Indivior Pharmaceuticals, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q and with our audited consolidated financial statements, including the accompanying notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2024. As discussed in Note 14. Revision of Previously Issued Financial Statements, the Company revised its previously issued financial statements to correct an accrual overstatement that did not have a material impact for any of the prior quarters or the annual periods in which they occurred. Amounts included in the discussion below for the three and nine months ended September 30, 2024 reflect the revisions.

Indivior is a pharmaceutical company working to help change patients' lives by developing medicines to treat OUD. The Company's vision is that all patients will have access to evidence-based treatment for OUD and we are dedicated to transforming OUD from a human crisis to a recognized and treated chronic disease. Building on its portfolio of OUD treatments, Indivior has a pipeline of product candidates designed to expand on its heritage in this category.

Operating Results

Overview

The Company operates as one business segment, which is predominantly the development, manufacture and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence and related disorders, and nalmefene nasal spray for emergency opioid overdose reversal. Substantially all our net revenue was derived from sales of SUBLOCADE and other buprenorphine-based sublingual products (including SUBOXONE Film, SUBOXONE Tablet and SUBUTEX Tablet). SUBLOCADE accounted for 70% and 69% of our net revenue for the three and nine months ended September 30, 2025, respectively, and 62% and 63% for the three and nine months ended September 30, 2024, respectively. Other buprenorphine-based sublingual products accounted for 26% and 28% of our net revenue for the three and nine months ended September 30, 2025, respectively, and 30% and 31% for the three and nine months ended September 30, 2024, respectively. In the U.S., SUBOXONE Film had an oral buprenorphine medically assisted treatment (BMAT) average share of 14.0% and 15.3% in the three months ended September 30, 2025 and 2024, respectively, according to data from IQVIA.

Recent Developments

For a discussion of recent developments with respect to litigation and tax settlements, see Note 12. Commitments and Contingencies and Note 3. Income Tax, respectively.

In August, 2025, the Company announced major initiatives as part of Phase 1 of the Indivior Action Agenda — Generate Momentum. In the three months ended September 30, 2025, $35 million of costs were recognized relating this agenda, consisting of severance for headcount reductions, impairment of real estate, and consulting, legal and tax expenses.

During the third quarter, the Company made a strategic decision to discontinue the sales and marketing support for OPVEE, its opioid overdose reversal product. The Company will continue to distribute OPVEE upon request and meet all required contractual and regulatory obligations. As a result of this decision, the Company recognized $37 million of costs in the three months ended September 30, 2025, including the write-down of inventory and intangible assets and expenses related to contract termination.

In October 2025, the Company initiated the optimization of the ROW business with plans to exit several non-U.S. markets, including the U.K., Ireland, Sweden, Israel, Finland and Italy. The Company will continue to own and operate its Fine Chemicals Plant in Hull, U.K. and will also continue to sell product and maintain operations in Canada, Australia and France, and sell product in Germany. These countries collectively represent 77% of forecasted ROW net revenue for the year. The optimization is expected to result in total charges ranging from $30 million to $50 million, primarily relating to headcount reductions, real estate consolidations, asset impairments, consulting services, and contractual termination and related costs. The majority of the charges will be recognized in the fourth quarter of 2025 and first quarter of 2026. These estimates are subject to a number of assumptions and actual expenses may differ materially from the estimates disclosed above.

In July 2025, the Company cancelled its London Stock Exchange listing and now trades exclusively on Nasdaq under the symbol "INDV", which aligns to the Company's capital markets footprint and a stronger focus on SUBLOCADE growth in the U.S.

Results of operations

Net revenue

Net revenue for the three and nine months ended September 30, 2025 and 2024 was driven by sales of SUBLOCADE and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE Tablet).

(in millions)

Total net revenue increased by $7 million, or 2%, and decreased by $8 million, or 1%, in the three and nine months ended September 30, 2025, respectively, and U.S. net revenue increased by $6 million, or 2%, and decreased by $12 million, or 2%, in the three and nine months ended September 30, 2025, respectively, as compared to the same periods of 2024.

