In the course of preparing the consolidated financial statements for the three and six months ended June 30, 2023, Akebia Therapeutics, Inc., referred to as Akebia or the Company, identified certain accounting errors relating to the recording and reporting of reserves for returns of the Company’s product, Auryxia® (ferric citrate) at the time the Company acquired Keryx Biopharmaceuticals, Inc. ("Keryx") on December 12, 2018 and when calculating the product return reserves for subsequent annual and quarterly periods through March 31, 2023 (collectively, the "Product Return Reserve Errors"). This resulted in errors in the Company's consolidated financial statements previously filed by the Company with the SEC for each of the fiscal years ended December 31, 2022, 2021 and 2020. Specifically, the Company utilized an incorrect methodology to calculate, record and report the Auryxia product return reserves at the time the Company acquired Keryx on December 12, 2018, which resulted in errors in the calculation of and understatement of goodwill of $2.6 million in each of the subsequent annual periods. The Company continued to utilize the incorrect methodology to calculate, record and report the product return reserves in the consolidated financial statements it issued with respect to its fiscal years ended December 31, 2022, 2021 and 2020, which resulted in the product return reserves and other product revenue allowances being understated by $8.2 million, $7.9 million and $6.0 million as of December 31, 2022, 2021 and 2020, respectively. A breakdown of the understatement of the product return reserves between current and long-term in the consolidated balance sheet are as follows:


	December 31,
(in thousands)	2020		2021		2022
Included in accrued expenses and other current liabilities:
Product return reserves and other product revenue allowances	$	1,956	$	4,557	$	5,051
Included in other long-term liabilities:
Product return reserves	4,048		3,360		3,132
Total understatement of product return reserves and other product revenue allowances	$	6,004	$	7,917	$	8,183

Further, as a result of the Product Return Reserve Errors, revenue was overstated by $0.1 million, $1.9 million and $0.6 million, and accounts receivable was understated by $1.1 million, $0.7 million and $0.7 million as of and for the years ended December 31, 2022, 2021 and 2020, respectively. The changes did not impact cash or ending cash balances in the Company’s consolidated balance sheets in the periods presented in this report or in previously issued annual and quarterly financial statements.

In addition to the Product Return Reserve Errors, the Company has corrected other immaterial misstatements in the revised consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 and related quarterly periods, including an understatement of $1.4 million to goodwill in each of the years ended December 31, 2022, 2021 and 2020 related to an excess purchase commitment recorded in connection with the Keryx acquisition.

The Company assessed the materiality of the impact of the Product Return Reserve Errors both quantitatively and qualitatively and determined the impact to be immaterial to the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 as well as the quarterly interim periods. However, the Company concluded that the effect of correcting the Product Return Reserve Errors in the quarter ended June 30, 2023 would materially misstate the Company’s unaudited consolidated financial statements for the three and six months ended June 30, 2023 and, accordingly, determined that it was necessary to revise the consolidated financial statements it previously issued with respect to the fiscal years ended December 31, 2022, 2021 and 2020. The remainder of the Notes to the Company's consolidated financial statements have been updated and revised, as applicable, to reflect the impact of the corrections described in this Note 1.

(in thousands, except per share data)


	December 31, 2022
Consolidated Balance Sheet	As Previously Reported		Adjustment		As Revised
Inventories	$	21,762	$	(194)	$	21,568
Accounts receivable, net	39,180		1,104		40,284
Prepaid expenses and other current assets	33,541		(677)		32,864
Total current assets	184,949		233		185,182
Goodwill	55,053		3,991		59,044
Total assets	$	351,830	$	4,224	$	356,054
Accrued expenses and other current liabilities	$	70,997	$	4,780	$	75,777
Total current liabilities	124,756		4,780		129,536
Other long-term liabilities	12,161		3,556		15,717
Total liabilities	342,488		8,336		350,824
Accumulated deficit	(1,552,913)		(4,112)		(1,557,025)
Total stockholder' equity	9,342		(4,112)		5,230
Total liabilities and stockholders' equity	$	351,830	$	4,224	$	356,054


	Year Ended December 31, 2022
Consolidated Statements of Operations and Comprehensive Loss	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	177,067	$	(118)	$	176,949
Cost of goods sold, product	48,754		772		49,526
Research and development	129,114		872		129,986
Selling, general and administrative	138,699		(98)		138,601
Operating loss	(79,115)		(1,664)		(80,779)
Net loss	$	(92,562)	(1,664)		(94,226)
Comprehensive loss	$	(92,562)	(1,664)		(94,226)
Earnings per share - basic and diluted	$(0.51)		$0.01		$(0.52)


	Year Ended December 31, 2022
Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(92,562)	$	(1,664)	$	(94,226)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in excess inventory purchase commitments	(67,618)		1,672		(65,946)
Changes in operating assets and liabilities:
Accounts receivable	11,695		(398)		11,297
Inventories	19,793		(706)		19,087
Prepaid expenses and other current assets	381		677		1,058
Accrued expenses and other current liabilities	(38,227)		222		(38,005)
Other non-current liabilities	2,080		197		2,277
Net cash used in operating activities	$	(73,154)	$	—	$	(73,154)


