Cipher Pharmaceuticals Q2 2026 Earnings Report

Cipher Pharmaceuticals EPS Results

• Actual EPS: C$0.21
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Cipher Pharmaceuticals Revenue Results

• Actual Revenue: $17.14 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Cipher Pharmaceuticals Announcement Details

• Quarter: Q2 2026
• Date: 8/11/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 12, 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 Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Natroba revenue fell 19% year over year to $6.3 million in Q2, pressured by lower sales volumes to state Medicaid programs. Management expects improvement from expanded commercial-channel efforts, including direct-to-patient access, delivery partnerships, and availability at Walmart stores nationwide.
• Positive Sentiment: Epuris revenue increased 14% to CAD 4.1 million, while sales volume rose 8% and Canadian market share reached 47.1%. A letter of intent with the pan-Canadian Pharmaceutical Alliance is expected to expand public-plan reimbursement and patient access over the next 30–60 days.
• Neutral Sentiment: Q2 net revenue declined 10% to $12.1 million and Adjusted EBITDA fell 10% to CAD 6.8 million, but EBITDA margins remained strong at 57%; year-to-date margins were 59%. Management also reduced SG&A through operational efficiencies and maintained a debt-free balance sheet with CAD 9.1 million in cash.
• Neutral Sentiment: Cipher continues to pursue product acquisitions or in-licensing, international out-licensing of Epuris and Natroba, and strategic company acquisitions. An acquisition that had reached an advanced stage was abandoned due to concerns about certain products and pricing, while other opportunities remain under evaluation.

Presentation

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Cipher Pharmaceuticals quarterly conference call for the company's second quarter 2026 financial results. At this time, all participants are in listen only mode. Following today's presentations, 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, Wednesday, August 12 of 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. Now I would 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 would like to remind everyone that all figures discussed on today's call are expressed in USD unless otherwise specified. Cipher's second quarter of 2026 continues to represent a highly profitable specialty pharma platform company that delivers strong shareholder returns. Cipher's combined business, led by Natroba in the U.S. and Epuris in Canada, is robust and continues to generate strong cash flows for our shareholders. In the quarter, the U.S.-based Natroba business experienced pressure with respect to sales volumes. However, in other aspects of the product portfolio, such as the Canadian product portfolio, we experienced growth and market share gains.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Looking ahead, we believe the Canadian portfolio will continue its growth, whereby we announced a positive development related to public reimbursement coverage for Epuris with the signing of a letter of intent between Cipher and the pan-Canadian Pharmaceutical Alliance, which is expected to expand patient access to Epuris with the product's inclusion on additional federal, provincial, and territory public drug plans. Revenue from Natroba for the second quarter of 2026 was $6.3 million, compared to $7.8 million for the same quarter in the prior year, impacted by reduced sales volumes to state Medicaid programs. Looking ahead, we are investing in and building new business verticals to expand the U.S. business to grow commercial payer volumes, which include, first, implementing strategies to grow volumes in our direct-to-patient platform, recently launched earlier this year.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Given the acute nature of Natroba's indication to treat head lice and scabies, we believe the product is consumer-focused and more susceptible to sales growth in this vertical, arguably more so than other pharmaceutical medications. Second, making the product easier to get to patients, either through direct mail or same-day delivery partners we have established and put in place. Third, investing in programs with large retailers to have Natroba and/or Spinosad on the shelf in large retailer settings, such as most recently launched a program to have the product available at Walmart, which represents an area we see as a tremendous opportunity for growth in the future. Epuris has demonstrated growth during the quarter, with revenue from Epuris of $4.1 million of the second quarter in 2026, an increase of $0.5 million or 14% compared to $3.6 million in the second quarter of 2025.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

During the second quarter of 2026, sales volumes increased 8% compared to the same period in prior year, and market share for Epuris grew by 1.3% for the first half of 2026 to 47.1% market share as of June 30, 2026, according to IQVIA market data. Epuris continues to expand its position as the market-leading isotretinoin product in Canada. We are also optimistic that recent developments surrounding the letter of intent signed with the pCPA establishing a path for expanded public drug plan coverage across Canada will provide growth for Epuris. Following the execution of the letter of intent with the pCPA, we have been actively collaborating with federal, provincial, and territorial drug plans to finalize product listing agreements, which we expect to be finalized over the next 30 to 60 days.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Listing on these additional public drug plans provides wider access for Epuris for patients who are not covered elsewhere, and accordingly expands Cipher's addressable market for the product, as there is a subset of patients that Epuris can now reach since they did not previously have coverage for the product. We expect our market share to grow meaningfully in time, particularly in certain key markets whereby a high proportion of their patient population has drug coverage through the public-funded drug plans as opposed to private insurance plans. The public drug plan coverage is something we have been pursuing in key markets with limited success for some time. Therefore, the signing of the letter of intent with the pCPA is an exciting achievement for Cipher and Epuris, and truly beneficial to the Canadian patient population navigating severe nodular acne.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

