SEC EDGAR · 10-Q

10-Q – 2026-05-06 – rprx-20260331.htm

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Omsättning

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 79
• sales risks of biopharmaceutical products on which we receive royalties; | • uncertainties related to the acquisition of interests in development-stage biopharmaceutical product candidates and our strategy to add development-stage product candidates to our product portfolio;
Proceeds from available for sale debt securities 4,320 12,586 | Proceeds from sales of available for sale debt securities — 510,553
Financial instruments that subject us to significant concentrations of credit risk consist primarily of financial royalty assets and available for sale debt securities. The majority of our financial royalty assets arise from contractual royalty agreements that entitle us to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying roy
We estimated the fair value of the Employee EPAs using a Monte Carlo simulation methodology under the option pricing framework. Using the Monte Carlo model, we first simulate cash flows for all underlying investments within the respective portfolio, incorporating a range of potential outcomes driven primarily by projected product sales and reflecting features such as milestone payments, royalty tiers, caps and floors, as well as sales-level volatility. Based on these simulated portfolio outcomes
Our return on the Cytokinetics Development Funding depends on the outcome of omecamtiv mecarbil’s Phase 3 clinical trial and approval by the U.S. Food and Drug Administration (the “FDA”). If omecamtiv mecarbil’s Phase 3 clinical trial is successful and approval by the FDA is received within a specific timeframe, we will receive a return of $ 100 million and the greater of an incremental 2.0 % royalty on annual net sales of omecamtiv mecarbil or quarterly fixed payments for 18 quarters and an inc
Sales (2) | — ( 510,553 ) — —
We used a Monte Carlo simulation under the option pricing framework to calculate the fair value of our portfolio of financial royalty assets for disclosure given the complexity of our royalty investments, which may include features such as milestone payments, royalty tiers, caps, and floors that could alter the cash flows based on future commercial, clinical or regulatory outcomes. The Monte Carlo model allows us to simulate a range of different outcomes based on various inputs, primarily the un

EBITDA

The Credit Agreement that governs the Revolving Credit Facility and the amended loan agreement that governs the Term Loan contain certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Adjusted EBITDA, each as defined and calculated as set forth in the Credit Agreement, (ii) a Consolidated Coverage Ratio at or ab
Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures that are key components of certain material covenants contained within the Credit Agreement. Noncompliance with the financial covenants under the Credit Agreement could result in our lenders requiring us to immediately repay all amounts borrowed. If we cannot satisfy these financial covenants, we would be prohibited under our Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, pay
The table below presents Adjusted EBITDA and Portfolio Cash Flow, each as calculated according to its respective definition in our Credit Agreement (in thousands):
(36,251) (101,696) | Adjusted EBITDA (non-GAAP) $ 889,111 $ 737,596 | Interest paid, net
Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures that exclude the impact of certain items and therefore have not been calculated in accordance with GAAP. We caution readers that amounts presented in accordance with our definitions of Adjusted EBITDA and Portfolio Cash Flow may not be the same as similar measures used by other companies or analysts. A reconciliation of Adjusted EBITDA and Portfolio Cash Flow to Net cash provided by operating activities , the closest GAAP me
Payments for Employee EPAs 9,696 — | Adjusted EBITDA (non-GAAP) $ 889,111 $ 737,596 | Interest paid, net (2)

Rörelseresultat

Operating income 563,038 534,182
Total operating expense, net 67,538 34,065 33,473 98.3 | Operating income 563,038 534,182 28,856 5.4 | Other (income)/expense

Periodens resultat

Total other expense, net 94,782 99,749 | Consolidated net income before tax 468,256 434,433 | Income tax expense — —
Income tax expense — — | Consolidated net income 468,256 434,433
Net income attributable to non-controlling interests 173,566 195,084
Net income attributable to Royalty Pharma plc $ 294,690 $ 239,349
Repurchases of Class A ordinary shares ( 1,121 ) — — — — — — — ( 10,969 ) ( 39,176 ) — — ( 50,145 ) | Net income — — — — — — — — — 294,690 173,566 — 468,256 | Balance at March 31, 2026 443,628 $ 45 132,558 $ — 50 $ 63 427,355 $ — $ 4,384,056 $ 2,507,091 $ 3,048,287 $ ( 2,709 ) $ 9,936,833
Repurchases of Class A ordinary shares ( 22,655 ) ( 2 ) — — — — — — ( 215,127 ) ( 507,981 ) — — ( 723,110 ) | Net income — — — — — — — — — 239,349 195,084 — 434,433 | Balance at March 31, 2025 425,590 $ 43 140,870 $ — 50 $ 63 394,513 $ — $ 4,210,531 $ 2,469,664 $ 3,100,010 $ ( 2,654 ) $ 9,777,657
The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma and all majority-owned and controlled subsidiaries, as well as variable interest entities, where we are the primary beneficiary. We consolidate based upon evaluation of our power, through voting rights or similar rights, to direct the activities of another entity that most significantly impact the entity’s economic performance. For consolidated entities where we own or are exposed to less than 100% o
Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance and make overall operating decisions. As such, we concluded that we operate as one single reportable segment, which is primarily focused on acquiring biopharmaceutical royalties. The measure of segment profit or loss that is most consistent with our condensed consolidated financial statements is conso

Resultat per aktie

13. Earnings per Share
In the first quarter of 2026 and 2025, Class B ordinary shares contingently issuable for the EPAs were evaluated and included in the diluted earnings per share computation as certain conditions were met.

Kassaflöde

We estimated the fair values of the funded Cytokinetics Funding Arrangements as of March 31, 2026 and December 31, 2025 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including an estimated risk-adjusted discount rate and the probability that there will be a change of control event, which would result in accelerated payments. Developing a risk-adjusted discount rate and assessing the probability that there will be a change of control event over the dura
• the write-off of cumulative allowance at the end of a royalty asset’s life which only impacts the condensed consolidated balance sheets, and | • the movement in the cumulative allowance for current expected credit losses, primarily associated with new financial royalty assets with limited protective rights and changes in the underlying cash flow forecasts of financial royalty assets with limited protective rights.
In connection with the Internalization, RP Holdings and RP Manager were each joined as a borrower under RPM’s then existing $ 380 million term loan (the “Term Loan”) with Bank of America, N.A (as amended, the “Loan Agreement”). Pablo Legorreta, Legorreta Investments, LLC and Legorreta Investments II LLC are guarantors under the Term Loan. Upon the closing of the Internalization, RPM was released as a borrower under the Term Loan. In the third quarter of 2025, the Loan Agreement was amended to ac
The Credit Agreement that governs the Revolving Credit Facility and the amended loan agreement that governs the Term Loan contain certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Adjusted EBITDA, each as defined and calculated as set forth in the Credit Agreement, (ii) a Consolidated Coverage Ratio at or ab
14. Indirect Cash Flow
2026 2025 | Cash flow from operating activities: | Consolidated net income (1)
Our portfolio of investments contains royalties and royalty-like terms held through different forms or instruments. Most of the royalties we acquire are treated as investments in cash flow streams and are classified as financial assets measured under the effective interest method in accordance with generally accepted accounting principles in the United States (“GAAP”). Under this accounting methodology, we calculate the effective interest rate on each financial royalty asset using a forecast of
The measurement of income from our financial royalty assets requires significant judgments and estimates, including management’s judgment in forecasting the expected future cash flows of the underlying royalties and the expected duration of each financial royalty asset. Our cash flow forecasts are updated each reporting period primarily using sell-side equity research analysts’ consensus sales estimates. We then calculate our expected royalty receipts by applying our royalty terms to these conse

Likvida medel

Current assets | Cash and cash equivalents $ 586,395 $ 618,696
Net change in cash and cash equivalents ( 32,301 ) 158,694 | Cash and cash equivalents, beginning of period 618,696 929,026
Net change in cash and cash equivalents ( 32,301 ) 158,694 | Cash and cash equivalents, beginning of period 618,696 929,026 | Cash and cash equivalents, end of period $ 586,395 $ 1,087,720
Cash and cash equivalents, beginning of period 618,696 929,026 | Cash and cash equivalents, end of period $ 586,395 $ 1,087,720
Preliminary allocation of purchase price Location on Condensed Consolidated Balance Sheet | Cash and cash equivalents $ 7,535 Cash and cash equivalents | Other current assets 1,458 Other current assets
(1) Recorded within Cash and cash equivalents on the condensed consolidated balance sheets. | (2) Related to the funded Cytokinetics Funding Arrangements.
Other expense, net of $22.8 million in the first quarter of 2026 was primarily comprised of $20.2 million of losses on equity securities and $6.7 million of losses on available for sale debt securities primarily driven by the changes in fair value of the Cytokinetics Funding Arrangements, partially offset by $6.2 million of interest income earned on cash and cash equivalents.
Other expense, net of $40.9 million in the first quarter of 2025 was primarily comprised of $45.9 million of losses on equity securities partially offset by $11.3 million of interest income on cash and cash equivalents.

Nettoskuld

Interest paid ( 173,526 ) ( 138,822 ) | Net cash provided by operating activities 718,233 596,076
Net cash (used in)/provided by investing activities ( 477,865 ) 503,917
Other ( 226 ) — | Net cash used in financing activities ( 272,669 ) ( 941,299 )
Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below (in thousands):
$ 468,256 $ 434,433 | Adjustments to reconcile consolidated net income to net cash provided by operating activities: | Income from financial royalty assets ( 594,992 ) ( 539,490 )
Other liabilities ( 1,011 ) — | Net cash provided by operating activities $ 718,233 $ 596,076
Our primary source of liquidity is cash provided by operations. For the first quarter of 2026 and 2025, we generated $718.2 million and $596.1 million, respectively, in Net cash provided by operating activities . We believe that our existing capital resources, cash provided by operating activities and access to our Revolving Credit Facility (as defined below) will continue to allow us to meet our operating and working capital requirements, to fund planned strategic acquisitions and R&D funding a
Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity measures that exclude the impact of certain items and therefore have not been calculated in accordance with GAAP. We caution readers that amounts presented in accordance with our definitions of Adjusted EBITDA and Portfolio Cash Flow may not be the same as similar measures used by other companies or analysts. A reconciliation of Adjusted EBITDA and Portfolio Cash Flow to Net cash provided by operating activities , the closest GAAP me

Eget kapital

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2026 and 2025 (unaudited) 3
Liabilities and shareholders’ equity | Current liabilities
Commitments and contingencies | Shareholders’ equity | Class A ordinary shares, $ 0.0001 par value; issued and outstanding: 2026– 443,628 and 2025– 428,669
Total shareholders’ equity 9,936,833 9,714,939
Total liabilities and shareholders’ equity $ 19,815,415 $ 19,620,780
ROYALTY PHARMA PLC | CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY | (In thousands, except per share amounts)
Ordinary Shares Class R | Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity | Shares Amount Shares Amount Shares Amount Shares Amount
2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”). | 3. Pablo Legorreta’s ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (the “Founder’s Equity”). See discussion in Note 5–Shareholders’ Equity. | 4. The Sellers’ (as defined in Note 3–Internalization) indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class E ordinary shares (the “RP Holdings Class E Interests”). In connection with the Internalization, we issued 24.5 million RP Holdings Class E Interests to the Sellers (the “Holders of RP Holdings Class E Interests”), subject to vesting conditions, as part of the transaction consideration.

Antal aktier

As of May 1, 2026, Royalty Pharma plc had 443,274,104 Class A ordinary shares outstanding and 132,558,100 Class B ordinary shares outstanding.
Diluted $ 0.67 $ 0.55 | Weighted average Class A ordinary shares outstanding: | Basic 436,790 435,480
Royalty Pharma plc has two classes of voting shares: Class A ordinary shares and Class B ordinary shares, each of which has one vote per ordinary share. The Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of shareholders, except as otherwise required by applicable law. The Class B ordinary shares are not publicly traded and holders of Class B ordinary shares only have limited rights to receive a distribution equal to their no
An exchange agreement entered into by, among others, Royalty Pharma plc, RP Holdings, the Continuing Investors Partnerships, RPI International Partners 2019, LP, RPI US Feeder 2019, LP, RPI International Feeder 2019, LP, RPI EPA Vehicle, LLC and certain recipients nominated by the Sellers (as amended from time to time, the “Exchange Agreement”) facilitates the exchange of RP Holdings Class E Interests and the exchange of RP Holdings Class B Interests for Class A ordinary shares. Pursuant to the
Denominator | Weighted average Class A ordinary shares outstanding - basic 436,790 435,480 | Add: Dilutive effects as shown separately below
Assumed exchanges of eligible Class B ordinary shares by the Holders of RP Holdings Class E Interests 3,686 — | Weighted average Class A ordinary shares outstanding - diluted 556,837 578,102
Periods Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (1)

Antal anställda

Prior to May 16, 2025, we were externally managed by RP Management, LLC, a Delaware limited liability company (the “Legacy Manager” or “RPM”), pursuant to advisory and management agreements (collectively, the “Legacy Management Agreement”). On May 16, 2025, we completed the Internalization (as defined below) and became an integrated company with the former employees of RPM becoming employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings. Refer to Note 3–Internalization for add
On January 10, 2025, we entered into an agreement (as amended, the “Purchase Agreement”) with RPM, Royalty Pharma Manager, LLC, a Delaware limited liability company (“RP Manager”) and the sellers named therein (the “Sellers”). Pursuant to the Purchase Agreement, RPM contributed substantially all of its previously held assets and liabilities to RP Manager and we agreed to acquire all of the equity interests of RP Manager from the Sellers (the “Internalization”). The Sellers included our founder,
In addition, we issued replacement equity awards in the form of RSUs to employees and recognized a liability related to the Employee EPAs. As described and each term as defined in Note 5–Shareholders’ Equity, the Employee EPAs represent the participation of certain employees in the economic returns of the EPAs for a specific Portfolio, which exclude Founder’s Equity, which represents Mr. Legorreta’s retained EPAs. Accordingly, at the closing of the Internalization, the portions of each of these
We issued approximately 316 thousand Class A ordinary shares as replacement awards to certain employees (the “Employee RSUs”) valued at $ 10.5 million based on our stock price of $ 33.12 upon the closing of the Internalization. Approximately $ 3.8 million of the Employee RSUs were considered to be attributable to service rendered pre-Internalization and were included as part of the purchase price. The remaining Employee RSUs are subject to straight-line vesting generally over a period up to four
As described and each term as defined in Note 5–Shareholders’ Equity, after the Internalization, employees who participate in the EPAs became employees of Royalty Pharma, LLC, and the service required for vesting became service required to be rendered to the Company. Accordingly, we began to account for the Employee EPAs under ASC 718 as compensation arrangements and began recognizing share-based compensation expense over the remaining post-Internalization service period. The Employee EPAs exclu
We issue RSUs to employees and independent directors under the 2025 Equity Incentive Plan and the 2020 Independent Director Equity Incentive Plan, respectively. The 2025 Equity Incentive Plan became effective on May 16, 2025 in connection with the Internalization and 2 million Class A ordinary shares were authorized for issuance. The 2020 Independent Director Equity Incentive Plan was effective on June 15, 2020, whereby 800 thousand Class A ordinary shares were authorized for issuance.
Mr. Legorreta granted ownership units in the entities that hold the RP Holdings Class C Special Interest to certain employees of RPM. These grants allow such employees to participate on a pro rata basis in the economic returns of the EPAs for a specific Portfolio (the “Employee EPAs”). In exchange for participation in the EPAs, these employees agreed to render services to RPM for generally four years , commencing at the beginning of each Portfolio.
(1) For the first quarter of 2025, Founder’s Equity includes $ 19.7 million for Mr. Legorreta’s retained EPAs and $ 21.8 million attributable to employees’ participation in the EPAs, which were considered part of Founder’s Equity prior to the closing of the Internalization. | (2) Amounts represent shares earned during the respective quarter that are payable at each quarter end. As of March 31, 2026, $ 15.1 million is expected to be settled in shares in the second quarter of 2026. As of March 31, 2025, $ 19.7 million was settled in shares in the second quarter of 2025.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to __________

Commission file number 001-39329

Royalty Pharma plc
(Exact name of registrant as specified in its charter)

England and Wales
98-1535773

(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

110 East 59 th Street

New York , New York 10022

(Address of principal executive offices and zip code)

( 212 ) 883-0200
(Registrant ’ s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s)
Name of each exchange on which registered
Class A ordinary shares, par value $0.0001 RPRX The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes     ☒      No    ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes     ☒     No    ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒
Accelerated filer
☐

Non-accelerated filer  
☐
Smaller reporting company
☐

Emerging growth company
☐

                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐      No    ☒

As of May 1, 2026, Royalty Pharma plc had 443,274,104 Class A ordinary shares outstanding and 132,558,100 Class B ordinary shares outstanding.

