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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, 2023
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 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 ☒
As of November 1, 2023, 62,956,913 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, 2023

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,
2023		December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$1,335,690 $881,482 
Investments250,000 — 
Accounts receivable, net of allowances627,841 651,493 
Inventories611,827 714,061 
Prepaid expenses109,990 91,912 
Other current assets310,404 267,192 
Total current assets3,245,752 2,606,140 
Property, plant and equipment, net222,476 228,050 
Operating lease assets65,038 73,326 
Intangible assets, net5,417,860 5,794,437 
Goodwill1,705,320 1,692,662 
Deferred tax assets, net464,367 376,247 
Deferred financing costs7,172 9,254 
Other non-current assets76,080 55,139 
Total assets$11,204,065 $10,835,255 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$109,850 $90,758 
Accrued liabilities769,942 803,255 
Current portion of long-term debt604,507 31,000 
Income taxes payable89,026 7,717 
Deferred revenue4 463 
Total current liabilities1,573,329 933,193 
Long-term debt, less current portion5,110,757 5,693,341 
Operating lease liabilities, less current portion61,892 71,838 
Deferred tax liabilities, net841,234 944,337 
Other non-current liabilities127,480 106,812 
Commitments and contingencies (Note 9)
Shareholders’ equity:
Ordinary shares6 6 
Non-voting euro deferred shares55 55 
Capital redemption reserve473 472 
Additional paid-in capital3,639,940 3,477,124 
Accumulated other comprehensive loss(1,035,399)(1,125,509)
Retained earnings884,298 733,586 
Total shareholders’ equity3,489,373 3,085,734 
Total liabilities and shareholders’ equity$11,204,065 $10,835,255 




The accompanying notes are an integral part of these condensed consolidated financial statements.
3
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Revenues:
Product sales, net$938,398 $935,766 $2,769,604 $2,673,903 
Royalties and contract revenues33,742 4,886 52,665 13,348 
Total revenues972,140 940,652 2,822,269 2,687,251 
Operating expenses:
Cost of product sales (excluding amortization of acquired developed technologies)102,153 133,661 328,334 373,153 
Selling, general and administrative308,310 358,478 947,071 1,033,764 
Research and development234,402 148,870 633,050 417,898 
Intangible asset amortization154,883 141,232 456,731 461,782 
Acquired in-process research and development— — 1,000 69,148 
Impairment charge— 133,648 — 133,648 
Total operating expenses799,748 915,889 2,366,186 2,489,393 
Income from operations172,392 24,763 456,083 197,858 
Interest expense, net(71,497)(80,244)(219,114)(214,117)
Foreign exchange loss(1,377)(4,649)(566)(16,532)
Income (loss) before income tax benefit and equity in loss (gain) of investees99,518 (60,130)236,403 (32,791)
Income tax benefit(47,176)(43,027)(86,823)(58,603)
Equity in loss (gain) of investees(126)2,545 2,548 9,148 
Net income (loss)$146,820 $(19,648)$320,678 $16,664 
Net income (loss) per ordinary share:
Basic$2.33 $(0.31)$5.05 $0.27 
Diluted$2.14 $(0.31)$4.67 $0.26 
Weighted-average ordinary shares used in per share calculations - basic63,114 62,785 63,532 62,365 
Weighted-average ordinary shares used in per share calculations - diluted71,293 62,785 72,866 63,388 












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,
 2023202220232022
Net income (loss)$146,820 $(19,648)$320,678 $16,664 
Other comprehensive income (loss):
Foreign currency translation adjustments(170,826)(511,617)82,952 (1,217,414)
Loss on fair value hedging activities reclassified from accumulated other comprehensive income (loss) to foreign exchange gain (loss), net of income tax benefit of $—, $—, $— and $43, respectively
— — — 128 
Unrealized gain on cash flow hedging activities, net of income tax expense of $1,176, $—, $3,063 and $—, respectively
3,539 — 9,218 — 
Gain on cash flow hedging activities reclassified from accumulated other comprehensive income (loss) to interest expense, net of income tax expense of $428, $—, $684 and $—, respectively
(1,289)— (2,060)— 
Other comprehensive income (loss)(168,576)(511,617)90,110 (1,217,286)
Total comprehensive income (loss)$(21,756)$(531,265)$410,788 $(1,200,622)



















