REG - Indivior PLC - Final Results
22/02/2024 07:00
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RNS Number : 0118E Indivior PLC 22 February 2024
http://www.rns-pdf.londonstockexchange.com/rns/0118E_1-2024-2-21.pdf (http://www.rns-pdf.londonstockexchange.com/rns/0118E_1-2024-2-21.pdf)
February 22, 2024
Strong Underlying Financial Performance and Execution Against Strategic
Priorities in 2023
• Achieved 21% net revenue (NR) growth; expanded adjusted operating margin
while investing for future growth
• FY 2023 SUBLOCADE® NR of $630m at top end of range and +54% versus FY
2022
• FY 2024 guidance introduced - expect to deliver 18% NR growth and ~300
basis points of operating margin expansion at the mid-points
• Initiating shareholder consultations to potentially transition to a
primary listing in the U.S. in 2024 while maintaining a secondary listing in
the U.K.
Comment by Mark Crossley, CEO of Indivior PLC
"At our December 2022 Capital Markets Day, we laid out Indivior's strategy and
medium term financial goals targeting double-digit top line growth, operating
margin expansion and strengthened cash flow. By executing against our
strategic priorities, we delivered strongly against these goals in 2023. We
grew SUBLOCADE and PERSERIS® net revenue by 54% and 50%, respectively, we
acquired Opiant and launched OPVEE®, and we expanded our pipeline of
innovative potential treatments for substance use disorders. Furthermore, we
converted 21% net revenue growth into adjusted operating profit growth of 27%
(reported operating loss of $4m), despite significant incremental operating
costs from the acquisition of Opiant and targeted investments in our U.S.
commercial organization. Among other highlights, we listed our shares on
NASDAQ, continued to de-risk legacy liabilities, and we initiated a third
$100m share repurchase program. 2023 was a year of considerable achievement
and I want to thank all Indivior employees for their efforts."
"Our guidance for 2024 builds off this momentum with expected double-digit net
revenue growth and meaningful operating margin expansion. We are also excited
to announce that we are initiating consultations with shareholders on
potentially transitioning to a primary listing in the U.S. in 2024 while
maintaining a secondary listing in the U.K. I look forward to reporting on our
strong progress in 2024."
Period to December 31st (Unaudited) Q4 Q4 % Change FY FY % Change
2023 2022 2023 2022
$m $m $m $m
Net Revenue 293 241 22% 1,093 901 21%
Operating Profit/(Loss)(1) 60 (258) NM (4) (85) -95%
Net Income/(Loss)(1) 54 (183) NM 2 (53) NM
Diluted EPS/(LPS)(1) ($) $0.38 $(1.34) NM $0.01 $(0.38) NM
Adjusted Basis
Adj. Operating Profit(2) 66 40 65% 269 212 27%
Adj. Net Income(2) 61 39 56% 223 169 32%
Adj. Diluted EPS(2) ($) $0.43 $0.27 59% $1.57 $1.16 35%
1 Includes the impact of exceptional provision increases of $240m for the FY
2023 and $290m for the FY 2022 and Q4 2022 periods, respectively, related to
certain antitrust multidistrict class claims ("Antitrust MDL") and an
intellectual property-related litigation matter. See Note 11 and Note 13 for
additional details including the timing of final settlement.
2 Adjusted Basis excludes the impact of exceptional items and other
adjustments as referenced and reconciled in the "Adjusted Results" appendix on
page 25. Adjusted results are not a substitute for, or superior to, reported
results presented in accordance with International Financial Reporting
Standards.
NM - Not meaningful
The "Company" refers to Indivior PLC and the "Group" refers to the Company and
its consolidated subsidiaries.
FY / Q4 2023 Financial Highlights
• FY 2023 total net revenue (NR) of $1,093m increased 21% (FY
2022: $901m); Q4 2023 total NR of $293m increased 22% (Q4 2022: $241m).
• FY 2023 reported operating loss was $4m (FY 2022: $85m loss); Q4
2023 reported operating profit was $60m (Q4 2022: $258m loss). FY 2023
adjusted operating profit of $269m represented an increase of 27% (Adjusted FY
2022: $212m). Q4 2023 adjusted operating profit of $66m increased 65%
(Adjusted Q4 2022: $40m).
• FY 2023 reported net income was $2m (FY 2022: $53m net loss); Q4
2023 reported net income was $54m (Q4 2022: $183m net loss). FY 2023 adjusted
net income of $223m represented an increase of 32% (Adjusted FY 2022: $169m).
Q4 2023 adjusted net income of $61m increased 56% (Adjusted Q4 2022: $39m).
• Cash and investments totaled $451m at the end of 2023 (including
$27m restricted for self-insurance) (FY 2022: $991m), primarily reflecting the
FY 2023 net cash outflows related to litigation settlements of $610m and $124m
for the Opiant acquisition.
FY / Q4 2023 Product Highlights
• SUBLOCADE: FY 2023 NR of $630m (+54% vs. FY 2022); Q4 2023 NR of
$176m (+49% vs. Q4 2022 and +5%vs. Q3 2023). Continued strong growth primarily
reflects further organized health system (OHS) channel penetration in the U.S.
and increased new U.S. patient enrollments. FY 2023 units dispensed were
approx. 509,000 (+61% vs. FY 2022). Q4 2023 U.S. units dispensed were approx.
142,700 (+53% vs. Q4 2022 and +7% vs. Q3 2023). Total U.S. patients on a
12-month rolling basis at the end of Q4 2023 were approximately 136,900 (+66%
vs. Q4 2022 and +13% vs. Q3 2023).
• PERSERIS®: FY 2023 NR of $42m (+50% vs. FY 2022); Q4 2023 NR of
$12m (+50% vs. Q4 2022 and 9% vs. Q3 2023) reflects increasing awareness of
the treatment across the U.S. healthcare system.
• SUBOXONE® (buprenorphine/naloxone) Film: U.S. share in Q4 2023
averaged 18% (Q4 2022: 19%).
FY 2024 Guidance
The Group is introducing the below guidance for FY 2024 which reflects top
line growth of 18% and adjusted operating margin expansion of approximately
300 basis points (at the midpoint) versus FY 2023.
Guidance assumes no material change in exchange rates for key currencies
compared with FY 2023 average rates, notably USD/GBP and USD/EUR.
FY 2024
Net Revenue (NR)(1) $1,240m to $1,330m
(+18% at midpoint vs. FY 2023)
SUBLOCADE NR $820m to $880m
(+35% at midpoint vs. FY 2023)
OPVEE® NR $15m to $25m(1)
PERSERIS NR $55m to $65m
(+43% at midpoint vs. FY 2023)
SUBOXONE Film Market Share Assumes historic rate of share decline in FY 2024 of 1 to 2 percentage points
and the potential impact from a fourth buprenorphine/naloxone sublingual film
generic in the U.S. market
Adjusted Gross Margin Low to mid-80s range
Adjusted SG&A ($575m) to ($590m)
R&D ($120m) to ($130m)
Adjusted Operating Profit $330m to $380m
1 The OPVEE NR guidance for FY 2024 includes approximately $8m as part of a
multi-year agreement with the U.S. Biomedical Advancement Research and
Development Authority (BARDA).
Initiating the Process for a Potential Primary Listing in the U.S. in the
Summer of 2024
Indivior is initiating formal shareholder consultations on potentially moving
Indivior's primary listing from the U.K. to the U.S. in the Summer of 2024.
The Board believes a primary U.S. listing could be beneficial to Indivior as
it would:
• Reflect the Group's current and future growth opportunities for
its proprietary treatments (SUBLOCADE, PERSERIS and OPVEE), which are centered
in the U.S.;
• Be expected to attract more U.S. investors and analysts by
further elevating the Group's leadership profile in addiction treatment in the
U.S. capital markets;
• Allow for inclusion in major U.S. indices over time, and;
• Reflect the growing proportion of the Group's share capital
owned by U.S.-based investors, which is currently approaching 50%.
The Board is aware that this is an important topic for shareholders and is
mindful that a resolution to move forward requires the support of 75% of
shareholders present and voting (in person or by proxy). If the consultations
indicate a strong level of support from shareholders, the Group intends to put
forward a formal resolution that would facilitate a primary U.S. listing in
the Summer of 2024. The Board intends to maintain Indivior's U.K. listing as a
secondary listing following any transition to a primary U.S. listing.
Share Repurchase Program
On November 17, 2023, Indivior announced a third share repurchase program of
up to $100m. Through February 16, 2024, the Group repurchased and cancelled
2,619,596 Indivior ordinary shares, equivalent to approximately 2% of diluted
shares outstanding, at a daily weighted average purchase price of 1,265p. The
cost was approximately $42m, which includes directly attributable transaction
costs. Refer to Note 15 for further discussion.
U.S. OUD Market Update
In FY 2023, U.S. buprenorphine medication-assisted treatments (BMAT) grew in
mid-single digits. The Group continues to expect long-term U.S. growth to be
sustained in the mid- to high-single digit percentage range due to increased
overall public awareness of the opioid epidemic and approved treatments,
together with regulatory and legislative actions, such as the late 2022
enactment of the Mainstreaming Addiction Treatment Act, that have expanded OUD
treatment funding and treatment capacity. The Group believes these regulatory
and legislative actions will help to normalize the view of addiction as a
chronic disease and expand access to evidence-based buprenorphine treatment in
the U.S. and supports these actions.
Financial Performance FY and Q4 2023
Total net revenue in FY 2023 increased 21% to $1,093m (FY 2022: $901m) at
actual exchange rates (+21% at constant exchange rates(1)). In Q4 2023, total
net revenue increased 22% at actual exchange rates (+21% at constant exchange
rates(1)) to $293m (Q4 2022: $241m).
U.S. net revenue increased 25% in FY 2023 to $912m (FY 2022: $731m) and by 26%
in Q4 2023 to $249m (Q4 2022: $198m). Strong year-over-year SUBLOCADE and
PERSERIS volume growth, along with underlying BMAT market growth were the
principal drivers of the net revenue increase in both periods.
