[July 30, 2015] |
|
Baxalta Reports Positive Sales Momentum in Second Quarter of 2015, Raises Financial Guidance for Second Half of 2015
Baxalta Incorporated (NYSE:BXLT) today reported revenues for the second
quarter and first half of 2015, which exceeded expectations, and
provided its financial outlook for the third quarter and second half of
2015. The company continues to bolster its portfolio with acquisitions
and collaborations focused on rare and orphan diseases, and advanced its
product pipeline with the achievement of significant milestones. Baxalta
launched as an independent company, listed on the New York Stock
Exchange, on July 1, 2015.
"The Baxalta team is successfully executing on our strategies to build
an independent, global biopharmaceutical company focused on delivering
innovation that provides patients with better treatment options for
challenging chronic and rare diseases," said Ludwig Hantson, chief
executive officer and president, Baxalta. "It is an exciting time for
Baxalta. Our strong financial performance, increasing depth and breadth
across the portfolio, progress toward near-term launches, and compelling
growth prospects are differentiating our company."
Results for the Second Quarter of 2015
During the second quarter, Baxalta generated worldwide pro forma sales
of $1.47 billion, reflecting growth of 7 percent excluding the impact of
foreign currency. Pro forma sales include international sales of $40
million, which were comparable to the prior year, associated with the
company's manufacturing and supply agreement (MSA) for certain
biosurgery products for Baxter International. On a GAAP (Generally
Accepted Accounting Principles) basis, Baxalta's worldwide revenues of
$1.43 billion declined 2 percent from the prior-year period.
Within the United States, sales of $775 million rose 6 percent, and
international sales of $654 million declined 9 percent. On a pro forma
basis, international sales of $694 million declined 8 percent. Excluding
foreign currency, international pro forma sales increased 9 percent.
Second quarter sales performance was the result of strong momentum and
balanced growth across the company's leading hematology and immunology
businesses. Hematology revenues, excluding the impact of foreign
currency, grew 6 percent in the second quarter driven by robust global
demand for ADVATE [Antihemophilic Factor (Recombinant)], a treatment for
hemophilia A, and double-digit growth of FEIBA [Anti-Inhibitor Coagulant
Complex], an inhibitor treatment. Newly launched products also
contributed to growth, such as RIXUBIS [Coagulation Factor IX
(Recombinant)] for the treatment of hemophilia B, and OBIZUR
[Antihemophilic Factor (Recombinant), Porcine Sequence], for the
treatment of acquired hemophilia A.
Pro forma immunology sales, excluding the impact of foreign currency,
advanced 10 percent driven by demand for immunoglobulin therapies and
continued launch success of HYQVIA [Immune Globulin Infusion 10% (Human)
with Recombinant Human Hyaluronidase]. HYQVIA is the only once-monthly
subcutaneous treatment available for adults with primary
immunodeficiency, which is achieving rapid acceptance in the United
States.
Results for the First Six Months of 2015
Baxalta generated worldwide pro forma sales for the first six months of
2015 of $2.87 billion, reflecting growth of 8 percent excluding the
impact of foreign currency. Excluding the impact of foreign currency,
hematology revenues grew 5 percent and pro forma immunology sales
advanced 11 percent. On a GAAP basis, Baxalta's worldwide revenues for
the first six months of 2015 were $2.79 billion, which does not reflect
international pro forma MSA revenues of $82 million for the period, and
were comparable to the prior year.
Revenues within the United States of $1.53 billion rose 6 percent, and
international sales of $1.26 million declined 6 percent. On a pro forma
basis, international sales of $1.34 billion declined 6 percent.
Excluding foreign currency, international pro forma sales increased 9
percent versus the first six months of the prior year.
Significant Progress with Cross-Portfolio Pipeline and Commercial
Milestones
"Baxalta has a rich pipeline, reflecting meaningful innovation with
promising late-stage assets, novel mechanisms, and disruptive
technologies," added Hantson. "We continue to achieve a number of
significant pipeline and portfolio milestones, which positions the
company to drive enhanced growth and value for patients and
shareholders."
Recent highlights include:
-
Completion of the ONCASPAR (pegaspargase) portfolio acquisition from
Sigma-Tau Finanziaria S.p.A., further accelerating Baxalta's
innovation capabilities and commercial presence in growing oncology
markets. The acquisition includes ONCASPAR, an important marketed
biologic treatment for acute lymphocytic leukemia (ALL), the
investigational biologic calaspargase pegol, and an established
oncology infrastructure with clinical and sales resources.
-
Presentations at the 2015 International Society on Thrombosis and
Haemostasis (ISTH) Congress, during which the company:
-
Introduced ADYNOVATE as the marketed brand name for BAX 855, an
investigational, extended half-life recombinant factor VIII (rFVIII)
treatment based on ADVATE. ADYNOVATE is currently under regulatory
review by the U.S. Food and Drug Administration (FDA) as well as
Japan's Ministry of Health.
-
Announced continued progress on the Phase I/II open-label study on BAX
335, an investigational factor IX gene therapy treatment for
hemophilia B.
-
Presented additional data from the Phase III clinical trial of BAX
111, which will be marketed in the U.S. as VONVENDI. VONVENDI is
currently under regulatory review in the U.S., and if approved, will
be the first highly-purified recombinant von Willebrand Factor (rVWF)
for patients with von Willebrand disease.
-
Receipt of a positive opinion on OBIZUR from the European Committee
for Medicinal Products for Human Use (CHMP) of the European Medicines
Agency (EMA). OBIZUR is a treatment for bleeding episodes in adult
patients with acquired hemophilia A caused by antibodies to factor
VIII, a very rare and potentially life-threatening acute bleeding
disorder. Marketing authorization from the European Commission is
anticipated later this year.
-
Submission of a European marketing authorization application (MAA) for
approval of the investigational 20% concentration subcutaneous immune
globulin (IGSC) treatment for primary immunodeficiencies. As Baxalta
expands its immunoglobulin portfolio to address patient needs, the
higher potency IG treatment is intended to offer faster infusions with
less volume. The company expects to file for U.S. approval later this
year.
-
Progress in Baxalta's contract fractionation agreement with Stichting
Sanquin Bloedvoorziening (Sanquin Blood Supply Foundation) to enhance
supply and support growth in global demand for plasma-based therapies.
Sanquin has submitted the production line for approval in Europe,
which will provide additional manufacturing flexibility.
-
Submission of a European MAA for MM-398 (nal-IRI), for the treatment
of metastatic pancreatic cancer for patients who have previously been
treated with gemcitabine-based therapy. Baxalta's U.S. partner
Merrimack Pharmaceuticals submitted a new drug application (NDA) for
MM-398 to the FDA and it has been granted Priority Review status.
-
Presentation of additional data on pacritinib with CTI BioPharma
during the 51st Annual Meeting of the American Society of Clinical
Oncology (ASCO). The presentation included primary and secondary
endpoints from PERSIST-1, a randomized, controlled Phase III
registration clinical trial of pacritinib, an oral kinase inhibitor
with specificity for JAK2 and FLT3 for the treatment of patients with
myelofibrosis.
-
Formation of Vitesse Biologics, LLC, a unique collaboration model
among Baxalta Ventures, Mayo Clinic, and Velocity Pharmaceutical
Development to develop antibody and protein-based therapeutics in the
areas of hematology, immunology, and oncology. Each organization will
provide recognized expertise to enhance target selection and
optimization, expression, and product development processes. Baxalta
will be involved in the early stages of development and has an
exclusive option to acquire the candidates identified by Vitesse
following the completion of Phase I trials.
Financial Outlook for Third Quarter and Second Half of 2015
Baxalta today provided its financial outlook for the third quarter and
second half of 2015. For the third quarter of 2015, excluding the impact
of foreign currency, the company expects pro forma sales growth of 8 to
10 percent. Including the impact of foreign currency, the company
expects reported pro forma sales to be comparable to the prior year.
