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Royalty Pharma reported Q3 FY2026 revenue of $690.1 million, up 13.3% from $609.3 million a year earlier. Diluted earnings per share fell to $0.32 from $0.67. The company reported an operating margin of 59.5%, compared with 70.1% a year earlier, and free cash flow of $686.1 million, compared with −$259.3 million.
The filing attributed an increase in income from financial royalty assets primarily to higher interest income from Tremfya and income from Imdelltra, acquired in the third quarter of 2025. It said other royalty income and revenues increased primarily because of growth in Trodelvy sales. General and administrative expenses rose primarily because of higher share-based compensation expense, according to the filing.
CFO Terry Coyne said quarterly portfolio receipts, a cash-based measure combining royalty receipts with milestones and other contractual receipts, grew 9% to $890 million. The filing said Royalty Pharma recorded a $150 million non-cash impairment charge related to pelacarsen in the quarter.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $690.1 million | $609.3 million | 13.3% |
| Diluted EPS | $0.32 | $0.67 | −52.2% |
| Gross margin | 100.0% | 100.0% | 0.0 percentage points |
| Operating margin | 59.5% | 70.1% | −10.6 percentage points |
| Free cash flow | $686.1 million | −$259.3 million | — |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.32 | $1.27 | Beat by 3.94% |
| Revenue | $773.0 million | $761.4 million | Beat by 1.52% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Pablo Legorreta said portfolio receipts and recurring royalty receipts each grew 9% in the third quarter. CFO Terry Coyne said royalty receipts grew 12% in the first nine months, citing contributions from Tremfya, Voranigo, Evrysdi and Imdelltra. Coyne also said declines in Promacta and Imbruvica created an approximately 5% combined headwind to royalty receipts.
Coyne said operating and professional costs were 5.6% of portfolio receipts in the quarter, reflecting cash savings from the 2025 internalization transaction. He put portfolio cash flow, which the company defines as adjusted EBITDA less net interest paid, at $673 million for the quarter.
Legorreta said Royalty Pharma had deployed $1.6 billion of capital during 2026 through the call date, with an announced value of $1.9 billion. Coyne said quarterly deployment of $362 million mainly went to R&D funding and upfront payments for royalty transactions.
On development investments, Marshall Urist, head of research and investments, said the pelacarsen outcomes trial was unsuccessful, but the transaction had been structured to provide protection. Legorreta said the company had received positive clinical and regulatory updates elsewhere in its portfolio.
Asked about competition in therapeutic areas, Urist said the company considers factors including whether a product is first and whether its partner can execute. He said Royalty Pharma can make multiple investments in the same therapeutic area and has expanded its team in Asia to pursue opportunities. On R&D co-funding, Chris Hite said the company had announced $1 billion of deals in 2026, split between J&J and Teva.
Asked about capital deployment, Coyne said transaction timing is difficult to predict and that deployment should be considered over multiple years. In response to a pricing question about ecopipam, Urist said pricing was probably a better question for Teva.
Guidance
Coyne said Royalty Pharma raised its 2026 portfolio receipts guidance to $3.5 billion to $3.55 billion from $3.4 billion to $3.5 billion. The outlook assumes royalty receipts growth of around 10% to 11%, versus 7% to 10% previously, and approximately $65 million in milestones and other contractual receipts, versus approximately $60 million in the prior outlook.
Coyne said operating and professional costs are expected to be 5.5% to 6% of portfolio receipts, compared with the previous 5.5% to 6.5% range. He said the current guidance is based on the portfolio as of the call and excludes future royalty acquisitions.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Operating expenses growth, Operating and Professional Costs Non Gaap | FY2026 | 5.50%–6.00% | — | New |
| Revenue, Milestones and Other Contractual Receipts Non Gaap | FY2026 | $65.0 million | — | New |
| Revenue growth, Royalty Receipts Non Gaap | FY2026 | 10.0%–11.0% | — | New |
| Revenue, non-GAAP | FY2026 | $3.5 billion–$3.6 billion | — | New |
| Operating expenses, Payments As Percentage of Portfolio Receipts | FY2026 | Royalty Pharma expects FY2026 payments for operating and professional costs to decrease as a percentage of Portfolio Receipts. | Royalty Pharma expects FY2026 payments for operating and professional costs to decrease as a percentage of Portfolio Receipts. | — |
| Revenue growth, Royalty Receipts Growth | FY2026 | 10.0%–11.0% | 7.00%–10.0% | Raised |
| Revenue, Portfolio Receipts | FY2026 | $3.5 billion–$3.6 billion | $3.4 billion–$3.5 billion | Raised |
| Net income, Growth | FY2030 | Royalty Pharma expects strong, low-volatility bottom-line growth through FY2030. | — | — |
| Revenue, Portfolio Receipts | FY2030 | $4.7 billion | — | New |
| Operating expenses, Interest Paid | Q4 FY2026 | Royalty Pharma expects a de minimis amount of interest paid in Q4 FY2026. | — | — |
| Operating expenses, Interest Paid | FY2026 | $350.0 million–$360.0 million | — | New |
| Operating expenses growth, Operating and Professional Costs As Percent of Portfolio Receipts | FY2026 | 5.50%–6.50% | — | New |
| Revenue, Milestones and Other Contractual Receipts | FY2026 | $60.0 million | — | New |