Hello, everyone. This is Marta Campos, Head of Finance for Rovi. Welcome to our company's review of business results for the first half of 2026. Before we begin, let me remind you that today's presentation and associated documentation are available on the investor relations section of Rovi's website. Please note that the information presented in this call contains forward-looking statements based on our current beliefs and expectations. Actual results could materially differ due to known and unknown risks, uncertainties and other factors, we undertake no obligation to update or revise any of the statements. Moving to today's agenda, Juan López-Belmonte, Rovi's Chairman and CEO, will discuss on our business performance for the quarter. Javier López-Belmonte, Rovi's Deputy Chairman and Chief Financial Officer, will then review financial results. The presentation will be followed by a Q&A session.
If you want to ask any questions during the presentation, please don't hesitate to send them through the question button on the platform. With that, I thank you for your presence here today, I will now turn the call over to Juan.
Thank you, Marta, and thanks to everyone for joining us today. I will provide the strategic context, and Javier will then take you through the detailed financials. Let me start with the key highlights of the first half of 2026 and our outlook for the year. Total revenue increased by 13% to EUR 357 million in the first half of the year. Operating revenue reached EUR 344.2 million, representing a 9% increase compared to the first half of 2025, mainly driven by the strong performance of our CDMO business, which grew 38% during the period. Gross profit increased by 21% to EUR 237.1 million, reflecting a gross margin improvement of 6.5 percentage points to 68.9%.
Before moving on, I would also like to highlight that on April 1st, we successfully completed the acquisition of the injectable manufacturing facility in Phoenix, Arizona, strengthening an industrial footprint in the U.S. and reinforcing our position as a global CDMO player. The acquisition generated a bargain purchase gain or badwill of EUR 62.4 million. EBITDA increased by 85% to EUR 121.2 million. Excluding the impact of the badwill, EBITDA decreased by 10% to EUR 58.8 million. Based on the current evolution of the business and the latest information available, we maintain our 2026 guidance and continue to expect operating revenue to increase by a low to mid-single- digit % compared to 2025. Moving to our specialty pharmaceutical business, sales in this division increased by 0.2% to EUR 237.8 million, driven by strong growth in Okedi, hospital products, and Neparvis.
I would now like to focus on the performance of the heparin business, a key area accounted for approximately 38% of the group's operating revenues in the first half of this year. The heparin franchise generated sales of EUR 130.1 million, down 4% year-on-year, while low molecular weight heparin sales declined 5% to EUR 125.3 million, mainly due to lower bemiparin sales, driven by high inventory levels for an international partners. Within the low molecular weight heparin franchise, sales of enoxaparin biosimilar reached EUR 78.6 million in the first half of 2026, representing a 2% year-on-year decline, while bemiparin sales amounted to EUR 46.7 million, down 9% year-on-year. It is important to highlight that although international bemiparin sales were weak in the first quarter, they show a strong recovery in the second quarter, increasing by 52% versus Q2 2025 and more than tripling compared with Q1 2026.
As a result of the recovery in international bemiparin sales during the second quarter, we now expect bemiparin sales to grow by a low- single-digit % in 2026 compared with 2025. We have seen an improvement in our expectations for the enoxaparin biosimilar, supported by stronger than expected performance in several markets. We have improved our outlook for the low molecular weight heparin franchise and now expect sales to decline by a mid-single digit percentage this year compared with our previous guidance of high single-digit decline. We continue to expect a year-on-year decline, primarily reflecting lower order volumes expected from partners since they hold high levels of stocks from the previous year, as well as ongoing pricing pressure across the sector. Preserving and improving the profitability of the heparin franchise remains a key priority for Rovi.
To mitigate pricing pressure, we continue to implement efficiency initiatives across the value chain. We are advancing our vertical integration strategy through the Glicopepton project, which is expected to improve cost competitiveness, increase self-sufficiency, and support the long-term sustainability of the business. We remain fully committed to the heparin franchise, which continues to be one of the historical pillars of Rovi. Through operational efficiency initiatives, vertical integration, and a broad international footprint, we believe we are well prepared to strengthen our competitive position, and support the long-term profitability of the business. Turning now to Okedi. The product remains a key growth driver with sales of EUR 34 million up 27% year-on-year. Its differentiated clinical profile continues to support a strong uptake, we remain excited to reach potential sales of between EUR 100 million-EUR 200 million in coming years.