Baxalta also expects adjusted earnings, before special items, of $0.48
to $0.50 per diluted share.
For the second half of 2015, Baxalta expects pro forma sales growth,
excluding the impact of foreign currency, of 5 to 6 percent. Including
the impact of foreign currency, the company expects reported pro forma
sales to decline 2 to 3 percent. Also for the second half of the year,
Baxalta expects adjusted earnings, before special items, of $1.02 to
$1.04 per diluted share.
The company's guidance for earnings in the third quarter of 2015
excludes approximately $0.01 per diluted share of projected intangible
asset amortization expense. The company's adjusted earnings guidance for
the second half excludes $0.02 per diluted share of projected intangible
asset amortization expense. Reconciling for the inclusion of these items
results in expected GAAP earnings of $0.47 to $0.49 per diluted share
for the third quarter of 2015, and earnings of $1.00 to $1.02 per
diluted share for the second half of 2015.
Conference Call and Webcast Information
Baxalta will host a conference call to discuss its second quarter 2015
results on Thursday, July 30, 2015, at 7:30 a.m. CDT. To access the
call, please dial 877-894-0694 (domestic) or 347-983-2217
(international). The Conference ID is 76039276. The call will be webcast
and accessible from the Baxalta corporate website at www.baxalta.com.
Please visit Baxalta's website for more information regarding this and
future investor events and webcasts.
About Baxalta
Baxalta Incorporated (NYSE: BXLT) is a $6 billion global
biopharmaceutical leader developing, manufacturing and commercializing
therapies for orphan diseases and underserved conditions in hematology,
oncology and immunology. Driven by passion to make a meaningful impact
on patients' lives, Baxalta's broad and diverse pipeline includes
biologics with novel mechanisms and advanced technology platforms such
as gene therapy. The Baxalta Global Innovation and R&D Center is located
in Cambridge, Massachusetts. Launched in 2015 following separation from
Baxter International Inc., Baxalta's heritage in biopharmaceuticals
spans decades. Baxalta's therapies are available in more than 100
countries and it has advanced biological manufacturing operations across
12 facilities, including state-of-the-art recombinant production and
plasma fractionation. Headquartered in Northern Illinois, Baxalta
employs 16,000 employees worldwide.
Forward-Looking Statements
This release includes forward-looking statements concerning Baxalta's
financial results, expected business prospects including the outlook for
the third quarter and the second half of 2015, long range plan, R&D
pipeline including regulatory actions and commercial launch events,
business development activities and other growth strategies. Such
statements are made of the date that they were first issued and are
based on current expectations, beliefs and assumptions of management.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that are
beyond Baxalta's control and which could cause actual results to differ
materially from those in the forward-looking statements, including the
following: demand for and market acceptance of risks for new and
existing products; product development risks; product quality or patient
safety concerns; future actions of regulatory bodies and other
governmental authorities, including the FDA and foreign counterparts;
failures with respect to compliance programs; future actions of
third-parties, including payers; U.S. healthcare reform and other global
austerity measures; pricing, reimbursement, taxation and rebate policies
of government agencies and private payers; the impact of competitive
products and pricing, including generic competition, drug reimportation
and disruptive technologies; global, trade and tax policies; accurate
identification of and execution on business development and R&D
opportunities and realization of anticipated benefits; fluctuations in
supply and demand and the pricing of plasma-based therapies; the
availability of acceptable raw materials and component supply; the
inability to create timely production capacity or other manufacturing or
supply difficulties; the ability to successfully achieve the intended
results of the spin-off from Baxter International Inc.; the ability to
enforce owned or in-licensed patents, or the patents of third parties
preventing or restricting manufacture, sale or use of affected products
or technology; the impact of global economic conditions; fluctuations in
foreign exchange and interest rates; any changes in law concerning the
taxation of income, including income earned outside the United States;
actions by tax authorities in connection with ongoing tax audits;
breaches or failures of Baxalta's information technology systems; loss
of key employees or inability to identify and recruit new employees; the
outcome of pending or future litigation; the adequacy of Baxalta's cash
flows from operations to meet its ongoing cash obligations and fund its
investment program; and other risks identified in Baxalta's registration
statement on Form 10 and other Securities and Exchange Commission
filings, all of which are available on Baxalta's website. Baxalta
expressly disclaims any intent or obligation to update these
forward-looking statements except as required by law.
|
BAXALTA INCORPORATED
|
GAAP Product Category Sales by U.S. and International
|
Three-Month and Six-Month Periods Ended June 30, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a GAAP basis by U.S. and International. Refer to the following
page for product category net sales on a pro forma basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
