ANI Pharmaceuticals, Inc. (ANIP) Earnings Call Transcript & Summary

Good day, everyone, and welcome to today's ANI Pharmaceuticals, Inc. Second Quarter 2026 Earnings Results Call. Please note this call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Irina Koffler. Please go ahead.

Thank you, Daniel. Welcome to ANI Pharmaceuticals' second quarter 2026 earnings results call. This is Irina Koffler, Investor Relations for ANI. With me on today's call are Nikhil Lalwani, President and Chief Executive Officer, Stephen Carey, Senior Vice President and Chief Financial Officer, and Chris Mutz, Senior Vice President and Head of ANI's Rare Disease Business. Earlier this morning on August 7, 2026, we released our results for the second quarter 2026 via a press release that is available on our website. This call is also available via webcast and is accompanied by a slide deck that can be accessed by going to the events section of the investors page of our website. Before we begin, I would like to remind you that we will be making forward-looking statements and discussing certain non-GAAP measures. Forward-looking statements are subject to substantial risks and uncertainties, speak only to the call's original date, and we take no obligation to update or revise any of the statements. During this call, we will also refer to certain non-GAAP financial measures to describe our performance and have provided a reconciliation to the most directly comparable GAAP financial measures within the materials that accompany this call. The archived webcast will be available for 30 days on our website, anipharmaceuticals.com. And with that, I'll turn the call over to Nikhil Lalwani.

Thank you, Irina. Good morning, everyone, and thank you for joining us for ANI's second quarter of 2026 earnings call. Starting on slide 5, our entire organization demonstrated outstanding focus during the second quarter as we continued to transform ANI into a leading rare disease company. We recorded record second quarter 2026 revenues of $266 million for the overall business, record Cortrophin revenues of $117.1 million and record adjusted EBITDA of $71.6 million. In the second quarter, we grew total net revenues 26% year over year, driven by persistent execution across our rare disease and generics businesses with incremental contribution from the Harmony Biosciences intellectual property out-licensing deal we announced last quarter. We also grew adjusted EBITDA 32% year over year to an all-time high and above our prior expectations. Furthermore, we achieved all of this while executing the single largest rare disease sales force expansion in our history. We increased our sales force by 50% to approximately 180 reps. Our strategic plan is on track and we are well positioned to drive meaningful growth in 2026 and beyond. Turning to slide 6. Our first area of focus in our transformation into a rare disease company is delivering organic growth for our durable branded rare disease medicines, Cortrophin Gel and ILUVIEN. We delivered $117.1 million in Cortrophin Gel net revenues for the second quarter, up 43% year over year and 56% over first quarter 2026, consistent with the expectations we outlined during our last quarterly call. Second quarter revenues from our existing specialties of rheumatology, nephrology, neurology, ophthalmology and pulmonology was healthy and we are seeing significant momentum in demand in the third quarter with July representing the highest month for new cases initiated. We expect our existing specialty sales force to be able to meet the needs of the community to continue its strong trajectory in the second half of 2026. We completed our gout-focused organization expansion, and the team was fully operational at the end of June, as expected. We are pleased that we have seen strong demand driven by the high unmet need for patients who are most severely impacted by acute gouty arthritis flares and who need an additional treatment option. Our leading indicators are very positive, such as total new cases initiated, cases initiated per sales rep, and a number of prescribers with multiple new cases. We believe we are at the start of a sizable inflection for this business and look forward to updating you on our progress. Taking a step back, our conviction in the growth and durability of Cortrophin Gel have only increased over time since our 2022 launch. Cortrophin has grown at a compounded annual growth rate of 103% to $348 million in sales in 2025, and we're just getting started. We believe Cortrophin will serve as the key building block catalyzing our transformation into a rare disease company. Now that we are midway through the year, we are modestly revising our Cortrophin Gel revenue guidance to $520 million to $540 million, primarily to account for results in the first half of 2026. Our expectations for the back half remain largely intact with what we had expected at the start of the year. Importantly, this still represents 50% to 55% growth for Cortrophin compared to 2025, and the addition of the gout expansion creates a strong new growth trajectory for Cortrophin. We believe we are well-positioned to achieve our revised 2026 guidance based on the continued momentum in existing specialties, as evidenced by the highest new cases in July, and the strong demand generation from the gout expansion. For ILUVIEN, we delivered $18.7 million of revenue in the second quarter. We announced the top line results from the Phase 4 open-label SYNCHRONICITY trial in NIU-PS and plan to unveil detailed results and additional analysis at a medical conference in the fourth quarter of 2026. These results are particularly relevant for retina specialists who see a large population of uveitis patients. Uveitis remains a category in which steroids are the standard of care and where we see an opportunity to build an increasing share of voice over time. Over the long term, we continue to believe the addressable patient populations in DME and NIU-PS represent at least 10x the number of patients treated with ILUVIEN today, a significant and durable opportunity for value creation. Turning to slide 7, our second strategic priority is continued execution in generics. We have launched 12 generics in 2026 and are on track to launch at least 15 in the full year. We'll also continue to hold our position as the #2 player in overall CGT filings. Driven by our superior R&D capabilities and operational execution, we delivered another strong quarter with generics revenue of $99.1 million, up 10% year over year. As a reminder, ANI is uniquely positioned to capitalize on opportunities in the evolving generic landscape that may arise. Approximately 95% of our revenues coming from finished goods manufactured in the U.S. Bringing high-quality generics and rare disease products made in the U.S. to our patients plays an important role in our success. Third, we remain focused on executing a disciplined capital allocation strategy. We are investing in organic growth that have expanded our Cortrophin commercial footprint in acute gouty arthritis flares. We continue to deploy a high single-digit percentage of generics revenue into generics R&D programs. We are also evaluating attractive inorganic growth opportunities to expand the scope and scale of our rare disease business. Turning to slide 8, our strong second quarter performance demonstrates the steadfast execution of our strategic priorities as we deploy the cash created by generics and brands in our virtuous cycle towards our transformation to becoming a leading rare disease company. We are confident in delivering 50% to 55% Cortrophin revenue growth in 2026 and are pleased that our gout expansion is off to a strong start. Taken together, these initiatives are expected to create operational leverage in 2027 and beyond as we maximize the corporate growth opportunity. In 2026, we expect to deliver $1.1 billion in revenue, representing 26% growth over 2025 at the midpoint of our guidance range, with rare disease as the primary driver of that growth. We also expect to expand the bottom line with adjusted EBITDA, forecasted to grow 27% year-over-year to $285 million to $300 million. The balance sheet is healthy with the capacity to support for future potential business development opportunities to expand the scope and scale of our rare disease business. I'll now turn the call to Chris to discuss our rare disease business and provide color from the ongoing launch in acute gouty arthritis flares. Chris?