ROYALTY PHARMA PLC

INDEX

PART I. FINANCIAL INFORMATION 1

Item 1. Condensed Consolidated Financial Statements 1

Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited) 1

Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (unaudited) 2

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2026 and 2025 (unaudited) 3

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited) 4

Notes to Condensed Consolidated Financial Statements (unaudited) 5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29

Item 3. Quantitative and Qualitative Disclosures About Market Risk 50

Item 4. Controls and Procedures 50

PART II. OTHER INFORMATION 50

Item 1. Legal Proceedings 50

Item 1A. Risk Factors 51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 79

Item 3. Defaults Upon Senior Securities 79

Item 4. Mine Safety Disclosures 79

Item 5. Other Information 80

Item 6. Exhibits 81

Signatures 81

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “target,” “forecast,” “guidance,” “goal,” “predicts,” “project,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective assets, our industry, our beliefs and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of the numerous risks outlined in Part II under Item 1A. under “Risk Factors.”

These risks and uncertainties include factors related to, among other topics:

• sales risks of biopharmaceutical products on which we receive royalties;
• uncertainties related to the acquisition of interests in development-stage biopharmaceutical product candidates and our strategy to add development-stage product candidates to our product portfolio;
• the assumptions underlying our business model;
• our ability to successfully execute our royalty acquisition strategy;
• our use of leverage;
• our ability to leverage our competitive strengths and to realize the benefits of our 2025 internalization of our manager;
• our ability to attract and retain highly talented professionals;
• the effect of changes to tax legislation and our tax position; and
• the risks, uncertainties and other factors we identify elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (“SEC”).

Although we believe the expectations reflected in the forward-looking statements are reasonable, any of those expectations could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and business objectives will be achieved. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations.

PART 1.     FINANCIAL INFORMATION

Item 1.         CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ROYALTY PHARMA PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)

 As of March 31,  As of December 31,
2026 2025
Assets
Current assets
Cash and cash equivalents $ 586,395   $ 618,696  

Financial royalty assets 779,844   854,386  

Available for sale debt securities 21,900   18,800  

Other royalty income receivable 27,511   29,316  
Other current assets 10,161   6,893  
Total current assets 1,425,811   1,528,091  

Financial royalty assets, net 16,542,353   16,208,482  
Equity securities 173,270   171,312  
Available for sale debt securities 406,800   419,000  

Equity method investments 265,697   289,968  
Goodwill 924,634   924,634  
Other assets 76,850   79,293  

Total assets $ 19,815,415   $ 19,620,780  

Liabilities and shareholders’ equity
Current liabilities
Distributions payable to non-controlling interests $ 87,417   $ 72,825  
Accounts payable and accrued liabilities 25,483   19,404  
Interest payable 25,302   110,818  

Current portion of long-term debt 380,000   380,000  

Other current liabilities 17,480   53,164  
Total current liabilities 535,682   636,211  

Long-term debt 8,576,443   8,570,917  

Accrued compensation liabilities 648,672   577,870  
Other liabilities 117,785   120,843  
Total liabilities 9,878,582   9,905,841  
Commitments and contingencies
Shareholders’ equity
Class A ordinary shares, $ 0.0001 par value; issued and outstanding: 2026– 443,628 and 2025– 428,669
45   43  
Class B ordinary shares, $ 0.000001 par value; issued and outstanding: 2026– 132,558 and 2025– 148,438
—   —  
Class R redeemable shares, £ 1 par value; issued and outstanding: 2026– 50 and 2025– 50
63   63  
Deferred shares, $ 0.000001 par value; issued and outstanding: 2026– 427,355 and 2025– 411,475
—   —  
Additional paid-in capital 4,384,056   4,123,088  
Retained earnings 2,507,091   2,356,318  
Non-controlling interests 3,048,287   3,238,039  
Treasury interests ( 2,709 ) ( 2,612 )

Total shareholders’ equity 9,936,833   9,714,939  

Total liabilities and shareholders’ equity $ 19,815,415   $ 19,620,780  

See accompanying notes to these unaudited condensed consolidated financial statements.
1

ROYALTY PHARMA PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

For the Three Months Ended March 31,
2026 2025
Income and other revenues
Income from financial royalty assets $ 594,992   $ 539,490  
Other royalty income and revenues 35,584   28,757  
Total income and other revenues 630,576   568,247  

Operating (income)/expense
Provision for changes in expected cash flows from financial royalty assets ( 197,485 ) ( 127,140 )
Provision for credit losses on unfunded commitments ( 3,700 ) —  
Research and development funding expense 39,790   50,500  
General and administrative expenses (includes $ 122,292 and $ 703 of share-based compensation expense for the three months ended March 31, 2026 and 2025, respectively; see Note 4)
159,490   110,705  
Financial royalty asset impairment 69,443   —  
Total operating expense, net 67,538   34,065  

Operating income 563,038   534,182  

Other (income)/expense
Equity in earnings of equity method investees ( 21,758 ) ( 6,443 )
Interest expense 93,722   65,261  
Losses on equity securities 20,166   45,878  
Losses on available for sale debt securities 6,680   3,281  
Interest income ( 6,229 ) ( 11,290 )
Other non-operating expenses, net 2,201   3,062  
Total other expense, net 94,782   99,749  
Consolidated net income before tax 468,256   434,433  
Income tax expense —   —  
Consolidated net income 468,256   434,433  

Net income attributable to non-controlling interests 173,566   195,084  

Net income attributable to Royalty Pharma plc $ 294,690   $ 239,349  

Earnings per Class A ordinary share:
     Basic $ 0.67   $ 0.55  
     Diluted $ 0.67   $ 0.55  
Weighted average Class A ordinary shares outstanding:
     Basic 436,790   435,480  
     Diluted 556,837   578,102  

See accompanying notes to these unaudited condensed consolidated financial statements.

2

ROYALTY PHARMA PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share amounts)
(Unaudited)

Class A
Ordinary Shares Class B
Ordinary Shares Class R
Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2025 428,669   $ 43   148,438   $ —   50   $ 63   411,475   $ —   $ 4,123,088   $ 2,356,318   $ 3,238,039   $ ( 2,612 ) $ 9,714,939  

Distributions —  —  —  —  —  —  —  —  —  —  ( 139,210 ) —  ( 139,210 )
Dividends ($ 0.235 per Class A ordinary share)
—  —  —  —  —  —  —  —  —  ( 104,490 ) —  —  ( 104,490 )
Other exchanges 15,737   2   ( 15,737 ) —  —  —  15,737   —  255,920   —  ( 255,825 ) ( 97 ) —  
Share-based compensation and share issuances for EPAs, Equity Incentive Plans and forfeiture of shares issued for Internalization 343   —  ( 143 ) —  —  —  143   —  16,017   ( 251 ) 31,717   —  47,483  
Repurchases of Class A ordinary shares ( 1,121 ) —  —  —  —  —  —  —  ( 10,969 ) ( 39,176 ) —  —  ( 50,145 )
Net income —  —  —  —  —  —  —  —  —  294,690   173,566   —  468,256  
Balance at March 31, 2026 443,628 $ 45   132,558 $ —   50 $ 63   427,355 $ —   $ 4,384,056   $ 2,507,091   $ 3,048,287   $ ( 2,709 ) $ 9,936,833  

Class A
Ordinary Shares Class B
Ordinary Shares Class R
Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2024 445,985 $ 45   143,128 $ —   50 $ 63   392,255 $ —   $ 4,103,482   $ 2,845,653   $ 3,395,785   $ ( 2,662 ) $ 10,342,366  
ASU 2025-07 adoption impact —  —  —  —  —  —  —  —  —  ( 12,000 ) —  —  ( 12,000 )
Contributions —  —  —  —  —  —  —  —  —  —  2,253   —  2,253  
Distributions —  —  —  —  —  —  —  —  —  —  ( 171,443 ) —  ( 171,443 )
Dividends ($ 0.22 per Class A ordinary share)
—  —  —  —  —  —  —  —  —  ( 95,357 ) —  —  ( 95,357 )
Other exchanges 2,258   —  ( 2,258 ) —  —  —  2,258   —  321,661   —  ( 321,669 ) 8   —  
Share-based compensation and related issuances of Class A ordinary shares 2   —  —  —  —  —  —  —  515   —  —  —  515  
Repurchases of Class A ordinary shares ( 22,655 ) ( 2 ) —  —  —  —  —  —  ( 215,127 ) ( 507,981 ) —  —  ( 723,110 )
Net income —  —  —  —  —  —  —  —  —  239,349   195,084   —  434,433  
Balance at March 31, 2025 425,590 $ 43   140,870 $ —   50 $ 63   394,513 $ —   $ 4,210,531   $ 2,469,664   $ 3,100,010   $ ( 2,654 ) $ 9,777,657  

See accompanying notes to these unaudited condensed consolidated financial statements.
3

ROYALTY PHARMA PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

For the Three Months Ended March 31,
2026 2025
Cash flows from operating activities:
Cash collections from financial royalty assets $ 915,598   $ 829,737  
Cash collections from intangible royalty assets 3,773   177  
Other royalty cash collections 33,616   31,759  
Distributions from equity method investees 3,722   13,396  
Interest received 6,497   12,025  
Development-stage funding payments ( 25,500 ) ( 50,500 )
Payments for operating and professional costs ( 36,251 ) ( 101,696 )
Payments for Employee EPAs ( 9,696 ) —  
Interest paid ( 173,526 ) ( 138,822 )
Net cash provided by operating activities 718,233   596,076  

Cash flows from investing activities:

Distributions from equity method investees 42,306   36,262  

Purchases of equity securities ( 22,500 ) ( 4,427 )
Proceeds from equity securities 375   —  

Proceeds from available for sale debt securities 4,320   12,586  
Proceeds from sales of available for sale debt securities —   510,553  

Acquisitions of financial royalty assets ( 452,366 ) ( 1,057 )

Milestone payments ( 50,000 ) ( 50,000 )

Net cash (used in)/provided by investing activities ( 477,865 ) 503,917  

Cash flows from financing activities:

Distributions to legacy non-controlling interests - Portfolio Receipts ( 77,973 ) ( 84,625 )

Distributions to continuing non-controlling interests ( 39,880 ) ( 53,833 )
Dividends to shareholders ( 104,490 ) ( 95,357 )

Repurchases of Class A ordinary shares ( 50,100 ) ( 708,781 )
Contributions from legacy non-controlling interests - R&D —   220  
Contributions from non-controlling interests - other —   1,077  

Other ( 226 ) —  
Net cash used in financing activities ( 272,669 ) ( 941,299 )

Net change in cash and cash equivalents ( 32,301 ) 158,694  
Cash and cash equivalents, beginning of period 618,696   929,026  
Cash and cash equivalents, end of period $ 586,395   $ 1,087,720  

See accompanying notes to these unaudited condensed consolidated financial statements.

4

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Organization and Purpose

Royalty Pharma plc is a public limited company incorporated under the laws of England and Wales. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Our principal asset is a controlling equity interest in Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales. We conduct our business through RP Holdings and its subsidiaries.

Prior to May 16, 2025, we were externally managed by RP Management, LLC, a Delaware limited liability company (the “Legacy Manager” or “RPM”), pursuant to advisory and management agreements (collectively, the “Legacy Management Agreement”). On May 16, 2025, we completed the Internalization (as defined below) and became an integrated company with the former employees of RPM becoming employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings. Refer to Note 3–Internalization for additional discussion.

2. Summary of Significant Accounting Policies

Basis of Preparation and Use of Estimates

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under GAAP. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2025 included in our Annual Report on Form 10-K.

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of income, revenues and expenses during the reporting period. Actual results may differ from those estimates. The results for the interim periods are not necessarily indicative of results for the full year.

Basis of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma and all majority-owned and controlled subsidiaries, as well as variable interest entities, where we are the primary beneficiary. We consolidate based upon evaluation of our power, through voting rights or similar rights, to direct the activities of another entity that most significantly impact the entity’s economic performance. For consolidated entities where we own or are exposed to less than 100% of the economics, we record Net income attributable to non-controlling interests in our condensed consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties, except for the RP Holdings Class C Interests (as defined below), which are recorded based on their rights.

RP Holdings is owned by Royalty Pharma plc and, indirectly, by various partnerships (the “Continuing Investors Partnerships”) and, post-Internalization, by the Holders of RP Holdings Class E Interests (as defined below). RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV (“RPI 2019 ICAV”), which is an Irish collective asset management vehicle and is the successor to Royalty Pharma Investments, an Irish unit trust. In 2022, we became an indirect owner of an 82 % economic interest in Royalty Pharma Investments ICAV, which was previously owned directly by Royalty Pharma Investments. In connection with the Internalization, Royalty Pharma Investments distributed all of its assets to Royalty Pharma Investments 2011 ICAV (together with Royalty Pharma Investments ICAV, “Old RPI”).

5

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate our initial public offering (“IPO”). Prior to the Exchange Offer, Royalty Pharma Investments was owned by various partnerships (the “Legacy Investors Partnerships”). Through the Exchange Offer, investors, which represented 82 % of the aggregate limited partnership in the Legacy Investors Partnerships, exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP and RPI International Holdings 2019, LP which are part of the Continuing Investors Partnerships. Following the Exchange Offer, we became the indirect owner of an 82 % economic interest in Royalty Pharma Investments which entitled us to 82 % of the economics of its wholly-owned subsidiary RPI Finance Trust, a Delaware statutory trust (“RPIFT”), and 66 % of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). In December 2023, we acquired the remaining interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”).

We report four non-controlling interests:

1. The Legacy Investors Partnerships’ ownership of approximately 18 % in Old RPI, which is the only remaining historical non-controlling interest that existed prior to our IPO.
2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”).
3. Pablo Legorreta’s ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (the “Founder’s Equity”). See discussion in Note 5–Shareholders’ Equity.
4. The Sellers’ (as defined in Note 3–Internalization) indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class E ordinary shares (the “RP Holdings Class E Interests”). In connection with the Internalization, we issued 24.5  million RP Holdings Class E Interests to the Sellers (the “Holders of RP Holdings Class E Interests”), subject to vesting conditions, as part of the transaction consideration.

The Continuing Investors Partnerships, the Founder’s Equity and the Holders of RP Holdings Class E Interests, collectively, are referred to as the “continuing non-controlling interests.”

All intercompany transactions and balances have been eliminated in consolidation.

Concentrations of Credit Risk

Financial instruments that subject us to significant concentrations of credit risk consist primarily of financial royalty assets and available for sale debt securities. The majority of our financial royalty assets arise from contractual royalty agreements that entitle us to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The products in which we hold royalties are marketed by leading industry participants, including, among others, Vertex, GSK, Biogen, Roche, Astellas, Pfizer, Johnson & Johnson, AbbVie, Servier, Gilead, Amgen and Alnylam. As of March 31, 2026 and December 31, 2025, Vertex, as the marketer and payor of our royalties on the cystic fibrosis franchise, accounted for 31 % and 32 % of our current portion of financial royalty assets, respectively, and represented the largest individual marketer and payor of our royalties.

We monitor the financial performance and creditworthiness of the counterparties to our royalty agreements so that we can properly assess and respond to changes in their credit profile. To date, we have not experienced any significant credit losses with respect to the collection of income on our royalty assets.

