INSMED IncINSM
INSMED Inc Revenue Disclosure
4. Product Revenues, Net
In accordance with ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract to determine which are performance obligations and to assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. For all contracts that fall into the scope of ASC 606, the Company has identified one performance obligation: the sale of its marketed products to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers.
Product revenues, net consist of global net sales of ARIKAYCE and US net sales of BRINSUPRI. The Company's customers in the US include specialty pharmacies and a specialty distributor. Product revenues are recognized once the Company performs and satisfies all five steps of the revenue recognition criteria described above.
The following table presents a geographic summary of the Company's product revenues, net for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| ARIKAYCE | |||||||||||||||||
| US | $ | 280,294 | $ | 254,800 | $ | 224,195 | |||||||||||
| International | 153,471 | 108,907 | 81,013 | ||||||||||||||
| Total | $ | 433,765 | $ | 363,707 | $ | 305,208 | |||||||||||
| BRINSUPRI | |||||||||||||||||
| US | $ | 172,658 | $ | — | $ | — | |||||||||||
| Total | $ | 172,658 | $ | — | $ | — | |||||||||||
| Total | |||||||||||||||||
| US | $ | 452,952 | $ | 254,800 | $ | 224,195 | |||||||||||
| International | 153,471 | 108,907 | 81,013 | ||||||||||||||
| Total product revenues, net | $ | 606,423 | $ | 363,707 | $ | 305,208 | |||||||||||
During the years ended December 31, 2025, 2024 and 2023, sales of ARIKAYCE in Japan comprised 80%, 81% and 81% of international ARIKAYCE revenues, respectively.
Revenue is recorded at net selling price (transaction price), which includes estimates of variable consideration for which reserves are established for (a) customer credits, such as invoice discounts for prompt pay, (b) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care rebates, (c) estimated chargebacks, and (d) estimated costs of co-payment assistance. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (prompt pay discounts and chargebacks), prepaid expenses (co-payment assistance), or as a current liability (rebates). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company's historical experience, current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.
Customer credits: Certain of the Company's customers are offered various forms of consideration, including prompt payment discounts. The payment terms for sales to specialty pharmacies and specialty distributors for prompt payment discounts are based on contractual rates agreed with the respective specialty pharmacies and distributors. The Company anticipates that its customers will earn these discounts and, therefore, deducts the full amount of these discounts from total gross product revenues at the time such revenues are recognized.
Rebates: The Company contracts with certain government agencies and managed care organizations, or collectively, third-party payors, so that its marketed products will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. The Company estimates the rebates it will provide to third-party payors and deducts these estimated amounts from total gross product revenues at the time the revenues are recognized. These reserves are recorded in the same period in which the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. The current liability is included in accounts payable and accrued liabilities on the consolidated balance sheets. The Company estimates the rebates that it will provide to third-party payors based upon (i) the Company's contracts with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, (iii) a range of possible outcomes that are probability-weighted for the estimated payor mix, and (iv) information obtained from the Company's specialty pharmacies.
Chargebacks: Chargebacks are discounts that occur when certain contracted customers, currently public health service institutions and federal government entities purchasing via the Federal Supply Schedule, purchase directly from the Company's specialty distributor. Contracted customers generally purchase the product at a discounted price and the specialty distributor, in turn, charges back to the Company the difference between the price the specialty distributor initially paid and the discounted price paid by the contracted customers. The Company estimates chargebacks provided to the specialty distributor and deducts these estimated amounts from gross product revenues, and from accounts receivable, at the time revenues are recognized.
Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. Based upon the terms of the program and information regarding programs provided for similar specialty pharmaceutical products, the Company estimates the average co-pay mitigation amounts and the percentage of patients that it expects to participate in the program in order to establish accruals for co-payment assistance. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue. The Company adjusts its accruals for co-pay assistance based on actual redemption activity and estimates of future redemptions related to sales in the current period.
If any, or all, of the Company's actual experience varies from its estimates, the Company may need to adjust prior period accruals, affecting revenue in the period of adjustment.
The Company also recognizes revenue related to various MAPs in Europe. During the fourth quarter of 2022, the Company agreed with French authorities on the final reimbursement price related to the temporary authorization for use (Autorisation Temporaire d'Utilisation or ATU) program in France. The accrued France ATU reimbursement payable as of December 31, 2025 relates to current year sales and is recorded within accounts payable and accrued liabilities in the consolidated balance sheets. See Note 8 - Accounts Payable and Accrued Liabilities for further details.
The following table provides a summary rollforward of the Company's sales allowances and related accruals for the years ended December 31, 2025 and 2024, which have been deducted in arriving at product revenues, net (in thousands):
| Customer Credits, Fees and Discounts | Rebates, Chargebacks and Co-pay Assistance | Total | |||||||||||||||
| Balance as of December 31, 2023 | $ | 15,482 | $ | 10,177 | $ | 25,659 | |||||||||||
| Allowances for current period sales | 14,410 | 41,082 | 55,492 | ||||||||||||||
| Allowances for prior period sales | 100 | 3,380 | 3,480 | ||||||||||||||
| Payments and credits | (22,415) | (39,958) | (62,373) | ||||||||||||||
| Balance as of December 31, 2024 | $ | 7,577 | $ | 14,681 | $ | 22,258 | |||||||||||
| Allowances for current period sales | 23,746 | 111,829 | 135,575 | ||||||||||||||
| Allowances for prior period sales | — | 500 | 500 | ||||||||||||||
| Payments and credits | (19,876) | (59,102) | (78,978) | ||||||||||||||
| Balance as of December 31, 2025 | $ | 11,447 | $ | 67,908 | $ | 79,355 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.