Royalty Pharma Reports Q4 and Full Year 2023 Results
- Strong financial performance in 2023 with Portfolio Receipts of $3,049 million for the full year.
- Significant transaction activity in 2023 with $4.0 billion in announced transactions.
- Positive clinical and regulatory milestones enhancing the outlook for the royalty portfolio.
- Financial guidance for 2024 expects Portfolio Receipts between $2,600 to $2,700 million with 5% to 9% growth in royalty receipts.
- Royalty Pharma's founder and CEO, Pablo Legorreta, expresses confidence in the company's position to fund life sciences innovation and deliver long-term growth.
- None.
Insights
The reported financials of Royalty Pharma plc indicate a robust performance for FY 2023, with Portfolio Receipts growing by 9% to $3,049 million. This growth is significant as it reflects the company's ability to generate revenue from its diversified royalty portfolio. The announcement of transactions up to $4.0 billion also underscores aggressive capital deployment in potentially transformative therapies, which could enhance future revenue streams. However, the Q4 decrease in Portfolio Receipts by 31% due to accelerated Biohaven payments in Q4 2022 should be considered when evaluating the quarter-on-quarter performance.
From a liquidity standpoint, the net cash provided by operating activities and non-GAAP measures like Adjusted EBITDA and Portfolio Cash Flow suggest a strong financial position. The company's strategic maneuvers, such as share repurchases and credit facility amendments, reflect confidence in its financial health and a commitment to delivering shareholder value. The guidance for 2024, projecting a 5% to 9% growth in royalty receipts, provides a positive outlook but should be weighed against the backdrop of the broader pharmaceutical industry's performance and potential market risks.
The pharmaceutical royalty market is increasingly competitive, with companies like Royalty Pharma seeking to capitalize on the growing demand for innovative treatments. The company's acquisition of royalties for Phase 3 products like TEV-’749 and Evrysdi and its interest in ecopipam, highlight its strategic focus on expanding its portfolio with late-stage assets that have a higher probability of reaching the market. This approach may provide a competitive edge and drive long-term growth.
Furthermore, the company's full-year guidance for 2024 reflects optimism about the performance of its existing portfolio and suggests confidence in the continued growth of its royalty receipts. Investors should monitor the progress of the company's development-stage assets and the potential impact of new transactions on its financial outlook. The emphasis on transparency in reporting, with changes in the presentation of Portfolio Receipts, is likely to be well-received by the market, fostering trust and clarity in Royalty Pharma's financial disclosures.
Royalty Pharma's portfolio includes royalties on several high-profile drugs with positive clinical trial results, such as aficamten for hypertrophic cardiomyopathy and pelabresib for myelofibrosis. These developments are likely to have a positive impact on the company's revenue streams if the drugs receive regulatory approval and achieve commercial success. Additionally, the acquisition of Karuna by Bristol Myers Squibb could potentially lead to increased royalty income from KarXT for schizophrenia.
The company's focus on acquiring royalties for drugs in late-stage clinical trials or already approved, such as Evrysdi for spinal muscular atrophy, strategically positions it to benefit from the drugs' commercial trajectories. The financial guidance for 2024, excluding contributions from future transactions, suggests a conservative approach, leaving room for upside surprises from new deals or better-than-expected drug performances. Stakeholders should consider the implications of these clinical and regulatory milestones on the company's future profitability and risk profile.
- Portfolio Receipts of
$736 million in Q4 2023 and$3,049 million for FY 2023 - Net cash provided by operating activities of
$773 million in Q4 2023 and$2,988 million for FY 2023 - Announced transactions of up to
$4.0 billion in 2023 - Full year 2024 guidance: Portfolio Receipts of
$2,600 t o$2,700 million (reflecting royalty receipts growth of5% to9% year/year) excluding future transactions
NEW YORK, Feb. 15, 2024 (GLOBE NEWSWIRE) -- Royalty Pharma plc (Nasdaq: RPRX) today reported financial results for the fourth quarter and full year of 2023 and introduced full year 2024 guidance for Portfolio Receipts. “Royalty Pharma delivered outstanding results in 2023,” said Pablo Legorreta, Royalty Pharma’s founder and Chief Executive Officer. “We reported another year of strong growth in royalty receipts and deployed substantial capital in value-enhancing transactions, including our strongest year ever for synthetic royalty transactions. Furthermore, a number of positive clinical and regulatory milestones strengthened the outlook for our diversified royalty portfolio. Based on the strong fundamental tailwinds underpinning our business, our strong balance sheet and robust deal pipeline, I am confident we are in an excellent position to fund life sciences innovation and deliver attractive, long-term compounding growth.”
