10-Q 1 jazz-20240930.htm 10-Q jazz-20240930
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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, 2024
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: 001-33500
JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter) 
Ireland98-1032470
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Fifth Floor, Waterloo Exchange,
Waterloo Road, Dublin 4, Ireland D04 E5W7
011-353-1-634-7800
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per shareJAZZThe Nasdaq Stock Market LLC

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 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, a 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 filerAccelerated filer
Non-accelerated filerSmaller 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 
As of October 31, 2024, 60,454,592 ordinary shares of the registrant, nominal value $0.0001 per share, were outstanding.


JAZZ PHARMACEUTICALS PLC
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024

INDEX
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

We own or have rights to various copyrights, trademarks, and trade names used in our business in the U.S. and/or other countries, including the following: Jazz Pharmaceuticals®, Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, Xyrem® (sodium oxybate) oral solution, Epidiolex® (cannabidiol) oral solution, Epidyolex® (the trade name in Europe and other countries outside the U.S. for Epidiolex), Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn), Enrylaze® (the trade name in Europe and other countries outside the U.S. and Canada for Rylaze), Zepzelca® (lurbinectedin), Defitelio® (defibrotide sodium), Defitelio® (defibrotide), Vyxeos® (daunorubicin and cytarabine) liposome for injection, Vyxeos® liposomal 44 mg/100 mg powder for concentrate for solution for infusion, CombiPlex® and Sativex® (nabiximols) oral solution. This Quarterly Report on Form 10-Q also includes trademarks, service marks and trade names of other companies. Trademarks, service marks and trade names appearing in this Quarterly Report on Form 10‑Q are the property of their respective owners.





2

PART I – FINANCIAL INFORMATION
 
Item 1.Financial Statements

JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$2,218,135 $1,506,310 
Investments400,000 120,000 
Accounts receivable, net of allowances723,639 705,794 
Inventories539,302 597,039 
Prepaid expenses155,132 185,476 
Other current assets354,215 320,809 
Total current assets4,390,423 3,435,428 
Property, plant and equipment, net176,422 169,646 
Operating lease assets77,164 65,340 
Intangible assets, net5,144,217 5,418,039 
Goodwill1,804,646 1,753,130 
Deferred tax assets, net583,218 477,834 
Deferred financing costs4,395 6,478 
Other non-current assets75,231 67,464 
Total assets$12,255,716 $11,393,359 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$85,425 $102,750 
Accrued liabilities858,578 793,914 
Current portion of long-term debt31,000 604,954 
Income taxes payable54,974 35,074 
Total current liabilities1,029,977 1,536,692 
Long-term debt, less current portion6,080,802 5,107,988 
Operating lease liabilities, less current portion71,115 59,225 
Deferred tax liabilities, net791,784 847,706 
Other non-current liabilities110,971 104,751 
Commitments and contingencies (Note 9)
Shareholders’ equity:
Ordinary shares6 6 
Non-voting euro deferred shares55 55 
Capital redemption reserve473 473 
Additional paid-in capital3,837,698 3,699,954 
Accumulated other comprehensive loss(603,397)(842,147)
Retained earnings936,232 878,656 
Total shareholders’ equity4,171,067 3,736,997 
Total liabilities and shareholders’ equity$12,255,716 $11,393,359 





The accompanying notes are an integral part of these condensed consolidated financial statements.
3

JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2024202320242023
Revenues:
Product sales, net$989,707 $938,398 $2,795,953 $2,769,604 
Royalties and contract revenues65,262 33,742 184,824 52,665 
Total revenues1,054,969 972,140 2,980,777 2,822,269 
Operating expenses:
Cost of product sales (excluding amortization of acquired developed technologies)111,611 102,153 317,000 328,334 
Selling, general and administrative325,772 308,310 1,016,007 947,071 
Research and development199,919 234,402 643,500 633,050 
Intangible asset amortization157,457 154,883 468,410 456,731 
Acquired in-process research and development  10,000 1,000 
Total operating expenses794,759 799,748 2,454,917 2,366,186 
Income from operations260,210 172,392 525,860 456,083 
Interest expense, net(58,702)(71,497)(186,841)(219,114)
Foreign exchange loss(701)(1,377)(1,887)(566)
Income before income tax benefit and equity in loss (gain) of investees200,807 99,518 337,132 236,403 
Income tax benefit(14,533)(47,176)(33,517)(86,823)
Equity in loss (gain) of investees285 (126)1,644 2,548 
Net income$215,055 $146,820 $369,005 $320,678 
Net income per ordinary share:
Basic$3.50 $2.33 $5.93 $5.05 
Diluted$3.42 $2.14 $5.63 $4.67 
Weighted-average ordinary shares used in per share calculations - basic61,414 63,114 62,275 63,532 
Weighted-average ordinary shares used in per share calculations - diluted63,174 71,293 67,511 72,866 