Thank you, Nikhil, and good morning, everyone. In the second quarter, Cortrophin grew 43% year over year to $117.1 million, in line with our expectations. This growth originated primarily from our existing specialties, such as nephrology, neurology, ophthalmology, pulmonology, and rheumatology, which represent the base Cortrophin business before the recent gout expansion. Momentum in our existing specialties has continued into the third quarter with a record number of new cases initiated in July. We also continue to realize meaningful revenue synergies in ophthalmology with second quarter Cortrophin volumes in ophthalmology again doubling over the same period a year ago. Moving now to slide 11. The overall ACTH market is quite healthy and expected to grow nearly 30% in 2026 to reach over $1.3 billion in sales, with Cortrophin expected to grow 50% to 55% year over year in 2026. This market expansion is driven by growth in key under-penetrated specialties that have significant upside potential. There are a large number of prescribers and patients who are naive to the ACTH category across all therapeutic areas and are steadily reaching this segment including as part of our gout expansion now reaching podiatrists and primary care physicians. Approximately half of Cortrophin Gel prescribers in our core specialties are naive to ACTH. Here on slide 12, we return to the size of the overall opportunity for Cortrophin Gel. Across indications, we estimate there are almost 1 million addressable patients, and yet, to date, ACTH therapies are vastly underpenetrated. With ANI's demonstrated ability to educate healthcare providers to help identify new patients who are appropriate candidates for Cortrophin treatment, we have confidence that there is significant runway for continued strong multi-year Cortrophin growth and market expansion. Turning to slide 13, we have made our largest commercial expansion in the first half of 2026, increasing our sales headcount by 50% to approximately 180 sales representatives based on what we view as a transformational multi-year growth opportunity for our business in the podiatry and primary care settings. Our team was fully onboarded and trained by the end of June and have been out in the field engaging with our new prescribers. Gout is a condition with significant patient burden, and our market research, as well as our early experience, shows us that people view their disease as disruptive, anxiety-provoking, and frustrating. Pain from acute gouty arthritis flares has been described by some as unbearable and can come on quickly and unexpectedly, especially in the middle of the night or the early morning. We believe podiatrists and primary care physicians are actively managing a much larger volume of acute gouty arthritis flares than specialists, and most often earlier in the patient journey either due to referral gaps or access limitations. Our sales representatives are educating podiatrists and primary care providers about Cortrophin Gel and the identification of appropriate patients. We're focused on the most severe patients who experience multiple flares a year who have previously been treated with injectable medicines like steroids or pain relieving medications. These patients may benefit from an additional treatment option. Our patient support team is helping patients request access to Cortrophin Gel to treat the current flare and to have drug readily available for when the next flare hits. Turning to slide 14, we feel confident about the opportunity in the podiatry and primary care settings because of the insights and results generated by both the pilots conducted in 10 territories as well as the strong momentum we are seeing today from the gout expansion. In these early days we are pleased to see encouraging trends in our leading indicators. To date we have been generating very strong demand with meaningful breadth and depth of prescribing. Over 95% of our new sales representatives have generated multiple new cases and momentum and demand persists with record new cases achieved by the team week over week. We've seen traction with both primary care and podiatry offices with initial and repeat prescribing. Over 1/3 of our prescribers have initiated 2 or more patient cases. Our patient support team has been successful in helping these patients get access to therapy. ANI's entire organization is dedicated to making this new commercial expansion successful. We're excited that this weekend our marketing, medical, and sales teams will be engaging with customers at the American Podiatric Medical Association Scientific Meeting, or APMA, being held in Nashville, and we intend to be increasingly visible to this key prescriber audience going forward. I want to thank the entire Cortrophin team for their superior focus and execution. Our new gout expansion is off to a very encouraging start, and we look forward to their contribution in the second half of 2026 and beyond. On slide 15, turning to our retina franchise, we continue to make progress to support a return to growth for ILUVIEN. We recently reported top-line results from the SYNCHRONICITY Phase 4 open-label trial in non-infectious uveitis of the posterior segment and plan to present the detailed results and additional analyses at a medical meeting in fourth quarter 2026. These data will support increased engagement with retina specialists who treat NIU-PS as we continue sharing insights and new findings from the SYNCHRONICITY study. The second quarter reflects strong execution across our team as we continue to accelerate into a leading rare disease company. With that, I will now turn the call over to Steve to detail our financials.