Portfolio Receipts show strong growth for full year 2023
- Portfolio Receipts (previously referred to as Adjusted Cash Receipts) decreased
31% to$736 million in the fourth quarter, reflecting the accelerated Biohaven payments received in the fourth quarter of 2022. - Portfolio Receipts increased
9% to$3,049 million for full year 2023, driven primarily by strong portfolio performance and new royalty acquisitions, and consistent with the raised guidance provided on January 8, 2024. - Royalty receipts grew
10% for the quarter and8% for the full year.
Significant transaction activity in 2023 with eight potentially transformative therapies added to portfolio
- Announced value of new transactions was
$4.0 billion for full year 2023. - Transactions since 2020 expected to add approximately
$1.2 billion to Portfolio Receipts in 2025.
Positive updates in the fourth quarter across development-stage royalty portfolio
- Phase 3 results for Cytokinetics’ aficamten met the primary endpoint for hypertrophic cardiomyopathy.
- Bristol Myers Squibb announced the acquisition of Karuna (marketer of KarXT for schizophrenia).
- Phase 3 results for MorphoSys’ pelabresib met the primary endpoint in myelofibrosis; Novartis announced the acquisition of MorphoSys.
Financial guidance for full year 2024 (excludes contribution from future transactions)
- Royalty Pharma expects 2024 Portfolio Receipts to be between
$2,600 million and$2,700 million . - 2024 Portfolio Receipts guidance includes expected growth in royalty receipts of
5% to9% .
Financial & Liquidity Summary
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| (unaudited) | ||||
| ($ and shares in millions) | 2023 | 2022 | 2023 | 2022 |
| Portfolio Receipts | 736 | 1,064 | 3,049 | 2,789 |
| Net cash provided by operating activities | 773 | 570 | 2,988 | 2,144 |
| Adjusted EBITDA (non-GAAP)* | 682 | 983 | 2,806 | 2,566 |
| Portfolio Cash Flow (non-GAAP)* | 687 | 996 | 2,708 | 2,421 |
| Weighted average/fully diluted Class A ordinary shares outstanding | 598 | 607 | 603 | 607 |
* See “Liquidity and Capital Resources” section. Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures calculated in accordance with the credit agreement. Portfolio Cash Flow is a non-GAAP measure that is calculated as Adjusted EBITDA minus interest paid or received, net.
Fourth Quarter 2023 Portfolio Receipts
As previously announced (January 8, 2024 press release), Portfolio Receipts is now being reported as a key performance metric. The calculation of Portfolio Receipts will result in the same amount as Royalty Pharma’s previous presentation of Adjusted Cash Receipts (which will no longer be reported).
This change of presentation will facilitate increased transparency into the economics of individual royalties as royalty receipts by product and franchise will now be reported net of legacy non-controlling interests. In addition, Royalty receipts and Milestones and other contractual receipts will be reported as two separate subtotals summing to Portfolio Receipts. This change will provide greater clarity on the underlying trends of Royalty Pharma’s royalty portfolio versus other contractual payments which may be more variable over time. Prior-period results using this updated presentation are available for download on the Quarterly Results page of the company’s website under Supplemental Financial Information (link here).
