What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 172 added, 125 removed, 750 unchanged (28% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

2023 December 31,

39 unchanged sentences

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Acquired in-process research and development — — 1,000 69,148

Impairment charge — 133,648 — 133,648

Total operating expenses 799,748 915,889 2,366,186 2,489,393

1 unchanged sentence

Interest expense, net ( 71,497 ) ( 80,244 ) ( 219,114 ) ( 214,117 )

Foreign exchange gain (loss) ( 2,382 ) ( 1,343 ) 811 ( 11,883 )

Income before income tax benefit and equity in loss of investees 81,784 21,014 136,885 27,339

Foreign exchange loss ( 1,377 ) ( 4,649 ) ( 566 ) ( 16,532 )

Income (loss) before income tax benefit and equity in loss (gain) of investees 99,518 ( 60,130 ) 236,403 ( 32,791 )

Income tax benefit ( 47,176 ) ( 43,027 ) ( 86,823 ) ( 58,603 )

Equity in loss of investees 1,669 2,461 2,674 6,603

Net income $ 104,438 $ 34,665 $ 173,858 $ 36,312

Net income per ordinary share:

Equity in loss (gain) of investees ( 126 ) 2,545 2,548 9,148

Net income (loss) $ 146,820 $ ( 19,648 ) $ 320,678 $ 16,664

Net income (loss) per ordinary share:

Basic $ 2.33 $ ( 0.31 ) $ 5.05 $ 0.27

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 104,438 $ 34,665 $ 173,858 $ 36,312

Net income (loss) $ 146,820 $ ( 19,648 ) $ 320,678 $ 16,664

Other comprehensive income (loss):

35 unchanged sentences

Balance at June 30, 2023 63,398 $ 6 4,000 $ 55 $ 473 $ 3,580,115 $ ( 866,823 ) $ 811,849 $ 3,525,675

Issuance of ordinary shares in conjunction with exercise of share options 50 — — — — 5,512 — — 5,512

Issuance of ordinary shares in conjunction with vesting of restricted stock units 59 — — — — — — — —

Shares withheld for payment of employee's withholding tax liability — — — — — ( 1,884 ) — — ( 1,884 )

Share-based compensation — — — — — 56,197 — — 56,197

Shares repurchased ( 562 ) — — — — — — ( 74,371 ) ( 74,371 )

Other comprehensive loss — — — — — — ( 168,576 ) — ( 168,576 )

Net income — — — — — — — 146,820 146,820

Balance at September 30, 2023 62,945 $ 6 4,000 $ 55 $ 473 $ 3,639,940 $ ( 1,035,399 ) $ 884,298 $ 3,489,373

JAZZ PHARMACEUTICALS PLC

26 unchanged sentences

Balance at June 30, 2022 62,623 $ 6 4,000 $ 55 $ 472 $ 3,312,319 $ ( 1,106,029 ) $ 993,958 $ 3,200,781

Issuance of ordinary shares in conjunction with exercise of share options 207 — — — — 21,260 — — 21,260

Issuance of ordinary shares in conjunction with vesting of restricted stock units 60 — — — — — — — —

Shares withheld for payment of employee's withholding tax liability — — — — — ( 2,567 ) — — ( 2,567 )

Share-based compensation — — — — — 56,985 — — 56,985

Other comprehensive loss — — — — — — ( 511,617 ) — ( 511,617 )

Net loss — — — — — — — ( 19,648 ) ( 19,648 )

Balance at September 30, 2022 62,890 $ 6 4,000 $ 55 $ 472 $ 3,387,997 $ ( 1,617,646 ) $ 974,310 $ 2,745,194

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

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

9 unchanged sentences

Acquired in-process research and development 1,000 69,148

Impairment charge — 133,648

Loss on disposal of a business — 39,258

14 unchanged sentences

Investing activities

Proceeds from maturity of investments 20,000 —

Acquired in-process research and development ( 1,000 ) ( 69,148 )

38 unchanged sentences

coli -derived asparaginase.

In September 2023, the European Commission, or EC, granted marketing authorization for this therapy under the trade name Enrylaze;

• Zepzelca® (lurbinectedin) , a product approved by FDA in June 2020 under FDA's accelerated approval pathway and launched in the U.S.

