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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35299

ALKERMES PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)



Ireland		98-1007018
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Connaught House

1 Burlington Road

Dublin 4, Ireland, D04 C5Y6

(Address of principal executive offices)

+ 353-1-772-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, $0.01 par value	ALKS	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of the registrant’s ordinary shares, $0.01 par value, outstanding as of April 30, 2026 was 166,675,807 shares.

ALKERMES PLC AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026



		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets — March 31, 2026 and December 31, 2025	5
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income — For the Three Months Ended March 31, 2026 and 2025	6
	Condensed Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2026 and 2025	7
	Condensed Consolidated Statements of Shareholders’ Equity — For the Three Months Ended March 31, 2026 and 2025	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

Cautionary Note Concerning Forward-Looking Statements

This document contains and incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, these statements can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,” “estimate,” “intend” or other similar words. These statements discuss future expectations and contain projections of results of operations or of financial condition, or state trends and known uncertainties or other forward-looking information. Forward-looking statements in this Quarterly Report on Form 10-Q (this “Form 10-Q”) may include, without limitation, statements regarding:

•

our expectations regarding our financial performance, including revenues, expenses, liquidity, capital expenditures, income taxes and profitability;

•

our expectations regarding our products, including expectations related to product development; regulatory exclusivities, filings, approvals and timelines; therapeutic and commercial value, scope and potential; and the costs and expenses related to such activities and expectations;

•

our expectations regarding the timing, design and results of clinical trials of our products;

•

our expectations regarding the competitive, payer, legislative, regulatory and policy landscape, and changes therein, related to our products, including competition from generic forms of our products or competitive products and development programs; barriers to access or coverage of our products and potential changes in reimbursement of our products; and legislation, regulations, executive orders, guidance or other measures that may impact pricing and reimbursement of, and access to, our products;

•

our expectations regarding the financial impact of currency exchange rate fluctuations and valuations;

•

our expectations regarding acquisitions, collaborations, licensing arrangements and other significant agreements with third parties, including those related to our products, development programs, and other business development opportunities;

•

our expectations regarding the impacts of new legislation, rules and regulations, the adoption of new accounting pronouncements, government shutdowns, or other global, political or economic changes, instability or disruptions;

•

our expectations regarding near-term changes in the nature of our market risk exposures or in our management’s objectives and strategies with respect to managing such exposures;

•

our expectations regarding our ability to comply with restrictive covenants of our indebtedness and our ability to fund our debt service obligations;

•

our expectations regarding future capital requirements and expenditures for our operations and our ability to finance such capital requirements and expenditures;

•

our expectations regarding the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our products and intellectual property (“IP”), including our patents, know-how, and related rights or obligations;

•

our expectations regarding the Avadel Acquisition (as defined below), including any anticipated benefits and synergies of the transaction;

•

our expectations regarding the tax treatment and other anticipated benefits of the completed separation of our oncology business; and

•

other expectations discussed elsewhere in this Form 10-Q.

Actual results might differ materially from those expressed or implied by these forward-looking statements because these forward-looking statements are subject to risks, assumptions and uncertainties. In light of these risks, assumptions and uncertainties, the forward-looking expectations discussed in this Form 10-Q might not occur. You are cautioned not to place undue reliance on the forward-looking statements in this Form 10-Q, which speak only as of the date of this Form 10-Q. All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by applicable law or regulation, we do not undertake any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For information about the risks, assumptions and uncertainties of our business,

see “Part I, Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on February 25, 2026 (our “Annual Report”).

This Form 10-Q may include data that we obtained from industry publications and third-party research, surveys and studies. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that any industry publications and third-party research, surveys and studies from which data is included in this Form 10-Q are reliable, we have not independently verified any such data. This Form 10-Q may also include data based on our own internal estimates and research. Our internal estimates and research have not been verified by any independent source and are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Part I, Item 1A—Risk Factors” in our Annual Report. These and other factors could cause our results to differ materially from those expressed or implied in this Form 10-Q.

Note Regarding Company and Product References

Alkermes plc is a global biopharmaceutical company that seeks to develop innovative medicines in the field of neuroscience. We have a portfolio of proprietary commercial products for the treatment of alcohol dependence, opioid dependence, schizophrenia, bipolar I disorder and narcolepsy, and a pipeline of clinical and preclinical candidates in development for neurological disorders, including late-stage candidates in narcolepsy and idiopathic hypersomnia, and early-stage candidates in attention-deficit hyperactivity disorder (“ADHD”) and fatigue associated with multiple sclerosis and Parkinson’s disease. Use of terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Form 10-Q is meant to refer to Alkermes plc and its consolidated subsidiaries. Except as otherwise suggested by the context, (a) references to “products” or “our products” in this Form 10-Q include our marketed products, marketed products using our proprietary technologies, our licensed products, our product candidates and product candidates using our proprietary technologies, (b) references to the “biopharmaceutical industry” in this Form 10-Q are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c) references to “licensees” in this Form 10-Q are used interchangeably with references to “partners.”

