What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-11 compared with 2025-02-12 · 614 added, 432 removed, 735 unchanged (59% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 and 20 23

Consolidated Statements of Comprehensive Income for the years ended December 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2025, 2024 and 2023

4 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Royalty Pharma plc (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Royalty Pharma plc (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

12 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Financial Royalty Assets and related Interest Income

9 unchanged sentences

We also tested the inputs to the model, principally comprising historic product sales and third-party analyst estimates of nearer-term sales amounts, by comparing to analyst reports or published sales information.

For royalty duration, among other procedures, we compared management’s assessment of the likely date of expiry of the Company’s cash flows against original purchase agreements, as well as independently assessing the royalty duration against available published information sources, such as those from regulatory bodies, counterparties, and product marketers.

We assessed the historical accuracy of management’s estimates by comparing expected cash flows to actual cash receipts.

For royalty duration, among other procedures, we compared management’s assessment of the likely date of expiry of the Company’s cash ﬂows against original purchase agreements, as well as independently assessing the royalty duration against available published information sources, such as those from regulatory bodies, counterparties, and product marketers.

We assessed the historical accuracy of management’s estimates by comparing expected cash ﬂows to actual cash receipts.

We also evaluated the related disclosures in the consolidated financial statements.

Initial recognition and valuation of Employee EPAs assumed as part of the Internalization

Description of the Matter As described in Note 3 to the consolidated financial statements, on May 16, 2025, the Company completed its acquisition of Royalty Pharma Manager, LLC for total consideration of $565.2 million (the “Internalization”).

The transaction was accounted for as a business combination.

As a result of the Internalization the company recognized an initial liability related to Employee Equity Performance Awards (“Employee EPAs”) of $422.5 million.

The initial recognition and valuation of the Employee EPAs required management to establish an accounting policy for the classification and measurement of the Employee EPAs and make significant judgments, estimates and assumptions.

Auditing the initial recognition and valuation of the Employee EPAs was complex due to the judgment and estimation required by management.

The complexity is due to the high subjectivity and estimation uncertainty of the assumptions used by management to estimate the fair value using the Monte Carlo Simulation model.

The key assumptions used in the valuation of the Employee EPAs are product growth rates applied to forecasted sales and the duration of cash receipts.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls related to the accounting and valuation of the Employee EPAs.

This included testing controls over management’s review of the technical accounting considerations, significant assumptions, and other inputs used in estimating the valuation of the liability.

To audit the Company's accounting policy for the initial recognition of the Employee EPAs we assessed the appropriateness of the conclusions reached in accordance with the applicable accounting principles.

To test the valuation of the liability and related share-based compensation expense, our audit procedures included, among others, evaluating the methodology and completeness and accuracy of the data used to develop the key assumptions identified.

For example, we engaged valuation specialists to gain an understanding of the approach taken by the Company and to assess the appropriateness of the methodology used, and to develop their own point estimate for the Employee EPA liability at fair value using the Monte Carlo Simulation.

We also evaluated the related disclosures in the consolidated financial statements.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2022.

New York, New York

Boston, Massachusetts

February 11, 2026

4 unchanged sentences

In our opinion, Royalty Pharma plc (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 12, 2025 expressed an unqualified opinion thereon.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls covering a portion of general and administrative expenses attributable to cash employee compensation for personnel of Royalty Pharma Manager, LLC which constituted 7% of general and administrative expenses for the year ended December 31, 2025.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of internal control over cash employee compensation for personnel of Royalty Pharma Manager, LLC.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 11, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

15 unchanged sentences

/s/ Ernst & Young LLP

New York, New York

Boston, Massachusetts

February 11, 2026

14 unchanged sentences

Equity method investments 289,968 379,424

Goodwill 924,634 —

Other assets 79,293 33,534

9 unchanged sentences

Long-term debt 8,570,917 6,614,653

Accrued compensation liabilities 577,870 —

Other liabilities 120,843 12,080

30 unchanged sentences

Total income and other revenues 2,378,193 2,263,576 2,354,554

Operating expense

Operating (income)/expense

Provision for changes in expected cash flows from financial royalty assets ( 295,838 ) 732,461 560,656

Provision for credit losses on unfunded commitments

Research and development funding expense 452,000 2,000 52,000

Amortization of intangible assets — — 5,670

General and administrative expenses 236,671 249,748 227,303

Financial royalty asset impairment — — 615,827

General and administrative expenses (includes $ 290,890 , $ 3,224 , and $ 3,302 of share-based compensation expense for the years ended December 31, 2025, 2024 and 2023, respectively;

573,481 236,671 249,748

Total operating expense, net 818,675 971,132 862,404

1 unchanged sentence

Other (income)/expense

Equity in (earnings)/losses of equity method investees ( 29,611 ) ( 28,882 ) 8,973

Equity in earnings of equity method investees ( 29,089 ) ( 29,611 ) ( 28,882 )

Interest expense 307,664 225,512 187,187

Losses/(gains) on derivative financial instruments

6,000 2,290 ( 96,610 )

(Gains)/losses on equity securities ( 39,549 ) ( 87,139 ) 33,442

(Gains)/losses on available for sale debt securities ( 154,906 ) ( 230,840 ) 6,815

Losses on derivative financial instruments — 6,000 2,290

Losses/(gains) on equity securities 21,852 ( 39,549 ) ( 87,139 )

Gains on available for sale debt securities ( 45,859 ) ( 154,906 ) ( 230,840 )

Interest income ( 33,591 ) ( 47,343 ) ( 72,291 )

Other non-operating expenses, net 14,349 1,528 21,737

Total other (income)/expense, net ( 38,369 ) ( 207,938 ) 77,001

Total other expense/(income), net 235,326 ( 38,369 ) ( 207,938 )

Consolidated net income before tax 1,324,192 1,330,813 1,700,088

11 unchanged sentences

ROYALTY PHARMA PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Years Ended December 31,

2024 2023 2022

Consolidated net income $ 1,330,813 $ 1,700,088 $ 230,064

Other comprehensive income/(loss):

Unrealized gains on available for sale debt securities — — 24,000

Reclassification of unrealized gains on available for sale debt securities — — ( 53,432 )

Other comprehensive loss:

$ — $ — $ ( 29,432 )

Comprehensive income $ 1,330,813 $ 1,700,088 $ 200,632

Comprehensive income attributable to non-controlling interests 471,830 565,254 175,418

Comprehensive income attributable to Royalty Pharma plc $ 858,983 $ 1,134,834 $ 25,214

See accompanying notes to these consolidated financial statements.

ROYALTY PHARMA PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

2 unchanged sentences

Ordinary Shares Class R

Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Non-Controlling Interests Treasury Interests Total Shareholders’ Equity

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

6 unchanged sentences

Share-based compensation and related issuances of Class A ordinary shares 57 — — — — — — — 2,357 — — — 2,357

Repurchases of Class A ordinary shares ( 9,846 ) ( 1 ) — — — — — — ( 85,711 ) ( 219,047 ) — — ( 304,759 )

Net income — — — — — — — — — 1,134,834 565,254 — 1,700,088

Other comprehensive income/(loss):

Unrealized gains on available for sale debt securities — — — — — — — — — — 14,262 9,738 — 24,000

Reclassification of unrealized gains on available for sale debt securities — — — — — — — — — — ( 31,880 ) ( 21,552 ) — ( 53,432 )

Purchase of non-controlling interest in RPCT — — — — — — — — — ( 4,566 ) ( 11 ) — ( 4,577 )

Balance at December 31, 2023 446,692 $ 45 150,743 $ — 50 $ 63 384,640 $ — $ 4,011,435 $ 2,517,583 $ 3,557,792 $ ( 2,629 ) $ 10,084,289

9 unchanged sentences

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 — — — — — — — — — — 9,983 — 9,983

3 unchanged sentences

Other exchanges 19,220 2 ( 19,220 ) — — — 19,220 — 345,605 — ( 345,657 ) 50 —

Share-based compensation and related issuances of Class A ordinary shares 81 — — — — — — — 2,344 — — — — 2,344

Share issuances for EPAs, Equity Incentive Plans and related share-based compensation 877 — — — — — — — 27,889 ( 551 ) 108,945 — 136,283

Shares and share-based awards issued for Internalization — — 24,530 — — — — — 3,778 — 57,000 — 60,778

Repurchases of Class A ordinary shares ( 37,413 ) ( 4 ) — — — — — — ( 357,666 ) ( 869,414 ) — — ( 1,227,084 )

Net income — — — — — — — — — 770,947 553,245 — 1,324,192

Purchase of non-controlling interest in RPCT — — — — — — — — — ( 1,108 ) — — — ( 1,108 )

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

11 unchanged sentences

Interest received 34,308 46,482 71,604

Development-stage funding payments - ongoing ( 2,000 ) ( 2,000 ) ( 2,106 )

Development-stage funding payments - upfront and milestone — ( 50,000 ) ( 175,000 )

Development-stage funding payments ( 452,000 ) ( 2,000 ) ( 52,000 )

Payments for operating and professional costs ( 288,138 ) ( 236,225 ) ( 243,012 )

Payments for Employee EPAs ( 10,943 ) — —

Interest paid ( 276,291 ) ( 159,570 ) ( 169,168 )

1 unchanged sentence

Cash flows from investing activities:

Acquisition of businesses, net of cash acquired ( 74,416 ) — —

Distributions from equity method investees 105,149 23,641 43,882

4 unchanged sentences

Proceeds from available for sale debt securities 21,226 19,786 1,440

Purchases of marketable securities — — ( 234,869 )

Proceeds from sales of available for sale debt securities 510,553 — —

Proceeds from sales and maturities of marketable securities — — 24,391

6 unchanged sentences

Distributions to legacy non-controlling interests - Portfolio Receipts ( 354,901 ) ( 362,280 ) ( 376,987 )

Distributions to legacy non-controlling interests - other — — ( 31,301 )

Distributions to continuing non-controlling interests ( 167,475 ) ( 125,159 ) ( 119,534 )

10 unchanged sentences

Other ( 1,790 ) ( 9,026 ) —

Net cash provided by/(used in) in financing activities

Net cash (used in)/provided by financing activities

( 1,185,973 ) 361,145 ( 2,148,754 )

6 unchanged sentences

Organization and Purpose

Royalty Pharma plc is a public limited company that was incorporated under the laws of England and Wales to facilitate the initial public offering (“IPO”) of our Class A ordinary shares.

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 control Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales and U.K.

tax resident, through our ownership of RP Holdings’ Class A ordinary shares (the “RP Holdings Class A Interests”) and RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”).

We conduct our business through RP Holdings and its subsidiaries.

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 (“Old RPI”).

RP Holdings is owned by Royalty Pharma plc, and, indirectly, by RPI US Partners 2019, LP, a Delaware limited partnership, and RPI International Holdings 2019, LP, a Cayman Islands exempted limited partnership (together, the “Continuing Investors Partnerships”).

Prior to the Exchange Offer (defined below), Old RPI was owned by various partnerships (the “Legacy Investors Partnerships”).

RP Management, LLC (the “Manager”), a Delaware limited liability company, is responsible for our management, including our day-to-day operations, pursuant to advisory and management agreements (collectively, the “Management Agreement”) .

