Jazz Pharmaceuticals plc JAZZ reported first-quarter 2016 earnings of $1.87 per share, up 12.7% from the year-ago period and significantly above the Zacks Consensus Estimate of $1.31.Total revenues in the reported quarter increased 8.6% year over year to $336 million, mainly driven by strong sales of Xyrem. Revenues, however, fell short of the Zacks Consensus Estimate of $339.9 million.The Quarter in DetailIn the reported quarter, Xyrem sales increased 17.3% to $249.5 million. Jazz stated that during the quarter 12,775 patients were on Xyrem.Sales reps continue to educate healthcare providers on narcolepsy and the use of Xyrem with a focus on physicians with high narcolepsy potential and low Xyrem utilization. The company’s narcolepsy market expansion efforts include consumer facing web-based disease education to increase the awareness and diagnosis of narcolepsy in the U.S., as well as physician directed disease education.Xyrem is currently facing patent challenges from several companies – Jazz said that it has settled with two (Wockhardt Bio AG and Ranbaxy) of the seven ANDA filers. Under the settlement agreements, these two companies have been given licenses to manufacture, market and sell generic versions of Xyrem on or after Dec 31, 2025, or earlier in certain circumstances.Erwinaze/Erwinase generated revenues of $51.2 million, up 2% year over year. Jazz said that due to constrained manufacturing capacity, it has been facing issues in building sufficient inventory levels that can be used to absorb supply disruption. The company faced supply challenges in the reported quarter that temporarily affected its ability to supply certain markets. Jazz expects further disruptions in its ability to supply certain markets including the U.S., in the current and future quarters.Prialt revenues were $6.2 million, a decrease of 8.2% from the year-ago period. Meanwhile, psychiatry product sales decreased 22.9% to $7 million.The company recorded Defitelio sales of $17.9 million in the first quarter of 2016, up 3% year over year. Defitelio gained FDA approval in late Mar 2016 and product shipment in the U.S. commenced early in April.Jazz's adjusted selling, general and administrative (SG&A) expenses during the quarter increased 7.9% to $102.6 million reflecting higher headcount and other expenses resulting from the expansion of the company's business.Adjusted research and development (R&D) expenses during the quarter increased 18% to $27.9 million, mainly due to higher pipeline development costs and outside services for the development of JZP-110 and line extensions for existing products.Jazz continues enrolling patients in phase III safety and efficacy studies on JZP-110 for the treatment of excessive daytime sleepiness in patients suffering from narcolepsy or obstructive sleep apnea (OSA). Preliminary efficacy data should be out at the end of 2016. Positive data from these studies would allow the company to file for approval in the second half of 2017.Updates 2016 EPS GuidanceJazz now expects earnings in the range of $11.10 - $11.50 per share, up from the previous guidance of $10.90 - $11.30 per share reflecting a lower share count. During the first quarter of 2016, the company spent $134 million on share buybacks and has about $125 million left under its $300 million share repurchase program.Jazz continues to expect revenues in the range of $1,490–$1,550 million. The Zacks Consensus Estimate is currently $1.53 billion. Total net product sales are expected in the range of $1,482–$1,542 million.Xyrem sales are expected in the range of $1,095–$1,130 million. Erwinaze/Erwinase sales guidance is in the range of $200–$225 million. Defitelio is expected to generate revenues of $100–$125 million including U.S. sales of about $20 million - $35 million.Meanwhile, the company expects adjusted SG&A and R&D expenses in the range of $390–$410 million and $115–$130 million, respectively.Our TakeJazz’s first-quarter results were mixed with earnings surpassing expectations and revenues falling short. While Xyrem continued to perform well, patent litigations related to the product will remain an overhang.Jazz is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector are Apricus Biosciences, Inc. APRI, ArQule Inc. ARQL and BioSpecifics Technologies Corp. BSTC. All three carry a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JAZZ PHARMACEUT (JAZZ): Free Stock Analysis Report BIOSPECIFICS TE (BSTC): Free Stock Analysis Report APPRICUS BIOSCI (APRI): Free Stock Analysis Report ARQULE INC (ARQL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research