|
Q2 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
$322
|
|
$350
|
|
$672
|
|
$323
|
|
$397
|
|
$720
|
|
0%
|
|
(12%)
|
|
(7%)
|
|
0%
|
|
7%
|
|
4%
|
Inhibitor Therapies
|
|
$69
|
|
$114
|
|
$183
|
|
$52
|
|
$132
|
|
$184
|
|
33%
|
|
(14%)
|
|
(1%)
|
|
33%
|
|
4%
|
|
12%
|
Hematology
|
|
$391
|
|
$464
|
|
$855
|
|
$375
|
|
$529
|
|
$904
|
|
4%
|
|
(12%)
|
|
(5%)
|
|
4%
|
|
6%
|
|
6%
|
Immunoglobulin Therapies
|
|
$318
|
|
$104
|
|
$422
|
|
$294
|
|
$99
|
|
$393
|
|
8%
|
|
5%
|
|
7%
|
|
8%
|
|
27%
|
|
13%
|
BioTherapeutics
|
|
$66
|
|
$86
|
|
$152
|
|
$64
|
|
$91
|
|
$155
|
|
3%
|
|
(5%)
|
|
(2%)
|
|
3%
|
|
3%
|
|
3%
|
Immunology
|
|
$384
|
|
$190
|
|
$574
|
|
$358
|
|
$190
|
|
$548
|
|
7%
|
|
0%
|
|
5%
|
|
7%
|
|
16%
|
|
10%
|
Total Baxalta
|
|
$775
|
|
$654
|
|
$1,429
|
|
$733
|
|
$719
|
|
$1,452
|
|
6%
|
|
(9%)
|
|
(2%)
|
|
6%
|
|
9%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2015
|
|
YTD 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
$627
|
|
$686
|
|
$1,313
|
|
$620
|
|
$775
|
|
$1,395
|
|
1%
|
|
(11%)
|
|
(6%)
|
|
1%
|
|
4%
|
|
3%
|
Inhibitor Therapies
|
|
$132
|
|
$217
|
|
$349
|
|
$96
|
|
$240
|
|
$336
|
|
38%
|
|
(10%)
|
|
4%
|
|
38%
|
|
6%
|
|
15%
|
Hematology
|
|
$759
|
|
$903
|
|
$1,662
|
|
$716
|
|
$1,015
|
|
$1,731
|
|
6%
|
|
(11%)
|
|
(4%)
|
|
6%
|
|
5%
|
|
5%
|
Immunoglobulin Therapies
|
|
$646
|
|
$196
|
|
$842
|
|
$601
|
|
$190
|
|
$791
|
|
7%
|
|
3%
|
|
6%
|
|
7%
|
|
22%
|
|
11%
|
BioTherapeutics
|
|
$125
|
|
$161
|
|
$286
|
|
$122
|
|
$137
|
|
$259
|
|
2%
|
|
18%
|
|
10%
|
|
2%
|
|
28%
|
|
16%
|
Immunology
|
|
$771
|
|
$357
|
|
$1,128
|
|
$723
|
|
$327
|
|
$1,050
|
|
7%
|
|
9%
|
|
7%
|
|
7%
|
|
24%
|
|
12%
|
Total Baxalta
|
|
$1,530
|
|
$1,260
|
|
$2,790
|
|
$1,439
|
|
$1,342
|
|
$2,781
|
|
6%
|
|
(6%)
|
|
0%
|
|
6%
|
|
9%
|
|
8%
|
|
|
|
BAXALTA INCORPORATED
|
|
Pro Forma Product Category Sales by U.S. and International
|
|
Three-Month and Six-Month Periods Ended June 30, 2015 and 2014
|
|
(unaudited)
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a pro forma basis by U.S. and International. A reconciliation to
GAAP net sales and a description of the pro forma adjustment is also
included below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
|
Q2 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
Hemophilia
|
|
$322
|
|
$350
|
|
$672
|
|
$323
|
|
$397
|
|
$720
|
|
0%
|
|
(12%)
|
|
(7%)
|
|
0%
|
|
7%
|
|
4%
|
|
Inhibitor Therapies
|
|
$69
|
|
$114
|
|
$183
|
|
$52
|
|
$132
|
|
$184
|
|
33%
|
|
(14%)
|
|
(1%)
|
|
33%
|
|
4%
|
|
12%
|
|
Hematology
|
|
$391
|
|
$464
|
|
$855
|
|
$375
|
|
$529
|
|
$904
|
|
4%
|
|
(12%)
|
|
(5%)
|
|
4%
|
|
6%
|
|
6%
|
|
Immunoglobulin Therapies
|
|
$318
|
|
$104
|
|
$422
|
|
$294
|
|
$99
|
|
$393
|
|
8%
|
|
5%
|
|
7%
|
|
8%
|
|
27%
|
|
13%
|
|
Pro Forma BioTherapeutics 1
|
|
$66
|
|
$126
|
|
$192
|
|
$64
|
|
$128
|
|
$192
|
|
3%
|
|
(2%)
|
|
0%
|
|
3%
|
|
5%
|
|
4%
|
|
Pro Forma Immunology
|
|
$384
|
|
$230
|
|
$614
|
|
$358
|
|
$227
|
|
$585
|
|
7%
|
|
1%
|
|
5%
|
|
7%
|
|
15%
|
|
10%
|
|
Pro Forma Total Baxalta
|
|
$775
|
|
$694
|
|
$1,469
|
|
$733
|
|
$756
|
|
$1,489
|
|
6%
|
|
(8%)
|
|
(1%)
|
|
6%
|
|
9%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2015
|
|
YTD 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
Hemophilia
|
|
$627
|
|
$686
|
|
$1,313
|
|
$620
|
|
$775
|
|
$1,395
|
|
1%
|
|
(11%)
|
|
(6%)
|
|
1%
|
|
4%
|
|
3%
|
|
Inhibitor Therapies
|
|
$132
|
|
$217
|
|
$349
|
|
$96
|
|
$240
|
|
$336
|
|
38%
|
|
(10%)
|
|
4%
|
|
38%
|
|
6%
|
|
15%
|
|
Hematology
|
|
$759
|
|
$903
|
|
$1,662
|
|
$716
|
|
$1,015
|
|
$1,731
|
|
6%
|
|
(11%)
|
|
(4%)
|
|
6%
|
|
5%
|
|
5%
|
|
Immunoglobulin Therapies
|
|
$646
|
|
$196
|
|
$842
|
|
$601
|
|
$190
|
|
$791
|
|
7%
|
|
3%
|
|
6%
|
|
7%
|
|
22%
|
|
11%
|
|
Pro Forma BioTherapeutics 1
|
|
$125
|
|
$243
|
|
$368
|
|
$122
|
|
$218
|
|
$340
|
|
2%
|
|
11%
|
|
8%
|
|
2%
|
|
18%
|
|
13%
|
|
Pro Forma Immunology
|
|
$771
|
|
$439
|
|
$1,210
|
|
$723
|
|
$408
|
|
$1,131
|
|
7%
|
|
8%
|
|
7%
|
|
7%
|
|
20%
|
|
11%
|
|
Pro Forma Total Baxalta
|
|
$1,530
|
|
$1,342
|
|
$2,872
|
|
$1,439
|
|
$1,423
|
|
$2,862
|
|
6%
|
|
(6%)
|
|
0%
|
|
6%
|
|
9%
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Sales Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
|
Q2 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
BioTherapeutics
|
|
$66
|
|
$86
|
|
$152
|
|
$64
|
|
$91
|
|
$155
|
|
3%
|
|
(5%)
|
|
(2%)
|
|
3%
|
|
3%
|
|
3%
|
|
Pro forma MSA revenue 1
|
|
$0
|
|
$40
|
|
$40
|
|
$0
|
|
$37
|
|
$37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma BioTherapeutics
|
|
$66
|
|
$126
|
|
$192
|
|
$64
|
|
$128
|
|
$192
|
|
3%
|
|
(2%)
|
|
0%
|
|
3%
|
|
5%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2015
|
|
YTD 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
BioTherapeutics
|
|
$125
|
|
$161
|
|
$286
|
|
$122
|
|
$137
|
|
$259
|
|
2%
|
|
18%
|
|
10%
|
|
2%
|
|
28%
|
|
16%
|
|
Pro forma MSA revenue 1
|
|
$0
|
|
$82
|
|
$82
|
|
$0
|
|
$81
|
|
$81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma BioTherapeutics
|
|
$125
|
|
$243
|
|
$368
|
|
$122
|
|
$218
|
|
$340
|
|
2%
|
|
11%
|
|
8%
|
|
2%
|
|
18%
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In connection with the separation, Baxalta and Baxter entered into a
manufacturing and supply agreement whereby Baxalta will manufacture
and sell certain products to Baxter. The pro forma net sales figures
assume that the manufacturing and supply agreement was in effect in
periods prior to the separation. Net sales related to the
manufacturing and supply agreement will be reported in the company's
actual net sales figures in periods following the separation.