Rest of World (ROW) net revenue increased 6% at actual exchange rates in FY
2023 to $181m (FY 2022: $170m) (+6% at constant exchange rates(1)). In Q4
2023, ROW net revenue increased 2% at actual exchange rates to $44m (Q4 2022:
$43m) (-2% at constant exchange rates(1)). In both the period and quarter,
positive contributions from new products (SUBLOCADE / SUBUTEX® Prolonged
Release and SUBOXONE Film) were offset primarily by ongoing competitive
pressure on legacy tablet products. FY 2023 and Q4 2023 SUBLOCADE / SUBUTEX
Prolonged Release net revenue in ROW was $41m (FY 2022: $27m) and $11m (Q4
2022: $8m) at actual exchange rates, respectively.
Gross margin as reported in FY 2023 and Q4 2023 was 83% and 82% (FY 2022 and
Q4 2022: 82%), respectively. Excluding $8m and $3m, respectively, of other
adjustments for amortization of acquired intangible assets within cost of
sales, adjusted gross margin in FY 2023 and Q4 2023 was 84% and 83%,
respectively. There were no adjustments to FY 2022 or Q4 2022 gross margin.
The increase in the adjusted gross margin in 2023 primarily reflects an
improved product mix from the continued growth of SUBLOCADE. These benefits
were partially offset by cost inflation.
1 Net revenue at constant exchange rates is an alternative performance
measure used by management to evaluate underlying performance of the business
and is calculated by applying the prior year exchange rate to net revenue in
the currencies of the foreign entities.
SG&A expenses as reported in FY 2023 were $811m (FY 2022: $763m) and $157m
as reported in Q4 2023 (Q4 2022: $431m). FY 2023 included $240m of exceptional
costs for the increase in provisions related to the Antitrust MDL and an
intellectual property-related matter and $28m of acquisition-related and U.S.
listing exceptional costs. Q4 2023 included $6m of exceptional acquisition
costs related to the acquisition of a business consisting of a manufacturing
facility, workforce, and supply contracts (refer to Note 17). FY 2022 and Q4
2022 included $296m of exceptional legal costs, respectively, and $6m and $2m
of exceptional U.S. listing costs, respectively.
Excluding exceptional items, FY 2023 SG&A expense increased 18% to $543m
(Adjusted FY 2022: $461m); adjusted Q4 2023 SG&A expense increased 14% to
$151m (Adjusted Q4 2022: $133m). The increase in FY 2023 primarily reflects
higher expenses related to increased SUBLOCADE commercial investments, the
addition of the Opiant business and subsequent launch expenses for OPVEE,
legacy legal defense costs and cost inflation. The increase in Q4 2023
primarily reflects the addition of the Opiant business and subsequent launch
expenses for OPVEE, SUBLOCADE commercial investments, and cost inflation.
R&D expenses in FY 2023 and Q4 2023 were $106m and $30m, respectively (FY
2022: $72m; Q4 2022: $29m) and represented an increase of 47% and an increase
of 3%, respectively. The increases in both periods were primarily due to a
greater activity level related to post-marketing studies for SUBLOCADE,
process validation testing related to LAI (long-acting injectable) capacity
expansion and phasing of ongoing early-stage pipeline activities.
Net other operating income in FY 2023 and Q4 2023 was $6m and $6m,
respectively, (FY 2022: $8m; Q4 2022: $4m). FY 2023 included $3m of
exceptional income recognized in relation to a supply agreement and FY 2022
included $5m of exceptional benefit related to a Directors' & Officers'
insurance claim settlement.
Operating loss as reported was $4m in FY 2023 (FY 2022: $85m loss).
Exceptional costs and other adjustments of $273m and $297m in FY 2023 and FY
2022, respectively, were primarily related to the Antitrust MDL, which was
settled in 2023. The change on a reported basis reflects the exceptional
charges related to legal matters.
FY 2023 adjusted operating profit increased 27% to $269m (FY 2022: $212m). The
increases primarily reflected higher NR from the Group's LAI products,
partially offset by increased SG&A and R&D expenses, as described
above.
Q4 2023 operating profit as reported was $60m (Q4 2022: $258m loss).
Exceptional costs and other adjustments of $6m are included in the current
period and exceptional costs of $298m were included in the year-ago period.
The change on a reported basis reflects the exceptional charges related to
legal matters. Q4 2023 adjusted operating profit increased 65% to $66m
(Adjusted Q4 2022: $40m). The increases on an adjusted basis primarily
reflected higher NR from the Group's LAI products, partially offset by
increased SG&A, as described above.
Net finance income as reported was $5m in FY 2023 (FY 2022: $10m expense). The
change in net finance income (expense) reflected higher interest rates on the
Group's investments. We expect investment income will not offset interest
expense in the near-term following the litigation cash settlement payments.
Reported tax benefit was $1m in FY 2023 and the effective tax rate was -100%,
which is not meaningful as a percentage due to the profit before taxation
being close to nil (FY 2022 tax benefit/rate: $42m, 44%). FY 2023 adjusted tax
expense was $51m, and the effective tax rate was 19% (FY 2022 tax
expense/rate: $33m, 16%). The adjusted results exclude $11m in exceptional tax
items and a $63m tax benefit on exceptional items and other adjustments.
Exceptional tax items are comprised of a $5m write-off of deferred tax assets
and tax expense due to limitation on the deduction of executive compensation
by U.S. publicly traded companies, $3m change in estimate as to the tax
benefit of legal provisions booked in the prior year, and $3m accrual for
adjustments to Opiant predecessor period taxes. Adjusted FY 2022 tax expense
was $33m, excluding the $75m tax benefit on exceptional items and other
adjustments, an effective tax rate of 16%. The movement in the effective tax
rate on adjusted profits is impacted by an increase in the U.K. corporation
tax rate from 19% to 23.5% and a temporary reduction in U.K. innovation
incentives due to 2022 and 2023 losses.
The Q4 2023 reported tax expense was $7m, or a rate of 11% (Q4 2022: $73m
benefit, 29%). The tax benefit on Q4 2023 adjusted profits amounted to $6m,
excluding the $1m tax expense on exceptional items and other adjustments,
which represented an effective tax rate of 9% (Q4 2022: $3m expense, 7%).
Reported net income in FY 2023 was $2m and adjusted net income was $223m (FY
2022 reported net loss: $53m; FY 2022 adjusted net income: $169m). The 32%
increase in net income on an adjusted basis primarily reflected higher NR
partially offset by the increase in operating expense. Q4 2023 net income on a
reported basis was $54m (Q4 2022 net loss: $183m), and $61m adjusted net
income excluding the net after-tax impact from exceptional items and other
adjustments (Adjusted Q4 2022: $39m profit). Higher Q4 2023 adjusted net
income was primarily due to strong NR growth.
Diluted earnings per share were $0.01 on a reported basis and $1.57 on an
adjusted basis in FY 2023 (FY 2022: $(0.38) loss per share on a diluted basis
and $1.16 earnings per share adjusted diluted basis). In Q4 2023, diluted
earnings per share were $0.38 and adjusted diluted earnings per share were
$0.43 (Q4 2022: $(1.34) loss per share on a diluted basis and $0.27 earnings
per share on an adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and investments totaled $451m at the end of Q4 2023, a decrease of $540m
versus the $991m position at the end of 2022. The decrease was primarily due
to litigation settlement related outflows of $610m and the net cash outflow of
$124m for the Opiant acquisition, including the transferred cash balance,
partially offset by beneficial timing of payments made on government rebates
and trade payables. The litigation settlement related outflows include the
Antitrust MDL settlement payment of $103m with States (refer to Note 13),
transfer of $415m into escrow accounts for the settlement with the Antitrust
MDL end payors and direct payors, subject to final court approval (refer to
Note 13), settlement payments of $24m for intellectual property-related and
other legal matters, in addition to the Group's scheduled litigation
settlement payments totaling $68m for the Department of Justice (DOJ), Reckitt
Benckiser (RB) and Dr. Reddy's Laboratories (DRL) matters. Gross borrowings
before issuance costs were $244m at December 31, 2023 (ending FY 2022: $246m).
Net working capital, defined by management as inventory plus trade
receivables, less trade and other payables, was negative $347m on
December 31, 2023, versus negative $283m at the end of FY 2022. The change in
the period was primarily a result of timing of payments made on government
rebates and trade payables.
Cash used in operations in FY 2023 was $292m (FY 2022 cash provided by
operations: $63m), primarily due to payments related to the Antitrust MDL, DOJ
Resolution, DRL settlement and RB settlement, partially offset by timing of
payments made on government rebates and trade payables. Before these
settlement related items, cash generated from operations in the current period
was $318m. Net cash outflow from operating activities was $315m in FY 2023 (FY
2022 cash outflow: $4m) reflecting tax payments and interest paid on the
Group's term loan facility and settlement payments, partially offset by
interest received on investments.
FY 2023 cash outflow from investing activities was $98m (FY 2022 cash outflow:
$223m) reflecting $124m for the Opiant acquisition, net of cash assumed. In
the prior year period, the outflow from investing activities primarily
reflected the net investment in a portfolio of investment-grade debt
securities (net) and ordinary shares of Aelis Farma.
FY 2023 cash outflow from financing activities was $46m (FY 2022 cash outflow:
$100m) reflecting shares repurchased and cancelled, the extinguishment of debt
assumed in the Opiant acquisition, principal portion of lease payments and
quarterly amortization of the Group's term loan facility, partially offset by
proceeds received from the issuance of shares for employee compensation
agreements. In the prior year period, the outflow from financing activities
primarily reflected shares repurchased and cancelled.
