Horizon Therapeutics plc Reports Record Third-Quarter 2020 Results; Increases TEPEZZA® Full-Year Net Sales Guidance to Greater Than $800 Million; Increases Full-Year 2020 Net Sales and Adjusted EBITDA Guidance

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-- Record Third-Quarter 2020 Net Sales of $636.4 Million Increased 90 Percent; Third-Quarter 2020 GAAP Net Income of $292.8 Million; Adjusted EBITDA of $329.8 Million --

-- Quarterly Orphan Segment Net Sales Increased 131 Percent to $534.8 Million, Representing Nearly 85 Percent of Total Company Net Sales --

-- TEPEZZA (teprotumumab-trbw) Third-Quarter 2020 Net Sales of $286.9 Million; Increasing Full-Year 2020 Guidance to Greater Than $800 Million from Greater Than $650 Million; Significantly Increasing Investment in TEPEZZA to Support Continued Strong Growth --

-- KRYSTEXXA® (pegloticase injection) Third-Quarter 2020 Net Sales of $108.5 Million; Increasing Full-Year 2020 Net Sales Guidance to Low Double-Digit Growth --

-- Increasing Full-Year 2020 Net Sales Guidance to $2.12 Billion to $2.14 Billion and Full-Year 2020 Adjusted EBITDA Guidance to $920 Million to $940 Million --

-- Pursuing TEPEZZA Expansion Outside the United States --

-- Karin Rosén, M.D., Ph.D., Named Executive Vice President, Research and Development and Chief Scientific Officer --

-- Topline Data Announced for RECIPE Randomized Controlled Trial Evaluating Co-Administration of KRYSTEXXA with an Immunomodulator; Response Rate of 86 Percent; KRYSTEXXA Use with Immunomodulation Now at More Than 25 Percent --

-- Expanding HZN-825 Development Program to Include Interstitial Lung Diseases --

-- Completed Equity Offering and Extinguishment of Exchangeable Senior Notes; Cash Position of $1.7 Billion at Sept. 30, 2020 --

Horizon Therapeutics plc (Nasdaq: HZNP) today announced record third-quarter 2020 financial results and increased both its full-year 2020 net sales and adjusted EBITDA guidance.

"We are proud of the fact that in just eight months TEPEZZA has made such a dramatic difference in the lives of so many patients, resulting in one of the most successful rare disease medicine launches ever," said Tim Walbert, chairman, president and chief executive officer, Horizon. "We are now pursuing our global strategy to provide TEPEZZA to patients with Thyroid Eye Disease in other parts of the world. Furthermore, we are significantly increasing our investment in TEPEZZA to drive additional awareness of Thyroid Eye Disease and support the continued strong demand for this important medicine."

Walbert continued, "During the third quarter we also saw a return to growth for KRYSTEXXA, our biologic for the treatment of uncontrolled gout and a key growth driver for the Company. With our substantial progress this year, including the improvements we have made to our capital structure and investments in our clinical programs, we are well positioned for continued growth."

Financial Highlights

(in millions except for per share amounts and percentages)

Q3 20

Q3 19

%
Change

YTD 20

YTD 19

%
Change

Net sales

$

636.4

$

335.5

90

$

1,455.1

$

936.5

55

Net income (loss)

292.8

18.2

NM

199.2

(19.7

)

NM

Non-GAAP net income

392.2

124.1

216

559.2

273.6

104

Adjusted EBITDA

329.8

130.4

153

627.7

342.9

83

Earnings (Loss) per share - diluted

1.31

0.09

NM

0.95

(0.11

)

NM

Non-GAAP earnings per share - diluted

1.74

0.64

172

2.58

1.44

79

Third-Quarter and Recent Company Highlights

  • Increasing TEPEZZA Investment to Support Continued Strong Growth: Today, the Company increased full-year 2020 net sales guidance for TEPEZZA to greater than $800 million from greater than $650 million. In addition, to support the Company’s outlook for continued strong TEPEZZA growth, as well as to increase awareness of Thyroid Eye Disease (TED), the Company is significantly expanding its commercial and field-based organization for TEPEZZA and increasing its investment in marketing initiatives, including its direct-to-consumer campaign. The Company is also increasing its investment in TEPEZZA long-term supply. These initiatives are intended to support TEPEZZA peak U.S. annual net sales guidance of greater than $3 billion.

  • Pursuing TEPEZZA Expansion Outside the United States: With the U.S. launch of TEPEZZA earlier this year and the demonstrated benefit it has provided U.S. patients with TED, the Company is pursuing its global expansion strategy to bring TEPEZZA to patients with TED in other parts of the world. Based on its preliminary analysis, the Company projects the initial opportunity to be greater than $500 million in annual net sales, which covers multiple geographies but does not yet incorporate any potential revenue in Europe. Japan is one of the countries the Company is pursuing, and the Company will be engaging with Japanese regulatory authorities and the Pharmaceutical and Medical Devices Agency, as well as with the Japanese medical community, to better understand the current dynamics of TED in Japan and the regulatory requirements for approval of TEPEZZA.

  • New Executive Vice President, Research & Development and Chief Scientific Officer: The Company announced today that Karin Rosén, M.D., Ph.D., has joined Horizon as executive vice president, research and development and chief scientific officer. Dr. Rosén is an accomplished life sciences executive and physician with nearly three decades of experience, which includes biologic clinical research and development, as well as building, leading and successfully launching multiple novel medicines in the United States and globally. Dr. Rosén will contribute to solidifying the Company’s position as a leading rare disease biopharmaceutical company.

  • Expanding HZN-825 Development Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in interstitial lung diseases. The most common interstitial lung disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating its first trial in an ILD, a Phase 2b pivotal trial in the IPF indication, in mid-2021.