Moving on to our CDMO business. The contract manufacturing business performed strongly, with revenue increasing by 38% to EUR 106.3 million in the first half of 2026. This growth was driven by the growth in business with existing customers following the restoration of full operational capacity at the Madrid facility after its temporary closure during the first half of 2025 to upgrade some Annex 1 GMP aspects for aseptic manufacturing. Second, the contribution of revenue generated under the supply agreement with Bristol Myers Squibb entered into in connection with acquisition of the Phoenix facility, completed on April 1st, 2026. Revenue from this customer accounted for approximately 13% of the total CDMO business revenue in the first half of 2026. We remain committed to our investment plan to strengthen our sterile fill and finish capabilities.
With ongoing capacity expansions and the recent integration of the Phoenix facility into our industrial network, Rovi is well positioned to capture long-term opportunities in high-value injectable manufacturing. Finally, our ISM platform continues to progress well. Letrozole-ISM has received FDA clearance to proceed with clinical investigations under its investigational new drug application, enabling the initiation of clinical development in the U.S., with phase III recruitment expected to start in the third quarter of 2026. Risperidone QUAR has also delivered strong phase I results and is now progressing toward phase III development, with patient enrollment expected to begin in the fourth quarter of 2026. Together, Letrozole-ISM and Risperidone QUAR further strengthen our confidence in the potential of the ISM platform and its ability to generate meaningful long-term growth opportunities for Rovi.
With that, I would like to thank you for your attention and hand over to Javier, who will take you through the financial performance for the period in more detail. Javier, over to you.
Thank you, Juan, and good morning, everyone. Before reviewing the financial statements in detail, I would like to briefly highlight two non-recurring items that affected our reported results during the first half of 2026. First, we completed the acquisition of the Phoenix manufacturing facility on April the 1st. As a result of the preliminary purchase price allocation exercise, we recognized a EUR 62.4 million bargain purchase gain or badwill, which was recorded as a non-recurring income in the income statement. Second, during the period, we concluded the tax inspection covering fiscal years between 2020 to 2022. The inspections cover all the major taxes. That means corporate income tax, VAT, and certain withholding tax matters, and has now been fully completed. Importantly, the process was concluded without any penalty proceedings.
The main impacts relate to agreed adjustments concerning the tax treatment of certain investments made to adapt manufacturing facilities Together with certain limited non-recurring expenses recognized as a result of the inspections. The outcome also led to the recognition of deferred tax assets that are expected to be recovered in future years. More broadly, the conclusion of this process provides greater visibility and certainty regarding the group's tax positions going forward. Let me now take you through our financial performance for the first half of the year, highlighting the key drivers behind our results and the progress we've made across the business. Total revenue increased by 13% to EUR 357 million. Operating revenue increased by 9% to EUR 344.2 million in the first half of 2026, mainly supported by the strong performance of the CDMO business. I will now walk you through the remainder of our P&L.
Gross profit increased by 21% to EUR 237.1 million in the first half of the year, with gross margin improving by 6.5 percentage points to 68.9%, partly reflecting the recognition of R&D grant income related to the LAISOLID project. Excluding other income, gross margin increased by 3 percentage points to 65.2%, mainly driven by the growth of the contract manufacturing business, higher contribution from Okedi, and lower heparin raw material costs. Now moving on the SG&A expenses. SG&A increased 28% to EUR 145 million in the first half of the year. Let me start now with the personnel cost. Employee benefit expenses, excluding R&D here, increased by 23% year-on-year.
This increase was mainly driven by, first, the incorporation of Rovi Phoenix into the group, second, the 3% salary increase under the new chemical industry collective agreement, and third, the hiring of additional personnel to support the continued growth of the CDMO business. Within this increase, let me highlight to you that we also recorded approximately EUR 1.6 million of non-recurring personnel-related expenses, the majority of which were associated with the tax inspection process that was concluded during the period. Therefore, excluding these non-recurrent expenses, employee benefit expenses increased by 20% year-on-year. If we turn to the other operating expenses, excluding R&D, this increased by 34% year-on-year.
