Amgen (AMGN) Q2 2026: Prolia Falls 32%, Growing Products Add $1.5B

Amgen's newer medicines outgrew its collapsing legacy franchises by roughly two to one this quarter. Products in decline shed $765 million of quarterly sales year over year, led by a 32.4% drop in Prolia and a 33.8% drop in XGEVA — the two denosumab brands, both now facing multiple biosimilar launches worldwide. Products in growth added $1,531 million, spread across the "Other products" bucket (+$317 million), Repatha (+$257 million), EVENITY (+$196 million), TEZSPIRE (+$144 million) and a cluster of newly launched oncology and immunology drugs. (Both aggregates are our own computation from the product-sales table in Note 15 of the 10-Q; Amgen does not disclose them as such. They cover product revenues only; the remaining $109 million of total revenue growth of $875 million reflects non-product revenues not captured in the product table.) Total revenue reached $10,054 million — the first quarter in which Amgen has cleared $10 billion, topping the $9.9 billion it reported in Q4 2025, its previous high. Alongside the results the company raised full-year 2026 revenue guidance to $38.2–39.4 billion from $37.1–38.5 billion. The reported operating margin jumped to 35.0% from 28.9% — but almost all of that expansion came from acquisition accounting charges rolling off, not from operating discipline.

1. Consolidated Balance Sheet

1-1. Principal asset lines

The cash build is the headline. Amgen added $4,860 million of cash in six months, and essentially all of it came from operations. Operating cash flow of $6,191 million covered $1,285 million of investing outflows, while financing was a wash at just $(46) million. The bridge on the financing line: $3,964 million of first-quarter debt proceeds, less $2,720 million of dividends paid, $833 million of debt repayment, $233 million of debt repurchase and a further $224 million of "Other" financing outflows — the last item mostly net settlement of employee equity awards. Nearly all of the ending cash balance sits in money market funds ($10,793 million) and Treasury bills ($2,493 million), all maturing within one year.

Receivables grew 6.9% against half-year revenue growth of 7.8%. Collections are keeping pace with sales — there is no sign of channel stuffing. Inventories were flat in dollars while sales rose, which means inventory turned faster. Within that flat total, finished goods fell to $1,668 million from $1,885 million while raw materials rose to $1,082 million from $915 million. That mix shift suggests product is moving out the door rather than piling up.

Intangibles fell $1,789 million with no impairment charge taken. This is pure amortization — the scheduled write-down of drug rights Amgen bought, chiefly in the 2023 Horizon Therapeutics deal. The company disclosed the remaining schedule: $1.8 billion for the rest of 2026, then $3.6 billion in 2027, $2.8 billion in 2028, $2.3 billion in 2029, $2.2 billion in 2030 and $2.1 billion in 2031. Read that schedule carefully before calling it a tailwind. Amgen already booked $1.8 billion in the first half, so full-year 2026 lands at roughly $3.6 billion — exactly the 2027 figure. There is no relief in 2027; the step-down only begins in 2028, and it is worth about $0.8 billion of pre-tax profit that year, tapering thereafter. Readers should not mistake any of it for improving operations.

Property, plant and equipment rose 8.0% in six months, which is fast for a company this size. Capital spending ran at $1,225 million versus $780 million a year earlier.

Debt maturity structure. Total principal debt is $58,814 million. Maturities due within roughly three years total $11,388 million, or 19.4% of principal: $3,680 million in the remainder of 2026 (the 2.60% 2026 Notes, the October 2026 term loan and the 5.50% sterling notes), $2,724 million in 2027 and $4,984 million in 2028. The maturity wall is manageable and well spread. The cost is not. In the first quarter Amgen issued $4.0 billion at coupons of 4.20% to 5.65%, while the debt it retired — €750 million of 2.00% notes — carried a coupon less than half that. Every refinancing from here reprices old cheap money at today's rates.

1-2. Financial versus operating liabilities

Financial debt (current portion plus long-term) carries at $57,304 million, up from $54,604 million — a $2,700 million increase, which is $198 million less than the $2,898 million of net issuance implied by the financing bridge above ($3,964 million of proceeds less $833 million of repayment and $233 million of repurchase), with the difference reflecting foreign-exchange movements and debt discount effects. Operating liabilities — accounts payable plus accrued liabilities — fell to $20,057 million from $20,890 million, as a $498 million rise in payables was more than offset by a $1,331 million decline in accrued liabilities.

