Teva posts $4.3 billion revenue in first quarter 2019
May 2, 2019-
- Revenues of $4.3 billion
-
- GAAP diluted loss per share of $0.10
-
- Non-GAAP diluted EPS of $0.60
-
- Free cash flow of $360 million
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- Spend base reduction of $2.5 billion since initiation of the
restructuring plan in 2018; on-track to achieve $3.0 billion by the
end of 2019
- Spend base reduction of $2.5 billion since initiation of the
-
- Full year 2019 revenues and EPS guidance reaffirmed
JERUSALEM–(BUSINESS WIRE)–Teva Pharmaceutical Industries Ltd. (NYSE: TEVA, TASE: TEVA) today
reported results for the quarter ended March 31, 2019.
Mr. Kåre Schultz, Teva’s President and CEO, said, “The second year of
our two-year restructuring program got off to a promising start. We are
on track to reduce our total cost base by $3 billion by the end of 2019
and we have achieved a reduction of $2.5 billion to date, while
continuing to lower our debt. “
Mr. Schultz continued: “We faced the expected loss of exclusivities of
key products COPAXONE® and ProAir® to generic
competition. Our focus is on stabilizing our global generics business
and ensuring the success of our long-term organic growth drivers,
especially AJOVY® and AUSTEDO®. Both products
continue to gain momentum since their initial launches and we are making
the necessary investments to be able to bring them to markets outside of
the U.S. as well as explore additional indications.”
First Quarter 2019 Consolidated Results
Revenues in the first quarter of 2019 were $4,295 million, a
decrease of 15%, or 12% in local currency terms, compared to the first
quarter of 2018, mainly due to generic competition to COPAXONE®
and a decline in revenues from our respiratory products and U.S.
generics business.
Exchange rate differences between the first quarter of 2019 and
the first quarter of 2018 negatively impacted our revenues and GAAP
operating income by $177 million and $49 million, respectively. Our
non-GAAP operating income was negatively impacted by $58 million.
GAAP gross profit was $1,856 million in the first quarter of
2019, a decrease of 20% compared to the first quarter of 2018. GAAP gross
profit margin was 43.2% in the first quarter of 2019, compared to
45.7% in the first quarter of 2018. Non-GAAP gross profit was
$2,150 million in the first quarter of 2019, a decline of 18% from the
first quarter of 2018. Non-GAAP gross profit margin was 50.1% in
the first quarter of 2019, compared to 51.7% in the first quarter of
2018. The decrease in gross profit margin was mainly due to lower
profitability in North America resulting mainly from a decline in
COPAXONE revenues due to generic competition and lower revenues of
certain other specialty products.
Research and Development (R&D) expenses in the first quarter
of 2019 were $261 million, a decrease of 18% compared to the first
quarter of 2018. Non-GAAP R&D expenses were $255 million, or 5.9% of
quarterly revenues in the first quarter of 2019, compared to $289
million, or 5.7%, in the first quarter of 2018. The decrease in R&D
expenses resulted primarily from pipeline optimization, phase 3 studies
that have ended and related headcount reductions.
Selling and Marketing (S&M) expenses in the first quarter of
2019 were $648 million, a decrease of 12% compared to the first quarter
of 2018. Non-GAAP S&M expenses were $602 million, or 14.0% of quarterly
revenues, in the first quarter of 2019, compared to $682 million, or
13.5%, in the first quarter of 2018. The decrease was mainly due to cost
reduction and efficiency measures as part of the restructuring plan.
General and Administrative (G&A) expenses in the first
quarter of 2019 were $292 million, a decrease of 11% compared to the
first quarter of 2018. Non-GAAP G&A expenses were $280 million, or 6.5%
of quarterly revenues, in the first quarter of 2019, compared to $322
million, or 6.4%, in the first quarter of 2018. The decrease was mainly
due to cost reduction and efficiency measures as part of the
restructuring plan.