Portfolio Receipts Highlights
| Three Months Ended December 31, | |||||
| (unaudited) | |||||
| ($ in millions) | 2023 | 2022 | Change | ||
| Products: | Marketers: | Therapeutic Area: | |||
| Cystic fibrosis franchise | Vertex | Rare disease | 208 | 187 | |
| Tysabri | Biogen | Neuroscience | 68 | 73 | (7)% |
| Trelegy | GSK | Respiratory | 60 | 47 | |
| Imbruvica | AbbVie, Johnson & Johnson | Cancer | 50 | 58 | (13)% |
| Promacta | Novartis | Hematology | 44 | 40 | |
| Xtandi | Pfizer, Astellas | Cancer | 38 | 38 | |
| Tremfya | Johnson & Johnson | Immunology | 35 | 29 | |
| Evrysdi | Roche | Rare disease | 20 | 14 | |
| Cabometyx/Cometriq | Exelixis, Ipsen, Takeda | Cancer | 18 | 15 | |
| Spinraza | Biogen | Rare disease | 17 | — | n/a |
| Trodelvy | Gilead | Cancer | 10 | 6 | |
| Erleada | Johnson & Johnson | Cancer | 9 | 5 | |
| Orladeyo | BioCryst | Rare disease | 8 | 6 | |
| Nurtec ODT/Zavzpret | Pfizer | Neuroscience | 5 | 4 | |
| Other products(5) | 63 | 71 | (12)% | ||
| Royalty receipts | 651 | 593 | |||
| Milestones and other contractual receipts | 84 | 470 | (82)% | ||
| Portfolio Receipts | 736 | 1,064 | (31)% | ||
| Results for full year 2023 and 2022 are shown in Table 4. Amounts shown in the table may not add due to rounding. | |||||
Portfolio Receipts was
Liquidity and Capital Resources
Royalty Pharma’s liquidity and capital resources are summarized below:
As of December 31, 2023, Royalty Pharma had cash and cash equivalents of
Liquidity Summary
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 |
| Portfolio Receipts | 736 | 1,064 | 3,049 | 2,789 |
| Payments for operating and professional costs | (54) | (81) | (243) | (223) |
| Adjusted EBITDA (non-GAAP)* | 682 | 983 | 2,806 | 2,566 |
| Interest received/(paid), net | 5 | 14 | (98) | (145) |
| Portfolio Cash Flow (non-GAAP)* | 687 | 996 | 2,708 | 2,421 |
Amounts may not add due to rounding.
*Adjusted EBITDA and Portfolio Cash Flow are calculated in accordance with the credit agreement.
Adjusted EBITDA and Portfolio Cash Flow are supplemental non-GAAP liquidity measures that are key components of certain material covenants contained in Royalty Pharma’s credit agreement.
- Adjusted EBITDA (non-GAAP) was
$682 million in the fourth quarter of 2023. Adjusted EBITDA is calculated in accordance with the credit agreement as Portfolio Receipts minus payments for operating and professional costs. The calculation of Adjusted EBITDA results in the same total as under Royalty Pharma’s previous presentation of Adjusted EBITDA. - Portfolio Cash Flow (non-GAAP) was
$687 million in the fourth quarter of 2023. Portfolio Cash Flow is calculated in accordance with the credit agreement as Adjusted EBITDA minus interest paid or received, net. This non-GAAP measure was added to our disclosure to align with a material covenant contained in Royalty Pharma’s credit agreement. This measure reflects the cash generated by Royalty Pharma’s business that can be redeployed into value-enhancing royalty acquisitions, used to repay debt, returned to shareholders through dividends or share purchases or utilized for other discretionary investments. The calculation of Portfolio Cash Flow does not include development-stage funding payments - upfront and milestone. This is the primary material difference from Royalty Pharma’s previous presentation of Adjusted Cash Flow (which will no longer be reported).
Royalty Pharma has provided a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure, net cash provided by operating activities in Table 5.
Royalty Pharma announced new transactions of up to
Capital Deployment Details
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 |
| Acquisitions of financial royalty assets | (1,002) | (250) | (2,116) | (1,742) |
| Development-stage funding payments - upfront and milestone | — | (50) | (50) | (175) |
| Development-stage funding payments – ongoing | (1) | (1) | (2) | (2) |
| Purchases of available for sale debt securities | — | (86) | — | (480) |
| Milestone payments | — | — | (12) | — |
| Investments in equity method investees | (2) | — | (13) | (10) |
| Acquisitions of other financial assets | — | — | — | (21) |
| Contributions from legacy non-controlling interests - R&D | 0 | 0 | 1 | 1 |
| Total Capital Deployment | (1,005) | (386) | (2,192) | (2,428) |
Amounts may not add due to rounding.
In October 2023, Royalty Pharma drew
Royalty Pharma began repurchasing its Class A ordinary shares in April 2023 under a
Recent Transactions
During the fourth quarter of 2023, Royalty Pharma announced new transactions of up to
Recent transactions include:
- In November 2023, Royalty Pharma acquired a royalty interest in long-acting injectable olanzapine (TEV-’749), a Phase 3 development-stage product for the treatment of schizophrenia, from Teva Pharmaceuticals Industries Ltd. (press release). Under the terms of the agreement, Royalty Pharma will provide R&D funding of up to
$125 million to support the development of TEV-’749. - In October 2023, Royalty Pharma acquired additional royalties on Roche’s Evrysdi (press release), an approved product for the treatment of spinal muscular atrophy, from PTC Therapeutics, Inc. (PTC) for an upfront payment of
$1.0 billion . Until December 31, 2025, PTC will have the option to sell the remainder of the Evrysdi royalty retained by PTC to Royalty Pharma for$500 million less royalties received in five equal tranches. If PTC exercises fewer than three of these options, Royalty Pharma has the option to purchase50% of the remaining PTC royalty for$250 million less royalties received until March 31, 2026. - Additionally, in January 2024, Royalty Pharma acquired a royalty interest in ecopipam for an upfront payment of
$49 million and up to$44 million in milestone payments contingent on the achievement of certain regulatory milestones. Ecopipam is in Phase 3 development by Emalex Biosciences for the treatment of Tourette Syndrome.