U.S. net revenue. The U.S. is our largest market. Rebates, discounts and returns and other offsets to gross revenues are reflected in net revenue. U.S. net revenue from SUBLOCADE increased by $25 million, or 14%, and $38 million, or 7%, in the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024, reflecting increase dispenses, the benefit of changes in estimate related to rebate accruals of $10 million, and a stocking benefit of $4 million. U.S. net revenue from other products declined $19 million and $50 million in the three and nine months ended September 30, 2025, reflecting the impact of increased competitive activity resulting in lower pricing and market share in the U.S. for SUBOXONE Film. Lower OPVEE volumes in 2025 and the decline in PERSERIS net revenue following the decision to discontinue commercial sales support in July 2024 also contributed to the net revenue decline in the three and nine months ended September 30, 2025. During the third quarter of 2025, the Company made a strategic decision to discontinue sales and marketing support for OPVEE, although it will continue to distribute OPVEE upon request and meet all required contractual and regulatory obligations.

Rest of the World net revenue. In the three and nine months ended September 30, 2025, net revenue attributable to Rest of the World increased by $1 million, or 2%, and $4 million, or 3%, respectively, as compared to the same periods in 2024, reflecting positive contributions from newer products (SUBLOCADE / SUBUTEX® Prolonged Release and SUBOXONE Film) that were partially offset by ongoing generic erosion of the legacy tablet business. In the three and nine months ended September 30, 2025, SUBLOCADE / SUBUTEX Prolonged Release net revenue in Rest of World was $16 million and $43 million, respectively, as compared to $13 million and $38 million for the same periods in 2024, respectively. We expect incremental growth from new products to continue to more than offset net revenue declines in the legacy tablet business in 2025, though Rest of World net revenue will be impacted by our plans to exit several non-U.S. markets. The countries in which we will continue operations or distribution represent 77% of forecasted Rest of World net revenue.

Estimates, assumptions and judgments applied to determine the provision for rebates, discounts and returns are set out in "Item 8. Financial Statements—Note 2. Summary of Significant Accounting Policies" in our Annual Report on Form 10-K for the year ended December 31, 2024.

The following table provides a summary of activities with respect to accrued rebates and product returns and prompt pay discounts for the nine months ended September 30, 2025:

Accrued rebates and product returns include chargebacks as these are paid by Indivior. Prompt pay discounts are recorded as offsets to accounts receivable as of September 30, 2025. Accrued rebates and product returns and prompt pay discounts increased to $616 million as of September 30, 2025 from $608 million as of September 30, 2024.

Expenses

(in millions)

(1) See Item 1. Financial Statements—Note 7. Accrued Litigation Settlement Expenses.

Cost of sales. Cost of sales increased $17 million, or 26%, and decreased $3 million, or 2%, in the three and nine months ended September 30, 2025, respectively, as compared to the same periods of 2024. The increase reflects $37 million of impairment and other costs in the three and nine months ended September 30, 2025 associated with the discontinuation of sales and marketing support for OPVEE, as well as a $10 million write-down of SUBLOCADE inventory in the nine months ended September 30, 2025 due to expected expiration of finished goods prior to sale. The three and nine months ended September 30, 2024 include $10 million and $42 million, respectively, of costs related to the discontinuation of PERSERIS marketing and promotional activities.

Gross margin, which we define as gross profit divided by net revenue, was 73% and 80% in the three and nine months ended September 30, 2025, respectively, as compared to 79% and 79% in the same periods of 2024, respectively. The changes were primarily driven by the cost of sales factors described above. In addition, both periods of 2025 benefited from favorable mix reflecting SUBLOCADE volume growth and the benefit of changes in estimates related to rebate accruals.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $13 million, or 9%, and increased by $8 million, or 2%, in the three and nine months ended September 30, 2025, respectively, as compared to the same periods of 2024. Selling, general and administrative expenses in the three and nine months ended September 30, 2025 include $22 million of corporate transition initiative costs related to Phase 1 of the Indivior Action Agenda announced in August 2025. Selling, general and administrative expenses in the same periods of 2024 include $9 million and $12 million, respectively, of severance and other costs associated with the discontinuation of marketing and promotion of PERSERIS. Investments in U.S. SUBLOCADE marketing contributed $6 million and $21 million, respectively, of the increase in the three and nine months ended September 30, 2025. Both periods of 2025 also benefited from streamlining actions taken in 2024, including narrowing the Company's commercial focus on OUD treatments and discontinuing marketing and promotion of PERSERIS.