Note Regarding Trademarks

We are the owner of various U.S. federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®, ARISTADA®, ARISTADA INITIO®, LinkeRx®, LUMRYZ®, LYBALVI®, MICROPUMP®, NANOCRYSTAL® and VIVITROL®.

The following are trademarks of the respective companies listed: BYANNLI®, INVEGA®, INVEGA HAFYERA®, INVEGA SUSTENNA®, INVEGA TRINZA®, RISPERDAL CONSTA®, TREVICTA®, and XEPLION®—Johnson & Johnson or its affiliated companies; LLC; and VUMERITY®—Biogen MA Inc. (together with its affiliates, “Biogen”). Other trademarks, trade names and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q may be referred to without the ® or TM symbol, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements:

ALKERMES PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 31, 2026			December 31, 2025
	(In thousands, except share and per share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	351,551		$	388,570
Restricted cash		—			731,206
Investments—short-term		160,311			199,645
Receivables, net		407,630			334,025
Inventory		336,703			196,625
Prepaid expenses and other current assets		102,449			79,090
Total current assets		1,358,644			1,929,161
PROPERTY, PLANT AND EQUIPMENT, NET		220,587			221,722
INVESTMENTS—LONG-TERM		26,363			145
RIGHT-OF-USE ASSETS		78,248			77,209
INTANGIBLE ASSETS, NET		1,784,040			815
GOODWILL		596,029			83,027
DEFERRED TAX ASSETS		134,808			125,815
OTHER ASSETS		59,357			49,099
TOTAL ASSETS	$	4,258,076		$	2,486,993
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	292,579		$	289,565
Accrued sales discounts, allowances and reserves		272,843			247,126
Operating lease liabilities—short-term		7,577			6,746
Current portion of long-term debt		26,500			—
Total current liabilities		599,499			543,437
OPERATING LEASE LIABILITIES—LONG-TERM		63,746			63,253
CONTINGENT CONSIDERATION		109,494			—
LONG-TERM DEBT		1,483,837			—
DEFERRED TAX LIABILITIES		181,920			—
OTHER LONG-TERM LIABILITIES		68,049			61,008
Total liabilities		2,506,545			667,698
COMMITMENTS AND CONTINGENT LIABILITIES (Note 18)
SHAREHOLDERS’ EQUITY:
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; and zero issued and outstanding at March 31, 2026 and December 31, 2025, respectively.		—			—
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 183,592,868 and 181,011,166 shares issued; and 166,462,299 and 165,607,028 shares outstanding at March 31, 2026 and December 31, 2025, respectively		1,836			1,810
Treasury shares, at cost (17,130,569 and 15,404,138 shares at March 31, 2026 and December 31, 2025, respectively)		(501,425	)		(450,287	)
Additional paid-in capital		3,055,302			3,004,666
Accumulated other comprehensive loss		(2,908	)		(2,100	)
Accumulated deficit		(801,274	)		(734,794	)
Total shareholders’ equity		1,751,531			1,819,295
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,258,076		$	2,486,993

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ALKERMES PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(unaudited)


	Three Months Ended
	March 31,
	2026			2025
	(In thousands, except per share amounts)
REVENUES:
Product sales, net	$	338,114		$	244,493
Manufacturing and royalty revenues		54,797			62,017
Total revenues		392,911			306,510
EXPENSES:
Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below)		61,578			49,197
Research and development		103,345			71,817
Selling, general and administrative		264,593			171,704
Amortization of acquired intangible assets		11,675			—
Total expenses		441,191			292,718
OPERATING (LOSS) INCOME		(48,280	)		13,792
OTHER (EXPENSE) INCOME, NET:
Interest income		8,539			10,141
Interest expense		(20,892	)		—
Other (expense) income, net		(1,293	)		1,556
Total other (expense) income, net		(13,646	)		11,697
(LOSS) INCOME BEFORE INCOME TAXES		(61,926	)		25,489
INCOME TAX PROVISION		4,554			3,025
NET (LOSS) INCOME	$	(66,480	)	$	22,464

(LOSS) EARNINGS PER ORDINARY SHARE:
(Loss) earnings per ordinary share- basic	$	(0.40	)	$	0.14
(Loss) earnings per ordinary share - diluted	$	(0.40	)	$	0.13

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING:
Basic		166,196			163,407
Diluted		166,196			168,737
COMPREHENSIVE (LOSS) INCOME:
Net (loss) income	$	(66,480	)	$	22,464
Holding (loss) gain, net of a tax (benefit) provision of $(171), and $168, respectively		(568	)		512
Foreign currency translation loss		(240	)		—
COMPREHENSIVE (LOSS) INCOME	$	(67,288	)	$	22,976

