Cipher Pharmaceuticals Q1 2026 Earnings Report

Cipher Pharmaceuticals EPS Results

• Actual EPS: C$0.33
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Cipher Pharmaceuticals Revenue Results

• Actual Revenue: $17.39 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Cipher Pharmaceuticals Announcement Details

• Quarter: Q1 2026
• Date: 5/7/2026
• Time: After Market Closes
• Conference Call Date: Friday, May 8, 2026
• Conference Call Time: 8:30AM ET

Cipher Pharmaceuticals (TSE:CPH) (TSX: CPH) (OTCQX: CPHRF) is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products, mainly in dermatology. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and currently markets those products in Canada, the U.S., and South America.

Cipher Pharmaceuticals Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The U.S. Natroba business remains highly profitable, reporting an ~87% gross margin and a product-level adjusted EBITDA of $4.4 million in Q1, up 30% year-over-year, driving top-line growth for the company.
• Positive Sentiment: Cipher generated $4.5 million of operating cash flow in Q1, fully repaid the remaining revolver and has now repaid the $40 million of acquisition-related debt within ~20 months, leaving $6.4 million cash on hand and ~$90 million of available financing capacity.
• Positive Sentiment: Operating efficiency improved materially—SG&A fell ~42% to $2.9 million, net income rose to $6.2 million ($0.24/sh) and adjusted EBITDA was CAD 7.7 million (up 25% YoY), benefiting from fewer one-off costs and higher licensing revenue.
• Neutral Sentiment: Management launched a direct-to-consumer platform for Natroba in March and is actively pursuing in-licensing, out-licensing, and strategic acquisitions, while awaiting Health Canada’s review decision (expected by end of 2026); these initiatives could boost growth but timing and outcomes remain uncertain.

Presentation

[Operator]

Morning, ladies and gentlemen. Thank you for standing by. Welcome to the Cipher Pharmaceuticals Quarterly Conference Call for the company's Q1 2026 financial results. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the call, you may press the star followed by the zero on your push-button phone. As a reminder, this conference is being recorded today, Friday, May 8th, 2026. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of the Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements.

[Operator]

Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that could cause results to vary, please refer to the risks identified in the company's annual information form and other filings with Canadian regulatory authorities. Except as required by Canadian securities laws, the company does not undertake to update any forward-looking statements. Such statements speak only as of the date made. I would now like to turn the call over to Mr. Craig Mull, Interim Chief Executive Officer of the company. Please go ahead, Mr. Mull.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Good morning, everyone, and thank you for joining us today. Before I begin, I'd like to remind everyone that all figures discussed on today's call are expressed in U.S. dollars unless otherwise specified. Cipher's first quarter of 2026 was an extension of our achievements during fiscal 2025. The U.S.-based Natroba business continues to deliver strong profitability with a gross margin percentage of 87% and an adjusted EBITDA of $4.4 million during the first quarter, which was an increase of 30% from $3.4 million in the first quarter of 2025. Additionally, our Canadian product portfolio also continues to be a reliable source of revenue, contributing meaningfully to our overall business.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

In fact, the Canadian product portfolio, which is led by Epuris, experienced its third consecutive quarter of sequential growth with $4.5 million in revenue, up from $4.2 million in fourth quarter of 2025 and $4 million from the third quarter in 2025. Our total adjusted EBITDA for the first quarter of 2026 was $7.7 million, an increase of 25% compared to the same quarter last year, and a sequential increase of 10% over fourth quarter of 2025. Our earnings continue to provide considerable free cash flow. Our accumulated cash was used to fully repay the $5 million outstanding balance on our revolving credit facilities prior to the end of the quarter.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

With 20 months from our acquisition of Natroba and the U.S. commercial operations, we have repaid the full $40 million of debt that was drawn upon to partially fund this acquisition. This is a remarkable achievement which highlights Cipher's strong cash generation, our operational efficiency, and a disciplined approach to capital allocation. Recently, on May 1st, we announced the renewal for an additional 12-month period of our normal course issuer bid or NCIB, allowing Cipher to repurchase up to 1.5 million of its common shares. Under our most recent NCIB, prior to the renewal, we purchased nearly 533,000 common shares, returning approximately $5.4 million in capital to shareholders. Our CFO, Ryan Mailling, will provide a detailed overview of our financial results following my comments.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

