Jazz Pharmaceuticals plcJAZZ

Jazz Pharmaceuticals plc Earnings Per Share Disclosure

10-KFiled Feb 24, 20263 min read
Net Income (Loss) per Ordinary Share
Basic net income (loss) per ordinary share is based on the weighted-average number of ordinary shares outstanding. Diluted net income (loss) per ordinary share is based on the weighted-average number of ordinary shares outstanding and potentially dilutive ordinary shares outstanding.
Basic and diluted net income (loss) per ordinary share were computed as follows (in thousands, except per share amounts):
 Year Ended December 31,
 202520242023
Numerator:
Net income (loss)$(356,148)$560,120 $414,832 
Effect of interest on assumed conversions of the 2026 Notes and the 2024 Notes, net of tax— 10,762 24,876 
Net income (loss) for dilutive net income (loss) per ordinary share$(356,148)$570,882 $439,708 
Denominator:
Weighted-average ordinary shares used in per share calculations - basic60,981 61,838 63,291 
Dilutive effect of the 2026 Notes and the 2024 Notes— 3,540 8,016 
Dilutive effect of employee equity incentive and purchase plans— 629 759 
Weighted-average ordinary shares used in per share calculations - diluted60,981 66,007 72,066 
Net income (loss) per ordinary share:
Basic $(5.84)$9.06 $6.55 
Diluted$(5.84)$8.65 $6.10 
Potentially dilutive ordinary shares from our employee equity incentive and purchase plans are determined by applying the treasury stock method to the assumed vesting of outstanding RSUs and PRSUs, the assumed exercise of share options and the assumed issuance of ordinary shares under our ESPP.
In August 2023, we irrevocably elected to fix the settlement method for exchanges of the 2024 Notes to a combination of cash and ordinary shares of the Company with a specified cash amount per $1,000 principal amount of the 2024 Notes of $1,000. As a result, the assumed issuance of ordinary shares upon exchange of the 2024 Notes has only been included in the calculation of diluted net income per ordinary share in 2023 up to the date the irrevocable election was made. In August 2024 we repaid the aggregate principal amount in cash.
In July 2024, we irrevocably elected to fix the settlement method for exchanges of the 2026 Notes to a combination of cash and ordinary shares of the Company with a specified cash amount per $1,000 principal amount of 2026 Notes exchanged equal to or in excess of $1,000. As a result, the assumed issuance of ordinary shares upon exchange of the 2026 Notes has only been included in the calculation of diluted net income per ordinary share in 2024, up to the date the irrevocable election was made. As a result of the election, an exchanging holder will receive (i) up to $1,000 in cash per $1,000 principal amount of 2026 Notes exchanged and (ii) cash, ordinary shares, or any combination thereof, at our election, in respect of the remainder, if any, of its exchange obligation in excess of $1,000 per $1,000 principal amount of 2026 Notes exchanged. The average price of our ordinary shares in 2025 and 2024 did not exceed the conversion price of the 2026 Notes.
For the 2030 Notes, we are required to settle the principal amount in cash and have the option to settle the conversion feature for the amount above the conversion price, or the conversion spread, in cash, ordinary shares or a combination of cash and ordinary shares. The conversion spread will have a dilutive impact on diluted net income per ordinary share when the average market price of our ordinary shares for a given period exceeds the conversion price of the 2030 Notes. For the year ended December 31, 2025, the 2030 Notes have been excluded from the computation of diluted net loss per ordinary share, as the effect was anti-dilutive. The average price of our ordinary shares in 2024 did not exceed the conversion price of the 2030 Notes.
The following table represents the weighted-average ordinary shares that were excluded from the computation of diluted net income (loss) per ordinary share for the years presented because including them would have an anti-dilutive effect (in thousands):
 Year Ended December 31,
 202520242023
Employee equity incentive and purchase plans4,369 4,074 2,973 
2030 Notes
3 — — 
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About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

Other Available Disclosures

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