Recently Adopted and Issued Accounting Standards

In September 2025, the Financial Accounting Standards Board (“FASB”) issued amendments which refine the scope of the guidance on derivatives in Accounting Standards Codification (“ASC”) 815 and clarify the guidance on share-based payments from a customer in ASC 606 (“ASU 2025-07”). ASU 2025-07 adds a new scope exception to the derivative guidance for contracts, such as certain research and development funding arrangements, that are not traded on an exchange and contain an underlying that is based on the operations or activities specific to one of the parties involved. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted in any interim or annual period for which financial statements have not yet been issued or made available for issuance.

6

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

We adopted ASU 2025-07 in the fourth quarter of 2025 using the modified retrospective transition method, effective January 1, 2025. The only impact of adopting this standard related to the CK-586 research and development (“R&D”) funding arrangement, which we entered into in 2024 and had previously accounted for as a derivative. Upon reassessment under the new guidance, we concluded that the CK-586 funding arrangement qualifies for the derivative scope exception. Accordingly, we recorded a $ 12.0  million cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2025 to derecognize the derivative asset and reflect the CK-586 funding arrangement as R&D expense. The accompanying condensed consolidated financial statements for the three months ended March 31, 2025 have been recast to reflect the adoption of ASU 2025-07 by removing the losses previously recognized on such derivative. Accordingly, the recast amounts differ from those previously reported in the Company’s Form 10-Q for the three months ended March 31, 2025.

Segment Information

Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance and make overall operating decisions. As such, we concluded that we operate as one single reportable segment, which is primarily focused on acquiring biopharmaceutical royalties. The measure of segment profit or loss that is most consistent with our condensed consolidated financial statements is consolidated net income. The accounting policies of our single reportable segment are the same as those for the condensed consolidated financial statements. The level of disaggregation and amounts of significant segment expenses that are regularly provided to the CODM are the same as those presented in the condensed consolidated statements of operations. Likewise, the measure of segment assets is reported on the condensed consolidated balance sheets as total assets.

Significant Accounting Policies

There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2025.

3. Internalization

On January 10, 2025, we entered into an agreement (as amended, the “Purchase Agreement”) with RPM, Royalty Pharma Manager, LLC, a Delaware limited liability company (“RP Manager”) and the sellers named therein (the “Sellers”). Pursuant to the Purchase Agreement, RPM contributed substantially all of its previously held assets and liabilities to RP Manager and we agreed to acquire all of the equity interests of RP Manager from the Sellers (the “Internalization”). The Sellers included our founder, chief executive officer and chairman, Pablo Legorreta, RPM I, LLC and RP MIP Holdings, LLC (“RP MIP Holdings”), as the former equity owners of RPM. The equity interest holders of RP MIP Holdings include our named executive officers and certain employees of the Legacy Manager, who became employees of Royalty Pharma, LLC, a subsidiary of RP Manager, in connection with the Internalization. We completed the acquisition of RP Manager on May 16, 2025 and accounted for the transaction as a business combination in accordance with ASC 805.

The announced transaction value for the Internalization of $ 1.1  billion included cash and 24.5  million newly issued RP Holdings Class E Interests, of which 1.7 million shares were recognized as part of the purchase price and 22.8 million shares were subject to vesting, with related share-based compensation expense to be recognized over the vesting period post-Internalization. The announced transaction value also included the assumption of a $ 380  million term loan. In accordance with ASC 805, the $ 380  million term loan was not recognized as part of the purchase price. Instead, it was recorded as a liability acquired in the preliminary allocation of purchase price below.

7

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In addition, we issued replacement equity awards in the form of RSUs to employees and recognized a liability related to the Employee EPAs. As described and each term as defined in Note 5–Shareholders’ Equity, the Employee EPAs represent the participation of certain employees in the economic returns of the EPAs for a specific Portfolio, which exclude Founder’s Equity, which represents Mr. Legorreta’s retained EPAs. Accordingly, at the closing of the Internalization, the portions of each of these components attributable to the pre-Internalization service period were included as part of the purchase price.

The following table presents the components of the total purchase price to acquire RP Manager (in thousands):

Cash $ 81,950  
Fair value of equity attributable to pre-Internalization service period:

RP Holdings Class E Interests 57,000  
Employee RSUs 3,778  
Employee EPAs
422,479  
Total purchase price
$ 565,207  

RP Holdings Class E Interests

We issued 24.5 million RP Holdings Class E Interests and an equal number of Royalty Pharma plc Class B ordinary shares to the Sellers, with an aggregate fair value of $ 812.4  million based on our stock price of $ 33.12 upon the closing of the Internalization. Approximately 1.7 million of the RP Holdings Class E Interests valued at approximately $ 57.0  million, were considered to be attributable to services rendered pre-Internalization and were included as part of the purchase price. The remaining 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $ 755.4  million are subject to straight-line vesting generally over five to nine years and forfeiture if vesting conditions are not met. We recognize the related share-based compensation expense over the corresponding vesting periods.

Employee RSUs

We issued approximately 316 thousand Class A ordinary shares as replacement awards to certain employees (the “Employee RSUs”) valued at $ 10.5  million based on our stock price of $ 33.12 upon the closing of the Internalization. Approximately $ 3.8  million of the Employee RSUs were considered to be attributable to service rendered pre-Internalization and were included as part of the purchase price. The remaining Employee RSUs are subject to straight-line vesting generally over a period up to four years and forfeiture if vesting conditions are not met.

Employee EPAs

As described and each term as defined in Note 5–Shareholders’ Equity, after the Internalization, employees who participate in the EPAs became employees of Royalty Pharma, LLC, and the service required for vesting became service required to be rendered to the Company. Accordingly, we began to account for the Employee EPAs under ASC 718 as compensation arrangements and began recognizing share-based compensation expense over the remaining post-Internalization service period. The Employee EPAs exclude Founder’s Equity, which represents Mr. Legorreta’s retained EPAs. The periodic cash distributions as tax advances related to the Employee EPAs are presented as an operating activity in the condensed consolidated statement of cash flows.

As a result of the Internalization, we recognized a liability for the Employee EPAs. The fair value of approximately $ 422.5  million, measured as of the closing of the Internalization, was considered attributable to service rendered pre-Internalization and was included as part of the purchase price. The fair value of the remaining Employee EPAs is recorded as share-based compensation expense over the corresponding vesting period. The fair value of the Employee EPAs is recognized as a liability within Accrued compensation liabilities on the condensed consolidated balance sheets and is estimated using a Monte Carlo simulation methodology. See Note 4–Share-Based Compensation for additional discussion.

8

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Preliminary Allocation of the Purchase Price

We allocated the purchase price to the estimated fair values of assets and liabilities acquired. The purchase price allocation is based on management’s estimates and assumptions, as well as information compiled by management. Our estimates and assumptions are subject to change during the measurement period of up to twelve months from the date of the Internalization as further information becomes available. The excess of the total purchase price over the fair value of the net assets acquired was allocated to goodwill. The goodwill recorded as part of the Internalization includes the assembled workforce and synergies resulting from the Internalization.

The following is a summary of a preliminary allocation of the purchase price (in thousands):

Preliminary allocation of purchase price Location on Condensed Consolidated Balance Sheet
Cash and cash equivalents $ 7,535   Cash and cash equivalents
Other current assets 1,458   Other current assets
Property, plant and equipment 23,085   Other assets
Operating lease right of use asset 20,967   Other assets
Other assets 172   Other assets
Accounts payable and accrued liabilities ( 1,867 ) Accounts payable and accrued liabilities
Interest payable ( 3,822 ) Interest payable
Term Loan ( 380,000 ) Long-term debt
Operating lease liabilities, current ( 2,749 ) Other current liabilities
Operating lease liabilities ( 18,218 ) Other liabilities
Other liabilities ( 5,988 ) Other liabilities
Goodwill 924,634   Goodwill
Total purchase price
$ 565,207  

Following the Internalization, we no longer pay Management Fees (as defined in Note 16–Related Party Transactions). The Internalization did not result in the recognition of gains or losses in the condensed consolidated statements of operations.

We recorded approximately $ 28.9 million of acquisition-related costs within General and administrative expenses in the consolidated statement of operations for the year ended December 31, 2025. These costs, primarily related to legal, advisory and professional services, were paid during 2025 and are included within Payments for operating and professional costs on the consolidated statement of cash flows for the year ended December 31, 2025.

4. Share-Based Compensation

Prior to the Internalization, our share-based awards consisted solely of RSUs issued to directors, for which we recognized immaterial share-based compensation expense. As a result of the Internalization, we began to recognize share-based compensation expense related to RP Holdings Class E Interests issued as part of the Internalization, Employee EPAs and Employee RSUs. Share-based compensation expense is comprised of the following (in thousands):

For the Three Months Ended March 31,
2026 2025
RP Holdings Class E Interests $ 31,717   $ —  
Employee EPAs 88,704   —  
Employee and Director RSUs 1,871   703  
Total Share-Based Compensation $ 122,292   $ 703  

9

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

RP Holdings Class E Interests

In connection with the Internalization, approximately 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $ 755.4  million as of the Internalization are expensed generally over vesting periods ranging from five to nine years thereafter.

As of March 31, 2026, we had $ 609.8  million of unrecognized compensation expense related to 18.4 million RP Holdings Class E Interests that are expected to vest over a weighted average period of 5.3 years.

Employee EPAs

In accordance with ASC 718, we account for the Employee EPAs as liability-classified share-based compensation arrangements. The Employee EPAs are subject to a service-based vesting period, generally four years , commencing at the start of each respective Portfolio (as defined in Note 5–Shareholders’ Equity).

We recognized a liability of approximately $ 422.5  million related to Employee EPAs as of the date of the Internalization. The fair value of the remaining Employee EPAs is recognized as share-based compensation expense over the remaining vesting period. We remeasure the fair value of the Employee EPAs at each reporting date with changes in the fair value recognized as part of share-based compensation expense. As of March 31, 2026 and December 31, 2025, the fair value of Employee EPAs were $ 648.7  million and $ 577.9  million, respectively, as recorded within Accrued compensation liabilities on the condensed consolidated balance sheets.

We estimated the fair value of the Employee EPAs using a Monte Carlo simulation methodology under the option pricing framework. Using the Monte Carlo model, we first simulate cash flows for all underlying investments within the respective portfolio, incorporating a range of potential outcomes driven primarily by projected product sales and reflecting features such as milestone payments, royalty tiers, caps and floors, as well as sales-level volatility. Based on these simulated portfolio outcomes, the Monte Carlo model estimates the probability of satisfying the applicable performance and return thresholds that determine Employee EPA payouts.

As of March 31, 2026, we had $ 105.6  million of unrecognized expense related to the Employee EPAs that are expected to vest over a weighted average period of 1.9 years.

Employee and Directors RSUs

We issue RSUs to employees and independent directors under the 2025 Equity Incentive Plan and the 2020 Independent Director Equity Incentive Plan, respectively. The 2025 Equity Incentive Plan became effective on May 16, 2025 in connection with the Internalization and 2  million Class A ordinary shares were authorized for issuance. The 2020 Independent Director Equity Incentive Plan was effective on June 15, 2020, whereby 800  thousand Class A ordinary shares were authorized for issuance.

5. Shareholders’ Equity

Capital Structure

Royalty Pharma plc has two classes of voting shares: Class A ordinary shares and Class B ordinary shares, each of which has one vote per ordinary share. The Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of shareholders, except as otherwise required by applicable law. The Class B ordinary shares are not publicly traded and holders of Class B ordinary shares only have limited rights to receive a distribution equal to their nominal value upon a liquidation, dissolution or winding up. As of March 31, 2026, Royalty Pharma plc had 443,628 thousand Class A ordinary shares and 132,558 thousand Class B ordinary shares outstanding.

10

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

An exchange agreement entered into by, among others, Royalty Pharma plc, RP Holdings, the Continuing Investors Partnerships, RPI International Partners 2019, LP, RPI US Feeder 2019, LP, RPI International Feeder 2019, LP, RPI EPA Vehicle, LLC and certain recipients nominated by the Sellers (as amended from time to time, the “Exchange Agreement”) facilitates the exchange of RP Holdings Class E Interests and the exchange of RP Holdings Class B Interests for Class A ordinary shares. Pursuant to the Exchange Agreement, RP Holdings Class B Interests are exchangeable on a one -for-one basis for Class A ordinary shares on a quarterly basis. Each such exchange also results in the re-designation of the same number of Class B ordinary shares as deferred shares. Such deferred shares are non-voting and do not confer a right to participate in our profits or any right to receive dividends. As of March 31, 2026, Royalty Pharma plc had 427,355 thousand deferred shares outstanding.

In addition, Royalty Pharma plc issued 50 thousand Class R redeemable shares, which do not entitle the holder to voting or dividend rights. As required by the U.K. Companies Act 2006, the Class R redeemable shares were issued to ensure sufficient sterling denominated share capital. The Class R redeemable shares may be redeemed at our option in the future. Any such redemption would be at the nominal value of £ 1 each.

Class A Ordinary Share Repurchases

In January 2025, our board of directors authorized a share repurchase program under which we may repurchase up to $ 3.0  billion of our Class A ordinary shares. The repurchases may be made in the open market or in privately negotiated transactions. The share repurchase program has been approved by our board of directors through June 2027 and shareholders have approved the terms of our share repurchase contracts and counterparties thereto through May 2030. In the first quarter of 2026, we repurchased 1.1 million shares at a cost of approximately $ 50.1  million. As of March 31, 2026, approximately $ 1.7  billion remained available under the share repurchase program.

In connection with our repurchase of Class A ordinary shares that began in the second quarter of 2023, RP Holdings also began to retire a corresponding number of RP Holdings’ Class A ordinary shares (“RP Holdings Class A Interests”) held by us which reduces our ownership in RP Holdings and which is reflected through Other exchanges in the tables below and in our condensed consolidated statements of shareholders’ equity.

Non-Controlling Interests

The changes in the balances of our non-controlling interests are as follows (in thousands):

Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity
RP Holdings Class E Interests Holders Total
December 31, 2025 $ 1,083,319   $ 1,799,783   $ —   $ 354,937   $ 3,238,039  

Distributions ( 92,180 ) ( 25,422 ) ( 15,894 ) ( 5,714 ) ( 139,210 )
Other exchanges —   ( 222,050 ) —   ( 33,775 ) ( 255,825 )
Share-based compensation —   —   —   31,717   31,717  
Net income 63,213   78,049   15,894   16,410   173,566  
March 31, 2026 $ 1,054,352   $ 1,630,360   $ —   $ 363,575   $ 3,048,287  

Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity (1)
Total
December 31, 2024 $ 1,188,340   $ 2,207,445   $ —   $ 3,395,785  
Contributions 1,264   989   —   2,253  
Distributions ( 97,906 ) ( 32,061 ) ( 41,476 ) ( 171,443 )
Other exchanges —   ( 321,669 ) —   ( 321,669 )
Net income 76,850   76,758   41,476   195,084  
March 31, 2025 $ 1,168,548   $ 1,931,462   $ —   $ 3,100,010  

(1) Amounts represent the entirety of the EPAs prior to the Internalization.
11

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Continuing Investors Partnerships

The Continuing Investors Partnerships hold the number of Class B ordinary shares equal to the number of RP Holdings Class B Interests indirectly held by them. As the Continuing Investors Partnerships exchange RP Holdings Class B Interests indirectly held by them for Class A ordinary shares, the Continuing Investors Partnerships’ indirect ownership in RP Holdings decreases.

Founder’s Equity

In 2020, RP Holdings issued the RP Holdings Class C Special Interest which entitles the holder, through RPI EPA Vehicle, LLC and other intermediary entities that are ultimately controlled by our founder and Chief Executive Officer, Pablo Legorreta, to receive distributions of Equity Performance Awards (the “Founder’s Equity”).

Equity Performance Awards (“EPAs”) represent 20 % of the Net Economic Profit (as defined below) generated from investments made during each two-year investment period (each, a “Portfolio”). Net Economic Profit is defined as the aggregate cash receipts for all new investments in a Portfolio, less Total Expenses, which is defined as interest expense, operating expense, and recovery of acquisition cost related to that Portfolio. Distributions of EPAs occur only upon the satisfaction of specified performance and return thresholds. EPAs are generally settled in RP Holdings Class B Interests, which are immediately exchanged upon issuance for Class A ordinary shares. A portion of the EPAs may be paid in cash as a tax advance to cover income tax obligations incurred by the beneficial owners of the RP Holdings Class C Special Interest.