The accompanying notes are an integral part of these condensed consolidated financial statements.
4


JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2024202320242023
Net income$215,055 $146,820 $369,005 $320,678 
Other comprehensive income (loss):
Foreign currency translation adjustments291,367 (170,826)241,218 82,952 
Unrealized gain (loss) on cash flow hedging activities, net of income tax (benefit) expense of $(1,727), $1,176, $522 and $3,063 respectively
(5,197)3,539 1,572 9,218 
Gain on cash flow hedging activities reclassified from accumulated other comprehensive loss to interest expense, net of income tax expense of $445, $428, $1,342 and $684 respectively
(1,340)(1,289)(4,040)(2,060)
Other comprehensive income (loss)284,830 (168,576)238,750 90,110 
Total comprehensive income (loss)$499,885 $(21,756)$607,755 $410,788 






















The accompanying notes are an integral part of these condensed consolidated financial statements.
5



JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 Ordinary SharesNon-voting Euro DeferredCapital
Redemption
Reserve
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
Balance at December 31, 202362,255 $6 4,000 $55 $473 $3,699,954 $(842,147)$878,656 $3,736,997 
Issuance of ordinary shares in conjunction with exercise of share options7 — — — — 494 — — 494 
Issuance of ordinary shares in conjunction with vesting of restricted stock units686 — — — — — — — — 
Issuance of ordinary shares in conjunction with vesting of performance-based restricted stock units80 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (49,296)— — (49,296)
Share-based compensation— — — — — 63,131 — — 63,131 
Other comprehensive loss— — — — — — (40,247)— (40,247)
Net loss— — — — — — — (14,618)(14,618)
Balance at March 31, 202463,028 $6 4,000 $55 $473 $3,714,283 $(882,394)$864,038 $3,696,461 
Issuance of ordinary shares in conjunction with exercise of share options4 — — — — 54 — — 54 
Issuance of ordinary shares under employee stock purchase plan122 — — — — 10,886 — — 10,886 
Issuance of ordinary shares in conjunction with vesting of restricted stock units49 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (2,847)— — (2,847)
Share-based compensation— — — — — 56,738 — — 56,738 
Shares repurchased(1,458)— — — — — — (161,428)(161,428)
Other comprehensive loss— — — — — — (5,833)— (5,833)
Net income— — — — — — — 168,568 168,568 
Balance at June 30, 202461,745 $6 4,000 $55 $473 $3,779,114 $(888,227)$871,178 $3,762,599 
Issuance of ordinary shares in conjunction with exercise of share options1 — — — — 17 — — 17 
Issuance of ordinary shares in conjunction with vesting of restricted stock units69 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (1,605)— — (1,605)
Share-based compensation— — — — — 60,172 — — 60,172 
Shares repurchased(1,372)— — — — — — (150,001)(150,001)
Other comprehensive income— — — — — — 284,830 — 284,830 
Net income— — — — — — — 215,055 215,055 
Balance at September 30, 202460,443 $6 4,000 $55 $473 $3,837,698 $(603,397)$936,232 $4,171,067 