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ALKERMES PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended
	March 31,
	2026			2025
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(66,480	)	$	22,464
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		19,429			7,421
Amortization of inventory step-up		12,726			—
Share-based compensation expense		36,330			22,810
Deferred income taxes		(8,787	)		2,507
Other non-cash charges		1,294			274
Changes in assets and liabilities:
Receivables		(23,216	)		65,825
Contract assets		—			1,941
Inventory		(6,427	)		(1,751	)
Prepaid expenses and other assets		(16,169	)		(844	)
Right-of-use assets		2,165			1,840
Accounts payable and accrued expenses		(119,472	)		(1,681	)
Accrued sales discounts, allowances and reserves		748			(22,657	)
Contract liabilities		—			359
Operating lease liabilities		(2,773	)		(2,548	)
Other long-term liabilities		4,889			2,851
Cash flows (used in) provided by operating activities		(165,743	)		98,811
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property, plant and equipment		(4,090	)		(10,110	)
Proceeds from the sale of property, plant and equipment		9			1,713
Business combination, net of cash acquired		(2,085,073	)		—
Purchases of investments		(30,454	)		(95,988	)
Sales and maturities of investments		42,608			113,487
Cash flows (used in) provided by investing activities		(2,077,000	)		9,102
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of ordinary shares under share-based compensation arrangements		15,714			29,528
Proceeds from the issuance of debt, net		1,511,557			—
Deferred financing costs paid to third-parties		(1,614	)		—
Employee taxes paid related to net share settlement of equity awards		(23,442	)		(28,781	)
Payment for the repurchase of ordinary shares		(27,696	)		—
Cash flows provided by financing activities		1,474,519			747
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(768,225	)		108,660
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period		1,119,776			291,146
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period	$	351,551		$	399,806
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for taxes	$	1,850		$	458
Non-cash investing and financing activities:
Purchased capital expenditures included in accounts payable and accrued expenses	$	5,556		$	5,911
Unpaid deferred financing costs to third-parties	$	1,551		$	—
Unpaid contingent consideration	$	107,713		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ALKERMES PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


	Ordinary Shares				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Capital		(Loss) Income			Deficit			Shares			Amount			Total
	(In thousands, except share data)
BALANCE — December 31, 2025		181,011,166	$	1,810	$	3,004,666	$	(2,100	)	$	(734,794	)		(15,404,138	)	$	(450,287	)	$	1,819,295
Issuance of ordinary shares under employee stock plans		2,581,702		26		15,688		—			—			—			—			15,714
Receipt of Alkermes' ordinary shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards		—		—		—		—			—			(730,937	)		(23,442	)		(23,442	)
Repurchase of Alkermes' ordinary shares		—		—		—		—			—			(995,494	)		(27,696	)		(27,696	)
Share-based compensation		—		—		34,948		—			—			—			—			34,948
Unrealized gain on marketable securities, net of tax benefit of $171		—		—		—		(568	)		—			—			—			(568	)
Foreign currency translation loss		—		—		—		(240	)											(240	)
Net loss		—		—		—		—			(66,480	)		—			—			(66,480	)
BALANCE — March 31, 2026		183,592,868	$	1,836	$	3,055,302	$	(2,908	)	$	(801,274	)		(17,130,569	)	$	(501,425	)	$	1,751,531


	Ordinary Shares				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Capital		(Loss) Income			Deficit			Shares			Amount			Total
	(In thousands, except share data)
BALANCE — December 31, 2024		176,670,785	$	1,767	$	2,860,890	$	(1,967	)	$	(976,458	)		(14,493,791	)	$	(419,255	)	$	1,464,977
Issuance of ordinary shares under employee stock plans		3,510,611		35		29,493		—			—			—			—			29,528
Receipt of Alkermes' ordinary shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards		—		—		—		—			—			(834,590	)		(28,781	)		(28,781	)
Share-based compensation		—		—		22,883		—			—			—			—			22,883
Unrealized gain on marketable securities, net of tax provision of $168		—		—		—		512			—			—			—			512
Net income		—		—		—		—			22,464			—			—			22,464
BALANCE — March 31, 2025		180,181,396	$	1,802	$	2,913,266	$	(1,455	)	$	(953,994	)		(15,328,381	)	$	(448,036	)	$	1,511,583

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited)

1. THE COMPANY

Alkermes plc is a global biopharmaceutical company that seeks to develop innovative medicines in the field of neuroscience. Alkermes has a portfolio of proprietary commercial products for the treatment of alcohol dependence, opioid dependence, schizophrenia, bipolar I disorder and narcolepsy, and a pipeline of clinical and preclinical candidates in development for neurological disorders, including late-stage candidates in narcolepsy and idiopathic hypersomnia, and early-stage candidates in ADHD and fatigue associated with multiple sclerosis and Parkinson’s disease. Headquartered in Ireland, Alkermes also has a corporate office and research and development (“R&D”) center in Massachusetts and a manufacturing facility in Ohio.

