Jazz Pharmaceuticals Reports Significant Earnings Shortfall in Q1 2025

Jazz Pharmaceuticals (JAZZ) disclosed first-quarter 2025 adjusted earnings of $1.68 per share, falling well below the Zacks Consensus Estimate of $4.51. This shortfall primarily stems from elevated operating expenses during the quarter. Year-over-year, earnings dropped 36%.

Total revenues fell by 0.5% year over year to $897.8 million, also missing the Zacks Consensus Estimate of $981 million, largely due to weak sales of its marketed products.

In after-market trading, Jazz shares declined by 3%, likely reflecting the disappointing earnings results. So far this year, the stock has depreciated by 10%, compared to a 3% decline in the broader industry.

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Earnings Breakdown for JAZZ

Net product sales remained constant year over year at $839.4 million, missing both the Zacks Consensus Estimate and internal expectations of $925 million and $895 million, respectively.

Revenue from royalty sources included approximately $48.9 million from high-sodium oxybate authorized generic products, a 2% decline from the prior year. This performance aligned with internal estimates but fell short of the Zacks Consensus Estimate of $50 million.

Additionally, other royalties and contract revenues decreased by 5% to $9.5 million in the quarter.

Neuroscience Segment Performance

Sales from Jazz’s neuroscience products increased by 4%, reaching $605.2 million. The combined sales for the oxybate products (Xyrem + Xywav) edged up by about 1% to $382 million, although this figure did not meet the Zacks Consensus Estimate of $416 million nor our own estimate of $388 million.

However, sales of the sleep disorder treatment Xyrem plummeted 42% year over year to $37.2 million as patients transitioned to Xywav, alongside the introduction of authorized generics in 2023. In contrast, Xywav generated sales of $344.8 million in the quarter, reflecting a 9% year-over-year increase due to strong acceptance in treating narcolepsy and idiopathic hypersomnia.

Sales of the epilepsy drug Epidiolex/Epidyolex rose by 10% to $217.7 million, likely driven by broader geographic market expansion. Sales figures fell short of the Zacks Consensus Estimate of $233 million and our estimate of $229 million. Furthermore, cannabis-based mouth spray Sativex achieved $5.4 million in sales during the quarter, up 98% year over year.

Oncology Segment Overview

Jazz’s oncology product sales dipped by 11% to $229.4 million. The chemotherapy drug Rylaze/Enrylaze reported sales of $94.2 million, an 8% decline from the previous year, affected by updated protocols for pediatric acute lymphoblastic leukemia. Jazz expects sales to normalize in the second quarter of 2025. Rylaze sales lagged behind the Zacks Consensus Estimate and our model estimates of $104 million and $103 million, respectively.

Sales for Zepzelca, utilized in treating small cell lung cancer, amounted to $63 million, a decrease of 16% year over year due to increased competition and treatment protocol changes. Sales for Vyxeos, targeting acute myeloid leukemia, fell by 8% to $29.5 million, while Defitelio saw a 15% decline year over year to $40.7 million. Meanwhile, Ziihera, newly approved for biliary tract cancer, contributed $2 million in sales, compared to $1.1 million in the previous quarter.

Assessment of Operating Costs

Adjusted selling, general, and administrative expenses surged by 52% year over year to $472.3 million, primarily attributable to $172 million in settlements related to Xyrem antitrust litigation during the quarter. However, adjusted research and development expenses decreased by 22% to $220.9 million, reflecting lower clinical program expenditures.

2025 Financial Guidance from JAZZ

While Jazz upheld its revenue forecasts, it revised its expense guidance following the completion of its $935 million acquisition of clinical-stage biotech Chimerix last month. Expected total revenues are now projected between $4.15 billion and $4.40 billion, suggesting 5% growth at the midpoint compared to 2024 levels.

Sales growth is anticipated from Xywav, Epidiolex, and its oncology portfolio, with expectations for Epidiolex to reach blockbuster status by year-end. Adjusted SG&A expenses are now forecasted to range from $1.47 billion to $1.53 billion, an increase from prior guidance of $1.25 billion to $1.31 billion. Adjusted R&D expenses are now projected at $760 million to $810 million, compared to previous expectations of $720 million to $770 million. The effective tax rate is forecasted between 35% and 45%, increasing from an earlier estimate of 13% to 15%. Adjusted earnings guidance for 2025 has been revised downward to between $4.00 and $5.60 per share, down from a previous range of $22.50 to $24.00.

Current Zacks Rank for JAZZ

Jazz holds a Zacks Rank #3 (Hold).

Jazz Pharmaceuticals PLC Price

Jazz Pharmaceuticals PLC price | Jazz Pharmaceuticals PLC Quote

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