• Revenue: $4.3 billion, up 15% in local currency terms.
• Adjusted EBITDA: $1.3 billion, up 17%.
• EPS: Up 16%.
• Free Cash Flow: $922 million.
• AUSTEDO Revenue: $435 million, 28% growth.
• AJOVY Revenue: 21% growth.
• UZEDY Revenue: $35 million in Q3, year-to-date $75 million.
• Global Generics Growth: 17% increase.
• TAPI Growth: 4% increase.
• Non-GAAP Gross Profit Margin: 53.7%.
• Non-GAAP Operating Margin: 28%.
• Non-GAAP EPS: $0.69.
• Net Debt: $15.7 billion.
• Net Debt to EBITDA Ratio: 3x.
• 2024 Revenue Guidance: Raised to $16.1 billion to $16.5 billion.
• 2024 EPS Guidance: Raised to $2.40 to $2.50.

• Warning! GuruFocus has detected 5 Warning Signs with TEVA.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Teva Pharmaceutical Industries Ltd (NYSE:TEVA) reported a 15% increase in revenues, reaching $4.3 billion for Q3 2024.
• The company's innovative products, AUSTEDO, AJOVY, and UZEDY, showed strong performance with growth rates of 28%, 21%, and a successful launch, respectively.
• Teva's global generics business grew by 17%, with significant contributions from all regions, including a 30% increase in the US.
• The company has made progress in its biosimilar portfolio, with 17 biosimilars targeting nearly $60 billion in brand value.
• Teva's financial outlook for the full year has been raised, reflecting strong performance and increased guidance for key products like UZEDY and COPAXONE.

Negative Points

• Teva recorded a GAAP operating loss of $51 million in Q3 2024, primarily due to goodwill impairment charges and higher legal settlements.
• The company faced a $600 million goodwill impairment charge related to its API reporting unit, impacting financial results.
• Foreign exchange rate movements negatively impacted revenues and profitability, with a $250 million impact on revenue year-to-date.
• Teva is dealing with legal challenges, including a $350 million provision related to an antitrust investigation by the European Commission.
• Despite strong performance, the pricing environment for generic medicines remains challenging, with ongoing downward pressure.

Q & A Highlights

Q: What are your expectations for the placebo response in the TL1A Phase II trial, and how is UZEDY's launch performance affecting your outlook for long-acting olanzapine? A: Placebo responses in ulcerative colitis and Crohn's disease are variable, and it's hard to predict. Regarding UZEDY, we're pleased with its performance, which gives us optimism for olanzapine due to its unmet need and our ability to prepare the market effectively. (Richard Francis, CEO; Eric Hughes, EVP, Global R&D, CMO)

Q: How can Teva leverage potential structural tailwinds from a push for US-made generics, and what are your expectations for olanzapine LAI's safety label? A: Teva works productively with any administration, and any policy changes benefiting generics would be helpful. For olanzapine LAI, we've designed the program with the FDA and have not seen any PDSS, which supports our confidence in its safety profile. (Richard Francis, CEO; Eric Hughes, EVP, Global R&D, CMO)

Q: What is your outlook for US generics in 2025, and where are UZEDY patients coming from? A: We have strong launches planned for 2025, including Symbicort and Saxenda, which will help manage changes in Revlimid. UZEDY is gaining patients from both orals and other long-acting injectables, with a significant number coming from orals. (Richard Francis, CEO)

Q: Can you provide an update on the TAPI divestment process and the impact of the European fine on cash flow? A: The TAPI divestment is on track for H1 2025. We are appealing the European fine, which will take years, so there's no immediate cash impact. (Richard Francis, CEO; Eliyahu Kalif, CFO)

Q: How quickly can you move TL1A into Phase III if Phase II data is successful, and what is your approach to investment given the pipeline momentum? A: We are prepared to start Phase III for TL1A in 2025 with Sanofi. We balance investment in growth drivers with shareholder value, aiming for a 30% operating margin by 2027. (Eric Hughes, EVP, Global R&D, CMO; Richard Francis, CEO; Eliyahu Kalif, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.