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, 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 


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, 202161,633 $6 4,000 $55 $472 $3,534,792 $(400,360)$830,226 $3,965,191 
Cumulative effect adjustment from adoption of ASU 2020-06— — — — — (333,524)— 127,474 (206,050)
Issuance of ordinary shares in conjunction with exercise of share options207 — — — — 21,729 — — 21,729 
Issuance of ordinary shares in conjunction with vesting of restricted stock units404 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (33,776)— — (33,776)
Share-based compensation— — — — — 50,106 — — 50,106 
Other comprehensive loss— — — — — — (190,360)— (190,360)
Net income— — — — — — — 1,647 1,647 
Balance at March 31, 202262,244 $6 4,000 $55 $472 $3,239,327 $(590,720)$959,347 $3,608,487 
Issuance of ordinary shares in conjunction with exercise of share options194 — — — — 16,640 — — 16,640 
Issuance of ordinary shares under employee stock purchase plan81 — — — — 8,234 — — 8,234 
Issuance of ordinary shares in conjunction with vesting of restricted stock units104 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (6,289)— — (6,289)
Share-based compensation— — — — — 54,407 — — 54,407 
Shares repurchased— — — — — — — (54)(54)
Other comprehensive loss— — — — — — (515,309)— (515,309)
Net income— — — — — — — 34,665 34,665 
Balance at June 30, 202262,623 $6 4,000 $55 $472 $3,312,319 $(1,106,029)$993,958 $3,200,781 
Issuance of ordinary shares in conjunction with exercise of share options207 — — — — 21,260 — — 21,260 
Issuance of ordinary shares in conjunction with vesting of restricted stock units60 — — — — — — — — 
Shares withheld for payment of employee's withholding tax liability— — — — — (2,567)— — (2,567)
Share-based compensation— — — — — 56,985 — — 56,985 
Other comprehensive loss— — — — — — (511,617)— (511,617)
Net loss— — — — — — — (19,648)(19,648)
Balance at September 30, 202262,890 $6 4,000 $55 $472 $3,387,997 $(1,617,646)$974,310 $2,745,194 



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,
 20232022
Operating activities
Net income$320,678 $16,664 
Adjustments to reconcile net income to net cash provided by operating activities:
Intangible asset amortization456,731 461,782 
Share-based compensation 173,900 160,438 
Acquisition accounting inventory fair value step-up adjustment119,094 203,189 
Other non-cash transactions54,262 (26,352)
Depreciation22,764 22,958 
Non-cash interest expense16,255 32,002 
Provision for losses on accounts receivable and inventory7,732 13,066 
Acquired in-process research and development1,000 69,148 
Impairment charge— 133,648 
Loss on disposal of a business— 39,258 
Deferred tax benefit(224,317)(146,874)
Changes in assets and liabilities:
Accounts receivable23,581 (43,868)
Inventories(12,016)(50,458)
Prepaid expenses and other current assets(37,327)23,801 
Operating lease assets14,423 10,672 
Other non-current assets(20,881)(4,006)
Accounts payable17,705 4,188 
Accrued liabilities(76,261)17,864 
Income taxes payable61,159 (172)
Deferred revenue(459)(1,570)
Operating lease liabilities, less current portion(13,855)(12,139)
Other non-current liabilities20,500 6,767 
Net cash provided by operating activities924,668 930,006 
Investing activities
Proceeds from maturity of investments20,000 — 
Acquired in-process research and development(1,000)(69,148)
Purchases of property, plant and equipment(13,860)(19,668)
Acquisition of investments(270,000)(61,036)
Proceeds from sale of a business— 53,000 
Acquisition of intangible assets— (25,000)
Net cash used in investing activities(264,860)(121,852)
Financing activities
Proceeds from employee equity incentive and purchase plans37,606 67,863 
Repayments of long-term debt(23,250)(574,264)
Payment of employee withholding taxes related to share-based awards(49,338)(42,632)
Share repurchases(169,966)(54)
Net cash used in financing activities(204,948)(549,087)
Effect of exchange rates on cash and cash equivalents(652)(11,157)
Net increase in cash and cash equivalents454,208 247,910 
Cash and cash equivalents, at beginning of period881,482 591,448 
Cash and cash equivalents, at end of period$1,335,690 $839,358 




