Indivior Pharmaceuticals, Inc.: Form 10-Q for the period ended Mar 31, 2026

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, 2025.

As the leader in long-acting injectable treatments for opioid use disorder (OUD), Indivior is singularly focused on delivering evidence-based treatment and advancing understanding of OUD as a chronic but treatable brain disease. For more than 25 years, Indivior has revolutionized the science of addiction medicine, developing treatments that help people move toward long-term recovery with independence and dignity. Building on this heritage, Indivior is ushering in a new era, renewing our commitment to individuals living with OUD and carrying forward what matters most: compassion, integrity, and science. Together – with science, people living with OUD, public health champions, and communities – we are powering recovery and renewing hope.

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. Substantially all of 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 73% and 66% of our net revenue for the three months ended March 31, 2026 and 2025, respectively. Other buprenorphine-based sublingual products accounted for 25% and 32% of our net revenue for the three months ended March 31, 2026 and 2025, respectively. SUBOXONE Film had an oral buprenorphine medically assisted treatment (BMAT) average share of approximately 14% and 15% in the three months ended March 31, 2026 and 2025, respectively, according to data from Symphony Health.

Recent Developments

During the three months ended March 31, 2026, the Company incurred $14 million of costs associated with the Indivior Action Agenda, primarily related to severance, real estate impairment, and consulting, legal and tax expenses. The Company has entered Phase II - Accelerate of the Action Agenda, which is designed to accelerate SUBLOCADE dispense unit growth, net revenue and grow cash flow at an even faster rate in 2026.

In February 2026, the Company announced a share repurchase program of up to $400 million with a term of up to 18 months. In the three months ended March 31, 2026, 3,974,153 shares were repurchased at an average price of $31.45 for a total of $125 million. Indivior has $275 million remaining under the program which it intends to utilize opportunistically.

During the three months ended March 31, 2026, the Company successfully completed a $500 million offering of 0.625% convertible senior notes due in 2031 which included an option to purchase up to an additional $50 million aggregate principal amount of the Notes granted to the initial purchasers, which was exercised in full. A portion of the $500 million proceeds was used to repay in full the $333 million balance of Indivior's original term loan.

For a discussion of recent developments with respect to litigation, see Note 12. Commitments and Contingencies.

Research & Development Pipeline Updates

INDV-6001 (Buprenorphine Caproate): Indivior does not intend to pursue Phase 3 development of INDV-6001 and has amended its license agreement with Alar Pharmaceuticals. Pursuant to the amendment, Alar will regain development rights to the asset and will have commercialization rights outside the U.S. Indivior will maintain exclusive commercial rights in the U.S. should Alar receive FDA approval for a commercially viable product in the future.

INDV-2000 (Rocavorexant): INDV-2000 did not meet the primary endpoint of "no treatment failure.” Following a topline evaluation of the Phase 2 proof-of-concept study data, Indivior will not be advancing INDV-2000 internally as a treatment for opioid use disorder.

However, Indivior will pursue a business development opportunity with third parties. Importantly, prospectively planned sensitivity analyses, together with converging supportive findings, identified a credible and biologically coherent signal at the 200-milligram dose. Indivior intends to continue to strengthen the data package through additional analyses, including exposure-response work and further evaluation of supportive clinical and mechanistic findings. Study findings included directional effects on polysubstance use abstinence, exploratory anxiety outcomes, and fMRI evidence consistent with modulation of relapse-related neural circuitry. INDV-2000 also demonstrated a favorable safety and tolerability profile consistent with findings from previous studies.

Results of operations

Net revenue

Net revenue growth for the three months ended March 31, 2026 as compared to the same period of 2025 was primarily driven by sales of SUBLOCADE in the U.S.

(in millions)

Total net revenue increased by $51 million, or 19%, and U.S. net revenue increased by $50 million, or 22%, in the three months ended March 31, 2026 as compared to the same period of 2025.

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 $54 million, or 33%, in the three months ended March 31, 2026, as compared to the same period in 2025, driven by dispense unit volume growth of 20% and favorable price mix. U.S. net revenue from other products declined $4 million in the three months ended March 31, 2026, reflecting lower category share in the U.S. for SUBOXONE Film, partially offset by favorable gross-to-net adjustments.

Rest of the World net revenue. In the three months ended March 31, 2026, net revenue attributable to Rest of the World of $45 million increased by $1 million as compared to the same period in 2025. Rest of World net revenues recorded in the three months ended March 31, 2026 included approximately $5 million of revenues related to Rest of World market exits that are not expected to recur at this level in future periods.

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, 2025.

The following table provides a summary of activities with respect to accrued rebates and product returns and prompt pay discounts for the three months ended March 31, 2026 and 2025:

Accrued rebates and product returns include chargebacks as these are paid by Indivior. Prompt pay discounts are recorded as offsets to accounts receivable. Accrued rebates and product returns and prompt pay discounts decreased to $555 million as of March 31, 2026 from $678 million as of March 31, 2025, primarily driven by timing of rebate invoicing and payments. Specifically, Accrued rebates and product returns and prompt pay discounts were higher in the prior period ending March 31, 2025, primarily as a result of a delay in payment of approximately $100 million of government rebates due to late receipt of invoices.

Expenses

(in millions)

Cost of sales. Cost of sales decreased $4 million, or 10%, in the three months ended March 31, 2026 as compared to the same period of 2025. The decrease was primarily driven by approximately $5 million of SUBLOCADE revenues recognized in the first quarter of 2026 with no corresponding cost of sales, as the related inventory had been fully written down in prior periods.