In January 2025, we agreed to acquire the Manager for approximately $ 1.1 billion in total consideration (the “Internalization”).

Refer to Note 16–Subsequent Events for additional discussion.

We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry.

We fund innovation in the biopharmaceutical industry both directly and indirectly - directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators.

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.

Summary of Significant Accounting Policies

6 unchanged sentences

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 consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties.

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”).

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 subsidiar y 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 34 % interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”).

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate the IPO.

Following the Exchange Offer, we became the indirect owner of an 82 % economic interest in Old RPI through our subsidiary RPI 2019 Intermediate Finance Trust, a Delaware statutory trust.

We are entitled to 82 % of the economics of Old RPI’s wholly-owned subsidiar y RPI Finance Trust, a Delaware statutory trust (“RPIFT”) , and 66 % of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”).

In 2022, we became an indirect owner of an 82 % economic interest in Royalty Pharma Investments ICAV (“RPI ICAV”), which was previously owned directly by Old RPI.

In December 2023, RPI 2019 ICAV acquired the remaining interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”), at which time RPSFT ceased to hold a non-controlling interest in RPCT.

Prior to December 2023, the remaining 34 % of RPCT was owned by the Legacy Investors Partnerships and RPSFT, which was wholly owned by Royalty Pharma Select, an Irish unit trust.

Following the above transaction in December 2023, we report three non-controlling interests:

(1) the Legacy Investors Partnerships’ ownership of approximately 18 % in Old RPI and RPI ICAV, which existed prior to our IPO, and, following the consummation of our IPO, (2) the Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings Class B Interests (the “continuing non-controlling interests”) and (3) RPI EPA Vehicle, LLC’s (“EPA Vehicle”) ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”).

Income will not be allocated to EPA Vehicle until certain performance conditions are met.

We report four non-controlling interests:

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 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”).

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.

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.

2 unchanged sentences

Concentrations of Credit Risk

Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, available for sale debt securities, financial royalty assets, derivatives and receivables.

Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations.

Our cash and cash equivalents balances as of December 31, 2024 and 2023 were held with Bank of America, State Street, TD Bank, Citibank, U.S.

Bank, DNB Bank and Scotiabank.

Our primary operating accounts significantly exceed the Federal Deposit Insurance Corporation limits.

Financial instruments that subject us to significant concentrations of credit risk consist primarily of financial royalty assets, available for sale debt securities and receivables.

The majority of our financial royalty assets and receivables 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, Roche, Johnson & Johnson, Biogen, AbbVie, Astellas, Novartis, Pfizer and Gilead.

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 December 31, 2025 and 2024, Vertex, as the marketer and payor of our royalties on the cystic fibrosis franchise, accounted for 32 % and 34 % of our current portion of financial royalty assets, respectively, and represented the largest individual marketer and payor of our royalties.

1 unchanged sentence

To date, we have not experienced any significant credit losses with respect to the collection of income or revenue 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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted and Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board issued a new accounting standard that amends the guidance for required disclosures related to a public entity’s reportable segments (ASU 2023-07).

We adopted ASU 2025-07 in 2025 using the modified retrospective transition method, effective January 1, 2025.

The only impact of adopting this standard related to the CK-586 R&D funding arrangement, which we entered into in 2024 and had previously accounted for as a derivative.

As of December 31, 2024, this derivative had a carrying amount of $ 12.0 million recorded within Other Assets .

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 scope clarification for share-based non-cash consideration from a customer in a revenue contract is not applicable to us.

As such, we adopted this update on December 31, 2025 on a prospective method.

In November 2023, the FASB issued a new accounting standard that amends the guidance for required disclosures related to a public entity’s reportable segments (“ASU 2023-07”).

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

13 unchanged sentences

In other words, we do not own the intellectual property or have the right to commercialize the underlying products.

These contractual cash flow rights have yield components that most closely resemble loans and are classified as financial royalty assets.

These contractual cash flow rights are classified as financial royalty assets.

In the limited instances where we possess rights to exploit the underlying patents, rights to the intellectual property related to the biopharmaceutical products, or the ability to influence the amount or duration of future royalty payments, these royalties are classified as intangible royalty assets.

1 unchanged sentence

Financial Royalty Assets, Net

Although a financial royalty asset does not have the contractual terms typical of a loan (such as contractual principal and interest), we account for financial royalty assets under Accounting Standards Codification (“ASC”) Topic 310 Receivables.

Although financial royalty assets do not have the contractual terms typical of a loan (such as principal and interest), we account for them under ASC Topic 310 Receivables.

In limited instances, our royalty assets may be classified as contract assets and recorded as part of financial royalty assets because they are accounted for in the same manner.

Our financial royalty assets are classified similar to loans receivable and are measured at amortized cost using the prospective effective interest method described in ASC 835-30 Imputation of Interest .

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The effective interest rate is calculated by forecasting the expected cash flows to be received over the life of the asset relative to the initial invested amount.

4 unchanged sentences

The provision is recorded through the statements of operations as Provision for changes in expected cash flows from financial royalty assets and the carrying value of Financial royalty assets, net is presented net of the cumulative allowance for changes in expected cash flows.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The application of the prospective approach to measure our financial royalty assets at amortized cost requires management’s judgment in forecasting the expected future cash flows of the underlying royalties.

1 unchanged sentence

• Analyst coverage.

Forecasts of expected future cash flows are developed from sales projections of the underlying biopharmaceutical products as published in sell-side equity research analyst reports.

In projecting future cash flows, our policy is to rely on sell-side research analysts’ consensus sales forecasts to derive annual sales projections for each financial royalty asset over the periods for which we are entitled to royalties or milestones.

These forecasts are based on market research that analyzes factors such as growth in global economies, industry trends and product life cycles.

We generally utilize statistical curves to project future sales for a portion of the royalty duration when sell-side equity research coverage ends or when estimates are not available for the duration of the royalty.

The statistical curves are modelled from a combination of historical trends and available sell-side equity research analyst consensus sales estimates.

Based on the level of detail in sell-side equity research analyst models, management can also be required to apply assumptions to the sales forecasts to estimate the quarterly and geographical allocation from annual sales projections and, for franchised products, to estimate the product mix and pricing mix, or to exclude from projections sales forecasts for unapproved products.

Our contractual royalty terms, rates, and any milestones are then applied to the adjusted sales projections to calculate the expected royalty or milestone payments over the term of the financial royalty asset’s life, forming the basis for our forecast of expected future cash flows used to calculate and measure interest income.

Expected future cash flows are derived from sales projections for the underlying biopharmaceutical products, based primarily on sell-side equity research analyst consensus forecasts.

These forecasts incorporate market research on global economic conditions, industry trends and product life cycles.

Our policy is to rely on sell-side research analysts’ consensus sales forecasts to derive annual sales projections for each financial royalty asset over the periods for which we are entitled to royalties or milestones.

When analyst estimates do not extend through the full royalty term, we project future sales using statistical curves which are modelled using a combination of historical product trends and available consensus estimates.

Depending on the level of details provided in analyst models, management may apply additional assumptions to allocate annual sales to quarterly periods and by geographic regions, determine product and pricing mix for franchises, or exclude sales for unapproved products.

Contractual royalty rates, terms and milestones are then applied to the adjusted sales projections to estimate the royalty or milestone payments over the asset’s life, forming the basis for expected future cash flows used in calculating and measuring interest income.

• Commercial performance.

4 unchanged sentences

Both the new cash flow streams and the cessation of cash flow streams related to a product’s performance in the market over the royalty term can materially affect our forecast of expected future cash flows, which directly impacts the measurement of interest income.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

• Royalty duration.

5 unchanged sentences

Macroeconomic factors, such as changes in economies or the competitive landscape, including the unexpected loss of exclusivity to the products underlying our portfolio of royalties, changes in government legislation, product life cycles, industry consolidations and other changes beyond our control could result in a positive or negative impact on our forecast of expected future cash flows and the related measurement of interest income.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As part of the preparation of the forecasted expected future cash flows, which relies on the sources and variables discussed above, management is required to make assumptions around the following forecast inputs:

2 unchanged sentences

In some cases, patent protection may extend to a later period than the expiration date management has estimated.

Management may apply a shorter royalty term in this situation if, based on its experience and expertise, management believes that it is more likely that the associated patents are subject to opposition or infringement, that the market for a particular product may shift based on pipeline approvals and products, or that product sales may be harmed by competition from generics.

Management may apply a shorter royalty term in this situation if, based on its experience and expertise, it believes that it is more likely that the associated patents are subject to opposition or infringement, that the market for a particular product may shift based on pipeline approvals and products, or that product sales may be harmed by competition from generics.

For products providing perpetual royalties, management applies judgment in establishing the duration over which it forecasts expected future cash flows .

A shortened royalty term can result in a reduction in the effective interest rate, a decline in the carrying value of the financial royalty asset, a decline in income from financial royalty assets, significant reductions in royalty payments compared to expectations, or a permanent impairment.

A shortened royalty term can result in a reduction in the effective interest rate, lower income from financial royalty assets, a decline in the carrying value of the financial royalty asset and recognition of provision expense, reductions in royalty payments compared to expectations, or a permanent impairment.

Additionally, royalty payments may occasionally continue beyond the estimated royalty expiration date for such reasons we cannot foresee such as excess inventory in the channel or additional scope of patent protection identified after expiry, including royalties we may become entitled to from new indications, new compounds, or for new regulatory jurisdictional approvals .

6 unchanged sentences

The current portion of financial royalty assets represents an estimation for current quarter royalty receipts which are collected during the subsequent quarter and for which the estimates are derived from the latest external publicly available sell-side equity research analyst reports, reported in arrears.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

In a subsequent period, if there is an increase in expected future cash flows, or if actual cash flows are greater than cash flows previously expected, we reduce the previously established cumulative allowance in part or in full, resulting in a non-cash credit to the provision recorded through the Provision for changes in expected cash flows from financial royalty assets on the consolidated statements of operations.

We also recalculate the amount of accretable yield to be received based on the revised remaining future cash flows.

We also recalculate the amount of accretable yield to be recognized based on the revised remaining future cash flows.

The adjustment to the accretable yield is treated as a change in estimate and is recognized prospectively over the remaining life of the financial royalty asset by adjusting the effective interest rate used to calculate income .

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Movements in the cumulative allowance for changes in expected cash flows, which forms part of the Financial royalty assets, net line item on the consolidated balance sheets, are accompanied by corresponding provision income or expense.

3 unchanged sentences

Allowance for Current Expected Credit Losses

We recognize an allowance for current expected credit losses under ASC 326 – Financial Instruments – Credit Losses on our portfolio of financial royalty assets with limited protective rights.

We recognize an allowance for current expected credit losses under ASC 326 – Financial Instruments – Credit Losses on (1) our portfolio of financial royalty assets for which we have limited protective rights and (2) on the unfunded portions of certain funding commitments for which we have limited protective rights once funded.

The credit loss allowance is estimated using the probability of default and loss given default method.