Mr. Legorreta granted ownership units in the entities that hold the RP Holdings Class C Special Interest to certain employees of RPM. These grants allow such employees to participate on a pro rata basis in the economic returns of the EPAs for a specific Portfolio (the “Employee EPAs”). In exchange for participation in the EPAs, these employees agreed to render services to RPM for generally four years , commencing at the beginning of each Portfolio.

Prior to the Internalization, the service requirement for employee participation in the EPAs was previously tied to services rendered to RPM, which was not a consolidated entity. Accordingly, Founder’s Equity, including the employee participation in the EPAs, was accounted for as non-controlling interest. Post-Internalization, Founder’s Equity only includes Mr. Legorreta’s retained EPAs, which continues to be accounted for as non-controlling interest. The Employee EPAs are accounted for as liability-classified share-based compensation arrangements.

We began making EPA payments in the first quarter of 2025 upon achievement of certain performance and return thresholds. In the first quarter of 2026 and 2025, total EPAs earned were $ 33.5  million and $ 41.5  million, respectively. Settlement of the EPAs consist of a combination of approximately equal amounts of Class A ordinary shares and cash payments, which are provided as tax advances. The table below summarizes the components of total EPAs earned (in thousands):

For the Three Months Ended March 31, Location Recorded in
Condensed Consolidated Financial Statements
2026 2025
Founder’s Equity (1)
$ 15,894   $ 41,476   Net income attributable to non-controlling interests

Employee EPAs 17,624   —   Accrued compensation liabilities (reduction of Employee EPAs liability)

Total $ 33,518   $ 41,476  

Form of Settlement
Cash $ 18,440   $ 21,772   Distributions to continuing non-controlling interests (Founder’s Equity)
Payments for Employee EPAs (Employee EPAs)

Shares (2)
15,078   19,704  
Total $ 33,518   $ 41,476  

(1) For the first quarter of 2025, Founder’s Equity includes $ 19.7  million for Mr. Legorreta’s retained EPAs and $ 21.8  million attributable to employees’ participation in the EPAs, which were considered part of Founder’s Equity prior to the closing of the Internalization.
(2) Amounts represent shares earned during the respective quarter that are payable at each quarter end. As of March 31, 2026, $ 15.1 million is expected to be settled in shares in the second quarter of 2026. As of March 31, 2025, $ 19.7 million was settled in shares in the second quarter of 2025.

12

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Holders of RP Holdings Class E Interests

We issued 24.5  million RP Holdings Class E Interests as part of the transaction for the Internalization, all of which were outstanding at closing of the Internalization and approximately 24.2  million remained outstanding as of March 31, 2026. The Holders of RP Holdings Class E Interests represent a non-controlling interest. The change in RP Holdings ownership following the issuance of RP Holdings Class E Interests is reflected through Other exchanges in the above table and in our condensed consolidated statements of shareholders’ equity. The Holders of RP Holdings Class E Interests are entitled to any dividends and distributions from RP Holdings on a pro rata, per share basis and pari passu with holders of RP Holdings Class A Interests and RP Holdings Class B Interests. They are also entitled to a pro rata portion of RP Holdings’ net assets on the same basis. Accordingly, we record Net income attributable to non-controlling interests for Holders of RP Holdings Class E Interests based on the weighted average number of RP Holdings Class E Interests outstanding during the period. Upon vesting, the RP Holdings Class E Interests are exchangeable on a one -for-one basis for Royalty Pharma plc Class A ordinary shares. As of March 31, 2026, approximately 3.8  million of RP Holdings Class E Interests had legally vested.

Non-Controlling Interests Ownership

The changes in RP Holdings ownership among the Continuing Investors Partnerships, the Holders of RP Holdings Class E Interests and us are reflected through Other exchanges in the above tables and in our condensed consolidated statements of shareholders’ equity. These changes typically result from activities during the period, including (1) the exchanges of RP Holding Class B Interests for Class A ordinary shares, (2) retirement of RP Holdings Class A Interests in connection with our repurchase of Class A ordinary shares and (3) the exchanges of RP Holding Class E Interests for Class A ordinary shares.

As of March 31, 2026, the ownership of RP Holdings was as follows: 4 % by the Holders of RP Holdings Class E Interests, 19 % by the Continuing Investors Partnerships and 77 % by Royalty Pharma plc. As of March 31, 2025, the ownership of RP Holdings was as follows: 25 % by the Continuing Investors Partnerships and 75 % by Royalty Pharma plc.

Dividends

The holders of Class A ordinary shares are entitled to receive dividends subject to approval by our board of directors. The holders of Class B ordinary shares do not have any rights to receive dividends; however, RP Holdings Class B Interests and RP Holdings Class E Interests are entitled to dividends and distributions from RP Holdings. In the first quarter of 2026, we declared and paid one quarterly cash dividend of $ 0.235 per Class A ordinary share in an aggregate amount of $ 104.5  million to holders of our Class A ordinary shares.

6. Available for Sale Debt Securities

Funding Arrangements with Cytokinetics

In May 2024, we expanded our funding collaboration with Cytokinetics, Incorporated (“Cytokinetics”). As part of the expanded funding collaboration, we provided funding of $ 100  million for Cytokinetics’ Phase 3 clinical trial of omecamtiv mecarbil (“Cytokinetics Development Funding”) and amended the funding agreement that we entered into with Cytokinetics in 2022 to provide two additional funding tranches (as amended, “Cytokinetics Commercial Launch Funding”). Following the amendment in May 2024, the Cytokinetics Commercial Launch Funding is comprised of seven tranches with total funding of up to $ 525  million.

Our return on the Cytokinetics Development Funding depends on the outcome of omecamtiv mecarbil’s Phase 3 clinical trial and approval by the U.S. Food and Drug Administration (the “FDA”). If omecamtiv mecarbil’s Phase 3 clinical trial is successful and approval by the FDA is received within a specific timeframe, we will receive a return of $ 100  million and the greater of an incremental 2.0 % royalty on annual net sales of omecamtiv mecarbil or quarterly fixed payments for 18 quarters and an incremental 2.0 % royalty thereafter. If FDA approval is not received within a specific timeframe, we will receive a return of 2.4 times the Cytokinetics Development Funding over 18 quarters. If the Phase 3 clinical trial is not successful within a specific timeframe, we will receive a return of 2.3 times the Cytokinetics Development Funding over 22 quarters.

13

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Out of the seven tranches of the Cytokinetics Commercial Launch Funding, we have funded a total of $ 275  million under tranches one, four, five and six as of March 31, 2026, including the required minimum draw in April 2025. Tranches two and three are no longer available because the related regulatory milestones were not met. In the fourth quarter of 2025, the contingency for tranche seven was met and up to $ 175  million became available for Cytokinetics to draw (“Cytokinetics Funding Commitments”) through the fourth quarter of 2026. For tranches one, four, five, six and seven, we expect a return of 1.9 times the amount drawn over 34 consecutive quarterly payments beginning on the last business day of the seventh quarter following the quarter each tranche was funded. We began receiving quarterly repayments on tranche one and tranche six in the fourth quarter of 2023 and first quarter of 2026, respectively.

We elected the fair value option to account for the Cytokinetics Development Funding and the Cytokinetics Commercial Launch Funding (collectively the “Cytokinetics Funding Arrangements”) as it most accurately reflects the nature of the funding arrangements. The funded Cytokinetics Funding Arrangements are recorded within Available for sale debt securities on the condensed consolidated balance sheets. The Cytokinetics Funding Commitments are recognized at fair value within Other liabilities on the condensed consolidated balance sheets. The changes in the fair value of the funded Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments are recorded within Losses on available for sale debt securities in the condensed consolidated statements of operations.

Further, as part of the expanded funding collaboration in May 2024, we purchased Cytokinetics common stock and provided funding for clinical trials of CK-586 in exchange for a royalty. Lastly, the funding collaboration also included the restructuring of our royalty on Myqorzo, formerly known as aficamten.

7. Fair Value Measurements and Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

As of March 31, 2026 As of December 31, 2025
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets:
Money market funds (1)
$ 321,103   $ —   $ —   $ 321,103   $ 383,568   $ —   $ —   $ 383,568  
Available for sale debt securities (2)
—   —   21,900   21,900   —   —   18,800   18,800  
Total current assets $ 321,103   $ —   $ 21,900   $ 343,003   $ 383,568   $ —   $ 18,800   $ 402,368  

Equity securities 173,270   —   —   173,270   171,312   —   —   171,312  
Available for sale debt securities (2)
—   —   406,800   406,800   —   —   419,000   419,000  
Total non-current assets $ 173,270   $ —   $ 406,800   $ 580,070   $ 171,312   $ —   $ 419,000   $ 590,312  

Liabilities:
Cytokinetics Funding Commitments —   —   ( 11,000 ) ( 11,000 ) —   —   ( 9,100 ) ( 9,100 )
Total non-current liabilities $ —   $ —   $ ( 11,000 ) $ ( 11,000 ) $ —   $ —   $ ( 9,100 ) $ ( 9,100 )

(1) Recorded within Cash and cash equivalents on the condensed consolidated balance sheets.
(2) Related to the funded Cytokinetics Funding Arrangements.

For the first quarter of 2026 and 2025, we recognized losses of $ 20.5  million and $ 45.9  million, respectively, on equity securities still held as of March 31, 2026.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The tables presented below summarize the change in the combined fair value (current and non-current) of Level 3 financial instruments (in thousands):

For the Three Months Ended March 31, 2026
Debt Securities Funding Commitments
Balance at the beginning of the period $ 437,800   $ ( 9,100 )

Changes in fair value (1)
( 4,780 ) ( 1,900 )

Redemptions (2)
( 4,320 ) —  
Balance at the end of the period $ 428,700   $ ( 11,000 )

(1) Recorded within Losses on available for sale debt securities in the condensed consolidated statements of operations.
(2) Amount relates to the quarterly repayments on the Cytokinetics Commercial Launch Funding.

For the Three Months Ended March 31, 2025
Equity Securities Debt Securities Funding Commitments Royalty at Fair Value
Balance at the beginning of the period $ 2,241   $ 751,700   $ ( 12,080 ) $ 5,323  

Changes in fair value (1)
—  2,539   ( 5,820 ) — 

Sales (2)
—  ( 510,553 ) —  — 
Redemptions (3)
—  ( 12,586 ) —  — 
Balance at the end of the period $ 2,241   $ 231,100   $ ( 17,900 ) $ 5,323  

(1) Recorded within Losses on available for sale debt securities in the condensed consolidated statements of operations.
(2) We provided funding of $ 300  million to MorphoSys in 2022 (“MorphoSys Development Funding Bonds”), which we sold in January 2025.
(3) Amount relates to the quarterly repayments on the MorphoSys Development Funding Bonds prior to the sale and the Cytokinetics Commercial Launch Funding.

Valuation Inputs for Recurring Fair Value Measurements

Below is a discussion of the valuation inputs used for financial instruments classified as Level 3 measurement as of March 31, 2026 and December 31, 2025 in the fair value hierarchy. As of March 31, 2026 and December 31, 2025, we did not have any financial instruments recorded at fair value using Level 2 inputs.

Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments

We estimated the fair values of the funded Cytokinetics Funding Arrangements as of March 31, 2026 and December 31, 2025 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including an estimated risk-adjusted discount rate and the probability that there will be a change of control event, which would result in accelerated payments. Developing a risk-adjusted discount rate and assessing the probability that there will be a change of control event over the duration of the Cytokinetics Funding Arrangements require significant judgment. Our estimate of the risk-adjusted discount rate could reasonably be different than the discount rate selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. Our expectation of the probability and timing of the occurrence of a change of control event could reasonably be different than the timing of an actual change of control event, and if so, would mean that the estimated fair value could be significantly higher or lower than the fair value determined by us at any particular date.

15

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

We estimated the fair value of the Cytokinetics Funding Commitments as of March 31, 2026 and December 31, 2025 using a Monte Carlo simulation methodology that includes simulating the interest rate movements using a Geometric Brownian Motion-based pricing model. This methodology simulates the likelihood of future discount rates exceeding the counterparty’s assumed cost of debt, which would impact Cytokinetics’ decision to exercise its option to draw on each respective tranche. As of March 31, 2026 and December 31, 2025 this methodology incorporates Level 3 inputs, including the probability of a change of control event occurring during the investment term, an assumed interest rate volatility of 42.5 % as of each date and an assumed risk-adjusted discount rate of 11.8 % and 10.9 %, respectively. We also assumed probabilities for the occurrence of each regulatory or clinical milestone, which impacts the availability of each future tranche of funding. Our estimate of expectation of the probability and timing of the occurrence of a change of control event, the risk-adjusted discount rate, the interest rate volatility and the probabilities of each underlying milestone could reasonably be different than the assumptions selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower.

Fair Value Disclosure of Financial Assets Not Measured at Fair Value

Financial royalty assets are not measured at fair value. Instead, they are measured and carried at amortized cost using the effective interest method on the condensed consolidated balance sheets. Financial royalty assets do not include our entire portfolio of investments, and specifically exclude the following:

1. development-stage product candidates where the funding was (i) expensed as upfront R&D upon acquisition (e.g., Trodelvy and Nurtec ODT) or (ii) expensed as ongoing R&D (e.g., our funding arrangement for litifilimab with Biogen); and
2. contractual funding arrangements (e.g., the Cytokinetics Funding Arrangements), which are accounted for as available for sale debt securities.

We used a Monte Carlo simulation under the option pricing framework to calculate the fair value of our portfolio of financial royalty assets for disclosure given the complexity of our royalty investments, which may include features such as milestone payments, royalty tiers, caps, and floors that could alter the cash flows based on future commercial, clinical or regulatory outcomes. The Monte Carlo model allows us to simulate a range of different outcomes based on various inputs, primarily the underlying projected product sales of each royalty bearing product, to project the cash flows, including royalty receipts and milestone payments, based on each of the simulated sales scenarios. The Monte Carlo methodology also takes volatility at the sales level into consideration. The fair value of financial royalty assets disclosed herein is classified as Level 3 within the fair value hierarchy since it is determined based on inputs that are both significant and unobservable.

As of March 31, 2026, the estimated fair values of the current and non-current portions of financial royalty assets were $ 0.8 billion and $ 23.9 billion, respectively. As of March 31, 2026, approximately 10 % of the current portion and 6 % of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests.

As of December 31, 2025, the estimated fair values of the current and non-current portions of financial royalty assets were $ 0.9 billion and $ 23.4 billion, respectively. As of December 31, 2025, approximately 7 % of the current portion and 7 % of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests.

8. Financial Royalty Assets

Financial royalty assets consist of contractual rights to cash flows relating to royalties derived from the expected sales of patent-protected biopharmaceutical products that entitle us and our subsidiaries to receive a portion of income from the sale of such products by third parties.

16

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current portion of financial royalty assets are as follows (in thousands):

As of March 31, 2026
Estimated Royalty Duration (1)
Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 9)
Net Carrying Value (4)

Cystic fibrosis franchise 2039-2041 (2)
$ 4,836,196   $ —   $ 4,836,196  
Evrysdi 2035-2036 2,307,411   ( 389,643 ) 1,917,768  
Voranigo 2038 979,753   —   979,753  
Tysabri (3)
1,088,300   ( 143,935 ) 944,365  
Trelegy 2029-2030 935,020   —   935,020  
Imdelltra 2038-2041
926,780   —   926,780  
Other
2026-2042 8,969,956   ( 1,982,732 ) 6,987,224  
Total $ 20,043,416   $ ( 2,516,310 ) $ 17,527,106  
Less: Cumulative allowance for credit losses (Note 9)
( 204,909 )
Total current and non-current financial royalty assets, net $ 17,322,197  

(1) Durations shown represent our estimates as of the current reporting date of when a royalty will substantially end, which may vary by geography and may depend on clinical trial results, regulatory approvals, contractual terms, commercial developments, estimates of regulatory exclusivity and patent expiration dates (which may include estimated patent term extensions) or other factors. There can be no assurances that our royalties will expire when expected.
(2) Royalty is perpetual. We estimate royalty duration of 2039-2041 due to expected Alyftrek patent expiration and potential generic entry thereafter leading to sales decline.
(3) Royalty is perpetual. We have applied an end date of 2035 for purposes of accreting income over the royalty term, which is periodically reviewed based on our estimates of impact from biosimilars.
(4) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 9–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information.

