Specialty pharmaceutical company Supernus Pharmaceuticals (NASDAQ:SUPN) reported Q4 CY2024 results beating Wall Street’s revenue expectations, with sales up 6% year on year to $174.2 million. On the other hand, the company’s full-year revenue guidance of $615 million at the midpoint came in 1.2% below analysts’ estimates. Its GAAP profit of $0.27 per share was significantly above analysts’ consensus estimates.
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Supernus Pharmaceuticals (SUPN) Q4 CY2024 Highlights:
- Revenue: $174.2 million vs analyst estimates of $155.2 million (6% year-on-year growth, 12.2% beat)
- EPS (GAAP): $0.27 vs analyst estimates of $0.03 (significant beat)
- Management’s revenue guidance for the upcoming financial year 2025 is $615 million at the midpoint, missing analyst estimates by 1.2% and implying -7.1% growth (vs 9.4% in FY2024)
- Operating Margin: 12.3%, in line with the same quarter last year
- Market Capitalization: $1.80 billion
“Our 2024 results reflect solid commercial execution across the company, including continued growth of our core products, and strong growth in operating earnings,” said Jack Khattar, President and CEO of Supernus.
Company Overview
Founded in 2005, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and commercializes treatments for central nervous system (CNS) disorders, focusing on epilepsy, ADHD, and Parkinson’s disease.
Branded Pharmaceuticals
The branded pharmaceutical industry relies on a high-cost, high-reward business model, driven by substantial investments in research and development to create innovative, patent-protected drugs. Successful products can generate significant revenue streams over their patent life, and the larger a roster of drugs, the stronger a moat a company enjoys. However, the business model is inherently risky, with high failure rates during clinical trials, lengthy regulatory approval processes, and intense competition from generic and biosimilar manufacturers once patents expire. These challenges, combined with scrutiny over drug pricing, create a complex operating environment. Looking ahead, the 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.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Supernus Pharmaceuticals’s sales grew at a decent 11% 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.
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 recent history shows its demand slowed as its revenue was flat over the last two years. 
We can better understand the company’s revenue dynamics by analyzing its most important segment, . Over the last two years, Supernus Pharmaceuticals’s revenue was flat. This segment has outperformed its total sales during the same period, lifting the company’s performance.
This quarter, Supernus Pharmaceuticals reported year-on-year revenue growth of 6%, and its $174.2 million of revenue exceeded Wall Street’s estimates by 12.2%.
Looking ahead, sell-side analysts expect revenue to decline by 5.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.
Supernus Pharmaceuticals has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 13.3%, higher than the broader healthcare sector.
Analyzing the trend in its profitability, Supernus Pharmaceuticals’s operating margin decreased by 21 percentage points over the last five years, but it rose by 5.4 percentage points on a two-year basis. Still, shareholders will want to see Supernus Pharmaceuticals become more profitable in the future.
This quarter, Supernus Pharmaceuticals generated an operating profit margin of 12.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
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 8.9% annually over the last five years while its revenue grew by 11%. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into Supernus Pharmaceuticals’s earnings to better understand the drivers of its performance. As we mentioned earlier, Supernus Pharmaceuticals’s operating margin was flat this quarter but declined by 21 percentage points over the last five years. Its share count also grew by 5.2%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. 
In Q4, Supernus Pharmaceuticals reported EPS at $0.27, down from $0.42 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Supernus Pharmaceuticals to perform poorly. Analysts forecast its full-year EPS of $1.32 will hit negative $0.05.
Key Takeaways from Supernus Pharmaceuticals’s Q4 Results
We were impressed by how significantly Supernus Pharmaceuticals blew past 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. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 1.3% to $33.25 immediately following the results.
Supernus Pharmaceuticals put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
