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VNDA, Vanda Pharmaceuticals Inc.

Pharmaceuticals consumer brand Cyclical

Vanda Pharmaceuticals Inc. is a leading global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients.

HETLIOZ is the first product approved by the United States Food and Drug Administration (FDA) for patients with Non-24 and for patients with SMS.

Latest annual: FY2025 10-K

VNDA · Vanda Pharmaceuticals Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$216M

+8.7% YoY · −3% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $218M 5-yr avg $226M

Gross margin 88%

Operating margin −73.6% 5-yr avg −15.9%

ROIC −56% 5-yr avg −10%

Owner-earnings margin −58% 5-yr avg −3%

Free cash flow margin −58% 5-yr avg −3%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Fanapt (54%), Hetlioz (33%) and PONVORY (13%).
Situation: Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
What moves the needle: Operating margin has reached 16% at its best but run negative through the cycle (median −7.2%) — so the question is which reading is truer: whether the median was pulled below zero by one-off charges, by the cycle, or by spending it is still growing into, and whether it settles back at a profit. Stock-based pay runs about 5.9% of sales, a real and recurring claim on owners that the GAAP margin understates. Read this kind of business on the pipeline against the patent cliff, and pricing. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −0%, above 15% in 0 of 10 years). By owner earnings: roughly 9% of revenue reaches owners as cash, though it swings, and customers and suppliers fund the business through negative working capital. The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Revenue spreads across 3 lines, the largest Fanapt at 54%.

Revenue by product line, FY2025

Fanapt54%$117M
Hetlioz33%$71M
PONVORY13%$27M

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$146M	$165M	$193M	$227M	$248M	$269M	$254M	$193M	$199M	$216M	$218M	RevenueRevenue
68%	75%	55%	57%	57%	46%	54%	59%	74%	110%	118%	SG&A / revenueSG&A/rev
20%	23%	23%	21%	22%	28%	34%	40%	37%	51%	47%	R&D / revenueR&D/rev
($19M)	($17M)	$22M	$23M	$27M	$42M	$6M	($14M)	($41M)	($151M)	($160M)	Operating incomeOp. inc.
−12.7%	−10.2%	11.3%	10.0%	11.0%	15.7%	2.5%	−7.2%	−20.5%	−70.0%	−73.6%	Operating marginOp. mgn
($18M)	($16M)	$25M	$116M	$23M	$33M	$6M	$3M	($19M)	($220M)	($240M)	Net incomeNet inc.
—	—	1%	—	26%	22%	44%	—	—	—	—	Effective tax rateTax rate
											Cash flow & returns
($8M)	($2M)	$30M	$46M	$52M	$64M	$32M	$13M	($16M)	($109M)	($127M)	Operating cash flowOp. cash
$935K	$1M	$1M	$1M	$1M	$1M	$1M	$920K	$859K	$1M	$1M	DepreciationDeprec.
$429K	$2M	($8M)	($84M)	$14M	$14M	$8M	($5M)	($10M)	$100M	$103M	Working capital & otherWC & other
$1M	$2M	$368K	$1M	$2M	$552K	$679K	$383K	$490K	$998K	$783K	CapexCapex
1.0%	1.0%	0.2%	0.4%	0.7%	0.2%	0.3%	0.2%	0.2%	0.5%	0.4%	Capex / revenueCapex/rev
($9M)	($3M)	$30M	$45M	$50M	$64M	$31M	$12M	($16M)	($110M)	($127M)	Owner earningsOwner earn.
−6.2%	−1.9%	15.3%	19.8%	20.3%	23.7%	12.3%	6.4%	−8.2%	−51.1%	−58.5%	Owner earnings marginOE mgn
($10M)	($4M)	$30M	$45M	$50M	$64M	$31M	$12M	($16M)	($110M)	($127M)	Free cash flowFCF
−6.5%	−2.2%	15.3%	19.8%	20.1%	23.7%	12.3%	6.4%	−8.2%	−51.1%	−58.5%	Free cash flow marginFCF mgn
-16%	-14%	10%	6%	5%	7%	1%	-2%	-7%	-49%	-56%	ROICROIC
-14%	-12%	9%	28%	5%	7%	1%	0%	-4%	-67%	-85%	Return on equityROE
−14%	−12%	9%	28%	5%	7%	1%	0%	−4%	−67%	−85%	Retained to equityRetained/eq
											Balance sheet
$40M	$34M	$61M	$45M	$61M	$52M	$135M	$136M	$102M	$85M	$54M	Cash & investmentsCash+inv
$20M	$18M	$29M	$26M	$30M	$32M	$34M	$34M	$47M	$55M	$57M	ReceivablesReceiv.
$779K	$840K	$994K	$1M	$1M	$1M	$1M	$1M	$2M	$2M	$2M	InventoryInvent.
$16M	$20M	$22M	$28M	$32M	$34M	$46M	$38M	$39M	$68M	$61M	Accounts payablePayables
$5M	($2M)	$8M	($83K)	($193K)	($946K)	($11M)	($3M)	$10M	($12M)	($2M)	Operating working capitalOper. WC
$174M	$170M	$299M	$354M	$409M	$478M	$519M	$433M	$439M	$347M	$293M	Current assetsCur. assets
$50M	$70M	$53M	$60M	$66M	$74M	$91M	$88M	$100M	$145M	$136M	Current liabilitiesCur. liab.
3.5×	2.4×	5.6×	6.0×	6.2×	6.4×	5.7×	4.9×	4.4×	2.4×	2.2×	Current ratioCurr. ratio
$210M	$205M	$332M	$484M	$533M	$594M	$634M	$648M	$656M	$489M	$434M	Total assetsAssets
($40M)	($34M)	($61M)	($45M)	($61M)	($52M)	($135M)	($136M)	($102M)	($85M)	($54M)	Net debt / (cash)Net debt
$131M	$131M	$275M	$411M	$453M	$505M	$527M	$545M	$539M	$327M	$281M	Shareholders’ equityEquity
5.9%	6.3%	6.0%	5.9%	5.4%	5.7%	6.4%	7.3%	6.3%	4.4%	4.2%	Stock comp / revenueSBC/rev
											Per share
43.4M	44.7M	53.0M	54.8M	55.2M	56.9M	57.0M	57.6M	58.1M	58.9M	59.5M	Shares out (diluted)Shares
$3.36	$3.69	$3.64	$4.14	$4.50	$4.72	$4.46	$3.35	$3.42	$3.67	$3.66	Revenue / shareRev/sh
$-0.41	$-0.35	$0.48	$2.11	$0.42	$0.58	$0.11	$0.04	$-0.33	$-3.74	$-4.03	EPS (diluted)EPS
$-0.21	$-0.07	$0.56	$0.82	$0.91	$1.12	$0.55	$0.22	$-0.28	$-1.87	$-2.14	Owner earnings / shareOE/sh
$-0.22	$-0.08	$0.56	$0.82	$0.91	$1.12	$0.55	$0.22	$-0.28	$-1.87	$-2.14	Free cash flow / shareFCF/sh
$0.03	$0.04	$0.01	$0.02	$0.03	$0.01	$0.01	$0.01	$0.01	$0.02	$0.01	Cap. spending / shareCapex/sh
$3.02	$2.94	$5.19	$7.49	$8.21	$8.87	$9.25	$9.47	$9.26	$5.55	$4.72	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+1.0%/yr	−4.0%/yr
Capital spending / share	−6.9%/yr	−12.2%/yr
Book value / share	+7.0%/yr	−7.5%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