The main drivers here were the inclusion, again, of Rovi Phoenix at lower comparison base in the first half of 2025 due to the temporary shutdown of the Madrid facility that was done to complete Annex I upgrades and certain non-recurrent costs related to asset write-offs and strategic projects. Excluding these non-recurrent expenses, other operating expenses increased by 28%. Overall, excluding non-recurrent items, SG&A expenses increased by 24% to EUR 140.5 million in the first half of this year. It's worth noting that Rovi Phoenix represented approximately 9% of SG&A expenses during the period. On a like-for-like basis analysis, excluding both Rovi Phoenix and non-reoccurring expenses, SG&A expenses increased by approximately 12% year-on-year versus the first half of 2025. This increase reflects both the expansion of our industrial and organizational capabilities, again, to support future growth, and a less favorable comparison base.
As I mentioned before, our Madrid facility was temporarily shut down during part of the first half of 2025 to implement Annex I GMP upgrades, resulting, therefore, in lower operating expenses in that period. Following the return to normal operations, these costs were fully reflected again in the first half of this year. Looking ahead for 2026, we continue to expect SG&A expenses, excluding Rovi Phoenix, to increase by a mid to high single-digit percentage growth compared with 2025. Regarding R&D expenses, they increased by 98% to EUR 33.3 million and were largely related to preparations for the Phase III development program of Letrozole-ISM. EBITDA totaled EUR 121.2 million in the first half of the year, with a margin of 35.2%. Excluding badwill, EBITDA decreased by 10% to EUR 58.8 million. EBIT amounted to EUR 103.2 million in the first half of this year, with a margin of 30%.
EBIT excluding badwill decreased by 20% to EUR 40.9 million. Net financial cost reached EUR 1.7 million in the first half of 2026, compared with net financial costs of EUR 1.3 million in the first half of 2025. Let me point out that the conclusion of the tax inspection covering, again, fiscal years 2020 to 2022, also had an impact on the financial result. This increase was mainly driven by higher finance cost as a result of a late payment interest associated with the tax inspection. Turning to taxes, the effective tax rate stood at 16.9% in the first half of 2026, compared with 20% in the same period of last year. The reduction in the effective tax rate was primarily driven by the non-taxable nature of badwill recognized in connection with the Phoenix acquisition.
The net profit reached EUR 84.4 million in the same period, an increase of 113% versus the first half of 2025. Well, let's now move to CapEx and cash generation. In the first half of 2026, Rovi invested EUR 30.4 million, allocated as follows: EUR 21.9 million dedicated to investments and EUR 8.5 million allocated to maintenance CapEx and other items. Cash generation was particularly strong this period. Cash flow from operating activities increased to EUR 94.3 million, compared with EUR 28 million in the first half of 2025. Free cash flow increased significantly to EUR 64.7 million, compared to EUR 7.5 million in the same period last year, highlighting both the strength of our underlying business and our ability to convert earnings into cash while continuing to invest in future growth opportunities. Our debt position.
As of June 30th, 2026, Rovi's total debt amounted to EUR 107.7 million, while gross cash increased to EUR 130.2 million. Rovi ended the first half with a net cash positive position of EUR 22.5 million, compared with a net debt of EUR 21.9 million at year-end 2025. This improvement reflects the strong cash generation of the business during the period. Our balance sheet remains solid, providing us with financial flexibility to continue investing in growth initiatives while maintaining a disciplined capital structure. On July 15th, we paid a dividend of EUR 0.9594 per share, representing approximately a 35% payout ratio policy. To conclude, we maintain our outlook for 2026 and continue to expect operating revenue growth in the low to mid- single- digit % compared to 2025.
Our priorities remain unchanged: continued growth of the CDMO business, successful integration and value creation from Phoenix, further progress in heparin vertical integration, and sustained growth of the specialty pharmaceutical franchise led by Okedi. We remain firmly committed to innovation with two phase III clinical programs underway and a clear focus on creating long-term value for shareholders. This approach reinforces our roadmap and our positioning over the medium to long term. Well, thank you very much for your attention, we are now happy to take your questions.
