Vertex Pharmaceuticals Incorporated (VRTX) Earnings & Analysis

Latest quarter

Vertex reported Q3 FY2026 revenue of $3.4 billion, up from $3.1 billion a year earlier. Revenue was 1.11% above the consensus, although both the reported figure and estimate rounded to $3.4 billion. Adjusted earnings per share of $4.76 missed the $4.92 consensus.

Vertex attributed revenue growth primarily to its cystic fibrosis therapies and expansion into other disease areas. The company reported $3.3 billion in cystic fibrosis revenue, while ALYFTREK generated $705.8 million in sales. Its filing reported $99.2 million in CASGEVY revenue, up 30% from the preceding quarter.

Diluted earnings per share fell to $2.56 from $4.20 a year earlier. Operating margin declined to 20.7% from 38.6%, while gross margin fell to 84.7% from 86.5%. Vertex’s filing attributed higher cost of sales as a share of product revenue partly to product mix and amortization from the Crinetics acquisition. The filing also said research, acquired research and selling expenses rose, primarily because of compensation and transaction expenses associated with the acquisition.

Free cash flow fell to $545.8 million from $1.1 billion a year earlier. Vertex ended the quarter with approximately $9.8 billion in cash and investments after the acquisition.

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

What management said on the call

On the call, Duncan McKechnie said more than 18,000 patients worldwide were using the cystic fibrosis medicine ALYFTREK. He also said JOURNAVX prescriptions exceeded 750,000 in the third quarter, up more than 40% from the preceding quarter. McKechnie said expanded Medicare Part D access shifted previously uncontracted prescriptions to rebated pricing, producing a one-time reset in net revenue.

For CASGEVY, McKechnie said more than 750 patients had started treatment worldwide since launch and approximately 200 infusions had been completed. He also said approximately 500 endocrinologists were prescribing Palsonify, which Vertex added through its Crinetics acquisition.

Chief operating and financial officer Charlie Wagner said third-quarter GAAP gross margin included amortization of intangible assets and inventory adjustments arising from the acquisition. He said Vertex incurred approximately $50 million in non-operating financing costs during the quarter, and interest income was $15 million lower than it otherwise would have been because cash balances fell after the deal.

Chief executive Reshma Kewalramani said Vertex would wait for data from its other next-generation cystic fibrosis candidates before choosing which to advance. Asked why VX-828 was not moving forward on its own, she said the company wanted to compare the candidates in the same family; results from the other two are expected next year.

Analysts also asked about the kidney-disease candidate povetacicept, including manufacturing and the planned duration of its study. Kewalramani said Vertex had used the same manufacturer throughout Phase 3 and intended to complete the study through two years because regulators outside the U.S. had different expectations for kidney-function data.

On the AMPLITUDE study of anaxaplin, Kewalramani said the interim analysis was expected early in 2027 and that the company’s accelerated-approval agreement with the FDA was based on a statistically significant difference in kidney-function slope. She declined to share the study’s power analysis. Kewalramani also said Jonathan Poole would succeed Wagner as CFO on January 1st, 2027, while Wagner would continue as COO.

Guidance

Wagner said Vertex raised its FY2026 revenue guidance to $13.15 to $13.25 billion from $13.1 to $13.2 billion, reflecting the addition of Crinetics. He said the underlying drivers of the outlook were unchanged.

Vertex also raised its combined non-GAAP operating expense estimate to approximately $6 billion from $5.65 to $5.75 billion. Wagner attributed the increase to approximately $250 million of Crinetics operating and integration-related costs.