Kamada (KMDA) Q3 2025: Adjusted EBITDA Climbs 34% as Portfolio Diversifies Beyond Royalties
Kamada’s third quarter delivered double-digit profit growth as new products and global expansion offset declining royalty streams. Management’s focus on portfolio diversity, biosimilar launches, and plasma center ramp-up is reshaping the company’s earnings mix and future revenue visibility. Operational execution and disciplined business development remain pivotal as Kamada transitions toward a more self-sustaining, integrated business model.
Summary
- Revenue Mix Shifts: Growth in biosimilars and international AAT sales is reducing reliance on U.S. royalties.
- Margin Resilience: Improved sales mix and scale are driving higher profitability despite royalty rate resets.
- Pipeline and M&A Watch: Clinical trial milestones and pending business development moves will shape 2026 trajectory.
Performance Analysis
Kamada’s third quarter revenue rose 13% year-over-year, driven by expansion in international markets and a broadened distribution portfolio. The company’s core business model—developing, manufacturing, and commercializing plasma-derived therapeutics—continued to generate robust cash flow, with adjusted EBITDA up 34% from the prior year. Segment drivers included Glacia, an AAT IV therapy, which saw outsized growth in Latin America and the CIS region, and VARZIG, a varicella zoster immune globulin that posted strong U.S. sales amid increased clinical awareness campaigns.
Despite a planned reduction in royalty rates from Takeda on Glacia sales in the U.S. and Canada, gross margin improved to 42% for the quarter, reflecting favorable product mix and operational scale. Operating expenses remained tightly controlled, with total spend flat year-over-year and R&D investment flexed to match clinical project timing. The Israeli distribution segment, now including biosimilars and respiratory therapies, delivered sequential and year-over-year growth, with management signaling this business could reach $15–20 million in annual sales within five years. Cash from operations reached $17.9 million year-to-date, supporting a healthy cash balance of $72 million and providing optionality for future M&A.
- Distribution Segment Expansion: Israeli distribution sales, including biosimilars, are now a material profit driver and are expected to grow further.
- Royalty Decline Offset: Planned drop in Glacia royalty rates was counteracted by international sales and new product launches.
- Cash Generation Strength: Strong operating cash flow supports both organic and inorganic growth initiatives.
Overall, Kamada’s ability to sustain double-digit profit growth amid shifting revenue streams underscores the resilience of its diversified model.
Executive Commentary
"We are excited for the growth prospects in our business over both the near and longer term, guided by our four-pillar growth strategy including organic commercial growth, business development, and M&A transactions, or plasma collection operation, and the advancement of our Pivotal Phase III in-health AET program."
Amir London, Chief Executive Officer
"It is important to note that we continue to achieve double-digit growth even through the expected decline in Glacia royalty income as a result of the reduction in the royalty rate that went into effect during the third quarter."
Jaime Orlev, Chief Financial Officer
Strategic Positioning
1. Diversification Beyond U.S. Royalties
Kamada’s earnings mix is shifting away from dependency on U.S. Glacia royalties, which dropped to 6% in Q3. Management is proactively compensating for this with international expansion and new product launches, particularly in Latin America, CIS, and Israel. Biosimilars and distribution products are emerging as significant contributors, with a target of $15–20 million in annual sales within five years.
2. Plasma Collection Vertical Integration
The company is ramping up its Houston and San Antonio plasma centers, each targeting 50,000 liters per year at full capacity. FDA approval for Houston has been secured, and San Antonio is expected to follow in early 2026. This move aims to secure supply for proprietary products and generate $8–10 million in annual revenue per site, reducing reliance on external plasma suppliers and enhancing supply chain resilience.
3. Pipeline and Clinical Development
The Pivotal Phase III Innovate trial for inhaled alpha-1 antitrypsin therapy (AATD) continues to progress, with interim futility analysis results due by year-end. Recruitment remains challenging due to orphan disease status and placebo controls, but management anticipates that positive interim results will accelerate enrollment. CytoGAM’s SHIELD study, targeting late-onset CMV in high-risk kidney transplant recipients, is expected to generate data supporting expanded clinical use and organic growth of the product.
4. M&A and Business Development Pipeline
Active due diligence on commercial targets continues, with management expecting to secure in-licensing or M&A transactions in early 2026. The focus remains on portfolio synergies and sustainable long-term growth rather than near-term revenue spikes. This conservative approach may delay deal execution but aims to ensure strategic fit and operational integration.
Key Considerations
Kamada’s Q3 results highlight a business in strategic transition, balancing near-term profit growth with long-term diversification and pipeline investment. The company’s ability to manage through royalty declines while investing in vertical integration and clinical programs will determine its future earnings power.
Key Considerations:
- Portfolio Breadth as Buffer: Diverse product and geographic mix is cushioning the impact of royalty resets.
- Biosimilars Acceleration: New launches in Israel are building a high-growth, recurring revenue base in distribution.
- Plasma Center Ramp Risks: Timely FDA and EMA approvals are critical for achieving targeted supply chain independence and revenue.
- Clinical Milestone Importance: Interim results from the Innovate trial will be a binary catalyst for the inhaled AATD program’s future.
- Disciplined M&A Approach: Lengthy due diligence reflects a focus on integration and long-term value rather than deal velocity.
Risks
Major risks include potential delays in plasma center regulatory approvals, which could impact both cost structure and supply chain reliability. Clinical pipeline execution risk is elevated, as enrollment challenges in the AATD trial and competitive gene therapy programs may slow progress. Royalty declines, while planned, still require sustained international and biosimilar growth to fully offset. External factors such as reimbursement dynamics, hospital formularies, and transplant procedure volumes also introduce variability.
Forward Outlook
For Q4 and year-end 2025, Kamada guided to:
- Annual revenue of $178–182 million
- Adjusted EBITDA of $40–44 million
For full-year 2025, management reiterated guidance, signaling confidence in continued organic growth and operational execution. Key factors highlighted include:
- Continued ramp in biosimilar launches and international AAT sales
- Imminent interim data from the Innovate trial and ongoing business development activities
Takeaways
Kamada’s Q3 2025 demonstrates the company’s ability to drive profit growth through commercial diversification and cost control, even as legacy royalty streams decline.
- Profitability Resilience: Double-digit EBITDA growth was achieved through improved mix and operational scale, despite anticipated royalty headwinds.
- Strategic Shift: Biosimilars, plasma vertical integration, and pipeline advancement are reshaping the earnings profile for the next phase of growth.
- Watch for Execution: Upcoming clinical trial milestones and M&A actions will be crucial in validating the new growth pillars.
Conclusion
Kamada’s third quarter underscores a successful pivot toward a more balanced and diversified business model, with new products and geographies increasingly offsetting legacy royalty declines. Operational discipline and pipeline execution will remain central to sustaining growth as the company enters a new phase of self-sufficiency and expansion.
Industry Read-Through
Kamada’s results provide a template for plasma therapeutics companies navigating expiring royalty agreements and shifting global demand. The move toward vertical integration in plasma collection and the strategic layering of biosimilars and distribution products reflect broader trends in specialty pharma, where supply chain control and portfolio breadth are becoming critical differentiators. Clinical trial execution and disciplined M&A remain industry-wide challenges, especially for orphan indications and complex biologics. The sector should watch for further consolidation and the increasing importance of international markets and biosimilar adoption as growth levers.