Neurocrine Biosciences sells medicines for movement disorders and rare diseases involving hormones and appetite. In the third quarter ended September 30, 2026, revenue grew 41%, with both its established medicine INGREZZA and newer products contributing. Buying Soleno added another marketed medicine, but helped reduce cash and tradable investments in bonds and similar securities by 69% from year-end. Neurocrine can finance substantial research from its operations, although it now has less stored cash for another large acquisition.
Analysis period: third quarter and first nine months of 2026. Research cutoff: November 3, 2026, New York time.
Source: Neurocrine’s third-quarter 2026 Form 10-Q, financial statements, Notes 2 and 11, and “Liquidity and Capital Resources,” pp. 3–9, 18–19 and 27–28. Percentages are calculated from the reported amounts.
1. Growth now comes from three medicines, although INGREZZA remains the largest
Neurocrine’s expansion extends beyond the sales it bought with Soleno. INGREZZA and CRENESSITY together added $227.6 million of third-quarter sales compared with a year earlier. VYKAT XR, acquired with Soleno in May, added another $106.7 million to Neurocrine’s reported comparison.
INGREZZA treats involuntary movements associated with tardive dyskinesia and Huntington’s disease. CRENESSITY helps control excess hormone production in classic congenital adrenal hyperplasia, or CAH. VYKAT XR treats the persistent, difficult-to-satisfy hunger associated with Prader-Willi syndrome. These medicines address different patient groups, giving the company more than one route to expand sales.
The product comparison shows how much each route contributed. Amounts are net sales, after estimated rebates, discounts and other reductions.
| Consolidated revenue, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| INGREZZA | 686.6 | 801.5 | 1,856.2 | 2,174.8 |
| CRENESSITY | 98.1 | 210.8 | 165.8 | 547.6 |
| VYKAT XR | 0.0 | 106.7 | 0.0 | 161.0 |
| Other product sales and collaboration revenue | 10.2 | 3.7 | 33.0 | 12.8 |
| Total revenue | 794.9 | 1,122.7 | 2,055.0 | 2,896.2 |
Source: 2026 Form 10-Q, Note 11 and revenue discussion, pp. 19 and 23. VYKAT XR enters Neurocrine’s accounts on May 18, 2026; the zero prior-year amounts mean it was outside Neurocrine’s reporting group, not that the medicine had no sales. “Other” includes the business sold in January 2026.
INGREZZA sales rose 16.7% in the quarter. Management attributed growth to more prescriptions, including new prescriptions, supported by patient demand. This follows approximately $613 million of third-quarter sales in 2024 and $686.6 million in 2025. The established product therefore continued expanding while the newer medicines grew around it. Its share of total quarterly revenue nevertheless fell from 86.4% to 71.4% in the latest year-over-year comparison.
CRENESSITY sales more than doubled. Its clinical role helps explain why doctors might add it to treatment: patients with CAH need steroid replacement, but often require higher steroid doses to control excess androgens. CRENESSITY can reduce that excess hormone production and help lower the steroid dose. It is approved alongside steroid treatment for patients aged four and older. In the adult approval trial, steroid doses fell 27% with CRENESSITY versus 10% with placebo while maintaining the specified hormone control.
Sources: 2026 Form 10-Q, pp. 21 and 23; Neurocrine’s October 30, 2024 results, “INGREZZA Net Product Sales Highlights”; FDA approval announcement, December 13, 2024, indication and adult trial results.
Patient use must also translate into reimbursement. In its November 2 results release, Neurocrine reported approximately 80% reimbursement for dispensed CRENESSITY prescriptions, alongside continued patient demand and treatment persistence—patients staying on treatment. That percentage measures prescriptions receiving reimbursement, rather than a percentage of the drug’s price collected. It helps explain why patient uptake and recorded revenue need to be assessed together.
Neurocrine reports one global operating segment, with pharmaceutical activity primarily in the United States. It does not disclose separate operating profits for these three products. The evidence establishes a broader sales base; product revenue alone does not show which medicine earns the highest profit after research and commercial support.
Sources: November 2, 2026 earnings release, “Total Revenue Highlights”; 2026 Form 10-Q, Note 11, p. 18.
2. Higher operating profit was outweighed by a reversal in investment income
Quarterly operating profit rose, but each sales dollar left slightly less operating profit. Operating profit is what remains after running costs, before investment income, interest and taxes. Revenue grew faster than selling and administrative costs, but research spending and acquisition-related accounting charges absorbed much of the benefit.
