Indivior Pharmaceuticals, Inc. (INDV) stock intrinsic value fair value estimate & owner earnings analysis

Indivior sells buprenorphine-based treatments for opioid use disorder. In 2025 it had net revenue of $1,239 million: SUBLOCADE, a monthly injection, was $856 million (69%); sublingual products led by SUBOXONE Film were $351 million; PERSERIS $24 million and OPVEE $8 million. The U.S. was $1,053 million of the total. SUBLOCADE has grown from $630 million in 2023 to $756 million in 2024 and $856 million in 2025. SUBOXONE Film is shrinking (its share of oral buprenorphine prescriptions fell from 16% to 14% in 2025) and the company stopped promoting it in 2020 under its U.S. Department of Justice agreement. Marketing of PERSERIS (July 2024) and OPVEE (third quarter 2025) has been dropped. What changed the picture: the legal overhang is largely gone. Litigation settlement expense was $239 million in 2023 and $195 million in 2024. In November 2025 the company prepaid its remaining $295 million Department of Justice obligation. The antitrust matters are fully paid. What remains is $94 million of accrued litigation, mostly $80 million for opioid lawsuits payable over about five years. Because settlement payments are stripped out of our owner-earnings measure as working-capital movements, we deduct that $94 million from every case. Owner earnings (operating cash flow, less working-capital movements, less stock compensation, less maintenance capital spending) were $139 million in 2025, or $1.09 per share, versus $0.23 in 2024, $(0.20) in 2023 and $(1.03) in 2022. The 2022-2024 figures carry heavy litigation charges and 2023 also carries a $162 million acquired-research write-off, so only 2025 describes the business as it now exists. The 2025 result rebuilds exactly from net income plus non-cash items. Only four years of filings were available. The 2025 figure understates today's earning power. The company's second-quarter 2026 report (August 3, 2026) shows six-month revenue of $660 million (up 16%), SUBLOCADE of $486 million (up 26%), U.S. SUBLOCADE units up 18% in the quarter and net income of $211 million in six months. Three consecutive strong periods (second half of 2025 net income of $145 million, then $89 million and $122 million in the first two quarters of 2026) corroborate a step up. On our basis, six-month 2026 owner earnings are about $245 million. Of that, $52 million comes from non-cash deferred taxes, so we treat taxes as fully paid and annualize: about $386 million, less about $25 million for extra interest (debt rose from $333 million at year-end 2025 to $487 million) and lower interest income, giving about $361 million a year, or roughly $2.9 per share on 124 million diluted shares. Growth check: owner earnings per share rose from $0.23 to $1.09 in 2025 (distorted by the 2024 litigation charge); our base assumes about $3.5 per share for 2026 including tax carryforwards. The reason is the dated 2026 actuals above and the November 2025 prepayment; management's own outlook was not used to set the level. Base case, $22.2 per share: the SUBLOCADE-and-other business is held flat at about $229 million a year and receives no further growth credit, since more volume depends on the market expanding and share gains not yet achieved. The sublingual business, which we estimate contributes about $132 million a year after tax, declines 10% a year, matching 2024 and 2025 (revenue fell 11% and 10%). We credit the company's tax loss, interest and foreign-credit carryforwards ($158 million) as $70 million, $55 million and $33 million in 2026-2028. After 2036 nothing we can evidence protects SUBLOCADE; the filing points to challenges to its intellectual property and BRIXADI is already approved. Earnings therefore fade to zero over five years. Total value $2,851 million less $94 million litigation = $2,757 million, or $22.2 per share. Bear case, $6.2 per share: earnings fall back to the 2025 level of $139 million and erode 10% a year through 2036, then nothing. That reflects named risks: BRIXADI competition, possible increased rebates and Medicaid cuts described in the risk factors, and a leveraged balance sheet (current liabilities exceeded current assets by over $250 million at year-end 2025 because rebates are paid before receivables are collected, and the term loan carries leverage and interest-coverage covenants). Value $859 million less $94 million = $765 million. Bull case, $33.7 per share: the 2026 run rate of $386 million holds and SUBLOCADE revenue, about $1,030 million in 2026 by our estimate, grows 10%, 8%, 6%, 4% and 2% in 2027-2031 with about 31% of added revenue reaching owner earnings. Support: three years of growth, record new patient starts of 32,816 in the second quarter of 2026, and the Raleigh manufacturing expansion for SUBLOCADE, with $30-40 million of 2026 capital spending planned. Earnings fade over ten years after 2036. Value $4,277 million less $94 million = $4,183 million. Pending merger: on August 3, 2026 Indivior agreed an all-stock merger with Supernus. Supernus holders receive 1.5401 Indivior shares per share, Indivior holders would own about 56.5%, and Indivior holders would receive a $1.0 billion special cash dividend before closing, partly funded by a $650 million term loan. Closing is expected in the fourth quarter of 2026, subject to approvals. Our values are Indivior alone and do not adjust for the dividend or the combined business. What would make this wrong: a SUBLOCADE patent or generic challenge that succeeds earlier than we assume, or heavier rebates. The share count (124 million) is the second-quarter diluted average; the company repurchased 4.7 million shares in that quarter. Patent expiry dates for SUBLOCADE could not be located in the filing sections we reviewed.