| SEGMENT INFORMATION |
15. SEGMENT INFORMATION The Company has one reportable segment: rare neurological diseases. The rare neurological diseases segment consists of the Company’s commercial product, WAKIX, and its potential product candidates that focus on patients living with rare neurological diseases. The Company currently derives all of its revenue from sales of WAKIX and manages its business activities on a consolidated basis. The accounting policies of the rare neurological diseases segment are consistent with those described in Note 3, Summary of Significant Accounting Policies, and the measure of segment assets is reported on the consolidated balance sheets as total assets. The Company’s CODM is the chief executive officer. The CODM assesses performance of the rare neurological diseases segment using net income as reported in the consolidated statements of operations and comprehensive income. Net income is assessed by the CODM to make decisions on how to allocate resources, such as reinvesting profits into the rare neurological diseases segment or pursuing potential investing activities. The following table summarizes segment revenue and significant segment expenses for each of the three and six months ended June 30, 2026, and 2025: | | | | | | | | | | | | | Rare Neurological Diseases Segment | | Three Months Ended June 30, | | Six Months Ended June 30, | | 2026 | | 2025 | | 2026 | | 2025 | Net product revenue | $ | 261,280 | | $ | 200,489 | | $ | 476,667 | | $ | 385,222 | Less: | | | | | | | | | | | | Cost of product sold (a) | | 63,191 | | | 38,147 | | | 107,696 | | | 70,134 | Research and development (b) | | 44,034 | | | 33,046 | | | 79,052 | | | 65,284 | Sales and marketing (c) | | 32,311 | | | 28,421 | | | 62,210 | | | 56,388 | General and administrative (d) | | 16,884 | | | 20,334 | | | 37,282 | | | 38,212 | Depreciation and amortization | | 5,968 | | | 5,967 | | | 11,936 | | | 11,935 | Stock-based compensation | | 9,576 | | | 11,394 | | | 19,884 | | | 23,844 | Interest expense | | 3,070 | | | 3,646 | | | 6,304 | | | 7,482 | Interest income | | (7,072) | | | (5,296) | | | (12,829) | | | (10,340) | Income tax expense | | 17,834 | | | 9,861 | | | 25,033 | | | 21,478 | Other segment items (e) | | 53 | | | 15,193 | | | 32,180 | | | 15,469 | Consolidated net income | $ | 75,431 | | $ | 39,776 | | $ | 107,919 | | $ | 85,336 |
| (a) | Cost of product sold excluding depreciation. |
| (b) | Research and development excluding stock-based compensation and IPR&D. |
| (c) | Sales and marketing excluding stock-based compensation. |
| (d) | General and administrative excluding stock-based compensation and amortization. |
| (e) | Other segment items include other expense, net and IPR&D charges. |
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