How Did Horizon Pharma Perform in 3Q16?



Analyzing Horizon’s segmental performance

Following the $65.0 million litigation settlement with Express Scripts, Horizon Pharma’s (HZNP) net sales on a GAAP (generally accepted accounting principles) basis fell to $208.7 million in the third quarter of 2016. Non-GAAP net sales were $273.7 million during the period, reflecting a yearly rise of 21.0%.

Of its three businesses—Primary Care, Orphan Drug, and Rheumatology—Horizon’s Primary Care business is currently its major contributor. We’ll look at this segment’s performance in detail in the next part of this series.

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Primary Care segment

Horizon’s Primary Care segment includes four major products—Duexis, Vimovo, Pennsaid 2%, and Migergot. The segment recorded net sales of $161.8 million in 3Q16. So on a GAAP basis, after accounting for the litigation settlement expense, Primary Care had a 77.5% share in Horizon’s total net sales during the period.

Orphan Drug segment

Horizon’s Orphan Drug segment is comprised of Ravicti, Actimmune, and Buphenyl. In the third quarter of 2016, the segment managed to earn $71.4 million, a rise of 8.0% in net sales. Horizon aims to become an orphan drug–oriented company in the long term.

Other companies that operate in orphan drugs include BioMarin Pharmaceutical (BMRN), Alexion Pharmaceuticals (ALXN), and Genzyme, Sanofi’s (SNY) subsidiary.

Rheumatology segment

Horizon’s Rheumatology segment includes Krystexxa and Rayos/Lodotra. In 3Q16, revenues for the segment rose a significant 217.0% to $40.5 million. It’s possible that Krystexxa, acquired in January 2016, was behind the robust growth. If we exclude Krystexxa’s contribution, the segment rose 16.4% during the period.

If you want exposure to Horizon Pharma, you can invest in the iShares Nasdaq Biotechnology (IBB). IBB holds 0.47% of its assets in HZNP.


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