The credit rating, which is assessed primarily based on publicly available data and updated quarterly, is the primary credit quality indicator used to determine the probability of default of the marketers responsible for paying our royalties and the resulting loss given default.

The allowance for current expected credit losses is presented net within the non-current portion of financial royalty assets on the consolidated balance sheets.

Any subsequent provision for credit losses is recorded as part of the Provision for changes in expected cash flows from financial royalty assets on the consolidated statements of operations .

The allowance for current expected credit losses related to financial royalty assets is presented net within the non-current portion of financial royalty assets on the consolidated balance sheets, and changes to such allowance are recorded within Provision for changes in expected cash flows from financial royalty assets on the consolidated statements of operations.

The allowance for current expected credit losses related to the unfunded portions of relevant funding arrangements is recorded within Other liabilities on the consolidated balance sheet, with changes to such allowance reflected within Provision for credit losses on unfunded commitments in the consolidated statements of operations.

Income from Financial Royalty Assets

4 unchanged sentences

An impairment loss is recognized if it is probable that we will be unable to recover the carrying value of the financial royalty asset held at cost and the amount of loss can be reasonably estimated.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Royalty Income and Revenues

Other royalty income and revenues includes income from financial royalty assets that have been fully amortized and income from synthetic royalties and milestones arising out of research and development (“R&D”) funding arrangements.

Other royalty income and revenues also includes revenues from intangible royalty assets and income from royalties that are recorded at fair value.

Other royalty income and revenues also includes revenues from intangible royalty assets.

Financial Instruments and Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, equity securities, derivatives, available for sale debt securities, royalty interests and long-term debt.

Cash and cash equivalents, equity securities, derivatives, available for sale debt securities and certain royalty interests are reported at their respective fair values on our consolidated balance sheets.

Outstanding borrowings under our senior unsecured notes and non-current financial royalty assets are reported at amortized cost on our consolidated balance sheets, for which fair values are disclosed.

Our financial instruments consist primarily of cash and cash equivalents, equity securities, available for sale debt securities, royalty interests, Employee EPAs (as defined in Note 5-Shareholders’ Equity) and long-term debt.

Cash and cash equivalents, equity securities, available for sale debt securities, Employee EPAs and certain royalty interests are reported at their respective fair values on our consolidated balance sheets.

Outstanding borrowings under our senior unsecured notes, term loan and non-current financial royalty assets are reported at amortized cost on our consolidated balance sheets, for which fair values are disclosed.

The remaining financial instruments are reported on our consolidated balance sheets at amounts that approximate fair value.

2 unchanged sentences

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

3 unchanged sentences

Equity Securities and Available for Sale Debt Securities

Our equity securities primarily consist of investments in publicly traded equity securities.

The equity securities are measured and recorded at fair value with unrealized gains and losses recorded in earnings.

Our equity securities primarily consist of investments in publicly traded equity securities and are measured and recorded at fair value, with unrealized gains and losses recorded in earnings.

For equity securities without a readily determinable fair value, recorded within Other assets on the consolidated balance sheets, we use the fair value measurement alternative and measure the securities at cost less impairment, if any.

2 unchanged sentences

Upon such election, the entire investment is measured at fair value on a recurring basis, with movements in fair value recognized in earnings.

For available for sale debt securities for which we did not elect the fair value option, the unrealized change in fair value is recorded within in Accumulated other comprehensive income and is reclassified to earnings as interest income is recognized when we can reliably estimate forecasted cash flows.

A decline in the market value of any available for sale debt security below its cost that is deemed to have resulted from a credit loss results in a reduction in carrying amount to fair value and is recognized in earnings.

Derivatives are measured at fair value on the consolidated balance sheets with movements in fair value recognized in earnings.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Investment in Non-Consolidated Affiliates

3 unchanged sentences

Subsequently, we recognize through earnings our proportionate share of the investee’s net income or loss, net of any adjustment to reflect the amortization of basis differences.

We generally record our share of the results of our investees one quarter in arrears within Equity in (earnings)/losses of equity method investees in the consolidated statements of operations.

We generally record our share of the results of our investees one quarter in arrears within Equity in earnings of equity method investees in the consolidated statements of operations.

The investment is reflected as Equity method investments on the consolidated balance sheets.

4 unchanged sentences

When we have committed to provide further support to the investee through capital call commitments and the investment has been reduced to zero, we provide for additional losses, resulting in a negative equity method investment, which is presented as a liability on the consolidated balance sheets.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

We first determine whether a set of assets acquired constitutes a business and should be accounted for as a business combination.

If the assets acquired do not constitute a business, we account for the transaction as an asset acquisition.

Business combinations are accounted for by means of the acquisition method of accounting.

The acquisition method of accounting for business combinations requires us to use significant estimates and assumptions, including fair value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period, which is defined as the period, not to exceed one year, in which we may adjust the provisional amounts recognized for a business combination.

Under the acquisition method of accounting, we recognize separately from goodwill the identifiable assets acquired and the liabilities assumed, generally at the acquisition date fair value.

The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill.

As a result of the Internalization (as defined below), we recorded goodwill which represents the excess of the total purchase price over the fair value of the net assets acquired.

Goodwill has an indefinite life and therefore is not amortized under the provisions of ASC 350 – Intangibles – Goodwill and Other .

We have one reporting unit and assess goodwill for impairment annually in the fourth quarter, or more frequently if there are indicators of impairment.

Research and Development Funding Expense

3 unchanged sentences

We may fund R&D upfront or over time as the underlying products undergo clinical trials.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Royalties earned on successfully commercialized products generated from R&D arrangements are recognized as Other royalty income and revenues in the same period in which the sale of the product occurs.

1 unchanged sentence

Milestone thresholds are typically not triggered until after all funding obligations have been completed.

Share-based Compensation

We account for share-based compensation in accordance with ASC 718 – Share-based Compensation .

We have share-based compensation arrangements in the form of (1) Employee EPAs (as defined in Note 5–Shareholders’ Equity), which are liability classified, (2) RP Holdings Class E Interests, which were issued as part of the Internalization consideration, and (3) RSUs, which are issued to directors and employees.

RP Holdings Class E Interests and RSUs are both equity classified.

Share-based compensation expense for equity-classified awards is measured at grant-date fair value and recognized on a straight-line basis over the requisite service period within General and administrative expenses .

We have elected to account for forfeitures as they occur.

The fair value of the Employee EPAs is remeasured at each reporting date using a Monte Carlo simulation methodology, with changes in the fair value recognized as part of the share-based compensation expense.

We periodically assess if our activities, as conducted through our subsidiaries, and as currently contemplated, constitute being engaged in the conduct of a trade or business within the United States.

8 unchanged sentences

We expect the associated income tax provision expense to become more significant in the future as we enter into more funding arrangements.

Additionally, we entered into an arrangement with MSCI Inc.

(“MSCI”) during 2021 as discussed in Note 15–Related Party Transactions that will be subject to U.S.

taxation when we begin to recognize revenue .

At that time, we will record a provision for U.S.

income taxes in accordance with ASC 740 – Income Taxes , with respect to revenue from the MSCI transaction.

We operate so as to be treated solely as resident in the U.K.

3 unchanged sentences

tax resident companies are subject to U.K.

corporation tax on receipt of dividends or other income distributions in respect of shares held by them, unless those dividends or other distributions fall within an exempt class.

corporation tax on dividend receipts or other income distributions in respect of shares held by them, unless those dividends or other distributions fall within an exempt class.

We believe that dividends received by us from RP Holdings, and dividends received by RP Holdings from RPI 2019 ICAV, should fall within such an exempt class and therefore should not be subject to U.K.

29 unchanged sentences

Our Class B ordinary shares, Class R redeemable shares and deferred shares do not share in the earnings or losses attributable to us and are therefore not participating securities.

Our outstanding Class B ordinary shares are, however, considered potentially dilutive shares of Class A ordinary shares because Class B ordinary shares, together with the related RP Holdings Class B Interests, are exchangeable into Class A ordinary shares on a one -for-one basis.

Potentially dilutive securities also include Class B ordinary shares contingently issuable to EPA Vehicle related to Equity Performance Awards and RSUs issued under our 2020 Independent Director Equity Incentive Plan.

Our outstanding Class B ordinary shares are considered potentially dilutive shares of Class A ordinary shares because Class B ordinary shares, together with the related RP Holdings Class B Interests and vested RP Holdings Class E Interests, are exchangeable into Class A ordinary shares on a one -for-one basis.

In addition, potentially dilutive securities include Class B ordinary shares contingently issuable for the EPAs and Class A ordinary shares issuable upon vesting of RSUs issued to directors and employees.

We include potentially dilutive shares in the denominator to compute diluted EPS if (i) the inclusion of the ordinary shares is dilutive for the respective reporting periods, and (ii) contingencies are satisfied as of the end of the reporting period for ordinary shares that are contingently issuable.

2 unchanged sentences

Amounts paid to repurchase shares in excess of the par value are allocated between Additional paid-in capital and Retained earnings .

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Total purchase price

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 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 remaining vesting period.

The fair value of the Employee EPAs is recognized as a liability within Accrued compensation liabilities on the consolidated balance sheet and is estimated using a Monte Carlo simulation methodology.

See Note 4-Share-Based Compensation for additional discussion.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 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 expenses

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

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 consolidated statements of operations.

In 2025, we recorded approximately $ 28.9 million of acquisition-related costs within General and administrative expenses in the consolidated statements of operations, all of which were paid and included within Payments for operating and professional costs on the consolidated statement of cash flows.

These costs are primarily related to legal, advisory and professional services.

In 2025, approximately 62 % of the total General and administrative expenses were related to costs incurred by RP Manager and its subsidiaries.

These costs primarily consisted of employee compensation expenses, including share-based compensation.

Pro Forma Information (Unaudited)

The unaudited pro forma results presented below are for informational purposes only and are not necessarily indicative of what our actual results of operations would have been had the Internalization occurred at the beginning of 2024 nor are they indicative of our results of operations for future periods.

The following table summarizes the pro forma consolidated information assuming we had completed the Internalization on January 1, 2024 (in thousands):

Years Ended December 31,

Pro forma revenue $ 2,378,193 $ 2,263,576

Pro forma net income (1)

1,395,756 1,136,623

(1) Pro forma net income in 2024 reflects a $ 28.9 million adjustment for non-recurring acquisition-related expenses.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Share-Based Compensation

We record share-based compensation expense on a straight-line basis over the corresponding service-based vesting periods within General and administrative expenses in the consolidated statements of operations.

Prior to the Internalization, our share-based awards consisted only 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 that were issued as part of the Internalization consideration, Employee EPAs and Employee RSUs.

The share-based compensation expense is comprised of the following (in thousands):

Years Ended December 31,

2025 2024 2023

RP Holdings Class E Interests $ 108,945 $ — $ —

Employee EPAs 176,334 — —

Employee and Director RSUs 5,611 3,224 3,302

Total Share-Based Compensation $ 290,890 $ 3,224 $ 3,302

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 will be expensed generally over vesting periods ranging from five to nine years .

In 2025, we recorded $ 108.9 million of share-based compensation expense related to the RP Holdings Class E Interests.