Thanks, Chris, and good morning to everyone on the call. Now I'll review our second quarter results and 2026 guidance in more detail. Starting with slide 17, ANI total net revenues were $266 million in the second quarter, up 26% over the prior year period. Revenues from Cortrophin Gel in the second quarter were $117.1 million, up 43% from the prior year period, driven by increased volume and performing in line with our expectations. ILUVIEN net revenues were $18.7 million in the second quarter, down 16% from the prior year based on timing of international shipments, we remain on track to meet our full year guidance for this product. In January, we entered into a licensing transaction with Harmony Biosciences. We recognized $17.7 million of associated revenues in the second quarter, consisting of $9.7 million of royalty income on sales of WAKIX and $8 million of revenue based upon work completed in the quarter toward the achievement of certain development milestones. We expect to recognize the remaining $2 million from the development milestone in the third quarter of 2026. Revenues for generics in the second quarter were $99.1 million, an increase of 10% over the prior year, driven by continued strength in the partner generic launch that commenced in the third quarter of 2025, contribution from new product launches, and commercial and operational outperformance. Turning to slide 18, non-GAAP cost of sales increased 34% to $99.6 million in the second quarter of 2026 compared to the prior year period. Non-GAAP gross margin in the second quarter was 62.6%, a decrease of approximately 230 basis points from the prior year driven by product mix. Non-GAAP research and development expenses decreased 11% to $14.1 million in the second quarter, primarily due to phasing of generic R&D spend. Non-GAAP selling, general, and administrative expenses increased 20% to $80.7 million in the second quarter, driven by our gout expansion for Cortrophin, as well as an overall increase in activities to support the ongoing growth of our business. Adjusted non-GAAP diluted earnings per share was $2.21 for the second quarter, compared to $1.80 per share in the prior year period. Adjusted non-GAAP EBITDA for the second quarter was $71.6 million, up 32% compared to the prior year period. We ended the second quarter with $360.2 million in unrestricted cash, up $74.6 million as compared to the December 31, 2025 balance sheet. Cash flow from operations was $56.7 million in the second quarter and $115 million on a year-to-date basis. As of June 30, 2026, we had $620.9 million in principal value of outstanding debt, inclusive of our senior convertible notes and term loan. At the end of the second quarter, our gross leverage was 2.4 times, and our net leverage was 1 time our trailing 12-month adjusted non-GAAP EBITDA of $259.6 million. Turning to slide 19, we are reaffirming our 2026 financial guidance for total net revenue, adjusted non-GAAP EBITDA, and adjusted non-GAAP EPS, which reflects significant top and bottom line growth, modestly revising our guidance for Cortrophin Gel. Our guidance outlined on slide 19 is as follows. We expect 2026 total company net revenue of $1.08 billion to $1.14 billion, representing 26% year-over-year growth. From a quarterly cadence perspective, we expect the third quarter total company revenues to be modestly higher as compared to second quarter and accelerating sequential growth in the fourth quarter. We are revising our guidance for Cortrophin Gel net revenue to $520 million to $540 million, primarily to account for results in the first half of the year. Our expectations for the back half of the year remain largely intact. From a quarterly cadence perspective, we expect third quarter Cortrophin revenues to be in the range of $143 million to $153 million, with further sequential gains in the fourth quarter driven by continued performance of our existing specialties team, in addition to the full deployment of our gout expansion sales force. We are reaffirming our ILUVIEN net revenue guidance of $78 million to $83 million, which reflects stronger ILUVIEN revenue in the back half of the year compared to the first half. This guidance assumes no meaningful contribution from third-party patient assistance foundations in line with our prior expectations. We expect adjusted non-GAAP EBITDA of $285 million to $300 million. From a quarterly cadence perspective, we expect third quarter non-GAAP EBITDA to be down sequentially, however higher than the first quarter of 2026 non-GAAP EBITDA. This will be driven by 2 factors. First, we expect to recognize the final $2 million Harmony development milestone in the third quarter as compared to the $8 million recognized in the second quarter. Secondly, the third quarter will be the first fully loaded quarter of the gout expansion and associated operating expense. We continue as we begin to achieve leverage on the gout expansion with increasing Cortrophin Gel revenues. We continue to expect adjusted non-GAAP earnings per share between $9.19 and $9.69. We continue to expect adjusted gross margin to be between 59.9% and 60.9% in 2026. We continue to anticipate between 21.5 million and 21.8 million shares outstanding for the purpose of calculating full-year non-GAAP diluted EPS. Full-year U.S. GAAP effective tax rate of approximately 26% to 28%. With that, I'll turn the call back to Nikhil.

