BioMarin Pharmaceutical (BMRN)

Biotech company BioMarin Pharmaceutical (NASDAQ:BMRN) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 17% year on year to $874.6 million. The company expects the full year’s revenue to be around $3.38 billion, close to analysts’ estimates. Its non-GAAP profit of $0.46 per share was 17.9% below analysts’ consensus estimates.

Company Overview

Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.

Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.

BioMarin's competitors in the rare disease space include Sanofi's Genzyme unit (NASDAQ: SNY), Ultragenyx Pharmaceutical (NASDAQ: RARE), Alexion (now part of AstraZeneca, NASDAQ: AZN), and Vertex Pharmaceuticals (NASDAQ: VRTX). In gene therapy for hemophilia, BioMarin competes with CSL Behring (ASX: CSL) and Pfizer (NYSE: PFE).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $3.22 billion in revenue over the past 12 months, BioMarin Pharmaceutical has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, BioMarin Pharmaceutical’s sales grew at a decent 11.6% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. BioMarin Pharmaceutical’s annualized revenue growth of 15.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, BioMarin Pharmaceutical reported year-on-year revenue growth of 17%, and its $874.6 million of revenue exceeded Wall Street’s estimates by 4.8%.

Looking ahead, sell-side analysts expect revenue to grow 13.4% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is noteworthy and suggests the market is baking in success for its products and services.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

BioMarin Pharmaceutical was profitable over the last five years but held back by its large cost base. Its average operating margin of 9.1% was weak for a healthcare business.

On the plus side, BioMarin Pharmaceutical’s operating margin rose by 17.2 percentage points over the last five years, as its sales growth gave it immense operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 5.9 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

This quarter, BioMarin Pharmaceutical generated an operating margin profit margin of negative 5.1%, down 26.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

BioMarin Pharmaceutical’s EPS grew at a spectacular 13.8% compounded annual growth rate over the last five years, higher than its 11.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into BioMarin Pharmaceutical’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, BioMarin Pharmaceutical’s operating margin declined this quarter but expanded by 17.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, BioMarin Pharmaceutical reported adjusted EPS of $0.46, down from $0.92 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects BioMarin Pharmaceutical’s full-year EPS of $3.15 to grow 71.1%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

BioMarin Pharmaceutical has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 11.5% over the last five years, better than the broader healthcare sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that BioMarin Pharmaceutical’s margin expanded by 17.2 percentage points during that time. This is encouraging because it gives the company more optionality.

BioMarin Pharmaceutical’s free cash flow clocked in at $58.92 million in Q4, equivalent to a 6.7% margin. The company’s cash profitability regressed as it was 15.5 percentage points lower than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although BioMarin Pharmaceutical has shown solid fundamentals lately, it historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 2.6%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. BioMarin Pharmaceutical’s ROIC has increased over the last few years. its rising ROIC is a good sign and could suggest its competitive advantage or profitable growth opportunities are expanding.

Companies with more cash than debt have lower bankruptcy risk.

BioMarin Pharmaceutical is a profitable, well-capitalized company with $1.56 billion of cash and $597.2 million of debt on its balance sheet. This $963.4 million net cash position is 7.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We enjoyed seeing BioMarin Pharmaceutical beat analysts’ revenue expectations this quarter. On the other hand, its full-year EPS guidance missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 2.7% to $61.21 immediately after reporting.

Are you wondering whether to buy BioMarin Pharmaceutical or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

BioMarin Pharmaceutical is a fine business. First off, its revenue growth was good over the last five years and is expected to accelerate over the next 12 months. And while its mediocre ROIC lags the market and is a headwind for its stock price, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.

BioMarin Pharmaceutical’s P/E ratio based on the next 12 months is 11.7x. Looking at the healthcare space right now, BioMarin Pharmaceutical trades at a compelling valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $88.87 on the company (compared to the current share price of $61.21), implying they see 45.2% upside in buying BioMarin Pharmaceutical in the short term.