Research and development expense rose $101.8 million in the quarter as clinical programs advanced and the research workforce expanded. Selling, general and administrative expense rose $74.7 million, reflecting larger sales teams and support for the broader product portfolio. The accounting charge for using acquired product rights—amortization—rose another $34.0 million.
| Consolidated reported results | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Operating profit, US$ millions | 239.0 | 331.3 | 408.2 | 676.2 |
| Operating profit as a share of revenue | 30.1% | 29.5% | 19.9% | 23.3% |
| Net income, US$ millions | 209.5 | 206.5 | 324.9 | 548.8 |
| Net income as a share of revenue | 26.4% | 18.4% | 15.8% | 18.9% |
| Diluted earnings per share, US$ | 2.04 | 1.96 | 3.19 | 5.26 |
Source: 2026 Form 10-Q, income statement and expense discussion, pp. 4 and 24–26. Margins are calculated using consolidated total revenue. Quarter and nine-month results are separate comparisons.
The main reason quarterly net income did not follow operating profit upward was a change outside drug operations. Neurocrine recorded a $52.3 million unrealized loss on equity investments, compared with a $30.6 million gain a year earlier. Those changes reflect the value of shares it holds in other companies. Investment income and other income also fell as Neurocrine sold much of its debt-security portfolio to fund Soleno.
Together, items below operating profit deteriorated by $100.4 million, exceeding the $92.3 million increase in operating profit. A $5.1 million reduction in tax expense softened the effect, leaving net income down $3.0 million. The calculation notes reconcile the entire change.
The nine-month picture was stronger: operating profit grew 65.7% and net income grew 68.9%. That comparison includes a $28.6 million pretax gain, after transaction costs, from selling Neurocrine Group Limited. Removing that gain alone leaves $647.6 million of operating profit versus $408.2 million; other acquisition costs remain in this calculation. The nine-month tax rate also fell to 20.8% from 30.3%. Management identified several influences, including research credits, share-based compensation tax benefits and recognition of some state tax benefits previously considered uncertain to use. The filing does not assign the whole rate reduction to one cause.
Source: 2026 Form 10-Q, Notes 12 and income-tax discussion, pp. 19–20 and 26.
Management’s adjusted quarterly net income was $346.7 million versus $222.1 million. The adjustment removes investment-value changes and several acquisition expenses, but also removes regular share-based employee compensation and charges that will continue for years. It therefore answers a different question from reported profit. The reported operating-profit increase supports the improvement in drug operations, while the adjusted measure also removes costs of paying employees and buying product rights. The full reported-to-adjusted reconciliation appears in the notes.
Source: November 2, 2026 earnings release, Table 3 and “Non-GAAP Financial Measures.”
3. Soleno added a working business and tied more assets to VYKAT XR’s future
Soleno broadened the commercial portfolio while making Neurocrine’s balance sheet much more dependent on acquired drug rights. Management’s stated purpose was to expand its rare-disease business and commercial product base. Buying an already marketed medicine brought revenue immediately, rather than requiring Neurocrine to wait for a development program to win approval.
The May 18 acquisition had preliminary accounting consideration of $2,829.9 million. Cash paid, after subtracting cash acquired with Soleno, was $2,358.5 million. These are different measures of the transaction: the first measures what Neurocrine transferred; the second measures the acquisition’s net use of cash in the cash-flow statement.
Soleno contributed $106.7 million of third-quarter revenue and $17.1 million of net income. Since acquisition, however, it had contributed a $35.1 million net loss. Those periods included $59.7 million and $163.3 million, respectively, of acquisition-related expenses and charges for acquired inventory and product rights. The first full quarter was profitable on the reported basis, while the purchase-to-date result still carried substantial integration and accounting costs. These subsidiary results are already included in consolidated income.
Sources: Acquisition announcement, April 6, 2026, strategic purpose; 2026 Form 10-Q, Note 2, pp. 7–9.
