Quarterly Financial Data (unaudited)

The following table sets forth the Company’s quarterly financial data for the two years ended December 31, 2018.



	Three Months Ended
	March 31, 2018			June 30, 2018			September 30, 2018			December 31, 2018
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	637,729		$	749,912		$	782,511		$	868,173
Collaborative and royalty revenues	3,070			2,245			2,024			1,933
Total revenues	640,799			752,157			784,535			870,106
Costs and expenses:
Cost of sales	71,613			104,382			111,255			122,289
Research and development expenses (1)	310,553			337,532			330,510			437,881
Sales, general and administrative expenses	129,808			137,303			137,295			153,210
Restructuring (income) expenses	(76		)	62			(174		)	4
Intangible asset impairment charge (2)	—			—			—			29,000
Total costs and expenses	511,898			579,279			578,886			742,384
Income from operations	128,901			172,878			205,649			127,722
Interest expense, net	(11,097		)	(10,106		)	(8,143		)	(4,773		)
Other income (expense), net (3)	96,838			53,819			(60,995		)	(90,452		)
Income before (benefit from) provision for income taxes	214,642			216,591			136,511			32,497
(Benefit from) provision for income taxes (4)	(12,659		)	10,341			8,055			(1,492,599		)
Net income	227,301			206,250			128,456			1,525,096
(Income) loss attributable to noncontrolling interest	(17,038		)	1,110			290			25,431
Net income attributable to Vertex	$	210,263		$	207,360		$	128,746		$	1,550,527

Amounts per share attributable to Vertex common shareholders:
Net income:
Basic	$	0.83		$	0.82		$	0.51		$	6.08
Diluted	$	0.81		$	0.80		$	0.50		$	5.97
Shares used in per share calculations:
Basic	253,231			254,135			254,905			254,868
Diluted	258,526			258,584			259,788			259,812



	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	480,622		$	513,988		$	549,642		$	621,228
Collaborative and royalty revenues (5)	234,096			30,147			28,523			30,406
Total revenues	714,718			544,135			578,165			651,634
Costs and expenses:
Cost of sales	46,988			71,205			72,874			84,052
Research and development expenses (6)	273,563			289,451			454,947			306,664
Sales, general and administrative expenses	113,326			127,249			120,710			134,794
Restructuring expenses	9,999			3,523			337			387
Intangible asset impairment charge (7)	—			—			255,340			—
Total costs and expenses	443,876			491,428			904,208			525,897
Income (loss) from operations	270,842			52,707			(326,043		)	125,737
Interest expense, net	(16,765		)	(14,664		)	(13,574		)	(12,547		)
Other expense, net (7)	(544		)	(2,537		)	(77,553		)	(748		)
Income (loss) before provision for (benefit from) income taxes	253,533			35,506			(417,170		)	112,442
Provision for (benefit from) income taxes (7)	3,985			4,337			(125,903		)	10,257
Net income (loss)	249,548			31,169			(291,267		)	102,185
(Income) loss attributable to noncontrolling interest (7)	(1,792		)	(13,173		)	188,315			(1,501		)
Net income (loss) attributable to Vertex	$	247,756		$	17,996		$	(102,952	)	$	100,684

Amounts per share attributable to Vertex common shareholders:
Net income (loss):
Basic	$	1.01		$	0.07		$	(0.41	)	$	0.40
Diluted	$	0.99		$	0.07		$	(0.41	)	$	0.39
Shares used in per share calculations:
Basic	246,024			247,521			250,268			251,557
Diluted	248,700			251,635			250,268			256,804


1.	In the fourth quarter of 2018, the Company incurred research and development expenses of $95.0 million to related license agreements with Merck KGaA, Darmstadt, Germany, and Arbor. See Note B, “Collaborative Arrangements and Acquisitions.”


2.	In the fourth quarter of 2018, the Company recorded a $29.0 million intangible asset impairment charge related to its VX-210 indefinite-lived in-process research and development asset. See Note J, “Intangible Assets and Goodwill.”


3.	In 2018, other income (expense), net was primarily related to changes in the fair value of the Company’s equity investment in CRISPR. See Note E, “Marketable Securities and Equity Investments.”


4.	In the fourth quarter of 2018, the Company released the valuation allowance on the majority of its net operating losses and other deferred tax assets as of December 31, 2018 resulting in a benefit from income taxes of $1.56 billion. See Note O, “Income Taxes.”

In the first quarter of 2017, the Company recognized $230.0 million of collaborative revenues related to an upfront payment from Merck KGaA, Darmstadt, Germany, pursuant to a collaboration. In each of the second and third quarters of 2017, the Company recognized $20.0 million of collaborative revenues related to payments that Parion, which was a variable interest entity during these periods, received from Shire pursuant to a license agreement. In the fourth quarter of 2017, the Company recognized $25.0 million of collaborative revenues related to a milestone achieved pursuant to its license agreement with Janssen pursuant to which Janssen is developing pimodivir for the treatment of influenza. See Note B, “Collaborative Arrangements and Acquisitions.”


6.	In the third quarter of 2017, the Company incurred research and development expenses of $160.0 million to acquire certain CF assets including VX-561 from Concert. See Note B, “Collaborative Arrangements and Acquisitions.”

In the third quarter of 2017, the Company recorded a $255.3 million intangible asset impairment charge related to Parion’s pulmonary ENaC platform indefinite-lived in-process research and development asset, a decrease in the fair value of the contingent payments payable by the Company to Parion of $69.6 million and benefit from income taxes of $126.2 million resulting from these charges. These charges and benefit from income taxes were attributable to noncontrolling interest. See Note B, “Collaborative Arrangements and Acquisitions,” and Note J, “Intangible Assets and Goodwill.”