Jazz Pharmaceuticals(JAZZ) - 2025 Q2 - Quarterly Results

Executive Summary Jazz Pharmaceuticals reported strong Q2 2025 financial performance, leadership transition, and updated 2025 financial guidance Second Quarter 2025 Financial Performance Overview Jazz Pharmaceuticals reported total revenues of $1.05 billion in Q2 2025, with Xywav revenues growing 13% year-over-year and robust net patient adds. The company also announced key regulatory milestones, including Priority Review for Zepzelca in 1L ES-SCLC - Total revenues reached $1.05 billion in Q2 2025[1] - Xywav revenues increased by 13% year-over-year, with approximately 625 net patient adds quarter-over-quarter[1] - Zepzelca was granted Priority Review by the U.S. FDA for 1L maintenance treatment of ES-SCLC[1][4] Leadership Transition Renee Gala has been appointed as President and CEO, effective August 11, succeeding Bruce Cozadd, who expressed confidence in her ability to drive long-term growth - Renee Gala named President and CEO, effective August 11[1][2] Updated 2025 Financial Guidance Jazz Pharmaceuticals updated its 2025 financial guidance, narrowing the total revenue range to $4.15 - $4.30 billion, representing 4% growth at the midpoint. The lower end of net (loss)/income and (loss)/earnings per share ranges were raised due to reductions in SG&A and R&D expenses and an improved effective tax rate Updated 2025 Total Revenue Guidance | Metric | Updated Guidance (August 5, 2025) | | :----- | :-------------------------------- | | Total Revenues | $4.15 - $4.30 billion | - Lower end of net (loss)/income and (loss)/earnings per share ranges raised due to reductions in SG&A and R&D and improvement in effective tax rate ranges[4] Business Updates The company provided updates on its commercial products, corporate development, pipeline highlights, and share repurchases Commercial Updates The company provided updates on its key commercial products across Neuroscience and Oncology portfolios, highlighting strong performance from Xywav and Epidiolex/Epidyolex, while Rylaze/Enrylaze and Zepzelca experienced sales decreases due to market dynamics and competition Neuroscience Portfolio Performance Xywav demonstrated strong growth with a 13% increase in net product sales and significant patient additions, reinforcing its position as a leading treatment for narcolepsy and IH. Epidiolex/Epidyolex also saw a 2% sales increase and is on track to achieve blockbuster status in 2025, while Xyrem sales declined Xywav Performance (2Q25 vs 2Q24) | Metric | 2Q25 | 2Q24 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Net Product Sales | $415.3 million | $368.5 million | +13% | | Active Patients (exiting 2Q25) | ~15,225 | N/A | N/A | | Net Patient Adds (2Q25) | ~625 | N/A | N/A | | IH Net Patient Adds (2Q25) | 400 | N/A | N/A | - Xywav is the only low-sodium oxybate and the 1 branded treatment for narcolepsy and the only FDA-approved therapy for IH, described by the FDA as clinically superior to Xyrem by means of greater safety[5] Epidiolex/Epidyolex and Xyrem Sales (2Q25 vs 2Q24) | Product | 2Q25 Net Product Sales | 2Q24 Net Product Sales | Change (YoY) | | :------ | :--------------------- | :--------------------- | :----------- | | Epidiolex/Epidyolex | $251.7 million | $247.1 million | +2% | | Xyrem | $35.3 million | $62.2 million | -43.2% | - Company remains confident in achieving blockbuster status for Epidiolex/Epidyolex in 2025[7] Oncology Portfolio Performance Oncology net product sales decreased by 1% in Q2 2025, primarily due to lower sales of Rylaze/Enrylaze and Zepzelca, partially offset by the launch of Ziihera. Zepzelca received U.S. FDA Priority Review for 1L ES-SCLC maintenance treatment, indicating potential for future growth Oncology Product Sales (2Q25 vs 2Q24) | Product | 2Q25 Net Product Sales | 2Q24 Net Product Sales | Change (YoY) | | :------ | :--------------------- | :--------------------- | :----------- | | Rylaze/Enrylaze | $100.7 million | $107.8 million | -7% | | Zepzelca | $74.5 million | $81.0 million | -8% | | Ziihera | $6.0 million | — | N/A (launched Dec 2024) | - Decrease in Rylaze/Enrylaze sales attributed to pediatric asparaginase use remaining below pre-protocol implementation levels[7] - Zepzelca sales decrease driven by increased competition in 2L SCLC and treatment protocol updates delaying progression of 1L limited-stage SCLC patients to the 2L setting[7] - Zepzelca and atezolizumab combination granted U.S. FDA Priority Review for 1L maintenance treatment of ES-SCLC with a PDUFA action date of October 7, 2025[4][7] - Ziihera received conditional marketing authorization by the European Commission for 2L BTC[4][7] Corporate Development Jazz Pharmaceuticals completed the acquisition of Chimerix in April 2025, adding dordaviprone, a novel treatment for H3 K27M-mutant diffuse glioma, to its late-stage pipeline - Acquisition of Chimerix, Inc. completed in April 2025, adding dordaviprone to the late-stage pipeline[8] - Dordaviprone is a novel first-in-class small molecule treatment for H3 K27M-mutant diffuse glioma, a rare, high-grade brain tumor[8] Key Pipeline Highlights The company's pipeline is advancing with key milestones expected for zanidatamab, including top-line Phase 3 data in 1L GEA in Q4 2025 and initiation of a new Phase 2 trial in breast cancer. Dordaviprone received FDA Priority Review for accelerated approval in recurrent H3 K27M-mutant diffuse glioma, with a PDUFA date in August 2025 - Top-line PFS data from the pivotal HERIZON-GEA-01 trial for zanidatamab in 1L GEA is expected in 4Q25[4][12] - New data for zanidatamab in combination with chemotherapy for 1L HER2-positive metastatic GEA showed a median overall survival of 36.5 months and 15.2 months median progression-free survival[12] - Phase 2 EmpowHER-BC-208 trial initiated in August 2025 to evaluate zanidatamab in HER2-positive neoadjuvant and adjuvant breast cancer[12] - New Drug Application for accelerated approval of dordaviprone in recurrent H3 K27M-mutant diffuse glioma accepted and granted Priority Review by FDA, with a PDUFA action date of August 18, 2025[12] - The ongoing Phase 3 ACTION trial is evaluating dordaviprone in newly diagnosed, non-recurrent H3 K27M-mutant diffuse glioma patients, potentially extending its use into the first-line setting[12] Share Repurchases The company resumed its share repurchase program in Q2 2025, repurchasing approximately $125 million of ordinary shares. As of June 30, 2025, $225 million remained authorized under the program - Approximately $125 million of ordinary shares repurchased in Q2 2025[10] - As of June 30, 2025, $225 million remained outstanding under the $500 million share repurchase authorization[10] Financial Performance (GAAP & Non-GAAP) This section details Jazz Pharmaceuticals' GAAP and non-GAAP financial results, including revenues, operating expenses, and balance sheet items Overall Financial Highlights Jazz Pharmaceuticals reported a GAAP net loss of $(718.5) million and a non-GAAP adjusted net loss of $(504.8) million for Q2 2025, primarily driven by a significant acquired IPR&D expense of $905.4 million related to the Chimerix acquisition. Total revenues increased by 2% year-over-year Key Financial Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Total revenues | $1,045,712 | $1,023,825 | | GAAP net income (loss) | $(718,470) | $168,568 | | Non-GAAP adjusted net income (loss) | $(504,849) | $360,656 | | GAAP earnings (loss) per share | $(11.74) | $2.49 | | Non-GAAP adjusted earnings (loss) per share | $(8.25) | $5.25 | - GAAP and