|
|
BAXALTA INCORPORATED
|
GAAP Product Category Sales by U.S. and International
|
Three-Month Periods Ended March 31, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a GAAP basis by U.S. and International. Refer to the following
page for product category net sales on a pro forma basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2015
|
|
Q1 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
$305
|
|
$336
|
|
$641
|
|
$297
|
|
$378
|
|
$675
|
|
3%
|
|
(11%)
|
|
(5%)
|
|
3%
|
|
1%
|
|
2%
|
Inhibitor Therapies
|
|
$63
|
|
$103
|
|
$166
|
|
$44
|
|
$108
|
|
$152
|
|
43%
|
|
(5%)
|
|
9%
|
|
43%
|
|
8%
|
|
18%
|
Hematology
|
|
$368
|
|
$439
|
|
$807
|
|
$341
|
|
$486
|
|
$827
|
|
8%
|
|
(10%)
|
|
(2%)
|
|
8%
|
|
3%
|
|
5%
|
Immunoglobulin Therapies
|
|
$328
|
|
$92
|
|
$420
|
|
$307
|
|
$91
|
|
$398
|
|
7%
|
|
1%
|
|
6%
|
|
7%
|
|
15%
|
|
9%
|
BioTherapeutics
|
|
$59
|
|
$75
|
|
$134
|
|
$58
|
|
$46
|
|
$104
|
|
2%
|
|
63%
|
|
29%
|
|
2%
|
|
78%
|
|
36%
|
Immunology
|
|
$387
|
|
$167
|
|
$554
|
|
$365
|
|
$137
|
|
$502
|
|
6%
|
|
22%
|
|
10%
|
|
6%
|
|
36%
|
|
14%
|
Total Baxalta
|
|
$755
|
|
$606
|
|
$1,361
|
|
$706
|
|
$623
|
|
$1,329
|
|
7%
|
|
(3%)
|
|
2%
|
|
7%
|
|
10%
|
|
8%
|
|
BAXALTA INCORPORATED
|
Pro Forma Product Category Sales by U.S. and International
|
Three-Month Periods Ended March 31, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a pro forma basis by U.S. and International. A reconciliation to
GAAP net sales and a description of the pro forma adjustment is also
included below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2015
|
|
Q1 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
Hemophilia
|
|
$305
|
|
$336
|
|
$641
|
|
$297
|
|
$378
|
|
$675
|
|
3%
|
|
(11%)
|
|
(5%)
|
|
3%
|
|
1%
|
|
2%
|
|
Inhibitor Therapies
|
|
$63
|
|
$103
|
|
$166
|
|
$44
|
|
$108
|
|
$152
|
|
43%
|
|
(5%)
|
|
9%
|
|
43%
|
|
8%
|
|
18%
|
|
Hematology
|
|
$368
|
|
$439
|
|
$807
|
|
$341
|
|
$486
|
|
$827
|
|
8%
|
|
(10%)
|
|
(2%)
|
|
8%
|
|
3%
|
|
5%
|
|
Immunoglobulin Therapies
|
|
$328
|
|
$92
|
|
$420
|
|
$307
|
|
$91
|
|
$398
|
|
7%
|
|
1%
|
|
6%
|
|
7%
|
|
15%
|
|
9%
|
|
Pro Forma BioTherapeutics 1
|
|
$59
|
|
$117
|
|
$176
|
|
$58
|
|
$90
|
|
$148
|
|
2%
|
|
30%
|
|
19%
|
|
2%
|
|
38%
|
|
24%
|
|
Pro Forma Immunology
|
|
$387
|
|
$209
|
|
$596
|
|
$365
|
|
$181
|
|
$546
|
|
6%
|
|
15%
|
|
9%
|
|
6%
|
|
27%
|
|
13%
|
|
Pro Forma Total Baxalta
|
|
$755
|
|
$648
|
|
$1,403
|
|
$706
|
|
$667
|
|
$1,373
|
|
7%
|
|
(3%)
|
|
2%
|
|
7%
|
|
9%
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Sales Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2015
|
|
Q1 2014
|
|
% Growth @ Actual Rates
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
BioTherapeutics
|
|
$59
|
|
$75
|
|
$134
|
|
$58
|
|
$46
|
|
$104
|
|
2%
|
|
63%
|
|
29%
|
|
2%
|
|
78%
|
|
36%
|
|
Pro forma MSA revenue 1
|
|
$0
|
|
$42
|
|
$42
|
|
$0
|
|
$44
|
|
$44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma BioTherapeutics
|
|
$59
|
|
$117
|
|
$176
|
|
$58
|
|
$90
|
|
$148
|
|
2%
|
|
30%
|
|
19%
|
|
2%
|
|
38%
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In connection with the separation, Baxalta and Baxter entered into a
manufacturing and supply agreement whereby Baxalta will manufacture
and sell certain products to Baxter. The pro forma net sales figures
assume that the manufacturing and supply agreement was in effect in
periods prior to the separation. Net sales related to the
manufacturing and supply agreement will be reported in the company's
actual net sales figures in periods following the separation.
|
|
BAXALTA INCORPORATED
|
GAAP Product Category Sales by U.S. and International
|
Quarterly and FY 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a GAAP basis by U.S. and International. Refer to the following
page for product category net sales on a pro forma basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
$297
|
|
$378
|
|
$675
|
|
$323
|
|
$397
|
|
$720
|
|
$318
|
|
$437
|
|
$755
|
|
$343
|
|
$491
|
|
$834
|
|
$1,281
|
|
$1,703
|
|
$2,984
|
Inhibitor Therapies
|
|
$44
|
|
$108
|
|
$152
|
|
$52
|
|
$132
|
|
$184
|
|
$55
|
|
$132
|
|
$187
|
|
$68
|
|
$153
|
|
$221
|
|
$219
|
|
$525
|
|
$744
|
Hematology
|
|
$341
|
|
$486
|
|
$827
|
|
$375
|
|
$529
|
|
$904
|
|
$373
|
|
$569
|
|
$942
|
|
$411
|
|
$644
|
|
$1,055
|
|
$1,500
|
|
$2,228
|
|
$3,728
|
Immunoglobulin Therapies
|
|
$307
|
|
$91
|
|
$398
|
|
$294
|
|
$99
|
|
$393
|
|
$305
|
|
$102
|
|
$407
|
|
$366
|
|
$113
|
|
$479
|
|
$1,272
|
|
$405
|
|
$1,677
|
BioTherapeutics
|
|
$58
|
|
$46
|
|
$104
|
|
$64
|
|
$91
|
|
$155
|
|
$60
|
|
$79
|
|
$139
|
|
$62
|
|
$87
|
|
$149
|
|
$244
|
|
$303
|
|
$547
|
Immunology
|
|
$365
|
|
$137
|
|
$502
|
|
$358
|
|
$190
|
|
$548
|
|
$365
|
|
$181
|
|
$546
|
|
$428
|
|
$200
|
|
$628
|
|
$1,516
|
|
$708
|
|
$2,224
|
Total Baxalta
|
|
$706
|
|
$623
|
|
$1,329
|
|
$733
|
|
$719
|
|
$1,452
|
|
$738
|
|
$750
|
|
$1,488
|
|
$839
|
|
$844
|
|
$1,683
|
|
$3,016
|
|
$2,936
|
|
$5,952
|
|
BAXALTA INCORPORATED
|
Pro Forma Product Category Sales by U.S. and International
|
Quarterly and FY 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a pro forma basis by U.S. and International. A reconciliation to
GAAP net sales and a description of the pro forma adjustment is also
included below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
Hemophilia
|
|
$297
|
|
$378
|
|
$675
|
|
$323
|
|
$397
|
|
$720
|
|
$318
|
|
$437
|
|
$755
|
|
$343
|
|
$491
|
|
$834
|
|
$1,281
|
|
$1,703
|
|
$2,984
|
|
Inhibitor Therapies
|
|
$44
|
|
$108
|
|
$152
|
|
$52
|
|
$132
|
|
$184
|
|
$55
|
|
$132
|
|
$187
|
|
$68
|
|
$153
|
|
$221
|
|
$219
|
|
$525
|
|
$744
|
|
Hematology
|
|
$341
|
|
$486
|
|
$827
|
|
$375
|
|
$529
|
|
$904
|
|
$373
|
|
$569
|
|
$942
|
|
$411
|
|
$644
|
|
$1,055
|
|
$1,500
|
|
$2,228
|
|
$3,728
|
|
Immunoglobulin Therapies
|
|
$307
|
|
$91
|
|
$398
|
|
$294
|
|
$99
|
|
$393
|
|
$305
|
|
$102
|
|
$407
|
|
$366
|
|
$113
|
|
$479
|
|
$1,272
|
|
$405
|
|
$1,677
|
|
Pro Forma BioTherapeutics 1
|
|
$58
|
|
$90
|
|
$148
|
|
$64
|
|
$128
|
|
$192
|
|
$60
|
|
$121
|
|
$181
|
|
$62
|
|
$121
|
|
$183
|
|
$244
|
|
$460
|
|
$704
|
|
Pro Forma Immunology
|
|
$365
|
|
$181
|
|
$546
|
|
$358
|
|
$227
|
|
$585
|
|
$365
|
|
$223
|
|
$588
|
|
$428
|
|
$234
|
|
$662
|
|
$1,516
|
|
$865
|
|
$2,381
|
|
Pro Forma Total Baxalta
|
|
$706
|
|
$667
|
|
$1,373
|
|
$733
|
|
$756
|
|
$1,489
|
|
$738
|
|
$792
|
|
$1,530
|
|
$839
|
|
$878
|
|
$1,717
|
|
$3,016
|
|
$3,093
|
|
$6,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Sales Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
|
BioTherapeutics
|
|
$58
|
|
$46
|
|
$104
|
|
$64
|
|
$91
|
|
$155
|
|
$60
|
|
$79
|
|
$139
|
|
$62
|
|
$87
|
|
$149
|
|
$244
|
|
$303
|
|
$547
|
|
Pro forma MSA revenue 1
|
|
$0
|
|
$44
|
|
$44
|
|
$0
|
|
$37
|
|
$37
|
|
$0
|
|
$42
|
|
$42
|
|
$0
|
|
$34
|
|
$34
|
|
$0
|
|
$157
|
|
$157
|
|
Pro Forma BioTherapeutics
|
|
$58
|
|
$90
|
|
$148
|
|
$64
|
|
$128
|
|
$192
|
|
$60
|
|
$121
|
|
$181
|
|
$62
|
|
$121
|
|
$183
|
|
$244
|
|
$460
|
|
$704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In connection with the separation, Baxalta and Baxter entered into a
manufacturing and supply agreement whereby Baxalta will manufacture
and sell certain products to Baxter. The pro forma net sales figures
assume that the manufacturing and supply agreement was in effect in
periods prior to the separation. Net sales related to the
manufacturing and supply agreement will be reported in the company's
actual net sales figures in periods following the separation.