GAAP other income in the first quarter of 2019 was $6 million,
compared to $203 million in the first quarter of 2018. Non-GAAP other
income in the first quarter of 2019 was $6 million, compared to $110
million in the first quarter of 2018. Other income in the first quarter
of 2018 was primarily the result of higher Section 8 recoveries from
multiple cases in Canada and net gain related to the divestment of our
women’s health business.
GAAP operating income in the first quarter of 2019 was $134
million, compared to $1,525 million in the first quarter of 2018.
Non-GAAP operating income in the first quarter of 2019 was $1,019
million, a decrease of 29% compared to $1,435 million in the first
quarter of 2018. The decrease in non-GAAP operating income was mainly
due to lower profits in North America resulting mainly from a decline in
COPAXONE revenues due to generic competition, lower revenues of certain
other specialty products in North America and lower other income,
partially offset by cost reductions and efficiency measures as part of
the restructuring plan.
EBITDA (non-GAAP operating income, which excludes amortization
and certain other items, as well as depreciation expenses) was $1,154
million in the first quarter of 2019, a decrease of 27% compared to
$1,587 million in the first quarter of 2018.
GAAP Financial expenses were $218 million in the first quarter of
2019, compared to $271 million in the first quarter of 2018.
Non-GAAP financial expenses were $220 million in the first
quarter of 2019, compared to $203 million in the first quarter of 2018.
The increase in non-GAAP financial expenses was mainly due to increased
interest expense as a result of the $4.4 billion bond issuance in March
2018, partially offset by reduced financial expenses as a result debt
repayments during 2018.
In the first quarter of 2019, we recognized a tax expense
of $9 million, or 11%, on pre-tax loss of $84 million. In the first
quarter of 2018, we recognized a tax expense of $46 million on pre-tax
income of $1,254 million. Our tax rate for the first quarter of 2019 was
mainly affected by impairments, amortization and interest disallowance
as a result of the U.S. Tax Cuts and Jobs Act. Non-GAAP income taxes
for the first quarter of 2019 were $125 million, or 16%, on pre-tax
non-GAAP income of $799 million. Non-GAAP income taxes in the first
quarter of 2018 were $211 million, or 17%, on pre-tax non-GAAP income of
$1,232 million. Our non-GAAP tax rate for the first quarter of 2019 was
mainly affected by the mix of products sold in different geographies.
GAAP net loss attributable to ordinary shareholders and GAAP
diluted loss per share in the first quarter of 2019 were $105
million and $0.10, respectively, compared to income of $1,055 million
and diluted earnings per share of $1.03 in the first quarter of 2018.
Non-GAAP net income attributable to ordinary shareholders and
non-GAAP diluted EPS in the first quarter of 2019 were $654
million and $0.60, respectively, compared to $954 million and $0.94 in
the first quarter of 2018.
The weighted average diluted outstanding shares used for the
fully diluted share calculation on a GAAP basis for the three months
ended March 31, 2019 and 2018 were 1,090 million and 1,020 million
shares, respectively. In the first quarter of 2019, the weighted average outstanding
shares for the fully diluted EPS calculation on a non-GAAP basis was
1,093 million, compared to 1,020 million in the first quarter of 2018.
The increase was mainly due to the conversion of the mandatory
convertible preferred shares to ordinary shares on December 17, 2018.
As of March 31, 2019 and 2018, the fully diluted share count for
purposes of calculating our market capitalization was approximately
1,107 million and 1,095 million, respectively. Non-GAAP information:
Net non-GAAP adjustments in the first quarter of 2019 were $759 million.
Non-GAAP net income and non-GAAP EPS for the first quarter of 2019 were
adjusted to exclude the following items:
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- Impairment of long-lived assets of $489 million comprised mainly of
impairment of intangible assets of product rights and IPR&D assets
related to the Actavis Generics acquisition;
- Impairment of long-lived assets of $489 million comprised mainly of
-
- Amortization of purchased intangible assets amounting to $283 million,
of which $248 million is included in cost of goods sold and the
remaining $35 million in S&M expenses;
- Amortization of purchased intangible assets amounting to $283 million,
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- Legal settlements and loss contingencies of $57 million;
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- Equity compensation expenses of $34 million;
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- Restructuring expenses of $32 million;
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- Contingent consideration income of $71 million;
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- Minority income of $8 million;
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- Other non-GAAP items of $59 million; and
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- Income tax of $116 million.