non-GAAP adjusted net loss in 2Q25 included acquired in-process research and development (IPR&D) expense of $905.4 million, representing the value allocated to dordaviprone in the Chimerix Acquisition, impacting results by $14.78 per share (GAAP) and $14.75 per share (non-GAAP adjusted)[14] - Total revenues increased 2% in 2Q25 compared to the same period in 2024[15] Total Revenues Analysis Total revenues for Q2 2025 increased by 2% to $1,045.7 million. Neuroscience revenue grew by 3% driven by Xywav and Epidiolex/Epidyolex, while Oncology net product sales decreased by 1% due to lower Rylaze/Enrylaze and Zepzelca sales, partially offset by Ziihera Total Revenues (2Q25 vs 2Q24) | Category | 2Q25 (in thousands) | 2Q24 (in thousands) | Change (YoY) | | :------- | :------------------ | :------------------ | :----------- | | Product sales, net | $985,571 | $964,144 | +2.2% | | Royalties and contract revenues | $60,141 | $59,681 | +0.8% | | Total revenues | $1,045,712 | $1,023,825 | +2.1% | Neuroscience Revenue Total Neuroscience revenue, including high-sodium oxybate AG royalty revenue, increased by 3% to $761.2 million in Q2 2025, primarily due to higher Xywav and Epidiolex/Epidyolex net product sales, despite a decrease in Xyrem sales Neuroscience Product Sales (2Q25 vs 2Q24) | Product | 2Q25 (in thousands) | 2Q24 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | Xywav | $415,321 | $368,472 | +12.7% | | Xyrem | $35,349 | $62,180 | -43.2% | | Epidiolex/Epidyolex | $251,730 | $247,102 | +1.9% | | Sativex | $4,615 | $6,383 | -27.6% | | Total Neuroscience | $707,015 | $684,137 | +3.3% | | High-sodium oxybate AG royalty revenue | $54,138 | $54,164 | -0.05% | | Total Neuroscience Revenue | $761,153 | $738,301 | +3.1% | Oncology Revenue Oncology net product sales decreased by 1% to $274.1 million in Q2 2025. This decline was mainly due to lower sales of Rylaze/Enrylaze and Zepzelca, partially offset by the contribution from Ziihera, which launched in December 2024 Oncology Product Sales (2Q25 vs 2Q24) | Product | 2Q25 (in thousands) | 2Q24 (in thousands) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :----------- | | Rylaze/Enrylaze | $100,659 | $107,829 | -6.7% | | Zepzelca | $74,541 | $81,047 | -8.0% | | Defitelio/defibrotide | $48,106 | $45,421 | +5.9% | | Vyxeos | $44,851 | $43,012 | +4.3% | | Ziihera | $5,991 | — | N/A | | Total Oncology | $274,148 | $277,309 | -1.1% | Operating Expenses and Effective Tax Rate Operating expenses saw notable changes in Q2 2025. GAAP and non-GAAP cost of product sales increased due to product mix. SG&A expenses rose due to compensation-related expenses and higher headcount. R&D expenses decreased primarily from lower clinical study costs for zanidatamab and JZP385, partially offset by dordaviprone costs. Acquired IPR&D significantly increased due to the Chimerix acquisition GAAP Operating Expenses (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | % of Total Revenues (2025) | % of Total Revenues (2024) | | :-------------------------- | :------------------ | :------------------ | :------------------------- | :------------------------- | | Cost of product sales | $116,268 | $109,902 | 11.1% | 10.7% | | Gross margin | 88.2% | 88.6% | N/A | N/A | | Selling, general and administrative | $358,399 | $338,523 | 34.3% | 33.1% | | Research and development | $189,972 | $220,734 | 18.2% | 21.6% | | Acquired IPR&D | $905,362 | — | 86.6% | 0.0% | | Income tax benefit | $(17,170) | $(30,653) | N/A | N/A | | Effective tax rate | 2.3% | (22.2)% | N/A | N/A | Non-GAAP Adjusted Operating Expenses (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | % of Total Revenues (2025) | % of Total Revenues (2024) | | :-------------------------- | :------------------ | :------------------ | :------------------------- | :------------------------- | | Cost of product sales | $76,308 | $72,413 | 7.3% | 7.1% | | Gross margin | 92.3% | 92.5% | N/A | N/A | | Selling, general and administrative | $310,322 | $303,386 | 29.7% | 29.6% | | Research and development | $167,031 | $203,463 | 16.0% | 19.9% | | Acquired IPR&D | $905,362 | — | 86.6% | 0.0% | | Income tax expense | $42,290 | $22,379 | N/A | N/A | | Effective tax rate | (9.1)% | 5.8% | N/A | N/A | - R&D expenses decreased primarily due to lower clinical study costs for zanidatamab and JZP385, partially offset by costs related to dordaviprone following the Chimerix Acquisition[20] - Acquired IPR&D in 2Q25 represents the $905.4 million value allocated to dordaviprone in the Chimerix Acquisition[21] Cash Flow and Balance Sheet As of June 30, 2025, Jazz Pharmaceuticals held $1.7 billion in cash, cash equivalents, and investments, with $5.4 billion in long-term debt. The company generated $518.6 million in cash from operations for the first six months of 2025, while the Chimerix acquisition was funded with $944.2 million in cash Cash, Investments, and Debt (As of June 30, 2025) | Metric | Amount | | :-------------------------- | :------------- | | Cash, cash equivalents and investments | $1.7 billion | | Outstanding principal balance of long-term debt | $5.4 billion | | Undrawn borrowing capacity (revolving credit facility) | $885.0 million | - Generated $518.6 million of cash from operations for the six months ended June 30, 2025[22] - The Chimerix acquisition in April 2025 for $944.2 million was funded with cash and cash equivalents[22] 2025 Financial Guidance This section outlines Jazz Pharmaceuticals' updated 2025 financial guidance, including revenue, GAAP, and non-GAAP projections Updated Guidance Summary Jazz Pharmaceuticals updated its full-year 2025 financial guidance, revising the total revenue range and adjusting various GAAP and non-GAAP metrics. The changes reflect reductions in SG&A and R&D expenses and an improved effective tax rate Updated 2025 Total Revenue Guidance | Metric | August 5, 2025 Guidance | May 6, 2025 Guidance | | :----- | :---------------------- | :------------------- | | Total Revenues | $4,150 - $4,300 million | $4,150 - $4,400 million | GAAP Guidance The GAAP guidance for 2025 shows a narrowed net loss range and improved net loss per diluted share, driven by lower projected SG&A and R&D expenses and a higher effective tax rate. Acquired IPR&D is set at $905 million 2025 GAAP Financial Guidance (Updated August 5, 2025) | Metric | August 5, 2025 Guidance | | :------------------------------------------ | :---------------------- | | Gross margin % | 88% | | SG&A expenses | $1,620 - $1,693 million | | R&D expenses | $805 - $865 million | | Acquired IPR&D | $905 million | | Effective tax rate | 4% - 16% | | Net loss | $(565) - $(450) million | | Net loss per diluted share | $(9.25) - $(7.50) | | Weighted-average ordinary shares (diluted) | 61 - 62 million | Non-GAAP Guidance The non-GAAP adjusted guidance for 2025 projects a higher net income range and improved diluted EPS compared to previous guidance, reflecting reduced SG&A and R&D expenses and a revised effective tax rate. Acquired IPR&D remains a significant factor 2025 Non-GAAP Financial Guidance (Updated August 5, 2025) | Metric | August 5, 2025 Guidance | | :------------------------------------------ | :---------------------- | | Gross margin % | 92% | | SG&A expenses | $1,450 - $1,500 million | | R&D expenses | $730 - $780 million | | Acquired IPR&D | $905 million | | Effective tax rate | 27% - 37% | | Net income | $300 - $350 million | | Net income per diluted share | $4.80 - $5.60 | | Weighted-average ordinary shares (diluted) | 62 - 63 million | - Projected GAAP net loss and non-GAAP adjusted