|
|
BAXALTA INCORPORATED
|
Combined Statements of Income
|
Three Months Ended March 31, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
|
|
|
|
|
|
|
NET SALES
|
|
$1,361
|
|
|
$1,329
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
571
|
|
|
559
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
790
|
|
|
770
|
|
|
3
|
%
|
% of Net Sales
|
|
58.0
|
%
|
|
57.9
|
%
|
|
0.1 pts
|
|
|
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
283
|
|
|
222
|
|
|
27
|
%
|
% of Net Sales
|
|
20.8
|
%
|
|
16.7
|
%
|
|
4.1 pts
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
156
|
|
|
163
|
|
|
(4
|
%)
|
% of Net Sales
|
|
11.5
|
%
|
|
12.3
|
%
|
|
(0.8 pts)
|
|
|
|
|
|
|
|
|
OTHER EXPENSE (INCOME), NET
|
|
12
|
|
|
(23
|
)
|
|
N/M
|
|
|
|
|
|
|
|
|
PRE-TAX INCOME FROM CONTINUING OPERATIONS
|
|
339
|
|
|
408
|
|
|
(17
|
%)
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
77
|
|
|
99
|
|
|
(22
|
%)
|
% of Pre-Tax Income from Continuing Operations
|
|
22.7
|
%
|
|
24.3
|
%
|
|
(1.6 pts)
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
|
|
262
|
|
|
309
|
|
|
(15
|
%)
|
|
|
|
|
|
|
|
|
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A
|
|
10
|
|
|
49
|
|
|
(80
|
%)
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$272
|
|
|
$358
|
|
|
(24
|
%)
|
|
|
|
|
|
|
|
|
BASIC EPS FROM CONTINUING OPERATIONS
|
|
$0.39
|
|
|
$0.46
|
|
|
(15
|
%)
|
DILUTED EPS FROM CONTINUING OPERATIONS
|
|
$0.38
|
|
|
$0.45
|
|
|
(16
|
%)
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING B
|
|
|
|
|
|
|
Basic
|
|
676
|
|
|
676
|
|
|
|
Diluted
|
|
681
|
|
|
681
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma and Non-GAAP Measures
C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRO FORMA NET SALES
|
|
$1,403
|
|
|
$1,373
|
|
|
2
|
%
|
ADJUSTED PRO FORMA OPERATING INCOME
|
|
$409
|
|
|
$422
|
|
|
(3
|
%)
|
ADJUSTED PRO FORMA EBITDA
|
|
$461
|
|
|
$468
|
|
|
(1
|
%)
|
ADJUSTED PRO FORMA NET INCOME
|
|
$275
|
|
|
$313
|
|
|
(12
|
%)
|
ADJUSTED PRO FORMA DILUTED EPS
|
|
$0.40
|
|
|
$0.46
|
|
|
(12
|
%)
|
|
|
|
|
|
|
|
|
|
|
A
|
|
Operating results from the company's vaccines business are
classified as discontinued operations for all periods presented.
|
|
|
|
B
|
|
On July 1, 2015 Baxter distributed approximately 544 million shares
of Baxalta common stock and retained an additional 132 million
shares. The computation of basic weighted-average shares outstanding
for both periods presented was calculated using the shares
distributed and the shares retained by Baxter on July 1, 2015. The
diluted weighted-average number of shares outstanding for the
periods presented include the dilutive effect of common share
equivalents for employee equity awards outstanding as of July 1,
2015.
|
|
|
|
C
|
|
Refer to pages 15 through 17 for reconciliations of GAAP to pro
forma and non-GAAP measures.
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statements of Income
|
Three Months Ended March 31, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
|
(unaudited)
|
($ in millions)
|
|
|
|
Below are reconciliations of Adjusted Pro Forma Operating Income,
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and
Adjusted Pro Forma Diluted Earnings per Share to their most directly
comparable GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods,
|
|
|
|
|
|
|
Ended March 31,
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income and Adjusted Pro Forma EBITDA
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Income from Continuing Operations - GAAP
|
|
$339
|
|
|
$408
|
|
|
(17
|
%)
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjustments1
|
|
(33
|
)
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special item adjustments1
|
|
44
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Pre-tax Income
|
|
$350
|
|
|
$398
|
|
|
(12
|
%)
|
|
|
|
|
|
|
|
|
|
|
Remove: Net interest expense
|
|
47
|
|
|
47
|
|
|
|
|
Remove: Other expense (income), net
|
|
12
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income
|
|
$409
|
|
|
$422
|
|
|
(3
|
%)
|
|
% of Pro Forma Net Sales
|
|
29.2
|
%
|
|
30.7
|
%
|
|
(1.5 ppts)
|
|
|
|
|
|
|
|
|
|
|
Remove: Depreciation expense
|
|
52
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma EBITDA
|
|
$461
|
|
|
$468
|
|
|
(1
|
%)
|
|
% of Pro Forma Net Sales
|
|
32.9
|
%
|
|
34.1
|
%
|
|
(1.2 ppts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
|
|
|
|
|
|
|
|
|
Net Income From Continuing Operations - GAAP
|
|
$262
|
|
|
$309
|
|
|
(15
|
%)
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pro forma adjustments 1
|
|
(33
|
)
|
|
(36
|
)
|
|
|
|
|
Impact of pro forma adjustments on income tax expense
|
|
13
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax special item adjustments 1
|
|
44
|
|
|
26
|
|
|
|
|
|
Impact of special item adjustments on income tax expense
|
|
(11
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
$275
|
|
|
$313
|
|
|
(12
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS From Continuing Operations - GAAP
|
|
$0.38
|
|
|
$0.45
|
|
|
(16
|
%)
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of pro forma adjustments on diluted EPS
|
|
(0.03
|
)
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of special item adjustments on diluted EPS
|
|
0.05
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
$0.40
|
|
|
$0.46
|
|
|
(12
|
%)
|
|
|
|
|
|
|
|
|
|
1
|
Refer to Pages 16 and 17 for descriptions of pro forma and special
item adjustments and the impacted statement of income line items.