As of December 31, 2025, we had $ 646.5 million of unrecognized compensation expense related to 19.5 million RP Holdings Class E Interests that is expected to vest over a weighted average period of 5.5 years.

Employee EPAs

In accordance with ASC 718, we accounted 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 December 31, 2025, the fair value of Employee EPAs was $ 577.9 million as recorded within Accrued compensation liabilities on the consolidated balance sheet.

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.

In 2025, we recorded $ 176.3 million of share-based compensation expense related to the Employee EPAs.

As of December 31, 2025, we had $ 80.5 million of unrecognized expense related to the Employee EPAs that is expected to vest over a weighted average period of 2.0 years.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

As of December 31, 2025, approximately 1.6 million and 321 thousand shares remain available for future issuance under the 2025 Equity Incentive Plan and 2020 Independent Director Equity Incentive Plan, respectively.

In 2025, 2024 and 2023, we recorded $ 5.6 million, $ 3.2 million and $ 3.3 million of share-based compensation expense related to the employee and directors RSUs, respectively.

As of December 31, 2025, we had $ 7.6 million of unrecognized expense related to the employee RSUs that are expected to vest over a weighted average period of 2.4 years and the total unrecognized expense related to the outstanding directors’ RSUs was not material.

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 December 31, 2025, Royalty Pharma plc had 428,669 thousand Class A ordinary shares and 148,438 thousand Class B ordinary shares outstanding.

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 December 31, 2025, Royalty Pharma plc had 411,475 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 new share repurchase program, which replaced the share repurchase program announced on March 27, 2023, 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 new 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 2025, we repurchased 37.4 million shares at a cost of approximately $ 1.2 billion.

In 2024, we repurchased 8.4 million shares at a cost of approximately $ 229.9 million.

As of December 31, 2025, approximately $ 1.8 billion remained available under the new 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 consolidated statements of shareholders’ equity.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-Controlling Interests

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

RPSFT Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity (1)

RP Holdings Class E Interests Holders

December 31, 2022 $ ( 597 ) $ 1,527,887 $ 2,369,933 $ — $ — $ 3,897,223

Contributions — 7,981 3,874 — — 11,855

Distributions ( 4,437 ) ( 363,635 ) ( 119,649 ) — — ( 487,721 )

Other exchanges — — ( 428,808 ) — — ( 428,808 )

Net income 5,045 167,483 392,726 — — 565,254

Purchase of non-controlling interest in RPCT ( 11 ) — — — — ( 11 )

December 31, 2023 $ — $ 1,339,716 $ 2,218,076 $ — $ — $ 3,557,792

Contributions — 5,161 3,877 — — 9,038

Distributions — ( 351,474 ) ( 125,158 ) — — ( 476,632 )

Other exchanges — — ( 166,243 ) — — ( 166,243 )

Net income — 194,937 276,893 — — 471,830

December 31, 2024 $ — $ 1,188,340 $ 2,207,445 $ — $ — $ 3,395,785

Contributions — 7,643 2,340 — — 9,983

Distributions — ( 345,188 ) ( 119,683 ) ( 60,243 ) ( 16,148 ) ( 541,262 )

Other exchanges — — ( 521,579 ) — 175,922 ( 345,657 )

Share-based compensation — — — — 108,945 108,945

Internalization — — — — 57,000 57,000

Net income — 232,524 231,260 60,243 29,218 553,245

December 31, 2025 $ — $ 1,083,319 $ 1,799,783 $ — $ 354,937 $ 3,238,039

(1) Amounts represent the entirety of the EPAs prior to the Internalization and only the Founder’s Equity portion after the Internalization.

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.

We historically reported a non-controlling interest related to a de minimis interest in RPCT held by RPSFT.

In December 2023, we acquired the remaining interest in RPCT held by RPSFT by effectively purchasing the net assets of RPSFT and its parent entities, which primarily consisted of cash and RPSFT’s right to receive a portion of royalties received by RPCT.

The estimated purchase price, subject to post-closing adjustments, was approximately $ 11.4 million and was unpaid as of December 31, 2023.

In 2024, we paid the finalized purchase price of approximately $ 12.5 million.

Following this December 2023 transaction, RPSFT no longer holds a non-controlling interest in RPCT.

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”).

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

Prior to 2025, no payments for EPAs were made as certain performance and return thresholds had not been met.

In the first quarter of 2025, we began making payments for EPAs as these thresholds were met during the period.

In 2025, total EPAs earned were $ 81.2 million, attributable to Founder’s Equity and Employee EPAs, with settlement consisting of a combination of approximately equal amounts in Class A ordinary shares and cash payments provided as tax advances.

The table presented below summarizes the breakdown of total EPAs earned in 2025 (in thousands):

Year Ended December 31, 2025 Location Recorded in Consolidated Financial Statements

Founder’s Equity (1)

$ 60,243 Net income attributable to non-controlling interests

Employee EPAs

20,943 Accrued compensation liabilities (reduction of Employee EPAs liability)

Total $ 81,186

Form of Settlement

$ 42,585 Distributions to continuing non-controlling interests (Founder’s Equity)

Payments for Employee EPAs (Employee EPAs)

Total $ 81,186

(1) Founder’s Equity includes $ 38.4 million for Mr.

Legorreta’s retained EPAs encompassing all of the 2025 period 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) Amount represents shares earned in 2025, substantially all of which were settled during the year except for $ 14.3 million payable as of December 31, 2025, which is expected to be settled in shares during the first quarter of 2026.

Holders of RP Holdings Class E Interests

We issued 24.5 million RP Holdings Class E Interests as part of the transaction consideration for the Internalization, all of which were outstanding as of closing of the Internalization and approximately 24.45 million remained outstanding as of December 31, 2025.

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 consolidated statements of shareholders’ equity.

The Holders of RP Holdings Class E Interests are entitled to any dividends and distributions from RP Holdings pro rata (on a per share basis) and on a pari passu basis with each RP Holdings Class A Interest and RP Holdings Class B Interest.

They are also entitled to a pro rata portion (on a per share basis) and on a pari passu basis with each RP Holdings Class A Interest and RP Holdings Class B Interest of RP Holdings’ net assets.

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 December 31, 2025, approximately 2.8 million of RP Holdings Class E Interests have legally vested.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 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 December 31, 2025, the ownership of RP Holdings was as follows:

4 % by the Holders of RP Holdings Class E Interests, 22 % by the Continuing Investors Partnerships and 74 % by Royalty Pharma plc.

As of December 31, 2024, the ownership of RP Holdings was as follows:

24 % by the Continuing Investors Partnerships and 76 % by Royalty Pharma plc.

As of December 31, 2023 the ownership of RP Holdings was as follows:

25 % by the Continuing Investors Partnerships and 75 % by Royalty Pharma plc.

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.

During 2025, we declared and paid four quarterly cash dividends of $ 0.22 per Class A ordinary share in an aggregate amount of $ 378.3 million to holders of our Class A ordinary shares .

Available for Sale Debt Securities

Funding Arrangements with Cytokinetics

In May 2024, we expanded our funding collaboration with Cytokinetics, Incorporated (“Cytokinetics”) to provide up to $ 575 million.

As part of the expanded funding collaboration, we provided funding of $ 100 million (“Cytokinetics Development Funding”) for Cytokinetics’ Phase 3 clinical trial of omecamtiv mecarbil 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 a total funding of up to $ 525 million.

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.

3 unchanged sentences

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Out of the seven tranches of the Cytokinetics Commercial Launch Funding, tranches one and six have been funded.

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 December 31, 2025, including the required minimum draw in April 2025.

Tranches two and three are no longer available because the related regulatory milestones were not met.

Tranches four , five and seven are available for draw upon the occurrence of certain regulatory and clinical development milestones (“Cytokinetics Funding Commitments”) and have a one-year draw period from the date when such contingency is met.

The contingencies for the fourth and fifth tranches were met in April and December 2024, respectively.

Up to $ 75 million is available to be drawn under tranche 4 until April 2025, and up to $ 100 million is available to be drawn under tranche 5 until December 2025.

A minimum of $ 50 million is required to be drawn under either tranche 4 or tranche 5.

The condition for $ 175 million to become available to be drawn under tranche 7 has not yet been satisfied.

For tranches one, four, five, six and seven, we expect to receive 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 of the funding date of each tranche.

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.

In the fourth quarter of 2023, we began receiving quarterly repayments on tranche one.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 consolidated balance sheets.

The Cytokinetics Funding Commitments, which include options and forwards, are recognized at fair value within Other liabilities on the consolidated balance sheets.

The changes in the fair value of the funded Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments are recorded within (Gains)/losses on available for sale debt securities in the 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, which is further described in Note 4–Derivative Instruments.

Lastly, the funding collaboration also included the restructuring of our royalty on aficamten.

The table below summarizes the components of our funding collaboration with Cytokinetics, including the expanded funding collaboration in May 2024 and related funding status as of December 31, 2024 (in thousands):

Funded Required Future Draw

Potential Future Draw

Cytokinetics Commercial Launch Funding (1)

$ 100,000 $ 50,000 $ 250,000 $ 400,000

Cytokinetics Development Funding

100,000 — — 100,000

Cytokinetics R&D Funding Derivative (2)

50,000 — 150,000 200,000

Cytokinetics Common Stock

50,000 — — 50,000

Total $ 300,000 $ 50,000 $ 400,000 $ 750,000

(1) Potential future draw of $ 250 million assumes no more than $ 25 million will be drawn under tranche 4.

(2) Related to our funding for the clinical trials of CK-586.

We have the option to fund up to an additional $ 150 million.

See Note 4–Derivative Instruments for additional discussion .

The Cytokinetics Funding Commitments are recognized at fair value within Other liabilities on the consolidated balance sheets.

The changes in the fair value of the funded Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments are recorded within Gains on available for sale debt securities in the 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.

MorphoSys Development Funding Bonds

In September 2022, we provided MorphoSys funding of $ 300 million (“MorphoSys Development Funding Bonds”).

Our return on the MorphoSys Development Funding Bonds is 2.2 times the amount funded.

We began receiving quarterly repayment in the fourth quarter of 2024.

In 2024, MorphoSys was acquired by Novartis.

In September 2022, we provided MorphoSys funding of $ 300 million (“MorphoSys Development Funding Bonds”) for which we began receiving quarterly repayments in the fourth quarter of 2024.

MorphoSys was acquired by Novartis in 2024.

In January 2025, the MorphoSys Development Funding Bonds were sold for approximately $ 511 million.

We elected the fair value option to account for the MorphoSys Development Funding Bonds as it most accurately reflects the nature of the instrument.

The MorphoSys Development Funding Bonds are recorded within Available for sale debt securities on the consolidated balance sheets.

The changes in the fair value of the MorphoSys Development Funding Bonds are recorded within (Gains)/losses on available for sale debt securities in the consolidated statements of operations.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The MorphoSys Development Funding Bonds were recorded within Available for sale debt securities on the consolidated balance sheet.

The changes in the fair value of the MorphoSys Development Funding Bonds were recorded within Gains on available for sale debt securities in the consolidated statement of operations.