Thank you, Steve. Turning to slide 21, in closing, we are making meaningful progress against our strategic priorities to accelerate our transformation into a leading rare disease company to continue executing in generics and to deploy capital in a disciplined manner. We are very encouraged by the initial demand that our Cortrophin sales force expansion in gout is driving and the momentum of our existing specialties. Overall, we expect to deliver over $1 billion in revenue in 2026, with rare disease approaching 60% of total revenues. We are confident in achieving our 2026 financial guidance, which reflects significant top and bottom line growth. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Vamil Divan with Guggenheim Partners. Your line is open.

Just focusing on Cortrophin here. Can you give a little bit more detail in terms of what you've been seeing so far in terms of the gout uptake? I appreciate the comments you made. I'm just sort of thinking about the way you structured the guidance here. You're going to get about $143 million, $153 million in the third quarter. It's a pretty meaningful step up from there into the fourth quarter. So just try to see what you've seen so far in gout and kind of the confidence it gives you to see the further uptake through the course of the year. And then sort of tied to that also, obviously, a lot of potential patients that Cortrophin can hit across the current indexes as you showed on the 1 slide here. Can you maybe just give us a sense of how penetrated you think some of these current indications are? Again, just trying to get a sense in terms of obviously there's a big runway ahead of you, but trying to get a sense of how far you've penetrated them to get a sense of what maybe is left to penetrate them.

