Alvotech (ALVO) Q3 2026 earnings review
Alvotech's product sales rise, but its cash drops almost two-thirds
Alvotech, an Icelandic maker of cheaper copies of biologic drugs, sold more medicine while fees from its partners fell. Product sales rose 78% from a year ago as its factory raised supply, chief executive Lisa Graver said. Alvotech kept its full-year plan but now expects the bottom of the range. By our math, that needs about $327 million of sales in the fourth quarter.
| Product sales | $58.2M +78% from a year ago |
|---|---|
| Licence and milestone income | $53.2M −34% from a year ago |
| Cash at end of September | $61.5M $172.4M at the end of 2025 |
| Full-year revenue outlook | Unchanged, toward the bottom range of $650–700M |
⚖️ Verdict: 🔴 Bearish
The story got worse, because Alvotech now aims for the bottom of its plan with less cash to cover a miss. An accounting change that books research spending as an asset also lifted profit. The good news: US regulators approved two upgrades at its Reykjavik plant in October.
The question now is whether Alvotech can ship enough medicine in the fourth quarter to reach that target. If deliveries and US approvals arrive on time, the year holds; if not, sales and cash fall short. US rulings on three medicines in December will tell.
🐂 Bull Case
Product Sales Rose for a Third Straight Quarter
Alvotech makes biosimilars, cheaper copies of biologic drugs, and partners such as Teva sell them. Factory work at its Reykjavik plant held back output in the first half. Chief executive Lisa Graver said the company is now "continuing to increase supply to meet strong underlying demand across our markets".
- Product sales: $58.2 million, up 78% from a year ago and 6% from the second quarter
- Product margin, what is left after production costs: 12%, from 6% in the second quarter
- Production costs: 89% of product sales, from 107% a year ago, by our math
This matters because product sales repeat, while partner fees arrive unevenly. But production costs still take most of each sales dollar, so Alvotech's medicines earn little profit so far.
What to watch: fourth-quarter product sales in the March results. A clear rise would show the faster production process approved in October is reaching customers.
US Regulators Approved Two Upgrades at Reykjavik
Alvotech needs US approval for its copies of Simponi, Eylea and Prolia. The US Food and Drug Administration (FDA) turned those applications down in late 2025 over problems at the Reykjavik plant.
Alvotech refiled in June, and the FDA closed a July inspection of the plant without enforcement action. In October the agency approved a second production suite for Simlandi, Alvotech's Humira copy. It also cleared a new process that "more than doubles output per batch".
This matters because executive chairman Róbert Wessman tied strong growth in 2027 to these US launches. The December decisions now depend on a plant whose recent changes the FDA has approved.
What to watch: the FDA decisions due in December on the three copies. Approval of all three would show the plant no longer blocks US launches.
Alvotech Filed First Copy of High-Dose Eylea
Alvotech called its European filing for AVT29, a copy of the high-dose eye drug Eylea HD, "the first known regulatory submission worldwide". The US Food and Drug Administration (FDA) also accepted AVT80, a copy of the bowel drug Entyvio that Teva will sell in the US.
- Entyvio market: about $7 billion, by the company's estimate
- High-dose Eylea market: about $4 billion, by the company's estimate
- Lotus deal: up to $150 million in upfront and milestone payments
Early entry means fewer rivals, the Icelandic group argues. Partner deals also fund research: Lotus Pharmaceuticals licensed copies of the cancer drug Imfinzi and the haemophilia drug Hemlibra. But none of these copies has approval yet, so they add nothing to product sales this year.
What to watch: partner milestone income in the fourth-quarter results. A rise from the third quarter would show partners still pay ahead for Alvotech's pipeline.
Positives this quarter didn't test
Three standing strengths got no new figures in the results or the presentation, though Alvotech described two of them in words. Each item below names the reading that would move it.
- Simlandi, the Humira copy, in the US: Alvotech claims the No. 2 position among copies but gave no share figure; a share update would test it.
- Selarsdi, the Stelara copy, in the US: Alvotech says Teva keeps adding insurer coverage but gave no sales figure; sales by product would test it.
- US manufacturing partners: LOTTE Biologics in Syracuse, New York, and Fujifilm add capacity; Fujifilm supply from the second half of 2027 is the first reading.
What to watch: product and market-share figures in the March annual results. A fresh share number for Simlandi would show whether US gains continued after the first quarter.
🐻 Bear Case
Cash Fell to $61 Million as Debt Rose
Alvotech carries about $1.4 billion of borrowings, so cash decides how long it can fund its plant and pipeline. Finance chief Linda Jónsdóttir aims for positive free cash flow in the fourth quarter, but the latest release did not repeat that goal.
- Cash: $61.5 million at September 30, from $142.8 million at June 30
- Cash used by operations, after interest: $205.6 million in nine months, against $12.7 million generated a year earlier
- Interest paid: $109.1 million in nine months, from $22.3 million
- Net debt including leases: about $1.5 billion, near 10 times the last four quarters' profit excluding one-offs, by our math, against an earlier target of about 6.4 times by year-end
Building stock as the plant restarted, paying interest in cash and spending on the pipeline used more money than the business brought in. Part of this year's revenue has also not turned into cash. Contract assets, revenue booked but not yet billed, grew about $45 million, by our math.