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statements of Income
|
Three Months Ended March 31, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Change
|
|
|
|
|
|
|
|
|
Net Sales - GAAP
|
|
$1,361
|
|
|
$1,329
|
|
|
2
|
%
|
Pro forma adjustments
|
|
|
|
|
|
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
42
|
|
|
44
|
|
|
|
Pro Forma Net Sales
|
|
$1,403
|
|
|
$1,373
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin - GAAP
|
|
$790
|
|
|
$770
|
|
|
3
|
%
|
Pro forma adjustments
|
|
|
|
|
|
|
|
Depreciation expense 4
|
|
(1
|
)
|
|
(2
|
)
|
|
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
-
|
|
|
-
|
|
|
|
|
Pension expense 2
|
|
5
|
|
|
4
|
|
|
|
Pro Forma Gross Margin
|
|
$794
|
|
|
$772
|
|
|
3
|
%
|
Special item adjustments
|
|
|
|
|
|
|
|
Intangible asset amortization expense 7
|
|
8
|
|
|
3
|
|
|
|
|
Business optimization items 6
|
|
-
|
|
|
2
|
|
|
|
Adjusted Pro Forma Gross Margin
|
|
$802
|
|
|
$777
|
|
|
3
|
%
|
% of Pro Forma Net Sales
|
|
57.2
|
%
|
|
56.6
|
%
|
|
0.6 ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative Expenses - GAAP
|
|
$283
|
|
|
$222
|
|
|
27
|
%
|
Pro forma adjustments
|
|
|
|
|
|
|
|
Depreciation expense 4
|
|
1
|
|
|
1
|
|
|
|
|
Supply chain TSA 3
|
|
(5
|
)
|
|
(5
|
)
|
|
|
|
Pension expense 2
|
|
(5
|
)
|
|
(4
|
)
|
|
|
Pro Forma Selling, General and Administrative Expenses
|
|
$274
|
|
|
$214
|
|
|
28
|
%
|
Special item adjustments
|
|
|
|
|
|
|
|
Business optimization items 6
|
|
1
|
|
|
-
|
|
|
|
|
Separation costs 9
|
|
(36
|
)
|
|
-
|
|
|
|
|
Plasma related litigation 10
|
|
-
|
|
|
10
|
|
|
|
Adjusted Pro Forma Selling, General and Administrative Expenses
|
|
$239
|
|
|
$224
|
|
|
7
|
%
|
% of Pro Forma Net Sales
|
|
17.0
|
%
|
|
16.3
|
%
|
|
0.7 ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development Expenses - GAAP
|
|
$156
|
|
|
$163
|
|
|
(4
|
%)
|
Pro forma adjustments
|
|
|
|
|
|
|
|
Pension expense 2
|
|
$(1
|
)
|
|
$(1
|
)
|
|
|
Pro Forma Research and Development Expenses
|
|
$155
|
|
|
$162
|
|
|
(4
|
%)
|
Special item adjustments
|
|
|
|
|
|
|
|
Separation costs 9
|
|
$(7
|
)
|
|
-
|
|
|
|
|
Business optimization items 6
|
|
6
|
|
|
(6
|
)
|
|
|
|
Upfront and milestone payments to collaboration partners 8
|
|
-
|
|
|
(25
|
)
|
|
|
Adjusted Pro Forma Research and Development Expenses
|
|
$154
|
|
|
$131
|
|
|
18
|
%
|
% of Pro Forma Net Sales
|
|
11.0
|
%
|
|
9.5
|
%
|
|
1.5 ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Expense - GAAP
|
|
-
|
|
|
-
|
|
|
N/M
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
Interest expense 5
|
|
47
|
|
|
47
|
|
|
|
Pro Forma Net Interest Expense
|
|
$47
|
|
|
$47
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
Refer to page 17 for tickmark explanations
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statements of Income
|
Three Months Ended March 31, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below (continued):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
|
|
|
|
|
|
|
Pre-Tax Income - GAAP
|
|
$339
|
|
|
$408
|
|
|
(17
|
%)
|
|
Impact of pro forma adjustments
|
|
$(33
|
)
|
|
$(36
|
)
|
|
|
|
Impact of special item adjustments
|
|
44
|
|
|
26
|
|
|
|
Adjusted Pro Forma Pre-Tax Income From Continuing Operations
|
|
$350
|
|
|
$398
|
|
|
(12
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense - GAAP
|
|
$77
|
|
|
$99
|
|
|
(22
|
%)
|
|
Impact of pro forma adjustments
|
|
$(13
|
)
|
|
$(16
|
)
|
|
|
|
Impact of special item adjustments
|
|
11
|
|
|
2
|
|
|
|
Adjusted Pro Forma Income Tax Expense
|
|
$75
|
|
|
$85
|
|
|
(12
|
%)
|
% of Adjusted Pro Forma Pre-tax Income from Continuing
Operations
|
|
21.4
|
%
|
|
21.4
|
%
|
|
- ppts
|
|
Description of pro forma adjustments:
|
|
The pro forma adjustments illustrate the financial impacts of the
separation of Baxalta from Baxter International Inc. and the related
transactions described below. The pro forma statement of income
adjustments give effect to the separation and related transactions
described below as if they had occurred as of January 1, 2014. The
pro forma adjustments are for informational purposes only and do not
purport to represent what Baxalta's results of operations actually
would have been had the separation and related transactions occurred
on the dates indicated, or to project Baxalta's financial
performance for any future period.
|
|
(1)
|
Reflects the effect of the manufacturing and supply agreement that
Baxalta and Baxter entered into in connection with the separation.
The net sales adjustment reflects additional sales that Baxalta
would have recorded for product manufactured and sold to Baxter.
The cost of sales adjustment reflects the impact of costs incurred
to manufacture these products as well as incremental costs that
Baxalta would have recorded for purchases of other products from
Baxter under the manufacturing and supply agreement.
|
(2)
|
Reflects a reduction in operating expenses related to the impact of
net retirement obligations transferred to Baxalta as part of the
separation.
|
(3)
|
Reflects a reduction in selling, general and administrative expenses
for the difference in costs to be incurred by Baxalta for certain
supply chain services to be provided by Baxter under terms of the
transition services agreement.
|
(4)
|
Reflects a net increase in depreciation expense related to certain
assets transferred to Baxalta pursuant to the separation agreement
that were not included in the company's historical financial
statements.
|
(5)
|
Reflects interest expense associated with approximately $5 billion
of debt issued by Baxalta in advance of the separation. The pro
forma adjustment does not include an estimate of the portion that
may have been capitalized.
|
|
Description of special item adjustments
|
(6)
|
The company's GAAP results were impacted by costs, and favorable
adjustments to previously estimated costs, associated with the
company's execution of certain strategies to optimize its
organizational structure. The charges and adjustments impacted cost
of sales, selling, general and administrative expenses and research
and development expenses in the periods presented.
|
(7)
|
The company's GAAP results included intangible asset amortization
expense for each period presented.
|
(8)
|
The company's GAAP results included R&D charges associated with
upfront payments to collaboration partners and payments to
collaboration partners upon the achievement of development
milestones.
|
(9)
|
The company's GAAP results were impacted by separation costs
incurred to prepare Baxalta to operate as an independent, standalone
public company.
|
(10)
|
The company's GAAP results included a benefit associated with the
reversal of a portion of a legal charge following the settlement of
class-action litigation related to pricing of plasma-derived
therapies.