The table below summarizes our available for sale debt securities recorded at fair value (in thousands):

Cost Unrealized Gains

Fair Value Current Assets Non-Current Assets Non-Current Liabilities Total

Cost Unrealized Gains Fair Value Current Assets Non-Current Assets Non-Current Liabilities Total

As of December 31, 2025

11 unchanged sentences

(1) The cost related to tranches one and six of the Cytokinetics Commercial Launch Funding and the cost for the Cytokinetics Development Funding reflect the fair values on their respective funding dates.

The cost of the Development Funding Bonds represents the amount funded.

As of December 31, 2025 and December 31, 2024, the costs related to tranche four and five of the Cytokinetics Commercial Launch Funding and the cost of the MorphoSys Development Funding Bonds, respectively, represent the amounts funded.

The costs are amortized as quarterly repayments are received.

(2) Related to Cytokinetics Funding Commitments for which certain tranches remain available as of the respective balance sheet dates.

The MorphoSys Development Funding Bonds were sold in January 2025.

(2) The costs associated with the Cytokinetics Funding Commitments represent the fair values on their respective transaction dates.

Derivative Instruments

We have historically managed the impact of interest rate risk through various financial instruments, including derivative instruments such as treasury rate lock contracts.

Our policy is to use derivatives strategically to hedge existing and future interest rate exposure and to minimize volatility in cash flow arising from our exposure to interest rate risk.

We may also acquire other financial instruments that are classified as derivatives.

We do not enter into derivative instruments for trading or speculative purposes.

In 2024, 2023 and 2022, we did not hold any derivatives that were designated as hedging instruments.

Cytokinetics R&D Funding Derivative

In May 2024, we funded $ 50 million upfront in exchange for a royalty on CK-586.

We have an option to fund up to an additional $ 150 million for which we would be eligible to receive milestone payments of up to $ 150 million upon regulatory approvals and an incremental royalty on CK-586.

Upon a change of control event, we have the option to cause Cytokinetics to pay us 1.5 times the initial and additional funding amounts in a lump sum to terminate our rights to receive royalties and milestone payments.

Our funding arrangement on CK-586 is accounted for as a derivative instrument and is recorded at fair value (“Cytokinetics R&D Funding Derivative”).

As of December 31, 2024, the fair value of the Cytokinetics R&D Funding Derivative of $ 12.0 million was recorded within Other assets on the consolidated balance sheet.

Milestone Acceleration Option

In August 2020, we entered into an expanded funding agreement with Biohaven to fund the development of zavegepant and the commercialization of Nurtec ODT in exchange for royalties and success-based milestones payable over time.

Following Pfizer Inc.’s (“Pfizer”) acquisition of Biohaven on October 3, 2022, which was a change of control event, we elected to accelerate the payment of the zavegepant milestone payments into a lump sum amount (“Milestone Acceleration Option”).

In March 2023, the FDA approved Zavzpret, the intranasal formulation of zavegepant, and we received a $ 475 million milestone payment which resulted in partial settlement of the derivative instruments.

The Milestone Acceleration Option had no remaining fair value as of December 31, 2023.

The table below summarizes the changes in fair value by derivative instrument which were recorded within Losses/(Gains) on derivative financial instruments in the consolidated statements of operations (in thousands):

Years Ended December 31,

2024 2023 2022

Cytokinetics R&D Funding Derivative

$ 6,000 $ — $ —

Milestone Acceleration Option

— 2,290 ( 96,610 )

ROYALTY PHARMA PLC

14 unchanged sentences

— — 419,000 419,000 — — 693,500 693,500

Derivative instrument (4)

Cytokinetics R&D Funding Derivative (4)

— — — — — — 12,000 12,000

2 unchanged sentences

Total non-current assets $ 171,312 $ — $ 419,000 $ 590,312 $ 184,719 $ — $ 713,064 $ 897,783

Funding commitments (5)

Cytokinetics Funding Commitments

— — ( 9,100 ) ( 9,100 ) — — ( 12,080 ) ( 12,080 )

1 unchanged sentence

(1) Recorded within Cash and cash equivalents on the consolidated balance sheets.

(2) Related to tranche one of the Cytokinetics Commercial Launch Funding and the MorphoSys Development Funding Bonds.

As of December 31, 2024, amount also included tranche six of the Cytokinetics Commercial Launch Funding, and the Cytokinetics Development Funding.

(3) The amounts reflected within Level 3 are related to equity securities and a revenue participation right acquired from ApiJect Holdings, Inc.

(2) Related to the funded Cytokinetics Funding Arrangements as of respective balance sheet dates.

As of December 31, 2024, amount also included the MorphoSys Development Funding Bonds, which were sold in January 2025.

(3) The amounts reflected within Level 3 as of December 31, 2024 relate to equity securities and a revenue participation right, recorded within Other assets on the consolidated balance sheet, that we acquired from ApiJect Holdings, Inc.

(“ApiJect”), a private company.

We elected the fair value option to account for our investments in ApiJect because it is more reflective of current values for such investments.

We estimated the fair value s related to both instruments using a discounted cash flow with Level 3 inputs, including forecasted cash flows and the weighted average cost of capital.

The revenue participation right was recorded within Other assets on the consolidated balance sheets.

See Note 8–Non-Consolidated Affiliates for additional discussion.

(4) Related to the Cytokinetics R&D Funding Derivative recorded within Other assets on the consolidated balance sheet.

(5) Related to the Cytokinetics Funding Commitments recorded within Other liabilities on the consolidated balance sheets.

For 2024, 2023 and 2022, we recognized losses of $ 8.6 million, gains of $ 55.6 million and losses of $ 7.3 million, respectively, on equity securities still held as of December 31, 2024.

In 2025, we wrote off the related balances.

No amounts were due from or to ApiJect as of December 31, 2025 and 2024.

(4) Recorded within Other assets on the consolidated balance sheet as of December 31, 2024.

Upon adoption of ASU 2025-07 in 2025, the Cytokinetics R&D Funding Derivative qualified for the derivative scope exception and the related derivative asset was derecognized as of January 1, 2025.

See Note 2-Summary of Significant Accounting Policies for additional discussion.

For 2025, 2024 and 2023, we recognized losses of $ 39.6 million and $ 8.6 million and gains of $ 55.6 million, respectively, on equity securities still held as of December 31, 2025.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Year Ended December 31, 2025

Equity Securities Debt Securities Funding Commitments Derivative Instrument

Royalty at Fair Value

Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value

Balance at the beginning of the period $ 2,241 $ 751,700 $ ( 12,080 ) $ 12,000 $ 5,323

Purchases — 175,000 — — —

Gains/(losses) on initial recognition (1)

Changes in fair value (1)

( 2,241 ) 42,679 3,180 — ( 5,323 )

Gains on equity securities 1,562 — — — —

Losses on derivative financial instruments — — — ( 6,000 ) —

Gains/(losses) on available for sale debt securities — 161,086 ( 6,180 ) — —

Other non-operating income — — — — 3,545

Transfer out of Level 3 (2)

— ( 510,553 ) — — —

Settlement of options and forward (3)

— 200 ( 200 ) — —

Redemptions (4)

— ( 21,226 ) — — —

ASU 2025-07 adoption impact (5)

— — — ( 12,000 ) —

Balance at the end of the period $ — $ 437,800 $ ( 9,100 ) $ — $ —

(1) Represents purchase price allocation to arrive at the appropriate fair value on initial recognition.

(2) Related to the expiration of the transfer restriction on Cytokinetics common stock.

(3) Amount relates to quarterly repayments on tranche one of the Cytokinetics Commercial Launch Funding and the MorphoSys Development Funding Bonds.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Changes in fair value of the financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the consolidated statements of operations.

(2) The MorphoSys Development Funding Bonds were sold in January 2025.

(3) Amount reflects the fair value attributable to the draws under tranche four and five of the Cytokinetics Commercial Launch Funding that were settled upon funding.

(4) Amount relates to the quarterly repayments on the MorphoSys Development Funding Bonds prior to the sale and on the Cytokinetics Commercial Launch Funding.

(5) Upon adoption of ASU 2025-07 in 2025, the Cytokinetics R&D Funding Derivative qualified for the derivative scope exception and the related derivative asset was derecognized as of January 1, 2025.

See Note 2-Summary of Significant Accounting Policies for additional discussion.

Year Ended December 31, 2024

Equity Securities Debt Securities Funding Commitments Derivative Instruments

Royalty at Fair Value

Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value

Balance at the beginning of the period $ 297 $ 455,400 $ ( 900 ) $ — $ 1,778

Losses on equity securities ( 8,175 ) — — — —

Losses on derivative financial instruments

Purchases 46,500 150,000 — 18,000 —

Gains/(losses) on initial recognition (1)

— 5,000 ( 5,000 ) — —

Gains on available for sale debt securities

Changes in fair value (2)

1,562 161,086 ( 6,180 ) ( 6,000 ) 3,545

Other non-operating expense — — — — ( 12,722 )

Transfer out of Level 3 (3)

( 46,118 ) — — — —

2 unchanged sentences

Balance at the end of the period $ 2,241 $ 751,700 $ ( 12,080 ) $ 12,000 $ 5,323

(1) Amount relates to the quarterly repayment on tranche one of the Cytokinetics Commercial Launch Funding.

(1) Represents purchase price allocation to arrive at the appropriate fair value on initial recognition.

(2) Changes in fair value of the financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the consolidated statement of operations.

(3) Related to the expiration of the transfer restriction on Cytokinetics common stock.

(4) Amount relates to quarterly repayments on tranche one of the Cytokinetics Commercial Launch Funding and the MorphoSys Development Funding Bonds.

Valuation Inputs for Recurring Fair Value Measurements

1 unchanged sentence

As of December 31, 2025 and 2024, we did not have any financial instruments recorded at fair value using Level 2 inputs.

Cytokinetics R&D Funding Derivative

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Cytokinetics Research & Development (“R&D”) Funding Derivative

In May 2024, we funded $ 50 million upfront in exchange for a royalty on CK-586.

This funding arrangement was accounted for as a derivative instrument and recorded at fair value (“Cytokinetics R&D Funding Derivative”) as of December 31, 2024.

We adopted ASU 2025-07 in 2025, effective January 1, 2025 and concluded that the Cytokinetics R&D Funding Derivative qualifies for the derivative scope exception.

See Note 2-Summary of Significant Accounting Policies for additional discussion.

We estimated the fair value of the Cytokinetics R&D Funding Derivative as of December 31, 2024 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including the probabilities of us exercising the additional funding option, regulatory approvals and the occurrence of a change of control event during the duration of the arrangement.

3 unchanged sentences

We estimated the fair values of the funded Cytokinetics Funding Arrangements as of December 31, 2025 and 2024 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 judgement.

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.

5 unchanged sentences

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MorphoSys Development Funding Bonds

We estimated the fair value of the MorphoSys Development Funding Bonds as of December 31, 2024 and 2023 based on a discounted cash flow calculation using estimated risk-adjusted discount rates, which are Level 3 inputs.

We estimated the fair value of the MorphoSys Development Funding Bonds as of December 31, 2024 based on a discounted cash flow calculation using estimated risk-adjusted discount rates, which are Level 3 inputs.

Our estimate of the risk adjusted discount rates could reasonably be different than the discount rates selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower.