What to watch: year-end cash in the March results. A balance below September's would point to more borrowing or another share sale in 2027.
Fourth Quarter Must Bring Half the Year's Sales
Alvotech kept its revenue plan for 2026 but said it now expects to finish "toward the lower end of the range". Finance chief Linda Jónsdóttir has said sales lean toward the fourth quarter every year.
Alvotech must book about $327 million in the fourth quarter to reach the bottom, by our math. That is nearly double the $173 million of a year ago, and half the year's sales, also by our math. Chief executive Lisa Graver named "planned product deliveries in the fourth quarter" as the priority.
Partner fees make the target harder to hit. Licence and milestone income fell 34% from a year ago, to $53.2 million. That drop cut gross margin, because fees carry almost no production cost. Cost of making the products rose to 46% of revenue from 31%, by our math.
That leaves little room. Jónsdóttir said after the first quarter that the bottom of the range assumes no US sales of the new copies, so existing markets and partner fees must carry it.
What to watch: fourth-quarter revenue in the March results, against the roughly $327 million the bottom requires. A shortfall would mean the plant restarted too late for 2026.
Profit Gain Relied on Booking Research as Assets
Alvotech's preferred profit measure, earnings before interest, tax, depreciation and one-offs, more than doubled to $31.5 million. Since January, a new accounting policy lets the biosimilar maker record more development spending as an asset rather than a cost.
- Research costs excluding one-offs: 15% of revenue, from 48% a year ago, by our math
- Profit margin on that measure: 28%, up 16 percentage points
- Cash spent on intangible assets, mostly development: $88.2 million in nine months, from $24.6 million
Alvotech said lower research costs partly reflect the change, so the profit gain overstates progress. By our math, nine-month profit on its measure minus intangible spending fell to minus $10 million from plus $43 million.
What to watch: research costs and intangible spending in the March annual report. Intangible spending that keeps outpacing profit would mean the headline measure overstates the cash the business makes.
Risks this quarter didn't answer
Several concerns from earlier quarters got no new figures in the results or the presentation. Each item below names the disclosure that would move it.
- Uzpruvo, the Stelara copy in Europe: sales flattened in the first quarter; a European sales figure would show whether growth returned.
- US price pressure on Simlandi: pharmacy benefit managers, who run drug plans for insurers, push for discounts; a price or volume figure would show the effect.
- Crowded markets for the Prolia and Eylea copies: Alvotech warned of tough tender pricing; sales by product would show what these launches earn.
- Reliance on Reykjavik: the plant remains the core of production; a clean result at the next FDA inspection would ease it.
What to watch: the annual report in March. A European sales figure for Uzpruvo would show whether the flattening seen in the first quarter has ended.
👓 Other Themes
Eylea Patients Are Moving to the High Dose
Alvotech said the market for Eylea, a leading eye drug, keeps moving to its high-dose form, "with HD now the leading Eylea presentation". That shift limits the market for AVT06, Alvotech's copy of the original dose, sold in Europe and Japan. The company said adding AVT29, its high-dose copy, positions it across both doses.
💲 Other KPIs
Inventory rose to $242.3 million, up 10% since December and 17% from a year ago, by our math. Alvotech said most of the build is half-finished product, while raw materials fell, as production rose. The build has slowed: stock jumped 72% during 2025 ahead of launches.
The number of shares outstanding rose 15% from a year ago, after a second-quarter share sale that raised $164.6 million before fees. Before that sale, the count barely moved for three quarters. New shares spread future profit across more owners.
Sales outside Europe and the US took 12% of revenue in the first nine months, double the 6% of a year earlier, led mainly by Japan, Alvotech said. Europe and the US supplied 44% each. The broader mix reduces reliance on two markets.
🔮 Guidance
Unchanged, but Alvotech now expects to land toward the bottom of the range. By our math, the bottom leaves about $327 million for Q4, almost three times Q3's sales. The bottom means growth of about 10% on 2025, against 14% at the middle. The range has not moved since the company first set it.
Unchanged, but now aimed at the bottom. The bottom still means growth of about 31% on 2025's $137 million, by our math. It leaves about $102 million for Q4, more than January to September combined. A new policy of recording more development spending as an asset lifts this measure.
❓ Key Questions
Does the fourth-quarter cash flow goal still stand?
Finance chief Linda Jónsdóttir set a goal of positive free cash flow in the fourth quarter, but the latest release did not repeat it. Operations used $89 million of cash in the third quarter, before interest and tax.
How much fourth-quarter revenue is already under contract?
By our math, the bottom of the range needs about $327 million of sales in one quarter. A split between signed orders and expected milestone payments would show how much of that is at risk.
What debt level does Alvotech now expect at year-end?
After 2025, Alvotech pointed to net debt of about 6.4 times yearly profit excluding one-offs. By our math, the ratio now stands near 10 times, and cash has fallen since.
What does the $20 million provision cover?
Alvotech set aside $20.2 million for "commercial and contractual matters" in the second quarter and left it out of profit excluding one-offs. It has not said who the other party is or whether cash will follow.
How much development spending did Alvotech record as assets?
A new accounting policy moves development costs onto the balance sheet. Without the quarterly amount, readers cannot compare research costs or profit with 2025 on the same basis.