Teva believes that excluding such items facilitates investors’
understanding of its business. See the attached tables for a
reconciliation of the GAAP results to the adjusted non-GAAP figures.
Investors should consider non-GAAP financial measures in addition to,
and not as replacement for, or superior to, measures of financial
performance prepared in accordance with GAAP.
Cash flow generated from operations during the first quarter of
2019 was $112 million, compared to $1,496 million in the first quarter
of 2018.
Free cash flow (cash flow generated from operations net of
capital expenditures and deferred purchase price cash component
collected for securitized trade receivables) was $360 million in the
first quarter of 2019, compared to $1,894 million in the first quarter
of 2018. The higher free cash flow in the first quarter of 2018 was
mainly due to the proceeds from the working capital adjustment with
Allergan and the legal settlement with Rimsa. In addition, the lower
cash flow in the first quarter of 2019 was mainly due to lower revenues
from COPAXONE, as well as a decline in sales of certain other specialty
products and generic products.
As of March 31, 2019, our debt was $28,624 million, compared to
$28,916 million as of December 31, 2018, mainly due to favorable
exchange rates, as well as the repurchase and cancellation of $126
million of our $1,700 million 1.7% senior notes due July 2019. The
portion of total debt classified as short-term as of March 31, 2019 was
10%, compared to 8% as of December 31, 2018. The increase in 2019 was
due to a net increase in current maturities.
Segment Results for the First Quarter 2019
North America Segment
Our North America segment includes the United States and Canada.
The following table presents revenues, expenses and profit for our North
America segment for the three months ended March 31, 2019 and 2018:
| Three months ended March 31, | ||||||||||||
| 2019 | 2018 | |||||||||||
| (U.S.$ in millions / % of Segment Revenues) | ||||||||||||
| Revenues | 2,047 | 100 | % | 2,531 | 100.0 | % | ||||||
| Gross profit | 1,039 | 50.8 | % | 1,403 | 55.5 | % | ||||||
| R&D expenses | 165 | 8.1 | % | 188 | 7.4 | % | ||||||
| S&M expenses | 268 | 13.1 | % | 276 | 10.9 | % | ||||||
| G&A expenses | 112 | 5.5 | % | 126 | 5.0 | % | ||||||
| Other income | (4 | ) | § | (102 | ) | (4.0 | %) | |||||
| Segment profit | 498 | 24.3 | % | 915 | 36.2 | % | ||||||
Revenues from our North America segment in the first quarter of
2019 were $2,047 million, a decrease of $484 million, or 19%, compared
to the first quarter of 2018, mainly due to a decline in revenues of
COPAXONE, our U.S. generics business, BENDEKA® / TREANDA®
and QVAR®, partially offset by higher revenues from our Anda
business, AUSTEDO® and AJOVY®. Revenues in the
United States, our largest market, were $1,911 million in the first
quarter of 2019, a decrease of $479 million, or 20%, compared to the
first quarter of 2018.
Revenues by Major Products and Activities
The following table presents revenues for our North America segment by
major products and activities for the three months ended March 31, 2019
and 2018:
| North America |
Three months ended |
Percentage |
||||||
| 2019 | 2018 | 2018-2019 | ||||||
| (U.S.$ in millions) | ||||||||
| Generic products | $ | 966 | $ | 1,088 | (11%) | |||
| COPAXONE | 208 | 476 | (56%) | |||||
| BENDEKA / TREANDA | 122 | 181 | (33%) | |||||
| ProAir | 59 | 130 | (55%) | |||||
| QVAR | 64 | 107 | (41%) | |||||
| AJOVY | 20 | – | NA | |||||
| AUSTEDO | 74 | 30 | 151% | |||||
| Anda | 379 | 331 | 14% | |||||
| Other | 155 | 188 | (18%) | |||||
| Total | 2,047 | 2,531 | (19%) | |||||
Generic products revenues in our North America segment in the
first quarter of 2019 decreased by 11% to $966 million, compared to the
first quarter of 2018, mainly due to market dynamics, price erosion in
our U.S. generics business and portfolio optimization, partially offset
by new generic product launches.