Financial Assets Not Measured at Fair Value

Financial royalty assets are measured and carried on the consolidated balance sheets at amortized cost using the effective interest method.

The MorphoSys Development Funding Bonds were sold in January 2025.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 consolidated balance sheets.

Financial royalty assets do not include our entire portfolio of investments and specifically exclude the following:

development-stage product candidates where the funding was (i) expensed as upfront R&D upon acquisition (e.g., Trodelvy and Nurtec ODT), (ii) expensed as ongoing R&D (e.g., historically, Soliqua from our co-funding agreement with Sanofi) or (iii) treated as a derivative instrument (e.g., CK-586);

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);

contractual funding arrangements (e.g., the MorphoSys Development Funding Bonds and the Cytokinetics Funding Arrangements), which are accounted for as available for sale debt securities.

The fair value of financial royalty assets is classified as Level 3 within the fair value hierarchy since it is determined based on inputs that are both significant and unobservable.

Fair value of financial royalty assets as of December 31, 2024

In 2024, we refined our methodology to value our financial royalty assets given the growing complexity of the portfolio.

The valuation approach applied in 2024 used a Monte Carlo simulation under the option pricing framework to calculate the fair value of financial royalty assets as of December 31, 2024.

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 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.

Fair value of financial royalty assets as of December 31, 2023

As of December 31, 2023, we calculated the fair value of financial royalty assets using forecasted royalty receipts based on the projected product sales for all royalty bearing products which are estimated using sell-side equity research analysts’ consensus sales forecasts.

These projected future royalty receipts by asset, along with any projected incoming or outgoing milestone payments, are then discounted to a present value using appropriate individual discount rates.

As of December 31, 2024, the estimated fair values of the current and non-current portions of financial royalty assets were $ 0.8 billion and $ 21.4 billion, respectively.

7 unchanged sentences

Estimated Royalty Duration (1)

Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 7) Net Carrying Value (4)

Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 9)

Net Carrying Value (3)

Cystic fibrosis franchise 2039-2041 (2)

1 unchanged sentence

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

Voranigo 2038

Imdelltra 2038-2041

924,239 — 924,239

10 unchanged sentences

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.

(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.

As of December 31, 2024, the balance of $ 15.9 billion above for total current and non-current financial royalty assets, net included $ 1.2 billion in unapproved financial royalty assets held at cost related to frexalimab for $ 522.6 million and other assets, primarily olpasiran, pelacarsen and olanzapine (TEV-’749).

As of December 31, 2025, the balance of $ 17.1 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).

As of December 31, 2024

7 unchanged sentences

1,319,298 ( 276,134 ) 1,043,164

Voranigo 2038

946,588 — 946,588

Tremfya 2031-2032

Xtandi 2027-2028 911,045 ( 268,701 ) 642,344

935,069 ( 77,895 ) 857,174

Other 2025-2042

8,164,902 ( 2,492,565 ) 5,672,337

Total $ 19,700,209 $ ( 3,551,159 ) $ 16,149,050

4 unchanged sentences

(2) Royalty is perpetual.

We estimate expected Trikafta patent expiration in 2037 and potential generic entry thereafter leading to sales decline.

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.

16 unchanged sentences

Write-off of cumulative allowance 87,393

Write-off of credit loss allowance 1,584

Provision for credit losses, net (2)

5 unchanged sentences

Balance at December 31, 2024

$ ( 3,789,281 )

Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets ( 687,269 )

4 unchanged sentences

(1) Includes $ 115.4 million related to cumulative allowance for credit losses.

(2) In 2022, the provision income for credit losses was primarily related to a declines in the value of Tazverik and changes in the payors for certain products with stronger credit profiles, which were partially offset by the addition of Trelegy to our portfolio.

(2) In 2023, the provision expense for credit losses was primarily related to the additions of Adstiladrin and Skytrofa to our portfolio.

In 2024, the provision expense for credit losses was primarily related to the addition of Niktimvo to our portfolio.

In 2025, the provision income for credit losses was primarily related to Niktimvo as a result of changes in sell-side equity research analysts’ consensus sales forecasts, partially offset by the addition of Imdelltra to our portfolio.

Non-Consolidated Affiliates

3 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In April 2022, we acquired common stock and a revenue participation right from ApiJect.

We elected the fair value option to account for our investments in ApiJect because it is more reflective of current values for such investments.

We are also required to purchase additional common stock from ApiJect if certain milestones are achieved.

The fair value of our equity investment in ApiJect is recorded within Equity securities and the change in fair value is recorded within (Gains)/losses on equity securities .

The fair value of the revenue participation right is recorded within Other assets and the change in fair value is recorded within Other non-operating expense, net .

No amounts were due from or to ApiJect related to the revenue participation right as of December 31, 2024 and 2023.

The Legacy SLP Interest

3 unchanged sentences

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 our Manager is also the Manager of the Legacy Investors Partnerships and has the ability to exercise significant influence.

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 and RPI ICAV.

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.

Management’s estimate of equity in earnings from the Legacy SLP Interest for the current period will be updated for historical results in the subsequent period.

Equity in earnings from the Legacy SLP Interest is recorded within Equity in (earnings)/losses of equity method investees.

Equity in earnings from the Legacy SLP Interest is recorded within Equity in earnings of equity method investees.

We recorded income allocations of $ 17.0 million, $ 10.4 million and $ 4.3 million in 2025, 2024 and 2023, respectively.

2 unchanged sentences

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.

Equity in earnings from the Avillion Entities is recorded within Equity in (earnings)/losses of equity method investees.

We recorded income allocations of $ 19.2 million and $ 24.6 million and a loss allocation of $ 12.0 million in 2024, 2023 and 2022, respectively.

On December 19, 2017, the FDA approved a supplemental New Drug Application for Pfizer’s Bosulif.

Equity in earnings from the Avillion Entities is recorded within Equity in earnings of equity method investees.

We recorded income allocations of $ 12.1 million, $ 19.2 million and $ 24.6 million in 2025, 2024 and 2023, respectively.

On December 19, 2017, the FDA approved a supplemental New Drug Application (“NDA”) for Pfizer’s Bosulif.

Avillion I is eligible to receive fixed payments from Pfizer based on this approval under its co-development agreement with Pfizer.

The only operations of Avillion I are the collection of cash and unwinding of the discount on the series of fixed annual payments due from Pfizer.

We received distributions from Avillion I of $ 13.4 million, $ 13.6 million and $ 13.4 million in 2024, 2023 and 2022, respectively.

In May 2018, RPIFT entered into an agreement with Avillion II, which was subsequently amended, 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, formerly known as PT027, which was approved by the FDA in January 2023.

We received distributions from Avillion I of $ 13.4 million in each of 2025 and 2024, and $ 13.6 million in 2023.

In May 2018, we entered into an agreement with Avillion II, which was subsequently amended, 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, formerly known as PT027, which was approved by the FDA in January 2023.

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.

In the first quarter of 2023, AstraZeneca notified Avillion II that it elected to pay a fee of $ 80 million to Avillion II to exercise an option to commercialize Airsupra in the United States and we received our pro rata portion of the exercise fee of $ 34.8 million from Avillion II.

In 2024, we received distributions of $ 1.0 million from Avillion II related to the Airsupra royalty.

In the fourth quarter of 2024, Airsupra met the primary endpoint in the Phase 3 clinical trial, triggering a milestone payment of $ 55 million from AstraZeneca to Avillion II.

We received our pro rata portion of the milestone of approximately $ 27.4 million from Avillion II in January 2025.

In the fourth quarter of 2024, Airsupra met the primary endpoint in the Phase 3 clinical trial and triggered a milestone payment of $ 55 million from AstraZeneca to Avillion II, of which we received our pro rata share of approximately $ 27.4 million in the first quarter of 2025.

In the third quarter of 2025, the FDA approval of a supplemental NDA for Airsupra triggered a milestone payable of $ 22 million from AstraZeneca to Avillion II, of which we received our pro rata share of approximately $ 10 million in January 2026.

We received distributions of $ 3.0 million and $ 1.0 million from Avillion II related to the Airsupra royalty in 2025 and 2024, respectively.

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 December 31, 2025 and 2024, we had unfunded commitments related to the Avillion Entities of $ 10.3 million.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 2024 and 2023, we had unfunded commitments related to the Avillion Entities of $ 10.3 million and $ 16.3 million, respectively.

Research and Development Funding Expense

R&D funding expense consists of payments that we have made to counterparties to acquire royalties or milestones on product candidates.

R&D funding expense includes development-stage funding payments made to counterparties on an upfront basis or upon pre-approval milestones, and development-stage funding payments that are made to counterparties over time as the related product candidates undergo clinical trials with our counterparties.

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 2025, we entered into an R&D funding arrangement with Biogen to provide $ 250 million over six quarters, including $ 50 million upfront for the development of litifilimab.

We did not enter into any new ongoing R&D funding arrangements in 2024 or 2023.

We recognized R&D funding expense of $ 452.0 million, $ 2.0 million and $ 52.0 million in 2025, 2024 and 2023, respectively.

The R&D expense in 2024 is related to ongoing development-stage funding payments.

The R&D expense in 2023 is primarily related to a $ 50.0 million clinical milestone payment to Cytokinetics for aficamten.

The R&D expenses in 2022 are primarily related to upfront and milestone development-stage funding payments of $ 100.0 million, $ 25.0 million and $ 50.0 million to acquire royalties on development-stage products from Cytokinetics, Theravance Biopharma, Inc., and MSD International Business GmbH, respectively.

The R&D expense in 2025 is primarily related to an upfront payment of $ 250.0 million to acquire royalties on daraxonrasib and the R&D funding arrangement for litifilimab.

The R&D expense in 2024 related to ongoing development-stage funding payments.

The R&D expense in 2023 primarily related to a $ 50.0 million clinical milestone payment to Cytokinetics for Myqorzo, formerly known as aficamten.

As of December 31, 2025, we had an unfunded commitment of $ 50 million related to the R&D funding arrangement with Biogen for litifilimab.

Our borrowings consisted of the following (in thousands):

21 unchanged sentences

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 —

Term Loan See below 7/2026 380,000 —

Unamortized debt discount and issuance costs ( 229,083 ) ( 187,574 )

3 unchanged sentences

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 composed 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.

In June 2024, we issued $ 1.5 billion of senior unsecured notes (the “2024 Notes”).

1 unchanged sentence

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.

We issued $ 1.3 billion and $ 6.0 billion of senior unsecured notes in 2021 (the “2021 Notes”) and 2020 (the “2020 Notes” and, collectively with the “2021 Notes” and “2024 Notes”, the “Notes”), respectively.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

We issued $ 1.3 billion and $ 6.0 billion of senior unsecured notes in 2021 (the “2021 Notes”) and 2020 (the “2020 Notes” and, collectively with the “2021 Notes”, “2024 Notes” and “2025 Notes”, the “Notes”), respectively.

The 2021 Notes and 2020 Notes were issued at a total discount of $ 176.4 million and we capitalized approximately $ 52.7 million in debt issuance costs primarily composed of underwriting fees.

1 unchanged sentence

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.

