What changed in this filing

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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-02-23 · 789 added, 504 removed, 1434 unchanged (47% of the section changed)

8 unchanged sentences

Changes in Internal Control over Financial Reporting.

As discussed above, the GW Acquisition closed on May 5, 2021.

The GW Acquisition was accounted for using the acquisition method of accounting.

The results of operations of the acquired GW business have been included in our results of operations since May 5, 2021, and we have evaluated and integrated GW’s historical internal controls with ours throughout the fiscal year.

During the quarter ended December 31, 2021, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Our management used the Committee of Sponsoring Organizations of the Treadway Commission Internal Control - Integrated Framework (2013), or the COSO framework, to evaluate the effectiveness of internal control over financial reporting.

Management believes that the COSO framework is a suitable framework for its evaluation of financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.

Management believes that the COSO framework is a suitable framework for its evaluation of

financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 and has concluded that such internal control over financial reporting was effective.

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Opinion on Internal Control Over Financial Reporting

We have audited Jazz Pharmaceuticals plc’s and subsidiaries’ (the ‘Company’) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited Jazz Pharmaceuticals plc and subsidiaries’ (the ‘Company’) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule at Item 15(a)2 (collectively, the consolidated financial statements), and our report dated February 23, 2021 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule at Item 15(a)2 (collectively, ‘the consolidated financial statements’), and our report dated March 1, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Dublin, Ireland

February 23, 2021

March 1, 2022

Other Information

Not applicable.

Item 9.C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Certain information required by Part III is omitted from this Annual Report on Form 10‑K and incorporated by reference to our definitive proxy statement for our 2022 annual general meeting of shareholders, or our 2022 Proxy Statement, to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, or Exchange Act.

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Directors, Executive Officers and Corporate Governance

The information required by this item is to be included in our 2021 Proxy Statement as follows:

The information required by this item is to be included in our 2022 Proxy Statement as follows and is incorporated by reference:

• The information relating to our directors and nominees for director is to be included in the section entitled “Proposal 1—Election of Directors;”

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Executive Compensation

The information required by this item is to be included in our 2021 Proxy Statement under the sections entitled “Executive Compensation,” “Director Compensation,” “Corporate Governance and Board Matters—Compensation Committee Interlocks and Insider Participation” and “Corporate Governance and Board Matters—Compensation Committee Report” and is incorporated herein by reference, provided that if the 2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, the omitted information will be included in an amendment to this Annual Report on Form 10‑K filed not later than the end of such 120-day period.

The information required by this item is to be included in our 2022 Proxy Statement under the sections entitled “Executive Compensation,” “Director Compensation,” “Corporate Governance and Board Matters—Compensation Committee Interlocks and Insider Participation” and “Corporate Governance and Board Matters—Compensation Committee Report” and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item with respect to equity compensation plans is to be included in our 2021 Proxy Statement under the section entitled “Equity Compensation Plan Information” and the information required by this item with respect to security ownership of certain beneficial owners and management is to be included in our 2021 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial Owners and Management” and in each case is incorporated herein by reference, provided that if the 2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, the omitted information will be included in an amendment to this Annual Report on Form 10‑K filed not later than the end of such 120-day period.

The information required by this item with respect to equity compensation plans is to be included in our 2022 Proxy Statement under the section entitled “Equity Compensation Plan Information” and the information required by this item with respect to security ownership of certain beneficial owners and management is to be included in our 2022 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial Owners and Management” and in each case is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

The information required by this item is to be included in our 2021 Proxy Statement under the sections entitled “Certain Relationships and Related Party Transactions” and “Corporate Governance and Board Matters—Independence of the Board of Directors” and is incorporated herein by reference, provided that if the 2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, the omitted information will be included in an amendment to this Annual Report on Form 10‑K filed not later than the end of such 120-day period.

The information required by this item is to be included in our 2022 Proxy Statement under the sections entitled “Certain Relationships and Related Party Transactions” and “Corporate Governance and Board Matters—Independence of the Board of Directors” and is incorporated herein by reference.

Principal Accountant Fees and Services

The information required by this item is to be included in our 2021 Proxy Statement under the section entitled “Proposal 2—On a Non-Binding Advisory Basis, Ratify Appointment of Independent Registered Accounting Firm and, On a Binding Basis, Authorize the Board of Directors, Acting Through the Audit Committee, to Determine the Independent Auditors’ Remuneration” and is incorporated herein by reference, provided that if the 2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, the omitted information will be included in an amendment to this Annual Report on Form 10‑K filed not later than the end of such 120-day period.

The information required by this item is to be included in our 2022 Proxy Statement under the section entitled “Proposal 2—On a Non-Binding Advisory Basis, Ratify Appointment of Independent Registered Accounting Firm and, On a Binding Basis, Authorize the Board of Directors, Acting Through the Audit Committee, to Determine the Independent Auditors’ Remuneration” and is incorporated herein by reference.

Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10‑K:

Index to Financial Statements:

See Index to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K.

Financial Statements:

See Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K.

Financial Statement Schedules:

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with the SEC on February 28, 2012).

4.4A Indenture, dated as of August 13, 2014, by and among Jazz Pharmaceuticals plc, Jazz Investments I Limited and U.S.

Bank National Association (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on August 13, 2014).

4.4B Form of 1.875% Exchangeable Senior Note due 2021 (incorporated herein by reference to Exhibit 4.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on August 13, 2014).

4.3A Indenture, dated as of August 23, 2017, among Jazz Pharmaceuticals Public Limited Company, Jazz Investments I Limited and U.S.

8 unchanged sentences

001-033500), as filed with the SEC on June 11, 2020).

4.5A Indenture, dated as of April 29, 2021, among Jazz Securities Designated Activity Company, the guarantors party thereto, U.S.

Bank National Association, as trustee and acknowledged by U.S.

Bank National Association, as collateral trustee.

(incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-033500), as filed with the SEC on April 29, 2021).

4.5B Form of 4.375% Senior Notes due 2029 (incorporated herein by reference to Exhibit 4.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-033500), as filed with the SEC on April 29, 2021).

4.5C First Supplemental Indenture, dated as of July 21, 2021, among GW Pharmaceuticals Limited, GW Global Services (International) Limited, GW Pharma Limited, GW Research Limited, GW UK Services Limited and Greenwich Biosciences, Inc., Jazz Securities Designated Activity Company, and U.S.

Bank National Association, as trustee under the Indenture, dated as of April 29, 2021 (incorporated herein by reference to Exhibit 4.5C in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30 , 20 21 , as filed with the SEC on August 3 , 20 21 ) .

4.6 Description of Share Capital.

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Master Manufacturing Services Agreement, dated as of October 1, 2015, by and between Jazz Pharmaceuticals Ireland Limited and Patheon Pharmaceuticals Inc.

10.9A† Clinical and Commercial Manufacturing and Supply Agreement, dated as of December 22, 2010, between Celator Pharmaceuticals, Inc.

(incorporated herein by reference to Exhibit 10.8 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021) .

Clinical and Commercial Manufacturing and Supply Agreement, dated as of December 22, 2010, between Celator Pharmaceuticals, Inc.

and Baxter Oncology GmbH (incorporated herein by reference to Exhibit 10.8 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the year ended December 31, 2017, as filed with the SEC on February 27, 2018).

10.9B† Amendment No.

Amendment No.

1 Clinical and Commercial Manufacturing and Supply Agreement, dated as of January 18, 2018, by and between Jazz Pharmaceuticals Ireland Limited and Baxter Oncology GmbH (incorporated herein by reference to Exhibit 10.3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

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001-33500) for the period ended June 30, 2020, as filed with the SEC on August 4, 2020).

10.12‡ Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ireland Limited .

10.11B Amendment No.

1, dated as of July 4, 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

(incorporated herein by reference to Exhibit 10.1A in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.11C Amendment No.

2, dated as of July 19, 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

(incorporated herein by reference to Exhibit 10.1 B in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.11D Amendment No.

3 , dated as of December 7 , 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

10.12A‡ Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ire land Limited (incorporated herein by reference to Exhibit 10.

12 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 20 20 , as filed with the SEC on February 2 3 , 202 1 ).

10.12B‡ Amendment No.

1, dated as of May 6, 2021, to Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ireland Limited (incorporated herein by reference to Exhibit 10.

2 in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.13A Credit Agreement, dated as of June 18, 2015, among Jazz Pharmaceuticals plc, Jazz Securities Limited, Jazz Pharmaceuticals, Inc., Jazz Financing I Limited, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

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001-33500) for the period ended June 30, 2018, as filed with the SEC on August 7, 2018).

10.13D Amendment No.

3, dated as of April 20, 2021, to Credit Agreement, dated as of June 18, 2015 (as previously amended by Amendment No.

1, dated as of July 12, 2016 and Amendment No.2, dated as of June 7, 2018), among Jazz Pharmaceuticals plc, Jazz Securities Designated Activity Company, Jazz Pharmaceuticals, Inc., Jazz Financing I Designated Activity Company, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on April 20, 2021.

10.14 Credit Agreement, dated as of May 5, 2021, by and among Jazz Pharmaceuticals Public Limited Company, the other borrowers from time to time party thereto, the lenders and issuing banks from time to time party thereto, Bank of America, N.A., as administrative agent, and U.S.

Bank National Association, as collateral trustee (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-033500), as filed with the SEC on May 5, 2021).

10.15A Commercial Lease, dated as of June 2, 2004, by and between Jazz Pharmaceuticals, Inc.

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001-33500) for the period ended September 30, 2018, as filed with the SEC on November 6, 2018).

10.17A Commercial Lease, dated as of September 22, 2017, by and between Jazz Pharmaceuticals, Inc.

and The Board of Trustees of the Leland Stanford Junior University (incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2017, as filed with the SEC on November 7, 2017).

10.17B First Amendment, dated as of January 29, 2018, to Commercial Lease, dated as of September 22, 2017, by and between The Board of Trustees of the Leland Stanford Junior University and Jazz Pharmaceuticals, Inc.

(incorporated herein by reference to Exhibit 10.6 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2018, as filed with the SEC on August 7, 2018).

10.18+ Form of Indemnification Agreement between Jazz Pharmaceuticals plc and its officers and directors (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on January 18, 2012).

10.19A+ Offer Letter from Jazz Pharmaceuticals, Inc.

to Michael Miller (incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2014, as filed with the SEC on November 4, 2014).

10.19B+ Transition and Termination Agreement, dated as of November 2, 2019, by and between Jazz Pharmaceuticals, Inc.

and Mike Miller (incorporated herein by reference to Exhibit 10.6 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2019, as filed with the SEC on November 5, 2019).

10.19C+ Amendment to Transition and Termination Agreement, dated as of March 31, 2020, by and between Jazz Pharmaceuticals, Inc.

and Michael Miller (incorporated herein by reference to Exhibit 10.

3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended March 31, 2020, as filed with the SEC on May 5, 2020).

10.19+ Offer Letter from Jazz Pharmaceuticals, Inc.

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10.23A+ Employment Contract, dated as of February 22, 2013, by and between Jazz Pharmaceuticals Ireland Limited and Finbar Larkin (incorporated herein by reference to Exhibit 10.27 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period en ded December 31, 2019, as f iled with the SEC on February 25, 2020 ) .

001-33500) for the period ended December 31, 2019, as filed with the SEC on February 25, 2020).

10.23B+ Amendment to Employment Contract, dated as of February 26, 2020, by and between Jazz Pharmaceuticals Ireland Limited and Finbar Larkin ((incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

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001-33500) for the period ended December 31, 2019, as filed with the SEC on February 25, 2020).

10.25B+ Amendment to Employment Contract, dated as of April 21, 2020, by and between Jazz Pharmaceuticals UK Limited and Samantha Pearce (incorporated herein by reference to Exhibit 10.

4 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.24B+ Amendment to Employment Contract, dated as of April 21, 2020, by and between Jazz Pharmaceuticals UK Limited and Samantha Pearce (incorporated herein by reference to Exhibit 10.4 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended March 31, 2020, as filed with the SEC on May 5, 2020).

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10.25+ Offer Letter, dated as of February 23, 2020, by and between Jazz Pharmaceuticals, Inc.

and Renée Galá (incorporated herein by reference to Exhibit 10.

1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10- Q (File No.

and Renée Galá (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended March 31, 2020, as filed with the SEC on May 5, 2020).

10.26+ Offer Letter, dated as of May 2, 2020, by and between Jazz Pharmaceuticals, Inc.

and Kim Sablich (incorporated herein by reference to Exhibit 10.

and Kim Sablich (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2020, as filed with the SEC on August 4, 2020).

10.27A+ Service Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.

4 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021) .

10.27B+ Participation Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.

5 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021) .

10.28A+ Jazz Pharmaceuticals plc 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.3 in Jazz Pharmaceuticals plc’s registration statement on Form S-8 (File No.

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001-33500) for the period ended March 31, 2019, as filed with the SEC on May 7, 2019).

10.29X+ Form of U.S.

Restricted Stock Unit Award Grant Notice and Form of U.S.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29Y+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.9 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29Z+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.

1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2021, as filed with the SEC on November 9 , 2021) .

10.29AA+ Form of U.S.

Performance Restricted Stock Unit Award Grant Notice and Form of U.S.

Performance Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.6 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29BB+ Form of Non-U.S.

Performance Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Performance Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.

7 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.30+ Jazz Pharmaceuticals plc Amended and Restated Directors Deferred Compensation Plan (incorporated herein by reference to Exhibit 99.6 in Jazz Pharmaceuticals plc’s registration statement on Form S-8 (File No.

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001-33500) for the period ended September 30, 2016, as filed with the SEC on November 8, 2016).

10.31F+ Amended and Restated 2007 Non-Employee Directors Stock Award Plan (approved July 30, 2020) (incorporated herein by reference to Exhibit 10.

3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.31F+ Amended and Restated 2007 Non-Employee Directors Stock Award Plan (approved July 30, 2020) (incorporated herein by reference to Exhibit 10.3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2020, as filed with the SEC on August 4, 2020).

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Restricted Stock Unit Award Grant Notice and Non-U.S.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2007 Non-Employee Directors Stock Award Plan (incorporated herein by reference to Exhibit 10.

3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2007 Non-Employee Directors Stock Award Plan (incorporated herein by reference to Exhibit 10.3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2020, as filed with the SEC on November 2, 2020).

10.32A+ GW Pharmaceuticals plc 2020 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 4.1 in GW’s Registration Statement on Form S-8 (file no.

333-238737), filed with the SEC on May 27, 2020).

10.32B+ Form of Restricted Stock Unit Award Agreement under the GW Pharmaceuticals plc 2020 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 0B in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.32C+ Form of Replacement Stock Option Award Agreement under the GW Pharmaceuticals plc 2020 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 0C in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.32D+ Form of Replacement Restricted Stock Unit Award Agreement under the GW Pharmaceuticals plc 2020 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 0 D in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.33A+ Jazz Pharmaceuticals plc 2007 Employee Stock Purchase Plan, as amended and restated (incorporated herein by reference to Exhibit 10.31A in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

3 unchanged sentences

10.34A+ Jazz Pharmaceuticals plc Cash Bonus Plan for U.S.

Affiliates (approved October 30, 2019) (incorporated herein by reference to Exhibit 10.34C in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2019, as filed with the SEC on February 25, 2020).

10.34B+ Jazz Pharmaceuticals Cash Bonus Plan (Ireland and Other Specified Affiliates) (Calendar Year 2020) (incorporated herein by reference to Exhibit 10.34D in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2019, as filed with the SEC on February 25, 2020).

10.34C+ Jazz Pharmaceuticals plc Cash Bonus Plan for U.S.

Affiliates (approved October 30, 2020) ( incorporated herein by reference to Exhibit 10.

1 unchanged sentence

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021).

10.33B+ Jazz Pharmaceuticals Cash Bonus Plan (Ireland and Other Specified Affiliates) (Calendar Year 2020) (incorporated herein by reference to Exhibit 10.

34D in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

10.34D+ Jazz Pharmaceuticals Cash Bonus Plan (Ireland and Other Specified Affiliates) (Calendar Year 2021) (incorporated herein by reference to Exhibit 10.33 D in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021) .

10.33C+ Jazz Pharmaceuticals plc Cash Bonus Plan for U.S.

Affiliates (approved October 30, 2020).

10.33D+ Jazz Pharmaceuticals Cash Bonus Plan (Ireland and Other Specified Affiliates) (Calendar Year 2021).

10.34+ Amended and Restated Executive Change in Control and Severance Benefit Plan, dated as of July 31, 2019 (incorporated herein by reference to Exhibit 10.6 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.34E+ Jazz Pharmaceuticals plc Global Cash Bonus Plan (approved November , 202 1 ) .

10.35+ Amended and Restated Executive Change in Control and Severance Benefit Plan, dated as of July 31, 2019 (incorporated herein by reference to Exhibit 10.

5 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2019, as filed with the SEC on November 5, 2019).

1 unchanged sentence

001-33500) for the period ended June 30, 2018, as filed with the SEC on August 7, 2018).

10.35B+ Amended and Restated Non-Employee Director Compensation Policy (approved July 21, 2020) (incorporated herein by reference to Exhibit 10.

1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.36B+ Amended and Restated Non-Employee Director Compensation Policy (approved July 21, 2020) (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2020, as filed with the SEC on November 2, 2020).

10.36C+ Amended and Restated Non-Employee Director Compensation Policy (approved July 29, 2021) (incorporated herein by reference to Exhibit 10.1 1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 3 0 , 202 1 , as filed with the SEC on August 3 , 202 1 ).

21.1 Subsidiaries of Jazz Pharmaceuticals plc.

21 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 23, 2021 Jazz Pharmaceuticals public limited company

March 1, 2022 Jazz Pharmaceuticals public limited company

/s/ B RUCE C.

6 unchanged sentences

Patricia Carr

Vice President, Finance

Senior Vice President, Chief Accounting Officer

(Principal Accounting Officer)

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(Principal Executive Officer)

February 23, 2021

March 1, 2022

/s/ R ENÉE G ALÁ

1 unchanged sentence

(Principal Financial Officer)

February 23, 2021

March 1, 2022

/s/ P ATRICIA C ARR

Vice President, Finance

Senior Vice President, Chief Accounting Officer

(Principal Accounting Officer)

February 23, 2021

March 1, 2022

Patricia Carr

/s/ P AUL L .

Director February 23, 2021

/s/ J ENNIFER E .

Director February 23, 2021

Director March 1, 2022

/s/ P ATRICK G .

Director February 23, 2021

Director March 1, 2022

/s/ P ETER G RAY

Director February 23, 2021

Director March 1, 2022

/s/ H EATHER A NN M CSHARRY

Director February 23, 2021

Director March 1, 2022

Heather Ann McSharry

/s/ S EAMUS C.