Gross margin, which we define as gross profit divided by net revenue, was 87% in the three months ended March 31, 2026, as compared to 83% in the same period of 2025. The changes were primarily driven by the growth in SUBLOCADE volume, channel mix, and the benefit of changes in estimate related to rebate accruals.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased by $9 million, or 7%, in the three months ended March 31, 2026 as compared to the same period of 2025. The overall decrease in selling, general and administrative expenses was primarily driven by headcount reductions and other savings related to the Indivior Action Agenda, partly offset by investments in U.S. SUBLOCADE marketing.

Research and development expenses. Research and development expenses decreased by $6 million, or 28%, in the three months ended March 31, 2026 as compared to the same period of 2025. Research and development expenses in the three months ended March 31, 2026 included the impact of $7 million of real estate consolidation costs related to the Indivior Action Agenda. Excluding these impacts, lower research and development costs in the three months ended March 31, 2026 primarily reflect reprioritization of pipeline activities and restructuring benefits associated with the Indivior Action Agenda.

As discussed in the Research & Development Pipeline Updates section above, the Company does not intend to pursue Phase 3 development of INDV-6001 and also will not be advancing INDV-2000 internally. As a result, Research and development activities are expected to decrease in future periods.

Loss on extinguishment of debt. Loss on extinguishment of debt in the three months ended March 31, 2026 includes $18 million of costs incurred in connection with the full repayment of the Company's Note Purchase Agreement.

Net interest expense. Net interest expense was $4 million in the three months ended March 31, 2026 as compared to net interest expense of $7 million in the three months ended March 31, 2025. The decrease in interest expense reflects the lower interest cost of the Convertible Notes compared to the Company's previous Note Purchase Agreement.

Income tax expense. On January 26, 2026, the Company completed a redomiciliation to the United States, which resulted in a change in the applicable federal statutory income tax rate from 25% to 21%. Income tax expense of $26 million in the three months ended March 31, 2026 resulted in an effective tax rate of 23%, primarily driven by a U.K. global minimum top-up tax, disallowed expenses, and a write-off of U.K. Net Operating Losses, partially offset by U.K. innovation deductions. Income tax expense of $11 million in the three months ended March 31, 2025, resulted in an effective tax rate of 19%, primarily driven by benefits from U.K. innovation deductions and intragroup financing transactions, partially offset by a U.K. global minimum top-up tax and stock-based compensation shortfall tax expense.

Liquidity and Capital Resources

Overview

The Company's financial condition is summarized as follows:

(In millions)

24

Cash flows

(in millions)

Operating activities

Net cash used in operating activities was $9 million during the three months ended March 31, 2026, compared to net cash provided by operating activities of $75 million in the same period of 2025, a decrease of $84 million. Net cash used in operating activities in the three months ended March 31, 2026 primarily reflected litigation settlement payments of $34 million and the timing of tax and operational payments, partly driven by streamlining actions taken under the Indivior Action agenda, including the Rest of World optimization. These uses of cash were partially offset by cash generated from operations. Net cash provided by operating activities in the three months ending March 31, 2025 benefited from the timing of receipt of approximately $100 million in government rebate invoices, partially offset by litigation settlement payments.

Investing activities

Net cash used in investing activities was $19 million and $5 million in the three months ended March 31, 2026 and 2025, respectively, an increase of $14 million. The change is driven by an increase in capital expenditures in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, and was primarily related to construction of the Company’s new wholly-owned manufacturing facility for SUBLOCADE located in Raleigh, North Carolina.

We expect approximately $20 million to $30 million of capital expenditures for the full year 2026, primarily related to the Raleigh, North Carolina manufacturing facility.

Financing activities

Net cash provided by financing activities in the three months ended March 31, 2026 was $7 million, as compared to cash used in financing activities of $17 million in the same period of 2025. The change primarily reflects $151 million net cash inflows related to the issuance of the Convertible Notes and payoff in full of the previous term loan in the three months ended March 31, 2026, partly offset by higher cash outflows for shares repurchased and canceled of $115 million as well as cash outflows for the settlement of tax on equity awards.

During the three months ended March 31, 2026, the Company successfully completed a $500 million offering of 0.625% convertible senior notes due in 2031 which included an option to purchase up to an additional $50 million aggregate principal amount of the Notes granted to the initial purchasers, which was exercised in full. A portion of the $500 million proceeds was used to repay in full the $333 million balance of Indivior's original term loan. See Item 1. Financial Statements—Note 8. Debt for more details.

During the three months ended March 31, 2026, the Company announced a $400 million share repurchase program and purchased approximately 4 million shares for total cash outflows of $125 million. The program runs through mid-2027.

Current Liabilities

Our current liabilities exceed our current assets by $111 million and total liabilities exceed our total assets by $144 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 new Raleigh, North Carolina manufacturing facility for SUBLOCADE.

Contractual Obligations

Our contractual obligations as of March 31, 2026 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, 2025. With the exception of the impacts on the timing and amounts of debt repayments following the issuance of Convertible Senior Notes that mature in 2031 and repayment of debt under the Note Purchase Agreement, no material changes to our contractual obligations have occurred beyond the ordinary course of business as of March 31, 2026.

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, 2025. No significant changes to our accounting policies occurred during the quarter ended March 31, 2026. 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, 2025.

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 the disclosure controls and procedures of Indivior Pharmaceuticals, Inc. were effective as of March 31, 2026.

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting ("ICFR", as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 with the exception that the following risk factors are removed: “Our term loan contains covenants that limit our ability to plan for or respond to changes in our business,” and “Clinical trials for the development of products may be unsuccessful.”