|
|
For more information on the company's use of non-GAAP financial
measures in this press release, please see the company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
|
|
BAXALTA INCORPORATED
|
Combined Statements of Income
|
Quarterly and FY 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
|
|
$1,329
|
|
|
$1,452
|
|
|
$1,488
|
|
|
$1,683
|
|
|
$5,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
559
|
|
|
599
|
|
|
614
|
|
|
671
|
|
|
2,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
770
|
|
|
853
|
|
|
874
|
|
|
1,012
|
|
|
3,509
|
|
% of Net Sales
|
|
57.9
|
%
|
|
58.7
|
%
|
|
58.7
|
%
|
|
60.1
|
%
|
|
59.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
222
|
|
|
242
|
|
|
278
|
|
|
311
|
|
|
1,053
|
|
% of Net Sales
|
|
16.7
|
%
|
|
16.7
|
%
|
|
18.7
|
%
|
|
18.5
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
163
|
|
|
166
|
|
|
310
|
|
|
181
|
|
|
820
|
|
% of Net Sales
|
|
12.3
|
%
|
|
11.4
|
%
|
|
20.8
|
%
|
|
10.8
|
%
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER (INCOME) EXPENSE, NET
|
|
(23
|
)
|
|
30
|
|
|
(23
|
)
|
|
120
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRE-TAX INCOME FROM CONTINUING OPERATIONS
|
|
408
|
|
|
415
|
|
|
309
|
|
|
400
|
|
|
1,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
99
|
|
|
97
|
|
|
84
|
|
|
66
|
|
|
346
|
|
% of Pre-Tax Income from Continuing Operations
|
|
24.3
|
%
|
|
23.4
|
%
|
|
27.2
|
%
|
|
16.5
|
%
|
|
22.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
|
|
309
|
|
|
318
|
|
|
225
|
|
|
334
|
|
|
1,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A
|
|
49
|
|
|
52
|
|
|
21
|
|
|
429
|
|
|
551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$358
|
|
|
$370
|
|
|
$246
|
|
|
$763
|
|
|
$1,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EPS FROM CONTINUING OPERATIONS
|
|
$0.46
|
|
|
$0.47
|
|
|
$0.33
|
|
|
$0.49
|
|
|
$1.75
|
|
DILUTED EPS FROM CONTINUING OPERATIONS
|
|
$0.45
|
|
|
$0.47
|
|
|
$0.33
|
|
|
$0.49
|
|
|
$1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING B
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
676
|
|
|
676
|
|
|
676
|
|
|
676
|
|
|
676
|
|
Diluted
|
|
681
|
|
|
681
|
|
|
681
|
|
|
681
|
|
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma and Non-GAAP Measures
C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRO FORMA NET SALES
|
|
$1,373
|
|
|
$1,489
|
|
|
$1,530
|
|
|
$1,717
|
|
|
$6,109
|
|
ADJUSTED PRO FORMA OPERATING INCOME
|
|
$422
|
|
|
$492
|
|
|
$500
|
|
|
$594
|
|
|
$2,008
|
|
ADJUSTED PRO FORMA EBITDA
|
|
$468
|
|
|
$542
|
|
|
$549
|
|
|
$646
|
|
|
$2,205
|
|
ADJUSTED PRO FORMA NET INCOME
|
|
$313
|
|
|
$361
|
|
|
$370
|
|
|
$459
|
|
|
$1,503
|
|
ADJUSTED PRO FORMA DILUTED EPS
|
|
$0.46
|
|
|
$0.53
|
|
|
$0.54
|
|
|
$0.68
|
|
|
$2.21
|
|
|
|
|
A
|
|
Operating results and gain from the sale of the company's vaccines
business are classified as discontinued operations for all periods
presented.
|
|
|
|
B
|
|
On July 1, 2015 Baxter distributed approximately 544 million shares
of Baxalta common stock and retained an additional 132 million
shares. The computation of basic weighted-average shares outstanding
for all periods presented was calculated using the shares
distributed and the shares retained by Baxter on July 1, 2015. The
diluted weighted-average number of shares outstanding for the
periods presented include the dilutive effect of common share
equivalents for employee equity awards outstanding as of July 1,
2015.
|
|
|
|
C
|
|
Refer to pages 19 through 21 for reconciliations of GAAP to pro
forma and non-GAAP measures.
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statements of Income
|
Quarterly and FY 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Below are reconciliations of Adjusted Pro Forma Operating Income,
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and
Adjusted Pro Forma Diluted Earnings per Share to their most directly
comparable GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income and Adjusted Pro Forma EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Income from Continuing Operations - GAAP
|
|
$408
|
|
|
$415
|
|
|
$309
|
|
|
$400
|
|
|
$1,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjustments 1
|
|
(36
|
)
|
|
(35
|
)
|
|
(36
|
)
|
|
(36
|
)
|
|
(143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special item adjustments 1
|
|
26
|
|
|
79
|
|
|
203
|
|
|
188
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Pre-tax Income
|
|
$398
|
|
|
$459
|
|
|
$476
|
|
|
$552
|
|
|
$1,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remove: Net interest expense
|
|
47
|
|
|
47
|
|
|
47
|
|
|
47
|
|
|
188
|
|
Remove: Other income, net
|
|
(23
|
)
|
|
(14
|
)
|
|
(23
|
)
|
|
(5
|
)
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income
|
|
$422
|
|
|
$492
|
|
|
$500
|
|
|
$594
|
|
|
$2,008
|
|
% of Pro Forma Net Sales
|
|
30.7
|
%
|
|
33.0
|
%
|
|
32.7
|
%
|
|
34.6
|
%
|
|
32.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Remove: Depreciation expense
|
|
46
|
|
|
50
|
|
|
49
|
|
|
52
|
|
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma EBITDA
|
|
$468
|
|
|
$542
|
|
|
$549
|
|
|
$646
|
|
|
$2,205
|
|
% of Pro Forma Net Sales
|
|
34.1
|
%
|
|
36.4
|
%
|
|
35.9
|
%
|
|
37.6
|
%
|
|
36.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income From Continuing Operations - GAAP
|
|
$309
|
|
|
$318
|
|
|
$225
|
|
|
$334
|
|
|
$1,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pro forma adjustments 1
|
|
(36
|
)
|
|
(35
|
)
|
|
(36
|
)
|
|
(36
|
)
|
|
(143
|
)
|
|
Impact of pro forma adjustments on income tax expense
|
|
16
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax special item adjustments 1
|
|
26
|
|
|
79
|
|
|
203
|
|
|
188
|
|
|
496
|
|
|
Impact of special item adjustments on income tax expense
|
|
(2
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|
(42
|
)
|
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
$313
|
|
|
$361
|
|
|
$370
|
|
|
$459
|
|
|
$1,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS From Continuing Operations - GAAP
|
|
$0.45
|
|
|
$0.47
|
|
|
$0.33
|
|
|
$0.49
|
|
|
$1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of pro forma adjustments on diluted EPS
|
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.03
|
)
|
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of special item adjustments on diluted EPS
|
|
0.04
|
|
|
0.09
|
|
|
0.24
|
|
|
0.22
|
|
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
$0.46
|
|
|
$0.53
|
|
|
$0.54
|
|
|
$0.68
|
|
|
$2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Refer to Pages 20 and 21 for descriptions of pro forma
and special item adjustments and the impacted statement of income
line items.