net income include an acquired IPR&D expense of $905.4 million and Xyrem antitrust litigation settlements of $172.0 million, impacting results by $1.1 billion (net of tax) or $16.96 per share (GAAP) and $16.83 per share (non-GAAP adjusted)[25][27] Additional Information This section provides details on the conference call, company overview, non-GAAP measures, and forward-looking statements Conference Call Details Jazz Pharmaceuticals hosted an investor conference call and live audio webcast on August 5, 2025, to discuss Q2 2025 results and provide a business and financial update. Registration and webcast replay details were provided - Investor conference call and live audio webcast held on August 5, 2025, at 4:30 p.m. EDT[28] - Registration and webcast replay available via the Investors section of the Jazz Pharmaceuticals website[29] About Jazz Pharmaceuticals Jazz Pharmaceuticals plc is a global biopharmaceutical company focused on developing life-changing medicines for serious diseases, with a diverse portfolio in sleep disorders, epilepsy, and oncology. The company emphasizes a patient-focused, science-driven approach to R&D - Jazz Pharmaceuticals is a global biopharmaceutical company dedicated to developing life-changing medicines for serious diseases[30] - Diverse portfolio includes marketed medicines for sleep disorders, epilepsy, and a growing portfolio of cancer treatments[30] - Headquartered in Dublin, Ireland, with R&D labs, manufacturing facilities, and employees worldwide[30] Non-GAAP Financial Measures Explanation The company uses non-GAAP adjusted financial measures to supplement GAAP results, believing they provide useful supplementary information for investors and analysts to compare performance, track guidance, and identify operating trends. These measures exclude certain items like intangible asset amortization, share-based compensation, and acquisition accounting inventory fair value step-up, and are regularly used internally for management decisions - Non-GAAP financial measures are used to supplement GAAP results, providing additional analysis for investors and analysts[31][32] - Non-GAAP adjustments exclude items such as intangible asset amortization, share-based compensation expense, acquisition accounting inventory fair value step-up, and integration related expenses[31][32] - Commencing with Q1 2025, the company no longer includes an adjustment for non-cash interest expense in non-GAAP measures, with 2024 periods updated for comparability[33] Caution Concerning Forward-Looking Statements This section highlights that the press release contains forward-looking statements regarding future financial results, pipeline advancements, regulatory activities, and commercialization strategies. These statements are based on current plans and involve significant risks and uncertainties that could cause actual results to differ materially, including market competition, regulatory approvals, clinical trial success, and integration of acquisitions - The press release contains forward-looking statements regarding growth prospects, financial results, pipeline catalysts, regulatory approvals, and commercialization strategies[34] - Actual results could differ materially due to significant risks and uncertainties, including maintaining sales, new product competition, regulatory approval processes, clinical trial success, and integration of acquired businesses like Chimerix[35][36] - Risks also include global economic disruptions, geopolitical events, macroeconomic conditions, and intellectual property protection[36] Condensed Consolidated Financial Statements This section presents Jazz Pharmaceuticals' unaudited condensed consolidated financial statements, including income, balance sheets, and cash flows Condensed