In the first quarter of 2019, we led the U.S. generics market in total
prescriptions and new prescriptions, with approximately 436 million
total prescriptions (based on trailing twelve months), representing 12%
of total U.S. generic prescriptions according to IQVIA data.
COPAXONE revenues in our North America segment in the first
quarter of 2019 decreased by 56% to $208 million, compared to the first
quarter of 2018, mainly due to generic competition in the United States.
COPAXONE revenues in the United States were $194 million in the first
quarter of 2019.
BENDEKA and TREANDA combined revenues in our North America
segment in the first quarter of 2019 decreased by 33% to $122 million,
compared to the first quarter of 2018, mainly due to lower volumes and
lower pricing, resulting partly from the June 2018 launch of a
ready-to-dilute bendamustine hydrochloride by Eagle Pharmaceuticals, Inc.
ProAir revenues in our North America segment in the first quarter
of 2019 decreased by 55% to $59 million, compared to the first quarter
of 2018, mainly due to lower volumes and lower net pricing. In January
2019, we launched our own ProAir authorized generic in the United
States, following the launch of a generic version of Ventolin®
HFA, another albuterol inhaler. Revenues from our ProAir HFA authorized
generic are included in “generic products” above.
QVAR revenues in our North America segment in the first quarter
of 2019 decreased by 41% to $64 million, compared to the first quarter
of 2018. The decrease in sales in the first quarter of 2019 was mainly
due to higher than normal volumes during the first quarter of 2018 in
connection with the launch of QVAR® RediHaler™ and lower net
pricing.
AJOVY revenues in our North America segment in the first quarter
of 2019 were $20 million. AJOVY was approved by the FDA and launched in
the United States in September 2018 for the preventive treatment of
migraine in adults.
AUSTEDO revenues in our North America segment in the first
quarter of 2019 were $74 million, compared to $30 million in the first
quarter of 2018.
Anda revenues in our North America segment increased by 14% to
$379 million in the first quarter of 2019, compared to the first quarter
of 2018 mainly due to higher volumes.
North America Gross Profit
Gross profit from our North America segment in the first quarter of 2019
was $1,039 million, a decrease of 26% compared to $1,403 million in the
first quarter of 2018. The decrease was mainly due to lower revenues
from COPAXONE, as well as a decline in sales of certain other specialty
products and generic products, partially offset by higher sales of
AUSTEDO and AJOVY.
Gross profit margin for our North America segment in the first quarter
of 2019 decreased to 50.8%, compared to 55.5% in the first quarter of
2018. The decrease was mainly due to lower revenues from COPAXONE and
certain other specialty products, partially offset by generic products
and Anda.
North America Profit
Profit from our North America segment in the first quarter of 2019 was
$498 million, a decrease of 46% compared to $915 million in the first
quarter of 2018. The decrease was mainly due to lower revenues from
COPAXONE, a decline in sales of certain other specialty products and
generic products and lower other income, partially offset by cost
reductions and efficiency measures as part of the restructuring plan.
Europe Segment
Our Europe segment includes the European Union and certain other
European countries.
The following table presents revenues, expenses and profit for our
Europe segment for the three months ended March 31, 2019 and 2018:
| Three months ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| (U.S.$ in millions / % of Segment Revenues) | ||||||||
| Revenues | 1,264 | 100% | 1,442 | 100% | ||||
| Gross profit | 730 | 57.8% | 792 | 55.0% | ||||
| R&D expenses | 66 | 5.2% | 73 | 5.1% | ||||
| S&M expenses | 215 | 17.0% | 250 | 17.4% | ||||
| G&A expenses | 48 | 3.8% | 91 | 6.3% | ||||
| Other income | (1) | § | 1 | § | ||||
| Segment profit | 403 | 31.9% | 377 | 26.1% | ||||
Revenues from our Europe segment in the first quarter of 2019 were
$1,264 million, a decrease of 12% or $178 million, compared to the first
quarter of 2018. In local currency terms, revenues decreased by 5%,
mainly due to a decline in COPAXONE revenues due to the entry of
competing glatiramer acetate products, the termination of the PGT joint
venture and the sale of our women’s health business, partially offset by
new generic product launches.