  • KRYSTEXXA Immunomodulation RECIPE Trial Achieved 86 Percent Response Rate: Data from the investigator-initiated trial RECIPE will be presented at the 2020 American College of Rheumatology annual meeting on Nov. 7, 2020. This trial was the first randomized controlled trial (RCT) evaluating the effect of co-administration of KRYSTEXXA with an immunomodulator to increase the complete response rate of KRYSTEXXA. The primary endpoint was the proportion of patients with serum uric acid (sUA) less than or equal to 6 mg/dL at 12 weeks: 86 percent of patients receiving KRYSTEXXA co-administered with the immunomodulator mycophenolate mofetil (MMF) achieved this outcome, compared to 40 percent of placebo patients on KRYSTEXXA monotherapy (p-value 0.01). After 12 weeks off of MMF therapy but continuing on KRYSTEXXA therapy, 68 percent of patients achieved a sustained response, compared to 30 percent of placebo patients. The combination was well tolerated with no new safety signals. This trial adds to the growing body of evidence supporting the immunomodulation treatment approach where complete response rates have ranged between 70 and 100 percent.

  • Initiated Enrollment in KRYSTEXXA Shorter Infusion Duration Trial: On Oct. 29, 2020, the Company announced that the first patient was enrolled in an open-label clinical trial to evaluate a shorter infusion duration for KRYSTEXXA co-prescribed with methotrexate to treat patients with uncontrolled gout. Currently, KRYSTEXXA is infused over a two-hour or longer timeframe. A shorter infusion duration administration could meaningfully impact the experience for patients, physicians and sites of care.

  • Announced Interim Data in KRYSTEXXA PROTECT Trial: On Oct. 22, 2020, the Company announced interim data from its PROTECT open-label trial evaluating KRYSTEXXA to improve management of uncontrolled gout for adults with a kidney transplant. These data were presented as part of the 2020 American Society of Nephrology Kidney Week. Early data of this ongoing clinical trial are encouraging with respect to the ability of KRYSTEXXA to treat uncontrolled gout in this very sensitive transplant population without compromising kidney function.

  • Expanding HZN-825 Development Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in interstitial lung diseases. The most common interstitial lung disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating its first trial in an ILD, a Phase 2b pivotal trial in the IPF indication, in mid-2021.

  • Completed Enrollment for KRYSTEXXA MIRROR RCT: In August 2020, the Company completed enrollment of its MIRROR RCT, with a total of 145 patients, exceeding its target enrollment of 135 patients. MIRROR RCT is the first randomized trial to evaluate the efficacy and safety of the concomitant use of KRYSTEXXA with methotrexate to increase the complete response rate of KRYSTEXXA. Preliminary six-month results are expected in the first half of 2021 with the full 12-month dataset available after the trial is completed in the second half of 2021.

  • Announced Topline Data from TEPEZZA OPTIC-X Open-Label Extension Trial and OPTIC 48-Week Off-Treatment Follow-Up Period: In July 2020, the Company announced topline results from its OPTIC-X open-label clinical trial, an extension trial of OPTIC, the TEPEZZA Phase 3 pivotal confirmatory clinical trial, as well as data from the OPTIC 48-week off-treatment follow-up period. OPTIC-X results demonstrated that 89 percent of patients who received placebo during OPTIC and then entered OPTIC-X and received TEPEZZA achieved the primary endpoint of 2 mm or more reduction in proptosis at Week 24. These patients had a TED diagnosis for an average of one year prior to initiating treatment with TEPEZZA compared with an average of six months for patients in OPTIC. The results of the OPTIC 48-week off-treatment follow-up period demonstrated that the majority of TEPEZZA patients who were proptosis responders at Week 24 of OPTIC maintained their response at Week 72, nearly a year off treatment. For the small number of TEPEZZA patients who relapsed during the OPTIC follow-up period, the majority experienced improvements in proptosis with an additional course of TEPEZZA in OPTIC-X. The OPTIC-X and OPTIC 48-week follow-up data underscore the long-term durability of TEPEZZA, the potential for retreatment and the efficacy of TEPEZZA in patients with longer duration of TED.

  • Permanent J-Code Issued for TEPEZZA: On Oct. 1, 2020, the Company’s permanent, product-specific Healthcare Common Procedure Coding System (HCPCS) J-code (J3241) became effective for TEPEZZA. The permanent J-code enables reimbursement in all outpatient treatment settings.

  • Additional Clinical Trial Data on TEPEZZA at Upcoming Medical Meetings: Several TEPEZZA-related events will take place at the Nov. 13-15, 2020, virtual American Academy of Ophthalmology (AAO) 2020 annual meeting, including additional details on OPTIC 48-week off-treatment durability of response as well as OPTIC-X treatment results. The Nov. 20-22, 2020, virtual American Society of Ophthalmic Plastic and Reconstructive Surgery (ASOPRS) Fall Scientific Symposium will include a presentation on the recent case report published in the American Journal of Ophthalmology on the treatment of a patient with chronic TED. Additionally, case reports of improvement of dysthyroid optic neuropathy after treatment with TEPEZZA will be presented at both meetings.

  • Completed Equity Offering and Improved Company’s Capital Structure: On Aug. 11, 2020, the Company completed a public offering of ordinary shares and raised approximately $920 million in net proceeds. On Aug. 3, 2020, the Company completed the extinguishment of all $400 million of its 2.50 percent exchangeable senior notes due 2022.