Consolidated Statements of Income (Loss) The condensed consolidated statements of income (loss) show a GAAP net loss of $(718.5) million for Q2 2025, compared to a net income of $168.6 million in Q2 2024. This shift is largely due to a substantial increase in acquired in-process research and development expenses Condensed Consolidated Statements of Income (Loss) (Unaudited, In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Product sales, net | $985,571 | $964,144 | $1,824,989 | $1,806,246 | | Royalties and contract revenues | $60,141 | $59,681 | $118,564 | $119,562 | | Total revenues | $1,045,712 | $1,023,825 | $1,943,553 | $1,925,808 | | Cost of product sales (excluding amortization of acquired developed technologies) | $116,268 | $109,902 | $220,888 | $205,389 | | Selling, general and administrative | $358,399 | $338,523 | $872,412 | $690,235 | | Research and development | $189,972 | $220,734 | $370,624 | $443,581 | | Intangible asset amortization | $162,103 | $155,223 | $316,551 | $310,953 | | Acquired in-process research and development | $905,362 | — | $905,362 | $10,000 | | Total operating expenses | $1,732,104 | $824,382 | $2,685,837 | $1,660,158 | | Income (loss) from operations | $(686,392) | $199,443 | $(742,284) | $265,650 | | Interest expense, net | $(47,363) | $(62,023) | $(101,069) | $(128,139) | | Foreign exchange gain (loss) | $(1,799) | $507 | $(2,012) | $(1,186) | | Income (loss) before income tax benefit and equity in loss of investees | $(735,554) | $137,927 | $(845,365) | $136,325 | | Income tax benefit | $(17,170) | $(30,653) | $(34,982) | $(18,984) | | Equity in loss of investees | $86 | $12 | $628 | $1,359 | | Net income (loss) | $(718,470) | $168,568 | $(811,011) | $153,950 | | Net income (loss) per ordinary share: Basic | $(11.74) | $2.68 | $(13.28) | $2.45 | | Net income (loss) per ordinary share: Diluted | $(11.74) | $2.49 | $(13.28) | $2.35 | | Weighted-average ordinary shares used in per share calculations - basic | 61,194 | 62,882 | 61,087 | 62,710 | | Weighted-average ordinary shares used in per share calculations - diluted | 61,194 | 69,625 | 61,087 | 69,684 | Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows a decrease in total assets to $10.94 billion from $12.01 billion at December 31, 2024, primarily driven by a reduction in cash and cash equivalents. Current liabilities significantly increased due to a higher current portion of long-term debt Condensed Consolidated Balance Sheets (Unaudited, In thousands) | Asset/Liability | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | ASSETS | | | | Cash and cash equivalents | $1,189,880 | $2,412,864 | | Investments | $480,000 | $580,000 | | Accounts receivable, net | $714,004 | $716,765 | | Inventories | $504,989 | $480,445 | | Total current assets | $3,350,433 | $4,629,028 | | Property, plant and equipment, net | $184,975 | $173,413 | | Intangible assets, net | $4,768,987 | $4,755,695 | | Goodwill | $1,843,974 | $1,716,323 | | Total assets | $10,944,141 | $12,012,257 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Accounts payable | $89,366 | $77,869 | | Accrued liabilities | $874,811 | $910,947 | | Current portion of long-term debt | $1,028,478 | $31,000 | | Total current liabilities | $2,071,205 | $1,038,573 | | Long-term debt, less current portion | $4,335,616 | $6,077,640 | | Total shareholders' equity | $3,706,359 | $4,093,756 | | Total liabilities and shareholders' equity | $10,944,141 | $12,012,257 | Summary of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $518.6 million, a decrease from $598.6 million in the prior year. Net cash used in investing activities significantly increased to $(809.9) million, primarily due to the Chimerix acquisition, and net cash used in financing activities also rose to $(938.0) million