18 unchanged sentences

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any other interim period or for any future period.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any other interim period or for any future period.

Our significant accounting policies have not changed substantially from those previously described in our Annual Report on Form 10‑K for the year ended December 31, 2022, other than as described below.

16 unchanged sentences

In this regard, our ability to maintain or increase oxybate revenues and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the launch of Xywav for the treatment of IH in adults and adoption in that indication;

competition from the recent introduction of two authorized generic, or AG, versions of high-sodium oxybate and new products, such as Avadel’s recently approved Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

competition from the recent introduction of two authorized generic, or AG, versions of high-sodium oxybate and new products, such as Avadel’s Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market, as well as potential future competition from additional AG versions of high-sodium oxybate and from generic versions of high-sodium oxybate and from other competitors;

1 unchanged sentence

increased rebates required to maintain access to our products;

challenges to our intellectual property around

Xywav and/or Xyrem, including from pending antitrust and intellectual property litigation;

challenges to our intellectual property around Xywav and/or

Xyrem, including from pending antitrust and intellectual property litigation;

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

9 unchanged sentences

future legislation, action by the U.S.

Drug Enforcement Agency or FDA action authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products;

Federal Government authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products;

delays or problems in the supply of our products, loss of single source suppliers or failure to comply with manufacturing regulations;

16 unchanged sentences

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

As of June 30, 2023, we had foreign exchange forward contracts with notional amounts totaling $ 365.3 million.

As of June 30, 2023, the outstanding foreign exchange forward contracts had a net asset fair value of $ 0.5 million.

As of June 30, 2023, we had interest rate swap contracts with notional amounts totaling $ 500 million.

These outstanding interest rate swap contracts had an asset fair value of $ 6.6 million as of June 30, 2023.

As of September 30, 2023, we had foreign exchange forward contracts with notional amounts totaling $ 509.9 million.

As of September 30, 2023, the outstanding foreign exchange forward contracts had a net liability fair value of $ 14.6 million.

As of September 30, 2023, we had interest rate swap contracts with notional amounts totaling $ 500 million.

These outstanding interest rate swap contracts had an asset fair value of $ 9.6 million as of September 30, 2023.

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

4 unchanged sentences

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 June 30, 2023 and December 31, 2022, allowances on receivables were not material.

As of June 30, 2023, five customers accounted for 81 % of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 49 % of gross accounts receivable, Cardinal Health, Inc., or Cardinal, which accounted for 11 % of gross accounts receivable and ASD Specialty Healthcare LLC, which accounted for 9 % of gross accounts receivable.

As of December 31, 2022, five customers accounted for 87 % of gross accounts receivable, including ESSDS, which accounted for 55 % of gross accounts receivable, Cardinal, which accounted for 10 % of gross accounts receivable and McKesson Corporation and affiliates, which accounted for 9 % of gross accounts receivable.

Historically, we have not experienced significant credit losses on our accounts receivable and as of September 30, 2023 and December 31, 2022, allowances on receivables were not material.

As of September 30, 2023, five customers accounted for 84 % of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 45 % of gross accounts receivable, McKesson Corporation and affiliates, or McKesson, which accounted for 12 % of gross accounts receivable and ASD Specialty Healthcare LLC, which accounted for 12 % of gross accounts receivable.

As of December 31, 2022, five customers accounted for 87 % of gross accounts receivable, including ESSDS, which accounted for 55 % of gross accounts receivable, Cardinal Health Inc, which accounted for 10 % of gross accounts receivable and McKesson, which accounted for 9 % of gross accounts receivable.

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

2 unchanged sentences

Cash, cash equivalents and investments consisted of the following (in thousands):

June 30, 2023

September 30, 2023

Losses Estimated

8 unchanged sentences

Fair Value Cash and

Equivalents Investments

Cash $ 334,018 $ — $ — $ 334,018 $ 334,018 $ —

3 unchanged sentences

Cash equivalents and investments are considered available-for-sale securities.

We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of income.

We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of income (loss).

Our investment balances represent time deposits with original maturities of greater than three months and less than one year.

Interest income from available-for-sale securities was $ 14.7 million and $ 25.3 million in the three and six months ended June 30, 2023, respectively, and $ 0.7 million and $ 0.9 million in the three and six months ended June 30, 2022, respectively.