  • Received Best Workplace Awards: During the third quarter, the Company received three workplace recognitions. In August 2020, Crain’s Chicago Business selected Horizon as one of the "Best Places to Work in Chicago" and Fortune and Great Place to Work® named Horizon to the "Fortune Best Workplaces for Millennials™" list. In September 2020, Horizon ranked 15th out of 50 U.S. companies on the "PEOPLE Companies That Care®" list. More recently, in October 2020, Horizon was named to the "Fortune Best Small & Medium Workplaces™" list, the Chicago Tribune Top Workplaces 2020 list, the "San Francisco Bay Area’s Best and Brightest Companies to Work For" list, the Dave Thomas Foundation for Adoption "Best Adoption-Friendly Workplaces" list and the Crain’s Chicago Business "Most Innovative Companies" List. To date in 2020, the Company has received 11 workplace-related recognitions, reflecting the high level of engagement of its employees.

Key Research and Development Programs

  • HZN-825 Diffuse Cutaneous Systemic Sclerosis (dcSSc) Program: HZN-825 is the Company’s LPAR1 antagonist in development for the treatment of dcSSc, a rare, chronic autoimmune disease marked by fibrosis, or skin thickening, with no FDA-approved treatment options. The Company expects to begin a Phase 2b pivotal trial in the first half of 2021.

  • HZN-825 ILD Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in ILD, starting with IPF, which is a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating a Phase 2b pivotal trial in the IPF indication in mid-2021.

  • TEPEZZA Trial in Chronic TED: The Company expects to initiate a randomized, placebo-controlled trial of TEPEZZA in patients with chronic TED by year-end 2020. In chronic TED, the disease is no longer progressive; however, significant disease manifestations such as proptosis (eye bulging) and diplopia (double vision) remain.

  • TEPEZZA Subcutaneous Administration Program: The Company has initiated a pharmacokinetic trial to explore subcutaneous dosing of TEPEZZA, which is currently administered by infusion. The objective of the trial is to inform the potential for additional administration options for TEPEZZA, which could provide greater flexibility for patients and physicians.

  • TEPEZZA dcSSc Exploratory Trial: As part of its evaluation of additional potential indications for TEPEZZA, the Company is planning to initiate an exploratory trial in dcSSc by year-end 2020.

  • KRYSTEXXA MIRROR RCT: The Company is currently evaluating the efficacy and safety of the concomitant use of KRYSTEXXA with methotrexate to increase the complete response rate of KRYSTEXXA in the MIRROR placebo-controlled RCT. The trial has completed enrollment, with 145 patients. The primary endpoint of the trial is the proportion of serum uric acid (sUA) responders (sUA of less than 6 mg/dL) at six months, with secondary endpoints out to 12 months. The registrational trial is designed to enable the potential submission of results to the FDA to update the prescribing information. The MIRROR RCT follows the MIRROR open-label trial completed in 2019 that demonstrated a 79 percent complete response rate for patients using KRYSTEXXA with methotrexate, nearly double the 42 percent response rate in the KRYSTEXXA Phase 3 clinical program, which evaluated KRYSTEXXA alone. Methotrexate is the immunomodulator most used by rheumatologists and has been shown to reduce anti-drug antibody formation to biologic therapies when used in conjunction with these therapies.

  • KRYSTEXXA PROTECT Trial in Kidney Transplant Patients with Uncontrolled Gout: The Company has achieved more than 75 percent enrollment in its PROTECT open-label clinical trial, and expects to complete enrollment by the end of 2020. The trial is evaluating the effect of KRYSTEXXA on serum uric acid levels in kidney transplant patients with uncontrolled gout. Kidney transplant patients have more than a tenfold increase in the prevalence of gout when compared to the general population, and literature suggests that persistently high serum uric acid levels can be associated with organ rejection. Managing uncontrolled gout is one of the most common and significant unmet needs of kidney transplant patients.

  • KRYSTEXXA Shorter Infusion Duration Trial: On Oct. 29, 2020, the Company enrolled the first patient in its shorter infusion duration trial to evaluate the impact of administering KRYSTEXXA over a significantly shorter infusion duration. Currently, KRYSTEXXA is infused over a two-hour or longer timeframe. A shorter infusion duration administration could meaningfully impact the experience for patients, physicians and sites of care.

Third-Quarter Financial Results

Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

  • Net Sales: Third-quarter 2020 net sales were $636.4 million, an increase of 90 percent compared to the third quarter of 2019.

  • Gross Profit: Under U.S. GAAP, the third-quarter 2020 gross profit ratio was 76.2 percent compared to 73.2 percent in the third quarter of 2019. The non-GAAP gross profit ratio in the third quarter of 2020 was 86.7 percent compared to 90.7 percent in the third quarter of 2019.

  • Operating Expenses: Research and development (R&D) expenses were 4.7 percent of net sales and selling, general and administrative (SG&A) expenses were 35.5 percent of net sales. Non-GAAP R&D expenses were 4.4 percent of net sales, and non-GAAP SG&A expenses were 30.5 percent of net sales.

  • Income Tax Benefit: In the third quarter of 2020, income tax benefit on a GAAP and non-GAAP basis was $91.1 million and $73.3 million, respectively.

  • Net Income: On a GAAP basis in the third quarter of 2020, net income was $292.8 million. Third-quarter 2020 non-GAAP net income was $392.2 million.

  • Adjusted EBITDA: Third-quarter 2020 adjusted EBITDA was $329.8 million.

  • Earnings per Share: On a GAAP basis diluted earnings per share in the third quarter of 2020 and 2019 was $1.31 and $0.09, respectively. Non-GAAP diluted earnings per share in the third quarter of 2020 and 2019 was $1.74 and $0.64, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the third quarter of 2020 were 223.7 million and 225.3 million, respectively.

Third-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments, the orphan segment and the inflammation segment. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.