As of March 31, 2026, the balance of $ 17.3  billion above for total current and non-current financial royalty assets, net included $ 1.4  billion in unapproved financial royalty assets held at cost related to frexalimab for $ 522.6  million and other assets, including primarily olpasiran, pelacarsen, neladalkib and olanzapine (TEV-’749).

In the first quarter of 2026, we recorded $ 69.4  million of non-cash impairment charges related to Tazverik following announcements by Ipsen and Eisai in March 2026 of the voluntary withdrawal of Tazverik across all indications and markets. The impairment charge was recorded within Financial royalty asset impairment in the condensed consolidated statement of operations.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

As of December 31, 2025
Estimated Royalty Duration (1)
Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 9)
Net Carrying Value (3)

Cystic fibrosis franchise 2039-2041 (2)
$ 4,901,121   $ —   $ 4,901,121  
Evrysdi 2035-2036 2,331,262   ( 494,123 ) 1,837,139  
Voranigo 2038 982,802   —   982,802  
Trelegy 2029-2030 993,629   ( 17,356 ) 976,273  
Imdelltra 2038-2041 924,239   —   924,239  
Tremfya 2031-2032 909,607   —   909,607  
Other 2025-2042 9,417,689   ( 2,674,043 ) 6,743,646  
Total $ 20,460,349   $ ( 3,185,522 ) $ 17,274,827  
Less: Cumulative allowance for credit losses (Note 9)
( 211,959 )
Total current and non-current financial royalty assets, net $ 17,062,868  

(1) Durations shown represent our estimates as of December 31, 2025 of when a royalty will substantially end, which may vary by geography and may depend on clinical trial results, regulatory approvals, contractual terms, commercial developments, estimates of regulatory exclusivity and patent expiration dates (which may include estimated patent term extensions) or other factors. There can be no assurances that our royalties will expire when expected.
(2) Royalty is perpetual. We estimate royalty duration of 2039-2041 due to expected Alyftrek patent expiration and potential generic entry thereafter leading to sales decline.
(3) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 9–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information.

9. Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets

The cumulative allowance for changes in expected cash flows from financial royalty assets is presented net within the non-current portion of financial royalty assets on the condensed consolidated balance sheets and includes the following:

• the movement in the cumulative allowance related to changes in forecasted royalty payments to be received based on royalty bearing products’ projected sales which are primarily derived from sell-side equity research analysts’ consensus sales forecasts,
• the write-off of cumulative allowance at the end of a royalty asset’s life which only impacts the condensed consolidated balance sheets, and
• the movement in the cumulative allowance for current expected credit losses, primarily associated with new financial royalty assets with limited protective rights and changes in the underlying cash flow forecasts of financial royalty assets with limited protective rights.

The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses (in thousands):

Activity for the Period
Balance at December 31, 2025 (1)
$ ( 3,397,481 )

Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets ( 96,221 )
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 286,656  
Write-off of cumulative allowance (2)
478,777  

Current period provision for credit losses, net 7,050  
Balance at March 31, 2026 $ ( 2,721,219 )

(1) Includes $ 212.0  million related to cumulative allowance for credit losses.
(2) Primarily relates to amounts removed from the cumulative allowance due to changes in expected cash flows associated with Tazverik as a result of the gross write-off of the related $ 548.3  million financial royalty asset.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

10. Non-Consolidated Affiliates

We have equity investments in certain entities at a level that provide us with significant influence. We account for such investments as equity method investments or as equity securities over which we have elected the fair value option.

The Legacy SLP Interest

In connection with the Exchange Offer, we acquired a special limited partnership interest in the Legacy Investors Partnerships (the “Legacy SLP Interest”) from the Continuing Investors Partnerships for $ 303.7  million in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy SLP Interest entitles us to the equivalent of performance distribution payments that would have been paid to the general partner of the Legacy Investors Partnerships and an income allocation on a similar basis. Our income allocation is equal to the general partner’s former contractual rights to the income of the Legacy Investors Partnerships, net of amortization of the basis difference. The Legacy SLP Interest is accounted for under the equity method as we have the ability to exercise significant influence over the Legacy Investors Partnerships. The Legacy Investors Partnerships no longer participate in investment opportunities from June 30, 2020 and, as such, the value of the Legacy SLP Interest is expected to decline over time. The Legacy Investors Partnerships also indirectly own a non-controlling interest in Old RPI.

The income allocation from the Legacy SLP Interest is based on an estimate as the Legacy Investors Partnerships are private partnerships that report on a lag. Our estimate of equity in earnings from the Legacy SLP Interest for the current period will be updated for historical results in the subsequent period.

The Avillion Entities

We account for our partnership interests in Avillion Financing I, LP and its related entities (“Avillion I”) and BAv Financing II, LP and its related entities (“Avillion II” and, together with Avillion I, the “Avillion Entities”) as equity method investments because RPIFT has the ability to exercise significant influence over the Avillion Entities.

Avillion I’s only operations are the collection of cash and unwinding of the discount on the series of fixed annual payments due from Pfizer under its co-development agreement, following the FDA's approval of a supplemental New Drug Application (“NDA”) for Pfizer’s Bosulif in December 2017.

Avillion II is a party to a co-development agreement with AstraZeneca to develop Airsupra for the treatment of asthma in exchange for royalties, a series of success-based milestones and other potential payments. Under our agreement with Avillion II, as amended, we agreed to fund a total of $ 155  million over multiple years for a portion of the costs of Phase 2 and 3 clinical trials to advance Airsupra. Following the FDA’s approval of Airsupra in 2023, we began receiving distributions from Avillion II related to the Airsupra royalty in the first quarter of 2025.

Our maximum exposure to loss at any particular reporting date is limited to the carrying value of our equity method investments plus the unfunded commitments. As of March 31, 2026 and December 31, 2025, we had unfunded commitments related to the Avillion Entities of $ 10.3  million.

Equity in earnings is recorded within Equity in earnings of equity method investees on the condensed consolidated statements of operations and cash distributions are recorded within Distributions from equity method investees on the condensed consolidated statements of cash flows. The following tables summarize equity in earnings and cash distributions from our equity method investees (in thousands):

For the Three Months Ended March 31,
2026 2025
Equity in (earnings)/losses of equity method investees

The Legacy SLP Interest $ ( 5,688 ) $ ( 8,195 )
The Avillion Entities ( 16,070 ) 1,752  
Total $ ( 21,758 ) $ ( 6,443 )

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

For the Three Months Ended March 31,
2026 2025
Distributions from equity method investees
The Legacy SLP Interest $ 6,059   $ 8,337  
Avillion I
13,396   13,396  
Avillion II (1)
26,573   27,925  
Total $ 46,028   $ 49,658  

(1) For the first quarter of 2026, amount includes approximately $ 10.3  million, representing our pro rata portion of the $ 22  million milestone payment Avillion II received from AstraZeneca following the FDA's approval of a supplemental NDA for Airsupra. For the first quarter of 2025, amount includes approximately $ 27.4  million, representing our pro rata portion of the $ 55  million milestone payment Avillion II received from AstraZeneca following Airsupra meeting the primary endpoint in the Phase 3 clinical trial.

11. Research and Development Funding Expense

R&D funding expense consists of certain development-stage funding payments that we have made to counterparties to acquire royalties or milestones on product candidates. The payments can be made upfront, as milestones upon the achievement of certain predefined criteria, or over time as the related product candidates undergo clinical trials.

In the first quarter of 2026, R&D funding expense of $ 39.8  million was primarily related to litifilimab and TEV-’408. In the first quarter of 2025, R&D funding expense of $ 50.5  million was primarily related to litifilimab.

Below summarizes our ongoing R&D funding arrangements as of March 31, 2026 (in thousands):

Product Candidates
Counterparties Total Commitments Funding Timing
Unfunded Commitments
JNJ‑4804
Johnson & Johnson $ 500,000   Eight fixed quarterly payments commencing in the second quarter of 2026
$ 500,000  
TEV-’408 (1)
Teva Pharmaceuticals
75,000   Variable quarterly payments commencing in second quarter of 2026
75,000  
Litifilimab
Biogen 250,000   Six fixed quarterly payments commencing in first quarter of 2025
25,000  
Total $ 825,000   $ 600,000  

(1) In the first quarter of 2026, we entered into an R&D funding arrangement with Teva Pharmaceuticals, a U.S. affiliate of Teva Pharmaceutical Industries Ltd, for TEV-’408 for up to $ 500  million. Under the agreement, we agreed to co-fund a Phase 2b study for vitiligo for up to $ 75  million and have the option to provide up to an additional $ 425  million to co-fund the Phase 3 development program based on the results of the Phase 2b study. In the first quarter of 2026, we accrued $ 14.3 million of R&D funding expense for our portion of estimated costs incurred for the Phase 2b study, which is recorded within Other current liabilities on the condensed consolidated balance sheet and is expected to be paid in the second quarter of 2026.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

12. Borrowings

Our borrowings consisted of the following (in thousands):

Type of Borrowing Date of Issuance Maturity As of March 31, 2026 As of December 31, 2025
Senior Unsecured Notes:
$ 1,000,000 , 1.75 % (issued at 98.284 % of par)
9/2020 9/2027 $ 1,000,000   $ 1,000,000  
$ 500,000 , 5.15 % (issued at 98.758 % of par)
6/2024 9/2029 500,000   500,000  
$ 1,000,000 , 2.20 % (issued at 97.760 % of par)
9/2020 9/2030 1,000,000   1,000,000  
$ 600,000 , 4.45 % (issued at 98.909 % of par)
9/2025 3/2031 600,000   600,000  
$ 600,000 , 2.15 % (issued at 98.263 % of par)
7/2021 9/2031 600,000   600,000  
$ 500,000 , 5.40 % (issued at 97.872 % of par)
6/2024 9/2034 500,000   500,000  
$ 900,000 , 5.20 % (issued at 97.989 % of par)
9/2025 9/2035 900,000   900,000  
$ 1,000,000 , 3.30 % (issued at 95.556 % of par)
9/2020 9/2040 1,000,000   1,000,000  
$ 1,000,000 , 3.55 % (issued at 95.306 % of par)
9/2020 9/2050 1,000,000   1,000,000  
$ 700,000 , 3.35 % (issued at 97.565 % of par)
7/2021 9/2051 700,000   700,000  
$ 500,000 , 5.90 % (issued at 97.617 % of par)
6/2024 9/2054 500,000   500,000  

$ 500,000 , 5.95 % (issued at 95.824 % of par)
9/2025 9/2055 500,000   500,000  
Term Loan See below
7/2026 380,000   380,000  
Unamortized debt discount and issuance costs ( 223,557 ) ( 229,083 )
Total debt carrying value 8,956,443   8,950,917  
Less: Current portion of long-term debt ( 380,000 ) ( 380,000 )
Total long-term debt $ 8,576,443   $ 8,570,917  

Senior Unsecured Notes

In September 2025, we issued $ 2.0  billion of senior unsecured notes (the “2025 Notes”). The 2025 Notes were issued at a total discount of $ 45.5  million and we capitalized approximately $ 16.2  million in debt issuance costs, primarily comprised of underwriting fees. The 2025 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 5.16 % and 5.61 %, respectively.

We issued $ 1.5  billion, $ 1.3  billion and $ 6.0  billion of senior unsecured notes in 2024 (the “2024 Notes”), 2021 (the “2021 Notes”) and 2020 (the “2020 Notes” and, collectively with the “2021 Notes”, “2024 Notes” and “2025 Notes”, the “Notes”), respectively. The 2024 Notes, 2021 Notes and 2020 Notes were issued at a total discount of $ 205.2  million and we capitalized approximately $ 65.3  million in debt issuance costs primarily comprised of underwriting fees. The 2024 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 5.48 % and 5.92 %, respectively. The 2021 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 2.80 % and 3.06 %, respectively. The 2020 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 2.13 % and 2.50 %, respectively. Through March 31, 2026, we have repaid $ 2.0  billion of the 2020 Notes upon maturity.

Interest on each series of the Notes accrues at the respective rate per annum and is payable semi-annually in arrears in March and September of each year.

The Notes may be redeemed at our option at a redemption price equal to the greater of (i) 100 % of the principal amount of the Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the treasury rate, plus a make-whole premium as defined in the indenture. In each case, accrued and unpaid interest is also required to be redeemed to the date of redemption.

Upon the occurrence of a change of control triggering event and downgrade in the rating of our Notes by two of three credit agencies, the holders may require us to repurchase all or part of their Notes at a price equal to 101 % of the aggregate principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of repurchase.

21

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Our obligations under the Notes are fully and unconditionally guaranteed by RP Holdings and RP Manager, our non-wholly owned subsidiaries. We are required to comply with certain covenants under our Notes and as of March 31, 2026, we were in compliance with all applicable covenants.

As of March 31, 2026 and December 31, 2025, the fair value of our outstanding Notes using Level 2 inputs was approximately $ 7.7  billion and $ 7.9  billion , respectively.

Term Loan

In connection with the Internalization, RP Holdings and RP Manager were each joined as a borrower under RPM’s then existing $ 380  million term loan (the “Term Loan”) with Bank of America, N.A (as amended, the “Loan Agreement”). Pablo Legorreta, Legorreta Investments, LLC and Legorreta Investments II LLC are guarantors under the Term Loan. Upon the closing of the Internalization, RPM was released as a borrower under the Term Loan. In the third quarter of 2025, the Loan Agreement was amended to accelerate the maturity of the Term Loan to July 31, 2026 and decrease the applicable interest rate. Following the amendment, the Term Loan is subject to an interest rate, at our option, of either (i) the Daily SOFR plus 1.25 % or (ii) Term SOFR plus 1.25 %, each as defined in the Loan Agreement. Interest is payable in arrears quarterly. We made the first interest payment in the third quarter of 2025. As of March 31, 2026 and December 31, 2025, the carrying value of the Term Loan approximates fair value, respectively, as the interest rate is variable and reflects current market rates. The Term Loan is subject to certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio, (ii) a Consolidated Coverage Ratio, and (iii) a Consolidated Portfolio Cash Flow Ratio, each as described further below under the description of the Credit Agreement that governs the Revolving Credit Facility.

Senior Unsecured Revolving Credit Facility

Our subsidiary, RP Holdings, as borrower, initially entered into the Amended and Restated Revolving Credit Agreement (the “Credit Agreement”) on September 15, 2021, which provides for an unsecured revolving credit facility (the “Revolving Credit Facility”). Amendment No. 3 to the Credit Agreement, which was entered into on December 22, 2023, increased the borrowing capacity to $ 1.8  billion for general corporate purposes with $ 1.69  billion of the revolving commitments maturing on December 22, 2028 and the remaining $ 110.0  million of revolving commitments maturing on October 31, 2027. On January 24, 2024 and April 8, 2025, we entered into Amendments No. 4 and 5, respectively, to the Credit Agreement to make certain technical modifications. As of March 31, 2026 and December 31, 2025, there were no outstanding borrowings under the Revolving Credit Facility.

The Revolving Credit Facility is subject to an interest rate, at our option, of either (a) a base rate determined by reference to the highest of (1) the administrative agent’s prime rate, (2) the federal funds rate plus 0.5 % and (3) Term SOFR plus 1 % or (b) Daily SOFR, Term SOFR, the Alternative Currency Term Rate or the Alternative Currency Daily Rate (each as defined in the Credit Agreement), plus in each case, the applicable margin. The applicable margin for the Revolving Credit Facility varies based on our public debt rating. Accordingly, the interest rates for the Revolving Credit Facility fluctuate during the term of the facility based on changes in the applicable interest rate and future changes in our public debt rating.