Interest income from available-for-sale securities was $ 19.2 million and $ 44.4 million in the three and nine months ended September 30, 2023, respectively, and $ 3.5 million and $ 4.4 million in the three and nine months ended September 30, 2022, respectively.

Fair Value Measurement

The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of June 30, 2023 and December 31, 2022 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):

June 30, 2023 December 31, 2022

The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of September 30, 2023 and December 31, 2022 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):

September 30, 2023 December 31, 2022

(Level 1) Significant

11 unchanged sentences

Totals $ — $ 15,964 $ 15,964 $ — $ — $ —

As of June 30, 2023, our available-for-sale securities included money market funds and time deposits and their carrying values were approximately equal to their fair values.

Money market funds were measured using quoted prices in active

markets, which represent Level 1 inputs and time deposits were measured at fair value using Level 2 inputs.

As of September 30, 2023, our available-for-sale securities included money market funds and time deposits and their carrying values were approximately equal to their fair values.

Money market funds were measured using quoted prices in

active markets, which represent Level 1 inputs and time deposits were measured at fair value using Level 2 inputs.

Level 2 inputs are obtained from various third party data providers and represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

2 unchanged sentences

There were no transfers between the different levels of the fair value hierarchy in 2023 or 2022.

As of June 30, 2023 and December 31, 2022, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 5.5 million.

As of September 30, 2023 and December 31, 2022, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 5.5 million.

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

As of June 30, 2023, the estimated fair values of the 1.50 % exchangeable senior notes due 2024, or 2024 Notes, the 2.00 % exchangeable senior notes due 2026, or 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, the 4.375 % senior secured notes, due 2029, or the Secured Notes, and the seven-year $ 3.1 billion term loan B facility were approximately $ 549 million, $ 1.0 billion, $ 1.3 billion and $ 2.7 billion respectively.

As of September 30, 2023, the estimated fair values of the 1.50 % exchangeable senior notes due 2024, or 2024 Notes, the 2.00 % exchangeable senior notes due 2026, or 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, the 4.375 % senior secured notes, due 2029, or the Secured Notes, and the seven-year $ 3.1 billion term loan B facility were approximately $ 555 million, $ 1.0 billion, $ 1.3 billion and $ 2.7 billion respectively.

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

7 unchanged sentences

Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures.

As of June 30, 2023 and December 31, 2022, the notional amount of foreign exchange contracts where hedge accounting is not applied was $ 365.3 million and $ 505.0 million, respectively.

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

As of September 30, 2023 and December 31, 2022, the notional amount of foreign exchange contracts where hedge accounting is not applied was $ 509.9 million and $ 505.0 million, respectively.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Foreign Exchange Forward Contracts:

2023 2022 2023 2022

Gain (loss) recognized in foreign exchange gain (loss) $ 353 $ ( 34,180 ) $ 4,628 $ ( 55,205 )

Loss recognized in foreign exchange gain (loss) $ ( 13,549 ) $ ( 40,331 ) $ ( 8,921 ) $ ( 95,536 )

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in April 2023 which are effective until April 2026.

These agreements hedge contractual term loan interest rates.

As of June 30, 2023 , the interest rate swap agreements had a notional amount of $ 500.0 million.

As a result of these agreements, the interest rate on a portion of our term loan borrowings was fixed at 3.9086 %, plus the borrowing spread, until April 30, 2026.

The impact on accumulated other comprehensive income (loss) and earnings from derivative instruments that qualified as cash flow hedges for the three and six months ended June 30, 2023 was as follows (in thousands):

As of September 30, 2023 , the interest rate swap agreements had a notional amount of $ 500.0 million.

As a result of these agreements, the interest rate on a portion of our term loan borrowings is fixed at 3.9086 %, plus the borrowing spread, until April 30, 2026.

The impact on accumulated other comprehensive income (loss) and earnings from derivative instruments that qualified as cash flow hedges for the three and nine months ended September 30, 2023 was as follows (in thousands):

Interest Rate Contracts:

Three and Six Months Ended

June 30, 2023

Three Months Ended

September 30, 2023 Nine Months Ended

September 30, 2023

Gain recognized in accumulated other comprehensive income (loss), net of tax $ 3,539 $ 9,218

Gain reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax ( 1,289 ) ( 2,060 )

Assuming no change in USD Secured Overnight Financing Rate based interest rates from market rates as of June 30, 2023 , $ 4.9 million of gains, net of tax, recognized in accumulated other comprehensive income (loss) will be reclassified to earnings over the next 12 months.

