Alkermes' revenue rose 27% to $496.0M on its first full quarter of LUMRYZ ($96.6M) from the Avadel deal, but GAAP net income fell to $0.5M on acquisition accounting, a $26.4M milestone charge and new debt interest; 2026 revenue guidance held at $1.73–1.84B.
Revenue
$496M
+27.0% YoY
Net income
$500K
-99.4% YoY
Diluted EPS
$0.00
-100.0% YoY
Operating margin
3.7%
This period vs a year ago
Same period last year
This period
Revenue▲+27.0%
≈$391M
$496M
Net income▼-99.4%
≈$83M
$500K
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Overview
Alkermes' second quarter of 2026 was its first full quarter owning LUMRYZ, the once-at-bedtime narcolepsy drug it got by buying Avadel Pharmaceuticals in February. That deal explains almost everything in the numbers. Total revenue rose 27% to $496.0 million (from $390.7 million), and LUMRYZ alone added $96.6 million. Without LUMRYZ, revenue rose about 2%. Profit fell much further: GAAP net income dropped from $87.1 million to $0.5 million ($0.00 per diluted share, from $0.52). Most of the drop came from acquisition costs, the interest on $1.5 billion of new debt, and a $26.4 million charge that, oddly enough, came from good news. The company's own "Adjusted EBITDA" (profit before interest, tax, depreciation, amortization, stock-based pay and deal costs) rose 10% to $139.2 million.
At a glance
$96.6 million from LUMRYZ: the acquired narcolepsy drug is already Alkermes' second-largest product line. About $7 million of that came from the timing of shipments, so the underlying run-rate is closer to $90 million a quarter.
3.7% operating margin, down from 23.8%: operating margin is the share of revenue left after the costs of running the business, before interest and tax. About $81.5 million of this quarter's costs were acquisition accounting and a milestone charge, not day-to-day operations.
Guidance unchanged at $1.73–1.84 billion revenue: the forecast GAAP loss widened by $25 million, matching the milestone charge, and every product sales range stayed where it was.
The quarter in numbers
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$496.0M
$390.7M
+27.0%
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Proprietary product sales, net
$411.7M
$307.2M
+34.0%
Manufacturing & royalty revenue
$84.3M
$83.4M
+1.0%
Operating income
$18.4M
$93.0M
−80.3%
Operating margin
3.7%
23.8%
−20.1 pts
Net income (GAAP)
$0.5M
$87.1M
−99.4%
Diluted EPS (GAAP)
$0.00
$0.52
−100%
Adjusted EBITDA (non-GAAP)
$139.2M
$126.5M
+10.0%
R&D expense
$112.9M
$77.4M
+45.9%
Source: Form 10-Q for the quarter ended June 30, 2026, and the July 28, 2026 earnings release. Adjusted EBITDA is the company's non-GAAP measure.
Product by product
Alkermes earns money two ways. It sells four drugs itself in the U.S. ("proprietary" sales), and it collects manufacturing fees and royalties on drugs other companies sell using its technology.
Product
What it treats
Q2 2026
Q2 2025
Change
VIVITROL
Alcohol and opioid dependence
$124.5M
$121.7M
+2.3%
ARISTADA (incl. INITIO)
Schizophrenia (long-acting injection)
$96.7M
$101.3M
−4.5%
LYBALVI
Schizophrenia, bipolar I
$94.0M
$84.3M
+11.5%
LUMRYZ
Narcolepsy
$96.6M
—
new (acquired Feb. 12)
VUMERITY (Biogen)
Multiple sclerosis
$30.6M
$39.4M
−22.3%
Long-acting INVEGA royalties (J&J)
Schizophrenia
$27.4M
$30.3M
−9.6%
Other (mainly RISPERDAL CONSTA manufacturing)
Schizophrenia
$26.3M
$13.7M
+92%
The 10-Q table shows LYBALVI at $93.9M; the earnings release rounds it to $94.0M.
LYBALVI is the organic growth engine. Sales rose 12% and total prescriptions rose 18%. The 10-Q says units sold rose 18%, helped by a 6% list-price increase on January 1. Units grew faster than revenue, so the average price received per unit fell. That usually means bigger discounts and rebates.
