Supernus Pharmaceuticals (SUPN)

Specialty pharmaceutical company Supernus Pharmaceuticals (NASDAQ:SUPN) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 21.5% year on year to $211.6 million. On the other hand, the company’s full-year revenue guidance of $855 million at the midpoint came in 0.7% below analysts’ estimates. Its GAAP loss of $0.07 per share was 66.7% above analysts’ consensus estimates.

Company Overview

With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.

Looking ahead, the branded pharmaceutical industry is positioned for tailwinds from advancements in precision medicine, increasing adoption of AI to enhance drug development efficiency, and growing global demand for treatments addressing chronic and rare diseases. However, headwinds include heightened regulatory scrutiny, pricing pressures from governments and insurers, and the looming patent cliffs for key blockbuster drugs. Patent cliffs bring about competition from generics, forcing branded pharmaceutical companies back to the drawing board to find the next big thing.

Supernus Pharmaceuticals competes with larger pharmaceutical companies like AbbVie (NYSE:ABBV), Takeda (NYSE:TAK), and Eli Lilly (NYSE:LLY) in the ADHD market, and with UCB (OTC:UCBJF), Jazz Pharmaceuticals (NASDAQ:JAZZ), and Eisai (OTC:ESALY) in the epilepsy space. In Parkinson's disease treatments, its competitors include AbbVie, Acorda Therapeutics (NASDAQ:ACOR), and privately-held Britannia Pharmaceuticals.

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 just $718.9 million in revenue over the past 12 months, Supernus Pharmaceuticals is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Supernus Pharmaceuticals’s sales grew at a mediocre 5.6% compounded annual growth rate over the last five years. This fell short of our benchmark for the healthcare sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Supernus Pharmaceuticals’s annualized revenue growth of 12.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Supernus Pharmaceuticals reported robust year-on-year revenue growth of 21.5%, and its $211.6 million of revenue topped Wall Street estimates by 8.4%.

Looking ahead, sell-side analysts expect revenue to grow 19.8% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and implies its newer products and services will spur better top-line performance.

Supernus Pharmaceuticals was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.6% was weak for a healthcare business.

Looking at the trend in its profitability, Supernus Pharmaceuticals’s operating margin decreased by 23 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 7.7 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Supernus Pharmaceuticals generated an operating margin profit margin of negative 1.9%, down 14.2 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Supernus Pharmaceuticals, its EPS declined by 18% annually over the last five years while its revenue grew by 5.6%. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Supernus Pharmaceuticals’s earnings can give us a better understanding of its performance. As we mentioned earlier, Supernus Pharmaceuticals’s operating margin declined by 23 percentage points over the last five years. Its share count also grew by 6.7%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q4, Supernus Pharmaceuticals reported EPS of negative $0.07, down from $0.27 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Supernus Pharmaceuticals’s full-year EPS of negative $0.68 will flip to positive $1.22.

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.

Supernus Pharmaceuticals has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 18.5% over the last five years, quite impressive for a healthcare business. 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 Supernus Pharmaceuticals’s margin dropped by 12.1 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

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).

Supernus Pharmaceuticals historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 3.2%, 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. Unfortunately, Supernus Pharmaceuticals’s ROIC has decreased over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

It was good to see Supernus Pharmaceuticals beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance slightly missed. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 4.7% to $55.75 immediately after reporting.

Updated: February 24, 2026 at 4:21 PM EST

When considering an investment in Supernus Pharmaceuticals, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Supernus Pharmaceuticals doesn’t pass our quality test. To kick things off, its revenue growth was mediocre over the last five years. While its strong free cash flow generation allows it to invest in growth initiatives while maintaining an ample cushion, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets. On top of that, its declining operating margin shows the business has become less efficient.

Supernus Pharmaceuticals’s P/E ratio based on the next 12 months is 21.4x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $61.33 on the company (compared to the current share price of $55.75).