Director February 23, 2021

Director March 1, 2022

/s/ K ENNETH W.

Director February 23, 2021

Director March 1, 2022

/s/ A NNE O’ RIORDAN

Director February 23, 2021

Director March 1, 2022

Anne O’Riordan

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R IEDEL, P H.

Director February 23, 2021

Director March 1, 2022

Riedel, Ph.D.

/s/ E LMAR S CHNEE

Director February 23, 2021

/s/ M ARK D .

Director February 23, 2021

Director March 1, 2022

/s/ C ATHERINE A.

S OHN, P HARM .D.

Director February 23, 2021

Director March 1, 2022

Sohn, Pharm.D.

/s/ R ICK E W INNINGHAM

Director February 23, 2021

Director March 1, 2022

Rick E Winningham

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Jazz Pharmaceuticals plc and subsidiaries (the ‘Company’) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedules at Item 15(a)2 (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Jazz Pharmaceuticals plc and subsidiaries (the ‘Company’) as of December 31, 2021 and 2020, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2021, and the related notes and financial statement schedules at Item 15(a)2 (collectively, ‘the consolidated financial statements’).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the carrying value for the Vyxeos intangible asset

As discussed in Note 9 to the consolidated financial statements, the finite-lived intangible assets balance as of December 31, 2020 was $2.2 billion, a substantial portion of which relates to the finite-lived intangible asset in respect of Vyxeos.

As discussed in Note 2, the Company reviews finite-lived intangible assets for impairment when events or circumstances indicate that the carrying value of such assets may not be recoverable.

We identified the assessment of the carrying value of the Vyxeos intangible asset as a critical audit matter.

There was a high degree of subjectivity in assessing the carrying value of Vyxeos, specifically revenue forecasts for Vyxeos, which are a key input to the determination of estimated undiscounted future cash flows.

The following are the primary procedures we performed to address this critical audit matter:

– We evaluated the design and tested the operating effectiveness of certain internal controls over the Vyxeos intangible asset impairment review process, including the Company’s control related to the development of the revenue forecasts for Vyxeos;

– We evaluated the reasonableness of management’s revenue forecasts for Vyxeos by comparing certain underlying assumptions to (1) company-specific operational information and management’s communications to the Board of Directors and (2) available industry or other third-party reports on expected market opportunities;

– We assessed the Company’s ability to accurately forecast revenues by comparing historical forecasted revenues for Vyxeos to actual results;

– We performed a sensitivity analysis over Vyxeos estimated undiscounted future cash flows to assess the impact of changes to those forecasts on the Company’s determination of the carrying value of Vyxeos.

Recoverability of U.S.

deferred tax assets

As discussed in Note 21 to the consolidated financial statements, the Company had $752.7 million of deferred tax assets as of December 31, 2020, a substantial portion of which relates to U.S.

net operating losses (NOLs) and tax credits carried forward.

As discussed in Note 2, realization of the deferred tax assets is dependent on the generation of future taxable income, the amount and timing of which are uncertain.

We identified the recoverability of U.S.

deferred tax assets as a critical audit matter due to the extent of specialized skills and knowledge needed and the subjectivity involved in assessing the Company’s forecast of sufficient future taxable income.

In particular, evaluating the Company’s U.S.

revenue forecasts involved a high degree of auditor judgment.

Preliminary measurement of fair value of acquired developed technology assets related to a business combination

As discussed in Note 3 to the consolidated financial statements, on May 5, 2021, the Company acquired GW Pharmaceuticals plc (‘GW’) in a business combination for a purchase price of $7,190.7 million.

In allocating the purchase price, the Company recognized intangible assets at fair value in the amount of $5,640.0 million, including acquired developed technology of $5,480.0 million.

We identified the assessment of the preliminary measurement of fair value of acquired developed technology assets acquired in the GW Acquisition as a critical audit matter.

A high degree of auditor judgment was required in evaluating the key fair value assumptions, specifically revenue forecasts.

Changes to these assumptions could have a significant effect on the initial measurement of fair value.

The following are the primary procedures we performed to address this critical audit matter:

– We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s deferred tax asset valuation allowance process including controls related to the development of U.S.

revenue forecasts;

– We evaluated the reasonableness of management’s revenue forecasts for products sold in the U.S.

by comparing certain underlying assumptions to (1) company-specific operational information and management’s communication to the Board of Directors and (2) available industry or other third-party reports on expected market opportunities;

– We involved income tax professionals with specialized skills and knowledge, who assisted in performing a technical assessment of the Company’s tax positions, application of relevant tax regulations and utilization of NOLs and tax credits;

– To assess the Company’s ability to forecast, for products sold in the U.S., we compared the Company’s historical forecasted revenues to actual historic outcomes.

– We evaluated the design and tested the operating effectiveness of certain internal controls related to the business combinations process, including the control over the development of the key assumptions;

– We evaluated the reasonableness of the Company’s revenue forecasts by comparing certain underlying assumptions to (1) company-specific operational information and management’s communications to the Board of Directors and (2) available industry or other third-party reports or data.

We have served as the Company’s auditor since 2012.

Dublin, Ireland

February 23, 2021

March 1, 2022

JAZZ PHARMACEUTICALS PLC

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JAZZ PHARMACEUTICALS PLC

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

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Intangible asset amortization 525,769 259,580 354,814

Impairment charges 136,139 — 42,896

Impairment charge — 136,139 —

Acquired in-process research and development — 251,250 109,975

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Foreign exchange loss ( 4,350 ) ( 3,271 ) ( 5,811 )

Income before income tax provision (benefit) and equity in loss of investees 275,095 454,302 529,463

Income tax provision (benefit) 33,517 ( 73,154 ) 80,162

Income (loss) before income tax expense (benefit) and equity in loss of investees ( 112,838 ) 275,095 454,302

Income tax expense (benefit) 216,116 33,517 ( 73,154 )

Equity in loss of investees 714 2,962 4,089

Net income $ 238,616 $ 523,367 $ 447,098

Net income per ordinary share:

Net income (loss) $ ( 329,668 ) $ 238,616 $ 523,367

Net income (loss) per ordinary share:

Basic $ ( 5.52 ) $ 4.28 $ 9.22

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JAZZ PHARMACEUTICALS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

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2021 2020 2019

Net income $ 238,616 $ 523,367 $ 447,098

Net income (loss) $ ( 329,668 ) $ 238,616 $ 523,367

Other comprehensive income (loss):

Foreign currency translation adjustments ( 268,347 ) 90,183 ( 20,720 )

Unrealized gain (loss) on hedging activities, net of income tax provision (benefit) of ($ 163 ), ($ 697 ) and $ 289 , respectively

Unrealized gain (loss) on cash flow hedging activities, net of income tax expense (benefit) of $ 353 , ($ 163 ) and ($ 697 ), respectively

2,468 ( 1,142 ) ( 4,882 )

Unrealized loss on fair value hedging activities, net of income tax benefit of $ 43 , $ — and $ — , respectively

Other comprehensive income (loss) ( 266,008 ) 89,041 ( 25,602 )

Total comprehensive income $ 327,657 $ 497,765 $ 390,132

Total comprehensive income (loss) $ ( 595,676 ) $ 327,657 $ 497,765

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

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Comprehensive

Income (Loss) Retained Earnings Total

Loss Retained Earnings Total

Shares Amount Shares Amount

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Balance at December 31, 2019 56,140 6 4,000 55 472 2,266,026 ( 223,393 ) 1,067,815 3,110,981

Cumulative effect adjustment from adoption of new accounting standards — — — — — — — 4,848 4,848

Stock issued under directors deferred compensation plan 37 — — — — — — — —

Issuance of Exchangeable Senior Notes, due 2026 — — — — — 176,260 — — 176,260

Partial repurchase of Exchangeable Senior Notes, due 2021 — — — — — ( 12,513 ) — — ( 12,513 )

Issuance of ordinary shares in conjunction with exercise of share options 780 — — — — 86,984 — — 86,984

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Shares repurchased ( 1,201 ) — — — — — — ( 146,537 ) ( 146,537 )

Other comprehensive loss — — — — — — ( 25,602 ) — ( 25,602 )

Other comprehensive income — — — — — — 89,041 — 89,041

Net income — — — — — — — 238,616 238,616

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Comprehensive

Income (Loss) Retained Earnings Total

Loss Retained Earnings Total

Shares Amount Shares Amount

Balance at December 31, 2020 56,171 $ 6 4,000 $ 55 $ 472 $ 2,633,670 $ ( 134,352 ) $ 1,159,894 $ 3,659,745

Stock issued under directors deferred compensation plan 37 — — — — — — — —

Issuance of Exchangeable Senior Notes, due 2026 — — — — — 176,260 — — 176,260

Partial repurchase of Exchangeable Senior Notes, due 2021 — — — — — ( 12,513 ) — — ( 12,513 )

Issuance of ordinary shares in connection with the acquisition of GW Pharmaceuticals plc 3,798 — — — — 608,456 — — 608,456

Share-based payment - precombination service in connection with the acquisition of GW Pharmaceuticals plc — — — — — 3,555 — — 3,555

Issuance of ordinary shares in conjunction with exercise of share options 1,042 — — — — 119,058 — — 119,058

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Share-based compensation — — — — — 189,452 — — 189,452

Shares repurchased ( 1,201 ) — — — — — — ( 146,537 ) ( 146,537 )

Other comprehensive income — — — — — — 89,041 — 89,041

Net income — — — — — — — 238,616 238,616

Other comprehensive loss — — — — — — ( 266,008 ) — ( 266,008 )

Net loss — — — — — — — ( 329,668 ) ( 329,668 )

Balance at December 31, 2021 61,633 $ 6 4,000 $ 55 $ 472 $ 3,534,792 $ ( 400,360 ) $ 830,226 $ 3,965,191

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Operating activities

Net income $ 238,616 $ 523,367 $ 447,098

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ ( 329,668 ) $ 238,616 $ 523,367

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

Intangible asset amortization 525,769 259,580 354,814

Acquisition accounting inventory fair value step-up adjustment 223,085 — —

Share-based compensation 189,006 120,998 110,563

Impairment charges 136,139 — 42,896

Non-cash interest expense 92,655 61,748 46,396

Deferred tax expense (benefit) 69,198 ( 136,937 ) ( 236,610 )

Depreciation 26,714 18,673 15,342

Acquired in-process research and development 251,250 109,975 —

Distributions from equity method investees 5,438 — —

Deferred tax benefit ( 136,937 ) ( 236,610 ) ( 88,815 )

Provision for losses on accounts receivable and inventory 19,668 15,000 6,668

Loss on extinguishment and modification of debt 5,089 — 1,425

Amortization of debt discount and deferred financing costs 56,659 46,396 43,960

Impairment charge — 136,139 —

Acquired in-process research and development — 251,250 109,975

Other non-cash transactions 10,032 14,580 59

Distributions from equity method investees — 5,438 —

Changes in assets and liabilities:

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Prepaid expenses and other current assets ( 83,320 ) ( 98,042 ) ( 25,650 )

Other non-current assets 21,913 ( 18,919 ) ( 2,523 )

Operating lease assets 15,583 12,366 14,148

Other non-current assets 817 21,913 ( 18,919 )

Accounts payable 57,021 ( 18,935 ) 4,770

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Deferred revenue ( 2,305 ) ( 4,720 ) ( 5,414 )

Other non-current liabilities ( 8,967 ) 3,561 14,537

Operating lease liabilities, less current portion ( 16,037 ) ( 12,383 ) ( 6,044 )

Other non-current liabilities ( 4,946 ) ( 8,967 ) 3,561

Net cash provided by operating activities 778,507 899,648 776,401

Investing activities

Acquisition of investments ( 2,397,675 ) ( 917,100 ) ( 1,165,915 )

Proceeds from maturity of investments 1,095,000 1,755,000 985,000

Acquired in-process research and development ( 251,250 ) ( 61,700 ) —

Purchases of property, plant and equipment ( 27,641 ) ( 15,004 ) ( 40,135 )

Asset acquisition, net of cash acquired — ( 55,074 ) —

Acquisition of intangible assets ( 17,891 ) ( 113,000 ) ( 80,500 )

Acquisition of investments ( 26,819 ) ( 2,397,675 ) ( 917,100 )

Acquisition of a business, net of cash acquired ( 6,234,792 ) — —

Acquired in-process research and development — ( 251,250 ) ( 61,700 )

Asset acquisition, net of cash acquired — — ( 55,074 )

Net proceeds from sale of assets — 14,259 14,209

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Financing activities

Net proceeds from issuance of Exchangeable Senior Notes, due 2026 981,381 — —

Proceeds from revolving credit facility 500,000 — —

Net proceeds from issuance of borrowings under credit agreement 3,719,930 — —

Net proceeds from issuance of Senior Secured Notes, due 2029 1,471,533 — —

Proceeds from employee equity incentive and purchase plans 135,261 99,681 57,831

Share repurchases ( 146,537 ) ( 301,450 ) ( 523,672 )

Payment of employee withholding taxes related to share-based awards ( 35,602 ) ( 16,877 ) ( 16,739 )

Payments for repurchase of Exchangeable Senior Notes, due 2021 ( 218,812 ) ( 356,188 ) —

Repayments of long-term debt ( 1,101,788 ) ( 33,387 ) ( 33,387 )

Payment of debt modification costs — — ( 6,406 )

Payments for partial repurchase of Exchangeable Senior Notes, due 2021 ( 356,188 ) — —

Net proceeds from issuance of Exchangeable Senior Notes, due 2026 — 981,381 —

Net proceeds from revolving credit facility — 500,000 —

Share repurchases — ( 146,537 ) ( 301,450 )

Repayments under revolving credit facility — ( 500,000 ) —

Proceeds from tenant improvement allowance on build-to-suit lease — — 1,253

Net cash provided by (used in) financing activities 3,970,522 528,073 ( 293,745 )

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Cash paid for interest $ 138,271 $ 42,470 $ 43,002

Cash paid for income taxes 226,823 183,610 164,217

Non-cash investing activities:

Amounts capitalized in connection with facility lease obligations — — 27,747

Cash paid for income taxes, net of refunds 271,217 226,823 183,610

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

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Organization and Description of Business

Jazz Pharmaceuticals plc is an innovative global biopharmaceutical company dedicated to developing and commercializing life-changing medicines that transform the lives of patients with serious diseases – often with limited or no options.

We have a diverse portfolio of marketed medicines and novel product candidates, in early- to late-stage development, across key therapeutic areas.

Our focus is in neuroscience, including sleep and movement disorders, and in oncology, including hematologic malignancies and solid tumors.

We actively explore new options for patients including novel compounds, small molecule advancements, biologics and innovative delivery technologies.

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:

• Xyrem ® (sodium oxybate) oral solution , a product approved by the U.S.

Food and Drug Administration, or FDA, and marketed in the U.S.

for the treatment of both cataplexy and excessive daytime sleepiness, or EDS, in narcolepsy patients seven years of age and older;

• Xywav™ (calcium, magnesium, potassium, and sodium oxybates) oral solution , a product that contains 92% less sodium than Xyrem, approved by FDA and launched in the U.S.

in November 2020 for the treatment of cataplexy or EDS in narcolepsy patients seven years of age and older;

• Sunosi ® (solriamfetol) , a product approved by FDA and the European Commission, and marketed in the U.S.

and in Europe to improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep apnea;

• Defitelio ® (defibrotide sodium) , a product approved in the U.S.

for the treatment of adult and pediatric patients with hepatic veno-occlusive disease, or VOD, also known as sinusoidal obstruction syndrome, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT, and in Europe (where it is marketed as Defitelio ® (defibrotide)) for the treatment of severe VOD in adults and children undergoing HSCT therapy;

• Erwinaze ® (asparaginase Erwinia chrysanthemi ) , a product approved in the U.S.

and in certain markets in Europe (where it is marketed as Erwinase ® ) for patients with acute lymphoblastic leukemia who have developed hypersensitivity to E.

• 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 aged 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 both cataplexy and EDS in patients seven years of age and older with narcolepsy;

Jazz also markets Xyrem in Canada for the treatment of cataplexy in patients with narcolepsy.

Xyrem is also approved and distributed in Europe, Great Britain and other markets through a licensing agreement;

• 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, Dravet syndrome, or tuberous sclerosis complex in patients one year of age or older;

in Europe (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome, 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 tuberous sclerosis complex in patients 2 years of age and older;

• Sunosi® (solriamfetol) , a product approved by FDA and marketed in the U.S., Canada, Europe and Great Britain to improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep apnea;

• Sativex® (nabiximols) oral solution , a product approved and marketed in the U.K., Canada and other markets as treatment for symptom improvement in adult patients with moderate to severe spasticity due to multiple sclerosis, or MS, who have not responded adequately to other anti-spasticity medication and who demonstrate clinically significant improvement in spasticity-related symptoms during an initial trial of therapy.

• Zepzelca® (lurbinectedin) , a product approved by FDA in June 2020 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;

i n Canada, Zepzelca was approved in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy;

• Rylaze™ (recombinant Erwinia asparaginase), 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 ALL, or lymphoblastic lymphoma, or LBL, in adults and pediatric patients who have developed hypersensitivity to E.

coli -derived asparaginase;

• Vyxeos ® (daunorubicin and cytarabine) liposome for injection , a product approved in the U.S.

and in Europe (where it is marketed as Vyxeos ® liposomal 44 mg/100 mg powder for concentrate for solution for infusion) for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia or acute myeloid leukemia with myelodysplasia-related changes;

• Zepzelca ™ (lurbinectedin) , a product approved by FDA and launched in July 2020 in the U.S.

for the treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy.

Throughout this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “Jazz,” “the registrant,” “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries.

• Vyxeos® (daunorubicin and cytarabine) liposome for injection , a product approved in the U.S., Canada, Europe and Great Britain (marketed as Vyxeos® liposomal in Europe and Great Britain) for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia, or t-AML, or AML with myelodysplasia-related changes (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;

• Defitelio® (defibrotide sodium) , is a product approved in the U.S.

and Brazil 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-veno occlusive disease).

It is currently approved in the EU, Great Britain, Canada, Israel, South Korea, Australia and Switzerland for the treatment of severe hepatic VOD, also known as sinusoidal obstructive syndrome, or SOS, in HSCT therapy.

It is indicated in adults and pediatric patients over 1 month of age.

In May 2021, we acquired GW Pharmaceuticals plc, or GW, with the objectives of broadening our neuroscience portfolio, further diversifying our revenue and driving sustainable, long-term value creation opportunities.

The total consideration paid by us for the entire issued share capital of GW was $ 7.2 billion.

