RPRX · Health care(pharmaceutical preparations) · 9 years of annual accounts filed with the SEC · latest fiscal year ended 2025-12-31
Royalty Pharma plc reported revenue of $2.4 billion in fiscal 2025. Of the $17.7 billion its operations generated over 9 years, 10.0% went to buybacks. On the accounting screens, it passes 5 of 8 Piotroski tests and its Altman Z'' of 2.25 is in the grey zone; 2 of the six cross-checks between its statements fire.
Revenue, fiscal 20252.4B
Operating margin65.6%gross margin —
Return on invested capital8.4%7.0% on average over 5 years
Free cash flow—
Net debt ÷ EBITDA5.3×net debt 8.3B
Piotroski F-score5/8tests of improvement passed
Is it growing?
Revenue and the operating income it turns into. Growth that does not reach operating income is growth bought with margin.
RevenueOperating income
01.0B2.0B3.0B
2017
2018Revenue 1.8BOperating income 1.4B
2019Revenue 1.8BOperating income 2.6B
2020Revenue 2.1BOperating income 1.6B
2021Revenue 2.3BOperating income 1.4B
2022Revenue 2.2BOperating income 307.1M
2023Revenue 2.4BOperating income 1.5B
2024Revenue 2.3BOperating income 1.3B
2025Revenue 2.4BOperating income 1.6B
201720182019202020212022202320242025
Compound growth a year
3 yrs
5 yrs
8 yrs
Revenue
+2.1%
+2.3%
—
Operating income
+71.9%
-0.5%
—
Net income
+162.1%
-4.6%
—
Earnings per share
+140.8%
-12.1%
—
Shares
+8.8%
+8.5%
—
Falling shares are buybacks: each remaining share owns more of the company.
Does it earn more than its capital costs?
Margins say how much of each sale is kept; return on invested capital says how much the business earns on the money it needs to operate. Growth only creates value when that return is above the cost of the capital.
GrossOperatingNetFree cash flow
0.0%50.0%100.0%150.0%
2017
2018Operating 76.0%Net 76.8%
2019Operating 144.6%Net 129.4%
2020Operating 75.2%Net 45.9%
2021Operating 62.5%Net 27.1%
2022Operating 13.7%Net 1.9%
2023Operating 63.4%Net 48.2%
2024Operating 57.1%Net 37.9%
2025Operating 65.6%Net 32.4%
201720182019202020212022202320242025
Return on invested capital
Return on invested capital
0.0%10.0%20.0%30.0%
2017
2018
2019Return on invested capital 21.2%
2020Return on invested capital 10.2%
2021Return on invested capital 8.2%
2022Return on invested capital 1.8%
2023Return on invested capital 9.2%
2024Return on invested capital 7.2%
2025Return on invested capital 8.4%
201720182019202020212022202320242025
Economic profit
Needs a cost of capital, which comes from the valuation below.
Return on equity
7.9%
Return on assets
3.9%
Asset turnover
0.12×
Research & development
19.0% of revenue
Overheads (SG&A)
24.1% of revenue
Is the profit cash, and where does the cash go?
Net income is an accounting opinion; free cash flow is what was left in the bank after investing. Stock-based pay does not leave the bank — shareholders pay it through dilution — so it is shown taken off as well.
Net incomeFree cash flowAfter stock-based pay
01.0B2.0B3.0B
2017
2018Net income 1.4B
2019Net income 2.3B
2020Net income 975.0M
2021Net income 619.7M
2022Net income 42.8M
2023Net income 1.1B
2024Net income 859.0M
2025Net income 770.9M
201720182019202020212022202320242025
Where 9 years of operating cash went, 2017–2025
17.7B generated by the business. Each band is its share of that total.
Reinvested in the business 0%0
Acquisitions 0%74.4M
Dividends 0%0
Share buybacks 10%1.8B
Kept, or used to pay down debt 90%15.9B
Over the same years it paid 304.6M in stock. 1.5B of the buybacks went beyond offsetting that dilution.