Assuming no change in USD Secured Overnight Financing Rate based interest rates from market rates as of September 30, 2023 , $ 5.1 million of gains, net of tax, recognized in accumulated other comprehensive income (loss) will be reclassified to earnings over the next 12 months.

In order to hedge our exposure to foreign currency exchange risk associated with our seven-year € 625.0 million term loan B facility, or the Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021, which matured in March 2022, and was de-designated as a fair value hedge.

1 unchanged sentence

The carrying amount of the Euro Term Loan and the fair value of the cross-currency interest rate swap contract were remeasured on a monthly basis, with changes in the euro to U.S.

dollar foreign exchange rates recognized within foreign exchange gain (loss) in the condensed consolidated statements of income.

dollar foreign exchange rates recognized within foreign exchange gain (loss) in the condensed consolidated statements of income (loss).

The impact on accumulated other comprehensive income (loss) and earnings from the cross-currency interest rate swap contract was as follows (in thousands):

Cross-Currency Interest Rate Contract:

Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2022

Loss reclassified from accumulated other comprehensive income (loss) to foreign exchange loss, net of tax $ 128

Loss recognized in foreign exchange loss 2,646

The cash flow effects of our derivative contracts for the six months ended June 30, 2023 and 2022 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which were included in net cash used in financing activities.

The cash flow effects of our derivative contracts for the nine months ended September 30, 2023 and 2022 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which were included in net cash used in financing activities.

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

Classification June 30,

Classification September 30,

2023 December 31,

9 unchanged sentences

These provisions were not applicable as of December 31, 2022 since all derivatives were in an asset position.

The following table summarizes the potential effect on our condensed consolidated balance sheets of offsetting our interest rate and foreign exchange forward contracts subject to such provisions as of June 30, 2023 (in thousands):

June 30, 2023

September 30, 2023

Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet

3 unchanged sentences

Inventories consisted of the following (in thousands):

September 30,

2023 December 31,

3 unchanged sentences

Total inventories $ 611,827 $ 714,061

As of June 30, 2023 and December 31, 2022 inventories included $ 390.3 million and $ 457.6 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

As of September 30, 2023 and December 31, 2022 inventories included $ 348.1 million and $ 457.6 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

Goodwill and Intangible Assets

2 unchanged sentences

Foreign exchange 12,658

Balance at June 30, 2023 $ 1,742,675

Balance at September 30, 2023 $ 1,705,320

The gross carrying amounts and net book values of our intangible assets were as follows (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Average Useful

8 unchanged sentences

Total finite-lived intangible assets $ 7,591,748 $ ( 2,173,888 ) $ 5,417,860 $ 7,506,287 $ ( 1,711,850 ) $ 5,794,437

The increase in the gross carrying amount of intangible assets as of June 30, 2023 compared to December 31, 2022 reflects the positive impact of foreign currency translation adjustments due to the strengthening of sterling and euro against the U.S.

The increase in the gross carrying amount of intangible assets as of September 30, 2023 compared to December 31, 2022 primarily relates to the positive impact of foreign currency translation adjustments due to the strengthening of sterling against the U.S.

The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective.

They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.

Based on finite-lived intangible assets recorded as of June 30, 2023, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):

Based on finite-lived intangible assets recorded as of September 30, 2023, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):

Year Ending December 31, Estimated Amortization Expense

4 unchanged sentences

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

September 30,

2023 December 31,

10 unchanged sentences

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

September 30,

2023 December 31,

3 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

September 30,

2023 December 31,

2 unchanged sentences

Accrued facilities expenses 52,006 25,864

Accrued collaboration expenses 41,407 33,205

Accrued interest 35,069 35,614

Clinical trial accruals 45,115 31,338

Accrued royalties 28,336 57,347

Accrued collaboration expenses 23,530 33,205

Accrued interest 22,200 35,614

Sales return reserve 20,150 26,164

1 unchanged sentence

Current portion of lease liabilities 16,722 15,938

Derivative instrument liabilities 15,964 —

Selling and marketing accruals 14,573 18,553

1 unchanged sentence

Accrued construction-in-progress 5,167 3,298

Derivative instrument liabilities 1,654 —

Other 66,036 68,672

1 unchanged sentence

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

September 30,

2023 December 31,

9 unchanged sentences

Less current portion (1)

604,507 31,000

Total long-term debt $ 5,110,757 $ 5,693,341

______________________________

(1) Balance as of September 30, 2023 includes the 2024 Notes since they mature in August 2024.