The acquisition, which we refer to as the GW Acquisition, closed on May 5, 2021.

For further information regarding the GW Acquisition, please see Note 3.

Throughout this report, 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 report, all references to “ordinary shares” refer to Jazz Pharmaceuticals plc’s ordinary shares.

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Our consolidated financial statements include the results of operations of businesses we have acquired from the date of each acquisition for the applicable reporting periods.

The results of operations of the acquired GW business, along with the estimated fair values of the assets acquired and liabilities assumed in the GW Acquisition, have been included in our consolidated financial statements since the closing of the GW Acquisition on May 5, 2021.

Use of Estimates

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Actual results could differ materially from those estimates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Adoption of New Accounting Standards

In August 2018, the Financial Accounting Standards Board, or FASB, issued ASU No.

2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

We adopted this standard on January 1, 2020 and adoption did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, “Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment” which simplifies the accounting for goodwill impairment by eliminating Step 2 of the goodwill impairment test.

Goodwill impairment will now be the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the carrying value of the goodwill.

We adopted this standard on January 1, 2020 and adoption did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” which requires that credit losses on financial assets measured at amortized cost be determined using an expected loss model, instead of the incurred loss model, and requires that credit losses related to available-for-sale debt securities be recorded through an allowance for credit losses and limited to the amount by which carrying value exceeds fair value.

In December 2019, the Financial Accounting Standards Board, or FASB, issued ASU No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes", which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

We adopted this standard on January 1, 2021 and adoption did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (ASC 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

ASC 848 allows for different elections to be made at different points in time, and the timing of those elections will be documented as applicable.

For the avoidance of doubt, we intend to reassess the elections of optional expedients and exceptions included within ASC 848 related to our hedging activities and will document the election of these items on a quarterly basis.

ASC 848 is effective for us as of January 1, 2020 and will no longer be available to apply after December 31, 2022.

In June 2020, we elected the expedient in ASC 848-50-25-2, which allows us to assume that our hedged interest payments will probably occur regardless of any expected modification in their terms related to reference rate reform.

Adoption is not expected to have a material impact on our consolidated financial statements.

Significant Risks and Uncertainties

With the global impact of the COVID-19 pandemic, we have developed a comprehensive response strategy including establishing cross-functional response teams and implementing business continuity plans to manage the impact of the COVID-19 pandemic on our employees, patients and our business.

Since the second quarter of 2020, we have been experiencing financial and other impacts of the pandemic, and given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, we expect that our business, financial condition, results of operations and growth prospects will continue to be adversely affected in future quarters.

With respect to our commercialization activities, the evolving effects of the COVID-19 pandemic continue to have a negative impact on demand, new patient starts and treatments for our products, primarily due to the inherent limitations of telemedicine and a reprioritization of healthcare resources toward COVID-19.

The extent of the impact on our ability to generate sales of and revenues from our approved products, execute on new product launches, our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our ordinary shares, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration and severity of the pandemic, governmental “stay-at-home” orders and travel restrictions, quarantines, social distancing and business closure requirements in the U.S., Ireland and other countries, and the effectiveness of actions taken globally to contain and treat the disease.

Our financial results are significantly influenced by sales of Xyrem.

Our future plans assume that our newly launched oxybate product Xywav, with 92% lower sodium compared to Xyrem, depending on the dose, absence of a sodium warning and dosing titration option, will become the treatment of choice for patients who can benefit from oxybate treatment, current Xyrem patients, and patients who previously were not prescribed Xyrem, including those patients for whom sodium content is a concern.

While we expect that our business will continue to be substantially dependent on oxybate product sales from both Xyrem and Xywav, there is no guarantee that we can maintain oxybate sales at or near historical levels, or that oxybate sales will continue to grow.

Our ability to maintain or increase oxybate sales is subject to a number of risks and uncertainties including, without limitation, those related to the introduction of authorized generic and generic versions of sodium oxybate and/or new products for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market, the current and potential impacts

We have implemented a comprehensive response strategy designed to manage the ongoing impact of the COVID-19 pandemic on our employees, patients and our business.

The prolonged nature of the pandemic is negatively impacting our business in a varied manner due to the emergence of the Delta and Omicron variants and other variants with increased transmissibility, even in some cases in vaccinated people, limited access to health care provider offices and institutions and the willingness of patients or parents of patients to seek treatment.

We expect that our business, financial condition, results of operations and growth prospects may continue to be negatively impacted by the pandemic on a limited basis that may vary depending on the context.

However we have begun to observe, and expect to continue to observe, a gradual normalization in patient and healthcare provider practices, as providers and patients have adapted their behaviors and procedures to the evolving circumstances and as COVID-19 vaccines continue to be administered.

With respect to our commercialization activities, while there continues to be some negative impact on demand, new patient starts and treatments for our products arising from the pandemic, primarily due to the inherent limitations of telemedicine and a reprioritization of healthcare resources toward COVID-19, we have seen improvements as healthcare systems have adapted to cope with the ongoing situation.

We believe these dynamics have negatively impacted new patient starts in the U.S.

The extent of the impact on our ability to generate sales of approved products, execute on new product launches, our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our ordinary shares, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time.

Such developments include continued spread of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of the ongoing COVID-19 pandemic, including the current and expected future negative impact on demand for our products and the uncertainty with respect to our ability to meet commercial demand in the future, increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to obtain and maintain adequate coverage and reimbursement for Xywav, challenges to our intellectual property around Xyrem and Xywav, and continued acceptance of Xyrem by physicians and patients and acceptance of Xywav by payors, physicians and patients.

In addition to risks related specifically to Xyrem and Xywav, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, including Sunosi, Defitelio, Erwinaze, Vyxeos and Zepzelca, 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:

obtaining regulatory approval of our late-stage product candidates;

effectively commercializing our recently approved products such as Sunosi, Zepzelca and Xywav;

Delta and Omicron variants in the U.S.

and other countries and the potential emergence of other SARS-CoV-2 variants that may prove especially contagious or virulent, the ultimate duration and severity of the pandemic, governmental “stay-at-home” orders and travel restrictions, quarantines, social distancing and business closure requirements in the U.S., Ireland and other countries, and the effectiveness of vaccination programs and other actions taken globally to contain and treat the disease.

Our business has been substantially dependent on Xyrem and while we expect that our business will continue to be substantially dependent on oxybate product sales from both Xywav and Xyrem, there is no guarantee that we can maintain oxybate revenues at or near current levels, or that oxybate revenues will continue to grow.

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 idiopathic hypersomnia in adults and adoption in that indication;

competition from the introduction of authorized generic and generic versions of sodium oxybate and new products for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market and from other competitors;

the current and potential impacts of the COVID-19 pandemic, including the current and expected future negative impact on demand for our products;

increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to maintain adequate coverage and reimbursement for Xywav;

increased rebates required to maintain access to our products;

challenges to our intellectual property around Xyrem and/or Xywav, including pending antitrust and intellectual property litigation;

and continued acceptance of Xywav and Xyrem by physicians and patients .

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, including Epidiolex, Sunosi, Defitelio, Vyxeos, Rylaze and Zepzelca, 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 recently approved or acquired products such as Xywav, Epidiolex, Zepzelca and Rylaze;

obtaining and maintaining adequate coverage and reimbursement for our products;

contracting and rebates to pharmacy benefit managers that reduces 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, Drug enforcement agency, or DEA, action or FDA action 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;

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and possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations.

In addition, to the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

In addition, the success of the GW Acquisition will depend, in part, on our ability to realize the anticipated benefits from successfully combining our and GW's historical businesses and the integration of our business practices and operations with GW's so that we can fully realize the anticipated benefits of the acquisition.

The anticipated benefits to us of the GW Acquisition may not be realized fully 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.

Moreover, to the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

Concentrations of Risk

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As of December 31, 2021 and 2020, we had foreign exchange forward contracts with notional amounts totaling $ 347.2 million and $ 357.4 million, respectively.

As of December 31, 2020 and 2019, the outstanding foreign exchange forward contracts had a net asset fair value of $ 11.1 million and $ 2.3 million, respectively.

As of December 31, 2020 and 2019, we had interest rate swap contracts with notional amounts totaling $ 300.0 million.

These outstanding interest rate swap contracts had a net liability fair value of $ 2.8 million and $ 1.5 million as of December 31, 2020 and 2019, respectively.

As of December 31, 2021 and 2020, the outstanding foreign exchange forward contracts had a net liability fair value of $ 2.6 million and a net asset fair value of $ 11.1 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2021, we had a cross-currency interest rate swap with a notional amount of $ 251.0 million.

This outstanding cross-currency interest rate swap contract had a net liability fair value of $ 15.2 million as of December 31, 2021.

The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not significant.

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Customer creditworthiness is monitored and collateral is not required.

We monitor deteriorating 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.

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 December 31, 2021, allowances on receivables were not material.

As of December 31, 2020, two customers accounted for 80 % of gross accounts receivable, Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 68 % of gross accounts receivable, and McKesson Corporation and affiliates, or McKesson, which accounted for 12 % of gross accounts receivable.

As of December 31, 2019, two customers accounted for 89 % of gross accounts receivable, ESSDS, which accounted for 77 % of gross accounts receivable, and McKesson, which accounted for 12 % of gross accounts receivable.

We depend on single source suppliers for most of our products, product candidates and their APIs.

With respect to Xyrem, the API is manufactured for us by a single source supplier and the finished product is manufactured both by us in our facility in Athlone, Ireland and by our U.S.-based Xyrem supplier.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2021, three customers accounted for 74 % of gross accounts receivable, Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 52 % of gross accounts receivable, McKesson Corporation and affiliates, or McKesson, which accounted for 12 % of gross accounts receivable and Cardinal Health Inc., or Cardinal, which accounted for 10 % of gross accounts receivable.

As of December 31, 2020, three customers accounted for 84 % of gross accounts receivable, ESSDS, which accounted for 68 % of gross accounts receivable, McKesson, which accounted for 12 % of gross accounts receivable and Cardinal which accounted for 4 % of gross accounts receivable.

We depend on single source suppliers for most of our products, product candidates and their active pharmaceutical ingredients, or APIs.

With respect to our oxybate products, the API is manufactured for us by a single source supplier and the finished product are manufactured both by us in our facility in Athlone, Ireland and by our U.S.-based supplier.

Business Acquisitions

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We use the specific-identification method for calculating realized gains and losses on securities sold.

Realized gains and losses and declines in value judged to be other than temporary on investments are included in interest expense, net in the consolidated statements of income.

Realized gains and losses and declines in value judged to be other than temporary on investments are included in interest expense, net in the consolidated statements of income (loss).

Derivative Instruments and Hedging Activities

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For a derivative to qualify as a hedge at inception and throughout the hedged period, we formally document the nature and relationships between the hedging instruments and hedged item.

We assess, both at inception and on an on-going basis, whether the derivative instruments that are used in cash flow hedging transactions are highly effective in offsetting the changes in cash flows of hedged items.

For derivatives formally designated as hedges, we assess both at inception and quarterly thereafter, whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item.

Gains or losses on cash flow hedges are reclassified from other comprehensive income (loss) to earnings when the hedged transaction occurs.

If we determine that a forecasted transaction is no longer probable of occurring, we discontinue hedge accounting and any related unrealized gain or loss on the derivative instrument is recognized in current earnings.

We designate cross-currency interest rate swaps as fair value hedges to hedge foreign currency risks related to our borrowings denominated in currencies other than the U.S.

Fair value hedge amounts included in the assessment of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

hedge effectiveness are recognized in foreign exchange gain (loss) within the consolidated statements of income (loss), along with the offsetting gains and losses of the related hedged item.

We have elected to exclude the total forward points or currency basis from the assessment of hedge effectiveness and account for them as excluded components.

The initial fair value of the excluded component is amortized to foreign exchange gain (loss) and the difference between changes in fair value of the excluded component and the amount recorded in earnings is recorded in other comprehensive income (loss).

Derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings.

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We had no pre-approval inventory on our consolidated balance sheet as of December 31, 2021 or 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our inventory production process for our cannabinoid products includes the cultivation of botanical raw material.

Because of the duration of the cultivation process, a portion of our inventory will not be sold within one year.

Consistent with the practice in other industries that cultivate botanical raw materials, all inventory is classified as a current asset.

Property, Plant and Equipment

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We determine if an arrangement is a lease at inception.

Leases are classified at lease commencement as either operating leases or finance leases.

Operating leases are included in operating lease assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

Finance lease assets are included in property, plant and equipment, net, and finance lease liabilities are included in other current liabilities and other non-current liabilities in our consolidated balance sheets.

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

In determining the net present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date.

The operating lease asset also includes any lease payments made, reduced by lease incentives and increased by initial direct costs incurred.

The lease asset also includes any lease payments made, reduced by lease incentives and increased by initial direct costs incurred.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Finance lease expense is recognized as depreciation expense of fixed assets and interest expense on finance lease liabilities.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

For vehicle leases we account for the lease and non-lease components as a single lease component.

We have elected the short-term lease exemption and, therefore, do not recognize an operating lease asset or corresponding liability for lease arrangements with an original term of 12 months or less.

We have elected the short-term lease exemption and, therefore, do not recognize a lease asset or corresponding liability for lease arrangements with an original term of 12 months or less.

Rent expense under short-term leases is recognized on a straight-line basis over the lease term.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill represents the excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed.

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Intangible Assets

Intangible assets with finite useful lives consist primarily of purchased developed technology and are amortized on a straight-line basis over their estimated useful lives, which range from two to eighteen years.

The estimated useful lives associated with finite-lived intangible assets are consistent with the estimated lives of the associated products and may be modified when circumstances warrant.

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Our revenue comprises product sales, net and royalty and contract revenues.

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

entitled to in exchange for those goods or services.

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Prior to recognizing revenue, we make estimates of the transaction price, including variable consideration that is subject to a constraint.

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Reserves for government chargebacks and prompt payment discounts are shown as a reduction in accounts receivable.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Royalties and Contract Revenues

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Cost of product sales includes manufacturing and distribution costs, the cost of drug substance, royalties due to third parties on product sales, product liability and cargo insurance, FDA user fees, freight, shipping, handling and storage costs and salaries and related costs of employees involved with production.

Excluded from cost of product sales shown on the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

consolidated statements of income is amortization of acquired developed technology of $ 259.6 million, $ 243.7 million and $ 201.3 million in 2020, 2019 and 2018, respectively.

Excluded from cost of product sales shown on the consolidated statements of income (loss) is amortization of acquired developed technology of $ 525.8 million, $ 259.6 million and $ 243.7 million in 2021, 2020 and 2019, respectively.

Research and Development

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A recognized tax benefit is then measured as the largest amount of tax benefit that is greater than fifty percent likely of being realized upon settlement.

Interest and penalties related to unrecognized tax benefits are included in the income tax provision and classified with the related liability on the consolidated balance sheets.

Interest and penalties related to an underpayment of income taxes are included in the income tax expense and classified with the related liability on the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign Currency

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Any monetary assets and liabilities arising from these transactions are translated into the relevant functional currency at exchange rates prevailing at the balance sheet date or on settlement.

Resulting gains and losses are recorded in foreign exchange gain (loss) in our consolidated statements of income.

Resulting gains and losses are recorded in foreign exchange gain (loss) in our consolidated statements of income (loss).

Deferred Financing Costs

Deferred financing costs are reported at cost, less accumulated amortization and are presented in the consolidated balance sheets as a direct deduction from the carrying value of the associated debt, with the exception of deferred financing costs associated with revolving-debt arrangements which are presented as assets.

The related amortization expense is included in interest expense, net in our consolidated statements of income.

The related amortization expense is included in interest expense, net in our consolidated statements of income (loss).

Contingencies

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The fair value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.

The estimation of share-based awards that will ultimately vest requires judgment, and, to the extent actual results or updated estimates differ from

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.

The estimation of share-based awards that will ultimately vest requires judgment, and, to the extent actual results or updated estimates differ from current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.

We primarily consider historical experience when estimating expected forfeitures.

Performance-Based Restricted Stock Unit Awards

Performance-based restricted stock units, or PRSUs, awarded to employees vest upon the achievement of certain performance criteria at the end of a specified performance period, subject to a relative total shareholder return, or TSR, modifier.

The estimated fair value of these PRSUs is based on a Monte Carlo simulation model.

Compensation expense for PRSUs is recognized from the date the Company determines the performance criteria probable of being achieved to the date the award, or relevant portion of the award, is expected to vest.

Cumulative adjustments are recorded on a quarterly basis to reflect subsequent changes to the estimated outcome of the performance criteria until the date results are determined.

Variable Interest Entity

In the year ended December 31, 2021, we invested in a cell of a protected cell company, or the protected cell, as part of our directors’ and officers’ liability risk financing strategy.

Based on our control and the structure of the protected cell, we concluded that Jazz is the primary beneficiary of the protected cell and is required to consolidate the protected cell.

The insurance premium payable to the protected cell for the year ended December 31, 2021 and the protected cell’s assets and liabilities as of December 31, 2021 were immaterial.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, "Income Taxes (Topic 740):

The amendments are effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted.

The new guidance is not expected to have a material impact on our results of operations and financial position.

In August 2020, the FASB issued ASU No.

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This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

This new standard will be effective for us for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than the fiscal year beginning after December 15, 2020.

We may elect to apply the amendments on a retrospective or modified retrospective basis.

We are currently evaluating the timing, method of adoption and overall impact of this standard on our consolidated financial statements.

Asset Acquisitions, Collaborations and Disposition

The Company adopted ASU 2020-06 on January 1, 2022, on a modified retrospective basis.

As a result of adoption, the Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

increased its convertible debt liabilities, retained earnings and deferred tax assets on January 1, 2022 by $ 206.2 million, $ 127.4 million and $ 0.1 million, respectively and decreased its additional paid-in capital by $ 333.5 million.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, 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.

The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted.

The new guidance is not expected to have a material impact on our results of operations, financial position, or cash flows.

Business Combination, Asset Acquisitions and Collaborations

GW Acquisition

On May 5, 2021, or the Closing Date, we acquired the entire issued share capital of GW.

As a result, GW became an indirect wholly owned subsidiary of the Company.

We acquired GW with the objective of broadening our neuroscience portfolio, further diversifying our revenue and driving sustainable, long-term value creation opportunities.

GW was a global leader in discovering, developing, manufacturing and commercializing novel, regulatory approved therapeutics from its proprietary cannabinoid research platform to address a broad range of diseases.