The information in this section should be read together with Royalty Pharma’s reports and documents filed with the SEC at www.sec.gov and the reader is also encouraged to review all other press releases and information available in the Investors section of Royalty Pharma’s website at www.royaltypharma.com.
Key Developments Relating to the Portfolio
The key developments related to Royalty Pharma’s royalty interests are discussed below based on disclosures from the marketers of the products.
| Pelabresib | In February 2024, Novartis announced that it has entered into an agreement to make a voluntary public takeover offer to acquire MorphoSys at an offer price of In November 2023, MorphoSys announced positive topline results from the Phase 3 MANIFEST-2 study investigating pelabresib in combination with ruxolitinib compared with placebo plus ruxolitinib in JAK inhibitor-naive patients with myelofibrosis. A New Drug Application (NDA) is expected to be submitted to the U.S. Food and Drug Administration (FDA) in the second half of 2024. |
| Cystic fibrosis franchise | In February 2024, Vertex announced positive Phase 3 results from its new triple combination therapy for the treatment of cystic fibrosis (CF). Vertex plans to file for approval with global regulators for people with CF ages 6 years and older by mid-2024. In November 2023, Vertex announced that the European Commission granted approval for the label expansion of Kaftrio in a combination regimen with ivacaftor for the treatment of children with CF ages 2 through 5 years old. |
| Trodelvy | In January 2024, Gilead announced that the Phase 3 EVOKE-01 study evaluating Trodelvy compared to docetaxel did not meet its primary endpoint of overall survival in patients with previously treated metastatic non-small cell lung cancer. |
| Aficamten | In December 2023, Cytokinetics announced positive topline results from SEQUOIA-HCM, the pivotal Phase 3 clinical trial of aficamten in patients with symptomatic obstructive hypertrophic cardiomyopathy. The full results will be presented at an upcoming conference. |
| KarXT | In December 2023, Bristol Myers Squibb announced it has agreed to acquire Karuna for In November 2023, Karuna announced that the FDA accepted its NDA for KarXT for the treatment of schizophrenia with an FDA action date of September 26, 2024. |
| Skytrofa | In December 2023, Ascendis Pharma announced positive topline results from foresiGHt, its Phase 3 trial to compare TransCon hGH with placebo and daily hGH in adults with growth hormone deficiency. Ascendis plans to submit a supplemental Biologics License Application to the FDA in 2024. |
| Xtandi | In November 2023, Astellas and Pfizer announced that the companies received an approval by the FDA of a supplemental NDA for Xtandi for the treatment of patients with nonmetastatic castration-sensitive prostate cancer with biochemical recurrence at high risk for metastasis. |
| Trontinemab | In October 2023, Roche presented interim results of a Phase 1b/2a study for trontinemab, a novel brainshuttle Aβ antibody for the treatment of Alzheimer’s disease. This study demonstrated that trontinemab rapidly reduces amlyoid plaque reduction in patients with Alzheimer’s disease. |
2024 Financial Outlook
Royalty Pharma has provided guidance for full year 2024, excluding transactions and borrowings announced after the date of this release, as follows:
| Provided February 15, 2024 | |
| Portfolio Receipts | |
| Payments for operating and professional costs | |
| Interest Paid |
The above Portfolio Receipts guidance includes expected royalty receipts growth of
Royalty Pharma’s full-year 2024 guidance reflects a negligible estimated foreign exchange impact to Portfolio Receipts, assuming current foreign exchange rates prevail for 2024.
Total interest paid is based on the semi-annual interest payment schedule of Royalty Pharma’s existing notes and is anticipated to be approximately
Royalty Pharma today provides this guidance based on its most up-to-date view on its prospects. This guidance assumes no major unforeseen adverse events and excludes the contributions from transactions announced subsequent to the date of this press release. Furthermore, Royalty Pharma may amend its guidance in the event it engages in new royalty transactions which have a material near-term financial impact on the company.
