TG Therapeutics (TGTX): Revenue +70% And Operating Income FELL. Is TGTX a Buy?

TG Therapeutics, Inc. (TGTX) Q2 2026 — Reported before the open (Q2 2026, the three months ended June 30, 2026). Total revenue $240.3M, +70.3% — a ~$10.6M BEAT. BRIUMVI U.S. net product revenue $227.7M, +64%. But diluted EPS was $0.05 against a Street estimate near $0.31, and operating income FELL to $21.7M from $34.8M — a 9.0% margin against 24.7%. FY2026 total revenue target RAISED to ~$950M from ~$925M, but the BRIUMVI U.S. target moved only $5M, to $890–905M. The stock closed at $46.46, DOWN 10.7% from a $52.03 close, after trading green at $52.65 in the first minutes. The arithmetic nobody ran: revenue rose $99.187M and cost of revenue rose $22.256M, so gross profit rose $76.931M — a 77.6% incremental margin, BELOW the 82.9% TGTX already earns. R&D rose $63.555M and SG&A rose $26.545M: $90.100M of new operating expense against $76.931M of new gross profit. Operating income therefore FELL $13.169M on a quarter that grew 70%. THE CALL: HOLD (3/5, THE DRUG IS WINNING. THE MARGIN IS NOT.) — base-case value ~$41.5 vs ~$46.46 today. KEY METRICS: - CALL: HOLD 3/5 — fair value ~$41.50 vs $46.46 (about 11% BELOW). Two-step, because $7.8M of net income on $240.3M of revenue and free cash flow that has swung between -$28.7M and +$19.7M across five quarters cannot take an owner-earnings DCF. STEP 1 is the quarterly BRIUMVI curve guidance implies. STEP 2 is a 10-year DCF on ECONOMIC free cash flow (after stock comp, capex, cash tax and interest): base case 18% growth in 2027 fading to 4%, margin 20% to 28%, 10.5% discount, 2.5% terminal = $40.24. Bear $13.56, bull $72.18. Weighted 25/50/25 = $41.56. - THE INCREMENTAL DOLLAR WENT BACKWARDS: revenue rose $99.187M ($141.148M to $240.335M, +70.3%) and cost of revenue rose $22.256M, so gross profit rose $76.931M — a 77.6% INCREMENTAL margin, below the 82.9% TGTX already earns. R&D rose $63.555M ($31.782M to $95.337M) and SG&A rose $26.545M ($55.585M to $82.130M) — $90.100M of new operating expense against $76.931M of new gross profit, about $1.17 of new cost per new dollar of gross profit. Operating income FELL $13.169M, from $34.843M to $21.674M; margin 24.7% to 9.0%. Net income $7.781M vs $28.187M, DOWN 72%. Fair qualification: $54.6M of the R&D increase is subcutaneous manufacturing and secondary-manufacturer start-up cost. - THE GUIDANCE RAISE IS SMALLER THAN IT LOOKS: total global revenue went from ~$925M to ~$950M, but the BRIUMVI U.S. target moved only from $885-900M to $890-905M — $5M at the midpoint (0.6%) after a ~$10.6M revenue beat. H1 U.S. BRIUMVI was $422.5M, so the guide implies H2 of $467.5-482.5M against $455.4M for a flat run rate. Management also expects to EXIT 2026 at an ~$1B annualised U.S. run rate (a Q4 near $250M), which implies Q3 at roughly $218-233M — against the $227.7M just delivered, and against a Street Q3 estimate of ~$244.7M. - THE BALANCE SHEET CHANGED CHARACTER IN MARCH: cash and investments went from $199.511M to $612.253M, but via a five-year $750M senior secured facility from Blue Owl Capital ($250M of old debt repaid, $500M net non-dilutive). Interest expense went from $6.716M to $16.572M, +147% — roughly $66M a year, about 8.8% money, against $7.781M of quarterly net income. Total equity FELL from $648.020M to $604.083M despite $27.558M of H1 net income, because the buyback authorisation was lifted from $100M to $300M; weighted-average basic shares fell from 146.7M to 141.8M. - THE BULL CASE, AT FULL STRENGTH: BRIUMVI U.S. $227.7M, +64% YoY and +16.9% sequentially from $194.8M. Subcutaneous Phase 1 showed mean bioavailability >60% vs IV, supporting quarterly dosing in a fully enrolled Phase 3 reading out year-end 2026/Q1 2027. The ENHANCE Phase 3 met its primary endpoint — a single 600mg Day 1 infusion replaces the Day 1 + Day 15 regimen. A registration-directed Phase 2 in myasthenia gravis (BRIUMVI maintenance after efgartigimod induction), a Phase 2 in treatment-resistant schizophrenia, and azer-cel Phase 1 data in progressive MS in H2. $612.3M of cash. At $46.46 across 157.3M diluted shares the EV is ~$7.45B — 7.8x the FY2026 revenue target. What to watch: Bullish: subcutaneous BRIUMVI hitting its Phase 3 at year-end 2026/Q1 2027; a third quarter above $240M in U.S. product revenue (which would prove the flat-quarter guide was conservatism); operating expense holding flat in Q4 as the $54.6M subcutaneous manufacturing spend rolls off. Bearish: U.S. BRIUMVI revenue below $220M in Q3, confirming a genuine deceleration; the $54.6M quarterly subcutaneous charge failing to fall in Q4 (a build cost has to end); any further increase in gross-to-net deductions or in the interest burden on the $754M Blue Owl facility. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.