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AP

Alkermes plc. (ALKS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $430.0M and proprietary net sales were $307.7M; GAAP diluted EPS from continuing operations was $0.88 and non-GAAP diluted EPS was $1.04. Operating income expanded sharply to $162.7M, supported by $35M tailwinds from year-end inventory timing and gross-to-net favorability, primarily in VIVITROL ($12M GtN) and ARISTADA (~$3M GtN) with inventory adds across brands .
  • 2025 guidance initiated: total revenue $1.34–$1.43B, VIVITROL $440–$460M, ARISTADA $335–$355M, LYBALVI $320–$340M; GAAP net income $175–$205M, EBITDA $215–$245M, adjusted EBITDA $310–$340M; effective tax rate ~17% .
  • Near-term phasing: management expects Q1 2025 proprietary net sales of $220–$240M; royalty/manufacturing down by ~$60M sequentially; Q1 EBITDA near breakeven, with profitability increasing from Q2 and stabilizing in H2 2025 .
  • Strategic catalyst: ALKS 2680 (orexin-2 agonist) Phase II data in NT1 and NT2 targeted for H2 2025; IH Phase II (Vibrance-3) initiation expected in early spring 2025. Company retired ~$290M debt and ended 2024 debt-free with ~$825M cash/investments, enhancing financial flexibility for pipeline execution .

What Went Well and What Went Wrong

What Went Well

  • Strong proprietary portfolio growth: Q4 net sales rose to $307.7M; LYBALVI revenue +37% YoY (TRx +30%), ARISTADA +16% YoY, VIVITROL +31% YoY, highlighting robust demand. “2024 marked the completion of a multi-year effort to transition the business into a highly profitable, pure-play neuroscience company.” — CEO Richard Pops .
  • Margin/earnings strength and balance sheet: Operating income reached $162.7M and EBITDA from continuing operations $170.0M in Q4; company retired ~$290M of debt and ended 2024 debt-free with ~$824.8M cash/investments .
  • Pipeline momentum: ALKS 2680 programs (NT1/NT2) advancing with well-powered Phase II trials across U.S., EU, Australia; management emphasizes transformative potential of orexin biology for 2025 and beyond — “ALKS 2680 is on the threshold of revealing its medical and its commercial potential” .

What Went Wrong

  • Lower manufacturing/royalty vs prior year: Q4 manufacturing/royalty revenue fell to $122.3M vs $135.5M in Q4 2023, and 2025 outlook includes an ~$215M decline vs 2024 due to expiration of U.S. INVEGA SUSTENNA royalty and legacy manufacturing runoff .
  • Non-recurring Q4 tailwinds: ~$35M of Q4 proprietary revenue tailwinds from inventory timing and gross-to-net favorability (not expected to repeat), with Q1 normalization and typical seasonality expected to depress proprietary net sales and EBITDA sequentially .
  • Increased near-term R&D spend: Management guides R&D up ~$50M sequentially in Q1 2025 tied to ALKS 2680 (NT1/NT2) and IH study startup, pressuring Q1 profitability before recovery in Q2+ .

Financial Results

Summary Financials (sequential comparison and YoY reference)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($M)$399.1 $378.1 $430.0
Operating Income ($M)$109.9 $104.8 $162.7
Net Income – Continuing Ops ($M)$94.7 $92.8 $145.7
EBITDA – Continuing Ops ($M)$118.6 $112.3 $170.0
GAAP Diluted EPS – Continuing Ops ($)$0.55 $0.56 $0.88
Non-GAAP Diluted EPS – Continuing Ops ($)$0.72 $0.73 $1.04
MetricQ4 2023
Total Revenues ($M)$377.5
Operating Income ($M)$54.6
Net Income – Continuing Ops ($M)$160.6
EBITDA – Continuing Ops ($M)$72.8
GAAP Diluted EPS – Continuing Ops ($)$0.94
Non-GAAP Diluted EPS – Continuing Ops ($)$0.48

Notes:

  • Q4 2024 operating metrics strengthened materially vs Q3 and Q4 2023; Q4 2023 net income/EPS benefited from unusual tax items (deferred tax valuation release) and arbitration-related effects reflected in full-year 2023 .