6

JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 Ordinary SharesNon-voting Euro DeferredCapital
Redemption
Reserve
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
Balance at December 31, 202263,214 $6 4,000 $55 $472 $3,477,124 $(1,125,509)$733,586 $3,085,734 
Issuance of ordinary shares in conjunction with exercise of share options188 — — — — 21,228 — — 21,228 
Issuance of ordinary shares in conjunction with vesting of restricted stock units585 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (43,266)— — (43,266)
Share-based compensation— — — — — 56,646 — — 56,646 
Other comprehensive income— — — — — — 145,279 — 145,279 
Net income— — — — — — — 69,420 69,420 
Balance at March 31, 202363,987 $6 4,000 $55 $472 $3,511,732 $(980,230)$803,006 $3,335,041 
Issuance of ordinary shares in conjunction with exercise of share options28 — — — — 2,003 — — 2,003 
Issuance of ordinary shares under employee stock purchase plan81 — — — — 8,863 — — 8,863 
Issuance of ordinary shares in conjunction with vesting of restricted stock units58 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (4,188)— — (4,188)
Share-based compensation— — — — — 61,705 — — 61,705 
Shares repurchased(756)— — — 1 — — (95,595)(95,594)
Other comprehensive income— — — — — — 113,407 — 113,407 
Net income— — — — — — — 104,438 104,438 
Balance at June 30, 202363,398 $6 4,000 $55 $473 $3,580,115 $(866,823)$811,849 $3,525,675 
Issuance of ordinary shares in conjunction with exercise of share options50 — — — — 5,512 — — 5,512 
Issuance of ordinary shares in conjunction with vesting of restricted stock units59 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (1,884)— — (1,884)
Share-based compensation— — — — — 56,197 — — 56,197 
Shares repurchased(562)— — — — — — (74,371)(74,371)
Other comprehensive loss— — — — — — (168,576)— (168,576)
Net income— — — — — — — 146,820 146,820 
Balance at September 30, 202362,945 $6 4,000 $55 $473 $3,639,940 $(1,035,399)$884,298 $3,489,373 





The accompanying notes are an integral part of these condensed consolidated financial statements.
7

JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) 
 Nine Months Ended
September 30,
 20242023
Operating activities
Net income$369,005 $320,678 
Adjustments to reconcile net income to net cash provided by operating activities:
Intangible asset amortization468,410 456,731 
Share-based compensation177,855 173,900 
Acquisition accounting inventory fair value step-up adjustment97,220 119,094 
Depreciation23,240 22,764 
Non-cash interest expense18,877 16,255 
Provision for losses on accounts receivable and inventory15,866 7,732 
Acquired in-process research and development10,000 1,000 
Deferred tax benefit(205,972)(224,317)
Other non-cash transactions19,615 54,262 
Changes in assets and liabilities:
Accounts receivable(21,979)23,581 
Inventories(26,877)(12,016)
Prepaid expenses and other current assets708 (37,327)
Operating lease assets10,697 14,423 
Other non-current assets(9,544)(20,881)
Accounts payable(16,938)17,705 
Accrued liabilities56,428 (76,261)
Income taxes payable20,098 61,159 
Deferred revenue (459)
Operating lease liabilities, less current portion(9,701)(13,855)
Other non-current liabilities320 20,500 
Net cash provided by operating activities997,328 924,668 
Investing activities
Acquisition of investments(835,125)(270,000)
Purchases of property, plant and equipment(24,783)(13,860)
Acquired in-process research and development(10,000)(1,000)
Proceeds from maturity of investments555,000 20,000 
Net cash used in investing activities(314,908)(264,860)
Financing activities
Net proceeds from issuance of exchangeable senior notes, due 2030980,767  
Proceeds from employee equity incentive and purchase plans11,451 37,606 
Repayments of long-term debt(23,250)(23,250)
Payment of employee withholding taxes related to share-based awards(53,748)(49,338)
Share repurchases(311,429)(169,966)
Repayment of exchangeable senior notes, due 2024(575,000) 
Net cash provided by (used in) financing activities28,791 (204,948)
Effect of exchange rates on cash and cash equivalents614 (652)
Net increase in cash and cash equivalents711,825 454,208 
Cash and cash equivalents, at beginning of period1,506,310 881,482 
Cash and cash equivalents, at end of period$2,218,135 $1,335,690 


The accompanying notes are an integral part of these condensed consolidated financial statements.
8