Financial Results Call
Royalty Pharma will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2023 results today at 8:00 a.m., Eastern Time. Please visit the “Investors” page of the company’s website at https://www.royaltypharma.com/investors/events to obtain conference call information and to view the live webcast. A replay of the conference call and webcast will be archived on the company's website for at least 30 days.
About Royalty Pharma plc
Founded in 1996, Royalty Pharma is the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry, collaborating with innovators from academic institutions, research hospitals and non-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. Royalty Pharma has assembled a portfolio of royalties which entitles it to payments based directly on the top-line sales of many of the industry’s leading therapies. Royalty Pharma funds innovation in the biopharmaceutical industry both directly and indirectly - directly when it partners with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when it acquires existing royalties from the original innovators. Royalty Pharma’s current portfolio includes royalties on more than 35 commercial products, including Vertex’s Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT and Gilead’s Trodelvy, and 14 development-stage product candidates.
Forward-Looking Statements
The information set forth herein does not purport to be complete or to contain all of the information you may desire. Statements contained herein are made as of the date of this document unless stated otherwise, and neither the delivery of this document at any time, nor any sale of securities, shall under any circumstances create an implication that the information contained herein is correct as of any time after such date or that information will be updated or revised to reflect information that subsequently becomes available or changes occurring after the date hereof.
This document contains statements that constitute “forward-looking statements” as that term is defined in the United States Private Securities Litigation Reform Act of 1995, including statements that express the company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Examples include discussion of Royalty Pharma’s strategies, financing plans, growth opportunities and market growth. In some cases, you can identify such forward-looking statements by terminology such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project,” “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or similar expressions. Forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to the company. However, these forward-looking statements are not a guarantee of Royalty Pharma’s performance, and you should not place undue reliance on such statements. Forward-looking statements are subject to many risks, uncertainties and other variable circumstances, and other factors. Such risks and uncertainties may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements. Many of these risks are outside of the company’s control and could cause its actual results to differ materially from those it thought would occur. The forward-looking statements included in this document are made only as of the date hereof. The company does not undertake, and specifically declines, any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments, except as required by law.
Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the company’s own internal estimates and research. While the company believes these third-party sources to be reliable as of the date of this document, it has not independently verified, and makes no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from third-party sources. In addition, all of the market data included in this document involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while the company believes its own internal research is reliable, such research has not been verified by any independent source.
For further information, please reference Royalty Pharma’s reports and documents filed with the U.S. Securities and Exchange Commission ("SEC") by visiting EDGAR on the SEC's website at www.sec.gov.
Portfolio Receipts
Portfolio Receipts is a key performance metric that represents our ability to generate cash from our portfolio investments, the primary source of capital that we can deploy to make new portfolio investments. Portfolio Receipts is defined as the sum of royalty receipts and milestones and other contractual receipts. Royalty receipts include variable payments based on sales of products, net of contractual payments to the legacy non-controlling interests, that is attributed to Royalty Pharma.
Milestones and other contractual receipts include sales-based or regulatory milestone payments and other fixed contractual receipts, net of contractual payments to legacy non-controlling interests, that is attributed to Royalty Pharma. Portfolio Receipts does not include proceeds from equity securities or proceeds from purchases and sales of marketable securities, neither of which are central to our fundamental business strategy.
Portfolio Receipts is calculated as the sum of the following line items from our GAAP consolidated statements of cash flows: Cash collections from financial royalty assets, Cash collections from intangible royalty assets, Other royalty cash collections, Proceeds from available for sale debt securities and Distributions from equity method investees less Distributions to legacy non-controlling interests - Portfolio Receipts, which represent contractual distributions of royalty receipts, milestones and other contractual receipts to the Legacy Investors Partnerships and RPSFT.
Use of Non-GAAP Measures
Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures that exclude the impact of certain items and therefore have not been calculated in accordance with GAAP. Management believes that Adjusted EBITDA and Portfolio Cash Flow are important non-GAAP measures used to analyze liquidity because they are key components of certain material covenants contained within Royalty Pharma’s credit agreement. Royalty Pharma cautions readers that amounts presented in accordance with the definitions of Adjusted EBITDA and Portfolio Cash Flow may not be the same as similar measures used by other companies or analysts. These non-GAAP liquidity measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for the analysis of Royalty Pharma’s results as reported under GAAP.
The definitions of Adjusted EBITDA and Portfolio Cash Flow used by Royalty Pharma are the same as the definitions in the credit agreement. Noncompliance with the interest coverage ratio, leverage ratio and Portfolio Cash Flow ratio covenants under the credit agreement could result in lenders requiring the company to immediately repay all amounts borrowed. If Royalty Pharma cannot satisfy these covenants, it would be prohibited under the credit agreement from engaging in certain activities, such as incurring additional indebtedness, paying dividends, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA and Portfolio Cash Flow are critical to the assessment of Royalty Pharma’s liquidity.