Principal Risks Update
The Board of Directors oversees the approach to risk management so that the
principal risks, including those that would threaten the Group's business
model, future performance or viability, are effectively managed and/or
mitigated. While the Group aims to identify and manage such risks, no risk
management strategy can provide absolute assurance against loss. The principal
risks facing the Group will be set out in the Group's Annual Report for the
2023 financial year available in March 2024. They remain broadly unchanged
compared to the prior year, except for two principal risks. With the continued
worldwide pricing and reimbursement pressure on pharmaceuticals products,
combined with the entrance by another company of a long-acting injectable for
the treatment of opioid use disorder (OUD) in the U.S., the Commercialization
principal risk has increased. Conversely, the Supply principal risk has
decreased, given the U.S. FDA regulatory approval of an alternate third-party
filling site for SUBLOCADE and PERSERIS and the acquisition of the Group's
aseptic manufacturing site in November 2023, which, although not able to
manufacture our products today, now provides an opportunity for the Group to
bring such manufacturing in-house in the future.
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into U.S. dollars that have most significant impact on the Group's
results were:
Full Year to December 31, Full Year to December 31,
2023
2022
GB £ period end 1.2731 1.2083
GB £ average rate 1.2435 1.2386
€ Euro period end 1.1037 1.0698
€ Euro average 1.0814 1.0545
Webcast Details
A live webcast presentation will be held on February 22nd, 2024, at 13:00 GMT
(8:00 am EST) hosted by Mark Crossley, CEO. The details are below. All
materials will be available on the Group's website prior to the event at
www.indivior.com. Please copy and paste the below web links into your browser.
The webcast link: https://edge.media-server.com/mmc/p/kymnerij
Participants may access the presentation telephonically by registering with
the following link (please cut and paste into your browser):
https://register.vevent.com/register/BI7bc18cb84a3744af8c4ad20973d37a5a
(Registrants will have an option to be called back directly immediately prior
to the call or be provided a call-in # with a unique pin code following their
registration)
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Teneo +44 (0)20 7353 4200
U.S. Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat substance use disorders (SUD) and
serious mental illnesses. Our vision is that all patients around the world
will have access to evidence-based treatment for the chronic conditions and
co-occurring disorders of SUD. Indivior is dedicated to transforming SUD from
a global human crisis to a recognized and treated chronic disease. Building on
its global portfolio of OUD treatments, Indivior has a pipeline of product
candidates designed to both expand on its heritage in this category and
potentially address other chronic conditions and co-occurring disorders of
SUD, including alcohol use disorder and cannabis use disorder. Headquartered
in the United States in Richmond, VA, Indivior employs more than 1,000
individuals globally and its portfolio of products is available in 37
countries worldwide. Visit www.indivior.com to learn more. Connect with
Indivior on LinkedIn by visiting www.linkedin.com/company/indivior.
Important Cautionary Note Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance including operating and profit margins
for 2024 and its medium- and long-term growth outlook; assumptions regarding
expected changes in market share and expectations regarding the extent and
impact of competition; assumptions regarding future exchange rates; strategic
priorities, strategies for value creation, and operational goals; expected
future growth and expectations for sales levels for particular products;
expected market growth rates, growing normalization of medically assisted
treatment for opioid use disorder, and expanded access to treatment; our
product development pipeline and potential future products, expectations
regarding regulatory approval of such product candidates, the timing of such
approvals, and the timing of commercial launch of such products or product
candidates, and eventual annual revenues of such future products; expectations
regarding future production at the Group's Raleigh, North Carolina
manufacturing facility; and other statements containing the words "believe,"
"anticipate," "plan," "expect," "intend," "estimate," "forecast," "strategy,"
"target," "guidance," "outlook," "potential," "project," "priority," "may,"
"will," "should," "would," "could," "can," "outlook," "guidance," the
negatives thereof, and variations thereon and similar expressions. By their
nature, forward-looking statements involve risks and uncertainties as they
relate to events or circumstances that may or may not occur in the future.
Actual results may differ materially from those expressed or implied in such
statements because they relate to future events. Various factors may cause
differences between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent Indivior PLC
Annual Report and in subsequent releases; the substantial litigation and
ongoing investigations to which we are or may become a party; our reliance on
third parties to manufacture commercial supplies of most of our products,
conduct our clinical trials and at times to collaborate on products in our
pipeline; our ability to comply with legal and regulatory settlements,
healthcare laws and regulations, requirements imposed by regulatory agencies
and payment and reporting obligations under government pricing programs; risks
related to the manufacture and distribution of our products, most of which
contain controlled substances; market acceptance of our products as well as
our ability to commercialize our products and compete with other market
participants; the fact that a substantial portion of our revenue derives from
a small number of key proprietary products; competition; the uncertainties
related to the development of new products, including through acquisitions,
and the related regulatory approval process; our dependence on third-party
payors for the reimbursement of our products and the increasing focus on
pricing and competition in our industry; unintended side effects caused by the
clinical study or commercial use of our products; our use of hazardous
materials in our manufacturing facilities; our ability to successfully execute
acquisitions, partnerships, joint ventures, dispositions or other strategic
acquisitions; our ability to protect our intellectual property rights and the
substantial cost of litigation or other proceedings related to intellectual
property rights; the risks related to product liability claims or product
recalls; the significant amount of laws and regulations that we are subject
to, including due to the international nature of our business; macroeconomic
trends and other global developments such as armed conflicts and pandemics;
the terms of our debt instruments, changes in our credit ratings and our
ability to service our indebtedness and other obligations as they come due;
changes in applicable tax rate or tax rules, regulations or interpretations
and our ability to realize our deferred tax assets; and volatility in our
share price due to factors unrelated to our operating performance or that may
result from the potential move of our primary listing to the U.S.
Forward-looking statements speak only as of the date that they are made and
should be regarded solely as our current plans, estimates and beliefs. Except
as required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking statements to
reflect future events or circumstances or to reflect the occurrences of
unanticipated events.
Unaudited condensed consolidated income statement
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 Notes $m $m $m $m
Net Revenue 2 293 241 1,093 901
Cost of sales (52) (43) (186) (159)
Gross Profit 241 198 907 742
Selling, general and administrative expenses 3 (157) (431) (811) (763)
Research and development expenses 3 (30) (29) (106) (72)
Net other operating income 6 4 6 8
Operating Profit/(Loss) 60 (258) (4) (85)
Finance income 4 10 10 43 19
Finance expense 4 (9) (8) (38) (29)
Net Finance Income/(Expense) 1 2 5 (10)
Profit/(Loss) Before Taxation 61 (256) 1 (95)
Income tax (expense)/benefit 5 (7) 73 1 42
Net Income/(Loss) 54 (183) 2 (53)
Earnings/(Loss) per ordinary share (in dollars)
Basic earnings/(loss) per share 6 $0.39 $(1.34) $0.01 $(0.38)
Diluted earnings/(loss) per share 6 $0.38 $(1.34) $0.01 $(0.38)
Unaudited condensed consolidated statement of comprehensive income/(loss)
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Net income/(loss) 54 (183) 2 (53)
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss in subsequent years:
Foreign currency translation adjustment, net 13 17 4 (19)
Other comprehensive income/(loss) 13 17 4 (19)
Total comprehensive income/(loss) 67 (166) 6 (72)
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated balance sheet
Dec 31, 2023 Dec 31, 2022
Notes $m $m
ASSETS
Non-current assets
Intangible assets 7 237 70
Property, plant and equipment 84 54
Right-of-use assets 33 31
Deferred tax assets 5 268 219
Investments 8 41 98
Other assets 9 28 38
691 510
Current assets
Inventories 142 114
Trade receivables 254 220
Other assets 9 457 27
Current tax receivable 5 - 5
Investments 8 94 119
Cash and cash equivalents 316 774
1,263 1,259
Total assets 1,954 1,769
LIABILITIES
Current liabilities
Borrowings 10 (3) (3)
Provisions 11 (407) (303)
Other liabilities 11 (125) (79)
Trade and other payables 14 (743) (617)
Lease liabilities (9) (8)
Current tax liabilities 5 (18) (9)
(1,305) (1,019)
Non-current liabilities
Borrowings 10 (236) (237)
Provisions 11 (12) (5)
Other liabilities 11 (367) (428)
Lease liabilities (34) (29)
(649) (699)
Total liabilities (1,954) (1,718)
Net assets - 51
EQUITY
Capital and reserves
Share capital 15 68 68
Share premium 11 8
Capital redemption reserve 7 6
Other reserve (1,295) (1,295)
Foreign currency translation reserve (35) (39)
Retained earnings 1,244 1,303
Total equity - 51
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated statement of changes in equity
Notes Share capital Share premium Capital redemption reserve Other reserve Foreign currency translation reserve Retained earnings Total equity
$m $m $m $m $m $m $m
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive loss
Net loss - - - - - (53) (53)
Other comprehensive loss - - - - (19) - (19)
Total comprehensive loss - - - - (19) (53) (72)
Transactions recognized directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 16 16
Settlement of tax on equity awards - - - - - (10) (10)
Shares repurchased and cancelled (3) - 3 - - (90) (90)
Transfer to share repurchase liability - - - - - (9) (9)
Taxation on share-based plans - - - - - 11 11
Balance at December 31, 2022 68 8 6 (1,295) (39) 1,303 51
Balance at January 1, 2023 68 8 6 (1,295) (39) 1,303 51
Comprehensive income
Net income - - - - - 2 2
Other comprehensive income - - - - 4 - 4
Total comprehensive income - - - - 4 2 6
Transactions recognized directly in equity
Shares issued 1 3 - - - - 4
Share-based plans - - - - - 22 22
Settlement of tax on equity awards - - - - - (22) (22)
Shares repurchased and cancelled (1) - 1 - - (33) (33)
Transfer to share repurchase liability - - - - - (23) (23)
Transfer from share repurchase liability - - - - - 9 9
Taxation on share-based plans - - - - - (14) (14)
Balance at December 31, 2023 68 11 7 (1,295) (35) 1,244 -
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated cash flow statement
2023 2022
For the twelve months ended December 31 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Loss (4) (85)
Depreciation and amortization of property, plant and equipment and intangible 19 13
assets
Depreciation of right-of-use assets 9 8
Gain on disposal of intangible assets - (1)
Share-based payments 22 16
Impact from foreign exchange movements (11) (3)
Settlement of tax on employee awards (22) (10)
Increase in trade receivables (33) (21)
(Increase)/decrease in current and non-current other assets (415) 72
Increase in inventories (21) (25)
Increase/(decrease) in trade and other payables 115 (98)
Increase in provisions and other liabilities(1) 49 197
Cash (used in)/provided by operations (292) 63
Interest paid (32) (24)
Interest received 42 15
Tax refunds 19 -
Taxes paid (52) (57)
Transaction costs related to debt refinancing - (1)
Net cash outflow from operating activities (315) (4)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of assets, net of cash acquired (refer to Note 16) (124) -
Acquisition of business (refer to Note 17) (5) -
Purchase of property, plant and equipment (8) (5)
Purchase of investments (45) (245)
Maturity of investments 129 27
Purchase of intangible asset (45) (1)
Proceeds from disposal of intangible assets - 1
Net cash outflow from investing activities (98) (223)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (12) (3)
Principal elements of lease payments (8) (9)
Lease incentive received 3 -
Shares repurchased and cancelled (33) (90)
Proceeds from the issuance of ordinary shares 4 2
Net cash outflow from financing activities (46) (100)
Exchange difference on cash and cash equivalents 1 (1)
Net decrease in cash and cash equivalents (458) (328)
Cash and cash equivalents at beginning of the period 774 1,102
Cash and cash equivalents at end of the period 316 774
(1)Changes in the line item provisions and other liabilities for FY 2023
include litigation settlement payments totaling $195m (FY 2022: $108m). $3m of
interest paid on the DOJ Resolution in FY 2023 has been recorded in the
interest paid line item (FY 2022: $4m).