I'd like to spend my remaining time providing an update on our business development activities, which we continue to be very active in during the first quarter of 2026 and to date. Myself, along with several members of our team, are focusing a significant amount of time and energy in this area. We have four distinct strategies we are pursuing to drive shareholder value and grow our business. Firstly, invest in the Natroba business with our U.S. operations. Secondly, acquisitions or in-licensing of complementary products for our U.S. platform. Three, out-licensing of Natroba globally. Lastly, company acquisitions of strategic value. The first strategy of investing and building upon Natroba business operations, is to position and to grow the platform, includes the launch of a direct-to-consumer or DTC sales model to supplement our existing sales force.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

We believe Natroba is well-suited for this DTC sales model given the acute nature of head lice and scabies. The platform launched in March of 2026, and we continue to pursue and refine our strategy surrounding this platform. The second area of our business development strategy is the pursuit of acquiring or in-licensing complementary products which can be directly commercialized through our existing Canadian and U.S. commercial infrastructures. We are currently active in discussions with various parties and continue to source and explore further opportunities. Although we continue to pursue these opportunities similar to other areas of our business development, these activities take time. The time horizons of each opportunity vary, and the opportunities may or may not come to realization in the end. The third strategy we have undertaken is pursuing out-licensing opportunities for Natroba globally.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

We continue to believe there's a high unmet need for a highly effective product like Natroba to address head lice and scabies indications in other territories globally. However, the product pricing in territories outside the U.S. varies considerably from the U.S. market. Therefore, we believe it is important to find the right markets and out-licensing partners for Natroba to ensure commercial success of the product in the territories outside North America. As a result, this strategy again takes time. The fourth area of our strategy for growing the business is evaluating and pursuing company acquisitions which may have strategic value for Cipher. As we have said previously, we continue to believe that Cipher would benefit from additional size and scale, both in its pursuit of other business development strategies I mentioned earlier, as well as its ongoing and future operations.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Accordingly, acquiring companies that would add to our size and scale as well as provide other strategic benefits continues to be an area where we are placing a great deal of focus. We are actively sourcing, evaluating, and pursuing potential acquisitions that achieve these objectives. We look forward to providing updates on this area of our business development strategy as they occur.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

In addition to these key strategies I mentioned, we continue to pursue the launch of Natroba in Canada with our new drug submission to Health Canada and its acceptance for review announced in January of 2026. We are now awaiting Health Canada's feedback with respect to its review of Natroba, and we expect to have a final decision by the end of 2026. Thank you again for joining us here today, and I look forward to answering your questions after our prepared remarks. I will now pass the call over to our CFO, Ryan Mailling. Please go ahead, Ryan.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Thanks, Craig, and good morning, everyone. As Craig mentioned at the beginning of today's call, all amounts provided are expressed in U.S. dollars unless otherwise noted. Today, Cipher Pharmaceuticals is reporting results from the company's first quarter of 2026, the three-month period ended March 31, 2026. Total net revenue was $12.5 million for the first quarter of 2026, an increase of $0.5 million or 4% compared to the same quarter in 2025. The increase was attributable to increased licensing revenue combined with net revenue growth of the U.S.-based Natroba business, partially offset by reduced revenue from the Canadian product portfolio. U.S. licensing revenue for the first quarter of 2026 was $1.1 million.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Licensing revenue increased by $0.4 million or 51% for the 3 months ended March 31, 2026, compared to the same period in the prior year, contributed to by $0.2 million of increased revenue from product shipments to Cipher's distribution partners. This was combined with higher net sales realized by our distribution partners on which Cipher earns a royalty, contributing to a year-over-year increase in royalty revenue of an additional $0.2 million. Product revenue for the U.S.-based Natroba business comprised of the brand Natroba and its authorized generic, spinosad, was $6.9 million for the first quarter of 2026, compared to $6.7 million for the same period in the prior year, representing an increase of $0.2 million or 3%.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Product revenue from the Canadian product portfolio for the first quarter of 2026 was $4.5 million, compared to $4.6 million for the same period in 2025, representing a decrease of 2%. Epuris benefited from temporary market conditions during the first quarter of 2025 as a result of stock outs of competing products, with Epuris gaining additional market share during this time. Those market conditions have since normalized, with Epuris retaining some, but not all of this additional market share in the first quarter of 2026. Gross margin for the first quarter of 2026 was 82%, compared to 76% for the same period in 2025.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Gross margin during the first quarter of 2025 was impacted by non-recurring fair value adjustments to acquired inventory, which were included in cost of products sold, which is in connection with the company's acquisition to the U.S.-based Natroba business. Excluding the impact of these fair value adjustments to the prior year, Cipher has experienced a 1% increase in gross margin year-over-year, benefiting from the impact of the additional licensing revenue during the first quarter of 2026. Selling, general, and administrative expenses for the three months ended March 31st, 2026 were $2.9 million, compared to $5 million during the three months ended March 31st, 2025.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Selling, general and administrative expenses for the first quarter of 2026 decreased by $2.1 million or 42% compared to the same quarter in the prior year. The decrease was largely contributed to by non-recurring costs incurred during the first quarter of 2025, including $1 million in legal costs associated with arbitration proceedings, as well as $0.1 million related to acquisition related costs from entering that period. The remaining decrease is primarily driven by operational efficiencies, including reduced employee costs, selling and marketing costs, and general remaining costs. Net income for the three months ended March 31, 2026 was $6.2 million or $0.24 per diluted common share. Compared to $2.6 million or $0.10 per diluted common share for the same period in 2025.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

