Core Viewpoint - Elite Pharmaceuticals, Inc. (ELTP) has experienced significant revenue growth driven by the launch of its lisdexamfetamine product line, despite facing challenges from price competition in the generic market [2][7]. Financial Performance - In Q2 of fiscal 2026, Elite Pharmaceuticals reported revenues of $36.3 million, a 92.4% increase from $18.9 million year-over-year, primarily due to the expansion of its lisdexamfetamine product line [2]. - Operating income surged 135.7% year-over-year to $8.2 million from $3.5 million, reflecting improved scale and product mix [2]. - Gross profit increased by 71.7% to $14.1 million from $8.2 million, although margins tightened sequentially due to price competition and one-time wholesaler fees [2]. - The company posted a net income of $13.7 million, translating to earnings of $0.01 per share, compared to a net loss of $11 million or 1 cent per share in the same quarter last year [2]. Research and Development - R&D spending decreased by 29.5% to $1.4 million from $1.9 million year-over-year, attributed to timing rather than reduced investment [3]. General and Administrative Expenses - General and administrative expenses rose 77.2% to $4 million from $2.3 million, driven by increased sales administration needs and compliance requirements [3][8]. Market Position and Product Performance - Elite Pharmaceuticals holds approximately 8% market share in lisdexamfetamine, with 19% in amphetamine immediate-release (IR) and 12% in amphetamine extended-release (ER) [4]. - Smaller marketed products like phendimetrazine achieved a 30% market share, while recently launched products contributed modest volumes [5]. Working Capital and Financial Health - The company ended the quarter with $75.1 million in working capital, up from $45.9 million as of March 31, 2025, supported by strong operating cash flow of $19.9 million over six months [6]. - Elite Pharmaceuticals maintains low and declining debt, enhancing its balance sheet strength [6]. Management Insights - Management noted that year-over-year gains reflect the maturation of the Elite label and the rapid expansion of lisdexamfetamine, which was not part of the previous year's quarter [7]. - The increase in G&A costs is linked to the complexity of handling larger order volumes and compliance across multiple states [8]. Market Dynamics - Competitive pressures in the lisdexamfetamine segment intensified with over 10 manufacturers, leading to price erosion despite increased shipment volumes [10]. - The Drug Enforcement Administration's decision to relax quotas for controlled substances contributed to heightened price competition [10]. Strategic Focus - The company is prioritizing three core product categories: lisdexamfetamine, amphetamine IR, and amphetamine ER, due to their attractive margins [12]. - Elite Pharmaceuticals is shifting towards indirect distribution channels, which broadens market access but may lower margins due to wholesaler fees [11]. Future Outlook - Management anticipates pricing stabilization in the lisdexamfetamine market and continued growth in the generic ADHD market [13]. - Upcoming product launches include ropinirole ER and methadone, with plans to file an ANDA for an undisclosed anticoagulant generic [13]. M&A Activity - Elite Pharmaceuticals is actively evaluating merger and acquisition opportunities, with several potential partners showing interest [14].