Exchangeable Senior Notes

2 unchanged sentences

No subsidiary of Jazz Pharmaceuticals plc guaranteed the Exchangeable Senior Notes.

Subject to certain local law restrictions on payment of dividends, among other things, and potential negative tax consequences, we are not aware of any significant restrictions on the ability of Jazz Pharmaceuticals plc to obtain funds from the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries by dividend or loan, or any legal or economic restrictions on the ability of the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries to transfer funds to Jazz Pharmaceuticals plc in the form of cash dividends, loans or advances.

transfer funds to Jazz Pharmaceuticals plc in the form of cash dividends, loans or advances.

There is no assurance that in the future such restrictions will not be adopted.

1 unchanged sentence

The effective interest rate of the 2026 Notes is 2.26 %.

During the three months ended June 30, 2023 and 2022, we recognized interest expense of $ 5.6 million, of which $ 5.0 million related to the contractual coupon rate and $ 0.6 million related to the amortization of debt issuance costs, respectively.

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $ 11.1 million, of which $ 10.0 million related to the contractual coupon rate and $ 1.1 million related to the amortization of debt issuance costs, respectively.

During the three months ended September 30, 2023 and 2022, we recognized interest expense of $ 5.7 million, of which $ 5.0 million related to the contractual coupon rate and $ 0.7 million related to the amortization of debt issuance costs, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized interest expense of $ 16.8 million, of which $ 15.0 million related to the contractual coupon rate and $ 1.8 million related to the amortization of debt issuance costs, respectively.

The total liability of the 2024 Notes is reflected net of issuance costs of $ 11.4 million which will be amortized over the term of the 2024 Notes.

The effective interest rate of the 2024 Notes is 1.79 %.

During the three months ended June 30, 2023 and 2022, we recognized interest expense of $ 2.5 million, of which $ 2.1 million related to the contractual coupon rate and $ 0.4 million related to the amortization of debt issuance costs, respectively.

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $ 5.0 million, of which $ 4.2 million related to the contractual coupon rate and $ 0.8 million related to the amortization of debt issuance costs, respectively.

Scheduled maturities with respect to our long-term debt principal balances outstanding as of June 30, 2023 were as follows (in thousands):

During the three months ended September 30, 2023 and 2022, we recognized interest expense of $ 2.5 million, of which $ 2.1 million related to the contractual coupon rate and $ 0.4 million related to the amortization of debt issuance costs, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized interest expense of $ 7.6 million, of which $ 6.4 million related to the contractual coupon rate and $ 1.2 million related to the amortization of debt issuance costs, respectively.

Scheduled maturities with respect to our long-term debt principal balances outstanding as of September 30, 2023 were as follows (in thousands):

Year Ending December 31, Scheduled Long-Term Debt Maturities

12 unchanged sentences

Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, we believe the fair value of these indemnification obligations is not significant.

Accordingly, we did not recognize any liabilities relating to these obligations as of June 30, 2023 and December 31, 2022.

Accordingly, we did not recognize any liabilities relating to these obligations as of September 30, 2023 and December 31, 2022.

No assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case we may incur substantial liabilities as a result of these indemnification obligations.

1 unchanged sentence

We are involved in legal proceedings, including the following matters:

Xyrem Class Action

Xyrem Antitrust Litigation

From June 2020 to May 2022, 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:

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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.

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.

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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.

On May 9, 2022, Aetna Inc., or Aetna, filed a lawsuit in the Superior Court of California for the County of Alameda 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 December 27, 2022, the Court granted in part and denied in part our motion to dismiss Aetna’s complaint.

As a result of that ruling, the generic defendants have been dismissed from the case, and certain of Aetna’s claims against Jazz have been dismissed.

On January 27, 2023, Aetna filed an amended complaint against Jazz.