Adjusted EBITDA and Portfolio Cash Flow are used by management as key liquidity measures in the evaluation of the company’s ability to generate cash from operations. Management uses Adjusted EBITDA and Portfolio Cash Flow when considering available cash, including for decision-making purposes related to funding of acquisitions, debt repayments, dividends and other discretionary investments. Further, these non-GAAP liquidity measures help management, the audit committee and investors evaluate the company’s ability to generate liquidity from operating activities.
The company has provided reconciliations of these non-GAAP liquidity measures to the most directly comparable GAAP financial measure, being net cash provided by operating activities in Table 5.
Royalty Pharma Investor Relations and Communications
+1 (212) 883-6637
ir@royaltypharma.com
| Royalty Pharma plc Condensed Consolidated Operations (unaudited) Table 1 | ||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 |
| Income and other revenues | ||||
| Income from financial royalty assets | 523 | 547 | 2,198 | 2,125 |
| Revenue from intangible royalty assets | 0 | 0 | 1 | 37 |
| Other royalty income | 73 | 19 | 156 | 75 |
| Total income and other revenues | 596 | 566 | 2,355 | 2,237 |
| Operating expenses | ||||
| Research and development funding expense | 1 | 51 | 52 | 177 |
| Provision for changes in expected cash flows from financial royalty assets | (77) | 309 | 561 | 904 |
| Amortization of intangible assets | — | — | — | 6 |
| General and administrative expenses | 59 | 73 | 250 | 227 |
| Financial royalty asset impairment | — | 616 | — | 616 |
| Total operating expenses, net | (17) | 1,048 | 862 | 1,930 |
| Operating income/(loss) | 613 | (483) | 1,492 | 307 |
| Other (income)/expense | ||||
| Equity in (earnings)/losses of equity method investees | (0) | 7 | (29) | 9 |
| Interest expense | 47 | 47 | 187 | 188 |
| Other (income)/expense, net | (152) | 74 | (366) | (120) |
| Total other (income)/expense, net | (105) | 127 | (208) | 77 |
| Consolidated net income/(loss) before tax | 718 | (610) | 1,700 | 230 |
| Income tax expense | — | — | — | — |
| Consolidated net income/(loss) | 718 | (610) | 1,700 | 230 |
| Net income/(loss) attributable to non-controlling interests | 223 | (154) | 565 | 187 |
| Net income/(loss) attributable to Royalty Pharma plc | 494 | (456) | 1,135 | 43 |
Amounts may not add due to rounding.
| Royalty Pharma plc Selected Balance Sheet Data (unaudited) Table 2 | ||
| ($ in millions) | As of December 31, 2023 | As of December 31, 2022 |
| Cash and cash equivalents | 477 | 1,711 |
| Marketable securities | — | 24 |
| Total current and non-current financial royalty assets, net | 14,827 | 14,184 |
| Total assets | 16,382 | 16,813 |
| Current portion of long-term debt | — | 998 |
| Long-term debt, net of current portion | 6,135 | 6,119 |
| Total liabilities | 6,298 | 7,288 |
| Total shareholders’ equity | 10,084 | 9,525 |
| Royalty Pharma plc Consolidated Statements of Cash Flows (unaudited) Table 3 | ||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 |
| Cash flows from operating activities: | ||||
| Cash collections from financial royalty assets | 747 | 663 | 3,201 | 2,507 |
| Cash collections from intangible royalty assets | 0 | 1 | 1 | 73 |
| Other royalty cash collections | 75 | 18 | 159 | 70 |
| Distributions from equity method investees | — | 6 | 19 | 39 |
| Interest received | 8 | 14 | 72 | 25 |
| Development-stage funding payments - ongoing | (1) | (1) | (2) | (2) |
| Development-stage funding payments - upfront and milestone | — | (50) | (50) | (175) |
| Payments for operating and professional costs | (54) | (81) | (243) | (223) |
| Interest paid | (3) | (1) | (169) | (170) |
| Net cash provided by operating activities | 773 | 570 | 2,988 | 2,144 |
| Cash flows from investing activities: | ||||
| Distributions from equity method investees | 5 | — | 44 | — |
| Investments in equity method investees | (2) | — | (13) | (10) |