The filing also provides an illustrative comparison assuming Soleno had belonged to Neurocrine from January 2025. On that basis, third-quarter revenue grew 30.4%, compared with reported growth of 41.2%. This supports the finding that growth was not solely the result of adding a company to the accounts. The illustrative figures include purchase-accounting adjustments and are neither actual historical combined results nor a forecast.
| Selected consolidated assets, US$ millions | December 31, 2025 | September 30, 2026 |
|---|---|---|
| Cash and marketable debt securities | 2,543.4 | 789.7 |
| Amounts customers had not yet paid | 686.8 | 957.3 |
| Inventory, current and noncurrent | 69.0 | 243.8 |
| Property and equipment, net | 89.8 | 92.2 |
| Acquired product rights, net | 4.7 | 2,191.0 |
| Goodwill | 6.1 | 500.6 |
| Total assets | 4,631.5 | 5,627.4 |
Source: 2026 Form 10-Q, balance sheet and Notes 2, 4 and 7, pp. 3 and 8–14. Selected assets do not sum to total assets. Cash and marketable debt securities exclude restricted cash and equity investments. The 2025 product-rights row excludes assets classified separately for the business subsequently sold.
Product rights and goodwill together accounted for 47.8% of September assets. Goodwill is the part of an acquisition price left after separately identifying acquired assets and liabilities. Here, a significant part arose because the accounting values assigned to acquired assets required Neurocrine to record future tax effects as liabilities. The remainder reflects expected benefits such as the workforce and combined commercial capabilities.
The product-rights charge will continue. Neurocrine expects approximately $140.2 million of annual amortization from 2027 through 2030. This spreads the recorded cost of its finite-lived rights across their useful lives. It does not require that much new cash each year, but it reflects a cost of obtaining the medicine’s future revenue.
Inventory increased mainly through the acquisition, which brought $185.3 million of inventory at purchase-date accounting values. That included a $168.2 million increase over the previous carrying value. Neurocrine expects to charge that increase against earnings as the acquired goods sell over approximately four to six years. Moreover, $177.7 million of inventory was classified as noncurrent because management expected its sale after September 2027. Thus, much of the inventory balance cannot serve near-term cash needs.
CRENESSITY creates a different accounting effect. Some ingredients were manufactured before approval, when their cost was expensed as research. Those ingredients remain in physical inventory with no recorded cost. As they are used, reported production costs can be lower than the cost of producing replacement inventory. These accounting differences help explain why the cost-of-revenues line was only 2.4% of total revenue. That line also excludes the separately reported charge for acquired product rights.
Source: 2026 Form 10-Q, Notes 2, 4 and 7, pp. 8, 11 and 13. The acquisition allocation remains preliminary.
4. Operations generated more cash, while collections and tax timing shaped the result
The operating business funded capital spending and buybacks, but the acquisition required accumulated financial reserves. Cash from operations rose to $677.4 million in the first nine months, from $394.3 million a year earlier. That amount is after operating spending, including research and commercial support.
Customers had not yet paid for a substantial amount of recorded sales. The cash-flow statement shows receivables using $235.9 million of cash, compared with $248.9 million a year earlier. The September receivable balance also includes amounts acquired with Soleno, so its full increase cannot be treated as delayed collection of Neurocrine’s own sales. The disclosures establish a large funding need between booking a sale and receiving payment, without establishing that customers were paying more slowly.
Collection exposure is concentrated. Three customers accounted for 89% of receivables at September 30, and 89% of gross product sales during the nine months. These are intermediary customers, not individual patients. A disruption at one of them could affect a large share of payments or distribution.
Sources: 2026 Form 10-Q, cash-flow statement and Notes 2–3, pp. 6, 8 and 10; 2025 Form 10-K, Note 1, “Product Revenue,” p. 72, for specialty pharmacy and distributor channels.
Income-tax timing also helped cash. Changes in tax assets and liabilities added $103.6 million to operating cash, versus a $54.3 million use a year earlier. Management attributes this movement primarily to the timing of tax payments. Separately, the cash-flow statement reverses deferred tax effects already included in profit. Combining those two tax adjustments gives a $27.8 million addition in 2026 versus $62.9 million in 2025. Looking only at the favorable payment-timing movement would therefore overstate how taxes explain the overall cash improvement.
Regular noncash share compensation added $176.5 million back to profit in the cash reconciliation. The separate $60.1 million expense for accelerated Soleno awards was settled in cash and was not included in that add-back. Excluding it from management’s adjusted earnings did not restore the cash spent.
| Cash allocation, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Cash from operations | 394.3 | 677.4 |
| Capital expenditures paid | 36.4 | 28.5 |
| Free cash flow, calculated | 357.9 | 648.9 |
| Cash paid for share repurchases | 167.7 | 158.1 |
| Free cash flow remaining after repurchases | 190.2 | 490.8 |
Source: 2026 Form 10-Q, cash-flow statement and liquidity discussion, pp. 6 and 27–28. Free cash flow here means operating cash less cash capital expenditures; it excludes acquisitions, securities trading and financing flows. No cash dividends were reported. The final row is an allocation calculation, not the change in the cash balance.