The Credit Agreement that governs the Revolving Credit Facility and the amended loan agreement that governs the Term Loan contain certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Adjusted EBITDA, each as defined and calculated as set forth in the Credit Agreement, (ii) a Consolidated Coverage Ratio at or above 2.50 to 1.00 of Adjusted EBITDA to consolidated interest expense, each as defined and calculated as set forth in the Credit Agreement and (iii) a Consolidated Portfolio Cash Flow Ratio at or below 5.00 to 1.00 (or at or below 5.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Portfolio Cash Flow, each as defined and calculated as set forth in the Credit Agreement. All obligations under the Revolving Credit Facility are unconditionally guaranteed by us. Noncompliance with the leverage ratio, Portfolio Cash Flow ratio and interest coverage ratio covenants under the Credit Agreement could result in our lenders requiring us to immediately repay all amounts borrowed. The Credit Agreement includes customary covenants for credit facilities of this type that limit our ability to engage in certain activities, such as incurring additional indebtedness, paying dividends, making certain payments and acquiring and disposing of assets. We were in compliance with the financial covenants as of March 31, 2026.

22

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Uncommitted Credit Facility

In August 2025, we entered into an uncommitted line of credit agreement with Société Générale (the “Uncommitted Credit Facility”) which provides for an aggregate borrowing capacity of up to $ 350.0  million for general corporate purposes within a quarter. As of March 31, 2026 and December 31, 2025, there were no outstanding borrowings under the Uncommitted Credit Facility, respectively.

Principal Payments on the Borrowings

The future principal payments for our borrowings as of March 31, 2026 are as follows (in thousands):

Year Principal Payments
Remainder of 2026 $ 380,000  
2027 1,000,000  
2028 —  
2029 500,000  
2030 1,000,000  
Thereafter 6,300,000  
Total (1)
$ 9,180,000  

(1) Excludes unamortized debt discount and issuance costs of $ 223.6 million as of March 31, 2026, which are amortized through interest expense over the remaining life of the underlying debt obligations.

13. Earnings per Share

In the first quarter of 2026 and 2025, Class B ordinary shares contingently issuable for the EPAs were evaluated and included in the diluted earnings per share computation as certain conditions were met.

In the second quarter of 2025, we issued 24.5  million RP Holdings Class E Interests and an equal number of Royalty Pharma plc Class B ordinary shares which, upon vesting, are exchangeable on a one -for-one basis for Royalty Pharma plc Class A ordinary shares. We use the “if-converted” method to determine the potentially dilutive effect related to the RP Holdings Class E Interests.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table sets forth the reconciliation of the numerator and denominator used to calculate basic and diluted earnings per Class A ordinary share (in thousands, except per share amounts):

For the Three Months Ended March 31,
2026 2025
Numerator
Consolidated net income (1)
$ 468,256   $ 434,433  
Less: Net income attributable to the Continuing Investors Partnerships 78,049   76,758  
Less: Net income attributable to the Legacy Investors Partnerships 63,213   76,850  
Less: Net income attributable to the Founder’s Equity (2)
15,894   41,476  
Less: Net income attributable to the RP Holdings Class E Interests Holders 16,410   —  
Net income attributable to Royalty Pharma plc - basic 294,690   239,349  
Add: Reallocation of net income attributable to the Continuing Investors Partnerships from the assumed exchanges of Class B ordinary shares 78,049   76,758  
Add: Reallocation of net income attributable to the Holders of RP Holdings Class E Interests from the assumed exchanges of eligible Class B ordinary shares 2,484   —  
Net income attributable to Royalty Pharma plc - diluted $ 375,223   $ 316,107  

Denominator
Weighted average Class A ordinary shares outstanding - basic 436,790   435,480  
Add: Dilutive effects as shown separately below
Assumed exchanges of Class B ordinary shares by the Continuing Investors Partnerships 115,840   141,974  
Unvested RSUs 163   48  
Shares contingently issuable for the Equity Performance Awards 358   600  
Assumed exchanges of eligible Class B ordinary shares by the Holders of RP Holdings Class E Interests 3,686   —  
Weighted average Class A ordinary shares outstanding - diluted 556,837   578,102  

Earnings per Class A ordinary share - basic $ 0.67   $ 0.55  
Earnings per Class A ordinary share - diluted $ 0.67   $ 0.55  

(1) Consolidated net income for 2025 has been recast as a result of the adoption of ASU 2025-07. See Note 2–Summary of Significant Accounting Policies for further details.
(2) Amounts for 2025 includes Mr. Legorreta’s retained EPAs and employees’ participation in the EPAs, which were considered part of Founder’s Equity prior to the closing of the Internalization.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

14. Indirect Cash Flow

Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below (in thousands):

For the Three Months Ended March 31,
2026 2025
Cash flow from operating activities:
Consolidated net income (1)
$ 468,256   $ 434,433  
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Income from financial royalty assets ( 594,992 ) ( 539,490 )
Provision for changes in expected cash flows from financial royalty assets ( 197,485 ) ( 127,140 )

Provision for credit losses on unfunded commitments ( 3,700 ) —  
Share-based compensation 121,992   515  
Amortization of debt discount and issuance costs 5,712   5,281  

Losses on equity securities 20,166   45,878  
Equity in earnings of equity method investees ( 21,758 ) ( 6,443 )

Distributions from equity method investees 3,722   13,396  

Amortization of prepaid expenses 1,958   —  
Losses on available for sale debt securities 6,680   3,281  

Depreciation 1,171   —  
Financial royalty asset impairment 69,443   —  
Other 1,889   1,104  
Changes in operating assets and liabilities:
Cash collected on financial royalty assets 915,598   829,737  

Other royalty income receivable 1,805   3,171  
Other current assets ( 5,226 ) 1,108  
Other assets 319   —  
Accounts payable and accrued liabilities ( 5,079 ) 10,086  
Interest payable ( 85,516 ) ( 78,841 )
Other current liabilities 14,289   —  
Other liabilities ( 1,011 ) —  
Net cash provided by operating activities $ 718,233   $ 596,076  

(1) Consolidated net income for 2025 has been recast as a result of the adoption of ASU 2025-07. See Note 2–Summary of Significant Accounting Policies for further details.

15. Commitments and Contingencies

Revolution Medicines Funding Commitments

In June 2025, we entered into a two part funding arrangement for up to $ 2  billion with Revolution Medicines, Inc. (“Revolution Medicines”). The funding arrangement is comprised of the purchase of a royalty on daraxonrasib and a senior secured term loan.

The royalty purchase is comprised of five $ 250  million tranches, totaling up to $ 1.25  billion. Out of the five tranches, the first tranche was funded upon closing and recorded as R&D funding expense. Revolution Medicines is required to draw the second tranche upon the occurrence of a certain clinical milestone and has the option to draw the remaining tranches upon the achievement of certain clinical, regulatory, or sales-based milestones. As of March 31, 2026, $ 1  billion of the royalty remained unfunded. Following Revolution Medicines’ announcement in April 2026 of positive Phase 3 results from its RASolute 302 trial of daraxonrasib, we funded the required second tranche of $ 250  million on May 4, 2026.

25

ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The term loan is comprised of three $ 250  million tranches, totaling up to $ 750  million. Out of the three tranches, Revolution Medicines is required to draw the first tranche upon the occurrence of a certain regulatory milestone and has the option to draw the remaining tranches upon the achievement of certain sales-based milestones. As of March 31, 2026, $ 750  million of the term loan remained unfunded.

As of March 31, 2026 and December 31, 2025, we recorded an allowance for credit losses of $ 85.3  million and $ 89.0  million, respectively, related to the unfunded portions of the funding arrangements with Revolution Medicines. These amounts are recorded within Other liabilities on the condensed consolidated balance sheets. The provision for credit losses recognized in the period is recorded within Provision for credit losses on unfunded commitments in the condensed consolidated statement of operations.

Cytokinetics Funding Commitments

As of March 31, 2026, $ 175  million remained available under the Cytokinetics Funding Commitments.

Leases

In connection with the Internalization, we entered into an operating lease agreement for our office space. The lease agreement has a non-cancelable term through October 31, 2031 and a five-year extension option. The extension option is not recognized as part of our right of use asset and lease liability. The right of use asset is recorded within Other assets and the lease liability is recorded within Other liabilities on the condensed consolidated balance sheets. As of March 31, 2026, we recognized $ 18.3  million of right of use asset and $ 15.3  million of lease liability. As of December 31, 2025, we recognized $ 19.1  million of right of use asset and $ 16.1  million of lease liability.

As of March 31, 2026, the future minimum lease payments under the non-cancelable operating lease are as follows (in thousands):

Year Payments
Remainder of 2026 $ 3,041  
2027 3,789  
2028 3,721  
2029 3,726  
2030 3,755  
Thereafter 3,129  
Total lease payments 21,161
Less: imputed interest ( 2,669 )
Present value of lease liabilities $ 18,492  

Other Commitments

We have commitments to advance funds to counterparties through our investment in the Avillion Entities and R&D arrangements. Please refer to Note 10–Non-Consolidated Affiliates and Note 11–Research and Development Funding Expense for details of these arrangements.

Indemnifications

In the ordinary course of our business, we may enter into contracts or agreements that contain customary indemnifications relating to such things as confidentiality agreements and representations as to corporate existence and authority to enter into contracts. The maximum exposure under such agreements is indeterminable until a claim, if any, is made. However, no such claims have been made against us to date and we believe that the likelihood of such proceedings taking place in the future is remote.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Legal Proceedings

We are a party to legal actions with respect to a variety of matters in the ordinary course of business. Some of these proceedings may be based on complex claims involving substantial uncertainties and unascertainable damages. Unless otherwise noted, it is not possible to determine the probability of loss or estimate damages, and therefore we have not established accruals for any of these proceedings on our condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025. When we determine that a loss is both probable and reasonably estimable, we record a liability, and, if the liability is material, we disclose the amount of the liability reserved. We do not believe the outcome of any existing legal proceedings to which we are a party, either individually or in the aggregate, will adversely affect our business, financial condition or results of operations.

Beginning in the second quarter of 2025, we did not receive from Vertex the full amount of royalty receipts on Alyftrek net sales to which we believe that we are contractually entitled. Accordingly, we commenced the dispute resolution procedures contemplated by the agreements relating to our royalties on Vertex’s cystic fibrosis products. Any amounts receivable by us, if any, in connection with this dispute will be recognized only upon the resolution of the matter in our favor.

16. Related Party Transactions

Internalization

On May 16, 2025, we acquired from the Sellers all of the equity interests in RP Manager. The Sellers included Pablo Legorreta, RPM I, LLC and RP MIP Holdings. Pablo Legorreta was the managing member of the Legacy Manager, holds an interest in us, and serves as our Chief Executive Officer and Chairman of our board of directors. The equity interest holders of RP MIP Holdings include our named executive officers. The Sellers received cash and equity consideration, with the equity consideration subject to vesting conditions. Refer to Note 3–Internalization for additional discussion.

Payments to Legacy Manager

Prior to the Internalization, we paid a quarterly operating and personnel payment to RPM or its affiliates pursuant to the Legacy Management Agreement equal to 6.5 % of the cash receipts from Royalty Investments (as defined in the Legacy Management Agreement) for such quarter and 0.25 % of the value of our security investments under GAAP as of the end of such quarter (“Management Fees”). We also paid certain costs and expenses of RPM. After the Internalization, we no longer pay Management Fees or RPM’s costs and expenses.

Total operating and personnel payments incurred, including the amounts attributable to Old RPI, which is an obligation of Legacy Investors Partnerships, are recognized within General and administrative expenses in the condensed consolidated statements of operations. During the first quarter of 2026 and 2025, total operating and personnel payments incurred were $ 1.0  million and $ 89.8  million, respectively.

Payments from Legacy Manager

After the Internalization, we entered into an agreement with RPM to provide administrative services in exchange for a fee. In the first quarter of 2026, we did not recognize material income related to this agreement.

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ROYALTY PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Distributions Payable to Non-Controlling Interests

The Distributions payable to non-controlling interests includes the contractual cash flows required to be distributed to the Legacy Investors Partnerships based on their non-controlling interest in Old RPI and the unpaid portion of the distributions for Equity Performance Awards attributable to the Founder’s Equity as of quarter end. Refer to Note 5–Shareholders’ Equity for additional discussion of the Equity Performance Awards. The distributions payable to non-controlling interests consists of the following (in thousands):

As of March 31, 2026 As of December 31, 2025
Payable to Founder
$ 7,150   $ 6,733  
Payable to Legacy Investors Partnerships 80,267   66,092  
Total distributions payable to non-controlling interests
$ 87,417   $ 72,825  

Other Transactions

In connection with the Exchange Offer, we acquired the Legacy SLP Interest from the Continuing Investors Partnerships in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy Investors Partnerships own a non-controlling interest in Old RPI. Refer to Note 10–Non-Consolidated Affiliates for additional discussion of the Legacy SLP Interest and our investments in other non-consolidated entities.

Each Continuing Investor Partnership and the Holders of RP Holdings Class E Interests is responsible for a pro rata portion based on its ownership percentage of RP Holdings of any costs and expenses in connection with the contemplation of, formation of, listing and ongoing operation of us and any of our subsidiaries, including any third-party expenses of managing us and any of our subsidiaries, such as accounting, audit, legal, reporting, compliance, administration (including directors’ fees), financial advisory, consulting, investor relations and insurance expenses relating to our affairs and those of any subsidiary.

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Item 2.         MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations, cash flows, other changes in financial condition and business performance. MD&A is provided as a supplement to, and should be read in conjunction with, our 2025 Annual Report on Form 10-K and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Special Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q and in Part II, Item 1A. Risk Factors.

Royalty Pharma plc is a public limited company that is incorporated under the laws of England and Wales and is a holding company. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. Our principal asset is a controlling equity interest in Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales. We conduct our business through RP Holdings and its subsidiaries.

Business Overview

We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Since our founding in 1996, we have been pioneers in the royalty market, collaborating with innovators from academic institutions, research hospitals and not-for-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. We have assembled a portfolio of royalties which entitles us to payments based directly on the top-line sales of many of the industry’s leading therapies, which includes royalties on more than 35 commercial products, including Vertex’s Trikafta and Alyftrek, GSK’s Trelegy, Biogen’s Tysabri and Spinraza, Roche’s Evrysdi, Astellas and Pfizer’s Xtandi, Johnson & Johnson’s Tremfya, AbbVie and Johnson & Johnson’s Imbruvica, Servier’s Voranigo, Gilead’s Trodelvy, Amgen’s Imdelltra and Alnylam’s Amvuttra, among others, and 19 development-stage product candidates.

Background and Format of Presentation

RP Holdings is owned by Royalty Pharma plc and, indirectly, by various partnerships (the “Continuing Investors Partnerships”) and, in addition, post-Internalization (as defined below), by the Holders of RP Holdings Class E Interests (as defined below). RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV (“RPI 2019 ICAV”), which is an Irish collective asset management vehicle and is the successor to Royalty Pharma Investments, an Irish unit trust. In 2022, we became an indirect owner of an 82 % economic interest in Royalty Pharma Investments ICAV, which was previously owned directly by Royalty Pharma Investments. In connection with the Internalization, Royalty Pharma Investments distributed all of its assets to Royalty Pharma Investments 2011 ICAV (together with Royalty Pharma Investments ICAV, “Old RPI”).

We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate our initial public offering (“IPO”). Prior to the Exchange Offer, Royalty Pharma Investments was owned by various partnerships (the “Legacy Investors Partnerships”). Through the Exchange Offer, investors, which represented 82% of the aggregate limited partnership in the Legacy Investors Partnerships, exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP and RPI International Holdings 2019, LP which are part of the Continuing Investors Partnerships. Following the Exchange Offer, we became the indirect owner of an 82% economic interest in Royalty Pharma Investments which entitled us to 82% of the economics of its wholly-owned subsidiary RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). In December 2023, we acquired the remaining interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”).

Prior to the Internalization (as defined below), we were externally managed by RP Management, LLC, a Delaware limited liability company (the “Legacy Manager” or “RPM”), pursuant to advisory and management agreements (collectively, the “Legacy Management Agreement”).