Summary of Cash Flows (Unaudited, In thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $518,639 | $598,581 | | Net cash used in investing activities | $(809,951) | $(528,995) | | Net cash used in financing activities | $(937,991) | $(217,637) | | Effect of exchange rates on cash and cash equivalents | $6,319 | $(2,457) | | Net decrease in cash and cash equivalents | $(1,222,984) | $(150,508) | Reconciliations of GAAP to Non-GAAP Information This section provides detailed reconciliations of GAAP to non-GAAP financial measures for various periods and guidance Net Income (Loss) and EPS Reconciliation This section provides a reconciliation of GAAP net income (loss) and EPS to non-GAAP adjusted figures, detailing adjustments for intangible asset amortization, share-based compensation, acquisition accounting inventory fair value step-up, integration expenses, and their income tax effects. For Q2 2025, GAAP net loss was $(718.5) million, while non-GAAP adjusted net loss was $(504.8) million Reconciliation of GAAP to Non-GAAP Adjusted Net Income (Loss) and EPS (Unaudited, In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 (Net Loss) | Three Months Ended June 30, 2025 (LPS) | Three Months Ended June 30, 2024 (Net Income) | Three Months Ended June 30, 2024 (EPS) | | :------------------------------------ | :------------------------------------------ | :--------------------------------------- | :------------------------------------------ | :--------------------------------------- | | GAAP reported | $(718,470) | $(11.74) | $168,568 | $2.49 | | Intangible asset amortization | 162,103 | 2.65 | 155,223 | 2.23 | | Share-based compensation expense | 64,501 | 1.05 | 56,654 | 0.81 | | Acquisition accounting inventory fair value step-up | 37,109 | 0.61 | 33,243 | 0.48 | | Integration related expenses | 9,368 | 0.15 | — | — | | Income tax effect of above adjustments | (59,460) | (0.97) | (53,032) | (0.76) | | Non-GAAP adjusted | $(504,849) | $(8.25) | $360,656 | $5.25 | - Diluted EPS for 2024 periods included 6.4 million shares related to the assumed conversion of 2026 Notes and associated interest expense add-back[45] - Integration related expenses in 2025 are specifically with respect to the Chimerix Acquisition[46] Certain Line Items Reconciliation (Three Months) This reconciliation details the adjustments made to specific GAAP operating expense line items to arrive at their non-GAAP adjusted counterparts for the three months ended June 30, 2025 and 2024. Key adjustments include intangible asset amortization, share-based compensation, and acquisition accounting inventory fair value step-up, impacting gross margin, SG&A, R&D, and the effective tax rate Reconciliation of GAAP to Non-GAAP Adjusted Certain Line Items (Three Months Ended June 30, 2025) (Unaudited, In thousands, except percentages) | Metric | GAAP Reported | Non-GAAP Adjustments | Non-GAAP Adjusted | | :-------------------------------- | :------------ | :------------------- | :---------------- | | Cost of product sales | $116,268 | $(39,960) | $76,308 | | Gross margin | 88.2% | 4.1% | 92.3% | | SG&A | $358,399 | $(48,077) | $310,322 | | R&D | $189,972 | $(22,941) | $167,031 | | Intangible asset amortization | $162,103 | $(162,103) | $0 | | Acquired IPR&D | $905,362 | $0 | $905,362 | | Interest expense, net | $47,363 | $0 | $47,363 | | Income tax expense (benefit) | $(17,170) | $59,460 | $42,290 | | Effective tax rate | 2.3% | (11.4)% | (9.1)% | Reconciliation of GAAP to Non-GAAP Adjusted Certain Line Items (Three Months Ended June 30, 2024) (Unaudited, In thousands, except percentages) | Metric | GAAP Reported | Non-GAAP Adjustments | Non-GAAP Adjusted | | :-------------------------------- | :------------ | :------------------- | :---------------- | | Cost of