The aggregate consideration for the GW Acquisition was $ 7.2 billion as follows (all amounts in thousands except American Depositary Shares, or ADS, and per GW ADS amounts):

GW ADS outstanding May 5, 2021 31,556,200

Cash consideration per GW ADS $ 200

Total cash consideration to GW ADS holders $ 6,311,240

Cash consideration to GW share option holders (inclusive of payroll taxes) 267,450

Total cash consideration 6,578,690

Equity consideration to GW ADS holders (1) 608,456

Consideration related to replacement share option pre-combination service 3,555

Total equity consideration 612,011

Total purchase consideration $ 7,190,701

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(1) 3.8 million ordinary shares were issued to GW ADS holders.

The closing price of the ordinary shares on May 4, 2021 ($ 160.20 ) was used to determine the fair value of this equity consideration because the closing of the transaction on May 5, 2021 occurred prior to the opening of regular trading.

In April 2021, we closed an offering of $ 1.5 billion in aggregate principal amount of 4.375 % senior secured notes, due 2029, or the Secured Notes.

In May 2021, we entered into a credit agreement, or the Credit Agreement, that provides for (i) a seven-year $ 3.1 billion term loan B facility, or the Dollar Term Loan, (ii) a seven-year € 625.0 million term loan B facility, or the Euro Term Loan and, together with the Dollar Term Loan, collectively known as the Term Loan and (iii) a five-year $ 500.0 million revolving credit facility, or the Revolving Credit Facility.

We financed the cash portion of the GW Acquisition consideration through a combination of cash on hand and borrowings under the Term Loan and the Secured Notes.

For further information on the Term Loan and the Secured Notes, please see Note 12.

The GW Acquisition was accounted for as a business combination using the acquisition method under which assets and liabilities of GW were recorded at their respective estimated fair values as of the Closing Date and added to the assets and liabilities of the Company, including an amount for goodwill representing the difference between the acquisition consideration and the estimated fair value of the identifiable net assets.

The results of operations of GW and the estimated fair values of the assets acquired and liabilities assumed have been included in our consolidated financial statements since the Closing Date.

In 2021, we incurred $ 81.9 million in acquisition-related costs related to the GW Acquisition, which primarily consisted of banking, legal, accounting and valuation-related expenses.

These expenses were recorded in selling, general and administrative expense in the accompanying consolidated statements of income (loss).

In 2021, our consolidated statements of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income (loss) included revenues of $ 476.4 million and a net loss of $ 704.6 million from the acquired GW business, as measured from the Closing Date.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the Closing Date before and after the measurement period adjustment (in thousands):

Before Measurement Period Adjustment Measurement Period Adjustment After Measurement Period Adjustment

Cash and cash equivalents $ 343,898 $ — $ 343,898

Accounts receivable 76,355 — 76,355

Inventory 1,206,290 — 1,206,290

Prepaid expenses and other current assets 72,758 — 72,758

Property, plant and equipment 154,407 — 154,407

Acquired developed technologies 5,480,000 — 5,480,000

In-process research and development

160,000 — 160,000

Total acquired identifiable intangible assets 5,640,000 — 5,640,000

Goodwill 947,831 ( 14,597 ) 933,234

Deferred tax liabilities, net ( 1,083,673 ) 14,597 ( 1,069,076 )

Accrued liabilities ( 131,971 ) — ( 131,971 )

Other assets/liabilities ( 35,194 ) — ( 35,194 )

Total purchase consideration $ 7,190,701 $ — $ 7,190,701

The fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, and our estimates and assumptions are subject to change as we obtain additional information for our estimates during the measurement period (up to one year from the Closing Date).

During the three months ended December 31, 2021, we recorded a measurement period adjustment which reduced deferred tax liabilities, net and goodwill by $ 14.6 million.

The measurement period adjustment primarily related to the refinement of the opening UK net operating loss position of GW.

Inventories acquired included raw materials, work in progress and finished goods.

Inventories were recorded at their estimated fair values.

The inventory was valued at estimated selling price less the estimated costs to be incurred to complete (in the case of work in progress) and sell the inventory, the associated margins on these activities and holding costs.

A step-up in value of inventory of $ 1,062.6 million was recorded in connection with the GW Acquisition.

The step-up expense will be recorded in cost of product sales on our consolidated statements of income (loss) as the inventory is sold to customers from the Closing Date.

Intangible assets

The fair value of acquired intangible assets was $ 5,640.0 million.

The intangible assets include acquired developed technologies, primarily related to Epidiolex, and IPR&D.

The fair value of the Epidiolex acquired developed technology asset was determined by applying the income approach, which recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs, using a discount rate of 9.4 % that reflects the return requirements of the market.

This intangible asset is being amortized over an estimated useful life of 12 years.

Acquired IPR&D relates to nabiximols, which is currently in Phase 3 clinical trials for the treatment of spasticity associated with multiple sclerosis and spinal cord injury.

The fair value of acquired IPR&D was determined using the income approach, including the application of probability factors related to the likelihood of success of nabiximols reaching final development and commercialization.

The fair value of acquired IPR&D was capitalized as of the Closing Date and is subsequently accounted for as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts.

Accordingly, during the development period after the Closing Date, this asset will not be amortized into earnings;

instead, it will be subject to periodic impairment testing.

Some of the more significant assumptions inherent in the development of intangible asset fair values include:

the amount and timing of projected future cash flows (including revenue, cost of sales, research and development cost and sales and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

marketing expenses);

probability of success;

the discount rate selected to measure inherent risk of future cash flows;

and the assessment of the asset’s life cycle and the competitive trends impacting the asset, among other factors.

Deferred tax liabilities, net

The net deferred tax liability relates to the difference between the financial statement carrying amount and the tax basis of acquired intangible assets and inventory, partially offset by acquired net operating loss carryforwards and other temporary differences.

Other tangible assets and liabilities

Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition-date fair values.

Goodwill represents the excess of the total purchase consideration over the estimated fair value of net assets acquired and was recorded in the consolidated balance sheet as of the Closing Date.

The goodwill was primarily attributable to the establishment of the deferred tax liability for the acquired intangible assets and inventory.

We do not expect any portion of this goodwill to be deductible for income tax purposes.

Pro Forma Financial Information (Unaudited)

The following unaudited supplemental pro forma information presents the combined historical results of income (loss) of the Company and GW for 2021 and 2020, respectively, as if the GW Acquisition had been completed on January 1, 2020.

The primary pro forma adjustments include:

• The exclusion of acquisition-related and integration expenses of $ 357.6 million in 2021 and related income tax expense of $ 23.6 million.

The inclusion of acquisition-related and integration expenses of $ 386.7 million in 2020 and related income tax benefit of $ 27.9 million.

• An increase in amortization expense of $ 159.1 million in 2021 and related income tax benefit of $ 30.2 million.

An increase in amortization expense of $ 464.6 million in 2020 and related income tax benefit of $ 88.3 million.

• An increase in cost of product sales of $ 81.9 million in 2021 and related income tax benefit of $ 12.4 million.

An increase in cost of product sales of $ 296.3 million in 2020 and related income tax benefit of $ 59.5 million.

• An increase in interest expense of $ 49.1 million in 2021 and related income tax benefit of $ 9.0 million.

An increase in interest expense of $ 241.0 million in 2020 and related income tax benefit of $ 51.9 million.

The increase in interest arose on additional borrowings made to partially fund the GW Acquisition as if the borrowings had occurred on January 1, 2020.

The unaudited pro forma results do not assume any operating efficiencies as a result of the consolidation of operations and are as follows (in thousands):

Total revenues $ 3,294,697 $ 2,890,772

Net loss $ ( 422,588 ) $ ( 980,481 )

Asset Acquisition and Exclusive License Agreement

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Under the terms of the agreement, SpringWorks has assigned or exclusively licensed all assets relating to its FAAH inhibitor program to us, including assignment of SpringWorks’ proprietary FAAH inhibitor PF-04457845, or PF-’845, now named JZP150 and its license agreement with Pfizer, Inc., or Pfizer, under which Pfizer exclusively licensed PF-’845 to SpringWorks in 2017.

In addition to assuming all milestone and royalty obligations owed by SpringWorks to Pfizer, we made an upfront payment of $ 35.0 million to SpringWorks, which was recorded as acquired in-process research and development, or IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and may make potential milestone payments to SpringWorks of up to $ 375.0 million upon the achievement of certain clinical, regulatory and commercial milestones, and pay incremental tiered royalties to SpringWorks on future net sales of JZP-150 in the mid- to high-single digit percentages.

In addition to assuming all milestone and royalty obligations owed by SpringWorks to Pfizer, we made an upfront payment of $ 35.0 million to SpringWorks, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and may make potential milestone payments to SpringWorks of up to $ 375.0 million upon the achievement of certain clinical, regulatory and commercial milestones, and pay incremental tiered royalties to SpringWorks on future net sales of JZP150 in the mid- to high-single digit percentages.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

License Agreement

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In June 2020, we made a milestone payment of $ 100.0 million to PharmaMar following FDA accelerated approval of Zepzelca, which was capitalized as an intangible asset on our consolidated balance sheet.

In October 2021, we reached our first sales milestone triggering a payment of $ 25.0 million, which was capitalized as an intangible asset on our consolidated balance sheet.

PharmaMar is eligible to receive potential future regulatory milestone payments of up to $ 150.0 million upon the achievement of continued U.S.

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commercial milestone payments, as well as incremental tiered royalties on future net sales of Zepzelca ranging from the high teens up to 30 percent.

PharmaMar may receive additional payments on approval of other indications, with any such payments creditable against

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

commercial milestone payment obligations.

PharmaMar may receive additional payments on approval of other indications, with any such payments creditable against commercial milestone payment obligations.

PharmaMar retains production rights for Zepzelca and will supply the product to us.

In October 2020, we entered into an amendment and restatement of the original license agreement with PharmaMar, or the amended license agreement, which expanded our exclusive license to include rights to develop and commercialize Zepzelca in Canada.

To date, we have paid PharmaMar an upfront payment of $ 1.0 million, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and a milestone payment of $ 1.0 million in September 2021 following the first NDA Approval by Health Canada, which was capitalized as an intangible asset on our consolidated balance sheet.

PharmaMar is also eligible to receive up to $ 6.0 million in potential Canadian regulatory and commercial milestone payments, as well as incremental tiered royalties on future Canadian net sales of Zepzelca ranging from the high teens up to 30 percent.

Asset Acquisition

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The acquisition of Cavion was accounted for as an asset acquisition because it did not meet the definition of a business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the total consideration for the acquisition and the value of assets acquired and liabilities assumed (in thousands):

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Total net assets acquired $ 55,471

The value attributed to in-process research and development relates to JZP-385 and was expensed as it was determined to have no alternative future use.

The value attributed to in-process research and development related to JZP385 and was expensed as it was determined to have no alternative future use.

Collaboration and License Agreement

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and we paid them a non-refundable upfront payment of $ 75.0 million, which was charged to acquired IPR&D expense upon closing of the transaction.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

This agreement was amended in November 2019.

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In December 2020, we exercised our opt-out rights with respect to IMGN632, thereby relinquishing the development and commercialization option.

In June 2018, we entered into an asset purchase agreement, or APA, with TerSera Therapeutics LLC, or TerSera, pursuant to which TerSera agreed to purchase substantially all of our assets related to the manufacture, marketing and sale of Prialt, but excluding accounts receivable, and to assume certain related liabilities as set forth in the APA.

We entered into an amendment to the APA, and the transaction closed, in September 2018.

The total sales price was $ 80.0 million, of which we received $ 50.0 million at closing and installment payments of $ 15.0 million, less certain reimbursable expenses, in December 2020 and December 2019.

The related assets met the assets held for sale criteria and were reclassified to assets held for sale as of June 30, 2018.

We adjusted the carrying value of the assets held for sale to fair value less costs to sell, which resulted in an impairment charge of $ 42.9 million in our consolidated statement of income in 2018, primarily related to the carrying balance of intangible assets.

Upon closing, we recognized a loss on disposal of $ 0.5 million within selling, general and administrative expenses in our consolidated statement of income in 2018.

We determined that the disposal of these assets did not qualify for reporting as a discontinued operation since it did not represent a strategic shift that had or will have a major effect on our operations and financial results.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash and Available-for-Sale Securities

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Cash $ 510,747 $ — $ — $ 510,747 $ 510,747 $ —

Time deposits 1,360,000 — — 1,360,000 285,000 1,075,000

Money market funds 80,701 — — 80,701 80,701 —

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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 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 $ 1.8 million, $ 11.1 million and $ 20.5 million in 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value Measurement

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Totals $ 80,701 $ 580 $ 81,281 $ 255,652 $ 1,371,907 $ 1,627,559

Cross-currency interest rate contracts $ — $ 15,232 $ 15,232 $ — $ — $ —

Interest rate contracts — — — — 2,835 2,835

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Totals $ — $ 18,419 $ 18,419 $ — $ 3,625 $ 3,625

As of December 31, 2020, our available-for-sale securities included time deposits and money market funds and their carrying values were approximately equal to their fair values.

Time deposits were measured at fair value using Level 2 inputs and money market funds were measured using quoted prices in active markets, which represent Level 1 inputs.

Level 2 inputs, obtained from various third party data providers, 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.

As of December 31, 2021 our available-for-sale securities were comprised of money market funds and the carrying value was approximately equal to the fair values.

Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs.

As of December 31, 2020 our available-for-sale securities comprised money market funds and time deposits.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our derivative assets and liabilities include cross-currency 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.

The interest rate swap agreements matured in July 2021.

There were no transfers between the different levels of the fair value hierarchy in 2021 or in 2020.

As of December 31, 2020 and 2019, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 4.5 million.

The carrying amount, which is recorded within other non-current assets, represents the purchase price paid in 2018.

As of December 31, 2020, the estimated fair values of our 1.875 % exchangeable senior notes due 2021, or the 2021 Notes, our 1.50 % exchangeable senior notes due 2024, or the 2024 Notes, and our 2.00 % exchangeable senior notes due 2026, or the 2026 Notes, were approximately $ 224 million, $ 615 million and $ 1.3 billion, respectively.

The fair values of the 2021 Notes, the 2024 Notes and the 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, were estimated using quoted market prices obtained from brokers (Level 2).

The estimated fair value of our borrowings under our term loan was approximately equal to its book value based on the borrowing rates currently available for variable rate loans (Level 2).

As of December 31, 2021 and 2020, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 5.0 million and $ 4.5 million, respectively.

The carrying amount, which is recorded within other non-current assets, is based on the latest observable transaction price.

As of December 31, 2021, the estimated fair values of our 1.50 % exchangeable senior notes due 2024, or the 2024 Notes, and our 2.00 % exchangeable senior notes due 2026, or the 2026 Notes, were approximately $ 576.0 million and $ 1.1 billion, respectively.

The 2024 Notes and the 2026 Notes, together with the 1.875 % exchangeable senior notes due 2021, or the 2021 Notes, that were repurchased on maturity on August 15, 2021, are collectively known as the Exchangeable Senior Notes.

As of December 31, 2021, the estimated fair value of the Secured Notes, the Dollar Term Loan and the Euro Term Loan, were approximately $ 1.6 billion, $ 3.1 billion and $ 236.0 million, respectively.

The fair values of each of these debt facilities was estimated using quoted market prices obtained from brokers (Level 2).

Derivative Instruments and Hedging Activities

We are exposed to certain risks arising from operating internationally, including fluctuations in interest rates on our outstanding term loan borrowings and fluctuations in foreign exchange rates primarily related to the translation of euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S.

We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of the Euro Term Loan and sterling and euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S.

dollar functional currency.

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.

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in March 2017 which are effective until July 2021.

These agreements hedge contractual term loan interest rates.

As of December 31, 2020 and 2019, the interest rate swap agreements had a notional amount of $ 300.0 million.

As a result of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

these agreements, the interest rate on a portion of our term loan borrowings was fixed at 1.895 %, plus the borrowing spread, until July 2021.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges was as follows (in thousands):

All of our derivative instruments are utilized for risk management purposes, we do not use derivatives for speculative trading purposes.

In order to hedge our exposure to foreign currency exchange risk associated with our Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021 with a maturity date of March 31, 2022.

The terms of this contract convert the principal repayments and interest payments on our Euro Term Loan into U.S.

As of December 31, 2021, the cross-currency interest rate swap had a notional amount of $ 251.0 million which is designated for accounting purposes as a fair value hedge.

The carrying amount of the Euro Term Loan and the fair value of the cross-currency interest rate swap contract will be remeasured with changes in the euro to U.S.

dollar foreign exchange rates recognized within foreign exchange loss in the 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:

Year Ended December 31, 2021

Interest Rate Contracts:

2020 2019 2018

Gain (loss) recognized in accumulated other comprehensive loss, net of tax $ ( 4,543 ) $ ( 3,903 ) $ 2,274

Loss (gain) reclassified from accumulated other comprehensive loss to interest expense, net of tax $ 3,401 $ ( 979 ) $ ( 252 )

A ssuming no change in LIBOR-based interest rates from market rates as of December 31, 2020, $ 2.5 million of losses, net of tax, recognized in accumulated other comprehensive loss will be reclassified to earnings over the next 12 months.

Loss recognized in accumulated other comprehensive income (loss), net of tax $ ( 375 )

Loss reclassified from accumulated other comprehensive income (loss) to foreign exchange loss, net of tax 246

Loss recognized in foreign exchange loss 35,885

During the next 12 months, we expect to reclassify $ 0.1 million of losses, net of tax, on the cross-currency interest rate contract recognized in accumulated other comprehensive income (loss) to foreign exchange gain (loss).

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.

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As of December 31, 2021 and 2020 , the notional amount of foreign exchange contracts where hedge accounting was not applied was $ 347.2 million and $ 357.4 million, respectively.

The foreign exchange loss in our consolidated statements of income included the following gains and losses associated with foreign exchange contracts not designated as hedging instruments (in thousands):

The foreign exchange loss in our consolidated statements of income (loss) included the following gains and losses associated with foreign exchange contracts not designated as hedging instruments (in thousands):

Year Ended December 31,

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Gain (loss) recognized in foreign exchange loss $ ( 19,585 ) $ 19,843 $ ( 6,192 )

The cash flow effects of our derivative contracts are included within net cash provided by operating activities in the consolidated statements of cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The cash flow effects of our derivative contracts are included within net cash provided by operating activities in the consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which are included in net cash provided by (used in) financing activities.

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in March 2017.

In May 2021, we repaid the term loan to which these interest rate swap agreements related, at which point the interest rate swap contracts were de-designated as cash flow hedges.

The interest rate swap agreements matured in July 2021.