Orphan Segment

(in millions except for percentages)

Q3 20

Q3 19

%
Change

YTD 20

YTD 19

%
Change

TEPEZZA®

286.9

-

NM

476.3

-

NM

KRYSTEXXA®

108.5

99.6

9

276.9

231.6

20

RAVICTI®

64.6

60.0

8

191.4

160.3

19

PROCYSBI®

43.1

40.4

7

122.8

121.1

1

ACTIMMUNE®

28.3

27.9

2

83.1

78.9

5

BUPHENYL®

3.2

3.0

6

8.4

8.2

3

QUINSAIRTM

0.2

0.2

(23

)

0.5

0.6

(9

)

Orphan Net Sales

$

534.8

$

231.1

131

$

1,159.4

$

600.7

93

Orphan Segment Operating Income

$

274.7

$

79.7

245

$

480.6

$

180.1

167

  • Third-quarter 2020 net sales of the orphan segment, the Company’s strategic growth segment, were $534.8 million, an increase of 131 percent over the prior year’s quarter, driven by the strong performance of TEPEZZA, KRYSTEXXA, RAVICTI and PROCYSBI. The orphan segment represented 84 percent of total third-quarter net sales.

  • Third-quarter 2020 orphan segment operating income was $274.7 million, which includes significant investment spend associated with the commercial launch of TEPEZZA.

Inflammation Segment

(in millions except for percentages)

Q3 20

Q3 19

%
Change

YTD 20

YTD 19

%
Change

PENNSAID 2%®

50.3

42.1

20

126.9

143.7

(12

)

DUEXIS®

27.9

29.9

(7

)

87.1

89.4

(3

)

RAYOS®

18.1

19.3

(6

)

50.8

59.1

(14

)

VIMOVO®(1)

5.3

13.1

(60

)

30.9

41.8

(26

)

MIGERGOT®(2)

-

-

NM

-

1.8

NM

Inflammation Net Sales

$

101.6

$

104.4

(3

)

$

295.7

$

335.8

(12

)

Inflammation Segment Operating Income

$

55.1

$

49.8

11

$

145.1

$

161.7

(10

)

(1)

On Feb. 27, 2020, Dr. Reddy’s Laboratory initiated an at-risk launch of generic VIMOVO in the United States.

(2)

In June 2019, the Company divested the rights to MIGERGOT.

  • Third-quarter 2020 net sales of the inflammation segment were $101.6 million and segment operating income was $55.1 million.

Cash Flow Statement and Balance Sheet Highlights

  • On a GAAP basis, operating cash flow in the third quarter of 2020 was $108.9 million. Non-GAAP operating cash flow was $109.0 million.

  • The Company had cash and cash equivalents of $1.725 billion as of Sept. 30, 2020.

  • As of Sept. 30, 2020, the total principal amount of debt outstanding was $1.018 billion, which reflects the extinguishment by holders in the third quarter of the remaining $193.0 million of the total $400.0 million of the Company’s 2.50 percent exchangeable senior notes due 2022 through $191.3 million of exchanges for ordinary shares and $1.7 million of cash redemptions. As of Sept. 30, 2020, the gross-debt-to-last-12-months adjusted EBITDA leverage ratio was 1.3 times, compared to 2.9 times as of Sept. 30, 2019.

Revised 2020 Guidance

The Company now expects full-year 2020 net sales to range between $2.12 billion and $2.14 billion, an increase from the previous guidance range of $1.85 billion to $1.90 billion. The Company now expects TEPEZZA full-year 2020 net sales of greater than $800 million, compared to the previous guidance of greater than $650 million, and low double-digit KRYSTEXXA full-year 2020 net sales growth. Full-year 2020 adjusted EBITDA is now expected to range between $920 million and $940 million, an increase from the previous guidance range of $725 million to $775 million.

Webcast

At 8 a.m. EST / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizontherapeutics.com. Please connect to the Company's website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.

About Horizon

Horizon is focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. Our pipeline is purposeful: we apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, please visit www.horizontherapeutics.com and follow us on Twitter, LinkedIn, Instagram and Facebook.

Note Regarding Use of Non-GAAP Financial Measures

EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by Horizon as non-GAAP financial measures. Horizon provides certain other financial measures such as non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax rate and non-GAAP operating cash flow, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon’s GAAP figures as well as EBITDA exclude acquisition and/or divestiture-related expenses, charges related to the discontinuation of ACTIMMUNE development for Friedreich’s ataxia, gain or loss from divestiture, gain or loss from sale of assets, upfront, progress and milestone payments related to license and collaboration agreements, litigation settlements, loss on debt extinguishment, costs of debt refinancing, drug manufacturing harmonization costs, restructuring and realignment costs, the income tax effect on pre-tax non-GAAP adjustments and other non-GAAP income tax adjustments, as well as non-cash items such as share-based compensation, depreciation and amortization, non-cash interest expense, long-lived asset impairment charges and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company’s historical and expected 2020 financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon’s management uses for planning and forecasting purposes and measuring the Company's performance. For example, adjusted EBITDA is used by Horizon as one measure of management performance under certain incentive compensation arrangements. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon has not provided a reconciliation of its full-year 2020 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items such as acquisition/divestiture-related expenses and share-based compensation that are a component of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon’s stock price, the variability associated with the size or timing of acquisitions/divestitures and other factors. These components of net income (loss) could significantly impact Horizon’s actual net income (loss).

