Why Harmony's record sales did not lift profit
Harmony posted record sales, but profit fell as royalties and milestone charges grew. A separate October milestone adds another fourth-quarter expense and payment.
Ticker Byline
Harmony Biosciences Holdings, Inc.
Harmony Biosciences markets WAKIX, a pitolisant medicine, and develops treatments for neurological disorders. Product sales fund its commercial operation and research pipeline, while licensing agreements create upfront, milestone and royalty costs.
- Ticker
- HRMY
- Exchange
- XNAS
- SEC CIK
- 0001802665
Sales and earnings
| Measure | 2026 | 2025 |
|---|---|---|
| Revenue | $268.9 | $239.5 |
| Cost of products sold | $80.7 | $59.7 |
| Gross profit | $188.2 | $179.8 |
| Research and development expense | $71.7 | $55.0 |
| Operating income | $54.2 | $65.5 |
| Net income | $48.2 | $50.9 |
Revenue growth outpaced gross profit growth as royalties absorbed more of each sales dollar. The annual revenue forecast remains $1.0 billion to $1.04 billion, unchanged from August.
Licensing costs and upcoming payments
Harmony entered the Novitium agreement in January and the MSN Laboratories agreement in February. It paid upfront fees of $15 million and $17 million, respectively. Those cash payments were classified as investing activities.
The Novitium agreement includes royalties on current and future pitolisant-based products. The MSN agreement calls for royalties on future new formulations covered by its licensed patents.
A September patent approval triggered a $25 million MSN milestone, which was charged to third-quarter research expense. The comparable 2025 quarter included a separate $15 million ZYN002 milestone. Harmony expects to pay the MSN milestone in the fourth quarter of 2026.
A separate Novitium development milestone was achieved in October. Harmony expects to recognize that $10 million expense and pay it in the fourth quarter.
Cash, investments and debt
At September 30, cash and cash equivalents were $647.1 million. Short-term investments were $124.0 million and long-term investments $280.5 million. Operating activities generated $196.9 million over the first nine months, compared with $222.0 million a year earlier.
Debt principal was $150 million, down from $165 million at year-end. Its carrying amount was $149.1 million after unamortized financing costs. The loan requires quarterly principal payments of $5 million and a final $115 million payment on July 26, 2028.
A planned leadership transition
As announced in October, Senior Executive Vice President and Chief Operating Officer Peter Anastasiou will become president and chief executive officer on January 1, 2027. President and Chief Executive Officer Jeffrey Dayno will retire on December 31, 2026.
Read our analysis: Why Harmony's record sales did not lift profit.
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