Yes. Good morning, Vamil, and thank you for your questions. I think your first question is on the gout expansion. So as we said, the leading indicators from the gout expansion are very positive, right? What we're seeing is the, you know, so first of all, you know, our gout-focused organization expansion was fully operational by the end of June as expected. And then the leading indicators of demand that we've pointed out are, which we're pleased with, is the breadth and the depth of the prescribing, right? So over 95% of the reps generated multiple new patient cases. Over 1/3 of the prescribers have initiated 2 or more cases. And we also saw balanced demand between primary care and podiatrists. We also see continued success and growth in the territories that were the 10 pilot territories that we had, which based on whose success we actually thought about the gout expansion. So I think all of those very pleased with the progress and the leading indicators of demand that we've pointed out for the gout extension. Now, when it comes to guidance, you know, Steve pointed out that our Q3 guidance for Cortrophin is $143 million to $153 million, and then, you know, your question was around the step up from there. So when you think about the gout expansion, right, we've executed our largest rare disease sales force expansion and we've increased our reps by 50%. This expansion from 120 to 180 reps, right? So that's a meaningful expansion. That expansion was operational by the end of June. I already spoke about the leading indicators of demand. So we expect Q3 to keep building on this momentum and therefore Q4 will have significantly higher impact from the gout expansion. In parallel, our existing specialties, which were the primary drivers of growth for the 56% quarter on quarter growth in 2Q, and have continued the momentum in 3Q with the highest number of new cases initiated in July, that also has continued momentum. And then lastly, that Q4 also benefits from the typical channel and insurance dynamics acting as tailwinds. So finally, as a reference point in 2025 to where we did a sales force expansion, revenue contribution from H2 was 61% of the total. And then, you know, just again, as the reference point, the expansion in 2026 is 3x the expansion in 2025 in terms of number of reps and was completed in the second quarter versus the first quarter in 2025. And then lastly, your question was on penetration across the addressable market. It's very low, very, very low, and so there is a huge opportunity, and we continue to believe in the strong multi-year growth opportunity for Cortrophin and are investing in multiple ways to capture that opportunity and to most importantly, you know, be true to our purpose of serving patients, improving lives. Thank you, Vamil.

Thank you. Our next question comes from Glenn Santangelo with Barclays. Your line is open.

Hey, Nikhil, at the beginning of the year, you called out all these prior authorization re-verification issues that would impact 1Q. But then on May 8th, when you reported 1Q, said that this was kind of behind the company, you know, this quarter you're talking about the early progress of your sales force expansion, the early success in gout, but yet you come in light and you sort of trim in the guide for the year. And so I just want to try to get your sense for how the months have progressed and how you know the insurance re-verification issues have progressed and is that playing a role here in the second quarter because you know what we find a little perplexing is the disconnect between the IQVIA data and what you're reporting. And so I'm kind of curious if we have a situation where scripts are getting written but not approved. Any sort of details around sort of how the first half played out from 1Q to 2Q would be helpful.

