Why Is Jazz (JAZZ) Down 6.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have lost about 6.9% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Jazz due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

Q2 Earnings Miss, Sales Beat Estimates

Jazz Pharmaceuticals reported second-quarter 2026 adjusted EPS of $5.71, which missed the Zacks Consensus Estimate of $6.04. This shortfall primarily reflected $77 million in acquired IPR&D expenses, which reduced adjusted EPS by 94 cents.

In the year-ago quarter, the company posted an adjusted loss of $8.25 per share, largely due to a one-time charge of $905.4 million related to the acquisition of clinical-stage biotech Chimerix.

Total revenues rose 16% year over year to $1.21 billion, which beat the Zacks Consensus Estimate of $1.11 billion. This uptick was driven by the better-than-expected sales performance of its oncology and neuroscience products.

Product Sales Fuel Revenue Growth

Net product sales totaled $1.16 billion, up 17% year over year. The reported figure beat both the Zacks Consensus Estimate of $1.08 billion and our model estimate of $1.05 billion.

High-sodium oxybate authorized generic (AG) royalty revenues fell 22% year over year to $42 million. Other royalty and contract revenues increased 67% to $10 million, though they remained a relatively small contributor to total revenues.

Sleep Franchise Sustains Momentum

Net product sales for the combined oxybate business, comprising Xyrem and Xywav, rose 11% to nearly $502 million. This figure beat both the Zacks Consensus Estimate of about $455 million and our model estimate of $441 million.

Xywav sales increased 13% year over year to $471 million, supported by continued demand across approved indications.

Jazz added approximately 525 net Xywav patients during the second quarter, marking its highest quarterly increase in a year. The company exited June with around 17,125 active patients, including 11,275 narcolepsy patients and 5,850 IH patients.

Management said the uptake of competing high-sodium generics remained limited, supporting its expectation for double-digit Xywav growth in 2026.

Xyrem sales continued their downward trajectory, declining 14% year over year to $30.5 million due to patients switching to Xywav and generic erosion.

Epilepsy Business Benefits From Demand

Epidiolex/Epidyolex sales increased 16% year over year to $292 million. Management attributed the performance primarily to strong underlying demand across pediatric and adult treatment settings.

Oncology Portfolio Records Broad Growth

Oncology sales increased 32% year over year to $362 million.

Zepzelca revenues surged 42% to nearly $106 million, driven by adoption in first-line maintenance treatment for extensive-stage SCLC. This figure beat the Zacks Consensus Estimate of more than $93 million and our model estimate of $81 million.

During the conference call, Jazz announced plans to submit a labeling supplement to remove Zepzelca’s second-line metastatic SCLC indication. The proposed removal will not affect its first-line maintenance indication.

Rylaze/Enrylaze posted sales of $99.5 million, down 1% year over year.

Modeyso generated $48 million in sales compared with $41 million in the previous quarter. More than 600 patients had received the brain tumor treatment through the end of the second quarter since its launch last year.

Vyxeos sales declined 30% to more than $31 million, while Defitelio revenues rose 29% to $62 million.

Ziihera contributed $15.4 million in the reported quarter compared with $13.3 million in the previous quarter.

Higher Expenses Weigh on Earnings

Adjusted gross margin contracted 60 basis points year over year to 92.1%. The decline reflected higher sales of Modeyso and Zepzelca, which carry third-party royalty obligations.

Adjusted selling, general and administrative expenses rose 11% to more than $343 million, reflecting higher marketing investments and compensation-related expenses.

Adjusted research and development costs also increased 11% to about $185 million, primarily due to higher clinical study expenses related to Ziihera.

The quarter included $77 million in acquired IPR&D expenses related to agreements with AbCellera Biologics and Werewolf Therapeutics.

Raises 2026 Revenue Guidance

Jazz raised its 2026 revenue guidance to $4.60-$4.75 billion from $4.25-$4.50 billion. The revision reflects stronger Xywav performance and expected double-digit growth from the epilepsy and oncology franchises.

The company now expects rare sleep revenues of $2.03-$2.13 billion.

Adjusted SG&A expense guidance was increased to $1.33-$1.37 billion from $1.26-$1.32 billion, while adjusted R&D expense guidance was maintained at $725-$775 million.

The adjusted effective tax rate is expected to remain between 11.5% and 13.5%.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, Jazz has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Jazz has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Jazz belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Repligen (RGEN), has gained 13.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Repligen reported revenues of $204.13 million in the last reported quarter, representing a year-over-year change of +11.9%. EPS of $0.54 for the same period compares with $0.37 a year ago.

Repligen is expected to post earnings of $0.46 per share for the current quarter, representing no change from the year-ago quarter. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

Repligen has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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