H1 (Interim) · Fiscal year 2026 · Published by Pham Hop
Alvotech's H1 2026 revenue fell 31% to $211.6M and it swung to a $65.8M loss, as plant remediation halved product sales and cut product gross margin to about 7%, while full-year guidance of $650–700M was kept.
Revenue
$212M
-30.8% YoY
Net income
-$66M
-146.4% YoY
Diluted EPS
$-0.22
-144.9% YoY
Operating margin
-1.0%
This period vs a year ago
Same period last year
This period
Revenue▼-30.8%
≈$306M
$212M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Alvotech, the Icelandic company that develops and manufactures biosimilars (lower-cost copies of biologic drugs whose patents have expired), had a sharply weaker first half of 2026. Revenue fell 31% to $211.6 million and the company swung from a $141.7 million profit to a $65.8 million loss. The main cause was its own Reykjavik plant. After a U.S. Food and Drug Administration (FDA) inspection in July 2025, Alvotech overhauled its manufacturing and quality systems, and the slower output roughly halved product sales. Milestone payments from partners held up and covered half of the revenue. The company still expects full-year revenue of $650–700 million, which would need the second half to be more than twice the first.
At a glance
Product revenue: $105.9 million, down 48%. Sales of the biosimilars it actually ships, mainly its Humira and Stelara copies, halved because the plant was producing less. This is the business the company's long-term value depends on.
Operating cash flow: –$80.2 million, vs +$68.3 million a year ago. The business consumed cash instead of generating it, and interest paid jumped to $72.2 million. The $164.6 million share sale in June covered the shortfall.
Full-year guidance unchanged at $650–700 million revenue. After $211.9 million in H1 (management's figure, including other income), the second half needs $438–488 million. That would mean every part of the recovery lands on schedule, including U.S. approvals expected in Q4.
The numbers
Alvotech is a foreign private issuer. It reports full IFRS accounts (the international accounting standard) every six months rather than every quarter, so the comparison below is the first half of 2026 against the first half of 2025. Figures are in US dollars.
Metric
H1 2026
H1 2025
YoY Change
Total revenue (IFRS)
$211.6M
$306.0M
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–30.8%
Product and service revenue
$105.9M
$204.7M
–48.3%
License and other (milestone) revenue
$105.7M
$101.3M
+4.4%
Gross margin (company definition, all revenue)
54%
55%
–1 pt
Gross margin on products only
7.2%
32.0%
–24.8 pts
Operating margin
–1.0%
9.4%
–10.4 pts
Net income (loss)
–$65.8M
$141.7M
–146.4%
Diluted EPS
–$0.22
$0.49
–144.9%
Adjusted EBITDA (non-IFRS)
$46.9M
$53.6M
–12.5%
Operating cash flow
–$80.2M
$68.3M
n/m
Cash at period end
$142.8M
$172.4M (Dec 31, 2025)
–17.2%
"Adjusted EBITDA" is the company's own profit measure. It starts from earnings before interest, tax, depreciation and amortization and also strips out items such as share-based pay and one-off provisions. "Operating margin" is the share of revenue left after running the business, before interest and tax.
What drove the half
Product sales halved because of the plant. According to the MD&A, the decline "primarily reflects the ongoing effects of manufacturing and quality system enhancements initiated following the FDA inspection of the Company's Reykjavik facility in July 2025, which affected product availability during the period". Products sold were mainly AVT02 (adalimumab, a Humira copy) and AVT04 (ustekinumab, a Stelara copy), plus smaller sales of the newer denosumab, golimumab and aflibercept biosimilars. Management says manufacturing "returned to planned operating levels at the end of the second quarter". The quarterly figures show how the half progressed. Revenue was $105.9 million in Q1 (from the Q1 release), which implies about $106.0 million in Q2, against roughly $173 million in Q2 2025. Revenue fell in both large regions: the U.S. dropped from $138.4 million to $84.4 million and Europe from $154.4 million to $101.4 million.
Milestone revenue held up, partly because of a related-party deal. License and other revenue rose 4.4% to $105.7 million. Milestones were earned on pipeline programs including AVT16 (vedolizumab, an Entyvio copy), AVT34 (durvalumab), AVT48, AVT87 (emicizumab), AVT28 and AVT33. The revenue note shows that $39.8 million of this came from a single new licensing agreement signed in Q2 with "an entity under common control/influence", meaning a company tied to Alvotech's own controlling shareholders. The filing does not name it. In the same half last year, this kind of upfront license revenue was zero.
Costs moved in opposite directions. Research and development (R&D) expense fell 50% to $46.4 million. Administrative costs rose 53% to $69.2 million, mostly because of a $20.2 million provision "related to commercial and contractual matters" under existing agreements. The company describes the provision only as management's "best estimate of probable losses" and says the final outcome is uncertain.
Most of the profit swing is below operating profit. In H1 2025, net profit was lifted by $149.2 million of finance income, mainly non-cash gains on derivatives that move with the share price. On top of that came a $39.0 million tax benefit and a $16.7 million gain on refinancing a loan. None of these repeated: finance income was only $17.0 million this half. Finance costs, mostly interest, rose to $81.8 million. The operating line moved much less, from a $28.6 million profit to a $2.0 million loss.