| Purchases of equity securities | — | (25) | — | (88) |
| Proceeds from equity securities | — | 165 | — | 211 |
| Purchases of available for sale debt securities | — | (86) | — | (480) |
| Proceeds from available for sale debt securities | 1 | 495 | 1 | 542 |
| Purchases of marketable securities | — | — | — | (235) |
| Proceeds from sales and maturities of marketable securities | — | 116 | 24 | 792 |
| Acquisitions of financial royalty assets | (1,002) | (250) | (2,116) | (1,742) |
| Acquisitions of other financial assets | — | — | — | (21) |
| Milestone payments | — | — | (12) | — |
| Other | (2) | — | (2) | — |
| Net cash (used in)/provided by investing activities | (1,000) | 415 | (2,073) | (1,029) |
| Cash flows from financing activities: | ||||
| Distributions to legacy non-controlling interests - Portfolio Receipts | (92) | (119) | (377) | (442) |
| Distributions to legacy non-controlling interests - other | — | (29) | — | (31) |
| Distributions to continuing non-controlling interests | (24) | (33) | (120) | (144) |
| Dividends to shareholders | (89) | (84) | (358) | (333) |
| Repurchases of Class A ordinary shares | (30) | — | (305) | — |
| Contributions from legacy non-controlling interests - R&D | 0 | 0 | 1 | 1 |
| Contributions from non-controlling interests - other | 1 | 1 | 7 | 6 |
| Cash acquired in connection with purchase of non-controlling interest | 5 | — | 5 | — |
| Proceeds from revolving credit facility | 350 | — | 350 | — |
| Repayment of revolving credit facility | (350) | — | (350) | — |
| Repayment of long-term debt | — | — | (1,000) | — |
| Debt issuance costs and other | (2) | (1) | (2) | (1) |
| Net cash used in financing activities | (232) | (266) | (2,149) | (945) |
| Net change in cash and cash equivalents | (459) | 719 | (1,234) | 170 |
| Cash and cash equivalents, beginning of period | 936 | 992 | 1,711 | 1,541 |
| Cash and cash equivalents, end of period | 477 | 1,711 | 477 | 1,711 |
Amounts may not add due to rounding.
| Royalty Pharma plc Fourth Quarter and Full Year Portfolio Receipts Highlights (unaudited) Table 4 | ||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||
| ($ in millions) | 2023 | 2022 | Change | 2023 | 2022 | Change |
| Products: | ||||||
| Cystic fibrosis franchise | 208 | 187 | 771 | 690 | ||
| Tysabri | 68 | 73 | (7)% | 279 | 305 | (8)% |
| Imbruvica | 50 | 58 | (13)% | 210 | 258 | (18)% |
| Trelegy | 60 | 47 | 203 | 90 | ||
| Promacta | 44 | 40 | 161 | 150 | ||
| Xtandi | 38 | 38 | 146 | 154 | (5)% | |
| Tremfya | 35 | 29 | 116 | 97 | ||
| Evrysdi | 20 | 14 | 66 | 41 | ||
| Cabometyx/Cometriq | 18 | 15 | 66 | 55 | ||
| Spinraza | 17 | — | n/a | 45 | — | n/a |
| Trodelvy | 10 | 6 | 33 | 20 | ||
| Orladeyo | 8 | 6 | 29 | 22 | ||
| Erleada | 9 | 5 | 27 | 18 | ||
| Nurtec ODT/Zavzpret | 5 | 4 | 18 | 15 | ||
| Other products(5) | 63 | 71 | (12)% | 277 | 355 | (22)% |
| Royalty receipts | 651 | 593 | 2,449 | 2,269 | ||
| Milestones and other contractual receipts | 84 | 470 | (82)% | 599 | 520 | |
| Portfolio Receipts | 736 | 1,064 | (31)% | 3,049 | 2,789 | 9% |
Amounts may not add due to rounding.
| Royalty Pharma plc GAAP to Non-GAAP Reconciliation (unaudited) Table 5 | ||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 |
| Net cash provided by operating activities (GAAP) | 773 | 570 | 2,988 | 2,144 |
| Adjustments: | ||||
| Proceeds from available for sale debt securities(6) | 1 | 495 | 1 | 542 |
| Distributions from equity method investees(6) | 5 | — | 44 | — |
| Interest (received)/paid, net(6) | (5) | (14) | 98 | 145 |
| Development-stage funding payments - ongoing | 1 | 1 | 2 | 2 |
| Development-stage funding payments - upfront and milestone | — | 50 | 50 | 175 |
| Distributions to legacy non-controlling interests - Portfolio Receipts(6) | (92) | (119) | (377) | (442) |
| Adjusted EBITDA (non-GAAP) | 682 | 983 | 2,806 | 2,566 |
| Interest received/(paid), net(6) | 5 | 14 | (98) | (145) |
| Portfolio Cash Flow (non-GAAP) | 687 | 996 | 2,708 | 2,421 |
Amounts may not add due to rounding.