Neurocrine raised $1,671.1 million net by selling or collecting maturing debt securities after subtracting new purchases. Those funds, together with available cash and operating inflows, supported the acquisition. The company also received $63.2 million from its January business sale. Cash including restricted amounts declined only $73.0 million because securities were converted into cash; the much larger decline was in the combined cash-and-securities reserve.
Physical capital expenditure was comparatively small. Property and equipment rose only $2.4 million, while research costs included higher facility expenses related to the new campus. Neurocrine relies on outside manufacturers rather than owning commercial manufacturing facilities. Its investment effort is therefore better understood through drug development, acquired rights and leased research space than through equipment spending alone. The filing does not separate maintenance from expansion capital expenditure.
Source: 2026 Form 10-Q, pp. 3, 6, 25, 27–28 and 42, including the manufacturing risk discussion.
5. Borrowing capacity supports liquidity, but operating bills and dilution remain
Neurocrine ended September without outstanding financing borrowings and with a fully undrawn $1 billion credit facility. It borrowed $600 million in May and repaid the principal in June. There is therefore no existing loan principal requiring refinancing at the reporting date. Management judged its resources sufficient for at least the next twelve months.
The credit facility provides a backup if cash needs rise. It is already secured against substantially all assets of Neurocrine and its subsidiary guarantors, subject to exceptions. Drawing on it would create interest costs, and availability depends on continued compliance with lending conditions.
| Funding term | Disclosed position |
|---|---|
| Revolving facility maturity | May 14, 2031 |
| Interest on borrowing tied to SOFR, a market interest-rate benchmark | Benchmark rate plus 1.125–1.75 percentage points |
| Interest on an alternate-base-rate borrowing | Base rate plus 0.125–0.75 percentage points |
| Fee on unused commitments | 0.10–0.25% annually; initial rate 0.15% |
| Maximum contractual net leverage ratio | 3.75 times; temporarily 4.25 times for qualifying acquisitions or investments |
| Minimum contractual interest coverage | 2.00 times |
| Covenant status at September 30, 2026 | Compliant |
Sources: May 18, 2026 Form 8-K, Item 2.03; credit agreement, “Applicable Rate” and Section 6.13; 2026 Form 10-Q, Note 5, pp. 11–12. The contractual ratios compare defined net debt or interest costs with defined earnings measures; they cannot be reproduced simply by dividing balance-sheet debt by reported operating profit. Rates depend on the agreement’s leverage and credit-rating provisions.
The absence of borrowings does not eliminate future bills. Operating leases require $567.6 million of undiscounted payments: $15.2 million in the remainder of 2026, $61.0 million in 2027, and the rest thereafter. Expected sublease receipts total $18.1 million. After discounting future payments, the recorded lease liability is $451.8 million, including $59.5 million due within a year. These obligations chiefly support offices and research laboratories.
Current liabilities rose to $984.6 million from $743.4 million. Larger sales-rebate obligations and current taxes payable accounted for $90.2 million and $82.1 million of the increase. Employee-related accruals also rose, and Soleno brought acquired liabilities into the group. These balances represent operating or tax obligations, rather than additional bank borrowing. With less cash stored in securities, continued collections become more important to meeting them.
Source: 2026 Form 10-Q, balance sheet and Notes 2, 6–7, pp. 3, 8 and 12–13.
Share repurchases returned $158.1 million to selling shareholders and retired 1.1 million shares during the nine months. Employee plans issued 2.3 million shares, so period-end shares still increased from 100.1 million to 101.3 million. The repurchased shares were retired immediately; they were not accumulated as treasury stock.
Dilution also affected earnings per share. The third-quarter diluted average share count—which includes potential shares from employee awards—increased 2.6%. Both outstanding common shares and potential additional shares increased. Consequently, diluted earnings per share fell 3.9%, more than the 1.4% decline in net income. Repurchases reduced the number of shares relative to what it otherwise would have been, but did not prevent an overall increase. The remaining $174.2 million authorization is discretionary, giving management room to balance further repurchases against development and liquidity needs.