Thanks, Javier. If you want to ask any questions, please don't hesitate to send them through the question button on the platform. The first questions come from Patricia Cifuentes, from Bestinver. Juan, the first one is for you. What is your assessment of the German healthcare reform starting in 2027? What proportion of your total revenue is exposed to increased rebate requirements?
Good morning. Thank you, Patricia. Like most of the pharma companies today, we are currently assessing the potential impact of our products on the new German healthcare reform. When it comes to Okedi, we are right now assessing all the different scenarios, the inclusion in the German reference price system. To be honest, at present, there is not that much visibility to really quantify precisely the final impact on pricing or revenues. Just to give you at least some broad figures on what would be the impact for the company, it would be very limited. It would be only focused for our sales in Germany, which when it comes to Okedi, represented EUR 8.4 million during the first six months of 2026.
We definitely are going to continue to monitor developments, and we will communicate to the market any new information that could provide visibility on the impact in our financials. Regarding low molecular weight heparin, we believe that is excluded from the German healthcare reform. Again, this is brand new. It was approved, I believe, less than two weeks ago. There's been a lot of rumors, different expectations in terms of clawbacks, and we are all, the companies right now, just waiting to see, just after summer in September, which are going to be the detailed impact by product. Again, our limitation would be, we believe, to Okedi, and Okedi represents, in the first half of the year, EUR 8.4 million, which accounts more or less for 36% of our Okedi sales in the first six months of 2026.
Thanks, Juan. The second question from Patricia is also for you. Have the generic heparin raw material prices fully stabilized? Do you maintain your 2026 guidance for the low molecular weight heparin franchise?
Regarding the heparin raw material prices, as we have mentioned in the different last calls, we've seen a significant improvement in the market environment when it comes to prices. We still believe that there is a continuous downward trend. The current level, again, we are always buying, and we are screening the market quarters in advance before the purchasing happens. We believe that this downward trend is gradually being stabilized. We continue, we speak to our different suppliers. We are scanning the market. We believe that we are starting or we are close to reach probably the bottom end of this continuous decrease in terms of raw material prices. Regarding the guidance, we have revised our estimates, and now we expect low molecular weight heparin sales to decline by a mid-single-digit % compared with our previous expectations of high- single-digit declines.
We're very excited, and we have a lot of expectations when it comes to cost of goods efficiency with different initiatives that are right now in place, ongoing, and as well with the Glicopepton kickoff. This vertical integration should give us another edge in terms of competitiveness. We are definitely, as we have mentioned in our presentation, both Javier and myself, we are fully committed to the low molecular weight heparins. It represents 38% of our sales, and we believe that we have all the features really to place Rovi and our portfolio of heparins, both with the bemiparin and enoxaparin, to be one of the major players worldwide in this essential work.
Thanks, Juan. Javier, the third question from Patricia is for you. What progress is being made in securing new take-or-pay contracts to boost capacity utilization across your 11 Spanish aseptic lines and the upcoming Phoenix Optima line?
Good morning once again. Thanks, Patricia, for your question. As everybody knows, our current priority is to complete the integration of the remaining manufacturing lines and for sure increase their utilization levels. Optimizing capacity utilization remains our key priority on the CDMO business. You know we continue to see a strong commercial activity. Look, the second quarter for the CDMO business has been very strong, and we still see a high level of customer interest. Unfortunately, new projects typically involve lengthy evaluation and assessments and then qualification and decision-making process, so it takes time. You also know that we are not allowed to make normally press releases and an announcement. I would say that we remain as optimistic as before, We still see a tremendous Tailwind dynamics in the market, if you could say so.
Regarding the future Phoenix Optima line, again, our immediate focus is on completing its installation and validation. It's been only since the 1st of April that we could take over from BMS and take control of the actual facility. We expect the line to become operational between end of 2027, early 2028. At that moment of time, if we are successful on our manufacturing efforts, at that point, we will start manufacturing and therefore invoicing from that line from Phoenix. For sure, we are already working to secure customers for this future capacity. Let me say, and I think I have repeated this many times, we are reinforcing and hiring more people on our business development team, and I think this is one of the underlying factors why we are increasing our SG&A there. We are actively pursuing new opportunities and advancing discussions with potential customers.