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon’s full-year 2020 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including potential growth in net sales of certain of Horizon’s medicines; development and commercialization plans; expected timing of clinical trials, studies and regulatory submissions; potential market opportunity for and benefits of Horizon’s medicines and medicine candidates; and business and other statements that are not historical facts. These forward-looking statements are based on Horizon’s current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks that Horizon’s actual future financial and operating results may differ from its expectations or goals; Horizon’s ability to grow net sales from existing medicines; impacts of the COVID-19 pandemic and actions taken to slow its spread, including impacts on net sales of Horizon’s medicines and potential delays in clinical trials; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; risks relating to Horizon’s ability to successfully implement its business strategies; risks inherent in developing novel medicine candidates and existing medicines for new indications; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including potential generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon operates and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Horizon’s filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

Horizon Therapeutics plc

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Net sales

$

636,427

$

335,466

$

1,455,115

$

936,484

Cost of goods sold

151,475

89,949

370,406

267,254

Gross profit

484,952

245,517

1,084,709

669,230

OPERATING EXPENSES:

Research and development

30,206

24,572

138,483

74,611

Selling, general and administrative

226,164

172,326

696,271

511,720

Loss on sale of assets

-

-

-

10,963

Total operating expenses

256,370

196,898

834,754

597,294

Operating income

228,582

48,619

249,955

71,936

OTHER EXPENSE, NET:

Loss on debt extinguishment

(14,602

)

(41,371

)

(31,856

)

(58,835

)

Interest expense, net

(12,185

)

(20,428

)

(48,100

)

(69,991

)

Foreign exchange (loss) gain

(753

)

(40

)

306

(25

)

Other income (expense), net

717

890

1,791

(193

)

Total other expense, net

(26,823

)

(60,949

)

(77,859

)

(129,044

)

Income (Loss) before benefit for income taxes

201,759

(12,330

)

172,096

(57,108

)

Benefit for income taxes

(91,081

)

(30,564

)

(27,143

)

(37,359

)

Net income (loss)

$

292,840

$

18,234

$

199,239

$

(19,749

)

Net income (loss) per ordinary share - basic

$

1.38

$

0.10

$

1.00

$

(0.11

)

Weighted average ordinary shares outstanding - basic

212,320,219

186,470,141

198,413,779

181,949,838

Net income (loss) per ordinary share - diluted

$

1.31

$

0.09

$

0.95

$

(0.11

)

Weighted average ordinary shares outstanding - diluted

223,743,903

194,171,967

208,678,460

181,949,838

Horizon Therapeutics plc

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

As of

September 30,
2020

December 31,
2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

1,725,403

$

1,076,287

Restricted cash

3,573

3,752

Accounts receivable, net

705,898

408,685

Inventories, net

77,104

53,802

Prepaid expenses and other current assets

220,341

143,577

Total current assets

2,732,319

1,686,103

Property and equipment, net

156,287

30,159

Developed technology and other intangible assets, net

1,847,880

1,702,628

Goodwill

413,669

413,669

Deferred tax assets, net

566,605

555,165

Other assets

50,115

48,310

Total assets

$

5,766,875

$

4,436,034

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

38,978

$

21,514

Accrued expenses

421,827

235,234

Accrued trade discounts and rebates

322,798

466,421

Total current liabilities

783,603

723,169

LONG-TERM LIABILITIES:

Exchangeable Senior Notes, net

-

351,533

Long-term debt, net

1,002,846

1,001,308

Deferred tax liabilities, net

97,647

94,247

Other long-term liabilities

85,968

80,328

Total long-term liabilities

1,186,461

1,527,416

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Ordinary shares, $0.0001 nominal value; 600,000,000 shares

authorized at September 30, 2020 and December 31, 2019;

220,995,108 and 188,402,040 shares issued at September 30, 2020

and December 31, 2019, respectively, and 220,610,742 and 188,017,674 shares

outstanding at September 30, 2020 and December 31, 2019, respectively

22

19

Treasury stock, 384,366 ordinary shares at September 30, 2020 and December 31, 2019

(4,585

)

(4,585

)

Additional paid-in capital

4,208,845

2,797,602

Accumulated other comprehensive loss

(1,028

)

(1,905

)

Accumulated deficit

(406,443

)

(605,682

)

Total shareholders' equity

3,796,811

2,185,449

Total liabilities and shareholders' equity

$

5,766,875

$

4,436,034

Horizon Therapeutics plc

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

292,840

$

18,234

$

199,239

$

(19,749

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization expense

70,510

59,319

209,906

177,336

Equity-settled share-based compensation

30,356

18,151

113,834

67,066

Acquired in-process research and development expense

-

-

47,517

-

Loss on debt extinguishment

14,602

41,371

31,856

58,835

Amortization of debt discount and deferred financing costs

1,208

5,447

12,025

17,069

Loss on sale of assets

-

-

-

10,963

Deferred income taxes

(3,480

)

9,559

(8,041

)

8,302

Foreign exchange and other adjustments

423

77

1,084

572

Changes in operating assets and liabilities:

Accounts receivable

(162,267

)

(1,625

)

(297,392

)

68,162

Inventories

(10,986

)

(7,500

)

(23,329

)

...

(8,004

)

Prepaid expenses and other current assets

(62,816

)

(54,358

)

(83,226

)

(72,055

)

Accounts payable

(65,846

)

(14,892

)

17,709

(3,338

)

Accrued trade discounts and rebates

34,170

5,910

(143,551

)

(53,241

)

Accrued expenses

(24,675

)

17,481

56,830

(10,591

)

Deferred revenues

-

(7,311

)

-

(4,901

)

Other non-current assets and liabilities

(5,176

)

(2,347

)

11,410

(1,474

)

Net cash provided by operating activities

108,863

87,516

145,871

234,952

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(13,429

)

(4,467

)

(133,399

)

(11,325

)

Payments for long-term investments

(8,937

)

-

(8,937

)

-

Proceeds from sale of assets

-

-

-

6,000

Payments for acquisitions

-

-

(262,305

)

-

Change in escrow deposit for property purchase

-

-

6,000

-

Net cash used in investing activites

(22,366

)

(4,467

)

(398,641

)

(5,325

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of senior notes

-

590,057

-

590,057

Repayment of senior notes

(1,739

)

(556,138

)

(1,739

)

(814,420

)

Net proceeds from the issuance of ordinary shares

919,995

-

919,995

326,793

Repayment of term loans

-

(100,155

)

-

(918,181

)