Yes. Good morning, Glenn, and thank you for your question. First is on the insurance re-verification, which impacted the performance in the first quarter. That issue is behind us and there's no impact from insurance re-verifications in the Q2 number. And then to level set here, we did make our guidance range for the quarter, achieving the 56% growth and 43% year over year growth in Q2 and are proud of the progress we made. And there are a diverse range of inputs that drives our guidance, right? Such as number of cases initiated, the indication mix, patient pull-through, payer type, and other such factors. And then, you know, in terms of momentum, right, going into Q2 and, you know, obviously we're sharing Q3 data too, the growth came in Q2 came primarily from existing specialties. And the momentum has continued into the third quarter from existing specialties itself. We have the highest month of new patient cases initiated in July. As expected and as previously discussed, given the timing of operationalizing our gout expansion, it did not have a meaningful impact on Q2 reported revenues, but we continue to expect measurable revenues in the third quarter and robust growth in the fourth quarter, and we're giving, you know, metrics on the indicators of demand, right? That are already laid out. And so our expectation for Q3 and Q4 hinges on both the continued momentum in the existing gout, as well as the very positive early feedback from the gout launch where we have over 95% of our team has generated multiple new cases and over 1/3 of our prescribers have initiated 2 or more cases. And we continue to have success going to prescribers who are naive to ACTH, right? Over the history of us commercializing Cortrophin, over half of our prescribers were naive to ACTH and began using ACTH to serve patients. With the linkage to IQVIA and the question around that, while the IQVIA data has historically provided directional insights on revenues, we also know that there is a lot of volatility in the data, and it has over or understated quarterly revenues in the past. That's really all we have to say about the IQVIA data. We understand that to be helpful to investors, we have been providing to investors many of our key internal metrics, such as next quarter's revenue guidance or various demand metrics from July in the first month of the current quarter. Thank you, Glenn.

Thank you. Our next question comes from Dennis Ding with Jefferies. Your line is open.

We have 2 on the Cortrophin guidance. So, #1, you know, what factors didn't play out to your expectations that has driven the guidance revision? Because you guys landed, you know, within your Q1 and Q2 [ SOF ] guidance, but then lower 2026 by about $30 million. I'm just curious, did early Q3 demand perhaps not meet your expectations or maybe you're seeing incremental headwinds on access? As we've seen a couple of other spec pharma companies flag additional step edits and things even though they're in other therapeutic areas. So that's question #1. And then question #2 is that, you know, your guidance also assumes a pretty big step up in Q4. But if I look at last year, that was actually the slowest sequential step up that Cortrophin had. So I'm just wondering, you know, what gives you the confidence that Q4 would play out as expected, appreciating that the gout expansion is happening and is accelerating.

Good morning and thank you for your questions, Dennis. So, you know, our revised guidance, accounts for the actual performance in the first half and largely maintains our expectations for both the existing specialties and the gout expansion in the back half. We expect to deliver 50% to 55% year over year growth, right? For Cortrophin to $520 million to $540 million in Cortrophin net revenue for the full year. And importantly, Cortrophin has a strong multi-year growth opportunity driven by the large significantly underpenetrated almost 1 million patients that we estimate as our addressable market. And we continue to see momentum across both our existing specialties and from the gout expansion. You asked about Q3 metrics, right? In existing specialties, highest number of new cases initiated in July. In the gout expansion, 95% of the reps, right, an expansion that was operational at the end of June, 95% of reps fully operational at the end of June. 95% of reps have initiated 2 or more cases. 1/3 of our prescribers have written 2 or more cases. So we are seeing very strong demand generation and very positive demand generation, which is on track or ahead on metrics that we have week on week, we're continuing to see that momentum. We do not see any additional headwinds in the back half of the year, and our, very importantly, our expectations for the back half of the year are largely intact with what we had originally anticipated at the start of the year, right? So the revised guidance is simply taking into account the actual results from the first half. And then you asked about the question on the step up in Q4. I think the big difference with last year is, we have an expansion that's 3x the previous year's expansion, right? That's fully operational at the end of June. So these reps will have been out, you know, 3 months in Q3, but then you'll have a full quarter and, you know, most reps will be out between 3 to 5 months when you get to the fourth quarter. So you'll see a much bigger impact from the gout expansion in the fourth quarter. Thank you, Dennis.

Okay, got it. And if I can have a quick follow-up. So on the dedicated gout expansion, can you comment on how many flares have been treated so far? Because based on some of your comments, I mean, you guys had 65 dedicated gout reps. You said 95% of them had multiple new cases. So if you have conservatively assumed 2 cases each, maybe that's 125 patients or flares from the end of June to the end of July. So that's about a month. And that's going to ramp up through the year. Do you think those are fair assumptions?

Yes. Thank you, Dennis, for your question. Look, we're trying to give as many internal metrics to be helpful to investors, but we are not at this point sharing flares per rep or number of cases per rep, because as I said, there are many factors that drive our guidance, and so I'll keep it at that. Thank you, Dennis.

Thank you. Our next question comes from David Amsellem with Piper Sandler. Your line is open.