JAZZ PHARMACEUTICALS PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. The Company and Summary of Significant Accounting Policies
Jazz Pharmaceuticals plc is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines, including leading therapies for sleep disorders and epilepsy, and a growing portfolio of cancer treatments. Our patient-focused and science-driven approach powers pioneering research and development advancements across our robust pipeline of innovative therapeutics in oncology and neuroscience.
Our lead marketed products, listed below, are approved in countries around the world to improve patient care.
Neuroscience
Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, a product approved by the U.S. Food and Drug Administration, or FDA, in July 2020, and launched in the U.S. in November 2020 for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients seven years of age and older with narcolepsy, and also approved by FDA in August 2021 for the treatment of idiopathic hypersomnia, or IH, in adults and launched in the U.S. in November 2021. Xywav contains 92% less sodium than Xyrem®. Xywav is also approved in Canada for the treatment of cataplexy in patients with narcolepsy.
Epidiolex® (cannabidiol) oral solution, a product approved by FDA and launched in the U.S. in 2018 by GW Pharmaceuticals plc, or GW, and currently indicated for the treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients one year of age or older; in the EU and Great Britain (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with LGS or DS, in conjunction with clobazam (EU and Great Britain only), in patients 2 years of age and older and for adjunctive treatment of seizures associated with TSC in patients 2 years of age and older.
Oncology
Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn), a product approved by FDA in June 2021 and launched in the U.S. in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia or lymphoblastic lymphoma in adults and pediatric patients aged one month or older who have developed hypersensitivity to E. coli-derived asparaginase. In September 2023, the European Commission granted marketing authorization under the trade name Enrylaze. This therapy is also approved in Great Britain, Canada and Switzerland.
Zepzelca® (lurbinectedin), a product approved by FDA in June 2020 under FDA's accelerated approval pathway and launched in the U.S. in July 2020 for the treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy; in Canada, Zepzelca received conditional approval in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy.
Throughout this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” “the Company,” “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries. Throughout this Quarterly Report on Form 10-Q, all references to “ordinary shares” refer to Jazz Pharmaceuticals plc’s ordinary shares.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10‑K for the year ended December 31, 2023.
In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results. The results for the
9

three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, for any other interim period or for any future period.
Our significant accounting policies have not changed substantially from those previously described in our Annual Report on Form 10‑K for the year ended December 31, 2023.
These condensed consolidated financial statements include the accounts of Jazz Pharmaceuticals plc and our subsidiaries, and intercompany transactions and balances have been eliminated.
Our operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision maker, or CODM. Our CODM has been identified as our chief executive officer. We have determined that we operate in one business segment, which is the identification, development and commercialization of meaningful pharmaceutical products that address unmet medical needs.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
Adoption of New Accounting Standards
In November 2023, the Financial Accounting Standards Board, or FASB, issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures”, which requires enhanced disclosures about significant segment expenses. The amendments are effective retrospectively to all prior periods presented in the financial statements, for fiscal years beginning after December 15, 2023. The new guidance is not expected to have a material impact on our financial statement disclosures.
Significant Risks and Uncertainties
We expect that our business will continue to meaningfully depend on oxybate revenues; however, there is no guarantee that oxybate revenues will remain at current levels. In this regard, our ability to maintain oxybate revenues and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the commercialization of Xywav for the treatment of IH in adults and adoption in that indication; competition from the introduction of two authorized generic, or AG, versions of high-sodium oxybate and a branded fixed-dose, high-sodium oxybate, Avadel’s Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S. market, as well as potential future competition from additional AG versions of high-sodium oxybate and from generic versions of high-sodium oxybate and from other competitors; increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to maintain adequate coverage and reimbursement for Xywav; increased rebates required to maintain access to our products; challenges to our intellectual property around Xywav and/or Xyrem, including from pending antitrust and intellectual property litigation; and continued acceptance of Xywav and Xyrem by physicians and patients. A significant decline in oxybate revenues could cause us to reduce our operating expenses or seek to raise additional funds and would have a material adverse effect on our business, financial condition, results of operations and growth prospects, including on our ability to acquire, in-license or develop new products to grow our business.
In addition to risks related specifically to Xywav and Xyrem, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, and other risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with: ongoing clinical research activity and related outcomes; obtaining regulatory approval of our late-stage product candidates, such as zanidatamab; effectively commercializing our approved products such as Epidiolex, Rylaze and Zepzelca; obtaining and maintaining adequate coverage and reimbursement for our products; contracting and rebates to pharmacy benefit managers and similar organizations that reduce our net revenue; increasing scrutiny of pharmaceutical product pricing and resulting changes in healthcare laws and policy; market acceptance; regulatory concerns with controlled substances generally and the potential for abuse; future legislation; action by the U.S. Federal Government authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products; delays or problems in the supply of our products; loss of single source suppliers or failure to comply with manufacturing regulations; delays or problems with third parties that are part of our manufacturing and supply chain; identifying, acquiring or in-licensing additional products or product candidates; our ability to realize the anticipated benefits of acquired or in-licensed products or product candidates, such as Epidiolex and zanidatamab, at the expected levels, with the expected costs and within the expected timeframe; pharmaceutical product
10