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Notes to the unaudited condensed consolidated financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these unaudited
condensed consolidated financial statements ('Condensed Financial
Statements'), reference to the 'Group' means the Company and all its
subsidiaries.
The Condensed Financial Statements are unaudited and do not include all the
information and disclosures required in the annual financial statements.
Therefore the Condensed Financial Statements should be read in conjunction
with the Group's Annual Report and Accounts for the year ended December 31,
2022, which were prepared in accordance with U.K. adopted International
Accounting Standards and in conformity with the Companies Act 2006 as
applicable to companies reporting under those standards. These Condensed
Financial Statements were approved for issue on February 21, 2024.
In May 2023, the International Accounting Standards Board issued International
Tax Reform-Pillar Two Model Rules which amended IAS 12 Income Taxes. Refer to
Note 5 for details.
In March 2023, the Group acquired 100% of the share capital of Opiant
Pharmaceuticals, Inc. ("Opiant") which has been accounted for as an asset
acquisition as substantially all of the fair value of the gross assets
acquired is concentrated in the value of the in-process research and
development. The Group has disclosed new accounting policies in Note 16
regarding the policy elected for treatment of contingent consideration and the
method used to evaluate whether an acquisition is a business combination or
asset acquisition.
Following the effectiveness of the additional U.S. listing of Indivior shares,
presentation of exceptional items and adjusted results has been removed from
the Condensed Financial Statements. This change creates consistency with
presentation of financial statements included in Indivior's SEC registration
statement and better aligns to the market practice for companies with U.S.
listings. The change has been applied to all periods presented.
In preparing these Condensed Financial Statements, the significant judgments
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended December 31, 2022,
except for estimates used in determining the valuation of the in-process
research and development associated with the acquisition of Opiant and
estimates used in determining the fair value of the assets acquired and
liabilities assumed in the acquisition of an aseptic manufacturing facility
(refer to Note 17).
The Directors have assessed the Group's ability to maintain sufficient
liquidity to fund its operations, fulfill financial and compliance obligations
as set out in Note 11, and comply with the minimum liquidity covenant in the
Group's term loan for the period to June 2025 (the going concern period). A
base case model was produced reflecting:
• Board reviewed financial plans for the period; and
• settlement of liabilities and provisions in line with
contractual terms, which are expected to be fully approved by the courts as
agreed.
The Directors also assessed a 'severe but plausible' downside scenario which
included the following key changes to the base case within the going concern
period:
• the risk that SUBLOCADE will not meet revenue growth
expectations by modeling a 10% decline on forecasts;
• an accelerated decline in U.S. SUBOXONE Film net revenue to
generic analogues; and
• a further decline in rest of world sublingual product net
revenues.
Under both the base case and the downside scenario, sufficient liquidity
exists and is generated from operations such that all business and covenant
requirements are met for the going concern period. As a result of the analysis
described above, the Directors reasonably expect the Group to have adequate
resources to continue in operational existence for at least one year from the
approval of these Condensed Financial Statements and therefore consider the
going concern basis to be appropriate for the accounting and preparation of
these Condensed Financial Statements.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended
December 31, 2022, were approved by the Board of Directors on March 7, 2023,
and delivered to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies Act 2006.
2. SEGMENT INFORMATION
The Group is engaged in a single business activity, which is predominantly the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis and allocates
resources on a functional basis between Commercial, Supply, Research and
Development, and other Group functions. Financial results are reviewed on a
consolidated basis for evaluating financial performance and allocating
resources. Accordingly, the Group operates in a single reportable segment.
Net revenue and non-current assets
Revenues are attributed geographically based on the country where the sale
originates. The following tables represent net revenues and non-current
assets, net of accumulated depreciation, amortization and impairment, by
country. Non-current assets for this purpose consist of intangible assets,
property, plant and equipment, right-of-use assets, investments, and other
assets.
Net revenue:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
United States 249 198 912 731
Rest of World 44 43 181 170
Total 293 241 1,093 901
On a disaggregated basis, the Group's net revenue by major product line:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
SUBLOCADE® 176 118 630 408
PERSERIS® 12 8 42 28
Sublingual/other 105 115 421 465
Total 293 241 1,093 901
Non-current assets:
Dec 31, Dec 31,
2023
2022
$m $m
United States 214 65
Rest of World 209 226
Total 423 291
3. OPERATING EXPENSES
The table below sets out selected operating costs and expense information:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Research and development expenses (30) (29) (106) (72)
Selling and marketing expenses (68) (58) (236) (218)
Administrative and general expenses(1) (89) (373) (575) (545)
Selling, general, and administrative expenses (157) (431) (811) (763)
Depreciation, amortization, and impairment(2) (5) (3) (15) (13)
(1) Administrative and general expenses include $240m in FY 2023 related to
increases in legal provisions (FY 2022 and Q4 2022: $296m). Refer to Note 11
for details. The Group also incurred acquisition-related costs of $22m and
$6m, respectively, in FY 2023 and Q4 2023 related to the acquisition of Opiant
and an aseptic manufacturing facility. Refer to Notes 16 and 17 for details.
(2) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in FY 2023 of $13m (FY 2022: $8m) and Q4
2023 of $5m (Q4 2022: $1m) for intangible assets and right-of-use assets is
included within cost of sales.
The increase in research and development expenses is primarily due to greater
activity level related to post-marketing studies for SUBLOCADE, process
validation testing related to LAI (long-acting injectable) capacity expansion
and phasing of ongoing early-stage pipeline activities.
Higher selling, general, and administrative expenses primarily reflect an
increase in legal provisions (refer to Note 11). Other contributing factors
include increased SUBLOCADE commercial investments, the addition of the Opiant
business and subsequent launch expenses for OPVEE, legacy legal defense costs
and cost inflation.
4. NET FINANCE INCOME/(EXPENSE)
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Finance income
Interest income on cash and cash equivalents/investments 10 9 43 18
Other finance income - 1 - 1
Total finance income 10 10 43 19
Finance expense
Interest expense on borrowings (6) (6) (27) (20)
Interest expense on lease liabilities (1) - (3) (2)
Interest expense on legal matters (2) (2) (7) (7)
Other interest expense - - (1) -
Total finance expense (9) (8) (38) (29)
Net finance income/(expense) 1 2 5 (10)
The increases to finance income and finance expense for full year periods were
primarily due to higher interest rates. Investments in corporate debt and U.S.
Treasury securities in 2022 also contributed to the increase in finance
income.
5. TAXATION
In the twelve months ended December 31, 2023, the reported total tax benefit
is $1m (FY 2022 tax benefit: $42m). The effective tax rate in both periods was
impacted by an increase in the U.K. tax rate from 19% in 2022 to 25% on April
1, 2023, (blended rate in 2023 is 23.5%) as well as the absence of U.K.
innovation incentives due to losses in 2022 and 2023. During 2023, the Group
recorded a tax expense of $6m due to limitations on the deduction of executive
compensation by U.S. publicly traded companies, including the write-off of
accumulated deferred tax assets of $5m. The Group recorded a tax expense of
$3m relating to a change in estimate as to the tax benefit of legal provisions
booked in the prior year. The Group benefited from additional R&D credits
in the year of $3m.
The Group's balance sheet at December 31, 2023 includes a current tax
receivable of $nil (FY 2022: $5m), current tax liabilities of $18m (FY 2022:
$9m), and deferred tax assets of $268m (FY 2022: $219m). The increase in
deferred tax assets is primarily due to net operating loss carryforwards in
the U.K. resulting from litigation provisions.
The Group recognizes deferred tax assets to the extent that sufficient future
taxable profits are probable against which these future tax deductions can be
utilized. At December 31, 2023, the Group's net deferred tax assets of $268m
relate primarily to net operating loss carryforwards, inventory costs
capitalized for tax purposes, and litigation liabilities. Recognition of
deferred tax assets is reliant on forecast taxable profits arising in the
jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future net revenues. These
forecasts are subject to similar uncertainties to those assessments. This is
reviewed each quarter and, to the extent required, an adjustment to the
recognized deferred tax asset may be made. With the exception of specific
assets that are not currently considered realizable, Management have concluded
full recognition of deferred tax assets to be appropriate and do not believe a
significant risk of material change in their assessment exists in the next 12
months from the balance sheet date.