Net proceeds from term loans

-

-

-

517,378

Contingent consideration proceeds from divestiture

-

3,297

-

3,297

Proceeds from the issuance of ordinary shares in conjunction with ESPP program

-

3

7,979

5,468

Proceeds from the issuance of ordinary shares in connection with stock option exercises

8,112

4,207

33,999

16,236

Payment of employee withholding taxes relating to share-based awards

(6,743

)

(5,086

)

(59,752

)

(29,460

)

Net cash provided by (used in) financing activities

919,625

(63,815

)

900,482

(302,832

)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

1,166

(1,260

)

1,225

(1,202

)

Net increase (decrease) in cash, cash equivalents and restricted cash

1,007,288

17,974

648,937

(74,407

)

Cash, cash equivalents and restricted cash, beginning of the period(1)

721,688

869,736

1,080,039

962,117

Cash, cash equivalents and restricted cash, end of the period(1)

$

1,728,976

$

887,710

$

1,728,976

$

887,710

(1)

Amounts include restricted cash balance in accordance with ASU No. 2016-18. Cash and cash equivalents excluding restricted cash are shown on the balance sheet.

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Net Income and Earnings Per Share (Unaudited)

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

GAAP net income (loss)

$

292,840

$

18,234

$

199,239

$

(19,749

)

Non-GAAP adjustments:

Acquisition/divestiture-related costs

199

67

47,296

2,613

Restructuring and realignment costs

-

-

-

33

Amortization and step-up:

Intangible amortization expense

65,353

57,662

190,677

172,762

Inventory step-up expense

-

-

-

90

Amortization of debt discount and deferred financing costs

1,208

5,447

12,025

17,069

Impairment of long-lived assets

-

-

1,072

-

Loss on sale of assets

-

-

-

10,963

Share-based compensation

30,356

18,151

113,834

67,066

Depreciation

5,157

1,658

19,229

4,574

Litigation settlements

-

-

-

1,000

Upfront, progress and milestone payments related to

license and collaboration agreements

-

3,073

3,000

9,073

Fees related to refinancing activities

-

262

54

1,437

Loss on debt extinguishment

14,602

41,371

31,856

58,835

Drug substance harmonization costs

193

80

483

394

Charges relating to discontinuation of Friedreich's ataxia program

-

-

-

1,221

Total of pre-tax non-GAAP adjustments

117,068

127,771

419,526

347,130

Income tax effect of pre-tax non-GAAP adjustments

(23,063

)

(21,919

)

(80,122

)

(52,291

)

Other non-GAAP income tax adjustments

5,331

-

20,541

(1,452

)

Total of non-GAAP adjustments

99,336

105,852

359,945

293,387

Non-GAAP Net Income

$

392,176

$

124,086

$

559,184

$

273,638

Non-GAAP Earnings Per Share:

Weighted average ordinary shares - Basic

212,320,219

186,470,141

198,413,779

181,949,838

Non-GAAP Earnings Per Share - Basic:

GAAP loss per share - Basic

$

1.38

$

0.10

$

1.00

$

(0.11

)

Non-GAAP adjustments

0.47

0.57

1.82

1.61

Non-GAAP earnings per share - Basic

$

1.85

$

0.67

$

2.82

$

1.50

Non-GAAP Net Income

$

392,176

$

124,086

$

559,184

$

273,638

Effect of assumed exchange of Exchangeable Senior Notes, net of tax

223

-

3,789

-

Numerator - non-GAAP Net Income

$

392,399

$

124,086

$

562,973

$

273,638

Weighted average ordinary shares - Diluted

Weighted average ordinary shares - Basic

212,320,219

186,470,141

198,413,779

181,949,838

Ordinary share equivalents

12,959,618

7,701,826

19,431,212

7,747,931

Denominator - weighted average ordinary shares – Diluted

225,279,837

194,171,967

217,844,991

189,697,769

Non-GAAP Earnings Per Share - Diluted

GAAP loss per share - Diluted

$

1.31

$

0.09

$

0.95

$

(0.11

)

Non-GAAP adjustments

0.43

0.55

1.63

1.61

Diluted earnings per share effect of ordinary share equivalents

-

-

-

(0.06

)

Non-GAAP earnings per share - Diluted

$

1.74

$

0.64

$

2.58

$

1.44

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

EBITDA (Unaudited)

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

GAAP net income (loss)

$

292,840

$

18,234

$

199,239

$

(19,749

)

Depreciation

5,157

1,658

19,229

4,574

Amortization and step-up:

Intangible amortization expense

65,353

57,662

190,677

172,762

Inventory step-up expense

-

-

-

90

Interest expense, net (including amortization of debt discount and deferred financing costs)

12,185

20,428

48,100

69,991

Benefit for income taxes

(91,081

)

(30,564

)

(27,143

)

(37,359

)

EBITDA

$

284,454

$

67,418

$

430,102

$

190,309

Other non-GAAP adjustments:

Acquisition/divestiture-related costs

199

67

47,296

2,613

Restructuring and realignment costs

-

-

-

33

Impairment of long-lived assets

-

-

1,072

-

Loss on sale of assets

-

-

-

10,963

Share-based compensation

30,356

18,151

113,834

67,066

Litigation settlements

-

-

-

1,000

Upfront, progress and milestone payments related to license and collaboration agreements

-

3,073

3,000

9,073

Fees related to refinancing activities

-

262

54

1,437

Loss on debt extinguishment

14,602

41,371

31,856

58,835

Drug substance harmonization costs

193

80

483

394

Charges relating to discontinuation of Friedreich's ataxia program

-

-

-

1,221

Total of other non-GAAP adjustments

45,350

63,004

197,595

152,635

Adjusted EBITDA

$

329,804

$

130,422

$

627,697

$

342,944

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Operating Income (Unaudited)