development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing our intellectual property rights; complying with applicable regulatory requirements; and possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations.
Concentrations of Risk
Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, investments and derivative contracts. Our investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper issued by U.S. corporations, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of U.S. states, agencies and municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. We are exposed to credit risk in the event of a default by the financial institutions holding our cash, cash equivalents and investments to the extent recorded on the balance sheet.
We manage our foreign currency transaction risk and interest rate risk within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. As of September 30, 2024, we had foreign exchange forward contracts with notional amounts totaling $292.7 million. As of September 30, 2024, the outstanding foreign exchange forward contracts had a net asset fair value of $8.4 million. As of September 30, 2024, we had interest rate swap contracts with notional amounts totaling $500.0 million with a liability fair value of $3.0 million. The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not significant.
We are also subject to credit risk from our accounts receivable related to our product sales. We monitor our exposure within accounts receivable and record a reserve against uncollectible accounts receivable as necessary. We extend credit to pharmaceutical wholesale distributors and specialty pharmaceutical distribution companies, primarily in the U.S., and to other international distributors and hospitals. Customer creditworthiness is monitored and collateral is not required. We monitor economic conditions in certain European countries which may result in variability of the timing of cash receipts and an increase in the average length of time that it takes to collect accounts receivable outstanding. Historically, we have not experienced significant credit losses on our accounts receivable and, as of September 30, 2024 and December 31, 2023, allowances on receivables were not material. As of September 30, 2024, five customers accounted for 81% of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc. and its affiliates, or ESSDS, which accounted for 41% of gross accounts receivable, ASD Specialty Healthcare LLC, or ASD, which accounted for 14% of gross accounts receivable and McKesson Corporation and affiliates, or McKesson, which accounted for 14% of gross accounts receivable. As of December 31, 2023, five customers accounted for 79% of gross accounts receivable, including ESSDS, which accounted for 41% of gross accounts receivable, ASD, which accounted for 13% of gross accounts receivable and McKesson, which accounted for 11% of gross accounts receivable.
We depend on single source suppliers for most of our products, product candidates and their active pharmaceutical ingredients, or APIs. With respect to our oxybate products, the API is manufactured for us by a single source supplier and the finished products are manufactured both by us in our facility in Athlone, Ireland and by our U.S.-based supplier.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures”, which requires enhanced tax disclosures providing greater disaggregation of information in the Company's effective tax rate reconciliation and disaggregates income taxes paid by jurisdiction. The amendments are effective on a prospective basis, with the option to apply it retrospectively, for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of adopting this new accounting guidance.

2. Cash and Available-for-Sale Securities
Cash, cash equivalents and investments consisted of the following (in thousands): 
September 30, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash and
Cash
Equivalents
Investments
Cash$797,583 $ $ $797,583 $797,583 $ 
Time deposits650,000   650,000 250,000 400,000 
Money market funds1,170,552   1,170,552 1,170,552  
Totals$2,618,135 $ $ $2,618,135 $2,218,135 $400,000 
11

December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash and
Cash
Equivalents
Investments
Cash$437,724 $ $ $437,724 $437,724 $ 
Time deposits420,000   420,000 300,000 120,000 
Money market funds768,586   768,586 768,586  
Totals$1,626,310 $ $ $1,626,310 $1,506,310 $120,000 
Cash equivalents and investments are considered available-for-sale securities. We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of income. Our investment balances represent time deposits with original maturities of greater than three months and less than one year. Interest income from available-for-sale securities was $26.0 million and $74.6 million in the three and nine months ended September 30, 2024, respectively, and $19.2 million and $44.4 million in the three and nine months ended September 30, 2023, respectively.