While Cipher's total adjusted EBITDA for the second quarter of 2026 was ultimately reduced compared to the prior year and the most recent quarter, we have maintained our overall profitability with adjusted EBITDA margins of 57%, calculated as adjusted EBITDA divided by revenue. Adjusted EBITDA margins for the second quarter of 2026 were consistent with the second quarter of 2025. Adjusted EBITDA margins for year to date, June 30, 2026, remained elevated at 59% compared to 54% for the same period in the prior year. Our CFO, Ryan Mailling, will provide a detailed overview of our financial results following my commentary. For the remainder of my commentary, I would like to provide an update on our business development activities, which are a key area of focus for Cipher, and we continue to be very active in this area during the second quarter of 2026.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Myself, along with several members of our team, are continuing to focus a significant amount of our time on these activities. We have three distinct strategies aside from our existing business we are pursuing to drive future shareholder value and growth in our business. Firstly, acquisition or in-licensing of complementary products. Secondly, out-licensing of Epuris and Natroba to markets outside of North America. Lastly, company acquisitions that are of strategic value to Cipher. The first area of growth 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 business development, these activities do take time.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

The time horizons on each opportunity vary, and the opportunities may or may not come to realization in the end. The second strategy we have undertaken is pursuing out-licensing opportunities for both Natroba and Epuris outside of North America. We have made progress in this area during and subsequent to the second quarter, particularly in pursuing opportunities to out-license Epuris to territories outside of North America. We have seen interest from a number of parties in exploring a partnership for distributing Epuris under license in their respective territories, and we are actively in discussions with these parties and evaluating the potential opportunities for the products in these territories. Given Epuris is the leading isotretinoin product in the Canadian market, we believe Epuris could also perform strongly in other territories with similar markets to Canada and represents a further avenue of growth for Cipher.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Similarly, with respect to Natroba, we continue to believe there is a high unmet need for a highly effective product like Natroba to address head lice and scabies indications in other territories. However, product pricing in territories outside of the U.S. varies considerably from the U.S. market, and therefore the execution of this strategy is taking time, as we believe it is important to find the right markets and out-licensing partners for Natroba to ensure commercial success of the product in territories outside of North America. The third area of 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 the other business development strategies I mentioned, as well as its ongoing and future operations.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Accordingly, acquiring companies that could add to our size and scale as well as provide other strategic benefits continues to be an area we are placing a great deal of focus. During the second quarter, we were in advanced stages of a process for an acquisition target. However, we ultimately determined that not continuing with the process was the right decision at this time. Cipher and therefore the deal did not materialize. We are currently assessing other opportunities and also continue to actively source, evaluate and pursue potential acquisitions that achieve our objectives. We remain optimistic that we will achieve success in finding and executing on the right opportunity. 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 USD unless otherwise noted. Today, Cipher Pharmaceuticals is reporting results from the company's second quarter and year-to-date 2026, the three and six-month period ended June 30th, 2026. Total net revenue for the three and six months ended June 30th, 2026 was $12.1 million and $24.6 million respectively. Net revenue for the second quarter of 2026 decreased by $1.3 million or 10% compared to the same quarter in 2025. Net revenue for the six months ended June 30th, 2026 decreased by $0.8 million or 3% compared to the same period in 2025. Revenue was impacted for both second quarter and year-to-date 2026 by lower revenue from Natroba, however, it was partially offset by revenue growth from Epuris.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Additionally, for the second quarter of 2026, due to reduced product shipments to Cipher's distribution partners, which are subject to variability from period to period, licensing revenue also contributed to the reduction in total net revenue during the quarter. Although Natroba experienced sales volume pressure contributing to lower revenue during the second quarter of 2026, this was primarily the result of evolving market dynamics with respect to Medicaid programs. Our expectations for the product have not changed despite market dynamics that may emerge over time. We expect performance of the product to improve in future quarters as the implementation of our strategy related to Natroba and its authorized generic, Spinosad, takes effect, including an expanded focus on commercial channels, which Craig discussed in his remarks. The overall business continued to remain highly profitable, despite a slight decline in margins for the second quarter of 2026.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

