DUBLIN--(BUSINESS WIRE)-- Horizon Therapeutics plc (Nasdaq: HZNP) today announced second-quarter 2022 financial results and revised its full-year 2022 net sales and adjusted EBITDA guidance.

“Double-digit net sales growth in our orphan segment drove our second-quarter performance, with very strong growth of KRYSTEXXA and an increasing contribution from UPLIZNA,” said Tim Walbert, chairman, president and chief executive officer, Horizon. “We were also pleased to receive FDA approval of our expanded KRYSTEXXA label in July, to include co-administration of KRYSTEXXA with methotrexate, which will enable many more patients to benefit from this important medicine.”

“We are revising our full-year guidance to reflect our expectation for TEPEZZA full-year net sales percentage growth in the high-teens and reflect recent generic competition in our inflammation segment. Importantly, our long-term outlook for TEPEZZA has not changed and we continue to estimate that our three key growth drivers TEPEZZA, KRYSTEXXA and UPLIZNA can generate aggregate global peak annual net sales of greater than $5.5 billion. We understand the dynamics impacting the pace of growth of TEPEZZA, and we are executing on our strategy to address them, including a more significant expansion of our TEPEZZA field force and implementing initiatives to drive further penetration. We are excited about the future prospects for Horizon, with our growth drivers, our expanding pipeline and our global expansion initiatives.”

Financial Highlights
(in millions except for per share amounts and percentages)		Q2 22			Q2 21			% Change			YTD 22			YTD 21			% Change
Net sales		$	876.4		$	832.5		5			$	1,761.7		$	1,175.0		50
Net income			61.0			158.1		(61	)			265.2			34.8		NM
Non-GAAP net income			253.8			340.7		(26	)			569.6			345.5		65
Adjusted EBITDA			306.6			320.4		(4	)			677.8			363.2		87
Earnings per share - diluted			0.26			0.67		(61	)			1.12			0.15		NM
Non-GAAP earnings per share - diluted			1.07			1.45		(26	)			2.41			1.47		64

Second Quarter and Recent Company Highlights

Key Clinical Development Programs

• HZN-1116, a fully human monoclonal antibody designed to bind and neutralize the function of the FLT3-ligand, thereby reducing both conventional and plasmacytoid dendritic cells.
   
  • Autoimmune Disease Trial: Phase 1 trial underway to evaluate HZN-1116 in patients with autoimmune diseases.

Second-Quarter Financial Results

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

• Net Sales: Second-quarter 2022 net sales were $876.4 million, an increase of 5% compared to the second quarter of 2021.
   
• Gross Profit: Under U.S. GAAP, the second-quarter 2022 gross profit ratio was 73.7% compared to 75.9% in the second quarter of 2021. The non-GAAP gross profit ratio in the second quarter of 2022 was 86.3% compared to 87.7% in the second quarter of 2021.
   
• Operating Expenses: R&D expenses were 11.8% of net sales and SG&A expenses were 45.4% of net sales in the second quarter of 2022. Second-quarter non-GAAP R&D expenses were 10.9% of net sales and non-GAAP SG&A expenses were 40.2% of net sales.
   
• Income Tax Expense: On a GAAP basis in the second quarter of 2022, income tax expense was $3.8 million. Second-quarter non-GAAP income tax expense was $33.7 million.
   
• Net Income: In the second quarter of 2022, net income on a GAAP and non-GAAP basis was $61.0 million and $253.8 million, respectively.
   
• Adjusted EBITDA: Second-quarter 2022 adjusted EBITDA was $306.6 million.
   
• Earnings per Share: On a GAAP basis, diluted earnings per share in the second quarter of 2022 and 2021 were $0.26 and $0.67, respectively. Non-GAAP diluted earnings per share in the second quarter of 2022 and 2021 were $1.07 and $1.45, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the second quarter of 2022 were 236.2 million.

