Krystal sold more VYJUVEK and kept more of the money in the latest reported period.
Revenue rose 24.1% to $119.2 million versus the comparable period a year earlier. Operating income grew 48.3%, and operating margin reached 49.0%. Shares still fell 7% at the latest close, a reminder that a profitable biotech can carry more than one storyline at once.
The revenue increase reflects launches in Europe and Japan. The complication is that US VYJUVEK sales fell while inventory built faster than sales.
Krystal attributed the revenue increase to new launches in Europe and Japan, with lower US VYJUVEK sales taking some of the shine off the expansion:
"The increase in product revenue, net was driven by an increase in VYJUVEK sales as compared to the prior year, primarily due to launches in our Europe and Japan markets, partially offset by a reduction in United States VYJUVEK sales."
Krystal Biotech, 10-Q, August 3, 2026
That is a geographic shift, not simply a bigger version of the same commercial machine. Krystal does not say why US sales fell. The filing does show inventory up 46.8%, ahead of the 24.1% revenue increase, so the product sitting on the balance sheet deserves a place in the story alongside the product moving through the income statement.
The margin expansion has a disclosed operating explanation. Krystal said manufacturing process optimizations lowered average costs per unit, even as VYJUVEK sales increased:
"The decrease was driven by manufacturing process optimizations that resulted in lower average costs per unit partially offset by an increase in VYJUVEK sales."
Krystal Biotech, 10-Q, August 3, 2026
That helps explain why profit grew faster than revenue. Free cash flow margin was 61.3%, up 20.3 percentage points from the comparable period. Cash reached $427.7 million, though operating cash flow also reflected a $36.6 million increase in net income and a $31.3 million effect from the final PeriphaGen settlement payment made in the first quarter of 2025. Cash generation improved, but one settlement-related comparison is still in the plumbing.
The broader trajectory is substantial: the company’s annual results show revenue reaching $389.1 million in 2025, up 33.9%, while annual operating margin reached 41.5%. Research and development spending also rose, tied to clinical development, product-candidate materials, and the timing of manufacturing runs across KB111, KB407, KB707, KB801, and KB803. The latest accounts show the timing of that spending across a wider pipeline.
At a 49.9x price-to-earnings ratio, the numbers are being read alongside a reported 166.4% premium to the filing-peer median, not in isolation. The filing supplies evidence for both sides of the current tension: launches are adding revenue and manufacturing changes are lifting margins, while US sales are lower and inventory is growing faster than the top line.
Krystal’s next quarterly report will have to put a fresh number on the US VYJUVEK trend and inventory growth. The unanswered question in Krystal’s reporting is whether US VYJUVEK sales recover while inventory growth moves back below revenue growth.