Revenues by Major Products and Activities
The following table presents revenues for our Europe segment by major
products and activities for the three months ended March 31, 2019 and
2018:
| Europe |
Three months ended |
Percentage |
||||||
| 2019 | 2018 | 2018-2019 | ||||||
| (U.S.$ in millions) | ||||||||
| Generic products | $ | 919 | $ | 997 | (8%) | |||
| COPAXONE | 114 | 153 | (26%) | |||||
| Respiratory products | 91 | 113 | (19%) | |||||
| Other | 140 | 179 | (22%) | |||||
| Total | $ | 1,264 | $ | 1,442 | (12%) | |||
Generic products revenues in our Europe segment in the first
quarter of 2019, including OTC products, decreased by 8% to $919
million, compared to the first quarter of 2018. In local currency terms,
revenues were flat compared to the first quarter of 2018, mainly due to
the loss of revenues from the termination of the PGT joint venture,
partially offset by new generic product launches.
COPAXONE revenues in our Europe segment in the first quarter of
2019 decreased by 26% to $114 million, compared to the first quarter of
2018. In local currency terms, revenues decreased by 20%, mainly due to
price reductions resulting from the entry of competing glatiramer
acetate products.
Respiratory products revenues in our Europe segment in the first
quarter of 2019 decreased by 19% to $91 million, compared to the first
quarter of 2018. In local currency terms, revenues decreased by 13%,
mainly due to lower volumes in the U.K.
Europe Gross Profit
Gross profit from our Europe segment in the first quarter of 2019 was
$730 million, a decrease of 8% compared to $792 million in the first
quarter of 2018. The decrease was mainly due to a decline in COPAXONE
revenues, the loss of revenues resulting from the sale of our women’s
health business and the impact of currency fluctuations, partially
offset by new generic product launches and lower cost of goods sold.
Gross profit margin for our Europe segment in the first quarter of 2019
increased to 57.8%, compared to 55.0% in the first quarter of 2018. The
increase was mainly due to the termination of the PGT joint venture.
Europe Profit
Profit from our Europe segment in the first quarter of 2019 was $403
million, an increase of 7% compared to $377 million in the first quarter
of 2018. The increase was mainly due to lower cost of goods sold related
to the termination of the PGT joint venture and cost reductions and
efficiency measures as part of the restructuring plan.
International Markets Segment
Our International Markets segment includes all countries other than
those in our North America and Europe segments. The key markets in this
segment are Israel, Japan and Russia.
The following table presents revenues, expenses and profit for our
International Markets segment for the three months ended March 31, 2019
and 2018:
| Three months ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| (U.S.$ in millions / % of Segment Revenues) | ||||||||
| Revenues | 668 | 100% | 750 | 100% | ||||
| Gross profit | 269 | 40.3% | 313 | 41.8% | ||||
| R&D expenses | 22 | 3.3% | 24 | 3.2% | ||||
| S&M expenses | 115 | 17.2% | 134 | 17.9% | ||||
| G&A expenses | 36 | 5.3% | 41 | 5.5% | ||||
| Other income | (0) | § | (8) | (1.1%) | ||||
| Segment profit | 97 | 14.5% | 122 | 16.3% | ||||
Revenues from our International Markets segment in the first quarter of
2019 were $668 million, a decrease of $82 million, or 11%, compared to
the first quarter of 2018. In local currency terms, revenues decreased
by 3% compared to the first quarter of 2018, mainly due to lower sales
in Japan, partially offset by higher sales in Russia.