The impact on accumulated other comprehensive income (loss) and earnings from interest rate swap contracts was as follows (in thousands):

Year Ended December 31,

Interest Rate Contracts:

2021 2020 2019

Loss recognized in accumulated other comprehensive income (loss), net of tax $ ( 14 ) $ ( 4,543 ) $ ( 3,903 )

Loss (gain) reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax $ 2,482 $ 3,401 $ ( 979 )

The following tables summarize the fair value of outstanding derivatives (in thousands):

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Derivatives designated as hedging instruments:

Interest rate contracts Other current assets $ — Accrued liabilities $ 2,835

Cross-currency interest rate contracts Other current assets $ — Accrued liabilities $ 15,232

Derivatives not designated as hedging instruments:

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Total fair value of derivative instruments $ 580 $ 18,419

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2020

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Interest rate contracts Other current assets $ — Accrued liabilities $ 2,835

Other non-current liabilities 660

Derivatives not designated as hedging instruments:

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Derivative liabilities $ ( 18,419 ) $ — $ ( 18,419 ) $ 567 $ — $ ( 17,852 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2020

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Total inventories $ 1,072,721 $ 95,396

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2021, inventories included $ 811.3 million related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

Other Current Assets

Other current assets consisted of the following (in thousands):

Deferred charge for income taxes on intercompany profit $ 203,480 $ 114,234

Other 48,912 38,257

Total other current assets $ 252,392 $ 152,491

Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

Construction-in-progress $ 86,511 $ 7,262

Manufacturing equipment and machinery 69,079 33,465

Leasehold improvements 66,318 54,113

Land and buildings 64,008 47,555

Manufacturing equipment and machinery 33,465 28,860

Computer software 25,646 22,781

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Furniture and fixtures 14,412 11,598

Construction-in-progress 7,262 5,147

Subtotal 342,208 195,523

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Depreciation and amortization expense on property, plant and equipment amounted to $ 26.7 million, $ 18.7 million and $ 15.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill and Intangible Assets

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Balance at December 31, 2020 $ 958,303

Goodwill arising from the GW Acquisition 933,234

Foreign exchange ( 63,928 )

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Trademarks — 2,893 ( 2,893 ) — 2,917 ( 2,917 ) —

Priority review voucher — — — — 111,101 ( 111,101 ) —

Total finite-lived intangible assets 8,210,692 ( 1,213,350 ) 6,997,342 3,395,214 ( 1,200,163 ) 2,195,051

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Total intangible assets $ 8,365,678 $ ( 1,213,350 ) $ 7,152,328 $ 3,395,214 $ ( 1,200,163 ) $ 2,195,051

The decrease in the gross carrying amount of intangible assets as of December 31, 2020 compared to December 31, 2019 reflects the impairment of our acquired IPR&D assets of $ 136.1 million following the decision to stop enrollment in our Phase 3 clinical study of defibrotide for the prevention of VOD due to a determination that the study is highly unlikely to reach one of its primary endpoints and the redemption of our priority review voucher in January 2020, partially offset by the capitalization of milestone payments of $ 100.0 million and $ 13.0 million triggered by FDA approval of Zepzelca in June 2020 and European Marketing Authorization of Sunosi in January 2020, respectively, and the positive impact of foreign currency translation adjustments due to the strengthening of the euro against the U.S.

The increase in the gross carrying amount of intangible assets as of December 31, 2021 compared to December 31, 2020 primarily reflects the intangible assets arising from the GW Acquisition, as described in Note 3, partially offset by the de-recognition of the fully amortized Erwinaze intangible assets and the negative impact of foreign currency translation adjustments due to the weakening of sterling and euro against the U.S.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Based on finite-lived intangible assets recorded as of December 31, 2021, and assuming the underlying assets will not be impaired and that we will not change the expected lives of any other assets, future amortization expenses were estimated as follows (in thousands):

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Total $ 6,997,342

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Liabilities

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Employee compensation and benefits 158,870 102,601

Sales returns reserve 18,368 3,462

Royalties 15,230 6,931

Current portion of operating lease liabilities 14,457 12,728

Inventory-related accruals 9,809 7,816

Accrued interest 48,640 5,722

Clinical trial accruals 25,612 9,108

Selling and marketing accruals 6,742 10,946

Accrued milestones 25,000 —

Consulting and professional services 22,507 6,660

Accrued interest 5,722 7,540

Selling and marketing accruals 21,566 6,742

Accrued royalties 20,345 15,230

Derivative instrument liabilities 18,419 3,625

Inventory-related accruals 16,166 9,809

Sales return reserve 15,814 18,368

Current portion of lease liabilities 15,763 14,457

Accrued construction-in-progress 2,894 1,119

Accrued collaboration expenses 444 2,494

Other 59,311 31,757

Total accrued liabilities $ 666,304 $ 352,732

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the carrying amount of our indebtedness (in thousands):

8 unchanged sentences

2026 Notes, net 849,270 820,482

Secured Notes 1,473,810 —

Term Loan 3,223,100 581,702

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Total long-term debt $ 6,018,943 $ 1,848,516

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Credit Agreement

On June 18, 2015, Jazz Pharmaceuticals plc, as guarantor, and certain of our wholly owned subsidiaries, as borrowers, entered into a credit agreement, or the 2015 credit agreement, that provided for a $ 750.0 million principal amount term loan, which was drawn in full at closing, and a $ 750.0 million revolving credit facility, of which $ 160.0 million was drawn at closing and subsequently repaid.

We used the proceeds from initial borrowings under the 2015 credit agreement to repay in full the $ 893.1 million principal amount of term loans outstanding under the credit agreement that we entered into in June 2012, as subsequently amended, which we refer to as the previous credit agreement, and to pay related fees and expenses.

The previous credit agreement was terminated upon repayment of the term loans outstanding thereunder.

On July 12, 2016, we amended the 2015 credit agreement to provide for a revolving credit facility of $ 1.25 billion and a $ 750.0 million term loan facility.

We used the proceeds of $ 1.0 billion of loans under the revolving credit facility, together with cash on hand, to fund the acquisition of Celator Pharmaceuticals, Inc., or the Celator Acquisition.

On June 7, 2018, we entered into the second amendment to the 2015 credit agreement to provide for a revolving credit facility of $ 1.6 billion, which replaced the existing revolving credit facility of $ 1.25 billion, and a new $ 667.7 million term loan facility, which replaced the $ 750.0 million term loan facility, of which $ 584.3 million principal amount was outstanding as of December 31, 2020.

We refer to the 2015 credit agreement as amended by the first and second amendments as the amended credit agreement.

Under the amended credit agreement, the term loan matures on June 7, 2023 and the revolving credit facility terminates, and any loans outstanding thereunder become due and payable, on June 7, 2023.

Borrowings under the amended credit agreement bear interest, at our option, at a rate equal to either (a) the LIBOR rate, plus an applicable margin ranging from 1.375 % to 1.750 % per annum, based upon our secured leverage ratio, or (b) the prime lending rate, plus an applicable margin ranging from 0.375 % to 0.750 % per annum, based upon our secured leverage ratio.

The revolving credit facility has a commitment fee payable on the undrawn amount ranging from 0.25 % to 0.35 % per annum based upon our secured leverage ratio.

As of December 31, 2020, the interest rate on the term loan was 1.52 % and the effective interest rate was 3.66 %.

As of December 31, 2020, we had undrawn revolving credit facilities totaling $ 1.6 billion.

Jazz Pharmaceuticals plc and certain of our wholly owned subsidiaries are borrowers under the amended credit agreement.

The borrowers’ obligations under the amended credit agreement and any hedging or cash management obligations entered into with a lender are guaranteed on a senior secured basis by Jazz Pharmaceuticals plc and certain of our subsidiaries

On May 5, 2021, the Company, Jazz Financing Lux S.à.r.l., or Jazz Lux, and certain of our other subsidiaries, as borrowers, (collectively with the Company and Jazz Lux, the “Borrowers”), entered into the Credit Agreement, that provides for (i) the Dollar Term Loan which was drawn by Jazz Lux on the Closing Date in U.S.

dollars (ii) the Euro Term Loan which was drawn by Jazz Lux on the Closing Date in Euros and (iii) the Revolving Credit Facility, which is available to be drawn by any Borrower in U.S.

We used the proceeds from the Term Loan (i) to repay in full $ 575.9 million under that certain credit agreement, dated as of June 18, 2015 (as amended) among the Company, and certain of our other subsidiaries as borrowers, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, or the Existing Credit Agreement, (ii) to fund, in part, the cash consideration payable in connection with the GW Acquisition and (iii) to pay related fees and expenses.

Upon the repayment in full of loans under the Existing Credit Agreement, it was terminated and all guarantees and liens thereunder were released.

Loans under the Term Loan and Revolving Credit Facility bear interest at a rate equal to (A) in the case of the Dollar Term Loan and the Revolving Credit Facility, at the applicable Borrower’s option, either (a) London Inter-Bank Offered Rate, or LIBOR or (b) the prime lending rate and (B) in the case of the Euro Term Loan, Euro Inter-Bank Offered Rate, or EURIBOR, in each case, plus an applicable margin.

The applicable margin for the Term Loan is 3.50 % (in the case of LIBOR or EURIBOR borrowings) and 2.50 % (in the case of borrowings at the prime lending rate).

The applicable margin for the Revolving Credit Facility ranges from 3.25 % to 2.75 % (in the case of LIBOR borrowings) and 2.25 % to 1.75 % (in the case of borrowings at the prime lending rate), depending on our first lien secured net leverage ratio level.

The Dollar Term Loan is subject to a LIBOR floor of 0.50 %, the Euro Term Loan and loans under the Revolving Credit Facility are not subject to a EURIBOR or LIBOR (as applicable) floor.

The Revolving Credit Facility has a commitment fee payable on the undrawn amount ranging from 0.50 % to 0.40 % per annum based upon our first lien secured net leverage ratio.

As of December 31, 2021, the interest rate and effective interest rate on the Dollar Term Loan were 4.00 % and 4.55 %, respectively.

The interest rate and effective interest rate on the Euro Term Loan were 4.43 % and 4.93 %, respectively.

As of December 31, 2021, we had an undrawn Revolving Credit Facility totaling $ 500.0 million.

The Borrowers’ obligations under the Credit Agreement and any hedging or cash management obligations entered into with any lender thereunder are guaranteed by the Company, the other borrowers, and each of the Company’s other existing or subsequently acquired or organized direct and indirect subsidiaries (subject to certain exceptions), or the Guarantors.

We refer to the Borrowers and the Guarantors collectively as the “Loan Parties.”

The Loan Parties’ obligations under the Credit Agreement are secured, subject to customary permitted liens and other exceptions, by a security interest in (a) all tangible and intangible assets of the Loan Parties, except for certain excluded assets, and (b) all of the equity interests of the subsidiaries of the Loan Parties held by the Loan Parties.

We may make voluntary prepayments at any time without payment of a premium or penalty, subject to certain exceptions, and are required to make certain mandatory prepayments of outstanding indebtedness under the Credit Agreement in certain circumstances.

Principal repayments of the Dollar Term Loan, which are due quarterly, began in September 2021 and are equal to 1.0 % per annum of the original principal amount of $ 3.1 billion with any remaining balance payable on the maturity date.

The Euro Term Loan does not have any mandatory principal repayments during its term, however in September and December 2021, we made voluntary prepayments totaling € 416.7 million or $ 502.0 million.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions.

The Credit Agreement contains financial covenants that require the Company and its restricted subsidiaries to (a) not exceed a maximum first lien secured net leverage ratio and (b) not fall below a minimum interest coverage ratio, provided that such covenants apply only to the Revolving Credit Facility and are applicable only if amounts are drawn (or non-cash collateralized letters of credit in excess of $ 50 million are outstanding) under the Revolving Credit Facility.

The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations.

2029 Senior Secured Notes

On April 29, 2021, Jazz Securities Designated Activity Company, or Jazz Securities, a direct wholly owned subsidiary of the Company, closed the offering of the Secured Notes in a private placement.

We used the proceeds from the Secured Notes to fund, in part, the cash consideration payable in connection with the GW Acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(including the issuer of the Exchangeable Senior Notes as described below) and are secured by substantially all of Jazz Pharmaceuticals plc’s, the borrowers’ and the guarantor subsidiaries’ assets.

We may make voluntary prepayments of principal at any time without payment of a premium.

We are required to make mandatory prepayments of the term loan (without payment of a premium) with (1) net cash proceeds from certain non-ordinary course asset sales (subject to other exceptions), (2) net cash proceeds from issuances of debt (other than certain permitted debt), and (3) casualty proceeds and condemnation awards (subject to other exceptions).

Principal repayments of the term loan, which are due quarterly, are equal to 5.0 % per annum of the principal amount outstanding on June 7, 2018 of $ 667.7 million, with any remaining balance payable on the maturity date.

The amended credit agreement contains financial covenants that require Jazz Pharmaceuticals plc and our restricted subsidiaries to not (a) exceed a maximum secured net leverage ratio or (b) fall below a cash interest coverage ratio.

As of December 31, 2020, we were in compliance with these financial covenants.

Interest on the Secured Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2022, at a rate of 4.375 % per year.

The Secured Notes mature on January 15, 2029.

The Secured Notes are jointly and severally guaranteed by the Company and each of its restricted subsidiaries, other than Jazz Securities, that is a borrower, or a guarantor, under the Credit Agreement.

The Secured Notes and related guarantees are secured by a first priority lien (subject to permitted liens and certain other exceptions), equally and ratably with the Credit Agreement, on the collateral securing the Credit Agreement.

Except as described below, the Secured Notes may not be optionally redeemed before July 15, 2024.

Thereafter, some or all of the Secured Notes, may be redeemed at any time and from time to time at a specified redemption prices, plus accrued and unpaid interest, if any, to, but excluding, to the redemption date.

Jazz Securities may redeem all but not part of the Secured Notes at its option at any time in connection with certain tax-related events and may redeem some or all of the Secured Notes at any time and from time to time prior to July 15, 2024 at a price equal to 100 % of the principal amount of the Secured Notes to be redeemed plus a “make whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, Jazz Securities may redeem up to 40 % of the aggregate principal amount of the Secured Notes at any time and from time to time prior to July 15, 2024, with the net proceeds of certain equity offerings at a price of 104.375 % of the principal amount of such Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, during each of the three consecutive twelve-month periods commencing on the issue date of the Secured Notes, Jazz Securities may redeem up to 10 % of the original aggregate initial principal amount of the Secured Notes at a redemption price of 103 % of the principal amount of such Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If Jazz undergoes a change of control, Jazz Securities will be required to make an offer to purchase all of the Secured Notes at a purchase price in cash equal to 101 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase, subject to certain exceptions.

The indenture governing the Secured Notes contains customary affirmative covenants and negative covenants applicable to the Company and its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions.

If Jazz Securities or the Company’s restricted subsidiaries engage in certain asset sales, Jazz Securities will be required under certain circumstances to make an offer to purchase the Secured Notes at 100 % of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

As of December 31, 2021, the interest rate and effective interest rate on the Secured Notes were 4.375 % and 4.64 %, respectively.

Exchangeable Senior Notes Due 2026

In the second quarter of 2020, Jazz Investments I Limited, our wholly owned subsidiary, completed a private placement of $ 1.0 billion principal amount of the 2026 Notes.

In 2020 we completed a private placement of $ 1.0 billion principal amount of the 2026 Notes.

We used a portion of the net proceeds from this offering to repurchase for cash $ 332.9 million aggregate principal amount of the 2021 Notes through privately-negotiated transactions concurrently with the offering of the 2026 Notes.

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Upon exchange, the 2026 Notes may be settled in cash, ordinary shares or a combination of cash and ordinary shares, at our election.

Our intent and policy is to settle the principal amount of the 2026 Notes in cash upon exchange.

Our intent and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

policy is to settle the principal amount of the 2026 Notes in cash upon exchange.

The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

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The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

As of December 31, 2021, the “if converted value” of the 2026 Notes did not exceed the principal amount of the 2026 Notes.

As of December 31, 2020, the “if converted value” of the 2026 Notes exceeded the principal amount by $ 59.3 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We allocated the total issuance costs incurred of $ 18.6 million to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component will be amortized to expense over the term of the 2026 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

As of December 31, 2020, the carrying value of the equity component of the 2026 Notes, net of equity issuance costs, was $ 176.3 million.

As of December 31, 2021 and 2020, the carrying value of the equity component of the 2026 Notes, net of equity issuance costs, was $ 176.3 million.

Exchangeable Senior Notes Due 2024

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In accounting for the issuance of the 2024 Notes, we separated the 2024 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated exchange feature.

The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

not have an associated exchange feature.

The carrying amount of the equity component representing the exchange option was determined by deducting the fair value of the liability component from the face value of the 2024 Notes as a whole.

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Exchangeable Senior Notes Due 2021

In 2014, we completed a private placement of the 2021 Notes.

Interest on the 2021 Notes is payable semi-annually in cash in arrears on February 15 and August 15 of each year, beginning on February 15, 2015, at a rate of 1.875 % per year.

In certain circumstances, we may be required to pay additional amounts as a result of any applicable tax withholding or deductions

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

required in respect of payments on the 2021 Notes.

The 2021 Notes mature on August 15, 2021, unless earlier exchanged, repurchased or redeemed.

The holders of the 2021 Notes have the ability to require us to repurchase all or a portion of their 2021 Notes for cash in the event Jazz Pharmaceuticals plc undergoes certain fundamental changes.

Prior to August 15, 2021, we may redeem the 2021 Notes, in whole but not in part, subject to compliance with certain conditions, if we have, or on the next interest payment date would, become obligated to pay to the holder of any 2021 Note additional amounts as a result of certain tax-related events.

We also may redeem the 2021 Notes on or after August 20, 2018, in whole or in part, if the last reported sale price per ordinary share has been at least 130 % of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide the notice of redemption.

The 2021 Notes are exchangeable at an initial exchange rate of 5.0057 ordinary shares per $1,000 principal amount of 2021 Notes, which is equivalent to an initial exchange price of approximately $ 199.77 per ordinary share.

Upon exchange, the 2021 Notes may be settled in cash, ordinary shares or a combination of cash and ordinary shares, at our election.

Our intent and policy is to settle the principal amount of the 2021 Notes in cash upon exchange.

The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

In addition, following certain make-whole fundamental changes occurring prior to the maturity date of the 2021 Notes or upon our issuance of a notice of redemption, we will in certain circumstances increase the exchange rate for holders of the 2021 Notes who elect to exchange their 2021 Notes in connection with that make-whole fundamental change or during the related redemption period.

Prior to February 15, 2021, the 2021 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

In 2014, we completed a private placement of the 2021 Notes with a maturity date of August 15, 2021.

Interest on the 2021 Notes was payable semi-annually in cash in arrears on February 15 and August 15 of each year, beginning on February 15, 2015, at a rate of 1.875 % per year.

