ALKS earnings analysis
What we found in ALKS's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Alkermes delivered Q2 revenue of $496.0 million, up 27.0% year over year and 26.2% sequentially, led by the acquired LUMRYZ franchise and continued LYBALVI growth. However, acquisition-related costs, including $31.0 million of inventory-step-up amortization and a $26.4 million contingent-consideration revaluation, reduced GAAP diluted EPS to $0.00 from $0.52 a year earlier and drove a negative 3.7% operating margin. The Avadel acquisition also transformed the balance sheet and cash profile, with $1.525 billion of new debt and first-half operating cash outflow of $20.6 million, although management expects $691.6 million of cash and investments to cover requirements for at least 12 months.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue rose 27% year over year
- Q2 revenue was $496.0 million, up $105.4 million (27.0%) from $390.6 million a year earlier and up $103.0 million (26.2%) from $393.0 million in Q1 2026. The year-over-year increase was primarily attributed to the addition of LUMRYZ.
- Product portfolio drove sales growth
- Net product sales increased $104.4 million year over year to $411.7 million. LUMRYZ contributed $96.6 million following the February 12, 2026 Avadel acquisition, while LYBALVI rose $9.6 million to $93.9 million and VIVITROL increased $2.8 million to $124.5 million.
- Core brands showed volume and pricing support
- LYBALVI unit volume increased 18% in Q2, and the company implemented a 6% price increase effective January 1, 2026 for LYBALVI, ARISTADA/ARISTADA INITIO and VIVITROL. ARISTADA/ARISTADA INITIO six-month unit volume increased 7%.
- Profitability improved sequentially
- Operating performance improved sequentially: the operating margin was negative 3.7% in Q2, versus negative 12.3% in Q1 2026, while diluted EPS improved to $0.00 from a $0.40 loss.
- Pipeline advanced in hypersomnolence
- Alixorexton Phase 3 Brilliance studies in narcolepsy were initiated on April 1, 2026, and LUMRYZ reported positive Phase 3 REVITALYZ topline results in idiopathic hypersomnia on May 12, 2026.
- Management cites at least 12 months of liquidity
- Management expects its $691.6 million of cash, cash equivalents and investments at June 30, 2026 to fund anticipated working-capital requirements, debt service and capital expenditures for at least 12 months.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Earnings collapsed despite revenue growth
- GAAP profitability deteriorated materially year over year: net income fell to $0.5 million from $87.1 million, diluted EPS fell to $0.00 from $0.52, and operating margin declined 27.5 percentage points to negative 3.7%.
- Acquisition accounting pressured gross margin
- Gross margin compressed to 80.2% from 87.3% a year earlier, as cost of goods sold increased $48.6 million to $98.1 million. This included approximately $31.0 million of amortization of the LUMRYZ inventory fair-value step-up.
- Cash conversion turned negative
- Operating cash flow was an outflow of $20.6 million for the first six months of 2026, versus $249.0 million of inflow a year earlier. Capital expenditures were $12.2 million, implying calculated six-month free cash flow of negative $32.8 million.
- New leverage adds interest-rate exposure
- The company borrowed the full $1.525 billion available under its new term-loan facilities for the Avadel acquisition. At June 30, 2026, a 10% increase in the 3.70% three-month SOFR rate would raise expected interest expense for the July-to-December period by $2.9 million.
- CVR revaluation created a material charge
- A $26.4 million contingent-consideration fair-value expense was recognized after positive LUMRYZ Phase 3 results increased the estimated probability of achieving the CVR milestone. The potential aggregate payment is $165.7 million, and management expects the milestone determination by the end of 2027.
- Legacy collaboration revenue declined
- Legacy royalty and manufacturing trends were weak: VUMERITY revenue declined $8.8 million to $30.6 million and long-acting INVEGA revenue declined $2.9 million to $27.4 million year over year. VUMERITY manufacturing subcontracting obligations concluded in August 2025.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.0
- Gross margin
- 80.2%
- Operating margin
- -3.7%
- Segment
- Product sales, net: $411.7 million (VIVITROL $124.5 million; ARISTADA/ARISTADA INITIO $96.7 million; LYBALVI $93.9 million; LUMRYZ $96.6 million).
- Segment
- Manufacturing and royalty revenues: $84.3 million (Long-acting INVEGA $27.4 million; VUMERITY $30.6 million; Other $26.3 million).
What they said about what is next.
The 10-Q does not provide quantitative revenue or EPS guidance; management states that existing cash, cash equivalents and investments are expected to fund anticipated working-capital needs, debt service and capital expenditures for at least the next 12 months.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 5, 2026
- Alkermes’ Q1 2026 results showed stronger-than-expected revenue of $392.9 million, surpassing estimates by 8.7%. However, the company faced a significant net loss of $66.5 million compared to net income of $22.5 million…
- 10-K · February 25, 2026
- Alkermes completed the Avadel acquisition (consideration of $21.00 per share plus a CVR up to $1.50) to add LUMRYZ and a narcolepsy commercial organization, while continuing to commercialize ARISTADA, LYBALVI and…
- 10-Q · July 29, 2025
- Alkermes reported Q2 2025 revenue of $390.7M and diluted EPS of $0.52, beating consensus and showing a sharp recovery versus Q1 2025. Gross margin expanded to ~87.3% and operating margin recovered to 23.8% from a weak…
- 10-Q · July 24, 2024
- Alkermes reported Q2 revenue of $399.131M, down sharply from $617.397M in Q2 2023, driven by a $256.055M decline in manufacturing and royalty revenues. Product sales increased to $269.273M (+$37.796M vs prior year),…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
Read the next one first.
We read every filing ALKS makes the day it lands, and put it next to what the options market did about it. Members get both, and an alert when a filing arrives.
Cancel anytime · Month to month · Switch tiers whenever