In September 2023, we repaid $ 1.0 billion of the 2020 Notes upon maturity.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Interest on each series of the Notes accrues at the respective rate per annum and is payable semi-annually in arrears on March 2 and September 2 of each year.

The first interest payment date for the 2024 Notes will be March 2, 2025.

Through December 31, 2025, 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 first interest payment for the 2025 Notes will be in March 2026.

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.

1 unchanged sentence

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.

Our obligations under the Notes are fully and unconditionally guaranteed by RP Holdings, a non-wholly-owned subsidiary.

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 December 31, 2025 , we were in compliance with all applicable covenants.

As of December 31, 2025 and 2024, the fair value of our outstanding Notes using Level 2 inputs was approximately $ 7.9 billion and $ 6.5 billion, respectively.

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 December 31, 2025, the carrying value of the Term Loan approximates fair value, 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 to 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”).

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, we entered into Amendment No.

4 to the Credit Agreement to make certain technical modifications.

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 December 31, 2025 and 2024, there were no outstanding borrowings under the Revolving Credit Facility.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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 contains 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.

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.

1 unchanged sentence

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.

As of December 31, 2024 , RP Holdings was in compliance with these covenants.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Principal Payments on the Notes

The future principal payments for our borrowings as of December 31, 2024 over the next five years and thereafter are as follows (in thousands):

We were in compliance with the financial covenants as of December 31, 2025.

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 December 31, 2025, there were no outstanding borrowings under the Uncommitted Credit Facility.

Principal Payments on the Borrowings

The future principal payments for our borrowings as of December 31, 2025 are as follows (in thousands):

Year Principal Payments

1 unchanged sentence

2027 1,000,000

2030 1,000,000

Thereafter 6,300,000

(1) Excludes unamortized debt discount and issuance costs of $ 229.1 million as of December 31, 2025, which are amortized through interest expense over the remaining life of the underlying debt obligations.

Shareholders’ Equity

Capital Structure

We have 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.

Our 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 December 31, 2024, we have 445,985 thousand Class A ordinary shares and 143,128 thousand Class B ordinary shares outstanding.

An exchange agreement entered into by, among others, us, RP Holdings, the Continuing Investors Partnerships, RPI International Partners 2019, LP, RPI US Feeder 2019, LP, RPI International Feeder 2019, LP and EPA Vehicle (as amended from time to time, the “Exchange Agreement”) governs the exchange of RP Holdings Class B Interests indirectly held by the Continuing Investors Partnerships for our Class A ordinary shares.

Pursuant to the Exchange Agreement, RP Holdings Class B Interests are exchangeable on a one -for-one basis for our Class A ordinary shares on a quarterly basis.

Each such exchange also results in the re-designation of the same number of our Class B ordinary shares as deferred shares.

Such deferred shares are non-voting and do not confer a right to participate in the profits of the Company or any right to receive dividends.

As of December 31, 2024, we have 392,255 thousand deferred shares outstanding.

In addition, we have in issue 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 Royalty Pharma Limited had sufficient sterling denominated share capital upon its re-registration in 2020 as Royalty Pharma plc, a public company.

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 March 2023, our board of directors authorized a share repurchase program under which we may repurchase up to $ 1.0 billion of our Class A ordinary shares.

The repurchases may be made in the open market or in privately negotiated transactions.

In 2024, we repurchased and retired 8.4 million shares at a cost of approximately $ 229.9 million.

In 2023, we repurchased and retired 9.8 million shares at a cost of approximately $ 304.8 million.

As of December 31, 2024, approximately $ 465.3 million remained available under the share repurchase program.

In connection with the Internalization as discussed in Note 16–Subsequent Events, our board of directors authorized a new share repurchase program in January 2025 under which we may repurchase up to $ 3.0 billion of our Class A ordinary shares.

This new share repurchase program replaces the unused capacity under the previous share repurchase program that was authorized in March 2023.

The repurchases may be made in the open market or in privately negotiated transactions.

The authorization for the new share repurchase program expires June 23, 2027.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-Controlling Interests

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

RPSFT Legacy Investors Partnerships Continuing Investors Partnerships EPA Vehicle

December 31, 2021 $ 13,528 $ 1,809,269 $ 2,649,154 $ — $ 4,471,951

Contributions — 6,343 5,253 — 11,596

Distributions ( 24,687 ) ( 435,446 ) ( 144,115 ) — ( 604,248 )

Other exchanges — — ( 157,494 ) — ( 157,494 )

Net Income 10,562 152,895 23,775 — 187,232

Other comprehensive income/(loss):

Unrealized gains on available for sale debt securities — 4,218 5,520 — 9,738

Reclassification of unrealized gains on available for sale debt securities — ( 9,392 ) ( 12,160 ) — ( 21,552 )

December 31, 2022 $ ( 597 ) $ 1,527,887 $ 2,369,933 $ — $ 3,897,223

Contributions — 7,981 3,874 — 11,855

Distributions ( 4,437 ) ( 363,635 ) ( 119,649 ) — ( 487,721 )

Other exchanges — — ( 428,808 ) — ( 428,808 )

Net income 5,045 167,483 392,726 — 565,254

Purchase of non-controlling interest in RPCT ( 11 ) — — — ( 11 )

December 31, 2023 $ — $ 1,339,716 $ 2,218,076 $ — $ 3,557,792

Contributions — 5,161 3,877 — 9,038

Distributions — ( 351,474 ) ( 125,158 ) — ( 476,632 )

Other exchanges — — ( 166,243 ) — ( 166,243 )

Net income — 194,937 276,893 — 471,830

December 31, 2024 $ — $ 1,188,340 $ 2,207,445 $ — $ 3,395,785

Continuing Investors Partnerships

The Continuing Investors Partnerships hold the number of our Class B ordinary shares equal to the number of RP Holdings Class B Interests indirectly held by them.

We operate and control the business affairs of RP Holdings through our ownership of RP Holdings Class A Interests and RP Holdings Class B Interests.

In connection with our repurchase of Class A ordinary shares that began in the second quarter of 2023, RP Holdings also began to retire RP Holdings Class A Interests held by us which reduces our ownership in RP Holdings.

The change in RP Holdings ownership between the Continuing Investors Partnerships and us as a result of (1) the exchanges of RP Holding Class B Interests for Class A ordinary shares and (2) retirement of RP Holdings Class A Interests is reflected through Other exchanges in the above tables and in our consolidated statements of shareholders’ equity.

The Continuing Investors Partnerships indirectly owned approximately 24 %, 25 % and 27 % of RP Holdings as of December 31, 2024, 2023 and 2022, respectively, with the remaining 76 %, 75 % and 73 % of RP Holding as of December 31, 2024, 2023 and 2022, respectively, owned by Royalty Pharma plc.

We historically reported a non-controlling interest related to a de minimis interest in RPCT held by RPSFT.

The estimated purchase price, subject to post-closing adjustments, was approximately $ 11.4 million and unpaid as of December 31, 2023.

In 2024, we paid the finalized purchase price of approximately $ 12.5 million.

Following this December 2023 transaction, RPSFT no longer holds a non-controlling interest in RPCT.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

RP Holdings Class C Special Interest Held by EPA Vehicle

EPA Vehicle is entitled to Equity Performance Awards (as defined below) through its RP Holdings Class C Special Interest based on our performance, as determined on a portfolio-by-portfolio basis.

Investments made during each two-year period are grouped together as separate portfolios (each, a “Portfolio”).

Subject to certain conditions, at the end of each fiscal quarter, EPA Vehicle is entitled to a distribution from RP Holdings in respect of each Portfolio equal to 20 % of the Net Economic Profit (defined as the aggregate cash receipts for all new portfolio investments in such Portfolio less Total Expenses (defined as interest expense, operating expense and recovery of acquisition cost in respect of such Portfolio)) for such Portfolio for the applicable measuring period (the “Equity Performance Awards”).

The Equity Performance Awards will be allocated to EPA Vehicle, as the holder of the RP Holdings Class C Special Interest, and recorded as Net income attributable to non-controlling interests in the consolidated statements of operations.

The Equity Performance Awards will be payable in RP Holdings Class B Interests that will be exchanged upon issuance for Class A ordinary shares.

EPA Vehicle may also receive a periodic cash advance in respect of the RP Holdings Class C Special Interest to the extent necessary for EPA Vehicle or any of its beneficial owners to pay when due any income tax imposed on it or them as a result of holding such RP Holdings Class C Special Interest.

The Equity Performance Awards will be reflected as a transaction between equity holders in the consolidated statements of shareholders’ equity and related periodic cash distributions will be presented as a financing activity in the consolidated statements of cash flows.

We expect the Equity Performance Awards to be payable in 2025 once certain performance conditions discussed above are met.

Similarly, we expect income to be allocated to EPA Vehicle once such performance conditions are met.

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 are entitled to dividends and distributions from RP Holdings.

During 2024, we declared and paid four quarterly cash dividends of $ 0.21 per Class A ordinary share in an aggregate amount of $ 376.5 million to holders of our Class A ordinary shares .

2020 Independent Directors Equity Incentive Plan and Share-based Compensation

On June 15, 2020, our 2020 Independent Director Equity Incentive Plan was approved and became effective, whereby 800 thousand Class A ordinary shares were authorized for issuance in the form of RSUs to our independent directors.

As of December 31, 2024, approximately 409 thousand shares remain available for future issuance under the plan.

RSUs granted under the plan generally vest over one year with the associated share-based compensation expense recorded as part of General and administrative expenses in the consolidated statements of operations.

In 2024, 2023 and 2022, respectively, we did not recognize material share-based compensation expense.

As of December 31, 2024, the total unrecognized share-based compensation expense related to total outstanding RSUs was not material.

Earnings per Share

In 2024, 2023 and 2022, Class B ordinary shares contingently issuable to EPA Vehicle were evaluated and were determined not to have any dilutive impact.

In 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 2024 and 2023, Class B ordinary shares contingently issuable for the EPA were evaluated and were determined not to have any dilutive impact.

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the reconciliation of the numerator and denominator used to calculate basic and diluted earnings per Class A ordinary share for 2024 and 2023 (in thousands, except per share amounts):

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):

Years Ended December 31,

2025 2024 2023

Consolidated net income $ 1,324,192 $ 1,330,813 $ 1,700,088

Net income attributable to continuing non-controlling interests 276,893 392,726

Net income attributable to legacy non-controlling interests 194,937 172,528

Net income attributable to the Continuing Investors Partnerships 231,260 276,893 392,726

Net income attributable to the Legacy Investors Partnerships 232,524 194,937 172,528

Net income attributable to the Founder’s Equity (1)

Net income attributable to the RP Holdings Class E Interests Holders 29,218 — —

Net income attributable to Royalty Pharma plc - basic 770,947 858,983 1,134,834

Reallocation of net income attributable to non-controlling interests from the assumed conversion of Class B ordinary shares 276,893 392,726

Reallocation of net income attributable to the Continuing Investors Partnerships from the assumed exchanges of Class B ordinary shares 231,260 276,893 392,726

Reallocation of net income attributable to the Holders of RP Holdings Class E Interests from the assumed exchanges of eligible Class B ordinary shares 3,315 — —

Net income attributable to Royalty Pharma plc - diluted $ 1,005,522 $ 1,135,876 $ 1,527,560

1 unchanged sentence

Dilutive effects as shown separately below

Class B ordinary shares exchangeable for Class A ordinary shares 145,911 155,292

Assumed exchanges of Class B ordinary shares by Continuing Investors Partnerships 132,616 145,911 155,292

Unvested RSUs 14 12 7

Weighted average Class A ordinary shares outstanding - diluted 594,108 602,900

Earnings per Class A ordinary share - basic $ 1.92 $ 2.54

Earnings per Class A ordinary share - diluted $ 1.91 $ 2.53

Class B ordinary shares in issue were evaluated under the if-converted method for potential dilutive effects and were determined to be anti-dilutive for 2022, and therefore were excluded from the computation of diluted earnings per shares of Class A ordinary share.