The exchange rate was 5.0057 ordinary shares per $1,000 principal amount of 2021 Notes, which was equivalent to an exchange price of approximately $ 199.77 per ordinary share.

In accounting for the issuance of the 2021 Notes, we separated the 2021 Notes into liability and equity components.

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The carrying amount of the equity component representing the exchange option was determined by deducting the fair value of the liability component from the face value of the 2021 Notes as a whole.

The excess of the principal amount of the liability component over its carrying amount will be amortized to interest expense over the expected life of the 2021 Notes using the effective interest method with an effective interest rate of 6.4 % per annum.

We have determined the expected life of the 2021 Notes to be equal to the original seven-year term.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

As of December 31, 2020 and 2019, the “if-converted value” did not exceed the principal amount of the 2021 Notes.

The excess of the principal amount of the liability component over its carrying amount was amortized to interest expense over the expected life of the 2021 Notes using the effective interest method with an effective interest rate of 6.4 % per annum.

We allocated the total issuance costs incurred of $ 16.1 million to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component will be amortized to expense over the term of the 2021 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

Concurrently with the offering of the 2026 Notes, we repurchased $ 332.9 million aggregate principal amount of the 2021 Notes.

In the third quarter of 2020, we repurchased a further $ 23.3 million aggregate principal amount of the 2021 Notes.

We recorded a loss on extinguishment of debt of $ 5.1 million in 2020 due to the write-off of unamortized debt issuance costs and debt discount related to the partial repurchase of the 2021 Notes.

We accounted for the difference between the consideration transferred and the fair value of the liability component of the 2021 Notes that were repurchased, of $ 12.5 million, as a reduction to the equity component.

As of December 31, 2020, the principal amount of the 2021 Notes remaining was $ 218.8 million.

As of December 31, 2020 and 2019, the carrying value of the equity component of the 2021 Notes, net of equity issuance costs, was $ 114.4 million and $ 126.9 million respectively.

Issuance costs attributable to the liability component were amortized to interest expense, net over the term of the 2021 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

In 2020 we repurchased $ 356.2 million aggregate principal amount of the 2021 Notes and we repurchased the remaining $ 218.8 million aggregate principal amount on maturity in August 2021.

The Exchangeable Senior Notes were issued by Jazz Investments I Limited, or the Issuer, a 100 %-owned finance subsidiary of Jazz Pharmaceuticals plc.

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There is no assurance that in the future such restrictions will not be adopted.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the years ended December 31, 2020, 2019 and 2018, we recognized $ 76.1 million, $ 59.1 million and $ 56.7 million, respectively, in interest expense, net related to the contractual coupon rate and amortization of the debt discount on the Exchangeable Senior Notes.

For the years ended December 31, 2021, 2020 and 2019, we recognized $ 89.9 million, $ 87.6 million and $ 62.5 million, respectively, in interest expense, net related to the contractual coupon rate and the amortization of the debt discount and debt issuance costs on the Exchangeable Senior Notes.

Scheduled maturities with respect to our long-term debt are as follows (in thousands):

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2022 $ 31,000

2026 1,031,000

Thereafter 4,665,458

Total $ 6,395,458

We have noncancelable operating leases for our office buildings and we are obligated to make payments under noncancelable operating leases for automobiles used by our sales force.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We have noncancelable leases for our buildings and growing facilities and we are obligated to make payments under noncancelable operating leases for automobiles used by our sales force.

The components of the lease expense for the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):

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Sublease income — ( 224 ) ( 634 )

Finance Lease Cost

Amortization of leased asset 324 — —

Interest on lease liabilities 295 — —

Net lease cost $ 30,038 $ 25,613 $ 24,923

Supplemental balance sheet information related to operating leases was as follows (in thousands):

Supplemental balance sheet information related to operating and finance leases was as follows (in thousands):

Leases Classification 2021 2020

Operating lease assets Operating lease assets $ 86,586 $ 129,169

Finance lease assets Property, plant and equipment 5,738 —

Total lease assets $ 92,324 $ 129,169

Operating lease liabilities Accrued liabilities $ 15,357 $ 14,457

Finance lease liabilities Accrued liabilities 406 —

Operating lease liabilities Operating lease liabilities, less current portion 87,200 140,035

Total operating lease liabilities $ 154,492 $ 163,954

Finance lease liabilities Other non-current liabilities 6,269 —

Total lease liabilities $ 109,232 $ 154,492

Lease Term and Discount Rate 2021 2020

Weighted-average remaining lease term - operating leases (years) 8.7 9.7

Weighted-average discount rate - operating leases 5.3 % 5.3 %

Weighted-average remaining lease term (years)

Operating leases 6.5 8.7

Finance leases 12.9 —

Weighted-average discount rate

Operating leases 5.2 % 5.3 %

Finance leases 7.4 % — %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Supplemental cash flow information related to operating leases was as follows (in thousands):

Supplemental cash flow information related to operating and finance leases was as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows from operating leases $ 24,847 $ 21,678 $ 17,066

Operating cash outflows from finance leases 625 — —

Financing cash outflows from finance leases 324 — —

Non-cash operating activities:

Operating lease assets obtained in exchange for new operating lease liabilities (1) $ 8,188 $ 1,763 $ 153,448

Finance lease assets obtained in exchange for new finance lease liabilities 650 — —

De-recognition of operating lease asset on lease assignment 56,968 — —

De-recognition of operating lease liability on lease assignment 68,064 — —

_____________________________

(1) Includes the balances recognized on January 1, 2019 on adoption of ASU No.

Maturities of operating lease liabilities were as follows (in thousands):

Year Ending December 31, Operating leases

Maturities of operating and finance lease liabilities were as follows (in thousands):

Year Ending December 31, Operating Leases Finance Leases

2022 $ 20,373 $ 876

2023 19,426 872

2024 20,996 872

2025 14,565 872

2026 12,741 872

Thereafter 34,560 6,135

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As of December 31, 2021, we had $ 73.2 million of noncancelable purchase commitments due within one year, primarily related to agreements with third party manufacturers.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Legal Proceedings

From June to September 2020, a number of class action lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with Hikma and other ANDA filers violate state and federal antitrust and consumer protection laws, as follows:

We are involved in legal proceedings, including the following matters:

Xyrem Class Action

From June 2020 to October 2021, a number of lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with generic drug manufacturers who had filed Abbreviated New Drug Applications, or ANDA, violate state and federal antitrust and consumer protection laws, as follows:

On June 17, 2020, a class action lawsuit was filed in the United States District Court for the Northern District of Illinois by Blue Cross and Blue Shield Association, or BCBS, against Jazz Pharmaceuticals plc, Jazz Pharmaceuticals, Inc., and Jazz Pharmaceuticals Ireland Limited, or, collectively, the Company Defendants (hereinafter referred to as the BCBS Lawsuit).

The BCBS Lawsuit also names Roxane Laboratories, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA), Inc., Hikma

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pharmaceuticals plc, Amneal Pharmaceuticals LLC, Par Pharmaceuticals, Inc., Lupin Ltd., Lupin Pharmaceuticals Inc., and Lupin Inc., or, collectively, the BCBS Defendants.

The BCBS Lawsuit also names Roxane Laboratories, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA), Inc., Hikma Pharmaceuticals plc, Amneal Pharmaceuticals LLC, Par Pharmaceuticals, Inc., Lupin Ltd., Lupin Pharmaceuticals Inc., and Lupin Inc., or, collectively, the BCBS Defendants.

On June 18 and June 23, 2020, respectively, two additional class action lawsuits were filed against the Company Defendants and the BCBS Defendants:

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On July 31, 2020, a class action lawsuit was filed in the United States District Court for the Southern District of New York by the A.F.

of L.-A.G.C Building Trades Welfare Plan on behalf of itself and all others similarly situated, against Jazz Pharmaceuticals plc (hereinafter referred to as the AFL Plan Lawsuit).

Building Trades Welfare Plan on behalf of itself and all others similarly situated, against Jazz Pharmaceuticals plc (hereinafter referred to as the AFL Plan Lawsuit).

The AFL Plan Lawsuit also names Roxane Laboratories Inc., West-Ward Pharmaceuticals Corp., Hikma Labs Inc., Hikma Pharmaceuticals plc, Amneal Pharmaceuticals LLC, Par Pharmaceuticals Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc.

On August 14, 2020, an additional class action lawsuit was filed in the United States District Court for the Southern District of New York by the Self-Insured Schools of California on behalf of itself and all others similarly situated, against the Company Defendants, as well as Hikma Pharmaceuticals plc, Eurohealth (USA) Inc., Hikma Pharmaceuticals USA, Inc., West-Ward Pharmaceuticals Corp., Roxane Laboratories, Inc., Amneal Pharmaceuticals LLC, Endo International, plc, Endo Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals Inc., Lupin Inc., Sun Pharmaceutical Industries Ltd., Sun Pharmaceutical Holdings USA, Inc., Sun Pharmaceutical Industries, Inc., Ranbaxy Laboratories Ltd., Teva Pharmaceutical Industries Ltd., Watson Laboratories, Inc., Wockhardt Ltd., Morton Grove Pharmaceuticals, Inc., Wockhardt USA LLC, Mallinckrodt plc, and Mallinckrodt LLC (hereinafter the Self-Insured Schools Lawsuit).

On September 16, 2020, an additional class action lawsuit was filed in the United States District Court for the Northern District of California, by Ruth Hollman on behalf of herself and all others similarly situated, against the same defendants named in the Self-Insured Schools Lawsuit.

In December 2020, the above cases were centralized and transferred to the United States District Court for the Northern District of California, where the multidistrict litigation will proceed for the purpose of discovery and pre-trial proceedings.

On March 18, 2021, United Healthcare Services, Inc.

filed a lawsuit in the United States District Court for the District of Minnesota against the Company Defendants, Hikma Pharmaceuticals plc, Roxane Laboratories, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA) Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical Inc., Lupin Ltd., and Lupin

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pharmaceuticals, Inc., raising similar allegations, or the UHS Lawsuit.

On March 24, 2021, the U.S.

Judicial Panel on Multidistrict Litigation conditionally transferred the UHS Lawsuit to the United States District Court for the Northern District of California, where it was consolidated for discovery and pre-trial proceedings with the other cases.

On August 13, 2021, the United States District Court for the Northern District of California granted in part and denied in part the Company Defendants motion to dismiss the complaints in the cases referenced above.

On October 8, 2021, Humana Inc.

filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

On October 8, 2021, Molina Healthcare Inc.

On February 17, 2022, Health Care Service Corporation filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

The parties have submitted a proposed case schedule through briefing on class certification.

A trial date will be set following a ruling on class certification.

The plaintiffs in certain of these lawsuits are seeking to represent a class of direct purchasers of Xyrem, and the plaintiffs in the remaining lawsuits are seeking to represent a class of indirect purchasers of Xyrem.

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If the plaintiffs were to be successful in their claims, they may be entitled to injunctive relief or we may be required to pay significant monetary damages, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

In December 2020, these cases were centralized and transferred to the United States District Court for the Northern District of California, where the multidistrict litigation will proceed for the purpose of discovery and pre-trial proceedings.

In January 2021, the Court issued a Case Management Order that schedules this case for trial in February 2023.

GW Acquisition Litigation

On March 15, 2021, GW filed a definitive proxy statement, or Proxy Statement, with the Securities and Exchange Commission in connection with the GW Acquisition.

Since the filing of the Proxy Statement, Jazz Pharmaceuticals plc has been named in two lawsuits filed in state and federal courts in New York on March 17, 2021 by purported GW shareholders in connection with the GW Acquisition.

The first was filed in the United States District Court for the Southern District of New York by James Farrell (hereinafter referred to as the Farrell Lawsuit) and an additional suit was filed in New York state court by Brian Levy (hereinafter referred to as the Levy Lawsuit).

In addition to Jazz Pharmaceuticals plc, Jazz Pharmaceuticals U.K.

Holdings Ltd., GW Pharmaceuticals plc, and the GW Board of Directors are named as defendants in the Farrell Lawsuit.

In the Levy Lawsuit, GW Pharmaceuticals plc, the GW Board of Directors, Centerview Partners LLC, and Goldman Sachs & Co.

LLC are named as defendants.

In addition to the Farrell Lawsuit and the Levy Lawsuit, ten additional suits have been filed in New York, California, and Pennsylvania federal courts by purported GW shareholders against GW Pharmaceuticals plc and its Board of Directors, but which do not name any Jazz Pharmaceuticals parties (hereinafter referred to as the GW Litigation, and collectively with the Farrell Lawsuit and the Levy Lawsuit, as the Transaction Litigation).

In the Transaction Litigation, the plaintiffs allege that the Proxy Statement omitted material information and contained misrepresentations, and that the individual members of the GW Board of Directors breached their fiduciary duties, in violation of state and federal laws, including the Securities Exchange Act of 1934.

The plaintiffs in the Transaction Litigation sought various remedies, including injunctive relief to prevent the consummation of the GW Acquisition unless certain allegedly material information was disclosed, or in the alternative, rescission or damages.

On April 14, 2021, GW filed a Form 8-K containing supplemental disclosures related to the GW Acquisition.

Pursuant to a memorandum of understanding between the parties, the Levy Lawsuit was dismissed on April 14, 2021.

On May 27, 2021, a class action lawsuit was filed in the United States District Court for the Southern District of California by plaintiff Kurt Ziegler against GW and its former Directors asserting claims under Sections 14(a) and 20(a) of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Securities Exchange Act of 1934, referred to as the Ziegler Lawsuit.

The allegations in the Ziegler Lawsuit are similar to those in the previously dismissed Transaction Litigation.

Patent Infringement Litigation

Avadel Patent Litigation

On May 13, 2021, we filed a patent infringement suit against Avadel Pharmaceuticals plc, or Avadel, and several of its corporate affiliates in the United States District Court for the District of Delaware.

The suit alleges that Avadel’s product candidate FT-218 will infringe five of our patents related to controlled release formulations of oxybate and the safe and effective distribution of oxybate.

The suit seeks an injunction to prevent Avadel from launching a product that would infringe these patents, and an award of monetary damages if Avadel does launch an infringing product.

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

On August 4, 2021, we filed an additional patent infringement suit against Avadel in the United States District Court for the District of Delaware.

The second suit alleges that Avadel’s product candidate FT-218 will infringe a newly-issued patent related to sustained-release formulations of oxybate.

The suit seeks an injunction to prevent Avadel from launching a product that would infringe this patent, and an award of monetary damages if Avadel does launch an infringing product.

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patent s.

On November 10, 2021, we filed an additional patent infringement suit against Avadel in the United States District Court for the District of Delaware.

The third suit alleges that Avadel’s product candidate FT-218 will infringe a newly-issued patent related to sustained-release formulations of oxybate.

The suit seeks an injunction to prevent Avadel from launching a product that would infringe this patent, and an award of monetary damages if Avadel does launch an infringing product.

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

Canopy Patent Litigation

In December 2020, Canopy Growth Corporation filed a complaint against our subsidiary, GW, in the United States District Court for the Western District of Texas, alleging infringement of its patent, U.S.

Canopy claims that our extraction process used to produce material used to produce Epidiolex infringes its patent.

Canopy seeks a judgment that we have infringed their patent and an award of monetary damages.

In July 2021, we filed an answer to the amended complaint, and counterclaims seeking judgment that the ‘632 patent is invalid and that we have not infringed the patent.

In October 2021, the United States District Court for the Western District of Texas held a claim construction hearing regarding the disputed term of the ‘632 patent.

In November 2021, the Court issued a claim construction order, which the Company views as generally favorable.

On February 23, 2022, the parties filed a Joint Motion and Stipulation to Enter Final Judgment in favor of GW.

Pursuant to the stipulation, Canopy has the right to appeal the Court’s ruling on the disputed term.

On February 25, 2022, the Court granted the parties’ motion and entered final judgment in favor of GW.

Lupin Patent Litigation

In June 2021, we received notice from Lupin Inc., or Lupin, that it has filed with FDA an ANDA, for a generic version of Xywav.

The notice from Lupin included a “paragraph IV certification” with respect to ten of our patents listed in FDA’s Orange Book for Xywav on the date of our receipt of the notice.

The asserted patents relate generally to the composition and method of use of Xywav, and methods of treatment when Xywav is administered concomitantly with certain other medications.

A paragraph IV certification is a certification by a generic applicant that alleges that patents covering the branded product are invalid, unenforceable, and/or will not be infringed by the manufacture, use or sale of the generic product.

In July 2021, we filed a patent infringement suit against Lupin in the United States District Court for the District of New Jersey.

The complaint alleges that by filing its ANDA, Lupin has infringed ten of our Orange Book listed patents.

We are seeking a permanent injunction to prevent Lupin from introducing a generic version of Xywav that would infringe our patents.

As a result of this lawsuit, we expect that a stay of approval of up to 30 months will be imposed by FDA on Lupin's ANDA.

In June 2021, FDA recognized seven years of Orphan Drug Exclusivity for Xywav through July 21, 2027.

On October 4, 2021, Lupin filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Otsuka Patent Litigation

In October 2021, Otsuka Pharmaceutical Co., Ltd., or Otsuka, filed claims against GW Pharma Limited and GW Pharmaceuticals Limited, or collectively, the GW Parties, in the English High Court, Patents Court.

Otsuka alleges that under a now-expired Research Collaboration and License Agreement between Otsuka and the GW Parties, Otsuka and the GW Parties jointly own certain patents and other intellectual property, that Epidiolex is covered by that intellectual property, and that Otsuka is therefore due a royalty on net sales of Epidiolex.

In December 2021, we filed an application for an order declaring that the English High Court, Patents Court has no jurisdiction over the dispute with Otsuka, or should not exercise its jurisdiction.

In January 2022, we filed a lawsuit against Otsuka in the Supreme Court of the State of New York, County of New York, seeking a declaration that Otsuka is not entitled to any royalties on sales of Epidiolex under the Research Collaboration and License Agreement.

The Company vigorously enforces its intellectual property rights, but cannot predict the outcome of these matters.

From time to time we are involved in legal proceedings arising in the ordinary course of business.

We believe there is no other litigation pending that could have, individually or in the aggregate, a material adverse effect on our results of operations or financial condition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Shareholders’ Equity

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The share repurchase program may be modified, suspended or discontinued at any time without prior notice.

In 2020, we spent a total of $ 146.5 million to repurchase 1.2 million of our ordinary shares at an average total purchase price, including brokerage commissions, of $ 121.98 per share.

In 2021, we did no t repurchase any of our ordinary shares under the share repurchase program.

In 2020, we spent a total of $ 146.5 million to repurchase 1.2 million of our ordinary shares at an average total purchase price, including brokerage commissions, of $ 121.98 per share.