Again, our main goal is that we have a gradual ramp-up in Phoenix and achieve utilization levels that are good from 2028 onwards.
Thanks, Javier. The next questions come from Juan Ros from ODDO. He has several questions on the contract from April 2024. The first one is, what exactly remains outstanding for PFS regulatory approval, and when is approval now expected? Does 2026 full-year guidance include routine PFS manufacturing revenue? Is the original 2027 PFS revenue range still valid? Javier, they are for you.
Yeah. Again, I think we stated in our first quarter results that this contract has a delay on the regulatory approval. We are both companies working, I would say, hard to get the regulatory approval. Again, this is delayed, so this is not going to change this year. As we said before in our previous quarterly results, we are not expecting any material income from this agreement. At least we are not expecting ongoing or recurring manufacturing activities from the contract this year, as we stated. This hasn't changed at all, so our current guidance is not taking into account this recurring manufacturing revenue from this agreement, as we explained last time. From next year onwards, we are working on this regulatory approval. We expect, for sure, that for next year, this agreement will have the regulatory approval. I think there's no doubt about that.
I think we are safe in the sense that we have these take-or-pay clauses, and we expect to start manufacturing next year, at least with this agreement. So there is no change in the outlook that we commented last quarter.
Thanks, Javier. The next questions come from Guilherme Sampaio from CaixaBank. The first one is for you, Javier. Could you provide more details regarding the levels of the organic year-on-year CDMO sales growth acceleration versus Q1? To what extent should this be maintained into H2?
Well, thank you, Guilherme, for your question. As I said before, I think it's been a fantastic quarter for the CDMO business. We are very proud of including Rovi Phoenix for the first time in our P&L and our statements, and the integration of Phoenix is going very well. I think this is an important fact, and I think it's an important item for the sales growth for the period. As we disclosed, revenues from Phoenix were around EUR 13.8 million revenue. So the main growth came from the existing business, and I think this is very well-diversified. There is not one single customer that hasn't been growing, and I would say that most of our main customers are growing in terms of revenues compared to the previous quarter. We also stated that first quarter was a slow quarter.
First quarter I guess that always is slower in the business, and this second quarter has picked up very well. There is no one customer to select. It's been all the portfolio. Look, we expect to keep the growth in the next coming quarters, and this will help us to achieve the guidance that we have stated.
Thanks, Javier. Juan, two questions from Guilherme for you. Could you offer some color on the weaker quarter-on-quarter performance of Okedi? How are you seeing the competitive environment evolving in schizophrenia?
Thank you, Guilherme. Good morning for you, Juan. We are extremely satisfied with Okedi's performance. The most important thing is that we are seeing a robust continuous uptake of Okedi by physicians, and it's not limited to a country, but definitely it's across most of the countries in which we have commercialized the product. Sales are strong in Spain. Sales are strong in Portugal. Sales are strong in Italy, Germany, Austria, to all our partners, with Orion in the northern countries. We are seeing really a very good momentum. Let me remind how the Okedi sales work out. We get new business from the dynamic market. That means that we're not targeting, let's say, the schizophrenia patient population. We're targeting those patients that they have to change medication for whatever reason. That's what we call the dynamic market. In that sense, we are extremely satisfied.
I think the sales force or the commercial team is doing a great job. That's why we are committed to the product, but definitely, we feel that the guidance in terms of sales that we provide, we are going to hit it. Actually, this is as well something regardless of the sales, which is really encouraging for the company, is that the product uptake by physicians is really going great. That's what makes the difference. The product works, the product fulfills the medical needs of patients and physicians. Again, as I mentioned before, which is also important, and it gives the color of the strong grounds of Okedi, which is that this is across all countries.
It's not something that it may be limited to dynamics in Italy or in Germany or in France, but we are seeing this throughout most of the countries where the product has been commercialized. We're extremely satisfied. We are going to see quarter-by-quarter different growth rates. In many cases, as I mentioned before, due to this market dynamic potentiality, and as well the schizophrenia patients on general, by nature, they are very fragile patients. We will see quarters stronger than others because we can imagine by common sense, physicians probably, they will choose certain quarters or certain months within the year to start the switch in terms of medication required by the patient, just for adherence and follow-ups to supervision. Regarding the schizophrenia market, the market is doing great. We see a continuous growth in the long-acting injectable market.