Per share
Earnings per shareFree cash flow per shareDividend per share
$0.00$1.00$2.00$3.00
2017
2018
2019
2020Earnings per share $2.60
2021Earnings per share $1.49
2022Earnings per share $0.10
2023Earnings per share $1.88
2024Earnings per share $1.45
2025Earnings per share $1.37
201720182019202020212022202320242025
Shares outstanding
Diluted shares
300.0M400.0M500.0M600.0M700.0M
2017
2018
2019
2020Diluted shares 375.5M
2021Diluted shares 414.8M
2022Diluted shares 438.0M
2023Diluted shares 602.9M
2024Diluted shares 594.1M
2025Diluted shares 564.5M
201720182019202020212022202320242025
How strong is the balance sheet?
Debt is not bad in itself; debt the business cannot service in a bad year is. Net debt is debt minus cash, and below zero the company holds more cash than it owes.
Net debt
02.5B5.0B7.5B10.0B
2017
2018
2019Net debt 6.0B
2020Net debt 4.8B
2021Net debt 5.6B
2022Net debt 5.4B
2023Net debt 5.7B
2024Net debt 6.7B
2025Net debt 8.3B
201720182019202020212022202320242025
Net debt ÷ EBITDA
5.3×
Interest coverage
5× operating income ÷ interest
Current ratio
2.40 current assets ÷ current liabilities
Cash conversion cycle
—
Three classic screens of the accounts
Each asks a different question of the same statements — is it improving, does it look like a company heading for distress, do the accounts resemble ones that were manipulated. None is a verdict; each shows what moves it.
Piotroski F-score
Is the business improving? Nine yes-or-no tests, this year against last.
5of 8 tests passed
✓ProfitableReturn on assets above zeropassed
✓Cash from operationsOperating cash flow above zeropassed
✕Profitability improvedReturn on assets higher than a year beforefailed
✓Profit backed by cashOperating cash flow above net income (low accruals)passed
✕Less long-term debtLong-term debt as a share of assets fellfailed
✓More liquidCurrent ratio higher than a year beforepassed
✓No new sharesShare count did not growpassed
–Better gross marginGross margin higher than a year before — not reportedno data
✕Sells more per assetAsset turnover higher than a year beforefailed
Where it misleads: it measures change, not level. An excellent business that stood still for a year scores low; a poor one recovering from a disaster scores high.
Altman Z''-score
Does the balance sheet look like those of companies that went bankrupt?
2.25grey zone
1.12.6
Working capital ÷ assets 0.05 × 6.56+0.30
Retained earnings ÷ assets 0.12 × 3.26+0.39
Operating income ÷ assets 0.08 × 6.72+0.53
Equity ÷ liabilities 0.98 × 1.05+1.03
Where it misleads: buybacks. A company that returns so much cash that its equity turns small or negative sinks the last two ratios without being anywhere near bankruptcy. Banks and insurers do not fit the model at all.
Beneish M-score
Do the accounts resemble those of companies that manipulated their earnings?
The accounts lack too many of the lines it needs.
Where the statements disagree
Cross-checks between the income statement, the balance sheet and the cash flow for the latest year, each with the benign reading and the worrying one.
The effective tax rate is 0.0%.
Benign
A favourable geographic mix, or legitimate tax credits.
Worrying
Not sustainable; projecting it forward inflates the valuation.
Net debt is 5.3 times EBITDA.
Benign
A stable sector with predictable cash flows and comfortable maturities.
Worrying
Little room if earnings fall; the maturity schedule is what to check.
What is it worth, under which assumptions?
A company is worth the cash it will generate, brought back to today. This model projects revenue with growth that fades over the years, applies a free cash flow margin, and discounts the result at the cost of capital. Every assumption says where it came from, and all of them can be changed.
The SEC accounts lack the lines needed for revenue, free cash flow or the share count, so there is no DCF for this company.
What it has filed lately
The last twelve months at the SEC, most important first: annual and quarterly reports, events, large holders and insiders.
Accounts from the company's own SEC filings; lines some companies do not report are shown as a dash rather than estimated. The risk-free rate is the 10-year US Treasury yield. A DCF is a way of making assumptions explicit, not a forecast: it states what the company would be worth if the assumptions held. The scores are screens that point where to look, not verdicts. Nothing here is a recommendation to buy or sell.
