Collegium's new ADHD drug lifts sales. Why is profit falling?

Collegium's newly acquired Azstarys generated $26.5 million of third-quarter sales. Its older Nucynta pain franchise lost about $24 million of revenue from a year earlier. Much of the new drug's contribution went toward filling that hole.

Total sales reached a record $216.3 million, up 3%. Yet adjusted EBITDA fell 9% to $121.6 million, while operating profit dropped by more than half to $28.7 million. The drugmaker is building a second business in ADHD, but the transition is taking more spending as its established pain portfolio shrinks.

The new growth engine has a bill

Collegium bought Azstarys in May to expand its presence in attention deficit hyperactivity disorder. The medicine joined Jornay PM, whose quarterly sales rose 24% to $51.9 million.

The two medicines together now account for more than a third of sales. Meanwhile, the pain portfolio brought in $138 million, down 18%. Nucynta revenue fell 44% to $30.8 million, including $4.2 million from authorized generic versions sold through Hikma.

The commercial push costs money. Sales and marketing expense rose $8.2 million from a year earlier, and pay and benefits also increased as Collegium added staff. Even after the company removes stock compensation, acquisition costs and other adjustments, operating expenses rose roughly a quarter to $69.4 million.

Adjusted EBITDA measures earnings before interest, taxes, depreciation and amortization, with selected other costs excluded. Its decline shows that the pressure extends beyond the one-time acquisition and settlement charges removed from that measure.

The forecast was already reset in August

Collegium kept its 2026 outlook at $825 million to $855 million in sales and $445 million to $470 million in adjusted EBITDA.

Those ranges had already been cut in August. At the May acquisition closing, management had expected $865 million to $895 million in sales and $475 million to $500 million in adjusted EBITDA. It subsequently lowered the forecast largely because prices for authorized generic Nucynta were weaker than expected.

Azstarys itself is expected to produce $65 million to $75 million of sales between the May 12 closing and year-end. That target was raised in August and retained in November.

Cash gives the transition room

Collegium generated $86.5 million of operating cash flow in the quarter, compared with $78.4 million a year earlier. It paid $50 million into an accelerated share repurchase and ended September with $144.8 million of unrestricted cash, up from $129.5 million in June.

There was another cash payment after the quarter: $17 million to settle a dispute with Grünenthal on October 15. The agreement ended royalty obligations under the Nucynta license. Part of the settlement was recognized as a third-quarter expense and excluded from adjusted EBITDA.

The next test is whether ADHD growth can cover the remaining decline in pain medicines and turn the larger commercial operation into higher earnings. Our Collegium company page tracks the results, acquisitions, debt and cash commitments.