Teva Announces Q1 2024 Financial Results and Reaffirms 2024 Outlook

Teva Pharmaceutical Industries Ltd. reported strong financial results for the first quarter of 2024, marked by significant growth in its generics business and key products such as AUSTEDO and AJOVY. The company's revenues for Q1 2024 reached $3.8 billion, reflecting a 5% increase in local currency terms compared to Q1 2023.

The generics business demonstrated robust performance globally, with revenue growth of 9% in local currency terms from the previous year. AUSTEDO, a treatment for tardive dyskinesia and Huntington’s disease, saw a remarkable 67% revenue increase in the U.S., reaffirming its projected 2024 revenue target of approximately $1.5 billion. AJOVY, used for migraine prevention, also showed positive momentum with an 18% increase in revenues, totaling $113 million for Q1 2024.

Teva received recent FDA approvals for two biosimilars: SIMLANDI, an interchangeable biosimilar to Humira® for various inflammatory conditions, and SELARSDI, a biosimilar to Stelara® for plaque psoriasis and psoriatic arthritis. Additionally, the company announced positive Phase 3 efficacy results for its olanzapine long-acting injectable (LAI), demonstrating a promising treatment option for schizophrenia.

Key financial metrics for Q1 2024 include:
- GAAP loss per share of $0.12
- Non-GAAP diluted EPS of $0.48
- Cash flow used in operating activities at $124 million
- Free cash flow of $32 million

Teva reaffirmed its full-year 2024 financial outlook, projecting revenues between $15.7 billion and $16.3 billion, adjusted EBITDA ranging from $4.5 billion to $5.0 billion, non-GAAP diluted EPS between $2.20 and $2.50, and free cash flow from $1.7 billion to $2.0 billion.

President and CEO Richard Francis highlighted the successful start of the year, attributing the revenue growth to the company's generics business and innovative brands. He lauded the positive developments in Teva's product pipeline, including the FDA approvals and Phase 3 results, as well as the ongoing execution of the "Pivot to Growth" strategy introduced in May 2023. This strategy focuses on enhancing growth engines, boosting innovation, maintaining a strong generics portfolio, and optimizing business operations for strategic capital deployment.

In the first quarter, Teva's revenues increased due to higher sales from generics, AUSTEDO, and AJOVY, though offset by decreases in COPAXONE and Anda, the company’s U.S. distribution business. Gross profit climbed 12% to $1.77 billion, with a gross profit margin of 46.4%. Non-GAAP gross profit also rose by 9% to $1.96 billion.

Research and Development (R&D) expenses were $242 million, a 4% increase, reflecting continued investment in Teva's innovative pipeline, especially in neuroscience and immunology. Selling and Marketing (S&M) expenses rose 11% to $608 million, driven by commercial activities for AUSTEDO and UZEDY in the U.S. General and Administrative (G&A) expenses decreased by 6% to $278 million, primarily due to lower litigation fees.

Teva reported an operating loss of $218 million, impacted by higher asset impairments and restructuring costs. Nonetheless, non-GAAP operating income increased to $892 million, demonstrating a 23.4% non-GAAP operating margin. Financial expenses for the quarter stood at $250 million, mainly from net-interest expenses.

The company recognized a tax benefit of $52 million on a pre-tax loss of $467 million. The non-GAAP tax rate was 15.0%, affected by deferred tax benefits from intellectual property-related integration plans and varying jurisdictional tax rates.

Net loss attributable to Teva was $139 million, or $0.12 per share, compared to a loss of $220 million, or $0.20 per share, in Q1 2023. Non-GAAP net income was $548 million, with non-GAAP diluted EPS at $0.48. Adjusted EBITDA for Q1 2024 was $1.005 billion, marking a 12% increase.

The company generated $32 million in free cash flow and reduced its debt to $19.6 billion by March 31, 2024. Teva's leverage ratio under its revolving credit facility was updated, capping it at 4.00x in 2024 and 2025, gradually decreasing to 3.50x by early 2027.