Segment/Product Revenue Breakdown

Metric ($M)Q3 2024Q4 2024Q4 2023
VIVITROL$113.7 $134.1 $102.4
ARISTADA (incl. INITIO)$84.7 $96.6 $83.4
LYBALVI$74.7 $77.0 $56.2
Total Proprietary Net Sales$273.0 $307.7 $242.0
Partnered Long-Acting Antipsychotics (J&J)$60.9 $51.3 $81.5
VUMERITY (Biogen)$32.6 $35.0 $33.6
Legacy Product Revenues$11.7 $36.0 $20.4
Manufacturing & Royalty (aggregate)$105.1 $122.3 $135.5
Total Revenues$378.1 $430.0 $377.5

KPIs and Non-GAAP

KPIQ4 2024Detail
LYBALVI TRx growth YoY+30% Q4 rev +37% YoY; ~$4M revenue from year-end inventory
ARISTADA revenue growth YoY+16% ~$9M benefit from inventory and Medicaid-related gross-to-net
VIVITROL revenue growth YoY+31% ~$23M benefit from inventory and Medicaid/VA gross-to-net
Proprietary tailwinds in Q4~$35M Combined inventory and gross-to-net favorability
Non-GAAP Net Income – Cont. Ops$173.4M Adds back SBC, D&A, certain items; non-GAAP diluted EPS $1.05 total, $1.04 cont. ops
Cash & Investments$824.8M (12/31/24) Debt fully retired in Dec 2024 (~$290M)
Diluted shares (Q4)166.6M Weighted average diluted

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($B)FY 2025—$1.34 – $1.43 Initiated
VIVITROL Net Sales ($M)FY 2025—$440 – $460 Initiated
ARISTADA Net Sales ($M)FY 2025—$335 – $355 Initiated
LYBALVI Net Sales ($M)FY 2025—$320 – $340 Initiated
Cost of Goods Sold ($M)FY 2025—$185 – $205 Initiated
R&D Expenses ($M)FY 2025—$305 – $335 Initiated
SG&A Expenses ($M)FY 2025—$655 – $685 Initiated
GAAP Net Income ($M)FY 2025—$175 – $205 Initiated
EBITDA ($M)FY 2025Preview “> $200M” (Q3 call) $215 – $245 Range formalized
Adjusted EBITDA ($M)FY 2025—$310 – $340 New metric going forward
Effective Tax RateFY 2025—~17% Initiated

Quarterly phasing color (Q1 2025):

  • Proprietary net sales: $220–$240M; royalty/manufacturing down ~$60M sequentially vs Q4; Q1 EBITDA closer to breakeven .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Orexin programs (ALKS 2680)Q2: Initiated Vibrance-1 NT1, positive Ph1b NT2/IH; Q3: Investor event and Phase II NT1/NT2 ongoing with global sites NT1/NT2 Phase II enrolling in U.S./EU/Australia; data H2 2025; IH Phase II (Vibrance-3) to start early spring 2025 Accelerating execution and visibility
Proprietary portfolio growthQ2: LYBALVI +52% YoY; VIVITROL +10% YoY; ARISTADA steady Q4: LYBALVI +37% YoY (TRx +30%); VIVITROL +31% YoY; ARISTADA +16% YoY Strengthening demand
Royalty/manufacturing trajectoryQ2: Elevated; Q3: down vs prior year; Q4: mixed; 2025 decline expected 2025 expected decrease by ~$215M vs 2024 due to INVEGA U.S. royalty expiry and legacy manufacturing runoff Structural decline baked into plan
Capital allocationQ2: $84.7M buybacks; Q3: $115.6M buybacks, $200M remaining auth. Q4: Retired ~$290M debt; ended debt-free with ~$825M cash/investments Balance sheet de-risked
Sales force footprintLimited mentions in H1/H3Adding ~80 reps; total ~400 reps; operational by Q2 2025 Expanding commercial reach
Policy/tariffs/macroMinimal in Q2/Q3 pressMonitoring IRA, potential Medicaid changes; limited tariff exposure Watchful stance on payer policy