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On January 10, 2025, we entered into an agreement (as amended, the “Purchase Agreement”) with RPM, Royalty Pharma Manager, LLC, a Delaware limited liability company (“RP Manager”) and the sellers named therein (the “Sellers”). Pursuant to the Purchase Agreement, RPM contributed substantially all of its assets and liabilities to RP Manager and we agreed to acquire all of the equity interests of RP Manager from the Sellers (the “Internalization”). The Sellers included our founder, chief executive officer and chairman, Pablo Legorreta, RPM I, LLC and RP MIP Holdings, LLC (“RP MIP Holdings”). The equity interest holders of RP MIP Holdings include our named executive officers and certain employees of the Legacy Manager, who became employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings, in connection with the Internalization. We completed the acquisition of RP Manager on May 16, 2025.

Understanding Our Financial Reporting

Our portfolio of investments contains royalties and royalty-like terms held through different forms or instruments. Most of the royalties we acquire are treated as investments in cash flow streams and are classified as financial assets measured under the effective interest method in accordance with generally accepted accounting principles in the United States (“GAAP”). Under this accounting methodology, we calculate the effective interest rate on each financial royalty asset using a forecast of the expected cash flows to be received over the life of the financial royalty asset relative to the initial acquisition price. The yield, which is calculated at the end of each reporting period and applied prospectively, is then recognized via accretion into our income at the effective rate of return over the expected life of the financial royalty asset.

The measurement of income from our financial royalty assets requires significant judgments and estimates, including management’s judgment in forecasting the expected future cash flows of the underlying royalties and the expected duration of each financial royalty asset. Our cash flow forecasts are updated each reporting period primarily using sell-side equity research analysts’ consensus sales estimates. We then calculate our expected royalty receipts by applying our royalty terms to these consensus sales forecasts. As we update our forecasted cash flows on a periodic basis and recalculate the present value of the remaining future cash flows, any shortfall when compared to the carrying value of the financial royalty asset is recorded directly in the condensed consolidated statements of operations as non-cash provision expense. If, in a subsequent period, there is an increase in expected cash flows or if actual cash flows are greater than cash flows previously expected, we reverse the provision expense previously recorded in part or in full by recording a non-cash credit to the provision, or provision income.

As a result of the non-cash charges associated with applying the effective interest method accounting methodology to our financial royalty assets, our condensed consolidated statements of operations activity can be volatile and unpredictable. Small declines in sell-side equity research analysts’ consensus sales forecasts over a long time horizon can result in an immediate non-cash income statement expense recognition, even though the applicable cash inflows will not be realized for many years into the future. For example, in late 2014 we acquired the cystic fibrosis franchise and shortly after, declines in near-term sales forecasts of sell-side equity research analysts caused us to recognize non-cash provision expense in our condensed consolidated statements of operations. Over the course of the next 10 quarters, we continued to recognize non-cash provision expense because of these changes in sales forecasts, ultimately reaching a peak cumulative allowance of $1.30 billion by September 30, 2017. With the approval of Vertex’s Trikafta, in October 2019, sell-side equity research analysts’ consensus sales forecasts increased to reflect the larger addressable market and the extension of the expected duration of the Trikafta royalty, resulting in the reversal of the remaining $1.10 billion cumulative allowance. The recognition of the associated non-cash provision income of $1.10 billion in 2019 was not tied to royalty receipts, but rather to the increase in sales forecasts due to the U.S. Food and Drug Administration (“FDA”) approval of Trikafta. This example illustrates the volatility caused by our accounting model in our condensed consolidated statements of operations.

We believe there is no direct correlation between income from financial royalty assets and royalty receipts due to the nature of the accounting methodology applied for financial royalty assets. Further, income from financial royalty assets and the provision for changes in expected cash flows related to these financial royalty assets can be volatile and unpredictable.

Our operations have historically been financed primarily with cash flows generated by our royalties. Given the importance of cash flows and their predictability to management’s operation of the business, management uses Portfolio Receipts (as defined below) as a primary measure of our operating performance. See “—Portfolio Overview” for additional discussion regarding Portfolio Receipts.

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Understanding Our Results of Operations

We report non-controlling interests related to the portion of ownership interests of consolidated subsidiaries not owned by us and which are attributable to:

1. The Legacy Investors Partnerships’ ownership of approximately 18% in Old RPI, which is the only remaining historical non-controlling interest that existed prior to our IPO. The value of this non-controlling interest will continue to decline over time as the assets in Old RPI expire. The Legacy Investors Partnerships are referred to as the “legacy non-controlling interests.”

2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”). RP Holdings Class B Interests are exchangeable into our Class A ordinary shares. As the Continuing Investors Partnerships conduct exchanges, the Continuing Investors Partnerships’ indirect ownership in RP Holdings decreases and the value of this non-controlling interest decreases.

3. Pablo Legorreta’s ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (“Founder’s Equity”).

Equity Performance Awards (“EPAs”) represent 20% of the Net Economic Profit (as defined below) generated from investments made during each two-year investment period (each, a “Portfolio”). Net Economic Profit is defined as the aggregate cash receipts for all new portfolio investments in a Portfolio less Total Expenses, which is defined as interest expense, operating expense and recovery of acquisition cost related to that Portfolio. Distributions of EPAs occur only upon the satisfaction of specified performance and return thresholds. EPAs are generally settled in RP Holdings’ Class B Interests, which are immediately exchanged upon issuance for Class A ordinary shares. A portion of the EPAs may be paid in cash as a tax advance to cover income tax obligations incurred by the beneficial owners of the RP Holdings Class C Special Interest.

Mr. Legorreta granted ownership units in the entities that hold the RP Holdings Class C Special Interest to certain employees of RPM, who became employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings, in connection with the Internalization. These grants allow such employees to participate on a pro rata basis in the economic returns of the EPAs for a specific Portfolio (the “Employee EPAs”). Prior to the Internalization, Founder’s Equity, which included the Employee EPAs, was accounted for as an equity transaction and recorded as non-controlling interest. Following the Internalization, Founder’s Equity, which no longer includes Employee EPAs, continues to be accounted as non-controlling interest.

4. The Sellers’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class E ordinary shares (the “RP Holdings Class E Interests”). In connection with the Internalization, we issued 24.5 million RP Holdings Class E Interests, subject to vesting conditions, to the Sellers (the “Holders of RP Holdings Class E Interests”) as part of the transaction considerations. Upon vesting, the RP Holdings Class E Interests become exchangeable on a one-for-one basis for Class A ordinary shares, and upon such exchange, the value of this non-controlling interest decreases.

The Continuing Investors Partnerships, the Founder’s Equity and the Holders of RP Holdings Class E Interests, collectively, are referred to as the “continuing non-controlling interests.”

Total income and other revenues

Total income and other revenues is primarily comprised of interest income from our financial royalty assets and royalty income generally arising from successful commercialization of products developed through research and development (“R&D”) funding arrangements. Most of our royalties are classified as financial assets as our ownership rights are generally passive in nature.

The royalty payor that accounted for greater than 10% of our total income and other revenues is shown in the table below:

For the Three Months Ended March 31,
Royalty Payor Royalty 2026 2025
Vertex Cystic fibrosis franchise 34  % 34  %

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Income from financial royalty assets

Our financial royalty assets represent investments in cash flow streams with yield components that most closely resemble loans measured at amortized cost under the effective interest method. We calculate the effective interest rate using forecasted expected cash flows to be received over the life of the royalty asset relative to the initial acquisition price. Interest income is recognized at the effective rate of return over the expected life of the asset, which is calculated at the end of each reporting period and applied prospectively. As changes in sell-side equity research analysts’ consensus sales estimates are updated on a quarterly basis, the effective rate of return changes. For example, if sell-side equity research analysts’ consensus sales forecasts increase, the yield to derive income on a financial royalty asset will increase and result in higher income for subsequent periods.

Variables affecting the recognition of interest income from financial royalty assets under the prospective effective interest method include any one of the following: (1) additional acquisitions, (2) changes in expected cash flows of the underlying pharmaceutical products, derived primarily from sell-side equity research analysts’ consensus sales forecasts, (3) regulatory approval of additional indications which leads to new cash flow streams, (4) changes to the estimated duration of the royalty (e.g., patent expiration date), (5) changes in amounts and timing of projected royalty receipts and milestone payments and (6) changes in the portion of sales that are subject to the royalty, which is referred to as royalty bearing sales. Our financial royalty assets are directly linked to sales of underlying pharmaceutical products whose life cycle typically peaks at a point in time, followed frequently by declining sales trends due to the entry of generic competition, resulting in natural declines in the asset balance and periodic interest income over the life of our royalties. The recognition of interest income from royalties requires management to make estimates and assumptions around many factors, including those impacting the variables noted above.

Other royalty income and revenues

Other royalty income and revenues primarily includes income from financial royalty assets that have been fully amortized and income from synthetic royalties and milestones arising out of R&D funding arrangements. Occasionally, a royalty asset may be amortized on an accelerated basis due to collectability concerns, which, if resolved, may result in future cash collections when no financial royalty asset remains. Similarly, we may continue to collect royalties on a fully amortized financial royalty asset beyond the estimated duration. In each scenario where a financial royalty asset has been fully amortized, income from such royalty is recognized as Other royalty income and revenues .

Provision for changes in expected cash flows from financial royalty assets

The Provision for changes in expected cash flows from financial royalty assets includes the following:

• non-cash expense or income related to the current period activity resulting from adjustments to the cumulative allowance for changes in expected cash flows; and
• non-cash expense or income related to the provision for current expected credit losses, which reflects the activity for the period, primarily due to new financial royalty assets with limited protective rights and changes to cash flow estimates for financial royalty assets with limited protective rights.

As discussed above, income is accreted on our financial royalty assets using the effective interest method. As we update our forecasted cash flows on a periodic basis and recalculate the present value of the remaining future cash flows, any shortfall when compared to the carrying value of the financial royalty asset is recorded directly in the condensed consolidated statements of operations through the line item Provision for changes in expected cash flows from financial royalty assets . If, in a subsequent period, there is an increase in expected cash flows or if actual cash flows are greater than cash flows previously expected, we reverse the provision expense previously recorded in part or in full by recording a credit to the provision, or provision income.

The same variables and management’s estimates affecting the recognition of interest income on our financial royalty assets noted above also directly impact the provision.

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Provision for credit losses on unfunded commitments

The provision for credit losses on unfunded commitments, a non-cash item, represents the current expected credit losses on the unfunded portions of our funding arrangements with Revolution Medicines, Inc. (“Revolution Medicines”). Because we have limited protective rights with respect to each unfunded portion once the committed funding is provided, we are required to recognize an allowance for current expected credit losses based on our estimate of probability of future funding. We estimate this allowance using the probability of default and loss given default method. We are required to reassess our estimate of current expected credit losses as of each reporting date and any subsequent change to such allowance, which can be income or expense, is reflected within Provision for credit losses on unfunded commitments in the condensed consolidated statements of operations.

R&D funding expense

R&D funding expense consists of certain development-stage funding payments that we have made to counterparties to acquire royalties or milestones on product candidates. The payments can be made on an upfront basis, upon pre-approval milestones or over time as the related product candidates undergo clinical trials.

General and administrative expenses

Prior to the Internalization, the most significant component of general and administrative (“G&A”) expenses was the Management Fees (as defined below). Under the Legacy Management Agreement, we paid a quarterly operating and personnel payment to RPM or its affiliates equal to 6.5% of the cash receipts from Royalty Investments (as defined in the Legacy Management Agreement) and 0.25% of the value of our security investments under GAAP as of the end of such quarter (“Management Fees”).

Following the Internalization, we no longer pay Management Fees; instead, employee compensation expenses represent the most significant component of G&A expenses. Employee compensation includes cash-based and share-based expenses. Share-based compensation expenses arising from the Internalization primarily include the following:

1. Approximately 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $755.4 million, which are expensed over vesting periods on a straight-line basis of generally five to nine years. As of March 31, 2026, we had $609.8 million of unrecognized compensation expense related to 18.4 million RP Holdings Class E Interests that are expected to vest over a weighted average period of 5.3 years.

2. The vesting of the Employee EPAs over their remaining service periods and the subsequent change in their fair value. The fair value of the Employee EPAs is driven by the performance of the investments within the Portfolio and will fluctuate based on the timing and amount of investments made during the investment period as well as the actual and expected returns on the investments.

Additionally, as each new Portfolio commences after the Internalization, any related Employee EPAs will also be recognized as share-based compensation expense over the required service periods of generally four years and included within General and administrative expenses in the condensed consolidated statement of operations. Lastly, G&A expenses include rent, legal fees and other expenses for professional services.

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Equity in earnings of equity method investees

Equity in earnings of equity method investees primarily includes the results of our share of income or loss from the following non-consolidated affiliates:

1. Legacy SLP Interest. In connection with the Exchange Offer, we acquired an equity method investment from the Continuing Investors Partnerships in the form of a special limited partnership interest in the Legacy Investors Partnerships (the “Legacy SLP Interest”) in exchange for issuing shares in our subsidiary. The Legacy SLP Interest entitles us to the equivalent of performance distribution payments that would have been paid to the general partner of the Legacy Investors Partnerships and a performance income allocation on a similar basis. As the Legacy Investors Partnerships no longer participate in investment opportunities, the value of the Legacy SLP Interest is expected to decline over time.

2. The Avillion Entities. The Avillion Entities (as defined below) partner with global biopharmaceutical companies to perform R&D in exchange for success-based milestones or royalties if products are commercialized. Our investments in Avillion Financing I, LP (“Avillion I”) and BAv Financing II, LP (“Avillion II” and together with Avillion I, the “Avillion Entities”) are accounted for using the equity method.

Other expense, net

Other expense, net primarily includes the changes in fair value of our equity securities and available for sale debt securities, including related forwards and funding commitments, and interest income.

Net income attributable to non-controlling interests

The net income attributable to non-controlling interests includes income attributable to the legacy non-controlling interests and the continuing non-controlling interests. Since the Legacy Investors Partnerships no longer participate in investment opportunities, the related net income attributable to the legacy non-controlling interests is expected to continue to decline over time as the assets held by Old RPI mature.

The net income attributable to the continuing non-controlling interests related to the Continuing Investors Partnerships and the Holders of RP Holdings Class E Interests is expected to decline over time if the investors who indirectly own the RP Holdings Class B Interests and RP Holdings Class E Interests, respectively, conduct exchanges for our Class A ordinary shares.

Net income attributable to non-controlling interests above can fluctuate significantly from period to period, primarily driven by volatility in the income statement activity of the respective underlying entity as a result of the non-cash charges associated with applying the effective interest accounting methodology to our financial royalty assets as described in the section titled “Understanding Our Financial Reporting.”

Further, the net income attributable to the continuing non-controlling interests includes EPAs attributable to Founder’s Equity.