The more useful figure is net debt: $43,315 million, down from $45,475 million. Gross borrowing rose, but cash rose faster. Amgen is quietly deleveraging while keeping a large liquidity buffer, and it has a $4.0 billion undrawn revolving credit facility extended to March 2029 on top of that.

Separately, long-term tax liabilities of $2,844 million sit on the balance sheet. Given the IRS dispute discussed in Section 4, that accrual deserves attention.

1-3. Capital structure

Total stockholders' equity is $11,688 million against $95,639 million of assets — an equity ratio of 12.2% and a debt-to-equity ratio of 4.90 times. Those numbers look alarming until you read the composition. Paid-in capital stands at $34,082 million against an accumulated deficit of $22,275 million. Amgen has not lost money; it has spent decades buying back its own shares and charging the cost against retained earnings. Book equity here measures buyback history, not financial health.

The deficit narrowed by $2,832 million in six months: $4,194 million of net income less $1,362 million of dividends declared during the period. That declared figure covers only one quarterly dividend of $2.52 per share, because the first-quarter 2026 dividend was declared back in December 2025 and therefore charged to the prior year's equity statement — which is why the cash flow statement shows $2,720 million of dividends paid over the same six months. Total equity rose 35.0%, from $8,658 million to $11,688 million. Accumulated other comprehensive loss — mostly unrealized swings on currency hedges — improved to $(119) million from $(258) million.

2. Consolidated Income Statement

2-1. Second-quarter results

(Q2 2024 revenue and operating income independently confirmed via SEC XBRL company facts. The final column is a two-year CAGR, not a year-over-year change; year-over-year figures are used in the text below.)

Year over year, revenue grew 9.5% and operating income grew 32.3%. That ratio — 3.4 times — is what analysts call operating leverage, meaning profit grows several times faster than sales because fixed costs stay put. Here the label is misleading, and the reason matters.

Cost of sales fell to $2,811 million from $3,011 million even as sales rose. Gross margin widened to 72.0% from 67.2%. Two acquisition-accounting items explain nearly all of it. Amortization of acquired drug rights, booked mostly in cost of sales, dropped to $890 million from a disclosed $1.1 billion. Amortization of the inventory step-up — a one-time markup applied to inventory acquired in a takeover, which then flows through cost of sales as that stock is sold — fell to $60 million from $339 million.

Strip both out and the picture changes:

• Q2 2026 adjusted operating income: $3,514M + $890M + $60M = $4,464M, a 44.4% margin
• Q2 2025 adjusted operating income: $2,656M + $1,100M + $339M = $4,095M, a 44.6% margin

Note that Amgen disclosed the prior-year amortization only as "$1.1 billion," so the 2025 add-back is rounded and the 44.6% carries roughly ±0.5 point of imprecision. On that basis, profit grew about 9% against revenue growth of 9.5%, and the margin was flat to marginally lower. The 6.1 percentage point expansion in reported operating margin is an accounting event, not a cost story. For the half year, once the prior period's $800 million Otezla impairment is also stripped out, adjusted operating margin was 44.4% versus 44.1% — a marginal gain, the opposite direction from the quarterly comparison above. Without that third add-back the 2025 base would be 39.5%, which flatters the comparison.

Below the operating line, two swings drove reported net income up 65.9%. Other expense narrowed to $(73) million from $(394) million, mostly because mark-to-market losses on the BeOne Medicines stake shrank to $227 million from $570 million. Offsetting that, the effective tax rate rose to 14.2% from 8.7% — which Amgen attributes to a shift in earnings mix, itself a consequence of the same falling acquisition amortization.

For the half year, revenue rose 7.8% to $18,672 million and net income rose 32.6% to $4,194 million from $3,162 million. Reported operating income rose 61.2%, but the prior-year period carried an $800 million Otezla impairment — visible in the "Other" operating expense line at $907 million in H1 2025. Excluding that charge, the underlying improvement is far smaller.

Diluted EPS of $4.37 rose 64.9% versus net income growth of 65.9%. The small gap is dilution from equity awards; the diluted share count rose to 544 million from 541 million. Amgen repurchased no shares in either the first half of 2026 or 2025, leaving $6.8 billion of buyback authorization untouched. All per-share growth this quarter came from earnings, none from share count.

2-2. Fixed versus variable cost behavior

Amgen reports as a single operating segment — human therapeutics — so segment tables offer no product-line profitability. The cost disclosure still separates usefully:

Profit share and royalties — the genuinely variable line, paid to partners on collaboration products — grew 27.5%, well ahead of sales. That reflects the growing weight of partnered drugs such as TEZSPIRE, w