Halozyme Therapeutics, Inc. (HALO) Earnings & Analysis

Latest quarter

Halozyme reported Q2 FY2026 revenue of $481.0 million, above the $409.6 million consensus, and adjusted EPS of $2.28, above the $1.82 consensus. Revenue rose from $325.7 million a year earlier, while diluted EPS increased to $1.90 from $1.33.

CFO Darren Snellgrove said royalty revenue rose to $307.7 million from $205.6 million, helped by recently launched partner products and continued sales of Darzalex and Vyvgart Hytrulo. Halozyme’s filing attributed royalty growth primarily to uptake of partner products launched since 2020, partly offset by price erosion in older products. The filing also attributed higher product sales to partner demand for bulk rHuPH20 and contributions from XYOSTED.

Halozyme reported gross margin of 83.5%, compared with 85.8% a year earlier, and operating margin of 59.8%, compared with 62.2%. The filing attributed higher cost of sales primarily to increased bulk rHuPH20 sales and higher research and development expense primarily to the acquisitions of Elektrofi and Surf Bio. Halozyme reported free cash flow of $236.7 million, compared with $98.1 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Helen Torley said royalty contributions from recently launched subcutaneous products increased approximately 80% quarter over quarter. She said Roche reported that 44,000 patients were receiving subcutaneous Ocrevus, and that approximately 80% of U.S. Vyvgart Hytrulo prefilled-syringe patients in the quarter were new to Vyvgart. CFO Darren Snellgrove said Darzalex generated $152.2 million in royalties for Halozyme, while Vyvgart Hytrulo contributed $72.6 million.

Torley said Halozyme signed four collaboration and licensing agreements in the second quarter and another in July. She said the new agreements contributed $35.5 million in upfront collaboration revenue during the quarter, split approximately evenly between ENHANZE and HyperCon. The agreements included an ENHANZE deal with GSK covering antibody-drug conjugates and a deal with an undisclosed partner to explore a nucleic acid therapeutic.

Asked about those new areas, Torley said they had broadened the companies Halozyme was approaching. She also said existing partners’ unused licensed targets were a separate source of potential pipeline growth, and that she expected more partner nominations in the second half.

On investment, Torley said Halozyme was preparing clinical supply for the first HyperCon clinical starts in the first half of 2027. Snellgrove said adjusted EBITDA margin was more than 65% in the quarter and that the company repurchased $332.8 million of shares.

Addressing litigation involving Merck, Torley said Halozyme was pursuing injunctions in approximately eight countries outside the U.S. and working through U.S. Patent Office proceedings. She said companies cite Halozyme’s safety database, supply history and experience when choosing to work with it.

For the second half, Snellgrove said, “We do expect royalty revenue to grow sequentially through the second half,” while adding that the increases might not match the step-up from the first quarter to the second.

Guidance

Halozyme raised its FY2026 revenue guidance to $1.835 billion to $1.91 billion. Torley said the revision reflected increased projected royalties from established and newly launched products, as well as upfront milestones from collaboration agreements. Snellgrove said the updated outlook included royalty revenue of $1.22 billion to $1.245 billion.