ARISTADA fell 4.5% despite help. The quarter includes about $4 million of "gross-to-net favorability." Drugmakers book an estimate of the rebates they will owe insurers and Medicaid. When the actual rebates come in lower than estimated, the difference is added back to revenue. Without that ~$4 million, ARISTADA would have been down about 8.5% from a year ago. The six-month figure was up 9%, so Q2 was a weak quarter against an unusually strong Q2 2025 ($101.3M vs. $73.5M in Q1 2025).
VIVITROL's +2.3% also includes about $4 million of rebate true-ups, so on an underlying basis it was close to flat.
VUMERITY fell 22% mainly because Alkermes stopped manufacturing the drug for Biogen in August 2025, which cut $7.4 million of manufacturing revenue. Royalties also dipped by $1.4 million on lower end-market sales. The manufacturing loss is permanent. Only the royalty now matters.
The "Other" line nearly doubled because Janssen took $17.1 million more RISPERDAL CONSTA batches for the U.S. market, where the selling price is higher. This depends on batch timing, so it shouldn't be treated as a new run-rate.
Why profit collapsed while revenue grew
The 10-Q says plainly that net income fell "primarily due to increases in total operating expenses and interest expense of $180.0 million and $25.9" million, "primarily related to the Avadel Acquisition." The main pieces:
Inventory step-up, $31.0 million. Under acquisition accounting, Avadel's LUMRYZ inventory was booked at its estimated market value, about $121.6 million more than it cost to make. That markup flows into cost of goods sold as the inventory is used up. It is a real accounting expense but not a cash cost. It is why cost of goods sold doubled from $49.5M to $98.1M. The company expects about $105 million of this to hit cost of goods sold in 2026.
Amortization, $22.6 million. The ~$1.8 billion value of LUMRYZ's intellectual property is now spread out as an expense over 14 years. The company projects $79.9 million of amortization in 2026, rising to $125.6 million in 2028.
Milestone charge, $26.4 million. Avadel shareholders received a contingent value right (CVR), an extra $1.50 per share (about $165.7 million in total) if a specified milestone is hit. In May, LUMRYZ's REVITALYZ phase 3 study in idiopathic hypersomnia (IH), a sleep disorder related to narcolepsy, came back positive. That made the milestone payout more likely, so Alkermes raised the liability on its books and recorded the increase as an expense. The trial success is what created the charge.
Interest, a $31.7 million swing. Interest expense went from zero to $25.9 million on the $1.525 billion of term loans taken out to fund the deal. Interest income fell from $11.1M to $5.3M because the cash pile was spent on Avadel.
Higher spending on the pipeline. R&D rose 46%. External spending on alixorexton, the company's lead orexin drug, rose from $23.8M to $28.8M, and spending on other orexin programs rose from $2.7M to $15.1M. Selling and marketing rose $33.1 million, mostly from taking on the LUMRYZ sales force, which added 16% to commercial headcount.
What the headline numbers hide
Cash conversion is negative so far this year. Operating cash flow was −$20.6 million for the first half, compared with +$249.0 million a year ago. The 10-Q attributes $147.8 million of that to working capital, the cash tied up in receivables, inventory and payables. Receivables rose from $334.0 million at year-end to $456.5 million. About $50.4 million of that increase came with Avadel; the rest grew alongside the larger sales base. Cash and investments rose from $538.2 million at March 31 to $691.6 million at June 30, so the second quarter itself appears to have generated cash. The first half overall did not.
There is a wide gap between GAAP and adjusted results. Adjusted EBITDA of $139.2 million excludes $31.3 million of stock-based pay, $32.5 million of Avadel deal costs (almost all of it the inventory step-up), the $26.4 million CVR charge, $22.6 million of amortization, and net interest. The step-up and the CVR are reasonably treated as non-recurring. Stock-based pay ($85.9 million in the first half) and the interest bill are not. They will recur every quarter.