Management Commentary

  • “2024 was a banner financial year... more than $450 million of EBITDA for continuing operations while investing in the pipeline... We repurchased approximately 8 million shares, retired all of our debt [and] ended the year with $825 million of cash” — CEO Richard Pops .
  • “We will continue to manage the business with a sharp focus on efficiency and profitability as we invest in the programs that we believe will drive the company’s next phase of growth.” — COO Blair Jackson .
  • “ALKS 2680 is our novel orexin-2 receptor agonist… designed to offer simple, once-daily dosing and a range of doses to accommodate patients across NT1, NT2 and idiopathic hypersomnia” — CEO Richard Pops .

Q&A Highlights

  • Orexin Phase II tolerability/retention: Management monitors blinded safety with DSMB; expects high retention; dose-response observed in Ph1b supports NT2 confidence .
  • Commercial investments: Expanding psychiatry sales force by ~80 reps, operational in Q2; aim to preserve competitive share of voice against larger rivals .
  • LYBALVI gross-to-net: Access improvements imply mid-30s GtN in Q1 2025, modulating through the year; TRx growth was ~5% in Q4; full-year demand +~25% expected .
  • Quarterly phasing and guidance: Q1 proprietary net sales $220–$240M; royalty/manufacturing down ~$60M sequentially; Q1 EBITDA near breakeven; 2025 adjusted EBITDA $310–$340M .
  • Royalty exposure: INVEGA royalties shift to lower ex-U.S. rates; INVEGA typically 40–50% of manufacturing/royalty line going forward .
  • VIVITROL payer mix: ~50% Medicaid, ~45% commercial, remainder PHS; alcohol-dependence indication is main driver .

Estimates Context

  • Wall Street consensus estimates for Q4 2024 EPS and revenue from S&P Global were unavailable during this session due to a request limit error. As a result, we cannot provide a definitive beat/miss vs consensus for ALKS in Q4 2024. Values would normally be retrieved from S&P Global consensus data if available.

Key Takeaways for Investors

  • Q4 2024 demonstrated strong operational leverage: operating income and EBITDA from continuing ops materially improved sequentially and YoY, aided by ~$35M non-recurring tailwinds; expect normalization in Q1 before reacceleration in Q2/H2 .
  • 2025 guidance embeds structural royalty/manufacturing headwinds (~$215M decline vs 2024) yet still targets positive GAAP net income and adjusted EBITDA $310–$340M, highlighting resilience of proprietary portfolio .
  • Commercial execution remains robust across LYBALVI, ARISTADA, and VIVITROL; sales force expansion (~80 reps to ~400 total) should support demand, with LYBALVI access improvements likely widening GtN to mid-30s initially .
  • Balance sheet now fully de-levered with ~$825M cash/investments, providing flexibility to fund late-stage orexin programs and potential BD while preserving profitability .
  • Near-term trading setup: Q1 likely soft (inventory normalization, seasonality, higher R&D), with management signaling EBITDA near breakeven; traders should watch Q2 inflection and cadence into H2 .
  • Medium-term thesis: Orexin Phase II readouts (NT1/NT2) in H2 2025 are pivotal; successful data could enable Breakthrough designation (NT2), rapid Phase III start, and accelerate the sleep/wake franchise strategy .
  • Policy risk monitored but manageable: limited tariff exposure; IRA/Medicaid watch points noted, with commitment to maintain access in serious mental illness and addiction populations .