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As of December 31, 2021, the remaining amount authorized under the share repurchase program was $ 431.2 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Authorized But Unissued Ordinary Shares

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2007 Employee Stock Purchase Plan 3,285 2,600

GW Incentive Plans 1,853 —

Amended and Restated 2007 Non-Employee Directors Stock Award Plan 807 889

Amended and Restated Directors Deferred Compensation Plan — 178

2007 Equity Incentive Plan — 5

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Comprehensive Income (Loss)

Comprehensive income (loss) includes net income and all changes in shareholders’ equity during a period, except for those changes resulting from investments by shareholders or distributions to shareholders.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Comprehensive income (loss) includes net income (loss) and all changes in shareholders’ equity during a period, except for those changes resulting from investments by shareholders or distributions to shareholders.

Accumulated Other Comprehensive Loss

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Other comprehensive income (loss) before reclassifications ( 389 ) ( 268,347 ) ( 268,736 )

Amounts reclassified from accumulated other comprehensive loss 3,401 — 3,401

Amounts reclassified from accumulated other comprehensive income (loss) 2,728 — 2,728

Other comprehensive income (loss), net 2,339 ( 268,347 ) ( 266,008 )

Balance at December 31, 2021 $ ( 128 ) $ ( 400,232 ) $ ( 400,360 )

In 2020, other comprehensive income reflects foreign currency translation adjustments, primarily due to the strengthening of the euro against the U.S.

dollar, and the net unrealized loss on derivatives that qualify as cash flow hedges.

Net Income per Ordinary Share

Basic net income per ordinary share is based on the weighted-average number of ordinary shares outstanding.

Diluted net income per ordinary share is based on the weighted-average number of ordinary shares outstanding and potentially dilutive ordinary shares outstanding.

Basic and diluted net income per ordinary share were computed as follows (in thousands, except per share amounts):

In 2021, other comprehensive loss reflects foreign currency translation adjustments, primarily due to the weakening of the sterling and euro against the U.S.

Net Income (Loss) per Ordinary Share

Basic net income (loss) per ordinary share is based on the weighted-average number of ordinary shares outstanding.

Diluted net income (loss) per ordinary share is based on the weighted-average number of ordinary shares outstanding and potentially dilutive ordinary shares outstanding.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Basic and diluted net income (loss) per ordinary share were computed as follows (in thousands, except per share amounts):

Year Ended December 31,

2021 2020 2019

Net income $ 238,616 $ 523,367 $ 447,098

Net income (loss) $ ( 329,668 ) $ 238,616 $ 523,367

Weighted-average ordinary shares used in per share calculations - basic 59,694 55,712 56,749

1 unchanged sentence

Weighted-average ordinary shares used in per share calculations - diluted 59,694 56,517 57,550

Net income per ordinary share :

Net income (loss) per ordinary share :

Basic $ ( 5.52 ) $ 4.28 $ 9.22

Diluted $ ( 5.52 ) $ 4.22 $ 9.09

Potentially dilutive ordinary shares from our employee equity incentive and purchase plans and the Exchangeable Senior Notes are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding restricted stock units, or RSUs, the assumed issuance of ordinary shares under our employee stock purchase plan, or ESPP, and the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The potential issue of ordinary shares issuable upon exchange of the Exchangeable Senior Notes had no effect on diluted net income per ordinary share because the average price of our ordinary shares in 2020, 2019 and 2018 did not exceed the effective exchange prices per ordinary share of the Exchangeable Senior Notes.

The following table represents the weighted-average ordinary shares that were excluded from the computation of diluted net income per ordinary share for the years presented because including them would have an anti-dilutive effect (in thousands):

Potentially dilutive ordinary shares from our employee equity incentive and purchase plans and the Exchangeable Senior Notes are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding restricted stock units, or RSUs and PRSUs, the assumed issuance of ordinary shares under our employee stock purchase plan, or ESPP, and the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The average share price of our ordinary shares in 2021 exceeded the effective exchange price per ordinary share of the 2026 Notes.

However, the potential ordinary shares issuable upon exchange were excluded from the calculation of diluted net loss per ordinary share because their effect would have been anti-dilutive.

The average price of our ordinary shares in 2021 did not exceed the effective exchange price per ordinary share of the 2021 Notes and 2024 Notes.

The potential issue of ordinary shares issuable upon exchange of the Exchangeable Senior Notes had no effect on diluted net income per ordinary share for 2020 and 2019 as the average price of our ordinary shares during those periods did not exceed the effective exchange prices per ordinary share of the Exchangeable Senior Notes.

The following table represents the weighted-average ordinary shares that were excluded from the computation of diluted net income (loss) per ordinary share for the years presented because including them would have an anti-dilutive effect (in thousands):

Year Ended December 31,

1 unchanged sentence

Exchangeable Senior Notes 9,725 8,077 5,504

Options, RSUs and ESPP 4,780 5,000 3,113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Employee equity incentive and purchase plans 3,927 4,780 5,000

Segment and Other Information

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents total long-lived assets by location (in thousands):

Ireland $ 65,478 $ 71,906

United Kingdom 176,778 3,438

United States 76,290 157,282

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Total Oxybate 1,801,127 1,757,022 1,642,525

Epidiolex/Epidyolex 463,645 — —

Sunosi 57,914 28,333 3,714

Sativex 12,707 — —

Total Neuroscience 2,335,393 1,785,355 1,646,239

Zepzelca 246,808 90,380 —

Rylaze 85,629 — —

Vyxeos 134,060 121,105 121,407

Defitelio/defibrotide 197,931 195,842 172,938

Erwinaze/Erwinase 69,382 147,136 177,465

Vyxeos 121,105 121,407 100,835

Zepzelca 90,380 — —

Total Oncology 733,810 554,463 471,810

25 unchanged sentences

Balance as of December 31, 2020 $ 4,861

Additions 483

Amount recognized within royalties and contract revenues ( 2,788 )

1 unchanged sentence

Share-Based Compensation

GW Incentive Plans

On May 5, 2021, Jazz Pharmaceuticals plc acquired the entire issued share capital of GW Pharmaceuticals plc.

In connection with the GW Acquisition, we assumed the GW Pharmaceuticals plc 2008 Long-Term Incentive Plan, GW Pharmaceuticals plc 2017 Long-Term Incentive Plan and GW Pharmaceuticals plc 2020 Long-Term Incentive Plan, each as amended from time to time, together referred to as the GW Incentive Plans.

The terms of the GW Incentive Plans provide for the grant of stock options, stock appreciation rights, RSUs, other stock awards, and performance awards that may be settled in cash, shares, or other property.

Ordinary shares granted to employees in exchange for GW ADS in connection with the GW Acquisition vest ratably over service periods of two years , while all post-acquisition grants vest ratably over service periods of four years , and expire no more than 10 years after the date of grant.

As of December 31, 2021, a total of 1,864,475 of our ordinary shares had been authorized for issuance under the GW Incentive Plans.

2011 Equity Incentive Plan

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stockholders in connection with its initial public offering, was continued and assumed by us upon consummation of the Azur Merger.

The 2007 Plan provided for the grant of stock options, RSUs, stock appreciation rights, performance stock awards and other forms of equity compensation to employees, including officers, non-employee directors and consultants.

The 2007 Plan provided for the grant of stock options, RSUs, stock appreciation rights, performance stock awards and other forms of equity compensation to employees, including

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

officers, non-employee directors and consultants.

Prior to the consummation of the Azur Merger, all of the grants under the 2007 Plan were granted to employees and vest ratably over service periods of three to five years and expire no more than 10 years after the date of grant.

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As of December 31, 2021, the number of shares reserved represents issuable shares from options granted but not yet exercised under the 2007 Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2007 Employee Stock Purchase Plan

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Amounts deferred under the Directors Deferred Plan are credited as shares of Jazz Pharmaceuticals, Inc.’s common stock (or our ordinary shares following the Azur Merger) to a phantom stock account, the number of which are based on the amount of the retainer fees deferred divided by the market value of Jazz Pharmaceuticals, Inc.’s common stock (or our ordinary shares following the Azur Merger) on the first trading day of the first open window period following the date the retainer fees are deemed earned.

On the 10th business day following the day of separation from the board of directors or the occurrence of a change in control, or as soon thereafter as practical once the non-employee director has provided the necessary information for electronic deposit of the deferred shares, each non-employee director will receive (or commence receiving, depending upon whether the director has elected to receive distributions from his or her phantom stock account in a lump sum or in installments over time) a distribution of his or her phantom stock account, in our ordinary shares (i) reserved under the 2007 Directors Option Plan prior to August 15, 2010 and (ii) from a new reserve of 200,000 shares set up under the Directors Deferred Plan on August 15, 2010.

On the 10th business day following the day of separation from the board of directors or the occurrence of a change in control, or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as soon thereafter as practical once the non-employee director has provided the necessary information for electronic deposit of the deferred shares, each non-employee director will receive (or commence receiving, depending upon whether the director has elected to receive distributions from his or her phantom stock account in a lump sum or in installments over time) a distribution of his or her phantom stock account, in our ordinary shares (i) reserved under the 2007 Directors Option Plan prior to August 15, 2010 and (ii) from a new reserve of 200,000 shares set up under the Directors Deferred Plan on August 15, 2010.

Since the consummation of the Azur Merger we have not permitted non-employee directors to defer any annual retainer fees under the Directors Deferred Plan.

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We recorded no expense in 2021, 2020 and 2019 related to retainer fees earned and deferred.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Share-Based Compensation

The table below shows, for all share option grants, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of share options granted in each of the past three years:

The table below shows, for market strike price option grants, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of market strike price option grants granted in each of the past three years:

Year Ended December 31,

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The expected dividend yield assumption was based on our history and expectation of dividend payouts.

Share-based compensation expense related to share options, RSUs and grants under our ESPP was as follows (in thousands):

Share-based compensation expense related to share options, RSUs, PRSUs and grants under our ESPP was as follows (in thousands):

Year Ended December 31,

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We recognized income tax benefits related to share option exercises of $ 9.3 million, $ 3.9 million and $ 5.1 million in 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Share Options

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The aggregate intrinsic value changes based on the fair market value of our ordinary shares.

The aggregate intrinsic value of share options exercised was

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$ 26.4 million, $ 26.2 million and $ 43.4 million during 2020, 2019 and 2018, respectively.

The aggregate intrinsic value of share options exercised was $ 51.8 million, $ 26.4 million and $ 26.2 million during 2021, 2020 and 2019, respectively.

We issued new ordinary shares upon exercise of share options.

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As of December 31, 2021, total compensation cost not yet recognized related to grants under the ESPP was $ 4.4 million, which is expected to be recognized over a weighted-average period of 1.1 years.

Nominal Strike Price Options

During the second quarter of 2021, we issued nominal strike price options to replace certain unvested GW awards in connection with the GW Acquisition with a weighted-average grant date fair value of $ 170.82 .

The fair value of nominal strike price options was determined on the date of the grant based on the market price of our ordinary shares as of that date.

The following table summarizes information as of December 31, 2021 and activity during 2021 related to our nominal strike price options:

(In thousands) Weighted-

Price Weighted-

Term (Years) Aggregate

(In thousands)

Outstanding at January 1, 2021 — $ —

Options granted 124 0.02

Options exercised ( 1 ) 0.02

Options forfeited ( 7 ) 0.02

Outstanding at December 31, 2021 116 $ 0.02 7.4 $ 14,803

Vested and expected to vest at December 31, 2021 110 $ 0.02 7.3 $ 13,969

Exercisable at December 31, 2021 22 $ 0.02 0.5 $ 2,846

As of December 31, 2021, total compensation cost not yet recognized related to unvested nominal strike price options was $ 8.1 million, which is expected to be recognized over a weighted-average period of 1.1 years.

Restricted Stock Units

3 unchanged sentences

In 2021, 692,000 RSUs were released with 465,000 ordinary shares issued and 227,000 ordinary shares withheld for tax purposes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total fair value of shares vested was $ 109.2 million, $ 53.5 million and $ 52.0 million during 2021, 2020 and 2019, respectively.

10 unchanged sentences

Outstanding at December 31, 2021 2,631 $ 149.05 1.4 $ 335,224

Performance-Based Restricted Stock Units

In May 2021, the Compensation & Management Development Committee of our board of directors approved awards of PRSU's to certain employees of the Company, subject to vesting on the achievement of certain commercial and pipeline performance criteria to be assessed over a performance period from the date of the grant to December 31, 2023.

Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded will be subject to adjustment based on the application of a relative TSR modifier.

The number of shares that may be earned ranges between 0 % and 200 % of the target number of PRSUs granted based on the degree of achievement of the applicable performance metric and the application of the relative TSR modifier.

The table below shows the number of PRSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of PRSUs granted:

Number of PRSUs (In thousands) Weighted-

Fair Value Weighted-

Term (Years) Aggregate

(In thousands)

Outstanding at January 1, 2021 — $ —

PRSUs granted 224 190.81

PRSUs forfeited ( 10 ) 190.81

Outstanding at December 31, 2021 214 $ 190.81 2.0 $ 27,265

As of December 31, 2021, total compensation cost not yet recognized related to unvested PRSUs was $ 26.4 million, which is expected to be recognized over a weighted-average period of 2.0 years.

As the PRSUs granted in May 2021 are subject to a market condition, the grant date fair value for such PRSUs was based on a Monte Carlo simulation model.

The Company evaluated the performance targets in the context of its current long-range financial plan and its product candidate development pipeline and recognized compensation expense based on the probable number of awards that will ultimately vest.

Employee Benefit Plans

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Expenses related to contributions to such plans for the years ended December 31, 2021, 2020 and 2019 were $ 11.4 million, $ 4.2 million and $ 3.2 million, respectively.

The components of income before the income tax provision (benefit) and equity in loss of investees were as follows (in thousands):

The expense for employee benefit plans in 2021 included plans acquired in the GW Acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of income (loss) before income tax expense (benefit) and equity in loss of investees were as follows (in thousands):

Year Ended December 31,

1 unchanged sentence

Ireland $ 97,557 $ ( 102,328 ) $ ( 6,451 )

United Kingdom ( 681,291 ) 3,836 3,304

United States 221,185 372,910 317,728

1 unchanged sentence

Total $ ( 112,838 ) $ 275,095 $ 454,302

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the details of the income tax provision (benefit) (in thousands):

The following table sets forth the details of income tax expense (benefit) (in thousands):

Year Ended December 31,

1 unchanged sentence

Ireland $ 25,770 $ 19,437 $ 51,696

United Kingdom ( 924 ) 166 —

United States 88,850 110,896 109,495

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Ireland ( 5,388 ) ( 32,458 ) ( 163,626 )

United Kingdom ( 111,534 ) 679 1,353

United States ( 46,531 ) ( 29,117 ) ( 41,297 )

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Deferred, change in tax rates

United Kingdom 259,873 ( 1,155 ) ( 52 )

United States 1,377 ( 371 ) 203

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Total deferred, change in tax rates 261,255 ( 1,763 ) 5,557

Total deferred tax benefit ( 136,937 ) ( 236,610 ) ( 88,815 )

Total income tax provision (benefit) $ 33,517 $ ( 73,154 ) $ 80,162

Our income tax provision of $ 33.5 million and $ 80.2 million in 2020 and 2018, respectively, and our income tax benefit of $ 73.2 million in 2019 related to tax arising on income in Ireland, the U.S.

Total deferred tax expense (benefit) 69,198 ( 136,937 ) ( 236,610 )

Total income tax expense (benefit) $ 216,116 $ 33,517 $ ( 73,154 )

Our income tax expense of $ 216.1 million and $ 33.5 million in 2021 and 2020, respectively, and our income tax benefit of $ 73.2 million in 2019 related to tax arising on income in Ireland, the U.K., the U.S.

and certain other foreign jurisdictions, certain unrecognized tax benefits and various expenses not deductible for income tax purposes.

The income tax benefit in 2019 included a discrete tax benefit of $ 112.3 million resulting from an intra-entity intellectual property asset transfer.

The tax benefit, which represents a deferred future benefit, was recorded as a deferred tax asset.

Our income tax expense in 2021 included an expense of $ 259.9 million arising on the remeasurement of our U.K.

net deferred tax liability, which arose primarily in relation to the GW Acquisition, due to a change in the statutory tax rate in the U.K.

following enactment of the U.K.

Finance Act 2021.

Our income tax benefit in 2019 included a discrete tax benefit of $ 112.3 million resulting from an intra-entity intellectual property asset transfer.

The effective tax rates for 2021, 2020 and 2019 were ( 191.5 )% , 12.2 % and ( 16.1 )%, respectively.

The effective tax rate for 2020 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of originating tax credits and deductions on subsidiary equity, partially offset by income taxable at a rate higher than the Irish statutory rate, the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French tax authorities.

The effective tax rate for 2021 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of the remeasurement of our U.K.

net deferred tax liability due to the change in the statutory tax rate in the U.K.

The effective tax rate for 2019 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of the intra-entity intellectual property asset transfer.

The effective tax rate for 2018 was higher than the Irish statutory rate of 12.5 %, primarily due to income taxable at a rate higher than the Irish statutory rate and unrecognized tax benefits, partially offset by the release of reserves related to unrecognized tax benefits from the expiration of a statute of limitation, originating tax credits and the release of a valuation allowance held against certain foreign net operating losses, or NOLs.

The increase in the effective tax rate in 2020 compared to 2019 was primarily due to the impact of the intra-entity intellectual property asset transfer.

Excluding this effect, the increase in the effective tax rate for 2020 compared to 2019 was primarily due to the benefit recognized in 2019 from the application of the Italian patent box incentive regime 2015 through 2019 and the impact of the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French tax authorities.

The decrease in the effective tax rate in 2019 compared to 2018 was primarily due to the impact of the intra-entity intellectual property asset transfer.

Excluding this effect, the decrease in the effective tax rate in 2019 compared to 2018 was primarily due to the benefit from the application of the Italian patent box incentive regime for 2015 through 2019.

The decrease in the effective tax rate in 2021 compared to 2020 was primarily due to the impact of the U.K.

statutory rate change.

Excluding this impact, the increase in the benefit for income taxes in 2021 compared to 2020 resulted primarily from the mix of pre-tax income and losses incurred across tax jurisdictions, deductions on subsidiary equity and the impacts recognized in 2020 of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The reconciliation between the statutory income tax rate applied to income before the income tax provision (benefit) and equity in loss of investees and our effective income tax rate was as follows:

disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

The increase in the effective tax rate in 2020 compared to 2019 was primarily due to the impact of the intra-entity intellectual property asset transfer.