Other tax matters
U.S. tax laws limit deductibility of compensation for certain management roles
for U.S. listed companies. With the U.S. listing completed in June 2023, the
Group wrote off deferred tax assets of $5m to tax expense and $7m to equity
relating to future tax deductions of share-based compensation for which book
expense has already been recognized. Additionally, the Group's current tax
liabilities increased by $5m, due to disallowance of current year
compensation.
In June 2023, Finance (No.2) Act 2023 was substantively enacted in the U.K.,
introducing the OECD's Pillar Two model rules and a global minimum effective
tax rate of 15% through implementation of a domestic top-up tax and a
multinational top-up tax. The legislation was also enacted or substantively
enacted in other jurisdictions in which the Group operates. The Pillar Two
legislation will be effective for the Group's financial year beginning January
1, 2024. The Group performed an assessment of the potential exposure to Pillar
Two income taxes. This assessment, which will be monitored prospectively, is
based on modelling of adjusted accounting data for the period ended December
31, 2023. Based on the assessment, the Group believes it qualifies for one of
the transitional safe harbors provided in the rules in all territories in
which it operates. Therefore, the Group does not anticipate a material impact
from Pillar Two legislation in the near future. The Group has applied the
recent amendment to IAS 12 which provides temporary relief to the recognition
of deferred taxes relating to top-up income taxes. Accordingly, the
legislation did not impact the Group's taxes in 2023.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations, and
certain non-recurring costs. Management have concluded tax provisions made to
be appropriate and do not believe a significant risk of material change to
uncertain tax positions exists in the next 12 months from the balance sheet
date. Including matters under audit, an estimate of reasonably possible
additional tax liabilities that could arise in later periods on resolution of
these uncertainties is in the range from $nil to $35m.
6. EARNINGS/(LOSS) PER SHARE
Share consolidation
In September 2022, the Company's shareholders approved a 5-for-1 share
consolidation. In October 2022, the Company completed this share
consolidation. Shareholders received 1 new ordinary share with a nominal value
of $0.50 each for every 5 previously existing ordinary shares which had a
nominal value of $0.10 each.
The table below sets out basic and diluted earnings/(loss) per share for each
period:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $ $ $ $
Basic earnings/(loss) per share $0.39 $(1.34) $0.01 $(0.38)
Diluted earnings/(loss) per share $0.38 $(1.34) $0.01 $(0.38)
Basic
Basic earnings/(loss) per share is calculated by dividing net income/(loss)
for the period attributable to owners of the Group by the weighted average
number of ordinary shares in issue during the period.
Diluted
Diluted earnings/(loss) per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The Group has dilutive potential ordinary
shares in the form of stock options and awards. The weighted average number of
shares is adjusted for the number of shares granted to the extent performance
conditions have been met at the balance sheet date and as determined using the
treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding (on a basic basis)
for FY 2023 includes the favorable impact of 1,897k ordinary shares
repurchased in FY 2023. See Note 15 for further discussion. Conditional awards
of 1,761k and 1,568k (reflective of the share consolidation in October 2022)
were granted under the Group's Long-Term Incentive Plan in FY 2023 and FY
2022, respectively.
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 thousands thousands thousands thousands
Weighted average shares on a basic basis 137,325 136,784 137,306 139,012
Dilution from share awards and options(1) 4,625 - 4,494 -
Weighted average shares on a diluted basis 141,950 136,784 141,800 139,012
(1) As there was a loss in FY 2022 and Q4 2022, the effect of potentially
dilutive shares of 6,605k and 7,164k, respectively, were not dilutive.
7. INTANGIBLE ASSETS
Dec 31, Dec 31,
2023
2022
Intangible assets, net of accumulated amortization and impairment $m $m
Products in development 79 36
Marketed products 150 29
Goodwill 5 -
Software 3 5
Total 237 70
The increase in marketed products is primarily due to the acquisition of
Opiant which resulted in the recognition of an intangible asset related to the
in-process research and development value for OPVEE® (nalmefene nasal spray),
formerly the pipeline product OPNT003, for $126m (refer to Note 16). Upon
approval by the U.S. Food and Drug Administration (FDA) in May 2023, the
intangible asset became classified as a marketed product and amortization
commenced over the patent life.
The increase in products in development is primarily due to the acquisition of
full ownership of INDV-2000 (oral Orexin-1 receptor antagonist) from C4X
Discovery and acquisition of global rights to develop, manufacture, and
commercialize Alar Pharmaceuticals Inc.'s portfolio of buprenorphine-based
ultra long-acting injectables.
Goodwill arose through the acquisition of a business consisting of a
manufacturing facility, workforce, and supply contracts in November 2023
(refer to Note 17).
8. INVESTMENTS
Dec 31, Dec 31,
2023
2022
Current and non-current investments $m $m
Equity securities at FVPL 10 10
Debt securities held at amortized cost 84 109
Total investments, current 94 119
Debt securities held at amortized cost 41 98
Total investments, non-current 41 98
Total 135 217
The Group's investments in debt and equity securities do not create
significant credit risk, liquidity risk, or interest rate risk. Debt
securities held at amortized cost consist of investment-grade debt. As of
December 31, 2023, expected credit losses for the Group's investments held at
amortized cost are deemed to be immaterial.
The decrease in investments is primarily due to reduced investable liquidity
following legal settlement related payments.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at
December 31, 2023.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 10 - - 10
The Group also has certain financial instruments which are not measured at
fair value. The carrying value of cash and cash equivalents, trade
receivables, other assets, and trade and other payables is assumed to
approximate fair value due to their short-term nature. At December 31, 2023,
the carrying value of investments held at amortized cost approximated the fair
value. The fair value of investments held at amortized cost was calculated
based on quoted market prices which would be classified as Level 1 in the fair
value hierarchy above.
9. CURRENT AND NON-CURRENT OTHER ASSETS
Dec 31, Dec 31,
2023
2022
Current and non-current other assets $m $m
Current prepaid expenses 23 14
Other current assets 434 13
Total other current assets 457 27
Non-current prepaid expenses 19 20
Other non-current assets 9 18
Total other non-current assets 28 38
Total 485 65
Other current assets primarily relate to the funding placed in escrow for the
Antitrust MDL (refer to Note 13). At December 31, 2023, this included $385m
for the direct purchaser class settlement, subject to final court approval,
and $30m for the end payor class settlement. During 2023, surety bond holders
returned $19m of collateral (including accrued interest) held within other
non-current assets in relation to intellectual property related matters.
Long-term prepaid expenses primarily relate to payments for contract
manufacturing capacity.
10. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Dec 31, Dec 31,
2023
2022
Term loan $m $m
Term loan - current (3) (3)
Term loan - non-current (236) (237)
Total term loan (239) (240)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $5m (FY 2022: $6m).
At December 31, 2023, the term loan fair value was approximately 100% (FY
2022: 98%) of par value. The key terms of the term loan in effect at
December 31, 2023, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 0.26% + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
The term loan amounting to $244m (FY 2022: $246m) is secured against the
assets of certain subsidiaries of the Group in the form of guarantees issued
by respective subsidiaries.
• Nominal interest margin is calculated as USD SOFR plus 26 bps, subject
to a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
11. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Dec 31, 2023 Current Non-Current Dec 31, 2022
Current and non-current provisions $m $m $m $m $m $m
Multidistrict antitrust class and state claims (385) - (385) (290) - (290)
Onerous contracts (18) (10) (28) - - -
False claims allegations (4) - (4) (5) - (5)
Intellectual property related matters - - - - (3) (3)
Other - (2) (2) (8) (2) (10)
Total provisions (407) (12) (419) (303) (5) (308)
Multidistrict antitrust class and state claims
During 2023, settlement agreements were entered into with all three classes of
plaintiffs in the multidistrict antitrust claims, resulting in the recognition
of an additional $228m charge to the provision. The State settlement amount of
$103m was paid in June 2023 and the $30m end payor settlement amount was
transferred to an escrow account and is reflected in other liabilities. The
current provision of $385m at December 31, 2023 (December 31, 2022: $290m)
reflects the amount that Indivior is required to pay in the settlement
agreements with the direct purchaser class. The direct purchaser settlement
has been preliminarily approved by the Court and remains subject to a notice
period and final approval by the Court. A fairness hearing concerning the
direct purchaser settlement is set for February 27, 2024. Refer to Note 13,
Antitrust Litigation and Consumer Protection for additional details.
Onerous contracts
In November 2023, through an acquisition of a business consisting of a
manufacturing facility, workforce, and supply contracts (refer to Note 17),
the Group assumed onerous contracts and carries a provision of $28m at
December 31, 2023. The facility continues to manufacture products for
customers based on the terms of contracts that existed pre-acquisition and the
expected costs to fulfill these contracts are in excess of the economic
benefits expected to be received. The minimum performance periods in the
onerous contracts end on various dates through September 2025 and the
provision is recorded at its discounted value, using a market rate at the time
of the transaction determined to be 7.6%.
False Claims Act allegations
The Group carries a provision of $4m (FY 2022: $5m) pertaining to all
outstanding False Claims Act allegations as discussed in Note 13. These
matters are expected to be settled within the next 12 months.
Intellectual property related matters
The intellectual property related provision was increased by $12m during 2023
and the resulting provision of $15m was utilized in Q4 following settlement of
these matters.
Other
Other provisions of $2m (FY 2022: $10m) represent retirement benefit costs
which are not expected to be settled within one year. The decrease in the
provision reflects the settlement of general legal matters during 2023.