The increase in net income for the first quarter of 2026 was contributed to by the non-recurring costs incurred in the first quarter of 2025, which totaled $1.8 million, including legal costs related to the arbitration, acquisition-related costs, and the fair value adjustments to acquired inventory. This reduced cost structure as a result of these non-recurring costs incurred in the prior year, was combined with additional licensing revenue and the reduced selling, general and administrative expenses during the first quarter of 2026, driving this year-over-year increase in net income. Adjusted EBITDA for the first quarter of 2026 was $7.7 million, compared to $6.2 million for the first quarter of 2025, representing an increase of $1.5 million or 25%.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

The increase in adjusted EBITDA resulted from increased licensing revenue combined with the reduced selling, general and administrative expenses. For the first quarter of 2026, we continued to generate strong cash flows from operations. With the business having generated $4.5 million in cash from operations during the quarter, we repaid the remaining $5 million outstanding balance on our revolving credit facility before the end of the quarter and retained $6.4 million in cash on our balance sheet at March 31st, 2026. Having fully repaid the outstanding balance on our revolving credit facility during the first quarter, retaining availability to $90 million of potential financing and continuing strong cash flows from operations, we are well positioned to deploy our capital for future growth once we identify the right opportunity in line with the strategies Craig highlighted during his remarks. We'll now open the call up to questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Thank you. Your first question comes from the line of Max Czmielewski from Stifel. Please go ahead.

[Max Czmielewski, Analyst at Stifel]

Hi, Craig and Ryan. It's Max on for Justin Keywood today. A nice quarter.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Thanks, Max.

[Max Czmielewski, Analyst at Stifel]

Just wondering for my first question, if you can provide any detail on the types of prescription volumes you're seeing in sort of these early innings through the DTC channels. And maybe as a follow-up to that, if we should expect any, you know, net pricing dynamics as this potentially becomes a larger proportion of the sales mix. You know, understanding that Natroba might not be the most expensive product in the first place, but any color there would be helpful.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Max, Craig Mull here. I'm with Ryan Mailling, who was part of our presentation, and Bryan Jacobs, who's the President of the U.S. Operations. I'm gonna turn the question to Bryan.

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

Hey, Max. I think your first question was on the direct to patient, direct to consumer platform. Our strategy in launching it, you know, as you know, seasonally, the kind of February and March are kind of the lower times of the year for the disease state. What we wanted to do was really launch the platform and kinda get it operate. You know, make sure that it was working and, you know, running properly and efficiently with the partners. We have a number of partners, whether it's telehealth as well as distributing and shipping the product and making sure that that was working properly. You know, arguably, we wouldn't want to plow a lot of marketing resources during our lowest time.

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

In Q1, we didn't really have meaningful volumes, but we're happy to kind of follow that up in the second quarter when we plan on having a lot more marketing, driving people into the website and into the platform. That's kind of what to expect ahead. Your second question, can you repeat that again?

[Max Czmielewski, Analyst at Stifel]

Yeah. It's just, if we should expect any pricing dynamics or price changes as more scripts go through the DTC versus through, you know, commercial?

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

Yes, that's a good question. We expect the audience coming through that will largely be commercial volume, and we do realize a higher net price on sales of commercial. That would be on the authorized generic spinosad. We do realize a higher net price on spinosad today. As we drive further volumes through that, we expect that are commercial-focused, we think that will only benefit net price going forward.

[Max Czmielewski, Analyst at Stifel]

Yeah, thanks. Any insight, just maybe switching gears, of any insight into potential upsizing of the credit facility, given the very terrific debt service ratios and the payback? Maybe how you're thinking about providing the company with some extra liquidity to get access to larger BD targets up the snack bracket.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Yeah, I mean, you know, we'll look at the credit facility and, you know, as our needs evolve here, with potential opportunities. Yes, that is something we are certainly considering.