Second-Quarter Segment Results

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

Orphan Segment
(in millions except for percentages)	Q2 22			Q2 21		% Change			YTD 22			YTD 21		% Change
TEPEZZA®	$	479.8		$	453.3	6			$	981.3		$	455.3	116
KRYSTEXXA®		167.8			130.3	29				308.5			237.1	30
RAVICTI®		75.7			68.4	11				154.1			141.3	9
PROCYSBI®		47.7			49.8	(4	)			97.3			93.1	4
UPLIZNA®(1)		38.6			14.5	167				69.1			16.3	323
ACTIMMUNE®		30.0			27.8	8				61.3			56.5	9
BUPHENYL®		1.4			2.2	(39	)			3.5			3.9	(10	)
QUINSAIRTM		0.3			0.2	51				0.6			0.5	46
Orphan Net Sales	$	841.3		$	746.5	13			$	1,675.7		$	1,004.0	67
Orphan Segment Operating Income	$	315.1		$	321.2	(2	)		$	666.6		$	322.3	107

(1)	Second-quarter and year-to-date 2022 UPLIZNA net sales included $8.6 million and $13.8 million, respectively, in revenue and milestone payments from the Company’s international partners.

• Second-quarter 2022 net sales of the orphan segment, the Company’s strategic growth segment, were $841.3 million, driven by the growth of TEPEZZA, KRYSTEXXA, UPLIZNA, RAVICTI and ACTIMMUNE. Second-quarter 2022 orphan segment operating income was $315.1 million.

• KRYSTEXXA second-quarter 2022 net sales increased 29% year-over-year driven by higher adoption of KRYSTEXXA with immunomodulation, which now exceeds 50% of new patient starts. In addition, the Company continues to see strong uptake of KRYSTEXXA from both rheumatologists and nephrologists.

   

Inflammation Segment

(in millions except for percentages)	Q2 22			Q2 21		% Change			YTD 22			YTD 21		% Change
PENNSAID 2%®(1)	$	23.6		$	48.9	(52	)		$	59.0		$	94.8	(38	)
RAYOS®		11.1			13.4	(17	)			24.6			28.7	(14	)
VIMOVO®		0.3			1.6	(81	)			1.2			5.9	(80	)
DUEXIS®(2)		0.1			22.1	(100	)			1.2			41.6	(97	)
Inflammation Net Sales	$	35.1		$	86.0	(59	)		$	86.0		$	171.0	(50	)
Inflammation Segment Operating (Loss) Income	$	(6.6	)	$	46.8	NM			$	8.8		$	89.4	(90	)

(1)	On May 6, 2022, Apotex Inc. initiated an at-risk launch of generic PENNSAID 2% in the United States.
(2)	On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States.

• Second-quarter 2022 net sales of the inflammation segment were $35.1 million and segment operating loss was $6.6 million. Net sales were impacted by an at-risk launch of generic PENNSAID 2%^® (diclofenac sodium) initiated on May 6, 2022, by Apotex Inc. in the United States.

Cash Flow Statement and Balance Sheet Highlights

• Second-quarter 2022 operating cash flow on a GAAP and non-GAAP basis was $249.2 million and $251.4 million, respectively.
• As of June 30, 2022, the Company had cash and cash equivalents of $1.89 billion.
• As of June 30, 2022, the total principal amount of debt outstanding was $2.60 billion.

Revised 2022 Guidance

The Company now expects full-year 2022 net sales to range between $3.53 billion and $3.60 billion, updated from the previous guidance range of $3.9 billion to $4.0 billion. The Company now expects TEPEZZA full-year 2022 net sales percentage growth in the high-teens, compared to the previous guidance of mid-30s percentage growth. The Company continues to expect KRYSTEXXA full-year 2022 net sales growth of more than 20%. The Company expects inflammation segment second-half 2022 net sales of less than $30 million due to an at-risk launch of a generic PENNSAID 2% initiated on May 6, 2022. Full-year 2022 adjusted EBITDA is now expected to range between $1.30 billion and $1.35 billion, updated from the previous guidance range of $1.63 billion to $1.70 billion.

Webcast

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

About Horizon

Horizon is a global biotechnology company focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Our pipeline is purposeful: We apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, visit www.horizontherapeutics.com and follow us on Twitter, LinkedIn, Instagram and Facebook.