The following table sets forth reconciliations of the numerators and denominators used to calculate basic and diluted earnings per Class A ordinary share for 2022 (in thousands, except per share amounts):

Year Ended December 31,

Consolidated net income $ 230,064

Net income attributable to continuing non-controlling interests 23,775

Net income attributable to legacy non-controlling interests 163,457

Net income attributable to Royalty Pharma plc - basic and diluted $ 42,832

Weighted average Class A ordinary shares outstanding - basic 437,963

Dilutive effect of unvested RSUs 9

Shares contingently issuable for the Equity Performance Awards 270 — —

Assumed exchanges of eligible Class B ordinary shares by Holders of RP Holdings Class E Interests 1,754 — —

Weighted average Class A ordinary shares outstanding - diluted 564,455 594,108 602,900

1 unchanged sentence

Earnings per Class A ordinary share - diluted $ 1.78 $ 1.91 $ 2.53

(1) Amounts represent the entirety of the EPAs prior to the Internalization and only the Founder’s Equity portion after the Internalization.

ROYALTY PHARMA PLC

9 unchanged sentences

Provision for changes in expected cash flows from financial royalty assets ( 295,838 ) 732,461 560,656

Amortization of intangible assets — — 5,670

Provision for credit losses on unfunded commitments 89,032 — —

Share-based compensation 289,894 2,344 2,357

Amortization of debt discount and issuance costs 22,440 19,562 20,499

Losses/(gains) on derivative financial instruments

6,000 2,290 ( 96,610 )

(Gains)/losses on equity securities ( 39,549 ) ( 87,139 ) 33,442

Equity in (earnings)/losses of equity method investees ( 29,611 ) ( 28,882 ) 8,973

Losses on derivative financial instruments — 6,000 2,290

Losses/(gains) on equity securities 21,852 ( 39,549 ) ( 87,139 )

Equity in earnings of equity method investees ( 29,089 ) ( 29,611 ) ( 28,882 )

Distributions from equity method investees 13,396 13,396 18,823

Loss on extinguishment of debt — — 419

Share-based compensation 2,344 2,357 2,170

Interest income accretion — — ( 53,432 )

(Gains)/losses on available for sale debt securities ( 154,906 ) ( 230,840 ) 6,815

Financial royalty asset impairment — — 615,827

Amortization of prepaid expenses 6,197 — —

Gains on available for sale debt securities ( 45,859 ) ( 154,906 ) ( 230,840 )

Depreciation 3,852 — —

Other 13,307 1,105 20,912

3 unchanged sentences

Other current assets ( 7,723 ) 13,844 3,147

Accounts payable and accrued expenses ( 2,290 ) 6,236 2,286

Other assets 276 — —

Accounts payable and accrued liabilities ( 13,928 ) ( 2,290 ) 6,236

Interest payable 8,934 46,380 ( 2,480 )

Other liabilities ( 2,350 ) — —

Net cash provided by operating activities $ 2,489,823 $ 2,768,986 $ 2,987,802

5 unchanged sentences

Milestone payable - Erleada (1)

18,600 — 12,400

Purchase of non-controlling interest in RPCT (2)

(1) Related to the achievements of the sales-based milestones that were not paid as of December 31, 2024 and 2022.

(1) Related to the achievement of sales-based milestones that were not paid as of December 31, 2025 and 2024.

(2) Related to the purchase of the remaining interest in RPCT held by RPSFT that was not paid as of December 31, 2023.

1 unchanged sentence

Commitments and Contingencies

Cytokinetics Funding Commitments

As of December 31, 2024, $ 350 million remained available under the Cytokinetics Funding Commitments and Cytokinetics is required to draw a minimum of $ 50 million.

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 which was 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 December 31, 2025, $ 1 billion of the royalty remained unfunded.

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 December 31, 2025, $ 750 million of the term loan remained unfunded.

We recorded an allowance for credit losses of $ 89.0 million within Other liabilities on the consolidated balance sheet and a corresponding provision for credit losses in 2025 within Provision for credit losses on unfunded commitments in the consolidated statements of operations, related to the unfunded portions of the funding arrangements with Revolution Medicines.

Cytokinetics Funding Commitments

As of December 31, 2025, $ 175 million remained available under the Cytokinetics Funding Commitments.

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.

As of December 31, 2025, we have recognized $ 19.1 million of right of use asset within Other assets and $ 16.1 million of lease liability within Other liabilities on the consolidated balance sheet.

As of December 31, 2025, the future minimum lease payments under the non-cancelable operating lease are as follows (in thousands):

Year Payments

Thereafter 3,129

Total lease payments 22,160

imputed interest ( 2,903 )

Present value of lease liabilities $ 19,257

Other Commitments

We have commitments to advance funds to counterparties through our investment in the Avillion Entities.

Please refer to Note 8–Non-Consolidated Affiliates for details of these arrangements.

We also have requirements to make Operating and Personnel Payments (defined below) over the life of the Management Agreement as described in Note 15–Related Party Transactions.

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

2 unchanged sentences

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.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings

4 unchanged sentences

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.

Related Party Transactions

The Manager is the investment manager of Royalty Pharma plc and its subsidiaries.

The managing member of the Manager, Pablo Legorreta, holds an interest in us and serves as our Chief Executive Officer and Chairman of our board of directors.

In connection with the Exchange Offer, the Manager entered into the Management Agreement with us and our subsidiaries, the Continuing Investors Partnerships, and with the Legacy Investors Partnerships.

Pursuant to the Management Agreement, we pay a quarterly operating and personnel payment to the Manager or its affiliates (“Operating and Personnel Payments”) equal to 6.5 % of the cash receipts from Royalty Investments (as defined in the Management Agreement) for such quarter and 0.25 % of the value of our security investments under GAAP as of the end of such quarter.

The operating and personnel payment for Old RPI, an obligation of the Legacy Investors Partnerships and for which the expense is reflected on our consolidated net income, is calculated as the greater of $ 1 million per quarter and 0.3125 % of royalties from Royalty Investments (as defined in the limited partnership agreements of the Legacy Investors Partnerships) during the previous twelve calendar months.

Additionally, we also pay certain costs and expenses of the Manager.

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 consolidated statements of operations.

During 2025, 2024 and 2023, total operating and personnel payments incurred were $ 115.7 million, $ 188.6 million and $ 204.6 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 2025, we did not recognize material income related to this agreement.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Total operating and personnel payments incurred, including the amounts attributable to Old RPI, are recognized within General and administrative expenses in the consolidated statements of operations.

During 2024, 2023 and 2022, total operating and personnel payments incurred, including the amounts attributable to Old RPI, were $ 188.6 million, $ 204.6 million and $ 188.4 million, respectively.

In January 2025, we agreed to acquire the Manager for approximately $ 1.1 billion in total consideration.

Refer to Note 16–Subsequent Events for additional discussion.

Distributions Payable to Legacy Non-Controlling Interests

The contractual cash flows required to be distributed based on the Legacy Investors Partnerships’ non-controlling interest in Old RPI and RPI ICAV are presented in the Distributions payable to legacy non-controlling interests on the consolidated balance sheets.

Distributions Payable to Non-Controlling Interests

The Distributions to continuing 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 December 31, 2025 As of December 31, 2024

Payable to Founder

Payable to Legacy Investors Partnerships 66,092 75,811

Total distributions payable to non-controlling interests

$ 72,825 $ 75,811

Acquisition from Bristol Myers Squibb

4 unchanged sentences

Other Transactions

In October 2025, we acquired preferred stock in Kailera Therapeutics Inc.

(“Kailera”) which was recorded within Other Assets on the consolidated balance sheet as of December 31, 2025.

Christopher Hite, our Executive Vice President & Vice Chairman, has served as a director of Kailera since June 2025.

This acquisition was conducted in the ordinary course of business and Mr.

Hite’s role as a director of Kailera is unrelated to this acquisition.

No amounts were due from or to Kailera as of December 31, 2025.

In January 2024, we acquired a royalty interest in ecopipam which was previously owned by Psyadon Pharmaceuticals, Inc.

2 unchanged sentences

De Souza received an upfront payment of $ 2.5 million and could receive milestone payments of up to $ 2.22 million in the future.

In December 2023, RPI 2019 ICAV acquired the remaining interest in RPCT held by RPSFT.

Refer to Note 11–Shareholders’ Equity for additional discussion.

Henry Fernandez, the lead independent director of our board of directors, serves as the chairman and chief executive officer of MSCI.

On April 16, 2021, we entered into an agreement with MSCI with an initial term of seven years to develop thematic life sciences indexes.

In return, we will receive a percentage of MSCI’s revenues from those indexes.

No amounts were due from MSCI as of both December 31, 2024 and 2023.

The financial impact associated with this transaction has not been material to date.

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 and RPI ICAV.

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.

RPIFT owns 27,210 limited partnership interests in the Continuing Investors Partnerships, whose only substantive operations are their investment in our subsidiaries.

The total investment of $ 4.3 million was recorded as treasury interests, of which $ 1.6 million were held by non-controlling interests as of December 31, 2024 and 2023.

ROYALTY PHARMA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Each Continuing Investors Partnership pays 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.

The total investment of $ 4.3 million was recorded as treasury interests, of which $1.7 million and $ 1.6 million were held by non-controlling interests as of December 31, 2025 and 2024, respectively.

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.

Subsequent Events

In January 2025, we agreed to acquire our Manager for an aggregate consideration of approximately $ 1.1 billion.

The consideration consists of approximately 24.5 million of RP Holdings shares, $ 380 million of existing debt of the Manager and $ 200 million of cash less the amount of the Operating and Personnel Payments made to the Manager from January 1, 2025 through the closing of the transaction.

The closing of the transaction is subject to the shareholders’ approval of the issuance of the share consideration and other customary closing conditions, including required regulatory approvals.

The transaction is estimated to close during the second quarter of 2025.

In January 2026, we entered into a funding agreement with Teva Pharmaceuticals, a U.S.

affiliate of Teva Pharmaceutical Industries Ltd.

(“Teva”) to fund up to $ 500 million to support the development of TEV-‘408, including $ 75 million to co-fund a Phase 2b study for vitiligo targeted to start in 2026 and, based on future results from Phase 2b in vitiligo, an option to fund an additional $ 425 million to co-fund the Phase 3 development program.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data