On March 22, 2023, we filed motions to dismiss and to strike portions of the amended complaint.

On June 26, 2023, the Court granted our motions, and granted Aetna leave to further amend its complaint.

On April 19, 2023, the Court held a hearing on class certification in the consolidated multi-district litigation referenced above.

1 unchanged sentence

The Court excluded Xywav purchasers from the classes.

The Court has not yet set a trial date in this matter.

Trial in this matter is scheduled for October 28, 2024.

On January 13, 2023, Amneal Pharmaceuticals LLC, Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, notified the Court that they had reached a settlement-in-principle with the class action plaintiffs.

1 unchanged sentence

On May 12, 2023, the Court granted the motion for preliminary approval of the proposed settlement.

On December 27, 2022, the Court granted in part and denied in part our motion to dismiss Aetna’s complaint.

As a result of that ruling, the generic defendants have been dismissed from the case, and certain of Aetna’s claims against Jazz have been dismissed.

On January 27, 2023, Aetna filed an amended complaint against Jazz.

On March 22, 2023, we filed motions to dismiss and to strike portions of the amended complaint.

On June 26, 2023, the Court granted our motions, and granted Aetna leave to further amend its complaint.

On August 7, 2023, Aetna filed a motion seeking leave of the Court to file a second amended complaint.

That motion was granted on November 3, 2023.

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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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 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.

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On December 9, 2022, we filed a motion to dismiss Avadel’s counterclaims.

The Court has not yet ruled on the motion.

As noted above, on March 3, 2023,

we and Avadel stipulated to the dismissal without prejudice of the claims and counterclaims related to infringement and validity of the delisted patent.

On June 29, 2023, we filed a motion seeking leave to supplement our motion to dismiss, as well as a motion to stay discovery pending resolution of the motion to dismiss.

The Court has not yet ruled on these motions.

As noted above, on March 3, 2023, we and Avadel stipulated to the dismissal without prejudice of the claims and counterclaims related to infringement and validity of the delisted patent.

On November 1, 2023, the Court held a claim construction hearing relating to disputed terms in the asserted patents.

The Court has not yet issued a ruling.

The Court scheduled a trial regarding our patent infringement claims against Avadel for February 26, 2024.

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On November 3, 2022, the Court granted our and FDA’s motions for summary judgment and denied Avadel’s motion.

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.

On February 23, 2022, the parties filed a Joint Motion and Stipulation to Enter Final Judgment in favor of GW.

On February 25, 2022, the Court granted the parties’ motion and entered final judgment in favor of GW.

Pursuant to the stipulation, Canopy filed a notice of appeal of the Court’s ruling on the disputed term in March 2022.

The United States Court of Appeals for the Federal Circuit held oral argument on Canopy’s appeal on April 3, 2023.

On April 24, 2023, the Federal Circuit affirmed the district court’s entry of judgment in favor of GW, finding that the extraction process used in the manufacture of Epidiolex does not infringe Canopy’s patent.

Xywav Patent Litigation

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On June 22, 2022, the Court consolidated the two lawsuits we filed against Lupin.

No trial date has been set in the consolidated case.

In November 2022, we received notice from Lupin that it had filed a paragraph IV certification regarding a newly-issued patent listed in the Orange Book for Xywav.

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The notice from Teva included a paragraph IV certification with respect to thirteen of our patents listed in FDA’s Orange Book for Xywav on the date of the 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.

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.

In March 2023, we filed a patent infringement suit against Teva in the United States District Court for the District of New Jersey.

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As a result of this lawsuit, we expect that a stay of approval of up to 30 months will be imposed by FDA on Alkem’s ANDA.

On October 4, 2023, we entered into a settlement agreement with Alkem that resolves our patent litigation.

Under the settlement agreement, we granted Alkem a license to manufacture, market, and sell its generic version of Xyrem on or after December 31, 2025, or earlier under certain circumstances, including circumstances where Hikma launches its own generic sodium oxybate product.

Epidiolex Patent Litigation

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The suit seeks an order that the effective date of FDA approval of each Epidiolex ANDA Filer’s application shall be a date no earlier than the expiration of the newly-issued patent.

Epidiolex also has Orphan Drug Exclusivity for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients 2 years of age and older through September 28, 2025, and for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients between 1 and 2 years of age and for the treatment of seizures associated with tuberous sclerosis complex through July 31, 2027.