[Max Czmielewski, Analyst at Stifel]

Okay. And lastly, what are you seeing in terms of private valuations in the therapeutic areas you're exploring, maybe for both in licensing deals or business acquisitions? There's been a bit of a rerating in small cap specialty pharma in the U.S., and wondering if you have any color you can give on how that's impacting the pace of your BD initiatives.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Yeah, Max, it's Craig here. We're not seeing a much of a change. Maybe you are, but, you know, each deal that we're looking at has got its own dynamics. You know, we haven't really seen a change, either, you know, an increase in pricing or a decrease in pricing of these type of deals. Again, it's gotta be evaluated on a case-by-case basis.

[Max Czmielewski, Analyst at Stifel]

Okay. That's all for me. Thanks, guys.

[Operator]

Thank you. Once again, that is star and one to ask a question. Your next question comes on the line of Andre Uddin from Research Capital. Please go ahead.

[Andre Uddin, Analyst at Research Capital]

Thanks, operator. Hi, Craig, Ryan, and Bryan. Just, besides your online marketing campaign, could you maybe discuss how you're going to accelerate growth of Natroba in the coming quarters?

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

Hey, Andre, it's Bryan. Good morning. One of the areas we do plan on getting, you know, volume and just making it accessible online, just because that's a modern way for people to get medications. Certainly down in the U.S. it's becoming a bit more, you know, expected that you should be able to find a source and, you know, get a medication if you think it's right suited for you, get it, you know, getting in contact with telehealth. Yes, we expect some good volume coming through that. Where I think there, you know, the growth is, you know, we do have our field sales team. Not a lot has changed associated with that, but, you know, we do think that it'll continue to contribute to growth.

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

Really the kind of the area that we, I think that there's gonna be a greater benefit is really just getting a higher awareness of the product out there. You know, for our direct-to-consumer platform, we plan on doing a lot of digital marketing, so marketing through various, whether it's social media as well as, you know, traditional, whether it's the Google pay-per-click, that type of thing. That's not when we do that type of marketing, it's not necessarily all gonna flow through the direct-to-consumer.

[Bryan Jacobs, President of U.S. Operations at Cipher Pharmaceuticals]

It just really raises the awareness out there to say, "Wait, this is probably a product, a one-and-done, you know, head lice solution for me because I don't wanna struggle with this and with my kids and my family." We think that, or, you know, we strongly believe that digital marketing campaign, which is something that was not done heavily historically, is not only gonna benefit direct-to-consumer, but also growth, you know, overall growth to Natroba.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Andre, just to add to that a little further, Bryan's made good headway into, you know, focusing on what we call some, you know, more going after the different pillars. For example, we've making inroads to the long-term care homes and their associations where we can, you know, get the awareness up through groups and through associations that, you will have meetings where we attend. For example, another area would be the Department of Defense and these larger organizations where we have much bigger impact and being able to get our word out through them and the awareness up. I think that, that is going to end up being very productive and increase volumes without the expense of knocking on, you know, individual doctor doors.

[Andre Uddin, Analyst at Research Capital]

Yeah. Great. Just, I was just wondering if you could also provide a bit of an update on MOB-015 and that's moving ahead or what's happening there.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Well, they continue to have success outside of North America. There was a recent press release by Moberg that said that they've expanded their partnership with the company that has Lamisil. I think that they've now got a license with them in Australia and parts of Asia. I spoke with the CEO a week ago to get an update whether they're still considering another phase III trial in the U.S., and it looks much more positive that they will go ahead with that study now. They've been able to, you know, generate quite a bit of cash through this new partnership and now can fund that phase III trial. I expect that they will proceed with that phase III trial, and obviously that would be pivotal to our decisions about launching the product in Canada.

[Andre Uddin, Analyst at Research Capital]

Great. I think that's it. Thanks, gentlemen.

[Operator]

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Craig Mull for any closing remarks.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Before signing off, I would like to take this opportunity to thank everyone for joining us today. We appreciate your support, and we look forward to continuing to update you on Cipher's progress. Thank you.

[Operator]

This concludes today's call. Thank you for participating. You may all disconnect.

Participants

Executives

• Bryan Jacobs, President of U.S. Operations
• Craig Mull, Interim CEO
• Ryan Mailling, CFO

Analysts

• Andre Uddin, Analyst at Research Capital
• Max Czmielewski, Analyst at Stifel