59Mpeak FY2025

ROIC

−49%low FY2025

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

($110M)owner earningsvs.($220M)net incomelow FY2025

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2018FY2023

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned a $220M loss into ($110M) of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	($220M)	($19M)	$3M	$6M	$33M
Depreciation & amortizationnon-cash charge added back	+$1M	+$859K	+$920K	+$1M	+$1M
Stock-based compensationreal costnon-cash, but a real cost	+$9M	+$12M	+$14M	+$16M	+$15M
Working capital & othertiming of cash in and out, other non-cash items	+$100M	−$10M	−$5M	+$8M	+$14M
Cash from operations	($109M)	($16M)	$13M	$32M	$64M
Capital expenditurecash put back in to keep running and to grow	−$998K	−$490K	−$383K	−$679K	−$552K
Owner earnings	($110M)	($16M)	$12M	$31M	$64M
Owner-earnings marginowner earnings ÷ revenue	-51%	-8%	6%	12%	24%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $9M), owner earnings is nearer ($120M).

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

No meaningful interest burden

Little or no interest expense reported

What this means
Little or no interest expense reported, the business isn't leaning on lenders to operate.
How heavy is the debt, net of cash? +$85M

Net cash, debt-free

Cash $85M − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $85M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -942d

Negative, funded by others

DSO 92 + DIO 29 − DPO 1063 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median -59%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 6%

Solid through the cycle

10-yr median margin, range -51%–24%; latest ($110M) = operating cash ($109M) − maintenance capex $998K

Industry peers: median -172%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -51% of revenue this year, a 6% median across 10 years. Treating stock comp as the real expense it is (less $9M of SBC) leaves ($120M).
Are earnings backed by cash? ($109M)

Loss, and burning cash

Net income ($220M) · cash from operations ($109M)

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did not.

How is the cash used?