	December 31, 2021
Consolidated Balance Sheet	As Previously Reported		Adjustment		As Revised
Inventories	$	38,195	$	(1,567)	$	36,628
Accounts receivable, net	50,875		706		51,581
Total current assets	272,010		(861)		271,149
Goodwill	55,053		3,991		59,044
Other long-term assets, net	49,754		667		50,421
Total assets	$	525,550	$	3,797	$	529,347
Accrued expenses and other current liabilities	$	104,456	$	4,558	$	109,014
Total current liabilities	256,493		4,558		261,051
Other long-term liabilities	82,525		1,687		84,212
Total liabilities	449,094		6,245		455,339
Accumulated deficit	(1,460,351)		(2,448)		(1,462,799)
Total stockholder' equity	76,456		(2,448)		74,008
Total liabilities and stockholders' equity	$	525,550	$	3,797	$	529,347


	For the Year Ended December 31, 2021
Consolidated Statements of Operations and Comprehensive Loss	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	142,216	$	(1,928)	$	140,288
Cost of goods sold, product	117,352		(2,723)		114,629
Selling, general and administrative	174,161		(21)		174,140
Operating loss	(265,318)		816		(264,502)
Net loss	$	(282,840)	$	816	$	(282,024)
Comprehensive loss	$	(282,847)	$	816	$	(282,031)
Earnings per share - basic and diluted	$(1.70)		$	—	$(1.70)


	For the Year Ended December 31, 2021
Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(282,840)	$	816	$	(282,024)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in excess inventory purchase commitments	33,391		(3,054)		30,337
Write-down of inventories	15,618		(569)		15,049
Changes in operating assets and liabilities:
Accounts receivable	(24,022)		(5)		(24,027)
Inventories	(25,847)		900		(24,947)
Accrued expenses and other current liabilities	(24,680)		2,600		(22,080)
Other non-current liabilities	(12,481)		(688)		(13,169)
Net cash used in operating activities	$	(252,965)	$	—	$	(252,965)


	For the Year Ended December 31, 2020
Consolidated Statements of Operations and Comprehensive Loss	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	128,901	$	(663)	$	128,238
Cost of goods sold, product	148,866		569		149,435
Cost of goods sold, amortization of intangible asset	31,515		1,102		32,617
Cost of goods sold, impairment of intangible asset	115,527		(1,102)		114,425
Operating loss	(376,442)		(1,384)		(377,826)
Net loss	$	(383,457)	$	(1,384)	$	(384,841)
Comprehensive loss	$	(383,444)	$	(1,384)	$	(384,828)
Earnings per share - basic and diluted	$(2.77)		$(0.01)		$(2.78)


	For the Year Ended December 31, 2020
Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(383,457)	$	(1,384)	$	(384,841)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible asset	31,515		1,102		32,617
Intangible asset impairment charge	115,527		(1,102)		114,425
Write-down of inventories	20,072		569		20,641
Changes in operating assets and liabilities:
Accounts receivable	12,011		(342)		11,669
Accrued expenses and other current liabilities	6,356		(97)		6,259
Other non-current liabilities	—		1,254		1,254
Net cash used in operating activities	$	(110,388)	$	—	$	(110,388)


	September 30, 2022
Unaudited Condensed Consolidated Balance Sheet	As Previously Reported		Adjustment		As Revised
Inventories	$	40,039	$	5,203	$	45,242
Accounts receivable, net	23,094		175		23,269
Prepaid expenses and other current assets	29,618		(678)		28,940
Total current assets	237,512		4,700		242,212
Goodwill	55,053		3,991		59,044
Other long-term assets, net	26,275		(334)		25,941
Total assets	$	435,894	$	8,357	$	444,251
Accrued expenses and other current liabilities	$	87,364	$	5,164	$	92,528
Total current liabilities	187,965		5,164		193,129
Other non-current liabilities	74,313		8,787		83,100
Total liabilities	422,041		13,951		435,992
Accumulated deficit	(1,545,361)		(5,594)		(1,550,955)
Total liabilities and stockholders' equity	$	435,894	$	8,357	$	444,251


	Three Months Ended September 30, 2022
Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	42,239	$	(250)	$	41,989
Cost of goods sold, product	28,936		334		29,270
Research and development	27,350		678		28,028
Selling, general and administrative	30,918		969		31,887
Operating loss	(48,174)		(2,230)		(50,404)
Net loss	$	(51,865)	$	(2,230)	$	(54,095)
Comprehensive loss	$	(51,865)	$	(2,230)	$	(54,095)
Earnings per share - basic and diluted	$(0.28)		$(0.01)		$(0.29)


	Nine Months Ended September 30, 2022
Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	127,390	$	(720)	$	126,670
Cost of goods sold, product	60,859		1,106		61,965
Research and development	97,210		678		97,888
Selling, general and administrative	108,052		641		108,693
Operating loss	(72,765)		(3,146)		(75,911)
Net loss	$	(85,010)	$	(3,146)	$	(88,156)
Comprehensive loss	$	(85,010)	$	(3,146)	$	(88,156)
Earnings per share - basic and diluted	$(0.47)		$(0.01)		$(0.48)