3. Fair Value Measurement
The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of September 30, 2024 and December 31, 2023, that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands): 
September 30, 2024December 31, 2023
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Total
Estimated
Fair Value
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Total
Estimated
Fair Value
Assets:
Available-for-sale securities:
Money market funds$1,170,552 $ $1,170,552 $768,586 $ $768,586 
Time deposits 650,000 650,000  420,000 420,000 
Foreign exchange forward contracts 8,364 8,364  18,035 18,035 
Interest rate contracts 13 13  3,784 3,784 
Totals$1,170,552 $658,377 $1,828,929 $768,586 $441,819 $1,210,405 
Liabilities:
Interest rate contracts$ $2,976 $2,976 $ $3,410 $3,410 
Foreign exchange forward contracts    681 681 
Totals$ $2,976 $2,976 $ $4,091 $4,091 
As of September 30, 2024, our available-for-sale securities included money market funds and time deposits and their carrying values were approximately equal to their fair values. Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs and time deposits were measured at fair value using Level 2 inputs. Level 2 inputs are obtained from various third party data providers and represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.
Our derivative assets and liabilities include interest rate and foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.
There were no transfers between the different levels of the fair value hierarchy in 2024 or 2023.
As of September 30, 2024 and December 31, 2023, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $4.3 million and $4.7 million, respectively. The carrying amount, which is recorded within other non-current assets, is based on the latest observable transaction price.
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As of September 30, 2024, the estimated fair values of the 2.000% exchangeable senior notes due 2026, or 2026 Notes, and the 3.125% exchangeable senior notes due 2030, or 2030 Notes, were approximately $1.0 billion and $1.0 billion, respectively. The 2030 Notes together with the 2026 Notes and the 1.50% exchangeable senior notes due 2024, or 2024 Notes, that were repaid upon maturity on August 15, 2024, are collectively known as the Exchangeable Senior Notes. As of September 30, 2024, the estimated fair values of the 4.375% senior secured notes, due 2029, or the Secured Notes, and the seven-year U.S. dollar term loan B facility were approximately $1.4 billion and $2.7 billion, respectively. The fair values of each of these debt facilities was estimated using quoted market prices obtained from brokers (Level 2).

4. Derivative Instruments and Hedging Activities
We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of sterling and euro denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S. dollar functional currency and fluctuations in interest rates on our outstanding term loan borrowings. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.
We enter into foreign exchange forward contracts, with durations of up to 12 months, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain non-U.S. dollar denominated liabilities, including intercompany balances. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of September 30, 2024 and December 31, 2023, the notional amount of foreign exchange contracts where hedge accounting is not applied was $292.7 million and $511.7 million, respectively.
The foreign exchange loss in our condensed consolidated statements of income included the following gains (losses) associated with foreign exchange contracts not designated as hedging instruments (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Foreign Exchange Forward Contracts:2024202320242023
Gain (loss) recognized in foreign exchange loss$14,396 $(13,549)$9,485 $(8,921)
To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in April 2023, which are effective until April 2026. These agreements hedge contractual term loan interest rates. As of September 30, 2024, the interest rate swap agreements had a notional amount of $500.0 million. As a result of these agreements, the interest rate on a portion of our term loan borrowings is fixed at 3.9086%, plus the borrowing spread, until April 30, 2026.
The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges for the three and nine months ended September 30, 2024 was as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Interest Rate Contracts:2024202320242023
Gain (loss) recognized in accumulated other comprehensive loss, net of tax$(5,197)$3,539 $1,572 $9,218 
Gain reclassified from accumulated other comprehensive loss to interest expense, net of tax(1,340)(1,289)(4,040)(2,060)
Assuming no change in the U.S dollar Secured Overnight Financing Rate, or Term SOFR, based interest rates from market rates as of September 30, 2024, $0.5 million of loss, net of tax, recognized in accumulated other comprehensive loss will be reclassified to earnings over the next 12 months.
The cash flow effects of our derivative contracts for the nine months ended September 30, 2024 and 2023 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows.
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The following tables summarize the fair value of outstanding derivatives (in thousands):
ClassificationSeptember 30,
2024
December 31,
2023
Assets
Derivatives designated as hedging instruments:
Interest rate contractsOther current assets$13 $3,784 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsOther current assets8,364 18,035 
Total fair value of derivative asset instruments$8,377 $21,819 
Liabilities
Derivatives designated as hedging instruments:
Interest rate contractsAccrued liabilities$572 $ 
Interest rate contractsOther non-current liabilities2,404 3,410 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsAccrued liabilities 681 
Total fair value of derivative liability instruments$2,976 $4,091 
Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event. The following table summarizes the potential effect on our condensed consolidated balance sheets of offsetting our interest rate and foreign exchange forward contracts subject to such provisions (in thousands):
September 30, 2024
Gross Amounts of Recognized Assets/ LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets/ Liabilities Presented in the Consolidated Balance SheetGross Amounts Not Offset in the Consolidated Balance Sheet
DescriptionDerivative Financial InstrumentsCash Collateral Received (Pledged)Net Amount
Derivative assets$8,377 $ $8,377 $(1,830)$ $6,547 
Derivative liabilities(2,976) (2,976)1,830  (1,146)
December 31, 2023
Gross Amounts of Recognized Assets/ LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets/ Liabilities Presented in the Consolidated Balance SheetGross Amounts Not Offset in the Consolidated Balance Sheet
DescriptionDerivative Financial InstrumentsCash Collateral Received (Pledged)Net Amount
Derivative assets$21,819 $ $21,819 $(4,091)$ $17,728 
Derivative liabilities(4,091) (4,091)4,091   