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

GAAP operating income

$

228,582

$

48,619

$

249,955

$

71,936

Non-GAAP adjustments:

Acquisition/divestiture-related costs

144

(44

)

47,416

1,231

Restructuring and realignment costs

-

-

-

33

Amortization and step-up:

Intangible amortization expense

65,353

57,662

190,677

172,762

Inventory step-up expense

-

-

-

90

Impairment of long-lived assets

-

-

1,072

-

Loss on sale of assets

-

-

-

10,963

Share-based compensation

30,356

18,151

113,834

67,066

Depreciation

5,157

1,658

19,229

4,574

Litigation settlements

-

-

-

1,000

Upfront, progress and milestone payments related to license and collaboration agreements

-

3,073

3,000

9,073

Fees related to refinancing activities

-

262

54

1,437

Drug substance harmonization costs

193

80

483

394

Charges relating to discontinuation of Friedreich's ataxia program

-

-

-

1,221

Total of non-GAAP adjustments

101,203

80,842

375,765

269,844

Non-GAAP operating income

$

329,785

$

129,461

$

625,720

$

341,780

Orphan segment operating income

274,687

79,695

480,584

180,095

Inflammation segment operating income

55,098

49,766

145,136

161,685

Total segment operating income

$

329,785

$

129,461

$

625,720

$

341,780

Foreign exchange (loss)/gain

(753

)

(40

)

306

(25

)

Other income, net

772

1,001

1,671

1,189

Adjusted EBITDA

$

329,804

$

130,422

$

627,697

$

342,944

Horizon Therapeutics plc

GAAP to Non-GAAP Reconciliations

Gross Profit and Operating Cash Flow (Unaudited)

(in thousands, except percentages)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Non-GAAP Gross Profit:

GAAP gross profit

$

484,952

$

245,517

$

1,084,709

$

669,230

Non-GAAP gross profit adjustments:

Acquisition/divestiture-related costs

-

-

-

1,114

Intangible amortization expense

65,149

57,458

190,070

172,156

Inventory step-up expense

-

-

-

90

Share-based compensation

1,566

901

5,543

2,891

Depreciation

17

158

435

475

Drug substance harmonization costs

193

80

483

394

Charges relating to discontinuation of Friedreich's ataxia program

-

-

-

1,221

Total of Non-GAAP adjustments

66,925

58,597

196,531

178,341

Non-GAAP gross profit

$

551,877

$

304,114

$

1,281,240

$

847,571

GAAP gross profit %

76.2

%

73.2

%

74.5

%

71.5

%

Non-GAAP gross profit %

86.7

%

90.7

%

88.1

%

90.5

%

GAAP cash provided by operating activities

$

108,863

$

87,516

$

145,871

$

234,952

Cash payments for acquisition/divestiture-related costs

97

88

80

583

Cash payments for restructuring and realignment costs

-

382

189

3,264

Cash payments for litigation settlements

-

1,000

-

1,000

Cash payments for upfront, progress and milestone payments related to license and collaboration agreement

-

7,073

-

9,073

Cash payments drug substance harmonization costs

-

313

290

985

Cash payments for discontinuation of Friedreich's ataxia program

-

-

-

2,589

Cash payments relating to refinancing activities

-

112

73

1,918

Non-GAAP operating cash flow

$

108,960

$

96,484

$

146,503

$

254,364

Horizon Pharma plc

GAAP to Non-GAAP Reconciliations

EBITDA (Unaudited) - 2019

(in thousands)

Twelve Months
Ended December 31,

2019

GAAP net income

$

573,020

Depreciation

6,733

Amortization and step-up:

Intangible amortization expense

230,424

Inventory step-up expense

89

Interest expense, net (including amortization of debt discount and deferred financing costs)

87,089

Benefit for income taxes

(593,244

)

EBITDA

$

304,111

Other non-GAAP adjustments:

Acquisition/divestiture-related costs

3,556

Restructuring and realignment costs

237

Share-based compensation

91,215

Litigation settlements

1,000

Upfront, progress and milestone payments related to license and collaboration agreements

9,073

Fees related to refinancing activities

2,292

Loss on debt extinguishment

58,835

Drug substance harmonization costs

457

Charges relating to discontinuation of Friedreich's ataxia program

1,076

Gain on sale of assets

10,963

Total of other non-GAAP adjustments

178,704

Adjusted EBITDA

$

482,815

Horizon Therapeutics plc

GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited)

(in millions, except percentages and per share amounts)

Q3 2020

Pre-tax Net
(Loss) Income

Income Tax
(Benefit) Expense

Tax Rate

Net Income
(Loss)

Diluted Earnings
(Loss) Per Share

As reported - GAAP

$

201.8

$

(91.1

)

(45.1

)%

$

292.8

$

1.31

Non-GAAP adjustments

117.1

17.7

99.3

Non-GAAP

$

318.8

$

(73.3

)

(23.0

)%

$

392.2

$

1.74

Q3 2019

Pre-tax Net
(Loss) Income

Income Tax
(Benefit) Expense

Tax Rate

Net Income
(Loss)

Diluted Earnings
(Loss) Per Share

As reported - GAAP

$

(12.3

)

$

(30.6

)

247.9

%

$

18.2

$

0.09

Non-GAAP adjustments

127.8

21.9

105.9

Non-GAAP

$

115.4

$

(8.7

)

(7.5

)%

$

124.1

$

0.64

YTD 2020

Pre-tax Net
(Loss) Income

Income Tax
(Benefit) Expense

Tax Rate

Net Income
(Loss)

Diluted Earnings
(Loss) Per Share

As reported - GAAP

$

172.1

$

(27.1

)

(15.8

)%

$

199.2

$

0.95

Non-GAAP adjustments

419.5

59.6

359.9

Non-GAAP

$

591.6

$

32.4

5.5

%

$

559.2

$

2.58

YTD 2019

Pre-tax Net
(Loss) Income

Income Tax
(Benefit) Expense

Tax Rate

Net Income
(Loss)