On a year-to-date basis, margins for the ongoing business remain consistent when compared to the same period in 2025. Gross margin for the second quarter of 2026 was 80%, a decrease of 1% from 81% in the second quarter of 2025. Gross margin during the quarter was impacted by reduced licensing revenue, as well as lower revenue from Natroba compared to the three months ended June 30th, 2025. On a year-to-date basis, gross margin increased by 2% to 81% for the six months ended June 30th, 2026, compared to 79% for the six months ended June 30th, 2025. The increase in gross margin for the year-to-date is largely due to the non-recurring fair value adjustments to acquired inventory included in the cost of sales for the six months ended June 30th, 2025, in connection with the company's acquisition of the U.S.-based Natroba business.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Excluding the impact of these fair value adjustments in the prior year, Cipher's gross margins remain consistent year-over-year at 81%. We have also maintained our approach of continuously monitoring and evaluating our cost base. As a result of this approach, we have seen a reduction in our selling, general, and administrative expenses for both the three and six months ended June 30th, 2026. Selling, general, and administrative expenses for the second quarter of 2026 were $3.4 million compared to $4.1 million during that same quarter in the prior year, representing a 16% reduction. For the six months ended June 30th, 2026, selling, general, and administrative expenses decreased by 30% to $6.3 million from $9 million during the same period in the prior year. There were two main components contributing to the reduction in our selling, general, and administrative expenses. One, non-recurring costs, and secondly, operational efficiencies.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

In the prior year, during the three and six months ended June 30th, 2025, we incurred non-recurring legal costs associated with the arbitration proceedings relating to defending the company's intellectual property, which were concluded in Cipher's favor. These costs amounted to $200,000 for the second quarter of 2025 and $1.2 million for the six months ended June 30th, 2025. Costs related to this matter were negligible in the current year. There were also $0.1 million of restructuring related costs incurred in the prior year during the six months ended June 30th, 2025. In the current year, however, there were certain non-recurring costs incurred related to professional services fees and other due diligence activities in connection with the advanced stages of pursuing an acquisition opportunity, as Craig mentioned in his remarks. We incurred $0.3 million in costs for these activities during the second quarter and year to date 2026.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

When removing these non-recurring costs, selling, general, and administrative expenses on a normalized basis have declined $0.8 million for the second quarter and $1.7 million for the six months ended June 30th, compared to the same periods in prior year. This remaining decrease is primarily driven by operational efficiencies gained within the U.S. business, including savings and employment-related costs from a rationalized employee complement and reduced selling and marketing costs. Net income for the three months ended June 30th, 2026 was $4 million or $0.15 per diluted common share, compared to $5.9 million or $0.22 per diluted common share for the same period in prior year.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

The decrease in net income for the second quarter of 2026 was attributable to reduced gross profit arising from the impacts on revenue described previously, combined with an unrealized foreign exchange loss from the effects of the US dollar's appreciation relative to the Canadian dollar on the translation of certain net assets of the company denominated in Canadian dollars. Net income for the six months ended June 30th, 2026 was $10.2 million or $0.39 per diluted common share, compared to $8.5 million or $0.32 per diluted common share for the same period in the prior year. This increase in net income for the six months ended June 30th, 2026, was contributed to by non-recurring costs incurred during the six months ended June 30th, 2026, totaling $2.1 million, including legal costs related to the arbitration, restructuring related costs, and fair value adjustments to acquired inventory.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

The reduced cost structure as a result of these non-recurring costs in the prior year was partially offset by lower gross profit during the six months ended June 30th, 2026. Adjusted EBITDA for the second quarter of 2026 was $6.8 million, compared to $7.6 million for the second quarter of 2025, representing a decrease of $0.8 million, or 10%. Decrease in adjusted EBITDA was largely contributed to by the lower growth profit. However, this was partially offset by reductions in SG&A expenses, mainly driven by the efficiencies in our cost structure. Adjusted EBITDA for the six months ended June 30th, 2026, was $14.6 million, compared to $13.8 million for the six months ended June 30th, 2025. This represents an increase of $0.8 million, or 6%.

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

The increase in adjusted EBITDA was primarily attributable to those reductions in selling general and administrative expenses, which I previously mentioned. Despite facing pressure on our top line during the second quarter of 2026, Cipher continues to be highly profitable, cash generative, and remains debt-free. Cipher ended the quarter with $9.1 million in cash and generated cash flow from operations of $7.6 million during the first half of 2026. Additionally, having fully repaid the outstanding balance on our revolving credit facility as at the end of the first quarter of 2026, we retained availability to $90 million of potential financing, comprised of a $65 million revolving credit facility, plus a $25 million accordion. This potential financing, combined with positive operating cash flows, positioned us well to continue investing in our growth strategy, which Craig had outlined in detail during his commentary.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Thanks, Ryan. Before we open the call for questions, I wanted to reiterate and leave you with a few key items from our commentary. First, Cipher remains highly profitable with gross margins of 81% and EBITDA margins of 59% on a year-to-date basis. Second, our expectations for the U.S. business have not changed. Despite impacts from market dynamics which may arise over time, we expect performance to improve in future quarters as our programs we are implementing related to Natroba take effect. Third, expanded public reimbursement for Epuris is expected to drive market share growth, especially in key markets, with the additional public drug plan listing enhancing patient access to the product, which already had the position as the market-leading isotretinoin in Canada prior to the expanded coverage.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Finally, we continue to remain highly active in the area of business development, including opportunities for in-licensing of products, acquisition of products or companies, and out-licensing of our existing portfolio. We view these activities as a key growth driver for Cipher. We will now open the call for questions. At this point, I will ask our operator to provide instructions for the questions and answer session. Operator, please go ahead.