Where do the earnings go? —

Not enough data

What this means
The filing data didn't include the inputs for this check.
Investing or harvesting? 0.90×

Maintaining

Capex $998K ÷ depreciation $1M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Miss

Revenue ≥ $2B · $216M

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.39×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Miss

A profit every year (10-yr record) · 4 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-1.31/share (latest year $-3.67), the averaged base the calculator's gate runs on, and book value is $5.44/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 6 of 10

What this means
Lost money in 4 year(s), look at what happened there before trusting the average.
Operating margin −4% → −33% (3-yr avg ends)

What this means
Through the cycle the operating margin slipped — about −4% early to −33% lately, median −7% — competition or costs are biting in.
Worst year 2025 · −70.0% op. margin

What this means
Operations went underwater in 2025, understand why before trusting the good years.
Share count +3.4%/yr

What this means
The share count is rising, dilution works against you on a per-share basis.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“There is also increasing use of data analytics, machine learning and artificial intelligence software, which our competitors may be able to use or implement more effectively than we are able to do.”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$293M

Cash & short-term investments$54M
Receivables$57M
Inventory$2M
Other current assets$181M

Current liabilities$136M

Accounts payable$61M
Other current liabilities$75M

Current ratio2.16×all current assets ÷ what's due · Graham looked for 2×

Quick ratio2.15×stricter: inventory excluded

Cash ratio0.40×strictest: cash alone against what's due

Working capital$158Mthe cushion left after near-term bills

Cash runway0.4 yrsthe business is consuming cash; this is how long the cash on hand lasts at that rate

Revenue, latest quarter vs. a year ago+3.4%the freshest read on whether the business is still growing

Current ratio, recent quarters4.7× → 2.2×

Deeper floors

Tangible book value$166Mequity stripped of goodwill & intangibles

Net current asset value$140MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$6M$6M of it operating leases

Deferred revenue$36Mcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $101M of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$9M · 9%
Retained (debt / cash)$92M · 91%

Net change in share count36.8%
The diluted count rose from 43M to 59M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Dr. Mihael H. Polymeropoulos	$6.2M	$5.6M	$64M
2022	Dr. Mihael H. Polymeropoulos	$4.3M	$860k	$31M
2023	Dr. Mihael H. Polymeropoulos	$3.7M	$1.8M	$12M
2024	Dr. Mihael H. Polymeropoulos	$3.9M	$4.3M	($16M)
2025	Dr. Mihael H. Polymeropoulos	$3.9M	$7.6M	($110M)

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership10.7%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$9M
The slice of the business handed to employees in shares this year, 4% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Vanda Pharmaceuticals Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

All 3 tests turned up something to look into. A record that trips every wire is one to understand slowly.

Look hereIs it less profitable than it was?−17.6% vs 2.4%
The owner-earnings margin averaged 2.4% early in the record and −17.6% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.
Look hereDid the share count rise anyway?36.8%
Diluted shares grew 36.8% over 2016–2025. Owners were diluted on net; each share owns less of the business than it did. Read the buyback line beside this one, not on its own.
Look hereDid receivables and inventory outpace sales?14% → 27% of sales
Receivables and inventory grew from $21M to $59M while revenue grew 49%: working capital is climbing faster than sales (14% of revenue then, 27% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Pharmaceuticals

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
AKBAAkebia Therapeutics Inc.	$236M	62%	-63.9%	-116%	-28%
ANABAnaptysBio Inc.	$235M	—	-206.9%	-25%	-172%
PBYIPuma Biotechnology Inc	$228M	76%	0.5%	-59%	8%
IDYAIDEAYA Biosciences Inc.	$219M	—	-180.4%	-22%	-191%
VNDAVanda Pharmaceuticals Inc.	$216M	89%	-2.4%	-0%	9%
AMRNAmarin Corporation plc	$214M	77%	-24.3%	-15%	-18%
RYTMRhythm Pharmaceuticals Inc.	$190M	90%	-238.1%	-67%	-176%
STOKStoke Therapeutics Inc.	$184M	—	-559.3%	-79%	-254%
Group median	—	77%	-122.1%	-42%	-100%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Vanda Pharmaceuticals Inc. has delivered.

Vanda Pharmaceuticals Inc.’s latest year shows negative owner earnings, a cyclical trough. So the tool opens on the through-cycle base, the cash it would earn at rest; clear the toggle below to read the latest year exactly as reported.

Today’s price $

Through the cycle, Vanda Pharmaceuticals Inc. earns about $20M on its 9.4% median owner-earnings margin. This year’s −51.1% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($20M) Net of stock comp (−$9M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth, delivered—

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings ($127M) on 60M shares outstanding, per the 10-Q cover, as of 2026-04-30; net cash $54M. The base opens on the through-cycle figure (the latest year sits off the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh VNDA against another business →

Cite: Owner Scorecard, "Vanda Pharmaceuticals Inc. (VNDA), the owner's record," https://ownerscorecard.com/c/VNDA, data as of 2026-07-09.

Manual order: ← VMI its page in the Manual VNO →

Industry order: ← UTHR the Pharmaceuticals chapter VRDN →