On February 12, 2026 (the “Closing Date”), the Company completed the acquisition of Avadel Pharmaceuticals plc (now operating as Avadel Pharmaceuticals Limited) (“Avadel”), pursuant to the definitive transaction agreement entered into in October 2025 and subsequently amended in November 2025 (the “Transaction Agreement”), adding both LUMRYZ to the Company’s portfolio of proprietary commercial products and a commercial organization with experience in narcolepsy. Pursuant to the Transaction Agreement, the Company acquired the entire issued and to be issued ordinary share capital of Avadel for consideration of (i) $21.00 per ordinary share, nominal value $0.01 per share, of Avadel (each, an “Avadel Share”), payable in cash at closing and (ii) a non-transferable contingent value right (the “CVR”) entitling holders of Avadel Shares to a potential additional cash payment of $1.50 per Avadel Share, contingent upon achievement of a certain specified milestone (the “Avadel Acquisition”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company for the three months ended March 31, 2026 and 2025 are unaudited and have been prepared on a basis substantially consistent with the audited financial statements for the year ended December 31, 2025. The year-end consolidated balance sheet data, which is presented for comparative purposes, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. (commonly referred to as “GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments of a normal recurring nature that are necessary to state fairly the results of operations for the reported periods.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company, which are contained in the Annual Report. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for any full fiscal year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries as disclosed in Note 2, Summary of Significant Accounting Policies in the “Notes to Consolidated Financial Statements” accompanying the Annual Report. Intercompany accounts and transactions have been eliminated. Columns and rows within tables may not sum due to rounding.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires that Company management make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies, including, but not limited to, those related to revenue from contracts with its customers and related allowances, impairment and amortization of intangibles and long-lived assets, inventory, share-based compensation, income taxes including the valuation allowance for deferred tax assets, valuation of the Avadel Acquisition, investments, contingent consideration and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different conditions or using different assumptions.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Business Combinations

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“Topic 805”), acquisitions that meet the definition of a business are recorded using the acquisition method of accounting. The Company recognizes and measures the identifiable assets acquired, liabilities assumed and any non-controlling interest as of the acquisition date at fair value. The excess, if any, of the fair value of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any non-controlling interest is recognized as goodwill. Transaction costs incurred as a result of a business combination other than costs related to the issuance of debt or equity securities are recorded in the period the costs are incurred.

Contingent Consideration

Contingent consideration in a business combination may consist of development, regulatory and/or commercial milestone payments and is included as part of the acquisition cost and recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach resulting from contingent consideration and is re-measured at each reporting date until the contingency is resolved. Changes in fair value are recognized within “Operating (loss) income” in the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

Reclassification

The Company reclassified certain prior year amounts on the consolidated balance sheet to conform to the current year presentation. These reclassifications had no impact on the previously reported total assets, liabilities or shareholders’ equity.

Intangible Assets

Intangible assets acquired in business combinations, including developed technology, product rights, licenses, and in-process research and development (“IPR&D”), are recorded at fair value as of the acquisition date. Definite-lived identifiable intangible assets are amortized based on the proportion of expected excess earnings over their estimated economic useful life. This method reflects the pattern in which the economic benefits of the intangible assets are expected to be realized.

Acquired IPR&D projects that have not yet received regulatory approval are considered indefinite-lived intangible assets and are required to be capitalized as indefinite-lived intangible assets until completion of the IPR&D project or abandonment. IPR&D projects are not amortized but are tested annually for impairment or more frequently if indicators arise. Upon completion of the development project, an impairment assessment is performed prior to amortizing the asset over its estimated useful life. IPR&D assets related to abandoned IPR&D projects are fully impaired.

Segment Information

Operating segments are defined as components of an enterprise engaging in business activities for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company has utilized the management approach to determine that the Company is managed as one segment on a consolidated basis and is in the business of developing, manufacturing and commercializing medicines designed to help people living with complex and difficult-to-treat psychiatric and neurological disorders. The Company’s CODM, the Chairman and Chief Executive Officer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit. The Company’s CODM measures profitability on a reportable segment basis using net income and utilizes this information in allocating resources and in assessing performance by monitoring budget versus actual results. Please refer to Note 17, Segment Reporting, in these “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for further information.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by the Company on or prior to the specified effective date. Unless otherwise described in this Form 10-Q, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income-Expense Disaggregation Disclosures, to improve disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization and depletion) in commonly-presented expense captions, such as cost of sales, selling, general and administrative expenses, and research and development. All disclosure requirements under this guidance are required for public business entities and effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted and the amendments in this guidance will be applied prospectively to financial statements for periods after the effective dates. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This ASU updates the requirements for capitalization of internal-use software, removing all reference to prescriptive and sequential software development stages (referred to as “project stages”). This ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those fiscal years. The Company is currently assessing the impact this ASU will have on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting. The amendments in this update clarify current interim disclosure requirements and provide a comprehensive list of required interim disclosures. The update also incorporates a disclosure principle that requires entities to disclose events that occur after the end of the reporting period. This update is effective for interim periods within annual periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently assessing the impact this ASU will have on its consolidated financial statements and related disclosures.