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statements of Income
|
Quarterly and FY 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales - GAAP
|
|
$1,329
|
|
|
$1,452
|
|
|
$1,488
|
|
|
$1,683
|
|
|
$5,952
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
44
|
|
|
37
|
|
|
42
|
|
|
34
|
|
|
157
|
|
Pro Forma Net Sales
|
|
$1,373
|
|
|
$1,489
|
|
|
$1,530
|
|
|
$1,717
|
|
|
$6,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin - GAAP
|
|
$770
|
|
|
$853
|
|
|
$874
|
|
|
$1,012
|
|
|
$3,509
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense 4
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
-
|
|
|
1
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
Pension expense 2
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
16
|
|
Pro Forma Gross Margin
|
|
$772
|
|
|
$856
|
|
|
$876
|
|
|
$1,015
|
|
|
$3,519
|
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense 7
|
|
3
|
|
|
4
|
|
|
3
|
|
|
6
|
|
|
16
|
|
|
Business optimization items 6
|
|
2
|
|
|
(2
|
)
|
|
-
|
|
|
1
|
|
|
1
|
|
Adjusted Pro Forma Gross Margin
|
|
$777
|
|
|
$858
|
|
|
$879
|
|
|
$1,022
|
|
|
$3,536
|
|
% of Pro Forma Net Sales
|
|
56.6
|
%
|
|
57.6
|
%
|
|
57.5
|
%
|
|
59.5
|
%
|
|
57.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative Expenses - GAAP
|
|
$222
|
|
|
$242
|
|
|
$278
|
|
|
$311
|
|
|
$1,053
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense 4
|
|
1
|
|
|
-
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
Supply chain TSA 3
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(20
|
)
|
|
Pension expense 2
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(16
|
)
|
Pro Forma Selling, General and Administrative Expenses
|
|
$214
|
|
|
$233
|
|
|
$270
|
|
|
$303
|
|
|
$1,020
|
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Business optimization items 6
|
|
-
|
|
|
1
|
|
|
(4
|
)
|
|
3
|
|
|
-
|
|
|
Separation costs 9
|
|
-
|
|
|
(1
|
)
|
|
(10
|
)
|
|
(32
|
)
|
|
(43
|
)
|
|
Branded Prescription Drug Fee 12
|
|
-
|
|
|
-
|
|
|
(26
|
)
|
|
-
|
|
|
(26
|
)
|
|
Plasma related litigation 10
|
|
10
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10
|
|
Adjusted Pro Forma Selling, General and Administrative Expenses
|
|
$224
|
|
|
$233
|
|
|
$230
|
|
|
$274
|
|
|
$961
|
|
% of Pro Forma Net Sales
|
|
16.3
|
%
|
|
15.6
|
%
|
|
15.0
|
%
|
|
16.0
|
%
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development Expenses - GAAP
|
|
$163
|
|
|
$166
|
|
|
$310
|
|
|
$181
|
|
|
$820
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Pension expense 2
|
|
(1
|
)
|
|
-
|
|
|
(1
|
)
|
|
-
|
|
|
(2
|
)
|
Pro Forma Research and Development Expenses
|
|
$162
|
|
|
$166
|
|
|
$309
|
|
|
$181
|
|
|
$818
|
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Separation costs 9
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
(13
|
)
|
|
Business optimization items 6
|
|
(6
|
)
|
|
2
|
|
|
(22
|
)
|
|
5
|
|
|
(21
|
)
|
|
Upfront and milestone payments to collaboration partners 8
|
|
(25
|
)
|
|
(35
|
)
|
|
(138
|
)
|
|
(19
|
)
|
|
(217
|
)
|
Adjusted Pro Forma Research and Development Expenses
|
|
$131
|
|
|
$133
|
|
|
$149
|
|
|
$154
|
|
|
$567
|
|
% of Pro Forma Net Sales
|
|
9.5
|
%
|
|
8.9
|
%
|
|
9.7
|
%
|
|
9.0
|
%
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Expense - GAAP
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense 5
|
|
47
|
|
|
47
|
|
|
47
|
|
|
47
|
|
|
188
|
|
Pro Forma Net Interest Expense
|
|
$47
|
|
|
$47
|
|
|
$47
|
|
|
$47
|
|
|
$188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) Expense, Net - GAAP
|
|
$(23
|
)
|
|
$30
|
|
|
$(23
|
)
|
|
$120
|
|
|
$104
|
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of contingent payment liabilities 11
|
|
-
|
|
|
(44
|
)
|
|
-
|
|
|
(80
|
)
|
|
(124
|
)
|
|
Other-than-temporary impairment charge 13
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(45
|
)
|
|
(45
|
)
|
Adjusted Other Income, Net
|
|
$(23
|
)
|
|
$(14
|
)
|
|
$(23
|
)
|
|
$(5
|
)
|
|
$(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to page 21 for tickmark explanations
|
|
BAXALTA INCORPORATED
|
Notes to Combined Statement of Income
|
Quarterly and FY 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below (continued):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
FY2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income - GAAP
|
|
$408
|
|
|
$415
|
|
|
$309
|
|
|
$400
|
|
|
$1,532
|
|
|
Impact of pro forma adjustments
|
|
(36
|
)
|
|
(35
|
)
|
|
(36
|
)
|
|
(36
|
)
|
|
(143
|
)
|
|
Impact of special item adjustments
|
|
26
|
|
|
79
|
|
|
203
|
|
|
188
|
|
|
496
|
|
Adjusted Pro Forma Pre-Tax Income from Continuing Operations
|
|
$398
|
|
|
$459
|
|
|
$476
|
|
|
$552
|
|
|
$1,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense - GAAP
|
|
$99
|
|
|
$97
|
|
|
$84
|
|
|
$66
|
|
|
$346
|
|
|
Impact of pro forma adjustments
|
|
(16
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|
(61
|
)
|
|
Impact of special item adjustments
|
|
2
|
|
|
16
|
|
|
37
|
|
|
42
|
|
|
97
|
|
Adjusted Pro Forma Income Tax Expense
|
|
$85
|
|
|
$98
|
|
|
$106
|
|
|
$93
|
|
|
$382
|
|
% of Adjusted Pro Forma Pre-tax Income from Continuing
Operations
|
|
21.4
|
%
|
|
21.4
|
%
|
|
22.3
|
%
|
|
16.8
|
%
|
|
20.3
|
%
|
|
Description of pro forma adjustments:
|
|
The pro forma adjustments illustrate the financial impacts of the
separation of Baxalta from Baxter International Inc. and the related
transactions described below. The pro forma statement of income
adjustments give effect to the separation and related transactions
described below as if they had occurred as of January 1, 2014. The
pro forma adjustments are for informational purposes only and do not
purport to represent what Baxalta's results of operations actually
would have been had the separation and related transactions occurred
on the dates indicated, or to project Baxalta's financial
performance for any future period.
|
|
(1)
|
Reflects the effect of the manufacturing and supply agreement that
Baxalta and Baxter entered into in connection with the separation.
The net sales adjustment reflects additional sales that Baxalta
would have recorded for product manufactured and sold to Baxter.
The cost of sales adjustment reflects the impact of costs incurred
to manufacture these products as well as incremental costs that
Baxalta would have recorded for purchases of other products from
Baxter under the manufacturing and supply agreement.
|
(2)
|
Reflects a reduction in operating expenses related to the impact of
net retirement obligations transferred to Baxalta as part of the
separation.
|
(3)
|
Reflects a reduction in selling, general and administrative expenses
for the difference in costs to be incurred by Baxalta for certain
supply chain services to be provided by Baxter under terms of the
transition services agreement.
|
(4)
|
Reflects a net increase in depreciation expense related to certain
assets transferred to Baxalta pursuant to the separation agreement
that were not included in the company's historical financial
statements.
|
(5)
|
Reflects interest expense associated with approximately $5 billion
of debt issued by Baxalta in advance of the separation. The pro
forma adjustment does not include an estimate of the portion that
may have been capitalized.
|
|
Description of special item adjustments
|
(6)
|
The company's GAAP results were impacted by costs, and favorable
adjustments to previously estimated costs, associated with the
company's execution of certain strategies to optimize its
organizational structure. The charges and adjustments impacted cost
of sales, selling, general and administrative expenses and research
and development expenses in the periods presented.
|
(7)
|
The company's GAAP results included intangible asset amortization
expense for each period presented.
|
(8)
|
The company's GAAP results included R&D charges associated with
upfront payments to collaboration partners and payments to
collaboration partners upon the achievement of development
milestones.
|
(9)
|
The company's GAAP results were impacted by separation costs
incurred to prepare Baxalta to operate as an independent, standalone
public company.
|
(10)
|
The company's GAAP results included a benefit associated with the
reversal of a portion of a legal charge following the settlement of
class-action litigation related to pricing of plasma-derived
therapies.
|
(11)
|
The company's GAAP results included losses resulting from increases
in the fair value of contingent payment liabilities associated with
previously completed business combinations.
|
(12)
|
The company's GAAP results included a charge to account for an
additional year of the Branded Prescription Drug Fee in accordance
with final regulations issued by the Internal Revenue Service.
|
(13)
|
The company's GAAP results included an other-than-temporary
impairment charge to write-down the company's investment in the
common stock of Onconova Therapeutics to its fair value.
|
|
For more information on the company's use of non-GAAP financial
measures in this press release, please see the company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150730005698/en/
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