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Results of Operations

Our historical results of operations for 2025 have been recast to reflect the adoption of ASU 2025-07 by removing the losses previously recognized on derivative. The comparison of our historical results of operations is as follows (in thousands):

For the Three Months Ended March 31, Change
2026 2025 $ %
Income and other revenues
Income from financial royalty assets $ 594,992  $ 539,490  55,502  10.3 
Other royalty income and revenues 35,584  28,757  6,827  23.7 
Total income and other revenues 630,576   568,247   62,329   11.0 
Operating (income)/expense
Provision for changes in expected cash flows from financial royalty assets (197,485) (127,140) (70,345) 55.3 
Provision for credit losses on unfunded commitments (3,700) —  (3,700) n/a
Research and development funding expense 39,790  50,500  (10,710) (21.2)
General and administrative expenses 159,490  110,705  48,785  44.1 
Financial royalty asset impairment 69,443  —  69,443  n/a
Total operating expense, net 67,538   34,065   33,473   98.3 
Operating income 563,038   534,182   28,856   5.4 
Other (income)/expense
Equity in earnings of equity method investees (21,758) (6,443) (15,315) 237.7 
Interest expense 93,722  65,261  28,461  43.6 
Other expense, net 22,818  40,931  (18,113) (44.3)
Total other expense, net 94,782   99,749   (4,967) (5.0)
Consolidated net income 468,256   434,433   33,823   7.8 
Net income attributable to non-controlling interests 173,566  195,084  (21,518) (11.0)
Net income attributable to Royalty Pharma plc $ 294,690   $ 239,349   55,341   23.1 

Total income and other revenues

Income from financial royalty assets

Income from financial royalty assets by top products is as follows, in order of contribution to income for the first quarter of 2026 (in thousands):

For the Three Months Ended March 31, Change
2026 2025 $ %
Cystic fibrosis franchise $ 211,981  $ 195,115  16,866  8.6 
Evrysdi 55,715  51,777  3,938  7.6 
Tremfya 46,690  38,125  8,565  22.5 
Voranigo 43,790  30,526  13,264  43.5 
Trelegy 39,072  34,777  4,295  12.4 
Tysabri 26,968  31,327  (4,359) (13.9)
Other products 170,776  157,843  12,933  8.2 
Total income from financial royalty assets $ 594,992   $ 539,490   55,502   10.3 

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Income from financial royalty assets increased by $55.5 million, or 10.3%, in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to $19.3 million of interest income from Imdelltra, which was acquired in the third quarter of 2025 and is reflected within other products in the above table, as well as increases in interest income from the cystic fibrosis franchise a nd Voranigo. The increase in income from the cystic fibrosis franchise was primarily driven by higher interest income following the reversal of the allowance for changes in expected cash flows related to the FDA approval of Alyftrek in the fourth quarter of 2024. The increase from Voranigo reflects the asset’s strong performance since its FDA approval in August 2024.

Other royalty income and revenues

Other royalty income and revenues increased by $6.8 million, or 23.7%, in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by income from fully amortized financial royalty assets.

Provision for changes in expected cash flows from financial royalty assets

Provision activity is a combination of income and expense items. The provision breakdown by royalty asset (exclusive of the provision for current expected credit losses) based on the largest contributors to each period’s provision income or expense (in thousands) is as follows:

For the Three Months Ended March 31, 2026 For the Three Months Ended March 31, 2025
Royalty Royalty
Evrysdi $ (104,480) Cystic fibrosis franchise $ (234,421)
Tysabri (91,388) Trelegy (66,647)
Xtandi (41,679) Xtandi (20,799)
Trelegy (17,356) Evrysdi 122,301 
Adstiladrin 56,226  Tremfya 61,048 
Other 8,242  Other 24,884 
Total provision, exclusive of provision for credit losses (190,435) Total provision, exclusive of provision for credit losses (113,634)
Provision for current expected credit losses (7,050) Provision for current expected credit losses (13,506)
Total provision $ (197,485) Total provision $ (127,140)

In the first quarter of 2026, we recorded provision income of $197.5 million, comprised of $190.4 million in provision income for changes in expected cash flows and $7.1 million in provision income for current expected credit losses. We recorded provision income for changes in expected cash flows primarily related to Evrysdi, Tysabri and Xtandi due to increases in sell-side equity research analysts’ consensus sales forecasts, partially offset by provision expense related to Adstiladrin due to changes in sales forecasts.

In the first quarter of 2025, we recorded provision income of $127.1 million, comprised of $113.6 million in provision income for changes in expected cash flows and $13.5 million in provision income for current expected credit losses. We recorded provision income for changes in expected cash flows primarily related to cystic fibrosis franchise due to increase in sell-side equity research analysts’ consensus sales forecasts. The provision income for changes in expected cash flows was partially offset by provision expense related to Evrysdi due to declines in sell-side equity research analysts’ consensus sales forecasts.

Provision for credit losses on unfunded commitments

Provision for credit losses on unfunded commitments was $3.7 million in the first quarter of 2026, related to our funding arrangement with Revolution Medicines entered into in June 2025.

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R&D funding expense

R&D funding expense decreased by $10.7 million, or 21.2% in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to lower R&D funding for litifilimab, partially offset by R&D expense for TEV-’408.

G&A expenses

G&A expenses increased by $48.8 million, or 44.1%, in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by additional share-based compensation expenses recognized following the Internalization which was completed on May 16, 2025. G&A expenses in the first quarter of 2025 primarily consisted of Management Fees, including a $33.0 million payment related to the sale of the MorphoSys Development Funding Bonds.

Financial royalty asset impairment

We recognized a financial royalty asset impairment charge of $69.4 million in the first quarter of 2026 related to Tazverik following announcements by Ipsen and Eisai in March 2026 of the voluntary withdrawal of Tazverik across all indications and markets. We did not recognize impairment charges in the first quarter of 2025.

Equity in earnings of equity method investees

Equity in earnings of equity method investees increased by $15.3 million, or 237.7%, in the first quarter of 2026 as compared to the first quarter of 2025. Equity in earnings of equity method investees in the first quarter of 2026 was primarily driven by a $15.2 million gain related to our portion of the Airsupra sales-based milestone that the Avillion Entities received from AstraZeneca. Equity in earnings of equity method investees in the first quarter of 2025 was primarily driven by an income allocation from the Legacy SLP Interest of $8.2 million.

Interest expense

Interest expense increased by $28.5 million, or 43.6%, in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by the issuance of $2.0 billion of senior unsecured notes in September 2025 and the $380 million term loan that we assumed as part of the Internalization. The weighted average coupon rate on our senior unsecured notes outstanding as of March 31, 2026 and 2025 was 3.75% and 3.06%, respectively.

Refer to the “Liquidity and Capital Resources” section for additional discussion of our debt financing arrangements.

Other expense, net

Other expense, net of $22.8 million in the first quarter of 2026 was primarily comprised of $20.2 million of losses on equity securities and $6.7 million of losses on available for sale debt securities primarily driven by the changes in fair value of the Cytokinetics Funding Arrangements, partially offset by $6.2 million of interest income earned on cash and cash equivalents.

Other expense, net of $40.9 million in the first quarter of 2025 was primarily comprised of $45.9 million of losses on equity securities partially offset by $11.3 million of interest income on cash and cash equivalents.

Net income attributable to non-controlling interests

Net income attributable to Legacy Investors Partnerships decreased by $13.6 million in the first quarter of 2026 as compared to first quarter of 2025, primarily driven by lower net income attributable to Old RPI as a result of impairment charges related to Tazverik.

Net income attributable to Continuing Investors Partnerships was relatively flat in the first quarter of 2026 as compared to first quarter of 2025.

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Net income attributable to Founder’s Equity decreased by $25.6 million in the first quarter of 2026 as compared to first quarter of 2025, primarily driven by the Internalization completed in May 2025. In the first quarter of 2025, net income attributable to Founder’s Equity included both Mr. Legorreta’s retained EPAs and employee participation in the EPAs. In the first quarter of 2026, Founder’s Equity includes only Mr. Legorreta’s retained EPAs.

Net income attributable to RP Holdings Class E Interests was $16.4 million in the first quarter of 2026. The RP Holdings Class E Interests were issued in connection with the Internalization.

Portfolio Overview

Our business model is different from that of traditional operating companies in the biopharmaceutical industry. Our operating performance is a function of our liquidity as our operations have historically been financed primarily with cash flows generated by our royalties. We use the cash generated by our existing royalties to fund investments in new royalties. We consider a variety of metrics in assessing the performance of our business. Portfolio Receipts is a key performance metric that represents our ability to generate cash from our portfolio investments, the primary source of capital that we can deploy to make new portfolio investments. Portfolio Receipts also enables management to better analyze our liquidity and long-term growth prospects by providing a more granular product-by-product presentation of the underlying cash generation of our royalty investments.

Portfolio Receipts is defined as the sum of royalty receipts and milestones and other contractual receipts. Royalty receipts include variable payments based on sales of products, net of contractual payments to the legacy non-controlling interests, that are attributed to us (“Royalty Receipts”). Milestones and other contractual receipts include sales-based or regulatory milestone payments and other fixed contractual receipts, net of contractual payments to the legacy non-controlling interests, that are attributed to us. Portfolio Receipts does not include royalty receipts and milestones and other contractual receipts that were received on an accelerated basis under the terms of the agreement governing the receipt or payment. Portfolio Receipts also does not include proceeds from equity securities or proceeds from purchases and sales of marketable securities, both of which are not central to our fundamental business strategy.

Portfolio Receipts is calculated as the sum of the following line items from our GAAP condensed consolidated statements of cash flows: Cash collections from financial royalty assets , Cash collections from intangible royalty assets , Other royalty cash collections , Proceeds from available for sale debt securities and Distributions from equity method investees less Distributions to legacy non-controlling interests - Portfolio Receipts , which represent contractual distributions of Royalty Receipts, milestones and other contractual receipts to the Legacy Investors Partnerships.

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Our portfolio consists of royalties on more than 35 marketed therapies and 19 development-stage product candidates. The therapies in our portfolio address therapeutic areas such as rare diseases, neuroscience, oncology, hematology, immunology, respiratory and diabetes, and are delivered to patients across both primary and specialty care settings. The table below shows Portfolio Receipts, including Royalty Receipts by product and milestones and other contractual receipts, in order of contribution to total Royalty Receipts for the first quarter of 2026 (in thousands):

Products
Marketer(s) Therapeutic Area For the Three Months Ended March 31, Change
2026 2025 $ %
Cystic fibrosis franchise (1)
Vertex Rare disease $ 253,254  $ 249,731  3,523  1.4 
Trelegy GSK Respiratory 97,681  85,235  12,446  14.6 
Evrysdi Roche Rare disease 79,657  52,654  27,003  51.3 
Tremfya Johnson & Johnson Immunology 63,983  35,647  28,336  79.5 
Tysabri Biogen Neuroscience 59,338  61,066  (1,728) (2.8)
Xtandi Pfizer, Astellas Oncology 51,028  52,478  (1,450) (2.8)
Voranigo Servier Oncology 46,839  19,542  27,297  139.7 
Imbruvica AbbVie, Johnson & Johnson Oncology 37,911  45,852  (7,941) (17.3)
Cabometyx/Cometriq Exelixis, Ipsen, Takeda Oncology 22,593  20,668  1,925  9.3 
Promacta Novartis Hematology 17,183  44,189  (27,006) (61.1)
Imdelltra Amgen Oncology 16,736  —  16,736  n/a
Trodelvy Gilead Oncology 13,430  12,605  825  6.5 
Spinraza Biogen Rare disease 11,689  12,891  (1,202) (9.3)
Amvuttra Alnylam Rare disease 8,266  —  8,266  n/a
Other products (2)
107,588  95,721  11,867  12.4 
Royalty Receipts
$ 887,176  $ 788,279  98,897  12.5 
Milestones and other contractual receipts
38,186  51,013  (12,827) (25.1)
Portfolio Receipts (3)
$ 925,362   $ 839,292   86,070   10.3 

(1) The cystic fibrosis franchise includes the following approved products: Kalydeco, Orkambi, Symdeko/Symkevi, Trikafta/Kaftrio and Alyftrek.
(2) Other products primarily include Royalty Receipts on the following products: Crysvita, Emgality, Erleada, Farxiga/Onglyza, IDHIFA, Niktimvo, Nurtec ODT, Orladeyo, Skytrofa, Soliqua, Yorvipath and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investees on the condensed consolidated statements of cash flows.
(3) Portfolio Receipts for 2025 does not include the $511 million of proceeds from our sale of the MorphoSys Development Funding Bonds because it was treated as an asset sale.

Analysis of Portfolio Receipts

The key drivers of Portfolio Receipts are discussed below:

• Cystic fibrosis franchise – Royalty Receipts from the cystic fibrosis franchise, including Kalydeco, Orkambi, Symdeko/Symkevi, Trikafta/Kaftrio and Alyftrek, which is marketed by Vertex for the treatment of cystic fibrosis, increased by $3.5 million in the first quarter of 2026 as compared to the first quarter of 2025. The increase was primarily due to strong cystic fibrosis patient demand, a modest benefit from channel inventory and higher net prices in the United States, while ex-U.S. saw solid performance across multiple geographies.

• Trelegy – Royalty Receipts from Trelegy, which is marketed by GSK for the maintenance treatment of chronic obstructive pulmonary disease and asthma, increased by $12.4 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by continued strong volume growth across all regions, reflecting patient demand, single inhaler triple therapy class growth, and increased market share.

• Evrysdi – Royalty Receipts from Evrysdi, which is marketed by Roche for the treatment of spinal muscular atrophy, increased by $27.0 million in the first quarter of 2026 as compared to the first quarter of 2025, attributable to growth in international markets due to tender-related buying and strong performance in Europe. Additionally, Royalty Receipts benefited from the incremental royalties we acquired in the fourth quarter of 2025.

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• Tremfya – Royalty Receipts from Tremfya, which is marketed by Johnson & Johnson for the treatment of plaque psoriasis, active psoriatic arthritis and inflammatory bowel disease, increased by $28.3 million in the first quarter of 2026 as compared to the first quarter of 2025 driven by market share gains and market growth, including strong uptake across recently launched inflammatory bowel disease indications.

• Tysabri – Royalty Receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, decreased by $1.7 million in the first quarter of 2026 as compared to the first quarter of 2025, due to increased competition in rest of world, partially offset by continued resilience in the United States.

• Xtandi – Royalty Receipts from Xtandi, which is marketed by Pfizer and Astellas for the treatment of prostate cancer, decreased by $1.5 million in the first quarter of 2026 as compared to the first quarter of 2025, attributable to lower sales in the United States, partially offset by continued growth across ex-U.S. regions.

• Voranigo – Royalty Receipts from Voranigo, which is marketed by Servier for the treatment of low-grade glioma, increased by $27.3 million in the first quarter of 2026 compared to first quarter of 2025, primarily driven by its strong launch in the United States.

• Imbruvica – Royalty Receipts from Imbruvica, which is marketed by AbbVie and Johnson & Johnson for the treatment of blood cancers and chronic graft versus host disease, decreased by $7.9 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to continued competitive dynamics and Medicare Part D redesign.

• Cabometyx/Cometriq – Royalty Receipts from Cabometyx/Cometriq, which is marketed by Exelixis, Ipsen and Takeda, primarily for the treatment of advanced renal cell carcinoma, hepatocellular carcinoma and neuroendocrine tumors, increased by $1.9 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by continued demand growth from uptake in combination with Opdivo in first-line renal cell carcinoma and previously treated advanced neuroendocrine tumors.

• Promacta – Royalty Receipts from Promacta, which is marketed by Novartis for the treatment of chronic immune thrombocytopenia purpura and aplastic anemia, decreased by $27.0 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to generic competition as well as revenue deduction adjustments in the United States.

• Imdelltra – Royalty Receipts from Imdelltra, which is marketed by Amgen for the treatment of extensive-stage small cell lung cancer (“ES-SCLC”) were $16.7 million in the first quarter of 2026, primarily driven by its strong global launch as it establishes a new standard of care in second-line ES-SCLC. We acquired the Imdelltra royalty in the third quarter of 2025 and began receiving Royalty Receipts in the fourth quarter of 2025.

• Trodelvy – Royalty Receipts from Trodelvy, which is marketed by Gilead for the treatment of metastatic triple-negative breast cancer and pre-treated hormone receptor-positive, human epidermal growth factor receptor 2 (“HER2”)-negative metastatic breast cancer, increased by $0.8 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily driven by higher demand in breast cancer treatment.

• Spinraza – Royalty Receipts from Spinraza, which is marketed by Biogen for the treatment of spinal muscular atrophy (“SMA”), decreased by $1.2 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to higher sales in the first nine months of 2025 as compared to the first nine months of 2024, which resulted in less royalty-bearing sales in the fourth quarter of 2025 due to the $1.5 billion sales cap, which was achieved in both years.

• Amvuttra – Royalty Receipts from Amvuttra, which is marketed by Alnylam for the treatment of transthyretin (“TTR”) amyloidosis with cardiomyopathy and for hereditary TTR amyloidosis with polyneuropathy were $8.3 million in the first quarter of 2026, mainly due to strong performance in the United States following its second quarter 2025 launch in transthyretin amyloidosis cardiomyopathy. We acquired the Amvuttra royalty in the fourth quarter of 2025 and began receiving Royalty Receipts in the first quarter of 2026.

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