On October 24, 2023, we entered into a settlement agreement with Padagis US LLC, or Padagis, that resolved our patent litigation with Padagis related to Epidiolex.

Under the settlement agreement, we granted Padagis a license to manufacture,

market, and sell its generic version of Epidiolex on a date that depends on the occurrence of certain other events.

The specific terms of the Padagis settlement agreement are confidential.

The settlement with Padagis does not resolve the litigation against the other nine Epidiolex ANDA Filers, which is ongoing.

We cannot predict the specific timing or outcome of events in these matters with respect to the remaining defendants or the impact of developments involving any specific parties or patents on other ongoing proceedings with any specific Epidiolex ANDA Filer.

Epidiolex also has ODE for the treatment of seizures associated with LGS or DS in patients 2 years of age and older through September 28, 2025, and for the treatment of seizures associated with LGS or DS in patients between 1 and 2 years of age and for the treatment of seizures associated with TSC through July 31, 2027.

The Company vigorously enforces its intellectual property rights, but cannot predict the outcome of these matters.

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MSP seeks monetary damages, restitution, disgorgement, and a declaration that the conduct alleged is unlawful.

On July 25, 2023, we and certain other defendants filed motions to dismiss MSP's complaint.

On July 25, 2023, we and certain other defendants filed motions to dismiss MSP's complaint, which remain pending.

No trial date has been set for this matter.

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and that approval of the Lumryz NDA was in excess of FDA’s statutory authority and was made without observance of procedure required by law.

On September 15, 2023, we filed a motion for summary judgment.

On October 20, 2023, Avadel and FDA filed cross motions for summary judgment.

These motions remain pending and the Court has not set a hearing date.

From time to time we are involved in legal proceedings arising in the ordinary course of business.

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Share Repurchase Program

In November 2016, our board of directors authorized a share repurchase program and as of June 30, 2023 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $ 1.5 billion, exclusive of any brokerage commissions.

In November 2016, our board of directors authorized a share repurchase program and as of September 30, 2023 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $ 1.5 billion, exclusive of any brokerage commissions.

Under this program, which has no expiration date, we may repurchase ordinary shares from time to time on the open market.

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The share repurchase program may be modified, suspended or discontinued at any time without prior notice.

During the three and six months ended June 30, 2023, we spent a total of $ 95.6 million to purchase 0.8 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $ 126.37 per share.

During the nine months ended September 30, 2023, we spent a total of $ 170.0 million to purchase 1.3 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $ 128.89 per share.

All ordinary shares repurchased were canceled.

As of June 30, 2023, the remaining amount authorized under the share repurchase program was $ 335.6 million.

As of September 30, 2023, the remaining amount authorized under the share repurchase program was $ 261.2 million, exclusive of any brokerage commissions.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

The components of accumulated other comprehensive loss as of September 30, 2023 and December 31, 2022 were as follows (in thousands):

Net Unrealized

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Other comprehensive income, net 7,158 82,952 90,110

Balance at June 30, 2023 $ 4,908 $ ( 871,731 ) $ ( 866,823 )

During the six months ended June 30, 2023, other comprehensive income primarily reflects foreign currency translation adjustments, primarily due to the strengthening of the sterling and the euro against the U.S.

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):

Balance at September 30, 2023 $ 7,158 $ ( 1,042,557 ) $ ( 1,035,399 )

During the nine months ended September 30, 2023, other comprehensive income primarily reflects foreign currency translation adjustments, primarily due to the strengthening of the sterling 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.

Basic and diluted net income (loss) per ordinary share were computed as follows (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 104,438 $ 34,665 $ 173,858 $ 36,312

Net income (loss) $ 146,820 $ ( 19,648 ) $ 320,678 $ 16,664

Effect of interest on assumed conversions of Exchangeable Senior Notes, net of tax 5,912 — 19,951 —

Net income for dilutive net income per ordinary share $ 111,514 $ 34,665 $ 187,897 $ 36,312

Net income (loss) for dilutive net income per ordinary share $ 152,732 $ ( 19,648 ) $ 340,629 $ 16,664

Weighted-average ordinary shares used in per share calculations - basic 63,114 62,785 63,532 62,365

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Weighted-average ordinary shares used in per share calculations - diluted 71,293 62,785 72,866 63,388

Net income per ordinary share:

Net income (loss) per ordinary share:

Basic $ 2.33 $ ( 0.31 ) $ 5.05 $ 0.27

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Potentially dilutive ordinary shares from the Exchangeable Senior Notes are determined by applying the if-converted method to the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The potential issue of ordinary shares upon exchange of the Exchangeable Senior Notes was anti-dilutive and had no impact on diluted net income per ordinary share for the three and six months ended June 30, 2022.

