AVADEL PHARMACEUTICALS PLC (AVDL)·Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue of $77.5M grew 55% YoY and exceeded both company’s prior Q3 revenue guidance ($71–$75M) and Street consensus*, while diluted EPS was $0.00 and missed the ~$0.05 consensus*; revenue upside was aided by patient growth and a one-time $9.5M royalty reversal in COGS tied to the Jazz settlement .
• Approximately 3,400 patients were on LUMRYZ at quarter‑end (vs. ~3,100 in Q2 and ~2,800 in Q1), sustaining strong demand trends and improved persistency noted earlier in the year .
• Strategic developments de‑risked the story: a global settlement with Jazz established a royalty framework and allowed commercialization beyond narcolepsy as early as Mar 1, 2028, and Avadel agreed to be acquired by Alkermes for $18.50 cash plus a $1.50 CVR up to $20.00/share (close expected in Q1’26) .
• Operating expenses stepped up due to a $20M upfront license for valiloxybate (GABA-B agonist), partially offset by the COGS royalty reversal; cash and marketable securities ended at $91.6M, up from $81.5M in Q2, reflecting positive cash flow in Q3 .

What Went Well and What Went Wrong

What Went Well

• Strong top-line and patient growth: LUMRYZ net product revenue reached $77.5M (+55% YoY) with ~3,400 patients on therapy (+48% YoY) .
• Legal de‑risking and expanded opportunity: global settlement with Jazz ended litigation and enables LUMRYZ commercialization beyond narcolepsy as soon as Mar 1, 2028; Jazz receives royalties on net sales from Oct 1, 2025 through Feb 18, 2036 .
• Corporate catalyst: Avadel agreed to be acquired by Alkermes for up to $20.00/share, including $18.50 cash at closing and a $1.50 CVR tied to IH commercialization by end of 2028; expected close Q1 2026 .

Selected management commentary:

• “Generated LUMRYZ™ net product revenue of $77.5 million, a 55% increase compared to third quarter 2024.”
• “Approximately 3,400 patients on LUMRYZ as of September 30, 2025, a 48% increase compared to September 30, 2024.”
• “Announced global settlement of all litigation with Jazz Pharmaceuticals, Inc.”

What Went Wrong

• EPS miss versus Street* as GAAP diluted EPS printed $0.00; elevated OpEx reflected the $20M upfront license fee for valiloxybate (R&D $27.0M vs $3.8M LY) .
• Gross margin temporarily inflated to 105% due to a $9.5M royalty reversal in COGS; while positive for Q3, it is non‑recurring and reflects settlement mechanics rather than structural margin expansion .
• No explicit reiteration/raise of FY25 guidance in the Q3 release; prior guidance was last raised in Q2 to $265–$275M, leaving some uncertainty for near‑term standalone trajectory into the pending acquisition .

Financial Results

Income Statement Snapshot (YoY and sequential trends)

Notes:

• Q3 gross margin equaled 105% due to the $9.5M royalty reversal in COGS related to the Jazz settlement .
• Q3 R&D was $27.0M, including a $20.0M upfront license fee for valiloxybate ($15M paid in Q3, $5M due in Q4) .

Balance Sheet / Liquidity Highlights

KPIs

Q3 2025 vs. Consensus (S&P Global)

Values marked with * are from S&P Global.

Guidance Changes

Note: Q3 revenue of $77.5M exceeded the prior Q3 guidance range .

Earnings Call Themes & Trends

Transcript for the Q3 2025 earnings call was not available via our sources; themes below reflect press releases and 8‑Ks for Q1–Q3 2025.

Management Commentary

• Q2 CEO perspective on commercial momentum and positioning: “LUMRYZ strengthened its market position and delivered accelerated growth in revenue, positive cash flow and momentum in the second quarter... we continue to identify additional opportunities to build on this momentum and capitalize on the differentiated profile of LUMRYZ to become the oxybate of choice for providers and patients.”
• Q1 CEO on growth plan and addressable opportunity: “We continue to build momentum and remain confident in our ability to deliver our growth plan and unlock the billion-dollar potential of LUMRYZ.”

Q3 qualitative highlights (press release):

• “Generated LUMRYZ™ net product revenue of $77.5 million, a 55% increase compared to third quarter 2024.”
• “Approximately 3,400 patients on LUMRYZ as of September 30, 2025, a 48% increase compared to September 30, 2024.”

Q&A Highlights

• The Q3 2025 earnings call transcript was not available via our document sources; as a result, we cannot provide Q&A highlights or management tone shifts specific to the call. This recap incorporates company disclosures from the Q3 8‑K/press release and prior-quarter releases for trend analysis .

Estimates Context

• Revenue: Q3 revenue of $77.467M beat the S&P Global consensus of ~$73.6M* .
• EPS: Q3 diluted EPS of $0.00 missed the S&P Global consensus of ~$0.05* .

Values marked with * are from S&P Global.

Implications: Expect upward adjustments to near‑term revenue models (given patient growth and beat vs guidance), but EPS revisions may be mixed as analysts normalize out non‑recurring COGS benefit and incorporate higher R&D from the valiloxybate license .

Key Takeaways for Investors

• Top-line outperformance with Q3 revenue above both guidance and Street*, driven by growing patient base; however, EPS missed as GAAP OpEx included a $20M upfront license expense .
• One-time COGS benefit (royalty reversal) inflated gross margin in Q3; investors should normalize margins for valuation and forward EPS models .
• Legal overhang eased materially with Jazz settlement; it establishes a clear royalty framework and allows broader commercialization timelines beyond narcolepsy beginning 2028 .
• Alkermes acquisition at $18.50 cash plus $1.50 CVR frames near‑term trading around deal probability and timing; expected close in Q1 2026 is a key catalyst path .
• Commercial trajectory remains positive: ~3,400 patients at Q3‑end vs. ~3,100 in Q2 and ~2,800 in Q1, supporting continued revenue scaling into year‑end .
• Prior FY25 revenue guidance was raised to $265–$275M in Q2; no update provided in Q3, but Q3 performance supports the raised range pending acquisition closing dynamics .
• Watch for IH Phase 3 (REVITALYZ) enrollment completion by year‑end and 2026 topline timing, which is also tied to CVR value realization under the Alkermes agreement .

Values marked with * are from S&P Global.