Note Regarding Use of Non-GAAP Financial Measures

Horizon provides certain non-GAAP financial measures, including EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax benefit (expense) and tax rate, non-GAAP operating cash flow and certain other non-GAAP income statement line items, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon’s GAAP figures exclude, as applicable, acquisition and/or divestiture-related costs, manufacturing plant start-up costs, restructuring and realignment costs, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, non-cash interest expense, goodwill and long-lived assets impairment charges, gain (loss) on equity security investments and sales of assets, and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company’s historical and expected financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon’s management uses for planning and forecasting purposes and measuring the Company's performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon has not provided a reconciliation of its full-year 2022 adjusted EBITDA guidance to expected GAAP net income (loss) guidance because certain items such as acquisition/divestiture-related expenses and share-based compensation that are components of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon’s share price, the variability associated with the size and/or timing of acquisitions/divestitures, and other factors. These components of net income (loss) could significantly impact Horizon’s GAAP net income (loss).

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon’s full-year 2022 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including projected growth in net sales of certain of Horizon’s medicines; development, manufacturing and commercialization plans, including the anticipated timing and impact of actions designed to accelerate growth of TEPEZZA; expected timing of clinical trials, availability of clinical data; expected future milestones, pipeline expansions and regulatory approvals; potential market opportunities for, and benefits of, Horizon’s medicines and medicine candidates and business and other statements that are not historical facts. These forward-looking statements are based on Horizon’s current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks that Horizon’s actual future financial and operating results may differ from its expectations or goals; Horizon’s ability to grow net sales from existing medicines; impacts of the COVID-19 pandemic and actions taken to slow its spread, including impacts on supplies and net sales of Horizon’s medicines and potential delays in clinical trials; impacts of the on-going war between Russia and Ukraine; changes in inflation, interest rates and general economic conditions; the fact that Horizon’s full-year 2022 net sales, adjusted EBITDA and TEPEZZA growth rate guidance and the expected timing of certain TEPEZZA clinical trials assume that future committed manufacturing slots for TEPEZZA are not cancelled and are run successfully, which could be impacted by additional government-mandated COVID-19 vaccine production orders and other risks associated with the manufacture of biologic medicines; acquisitions, such as the risk that acquired businesses or products will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the related transactions will not occur; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; Horizon’s ability to successfully implement its business strategies, including the risks that its TEPEZZA growth and global expansion initiatives and strategies may not be successful and that new challenges to TEPEZZA growth may arise in the future; risks inherent in developing novel medicine candidates and existing medicines for new indications; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon operates, and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Horizon’s filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

Horizon Therapeutics plc
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Net sales	$	876,411		$	832,548		$	1,761,656		$	1,174,954
Cost of goods sold		230,216			200,995			445,278			301,363
Gross profit		646,195			631,553			1,316,378			873,591
OPERATING EXPENSES:
Research and development		103,246			139,834			206,378			197,527
Selling, general and administrative		398,221			355,204			770,955			687,196
Impairment of goodwill		56,171			-			56,171			-
Impairment of long-lived asset		-			-			-			12,371
Gain on sale of asset		-			(2,000	)		-			(2,000	)
Total operating expenses		557,638			493,038			1,033,504			895,094
Operating income (loss)		88,557			138,515			282,874			(21,503	)
OTHER EXPENSE, NET:
Interest expense, net		(21,409	)		(22,581	)		(42,665	)		(36,041	)
Foreign exchange gain (loss)		28			(39	)		448			(887	)
Other (expense) income, net		(2,389	)		(262	)		(3,131	)		2,962
Total other expense, net		(23,770	)		(22,882	)		(45,348	)		(33,966	)
Income (loss) before expense (benefit) for income taxes		64,787			115,633			237,526			(55,469	)
Expense (benefit) for income taxes		3,813			(42,484	)		(27,709	)		(90,235	)
Net income	$	60,974		$	158,117		$	265,235		$	34,766
Net income per ordinary share - basic	$	0.27		$	0.70		$	1.16		$	0.15
Weighted average ordinary shares outstanding - basic		230,020,004			225,119,684			229,559,715			224,523,538
Net income per ordinary share - diluted	$	0.26		$	0.67		$	1.12		$	0.15
Weighted average ordinary shares outstanding - diluted		236,166,384			235,191,860			236,077,147			234,719,830