	Nine Months Ended September 30, 2022
Unaudited Condensed Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(85,010)	$	(3,146)	$	(88,156)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in excess inventory purchase commitments	12,422		1,673		14,095
Changes in operating assets and liabilities:
Accounts receivable	27,781		531		28,312
Inventory	1,405		(6,770)		(5,365)
Prepaid expenses and other current assets	9,131		667		9,798
Other long-term assets	14,817		6,214		21,031
Accrued expenses and other current liabilities	(22,364)		831		(21,533)
Net cash used in operating activities	$	(18,475)	$	—	$	(18,475)


	June 30, 2022
Unaudited Condensed Consolidated Balance Sheet	As Previously Reported		Adjustment		As Revised
Inventories	$	36,272	$	3,954	$	40,226
Accounts receivable, net	81,869		133		82,002
Total current assets	304,163		4,087		308,250
Goodwill	55,053		3,991		59,044
Total assets	$	521,804	$	8,078	$	529,882
Accrued expenses and other current liabilities	$	91,284	$	3,721	$	95,005
Total current liabilities	233,680		3,721		237,401
Other non-current liabilities	66,889		7,721		74,610
Total liabilities	459,504		11,442		470,946
Accumulated deficit	$	(1,493,496)	$	(3,363)	$	(1,496,859)
Total liabilities and stockholders' equity	$	521,804	$	8,078	$	529,882


Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income	Three Months Ended June 30, 2022
	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	43,703	$	(394)	$	43,309
Selling, general and administrative	32,807		(567)		32,240
Operating income	33,902		173		34,075
Net income	$	29,276	$	173	$	29,449
Comprehensive Income	$	29,276	$	173	$	29,449
Earnings per share - basic	$0.16		$	—	$0.16
Earnings per share - diluted	$0.15		$	—	$0.15


	Six Months Ended June 30, 2022
Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	85,151	$	(470)	$	84,681
Cost of goods sold, product	31,923		771		32,694
Selling, general and administrative	77,134		(328)		76,806
Operating loss	(24,591)		(913)		(25,504)
Net loss	$	(33,145)	$	(913)	$	(34,058)
Comprehensive loss	$	(33,145)	$	(913)	$	(34,058)
Net loss per share - basic and diluted	$(0.18)		$(0.01)		$(0.19)


	Six Months Ended June 30, 2022
Unaudited Condensed Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(33,145)	$	(913)	$	(34,058)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in excess inventory purchase commitments	(773)		5,627		4,854
Changes in operating assets and liabilities:
Accounts receivable	(30,994)		573		(30,421)
Inventory	1,159		(5,521)		(4,362)
Other long-term assets	9,347		665		10,012
Accrued expenses and other current liabilities	(18,625)		(839)		(19,464)
Other non-current liabilities	(9,030)		408		(8,622)
Net cash used in operating activities	$	(52,280)	$	—	$	(52,280)


	March 31, 2022
Unaudited Condensed Consolidated Balance Sheet	As Previously Reported		Adjustment		As Revised
Inventories	$	39,422	$	1,676	$	41,098
Accounts receivable, net	64,582		$	776	65,358
Total current assets	302,687		2,452		305,139
Goodwill	55,053		3,991		59,044
Total assets	$	535,356	$	6,443	$	541,799
Accrued expenses and other current liabilities	$	109,660	$	4,583	$	114,243
Total current liabilities	253,914		4,583		258,497
Other non-current liabilities	77,743		5,398		83,141
Total liabilities	509,240		9,981		519,221
Accumulated deficit	(1,522,772)		(3,536)		(1,526,308)
Total liabilities and stockholders' equity	$	535,356	$	6,443	$	541,799


	Three Months Ended March 31, 2022
Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income	As Previously Reported		Adjustment		As Revised
Product revenue, net	$	41,448	$	(76)	$	41,372
Cost of goods sold, product	22,333		772		23,105
Selling, general and administrative	44,327		239		44,566
Operating loss	(58,493)		(1,088)		(59,581)
Net loss	(62,421)		(1,088)		(63,509)
Comprehensive loss	(62,421)		(1,088)		(63,509)
Earnings per share - basic and diluted	$	(0.35)	$	—	$	(0.35)


	Three Months Ended March 31, 2022
Unaudited Condensed Consolidated Statement of Cash Flows	As Previously Reported		Adjustment		As Revised
Net loss	$	(62,421)	$	(1,088)	$	(63,509)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in excess inventory purchase commitments	(773)		773		—
Changes in operating assets and liabilities:
Accounts receivable	(13,707)		(71)		(13,778)
Inventory	(5,247)		(3,243)		(8,490)
Other long-term assets	3,297		669		3,966
Accrued expenses and other current liabilities	4,426		2,960		7,386
Other non-current liabilities	(3,191)				(3,191)
Net cash used in operating activities	$	(21,620)	$	—	$	(21,620)