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 and novel product candidates, from early- to late-stage development, in neuroscience and oncology. Within these therapeutic areas, we strive to identify new options for patients by actively exploring small molecules and biologics, and through innovative delivery technologies and cannabinoid science.
Our lead marketed products are:
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 with narcolepsy seven years of age and older, 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®;
•Xyrem (sodium oxybate) oral solution, a product approved by FDA and distributed in the U.S. for the treatment of cataplexy or EDS in patients with narcolepsy seven years of age and older; Jazz also markets Xyrem in Canada for the treatment of cataplexy in patients with narcolepsy. Xyrem is also approved and distributed in the European Union, or EU (EU market authorizations include Northern Ireland), Great Britain and other markets through a licensing agreement; and
•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 (select markets).
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, or EC, granted marketing authorization for this therapy under the trade name Enrylaze;
•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;
•Defitelio® (defibrotide sodium), a product approved in the U.S. for the treatment of hepatic veno-occlusive disease, or VOD, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT, and in Japan for the treatment of hepatic sinusoidal obstruction syndrome (hepatic VOD). It is currently approved in the EU, Great Britain and other markets for the treatment of severe hepatic VOD, also known as sinusoidal obstructive syndrome in HSCT therapy. It is indicated in adults and pediatric patients over 1 month of age; and
•Vyxeos® (daunorubicin and cytarabine) liposome for injection, a product approved in the U.S., Canada, EU, Great Britain and other markets (marketed as Vyxeos® liposomal in the EU, Great Britain and other markets) for the treatment of adults with newly diagnosed therapy-related acute myeloid leukemia, or t-AML, or AML with myelodysplasia-related changes, or AML-MRC. An expanded indication was granted in the U.S. for the treatment of newly diagnosed t-AML or AML-MRC in pediatric patients aged 1 year and older.
9
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, 2022.
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 three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, 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, 2022, other than as described below.
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 October 2021, the Financial Accounting Standards Board issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, or ASU 2021-08, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. ASU 2021-08 was effective for the Company from January 1, 2023 and we will apply to future business combinations, if any.
Significant Risks and Uncertainties
Historically, our business has been substantially dependent on Xyrem and while we expect that our business will continue to meaningfully depend on oxybate revenues from both Xywav and Xyrem, there is no guarantee that we can maintain oxybate revenues at or near historical levels, or that oxybate revenues will grow. In this regard, our ability to maintain or increase 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 launch of Xywav for the treatment of IH in adults and adoption in that indication; competition from the recent introduction of two authorized generic, or AG, versions of high-sodium oxybate and new products, such as 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 and Xyrem; increased rebates required to maintain access to our products; challenges to our intellectual property around Xywav and/or
10
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, which 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; effectively commercializing our approved or acquired 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; pharmaceutical product 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. In addition, the success of the acquisition of GW, or the GW Acquisition, will depend, in part, on our ability to realize the anticipated benefits from the combination of our and GW's historical businesses. The anticipated benefits to us of the GW Acquisition may not be realized at the expected levels, within the expected timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
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, 2023, we had foreign exchange forward contracts with notional amounts totaling $509.9 million. As of September 30, 2023, the outstanding foreign exchange forward contracts had a net liability fair value of $14.6 million. As of September 30, 2023, we had interest rate swap contracts with notional amounts totaling $500 million. These outstanding interest rate swap contracts had an asset fair value of $9.6 million as of September 30, 2023. 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, 2023 and December 31, 2022, allowances on receivables were not material. As of September 30, 2023, five customers accounted for 84% of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc. and its affiliates, or ESSDS, which accounted for 45% of gross accounts receivable, McKesson Corporation and affiliates, or McKesson, which accounted for 12% of gross accounts receivable and ASD Specialty Healthcare LLC, which accounted for 12% of gross accounts receivable. As of December 31, 2022, five customers accounted for 87% of gross accounts receivable, including ESSDS, which accounted for 55% of gross accounts receivable, Cardinal Health Inc, which accounted for 10% of gross accounts receivable and McKesson, which accounted for 9% of gross accounts receivable.
11
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.

