectively

 

23

 

 

23

 

Treasury stock, 384,366 ordinary shares at September 30, 2022 and December 31, 2021

 

(4,585

)

 

(4,585

)

Additional paid-in capital

 

4,424,509

 

 

4,373,337

 

Accumulated other comprehensive income (loss)

 

7,460

 

 

(14,987

)

Retained earnings

 

606,280

 

 

318,605

 

Total shareholders’ equity

 

5,033,687

 

 

4,672,393

 

Total liabilities and shareholders’ equity

$

9,027,862

 

$

8,677,728

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

$

925,359

 

 

$

1,036,992

 

 

$

2,687,015

 

 

$

2,211,946

 

Cost of goods sold

 

234,132

 

 

 

251,640

 

 

 

679,410

 

 

 

553,003

 

Gross profit

 

691,227

 

 

 

785,352

 

 

 

2,007,605

 

 

 

1,658,943

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

114,058

 

 

 

89,549

 

 

 

320,436

 

 

 

244,076

 

Acquired in-process research and development and milestones

 

19,000

 

 

 

4,000

 

 

 

19,000

 

 

 

47,000

 

Selling, general and administrative

 

397,563

 

 

 

360,260

 

 

 

1,168,518

 

 

 

1,047,456

 

Impairment of goodwill

 

 

 

 

 

 

 

56,171

 

 

 

 

Impairment of long-lived asset

 

 

 

 

 

 

 

 

 

 

12,371

 

Gain on sale of asset

 

 

 

 

 

 

 

 

 

 

(2,000

)

Total operating expenses

 

530,621

 

 

 

453,809

 

 

 

1,564,125

 

 

 

1,348,903

 

Operating income

 

160,606

 

 

 

331,543

 

 

 

443,480

 

 

 

310,040

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(22,480

)

 

 

(22,977

)

 

 

(65,145

)

 

 

(59,018

)

Foreign exchange loss

 

(768

)

 

 

(476

)

 

 

(320

)

 

 

(1,363

)

Other (expense) income, net

 

(2,277

)

 

 

(849

)

 

 

(5,408

)

 

 

2,113

 

Total other expense, net

 

(25,525

)

 

 

(24,302

)

 

 

(70,873

)

 

 

(58,268

)

Income before benefit for income taxes

 

135,081

 

 

 

307,241

 

 

 

372,607

 

 

 

251,772

 

Benefit for income taxes

 

(758

)

 

 

(19,302

)

 

 

(28,467

)

 

 

(109,537

)

Net income

$

135,839

 

 

$

326,543

 

 

$

401,074

 

 

$

361,309

 

Net income per ordinary share—basic

$

0.59

 

 

$

1.44

 

 

$

1.75

 

 

$

1.61

 

Weighted average ordinary shares outstanding—basic

 

230,333,287

 

 

 

226,096,747

 

 

 

229,820,406

 

 

 

225,053,704

 

Net income per ordinary share—diluted

$

0.58

 

 

$

1.38

 

 

$

1.70

 

 

$

1.54

 

Weighted average ordinary shares outstanding—diluted

 

235,385,570

 

 

 

236,198,789

 

 

 

235,923,030

 

 

 

235,256,424

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts designated as cash flow hedges

$

23,874

 

 

$

 

 

$

25,885

 

 

$

 

Pension and other post-employment benefit plan remeasurements

 

250

 

 

 

 

 

 

28

 

 

 

(287

)

Foreign currency translation adjustments

 

(1,573

)

 

 

(514

)

 

 

(3,466

)

 

 

(1,100

)

Other comprehensive income (loss)

 

22,551

 

 

 

(514

)

 

 

22,447

 

 

 

(1,387

)

Comprehensive income

$

158,390

 

 

$

326,029

 

 

$

423,521

 

 

$

359,922

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

 

Ordinary Shares

 

 

Treasury Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Equity

 

Balances at December 31, 2021

 

 

227,760,936

 

 

$

23

 

 

 

384,366

 

 

$

(4,585

)

 

$

4,373,337

 

 

$

(14,987

)

 

$

318,605

 

 

$

4,672,393

 

Issuance of ordinary shares in conjunction with the exercise of stock options
and the vesting of restricted stock units and performance stock units

 

 

2,112,964

 

 

 

 

 

 

 

 

 

 

 

 

9,071

 

 

 

 

 

 

 

 

 

9,071

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(115,108

)

 

 

 

 

 

 

 

 

(115,108

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,347

 

 

 

 

 

 

 

 

 

47,347

 

Pension and other post-employment benefit plan remeasurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325

 

 

 

 

 

 

325

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(460

)

 

 

 

 

 

(460

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

204,261

 

 

 

204,261

 

Balances at March 31, 2022

 

 

229,873,900

 

 

$

23

 

 

 

384,366

 

 

$

(4,585

)

 

$

4,314,647

 

 

$

(15,122

)

 

$

522,866

 

 

$

4,817,829

 

Issuance of ordinary shares in conjunction with the exercise of stock options
and the vesting of restricted stock units and performance stock units

 

 

660,784

 

 

 

 

 

 

 

 

 

 

 

 

12,951

 

 

 

 

 

 

 

 

 

12,951

 

Issuance of ordinary shares in conjunction with Employee Share Purchase Plan

 

 

182,109

 

 

 

 

 

 

 

 

 

 

 

 

13,884

 

 

 

 

 

 

 

 

 

13,884

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,419

)

 

 

 

 

 

 

 

 

(5,419

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,281

 

 

 

 

 

 

 

 

 

45,281

 

Pension and other post-employment benefit plan remeasurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(547

)

 

 

 

 

 

(547

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,433

)

 

 

 

 

 

(1,433

)

Interest rate swap contracts designated as cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,011

 

 

 

 

 

 

2,011

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,974

 

 

 

60,974

 

Balances at June 30, 2022

 

 

230,716,793

 

 

$

23

 

 

 

384,366

 

 

$

(4,585