Source: 2026 Form 10-Q, equity statement and Notes 8–9, pp. 5 and 14. Share movements are rounded to millions; percentages use reported quarterly averages.
6. Research spending is building another set of products before the next major results
Two major late-stage tests are expected in 2027, while the spending is already occurring. Management expects Phase 3 results for osavampator in major depressive disorder and direclidine in schizophrenia during 2027. Successful results could move these programs closer to regulatory submissions; they are not yet sources of approved-product sales.
The expenditure follows that strategy. Third-quarter late-stage development costs rose to $82.5 million from $52.2 million, primarily because the two Phase 3 programs progressed. Early-stage costs rose to $37.8 million from $16.1 million, including work in movement disorders, CAH, obesity and immunology. Research payroll and benefits rose as the company hired for its broader portfolio. Development is expanding across both later-stage medicines and earlier experiments, which places multiple demands on cash before their outcomes are known.
Management maintained full-year reported research expense guidance of $1.275–$1.325 billion. It lowered selling and administrative expense guidance to $1.540–$1.560 billion from $1.575–$1.600 billion. The combination points to continued development investment with lower expected commercial and administrative costs than previously planned.
Sources: 2026 Form 10-Q, research discussion, pp. 24–25; November 2, 2026 earnings release, management outlook and “Full Year 2026 Financial Guidance.” Guidance is management’s forecast.
Licensing agreements also determine how much benefit Neurocrine would retain if development succeeds. Following the 2025 amendment with Takeda, Neurocrine controls osavampator outside Japan and bears development costs in its territories. If commercialized, U.S. royalties payable to Takeda would be in the mid-to-upper teens as a percentage of net sales. Direclidine and other programs licensed from Nxera also require payments when specified development targets are met, followed by royalties if products reach the market.
Across existing collaboration agreements, possible future milestone payments total up to $16.5 billion. This is a ceiling conditional on specified achievements across the portfolio, not a debt balance or a near-term payment schedule. The economic consequence is that successful development can bring both new revenue opportunities and additional payments to partners.
Source: 2026 Form 10-Q, Note 10 and “Material Cash Requirements,” pp. 15–18 and 28.
There is also a nearer-term sales test. Management raised full-year INGREZZA guidance to $2.900–$2.925 billion. Subtracting nine-month actual sales implies $725.2–$750.2 million for the fourth quarter, below the third quarter’s $801.5 million. The higher annual forecast therefore does not require another sequential increase in quarterly sales.
The November 3 company announcement scheduled research presentations for the November 5–8 NEI congress, including further INGREZZA analyses and work supporting its psychiatry programs. This was a post-filing update within the research cutoff. It announced forthcoming presentations, rather than reporting the anticipated Phase 3 outcomes. Those future results remain the decisive development evidence.
Sources: November 2, 2026 earnings release, INGREZZA guidance; 2026 Form 10-Q, p. 23, actual sales; November 3, 2026 NEI announcement, conference dates and presentation descriptions. The fourth-quarter range is calculated, not separately issued guidance.
7. Pricing, patient access and legal protection will determine how much growth is retained
More prescriptions will help most if Neurocrine can preserve reimbursement and treatment continuity. The company faces an active competitor in Teva’s AUSTEDO franchise, which treats the same two movement-disorder indications as INGREZZA. In its second-quarter 2026 report, Teva disclosed U.S. AUSTEDO revenue of $676 million, up from $495 million a year earlier. Teva attributed the increase to volume and improved sales mix and net pricing. This earlier-quarter comparison establishes that the competitor was expanding too; it is not a third-quarter market-share estimate.
A concrete pricing change arrives in January 2027. Medicare’s negotiated price for AUSTEDO and AUSTEDO XR is $4,093 for a standardized thirty-day supply. CMS compares that with a 2024 list price of $6,623, a 38% reduction. The comparison is to list price before rebates, so it does not measure a 38% fall in Teva’s actual net receipts.
Neurocrine warns that the lower competitor price could increase pressure on INGREZZA’s pricing and placement on insurers’ covered-drug lists. INGREZZA itself remains protected from selection until 2027 under the small-biotech exception, potentially leading to negotiated prices in 2029 if selected. That timing distinction matters: competitive pricing pressure can arrive before a negotiated price for INGREZZA itself.