Other liabilities
Total Total
Current Non-Current Dec 31, 2023 Current Non-Current Dec 31, 2022
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (53) (344) (397) (52) (392) (444)
Multidistrict antitrust class and state claims (30) - (30) - - -
Intellectual property related matters (11) - (11) (10) (11) (21)
RB indemnity settlement (8) (15) (23) (8) (22) (30)
Share repurchase (23) - (23) (9) - (9)
Other - (8) (8) - (3) (3)
Total other liabilities (125) (367) (492) (79) (428) (507)
DOJ Resolution Agreement
In July 2020, the Group settled criminal and civil liability with the United
States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC),
and U.S. state attorneys general. Pursuant to the resolution agreement,
aggregate payments of $210m (including interest) have been made through
December 31, 2023. An additional payment of $53m was paid in January 2024 and
three annual installments of $50m plus interest will be due every January 15
from 2025 to 2027, with the final installment of $200m due in December 2027.
The Group has the option to prepay. Interest accrues at 1.25% on certain
portions of the resolution and will be paid with the annual installment
payments. For non-interest-bearing portions, the liability has been recorded
at the net present value based on timing of the estimated payments using a
discount rate equal to the interest rate on the interest-bearing portions. In
FY 2023, the Group recorded interest expense totaling $6m (FY 2022: $6m).
Multidistrict antitrust class and state claims
As noted above, the multidistrict antitrust claims were resolved during 2023
through settlement agreements entered into with three classes of plaintiffs.
The current liability of $30m at December 31, 2023 reflects the settlement
amount payable to the end payor class. An equivalent amount is held in an
escrow account (refer to Note 9).
IP related matters
Other liabilities for intellectual property related matters of $11m (FY 2022:
$21m) relate to the settlement of litigation with DRL in June 2022. Under the
settlement agreement, the Group has made payments to DRL of $60m to date,
including $10m in 2023, with a final payment due in 2024. This liability has
been recorded at net present value, using a market interest rate at the time
of the settlement determined to be 4.50%, considering the timing of payments
and other factors. In FY 2023, the Group recorded $nil of finance expense (FY
2022: $1m) for time value of money on the liability.
RB indemnity settlement
Under the RB indemnity settlement, the Group has paid $26m of the $50m
settlement agreement through December 31, 2023. An additional $8m was paid in
January 2024, with remaining annual installment payments of $8m due in January
2025 and 2026. The Group carries a liability totaling $23m (FY 2022: $30m)
related to this settlement. This liability has been recorded at the net
present value, using a market interest rate at the time of the settlement
determined to be 3.75%, considering the timing of payments and other factors.
In YTD 2023, the Group recorded $1m of finance expense (YTD 2022: $nil) for
time value of money on the liability.
Share repurchase
In November 2023, the Group commenced a share repurchase program of $100m. As
of December 31, 2023, the liability of $23m represents the amount to be spent
under the program through February 23, 2024, after which date the Company has
the ability to modify or terminate the program. As of December 31, 2022, the
current liability of $9m represented the amount to be spent under a 2022 share
repurchase program through February 16, 2023.
Other
Other liabilities primarily represent employee related liabilities which are
non-current as of December 31, 2023.
12. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where liabilities related to these
matters are determined to be possible, they represent contingent liabilities.
Except for those matters discussed in Note 13 under "Multidistrict antitrust
class and state claims" and "False Claims Act allegations", for which
liabilities or provisions have been recognized, Note 13 sets out the details
for legal and other disputes for which the Group has assessed as contingent
liabilities. Where the Group believes that it is possible to reasonably
estimate a range for the contingent liability this has been disclosed.
13. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in
which the Group is a party, but in which the Group believes the possibility of
an adverse impact is remote and they are not discussed in this Note.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
• Indivior Inc. has entered into settlement agreements to resolve
all claims of all plaintiff groups in the company's previously-disclosed
antitrust multidistrict litigation ("Antitrust MDL"). In the Antitrust MDL,
civil antitrust claims had been filed by three classes of Plaintiffs -namely,
(i) 41 states and the District of Columbia (the "States"), (ii) end payors,
and (iii) direct purchasers (collectively, the "Plaintiffs"). The Plaintiffs
generally alleged, among other things, that Reckitt Benckiser Pharmaceuticals
Inc. ("RBPI," now known as Indivior Inc.) violated U.S. federal and/or state
antitrust and consumer protection laws in attempting to delay generic entry of
alternatives to SUBOXONE Tablets. Plaintiffs further alleged that RBPI
unlawfully acted to lower the market share of these products.
• After engaging in informal settlement discussions and formal
mediation, Indivior Inc. reached a settlement with the States for $103m on
June 1, 2023. Indivior Inc. entered into a settlement agreement with the end
payor class for $30m on August 14, 2023 and received final court approval on
December 5, 2023. On October 22, 2023, Indivior Inc. entered into a settlement
agreement with the remaining direct purchaser class for $385m. The direct
purchaser settlement has been preliminarily approved by the Court and remains
subject to a notice period and final approval by the Court. A fairness hearing
concerning the direct purchaser settlement is set for February 27, 2024.
Other Antitrust and Consumer Protection Claims
• In 2013, RBPI (now known as Indivior Inc.) received notice that
it and other companies were defendants in a lawsuit initiated by writ in the
Philadelphia County (Pennsylvania) Court of Common Pleas. See Carefirst of
Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No. 2875,
December Term 2013. The plaintiffs included approximately 79 entities, most of
which appeared to be insurance companies or other providers of health benefits
plans. The Carefirst plaintiffs' claims were resolved in connection with final
approval of the end payor settlement in the Antitrust MDL, and the Carefirst
action accordingly was dismissed on February 14, 2024.
• Humana, Inc. filed a Complaint in state court in Kentucky on
August 20, 2021 with substantially the same claims as were raised in the
Antitrust MDL. See Humana Inc. v. Indivior Inc., No. 21-CI-004833 (Ky. Cir.
Ct.) (Jefferson Cnty). The court lifted a stay on October 30, 2023. Centene
Corporation, Wellcare Healthcare Plans, Inc., New York Quality Healthcare
Corp. (d/b/a Fidelis Care), and Health Net, LLC filed a complaint in the
Circuit Court for the County of Roanoke, Virginia alleging similar claims on
January 13, 2023. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va.
Cir. Ct.) (Roanoke Cnty). Indivior demurred to the complaint and asserted
pleas in bar in early February 2024.
• Cases filed by (1) Blue Cross and Blue Shield of Massachusetts,
Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health
Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health
Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota)
and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6)
Aetna Inc. were filed in the Circuit Court for the County of Roanoke,
Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead
Case) (Va. Cir. Ct.) (Roanoke Cnty). In July 2023, Indivior Inc. and BCBSM,
Inc. and HMO Minnesota agreed to mutual releases and settlement. The remaining
plaintiffs asserted claims under federal and state RICO statutes, state
antitrust statutes, state statutes prohibiting unfair and deceptive practices,
state statutes prohibiting insurance fraud, and common law fraud, negligent
misrepresentation, and unjust enrichment. The Group filed demurrers, which the
court sustained in part and overruled in part. Separately, Indivior Inc. filed
counterclaims against several plaintiffs alleging violations of certain
insurance fraud statutes. The plaintiffs demurred. The court overruled HCSC's
demurrer but sustained the demurrers of the remaining plaintiffs named in
Indivior Inc.'s counterclaims. A jury trial on the Group's pleas in bar to the
remaining plaintiffs' fraud claims was held on October 30 - November 3, 2023.
The jury rendered a verdict finding that the plaintiffs' fraud claims are not
barred by the statute of limitations. A jury trial on the merits has been set
for July 15, 2024 - August 8, 2024.
• The Group is still in the process of evaluating the claims,
believes it has meritorious defenses, and intends to defend itself. No
estimate of the range of potential loss can be made at this time.
Civil Opioid Litigation
• The Group has been named as a defendant in more than 400 civil
lawsuits alleging that manufacturers, distributors, and retailers of opioids
engaged in a longstanding practice to market opioids as safe and effective for
the treatment of long-term chronic pain to increase the market for opioids and
their own market shares for opioids, or alleging individual personal injury
claims. Most of these cases have been consolidated and are pending in a
federal multidistrict litigation ("the Opioid MDL") in the U.S. District Court
for the Northern District of Ohio. See In re National Prescription Opiate
Litigation, MDL No. 2804 (N.D. Ohio). Nearly two-thirds of the cases in the
Opioid MDL were filed by cities and counties, while nearly one-third of the
cases were filed by individual plaintiffs, most of whom assert claims relating
to neonatal abstinence syndrome ("NAS"). Litigation against the Group in the
Opioid MDL is stayed. Motions to remand have been denied or withdrawn in more
than 50 cases to which the Group is a party (among numerous other defendants).
Motions to remand remain pending in additional cases to which the Group is a
party.
• The court in the Opioid MDL has indicated that it does not
expect to set additional bellwether trials involving county and municipality
plaintiffs, provided that the parties are progressing on a settlement track.
By order dated October 25, 2023, the Court selected four third-party payor
(TPP) cases for bellwether trials. Indivior is not named as a defendant in any
of the four TPP cases selected for bellwether trials.
• The court in the Opioid MDL has indicated that it does not
intend to set additional bellwether trials for Tier 2 and Tier 3 manufacturer
and distributor defendants, provided that those defendants remain actively
engaged in mediation. The plaintiffs' executive committee indicated that it
may seek leave to amend complaints to name additional defendants based on
ARCOS data concerning opioid products. The court held a status conference on
February 14, 2024, but did not rule on whether such amendment will be
permitted.
• Regarding civil opioid cases not in the Opioid MDL:
◦ In 2017, Indivior Inc. was named as one of numerous defendants
in International Brotherhood of Electrical Workers Local 728 Family Healthcare
Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That case
was consolidated with Lead Case No. 2017-008095 in Delaware County and stayed.
The court held a hearing on September 29, 2023 regarding the status of
settlement discussions and other issues in various groups of cases in the
consolidated action. On December 29, 2023, the court issued an order remanding
all third-party payor cases, including the case involving Indivior, back to
the Philadelphia Court of Common Pleas. By agreement of the parties,
objections to the complaints are due on February 26, 2024, or one week after
the remand order is docketed, whichever is later.