Excluding this effect, the increase in the effective tax rate for 2020 compared to 2019 was primarily due to the benefit recognized in 2019 from the application of the Italian patent box incentive regime 2015 through 2019 and the impacts recognized in 2020 of the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

The reconciliation between the statutory income tax rate applied to income before the income tax expense (benefit) and equity in loss of investees and our effective income tax rate was as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Statutory income tax rate 12.5 % 12.5 % 12.5 %

Research and other tax credits ( 11.8 ) % ( 8.8 ) % ( 3.0 ) %

Income tax expense/(benefit) at the statutory income tax rate $ ( 14,105 ) $ 34,387 $ 56,788

Change in tax rate 261,663 ( 1,836 ) 6,923

Deduction on subsidiary equity ( 116,438 ) ( 25,740 ) ( 23,450 )

Foreign income tax rate differential 6.0 % 8.7 % 11.9 %

Change in unrecognized tax benefits 5.9 % 0.1 % 1.1 %

Change in valuation allowance 81,280 6,074 14,823

Research and other tax credits ( 31,069 ) ( 30,836 ) ( 39,776 )

Non-deductible acquisition-related costs 20,929 — 11,738

Non-deductible compensation 19,914 8,604 8,321

Financing costs 14,418 7,132 ( 7,615 )

Change in valuation allowance 2.2 % 3.3 % 3.2 %

Change in unrecognized tax benefits ( 6,436 ) 16,309 499

Tax deficiencies/(excess tax benefits) from share-based compensation ( 5,555 ) 5,274 537

Foreign income tax rate differential ( 4,343 ) 16,126 39,695

Foreign derived intangible income benefit ( 3,416 ) — —

Change in estimates ( 2,653 ) ( 3,604 ) 1,156

Change in tax rate ( 0.7 ) % 1.5 % ( 0.1 ) %

Investment in subsidiaries 0.1 % — % ( 4.8 ) %

Intra-entity transfer of intellectual property assets — — ( 112,274 )

Patent box incentive benefit — — ( 31,642 )

Non-deductible acquired IPR&D — % 2.5 % — %

Non-deductible loss contingency — % — % 0.8 %

Impact of U.S.

Tax Act — % — % ( 1.4 ) %

Other 1,927 1,627 1,123

Effective income tax rate 12.2 % ( 16.1 ) % 15.1 %

Reported income tax expense/(benefit) $ 216,116 $ 33,517 $ ( 73,154 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Significant components of our net deferred tax assets/(liabilities) were as follows (in thousands):

Deferred tax assets:

Operating loss carryforwards $ 89,216 $ 91,295

Tax credit carryforwards $ 284,155 $ 258,296

Operating loss carryforwards 265,156 68,860

Intangible assets 189,959 173,918

Share-based compensation 26,090 26,091

Accruals 62,561 49,063

Accrued liabilities 84,509 62,561

Deduction on subsidiary equity carryforwards 78,514 13,201

Indirect effects of unrecognized tax benefits 46,876 48,743

Share-based compensation 37,289 26,090

Lease liabilities 15,865 31,787

5 unchanged sentences

Intangible assets ( 1,652,297 ) ( 448,310 )

Inventory ( 181,742 ) —

Operating lease assets ( 12,657 ) ( 26,316 )

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The net change in valuation allowance was an increase of $ 76.9 million, $ 11.0 million and $ 5.1 million in 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the presentation of deferred tax assets and liabilities (in thousands):

1 unchanged sentence

Deferred tax liabilities ( 1,300,541 ) ( 130,397 )

Net deferred tax assets/(liabilities) $ 124,519 $ ( 2,692 )

As of December 31, 2020, we had NOL carryforwards and tax credit carryforwards for U.S.

Net of deferred tax assets and (liabilities) $ ( 989,438 ) $ 124,519

As of December 31, 2021, we had net operating losses, or NOL, carryforwards and tax credit carryforwards for U.S.

federal income tax purposes of approximately $ 81.6 million and $ 216.5 million, respectively, available to reduce future income subject to income taxes.

These NOL carryforwards are inclusive of $ 122.3 million from the Celator Acquisition in 2016 and $ 18.7 million from the Cavion acquisition in 2019.

federal NOL carryforwards will expire, if not utilized, in the tax years 2022 to 2036, and the U.S.

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state NOL carryforwards will expire, if not utilized, in the tax years 2022 to 2040.

As of December 31, 2020, there were NOL and other carryforwards for income tax purposes of approximately $ 271.5 million, $ 49.2 million, $ 40.1 million and $ 37.7 million available to reduce future income subject to income taxes in Ireland, Luxembourg, the United Kingdom and Malta, respectively.

The NOLs and other carryforwards generated in Ireland, Luxembourg, the United Kingdom and Malta have no expiration date.

As of December 31, 2021, there were NOL and other carryforwards for income tax purposes of approximately $ 864.9 million, $ 224.3 million, $ 133.5 million and $ 45.7 million available to reduce future income subject to income taxes in the United Kingdom, Malta, Ireland and Luxembourg respectively.

The NOLs and other carryforwards generated in the United Kingdom, Malta, Ireland and Luxembourg have no expiration date.

We also had foreign tax credit carryforwards in Ireland, as of December 31, 2021, of $ 58.8 million, which may only be utilized against certain sources of income.

6 unchanged sentences

taxable income resulting from certain transactions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable.

Such assessment is required on a jurisdiction-by-jurisdiction basis.

Such assessment is required by tax paying component.

Our valuation allowance was $ 154.3 million and $ 77.3 million as of December 31, 2021 and 2020, respectively, for certain Irish, U.S.

(federal and state) and foreign deferred tax assets which we maintain until sufficient positive evidence exists to support reversal.

During 2020, as part of the overall change in valuation allowance, we recognized a net income tax provision of $ 6.2 million relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries.

During 2019, as part of the overall change in valuation allowance, we recognized a net income tax provision of $ 6.3 million relating primarily to the creation of a valuation allowance of $ 15.7 million against certain deferred tax assets primarily associated with foreign tax credits and temporary differences related to foreign subsidiaries, partially offset by the net release of valuation allowances against certain deferred tax assets primarily associated with NOLs.

During 2018, as part of the overall change in valuation allowance, we recognized a net income tax provision of $ 11.2 million relating primarily to the creation of a valuation allowance of $ 25.7 million against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries, partially offset by the net release of valuation allowances against certain deferred tax assets primarily associated with NOLs and foreign tax credits.

The $ 11.2 million net income tax provision included a benefit of $ 10.9 million relating to a change in judgment leading to the reversal of a valuation allowance against certain deferred tax assets, primarily related to NOLs in the United Kingdom and a benefit of $ 5.9 million relating to the reversal of a valuation allowance upon completing our analysis of our ability to utilize certain foreign tax credits generated by the one-time transition tax in the U.S.

Management determined that valuation allowances were no longer needed on these deferred tax assets based on an assessment of the relative impact of all positive and negative evidence that existed at December 31, 2018, including an evaluation of cumulative income in recent years, future sources of taxable income exclusive of reversing temporary differences, and significant risks and uncertainties related to our business.

We periodically evaluate the likelihood of the realization of deferred tax assets and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of tax audits and the regulatory approval of products currently under development.

During 2021, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 81.3 million relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries and foreign tax credit carryforwards.

During 2020, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 6.2 million relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries.

During 2019, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 6.3 million relating primarily to the creation of a valuation allowance of $ 15.7 million against certain deferred tax assets primarily associated with foreign tax credits and temporary differences related to foreign subsidiaries, partially offset by the net release of valuation allowances against certain deferred tax assets primarily associated with NOLs.

We periodically evaluate the likelihood of the realization of deferred tax assets and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant taxing authorities, the progress of tax examinations and the regulatory approval of products currently under development.

Realization of the deferred tax assets is dependent on future taxable income.

Temporary differences related to foreign subsidiaries that are considered indefinitely reinvested totaled approximately $ 1.9 billion and $ 1.6 billion as of December 31, 2020 and 2019, respectively.

In the event of the distribution of those earnings in the form of dividends, a sale of the subsidiaries, or certain other transactions, we may be liable for income taxes, subject to an adjustment, if any, for foreign tax credits and foreign withholding taxes payable to certain foreign tax authorities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2020, it was not practicable to determine the amount of the unrecognized deferred tax liability related to these earnings.

No provision has been made for income tax on undistributed earnings of the Company’s foreign subsidiaries where such earnings are considered indefinitely reinvested in the foreign operations.

Temporary differences related to such earnings totaled approximately $ 2.3 billion as of December 31, 2021.

The Company estimates that it would incur additional income taxes of up to approximately $ 113 million on repatriation of these unremitted earnings to Ireland.

We only recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.

6 unchanged sentences

Decreases related to prior year tax positions ( 182 ) ( 213 ) ( 91 )

Increases recognized through purchase accounting 5,916 — —

Decreases related to settlements with taxing authorities ( 14,744 ) — —

Lapse of the applicable statute of limitations ( 26,566 ) ( 25,169 ) ( 22,116 )

Balance at the end of the year $ 137,867 $ 146,557 $ 124,319

The unrecognized tax benefits were included in income taxes payable, other non-current liabilities, deferred tax liabilities, net, and deferred tax assets, net, in our consolidated balance sheets.

Interest related to our unrecognized tax benefits is recorded in the income tax provision in our consolidated statements of income.

As of December 31, 2020 and 2019, our accrued interest and penalties related to unrecognized tax benefits was $ 11.3 million and $ 7.4 million, respectively.

Interest and penalties related to unrecognized tax benefits recognized in the statements of income were not significant.

The unrecognized tax benefits were included in income taxes payable, other non-current liabilities and deferred tax assets, net, in our consolidated balance sheets.

Interest related to our unrecognized tax benefits is recorded in the income tax expense (benefit) in our consolidated statements of income (loss).

As of December 31, 2021 and 2020, our accrued interest and penalties related to income taxes was $ 4.6 million and $ 11.3 million, respectively.

Interest and penalties related to income taxes benefits recognized in the consolidated statements of income (loss) were not significant.

Included in the balance of unrecognized tax benefits were potential benefits of $ 82.0 million and $ 93.0 million at December 31, 2021 and 2020, respectively, that, if recognized, would affect the effective tax rate on income.

We file income tax returns in multiple tax jurisdictions, the most significant of which are Ireland and the U.S.

We file income tax returns in multiple tax jurisdictions, the most significant of which are Ireland the U.K.

(both at the federal level and in various state jurisdictions).

For Ireland we are no longer subject to income tax audits by taxing authorities for the years prior to 2016.

For Ireland we are no longer subject to income tax examinations by taxing authorities for the years prior to 2017.

we are no longer subject to income tax examinations by taxing authorities for the years prior to 2018.

jurisdictions generally have statute of limitations three to four years from the later of the return due date or the date when the return was filed.

However, in the U.S.

(at the federal level and in most states), carryforwards that were generated in 2016 and earlier may still be adjusted upon examination by the tax authorities.

Certain of our subsidiaries are currently under examination by the French tax authorities for the years ended December 31, 2012, 2013, 2015, 2016 and 2017.

These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes.

In the period from December 2015 through to December 2019, we received proposed tax assessment notices for each of the years under examination relating to certain transfer pricing adjustments.

The notices propose additional French tax of approximately $ 45.9 million for 2012 and 2013 and approximately $ 13.1 million for 2015, 2016 and 2017 including interest and penalties through the respective dates of the proposed assessments, translated at the foreign exchange rate at December 31, 2020.

Due to the subjective nature of the transfer pricing issues involved, during 2020, the Company reached an agreement in principle to settle the audits for all open years with the French tax authorities.

The settlement would require the Company to pay incremental taxes, interest and penalties of $ 19.6 million, translated at the foreign exchange rate as of December 31, 2020.

The income tax expense in 2020 includes the impact of the settlement, which is expected to be finalized and paid in 2021.

Certain of our Italian subsidiaries are currently under examination by the Italian tax authorities for the year ended December 31, 2017.

Certain of our Luxembourg subsidiaries are currently under examination by the Luxembourg tax authorities for the years ended December 31, 2017 and 2018.

Subsequent Events

GW Transaction Agreement

On February 3, 2021, we announced that we have entered into a definitive transaction agreement, or the GW Transaction Agreement, with GW Pharmaceuticals plc, or GW, under which a wholly-owned subsidiary of ours, Jazz Pharmaceuticals UK Holdings Limited, or Acquisition Sub, agreed to acquire GW.

The GW Transaction Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth in the GW Transaction Agreement, Acquisition Sub will acquire the entire issued share capital of GW pursuant to a scheme of arrangement under Part 26 of the United Kingdom Companies Act 2006, or Scheme of Arrangement, which we refer to as the GW Acquisition.

Under the GW Transaction Agreement, at the effective time of the Scheme of Arrangement, all GW ordinary shares issued and outstanding will be transferred to Acquisition Sub, and the holders of GW ordinary shares will have the right to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

receive, for each such share, (a) $ 16.66 2 ⁄ 3 in cash and (b) an amount of our ordinary shares determined based on the exchange ratio, which exchange ratio will be determined as follows:

• If the volume-weighted weighted average sales price of our ordinary shares, as determined in accordance with the GW Transaction Agreement, or the Defined VWAP, is greater than $ 139.72 but less than $ 170.76 , the exchange ratio will be an amount equal to the quotient obtained by dividing (x) $ 1.66 2 ⁄ 3 by (y) the Defined VWAP;

• If the Defined VWAP is equal to or less than $ 139.72 , the exchange ratio will be 0.011929 ;

• If the Defined VWAP is an amount equal to or greater than $ 170.76 , the exchange ratio will be 0.009760 .

Because each American Depositary Share in GW, or GW ADSs, represents a beneficial interest in 12 GW ordinary shares, holders of GW ADSs will be entitled to receive 12 times the foregoing cash and share amounts, or (1) $ 200.00 in cash and (2) $ 20.00 in the form of our ordinary shares with the actual number of our ordinary shares being determined based on the exchange ratio set out above.

The total consideration to be paid by us for the entire issued share capital of GW is approximately $ 7.2 billion.

The respective obligations of GW and us to consummate the GW Acquisition are subject to the satisfaction or waiver of a number of customary conditions, including the approval by GW’s shareholders of the Scheme of Arrangement, obtaining certain regulatory approvals, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and obtaining sanction of the Scheme of Arrangement by the High Court of Justice of England and Wales.

The GW Acquisition is not subject to approval by our shareholders, nor is the GW Acquisition subject to a financing contingency.

The GW Acquisition is expected to close in the second quarter of 2021, subject to the satisfaction or waiver of the conditions set forth in the GW Transaction Agreement.

The GW Transaction Agreement contains customary representations and warranties given by GW and us , covenants regarding the conduct of GW ’s business prior to the consummation of the GW Acquisition, termination rights and other customary provisions.

Financing Commitment

On February 3, 2021, in connection with the execution of the GW Transaction Agreement, we entered into a commitment letter with BofA Securities, Inc., Bank of America, N.A.

and JPMorgan Chase Bank, N.A.

pursuant to which the commitment parties have committed to provide us with a senior secured revolving credit facility in an aggregate principal amount of up to $ 500.0 million, a senior secured term loan B facility in an aggregate principal amount of up to $ 3.15 billion and a senior secured bridge loan facility in an aggregate principal amount of up to $ 2.2 billion to, among other things, finance our obligations in respect of the GW Acquisition.

The effectiveness of such credit facilities is subject to the occurrence of customary closing conditions, including the consummation of the GW Acquisition.

(at the federal level and in most states), carryforwards that were generated in 2017 and earlier may still be adjusted upon examination by the taxing authorities.

During 2021, certain of our subsidiaries were under examination by the French taxing authorities for the years ended December 31, 2012, 2013, 2015, 2016 and 2017.

Due to the subjective nature of the transfer pricing issues involved, the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Quarterly Financial Data (Unaudited)

The following interim financial information presents our 2020 and 2019 results of operations on a quarterly basis (in thousands, except per share amounts):

March 31 June 30 September 30 December 31

Revenues $ 534,726 $ 562,436 $ 600,888 $ 665,517

Gross margin (1) 501,548 530,195 554,854 611,146

Net income (loss) ( 157,833 ) 114,801 148,234 133,414

Net income (loss) per ordinary share, basic ( 2.82 ) 2.07 2.67 2.39

Net income (loss) per ordinary share, diluted ( 2.82 ) 2.06 2.64 2.33

March 31 June 30 September 30 December 31

Revenues $ 508,186 $ 534,133 $ 537,702 $ 581,740

Gross margin (1) 469,825 495,747 500,921 541,178

Net income 85,201 261,898 102,276 73,992

Net income per ordinary share, basic 1.49 4.62 1.80 1.31

Net income per ordinary share, diluted 1.47 4.56 1.78 1.29

__________________________

(1) Gross margin is computed by subtracting cost of product sales (excluding amortization of acquired developed technologies) from product sales, net.

The interim financial information above includes the following items:

• Acquired IPR&D expense of $ 202.3 million and $ 36.0 million in the first and fourth quarters of 2020, respectively, and $ 56.0 million and $ 48.3 million in the first and third quarters of 2019, respectively;

• Impairment charge of $ 136.1 million in the first quarter of 2020;

• A one-time tax benefit of $ 112.3 million resulting from an intra-entity intellectual property asset transfer in the second quarter of 2019;

• Amortization costs of $ 111.1 million in the fourth quarter of 2019 in respect of the PRV.

Company reached an agreement with the French taxing authorities to settle the examinations for all open years.

The Company paid incremental taxes, interest and penalties of $ 19.7 million, during 2021 to close all periods under examination.

Certain of our Italian subsidiaries are currently under examination by the Italian taxing authorities for the year ended December 31, 2017.

Certain of our Luxembourg subsidiaries are currently under examination by the Luxembourg taxing authorities for the years ended December 31, 2017 and 2018.

Certain of our German subsidiaries are currently under examination by the German taxing authorities for the years ended December 31, 2017, 2018 and 2019.

Valuation and Qualifying Accounts

22 unchanged sentences

(federal and state) and other foreign deferred tax assets where we continue to maintain a valuation allowance until sufficient positive evidence exists to support reversal.

(3) Deductions from the deferred tax asset valuation allowance include movements relating to utilization of NOLs and tax credit carryforwards, release in valuation allowance and other movements including adjustments following finalization of tax returns.

(3) Other additions to the deferred tax asset valuation allowance relate to currency translation adjustments recorded directly in other comprehensive income and, in 2019, additions resulting from the Cavion asset acquisition.

(4) Deductions from the deferred tax asset valuation allowance include movements relating to utilization of NOLs and tax credit carryforwards, release in valuation allowance and other movements including adjustments following finalization of tax returns.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures