Restructuring, Business Transformation and Other Cost Saving Initiatives

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring, Business Transformation and Other Cost Saving Initiatives

2022 Cost Saving Initiatives

In December 2021 and May 2022 we announced our plans to implement a series of cost-reduction measures during 2022. These savings are being achieved through a number of initiatives, including reductions to our workforce, the substantial elimination of our commercial ADUHELM infrastructure, the consolidation of certain real estate locations and operating efficiencies across our selling, general and administrative and research and development functions.

Under these initiatives, we estimate we will incur total restructuring charges of approximately $135.0 million, primarily related to severance. These amounts were substantially incurred during 2022. As of March 31, 2023, $28.0 million remained in our restructuring reserve and payments are expected to be made through 2026.

For the three months ended March 31, 2023 and 2022, we recognized $9.6 million and $38.1 million, respectively, of net pre-tax restructuring charges, of which approximately $7.1 million and $27.7 million, respectively, consisted of employee severance costs. These costs were recorded in restructuring charges in our condensed consolidated statements of income. Our restructuring reserve is included in accrued expense and other in our condensed consolidated balance sheets.

In September 2022 we entered into an agreement to partially terminate a portion of our lease located at 300 Binney Street, as well as to reduce the lease term for the majority of the remaining space. This resulted in a gain of approximately $5.3 million, which was recorded within restructuring charges in our condensed consolidated statements of income during the third quarter of 2022. For additional information on our 300 Binney Street lease modification, please read Note 12, Leases, to our consolidated financial statements included in our 2022 Form 10-K.

Following an evaluation of our current capacity needs, in March 2022 we ceased using a patient services office space in Durham, North Carolina. Our decision to cease use of the facility resulted in the immediate expense of certain leasehold improvements and other assets at this facility. As a result, we recognized approximately $10.4 million of accelerated depreciation expense, which was recorded in restructuring charges in our condensed consolidated statements of income for the three months ended March 31, 2022. In May 2022 we entered into a lease assignment agreement whereby we assigned our remaining lease obligations to an external third party. As a result of the lease assignment, we derecognized the related operating lease obligation and right-of-use asset during the second quarter of 2022.

For the three months ended March 31, 2023, we recognized other restructuring costs of approximately $2.5 million, which were recorded in restructuring charges in our condensed consolidated statements of income. Other restructuring costs include items such as facility closure costs, employee non-severance expense, asset write-offs and other costs.

Charges and spending related to our workforce reductions is summarized as follows:

	For the Three Months Ended March 31,
(In millions)	2023			2022
Restructuring reserve as of December 31	$	35.9		$	—
Expense	7.1			27.7
Payment	(15.6)			(6.2)
Foreign currency and other adjustments	0.6			—
Restructuring reserve as of March 31	$	28.0	—	$	21.5