Research and development expenses. Research and development expenses increased by $11 million, or 48% in the three months ended September 30, 2025 and remained flat in the nine month period, as compared to the same periods of 2024. Research and development expenses in the three and nine months ended September 30, 2025 included the impact of $13 million of restructuring and impairment costs related to Phase 1 of the Indivior Action Agenda announced in August 2025. Excluding these impacts, lower research and development costs primarily reflect the Company's actions to refocus its development pipeline on the Phase 2 OUD assets (INDV-2000 and INDV-6001). We expect research and development expenses to continue to track below 2024 levels through the remainder of the year.

Net interest expense. Net interest expense was $6 million and $23 million in the three and nine months ended September 30, 2025, respectively, as compared to net interest expense of $5 million and $10 million in the three and nine months ended September 30, 2024. Higher net interest expense in the nine months ended September 30, 2025 includes $4 million related to an expected U.K. tax settlement and reflects interest expense on the larger amount borrowed under the Company's new borrowing arrangement secured in late 2024.

Income tax expense (benefit). Income tax benefit of $5 million and income tax expense of $50 million in the three and nine months ended September 30, 2025, respectively, as compared to income tax expense of $8 million and income tax benefit of $4 million in the three and nine months ended September 30, 2024, resulted in an effective tax rate of 14% and 32% in the three and nine months ended September 30, 2025, respectively. Both periods benefited from intragroup financing transactions; however, in the nine months ended September 30, 2025 this benefit was fully offset by a tax reserve for an HMRC settlement. During the three months ended September 30, 2025, HMRC's acceptance of our proposed settlement within calendar year 2025 became probable. Accordingly, the settlement payment is expected to be treated as a covered tax, effectively eliminating our Pillar II top-up tax expense for the year. Neither the settlement cost nor the resulting Pillar II elimination are expected to recur in future periods. In the three and nine months ended September 30, 2024, the Company incurred disallowed expenses, offset by share-compensation excess tax benefits and intragroup financing transaction benefits.

In July 2025, legislation commonly referred to as the OBBBA was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027, primarily impacting companies domiciled in the U.S. The Company is evaluating the implications of these tax law changes and does not currently anticipate material impacts.

Known Risks and Uncertainties

Many risks and uncertainties are discussed in the Risk Factors section in Item 1A of our Annual Report on Form 10-K filed March 3, 2025 and Quarterly Reports on Form 10-Q filed May 1, 2025 and July 31, 2205, Part II Item 1A herein, and our other filings with the U.S. Securities and Exchange Commission.

Regulatory Uncertainties

The budget reconciliation legislation of 2025, the OBBBA, was signed into law in July 2025. The OBBBA contains a variety of provisions that could impact our business and results of operations, and States, Medicaid plans and providers may respond to policy and sector change by limiting patient eligibility and care delivery in ways that affect access to treatment for OUD, including: innovative or higher cost treatments could be deprioritized or removed from states formularies; changes to Medicaid funding and eligibility rules, including more frequent redeterminations for beneficiaries receiving coverage through Medicaid; a requirement for adults made eligible under the Affordable Care Act ("ACA") to meet work or community engagement standards (from which persons with substance use disorder are exempt); changes to federal requirements regarding Medicaid state directed payments and provider taxes; and establishes a new rural health transformation program, among other provisions. Additional federal and state guidance is expected to be issued in order to implement these OBBBA provisions, most of which have effective dates in 2027 and 2028. Additionally, in June 2025, CMS finalized the Marketplace Integrity and Affordability Regulation which modifies the ACA exchange open enrollment periods and eligibility for premium tax credits, among other requirements.