Revenues by Major Products and Activities
The following table presents revenues for our International Markets
segment by major products and activities for the three months ended
March 31, 2019 and 2018:
| International Markets |
Three months ended |
Percentage |
||||||
| 2019 | 2018 | 2018-2019 | ||||||
| (U.S.$ in millions) | ||||||||
| Generic products | $ | 441 | $ | 488 | (10%) | |||
| COPAXONE | 13 | 16 | (18%) | |||||
| Distribution | 151 | 153 | (1%) | |||||
| Other | 62 | 93 | (33%) | |||||
| Total | 668 | 750 | (11%) | |||||
Generic products revenues in our International Markets segment in
the first quarter of 2019, which include OTC products, decreased by 10%
to $441 million, compared to the first quarter of 2018. In local
currency terms, revenues decreased by 1%, mainly due to lower sales in
Japan resulting from regulatory pricing reductions and generic
competition to off-patent products, partially offset by higher sales in
Russia.
COPAXONE revenues in our International Markets segment in the
first quarter of 2019 decreased by 18% to $13 million, compared to the
first quarter of 2018. In local currency terms, revenues increased by 3%.
Distribution revenues in our International Markets segment in the
first quarter of 2019 decreased by 1% to $151 million, compared to the
first quarter of 2018. In local currency terms, revenues increased by 4%.
International Markets Gross Profit
Gross profit from our International Markets segment in the first quarter
of 2019 was $269 million, a decrease of 14% compared to $313 million in
the first quarter of 2018.
Gross profit margin for our International Markets segment in the first
quarter of 2019 decreased to 40.3%, compared to 41.8% in the first
quarter of 2018. The decrease was mainly due to lower sales in Japan,
partially offset by higher sales in Russia.
International Markets Profit
Profit from our International Markets segment in the first quarter of
2019 was $97 million, a decrease of 20% compared to $122 million in the
first quarter of 2018. The decrease was mainly due to lower sales in
Japan resulting from regulatory pricing reductions and generic
competition to off-patent products, partially offset by higher sales in
Russia and cost reductions and efficiency measures as part of the
restructuring plan.
Other Activities
We have other sources of revenues, primarily the sale of APIs to third
parties, certain contract manufacturing services and an out-licensing
platform offering a portfolio of products to other pharmaceutical
companies through our affiliate Medis. Our other activities are not
included in our North America, Europe or International Markets segments
described above.
Our revenues from other activities in the first quarter of 2019
were $317 million a decrease of 7% compared to the first quarter of
2018. In local currency terms, revenues decreased by 5%.
API sales to third parties in the first quarter of 2019 were $187
million, an increase of 4% compared to the first quarter of 2018. In
local currency terms, revenues increased by 5%.
Conference Call
Teva will host a conference call and live webcast along with a slide
presentation on Thursday, May 2, 2019 at 8:00 a.m. ET to discuss its
first quarter 2019 results and overall business environment. A question
& answer session will follow.
United States 1 (866) 966-1396
International +44 (0) 2071 928000
Israel 1 (809) 203-624
For a list of other international toll-free numbers, click here.
Passcode: 9470199
A live webcast of the call will also be available on Teva’s website at: ir.tevapharm.com.
Please log in at least 10 minutes prior to the conference call in order
to download the applicable software.
Following the conclusion of the call, a replay of the webcast will be
available within 24 hours on the Company’s website. The replay can also
be accessed until August 30, 2019, 9:00 a.m. ET by calling United States
1 (866) 331-1332 or International +44 (0) 3333009785; passcode: 9470199.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) has been
developing and producing medicines to improve people’s lives for more
than a century. We are a global leader in generic and specialty
medicines with a portfolio consisting of over 35,000 products in nearly
every therapeutic area.
Contacts
IR Contacts
United States
Kevin C. Mannix
(215)
591-8912
Israel
Ran Meir
972 (3) 9267516
PR
Contacts
United States
Kelley Dougherty
(973)
658-0237
Israel
Yonatan Beker
972 (54) 888
5898