What the headline numbers hide
The 54% gross margin is mostly milestone income. Alvotech calculates gross margin on all revenue, and milestone payments carry almost no cost of goods. On products alone, revenue of $105.9 million against $98.3 million of cost of product and service revenue leaves a 7.2% margin, down from 32.0% a year ago. The factory earned very little on what it sold this half. This is the number to watch as output recovers.
R&D spending did not halve; more of it went onto the balance sheet. The MD&A says the drop in R&D expense was "primarily attributable to the capitalization of development costs" for programs past process lock. Capitalized spending is recorded as an asset instead of an expense. Spending capitalized as intangible assets rose from $15.2 million to $56.0 million. Adding expensed and capitalized amounts together, development spending was about $102 million against $108 million, close to flat. The extra capitalization of about $41 million kept the operating loss at $2.0 million. Without it, the operating loss would have been roughly $40 million or more. It also lifts adjusted EBITDA, because capitalized costs never pass through the income statement.
Cash conversion was poor. Operating cash flow was –$80.2 million, worse than the $65.8 million net loss and far below the +$46.9 million adjusted EBITDA. Three items explain most of the gap. Interest paid rose to $72.2 million from $8.0 million. Contract assets (revenue already booked but not yet billable) grew by $47.3 million. Contract liabilities (cash received in advance) fell by $13.0 million. Contract assets now total $233.7 million, and $165.0 million of that is non-current, which the company says "will materialize over the next 2 to 4 years". Much of this half's milestone revenue is therefore an IOU rather than cash.
Inventory did not fall with sales. Inventory edged up to $226.6 million from $220.1 million while product revenue halved. The reserve for unusable or obsolete stock rose from $7.8 million to $12.7 million. Some of the increase is a deliberate rebuild after the plant restarted, but the growing reserve is worth tracking.
The adjustments are large. Going from the IFRS net loss to adjusted EBITDA adds back $64.8 million of net finance costs, $20.6 million of depreciation and amortization, the $20.2 million commercial provision, $5.3 million of incentive pay and $2.8 million of workforce-reduction costs. The provision and severance are reasonable one-offs to exclude. Interest is not, given that the debt is permanent.
The balance sheet is stretched. Borrowings were $1,306.0 million at June 30 against $142.8 million of cash. The weighted-average interest rate was 9.43%. Total equity was negative $191.5 million, meaning liabilities exceed assets, although that was an improvement from –$284.5 million after the share sale. Another $75.0 million term loan was drawn on August 10. Six months of interest payments ($72.2 million) exceeded six months of adjusted EBITDA ($46.9 million).
Dilution. The June offering issued 43.9 million new shares at $3.75, roughly 15% of the 296.7 million H1 average share count. This will weigh on per-share figures from H2 onward.
Did the year-start plan hold up?
This is the first Alvotech report on this site, so there is no earlier analysis to check. The company's own plan from March is a useful benchmark instead. With full-year 2025 results, management set 2026 revenue at $650–700 million, "reflecting continued double-digit sales growth", and adjusted EBITDA at $180–220 million. It also pointed to "continued focus on robust cash flow and margin expansion". Six months later, revenue is down 31% year on year, product margin has collapsed and operating cash flow is negative. The guidance figures have not moved, but the first half went the opposite way from what that guidance assumed.
Takeaway: Alvotech's half-year looks steadier than it was because milestone income held up, including $39.8 million from one related-party license. On the products it actually makes and sells, revenue halved and gross margin fell to about 7%. With $1.3 billion of debt at roughly 9.4% interest, everything now depends on whether the restarted plant and Q4 FDA decisions produce a second half twice the size of the first.
Outlook
Management's guidance. Management reaffirmed 2026 revenue of $650–700 million and adjusted EBITDA of $180–220 million. The low end of the revenue range assumes no revenue from new U.S. launches this year. Catalysts the company points to:
In June, Alvotech resubmitted U.S. applications for AVT05 (golimumab, a Simponi copy) and AVT06 (aflibercept, an Eylea copy), and partner Dr. Reddy's resubmitted AVT03 (denosumab, a Prolia/Xgeva copy). The FDA has set decision goal dates in Q4 2026.
The FDA closed its April–May 2026 inspection of the Reykjavik plant with a "VAI" (Voluntary Action Indicated) classification. That means it found issues but is not requiring regulatory action, which clears an obstacle to those approvals.
The FDA accepted the vedolizumab application AVT16 for review in May, and a subcutaneous version (AVT80) on August 31.
The next results are due November 11, 2026.
Our view. Hitting even the low end of guidance requires about $438 million of revenue in H2. That is roughly 50% more than the approximately $287 million implied for H2 2025 (full-year 2025 revenue of $593 million minus H1). The EBITDA range requires $133–173 million in six months, after $46.9 million in the first half. Product sales should rebound as the plant runs normally, and Europe, the UK and Japan already have approvals for the newer products. Even so, closing the gap probably also needs large milestone payments in H2, which are lumpy by nature. A cut to guidance at the November release would not be surprising. The things to watch are product revenue and product-only gross margin, rather than total revenue. Also watch whether contract assets start turning into cash, and whether the Q4 FDA decisions come in on time. Until product margin recovers, interest costs alone exceed what the business earns before interest.