Horizon Therapeutics plc
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
	As of
	June 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,892,563		$	1,580,317
Restricted cash		4,737			3,839
Accounts receivable, net		673,307			632,775
Inventories, net		203,680			225,730
Prepaid expenses and other current assets		428,807			357,106
Total current assets		3,203,094			2,799,767
Property, plant and equipment, net		302,260			292,298
Developed technology and other intangible assets, net		2,850,643			2,960,118
In-process research and development		810,000			880,000
Goodwill		1,010,538			1,066,709
Deferred tax assets, net		516,317			538,098
Other long-term assets		160,621			140,738
Total assets	$	8,853,473		$	8,677,728
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,538		$	30,125
Accrued expenses and other current liabilities		419,036			523,015
Accrued trade discounts and rebates		337,487			317,431
Long-term debt—current portion		16,000			16,000
Total current liabilities		791,061			886,571
LONG-TERM LIABILITIES:
Long-term debt, net		2,550,989			2,555,233
Deferred tax liabilities, net		366,247			390,455
Other long-term liabilities		199,645			173,076
Total long-term liabilities		3,116,881			3,118,764
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares
authorized at June 30, 2022 and December 31, 2021;
230,716,793 and 227,760,936 shares issued at June 30, 2022
and December 31, 2021, respectively; and 230,332,427 and 227,376,570 shares
outstanding at June 30, 2022 and December 31, 2021, respectively		23			23
Treasury stock, 384,366 ordinary shares at June 30, 2022 and December 31, 2021		(4,585	)		(4,585	)
Additional paid-in capital		4,381,344			4,373,337
Accumulated other comprehensive loss		(15,091	)		(14,987	)
Retained earnings		583,840			318,605
Total shareholders' equity		4,945,531			4,672,393
Total liabilities and shareholders' equity	$	8,853,473		$	8,677,728

Horizon Therapeutics plc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
	Three Months Ended June 30,							Six Months Ended June 30,
		2022			2021				2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	60,974		$	158,117			$	265,235			$	34,766
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		97,426			91,916				192,538				162,736
Equity-settled share-based compensation		45,149			54,424				92,449				115,590
Acquired in-process research and development expense		-			46,500				2,000				46,500
Impairment of goodwill		56,171			-				56,171				-
Impairment of long-lived asset		-			-				-				12,371
Amortization of debt discount and deferred financing costs		2,327			1,467				3,904				2,240
Gain on sale of asset		-			(2,000	)			-				(2,000	)
Deferred income taxes		30,864			10,656				(3,032	)			(18,115	)
Foreign exchange and other adjustments		7,376			1,988				8,566				(3,452	)
Changes in operating assets and liabilities:
Accounts receivable		11,152			(292,589	)			(40,513	)			(68,014	)
Inventories		22,818			(18,053	)			22,033				(31,713	)
Prepaid expenses and other current assets		(38,373	)		(29,548	)			(71,578	)			(95,123	)
Accounts payable		(48,047	)		9,313				(11,980	)			10,306
Accrued trade discounts and rebates		(27,047	)		(19,277	)			20,232				(48,013	)
Accrued expenses and other current liabilities		36,874			87,322				(76,901	)			(24,641	)
Other non-current assets and liabilities		(8,468	)		(10,834	)			5,863				(7,764	)
Net cash provided by operating activities		249,196			89,402				464,987				85,674
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired		-			(67,972	)			(3,122	)			(2,775,330	)
Purchases of property, plant and equipment		(10,154	)		(13,922	)			(24,352	)			(32,255	)
Payments for long-term investments		(6,443	)		(3,770	)			(4,847	)			(11,473	)
Receipts from long-term investments		4,416			-				4,416				3,895
Payments related to license agreements		-			-				(25,000	)			-
Net cash used in investing activities		(12,181	)		(85,664	)			(52,905	)			(2,815,163	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from term loans		-			(2,619	)			-				1,574,993
Repayment of term loans		(4,000	)		(4,000	)			(8,000	)			(4,000	)
Proceeds from the issuance of ordinary shares in conjunction with ESPP program		13,884			11,482				13,884				11,482
Proceeds from the issuance of ordinary shares in connection with stock option exercises		12,951			7,996				22,022				27,839
Payment of employee withholding taxes relating to share-based awards		(5,419	)		(13,387	)			(120,527	)			(141,648	)
Net cash provided by (used in) financing activities		17,416			(528	)			(92,621	)			1,468,666
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(4,396	)		(2,500	)			(6,317	)			(6,498	)
Net increase (decrease) in cash, cash equivalents and restricted cash		250,035			710				313,144				(1,267,321	)
Cash, cash equivalents and restricted cash, beginning of the period(1)		1,647,265			815,448				1,584,156				2,083,479
Cash, cash equivalents and restricted cash, end of the period(1)	$	1,897,300		$	816,158			$	1,897,300			$	816,158