The quarter had about $15 million of favorable one-timers: roughly $4 million each of rebate true-ups on VIVITROL and ARISTADA, and about $7 million of LUMRYZ shipment timing. The $17.1 million RISPERDAL CONSTA batch increase is also timing-dependent.
The share count went up, not down. Diluted shares rose 3.0% to 173.5 million, even though the company spent $27.7 million on buybacks in the first half. Employee option exercises ($42.0 million received) more than offset the repurchases.
The balance sheet changed character. Alkermes went from no debt at year-end to about $1.50 billion of term loans ($26.5 million current), against $691.6 million of cash and investments. That leaves net debt of roughly $810 million. Goodwill and intangibles now total $2.36 billion, more than half of the $4.39 billion in total assets.
Takeaway: Alkermes has effectively become a sleep-medicine company that also has a legacy psychiatry business. LUMRYZ (~$90 million a quarter underlying) and LYBALVI (+12%) are doing the growing. ARISTADA, VUMERITY and the J&J royalties are flat to shrinking. The near-zero GAAP profit mostly reflects accounting from the acquisition. The real test is whether operating cash flow turns clearly positive in the second half, because the company now carries $1.5 billion of debt.
Guidance and outlook
Management left its full-year 2026 ranges unchanged on July 28. The only exception was the GAAP net loss, which widened by $25 million to account for the CVR charge.
2026 guidance item
May 5
July 28
First half actual
Implied second half
Total revenue
$1,730–1,840M
unchanged
$888.9M
$841–951M
VIVITROL
$460–480M
unchanged
$236.9M
$223–243M
LYBALVI
$380–400M
unchanged
$186.3M
$194–214M
ARISTADA
$365–385M
unchanged
$190.5M
$175–195M
LUMRYZ (Feb. 12–Dec. 31)
$315–335M
unchanged
$136.1M
$179–199M
GAAP net loss
$(70)–(90)M
$(95)–(115)M
$(66.0)M
$(29)–(49)M
Adjusted EBITDA
$370–410M
unchanged
$219.5M
$151–191M
Implied second half = full-year range minus first-half actual (our calculation).
Two things stand out from that table:
The guidance implies a weaker second half on adjusted profit. Q1 Adjusted EBITDA was $80.3 million and Q2 was $139.2 million. The full-year range implies $75–95 million a quarter for the rest of the year, which looks more like Q1 than Q2. Revenue guidance suggests a flat second half, not a decline. So either costs step up (the alixorexton phase 3 Brilliance studies started in April, and R&D guidance of $445–485 million implies $229–269 million of second-half R&D against $216.3 million in the first half), or the ranges are conservative. The release doesn't explain which.
VIVITROL's range implies it slows down. At $112–122 million a quarter for the second half, the guidance sits below Q2's $124.5 million, which included the ~$4 million rebate true-up.
Pipeline catalysts. Alixorexton is in phase 3 for narcolepsy types 1 and 2. Topline results from Vibrance-3, its phase 2 study in IH, are expected toward year-end. After the quarter, on September 21, Alkermes reported positive phase 1b results for ALKS 7290, a second orexin 2 receptor agonist, in 50 adults with ADHD. The improvements were dose-dependent, on exploratory endpoints the study wasn't powered to test formally. A phase 2 ADHD study is enrolling, with data expected in 2027. The positive REVITALYZ result opens the way to an IH filing for LUMRYZ, which would also trigger the CVR payout. Jazz Pharmaceuticals takes a 3.85% royalty on LUMRYZ narcolepsy sales and additional royalties on any other indication, under the October 2025 settlement. Blair Jackson took over as CEO on August 1, and Richard Pops stays on as chairman.
Our read. The commercial base looks stable but slow-growing once LUMRYZ is set aside: about 2% growth excluding the acquisition, with LYBALVI offsetting declines in ARISTADA and VUMERITY. The investment case now depends on two things. The first is LUMRYZ growing beyond its ~$90 million quarterly base, possibly with an IH label. The second is whether the orexin programs justify a step-up in R&D spending that guidance suggests will weigh on second-half profit. The numbers to watch in Q3 are operating cash flow, LUMRYZ sales without the shipment-timing help, and whether ARISTADA's second-quarter dip continues.