Diluted Earnings
(Loss) Per Share

As reported - GAAP

$

(57.1

)

$

(37.4

)

65.4

%

$

(19.7

)

$

(0.11

)

Non-GAAP adjustments

347.1

53.7

293.4

Non-GAAP

$

290.0

$

16.3

5.6

%

$

273.7

$

1.44

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended Sept. 30, 2020 and Sept. 30, 2019 (Unaudited)

(in thousands)

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended Sept. 30, 2020

(in thousands)

Income Tax

Research &

Selling, General

Loss on Debt

Interest

Other

Benefit

COGS

Development

& Administrative

Extinguishment

Expense

Expense

(Expense)

GAAP as reported

$

(151,475

)

$

(30,206

)

$

(226,164

)

$

(14,602

)

$

(12,185

)

$

717

$

91,081

Non-GAAP Adjustments (in thousands):

Acquisition/divestiture-related costs(1)

-

36

108

-

-

55

-

Amortization and step-up:

Intangible amortization expense(2)

65,149

-

204

-

-

-

-

Amortization of debt discount and deferred financing costs(3)

-

-

-

-

1,208

-

-

Share-based compensation(4)

1,566

2,453

26,337

-

-

-

-

Depreciation(5)

17

29

5,111

-

-

-

-

Loss on debt extinguishment(6)

-

-

-

14,602

-

-

-

Drug substance harmonization costs(7)

193

-

-

-

-

-

-

Income tax effect on pre-tax non-GAAP adjustments(8)

-

-

-

-

-

-

(23,063

)

Other non-GAAP income tax adjustments(9)

-

-

-

-

-

-

5,331

Total of non-GAAP adjustments

66,925

2,518

31,760

14,602

1,208

55

(17,732

)

Non-GAAP

$

(84,550

)

$

(27,688

)

$

(194,404

)

$

-

$

(10,977

)

$

772

$

73,349

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Three Months Ended September 30, 2019

(Unaudited)

Income Tax

Research &

Selling, General

Loss on Debt

Interest

Other

Benefit

COGS

Development

& Administrative

Extinguishment

Expense

Income, net

(Expense)

GAAP as reported

$

(89,949

)

$

(24,572

)

$

(172,326

)

$

(41,371

)

$

(20,428

)

$

890

$

30,564

Non-GAAP Adjustments (in thousands):

Acquisition/divestiture-related costs(1)

-

-

(44

)

-

-

111

-

Amortization and step-up:

Intangible amortization expense(2)

57,458

-

204

-

-

-

-

Amortization of debt discount and deferred financing costs(3)

-

-

-

-

5,447

-

-

Share-based compensation(4)

901

1,953

15,297

-

-

-

-

Depreciation(5)

158

-

1,500

-

-

-

-

Upfront, progress and milestone payments related to license

and collaboration agreements(10)

-

3,073

-

-

-

-

-

Loss on debt extinguishment(6)

-

-

-

41,371

-

-

-

Fees related to refinancing activities (11)

-

-

262

-

-

-

-

Drug substance harmonization costs(7)

80

-

-

-

-

-

-

Income tax effect on pre-tax non-GAAP adjustments(8)

-

-

-

-

-

-

(21,919

)

Total of non-GAAP adjustments

58,597

5,026

17,219

41,371

5,447

111

(21,919

)

Non-GAAP

$

(31,352

)

$

(19,546

)

$

(155,107

)

$

-

$

(14,981

)

$

1,001

$

8,645

-

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Nine Months Ended Sept. 30, 2020 and Sept. 30, 2019 (Unaudited)

(in thousands)

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Nine Months Ended Sept. 30, 2020

(Unaudited)

Income Tax

Research &

Selling, General

Interest

Other

Loss on Debt

Benefit

COGS

Development

& Administrative

Expense

Expense

Extinguishment

(Expense)

GAAP as reported

$

(370,406

)

$

(138,483

)

$

(696,271

)

$

(48,100

)

$

1,791

$

(31,856

)

$

27,143

Non-GAAP Adjustments (in thousands):

Acquisition/divestiture-related costs(1)

-

47,365

51

-

(120

)

-

-

Amortization and step-up:

Intangible amortization expense(2)

190,070

-

607

-

-

-

-

Amortization of debt discount and deferred financing costs(3)

-

-

-

12,025

-

-

-

Impairment of long lived assets(12)

-

-

1,072

-

-

-

-

Share-based compensation(4)

5,543

11,381

96,910

-

-

-

-

Depreciation(5)

435

72

18,722

-

-

-

-

Loss on debt extinguishment(6)

-

-

-

-

-

31,856

-

Upfront, progress and milestone payments related to license

and collaboration agreements(10)

-

3,000

-

-

-

-

-

Fees related to refinancing activities (11)

-

-

54

-

-

-

-

Drug substance harmonization costs(7)

483

-

-

-

-

-

-

Income tax effect on pre-tax non-GAAP adjustments(8)

-

-

-

-

-

-

(80,122

)

Other non-GAAP income tax adjustments(9)

-

-

-

-

-

-

20,541

Total of non-GAAP adjustments

196,531

61,818

117,416

12,025

(120

)

31,856

(59,581

)

Non-GAAP

$

(173,875

)

$

(76,665

)

$

(578,855

)

$

(36,075

)

$

1,671

$

-

$

(32,438

)

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Nine Months Ended September 30, 2019

(Unaudited)

Income Tax

Research &

Selling, General

Loss on Debt

Loss/(Gain) on

Interest

Other

Benefit

COGS

Development

& Administrative

Extinguishment

Sale of Assets

Expense

Income

(Expense)

GAAP as reported

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