Shareholders' Equity

3 Months Ended

Mar. 31, 2026

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 March 31, 2026, Royalty Pharma plc had 443,628 thousand Class A ordinary shares and 132,558 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 March 31, 2026, Royalty Pharma plc had 427,355 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 share repurchase program 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 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 the first quarter of 2026, we repurchased 1.1 million shares at a cost of approximately $50.1 million. As of March 31, 2026, approximately $1.7 billion remained available under the 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 condensed consolidated statements of shareholders’ equity.

Non-Controlling Interests

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


	Legacy Investors Partnerships		Continuing Investors Partnerships		Founder’s Equity		RP Holdings Class E Interests Holders		Total
December 31, 2025	$	1,083,319	$	1,799,783	$	—	$	354,937	$	3,238,039

Distributions	(92,180)		(25,422)		(15,894)		(5,714)		(139,210)
Other exchanges	—		(222,050)		—		(33,775)		(255,825)
Share-based compensation	—		—		—		31,717		31,717
Net income	63,213		78,049		15,894		16,410		173,566
March 31, 2026	$	1,054,352	$	1,630,360	$	—	$	363,575	$	3,048,287


	Legacy Investors Partnerships		Continuing Investors Partnerships		Founder’s Equity(1)		Total
December 31, 2024	$	1,188,340	$	2,207,445	$	—	$	3,395,785
Contributions	1,264		989		—		2,253
Distributions	(97,906)		(32,061)		(41,476)		(171,443)
Other exchanges	—		(321,669)		—		(321,669)
Net income	76,850		76,758		41,476		195,084
March 31, 2025	$	1,168,548	$	1,931,462	$	—	$	3,100,010

(1)Amounts represent the entirety of the EPAs prior to 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.

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”).

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.

Mr. 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. The Employee EPAs are accounted for as liability-classified share-based compensation arrangements.

We began making EPA payments in the first quarter of 2025 upon achievement of certain performance and return thresholds. In the first quarter of 2026 and 2025, total EPAs earned were $33.5 million and $41.5 million, respectively. Settlement of the EPAs consist of a combination of approximately equal amounts of Class A ordinary shares and cash payments, which are provided as tax advances. The table below summarizes the components of total EPAs earned (in thousands):


	For the Three Months Ended March 31,				Location Recorded in Condensed Consolidated Financial Statements
	2026		2025
Founder’s Equity(1)	$	15,894	$	41,476	Net income attributable to non-controlling interests
Employee EPAs	17,624		—		Accrued compensation liabilities (reduction of Employee EPAs liability)
Total	$	33,518	$	41,476

Form of Settlement
Cash	$	18,440	$	21,772	Distributions to continuing non-controlling interests (Founder’s Equity) Payments for Employee EPAs (Employee EPAs)
Shares(2)	15,078		19,704
Total	$	33,518	$	41,476

(1)For the first quarter of 2025, Founder’s Equity includes $19.7 million for Mr. Legorreta’s retained EPAs 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)Amounts represent shares earned during the respective quarter that are payable at each quarter end. As of March 31, 2026, $15.1 million is expected to be settled in shares in the second quarter of 2026. As of March 31, 2025, $19.7 million was settled in shares in the second quarter of 2025.

Holders of RP Holdings Class E Interests

We issued 24.5 million RP Holdings Class E Interests as part of the transaction for the Internalization, all of which were outstanding at closing of the Internalization and approximately 24.2 million remained outstanding as of March 31, 2026. 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 condensed consolidated statements of shareholders’ equity. The Holders of RP Holdings Class E Interests are entitled to any dividends and distributions from RP Holdings on a pro rata, per share basis and pari passu with holders of RP Holdings Class A Interests and RP Holdings Class B Interests. They are also entitled to a pro rata portion of RP Holdings’ net assets on the same basis. 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 March 31, 2026, approximately 3.8 million of RP Holdings Class E Interests had legally vested.

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 condensed 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 March 31, 2026, the ownership of RP Holdings was as follows: 4% by the Holders of RP Holdings Class E Interests, 19% by the Continuing Investors Partnerships and 77% by Royalty Pharma plc. As of March 31, 2025, the ownership of RP Holdings was as follows: 25% by the Continuing Investors Partnerships and 75% by Royalty Pharma plc.

Dividends

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. In the first quarter of 2026, we declared and paid one quarterly cash dividend of $0.235 per Class A ordinary share in an aggregate amount of $104.5 million to holders of our Class A ordinary shares.