ELITE PHARMACEUTICALS INC /NV/ (ELTP)·Q1 2026 Earnings Summary

Executive Summary

• Q1 FY2026 revenue surged 114% year over year to $40.21M on Elite-label growth and the lisdexamfetamine (Vyvanse generic) launch; operating income rose to $21.70M, but GAAP net loss of $5.88M reflected a large non-cash warrant liability revaluation and tax expense .
• Gross margin expanded to 68% (from 45% YoY) on mix shift to higher-margin products and higher proportion of direct Elite-label sales; operating leverage was significant (operating income +$17.8M YoY) .
• Cash generation was strong: $14.78M operating cash flow in the quarter; working capital increased to $67.10M as AR and inventory grew with orders; related-party loans were repaid in June, strengthening the balance sheet .
• No formal quantitative guidance was issued; key stock narrative drivers are sustainability of Vyvanse generic share amid heavy competition/DEA quota dynamics and the non-cash derivative warrant swings that distort GAAP EPS optics .

What Went Well and What Went Wrong

• What Went Well

  • Triple-digit YoY growth with margin expansion: revenue +114% to $40.21M; gross margin 68% vs 45% prior-year quarter; operating income $21.70M vs $3.86M .
  • Mix improvements and Elite-label strategy: management cited higher shares of higher-margin products and more direct sales as the primary drivers .
  • Execution/cash: $14.78M operating cash flow; working capital rose to $67.10M; repayment of $4.0M related-party loans in June improved leverage optics .
  • “We are doing excellent with Lisdex… more than 10 suppliers… Elite currently has about 8–10% of the market” (CEO, Q4 FY2025 call) .

• What Went Wrong

  • GAAP noise: $22.11M non-cash expense from change in fair value of warrant derivatives drove a GAAP net loss; CFO emphasized this item never uses/produces cash .
  • Material weaknesses in internal controls (segregation of duties, documentation/testing of controls) remained as of June 30, 2025 .
  • Concentration/legal risk: top 3 customers were 76% of revenue; Purdue litigation over OxyContin ANDA continues (motions filed; outcome uncertain) .

Financial Results

Revenue mix

Segment

KPIs/Balance sheet highlights

• Operating cash flow: $14.78M (Q1 FY2026)
• Working capital: $67.10M (6/30/25)
• Warrant derivative liability: $47.31M (6/30/25)
• Top-3 customer concentration: 76% of revenue (Q1 FY2026)

Guidance Changes

Management did not issue numeric guidance in the quarter and filings contain no forward quantitative outlook .

Earnings Call Themes & Trends

Management Commentary

• “The increase in operating profits was primarily attributed to sales of Elite’s lisdexamfetamine products… as well as overall strong growth in the Elite label product lines” (Q1 FY2026 press release) .
• “If our stock price increases, we record an expense [for derivative warrants]… this is a noncash expense… we will never pay cash for any expense shown” (CFO) .
• “Elite currently has about 8–10% of the [Vyvanse generic] market… 13 companies… margins continue to be very attractive” (CEO) .
• Q1 gross margin expansion “primarily due to [a] greater proportion of higher margin products [and] greater proportion of direct sales” (MD&A) .

Q&A Highlights

• Capital markets/M&A: Priority on M&A first; potential Nasdaq uplisting considered only if M&A not attractive; valuation work underway with external firm (CEO) .
• DEA quota/API: Quota remains a constraint typical of CII markets; APIs used by Elite currently tariff-exempt with minimal duty impact (CEO/CFO) .
• Capacity: Two packaging lines operational at new facility; previous line moved after new line stabilized (CEO) .
• Pipeline: Positive BE for a large anticoagulant brand (no US generic); ANDA preparation ongoing; additional ANDAs under review (CEO) .
• Financial optics: CFO reiterated warrant-derivative mechanics and non-cash nature of related P&L swings .

Note: A Q1 FY2026 earnings call was scheduled, but a full transcript was not available in our document set; Q&A themes reflect the most recent (Q4 FY2025) call .

Estimates Context

• Wall Street consensus (S&P Global/Capital IQ): No published EPS or revenue consensus for ELTP’s Q1 FY2026 was available; coverage appears limited for this microcap. Actual revenue was $40.21M (per 10-Q) .
• Implication: With no consensus anchor, post-print estimate revisions are unlikely; investor focus should remain on volume/mix sustainability and margin durability rather than a “beat/miss” frame.

(Values related to consensus retrieved from S&P Global; none available for this period.)

Key Takeaways for Investors

• Core run-rate reset higher: Q1 revenue of $40.21M with 68% gross margin indicates meaningful scale/mix improvement; monitor whether this level is sustainable through competitive cycles in ADHD generics .
• GAAP optics vs cash reality: Non-cash warrant valuation drove GAAP loss; cash flow from operations was $14.78M, and working capital expanded materially to support growth .
• Competitive dynamics: CEO flagged 13 competitors and quota pressure in Vyvanse generics; watch pricing and DEA allocation updates—key swing variables for revenue/margins .
• Balance sheet de-risking: Related-party loans were repaid in June; low traditional debt, improving financial flexibility .
• Governance/process: Material weaknesses in internal controls persist; remediation progress will matter for uplisting/M&A credibility .
• Legal overhang: Purdue litigation around OxyContin ANDA continues; outcomes/timeline remain uncertain and could influence optionality in pain portfolio .
• Pipeline optionality: Positive BE on a large anticoagulant (no current generic) provides medium-term upside if ANDA approval and patent hurdles are navigated .

Appendix: Prior Quarters Reference

• Q3 FY2025 revenue $14.36M; softness tied to holiday shipment timing; subsequent packaging site approval supported further scale .
• FY2025 revenue $84.0M (+~48% YoY) with operating income $19.6M (+~81% YoY), establishing momentum into FY2026 .