Alaris Royalty (5UK) Q3 2026 Earnings Report

The call was predominantly positive. Management reported strong cash-flow and revenue growth, record Run Rate Revenue, substantial investment deployment, improved payout coverage, low portfolio leverage, expanded financing capacity, and positive performance at several Partners. These strengths were offset by a quarterly net loss and significant non-cash fair value losses, expectedly flat 2027 resets, short-term issues at several Partners, macro-related pressure on LMS, softness in private equity markets, and uncertainty around exit timing. The cash-generating performance and outlook were emphasized as strong despite the accounting-driven decline in earnings and net book value.

Alaris expects 2027 resets, based on Partners’ 2026 financial performance, to be relatively flat overall; fourth-quarter total Partner revenue is forecast at approximately CAD 53 million, estimated next 12-month Run Rate Revenue is approximately CAD 231 million, and estimated Run Rate Payout Ratio is approximately 63%, below the long-term target range of 65%-70%. Based on current assumptions, Alaris expects to generate approximately CAD 125.8 million in annual net cash from operating activities, with approximately CAD 79.2 million allocated to unitholder distributions and approximately CAD 46.6 million available for reinvestment, debt repayment, and other corporate purposes. Alaris currently has about $140 million available on the credit facility and about $46 million generated a year in capacity, bringing available room to about $200 million; it expects more growth between now and year-end, still expects one or more exits in the coming months, and is targeting 2028 through 2030 for Brookfield and Sono Bello and the Ohana third-party partners. Barring future changes, it expects a recovery of about 50% of the write-down, or approximately 15% even just on the preferred portfolio alone.