Liquidity and Capital Resources

Overview

The Company's financial condition is summarized as follows:

(In millions)

Cash flows

(in millions)

Operating activities

Net cash provided by operating activities was $194 million and $53 million during the nine months ended September 30, 2025 and 2024, respectively, an increase of $141 million. Net cash provided by operating activities in the nine months ended September 30, 2025 primarily reflected higher cash generated from operations.

Both periods reflected scheduled payment of litigation settlements. Refer to Item 1. Financial Statements—Note 7. Accrued Litigation Settlement Expenses for additional details.

Investing activities

Net cash used in investing activities was $42 million and net cash provided by investing activities was $61 million in the nine months ended September 30, 2025 and 2024, respectively, a decrease of $103 million. The change reflects lower proceeds from maturities of investments, partly offset by an increase in capital expenditures.

We expect approximately $45 million to $55 million of capital expenditures for the full year 2025 and an additional $35 million to $45 million in 2026, primarily related to the Raleigh Manufacturing Facility SUBLOCADE suite.

The Company expects to continue evaluating investment opportunities in commercial stage assets, with no current commitments.

Financing activities

Net cash used in financing activities decreased by $117 million in the nine months ended September

30, 2025. Net cash used in financing activities in the current period primarily reflects lower cash outflows for shares repurchased and canceled and the settlement of tax on equity awards, partially offset by higher scheduled repayments under the Company's new debt facility. In 2025, the annual scheduled repayments are 5% of the original gross loan balance.

Current Liabilities

Our current liabilities exceed our current assets by $43 million and total liabilities exceed our total assets by $207 million. The Company sustains negative working capital because of the timing of rebate payments relative to the collection of accounts receivable.

Capital Resources

The Company believes its existing cash and cash equivalents and investments together with cash generated from operations and debt will enable its anticipated cash needs to be met, including working capital, capital expenditures, litigation settlement payments, milestone payments, income taxes, debt repayments and other funding requirements, for at least the twelve-month period following the issuance of this Form 10-Q. The Company will need to sustain sales volume performance with no material change in the timing of its collections and rebate payments to maintain necessary liquidity in the near term and to meet our obligations in the long term. The Company is also subject to contingent liabilities as described in Item 1. Financial Statements—Note 12. Commitments and Contingencies.

Capital Expenditures

(in millions)

The Company’s capital expenditures primarily reflect investments in the expansion of the Raleigh Manufacturing Facility.

Contractual Obligations

Our contractual obligations as of September 30, 2025 that require material cash requirements in the future consist of debt repayments, litigation settlements, commercial commitments related to contract manufacturing and supply of materials, capital expenditures, lease and employee-related obligations, and contractual milestones. Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024. As of September 30, 2025 no material changes to our contractual obligations have occurred beyond the ordinary course of business.

Research and Development Expenses, Patents and Licenses, etc.

No material changes have occurred from the information provided in Item 1. Business—Research and Development,” “Item 1. Business—Intellectual Property,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operating Results" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Trend Information

For a discussion of trend information, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operating Results.”

Critical Accounting Estimates

Our significant accounting policies, which include management’s estimates and judgments, are included in "Item 1. Financial Statements - Note 2 Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2024. No significant changes to our accounting policies occurred during the quarter ended September 30, 2025. A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates is included in the Critical Accounting Estimates section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, refer to Item 1. Financial Statements - Note 1. Business Overview, Basis of Presentation, and Recently Issued Accounting Standards.

No material changes in market risk have occurred from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the Company’s Annual Report on Form 10-K.

Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Indivior PLC’s disclosure controls and procedures were effective as of September 30, 2025.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting ("ICFR", as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter ended September 30, 2025 that has materially affected, or is likely to materially affect, the Company’s ICFR.