3. BUSINESS COMBINATION

Acquisition of Avadel Pharmaceuticals plc

On February 12, 2026, the Company successfully completed the Avadel Acquisition, adding both LUMRYZ to the Company’s proprietary commercial products and a commercial organization with experience in narcolepsy. Pursuant to the Transaction Agreement, the Company acquired all of the issued and outstanding Avadel Shares for $21.00 per share in cash and a non-transferable CVR entitling holders of Avadel Shares to a potential additional cash payment of $1.50 per Avadel Share, contingent upon achievement of a certain specified milestone (the “CVR Milestone”).

Contingent payments of up to $165.7 million may become due to former Avadel shareholders upon the achievement of the CVR Milestone. In connection therewith, the Company recorded a contingent consideration liability of $107.7 million as of the Closing Date to reflect the estimated fair value of such contingent consideration. The estimated fair value of the contingent consideration was determined under an income approach using a Probability-Weighted Discounted Cash Flow Model (“DCF”). The key assumptions considered include probability of milestone achievement and estimated discount rates. At each reporting period after the Avadel Acquisition, the Company will revalue the contingent consideration liability and will record increases or decreases in the fair value of the liability in its condensed consolidated statements of operations and comprehensive (loss) income. Changes in fair value will result from changes in actual and projected achievement of the CVR Milestone, as well as changes to the discount rate. The change in the fair value of the contingent consideration from the Closing Date through March 31, 2026 was not material.

In connection with the Avadel Acquisition, the vesting of certain outstanding Avadel equity awards was accelerated as of the Closing Date and each vested Avadel equity award became entitled to receive cash consideration and the right to receive one CVR per Avadel Share. The purchase price for the Avadel Acquisition includes $134.9 million related to Avadel Shares for which vesting was accelerated in connection with the acquisition and is attributable to pre-combination service. The Company recognized share-based compensation expense of $20.2 million during the three months ended March 31, 2026 related to the acceleration of unvested share-based compensation awards attributable to post-combination service and the fair value related to the contingent CVR payment that could be made to former Avadel employees as of the Closing Date.

The Avadel Acquisition has been accounted for as a business combination, using the acquisition method of accounting in accordance with Topic 805. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

The Company’s purchase price allocation is preliminary and based on the information available as of the reporting date. The Company’s estimates and assumptions are subject to refinement as the Company continues to review information related to the Avadel Acquisition. The Company remains in the process of reviewing and finalizing the measurement of certain assets acquired and liabilities assumed, including but not limited to: tax positions, and other tax-related matters, and the estimated fair values of acquired intangible assets and inventory. Adjustments to the valuation of assets acquired and liabilities assumed will result in a corresponding adjustment to goodwill. The Company expects to complete the purchase price allocation as soon as practicable, but no later than one year from the Closing Date.

The total preliminary purchase consideration related to the Avadel Acquisition was as follows:


(In thousands)	Amount
Cash consideration paid for Avadel’s ordinary shares	$	2,064,310
Cash consideration paid for cash settlement of Avadel equity awards		134,897
Fair value of CVR contingent consideration		107,713
Total preliminary purchase consideration	$	2,306,920

The following table summarizes the preliminary estimates of the fair value of assets acquired and liabilities assumed as of the Closing Date:


(In thousands)	February 12, 2026
Acquired Assets:
Cash and cash equivalents	$	114,135
Receivables		50,389
Inventory		147,323
Prepaid expenses and other current assets		13,483
Property, plant and equipment		796
Right-of-use assets		2,297
Intangible assets		1,794,900
Deferred tax assets		1,244
Other assets		6,551
Total fair value of assets acquired	$	2,131,118
Assumed Liabilities:
Accounts payable and accrued expenses	$	124,654
Accrued sales discounts, allowances and reserves		24,969
Operating lease liabilities		2,296
Deferred tax liability		183,129
Other long-term liabilities		2,152
Total recognized identifiable net assets acquired and liabilities assumed	$	1,793,918
Goodwill		513,002
Preliminary fair value of total consideration	$	2,306,920
Contingent consideration		107,713
Total Cash Consideration Paid	$	2,199,207

Acquired Inventory

The fair value of the acquired inventory was estimated using the comparative sales method, which estimated the expected sales price of the product, reduced by all costs expected to be incurred to complete or to dispose of the inventory, as well as a market-participant profit allowance.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Acquired Intangible Assets

The identifiable intangible assets acquired included the following:


(In thousands)
LUMRYZ	$	1,768,600
In-process research and development		26,300
Total identifiable intangible assets	$	1,794,900

The fair value of LUMRYZ was estimated based on a multi-period excess earnings method which calculates the present value of the estimated revenues and net cash flows derived from LUMRYZ. Amortization of LUMRYZ is calculated using the percentage of excess earnings over the economic useful life method. The IPR&D relates to the product candidate acquired in the Avadel Acquisition, valiloxybate. Due to the early stage of development of this asset, and given the proximity to the Closing Date of a license agreement entered into by Avadel related to valiloxybate and the lack of suitable market comparables, the valuation was prepared utilizing a cost approach consisting of the upfront payment under the license agreement, together with additional development costs incurred by Avadel through prior to the Closing Date in respect of valiloxybate.