Sources: Teva’s July 29, 2026 second-quarter results, United States product revenue table and AUSTEDO discussion; CMS negotiated-price fact sheet for 2027, AUSTEDO row and pricing definitions; 2026 Form 10-Q, pricing risk discussion, p. 51.
The rare-disease products face different practical limits. CRENESSITY must earn a place alongside established steroid treatment. VYKAT XR’s prescribing information requires monitoring for elevated blood sugar and warns about fluid overload. These treatment requirements can affect physician choice and whether patients remain on therapy. They make successful patient support and safe ongoing use part of the commercial task, alongside finding eligible patients.
Sources: FDA CRENESSITY approval announcement, December 13, 2024; FDA VYKAT XR prescribing information, approved March 2025, Sections 2.3 and 5.1–5.2; 2026 Form 10-Q, competition discussion, p. 34.
Protecting VYKAT XR is especially relevant after the acquisition. Alvogen notified Neurocrine of a generic application in September, and Neurocrine sued in October. The suit triggered a thirty-month stay of FDA approval, alongside disclosed new-product exclusivity through March 2028 and orphan-drug exclusivity through March 2032. Those protections support the current commercial position, while the patent dispute remains unresolved. Neurocrine also continues litigation over a proposed generic INGREZZA SPRINKLE product.
Other legal matters could affect cash or commercial practices. The Justice Department’s August 2025 request concerning INGREZZA sales and marketing remained unresolved in the filing. A securities case against Soleno and certain managers also continued, with defendants moving to dismiss on October 30, 2026. Note 13 supplies no quantified reasonably possible loss range for these matters, so no assumed damages are included here.
The FDA did close the separate matter involving its September 2025 INGREZZA promotional letter after Neurocrine responded. That resolves one regulatory issue, while the Justice Department investigation remains open.
Source: 2026 Form 10-Q, Note 13, p. 20, and post-approval regulatory discussion, pp. 45–46.
Tax uncertainty also remains relevant to future cash needs. The last annual filing disclosed $219.9 million of tax benefits that had not been recognized because their acceptance by tax authorities was uncertain, and an IRS examination of the 2023 tax year. The quarterly filing does not update that detailed tax-benefit schedule. The historical amount therefore identifies a material exposure, rather than a current estimate of a payment due.
Source: 2025 Form 10-K, Note 10, p. 89; 2026 Form 10-Q, Note 7 and tax discussion, pp. 13 and 26.
8. The broader business can fund development, but has less room for another large purchase
Neurocrine has become less dependent on one medicine for sales, while becoming more dependent on disciplined use of its operating cash. INGREZZA continues to expand, CRENESSITY has become a meaningful second contributor, and Soleno adds an already marketed third product. Reported operating profit and nine-month cash generation support continued development spending.
The trade-off is a smaller financial reserve and substantial assets tied to VYKAT XR’s future. The undrawn credit facility provides flexibility, but another large acquisition would compete more directly with research, commercial support and shareholder cash returns. The strongest evidence of further progress would be continued reimbursed patient use, collections that replenish cash, and successful late-stage results. Greater pricing concessions, difficulty keeping patients on therapy or disappointing trials would reduce the business benefit of its larger portfolio.
Reporting basis and calculation notes
Reporting basis: This analysis uses Neurocrine Biosciences, Inc.’s unaudited consolidated U.S. GAAP Form 10-Q for September 30, 2026, filed November 2, 2026, accession 0000914475-26-000054, CIK 0000914475. The accounts include wholly owned subsidiaries and eliminate intercompany transactions. Quarterly comparisons cover July–September; cumulative comparisons cover January–September. Balance-sheet comparisons use December 31, 2025. Soleno is consolidated from May 18, 2026; the business sold January 21 remains in continuing-operations comparisons only for periods before disposal. The research cutoff is November 3, 2026, New York time. The latest company announcement inspected is dated November 3; the report does not claim to have checked every development through that date.
Sources: SEC filing, cover, Notes 1–2 and 12; SEC submissions record; SEC company facts. Core statement figures were cross-checked against U.S. GAAP XBRL facts using the selected accession, exact start/end dates and units. Dollar facts were converted to millions; per-share facts retain dollars per share. Product figures and scope details were checked against the filing tables and footnotes.