The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands):

In August 2023, we made an irrevocable election to fix the settlement method for exchanges of the 2024 Notes to a combination of cash and ordinary shares of the Company with a specified cash amount per $1,000 principal amount of the 2024 Notes of $1,000.

As a result, the assumed issuance of ordinary shares upon exchange of the 2024 Notes has only been included in the calculation of diluted net income per ordinary share in the three and nine months ended September 30, 2023 up to the date the irrevocable election was made.

The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income (loss) per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Xyrem 125,110 256,039 463,009 772,957

Total Oxybate 486,333 504,446 942,224 938,023

Epidiolex/Epidyolex 213,711 196,218 604,846 529,400

Sativex 4,627 3,220 14,531 12,104

— 12,966 — 28,844

Total Neuroscience 675,081 711,413 2,018,344 2,020,346

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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McKesson 12 % 10 % 11 % 11 %

Cardinal 10 % 9 % 10 % 9 %

Financing and payment

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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The Company evaluated the performance targets in the context of its current long-range financial plan and its product candidate development pipeline and recognized expense based on the probable number of awards that will ultimately vest.

As of June 30, 2023, compensation cost not yet recognized related to unvested RSUs, PRSUs, ESPP and share options was $ 386.3 million, $ 59.5 million, $ 8.1 million and $ 5.0 million, respectively, which is expected to be recognized over a weighted-average period of 2.8 years, 1.6 years, 1.2 years and 0.9 years, respectively.

Our income tax benefit was $ 24.3 million and $ 39.6 million for the three and six months ended June 30, 2023, compared to an income tax benefit of $ 16.1 million and $ 15.6 million for the same periods in 2022, relating to tax arising on income or losses in Ireland, the U.K., the U.S.

As of September 30, 2023, compensation cost not yet recognized related to unvested RSUs, PRSUs, ESPP and share options was $ 351.8 million, $ 44.1 million, $ 6.0 million and $ 3.3 million, respectively, which is expected to be recognized over a weighted-average period of 2.6 years, 1.4 years, 1.1 years and 0.7 years, respectively.

Our income tax benefit was $ 47.2 million and $ 86.8 million for the three and nine months ended September 30, 2023, compared to an income tax benefit of $ 43.0 million and $ 58.6 million for the same periods in 2022, relating to tax arising on income or losses in Ireland, the U.K., the U.S.

and certain other foreign jurisdictions, offset by deductions on subsidiary equity, Foreign Derived Intangible Income and patent box benefits.

Our effective tax rate was ( 29.7 )% and ( 29.0 )% for the three and six months ended June 30, 2023 compared to effective tax rates of ( 76.7 )% and ( 57.0 )% for the same periods of 2022.

The increases in the effective tax rates, resulted primarily from the impact of the disposal of Sunosi in 2022.

Our effective tax rate was ( 47.4 )% and ( 36.7 )% for the three and nine months ended September 30, 2023 compared to effective tax rates of 71.6 % and 178.7 % for the same periods of 2022.

The increase in the income tax benefit for the three and nine months ended September 30, 2023, resulted primarily from the mix of pre-tax income and losses across tax jurisdictions partially offset by the impairment of our acquired in-process research and development asset in 2022.

We do not provide for Irish income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

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In October 2022 and in January 2023, we received tax assessment notices from the Luxembourg taxing authorities for all years under examination relating to certain transfer pricing and other adjustments.

The notices propose additional Luxembourg income tax of approximately $ 24.3 million, translated at the foreign exchange rate as June 30, 2023.

The notices propose additional Luxembourg income tax of approximately $ 23.7 million, translated at the foreign exchange rate as September 30, 2023.

We disagree with the proposed assessments and are contesting them vigorously.

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-Q

Item 1. Financial Statements