Deferred Tax Liabilities

The deferred tax liability of $183.1 million relates to the tax effect of the difference between the fair value and tax basis of acquired intangible assets owned by an Irish subsidiary of the Company. The deferred tax asset of $1.2 million relates to the tax effect of acquired net operating losses and temporary differences, partially offset by the difference between the fair value and tax basis of acquired intangible assets and inventory owned by a U.S. subsidiary of the Company.

Goodwill

The excess of the estimated fair value of the purchase price consideration over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the Avadel Acquisition. The factors that contributed to the recognition of goodwill included the synergies that are specific to the Company’s business and not available to market participants, including the acquisition of a commercial organization with experience in narcolepsy which accelerates the Company’s commercial entry into the sleep medicine market and provides a strong foundation for the potential launch of alixorexton, the Company’s lead orexin development candidate. Goodwill is not deductible for tax purposes.

Revenues and Net (Loss) Income of Avadel

The operations of Avadel for the period of the Closing Date through March 31, 2026 have been included in the Company’s condensed consolidated statements of operations and comprehensive (loss) income for the quarter ended March 31, 2026. Total revenues of $39.5 million and net income of $16.2 million were recorded for this period.

Transaction Costs

In conjunction with the Avadel Acquisition, the Company incurred approximately $34.8 million of transaction costs during the three months ended March 31, 2026, all of which were recognized as selling, general and administrative in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. There were no transaction costs for the Avadel Acquisition incurred during the three months ended March 31, 2025.

Pro forma financial information (unaudited)

The following unaudited pro forma information presents the combined results of operations for the three months ended March 31, 2026 and 2025 as if the Avadel Acquisition had been completed on January 1, 2025. The unaudited pro forma financial information is based on the historical financial information for the Company and Avadel, along with certain pro forma adjustments described below. The unaudited pro forma information for the three months ended March 31, 2026 reflects revenues and net loss of Avadel from January 1, 2026 through the Closing Date, and excludes approximately $77.7 million of direct one-time transaction costs incurred by Avadel. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations had the Avadel Acquisition occurred on the assumed date, nor is it necessarily an indication of future operating results.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)


	Three Months Ended March 31,
(In thousands)	2026			2025
Revenues	$	425,740		$	359,021
Net loss		(35,860	)		(125,578	)

The unaudited pro forma financial information includes, where applicable, adjustments primarily for:

(i)

increased amortization expense related to the LUMRYZ intangible asset acquired;

(ii)

increased costs of goods manufactured and sold related to the amortization of inventory fair value adjustments;

(iii)

increased interest expense to reflect the borrowings under the Facilities (as defined in Note 12, Long-Term Debt in these “Notes to Condensed Consolidated Financial Statements”), including the interest and amortization of deferred financing costs, net of reversal of historical interest expense and loss on extinguishment of Avadel’s royalty financing obligation;

(iv)

adjustment of approximately $44.5 million in direct one-time acquisition transaction costs, including $9.7 million recognized in fiscal year 2025, from the periods incurred to the period these expenses would have been recognized given the assumed transaction date identified above;

(v)

adjustment of $20.2 million related to the acceleration of unvested share-based compensation awards attributable to post-combination service and the fair value related to the contingent CVR payment that could be made to former Avadel employees if the specified CVR milestone is met, from the period incurred to the periods in which these expenses would have been recognized with the assumed transaction date identified above; and

(vi)

the related income tax effects of these adjustments to the income tax provision for the Company.

The unaudited pro forma information does not reflect the cost of any integration activities, benefits from any synergies that may be derived from the Avadel Acquisition or revenue growth that may be anticipated.

4. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed in accordance with FASB ASC 606, Revenue from Contracts with Customers, or Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligations.

Product Sales, Net

The Company’s product sales, net consist of sales in the U.S. of ARISTADA and ARISTADA INITIO, LYBALVI, VIVITROL, and, following the completion of the Avadel Acquisition on February 12, 2026, LUMRYZ, primarily to wholesalers, specialty distributors and specialty pharmacies. Product sales, net are recognized when the customer obtains control of the product, which is when the product has been received by the customer.

