Jazz Pharmaceuticals PLC (JAZZ) Earnings & Analysis

Latest quarter

Jazz Pharmaceuticals reported second-quarter revenue of $1.2 billion, above the $1.1 billion consensus. Adjusted earnings per share of $5.71 missed the consensus of $6.04.

Revenue rose 15.5% from $1.0 billion a year earlier. Jazz’s filing attributed growth in Xywav sales to higher volume and selling prices, partly offset by higher deductions from gross sales. Xywav generated $471.2 million in quarterly sales. Epidiolex/Epidyolex sales were $292.1 million; the filing attributed their increase to volume growth, lower deductions and a higher average selling price.

The filing said Zepzelca sales grew as use in first-line maintenance treatment increased, partly offset by a decline in second-line use. Xyrem sales fell as volumes declined, while royalties and contract revenue decreased primarily because of a lower royalty rate on high-sodium authorized generic sales.

Jazz reported a gross margin of 90.4%, compared with 88.9% a year earlier. Diluted earnings per share were $2.78, versus −$11.74, and free cash flow was $320.6 million, compared with −$782.2 million.

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

What management said on the call

On the earnings call, CEO Renee Gala attributed the quarter’s results to demand across Jazz’s commercial products and said the first half gave the company confidence to raise its annual revenue guidance. Sam Pearce described the sleep franchise’s first-half performance as having “limited impact from high sodium generics.”

CFO Phil Johnson said Xywav’s benefits were resonating with physicians and patients and that uptake of high-sodium generics had been slower than Jazz might initially have anticipated. Responding to a question about the revised outlook, Johnson said the pace of generic introductions led Jazz to expect a “much more muted impact in the back half of the year” than previously expected. He said Jazz would monitor the market but was not ready to provide specific guidance for 2027.

Johnson said the year-over-year comparison for revenue outside the U.S. benefited from pricing adjustments that had depressed revenue in some markets a year earlier. He also said foreign exchange contributed to first-half growth outside the U.S., although its effect was less pronounced in the second quarter than in the first.

On margins, Johnson said adjusted gross margin declined year over year because higher sales of Zepzelca and Modeyso carried third-party royalties. He said adjusted selling, general and administrative spending rose with expenses for commercial products and investments in capabilities, while higher clinical trial costs drove the increase in adjusted research and development spending.

Gala said Jazz’s preclinical collaboration with AbCellera would use its T-cell engager platform to discover multispecific antibodies. Johnson also said Jazz paid off its 2026 convertible notes during the quarter.

Guidance

Johnson said Jazz now expects 2026 total revenue in the range of 4.60 to 4.75 billion dollars, compared with its previous guidance of $4.25 billion to $4.5 billion. He said Jazz now anticipates double-digit Xywav growth for the year, having previously expected the product to be flat to up mid-single digits.

Johnson put updated 2026 rare sleep revenue expectations between 2.025 and $2.125 billion. He also said Jazz had modestly increased its selling, general and administrative expense guidance to support investments in Xywav, Epidiolex and its rare-disease strategy.