2. Cash and Available-for-Sale Securities
Cash, cash equivalents and investments consisted of the following (in thousands): 
September 30, 2023
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair Value		Cash and
Cash
Equivalents		Investments
Cash$366,100 $— $— $366,100 $366,100 $— 
Time deposits560,000 — — 560,000 310,000 250,000 
Money market funds659,590 — — 659,590 659,590 — 
Totals$1,585,690 $— $— $1,585,690 $1,335,690 $250,000 
December 31, 2022
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair Value		Cash and
Cash
Equivalents		Investments
Cash$334,018 $— $— $334,018 $334,018 $— 
Time deposits30,000 — — 30,000 30,000 — 
Money market funds517,464 — — 517,464 517,464 — 
Totals$881,482 $— $— $881,482 $881,482 $— 
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 (loss). 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 $19.2 million and $44.4 million in the three and nine months ended September 30, 2023, respectively, and $3.5 million and $4.4 million in the three and nine months ended September 30, 2022, 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, 2023 and December 31, 2022 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands): 
September 30, 2023December 31, 2022
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$659,590 $— $659,590 $517,464 $— $517,464 
Time deposits— 560,000 560,000 — 30,000 30,000 
Interest rate contracts— 9,577 9,577 — — — 
Foreign exchange forward contracts— 1,331 1,331 — 17,356 17,356 
Totals$659,590 $570,908 $1,230,498 $517,464 $47,356 $564,820 
Liabilities:
Foreign exchange forward contracts$— $15,964 $15,964 $— $— $— 
Totals$— $15,964 $15,964 $— $— $— 
As of September 30, 2023, 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
12
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 2023 or 2022.
As of September 30, 2023 and December 31, 2022, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $5.5 million. The carrying amount, which is recorded within other non-current assets, is based on the latest observable transaction price.
As of September 30, 2023, the estimated fair values of the 1.50% exchangeable senior notes due 2024, or 2024 Notes, the 2.00% exchangeable senior notes due 2026, or 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, the 4.375% senior secured notes, due 2029, or the Secured Notes, and the seven-year $3.1 billion term loan B facility were approximately $555 million, $1.0 billion, $1.3 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, 2023 and December 31, 2022, the notional amount of foreign exchange contracts where hedge accounting is not applied was $509.9 million and $505.0 million, respectively.
The foreign exchange gain (loss) in our condensed consolidated statements of income (loss) included the following losses associated with foreign exchange contracts not designated as hedging instruments (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
Foreign Exchange Forward Contracts:2023202220232022
Loss recognized in foreign exchange gain (loss)$(13,549)$(40,331)$(8,921)$(95,536)
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, 2023, 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 income (loss) and earnings from derivative instruments that qualified as cash flow hedges for the three and nine months ended September 30, 2023 was as follows (in thousands):
Interest Rate Contracts:Three Months Ended
September 30, 2023		Nine Months Ended
September 30, 2023
Gain recognized in accumulated other comprehensive income (loss), net of tax$3,539 $9,218 
Gain reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax(1,289)(2,060)
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Assuming no change in USD Secured Overnight Financing Rate based interest rates from market rates as of September 30, 2023, $5.1 million of gains, net of tax, recognized in accumulated other comprehensive income (loss) will be reclassified to earnings over the next 12 months.
In order to hedge our exposure to foreign currency exchange risk associated with our seven-year €625.0 million term loan B facility, or the Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021, which matured in March 2022, and was de-designated as a fair value hedge. The terms of this contract converted the principal repayments and interest payments on the Euro Term Loan into U.S. dollars. The carrying amount of the Euro Term Loan and the fair value of the cross-currency interest rate swap contract were remeasured on a monthly basis, with changes in the euro to U.S. dollar foreign exchange rates recognized within foreign exchange gain (loss) in the condensed consolidated statements of income (loss).
The impact on accumulated other comprehensive income (loss) and earnings from the cross-currency interest rate swap contract was as follows (in thousands):
Cross-Currency Interest Rate Contract:Nine Months Ended
September 30, 2022
Loss reclassified from accumulated other comprehensive income (loss) to foreign exchange loss, net of tax$128 
Loss recognized in foreign exchange loss2,646 
The cash flow effects of our derivative contracts for the nine months ended September 30, 2023 and 2022 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which were included in net cash used in financing activities.
The following tables summarize the fair value of outstanding derivatives (in thousands):
ClassificationSeptember 30,
2023		December 31,
2022
Assets
Derivatives designated as hedging instruments:
Interest rate contractsOther current assets$6,896 $— 
Other non-current assets2,681 — 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsOther current assets1,331 17,356 
Total fair value of derivative asset instruments$10,908 $17,356 
Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsAccrued liabilities$15,964 $— 
Although we do not offset derivative assets and liabilities within our 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. These provisions were not applicable as of December 31, 2022 since all derivatives were in an asset position. 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 as of September 30, 2023 (in thousands):
September 30, 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$10,908 $— $10,908 $(7,702)$— $3,206 
Derivative liabilities(15,964)— (15,964)7,702 — (8,262)