product sales | $109,902 | $(37,489) | $72,413 | | Gross margin | 88.6% | 3.9% | 92.5% | | SG&A | $338,523 | $(35,137) | $303,386 | | R&D | $220,734 | $(17,271) | $203,463 | | Intangible asset amortization | $155,223 | $(155,223) | $0 | | Acquired IPR&D | $0 | $0 | $0 | | Interest expense, net | $62,023 | $0 | $62,023 | | Income tax expense (benefit) | $(30,653) | $53,032 | $22,379 | | Effective tax rate | (22.2)% | 28.0% | 5.8% | Certain Line Items Reconciliation (Six Months) This section provides the reconciliation of GAAP to non-GAAP adjusted certain line items for the six months ended June 30, 2025 and 2024. Similar to the quarterly reconciliation, it details adjustments for non-cash items and their tax effects, showing the impact on cost of product sales, gross margin, SG&A, R&D, and the effective tax rate over the half-year period Reconciliation of GAAP to Non-GAAP Adjusted Certain Line Items (Six Months Ended June 30, 2025) (Unaudited, In thousands, except percentages) | Metric | GAAP Reported | Non-GAAP Adjustments | Non-GAAP Adjusted | | :-------------------------------- | :------------ | :------------------- | :---------------- | | Cost of product sales | $220,888 | $(74,889) | $145,999 | | Gross margin | 87.9% | 4.1% | 92.0% | | SG&A | $872,412 | $(89,751) | $782,661 | | R&D | $370,624 | $(43,871) | $326,753 | | Intangible asset amortization | $316,551 | $(316,551) | $0 | | Acquired IPR&D | $905,362 | $0 | $905,362 | | Interest expense, net | $101,069 | $0 | $101,069 | | Income tax expense (benefit) | $(34,982) | $113,667 | $78,685 | | Effective tax rate | 4.1% | (28.7)% | (24.6)% | Reconciliation of GAAP to Non-GAAP Adjusted Certain Line Items (Six Months Ended June 30, 2024) (Unaudited, In thousands, except percentages) | Metric | GAAP Reported | Non-GAAP Adjustments | Non-GAAP Adjusted | | :-------------------------------- | :------------ | :------------------- | :---------------- | | Cost of product sales | $205,389 | $(68,828) | $136,561 | | Gross margin | 88.6% | 3.8% | 92.4% | | SG&A | $690,235 | $(75,350) | $614,885 | | R&D | $443,581 | $(36,103) | $407,478 | | Intangible asset amortization | $310,953 | $(310,953) | $0 | | Acquired IPR&D | $10,000 | $0 | $10,000 | | Interest expense, net | $128,139 | $0 | $128,139 | | Income tax expense (benefit) | $(18,984) | $106,098 | $87,114 | | Effective tax rate | (13.9)% | 27.8% | 13.9% | 2025 Guidance Reconciliation This section reconciles the 2025 GAAP net loss and diluted LPS guidance to the non-GAAP adjusted net income and diluted EPS guidance. It outlines the projected impact of intangible asset amortization, share-based compensation, acquisition accounting inventory fair value step-up, integration expenses, and their income tax effects on the full-year outlook Reconciliation of 2025 GAAP Net Loss and Diluted LPS to Non-GAAP Adjusted Net Income and Diluted EPS Guidance (Unaudited, In millions, except per share amounts) | Metric | Net Income (Loss) | Diluted EPS/(LPS) | | :------------------------------------------ | :---------------- | :---------------- | | GAAP | $(565) - $(450) | $(9.25) - $(7.50) | | Intangible asset amortization | 610 - 660 | 9.70 - 10.60 | | Share-based compensation expense | 240 - 270 | 3.80 - 4.35 | | Acquisition accounting inventory fair value step-up | 135 - 155 | 2.15 - 2.50 | | Integration related expenses | 20 - 25 | 0.30 - 0.40 | | Income tax effect of above adjustments | (215) - (235) | (3.40) - (3.75) | | Effect of potentially dilutive ordinary shares on non-GAAP adjusted EPS | - | 0.05 - 0.20 | | Non-GAAP adjusted | $300 - $350 | $4.80 - $5.60 | | Weighted-average ordinary shares used in per share calculations - GAAP | 61 - 62 | N/A | | Weighted-average ordinary shares used in per share calculations - non-GAAP | 62 - 63 | N/A |