Royalty Pharma(RPRX) - 2025 Q4 - Annual Results

Financial Performance - Portfolio Receipts reached $874 million in Q4 2025, an 18% increase from $742 million in Q4 2024, and $3,254 million for FY 2025, a 16% increase from $2,801 million in FY 2024[4] - Royalty Receipts grew 17% to $856 million in Q4 2025 and 13% to $3,127 million for FY 2025, driven by products like Voranigo, Trelegy, and Tremfya[6] - Adjusted EBITDA for Q4 2025 was $816 million, a 22% increase from $669 million in Q4 2024, and $2,966 million for FY 2025, a 16% increase from $2,565 million in FY 2024[4] - Total income and other revenues for the three months ended December 31, 2025, increased to $622 million, up from $594 million in the same period of 2024, representing a growth of 4.7%[49] - Operating income for the twelve months ended December 31, 2025, reached $1,560 million, compared to $1,292 million in 2024, reflecting a significant increase of 20.7%[49] - Cash collections from financial royalty assets for the twelve months ended December 31, 2025, amounted to $3,355 million, an increase of 12.5% from $2,983 million in 2024[55] - The company reported an adjusted EBITDA of $2,966 million for the twelve months ended December 31, 2025, compared to $2,565 million in 2024, marking an increase of 15.7%[60] - Royalty receipts for the three months ended December 31, 2025, totaled $856 million, a 17% increase from $729 million in the same period of 2024[62] - The cystic fibrosis franchise generated $251 million in revenue for the three months ended December 31, 2025, reflecting a 6% increase year-over-year[62] Capital Management - The company deployed $2.6 billion in capital for royalty transactions in 2025, including a partnership for the Phase 3 therapy daraxonrasib[6] - Royalty Pharma repurchased approximately 37 million Class A ordinary shares for $1.2 billion in 2025, including $75 million in Q4 2025[18] - The company increased its quarterly dividend by 7% to $0.235 per share in Q1 2026[17] - Royalty Pharma's liquidity strategy includes a new share repurchase program allowing for up to $3.0 billion in Class A ordinary shares repurchases[18] Debt and Equity - Total debt as of December 31, 2025, was $9.2 billion, with cash and cash equivalents of $609 million[17] - Total liabilities as of December 31, 2025, were $9,906 million, up from $7,880 million in 2024, indicating a rise of 25.7%[53] - The company’s cash and cash equivalents decreased to $619 million as of December 31, 2025, down from $929 million at the end of 2024[52] - Total shareholders' equity decreased to $9,715 million as of December 31, 2025, from $10,342 million in 2024, a decline of 6.1%[53] Future Guidance and Strategy - Full year 2026 guidance for Portfolio Receipts is expected to be between $3,275 million and $3,425 million, reflecting an anticipated growth of 3% to 8%[7] - Payments for operating and professional costs in 2026 are expected to decrease as a percentage of Portfolio Receipts, from 8.9% in 2025[8] - The company anticipates significant future cash flows from its portfolio, driven by ongoing product developments and acquisitions[34] - Royalty Pharma's funding agreements and acquisitions are aimed at expanding its portfolio and enhancing revenue streams[26] - The company emphasizes the importance of maintaining compliance with financial covenants to ensure liquidity and operational flexibility[43] Acquisitions and Partnerships - In January 2026, Royalty Pharma announced a funding agreement with Teva Pharmaceuticals for TEV-'408, involving up to $500 million, including $75 million for a Phase 2b study for vitiligo[26] - Royalty Pharma acquired the remaining royalties on Roche's Evrysdi for spinal muscular atrophy for an upfront payment of $240 million and up to $60 million in sales-based milestones[26] - The company acquired a royalty interest in Nuvalent's neladalkib and zidesamtinib for up to $315 million, including an upfront payment of $155 million[26] - Royalty Pharma announced a transaction to acquire royalty interest in Denali Therapeutics' tividenofusp alfa for up to $275 million, with a $200 million payment contingent on FDA approval[26] Performance Metrics - Portfolio Receipts, a key performance metric, includes Royalty Receipts and Milestones, which are critical for generating cash from portfolio investments[38] - Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures used to analyze the company's ability to generate cash from operations[42] - Royalty Pharma's portfolio includes royalties on 35 commercial products, including notable therapies like Biogen's Tysabri and Spinraza[32]