| Royalty Pharma plc Description of Approved Indications for Select Portfolio Therapies Table 6 | |
| Cystic fibrosis franchise | Cystic fibrosis |
| Tysabri | Relapsing forms of multiple sclerosis |
| Imbruvica | Hematological malignancies and chronic graft versus host disease |
| Trelegy | Chronic obstructive pulmonary disease and asthma |
| Promacta | Chronic immune thrombocytopenia purpura and aplastic anemia |
| Xtandi | Prostate cancer |
| Tremfya | Plaque psoriasis and active psoriatic arthritis |
| Evrysdi | Spinal muscular atrophy |
| Cabometyx / Cometriq | Kidney, liver and thyroid cancer |
| Spinraza | Spinal muscular atrophy |
| Trodelvy | Breast and bladder cancer |
| Orladeyo | Hereditary angioedema |
| Erleada | Prostate cancer |
| Nurtec ODT | Acute and preventative treatment of migraine |
Notes
(1) Portfolio Receipts is a key performance metric that represents our ability to generate cash from our portfolio investments, the primary source of capital that we can deploy to make new portfolio investments. Portfolio Receipts is defined as the sum of royalty receipts and milestones and other contractual receipts. Royalty receipts include variable payments based on sales of products, net of contractual payments to the legacy non-controlling interests, that is attributed to Royalty Pharma. Milestones and other contractual receipts include sales-based or regulatory milestone payments and other fixed contractual receipts, net of contractual payments to the legacy non-controlling interests, that is attributed to Royalty Pharma. Portfolio Receipts does not include proceeds from equity securities or marketable securities, both of which are not central to our fundamental business strategy.
Portfolio Receipts is calculated as the sum of the following line items from our GAAP consolidated statements of cash flows: Cash collections from financial royalty assets, Cash collections from intangible royalty assets, Other royalty cash collections, Proceeds from available for sale debt securities and Distributions from equity method investees less Distributions to legacy non-controlling interests - Portfolio Receipts, which represent contractual distributions of royalty receipts and milestones and other contractual receipts to the Legacy Investors Partnerships and RPSFT.
(2) Adjusted EBITDA is defined under the credit agreement as Portfolio Receipts minus payments for operating and professional costs. Operating and professional costs reflect Payments for operating and professional costs from the statements of cash flows. See GAAP to Non-GAAP reconciliation in Table 5.
(3) Portfolio Cash Flow is defined under the credit agreement as Adjusted EBITDA minus interest paid or received, net. See GAAP to Non-GAAP reconciliation in Table 5. Portfolio Cash Flow reflects the cash generated by Royalty Pharma’s business that can be redeployed into value-enhancing royalty acquisitions, used to repay debt, returned to shareholders through dividends or share purchases or utilized for other discretionary investments.
(4) Capital Deployment is calculated as the summation of the following line items from our GAAP consolidated statements of cash flows: Investments in equity method investees, Purchases of available for sale debt securities, Acquisitions of financial royalty assets, Acquisitions of other financial assets, Milestone payments, Development-stage funding payments - ongoing, Development-stage funding payments - upfront and milestone less Contributions from legacy non-controlling interests - R&D.
(5) Other products primarily include royalty receipts on the following products: Cimzia, Crysvita, Emgality, Entyvio, Farxiga/Onglyza, IDHIFA, Januvia, Janumet, Other DPP-IVs, Lexiscan, Mircera, Nesina, Prevymis, Soliqua and distributions from the Legacy SLP Interest, which is presented as Distributions from equity method investees on the GAAP consolidated statements of cash flows.
(6) The table below shows the line item for each adjustment and the direct location for such line item on the GAAP consolidated statements of cash flows.
| Reconciling Adjustment | Statements of Cash Flows Classification |
| Interest (received)/paid, net | Operating activities(Interest receivedlessInterest paid) |
| Distributions from equity method investees | Investing activities |
| Proceeds from available for sale debt securities | Investing activities |
| Distributions to legacy non-controlling interests - Portfolio Receipts | Financing activities |
FAQ
What were Royalty Pharma's Portfolio Receipts for Q4 2023 and FY 2023?
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