We are seeing that adherence is becoming a more and more important item. We're seeing countries like Portugal, where adherence growth is much faster than in other countries, or in the case of Spain, which is also growing stronger. Other countries which the long-acting injectable market still delivers probably not the best growth that we're expecting in terms of adherence like Germany. In general, as I mentioned before, I think the dynamics are great, and I don't see to date, with the information that we have available, any issue that might prevent Rovi to obtain the Okedi sales guidance. That's the reason why we are investing heavily on Risperidone QUAR, because probably in other quarters, we might have the chance to discuss in more detail the phase III protocol.
Again, I believe this is going to be a boost and this is going to provide Rovi the perfect product portfolio to really become as well, like in the low molecular weight heparin, to become a major global player in the long-acting injectable schizophrenia market.
Thanks, Juan. The next question comes from Chris Richardson from Jefferies. Javier, is the 13% BMS contribution a valid run rate on a quarterly basis? It is much higher than the previously communicated minimum order value from BMS.
Hi. Hi, Chris. Thanks for your question. Actually, I'm not quite sure about the 13% contribution which do you refer to. What I can tell you is, again, I think you are right. I think it's important to highlight it in this conference call, we've just taken over Phoenix, and we are extremely excited about the opportunity, not only because of the price we paid Also the outstanding opportunities that lay ahead of us in the U.S. Coming back to your question, I think I stated very clear that the agreement, which is at least a take-or-pay agreement, it's at least $50 million U.S. dollars revenue per year coming from BMS. I would say that's the baseline for Phoenix and for this Bristol Myers contribution. You could take that as a baseline.
If you do some numbers, Israel, right, we have a higher income coming from Rovi Phoenix this quarter. This is exciting because it's just the first quarter. From a cost view side or from a safe side, you can consider this $50 million revenue per year as a baseline. If good news comes, it will be slightly higher during this first year.
Thanks, Javier. The next questions come from Jaime Escribano from Grupo Santander and are related to heparins. Juan , they are for you. If heparin outlook improved, why not improving full year 2026 guidance? How is the competition environment in heparins same as in the first quarter of 2026, improving, worsening?
Thank you, Jaime, for your question. The heparin competitive landscape remains the same. Basically, it's Rovi with Chinese players betting for this market. Sanofi is suffering tremendous sales decline across most markets. In some markets, Sanofi has even almost disappeared, like the case of Germany. We are maintaining this competitive edge versus the Chinese heparin players. The landscape in that sense, it remains very stable. Actually, we don't see that many other players coming into place. Probably we'll see in the near future some raw material Chinese suppliers that they may decide to launch the product outside China. Again, we don't feel scared or afraid, or we don't think that Rovi's position in the market will be jeopardized by the entry of new competitors.
The heparin business, the low molecular weight heparin business, answering your first part of the question, it's mainly focused on hospitals and retail market. That's why sometimes we suffer quarterly variations. It's a very dynamic market. It's an acute product. Again, compared to other product portfolios that we have, which attends chronic pathologies like Neparvis or Okedi, which we see a continuous and very stable sales graph or sales evolution. Low molecular weight heparins, by definition, they treat thrombo events. It's a blood thinner product, it targets acute symptoms, whether the patient is based on the hospital or whether he has been discharged to follow the treatment for 10, maximum 30 days at the different health centers. Again, we don't feel that today changing.
We have changed the guidance, as I mentioned before, in terms of growth to the low molecular weight heparins, but we'd rather prefer to remain cautious. As Javier has mentioned, we see robust evolution in this second quarter in heparins, in the CMO business. We see as well that Okedi is performing well, but we also have to take into account that we have the Neparvis contract resolution in October this year, which accounts for an important or a significant sales revenue. Again, that all together, although we do believe that the heparins, as I mentioned before, both bemiparin and enoxaparin, it looks like it's going to remain strong, we'd rather prefer to be cautious on the global guidance of the company.
Thank you very much, Juan. Thank you very much for your participation. The Rovi IR team will answer the pending questions as soon as possible. Thank you again for your assistance, and have a very nice summer.