Calculation notes: growth and profit. Growth equals the current-period amount divided by the comparable prior-period amount, minus one. Margins equal profit divided by total revenue. Third-quarter revenue growth is $1,122.7 million ÷ $794.9 million − 1 = 41.2%. The illustrative acquisition comparison uses $1,122.7 million ÷ $860.9 million − 1 = 30.4%. The latter uses Note 2’s combined-company comparison, not reported 2025 revenue.
The quarterly net-income bridge below checks why higher operating profit did not produce higher final profit. All amounts are US$ millions.
| Step from third-quarter 2025 to third-quarter 2026 | Amount |
|---|---|
| Starting net income | 209.5 |
| Increase in operating profit | +92.3 |
| Deterioration in other income and expense | −100.4 |
| Reduction in tax expense | +5.1 |
| Ending net income | 206.5 |
The $100.4 million deterioration comprises an $82.9 million investment-value reversal, $17.2 million less investment and other income, and $0.3 million more interest expense.
Source: 2026 Form 10-Q, income statement, p. 4, and Note 2, p. 9.
Calculation notes: management’s adjusted earnings. Positive adjustments add expenses back; negative adjustments remove gains or reflect management’s tax adjustment. All adjustment rows except the tax row are pretax amounts. The starting and ending net-income rows are after tax. Management applies relevant statutory rates, considers valuation allowances and may reflect discrete tax items; a single assumed tax rate is not applied here.
| Consolidated earnings reconciliation, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Reported GAAP net income | 209.5 | 206.5 | 324.9 | 548.8 |
| Regular share-based compensation | +53.7 | +54.3 | +159.3 | +176.5 |
| Accelerated Soleno awards and related taxes | 0.0 | 0.0 | 0.0 | +60.1 |
| Acquisition-related compensation and severance | 0.0 | +16.7 | 0.0 | +38.6 |
| Expense from acquired inventory value increase | 0.0 | +6.3 | 0.0 | +9.3 |
| Amortization of acquired product rights | +1.0 | +35.0 | +3.0 | +51.5 |
| Acquisition/divestiture transaction and integration costs | 0.0 | +1.9 | 0.0 | +50.6 |
| Gain on business sale, net of transaction costs | 0.0 | 0.0 | 0.0 | −28.6 |
| Changes in equity-investment values | −30.6 | +52.3 | +6.7 | +25.8 |
| Other adjustments | +0.8 | +1.9 | +3.1 | +3.2 |
| Income-tax adjustment | −12.3 | −28.2 | −37.1 | −91.9 |
| Management’s non-GAAP net income | 222.1 | 346.7 | 459.9 | 843.9 |
The adjusted amounts retain development milestones and acquired research expense. In the third quarter of 2026 these were $10.0 million and $11.7 million, respectively. “Other adjustments” include noncash credit-facility interest, legacy-campus costs net of sublease income, and other small items. The adjusted results are company-defined measures, not a forecast of recurring profit.
Source: November 2, 2026 earnings release, Table 3 and footnotes 1–8.
Calculation notes: profit to operating cash. The following table separates unpaid customer sales, tax effects and noncash expenses. All amounts are US$ millions for the first nine months.
| Reconciliation item | 2025 | 2026 |
|---|---|---|
| Net income | 324.9 | 548.8 |
| Noncash share compensation | +159.3 | +176.5 |
| Other noncash items and investing-related adjustments | +40.9 | +91.1 |
| Deferred income-tax adjustment | +117.2 | −75.8 |
| Increase in customer receivables | −248.9 | −235.9 |
| Inventory, operating payables and other operating balances | +55.2 | +69.1 |
| Income-tax asset and liability changes | −54.3 | +103.6 |
| Operating cash flow | 394.3 | 677.4 |
The grouped adjustments reverse costs that did not use cash during the period, or remove gains belonging in investing activities. Their components are shown below so the grouped totals can be reproduced.
| Components of the grouped adjustments, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Depreciation of equipment and facilities | +19.6 | +24.6 |
| Expense from acquired inventory value increase | 0.0 | +9.3 |
| Noncash income as debt securities approach repayment value | −10.7 | −1.5 |
| Realized loss on securities sold | 0.0 | +5.2 |
| Amortization of acquired product rights | +3.0 | +51.5 |
| Equity-investment value losses | +6.7 | +25.8 |
| Noncash lease expense | +20.9 | +4.6 |
| Removal of business-sale gain | 0.0 | −28.6 |
| Other | +1.4 | +0.2 |
| Total grouped adjustments | +40.9 | +91.1 |
The operating-balance group has three parts. Inventory changes added $1.1 million in the first nine months of 2026, versus using $11.9 million a year earlier. Changes in operating payables added $54.0 million versus $83.7 million. Other operating assets and liabilities added $14.0 million versus using $16.6 million. Income-tax balances are shown separately.