[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 number one on your touchtone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. One moment for your first question. Your first question comes from the line of Max of Stifel. Please go ahead.

[Analyst at Stifel]

Yeah. Good morning, gentlemen. On for Justin this morning. A couple of questions. Firstly, just curious on sort of the Natroba dynamics. Can you characterize what exactly is impacting the sales channel with respect to Medicaid and sort of how many patients who would be publicly covered patients are falling off, maybe due to recent regulation or legislation at the federal level, and how you expect to mitigate this via, one, through your stocking program and, two, any traction in the DTC. Thank you.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Thanks for the question, Max. Bryan, would you like to address Max's question?

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

Hi, Max. Good morning. It's Bryan Jacobs. As you know, I'm the President of the U.S. business. Your question on Medicaid, answering what's happening in the overall Medicaid plans and covered lives is a little bit beyond what we can talk about that's widely covered in the news. What we can say that impacts us is one of the strengths of the business is that we've always had very strong Medicaid coverage in the U.S. business. That will continue to be a strength going forward, whether there's an increase or what we're seeing is a decrease in covered lives in Medicaid. The business will have to ebb and flow on that.

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

Really then to answer the question of, what are we doing about it, because we can't control legislative changes to Medicaid, we can only control what we want to do in making sure that the Natroba business continues to grow.

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

We didn't start that just yesterday. We've been looking at that and expanding it over the course of the last year. It took a tremendous amount of time to get a first-in-class direct-to-patient model. We don't just have a telehealth-type service built onto our website. We have a first-in-class design so that you can get a script within an hour, and you can schedule delivery or have a script routed to your nearest pharmacy instantly so that you can pick it up. We've been working on that for the better part of a year ahead of this quarter. In addition to that, we've had discussions with very large retail pharmacies like the one that we've talked about here. Those conversations have been going on for the better part of a year.

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

We're happy to announce that we closed one of them to make Natroba and Spinosad available at every single Walmart across the U.S. So those are both initiatives to focus on commercial growth, so that we're not just ebb and flowing with changes in Medicaid that occur.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Max, you had one question at the end there as well. Second question.

[Analyst at Stifel]

No, I think Bryan did a good job. It was mostly just kind of relating what the impact of these dynamics are and how you're going to or expect to mitigate them through both the stocking or retail access and DTC. So that adequately answered the question. My second question is just on sort of business development. You noted in the quarter that you stepped away from a transaction. I understand that maybe details will be scarce, but any additional color on maybe what criteria moved you away from the deal? How near-term are the rest of the pipeline opportunities?

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

We're under a CDA with the other party, so I'm going to not give you a lot of the details that you want, but it was a larger outfit that we thought would fit very well with Cipher's business model. It would have added significant bulk to the company. But as many things, a combination of concerns about some products and price meant that at this point in time, at this date, that it's probably not the right deal for Cipher.

[Analyst at Stifel]

That's fine. Maybe one last question. I noticed that in the second quarter, free cash flow is a little bit weaker. Some working capital movements with regard to contract liabilities. I think we discussed this last quarter, but any insight on what that entails? Is that still sort of payer rebates that are causing that, and could we expect sort of free cash flow normalization for the rest of the year?

[Ryan Mailling, CFO at Cipher Pharmaceuticals]

Hi, Max, it's Ryan. Yeah, I can address that. So yeah, that is related to payer rebates. With the decline in revenues in the U.S. business this quarter, what's happening is you're seeing the payments which trail from prior rebates that arose in prior quarters. You're seeing those payments essentially come through at a higher rate this quarter than the cash we've basically collected and parked on the balance sheet as a future liability for rebates this quarter that will be paid in a future quarter. So that will kind of ebb and flow as we do see changes from quarter to quarter in revenues. But given the meaningful change, I guess you can say, from prior quarters, that's why you've seen this reversal this quarter.

[Analyst at Stifel]

Very helpful. Thanks so much.

[Operator]

Again, if you wish to ask a question, please press star one to join the queue. There are no further questions at this time. I will now turn the call over to Mr. Craig Mull. Please continue.

[Craig Mull, Interim CEO at Cipher Pharmaceuticals]

Thank you, operator. Thank you everybody for joining the call today. We appreciate it. Just before signing off, we would like to take the opportunity to again thank everybody for joining the call, and we look forward to reporting more positive quarters going forward. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you everyone for joining. You may now disconnect.

Participants

Executives

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

Analysts

• Analyst at Stifel