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5. Inventories
Inventories consisted of the following (in thousands): 
September 30,
2023		December 31,
2022
Raw materials$25,028 $20,786 
Work in process457,877 517,670 
Finished goods128,922 175,605 
Total inventories$611,827 $714,061 
As of September 30, 2023 and December 31, 2022 inventories included $348.1 million and $457.6 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

6. Goodwill and Intangible Assets
The gross carrying amount of goodwill was as follows (in thousands):
Balance at December 31, 2022$1,692,662 
Foreign exchange12,658 
Balance at September 30, 2023$1,705,320 


The gross carrying amounts and net book values of our intangible assets were as follows (in thousands): 
 September 30, 2023December 31, 2022
 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 technologies9.7$7,577,534 $(2,159,674)$5,417,860 $7,491,994 $(1,697,557)$5,794,437 
Manufacturing contracts—11,340 (11,340)— 11,417 (11,417)— 
Trademarks—2,874 (2,874)— 2,876 (2,876)— 
Total finite-lived intangible assets$7,591,748 $(2,173,888)$5,417,860 $7,506,287 $(1,711,850)$5,794,437 
The increase in the gross carrying amount of intangible assets as of September 30, 2023 compared to December 31, 2022 primarily 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.
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Based on finite-lived intangible assets recorded as of September 30, 2023, 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
2023 (remainder)$150,595 
2024602,379 
2025602,379 
2026602,379 
2027602,379 
Thereafter2,857,749 
Total$5,417,860 

7. Certain Balance Sheet Items
Property, plant and equipment consisted of the following (in thousands):
September 30,
2023		December 31,
2022
Manufacturing equipment and machinery$77,865 $73,580 
Construction-in-progress73,286 67,385 
Land and buildings69,355 68,935 
Leasehold improvements65,994 64,776 
Computer software36,543 34,116 
Computer equipment14,967 16,424 
Furniture and fixtures9,285 10,481 
Subtotal347,295 335,697 
Less accumulated depreciation and amortization(124,819)(107,647)
Property, plant and equipment, net$222,476 $228,050 
Other current assets consisted of the following (in thousands):
September 30,
2023		December 31,
2022
Deferred charge for income taxes on intercompany profit$209,009 $176,057 
Other101,395 91,135 
Total other current assets$310,404 $267,192 
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Accrued liabilities consisted of the following (in thousands):
September 30,
2023		December 31,
2022
Rebates and other sales deductions$323,000 $313,176 
Employee compensation and benefits107,890 143,243 
Accrued facilities expenses52,006 25,864 
Clinical trial accruals45,115 31,338 
Accrued royalties28,336 57,347 
Accrued collaboration expenses23,530 33,205 
Accrued interest22,200 35,614 
Sales return reserve20,150 26,164 
Consulting and professional services18,507 22,278 
Current portion of lease liabilities16,722 15,938 
Derivative instrument liabilities15,964 — 
Selling and marketing accruals14,573 18,553 
Inventory-related accruals10,746 8,565 
Accrued construction-in-progress5,167 3,298 
Other66,036 68,672 
Total accrued liabilities$