During the three months ended March 31, 2026 and 2025, the Company recorded product sales, net, as follows:


	Three Months Ended March 31,
(In thousands)	2026		2025
VIVITROL	$	112,434	$	100,996
ARISTADA and ARISTADA INITIO		93,824		73,475
LYBALVI		92,364		70,022
LUMRYZ		39,492		—
Total product sales, net	$	338,114	$	244,493

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers, healthcare providers or payers. The Company’s process for estimating reserves established for these variable consideration components does not differ materially from historical practices. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from the Company’s estimates. If actual results vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment. See the “Revenue from Contracts with Customers” section in Note 2, Summary of Significant Accounting Policies in the “Notes to Consolidated Financial Statements” in the Annual Report for information with respect to the Company’s significant categories of sales discounts and allowances.

The decrease in Medicaid rebates as a percentage of sales was primarily due to gross-to-net favorability, as actual Medicaid rebates related to VIVITROL, ARISTADA/ARISTADA INITIO and LYBALVI were lower than original estimates by approximately $5.4 million, $2.8 million and $0.5 million, respectively.

A rollforward of the Company’s provisions for sales discounts and allowances is as follows:


	March 31, 2026
(In thousands)	Contractual Adjustments(2)			Discounts(3)			Product Returns			Other			Total
Beginning balance — December 31, 2025	$	211,440		$	41,327		$	55,455		$	7,813		$	316,035
Avadel beginning balance as of February 12, 2026 (1)		1,475			2,642			724			24,180			29,021
Current provisions relating to sales in current year		146,144			111,269			6,518			39,093			303,024
Adjustments relating to prior years		(8,772	)		(5,347	)		(674	)		286			(14,507	)
Payments relating to sales in current year		(11,666	)		(100,040	)		—			(27,272	)		(138,978	)
Payments relating to sales in prior years		(124,102	)		(14,947	)		(3,197	)		(12,743	)		(154,989	)
Ending balance — March 31, 2026	$	214,519		$	34,904		$	58,826		$	31,357		$	339,606

(1)

Amounts consist of beginning balance as of the Closing Date.

(2)

“Contractual Adjustments” include “Medicaid Rebates” and “Medicare Part D” accruals.

(3)

“Discounts” include “Chargebacks” and “Product Discounts.”

Total revenue-related reserves as of March 31, 2026 and December 31, 2025 included in the accompanying consolidated balance sheets are summarized as follows:


	March 31,		December 31,
(In thousands)	2026		2025
Reduction of accounts receivable	$	16,249	$	21,049
Components of accrued sales discounts, allowances and reserves		272,843		247,126
Components of other long-term liabilities		50,514		47,860
Total revenue-related reserves	$	339,606	$	316,035

Manufacturing and Royalty Revenues

During the three months ended March 31, 2026 and 2025, the Company recorded manufacturing and royalty revenues from its collaboration arrangements as follows:


	Three Months Ended March 31, 2026
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products(1)	$	—	$	17,995	$	17,995
VUMERITY		—		27,349		27,349
Other		4,068		5,385		9,453
	$	4,068	$	50,729	$	54,797

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)


	Three Months Ended March 31, 2025
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products(1)	$	—	$	17,745	$	17,745
VUMERITY		5,975		21,858		27,833
Other		11,352		5,087		16,439
	$	17,327	$	44,690	$	62,017

(1)

“long-acting INVEGA products”: INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate) and INVEGA HAFYERA/BYANNLI (paliperidone palmitate). The Company’s royalty on net sales of INVEGA SUSTENNA in the U.S. expired in August 2024.

5. INVESTMENTS

Investments consist of the following (in thousands):


			Gross Unrealized
					Losses
	Amortized				Less than			Greater than		Estimated
March 31, 2026	Cost		Gains		One Year			One Year		Fair Value
Short-term investments:
Available-for-sale securities:
U.S. government and agency debt securities	$	67,931	$	117	$	(20	)	$	—	$	68,028
Corporate debt securities		92,166		186		(69	)		—		92,283
Total short-term investments		160,097		303		(89	)		—		160,311
Long-term investments:
Available-for-sale securities:
U.S. government and agency debt securities		15,044		—		(37	)		—		15,007
Corporate debt securities		11,255		—		(44	)		—		11,211
		26,299		—		(81	)		—		26,218
Held-to-maturity securities:
Certificates of deposit		145		—		—			—		145
Total long-term investments		26,444		—		(81	)		—		26,363
Total investments	$	186,541	$	303	$	(170	)	$	—	$	186,674

December 31, 2025
Short-term investments:
Available-for-sale securities:
U.S. government and agency debt securities	$	101,033	$	338	$	—		$	—	$	101,371
Corporate debt securities		97,740		534		—			—		98,274
Total short-term investments		198,773		872		—			—		199,645
Held-to-maturity securities:
Certificates of deposit		145		—		—			—		145
Total long-term investments		145		—		—			—		145
Total investments	$	198,918	$	872	$	—		$	—	$	199,790

