Royalty Pharma plc

Royalty Pharma reported second-quarter 2026 portfolio receipts of $773 million, up 6% year over year, and royalty receipts up 14% year over year. Adjusted portfolio cash flow was $736 million in the quarter, with operating and professional costs at 4.8% of portfolio receipts and net interest paid de minimis; return on invested capital was 14.2% and return on invested equity was 20.1%. Cash and equivalents were $812 million at June 30, 2026, debt outstanding was $9.2 billion, and leverage was 2.8x total debt to adjusted EBITDA, or 2.6x net. For 2026, management raised portfolio receipts guidance to $3.4 billion to $3.5 billion from $3.325 billion to $3.45 billion, royalty receipts growth guidance to about 7% to 10% from 4% to 8%, and continued to expect milestones and other contractual receipts of about $60 million, operating and professional costs of 5.5% to 6.5% of portfolio receipts, and interest paid of $350 million to $360 million.

Pablo Legorreta framed the quarter as another example of strong, predictable double-digit growth and disciplined capital allocation. He emphasized the company’s long record of compounding, saying this was Royalty Pharma’s 25th consecutive quarter as a public company with strong predictable growth, and pointed to the firm’s scale, moat, and ability to build one-of-a-kind royalty assets over years. He also stressed that the business is well positioned to keep growing through 2030 and beyond, supported by a diversified portfolio, a robust deal pipeline, and ongoing strength in life sciences innovation.

Terry Coyne focused on cash generation, efficiency, and balance-sheet flexibility. He said portfolio receipts were $773 million, adjusted portfolio cash flow was $736 million, and the margin was around 95%, while operating and professional costs were 4.8% of portfolio receipts and net interest paid was de minimis due to payment timing and cash on hand. He also noted $812 million of cash, $9.2 billion of investment-grade debt, 2.8x gross leverage, 2.6x net leverage, an undrawn $1.8 billion revolver, and BBB ratings across all major agencies. On capital allocation, he said Royalty Pharma deployed $877 million in H1 2026 and returned about $367 million to shareholders, including about $100 million in repurchases.

Analysts pressed management on deal structure flexibility amid increased pharma M&A, the impact of CARDIO-TTRansform on Amvuttra, the pace of synthetic royalties, development-stage versus approved mix, China exposure and U.S. policy risk, operating-cost seasonality, and whether milestones could rise in the second half. Management said it remains agnostic to rates and flexible in partnering, is excited about the synthetic royalty market, and is comfortable with the current overall mix while allowing development-stage exposure to rise modestly over time. On TTR, management said it is pleased to have both Amvuttra and cliramitug, and on China it said the opportunity is real but early, with monitoring of Washington policy developments ongoing. On milestones, management reiterated full-year expectations of about $60 million.