◦ Indivior also was named as one of numerous defendants in
various other federal and state court cases that are not in the Opioid MDL and
were brought by municipalities. These cases include, for example, 35 actions
filed in New York state court that were removed to federal court, as well as
cases filed in federal district courts sitting in Alabama, Florida, and
Georgia. The plaintiffs filed motions to remand the New York cases, which
remain pending. The plaintiffs in the case filed in the Northern District of
Alabama have voluntarily dismissed their complaint, subject to certain tolling
agreements. The various other federal actions currently are stayed, and
Indivior is not yet required to substantively respond to the complaints.
◦ Indivior Inc. was named as a defendant in five individual
complaints filed in West Virginia state court that were transferred to West
Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000
NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior
Inc.'s cases in the WV MLP Action involved claims related to NAS. Indivior
Inc. moved to dismiss all five complaints on January 30, 2023. By order dated
April 17, 2023, the court granted Indivior's motions to dismiss. The
plaintiffs filed a notice of appeal on June 30, 2023. Appellate briefing in
the cases involving Indivior has been stayed.
• Given the status and preliminary stage of litigation in both the
Opioid MDL and the separate federal and state court actions, no estimate of
possible loss in the opioid litigation can be made at this time.
False Claims Act Allegations
• In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group filed a Motion to Dismiss in June 2021, which was granted
in part and denied in part on October 17, 2023. The relator filed a sixth
amended complaint against only Indivior Inc. on December 7, 2023. Indivior's
deadline to respond to the sixth amended complaint is March 18, 2024.
• In May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District of New
York, seeking records relating to the SUBOXONE Film manufacturing process. The
Group provided the USAO certain information regarding allegations that the
government received regarding SUBOXONE Film. There has been no communication
regarding this matter with the USAO since 2022.
U.K. Shareholder Claims
• On September 21, 2022, certain shareholders issued
representative and multiparty claims against Indivior PLC in the High Court of
Justice for the Business and Property Courts of England and Wales, King's
Bench Division. On January 16, 2023, the representative served its Particular
of Claims setting forth in more detail the claims against the Group, while the
same law firm that represents the representative also sent its draft
Particular of Claims for the multiparty action. The claims made in both the
representative and multiparty actions generally allege that Indivior PLC
violated the U.K. Financial Services and Markets Act 2000 ("FSMA 2000") by
making false or misleading statements or material omissions in public
disclosures, including the 2014 Demerger Prospectus, regarding an alleged
product-hopping scheme regarding the switch from SUBOXONE Tablets to SUBOXONE
Film. Indivior PLC filed an application to strike out the representative
action. On December 5, 2023, the court handed down a judgment allowing the
Group's application to strike out the representative action. The court
subsequently awarded certain costs to the Group. On January 23, 2024, the
claimants requested permission to appeal the decision to the court of appeals.
• The Group has begun its evaluation of the claims, believes it
has meritorious defenses, and intends to vigorously defend itself. Given the
status and preliminary stage of the litigation, no estimate of possible loss
can be made at this time.
Tooth Damage Allegations
• The Group has been named as a defendant in more than 30 lawsuits
that have been consolidated into a multidistrict litigation in the Northern
District of Ohio. See In Re Suboxone (Buprenorphine/Naloxone) Film Products
Liability Litigation, MDL No. 3092 (N.D. Oh.). The plaintiffs generally allege
that the Group failed to properly warn physicians of the risk of dental
injury, and further allege that SUBOXONE products were defectively designed.
The plaintiffs generally seek compensatory damages, as well as punitive
damages and attorneys' fees and costs. On February 2, 2024, the Judicial Panel
on Multidistrict Litigation entered an order establishing multidistrict
litigation proceedings in the United States District Court for the Northern
District of Ohio. Product liability cases such as these typically involve
issues relating to medical causation, label warnings and reliance on those
warnings, scientific evidence and findings, actual, provable injury and other
matters. These cases are in their preliminary stages. The Group is evaluating
the claims and its defenses, believes it has meritorious defenses, and intends
to defend itself. No estimate of the range of potential loss can be made at
this time. These lawsuits follow a June 2022 required revision to the
Prescribing Information and Patient Medication Guide about dental problems
reported in connection with buprenorphine medicines dissolved in the mouth to
treat opioid use disorder. This revision was required by the FDA of all
manufacturers of these products.
14. TRADE AND OTHER PAYABLES
Dec 31, Dec 31,
2023
2022
$m $m
Accrual for rebates, discounts and returns (507) (428)
Accounts payable (65) (36)
Accruals and other payables (152) (138)
Other tax and social security payable (19) (15)
Total trade and other payables (743) (617)
15. SHARE CAPITAL
Equity ordinary shares (thousands) Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2023 136,481 $0.50 68
Ordinary shares issued 1,942 $0.50 1
Shares repurchased and cancelled (1,897) $0.50 (1)
At December 31, 2023 136,526 68
Equity ordinary shares (thousands) Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2022 702,440 $0.10 70
Ordinary shares issued 4,185 $0.10 1
Shares repurchased and cancelled (17,815) $0.10 (2)
Share consolidation (551,048)
Shares repurchased and cancelled (post share consolidation) (1,281) $0.50 (1)
At December 31, 2022 136,481 68
Ordinary shares issued
During the period, 1,942k ordinary shares at $0.50 each (FY 2022: 4,185k at
$0.10 each) were issued to satisfy vesting/exercises under the Group's
Long-Term Incentive Plan, the Indivior U.K. Savings-Related Share Option
Scheme, and the U.S. Employee Stock Purchase Plan. In FY 2023, net settlement
of tax on employee equity awards was $22m (FY 2022: $10m).
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders
received 1 new ordinary share with a nominal value of $0.50 each for every 5
previously existing ordinary shares which had a nominal value of $0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 39,699k of ordinary
shares, (equivalent shares post consolidation: 7,940k) which concluded on
February 28, 2023. Over the duration of the program, 17,559k of the Company's
ordinary shares at $0.10 per share (equivalent shares post consolidation:
3,512k) and 1,765k at $0.50 per share were repurchased and cancelled.
On November 17, 2023, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 13,632k of ordinary
shares and ending no later than August 30, 2024. Under this program, 1,413k
ordinary shares were repurchased at $0.50 per share through December 31, 2023.
During the period, the Group repurchased and cancelled a total of 1,897k
ordinary shares at $0.50 per share for an aggregate nominal value of $1m. In
FY 2022, 17,815k ordinary shares at $0.10 (equivalent shares post
consolidation: 3,563k) were repurchased and cancelled for an aggregate nominal
value of $2m, including 256k ordinary shares purchased as part of the Group's
share repurchase program executed in 2021 and cancelled in January 2022. In FY
2022, subsequent to the share consolidation, the Group repurchased and
cancelled 1,281k ordinary shares for an aggregate nominal value of $1m ($0.50
per share).
All ordinary shares repurchased during the period under share repurchase
programs were cancelled (except for 68k shares that were cancelled in January
2024) resulting in a transfer of the aggregate nominal value to a capital
redemption reserve. The total cost of the purchases made under the share
repurchase programs during the period, including directly attributable
transaction costs, was $33m (FY 2022: $90m). A net repurchase amount of $23m
has been recorded as a financial liability and reduction of retained earnings
which represents the amount to be spent under the program through February 23,
2024, after which date the Company has the ability to modify or terminate the
program. Total purchases under the share repurchase program will be made out
of distributable profits.
16. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant,
which at the time was a publicly traded company in the United States, for
upfront cash consideration of $146m and an additional amount to be potentially
paid upon achievement of net sales milestones. Opiant was a specialty
pharmaceutical company focusing on developing drugs for addictions and drug
overdose. As a result of the acquisition, the Group added OPVEE (nalmefene
nasal spray), formerly the pipeline product OPNT003, an opioid overdose
treatment well-suited to confront illicit synthetic opioids like fentanyl, to
its addiction science portfolio. OPVEE was approved by the FDA in May 2023 and
launched in October 2023.
Management elected to apply the optional concentration test under IFRS 3. For
the acquisition of Opiant, substantially all of the fair value of the gross
assets acquired was concentrated in the in-process research and development
associated with OPVEE. As substantially all of the fair value of the gross
assets acquired (excluding cash and cash equivalents, deferred tax assets, and
goodwill resulting from the effects of deferred tax liabilities) were
concentrated in a single asset, the Group accounted for the transaction as an
asset acquisition. With the closing of this transaction, a relative fair value
approach was taken for allocating the purchase consideration to the acquired
assets and liabilities with no goodwill recognized. The Group recorded an
intangible asset associated with OPVEE for $126m (refer to Note 7). The Group
used a multi-period excess earnings method, a form of the income approach, to
determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of
$8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group
will pay $2.00 per CVR for each of the following net revenue thresholds
achieved by OPNT003, during any period of four consecutive quarters prior to
the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m
and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003
achieves net revenue of $250m during any period of four consecutive quarters
prior to the third anniversary of the U.S. commercial launch. The potential
undiscounted payout of contingent consideration ranges from $nil to $68m based
on the achievement of the milestones. The Group accounts for contingent
consideration associated with asset acquisitions using a cost accumulation
model. No liabilities are initially recognized at the date of acquisition.
When an obligation associated with a variable payment is no longer uncertain,
it is capitalized as part of the cost of the asset, as it represents a direct
cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired
whereby only certain items are recognized with the transaction, such as net
operating loss carryforwards, other tax carryforwards, and tax credits. Such
attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition was $124m, net of cash acquired. Direct
transaction costs of $10m are included in this cash outflow and capitalized as
a component of the total cost of the asset acquisition. Of the $146m upfront
consideration, $2m represents acceleration of vesting of employee share
compensation and has been recognized as a post-combination expense. As part of
the acquisition, the Group assumed outstanding debt of $10m which was settled
and included as a cash outflow from financing activities.