The cash-balance check includes restricted cash—money set aside and unavailable for general spending. All amounts below are US$ millions for the first nine months of 2026.
| Cash-balance reconciliation | Amount |
|---|---|
| Opening cash, including restricted cash | 721.0 |
| Operating cash inflow | +677.4 |
| Investing cash outflow | −652.7 |
| Financing cash outflow | −97.7 |
| Closing cash, including restricted cash | 648.0 |
Closing cash consists of $641.5 million unrestricted cash and equivalents plus $6.5 million restricted cash. The opening restricted amount was $8.0 million. The broader $789.7 million financial reserve comprises unrestricted cash of $641.5 million, current debt securities of $96.4 million and noncurrent debt securities of $51.8 million.
The table below checks the two cash-flow categories outside operations. Positive amounts bring cash in; negative amounts use cash.
| Investing and financing cash movements, US$ millions | First nine months 2026 |
|---|---|
| Purchases of debt securities | −861.4 |
| Sales and maturities of debt securities | +2,532.5 |
| Acquisition cash, net of cash acquired | −2,358.5 |
| Business-sale proceeds | +63.2 |
| Capital spending | −28.5 |
| Net investing cash flow | −652.7 |
| Revolver borrowing | +600.0 |
| Revolver repayment | −600.0 |
| Financing fees | −6.7 |
| Employee-plan share issuance proceeds | +133.7 |
| Employee-award tax withholding paid | −66.6 |
| Share repurchases paid | −158.1 |
| Net financing cash flow | −97.7 |
Subtracting disclosed acquired cash of $471.3 million from purchase consideration of $2,829.9 million gives $2,358.6 million, $0.1 million above reported net acquisition cash. The report uses the cash-flow statement's $2,358.5 million for cash calculations and does not assign the small difference to an undisclosed cost.
Source: 2026 Form 10-Q, pp. 3, 6 and 8, and Note 7, p. 14.
Calculation notes: assets, equity and taxes. Assets reconcile to liabilities plus equity: September 2026, $5,627.4 million = $1,748.7 million + $3,878.7 million; December 2025, $4,631.5 million = $1,378.4 million + $3,253.1 million.
| Equity component, US$ millions | December 31, 2025 | Nine-month change | September 30, 2026 |
|---|---|---|---|
| Common stock at par value | 0.1 | 0.0 | 0.1 |
| Paid-in capital | 2,792.2 | +243.6 | 3,035.8 |
| Accumulated gains outside net income | 13.1 | −8.7 | 4.4 |
| Retained earnings | 447.7 | +390.7 | 838.4 |
| Total equity | 3,253.1 | +625.6 | 3,878.7 |
Paid-in capital records amounts associated with issued shares and share awards. Its increase combines $176.5 million of share compensation and $67.1 million from employee-plan issuances net of tax withholding. The latter equals $133.7 million of issuance proceeds less $66.6 million of withholding paid.
Retained earnings rose by $548.8 million of profit less $158.1 million allocated to retired repurchased shares. Gains recorded outside net income fell by $8.7 million: a $0.5 million currency gain was outweighed by a $9.2 million decrease from debt-security valuation changes. Common stock's small legal par value was unchanged at the displayed precision.
Deferred taxes represent future tax effects of differences between accounting and tax records. Deferred tax assets fell from $320.3 million to $11.8 million, while deferred tax liabilities rose from zero to $105.0 million. Together, these moved from a net asset of $320.3 million to a net liability of $93.2 million. The acquisition created a $489.4 million deferred tax liability because acquired assets received accounting values above their tax bases. The period also included a $75.8 million deferred tax benefit. These two disclosed effects explain the net movement within $0.1 million; they do not represent cash tax payments.
Other noncurrent liabilities included $266.6 million of taxes payable at September 2026, versus $214.5 million at year-end. This is a separate measure from the uncertain tax benefits discussed above and should not be treated as financing debt.
Sources: 2026 Form 10-Q, pp. 3–8 and Note 7, p. 13; 2025 Form 10-K, Note 10, p. 89.
This analysis is for general information and is not investment advice.