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

Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Net Income and Earnings Per Share (Unaudited)
(in thousands, except share and per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
EBITDA	$	60,974		$	158,117		$	265,235		$	34,766
Non-GAAP adjustments:
Acquisition/divestiture-related costs		1,023			29,830			2,612			78,938
Loss on equity security investments		438			-			5,084			-
Restructuring and realignment costs		1,253			930			1,790			7,023
Manufacturing plant start-up costs		1,582			-			2,389			-
Amortization and step-up:
Intangible amortization expense		91,335			88,523			180,595			154,892
Inventory step-up expense		17,362			7,091			44,563			8,002
Amortization of debt discount and deferred financing costs		2,327			1,467			3,904			2,240
Impairment of long-lived asset		-			-			-			12,371
Impairment of goodwill		56,171			-			56,171			-
Gain on sale of asset		-			(2,000	)		-			(2,000	)
Share-based compensation		45,149			54,424			92,449			115,590
Depreciation		6,091			3,393			11,943			7,844
Total of pre-tax non-GAAP adjustments		222,731			183,658			401,500			384,900
Income tax effect of pre-tax non-GAAP adjustments		(29,919	)		(31,934	)		(97,131	)		(105,063	)
Other non-GAAP income tax adjustments		-			30,881			-			30,881
Total of non-GAAP adjustments		192,812			182,605			304,369			310,718
Non-GAAP net income	$	253,786		$	340,722		$	569,604		$	345,484
Non-GAAP Earnings Per Share:
Weighted average ordinary shares - Basic		230,020,004			225,119,684			229,559,715			224,523,538
Non-GAAP Earnings Per Share - Basic
GAAP earnings per share - Basic	$	0.27		$	0.70		$	1.16		$	0.15
Non-GAAP adjustments		0.83			0.81			1.32			1.39
Non-GAAP earnings per share - Basic	$	1.10		$	1.51		$	2.48		$	1.54
Weighted average ordinary shares - Diluted
Weighted average ordinary shares - Basic		230,020,004			225,119,684			229,559,715			224,523,538
Ordinary share equivalents		6,146,380			10,072,176			6,517,432			10,196,292
Weighted average ordinary shares - Diluted		236,166,384			235,191,860			236,077,147			234,719,830
Non-GAAP Earnings Per Share - Diluted
GAAP earnings per share - Diluted	$	0.26		$	0.67		$	1.12		$	0.15
Non-GAAP adjustments		0.81			0.78			1.29			1.32
Non-GAAP earnings per share - Diluted	$	1.07		$	1.45		$	2.41		$	1.47

Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
EBITDA and Adjusted EBITDA (Unaudited)
(in thousands)
	Three Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2022			2021
GAAP net income	$	60,974	$	158,117		$	265,235		$	34,766
Depreciation		6,091		3,393			11,943			7,844
Amortization and step-up:
Intangible amortization expense		91,335		88,523			180,595			154,892
Inventory step-up expense		17,362		7,091			44,563			8,002
Interest expense, net (including amortization of
debt discount and deferred financing costs)		21,409		22,581			42,665			36,041
Expense (benefit) for income taxes		3,813		(42,484	)		(27,709	)		(90,235	)
EBITDA	$	200,984	$	237,221		$	517,292		$	151,310
Other non-GAAP adjustments:
Share-based compensation		45,149		54,424			92,449			115,590
Loss on equity security investments		438		-			5,084			-
Acquisition/divestiture-related costs		1,023		29,830			2,612			78,938
Manufacturing plant start-up costs		1,582		-			2,389			-
Restructuring and realignment costs		1,253		930			1,790			7,023
Impairment of goodwill		56,171		-			56,171			-
Impairment of long-lived asset		-		-			-			12,371
Gain on sale of asset		-		(2,000	)		-			(2,000	)
Total of other non-GAAP adjustments		105,616		83,184			160,495			211,922
Adjusted EBITDA	$	306,600	$	320,405		$	677,787		$	363,232

Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Operating Income (Unaudited)
(in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022		2021
GAAP operating income (loss)	$	88,557		$	138,515		$	282,874	$	(21,503	)
Non-GAAP adjustments:
Acquisition/divestiture-related costs		1,023			30,626			2,612		80,017
Restructuring and realignment costs		1,253			930			1,790		7,023
Manufacturing plant start-up costs		1,582			-			2,389		-
Amortization and step-up:
Intangible amortization expense		91,335			88,523			180,595		154,892
Inventory step-up expense		17,362			-			44,563		8,002
Impairment of long-lived asset		-			7,091			-		12,371
Impairment of goodwill		56,171			-			56,171		-
Gain on sale of asset		-			(2,000	)		-		(2,000	)
Share-based compensation		45,149			54,424			92,449		115,590
Depreciation		6,091			3,393			11,943		7,844
Total of non-GAAP adjustments		219,966			182,987			392,512		383,739
Non-GAAP operating income	$	308,523		$	321,502		$	675,386	$	362,236
Foreign exchange gain (loss)		28			(39	)		448		(887	)
Other (expense) income, net		(1,951	)		(1,058	)		1,953		1,883
Adjusted EBITDA	$	306,600		$	320,405		$	677,787	$	363,232

Horizon Therapeutics plc
GAAP to Non-GAAP Reconciliations
Gross Profit and Operating Cash Flow (Unaudited)
(in thousands, except percentages)
	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Non-GAAP Gross Profit:
GAAP gross profit	$	646,195		$	631,553		$	1,316,378		$	873,591
Non-GAAP gross profit adjustments:
Acquisition/divestiture-related costs		(119	)		(76	)		(1,423	)		129
Intangible amortization expense		90,439			88,321			179,164			154,490
Inventory step-up expense		17,362			7,091			44,563			8,002
Share-based compensation		2,294			3,144			4,471			5,080
Depreciation		55			57			111			172
Total of Non-GAAP adjustments		110,031			98,537			226,886			167,873
Non-GAAP gross profit	$	756,226		$	730,090		$	1,543,264		$	1,041,464
GAAP gross profit %		73.7	%		75.9	%		74.7	%		74.4	%
Non-GAAP gross profit %		86.3	%		87.7	%		87.6	%		88.6	%
GAAP cash provided by operating activities	$	249,196		$	89,402		$	464,987		$	85,674
Cash payments for acquisition/divestiture-related costs		748			56,042			5,196			120,234
Cash payments for restructuring and realignment costs		570			1,220			1,144			1,220
Cash payments for manufacturing start-up costs		895			-			2,663			-
Non-GAAP operating cash flow	$	251,409		$	146,664		$	473,990		$	207,128

Horizon Therapeutics plc
GAAP to Non-GAAP Tax Rate Reconciliation (Unaudited)
(in millions, except percentages and per share amounts)
	Q2 2022
	Pre-tax Net Income			Income Tax Expense			Tax Rate			Net Income			Diluted Earnings Per Share
As reported - GAAP	$	64.8		$	3.8		5.9	%		$	61.0		$	0.26
Non-GAAP adjustments		222.7			29.9						192.8
Non-GAAP	$	287.5		$	33.7		11.7	%		$	253.8		$	1.07
	Q2 2021
	Pre-tax Net Income			Income Tax (Benefit) Expense			Tax Rate			Net Income			Diluted Earnings Per Share
As reported - GAAP	$	115.6		$	(42.5	)	(36.7	)%		$	158.1		$	0.67
Non-GAAP adjustments		183.7			1.1						182.6
Non-GAAP	$	299.3		$	(41.4	)	(13.8	)%		$	340.7		$	1.45
	YTD 2022
	Pre-tax Net Income			Income Tax (Benefit) Expense			Tax Rate			Net Income			Diluted Earnings Per Share
As reported - GAAP	$	237.5		$	(27.7	)	(11.7	)%		$	265.2		$	1.12
Non-GAAP adjustments		401.5			97.1						304.4
Non-GAAP	$	639.0		$	69.4		10.9	%		$	569.6		$	2.41
	YTD 2021
	Pre-tax Net Income (loss)			Income Tax (Benefit) Expense			Tax Rate			Net Income			Diluted Earnings Per Share
As reported - GAAP	$	(55.5	)	$	(90.2	)	162.7	%		$	34.8		$	0.15
Non-GAAP adjustments		384.9			74.2						310.7
Non-GAAP	$	329.4		$	(16.1	)	(4.9	)%		$	345.5		$	1.47

Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended June 30, 2022 (Unaudited)
(in thousands)
				Research &			Selling, General			Impairment of			Interest			Other			Income Tax
	COGS			Development			& Administrative			goodwill			Expense			Expense, net			(Expense)
GAAP as reported	$	(230,216	)	$	(103,246	)	$	(398,221	)	$	(56,171	)	$	(21,409	)	$	(2,389	)	$	(3,813	)
Non-GAAP Adjustments:
Acquisition/divestiture-related costs(1)		(119	)		803			339			-			-			-			-
Loss on equity security investments(2)		-			-			-			-			-			438			-
Restructuring and realignment costs(3)		-			-			1,253			-			-			-			-
Manufacturing plant start-up costs(4)		-			-			1,582			-			-			-			-
Amortization and step-up:
Intangible amortization expense(5)		90,439			-			896			-			-			-			-
Inventory step-up expense(6)		17,362			-			-			-			-			-			-
Amortization of debt discount and deferred financing costs(7)		-			-			-			-			2,327			-			-
Share-based compensation(8)		2,294			6,742			36,113			-			-			-			-
Depreciation(9)		55			267			5,769			-			-			-			-
Impairment of goodwill (10)		-			-			-			56,171			-			-			-
Income tax effect on pre-tax non-GAAP adjustments(11)		-			-			-			-			-			-			(29,919	)
Total of non-GAAP adjustments (15)		110,031			7,812			45,952			56,171			2,327			438			(29,919	)
Non-GAAP (15)	$	(120,185	)	$	(95,434	)	$	(352,269	)	$	-		$	(19,082	)	$	(1,951	)	$	(33,732	)
Horizon Therapeutics plc
Certain Income Statement Line Items - Non-GAAP Adjusted
For the Three Months Ended June 30, 2021 (Unaudited)
(in thousands)
																			Income Tax
				Research &			Selling, General			Gain on			Interest			Other			Benefit
	COGS			Development			& Administrative			Sale of asset			Expense			Expense, net			(Expense)
GAAP as reported	$	(200,995	)	$	(139,834	)	$	(355,204	)	$	2,000		$	(22,581	)	$	(262	)	$	42,484
Non-GAAP Adjustments:
Acquisition/divestiture-related costs(1)		(76	)		-			30,701			-			-			(795	)		-
Restructuring and realignment costs(3)		-			-			930			-			-			-			-
Amortization and step-up:
Intangible amortization expense(5)		88,321			-			202			-			-			-			-
Inventory step-up expense(6)		7,091			-			-			-			-			-			-
Amortization of debt discount and deferred financing costs(7)		-			-			-			-			1,467			-			-
Gain on sale of asset(12)		-			-			-			(2,000	)		-			-			-
Share-based compensation(8)		3,144			12,160			39,120			-			-			-			-
Depreciation(9)		57			117			3,219			-			-			-			-
Income tax effect on pre-tax non-GAAP adjustments(11)		-			-			-			-			-			-			(31,934	)
Other non-GAAP income tax adjustments(13)		-			-			-			-			-			-			30,881
Total of non-GAAP adjustments (15)		98,537			12,277			74,172			(2,000	)		1,467			(795	)		(1,053	)
Non-GAAP (15)	$	(102,458	)	$	(127,557	)	$	(281,032	)	$	-		$	(21,114	)	$	(1,057	)	$	41,431

Horizon Therapeutics plc

Certain Income Statement Line Items - Non-GAAP Adjusted

For the Six Months Ended June 30, 2022 (Unaudited)

(in thousands)

Income Tax

Research &

Selling, General

Impairment of

Interest

Other Income

Benefit

COGS

Development

& Administrative

goodwill

Expense

(Expense), net

(Expense)

GAAP as reported

$

(445,278

)

$

(206,378