5. Inventories
Inventories consisted of the following (in thousands): 
September 30,
2024
December 31,
2023
Raw materials$24,819 $25,595 
Work in process366,602 431,732 
Finished goods147,881 139,712 
Total inventories$539,302 $597,039 
As of September 30, 2024 and December 31, 2023, inventories included $243.4 million and $328.0 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired as part of our acquisition of GW.
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6. Goodwill and Intangible Assets
The gross carrying amount of goodwill was as follows (in thousands):
Balance at December 31, 2023$1,753,130 
Foreign exchange51,516 
Balance at September 30, 2024$1,804,646 


The gross carrying amounts and net book values of our intangible assets were as follows (in thousands): 
 September 30, 2024December 31, 2023
 Remaining
Weighted-
Average Useful
Life
(In years)
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Acquired developed technologies8.0$8,064,193 $(2,919,976)$5,144,217 $7,785,495 $(2,367,456)$5,418,039 
Manufacturing contracts11,984 (11,984) 11,828 (11,828) 
Trademarks2,889 (2,889) 2,886 (2,886) 
Total finite-lived intangible assets$8,079,066 $(2,934,849)$5,144,217 $7,800,209 $(2,382,170)$5,418,039 
The increase in the gross carrying amount of intangible assets as of September 30, 2024, compared to December 31, 2023, relates to the positive impact of foreign currency translation adjustments due to the strengthening of sterling against the U.S. dollar.
The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.
Based on finite-lived intangible assets recorded as of September 30, 2024, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands): 
Year Ending December 31,Estimated Amortization Expense
2024 (remainder)$162,109 
2025648,436 
2026648,436 
2027648,436 
2028647,104 
Thereafter2,389,696 
Total$5,144,217 

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7. Certain Balance Sheet Items
Property, plant and equipment consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Manufacturing equipment and machinery$91,560 $82,897 
Leasehold improvements71,950 67,722 
Land and buildings70,762 70,912 
Computer software41,847 38,134 
Construction-in-progress30,645 18,661 
Computer equipment17,530 15,398 
Furniture and fixtures8,942 9,273 
Subtotal333,236 302,997 
Less accumulated depreciation and amortization(156,814)(133,351)
Property, plant and equipment, net$176,422 $169,646 
Accrued liabilities consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Rebates and other sales deductions$405,134 $325,711 
Employee compensation and benefits125,497 121,209 
Accrued royalties40,923 30,706 
Clinical trial accruals37,620 44,757 
Consulting and professional services