At March 31, 2026, the Company’s investments in corporate debt securities had a minimum rating of A2 (Moody’s)/A (Standard and Poor’s), and 47 of the Company’s 120 investment securities were in an unrealized loss position with an aggregate estimated fair value of $83.4 million. The primary reason these securities were in an unrealized loss position is that they are fixed-rate securities that were acquired in a rising interest rate environment. In making the determination whether the decline in fair value of these securities was temporary, the Company evaluated whether it intended to sell the security and whether it was more likely than not that the Company would be required to sell the security before recovering its amortized cost basis. The Company has the intent and ability to hold these investments until recovery, which may be at maturity.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Realized gains and losses on the sales and maturities of investments, which were identified using the specific identification method, were as follows:


	Three Months Ended March 31,
(In thousands)	2026		2025
Proceeds from the sales and maturities of investments	$	42,608	$	113,487
Realized gains	$	1	$	1
Realized losses	$	—	$	—

The Company’s available-for-sale and held-to-maturity securities at March 31, 2026 had contractual maturities in the following periods:


	Available-for-sale				Held-to-maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Within 1 year	$	113,728	$	113,778	$	145	$	145
After 1 year through 5 years		72,668		72,751		—		—
Total	$	186,396	$	186,529	$	145	$	145

6. FAIR VALUE

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy and the valuation techniques that the Company utilized to determine such fair value:


	March 31,
(In thousands)	2026		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	7,960	$	7,960	$	—	$	—
U.S. government and agency debt securities		83,035		78,676		4,359		—
Corporate debt securities		103,494		—		102,994		500
Total	$	194,489	$	86,636	$	107,353	$	500
Liabilities:
Contingent consideration	$	109,494		—		—		109,494
Total	$	109,494	$	—	$	—	$	109,494


	December 31,
	2025		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	18,583	$	18,583	$	—	$	—
U.S. government and agency debt securities		101,371		94,246		7,125		—
Corporate debt securities		98,274		—		97,774		500
Total	$	218,228	$	112,829	$	104,899	$	500

The Company transfers its financial assets and liabilities, measured at fair value on a recurring basis, between the fair value hierarchies at the end of each reporting period. There were no transfers of any securities between levels during the three months ended March 31, 2026. At March 31, 2026, the contingent consideration resulting from the Avadel Acquisition was valued as a contingent liability utilizing Level 3 inputs as its fair value is based on significant inputs not observable in the market.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

The following table is a rollforward of the fair value of the Company’s assets with fair values that were determined using Level 3 inputs at March 31, 2026:


	Fair Value
(In thousands)	Assets		Liabilities
Balance, January 1, 2026	$	500	$	—
Addition of contingent consideration related to CVR Milestone for consideration transferred		—		107,713
Addition of contingent consideration related to CVR Milestone for post-combination expense		—		1,781
Balance, March 31, 2026	$	500	$	109,494

The Company’s investments classified as Level 2 within the fair value hierarchy were initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing market-observable data. The market-observable data included reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. The Company validated the prices developed using the market-observable data by obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. For additional information related to the Company’s contingent consideration, see Note 18, Commitments and Contingent Liabilities in these “Notes to Condensed Consolidated Financial Statements”.

The carrying amounts reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, contract assets, other current assets, accounts payable and accrued expenses, sales discounts, allowances and reserves approximate fair value due to their short-term nature.

The estimated fair value of the Company’s long-term debt under its Facilities (as defined in Note 12, Long-Term Debt in these “Notes to Condensed Consolidated Financial Statements”), which was based on quoted market price indications (Level 2 in the fair value hierarchy) and which may not be representative of actual values that could have been, or will be, realized in the future, was $1,542.6 million at March 31, 2026.

7. INVENTORY

Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Inventory consists of the following:


	March 31,		December 31,
(In thousands)	2026		2025
Raw materials	$	70,966	$	68,387
Work in process		120,844		90,498
Finished goods(1)		144,893		37,740
Total inventory	$	336,703	$	196,625

(1)

At March 31, 2026 and December 31, 2025, the Company had $26.2 million and $31.7 million, respectively, of finished goods inventory located at its third-party warehouse and shipping service provider.

In connection with the Avadel Acquisition, the Company recorded a fair value step-up adjustment to inventory of $121.6 million, consisting of approximately $19.1 million and $102.5 million in work in process and finished goods, respectively. The inventory step-up is being amortized when inventory is sold to customers, substantially all of which is expected to be within a year of the Closing Date. During the three months ended March 31, 2026, the Company amortized $12.7 million in inventory step-up within “Cost of goods manufactured and sold” in the accompanying condensed consolidated statement of operations and comprehensive (loss) income.

ALKERMES PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:


	March 31,		December 31,
(In thousands)	2026		2025
Land	$	957	$	957
Building and improvements		152,112		150,672
Furniture, fixtures and equipment		259,014		255,773
Leasehold improvements		59,900		42,535
Construction in progress		23,829		38,795

Alkermes plc. 10-Q