Additional acquisition-related costs of $16m were incurred in YTD 2023 and
included in selling, general, and administrative expenses, primarily relating
to severance, acceleration of vesting of Opiant employee share compensation,
and short-term retention accruals.
The following table summarizes the net assets acquired:
Net assets acquired $m
Cash and cash equivalents 30
Inventories 3
Right-of-use assets 2
Intangible assets 126
Deferred tax assets 9
Other assets 6
Trade and other payables (10)
Lease liabilities (2)
Borrowings (10)
Total net assets acquired 154
17. BUSINESS COMBINATION
On November 1, 2023, the Group acquired an aseptic manufacturing facility (the
"Facility") in the United States for upfront consideration of $5m in cash and
assumption of certain contract manufacturing obligations. The Facility will be
further developed to secure the long-term production and supply of SUBLOCADE
and PERSERIS.
The acquisition has been accounted for as a business combination using the
acquisition method of accounting in accordance with IFRS 3 Business
Combinations. The assets acquired and liabilities assumed were recorded at
fair value, with the excess of the purchase price over the fair value of the
identifiable assets and liabilities recognized as $5m of goodwill. An onerous
contract provision was recorded at fair value to reflect the present value of
the expected losses from assumed contractual manufacturing obligations. Net
operating losses attributable to these contractual obligations will be
recorded against the onerous contract provision from the date of acquisition
through fulfillment of the contracts in late 2025.
For the period from November 1, 2023 through December 31, 2023, the Facility's
contribution to the Group's revenue and net loss were immaterial.
Substantially all of the Facility's costs were recorded against the onerous
contract provision.
Acquisition-related costs
The Group incurred acquisition-related costs of $6m for advisory, legal, and
other professional fees. These costs have been included in selling, general
and administrative expenses in the consolidated income statement.
Identifiable assets acquired and liabilities assumed
The following table summarizes the provisional fair value of assets acquired
and liabilities assumed at the date of acquisition:
Net assets acquired $m
Property, plant and equipment 28
Deferred tax assets 2
Trade and other payables (1)
Provisions (29)
Total net assets acquired -
Goodwill
Goodwill arising from the acquisition has been recognized as follows:
$m
Consideration transferred 5
Fair value of net assets acquired -
Goodwill 5
The goodwill is primarily attributable to Indivior-specific synergies relating
to accelerated in-sourcing of SUBLOCADE production and the skills and
technical talent of the Facility's workforce. None of the goodwill recognized
is expected to be deductible for tax purposes.
As the acquisition was completed in late 2023, the Group expects to finalize
the purchase accounting as soon as possible but no later than one year from
the acquisition date.
APPENDIX: ADJUSTED RESULTS
Exceptional items and other adjustments
Exceptional items and other adjustments represent significant expenses or
income that do not reflect the Group's ongoing operations or the adjustment of
which may help with the comparison to prior periods. Exceptional items and
other adjustments are excluded from adjusted results consistent with the
internal reporting provided to management and the Directors. Examples of such
items could include income or restructuring and related expenses from the
reconfiguration of the Group's activities and/or capital structure,
amortization of acquired intangible assets, impairment of current and
non-current assets, gains and losses from the sale of intangible assets,
certain costs arising as a result of significant and non-recurring regulatory
and litigation matters, and certain tax related matters.
Adjusted results are not measures defined by IFRS and are not a substitute
for, or superior to, reported results presented in accordance with IFRS.
Adjusted results as presented by the Group are not necessarily comparable to
similarly titled measures used by other companies. As a result, these
performance measures should not be considered in isolation from, or as a
substitute analysis for, the Group's reported results presented in accordance
with IFRS. Management performs a quantitative and qualitative assessment to
determine if an item should be considered for adjustment. The table below sets
out exceptional items and other adjustments recorded in each period:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Exceptional items and other adjustments within cost of sales
Amortization of acquired intangible assets(1) (3) - (8) -
Total exceptional items and other adjustments within cost of sales (3) - (8) -
Exceptional items and other adjustments within SG&A
Legal costs/provision(2) - (296) (240) (296)
Acquisition-related costs(3) (6) - (22) -
U.S. listing costs(4) - (2) (6) (6)
Total exceptional items and other adjustments within SG&A (6) (298) (268) (302)
Exceptional items and other adjustments within net other operating income
Income recognized in relation to a supply agreement(5) 3 - 3 -
Insurance reimbursement(6) - - - 5
Total exceptional items and other adjustments within net other operating 3 - 3 5
income
Total exceptional items and other adjustments before taxes (6) (298) (273) (297)
Tax on exceptional items and other adjustments 2 58 63 57
Exceptional tax items(7) (3) 18 (11) 18
Total exceptional items and other adjustments (7) (222) (221) (222)
1. With the acquisition of Opiant and approval of OPVEE, the
Group reported adjusted cost of sales to exclude amortization of acquired
intangible assets on a prospective basis from Q2 2023. Prior period adjusted
results have not been restated as the impact is not material.
2. In Q4 2022, the Group recognized a provision for $290m
related to certain multidistrict antitrust class and state claims. In FY 2023,
the Group increased this provision by $228m. Refer to Note 13, Legal
Proceedings, for further details. Additionally, the Group increased a
provision for IP related matters by $12m in FY 2023 and recognized a provision
of $6m to settle a dispute over reimbursement of legal costs with a supplier
in FY 2022.
3. In FY 2023 and Q4 2023, the Group recognized $6m of
exceptional costs related to the acquisition of a business consisting of a
manufacturing facility, workforce, and supply contracts (refer to Note 17).
The Group also recognized $16m of exceptional costs related to the acquisition
of Opiant in FY 2023 (refer to Note 16).
4. In FY 2023, the Group recognized $6m of exceptional costs in
preparation for an additional listing of Indivior shares on a major U.S.
exchange (FY 2022 and Q4 2022: $6m and $2m).
5. In FY 2023 and Q4 2023, the Group recognized $3m of
exceptional income related to a supply agreement where no further obligations
are outstanding for the Group to deliver.
6. The Group recognized $5m of exceptional income in FY 2022
related to the proceeds received from a Directors' & Officers' insurance
reimbursement claim.
7. Exceptional tax items are comprised of $5m write off of
deferred tax assets and tax expense due to limitation on the deduction of
executive compensation by U.S. publicly traded companies, $3m change in
estimate as to the tax benefit of legal provisions booked in the prior year,
and $3m accrual for adjustments to Opiant predecessor period taxes.
Adjusted results
Management provides certain adjusted financial measures which may be useful to
investors. These adjusted financial measures exclude items which do not
reflect the Group's day-to-day operations and therefore may help with
comparisons to prior periods or among companies. Management may use these
financial measures to better understand trends in the business.
The tables below present the adjustments between reported and adjusted results
for both Q4/FY 2023 and Q4/FY 2022.
Reconciliation of gross profit to adjusted gross profit
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Gross profit 241 198 907 742
Exceptional items and other adjustments in cost of sales 3 - 8 -
Adjusted gross profit 244 198 915 742
We define adjusted gross margin as adjusted gross profit divided by net
revenue.
Reconciliation of selling, general and administrative expenses to adjusted
selling, general and administrative expenses
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Selling, general and administrative expenses (157) (431) (811) (763)
Exceptional items and other adjustments in selling, general and administrative 6 298 268 302
expenses
Adjusted selling, general and administrative expenses (151) (133) (543) (461)
Reconciliation of operating profit/(loss) to adjusted operating profit
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Operating profit/(loss) 60 (258) (4) (85)
Exceptional items and other adjustments in cost of sales 3 - 8 -
Exceptional items and other adjustments in selling, general and administrative 6 298 268 302
expenses
Exceptional items and other adjustments in net other operating income (3) - (3) (5)
Adjusted operating profit 66 40 269 212
Reconciliation of profit/(loss) before taxation to adjusted profit before
taxation
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Profit/(loss) before taxation 61 (256) 1 (95)
Exceptional items and other adjustments in cost of sales 3 - 8 -
Exceptional items and other adjustments in selling, general and administrative 6 298 268 302
expenses
Exceptional items and other adjustments in net other operating income (3) - (3) (5)
Adjusted profit before taxation 67 42 274 202
Reconciliation of tax (expense)/benefit to adjusted tax expense
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Tax (expense)/benefit (7) 73 1 42
Tax on exceptional items and other adjustments (2) (58) (63) (57)
Exceptional tax items 3 (18) 11 (18)
Adjusted tax expense (6) (3) (51) (33)
Reconciliation of net income/(loss) to adjusted net income
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 $m $m $m $m
Net income/(loss) 54 (183) 2 (53)
Exceptional items and other adjustments in cost of sales 3 - 8 -
Exceptional items and other adjustments in selling, general and administrative 6 298 268 302
expenses
Exceptional items and other adjustments in net other operating income (3) - (3) (5)
Tax on exceptional items and other adjustments (2) (58) (63) (57)
Exceptional tax items 3 (18) 11 (18)
Adjusted net income 61 39 223 169
Adjusted diluted earnings per share
Management believes that diluted earnings/(loss) per share, adjusted for the
impact of exceptional items and other adjustments after the appropriate tax
amount, may provide meaningful information on underlying trends to
shareholders in respect of earnings per ordinary share. A reconciliation of
net income/(loss) to adjusted net income is included above.
Weighted average shares used in computing diluted earnings/(loss) per share is
reconciled to weighted average shares used in computing adjusted diluted
earnings per share below:
Q4 Q4 FY FY
2023 2022 2023 2022
For the three and twelve months ended December 31 thousands thousands thousands thousands
Weighted average shares used in computing diluted earnings/(loss) per share 141,950 136,784 141,800 139,012
Potentially dilutive share excluded, because effect was anti-dilutive - 7,164 - 6,605
Weighted average shares used in computing adjusted diluted earnings per share 141,950 143,948 141,800 145,617
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